File No. 70-8553
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 1
TO
APPLICATION OR DECLARATION
ON
FORM U-1
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Allegheny Power System, Inc.
12 East 49th Street
New York, NY 10017
(Name of company or companies filing this statement
and addresses of principal executive offices)
Allegheny Power System, Inc.
(Name of top registered holding company parent
of each applicant or declarant)
Nancy H. Gormley, Esquire
Vice President
Allegheny Power System, Inc.
12 East 49th Street
New York, NY 10017
(Name and address of agent for service)
<PAGE>
1. Applicant hereby amends Item 1. Description of Proposed Transaction by
changing the number of shares set forth in the second paragraph as issued as
of December 30, 1994 pursuant to the DRISP and ESOSP to 18,294,149 and
4,654,343, respectively.
2. Applicant further amends Item 1. Description of Proposed Transaction by
deleting the eighth paragraph under subsection A. The Dividend Plan and
replacing it with the following:
The proceeds from the issuance of the DRISP Additional
Common Stock, the total amount of which cannot be
determined, will be used by APS to acquire common
stock of its subsidiaries and for other general
corporate purposes. If APS decides to use the
proceeds in order to make capital contributions to its
direct and advances to its indirect subsidiaries,
other than AYP Capital, Inc. (See File No. 70-8411),
to acquire notes of such subsidiaries or to make other
types of loans, other than through the operation of
the Money Pool (See File No. 70-7888), APS will
request additional SEC approval.
3. Applicant additionally amends Item 1. Description of Proposed
Transaction by deleting the second and fourth paragraphs under subsection C.
Restricted Stock Plan for Outside Directors in their entirety, and replacing
them with the following, to be inserted after the former third paragraph:
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Each award will be subject to adjustment to
prevent dilution or enlargement of the participant's
rights under the Plan in the event of a stock
dividend, stock split, reverse stock split,
recapitalization, reorganization or similar event.
The shares of common stock which the Outside
Directors receive will be restricted as provided in
the Outside Directors' Plan (hereinafter "Restricted
Shares"). Restricted Shares are subject to
conditions, including a time period during which such
Restricted Shares are subject to forfeiture.
Restricted Shares granted under the Outside Directors'
Plan which are forfeited pursuant to the terms of the
Plan will be available for further grants under the
Plan. Under the Outside Directors' Plan, Restricted
Shares may not be sold, assigned, exchanged,
transferred, pledged, hypothecated or otherwise
encumbered or disposed of during the period commencing
with the date of an award and continuing until
termination of service because of that Outside
Director's (i) death or disability; (ii) failure to
stand for reelection at the end of the term during
which the Outside Director turns 65; (iii) resignation
or failure to stand for reelection prior to the end of
the term during which the Outside Director turns 65
with the consent of the Board; or (iv) failure to be
reelected to the Board after being duly nominated.
If an Outside Director so chooses, he or she may
elect to receive shares which are not subject to the
above-mentioned restrictions (Alternate Shares).
Directors who elect to receive Alternate Shares and
directors who receive Restricted Shares must represent
to APS that they are taking shares awarded under the
Plan for investment purposes only, and not for
purposes of sale or other disposition and that they
will not transfer any shares except with an opinion of
counsel that such shares may be disposed of without
registration under the Securities Act of 1933. An
Outside Director (whether he or she receives Alternate
Shares or Restricted Shares) has all other rights of a
shareholder with respect to such shares of common
stock awarded under the Plan, including voting rights
and the right to receive and retain all cash dividends
paid, and to receive all other distributions made with
respect to such shares. The Board of Directors of APS
has approved the Outside Director's Plan and no
shareholder approval is required.
<PAGE>
4. Applicant also amends Item 1. Description of Proposed Transaction by
adding the following onto the end thereof:
APS does not currently have an interest in any exempt
wholesale generators (EWG) or foreign utility
companies (FUCO) and will not use the proceeds from
the issuance and sale of its common stock to acquire
an interest, directly or indirectly, in an EWG or
FUCO.
5. Applicant further amends Item 6. Exhibits and Financial Statements by
adding the following:
(a) Exhibits
B-1 Dividend Reinvestment and Stock Purchase Plan.
B-3 Employee Stock Ownership and Savings Plan, as
amended and restated effective January 1, 1993,
July 1, 1993, and January 1, 1994.
D-1 Petition of APS to the Maryland Public Service
Commission (excluding exhibits).
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, the undersigned has duly caused this statement to be signed on
its behalf by the undersigned thereunto duly authorized.
ALLEGHENY POWER SYSTEM, INC.
By NANCY H. GORMLEY
Nancy H. Gormley
Vice President
Dated: February 7, 1995
U:\DUMP\DRISP\AMEND1
PROSPECTUS
ALLEGHENY POWER SYSTEM, INC.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
COMMON STOCK
(Par Value $1.25)
The Dividend Reinvestment and Stock Purchase Plan (the Plan) of
Allegheny Power System, Inc. (the Company) provides holders of record of the
Company's Common Stock, par value $1.25 per share (the Common Stock), with a
convenient and economical way to purchase additional shares.
Participants in the Plan may at the time of each cash dividend payment
on the Common Stock (1) have all or a portion of their dividends automatically
invested in additional shares of Common Stock or (2) invest any amount they
wish between $50 and $10,000 in additional shares of Common Stock or (3) do
both.
The price per share of shares purchased from the Company will be the
average of the daily high and low sales prices of the Common Stock, as
published in The Wall Street Journal report of New York Stock Exchange
Composite Transactions, for the period of 10 trading days immediately prior to
the dividend payment date. In the event the Company elects not to issue new
shares but to cause the purchase of shares on the open market, the price per
share of any such shares will be the average cost of all shares so purchased,
excluding any related broker fees or commissions, which will be paid by the
Company. Plan participation fees are noted in the applicable section of the
Prospectus and on page ten.
A participant may withdraw from the Plan at any time effective upon
receipt of written notice, except that withdrawal will not be effective if
received after a dividend record date until that dividend is paid.
Stockholders who do not wish to participate in the Plan will continue to
receive cash dividends, as declared, by check in the usual manner.
This Prospectus relates to 5,000,000 shares of Common Stock registered
for sale pursuant to the Plan. The shares of Common Stock offered hereby are
listed on the New York, Chicago and Pacific Stock Exchanges, subject to notice
of issuance. It is suggested that this Prospectus be retained for further
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is
<PAGE>
STATEMENT OF AVAILABLE INFORMATION
Allegheny Power System, Inc., 12 East 49th Street, New York, N.Y.
10017, telephone no. (212) 752-2121, is subject to the informational
requirements of the Securities Exchange Act of 1934 and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected at the
public reference facilities of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, as well as the following
Regional Offices: Suite 1400, 500 West Madison Street, Chicago, Illinois
60661; and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of
the Commission at prescribed rates by writing to the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Reports,
proxy statements and other information concerning the Company can be inspected
at the New York, Chicago and Pacific Stock Exchanges, on which the Company's
Common Stock is listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Securities and
Exchange Commission are hereby incorporated in this Prospectus by reference:
(i) The Company's Annual Report on Form 10-K for the year ended
December 31, 1993 (the "Annual Report"); and
(ii) The Company's Quarterly Reports on Form 10-Q for the
Quarters ended March 31, 1994, June 30, 1994 and September
30, 1994.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of
<PAGE>
this Prospectus and prior to the termination of the offering of the securities
offered hereby shall be deemed to be incorporated in this Prospectus by
reference and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as modified or
superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus has been delivered, on the written or
oral request of any such person, a copy of any or all of the documents
referred to above which have been or may be incorporated by reference in this
Prospectus other than exhibits to such documents. Written requests for such
copies should be directed to: Corporate Secretary, Allegheny Power System,
Inc., 12 East 49th Street, New York, New York 10017, telephone no. (212) 752-
2121.
No person has been authorized to give any information or to make
any representation not contained in this Prospectus and, if given or made,
such information or representation must not be relied upon as having been
authorized by the Company. This Prospectus is not an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
<PAGE>
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.
THE COMPANY
The Company, incorporated in Maryland in 1925, is an electric
utility holding company that derives substantially all of its income from the
electric utility operations of its direct and indirect subsidiaries (the
"Subsidiaries"), Monongahela Power Company ("Monongahela"), The Potomac Edison
Company ("Potomac Edison"), West Penn Power Company ("West Penn"), and
Allegheny Generating Company ("AGC"). The properties of the Subsidiaries are
located in Maryland, Ohio, Pennsylvania, Virginia and West Virginia, are
interconnected, and are operated as a single integrated electric utility
system (the "System"), which is interconnected with all neighboring utility
systems. The three principal electric utility operating subsidiaries are
Monongahela, Potomac Edison, and West Penn (collectively, the "Operating
Subsidiaries"). Together, Monongahela, Potomac Edison, and West Penn own 100%
of the common stock of AGC. AGC owns an undivided 40% interest (840 MW) in a
pumped-storage hydroelectric station in Bath County, Virginia, which is
operated by an unaffiliated company.
The Company's executive offices are located at 12 East 49th Street, New
York, New York 10017, and its telephone number is (212) 752-2121.
THE PLAN
The Plan is administered for the participants by the Company and the
agent (the Agent) the Company has appointed:
<PAGE>
Chemical Bank
Dividend Reinvestment Department--Re: Allegheny Power System, Inc.
J.A.F. Building, P.O. Box 3069
New York, New York 10116-3069
Chemical Bank is the transfer agent and registrar for the Common Stock.
It is also a depository of funds of and a maker of loans to the Company and
the Subsidiaries.
1. ELIGIBILITY
All holders of record of Common Stock are eligible to participate in the
Plan.
2. PARTICIPATION
A stockholder of record may join the Plan at any time by completing and
signing an Authorization Form and returning it to the Agent. An Authorization
Form may be obtained by written request to the Agent or the Company.
Participation, whether for full or partial dividend reinvestment, will
begin with the next quarterly dividend payment, as and when declared, after
receipt of the Authorization Form by the Agent, provided it is received at
least 20 days prior to the payment date for that dividend (ordinarily the last
business day of March, June, September and December). Participants, whether
for full or partial dividend reinvestment, will be charged a fee of 3% of the
dividend amount to be reinvested, with a maximum of $3.00. The fee will be
deducted from the dividend and the balance reinvested. The Authorization Form
<PAGE>
must be received not less than 10 days prior to the dividend payment date if
"Optional Cash Payments Only" is checked. Should the Authorization Form
arrive after these deadlines, it will be necessary to delay participation
until the next dividend payment.
Participants who elect "Partial Dividend Reinvestment" may use less than
all of the cash dividends payable on shares credited to their accounts to
purchase additional shares of Common Stock, with cash dividends continuing to
be paid in the usual manner on the remaining number of whole and fractional
shares.
A participant desiring to invest cash, other than dividends, on any
dividend payment date may do so by sending the Agent a check or money order
made payable to the Agent, for the amount he wishes to invest, which shall not
be less than $50 or more than $10,000. There will be a charge of $3.00 for
each optional cash investment, which will be deducted from the optional cash
payment prior to the investment. Any cash payment received by the Agent more
than 30 days or less than 3 business days prior to a dividend payment date may
be returned. No interest will be paid on cash payments.
A participant may change options under the Plan, including increasing or
decreasing the number of whole shares on which dividends are to be paid in
cash, by completing, signing and sending to the Agent a new Authorization
Form. The change will apply as of the next dividend payment date that is 20
or more days after the Agent receives the Authorization Form.
<PAGE>
The maximum number of shares that can be sold by the Company pursuant to
the Plan on any dividend payment date is the number of shares which would have
been sold if all dividends paid on that date were invested under the Plan. If
on any dividend payment date there are insufficient shares available after
investment of participants' dividends to permit investment of all optional
cash payments received, shares available for investment with optional cash
payments will be allotted among all participants making optional cash payments
in proportion to the amounts of their optional cash payments, and any excess
cash remaining will be refunded to participants without interest.
3. SAFEKEEPING PROGRAM
To protect against certificates being lost, misplaced or stolen, Plan
participants may deposit their share certificates with the Agent for credit to
their Plan account. Participants who wish to avail themselves of the
safekeeping feature of the Plan should mail their certificates to Chemical
Bank, J.A.F. Building, P.O. Box 3069, New York, New York 10116-3069.
Certificates should be sent by registered mail, accompanied by a completed
Authorization Form specifying (i) that the shares are furnished for
safekeeping and (ii) dividends on all or a portion of the shares are to be
either reinvested pursuant to the Plan or paid in cash. There is a one-time
charge of $3.00 for this safekeeping feature of the Plan and a check for this
amount, payable to Chemical Bank, should be sent with the share certificates.
The Agent will confirm the receipt of any shares which are delivered for
safekeeping.
<PAGE>
4. PURCHASES
Shares are purchased from the Company under the Plan on each dividend
payment date at the average of the daily high and low sales prices of the
Common Stock, as published in The Wall Street Journal report of New York Stock
Exchange Composite Transactions, for the period of 10 trading days immediately
prior to that date. Instead of issuing new shares, the Company reserves the
right to cause the purchase of an appropriate number of shares on the open
market, subject to any applicable legal requirements, with funds provided from
participants' cash dividends and optional cash payments. In such event the
price per share of any such shares to each participant will be the average
cost of all shares so purchased, excluding any related broker fees or
commissions, which will be paid by the Company. Participants' accounts will
be credited with a number of whole and fractional shares determined by
dividing the amount to be invested by the purchase price.
5. REPORTS
A separate account will be maintained by the Agent for each participant.
Quarterly reports will be sent to each participant indicating the status of
his share ownership under the Plan, including the amount of dividends
reinvested and optional cash payments invested, the purchase price per share,
the number of shares purchased, the number of shares held in his account and
the fair market value of all shares purchased. (The fair market value is the
average of the high and low sales prices of the Common Stock on the date the
shares were purchased.) Duplicate previous statements may be requested by
sending a written notice to the Agent. A transaction fee of $5.00 will be
charged for each duplicate statement for the immediately preceding calendar
<PAGE>
year and a charge of $20.00 will be charged for each duplicate statement for
any earlier year other than the immediately preceding year.
6. CERTIFICATES
Certificates for any number of whole shares credited to a participant's
account under the Plan will be issued at any time upon the written request of
the participant to the Agent. Any remaining full shares and fraction of a
share will continue to be credited to the participant's account. Certificates
for fractions of shares will not be issued. There is a charge of $5.00 for
each certificate issued.
7. FEE SCHEDULE
Reinvestment of quarterly dividend 3% of dividend, maximum $3.00
Investment of optional cash $3.00
Issuance of certificate $5.00 per certificate
Safekeeping of certificate(s) $3.00 (one time only)
Sale of stock through the Plan $15.00 plus commissions per
transaction
Duplicate statements $5.00 immediately preceding calendar
year, $20.00 each earlier year other
than the immediately preceding year
8. VOTING RIGHTS
The Company will provide each participant with a proxy card for the
total number of shares registered in the participant's name and those held by
<PAGE>
the Agent for the participant's account under the Plan. If the proxy card is
returned properly signed and marked for voting, the shares covered thereby
will be voted as marked. If a properly signed proxy card is returned without
voting instructions, the shares covered thereby will be voted in accordance
with the recommendations of the Company's management. The total number of
whole shares held may also be voted in person at any meeting. Fractional
shares held in Plan accounts cannot be voted.
9. STOCK DIVIDENDS, SPLITS AND RIGHTS OFFERINGS
Any stock dividends of shares resulting from a stock split, distributed
by the Company, will be mailed directly to the participant in the usual manner
as to shares registered in the name of the participant and will be credited to
the participant's Plan account as to shares held for the participant by the
Agent.
In the event that the Company makes available to its stockholders rights
to purchase additional shares, such rights accruing to shares registered in
the name of the participant will be sent to the participant, but rights
accruing to shares held by the Agent for participants will be sold and the
proceeds invested in additional shares of Common Stock prior to or with the
next regular cash dividend. Any participant who wishes to exercise stock
purchase rights as to shares held by the Agent must request that a stock
certificate for such shares be sent to him by the Agent prior to the record
date of the rights offering.
<PAGE>
10. ASSIGNABILITY
Shares held by the Agent under the Plan may not be pledged. A
participant who wishes to pledge such shares must request that certificates
for such shares be issued to the participant.
11. WITHDRAWAL FROM THE PLAN
A participant may withdraw from the Plan by sending a written notice of
withdrawal to the Agent. If the withdrawal notice is received by the Agent
after the date record ownership is determined for the payment of a dividend,
the withdrawal will not be effective until after the payment of such dividend,
the proceeds of which will be reinvested in shares under the Plan. When a
participant withdraws from the Plan, or upon termination of the Plan by the
Company, certificates for whole shares credited to the participant's account
under the Plan will be issued to the participant and a cash payment made for
any fraction of a share, unless the participant requests that some or all
whole shares be sold.
If the participant requests that some or all of the shares, both whole
and fractional, credited to his account be sold by the Agent, the Agent will
sell such shares as soon as practicable following receipt of the request and
will send the participant a check for the proceeds, less any brokerage
commission and transfer tax, and a transaction fee of $15.00 for each sale of
any number of whole shares.
<PAGE>
Full and fractional shares sold may be combined with those of other
terminating participants, in which case the proceeds for each participant will
be based on the average sale price of all such shares.
There are no requirements for certification of a participant's request
to terminate participation or to authorize the Agent to sell a participant's
shares unless a legal transfer, such as transfers involving fiduciaries, is
involved, in which event required certification will vary depending upon
governing state law.
12. MODIFICATION OR TERMINATION
The Company may, upon written notice to all participants, change,
suspend or terminate the Plan at any time.
13. TAX EFFECT
For Federal income tax purposes dividend payments applied to the
purchase of new shares are included in taxable income. Cash payments when
whole or fractional shares are sold, either upon withdrawal from the Plan or
otherwise, may result in gain or loss for tax purposes. The amount of such
gain or loss generally will be measured by the difference between the amount
received for such shares or fraction of a share and the tax basis thereof.
Quarterly statements should be retained to help determine the tax basis
of shares acquired under the Plan. For additional information or other
possible tax consequences, participants are advised to consult their tax
advisors.
<PAGE>
14. RESPONSIBILITY
The Company, except to the extent otherwise required under applicable
state and federal securities laws, and the Agent will not be liable for any
act or omission to act done or made in good faith in administering the Plan.
PARTICIPANTS SHOULD RECOGNIZE THAT NEITHER THE COMPANY NOR THE
AGENT CAN ASSURE THEM OF A PROFIT OR PROTECT THEM AGAINST A LOSS
ON THE SHARES PURCHASED BY THEM UNDER THE PLAN OR OTHERWISE.
15. APPLICABLE LAWS AND REGULATIONS
The Plan shall be conducted in accordance with all applicable laws. The
obligations of the Company to offer, issue or sell shares of its Common Stock
shall be subject (a) to the obtaining by the Company of all approvals,
authorizations and consents which may be required from (i) all regulatory
authorities having jurisdiction, including the Securities and Exchange
Commission under the Public Utility Holding Company Act of 1935, and (ii) any
stock exchange on which the Common Stock of the Company may then be listed and
(b) to the condition that at the time of purchase the price at which shares
are being purchased shall be at least equal to the then par value of the stock
being purchased.
Under Article XIII of the Articles of Incorporation of the Company,
Article VI of the By-laws of the Company and Section 2-418 of the Corporations
and Associations Article of the Annotated Code of Maryland, directors and
officers are entitled to indemnification by the Company against liability
which they may incur in their respective capacities as directors and officers
<PAGE>
under certain circumstances. Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended (the Act), may be
permitted to directors or officers pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is therefore unenforceable.
USE OF PROCEEDS
The net proceeds from the sale of shares of Common Stock pursuant to the
Plan will be added to the Company's general funds and will be used to make
capital contributions and advances to its direct and indirect Subsidiaries, to
acquire notes or stock of such Subsidiaries, and to finance other corporate
needs. The Subsidiaries will use the funds (and revenues from their
operations) directly or indirectly to finance their construction programs and
for other corporate purposes.
THE COMMON STOCK
The Common Stock is the only class of capital stock of the Company
authorized or outstanding. At December 9, 1994, there were 118,894,110 shares
outstanding of the 260,000,000 shares authorized to be issued.
The outstanding shares of Common Stock are, and the additional shares of
Common Stock upon issuance will be, fully paid and nonassessable. The
following is a brief summary of certain provisions of the Charter of the
Company.
<PAGE>
Dividend Rights: The Board of Directors may declare dividends on Common
Stock, payable at such times as it may determine, out of available retained
earnings or net income. Supplemental indentures relating to certain
outstanding bonds of Subsidiaries contain dividend restrictions, under the
most restrictive of which $461,539,000 of consolidated retained earnings at
September 30, 1994, is not available for cash dividends on their common
stocks, except that a portion thereof may be paid as cash dividends where
concurrently an equivalent amount of cash is received by a subsidiary as a
capital contribution or as the proceeds of the issue and sale of shares of
such subsidiary's common stock. Retained earnings available for dividends on
Common Stock amounted to $444,879,000 at September 30, 1994.
Liquidation Rights: The holders of Common Stock are entitled to receive
the assets of the Company available for distribution to its stockholders.
Voting Rights: The holders of Common Stock are entitled to one vote per
share with the right to cumulative voting in elections of directors.
Preemptive Rights: No holder of Common Stock is entitled as a matter of
right to subscribe to any new or additional shares of Common Stock, or any
security convertible into Common Stock, unless the same is offered for money
other than by a public offering or an offering to or through underwriters or
investment bankers who agree promptly to make a public offering.
<PAGE>
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
VALIDITY OF THE COMMON STOCK
The validity of the Common Stock offered hereby is being passed upon by
Sullivan & Cromwell, 125 Broad Street, New York, New York 10004.
ALLEGHENY POWER SYSTEM
EMPLOYEE
STOCK OWNERSHIP AND SAVINGS PLAN
(As Amended and Restated Effective January 1, 1993,
July 1, 1993, and January 1, 1994)
<PAGE>
TABLE OF CONTENTS
Page
Article 1 Introduction 1
Article 2 Definitions 1
Article 3 Stock Ownership Plan 9
Article 4 Savings Plan 13
Article 5 Maximum Contributions and Limitations 26
Article 6 Administration 31
Article 7 General Provisions 35
Article 8 Amendment, Merger and Termination 41
Article 9 Miscellaneous Provisions 42
<PAGE>
Article 1
Introduction
Allegheny Power System, Inc. (the Company) and certain of its
subsidiaries have established this Plan, comprised of a stock ownership plan
and a savings plan, for the exclusive benefit of the Company and of
participating Employees and their Beneficiaries. The stock ownership plan
enabled Employees to become beneficial owners of shares of Common Stock of the
Company at no cost to themselves as the funds for paying for such Stock came
from tax credits or savings under the Internal Revenue Code that System
companies got because of the stock ownership plan. The savings plan enables
Employees to provide for their future through tax deferred pre-tax
contributions (which are matched by Company contributions) and post-tax
contributions.
Article 2
Definitions
2.1 "Account" shall collectively refer to the Stock Account (if any)
and the Savings Account (if any) maintained for each Member. Stock Account
means the account in the stock plan maintained for each Member for each Plan
Year to which are allocated and credited: (a) the Member's share of Employer
Contributions for such Plan Year and (b) dividends and other earnings credited
to such Account. Savings Account shall collectively refer to a Member's Salary
Pre-tax Contribution Account, Company Contribution Account, Post-tax
Contribution Account and Rollover Account in the savings plan, and Savings
Account Balance shall mean on any date of determination the value of the
savings account.
<PAGE>
2.2 "Allocation Date" means the last day of the applicable Plan
Year.
2.3 "Annual Additions" shall mean the sum for a Plan Year of Company
contributions to the Member's Stock Account, Pre-tax Contribution Account,
Company Contribution Account; the Employee's contributions to the Post-tax
Contributions Account, and any forfeitures or excess contributions as defined
by the Code.
2.4 "Beneficiary" means a spouse to whom the Member has been married
for at least one year or, subject to the consent of such spouse (if there be
any), such other person or persons designated by a Member under the Company's
group life insurance plan unless otherwise designated by him in a written
instrument filed with the Employee Benefits Committee. Any spousal consent
must be in a written instrument prescribed by and filed with the Employee
Benefits Committee. If there is no Beneficiary designated or surviving when a
death benefit becomes payable under the Plan, payment will be made to the
first surviving class of the following classes of successive preference
Beneficiaries: the Employee's (a) widow or widower, (b) surviving children, or
surviving issue of deceased children, per stirpes, (c) surviving parents, (d)
surviving brothers and sisters, or surviving issue of deceased brothers and
sisters, per stirpes, (e) executor or administrators. In the sole discretion
of the Employee Benefits Committee, any minor's share may be paid in
installments to such adult or adults as, in its opinion, have assumed the
custody and principal support of such minor.
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
<PAGE>
2.6 "Company" means Allegheny Power System, Inc.
2.7 "Company Stock" means common stock issued by Allegheny Power
System, Inc. with voting power and dividend rights no less favorable than the
voting power and dividend rights of other common stock issued by Allegheny
Power System, Inc.
2.8 "Company Contributions Account" shall mean the portion of the
Member's Savings Account Balance derived from Company contributions under
Article 4 hereof.
2.9 "Compensation" means all wage and salary compensation payable by
the Employer to a Member during any Plan Year determined prior to all pre-tax
contributions pursuant to Section 4.1(a) hereof, but excluding all amounts
attributable to items such as moving expenses, educational allowances, the
imputed value of life insurance, and such other similar items as the Employee
Benefits Committee may determine. Effective for Plan Years beginning on or
after January 1, 1994, the annual compensation shall not exceed $150,000 (or
such higher maximums as may be permitted under Section 401(a)(17) of the
Code).
2.10 "Effective Date" in the case of the stock ownership plan is
January 1, 1976, and in the case of the savings plan is July 1, 1984.
<PAGE>
2.11 "Employee" means all persons, except a leased employee, employed by
the Employer on a regular or probationary full-time basis not represented for
purposes of collective bargaining and such represented persons who as a result
of collective bargaining have entered into a written agreement with the
Company or its affiliates, which agreement specifically provides that such
persons shall be eligible to participate in the Plan.
2.12 "Employee Benefits Committee" means the Allegheny Power System
Employee Benefits Committee, as described in Article 6.
2.13 "Employer" means the Company and such of its subsidiaries or
affiliates as the Board of Directors of the Company or Finance Committee
thereof may from time to time designate.
2.14 "Employer Stock Ownership Plan Contributions" means, for any
portion of a Plan Year beginning on or after January 1, 1983 and ending
December 31, 1986 with respect to which the Employer made an election to claim
an additional credit pursuant to Section 41G(c)(1)(B) of the Code, an amount
equal to such additional credit determined pursuant to Sections 41G(a)(2) and
41G(c)(1)(B) of the Code.
2.15 "Entry Dates" shall be the first day of each month unless otherwise
provided in this Plan.
2.16 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
<PAGE>
2.17 "Finance Committee" means the Finance Committee of the Board of
Directors of the Company.
2.18 "Highly Compensated Employee" means for any Plan Year an Employee
of the Company or Related Entity of the Company who, during the Plan Year or
the preceding Plan:
(A) Owned at any time more than five percent of Company Stock,
(B) Had Compensation in excess of $75,000 (adjusted for increases
in the cost of living),
(C) Had Compensation in excess of $50,000 (adjusted for increases
in the cost of living) and was in the Top Paid Group of
Employees, or
(D) Was an officer of the Company who received Compensation
greater than 50% of the amount in effect under Section
415(b)(1)(A) of the Code for such Plan Year.
For purposes of clauses (B), (C), and (D), an Employee not
described therein for the preceding Plan Year shall not be treated as
described therein during the current Plan Year unless such Employee is a
member of the group consisting of the 100 employees who had the greatest
Compensation for the Plan Year for which such determination is made.
<PAGE>
2.19 "Hour of Service" shall include each hour for which an Employee is
directly or indirectly paid, or entitled to payment, by the Related Entity for
the performance of duties, and for reasons other than the performance of
duties, during the Plan Year, and shall include periods of vacation, regular
holidays, temporary illness, leaves of absence and military service at the
rate of the Employee's normally scheduled work hours per day. An hour of
employment includes each hour for which back pay, irrespective of mitigation
or damage, has been either awarded or agreed to by the Related Entity. These
hours shall be credited to the Employee for the computation period to which
the award or agreement pertain rather than the computation period in which the
award, agreement, or payment was made. Hours under this section shall be
calculated and credited pursuant to Section 2530.200 b-2(b) and (c) of the
Department of Labor regulations, which are incorporated herein by reference.
2.20 "Investment Options" shall mean any investment program or fund
which the Employee Benefits Committee (with the approval of the Finance
Committee) makes available under the Savings Plan.
2.21 "Member" shall mean each Employee who is a member of the stock
ownership plan and/or savings plan pursuant to Article 7.
2.22 "Plan" shall mean the Allegheny Power System Employee Stock
Ownership and Savings Plan.
2.23 "Plan Year" shall mean the fiscal year of the Company, except that
the first Plan Year of the savings plan shall commence on the Effective Date
of the savings plan.
<PAGE>
2.24 "Post-tax Contribution Account" shall mean that portion of a
Member's Savings Account Balance derived from post-tax contributions.
2.25 "Probationary Employee" shall mean an Employee who occupies a
full-time position for a trial period to determine fitness as a Regular
Employee.
2.26 "Pre-tax Contribution Account" shall mean the portion of the
Member's Savings Account Balance derived from the Member's pre-tax
contributions under Article 4 hereof.
2.27 "Regular Employee" shall mean an Employee who has qualified for and
occupies a full-time position.
2.28 "Related Entity" shall mean (i) all corporations which are
affiliated with the Company in a controlled group of corporations within the
meaning of Section 1563(a) of the Code, determined without regard to Section
1563(a)(4) and (e)(3)(C) of the Code, and (ii) all trades or businesses
(whether or not incorporated) which are under common control with the Company
as determined by regulations promulgated under Section 414(c) of the Code.
2.29 "Rollover Contribution Account" shall mean the portion of the
Member's Savings Account Balance derived from a "rollover amount" from a
"qualified trust", adjusted for investment gain or loss and income or expense.
2.30 "Top Paid Group of Employees" means for any Plan Year those
Employees of the Company or Related Entity of the Company who are in the top
20% of Employees when ranked on the basis of total compensation for such Plan
Year.
<PAGE>
2.31 "Trust Fund" means the cash, Company Stock, Investment Options and
other property held by the Trustee pursuant to the terms of the Trust
Agreement established to hold the assets of the Plan.
2.32 "Trustee" mean any person(s) or corporation designated by the Board
of Director of the Company to hold the Trust Fund.
2.33 "Trust Agreement" means the agreement between the Company and the
Trustee.
2.34 Words importing males will be construed to include females wherever
appropriate.
<PAGE>
Article 3
Stock Ownership Plan
3.1 Employer Stock Ownership Plan Contributions
3.1(a) Employer Stock Ownership Plan Contributions for any
portion of a Plan Year which occurred on or after January 1, 1983
and prior to January 1, 1987 were equal to:
(i) One-half of one percent (.50%) of Compensation paid
to stock ownership plan Members in respect of any portion of a
Plan Year which occurred in calendar years 1983 and ended in
1986; less
(ii) The total amount, if any, of recaptured tax credits
attributable to Employer Stock Ownership Plan Contributions to
the stock ownership plan for prior Plan Years, and reductions
pursuant to a final determination within the meaning of
Section 41G(b)(2) in tax credits attributable to Employer
Stock Ownership Plan Contributions to the stock ownership plan
for prior Plan Years, as provided in Section 41G(c)(3) of the
Code.
<PAGE>
3.1(b) Employer Stock Ownership Plan Contributions were made in:
(i) Cash;
(ii) Shares of Company Stock, in which event such shares
were valued at the daily average of the closing prices as
published in The Wall Street Journal report of the New York
Stock Exchange - Composite Transactions for the twenty
consecutive trading days immediately preceding the date of
transfer of such shares to the Trustee; or
(iii) Any combination of the foregoing.
3.1(c) Except as may otherwise be provided pursuant to
regulations issued under Section 41G(c)(1)(B) of the Code,
Employer Stock Ownership Plan Contributions for a Plan Year
were, to the extent allocable to the additional credit under
Section 41G(a) of the Code which was allowed for the taxable
year or allowed as a carryback to a preceding taxable year,
paid to the Trustee no later than 30 days after the due date
of the Company's federal income tax return for such Plan Year,
including extensions of time granted for the filing thereof.
To the extent such Employer Stock Ownership Plan Contributions
were allocable to that portion of such additional investment
credit which was allowed as a carryover in a succeeding
taxable year, the Contributions were, except as otherwise
provided by such regulations, paid to the Trustee no later
than 30 days after the due date of the Company's Federal
<PAGE>
income tax return for such succeeding taxable year, including
extensions of time granted for the filing thereof. All
Employer Stock Ownership Plan Contributions paid to the
Trustee shall remain in the Plan regardless of whether the
additional investment credit attributable to such Employer
Stock Ownership Plan Contributions is recaptured or
redetermined.
3.1(d) No Member Contributions were required or permitted
under the stock ownership plan.
3.2 Investments in Company Stock
3.2(a) Subject to the payment of stock ownership plan expenses
provided for in Section 6.1, any cash Stock Ownership Plan
Contributions transferred to the Trust Fund were used to purchase
Company Stock within 30 days of receipt thereof by the Trustee.
3.2(b) All earnings [less expenses provided for in Section 6.1]
shall be allocated among all stock ownership plan Members on the
basis of the number of shares credited to their accounts for each
Plan Year and shall be applied to the purchase of additional shares
of Company Stock which may be purchased directly from the Company
through its Dividend Reinvestment and Stock Purchase Plan.
3.3 Allocation of Contributions
3.3(a) Employer Stock Ownership Plan Contributions for each Plan
Year were allocated and credited as of the Allocation Date to the
Stock Account of each stock ownership plan Member who was in the
<PAGE>
employ of the Company during such Plan Year in the proportion that
the Member's total Compensation not in excess of $100,000 during
the Plan Year bore to the total of all Compensation, not in excess
of $100,000 in the case of any stock ownership plan Member, paid to
all stock ownership plan Members during the Plan Year.
3.3(b) All amounts allocated to stock ownership plan Members'
Accounts shall be nonforfeitable.
3.4 Distributions While Employed
3.4(a) A stock ownership plan Member, who is an employee, may
request to have his Stock Ownership Plan Account for a Plan Year
distributed to him after the 84th month beginning after the month
in which the Employer Stock Ownership Plan Contribution was
allocated to the Stock Ownership Plan Account. Such request shall
be made on a form prescribed by the Employee Benefits Committee and
must be received by such Committee at least 30 days prior to the
end of the 84-month period. If the Committee has not received a
proper request pursuant to this Section 3.4(a), a stock ownership
plan Member shall not be entitled to receive distribution of his
Stock Ownership Plan Account for the Plan Year until his
Termination, as provided in Section 7.2(a).
<PAGE>
Article 4
Savings Plan
4.1 Member and Company Contributions
4.1(a) Pre-tax Contributions. Each Employee who is eligible for
membership in the savings plan may elect to have the Employer
contribute on his behalf not less than two percent nor more than
seven percent (in multiples of one percent) of his Compensation as
he shall elect in writing on a form prescribed by the Employee
Benefits Committee subject to the limits of Section 4.4 and 4.5.
Such contribution shall be accomplished through direct reduction of
Compensation in each payroll period that the election is in effect.
A Member may elect to reduce, discontinue or increase such
contributions by completion and delivery to the Members' Company
Payrolls Section of a form prescribed by the Employee Benefits
Committee. Any election to discontinue contributions shall be
effective as soon as practicable following the receipt of the
election form by the Members' Company Payrolls Section. Any other
election shall be effective as of the beginning of the next
calendar quarter providing adequate notice of such election has
been given to the Committee. An election to resume contributions
shall not be effective earlier than the beginning of the quarter
following at least ninety days from the effectiveness of a notice
to discontinue such contributions. All pre-tax contributions shall
be paid to the Trustee no later than thirty days after the payroll
period for which such contributions were withheld. Each Member's
pre-tax contributions, as adjusted for investment gain or loss and
income or expense, constitute such Member's Pre-tax Contribution
Account.
<PAGE>
4.1(b) Company Contributions. Company contributions shall be
made equal to fifty percent of a Member's first six percent of pre-
tax contributions, and shall not exceed three percent of his
Compensation. Company contributions made on behalf of a Member, as
adjusted for investment gain or loss and income or expense,
constitute such Member's Company Contribution Account. Such
Company contributions shall be paid to the Trustee, at least
quarterly, in cash or Company Stock or both. Company Stock shall
be valued at the average of the daily high and low sales prices of
the common stock published in The Wall Street Journal report of the
New York Stock Exchange - Composite Transactions for the period of
ten consecutive trading days immediately preceding the date of
transfer of such shares to the Trustee. Cash so transferred to the
Trustee and the income from the Company Contribution Account shall
be used to purchase Company Stock within thirty days of receipt
thereof by the Trustee. Such purchase may be effected through the
Dividend Reinvestment and Stock Purchase Plan.
4.1(c) Post-tax Contributions. Each employee who is eligible for
membership in the savings plan may elect post-tax contributions (in
multiples of one percent) up to six percent of his Compensation as
he shall elect in writing on a form prescribed by the Employee
Benefits Committee subject to the limits of Section 4.5. A Member
may elect to reduce, discontinue or increase such contributions by
completion and delivery to the Members' Company Payrolls Section of
a form prescribed by the Employee Benefits Committee. Any election
to discontinue contributions shall be effective as soon as
practicable following the receipt of the election form by the
<PAGE>
Members' Company Payrolls Section. Any other election shall be
effective as of the beginning of the next calendar quarter
providing adequate notice of such election has been given to the
Committee, provided that an election to resume contributions shall
not be effective earlier than ninety days from the effectiveness of
a notice to discontinue such contributions. All post-tax
contributions shall be paid to the Trustee no later than thirty
days after the payroll period for which such contributions were
withheld. Each Member's post-tax contributions, as adjusted for
investment gain or loss and income or expense, constitute such
Member's Post-tax Contribution Account.
4.1(d) Vesting. A Member shall at all times have a
nonforfeitable interest in his Savings Account.
4.1(e) Rollover Account. Each Member may contribute to a
separate Rollover Contribution Account an amount constituting a
"rollover amount" from a "qualified trust", of a previous employer,
within the meaning of Section 401(a) of the Code. Such amount,
adjusted for investment gain or loss and income or expense, shall
constitute such Member's Rollover Contribution Account. An
Employee not yet eligible because of age and service to become a
Member of the savings plan may establish a Rollover Contribution
Account.
<PAGE>
4.1(f) Earnings Limitation. Pre-tax and Company contributions
shall be made from the consolidated net earnings of the Company for
the fiscal year in which the Plan Year ends as determined by the
Company upon the basis of its books of account, in accordance with
generally accepted accounting principles to the extent applicable,
but without any deduction for any tax on income or for
contributions to this Plan. If there are no such current net
earnings, the contributions may be made from retained earnings from
prior fiscal years.
4.2 Administration of Savings Plan Funds
4.2(a) Investment Control. The management and control of the
Trust Fund shall be vested in the Trustee except to the extent that
investment managers are appointed by the Administrator.
4.2(b) Member-Directed Investments. Savings plan Members,
subject to such reasonable restrictions as the Employee Benefits
Committee may impose for administrative convenience, may designate
what percentage of their Savings Accounts (excluding the Company
Contribution Account) will be invested in each of the Investment
Options. In no event may Savings Accounts be invested in Company
Stock.
4.2(c) No Member Election. If a Member does not make a written
designation of an Investment Option, the Employee Benefits
Committee shall direct the Trustee to invest all amounts held or
received on account of such Member in such Investment Option as is
designated by the Employee Benefits Committee for this purpose.
<PAGE>
4.2(d) Valuations. The Savings Plan and each Member's Account
shall be valued by the Trustee at fair market value as of each date
of determination as defined in Section 5.2(a)(iv).
4.3 Savings Plan Withdrawals While Employed
4.3(a) Post-tax Contributions. A Member, who is an employee and
has made post-tax contributions, may withdraw such contributions at
any time, but no more than once a calendar quarter, by submitting a
written request to the Employee Benefits Committee specifying the
amount to be withdrawn. Payment shall be made to the Member as
soon as practicable after the date the request is filed with the
Employee Benefits Committee. The withdrawal may not exceed the
balance in the Member's Post-tax Contribution Account.
4.3(b) Hardship. A Member, who is an employee and has withdrawn
the total amount available under Section 4.3(a), may also withdraw
amounts from the Member's Pre-tax Contribution Account by
submitting a written request to the Employee Benefits Committee at
such time and in such manner as shall be prescribed by the Employee
Benefits Committee subject to the following provisions:
(i) The withdrawal request must be for an immediate and
heavy financial need created by hardship and funds are not
readily available from other sources.
<PAGE>
(ii) The amount withdrawn may not exceed the actual
expense incurred or to be incurred by the Member on account of
such hardship. Withdrawal is limited to pre-tax contributions
to date, and accrued income on pre-tax contributions as of
December 31, 1988.
(iii) The determination of the existence of financial
hardship and the amount required to be distributed to meet the
need created by the hardship, shall be made by the Employee
Benefits Committee. All determinations regarding financial
hardships shall be made in accordance with written procedures.
(iv) If the Employee Benefits Committee approves a
withdrawal pursuant to this Section 4.3(b), then the
withdrawal amount shall be paid as soon as practicable.
Upon approval and distribution of a hardship withdrawal, a
Member must suspend all contributions to the plan. An
election to resume contributions shall not be effective until
the beginning of the quarter following at least 90 days of no
contributions.
4.3(c) Loans
<PAGE>
(i) Committee Discretion. The Employee Benefits
Committee, in its discretion, shall have the right to direct
the Trustee to make a loan(s) to any Member who is an employee
and requests the same. Effective for all loans acquired after
October 18, 1989 all such loans shall bear a reasonable rate
of interest, shall be reasonably secured and shall be subject
to the other requirements of this Section, the Loan Rules
(Exhibit I), and such other rules which the Committee shall
from time to time prescribe. Eligibility for and the rules
with respect to loans shall be uniformly applied to all
Members. Loans shall not be made available to Highly
Compensated Employees, as defined in Section 414(q) of the
Code in an amount greater than the amount made available to
other Members. Nothing in this Section shall require the
Employee Benefits Committee to make loans available to
Members.
(ii) Loan Fund. The principal amount of the loan shall be
transferred proportionately from the Investment
Options in the Member's Pre-tax Contribution Account
to a "loan fund" in such Account which shall be
invested solely in such loan. Payments of principal
will reduce the balance in the loan fund and together
with payments of interest will be credited to the
Account and invested proportionately in Investment
Options in accordance with the Member's then
effective instructions.
<PAGE>
(iii) Spousal Consent. A loan by a married Member in the
plan requires the written consent of the Member and his spouse
within 90 days of making the loan. Such consent shall
thereafter be binding with respect to the consenting spouse or
any subsequent spouse with respect to that loan. If spousal
consent is not available due to the disability or
unavailability of the spouse, the Plan Administrator may waive
the spousal consent requirement.
4.4(a) Maximum Pre-tax Contribution Limit. The maximum amount
that an Employee can elect to defer to the Pre-tax Contribution
Account for any taxable year under the savings plan is limited to
$7,000 adjusted for increases in the cost of living pursuant to
Section 402(g)5 of the Code.
4.4(b) Excess Deferred Contributions. In any Plan Year of the
Member if the total amount deferred to the Pre-tax Contribution
Account exceeds the limit set forth in Section 4.4(a), the amount
in excess of the limit will be included in the Member's gross
income for such year. The amount of excess contributions adjusted
for any gains or losses will be distributed to the Member no later
than April 15 after the close of the Plan Year. All gains or
losses will be treated as earned and received in the year of
distribution.
In any taxable year of the Member if the total amount of elective
deferrals (as defined in Section 402(g)(3) of the Code) on behalf
of a Member to all plans qualified under Section 401(a) of the Code
<PAGE>
in which a Member participates exceeds the limit set forth in
Section 4.4(a), a Member, not later than the March 1 following the
end of a Plan Year, may submit a written statement to the Employee
Benefits Committee which:
(i) sets forth that the sum of (1) the pre-tax
contributions made to the Member's account for such Plan Year
and (2) the Member's other elective deferrals for such Plan
Year exceeds the amount provided for in Section 4.4(a), and
(ii) sets forth the amount of pre-tax contributions which
are to be treated as excess elective deferrals.
In such case, not later than the April 15 following the end of the
Plan Year there shall be distributed to the Member such amount of
pre-tax contributions, adjusted for any gain or loss allocable
thereto for such Year.
4.5(a) Pre-tax, Post-tax, and Company Contribution Limitation.
The Employee Benefits Committee, at its sole discretion, may limit
the maximum amount of the pre-tax, post-tax, and Company
contribution for all Members or any class of Members to the extent
it determines that such limitation is appropriate or that such
limitation is necessary to keep the Plan in compliance with
applicable rules for tax qualification under Sections 401(a) and
(k) of the Code. Such limitation shall be effective for all
payroll periods beginning in the calendar quarter following the
announcement of the limitation.
<PAGE>
4.5(b) Pre-tax Contribution Limitation. In respect of each Plan
Year, pre-tax contributions must satisfy one of the following
tests:
(i) The actual deferred percentage under the Plan by
Highly Compensated Employees for a Plan Year may not exceed
125 percent of the actual deferral percentage of all
non-highly compensated Employees who are (or are eligible to
become) Members pursuant to Section 7.1, or
(ii) The excess of the actual deferral percentage of the
Highly Compensated Employees over that of all other
eligible Employees may not be more than two
percentage points and the actual deferral percentage
for the group of Highly Compensated Employees may not
be more than the actual deferral percentage of all
non-highly compensated Employees multiplied by two.
The "actual deferral percentage" for the Highly Compensated
Employees and the non-highly compensated Employees for a Plan Year
is the average of the ratios, calculated separately for each
Employee in such group, of the amount of Pre-tax Contributions paid
under the Plan for such Plan Year on behalf of each such Employee
for such Plan Year, to the Employee's Compensation for such Plan
Year (prior to any deferral hereunder).
If neither of the tests set forth in the preceding paragraphs would
be satisfied in any Plan Year, the Employee Benefits Committee
<PAGE>
shall make the following adjustments, proportionately for each
Member who is a Highly Compensated Employee, to the extent
necessary so that one of the tests will be satisfied:
(1) first, by reducing the pre-tax contributions by the Company
under Section 4.1(a) with respect to the balance of the
Compensation payable to the Member for that Plan Year; and
(2) second, no later than the end of the following Plan Year, by
either (A) paying to the Member in cash a portion of the
Pre-tax Contributions Account pursuant Section 4.1(a)
(adjusted for any gain or loss allocable thereto for such Plan
Year), or (B) if elected by the Member, treating a portion of
the pre-tax contributions pursuant to Section 4.1(a) as a
post-tax contribution under Section 4.1(c) for all purposes
under the Plan.
The Employee Benefits Committee shall make the adjustments referred
to in this Section only for each Member who is a Highly Compensated
Employee whose ratio for the Plan Year of pre-tax contributions
pursuant to Section 4.1(a) to Compensation does not satisfy either
of the tests set forth in the preceding paragraph, determined as if
such Member were the only Highly Compensated Employee.
4.5(c) Company Contribution and Post-tax Contribution
Limitations. In respect of each Plan Year, the sum of Company
contributions and post-tax contributions must satisfy one of the
following tests:
<PAGE>
(i) the actual contribution percentage under the Plan by
Highly Compensated Employees for a Plan Year may not exceed
125 percent of the actual contribution percentage of all
non-highly compensated Employees who are (or eligible to
become) Members pursuant to Section 7.1, or
(ii) the excess of the actual contribution percentage of
the Highly Compensated Employees over that of all other
eligible Employees may not be more than two percentage points
and the actual contribution percentage for the group of Highly
Compensated Employees may not be more than the actual
contribution percentage of all non-highly compensated
Employees multiplied by two.
The "actual contribution percentage" for the Highly Compensated
Employees and the non-highly compensated employees for a Plan Year
is the average of the ratios, calculated separately for each
Employee in such group, of sum of the amount of Company
contributions and Employee post-tax contributions paid under the
Plan for such Plan Year, to the Employee's Compensation for such
Plan Year (prior to any deferral hereunder).
If neither of the tests set forth in the preceding paragraphs would
be satisfied in any Plan Year, the Employee Benefits Committee
shall make the following adjustments, proportionately for each
Member who is a Highly Compensated Employee, to the extent
necessary so that one of the tests will be satisfied:
<PAGE>
(1) first, by reducing the post-tax contributions by the Member
under Section 4.1(c) with respect to the balance of the
Compensation payable to the Member for that Plan Year; and
(2) second, no later than the end of the following Plan Year, by
paying to the Member in cash a portion of the Post-tax
Contribution Account pursuant to Section 4.1(c) (adjusted for
any gain or loss allocable thereto for such Plan Year).
The Employee Benefits Committee shall make the adjustments referred
to in this paragraph only for each Member who is a Highly
Compensated Employee whose ratio for the Plan Year of the sum of
Company contributions and post-tax contributions pursuant to
Section 4.1(b) and 4.1(c) to Compensation does not satisfy either
of the tests set forth in the preceding paragraph, determined as if
such Member were the only highly compensated Employee.
<PAGE>
Article 5
Maximum Contributions and Limitations
5.1(a) Defined Contribution Plan Limitation. In the event that
the amount required to be contributed by the Employer under Section
4.1(b) hereof in respect of any Plan Year would cause the Annual
Additions to the accounts of any Member to exceed for any Plan Year
the lesser of (i) $30,000, or if greater, one fourth of the defined
benefit dollar limitation set forth in Section 415(b)(1)A of the
Code as in effect for the limitation year, or (ii) twenty-five
percent of such Member's total compensation for such Plan Year,
then such amount which could have been contributed by a Member as a
post-tax contribution shall be reduced. If after such reduction an
excess still exists, the amount of the Company contributions under
Section 4.1(b) hereof which caused such excess shall be reallocated
to the other Members of the Plan in proportion to their
Compensation for such Plan Year. However, if the allocation or
reallocation of the excess amounts pursuant to the provisions of
the Plan causes the limitations described above to be exceeded with
respect to each Member for the Plan Year, then these amounts must
be held unallocated in a suspense account. If a suspense account
is in existence at any time during a particular Plan Year, other
than the Plan Year described in the preceding sentence, all amounts
in the suspense account must be allocated and reallocated to
Members' accounts (subject to the limitations as described above)
before any other contributions which would constitute Annual
Additions may be made to the Plan for that Plan Year.
<PAGE>
5.1(b) Combined Limitation. In addition to the limitation of
Section 5.1(a) hereof, if a Member participates in a defined
benefit plan maintained by the Company any adjustment required to
satisfy Section 415(e) of the Code shall be made to the Member's
benefit under the defined benefit plan.
5.2 Minimum Benefits in Top Heavy Plan Years
5.2(a) Definitions. For purposes of determining whether the Plan
is Top Heavy, the following definitions shall be applicable:
(i) Key Employee. Any Employee or former Employee (and
the Beneficiaries of such Employee) who at any time during the
determination period was an officer of the Employer if such
individual's annual compensation exceeds 150 percent of the
dollar limitation under Section 415(b)(1)(A) of the Code, an
owner (or considered an owner under Section 318 of the Code)
of one of the ten largest interests in the Employer if such
individual's compensation exceeds 100 percent of the dollar
limitation under Section 415(c)(1)(A) of the Code, a 5-percent
owner of the Employer, or a 1-percent owner of the Employer
who has an annual compensation of more than $150,000. Annual
compensation means compensation as defined in Section
415(c)(3) of the Code, but including amounts contributed by
the Employer pursuant to a salary reduction agreement which
are excludable from the Employee's gross income under Section
125, Section 402(a)(8), Section 402(h) or section 403(b) of
the Code. The determination period is the Plan Year
containing the determination date and the 4 preceding Plan
Years. The determination of who is a Key Employee will be
<PAGE>
made in accordance with Section 416(i)(1) of the Code and the
regulations thereunder.
(ii) Stock. Stock means the outstanding stock of the
Company and its affiliates within the meaning of Section
416(i)(1)(B) of the Code.
(iii) Non-Key Employee. Non-Key Employee means any
Employee who is not a Key Employee.
(iv) Determination Date. Determination Date means for any
Plan Year, the last day of the preceding Plan Year.
(v) Qualified Plan. Qualified Plan means any plan maintained
by the Company which satisfies the qualification requirements
of Section 401(a) of the Code.
(vi) Aggregation Group. Aggregation Group means each
Qualified Plan in which one or more Key Employees are
participants, each Qualified Plan that enables a Qualified
Plan in which one or more Key Employees are participants to
satisfy the requirements of Section 401(a)(4) or Section 410
of the Code, and each Qualified Plan that the Company
designates as part of the Aggregation Group, provided that the
resulting Aggregation Group satisfies the requirements of
Section 401(a)(4) and Section 410 of the Code.
<PAGE>
5.2(b) Top Heavy Plan. The Plan will be Top Heavy for any Plan
Year beginning on or after January 1, 1984 if, as of Determination
Date for such Plan Year, the sum of (1) the aggregate of the
present value of accrued benefits for Key Employees under each
defined benefit plan (as defined in Section 414(j) of the Code) in
the Aggregation Group and (2) the aggregate of the value of the
accounts for Key Employees under each defined contribution plan (as
defined in Section 414(i) of the Code) in the Aggregation Group,
exceeds 60% of the sum of the present value of accrued benefits and
the value of accounts for Key Employees and Non-Key Employees under
each Qualified Plan in the Aggregation Group.
In determining the present value of accrued benefits and the
aggregate value of accounts there shall be included any
distributions made from the Qualified Plan with respect to the Key
Employee or Non-Key Employee during the five-year period ending on
the Determination Date and there shall be excluded the present
value of accrued benefits and the value of accounts with respect to
a Key Employee or Non-Key Employee who has not received any
Compensation from the Company at any time during the five-year
period ending on the Determination Date.
5.2(c) Minimum Contributions. If the Plan is Top Heavy in any
Plan Year, each Participant who is a Non-Key Employee shall receive
a minimum contribution from the Company of 3% of his total
compensation for such Plan Year. Notwithstanding the foregoing:
<PAGE>
(i) a minimum contribution shall not be made with respect
to a Non-Key Employee to the extent he has been provided with
the minimum benefit required by Section 416(c) of the Code
with respect to such Plan Year under a Qualified Plan which is
a defined benefit plan; and
(ii) the minimum contribution percentage under this
section shall in no event exceed the highest percentage of the
total Compensation at which contributions are made by the
Company for such Plan Year for the account of any Key
Employee.
(iii) if the highest rate allocated to a Key Employee, in a
year in which the Plan is considered Top Heavy, is less than
3%, the amounts contributed as a result of a salary reduction
agreement must be included in determining contributions made
on behalf of Key Employees.
5.2(d) Top Heavy Combined Limitations. If Members are covered
under both a defined contribution and a defined benefit plan of the
Employer, the factor of 1.0 times the dollar limitation must be
used when the Top Heavy ratio exceeds 90%. If the Top Heavy ratio
does not exceed 90% and the Employer uses a factor of 1.25 in the
denominator of the IRS section 415 fraction, a defined benefit
minimum of 3% per year of service shall be provided.
<PAGE>
Article 6
Administration
6.1 Expenses
(a) The expenses of establishing and amending the stock ownership
plan and the Trust Agreement shall be paid from the Employer Stock
Ownership Plan Contribution for the applicable Plan Year (or any
succeeding year) but not in excess of the sum of (i) 10% of the
first $100,000 of the Employer Stock Ownership Plan Contribution
and (ii) 5% of the Employer Stock Ownership Plan Contribution in
excess of $100,000.
(b) The expenses of administering the stock ownership plan shall
be paid by the Trust Fund but not in excess of the lesser of (i)
the sum of (A) 10% of the first $100,000 of the income from
dividends paid to the stock ownership plan with respect to Company
Shares during the Plan Year and (B) 5% of such dividends in excess
of $100,000, or (ii) $100,000, or by the Company.
(c) All commission fees received by the Trustee for the sale of
Company shares as elected by a member, receiving a distribution
from the Savings Plan, shall be used to offset Savings Plan
expenses.
(d) All other reasonable fees and expenses in connection with the
Plan shall be paid by the Company.
<PAGE>
6.2 Employee Benefits Committee. The Employee Benefits Committee
shall be the Plan administrator. The Employee Benefits Committee shall
consist of not less than three or more than five members appointed from time
to time by the Finance Committee and shall serve at the pleasure of the
Finance Committee.
6.3 Appointment and Resignation. Any person appointed a member of
the Employee Benefits Committee shall become such upon notice in writing to
the Finance Committee of his acceptance. Any member of the Employee Benefits
Committee may resign by delivering a written resignation to the Finance
Committee, and such resignation shall become effective upon the date specified
therein.
6.4 Officers. The Finance Committee shall appoint a Chairman and a
Secretary of the Employee Benefits Committee. The Secretary may, but need not
be, a member of the Employee Benefits Committee. The Employee Benefits
Committee may appoint from its members such committees with such powers as it
shall determine, may authorize one or more of its members or any agent to
execute or deliver any instrument or make any payment on its behalf, and may
employ counsel and agents and such clerical, accounting, performance
evaluation, and actuarial services as it may require in carrying out the
provisions of the Plan.
6.5 Quorum. A majority of the members of the Employee Benefits
Committee at the time in office shall constitute a quorum for the transaction
of business at any meeting. Any determination or action of the Employee
Benefits Committee may be made or taken at any meeting thereof at which a
quorum is present by a majority of the members present, or without a meeting
by a resolution or memorandum concurred in by a majority of the members then
in office.
<PAGE>
6.6 Powers. The Employee Benefits Committee shall administer the
Plan and shall have the power and the duty to take all administrative action
and to make all administrative decisions necessary or proper to carry out the
Plan. The Employee Benefits Committee shall be authorized to delegate
administrative responsibilities to the personnel department of an Employer.
The determination of the Employee Benefits Committee as to any question
involving the general administration and interpretation of the Plan shall be
final. Any discretionary actions to be taken under the Plan by the Employee
Benefits Committee shall be uniform in their nature and applicable to all
persons similarly situated. Without limiting the generality of the foregoing,
the Employee Benefits Committee shall have the following powers and duties:
(a) To require any person to furnish such information as it may
request for the purpose of the proper administration of the Plan as
a condition to receiving any benefit under the Plan;
(b) To make and enforce such rules and regulations and prescribe
the use of such forms as it shall deem advisable for the efficient
administration of the Plan;
(c) To interpret the Plan and to resolve ambiguities,
inconsistencies, and omissions;
(d) To decide on the eligibility
of any Employee to participate in the Plan;
<PAGE>
(e) To determine each Employee's Compensation, service, and the
benefits which shall be payable to any person in accordance with
the provisions of the Plan; and
(f) To make such reports to government agencies and Employees as
may be required by ERISA.
6.7 Compensation. No Member of the Employee Benefits Committee
shall receive any Compensation for his services as such.
6.8 Claim Procedure. The Employee Benefits Committee shall provide
adequate notice in writing to any person whose claim for benefits under the
Plan has been denied, setting forth specific reasons for denial in a manner
calculated to be understood by the recipient of such notice without legal
counsel. In addition, the Employee Benefits Committee shall establish a
procedure whereby a person whose claim for benefits has been denied is
afforded a full and fair review of its determination. Such review procedure
shall comply with the requirements of ERISA and the regulations issued
thereunder.
6.9 Disbursements. The Employee Benefits Committee shall determine
the manner in which the assets of the Plan shall be disbursed, including the
form of voucher or warrant to be used in making disbursements and the
qualification of persons authorized to approve or sign the same.
6.10 Multiple Fiduciary Capacity. Any person or group of persons may
serve in more than one fiduciary capacity with respect to the Plan.
<PAGE>
Article 7
General Provisions
7.1 Eligibility and Membership
7.1(a) Employees of the Company who are at least twenty-one years
of age and who have completed one year of service as a Regular
and/or Probationary Employee with the Employer shall become
eligible to participate in the Plan. A year of service is a twelve
consecutive month period beginning with the date of employment in
which an Employee has at least 1,000 Hours of Service. An Employee
who is represented by a collective bargaining unit whose collective
bargaining agreement provides for membership in the Plan will
become a Member on the effective date of such agreement or when the
requirements of this Section hereof have been met, whichever is
later.
7.1(b) An Employee who satisfies all the requirements for
eligibility under this Section 7.1 shall become a Plan Member on
the Entry Date coincident with or next following the date on which
he satisfied the eligibility requirements of Section 7.1(a) hereof
and completes and files an enrollment form supplied by the Employee
Benefits Committee.
7.1(c) An Employee who becomes a Plan Member shall remain a
Member as long as he has a Account Balance.
<PAGE>
7.2 Distribution Upon Termination of Employment
7.2(a) Unless otherwise elected under Section 7.3, a Member's
Account shall be distributed in a lump sum to him, or in the event
of death, to his Beneficiary, upon his ceasing to be an Employee on
account of retirement, death, disability, or other termination of
employment.
7.2(b) Distribution of the Account to a Member or Beneficiary
shall commence as soon as practicable after the event giving rise
to such distribution but in no event shall the distribution process
begin later than the 60th day after the close of the Plan Year in
which the Member terminates or elects to receive a deferred
distribution.
7.2(c) Distribution of the Company Stock in the Stock Account and
Company Contribution Account shall be made in the form of whole
number of shares plus cash for any fractional shares. Any
fractional shares in the combined accounts shall be valued on the
basis of the closing price on the last business day of the quarter
as published in the Wall Street Journal report of the New York
Stock Exchange - Composite Transactions.
7.2(d) A Member may ask the Trustee to sell the Company Stock in
his Company Contribution Account at the Member's expense.
7.3 Deferral of Distribution. If the value of the account of a Member,
who terminates employment for any reason other than death prior to attaining
age 70-1/2, is $3,500 or more, the Member may elect to defer receipt of the
<PAGE>
distribution until no earlier than the date the Member attains age 55 and no
later than April 1 of the year after the year in which the Member attains age
70-1/2. In the event of death of a Member who has elected to defer
distribution of the Member's account, the Member's deferred distribution
account will be distributed to his Beneficiary as soon as practicable after
the Member's death.
A Member who has deferred his distribution may not make contributions
to, or withdrawals from his Account including loans, hardship withdrawals,
and/or requests for distribution of the Stock Ownership Plan Account.
Transfers between Savings Plan Investment Funds and transfers from the Company
stock fund into the investment funds will be permitted. Transfers into the
Company stock fund will not be permitted.
Failure of a Member to consent to a distribution which is immediately
distributable shall be deemed to be an election to defer a distribution.
7.4 Minimum Distribution. Notwithstanding anything contained herein to
the contrary, payment to a Member of his benefits will be made no later than
April 1 of the calendar year following the calendar year in which the Member
attains age 70-1/2. Further distributions will be made by December 31 of each
year thereafter.
7.5 Direct Rollovers of Distributions. A Distributee may elect, at the
time and in the manner prescribed by the Employee Benefits Committee, to have
any portion of an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct Rollover.
<PAGE>
(A) Definitions.
(i) Eligible Rollover Distribution: An Eligible Rollover
Distribution is any distribution of all or any portion of the
balance to the credit of the Distributee, except that an Eligible
Rollover Distribution does not include:
(a) Any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the Distributee or
the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated beneficiary, or
for a specified period of ten years or more:
(b) Any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code;
(c) The portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to Employer
securities); and
(d) Any distribution with a value of $200 or less.
(ii) Eligible Retirement Plan: An Eligible Retirement Plan is an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section 408(b)
of the Code, an annuity plan described in Section 403(a) of the
Code, or a qualified trust described in Section 401(a) of the Code,
<PAGE>
that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to the
surviving spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
Notwithstanding anything herein to the contrary, only one Eligible
Retirement Plan may be designated with respect to any Eligible
Rollover Distribution.
(iii) Distributee: A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's spouse
or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the Code,
are Distributees with regard to the interest of the spouse or
former spouse.
(iv) Direct Rollover: A Direct Rollover is a payment by the Plan
to the Eligible Retirement Plan specified by the Distributee.
Notwithstanding anything herein to the contrary, only one Direct
Rollover may be made with respect to any Eligible Rollover
Distribution.
7.6 Qualification Under Internal Revenue Code. Anything herein to the
contrary notwithstanding, if a final determination letter is received from
the Internal Revenue Service that the Plan as herein set forth or as amended
prior to the receipt of such ruling, does not qualify under Sections 401 and
501 of the Code as to the Company for the first taxable year for which it has
been adopted by the Company, the Company, at its option, may withdraw all
contributions theretofore made by it and any income earned thereon, less all
<PAGE>
expenses incurred, at the then current value thereof, and the Plan shall
thereupon terminate. In the event of termination of the Plan pursuant to this
Section, there shall also be forthwith paid to each Member the then value, if
any, of all contributions made on his behalf. In the event of the receipt of
such an adverse determination letter and the termination of the Plan, no
Member or beneficiary of a Member shall have a right or claim against the Fund
or to any benefit under the Plan, and no benefits shall be paid to any Member,
former Member, or his beneficiary.
7.7 Qualified Domestic Relations Orders. A separate account will be
established for amounts payable to an individual granted alternate payee
status in accordance with a qualified domestic relations order. The alternate
payee may not make contributions to or withdrawals from his/her account
including loans, hardship withdrawals and/or requests for distribution of the
Stock Ownership Plan Account except for 84-month election distributions as
mandated by a qualified domestic relations order. The alternate payee may not
elect transfers between Savings Plan funds.
<PAGE>
Article 8
Amendment, Merger and Termination
8.1 Amendment or Termination. The Board of Directors of the
Company reserves the right to amend or terminate the Plan without the consent
of any Employee, Member, Beneficiary, or other person; provided, however, that
no such amendment or other modification of the Plan shall make it possible for
any part of the Trust Fund to be used for, or diverted to, purposes other than
for the exclusive benefit of Members and Beneficiaries under the Plan (other
than such part as is required to pay taxes and administrative expenses).
8.2 Merger. In the event of any merger or consolidation with or
transfer of assets or liabilities of the Plan to any other plan qualified
under Section 401(a) of the Code, each Member shall be entitled to receive a
benefit immediately after the merger, consolidation, or transfer (if the Plan
then terminated) which is at least equal to the benefit the Member would have
been entitled to receive immediately before the merger, consolidation, or
transfer (if the Plan had then terminated).
<PAGE>
Article 9
Miscellaneous Provisions
9.1 Nature of Plan. This Plan shall not be deemed to constitute a
contract between the Employer and any Employee or other person in the employ
of the Employer, nor shall anything herein contained be deemed to give any
Employee or other person in the employ of the Employer any right to be
retained in the employ of the Employer or to interfere with the right of the
Employer to discharge any Employee or such other person at any time and to
treat him without regard to the effect which such treatment might have upon
him as a Member of the Plan.
9.2 Voting Rights. All whole and fractional shares of Company Stock
allocated to a Member's Account shall be voted by the Trustee as the Member
directs in writing from time to time. The Trustee shall solicit the
directions before each annual or special stockholders' meeting of the Company
from each Member. Upon timely receipt of the directions, the Trustee shall
vote those shares in accordance with the directions received.
9.3 Assignments. No benefit under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt so to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be void; nor
shall any such benefit be in any manner liable for or subject to the debts,
contracts, liabilities, engagements, or torts of the person entitled to such
benefits, except as specifically provided in the Plan or unless pursuant to a
qualified domestic relations order as defined in Section 414(p) of the Code.
<PAGE>
If any Member or other person entitled to benefits under the Plan
becomes bankrupt or attempts to anticipate, alienate, sell, transfer, assign,
pledge, encumber, or charge any benefit under the Plan, except as specifically
provided herein, then such benefit shall, in the discretion of the Employee
Benefits Committee, cease and determine, and in that event the Employee
Benefits Committee shall hold or apply the same to or for the benefit of such
Member or Beneficiary, children, or other dependents, or any of them in such
manner and in such proportion as the Employee Benefits Committee may deem
proper.
9.4 Indemnification. The members of the Board of Directors of the
Company, the Finance Committee, the Employee Benefits Committee, and other
Employees to whom fiduciary responsibility is delegated under the provisions
of the Plan (except the Trustees) shall be indemnified by the Employer for all
acts or omissions in connection with their fiduciary responsibilities, except
for acts or omissions occasioned by their own gross negligence or willful
misconduct. No member of the Finance Committee or of the Employee Benefits
Committee shall be liable for the neglect, omissions, or wrongdoing of any
other member, or for the neglect, omissions, or wrongdoing of the agents or
counsel of the committee, except as provided in ERISA.
9.5 Jurisdiction. To the extent not inconsistent with or superseded
by ERISA, the provisions of the Plan shall be construed, administered, and
governed by the laws of the State of New York.
<PAGE>
Exhibit I
SAVINGS PLAN LOAN RULES
(A part of the Allegheny Power System
Employee Stock Ownership and Savings Plan)
1.0 ELIGIBILITY - Employee must be member of Savings Plan one (1)
year before becoming eligible for loan.
2.0 TYPES - There are two types of loans available under the
Savings Plan--general purpose loan and principal residence
loan.
3.0 PURPOSE
3.1 A general purpose loan may be obtained for any purpose.
3.2 A principal residence loan must be used to finance the
acquisition of a principal residence of the employee.
3.3 A principal residence loan cannot be used to refinance
another loan.
4.0 NUMBER - Two general purpose and one principal residence loan
may be outstanding at any time.
5.0 AMOUNT AVAILABLE FOR LOANS - Pre-tax contribution account
balance excluding company stock funds at end of quarter prior
to that in which loan application is made will be available
for loans. Amount is subject to limits set forth in the plan
document, by the Tax Equity and Fiscal Responsibility Act,
the Tax Reform Act of 1986, ERISA, and Sections 6.0 and 7.0
herein. Principal amount of loan withdrawn from pre-tax
investment funds will not earn income starting with the first
day of the quarter in which the loan is issued.
6.0 MINIMUM AMOUNTS - Each general purpose loan must be at least
$500; principal residence loans at least $1,000.
7.0 MAXIMUM AMOUNTS
7.1 Principal amount of an employee's loans may not exceed
the lesser of:
A. Fifty percent (50%) of pre-tax-contribution account
balance or
B. Fifty thousand dollars ($50.000), reduced by the
difference between the highest outstanding loan(s)
balance during the preceding 12-month period and the
outstanding loan(s) balance on the last day of the
quarter prior to the date of the new loan application.
7.2 In addition, employee will not be permitted to borrow an
amount which would require employee to make loan
repayments in excess of ten percent (10%) of gross base
pay for all outstanding savings plan loans.
8.0 INCREMENTS - All loans must be in $100 increments.
9.0 TERM
9.1 Each general purpose loan will be for a minimum of one
year and a maximum of five years.
9.2 Principal residence loan will be for a minimum of five
years and a maximum of twenty-five years.
10.0 INTEREST RATE
10.1 Interest rate will be a rate commensurate with the
prevailing interest rate charged by commercial lending
institutions for loans made under similar circumstances.
10.2 Interest rate for new loans will be fixed as of first
business day of third month of quarter in which
application is accepted.
10.3 Loans will bear a fixed interest rate for their term.
11.0 REPAYMENT
11.1 Repayment of the principal and interest of each loan
will be made by payroll deduction twice a month.
11.2 The repayment schedule for all loans will be based on
semimonthly repayments with the first repayment being
made as soon as practicable after the loan amount is
distributed to the participant.
12.0 PREPAYMENTS
12.1 Participants have the right to prepay a loan in whole or
in part.
12.2 Partial payments must be made by personal or certified
check in one hundred dollar ($100) increments.
12.3 Prepayments will not affect amount deducted each pay
period but may decrease length of loan period.
12.4 Prepayments must be made no later than ten (10) days
before month-end in order to be credited the following
month.
12.5 Checks are to be made payable to the appropriate company
as agent for The Bank of New York, Trustee Example: West
Penn Power Company as agent for The Bank of New York,
Trustee) and mailed as follows:
Monongahela Power Assistant Secretary & Assistant Treasurer
Monongahela Power Company
1310 Fairmont Avenue
Fairmont, West Virginia 26555-1392
Potomac Edison Assistant Secretary & Assistant Treasurer
The Potomac Edison Company
10435 Downsville Pike
Hagerstown, Maryland 21740-1766
West Penn Power Assistant Treasurer
and West Penn Power Company
APSC (NY & Field) 800 Cabin Hill Drive
Greensburg, Pennsylvania 15601-1689
NOTE: Enclose completed Form 22-155, Employee Loan Payment with
your check.
13.0 LEAVE OF ABSENCE AND SICK LEAVE
13.1 Employee on leave of absence or on sick leave without
pay is responsible for making monthly payments.
13.2 Payment, although required monthly, must equal that of
two (2) semimonthly deductions.
13.3 Checks are to be made payable as defined under
Prepayments,
Section 12.0.
14.0 TERMINATION OF EMPLOYMENT
14.1 If employee's employment is terminated for any reason
prior to loan being repaid, the remaining unpaid balance
will be deducted from Savings Plan distribution.
14.2 Employee terminating employment with an outstanding loan
balance who defers distribution of account balance, is
responsible for making monthly payments. Payment must
equal that of two (2) semimonthly deductions. Checks
are to be made payable as defined under prepayments,
section 12.0.
15.0 DEFAULTS AND REMEDIES
15.1 Terms set forth in loan agreement will be enforced by
the Employee Benefits Committee and/or the Trustee.
15.2 Loan will be declared in default if any payment is not
made when due.
15.3 Appropriate steps will be taken by the Employee Benefits
Committee and/or Trustee to insure collection of loan
payments in default. The Committee and Trustee may take
the following steps or any other action including any
legal remedies it considers appropriate to collect the
unpaid balance of the loan in default:
A. If a participant is age 59 1/2 or older, the
outstanding balance will be treated as a
distribution from the Savings Plan.
B. If an employee applies and qualifies for a hardship
withdrawal, the outstanding balance will be treated
as a distribution from the Savings Plan.
16.0 DISTRIBUTION--If the outstanding balance is treated as a
distribution from the Savings Plan, either because the
employee's employment is terminated and the loan is not
repaid or because the loan is in default, the distribution
may result in taxable income lo the participant.
17.0 SOURCE AND APPLICATION OF FUNDS
17.1 An employee will borrow money from own pre-tax account
and will repay loan, with interest, back to employee's
own account.
17.2 All pre-tax account balances excluding company stock
fund will be available for loans.
17.3 Amount of an individual loan will be transferred
proportionately from employee's pre-tax contribution
account investment fund(s) to a loan fund.
17.4 Employee's loan repayments will be reinvested in the
Savings Plan in accordance with employee's current
election (s) for new contributions.
18.0 LOAN APPLICATION AND PROCESSING
18.1 Loan application may be made by completing the required
forms and submitting them to Personnel Department which
will submit them to Personnel Policy, Development &
Administration - CS, Cabin Hill.
18.2 Loan application must be submitted to Benefits Section,
Personnel Department, General Office no later than
fifteen (15) days before the end of a quarter.
18.3 Loan application will be approved or disapproved in
accordance with uniform procedures adopted by the
Employee Benefits Committee.
18.4 Loans will be processed quarterly.
18.5 Every attempt will be made to have funds available no
later than forty-five (45) days after end of quarter in
which application is made.
19.0 AMENDMENTS--The Trustee and/or the Employee Benefits
Committee reserves the right to amend these Loan Rules at any
time for any reason with or without notice to participants.
Such amendment will not affect a participant's outstanding
loan at the time such amendment is made.
20.0 SPOUSAL CONSENT--Employee's spouse must consent in writing to
each loan. The consent is binding with respect to the
consenting spouse or any subsequent spouse with respect to
that loan. Separated or legally separated employees are
considered married. Spousal consent must be notarized. The
notary's seal or stamp must be affixed to each copy of the
loan application.
FORM 22-154 REV.4
Before the
Public Service Commission
of Maryland
In the Matter of the *
Application of Allegheny
Power System, Inc. for * Case No.
Authority to Issue and Sell
Common Stock Pursuant to its *
Dividend Reinvestment and
Stock Purchase Plan, its *
Employee Stock Ownership
and Savings Plan, its Performance *
Share Plan, and its Restricted
Stock Plan for Outside Directors *
Petition
The Petition of Allegheny Power System, Inc. (APS or Company)
respectfully shows:
1. APS is a Maryland corporation which controls, through
stock ownership, public service companies within the meaning of the
Public Service Commission Law as fully appears in former
proceedings before this Commission.
2. APS requests authority to issue from time to time a total
of not more than 6,525,000 additional shares of its authorized and
unissued common stock, par value $1.25 per share, as follows:
5,000,000 shares (the "DRISP Additional Common Stock") pursuant to
its Dividend Reinvestment and Stock Purchase Plan (the "Dividend
Plan"); 1,000,000 shares (the "ESOSP Additional Common Stock")
pursuant to its Employee Stock Ownership and Savings Plan (the
"ESOSP"); 500,000 shares (the "Performance Shares") pursuant to its
Performance Share Plan (the "Performance Plan"); and 25,000 shares
(the "Outside Directors' Additional Common Stock") pursuant to the
<PAGE>
Restricted Stock Plan for Outside Directors (the "Restricted Stock
Plan"). The ESOSP was formerly called the Tax Reduction Act
Employee Stock Ownership Plan ("TRASOP") and the Tax Credit
Employee Stock Ownership Plan ("PASOP").
3. As of December 1, 1994 APS was authorized to issue
260,000,000 shares of its common stock, of which 118,894,110 shares
were outstanding.[1]
4. In numerous prior cases, the Commission has authorized
the issuance by APS of shares of its authorized and unissued common
stock pursuant to its Dividend Plan and the ESOSP.[2] As of
December 31, 1994, the last date on which shares were issued under
either of these plans, 18,294,149 shares have been issued pursuant
to the Dividend Plan and 4,654,343 shares have been issued under
ESOSP and its predecessors.
5. APS proposes to issue from time to time, collectively,
not more than 5,000,000 additional shares of the DRISP Additional
Common Stock pursuant to its Dividend Plan. The Dividend Plan
makes the following options available, on a voluntary basis, to all
holders of record from time to time of common stock of APS:
(a) to invest cash dividends automatically, on each
quarterly dividend payment date, in DRISP Additional Common
[1]Effective November 4, 1993 APS split its $2.50 per share par value common
stock two for one reducing the par value to $1.25 per share.
[2]See PSC of MD. Case Nos. 7072, 7420, 7731, 7993 and 8285.
<PAGE>
Stock.
(b) to make optional cash purchases of not less than $50
and not more than $10,000 per quarter of DRISP Additional
Common Stock provided that in each quarter the maximum
aggregate amount of DRISP Additional Common Stock to be made
available for purchase shall not exceed the number of shares
which have been offered to, but not purchased by, the holders
of shares of common stock with cash dividends.
c) both (a) and (b).
The Dividend Plan is set forth on Exhibit No. 1 and is
explained in more detail in the testimony of Nancy L. Campbell
filed herewith.
6. APS proposes to issue from time to time, collectively,
not more than 1,000,000 additional shares of the ESOSP Additional
Common Stock pursuant to the ESOSP. The ESOSP, a copy of which is
attached hereto as Exhibit No. 2, is comprised of a Stock Ownership
Plan and a Savings Plan. Shares of common stock are no longer
issued under the ESOSP to participants in the Stock Ownership Plan.
Under the Savings Plan, APS issues ESOSP Additional Common Stock to
a trust in an amount equal to fifty percent of a member-employee's
pre tax contribution not to exceed 3% of such member-employee's
compensation. Additional details of the ESOSP are explained in the
testimony of Nancy L. Campbell filed herewith.
7. APS proposes to issue from time to time, collectively,
not more than 500,000 shares of the Performance Shares pursuant to
the Performance Share Plan. The Performance Share Plan is for
<PAGE>
senior officers of APS and its subsidiaries and is designed to
permit the Company to attract and retain individuals of outstanding
ability and reward them for continuing to provide economic and
reliable service to customers. A copy of the Performance Share
Plan is set forth as Exhibit No. 3 and is explained in more detail
in the testimony of Nancy L. Campbell filed herewith.
8. APS proposes to issue from time to time, collectively,
not more than 25,000 shares of the Outside Directors' Additional
Common Stock pursuant to its Restricted Stock Plan. The Restricted
Stock Plan applies to members of APS's Board of Directors and the
Board of Directors of APS's subsidiaries who are not, at the time
of his or her service as director, an employee of APS or any of its
subsidiaries (i.e., outside directors). The Restricted Stock Plan
is attached hereto as Exhibit No. 4. The Restricted Stock Plan
provides for each outside director to receive an annual fixed award
of 200 shares of APS common stock in addition to the present annual
retainer and committee fees, as further compensation for his or her
services as a member of the Board of Directors of APS or its
subsidiaries. The purpose of the Restricted Stock Plan is to
attract and retain highly qualified individuals to serve as non-
employee directors on the Board of Directors of APS and its
subsidiaries. The provisions of the Plan are explained in more
detail in the testimony of Nancy L. Campbell filed herewith.
9. The proceeds from the issuance of the DRISP Additional
Common Stock and the cash that otherwise would have been paid to
<PAGE>
compensate employees, senior management and outside directors as a
result of the ESOSP Additional Common Stock, the Performance Shares
and Outside Directors' Additional Common Stock, the total amount of
which cannot be determined, will be used for the reimbursement of
monies (not secured by or obtained from the issuance of stocks,
bonds, securities, notes or other evidences of indebtedness,
payable in whole or in part more than 12 months after the date of
issuance) expended by APS within five years next prior to the
filing of this Petition, for the acquisition of certain property by
APS and the discharge of certain of its obligations. Exhibit No. 5
details unreimbursed expenditures of APS as of September 30, 1994.
10. Issuance of the DRISP Additional Common Stock, the ESOSP
Additional Common Stock, the Performance Shares and the Outside
Directors' Additional Common Stock will further the objectives of
the broadened ownership of APS shares in accordance with the policy
set forth in Section 1-206 of Article 83A of the Annotated Code of
Maryland.
11. APS files herewith marked as Exhibit No. 6, the statement
of the financial condition of APS as of September 30, 1994.
12. No franchise or right of APS is capitalized, directly or
indirectly, except as authorized by the Public Service Commission
law.
Wherefore, APS prays that the Public Service Commission of
Maryland, by its Order, authorize APS to issue additional common
stock as set forth in this Petition and take such further action in
<PAGE>
the premises as may be requisite.
Respectfully submitted,
Allegheny Power System, Inc.
By: ALAN J. NOIA
Alan J. Noia
President
Counsel:
PHILIP J. BRAY
Philip J. Bray
The Potomac Edison Company Building
10435 Downsville Pike
Hagerstown, Maryland 21740
301-790-6283
Dated: February 3, 1995
WPFILES\MDPSC/STOCKS.PLN\APPLICAT
<PAGE>
Affidavit
State of New York )
ss:
County of New York )
I hereby certify that on February 2, 1995, before me, the
subscriber, a Notary Public of the State of New York, in and for
the County of New York, aforesaid personally appeared Alan J. Noia,
President of Allegheny Power System, Inc., and made oath in due
form of law that the matters and facts set forth in the foregoing
Petition are true to the best of his knowledge, information and
belief.
Witness my hand and Notarial Seal, the day and year last above
written.
EILEEN M. BECK
Notary Public
WPFILES\MDPSC\STOCKS.PLN\APPLICAT
<PAGE>
Affidavit of Three Directors
State of New York )
ss:
County of New York )
I hereby certify that on February 2, 1995, before me, the
subscriber, a Notary Public of the State of New York, in and for
the County of New York, aforesaid personally appeared Klaus
Bergman, Alan J. Noia, and William L. Bennett, three of the
Directors of the Allegheny Power System, Inc., and made oath in due
form of law that it is the intention of Allegheny Power System,
Inc. in good faith to use the proceeds of the additional common
stock proposed to be issued in the Petition to which this Affidavit
is appended, for the purposes set forth in said Petition.
Witness my hand and Notarial Seal, the day and year last above
written.
EILEEN M. BECK
Notary Public
WPFILES\MDPSC\STOCKS.PLN\APPLICAT
