Ex-10.8



 





Exhibit 10.8




ALLEGHENY ENERGY

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN




(Amended and Restated as of January 1, 2008)




 









 





Table of Contents




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	1.	 	INTRODUCTION	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	1.1	 	History and Purpose	 	 	1	 
	 
	 	1.2	 	Effective Date	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	2.	 	DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	2.1	 	Accrued Benefit	 	 	1	 
	 
	 	2.2	 	Affiliate	 	 	1	 
	 
	 	2.3	 	“Beneficiary” or “Beneficiaries”	 	 	1	 
	 
	 	2.4	 	Board of Directors	 	 	1	 
	 
	 	2.5	 	Cause	 	 	1	 
	 
	 	2.6	 	Code	 	 	2	 
	 
	 	2.7	 	Committee	 	 	2	 
	 
	 	2.8	 	Company	 	 	2	 
	 
	 	2.9	 	Compensation	 	 	2	 
	 
	 	2.10	 	Contingent Annuitant Option	 	 	2	 
	 
	 	2.11	 	Early Retirement Date	 	 	2	 
	 
	 	2.12	 	Eligible Employee	 	 	2	 
	 
	 	2.13	 	Employee	 	 	3	 
	 
	 	2.14	 	ERISA	 	 	3	 
	 
	 	2.15	 	Final Average Compensation	 	 	3	 
	 
	 	2.16	 	Normal Retirement Date	 	 	3	 
	 
	 	2.17	 	Other Supplemental Plan Reduction	 	 	3	 
	 
	 	2.18	 	Participant	 	 	3	 
	 
	 	2.19	 	Plan	 	 	3	 
	 
	 	2.20	 	Qualified Joint and Survivor Annuity	 	 	3	 
	 
	 	2.21	 	Retirement Plan	 	 	3	 
	 
	 	2.22	 	Retirement Plan Reduction	 	 	3	 
	 
	 	2.23	 	Single Life Annuity	 	 	4	 
	 
	 	2.24	 	Surviving Spouse	 	 	4	 
	 
	 	2.25	 	Year of Service	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	3.	 	PARTICIPATION AND ELIGIBILITY	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1	 	Current Participants	 	 	4	 
	 
	 	3.2	 	New Participants	 	 	4	 
	 
	 	3.3	 	Eligibility Requirements	 	 	4	 
	 
	 	3.4	 	Termination of Participation	 	 	5	 
	 
	 	3.5	 	Additional Age and Service	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	4.	 	RETIREMENT BENEFITS	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1	 	Determination of Accrued Benefit	 	 	6	 
	 
	 	4.2	 	Normal Retirement Benefit	 	 	6	 
	 
	 	4.3	 	Early Retirement Benefit	 	 	6	 






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Table of Contents

(continued)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	4.4	 	Timing and Form of Payment for the Accrued Benefit	 	 	7	 
	 
	 	4.5	 	Benefit Computation	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	5.	 	DEATH BENEFITS	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1	 	Death Before Commencement of Benefits	 	 	7	 
	 
	 	5.2	 	Death After Commencement of Benefits	 	 	8	 
	 
	 	5.3	 	Designating a Beneficiary	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	6.	 	VESTING	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	7.	 	FUNDED NATURE OF THE PLAN	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	8.	 	ADMINISTRATION OF THE PLAN	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.1	 	Authority of the Committee	 	 	9	 
	 
	 	8.2	 	Delegation of Authority	 	 	9	 
	 
	 	8.3	 	Compensation and Expenses	 	 	9	 
	 
	 	8.4	 	Liability of the Committee and Board; Indemnification	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	9.	 	AMENDMENTS AND TERMINATION	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	10.	 	CLAIMS PROCEDURES	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	11.	 	MISCELLANEOUS	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 
	 	11.1	 	Construction	 	 	11	 
	 
	 	11.2	 	Taxes	 	 	11	 
	 
	 	11.3	 	Governing Law	 	 	11	 
	 
	 	11.4	 	No Right of Employment	 	 	11	 
	 
	 	11.5	 	Payment in Satisfaction of Claims	 	 	11	 
	 
	 	11.6	 	No Alienation of Benefits	 	 	12	 
	 
	 	11.7	 	Incapacity	 	 	12	 
	 
	 	11.8	 	Adjustment	 	 	12	 
	 
	 	11.9	 	Compliance With Code Section 409A	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	Appendix A	 	 	 	 	i	 







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1. INTRODUCTION




     1.1 History and Purpose. Allegheny Energy Service Corporation (the “Company”)
previously established the Allegheny Energy Supplemental Executive Retirement Plan (the “Plan”), an
unfunded supplemental executive retirement plan. The purpose of the Plan is to provide special
supplemental retirement benefits to a select group of senior executives of the Company and its
Affiliates (as defined below) in order to assist the Company and its Affiliates in attracting,
motivating and retaining executives of superior ability, industry and loyalty. It is intended that
the Plan shall at all times be maintained on an unfunded basis for federal income tax purposes
under the Internal Revenue Code of 1986, as amended, be administered as a “top-hat” plan for a
“select group of management or highly compensated employees”, and be exempt from the substantive
requirements of the Employee Retirement Income Security Act of 1974, as amended.



     1.2 Effective Date. The Plan was originally established effective as of July 1, 1990
and was amended and restated effective as of February 24, 2006. The Plan is hereby amended and
restated effective as of January 1, 2008, to reflect certain changes in the administration and
operation of the Plan, to update the Plan for certain changes in applicable law, and to make
certain other clarifying changes.



2. DEFINITIONS




     Except as otherwise stated herein, capitalized terms used in this Plan have the meanings set
forth below:



     2.1 “Accrued Benefit” means, at any time, the annual benefit payable to a Participant at his
Normal Retirement Date in the form of a Single Life Annuity as determined in accordance with
Section 4.1, adjusted to the extent applicable in accordance with Section 4.3.



     2.2 “Affiliate” means a parent or subsidiary of the Company.



     2.3 “Beneficiary” or “Beneficiaries” mean the person or persons entitled to receive a
Participant’s retirement benefits as designated in accordance with Section 5.3.



     2.4 “Board of Directors” means the Board of Directors of the Company.



     2.5 “Cause” means the definition of “Cause” as set forth in any employment agreement, offer
letter, or similar agreement between a Participant and the Company or an Affiliate or, if no such
agreement exists, “Cause” means (i) the Employee’s conviction of, or plea of guilty or nolo
contendere to, (A) a felony, or (B) a lesser crime or offense which, in the reasonable opinion
of the Company, could adversely affect the business or reputation of the Company or its Affiliates,
(ii) the Employee’s repeated failure to follow specific lawful directions of the Board of Directors
or any officer to whom he reports, (iii) the Employee’s willful misconduct, fraud, embezzlement or
dishonesty either in connection with his duties to the
Company or its Affiliates or which otherwise causes damage or, in the reasonable opinion of



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the Company, is likely to cause damage, to the Company or its Affiliates, (iv) the Employee’s
failure to perform a substantial part of his duties following notice and a reasonable opportunity
to cure (if such failure is capable of cure), (v) the Employee’s material violation of any policy,
procedure or guideline of the Company or its Affiliates following notice and reasonable opportunity
to cure (if such violation is capable of cure), (vi) the Employee’s abuse of alcohol or illegal
drugs, or (vii) the Employee’s violation of any applicable confidentiality, non-competition or
non-solicitation covenants relating to the Company or its Affiliates.



     2.6 “Code” means the Internal Revenue Code of 1986, as amended.



     2.7 “Committee” means the Management Compensation and Development Committee of the Board of
Directors, as it shall be constituted from time to time.



     2.8 “Company” means Allegheny Energy Service Corporation and any successor to all or a major
portion of the assets or business of Allegheny Energy Service Corporation.



     2.9 “Compensation” means a Participant’s total earnings from the Company and any Affiliate
including base pay, overtime, commissions, bonuses and other elements of earnings (whether or not
payment thereof is deferred as part of any plan, program or policy of the Company), but excluding
(i) any compensation that is designated as “long-term incentive compensation”, (ii) proceeds from
the exercise of stock options or stock appreciation rights and earnings from grants of restricted
stock, restricted stock units, or other stock-based awards, (iii) moving expenses or other payments
made in connection with a relocation, (iv) reimbursements for medical or dental premiums, (v) other
reimbursements or allowances for reasonable business-related expenses, including, without
limitation, any automobile allowance, (vi) payments made to “gross-up” a Participant for any
applicable taxes, (vii) any bonuses that are paid to a Participant for reasons other than the
direct performance of services for the Company or its Affiliates, including, without limitation,
signing bonuses and retention or stay bonuses, (viii) spot awards, (ix) the imputed value of
Company-provided life insurance, (x) the value of any Company-paid educational assistance benefits
that are taxable to the Participant, (xi) any separation or severance payments, (xii) any other
elements of compensation that are designated by the Committee as not being eligible for purposes of
the Plan.



     2.10 “Contingent Annuitant Option” shall mean the optional annuity forms of distribution set
forth in the Retirement Plan.



     2.11 “Early Retirement Date” means the date upon which a Participant retires after attaining
age 55 and completing ten or more Years of Service, and prior to his Normal Retirement Date.



     2.12 “Eligible Employee” means any Employee who is employed by the Company or an Affiliate as
a Vice President or in a more senior position and who is designated
for participation in the Plan by the Chief Executive Officer of the Company. Consistent with
the authority delegated to him by the Committee, the Chief Executive Officer of the Company may
also designate other Employees as Eligible Employees. The Employees who have been



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designated as Eligible Employees are set forth in Appendix A to the Plan as amended and updated by the Company
from time to time.



     2.13 “Employee” means a person who receives salary, wages or commissions from the Company or
an Affiliate that are subject to withholding for purposes of federal income and employment taxes.
The term Employee shall not include an independent contractor or any other person who the Committee
or its designees determines is not subject to withholding for purposes of federal income and
employment taxes, regardless of any contrary governmental or judicial determination relating to
such employment or tax withholding status.



     2.14 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time
to time.



     2.15 “Final Average Compensation” means 12 times the Participant’s highest average monthly
Compensation for any 36-consecutive calendar month period. In the event the Participant has less
than 36 months of Compensation prior to his termination of employment, Final Average Compensation
means 12 times the average of his months of Compensation for his total period of service.



     2.16 “Normal Retirement Date” means the first day of the month following the attainment of age
60.



     2.17 “Other Supplemental Plan Reduction” means the retirement benefit payable to a Participant
under any other supplemental pension benefit provided to the Participant by the Company or any
other Affiliate for any period of service for which the Participant is receiving a benefit under
this Plan.



     2.18 “Participant” means an Eligible Employee who has satisfied the eligibility requirements
set forth in Article III.



     2.19 “Plan” means the Allegheny Energy Supplemental Executive Retirement Plan as set forth in
this document and in any amendments from time to time made hereto.



     2.20 “Qualified Joint and Survivor Annuity” means an annuity that provides equal monthly
installments to a Participant during his lifetime and equal monthly installments, which are
one-half of the amount of the installments paid to the Participant, to the Participant’s Surviving
Spouse after the Participant’s death.



     2.21 “Retirement Plan” means the Allegheny Energy Retirement Plan.



     2.22 “Retirement Plan Reduction” means the retirement benefit payable to a Participant under
the Retirement Plan, excluding any increases in such Retirement Plan benefits that become effective
after the Participant has retired from the Company and its Affiliates.



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     2.23 “Single Life Annuity” means an annuity that provides equal monthly installments to a
Participant for his lifetime and no payments to his Surviving Spouse or any other Beneficiary after
his death.



     2.24 “Surviving Spouse” refers to the person who is legally married to the Participant at the
time of his death and for the full one year (365 days) period immediately prior to his death.



     2.25 “Year of Service” shall mean a Participant’s “Service” (as that term is defined under the
terms of the Retirement Plan) as determined for purposes of calculating the amount of a
Participant’s Retirement Plan benefit under Article IV of the Retirement Plan; provided, that for
purposes of this Plan, Service shall also include Service with any Affiliate, regardless of whether
such Affiliate has adopted the Retirement Plan.



3. PARTICIPATION AND ELIGIBILITY




     3.1 Current Participants. Each individual who was a Participant in the Plan on the
date immediately before this amendment and restatement shall be a Participant in the Plan on and
after such date; provided, that a Participant must satisfy the eligibility requirements of Section
3.3 in order to receive a benefit from the Plan.



     3.2 New Participants. Each Employee who first becomes an Eligible Employee on or
after the date of this amendment and restatement shall become a Participant on the first day of the
month in which he first becomes an Eligible Employee or such earlier or later date as the Chief
Executive Officer of the Company shall specify; provided, that a Participant must satisfy the
eligibility requirements of Section 3.3 in order to receive a benefit from the Plan.



     3.3 Eligibility Requirements. Each individual who satisfies the requirements of
Section 3.1 or 3.2 shall be a Participant and shall be eligible to receive a benefit from the Plan
upon satisfying the following age and service and other eligibility requirements:



          (a) General Eligibility Requirements. A Participant who is actively employed by the
Company or an Affiliate shall be eligible for a benefit from the Plan if (i) he retires when he has
ten or more Years of Service, (ii) he retires on or after attaining age 55, and (iii) he elects to
commence payment of his Retirement Plan benefits as of the earliest date that such benefits are
payable under the Retirement Plan.




          (b) Special Eligibility Rules in the Event of Death Before Retirement. A Participant
who is actively employed by the Company or an Affiliate shall be eligible to receive a death
benefit from the Plan if he (i) dies after attaining age 55, but before retiring from the
Company or an Affiliate, and (ii) has ten or more Years of Service as of the date of his
death. Further, a Participant who is actively employed by the Company or an Affiliate shall be
eligible to receive a death benefit from the Plan if he (i) dies before age 55 and before retiring
from the Company or an Affiliate, and (ii) if he has 15 or more Years of Service as of the date of
his death. The death benefits provided under the Plan shall be determined in accordance with
Article V and shall be paid to the Participant’s Surviving Spouse.




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          (c) Termination for Cause and Other Similar Circumstances. Notwithstanding paragraph
(a) hereof and any other provision of the Plan to the contrary,




               (i) a Participant and his Beneficiaries shall not be eligible for a benefit from the Plan if
(A) a Participant’s employment with the Company or an Affiliate is terminated for Cause, or (B) the
Committee determines that the facts and circumstances surrounding a Participant’s termination of
employment (whether characterized as a voluntary or involuntary termination) with the Company or an
Affiliate constitute a basis for terminating the Participant for Cause, or



               (ii) benefits being paid to a Participant or his Beneficiaries under the Plan shall
immediately cease and all Plan benefits shall be forfeited if (A) based upon material information
that was not previously known to the Committee or the senior management of the Company or its
Affiliates at the time of a Participant’s termination of employment, the Committee determines that
the facts and circumstances surrounding a Participant’s termination of employment (whether
characterized as a voluntary or involuntary termination) with the Company or an Affiliate would
have constituted a basis for terminating the Participant for Cause, or (B) the Committee determines
that the Participant materially breached the terms of any agreement with the Company or its
Affiliates including, without limitation, the terms of any employment, separation, covenant not to
compete, confidentiality, non-solicitation agreement or other such agreement or covenant.



     3.4 Termination of Participation. The Committee (or the Chief Executive Officer
acting in accordance with the authority delegated to him by the Committee) may terminate or limit
the participation of any Participant in the Plan for any reason at any time before the Participant
or his Beneficiaries commences his benefit and otherwise satisfies the eligibility requirements of
Section 3.3. This termination or limitation of participation may include, without limitation,
limiting the Years of Service and Compensation that may be taken into account for purposes of
determining the amount of a Participant’s Accrued Benefit.



     3.5 Additional Age and Service. In its sole discretion, the Committee (or the Chief
Executive Officer acting in accordance with the authority delegated to him by the Committee) may
establish an adjusted number of Years of Service and/or an adjusted age for a Participant. In
determining the amount of a Participant’s Accrued Benefit in accordance with Article IV, a
Participant’s adjusted age and adjusted Years of Service shall be used as if they were his or her
actual age and actual Years of Service. A Participant’s adjusted Years of Service shall be taken
into account for all purposes under the Plan including determinations as to a
Participant’s eligibility to receive his Accrued Benefit and the amount of his Accrued
Benefit. To be recognized under this Section 3.5, adjusted Years of Service and/or an adjusted age
for a Participant must be set forth in an employment agreement or other written agreement between
the Participant and the Company or its Affiliates. For the sake of clarity, adjusted Years of
Service and/or an adjusted age granted to a Participant pursuant to an employment agreement or
other written agreement entered into before the date of this amendment and restatement shall be
effective under this Section 3.5.



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4. RETIREMENT BENEFITS




     4.1 Determination of Accrued Benefit.



          (a) Accrued Benefit Formula. A Participant’s annual Accrued Benefit shall be equal
to: (i) his Final Average Compensation multiplied by 2% multiplied by his Years of Service up to
25 years, plus (ii) his Final Average Compensation multiplied by 1% multiplied by his Years of
Service from 26 to 30 years, plus (iii) his Final Average Compensation multiplied by 1/2% multiplied
by his Years of Service from 31 to 40 years, minus (iv) the Participant’s Retirement Plan
Reduction, and minus (v) any Other Supplemental Plan Reduction.




          (b) Limit on Amount of Accrued Benefit. Notwithstanding the benefit formula in
paragraph (a) and any other provision of the Plan to the contrary, a Participant’s Accrued Benefit
calculated in accordance with Section 4.1(a) shall not exceed 60% of the Participant’s Final
Average Compensation, and such Accrued Benefit shall be reduced, if applicable, for early payment
in accordance with the reduction factors described in Section 4.3.




          (c) Assumptions. To the extent that the Participant’s Accrued Benefit is determined
as of any date before a component benefit (that is, the benefit accrued under the Plan, the
Retirement Plan benefit, or a benefit accrued under another supplemental pension plan) is payable
on an unreduced basis, prior to making such determination, each such component benefit(s) shall be
reduced for early payment in accordance with the applicable reduction factors set forth in the plan
documents for such component benefit(s). Further, to the extent that the Participant’s Accrued
Benefit is determined and payable before the date as of which the benefit accrued under the
Retirement Plan or another supplemental pension plan is payable, the Accrued Benefit shall not be
reduced by the Retirement Plan Reduction and/or the Other Supplemental Plan Reduction until such
time as amounts are first payable under such plan(s); provided, that once amounts first become
payable under such plan(s), the Accrued Benefit shall be reduced by the Retirement Plan Reduction
and/or the Other Supplemental Plan Reduction, as the case may be, even if the Participant does not
start receiving benefits under such other plan(s).




     4.2 Normal Retirement Benefit. A Participant shall be entitled to receive his Accrued
Benefit upon retiring on or after his Normal Retirement Date. Except to the extent of taking into
account Years of Service and Compensation earned on or after a Participant’s Normal Retirement
Date, a Participant’s Accrued Benefit shall not be adjusted or increased if the Participant retires
after his Normal Retirement Date.



     4.3 Early Retirement Benefit. A Participant shall be entitled to receive his Accrued
Benefit upon retiring at an Early Retirement Date; provided, that such Accrued Benefit shall be
subject to a reduction of 2% for each year (or fractional portion thereof based upon the number of
months for each year) that the Participant retires before his Normal Retirement Date.



     4.4 Timing and Form of Payment for the Accrued Benefit.



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          (a) Timing of Payment. Subject to the required delay described in the following
sentence, a Participant’s Accrued Benefit shall be due and payable to him as soon as practicable,
but in no event more than 30 days, after the Participant’s retirement from the Company or any
Affiliate; provided, however, that the Participant’s retirement constitutes a separation from
service for purposes of Code Section 409A and the corresponding regulations and guidance issued
thereunder. Notwithstanding any provision of the Plan to the contrary, to comply with Code Section
409A, the distribution of the Participant’s Accrued Benefit upon his separation from service shall
not start earlier than six months after the date of the Participant’s separation from service. The
accumulated monthly payments that are due and payable to a Participant following his separation
from service but that are withheld to comply with Code Section 409A shall be paid on the next
monthly payment date following the end of the six-month period. If the Participant dies during
such six-month period, the amounts withheld on account of Code Section 409A shall be paid to the
Participant’s Beneficiary within 90 days after the date of the Participant’s death.




          (b) Form of Payment. The Accrued Benefit of a Participant who is not married shall be
paid to him in the form of a Single Life Annuity and the Accrued Benefit of a Participant who is
married shall be paid to him in the form of a Qualified Joint and Survivor Annuity that has the
same actuarial value as the Single Life Annuity. In addition, a married Participant shall be
eligible to elect to have his Accrued Benefit paid to him in the form of a Single Life Annuity and
any Participant shall be eligible to elect to have his Accrued Benefit paid to him in the form of a
Contingent Annuitant Option that has the same actuarial value as a Single Life Annuity. Any such
election to receive a Contingent Annuitant Option (or, in the case of a married Participant, a
Single Life Annuity) shall be made in accordance with the generally applicable terms of the
Retirement Plan; provided, that (i) the Participant shall not be required to obtain the consent of
his spouse, and (ii) the Participant shall not be required to provide evidence of good health. The
actuarial assumptions set forth in the Retirement Plan shall be used for purposes of converting the
Single Life Annuity into other payment forms.




     4.5 Benefit Computation. A Participant’s retirement benefits shall be computed by the
Committee or its designees under the terms of the Plan in effect as of the date of the
Participant’s termination of employment with the Company or an Affiliate and shall not be
recomputed, increased or decreased after such termination, except for supplemental increases, if
any, as may be granted by the Board of Directors.



5. DEATH BENEFITS




     5.1 Death Before Commencement of Benefits.



          (a) General. In the event that a Participant dies before he retires and before he
starts receiving payment of his Accrued Benefit but after satisfying the eligibility requirements
to receive death benefits as described in Article III, the Participant’s Surviving Spouse shall be
eligible to receive a pre-retirement death benefit from the Plan. This death benefit shall be
determined in accordance with paragraph (b).




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          (b) Pre-Retirement Death Benefit. If a Participant dies while employed by the Company
or an Affiliate and before attaining age 55, the Participant’s Surviving Spouse will receive the
same benefit that would have been payable if the Participant had: (i) separated from service on the
date of death, (ii) survived until age 55, (iii) elected, in accordance with Article IV, to have
benefits commence in the form of a Qualified Joint and Survivor Annuity, and (iv) died on the day
after his 55th birthday. If a Participant dies while employed by the Company or an Affiliate and
after attaining age 55, the Participant’s Surviving Spouse will receive the same benefit that would
have been payable if the Participant had retired with a Qualified Joint and Survivor Annuity on the
day before his death. The pre-retirement death benefit described in this paragraph shall start
being paid to the Surviving Spouse as of the later of (i) the date the Participant would have
attained age 55, or (ii) the date of the Participant’s death.




     5.2 Death After Commencement of Benefits. If a Participant dies after payment of his
Accrued Benefit has started, the death benefits, if any, payable under the Plan shall be determined
by the distribution form elected by the Participant before his death.



     5.3 Designating a Beneficiary. A Participant may designate a Beneficiary to receive
any death benefit payable under Section 5.2 in accordance with the procedures established by the
Committee or its designees.



6. VESTING




     A Participant shall have a vested interest in his Accrued Benefits upon the satisfaction of
the eligibility requirements of Article III. Notwithstanding the foregoing, a Participant who does
not receive or does not continue to receive, as the case may be, benefits from the Plan pursuant to
Section 3.3(c) shall forfeit any vested interest in his Accrued Benefit. In its sole discretion,
the Board of Directors or the Compensation Committee (or the Chief Executive Officer of the Company
acting in accordance with authority delegated to him by the Board of Directors or the Compensation
Committee) may accelerate the vesting of a Participant’s Accrued Benefit.



7. FUNDED NATURE OF THE PLAN




     The funds used for payment of benefits under this Plan and the expenses incurred in the
administration thereof shall, until such actual payment, continue to be a part of the general funds
of the Company and no person other than the Company shall, by virtue of this Plan, have any
interest in any such funds. Nothing contained herein shall be deemed to create a trust of any kind
or create any fiduciary relationship. To the extent that any person acquires a right to receive
payments from the Company under this Plan, such right shall be no greater than the right of any
unsecured general creditor of the Company or its Affiliates.



8. ADMINISTRATION OF THE PLAN




     8.1 Authority of the Committee. The Plan shall be administered by the Committee.
Subject to Section 8.2, the Committee shall have the exclusive authority and responsibility for all
matters in connection with the operation and administration of the Plan. This authority and



8









 




responsibility shall include, without limitation, the full power and discretion to: (a) interpret
and apply the Plan’s provisions, (b) establish procedures for administering the Plan, (c) make
decisions relating to an individual’s eligibility to participate in the Plan, the amount of Plan
benefits and factual determinations relating to the payment of benefits, (d) determine the time and
form of benefit payments, (e) compile and maintain all records necessary in connection with the
Plan; (f) authorize the payment of all benefits and expenses of the Plan as they become payable
under the Plan; (g) reduce or otherwise adjust amounts payable under the Plan if payments are made
in error; and (h) engage such legal, accounting, and other professional services as it may deem
proper. The decisions of the Committee shall be made in the sole discretion of the Committee and
shall be final and binding upon all parties, including without limitation, the Company and its
Affiliates, Participants and Beneficiaries.




     8.2 Delegation of Authority. The Committee, from time to time, may delegate to one or
more of its members or to any other person or persons or organizations any of its rights, powers,
and duties with respect to the operation and administration of the Plan.



     8.3 Compensation and Expenses. The members of the Committee shall serve without
compensation, but all benefits payable under the Plan and all expenses properly incurred in the
administration of the Plan, including all expenses properly incurred by the Committee in exercising
its duties under the Plan, shall be borne by the Company.



     8.4 Liability of the Committee and Board; Indemnification. To the extent permitted by
applicable law, no member of the Committee or the Board, or any authorized delegate thereof, shall
be liable to any person for any action taken or omitted in connection with the interpretation and
administration of the Plan unless attributable to his own gross negligence, fraud or bad faith. The
Company shall indemnify the members of the Committee and the Board and any authorized delegate
thereof against any and all claims, losses, damages and expenses, including counsel fees incurred
by them and any liability, including any amounts paid in settlement with their approval, arising
from their action or failure to act, except when the same is determined to be attributable to their
gross negligence, fraud or bad faith. The provisions of this paragraph are not intended to be
exclusive, and nothing contained in this paragraph shall in any way limit indemnification provided
to members of the Committee or the Board or any authorized delegate thereof under the bylaws of the
Company, by contract, by statute or otherwise.



9. AMENDMENTS AND TERMINATION




     The Company (acting through the Board of Directors or its authorized delegate) reserves the
right at any time and from time to time, to modify or amend, in whole or in part, any or all of the
provisions of the Plan but no such amendment shall adversely affect any Participant’s rights to his
Accrued Benefit that is vested as determined in accordance with Section 6. Notwithstanding the
foregoing, the Chief Executive Officer of the Company shall have the authority to adopt such
amendments to the Plan as may be necessary to comply with applicable law (including, without
limitation, adopting retroactive or prospective amendments to comply with Code Section 409A),
conform the terms of the Plan with its administration, or as may



9









 




otherwise be necessary to maintain the Plan; provided, that such amendments do not materially affect the benefits provided to
Participants hereunder. To the extent permissible under Code Section 409A, the Company (acting
through the Board of Directors or its authorized delegate) shall have the right to terminate the
Plan at any time but such action shall not adversely affect any Participant’s rights to his Accrued
Benefits that is vested as determined in accordance with Section 6.




10. CLAIMS PROCEDURES




     Any Participant or other person claiming a benefit hereunder (“Claimant”) may submit a written
application to the Committee for payment of any benefit that may be due him under the Plan. Any
such application shall set forth the nature of the claim and any additional information as the
Committee may reasonably request. Upon receipt of any such application, the Committee shall
determine whether or not the Claimant is entitled to the benefit hereunder. If a claim is denied,
in whole or in part, the Committee shall give written notice to any Claimant of the denial of a
claim for the commencement, continuation or calculation of amount of retirement benefits under the
Plan. The notice shall be given within 90 days after receipt of the Claimant’s application, unless
special circumstances require an extension for processing the claim. In no event shall such
extension exceed a period of 90 days from the end of such initial review period. The notice will
be delivered to the Claimant or sent to the Claimant’s last known address, and will include (a) the
specific reason or reasons for the denial, (b) a specific reference or references to pertinent Plan
provisions on which the denial is based, (c) a description of any additional material or
information for the Claimant to perfect the claim, which will indicate why such material or
information is needed, (d) an explanation of the Plan’s claims review procedure, and the time
limits applicable to such review periods, and (e) a statement of the Claimant’s right to bring a
civil action under Section 502(a) of ERISA following an adverse determination upon review.



     If the Claimant wishes to appeal the claim’s denial, the Claimant or a duly authorized
representative must file a written request with the Committee for a review. This request must be
made by the Claimant within 60 days after receiving notice of the claim’s denial. The Claimant or
representative may review pertinent documents relating to the claim and its denial, may submit
issues and comments in writing to the Committee and may request a hearing. Within 60 days after
receipt of such a request for review, the Committee shall reconsider the claim and, if the Claimant
shall have so requested and the Committee has granted such request, shall afford the Claimant or
his representative a hearing before the Committee and make a decision on the merits
of the claim. If circumstances require an extension of time for processing the claim, the 60-day
period may be extended, but in no event more than 120 days after the receipt of a request for
review. In the event that the period of time is extended for the Claimant’s failure to submit
information necessary to decide the claim, the period for making the benefit determination shall be
tolled from the date upon which the notification is sent to the Claimant and the date of the
Claimant’s response. The decision on review will be in writing and will be delivered to the
Claimant or sent to the Claimant’s last known address. If the Claimant’s appeal is denied by the
Committee, the denial will include (a) the specific reason or reasons for the denial, (b) a
specific



10









 




reference or references to pertinent Plan provisions on which the denial is based, (c) a
statement that the Claimant is entitled to receive, upon request, copies of all documents, records
and other information relevant to the Claimant’s claim, and (d) a statement of the Claimant’s right
to bring a civil action under Section 502(a) of ERISA.




     No court challenge to any Committee determination regarding a claim for benefits may be made
by any Claimant until and unless he has exhausted the procedure set forth above.



11. MISCELLANEOUS




     11.1 Construction. The headings and subheadings of this instrument are inserted for
convenience of reference only and are not to be considered in the construction of this Plan.
Wherever appropriate, words used in the singular may include the plural, plural may be read as the
singular and the masculine may include the feminine.



     11.2 Taxes. The Company or its Affiliates will deduct from Plan payments or from
other compensation payable to a Participant or Beneficiary any amounts required to be withheld for
federal, state or local taxes with respect to benefits under this Plan.



     11.3 Governing Law. The instrument creating the Plan shall be construed,
administered, and governed in all respects in accordance with the laws of the Commonwealth of
Pennsylvania to the extent not preempted by ERISA. If any provision of this Plan shall be held by
a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions shall
continue to be fully effective.



     11.4 No Right of Employment. Participation in the Plan shall not give to any Employee
the right to be retained in the employ of the Company or any Affiliate or any right or interest in
the Plan other than is herein specifically provided.



     11.5 Payment in Satisfaction of Claims. Any payment to a Participant or Beneficiary
or the legal representative of the aforesaid, in accordance with the terms of the Plan shall to the
extent thereof be in full satisfaction of all claims such person may have against the Plan, the
Company or any Affiliate hereunder with respect to such payment. The Plan, the Company or any
Affiliate may require such payee, as a condition to such payment, to execute a receipt and release
therefor in such form as shall be determined by the Company.



     11.6 No Alienation of Benefits. Subject to the provisions of Section 6 and Section
3.3(c), benefits under the Plan shall not be alienated, hypothecated or otherwise encumbered, and
to the maximum extent permitted by law, such benefits shall not in any way be subject to claim of
creditors or liable to attachment, execution or other process of law.



     11.7 Incapacity. If an individual entitled to receive retirement benefits is
determined by a court, or if not by a court, by the Committee, to be legally incapable of giving
valid receipt and discharge for such benefits, they shall be paid to the duly appointed and acting
guardian, if any, and if no such guardian is appointed and acting, to such person as the Committee
may



11









 




designate. Such payment shall, to the extent made, be deemed a complete discharge for such
payments under the Plan.




     11.8 Adjustment. If the Committee is unable to make the determinations required under
the Plan in sufficient time for payments to be made when due, the Committee shall make the payments
upon the completion of such determinations, with interest, at a reasonable rate from the due date
and may, at its option, make provisional payments, subject to adjustment, pending such
determination.



     11.9 Compliance With Law. The Plan is intended to comply with applicable law.
Without limiting the foregoing, the Plan is intended to comply with the applicable requirements of
Code Section 409A, and shall be administered in accordance with Code Section 409A to the extent
Code Section 409A applies to the Plan. Notwithstanding anything in the Plan to the contrary,
distributions may only be made under the Plan upon an event and in a manner permitted by Code
Section 409A. To the extent that any provision of the Plan would cause a conflict with the
requirements of Code Section 409A, or would cause the administration of the Plan to fail to satisfy
the requirements of Code Section 409A, such provision shall be deemed null and void to the extent
permitted by applicable law.



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Appendix A




Participants in the Supplemental Executive Retirement Plan as of July 24, 2007



Name of Participant




1. J. M. Adams




2. David C. Cannon, Jr.




3. Edward Dudzinski




4. Carrol V. Estel, Jr.




5. David M. Feinberg




6. David E. Flitman




7. Thomas R. Gardner




8. Philip L. Goulding




9. James R. Haney




10. Thomas J. Kalup




11. James B. Kauffman




12. Barry E. Pakenham




13. Leo C. Rajter




14. Joseph H. Richardson




15. William F. Wahl




16. Loyd (Aldie) Warnock