Document:

Ex-10.9

 

Exhibit 10.9

ALLEGHENY ENERGY, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

Amended and Restated as of January 1, 2008

          Allegheny Energy, Inc. (the “Company”) hereby establishes the Allegheny Energy, Inc.
Nonqualified Deferred Compensation Plan (the “Plan”).

     1. Purpose And Effective Date. The purpose of the Plan is to provide tax-deferred
savings to a select group of key executive – level employees by allowing them to elect to defer
compensation otherwise payable to them under the Company’s Annual Incentive Plan (the “AIP”). This
Plan originally became effective upon its approval by the Company’s Board of Directors (the
“Board”). The Plan is hereby amended and restated effective January 1, 2008 to update the Plan for
certain changes in the applicable law and to make certain other clarifying changes.

     2. Administration. Subject to all applicable legal requirements, including without
limitation, compliance with securities, tax or other laws, or rules, regulations or regulatory
interpretations thereof, applicable to the Plan, or the requirements of the exchanges, and any
requirements of other governmental or regulatory authorities, the Plan shall be administered by the
Management Compensation and Development Committee of the Board (the “Committee”), which shall have
the sole authority to construe and interpret the terms and provisions of the Plan. The Committee’s
actions shall be final and binding on all persons and parties. The Committee may retain any
accounting, legal, clerical and other services reasonably required by it in the administration of
the Plan. The Committee may agree to pay reasonable compensation for such services, and the
Company shall pay all of the reasonable expenses of the administration of the Plan. In addition,
the Committee shall establish a process for (i) Plan participants and beneficiaries to submit
claims and (ii) making decisions on claims under the Plan.

     3. Eligibility and Participation.

     3.1 Eligibility to participate in the Plan is limited to employees of the Company at the level
of director or above who are then eligible for participation in the AIP.

     3.2 Each individual eligible to participate shall become a participant (a “Participant”) by
electing, pursuant to a deferred compensation election form provided by or acceptable to the
Committee, to defer receipt of a percentage of “Eligible Compensation” otherwise payable to such
Participant with respect to such calendar year. A deferral election shall be irrevocable for the
calendar year for which it is made and shall terminate automatically at the end of such calendar
year. For the purposes hereof, a Participant’s “Eligible Compensation” with respect to any
calendar year shall mean the amount, if any, of the award payable to such Participant with respect
to such year under the AIP (with such amount being ordinarily payable in the following year absent
a deferral election hereunder). No deferral election may reduce a Participant’s compensation below
the amount necessary to satisfy applicable employment taxes, the withholding requirements under
applicable law and the amount of any contributions which the individual may be required to make or
may have elected to make under other benefit plans.

 

 

     3.3 The Plan’s initial plan year shall begin on the date on which this Plan is adopted by the
Board and end on December 31, 2004. Each Participant who wishes to participate in the Plan and
defer a portion of his or her Eligible Compensation with respect to the initial plan year must
submit an election form no later than thirty days after the date this Plan is adopted by the Board.

     3.4 Subsequent plan years shall begin on January 1 and end on December 31. Each eligible
individual who wishes to participate in the Plan and defer a portion of his or her Eligible
Compensation must submit an election form no later than December 20 of the year immediately prior
to the plan year with respect to which the election is to be effective, or as otherwise determined
by the Committee. If an individual becomes eligible for the Plan after the first day of any plan
year, he or she must file an election with the Committee no later than 30 days after such
individual becomes eligible to participate in the Plan; provided, however, that
such election shall apply only to Eligible Compensation earned after the date of such election.

     3.5 A Participant shall continue to be a Participant until the entire amount due under the
Plan, if any, is paid to the Participant and/or his or her beneficiary. Each Participant shall be
bound by all of the terms and conditions of the Plan, all rules and regulations established from
time to time by the Committee and all decisions made by the Committee in accordance with the Plan.
Each Participant must furnish to the Committee all pertinent information and execute all forms,
agreements and other instruments requested by the Committee.

     4. Crediting of Accounts.

     4.1 The Committee shall establish a bookkeeping account (the “Account”) on behalf of each
Participant under the Plan. For each plan year, the Committee shall accrue the amount of Eligible
Compensation elected by the Participant to be deferred under the Plan and credit each Participant’s
Account with such amount on the date such Eligible Compensation would have otherwise been payable
to the Participant in the absence of an election hereunder. The Committee shall credit and/or
debit each Participant’s Account based upon the performance of a Participant’s deemed investments
in a manner and at times prescribed by the Committee.

     4.2 A Participant may elect in a manner prescribed by the Committee to have a specified
percentage of his or her Account invested in one or more investment option(s) made available by the
Committee from time to time. In accordance with any procedures established by the Committee, each
Participant may elect to change the deemed investment(s) of all or a portion of his or her Account
among the investment options then allowed by the Plan. The Participant shall assume all risks in
connection with the value credited (or debited) to the Participant’s Account as a result of his or
her election. The Committee, in its sole discretion, may add, delete or otherwise alter the
investment options at any time. Notwithstanding the foregoing, the investment options made
available to Participants under the Plan shall be comparable to those which a participant may elect
under the Allegheny Energy Employee Stock Ownership and Savings Plan.

     4.3 Statements will be sent to Participants following the end of each year as to the value of
their Accounts as of December 31 of such year.

     5. Payment of Benefits.

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     5.1 Each Participant shall be 100% vested at all times in amounts held in his or her Account.

     5.2 At the time that a Participant makes an election to defer Eligible Compensation for a
particular calendar year as described in Section 3, the Participant shall make an irrevocable
distribution election to have the Eligible Compensation deferred for such calendar year (and any
interest or earnings accrued thereon) distributed to him in a single lump-sum cash payment no later
than 30 business days after: (i) the first day of a calendar year that is no less than 12 months
and a day from the date of the distribution election, or (ii) the date that the Participant has a
Separation from Service (as defined below) from the Company; provided, however,
that no later than 30 business days after the Participant’s Separation from Service from the
Company, the entire balance in the Participant’s Account shall be paid to the Participant (or the
Participant’s beneficiary, if applicable) in a single lump-sum cash payment. In the event that a
Participant fails to make the election provided in the preceding sentence, such Participant shall
be deemed to have made an election to receive the payment described in clause (ii) of the preceding
sentence. Once made, any election under this Section 5.2 is irrevocable and may not be modified by
any Participant; provided, however, that deferred amounts may be paid at a
different time than specified in the election form upon a change of ownership or upon financial
hardship, as provided in Sections 5.5 and 6 of this Plan. Any payments due a Participant (or the
Participant’s beneficiary, if applicable) shall be paid in a single lump-sum cash payment. A
“Separation from Service” for purposes of the Plan shall mean a separation from service as such
term is defined under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
and the corresponding regulations and guidance issued thereunder.

     5.3 A Participant may designate in writing on a form provided by or acceptable to the
Committee a beneficiary or beneficiaries to be paid any benefits that are payable under the Plan
following the Participant’s death. In the absence of any written designation of a beneficiary or a
surviving beneficiary, any benefits payable under the Plan following the Participant’s death shall
be payable to his or her estate.

     5.4 If any individual entitled to receive a payment under the Plan is determined by the
Committee, in its sole discretion, to be physically, mentally, or legally incapable of receiving or
acknowledging receipt of such payment, and no legal representative has been appointed for the
individual, the Company may (but is not required to) direct payment to either the Participant’s
beneficiary or the Participant’s spouse, children or other relatives by blood or marriage. The
Committee and/or the Company is not required to see to the proper application of such payments, and
the payment to any such individual shall completely discharge all claims which the Participant and
his or her heirs and successors have under the Plan to the extent of the payment.

     5.5 Notwithstanding anything to the contrary, all of a Participant’s accumulated benefits
under the Plan held in his or her Account shall become immediately payable to the Participant (or
the Participant’s beneficiary, if applicable) as soon as administratively practicable following a
change in the ownership or effective control of the Company or a change in the ownership of a
substantial portion of the Company’s assets (as such terms are defined under Code Section 409A and
the corresponding regulations and guidance issued thereunder).

     5.6 Notwithstanding any provision of the Plan to the contrary, if a Participant becomes
entitled to receive a distribution of his Account balance on account of his Separation from
Service, the

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distribution shall not be made earlier than six months following the date of the Participant’s
Separation from Service. Distributions that are withheld pursuant to this Section 5.6, shall be
paid within 30 days after the end of the six-month delay period. If the Participant dies during
such six-month period, the amounts withheld pursuant to this Section 5.6 shall be paid to the
Participant’s Beneficiary within 90 days of the Participant’s death.

     6. Hardship. In the event of a severe financial hardship to the Participant or any
beneficiary resulting from (i) a sudden and unexpected illness or accident of the Participant or
beneficiary or the Participant or beneficiary’s spouse or dependent (as defined in Code Section
152(a)), (ii) loss of the Participant or beneficiary’s property due to casualty, or (iii) other
similar extraordinary and unforeseeable circumstances arising as a result of events beyond the
control of the Participant or beneficiary, a Participant may file a notice with the authorized
Human Resources representative of the Company to be presented to the Committee, advising it of the
circumstances of the hardship or emergency, and requesting a withdrawal of previously deferred
amounts. The Committee, in its sole discretion, may agree to accelerate distribution of all or a
part of amounts previously deferred. A hardship withdrawal by a Participant shall have no effect
on any amounts remaining in such Participant’s Account, and shall not have any effect on any
current or future deferral election after the hardship withdrawal. Withdrawals of amounts because
of such hardship shall only be permitted to the extent reasonably necessary to satisfy the hardship
or emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which such hardship or emergency is or may be
relieved (i) through reimbursement or compensation by insurance or otherwise, or (ii) by
liquidation of the Participant’s assets, to the extent the liquidation of such assets would not
itself cause a financial hardship.

     7. Amendment. The Board reserves the right to amend the Plan at any time and in any
fashion as it deems advisable. To be effective, any amendment to the Plan must be stated in a
written instrument adopted by the Board. An amendment to the Plan adopted under this section is
binding on all interested parties as of the effective date of the amendment. No amendment to the
Plan may have any retroactive effect that deprives any Participant or the beneficiary of a deceased
Participant of any material benefit, right or feature to which the Participant is entitled under
the terms of the Plan immediately prior to the effective date of the amendment. Any amendment to
this Plan must comply with all applicable legal requirements including without limitation,
compliance with securities, tax, or other laws, or rules, regulations or regulatory interpretations
thereof, applicable to this Plan.

     8. Termination of the Plan. The Board reserves the right to terminate the Plan at any
time. The Plan will terminate as of the date designated by the Board. If the Plan, which was
designed and intended to be a non-qualified deferred compensation plan for a select group of
management or highly compensated employees (a “Top-Hat Plan”) is deemed not to be a Top-Hat Plan,
it will be terminated. Upon the termination of the Plan, the Committee, in its sole discretion,
may elect to cause all accumulated amounts in a Participant’s Account to be distributed to the
Participant in a single lump-sum cash payment; provided, however, that the
distribution of such Accounts is permissible under Code Section 409A and the regulations
thereunder.

     9. Source of Payments. The Company intends the Plan to be unfunded for federal income
tax purposes and for purposes of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”). Accordingly, the Company’s obligations under this Plan shall be general obligations of
the Company and shall not be secured in any manner. The eventual payment of benefits under this
Plan shall not be secured by the issuance of any negotiable instrument or other evidence of

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indebtedness of the Company. The Company may establish a trust and place assets in such trust
to assist it in meeting the obligations under the Plan. No participant, beneficiary or other
person shall be deemed to have any property interest, legal or equitable, in any specific assets of
the Company as a result of the benefits provided by this Plan. Any right of a Participant to
receive payment pursuant to this Plan shall be an unfunded entitlement and shall be an unsecured
claim against the general assets of the Company. Each Participant shall have only the status of a
general unsecured creditor hereunder, and this Plan shall constitute only a promise by the Company
to pay the value of any deferred amounts on any required payment date. In no event shall any of
the directors, officers or employees of the Company or any affiliate be liable in their individual
capacities to any person whomsoever for the payment of benefits under the Plan.

     10. Withholding. The Company may withhold from any amounts payable pursuant to this
Plan or from any other compensation payable to a Participant such Federal, state and local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.

     11. No Right to Employment. Nothing in this Plan shall confer upon a Participant the
right to remain employed by the Company.

     12. Waiver of Breach. If the Company, the Committee or any Participant fails to
require the performance of any term of this Plan, then that failure shall not prevent the party
from later enforcing that term. If the Company, the Committee or any Participant waives a breach
of a term, then that waiver shall not be treated as waiving a later breach of the term. This Plan
constitutes the entire agreement of the parties with respect to the Plan and the Accounts, and a
Participant may not rely on any promises, representations or undertakings other than those
expressly set forth in the Plan.

     13. Severability. If any part of this Plan is for any reason found to be invalid or
unenforceable, it shall not affect the other provisions, and this Plan shall remain in effect as
though the invalid or unenforceable provisions were omitted. Upon a determination that any term or
other provision is invalid or unenforceable, the Board shall in good faith amend the Plan so as to
give effect to the original intent of the Board as closely as possible.

     14. Non-Assignability. Any amounts payable to a Participant pursuant to this Plan
shall not be assignable or transferable by such Participant (other than pursuant to Section 5.3, by
will or the laws of descent and distribution) or by the Company (other than to successors of the
Company) and no amounts deferred pursuant to the Plan shall be subject in any manner to any
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, levy, lien, attachment,
garnishment, debt or other charge or disposition of any kind.

     15. Tax Treatment. The Company and the Board make no warranties to any person
regarding tax treatment of participation in the Plan and make no warranties for any action or
omission of the Company, the Board or a Participant in connection with such tax treatment.
Participants have been advised to consult with their own tax advisers regarding the tax
consequences of participation in the Plan.

     16. Successors. Unless otherwise stated in the Plan, all obligations of the Company
under the Plan shall be binding on all corporate successors.

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     17. Governing Law. This Plan will be governed by and construed in accordance with the
laws of the State of New York, without regard to its conflict of law principles.

     18. Compliance with Law. This 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 and its corresponding
regulations and related guidance to the extent that Code Section 409A applies to the Plan.
Notwithstanding anything in the Plan to the contrary, distributions from the Plan may only be made
in a manner, and upon an event, permitted by Code Section 409A and its corresponding regulations
and related guidance. If any payment or benefit cannot be provided or made at the time specified
herein without incurring penalties under Code Section 409A, then such benefit or payment shall be
provided in full at the earliest time thereafter when such penalties will not be imposed. To the
extent that any provision of the Plan would cause a conflict with the applicable requirements of
Code Section 409A, or would cause the administration of the Plan to fail to satisfy the applicable
requirements of Code Section 409A, such provision shall be deemed null and void to the extent
permitted by applicable law.

6Ex-10.10

 

Exhibit 10.10

AMENDMENT TO EMPLOYMENT AGREEMENT

     WHEREAS, Allegheny Energy Service Corporation for itself and as agent for its parent,
Allegheny Energy, Inc., the affiliates and subsidiaries of AESC and AEI, and any successors or
assigns of any of the foregoing previously entered into that certain employment agreement with
Philip L. Goulding (the “Executive”) dated October 3, 2003 (the “Agreement”).

     WHEREAS, effective as of November 1, 2007, the parties desire to amend the Agreement to comply
with certain changes in applicable law.

     NOW, THEREFORE, in consideration of the covenants contained herein, and for other good and
valuable consideration, the parties hereto agree as follows:
 

     1. Section 13 of the Agreement is amended and restated in its entirety to read as follows:

     “13. Withholding and Special Terms Relating to Payments and Benefits. AESC shall
be entitled to withhold from payments due hereunder any required federal, state or local
withholding or other taxes. To the extent that any amounts payable to the Executive under the
Agreement are subject to Section 409A(a)(2)(B) of the Internal Revenue Code of 1986, as amended
(the “Code”), any requirements that such amounts be paid promptly shall not apply and instead
such amounts shall be paid in a lump sum as of the date six (6) months after the Date of
Termination. The Agreement shall be interpreted to avoid any penalty sanctions under Section
409A of the Code. If any payment or benefit cannot be provided or made at the time specified
herein without incurring sanctions under Section 409A of the Code, then such benefit or payment
shall be provided in full at the earliest time thereafter when such sanctions will not be
imposed. For purposes of Section 409A of the Code, each payment made under the Agreement shall
be treated as a separate payment and any payment to be made upon a termination of employment
under the Agreement may only be made if such termination of employment constitutes a “separation
from service” as determined under Section 409A of the Code and its corresponding regulations and
related guidance. All reimbursements and in-kind benefits provided under the Agreement shall be
made or provided in accordance with the requirements of Section 409A of the Code, including,
where applicable, the requirement that (i) any reimbursement is for expenses incurred during the
Executive’s lifetime (or during a shorter period of time specified in the Agreement), (ii) the
amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar
year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided,
in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or
before the last day of the calendar year following the year in which the expense is incurred,
and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit.”

     IN WITNESS WHEREOF, the parties hereto have caused the Amendment to be executed as of the date
first above written.

 

 

	 	 	 	 	 
	Allegheny Energy Service Corporation	 	 
	 
	 	 	 	 
	 

	 	/s/ Paul J. Evanson	 	 
	 

	 	 	 	 
	 

	 	Name: Paul J. Evanson	 	 
	 

	 	Title: Chairman & Chief Executive Officer
	 	 
	 
	 	 	 	 
	Allegheny Energy, Inc.	 	 
	 
	 	 	 	 
	 

	 	/s/ Paul J. Evanson	 	 
	 

	 	 	 	 
	 

	 	Name: Paul J. Evanson	 	 
	 

	 	Title: Chairman & Chief Executive Officer	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	/s/ Philip L. Goulding 

	 	 
	 	 	 
	Philip L. Goulding

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