Document:

Ex-10.5

 

Exhibit 10.5

ALLEGHENY ENERGY, INC.

1998 LONG-TERM INCENTIVE PLAN

Effective May 14, 1998

Amended and Restated January 1, 2008

ARTICLE I

PURPOSE AND ADOPTION OF THE PLAN

     Sec. 1.01 Purpose. The purpose of the Allegheny Energy, Inc. 1998 Long-Term Incentive
Plan (as the same may be amended from time to time, the “Plan”) is to assist Allegheny Energy,
Inc., a Maryland corporation (the “Company”), and its Subsidiaries (as defined below) in attracting
and retaining highly competent key employees and directors and to act as an incentive in motivating
selected key employees and directors of the Company and its Subsidiaries (as defined below) to
achieve long-term corporate objectives.

     Sec. 1.02 Adoption and Term. The Plan has been approved by the Board of Directors of
the Company (the “Board”) to be effective as of the date of approval of the Plan by the
shareholders of the Company (the “Effective Date”). The Plan shall remain in effect until the
tenth anniversary of the Effective Date; provided, however, that the provisions of Articles VII and
VIII with respect to performance-based awards to “covered employees” under Section 162(m) of the
Code (as defined below) shall expire as of the fifth anniversary of the Effective Date. This Plan
is hereby amended and restated effective as of January 1, 2008 to update it for changes in
applicable law and to make certain other clarifying changes.

ARTICLE II

DEFINITIONS

     For the purposes of this Plan, capitalized terms shall have the following meanings:

     Sec. 2.01 “Acquiring Corporation” shall have the meaning given to such term in Section
9.08(b).

     Sec. 2.02 “Award” means any grant to a Participant of one or a combination of Non-Qualified
Stock Options or Incentive Stock Options described in Article VI, Restricted Shares described in
Article VII and Performance Awards described in Article VIII.

     Sec. 2.03 “Award Agreement” means a written agreement between the Company and a Participant or
a written notice from the Company to a Participant specifically setting forth the terms and
conditions of an Award granted under the Plan.

     Sec. 2.04 “Award Period” means, with respect to an Award, the period of time set forth in the
Award Agreement during which specified target performance goals must be achieved or other
conditions set forth in the Award Agreement must be satisfied.

     Sec. 2.05 “Beneficiary” means an individual, trust or estate who or which, by a written
designation of the Participant filed with the Company or by operation of law, succeeds to the
rights and obligations of the Participant under the Plan and an Award Agreement upon the
Participant’s death.

 

 

     Sec. 2.06 “Board” shall have the meaning given to such term in Section 1.02.

     Sec. 2.07 “Change in Control” shall be deemed to have occurred at such time as (a) any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 25% or more of the combined voting power of the Company Voting
Securities; or (b) during any period of not more than two years, individuals who constitute the
Board as of the beginning of the period and any new director (other than a director designated by a
person who has entered into an agreement with the Company to effect a transaction described in
clause (a) or (c) of this sentence) whose election by the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at such time or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority thereof; or (c) the
shareholders of the Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the Company Voting
Securities outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity) at least 50% of
the combined voting power of the Company Voting Securities or the voting securities of such
surviving entity outstanding immediately after such merger or consolidation, or the shareholders of
the Company approve a plan of complete liquidation of the Company or any agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets.

     Sec. 2.08 “Code” means the Internal Revenue Code of 1986, as amended. References to a section
of the Code include that section and any comparable section or sections of any future legislation
that amends, supplements or supersedes said section.

     Sec. 2.09 “Committee” means the committee established in accordance with Section 3.01.

     Sec. 2.10 “Company” shall have the meaning given to such term in Section 1.01.

     Sec. 2.11 “Common Stock” means Common Stock of the Company.

     Sec. 2.12 “Company Voting Securities” means the combined voting power of all outstanding
securities of the Company entitled to vote generally in the election of directors of the Company.

     Sec. 2.13 “Date of Grant” means the date as of which the Committee grants an Award. If the
Committee contemplates an immediate grant to a Participant, the Date of Grant shall be the date of
the Committee’s action. If the Committee contemplates a date on which the grant is to be made
other than the date of the Committee’s action, the Date of Grant shall be the date so contemplated
and set forth in or determinable from the records of action of the Committee; provided, however,
that the Date of Grant shall not precede the date of the Committee’s action.

     Sec. 2.14 “Dividend Equivalent Account” shall have the meaning given to such term in Section
6.03(a).

     Sec. 2.15 “Effective Date” shall have the meaning given to such term in Section 1.02.

 

 

     Sec. 2.16 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     Sec. 2.17 “Exercise Price” shall have the meaning given to such term in Section 6.01(b).

     Sec. 2.18 “Fair Market Value” means, as of any applicable date, the closing price per share of
the Common Stock as quoted in the NYSE-Composite Transactions listing in The Wall Street Journal
(or such other reliable publication as the Committee, in its discretion, may determine to rely
upon) for the date as of which Fair Market Value is to be determined. If there are no sales on
such date, then Fair Market Value shall be the closing price per share of the Common Stock as so
quoted on the nearest date before the date as of which Fair Market Value is to be determined on
which there are sales. If the Common Stock is not listed on the New York Stock Exchange on the
date as of which Fair Market Value is to be determined, the Committee shall in good faith determine
the Fair Market Value of the Common Stock on such date. Fair Market Value shall be determined
without regard to any restriction other than a restriction which, by its terms, will never lapse.
Notwithstanding the foregoing, in the case of Options granted in connection with the assumption by
the Company of stock options of acquired companies, as described in Section 9.08(c) the Committee
may determine that the term “Fair Market Value” shall have the same meaning as is given to such
term under the provisions of such assumed stock option. All determinations regarding the Fair
Market Value of the Company’s Common Stock shall be consistent with the requirements of Section
409A of the Code and its corresponding regulations and related guidance.

     Sec. 2.19 “Incentive Stock Option” means a stock option within the meaning of Section 422 of
the Code.

     Sec. 2.20 “Merger” means any merger, reorganization, consolidation, share exchange, transfer
of assets or other transaction having similar effect involving the Company.

     Sec. 2.21 “Non-Qualified Stock Option” means a stock option which is not an Incentive Stock
Option.

     Sec. 2.22 “Options” means all Non-Qualified Stock Options and Incentive Stock Options granted
at any time under the Plan.

     Sec. 2.23 “Original Option” shall have the meaning given to such term in Section 6.04.

     Sec. 2.24 “Participant” means a person designated to receive an Award under the Plan in
accordance with Section 5.01.

     Sec. 2.25 “Performance Awards” means Awards granted in accordance with Article VIII.

     Sec. 2.26 “Plan” shall have the meaning given to such term in Section 1.01.

     Sec. 2.27 “Reload Option” shall have the meaning given to such term in Section 6.04.

 

 

     Sec. 2.28 “Restricted Shares” means Common Stock subject to restrictions imposed in connection
with Awards granted under Article VII.

     Sec. 2.29 “Retirement” means early or normal retirement under a pension plan or arrangement of
the Company or one of its Subsidiaries in which the Participant participates.

     Sec. 2.30 “Subsidiary” means a subsidiary of the Company within the meaning of Section 424(f)
of the Code.

     Sec. 2.31 “Termination of Employment” means the voluntary or involuntary termination of a
Participant’s employment with the Company or a Subsidiary for any reason, including death,
disability, retirement or as the result of the divestiture of the Participant’s employer or any
similar transaction in which the Participant’s employer ceases to be the Company or one of its
Subsidiaries. A leave of absence approved in accordance with Company policy shall not be deemed a
Termination of Employment. Whether entering military or other government service shall constitute
Termination of Employment, or whether a Termination of Employment shall occur as a result of
disability, shall be determined in each case by the Committee in its sole discretion. In the case
of a director who is not an employee of the Company or a Subsidiary, Termination of Employment
shall mean voluntary or involuntary cessation of Board service for any reason. Notwithstanding the
foregoing, Termination of Employment for purposes of determining whether an Award that is “deferred
compensation” and subject to Section 409A of the Code is payable from the Plan means a “separation
from service” as determined under Section 409A of the Code and its corresponding regulations and
related guidance.

ARTICLE III

ADMINISTRATION

     Sec. 3.01 Committee. The Plan shall be administered by a committee of the Board (the
“Committee”) comprised of at least two directors of the Company. The Committee shall have
exclusive and final authority in each determination, interpretation or other action affecting the
Plan and its Participants. The Committee shall have the sole discretionary authority to interpret
the Plan, to establish and modify administrative rules for the Plan, to impose such conditions and
restrictions on Awards as it determines appropriate, and to take such steps in connection with the
Plan and Awards granted hereunder as it may deem necessary or advisable. The Committee may,
subject to compliance with applicable legal requirements, delegate to any designated executive
officer of the Company the power to determine the employees (other than himself or herself or any
employee to whom such designated executive officer reports) to receive Awards under the Plan and
the types and amounts of such Awards, subject in each case to the terms and conditions of the Plan.
In addition, the Board may exercise any of the authority conferred upon the Committee hereunder.
In the event of any such delegation of authority or exercise of authority by the Board, references
in the Plan to the Committee shall be deemed to refer to the delegate of the Committee or the
Board, as the case may be.

 

 

ARTICLE IV

SHARES

     Sec. 4.01 Number of Shares Issuable. The total number of shares initially authorized
to be issued under the Plan shall be 10,000,000 shares of Common Stock. The number of shares
available for issuance under the Plan shall be subject to adjustment in accordance with Section
9.08. The shares to be offered under the Plan shall be authorized and unissued shares of Common
Stock, or issued shares of Common Stock which will have been reacquired by the Company.

     Sec. 4.02 Shares Subject to Terminated Awards. Shares of Common Stock covered by any
unexercised portions of terminated Options (including canceled Options) granted under Article VI,
shares of Common Stock forfeited as provided in Section 7.02(a) and shares of Common Stock subject
to any Award that are otherwise surrendered by a Participant or terminated may be subject to new
Awards under the Plan. If any shares of Common Stock are withheld from those otherwise issuable or
are tendered to the Company, by attestation or otherwise, in connection with the exercise of an
Option, only the net number of shares of Common Stock issued as a result of such exercise shall be
deemed delivered for purposes of determining the maximum number of shares available for delivery
under the Plan.

ARTICLE V

PARTICIPATION

     Sec. 5.01 Eligible Participants. Participants in the Plan shall be such key employees
and directors of the Company and its Subsidiaries as the Committee, in its sole discretion, may
designate from time to time. The Committee’s designation of a Participant in any year shall not
require the Committee to designate such person to receive Awards in any other year. The
designation of a Participant to receive an Award under one portion of the Plan does not require the
Committee to include such Participant under other portions of the Plan. The Committee shall
consider such factors as it deems pertinent in selecting Participants and in determining the types
and amounts of their respective Awards. Subject to adjustment in accordance with Section 9.08,
during any calendar year no Participant shall be granted Awards in respect of more than 600,000
shares of Common Stock (whether through grants of Options or other Awards of Common Stock or rights
with respect thereto); provided, however, that if it is the Committee’s intention as of the Date of
Grant of an Award, as evidenced by the applicable Award Agreement, that such Award shall be earned
by the Participant over a period of more than one calendar year, then for purposes of applying the
foregoing per calendar year share limitation, the shares of Common Stock subject to such Award
shall be allocated to the first calendar year in which such shares may be earned (determined
without regard to possible vesting as a result of a Change in Control or pursuant to any provision
of this Plan authorizing the Committee to accelerate the vesting of an Award).

ARTICLE VI

STOCK OPTIONS

     Sec. 6.01 Option Awards.

          (a) Grant of Options. The Committee may grant, to such Participants as the Committee may
select, Options entitling the Participants to purchase shares of Common Stock from the Company in
such numbers, at such prices, and on such terms and subject to such conditions, not inconsistent
with the terms of the Plan, as may be established by the Committee. The terms of any Option
granted under the Plan shall be set forth in an Award Agreement.

 

 

          (b) Exercise Price of Options. The exercise price of each share of Common Stock which may be
purchased upon exercise of any Option granted under the Plan (the “Exercise Price”) shall be
determined by the Committee; provided, however, that, except in the case of any substituted Options
described in Section 9.08(c), the Exercise Price shall in all cases be equal to or greater than the
Fair Market Value on the Date of Grant.

          (c) Designation of Options. Except as otherwise expressly provided in the Plan, the Committee
may designate, at the time of the grant of an Option, such Option as an Incentive Stock Option or a
Non-Qualified Stock Option; provided, however, that an Option may be designated as an Incentive
Stock Option only if the applicable Participant is an employee of the Company or a Subsidiary on
the Date of Grant.

          (d) Special Incentive Stock Option Rules. No Participant may be granted Incentive Stock
Options under the Plan (or any other plans of the Company and its Subsidiaries) that would result
in Incentive Stock Options to purchase shares of Common Stock with an aggregate Fair Market Value
(measured on the Date of Grant) of more than $100,000 first becoming exercisable by such
Participant in any one calendar year. Notwithstanding any other provision of the Plan to the
contrary, no Incentive Stock Option shall be granted to any person who, at the time the Option is
granted, owns stock (including stock owned by application of the constructive ownership rules in
Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary, unless at the time the Incentive Stock Option is
granted the Exercise Price is at least 110% of the Fair Market Value on the Date of Grant of the
Common Stock subject to the Incentive Stock Option and the Incentive Stock Option by its terms is
not exercisable for more than five (5) years from the Date of Grant.

          (e) Rights as a Shareholder. A Participant or a transferee of an Option pursuant to Section
9.04 shall have no rights as a shareholder with respect to the shares of Common Stock covered by an
Option until that Participant or transferee shall have become the holder of record of any such
shares, and, except to the extent that Dividend Equivalent Accounts are granted in accordance with
Section 6.03, no adjustment shall be made with respect to any such shares of Common Stock for
dividends in cash or other property or distributions of other rights on the Common Stock for which
the record date is prior to the date on which that Participant or transferee shall have become the
holder of record of any shares covered by such Option; provided, however, that Participants are
entitled to the adjustments set forth in section 9.08.

     Sec. 6.02 Terms of Stock Options. 

          (a) Conditions on Exercise. An Award Agreement with respect to Options may contain such
waiting periods, exercise dates and restrictions on exercise (including, but not limited to,
periodic installments) as may be determined by the Committee at the time of grant.

          (b) Duration of Options. Options shall terminate after the first to occur of the following
events:

	 	(i)	 	Expiration of the Option as provided in the
related Award Agreement; or
	 
	 	(ii)	 	Termination of the Award as provided in Section
6.02(e) following the Participant’s Termination of Employment; or

 

 

	 	(iii)	 	Ten years from the Date of Grant.

          (c) Acceleration of Exercise Time. The Committee, in its sole discretion, shall have the
right (but shall not in any case be obligated), exercisable at any time after the Date of Grant, to
permit the exercise of any Option prior to the time such Option would otherwise become exercisable
under the terms of the related Award Agreement.

          (d) Extension of Exercise Time. In addition to the extensions permitted under Section 6.02(e)
in the event of Termination of Employment, the Committee, in its sole discretion, shall have the
right (but shall not in any case be obligated), exercisable on or at any time after the Date of
Grant, to permit the exercise of any Option after its expiration date described in Section 6.02(e),
subject, however, to the limitations described in Sections 6.02(b)(i) and (iii).

          (e) Exercise of Options Upon Termination of Employment.

	 	(i)	 	Termination. In the event of Termination of
Employment of a Participant other than by reason of death, disability
or Retirement, all Options which were not exercisable as of the date of
the Termination of Employment shall expire as of such date and the
right of the Participant to exercise any Options which were exercisable
as of the date of Termination of Employment shall expire ninety (90)
days after the date of such Termination of Employment, unless the
exercise period is extended by the Committee in accordance with Section
6.02(d). In no event, however, may the Option be exercised later than
the date of expiration of the Option determined pursuant to Section
6.02(b)(i) or (iii).
	 
	 	(ii)	 	Disability or Retirement. In the event of a
Participant’s Termination of Employment on or after January 1, 2004 by
reason of disability or Retirement, the right of the Participant to
exercise all Options which were not exercisable as of the date of the
Termination of Employment shall expire as of such date and all Options
which he or she was entitled to exercise upon Termination of Employment
shall expire three years after the date of such Termination of
Employment, unless the exercise period is extended by the Committee in
accordance with Section 6.02(d). In the event of a Participant’s
Termination of Employment prior to January 1, 2004 by reason of
disability or Retirement, the right of the Participant to exercise all
Options which were not exercisable as of the date of the Termination of
Employment shall expire as of such date and all Options which he or she
was entitled to exercise upon Termination of Employment shall expire
one year after the date of such Termination of Employment, unless the
exercise period is extended by the Committee in accordance with Section
6.02(d). In no event, however, may any Option be exercised later than
the date of expiration of the Option determined pursuant to Section
6.02(b)(i) or (iii).
	 
	 	(iii)	 	Death. In the event of the death of a
Participant while employed by the Company or a Subsidiary and prior to
the expiration of any Option

 

 

	 	 	 	as provided pursuant to Section 6.02(e)(i) or Section 6.02(d) above, all
Options which were not exercisable as of the date of death shall expire
as of such date and to the extent the right to exercise the Option was
accrued as of the date of death, the right of the Participant’s
Beneficiary to exercise the Option shall expire one year after the date
of the Participant’s death. In the event of the death of a Participant
which occurs within any additional period of time from the date of the
Participant’s Termination of Employment, for Terminations of Employment
which occur prior to January 1, 2004, and prior to the expiration of any
Option as provided pursuant to Section 6.02(e)(i) or (ii) or Section
6.02(d) above, all Options which were not exercisable as of the date of
death shall expire as of such date and to the extent the right to
exercise the Option was accrued as of the date of such Termination of
Employment and had not expired during such additional period, the right
of the Participant’s Beneficiary to exercise the Option shall expire one
year after the date of the Participant’s death (but in no event more
than one year from the date of the Participant’s Termination of
Employment by reason of disability or Retirement). In the event of the
death of a Participant which occurs within any additional period of time
from the date of the Participant’s Termination of Employment, for
Terminations of Employment which occur on or after January 1, 2004, and
prior to the expiration of any Option as provided pursuant to Section
6.02(e)(i) or (ii) or Section 6.02(d) above, all Options which were not
exercisable as of the date of death shall expire as of such date and to
the extent the right to exercise the Option was accrued as of the date
of such Termination of Employment and had not expired during such
additional period, the right of the Participant’s Beneficiary to
exercise the Option shall expire upon the later of one year after the
date of the Participant’s death or, if applicable, three years from the
date of the Participant’s Termination of Employment by reason of
disability or Retirement. The exercise period may be extended by the
Committee in accordance with Section 6.02(d). In no event, however, may
any Option be exercised later than the date of expiration of the Option
determined pursuant to Section 6.02(b)(i) or (iii).

     Sec. 6.03 Dividend Equivalent Accounts. The Committee shall have the discretion, upon
the grant of an Option or thereafter, to establish a dividend equivalent account (“Dividend
Equivalent Account”) with respect to the Option, and applicable Option Award Agreement or an
amendment thereto shall confirm such establishment. If a Dividend Equivalent Account is
established, the following terms apply:

          (a) Crediting of Dividends. Subject to such conditions, limitations and restrictions as shall
be established by the Committee, from the Date of Grant of the Option or, if later, the date of
establishment of the Dividend Equivalent Account, to the earlier of (i) the date of payment of such
Dividend Equivalent Account or (ii) the date of cancellation, termination or expiration of the
Option, the Dividend Equivalent Account shall be credited as of the record date of each cash
dividend on the Common Stock with an amount equal to the cash dividends which would be paid

 

 

with respect to the Common Stock then covered by the Option if the Option had been exercised
and such Common Stock had been held of record on such record date. The Participant or other holder
of such Option shall be entitled to receive from the Company in cash the balance credited to the
Dividend Equivalent Account at such time, or from time to time, and subject to such terms and
conditions as shall be determined by the Committee and set forth in the applicable Option Award
Agreement or an amendment thereto.

          (b) Other Dividend Equivalent Terms. To the extent that an Option is cancelled, terminates or
expires without being exercised, the Dividend Equivalent Account with respect to the Option shall
be eliminated, and no payment with respect to the Dividend Equivalent Account shall be made by the
Company. Dividend Equivalent Accounts shall be established and maintained only on the books and
records of the Plan and/or the Company and no assets or funds of the Company or of the Plan shall
be set aside, placed in trust, removed from the claims of the Company’s general creditors, or
otherwise made available until such amounts are actually payable as provided hereunder.

     Sec. 6.04 Reload Options. The Committee shall have the authority to specify, at or
after the time of grant of an Option, that, subject to the availability of shares of Common Stock
under the Plan at the time of such grant, a Participant shall be granted a reload option (“Reload
Option”) in the event(i) such Participant exercises all or a part of an Option (an “Original
Option”) by surrendering previously acquired shares of Common Stock in full or partial payment of
the Exercise Price under such Original Option, and/or (ii) a Participant’s withholding tax
obligation with respect to the exercise of an Original Option is satisfied in whole or in part by
the delivery of previously acquired shares of Common Stock by the Participant to the Company or the
withholding of shares of Common Stock from the shares otherwise issuable to the Participant upon
the exercise of the Original Option. Each such Reload Option shall cover a number of shares of
Common Stock equal to the number of shares of Common Stock surrendered in payment of the Exercise
Price under such Original Option and/or surrendered or withheld to pay withholding taxes with
respect to such Original Option. Each such Reload Option shall have an Exercise Price per share of
Common Stock equal to the Fair Market Value of the Common Stock on the date of exercise of the
Original Option in respect of which the Reload Option was granted and shall expire on the stated
expiration date of the Original Option. A Reload Option shall be exercisable at any time and from
time to time from and after the Date of Grant of such Reload Option, subject to such restrictions
on exercisability as may be imposed in the discretion of the Committee. Any Reload Option may
provide for the grant, when exercised, of subsequent Reload Options to the extent and upon such
terms and conditions, consistent with this Section 6.04, as the Committee in its sole discretion
shall specify at or after the time of grant of such Reload Option. A Reload Option shall contain
such other terms and conditions, which may include a restriction on the transferability of the
shares of Common Stock received upon exercise of the Reload Option, as the Committee in its sole
discretion shall deem desirable and which may be set forth in rules or guidelines adopted by the
Committee or in the Award Agreements evidencing the Reload Options.

     Sec. 6.05 Option Exercise Procedures. Each Option granted under the Plan shall be
exercised by written notice to the Company which must be received by the officer or employee of the
Company designated in the Award Agreement at or before the close of business on the expiration date
of the Award. The Exercise Price of shares purchased upon exercise of an Option granted under the
Plan shall be paid in full in cash by the Participant pursuant to the Award

 

 

Agreement; provided, however, that in lieu of such cash a Participant may (if authorized by
the Committee) pay the Exercise Price in whole or in part by delivering (actually or by
attestation) to the Company shares of the Common Stock having a Fair Market Value on the date of
exercise of the Option equal to the Exercise Price for the shares being purchased; except that (i)
any portion of the Exercise Price representing a fraction of a share shall in any event be paid in
cash and (ii) no shares of the Common Stock which have been held for less than six months may be
delivered in payment of the Exercise Price of an Option. Payment may also be made, in the
discretion of the Committee, by the delivery (including, without limitation, by fax) to the Company
or its designated agent of an executed irrevocable option exercise form together with irrevocable
instructions to a broker-dealer to sell or margin a sufficient portion of the shares and deliver
the sale or margin loan proceeds directly to the Company to pay for the Exercise Price. The date
of exercise of an Option shall be determined under procedures established by the Committee, and as
of the date of exercise the person exercising the Option shall, as between the Company and such
person, be considered for all purposes to be the owner of the shares of Common Stock with respect
to which the Option has been exercised. Any part of the Exercise Price paid in cash upon the
exercise of any Option shall be added to the general funds of the Company and may be used for any
proper corporate purpose. Unless the Committee shall otherwise determine, any shares of Common
Stock transferred to the Company as payment of all or part of the Exercise Price upon the exercise
of any Option shall be held as unauthorized but unissued shares.

     Sec. 6.06 Change in Control. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all Options outstanding on the
date of such Change in Control shall become immediately and fully exercisable. The provisions of
this Section 6.06 shall not be applicable to any Options granted to a Participant if any Change in
Control results from such Participant’s beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of Common Stock or Company Voting Securities.

ARTICLE VII

RESTRICTED SHARES

     Sec. 7.01 Restricted Share Awards. The Committee may grant to any Participant an
Award of such number of shares of Common Stock on such terms, conditions and restrictions, whether
based on performance standards, periods of service, retention by the Participant of ownership of
specified shares of Common Stock or other criteria, as the Committee shall establish. With respect
to performance-based Awards of Restricted Shares intended to qualify for deductibility under the
“performance-based” compensation exception contained in Section 162(m) of the Code, performance
targets will include specified levels of one or more of the following (in absolute terms or
relative to one or more other companies or indices): operating income, return on investment, return
on shareholders’ equity, stock price appreciation, earnings before interest, taxes, depreciation
and amortization, earnings per share and/or growth in earnings per share. The terms of any
Restricted Share Award granted under this Plan shall be set forth in an Award Agreement which shall
contain provisions determined by the Committee and not inconsistent with this Plan.

          (a) Issuance of Restricted Shares. As soon as practicable after the Date of Grant of a
Restricted Share Award by the Committee, the Company shall cause to be transferred on the books of
the Company or its agent, shares of Common Stock, registered on behalf of the Participant,
evidencing the Restricted Shares covered by the Award, subject to forfeiture to the

 

 

Company as of the Date of Grant if an Award Agreement with respect to the Restricted Shares
covered by the Award is not duly executed by the Participant and timely returned to the Company.
All shares of Common Stock covered by Awards under this Article VII shall be subject to the
restrictions, terms and conditions contained in the Plan and the applicable Award Agreements
entered into by the appropriate Participants. Until the lapse or release of all restrictions
applicable to an Award of Restricted Shares the share certificates representing such Restricted
Shares may be held in custody by the Company, its designee, or, if the certificates bear a
restrictive legend, by the Participant. Upon the lapse or release of all restrictions with respect
to an Award as described in Section 7.01(d), one or more share certificates, registered in the name
of the Participant, for an appropriate number of shares as provided in Section 7.01(d), free of any
restrictions set forth in the Plan and the related Award Agreement shall be delivered to the
Participant.

          (b) Shareholder Rights. Beginning on the Date of Grant of a Restricted Share Award and
subject to execution of the related Award Agreement as provided in Section 7.01(a), and except as
otherwise provided in such Award Agreement, the Participant shall become a shareholder of the
Company with respect to all shares subject to the Award Agreement and shall have all of the rights
of a shareholder, including, but not limited to, the right to vote such shares and the right to
receive dividends; provided, however, that any shares of Common Stock distributed as a dividend or
otherwise with respect to any Restricted Shares as to which the restrictions have not yet lapsed,
shall be subject to the same restrictions as such Restricted Shares and held or restricted as
provided in Section 7.01(a).

          (c) Restriction on Transferability. None of the Restricted Shares may be assigned or
transferred (other than by will or the laws of descent and distribution or to an inter vivos trust
with respect to which the Participant is treated as the owner under Sections 671 through 677 of the
Code), pledged or sold prior to the lapse of the restrictions applicable thereto.

          (d) Delivery of Shares Upon Vesting. Upon expiration or earlier termination of the forfeiture
period without a forfeiture and the satisfaction of or release from any other conditions prescribed
by the Committee, or at such earlier time as provided under the provisions of Section 7.03, the
restrictions applicable to the Restricted Shares shall lapse. As promptly as administratively
feasible thereafter, subject to the requirements of Section 9.05, the Company shall deliver to the
Participant or, in case of the Participant’s death, to the Participant’s Beneficiary, one or more
share certificates for the appropriate number of shares of Common Stock, free of all such
restrictions, except for any restrictions that may be imposed by law.

     Sec. 7.02 Terms of Restricted Shares.

          (a) Forfeiture of Restricted Shares. Subject to Sections 7.02(b) and 7.03, Restricted Shares
shall be forfeited and returned to the Company and all rights of the Participant with respect to
such Restricted Shares shall terminate unless the Participant continues in the service of the
Company or a Subsidiary until the expiration of the forfeiture period for such Restricted Shares
and satisfies any and all other conditions set forth in the Award Agreement. The Committee shall
determine the forfeiture period (which may, but need not, lapse in installments) and any other
terms and conditions applicable with respect to any Restricted Share Award.

 

 

          (b) Waiver of Forfeiture Period. Notwithstanding anything contained in this Article VII to
the contrary, the Committee may, in its sole discretion, waive the forfeiture period and any other
conditions set forth in any Award Agreement under appropriate circumstances (including the death,
disability or Retirement of the Participant or a material change in circumstances arising after the
date of an Award) and subject to such terms and conditions (including forfeiture of a proportionate
number of the Restricted Shares) as the Committee shall deem appropriate.

     Sec. 7.03 Change in Control. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all restrictions applicable to the
Restricted Share Award shall terminate fully and the Participant shall immediately have the right
to the delivery of share certificates for such shares in accordance with Section 7.01(d).

ARTICLE VIII

PERFORMANCE AWARDS

     Sec. 8.01 Performance Awards.

          (a) Award Periods and Determinations of Awards. The Committee may grant Performance Awards to
Participants. A Performance Award shall consist of the right to receive a payment (measured by the
Fair Market Value of a specified number of shares of Common Stock, increases in such Fair Market
Value during the Award Period and/or a fixed cash amount) contingent upon the extent to which
certain predetermined performance targets have been met during an Award Period. Performance Awards
may be made in conjunction with, or in addition to, Restricted Share Awards made under Article VII.
The Award Period shall be two or more fiscal or calendar years or other annual periods as
determined by the Committee. The Committee, in its discretion and under such terms as it deems
appropriate, may permit newly eligible Participants, such as those who are promoted or newly hired,
to receive Performance Awards after an Award Period has commenced.

          (b) Performance Targets. The performance targets may include such goals related to the
performance of the Company and/or the performance of a Participant as may be established by the
Committee in its discretion. In the case of Performance Awards intended to qualify for
deductibility under the “performance-based” compensation exception contained in Section 162(m) of
the Code, the targets will include specified levels of one or more of the following (in absolute
terms or relative to one or more other companies or indices): operating income, return on
investment, return on shareholders’ equity, stock price appreciation, earnings before interest,
taxes, depreciation and amortization, earnings per share and/or growth in earnings per share. The
performance targets established by the Committee may vary for different Award Periods and need not
be the same for each Participant receiving a Performance Award in an Award Period. Except to the
extent inconsistent with the performance-based compensation exception under Section 162(m) of the
Code, in the case of Performance Awards granted to Participants to whom such section is applicable,
the Committee, in its discretion, but only under extraordinary circumstances as determined by the
Committee, may change any prior determination of performance targets for any Award Period at any
time prior to the final determination of the value of a related Performance Award when events or
transactions occur to cause such performance targets to be an inappropriate measure of achievement.

 

 

          (c) Earning Performance Awards. The Committee, on or as soon as practicable after the Date of
Grant, shall prescribe a formula to determine the percentage of the applicable Performance Award to
be earned based upon the degree of attainment of performance targets.

          (d) Payment of Earned Performance Awards. Payments of earned Performance Awards shall be made
in cash, stock options or shares of Common Stock or a combination thereof, in the discretion of the
Committee. The Committee, in its sole discretion, may provide such terms and conditions with
respect to the payment of earned Performance Awards as it may deem desirable.

     Sec. 8.02 Terms of Performance Awards.

          (a) Termination of Employment. Unless otherwise provided below or in Section 8.03, in the
case of a Participant’s Termination of Employment prior to the end of an Award Period, the
Participant will not have earned any Performance Awards for that Award Period.

          (b) Retirement. If a Participant’s Termination of Employment is because of Retirement prior
to the end of an Award Period, the Participant will not be paid any Performance Award, unless the
Committee, in its sole and exclusive discretion, determines that an Award should be paid. In such
a case, the Participant shall be entitled to receive a pro-rata portion of his or her Award as
determined under subsection (d).

          (c) Death or Disability. If a Participant’s Termination of Employment is due to death or to
disability (as determined in the sole and exclusive discretion of the Committee) prior to the end
of an Award Period, the Participant or the Participant’s personal representative shall be entitled
to receive a pro-rata share of his or her Award as determined under subsection (d).

          (d) Pro-Rata Payment. The amount of any payment to be made to a Participant whose employment
is terminated by Retirement, death or disability (under the circumstances described in subsections
(b) and (c)) will be the amount determined by multiplying (i) the amount of the Performance Award
that would have been earned through the end of the Award Period had such employment not been
terminated by (ii) a fraction, the numerator of which is the number of whole months such
Participant was employed during the Award Period, and the Denominator of which is the total number
of months of the Award Period. Any such payment made to a Participant whose employment is
terminated prior to the end of an Award Period shall be made at the end of such Award Period,
unless otherwise determined by the Committee in its sole discretion. Any partial payment
previously made or credited to a deferred account for the benefit of a Participant in accordance
with Section 8.01(d) of the Plan shall be subtracted from the amount otherwise determined as
payable as provided in this Section 8.02(d).

          (e) Other Events. Notwithstanding anything to the contrary in this Article VIII, the
Committee may, in its sole and exclusive discretion, determine to pay all or any portion of a
Performance Award to a Participant who has terminated employment prior to the end of an Award
Period under certain circumstances (including the death, disability or Retirement of the
Participant or a material change in circumstances arising after the Date of Grant), subject to such
terms and conditions as the Committee shall deem appropriate.

 

 

     Sec. 8.03 Change in Control. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all Performance Awards for all
Award Periods shall immediately become fully payable to all Participants and shall be paid to
Participants within thirty (30) days after such Change in Control.

ARTICLE IX

TERMS APPLICABLE TO ALL AWARDS GRANTED UNDER THE PLAN

     Sec. 9.01 Plan Provisions Control Award Terms. The terms of the Plan shall govern all
Awards granted under the Plan, and in no event shall the Committee have the power to grant any
Award under the Plan the terms of which are contrary to any of the provisions of the Plan. In the
event any provision of any Award granted under the Plan shall conflict with any term in the Plan as
constituted on the Date of Grant of such Award, the term in the Plan as constituted on the Date of
Grant of such Award shall control. All Awards granted under the terms of the Plan and any related
Award Agreement shall be structured to comply with requirements of Section 409A of the Code and its
corresponding regulations and related guidance. Without limiting the foregoing, if and to the
extent that any Award is deemed to be deferred compensation for purposes of Section 409A of the
Code, the payment of such Award shall only be made upon the occurrence of an event that is a
permissible payment event for purposes of Section 409A of the Code.

     Sec. 9.02 Award Agreement. No person shall have any rights under any Award granted
under the Plan unless and until the Company and the Participant to whom such Award shall have been
granted shall have executed and delivered an Award Agreement or the Participant shall have received
and acknowledged notice of the Award authorized by the Committee expressly granting the Award to
such person and containing provisions setting forth the terms of the Award.

     Sec. 9.03 Modification of Award After Grant. No Award granted under the Plan to a
Participant may be modified (unless such modification does not materially decrease the value of
that Award) after its Date of Grant except by express written agreement between the Company and
such Participant, provided that any such change (a) may not be inconsistent with the terms of the
Plan, and (b) shall be approved by the Committee.

     Sec. 9.04 Limitation on Transfer. Except as provided in Section 7.01(c) in the case
of Restricted Shares, a Participant’s rights and interest under the Plan may not be assigned or
transferred other than by will or the laws of descent and distribution and, during the lifetime of
a Participant, only the Participant personally (or the Participant’s personal representative) may
exercise rights under the Plan. The Participant’s Beneficiary may exercise the Participant’s
rights to the extent they are exercisable under the Plan following the death of the Participant.
Notwithstanding the foregoing, the Committee may grant Non-Qualified Stock Options that are
transferable, without payment of consideration, to immediate family members of the Participant, to
trusts or partnerships for such family members, or to such other parties as the Committee may
approve (was evidenced by the applicable Award Agreement or an amendment thereto), and the
Committee may also amend outstanding Non-Qualified Stock Options to provide for such
transferability.

     Sec. 9.05 Withholding Taxes. The Company shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant in lieu of

 

 

withholding) the amount of any withholding or other tax required by law to be withheld or paid
by the Company with respect to any amount payable and/or shares issuable under such Participant’s
Award or with respect to any income recognized upon a disqualifying disposition of shares received
pursuant to the exercise of an Incentive Stock Option, and the Company may defer payment of cash or
issuance of shares upon exercise or vesting of an Award unless indemnified to its satisfaction
against any liability for any such tax. The amount of such withholding or tax payment shall be
determined by the Committee and shall be payable by the Participant at such time as the Committee
determines. With the approval of the Committee, the Participant may elect to meet his or her
withholding requirement (i) by having withheld from such Award at the appropriate time that number
of shares of Common Stock, rounded up to the next whole share, the Fair Market Value of which is
equal to the amount of withholding taxes due, (ii) by direct payment to the Company in cash of the
minimum amount of any taxes required to be withheld with respect to such Award or (iii) by a
combination of withholding such shares and paying cash.

     Sec. 9.06 Surrender of Awards. Any Award granted under the Plan may be surrendered to
the Company for cancellation on such terms as the Committee and the Participant approve.

     Sec. 9.07 Cancellation and Rescission of Awards.

          (a) Detrimental Activities. Unless the Award Agreement specifies otherwise, the Committee may
cancel, rescind, suspend, withhold or otherwise limit or restrict any unexpired, unpaid, or
deferred Awards at any time if the Participant is not in compliance with all applicable provisions
of the Award Agreement and the Plan, or if the Participant engages in any “Detrimental Activity.”
For purposes of this Section 9.07, “Detrimental Activity” shall include: (i) the rendering of
services for any organization or engaging directly or indirectly in any business which is or
becomes competitive with the Company, or which organization or business, or the rendering of
services to such organization or business, is or becomes otherwise prejudicial to or in conflict
with the interests of the Company; (ii) the disclosure to anyone outside the Company, or the use in
other than the Company’s business, without prior written authorization from the Company, of any
confidential information or material relating to the business of the Company, acquired by the
Participant either during or after employment with the Company; (iii) any attempt directly or
indirectly to induce any employee of the Company to be employed or perform services elsewhere or
any attempt directly or indirectly to solicit the trade or business of any current or prospective
customer, supplier or partner of the Company; or (iv) any other conduct or act determined to be
injurious, detrimental or prejudicial to any interest of the Company.

          (b) Certification. Upon exercise, payment or delivery pursuant to an Award, the Participant
shall certify in a manner acceptable to the Company that he or she is in compliance with the terms
and conditions of the Plan. In the event a Participant fails to comply with the provisions of
paragraphs (a)(i)-(vii) of this Section 9.07 prior to, or during the six months after, any
exercise, payment or delivery pursuant to an Award, such exercise, payment or delivery may be
rescinded within two years thereafter. In the event of any such rescission, the Participant shall
pay to the Company the amount of any gain realized or payment received as a result of the rescinded
exercise, payment or delivery, in such manner and on such terms and conditions as may be required,
and the Company shall be entitled to set-off against the amount of any such gain any amount owed to
the Participant by the Company.

 

 

     Sec. 9.08 Adjustments to Reflect Capital Changes.

          (a) Recapitalization. The number and kind of shares subject to outstanding Awards, the
Exercise Price or Exercise Price for such shares, the number and kind of shares available for
Awards subsequently granted under the Plan and the maximum number of shares in respect of which
Awards can be made to any Participant in any calendar year shall be appropriately adjusted to
reflect any stock dividend, stock split, combination or exchange of shares, merger, consolidation
or other change in capitalization with a similar substantive effect upon the Plan or the Awards
granted under the Plan. The Committee shall have the power and sole discretion to determine the
amount of the adjustment to be made in each case.

          (b) Certain Mergers. After any Merger in which the Company is not the surviving corporation
or pursuant to which a majority of the shares which are of the same class as the shares that are
subject to outstanding Options are exchanged for, or converted into, or otherwise become shares of
another corporation, the surviving, continuing, successor or purchasing corporation, as the case
may be (the “Acquiring Corporation”), will either assume the Company’s rights and obligations under
outstanding Award Agreements or substitute awards in respect of the Acquiring Corporation’s stock
for outstanding Awards, provided, however, that if the Acquiring Corporation does not assume or
substitute for such outstanding Awards, the Board shall provide prior to the Merger that any
unexercisable and/or unvested portion of the outstanding Awards shall be immediately exercisable
and vested as of a date prior to such Merger, as the Board so determines. The exercise and/or
vesting of any Award that was permissible solely by reason of this Section 9.08 shall be
conditioned upon the consummation of the Merger. Any Awards which are neither assumed by the
Acquiring Corporation nor exercised as of the date of the Merger shall terminate effective as of
the effective date of the Merger. Comparable rights shall accrue to each Participant in the event
of successive Mergers of the character described above.

          (c) Options to Purchase Shares or Stock of Acquired Companies. After any Merger in which the
Company or a Subsidiary shall be a surviving corporation, the Committee may grant Options or other
Awards under the provisions of the Plan, pursuant to Section 424 of the Code or as is otherwise
permitted under the Code, in full or partial replacement of or substitution for old stock options
granted under a plan of another party to the merger whose shares of stock subject to the old
options may no longer be issued following the Merger. The manner of application of the foregoing
provisions to such options and any appropriate adjustments in the terms of such stock options shall
be determined by the Committee in its sole discretion. Any such adjustments may provide for the
elimination of any fractional shares which might otherwise become subject to any Options. The
foregoing shall not be deemed to preclude the Company from assuming or substituting for stock
options of acquired companies other than pursuant to this Plan.

          (d) Adjustments. Any adjustments to outstanding Awards shall be consistent with Sections 409A
and 424 of the Code, to the extent applicable.

     Sec. 9.09 Legal Compliance. Shares of Common Stock shall not be issued hereunder
unless the issuance and delivery of such shares shall comply with applicable laws and shall be
further subject to the approval of counsel for the Company with respect to such compliance.

 

 

     Sec. 9.10 No Right to Employment. No Participant or other person shall have any claim
of right to be granted an Award under the Plan. Neither the Plan nor any action taken hereunder
shall be construed as giving any Participant any right to be retained in the service of the Company
or any of its Subsidiaries.

     Sec. 9.11 Awards Not Includable for Benefit Purposes. Payments received by a
Participant pursuant to the provisions of the Plan shall not be included in the determination of
benefits under any pension, group insurance or other benefit plan applicable to the Participant
which is maintained by the Company or any of its Subsidiaries, except as may be provided under the
terms of such plans or determined by the Board.

     Sec. 9.12 Governing Law. All determinations made and actions taken pursuant to the
Plan shall be governed by the laws of the State of Maryland, other than the conflict of laws
provisions thereof, and construed in accordance therewith.

     Sec. 9.13 No Strict Construction. No rule of strict construction shall be implied
against the Company, the Committee or any other person in the interpretation of any of the terms of
the Plan, any Award granted under the Plan or any rule or procedure established by the Committee.

     Sec. 9.14 Captions. The captions (i.e., all Section headings) used in the Plan are
for convenience only, do not constitute a part of the Plan, and shall not be deemed to limit,
characterize or affect in any way any provisions of the Plan, and all provisions of the Plan shall
be construed as if no captions had been used in the Plan.

     Sec. 9.15 Severability. Whenever possible, each provision in the Plan and every Award
at any time granted under the Plan shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of the Plan or any Award at any time granted under the
Plan shall be held to be prohibited by or invalid under applicable law, then (a) such provision
shall be deemed amended to accomplish the objectives of the provision as originally written to the
fullest extent permitted by law and (b) all other provisions of the Plan, such Award and every
other Award at any time granted under the Plan shall remain in full force and effect.

     Sec. 9.16 Amendment and Termination.

          (a) Amendment. The Board shall have complete power and authority to amend the Plan at any
time; provided, that no termination or amendment of the Plan may, without the consent of the
Participant to whom any Award shall theretofore have been granted under the Plan, materially
adversely affect the right of such individual under such Award; and provided further, that no such
alteration or amendment of the Plan shall, without approval by the shareholders of the Company (a)
increase the total number of shares of Common Stock which may be issued or delivered under the
Plan, (b) increase the total number of shares which may be covered by Awards to any one
Participant, or (c) change the minimum Option Exercise Price.

          (b) Termination. The Board shall have the right and the power to terminate the Plan at any
time. No Award shall be granted under the Plan after the termination of the Plan, but the
termination of the Plan shall not have any other effect and any Award outstanding at the time of
the termination of the Plan may be exercised after termination of the Plan at any time prior to the
expiration date of such Award to the same extent such Award would have been exercisable had the

 

 

Plan not been terminated. A termination of the Plan will comply with the requirements of
Section 409A of the Code and its corresponding regulations and related guidance.

     Sec. 9.17 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
Section 409A of the Code and its corresponding regulations and related guidance, and shall be
administered in accordance with Section 409A of the Code to the extent it applies to the Plan. To
the extent that any provision of the Plan or an Award Agreement would cause a conflict with the
requirements of Section 409A of the Code or would cause the administration of the Plan to fail to
satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void
to the extent permitted by applicable law.Ex-10.6

 

Exhibit 10.6

Allegheny Energy, Inc.

Stock Unit Plan

Amended and Restated as of January 1, 2008

     1. Purposes and Effective Date.

The purpose of the Stock Unit Plan (the “Plan”) is to aid Allegheny Energy, Inc. (the “Company”) in
attracting and retaining employees who are essential for the growth and profitability of the
Company through the issuance of stock units (“Units”). This Plan became effective upon its
approval by the Board of Directors of the Company (the “Board”). Upon such approval, and the
consent of each of the Executive Officers specified on Exhibit A attached hereto, the 3,414,048
Units, previously granted to such Executive Officers (the “Outstanding Units”) shall become subject
to the terms and conditions of the Plan. This Plan is hereby amended and restated effective as of
January 1, 2008 to update the Plan to comply with 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 Board, which shall
have the sole authority to construe and interpret the terms and provisions of the Plan. The Board
shall have the authority to determine the individuals to whom Units shall be granted (the
“Participants”), the conditions under which such Units may become vested and/or forfeited, and such
other terms and conditions as the Board may establish with respect to such Units. Each Participant
shall enter into an agreement with the Company evidencing the terms and conditions of the Company’s
award to such Participant of Units pursuant to this Plan (a “Stock Unit Agreement”). Each Stock
Unit Agreement shall provide that, upon vesting, each Participant shall be entitled to receive one
share of the Company’s common stock, $1.25 par value (“Common Stock”), with respect to each Unit
and shall be subject to the terms and conditions of this Plan. Each such share of Common Stock
shall be registered under the Securities Exchange Act of 1933, as amended. In addition, a Stock
Unit Agreement may grant a Participant rights with respect to dividends paid by the Company during
the period such Unit was held, as well as a right to defer payments with respect to vested Units.
The Board shall maintain records and disburse payments hereunder. The Board may adopt, amend and
rescind such rules and regulations as it deems necessary, desirable or appropriate in
administrating the Plan and the Board may act as a meeting, in a written action without a meeting
or by having actions otherwise taken by a member of the Board pursuant to a delegation of duties
from the Board. The determination of the Board as to any calculations or disputed questions
arising under the Plan, including questions of construction and interpretation, shall be final,
binding and conclusive upon all persons.

     3. Units.

     3.1 Subject to adjustment as provided in Section 3.2, the number of Units authorized under
the Plan is 4,500,000, inclusive of the Outstanding Units. If any award pursuant to this Plan is
forfeited or otherwise terminated or is canceled prior to the vesting of any Units, then the Units
covered by such award, to the extent of such forfeiture, termination or cancellation, shall again
be available under the Plan.

 

 

     3.2 In the event that the Board determines that any distribution, recapitalization, split,
reverse split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase,
or exchange of shares of Common Stock or other securities of the Company, issuance of warrants or
other rights to purchase shares of common stock or other securities of the Company, or other
similar transaction or event affects the Units such that an adjustment is appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Board shall, in such manner as it may deem equitable, adjust (i) the
number of Units with respect to which awards may be granted and (ii) the number of Units subject to
outstanding awards; provided, that the number of Units subject to any award shall always be a whole
number.

     3.3 No Units may be awarded under this Plan unless such award is made pursuant to a
transaction which qualifies for one of the exemptions from stockholder approval set forth in rule
303A.08 of the rules of the New York Stock Exchange and the Company has complied with all
applicable stock exchange rules and obtained any required regulatory approvals.

     3.4 Participants shall not be deemed for any purpose to be, or have any rights as,
stockholders of the Company with respect to any Units awarded under this Plan except if, as and
when the Company issues payment in respect of any vested units in the form of shares of Common
Stock and then only from the date of the certificates therefor.

     3.5. Deferral and Payment Provisions to Comply with Code Section 409A.

     (a) Subject to the terms of a Stock Unit Agreement, a Participant may be permitted to
make an election to defer payment of vested Units (and any additional Units awarded to a
Participant on account of any dividend declared on the original award of Units);
provided, however, that such election must be made within 30 days of the
date that the Units are awarded to the Participant, the election is made at least 12 months
in advance of the earliest date as of which the Participant would become vested in any
portion of the Units, and the deferral election otherwise complies with the deferral
election requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”) and its corresponding regulations and related guidance.

     (b) Units shall be paid to a Participant pursuant to the terms of the Stock Unit
Agreement; provided, however, that to the extent Code Section 409A applies
to the payment of the Units, the Units shall be paid in accordance with the distribution
requirements of Code Section 409A and its corresponding regulations and related guidance.
To the extent a payment of Units is subject to Code Section 409A and is made on account of a
separation from service (as that term is defined for purposes of Code Section 409A), no
payment shall be made earlier than six months following the date of the Participant’s
separation from service, except that if the Participant dies during such six-month period,
the Units shall be paid to the Participant’s beneficiary within 90 days after the date of
the Participant’s death and without regard to the six-month delay period.

 

 

     (c) Except to the extent that a deferral election is made with respect to a grant of
Units, the Plan and any Stock Unit Agreements entered into between the Company and a
Participant pursuant to the Plan are intended to comply with the short-term deferral rule
set forth in the regulations under Code Section 409A, in order to avoid application of Code
Section 409A to the Plan and the Stock Unit Agreement. If and to the extent a deferral
election is made with respect to the grant of Units or a grant of Units is otherwise deemed
to be deferred compensation subject to the requirements of Code Section 409A, this Plan and
any Stock Unit Agreement shall be administered so that such payments are made in accordance
with the requirements of Code Section 409A. Further, if any Plan or Stock Unit Agreement
provision would cause a conflict with the applicable requirements of Code Section 409A, or
would cause the administration of the Plan or the Stock Unit Agreement to fail to satisfy
the applicable requirements of Code Section 409A, such provision shall be deemed null and
void.

     4. Amendment and Discontinuance.

     4.1 The Board may amend this Plan or condition or modify Units issued under the Plan (a) to
conform this Plan to securities or other laws, or rules, regulations or regulatory interpretations
thereof, applicable to this Plan, or (b) to comply with stock exchange rules or requirements.

     4.2 The Board may suspend or discontinue this Plan in whole or in part, but any such
suspension or discontinuance shall not affect the rights of any Participants with respect to Units
granted under this Plan prior thereto. A suspension or discontinuance of the Plan shall comply
with the requirements of Code Section 409A and its corresponding regulations and related guidance.

     4.3 Notwithstanding anything to the contrary in this Section 4, 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.

     5. Compliance With Applicable Legal Requirements.

No payments in respect of any vested Units shall be made unless the Company has complied with all
applicable legal requirements including without limitation, compliance with the provisions of the
Securities Act of 1933, as amended, the Public Utilities Holding Company Act of 1935, as amended,
the requirements of the exchanges on which the Company’s securities are listed, and any
requirements of other governmental or regulatory authorities.

     6. Term of the Plan.

The Plan shall be effective on the date of its approval by the Board and shall continue until the
date terminated by the Board or until Units are no longer available for grants of awards under the
Plan, whichever occurs first. However, unless otherwise expressly provided in the Plan or in an
applicable Stock Unit Agreement granted prior to such termination, any award granted prior to such
termination shall extend beyond such termination date.

     7. Source of Payments.

 

 

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 awards granted on any
required payment date.

     8. Withholding.

The Company may withhold from any amount payable pursuant to this Plan such Federal, state and
local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

     9. No Right to Employment.

Nothing in this Plan shall confer upon a Participant the right to remain employed by the Company.

     10. 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.

 

 

Exhibit A

	 	 	 	 	 
	Executive Officers	 	Outstanding Units
	Paul J. Evanson
	 	 	2,049,439	 
	 
	Jeffrey D. Serkes
	 	 	714,795	 
	 
	David E. Hertzog
	 	 	389,888	 
	 
	Joseph H. Richardson
	 	 	109,926	 
	 
	Philip L. Goulding
	 	 	150,000	 
	 
	TOTAL
	 	 	3,414,048

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00131-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00131-of-00352.parquet"}]]