EXHIBIT 10-N
February 6, 1997
Xx. Xxxxx X. Xxxx
0 Xxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Dear Xxx:
The purpose of this letter is to amend and restate the letter agreement
dated November 1, 1996 between you and GPU, Inc. ("GPU") (the "Prior
Agreement"). That letter amended and restated a letter agreement dated November
22, 1995 between you and GPU, Inc. which set forth the terms and conditions of
the supplemental pension that GPU has agreed to provide to you upon your
retirement. Upon your agreement to this amendment and restatement as provided on
the last page of this letter agreement (the "Agreement"), the Prior Agreement
shall be superseded and replaced in its entirety by the terms and conditions set
forth below.
1. Upon your retirement on any date subsequent to the date of this
letter (the date as of which you so retire is referred to herein as your
"Retirement Date") you shall be entitled to receive from GPU a supplemental
pension (your "Supplemental Pension"), which shall be in addition to the pension
amounts payable to you under the GPU Service Corporation Employee Pension Plan
(the "EPP"), the GPU Service Corporation Supplemental and Excess Benefits Plan
(the "SEBP"), and the amended and restated letter agreement (the "JCP&L Letter
Agreement") between you and Jersey Central Power & Light Company dated August 1,
1996 (together, the "Retirement Plans").
2. The Supplemental Pension payable to you hereunder, when expressed as
a single life annuity, shall be an annual amount of income equal to (a) 65% of
your Final Average Compensation (as defined in Section 3 hereof), reduced by (b)
the aggregate annual pension amount payable to you under the Retirement Plans,
determined for this purpose without taking into account the 20% increase in the
pension amounts payable to you under the EPP and the SEBP during the first 12
months following your Retirement Date. If any pension amount included in the
aggregate pension amount referred to in clause (b) of the preceding sentence is
not payable in the form of a single life annuity commencing on the first day of
the month following your Retirement Date, it shall be converted into a pension
amount that would be of equivalent actuarial value to such pension amount if it
were so payable.
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February 6, 1997
Page 2
3. For purposes of Section 2 hereof, your "Final Average Compensation"
shall mean the quotient resulting from dividing by three the sum of (a) the
aggregate amount of base salary payable to you during the 36-month period ending
on your Retirement Date and (b) the aggregate amount of the awards made to you
under the Incentive Compensation Plan for Elected Officers of GPU Service, Inc.
(the "ICP") that are attributable to such 36-month period.
The amounts referred to in clauses (a) and (b) of the
preceding paragraph shall be determined without taking into account any deferral
election made by you under the GPU, Inc. and Subsidiary System Companies
Employee Savings Plan for Non-bargaining Employees or under the GPU System
Companies Deferred Compensation Plan, and without taking into account any salary
reduction election made by you under the GPU Service, Inc. Flexible Benefit
Plan.
For purposes of clause (b) of the first paragraph of this
section 3, the portion of an award made to you under the ICP for any year that
is attributable to each of the calendar months within such year shall be
determined by dividing the total amount of such award by twelve (12) or, in the
case of the year in which you retire, the number of months in the portion of
such year ending on your Retirement Date.
4. The Supplemental Pension shall be paid to you in the form of a
single life annuity unless you are married on your Retirement Date, in which
case it shall be paid in the form described as Option 2 in Section 10.1 of the
EPP, with your spouse as beneficiary.
5. If you should die before you start to receive your Supplemental
Pension, your surviving spouse, if any, shall be entitled to receive from GPU an
annuity (the "Survivor's Annuity") payable to her for her lifetime in an annual
amount equal to 50% of the Supplemental Pension that would have been payable to
you hereunder if you had not died, if you had retired on the last day of the
month in which your death occurs, and if you had not been married on such last
day.
6. Although expressed as annual amounts, the Supplemental Pension and
the Survivor's Annuity shall be paid in equal monthly installments. Payment of
your Supplemental Pension shall commence on the first day of the month following
your Retirement Date and shall end with the installment payable for the month in
which your death occurs or, if the Supplemental Pension is payable in the form
described as Option 2 in Section 10.1 of the
Xx. Xxxxx X. Xxxx
February 6, 1997
Page 2
EPP, the month in which your death or your spouse's death occurs, whichever is
the later. Payment of the Survivor's Annuity shall commence on the first day of
the month following the date of your death and shall end with the installment
payable for the month in which your surviving spouse's death occurs.
7. With each monthly installment of the Supplemental Pension payable to
you during the first 12 months following your Retirement Date, you shall be
entitled to receive an additional amount equal to 20% of the sum of (a) the
amount of such monthly installment, and (b) the supplemental pension amount
payable to you for such month under the JCP&L Letter Agreement. Such additional
amount shall not be taken into account in determining the amount of the
Survivor's Annuity payable pursuant to Section 5 hereof.
8. Notwithstanding any other provision of this Agreement or the
Retirement Plans to the contrary, or any other form of distribution provided for
or optional form of distribution otherwise elected under this Agreement or the
Retirement Plans, you shall be permitted to make a special distribution election
to have the Supplemental Pension payable to you hereunder, or the Survivors
Annuity payable hereunder to your surviving spouse, distributed in the form of a
single lump sum payment in the event of your termination of employment within
the GPU System (a) by any GPU System Company (1) within twelve (12) months prior
to a Change in Control (as defined in Appendix A hereto) or (2) prior to a
Change in Control but which you reasonably demonstrate (A) was at the request of
a third party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who effectuates a Change in Control
or (B) otherwise arose in connection with, or in anticipation of, a Change in
Control which has been threatened or proposed and which actually occurs, or (b)
for any reason within the two (2) year period following the occurrence of a
Change in Control; provided, however, that such election shall be effective only
if it is made either (y) at least twenty-four (24) months prior to such
termination of your employment, or (z) if such termination of your employment is
the result of an "Involuntary Termination" (as defined in Appendix A hereto) at
least one year prior to such Change in Control. Any special election made
hereunder may be revoked, and a new special election may be made, at any time;
provided, however, that any such revocation or new election shall be effective
only if it is made within the election period specified in clause (y) or (z) of
the preceding sentence.
Xx. Xxxxx X. Xxxx
February 6, 1997
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Any special election, or revocation of a special election, that may be made
hereunder shall be made in writing, on a form furnished to you for such purpose
by the Administrative Committee of the EPP. The lump sum payment to be made to
you hereunder shall be in an amount that is "Actuarially Equivalent" (as defined
below) to the Supplemental Pension that otherwise would be payable to you
hereunder if payment of your Supplemental Pension and the pension payable to you
under the Retirement Plans (i) were to commence on your Retirement Date, and
(ii) were to be made in the form of a single life annuity. The lump sum payment
to be made hereunder to your surviving spouse shall be in an amount that is
Actuarially Equivalent (as defined below) to the Survivor's Annuity that
otherwise would be payable to such spouse pursuant to Section 4 hereof.
The lump sum payment to be made hereunder to you or your
surviving spouse shall be made by no later than 30 days following the date of
your termination of employment or, if your employment terminates prior to the
Change in Control, thirty (30) days after the date on which the Change in
Control occurs; provided, however, that if any payment with respect to your
Supplemental Pension would have been made on any date prior to the Change in
Control pursuant to Sections 6 and 7 of this Agreement if you had not made a
special election under this Section 8, such payment shall be made on such prior
date notwithstanding your special election hereunder and, in such case, the
payment otherwise required to be made pursuant to your special election
hereunder shall be reduced by the actuarial value of all such prior payments.
For purposes of this Section 8, "Actuarially Equivalent" shall
mean, with respect to any distribution or payment, an actuarially equivalent
amount, calculated by using the annual interest rate on 30-year Treasury
securities for the second month preceding the calendar year in which such
distribution is made or commences, and the mortality table prescribed for
purposes of section 417(e)(3)(A)(ii)(I) of the Internal Revenue Code of 1986, as
amended (the "Code"). Such annual interest rate and mortality table shall be as
specified or prescribed by the Commissioner of the Internal Revenue Service for
purposes of Section 417(e)(3)(A)(ii) of the Code in revenue rulings, notices or
other guidance.
9. You and your surviving spouse shall have the status of a general
unsecured creditor of GPU with respect to your, and her, right to receive any
payment under this Agreement. This Agreement shall constitute a mere promise by
GPU to make payments
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February 6, 1997
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in the future of the benefits provided for herein. It is intended that the
arrangements reflected in this Agreement be treated as unfunded for tax
purposes, as well as for purposes of Title I of ERISA.
10. Your rights and your surviving spouse's rights to payments under
this Agreement shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by
your creditors or the creditors of your spouse or any other beneficiary.
If the foregoing correctly reflects your understanding of the agreement
between you and GPU relating to your Supplemental Pension, will you please so
indicate on the enclosed duplicate copy of this letter which will then
constitute a binding agreement between GPU and you.
GPU, INC.
By: _______________________________________
Xxx X. Xxxxxx
Senior Vice President and General Counsel
Xx. Xxxxx X. Xxxx
February 6, 1997
Page 5
The foregoing correctly reflects my understanding and is agreed to by me as of
the date of this letter.
-----------------------------
Xxxxx X. Xxxx
APPENDIX A
"Change in Control" shall mean:
(1) An acquisition (other than directly from GPU) of any
common stock of GPU ("Common Stock") or other voting securities of GPU entitled
to vote generally for the election of directors (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of the then outstanding shares of common stock or the combined
voting power of GPU's then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has occurred, Voting Securities which
are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (A) an employee benefit plan (or a
trust forming a part thereof) maintained by (i) GPU or (ii) any corporation or
other Person of which a majority of its voting power or its voting equity
securities or equity interest is owned, directly or indirectly, by GPU (for
purposes of this definition, a "Subsidiary"), (B) GPU or its Subsidiaries, or
(C) any Person in connection with a "Non-Control Transaction" (as hereinafter
defined);
(2) The individuals who, as of August 1, 1996, are members of
the Board of Directors of GPU (the "Incumbent Board"), cease for any reason to
constitute at least seventy percent (70%) of the members of the Board of
Directors of GPU (the "Board"); provided, however, that if the election, or
nomination for election by GPU's shareholders, of any new director was approved
by a vote of at least two-thirds of the Incumbent Board, such new director
shall, for purposes of this Agreement, be considered as a member of the
Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(3) The consummation of:
(A) A merger, consolidation or reorganization with or
into GPU or in which securities of GPU are issued, unless such
merger, consolidation or reorganization is a "Non-Control
Transaction." A "Non-Control Transaction" shall mean a merger,
consolidation or reorganization with or into GPU or in which
securities of GPU are issued where:
(i) the shareholders of GPU, immediately
before such merger, consolidation or reorganization,
own directly or indirectly immediately following such
merger, consolidation or reorganization, at least
sixty percent (60%) of the combined voting power of
the outstanding voting securities of the corporation
resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership
of the Voting Securities immediately before such
merger, consolidation or reorganization,
(ii) the individuals who were members of the
Incumbent Board immediately prior to the execution of
the agreement providing for such merger,
consolidation or reorganization constitute at least
seventy percent (70%) of the members of the board of
directors of the Surviving Corporation, or a
corporation, directly or indirectly, beneficially
owning a majority of the Voting Securities of the
Surviving Corporation, and
(iii) no Person other than (w) GPU, (x) any
Subsidiary, (y) any employee benefit plan (or any
trust forming a part thereof) that, immediately prior
to such merger, consolidation or reorganization, was
maintained by GPU or any Subsidiary, or (z) any
Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial
Ownership of twenty percent (20%) or more of the then
outstanding Voting Securities or common stock of GPU,
has
A-2
Beneficial Ownership of twenty percent (20%) or more
of the combined voting power of the Surviving
Corporation's then outstanding voting securities or
its common stock.
(B) A complete liquidation or dissolution of GPU; or
(C) The sale or other disposition of all or
substantially all of the assets of GPU to any Person (other
than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding Common Stock
or Voting Securities as a result of the acquisition of Common Stock or Voting
Securities by GPU which, by reducing the number of shares of Common Stock or
Voting Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of shares of Common Stock or Voting Securities by GPU, and after
such share acquisition by GPU, the Subject Person becomes the Beneficial Owner
of any additional shares of Common Stock or Voting Securities which increases
the percentage of the then outstanding shares of Common Stock or Voting
Securities Beneficially Owned by the Subject Person, then a Change in Control
shall occur.
"Involuntary Termination" shall mean the termination of your employment
within the GPU System (A) as a result of your death, (B) by GPU or GPU Service,
Inc., for any reason, or (C) by you, for "Good Reason."
"Good Reason" shall mean the occurrence after a Change in Control of
any of the following events or conditions:
(1) a change in your status, title, position or
responsibilities (including reporting responsibilities) which, in your
reasonable judgment, represents an adverse change from your status, title,
position or responsibilities as in effect immediately prior thereto; the
assignment to you of any duties or responsibilities which, in your reasonable
judgment, are inconsistent with your status, title, position or
responsibilities; or any removal of you from or failure to reappoint or reelect
you to any of such offices or positions,
A-3
except in connection with the termination of your employment for disability,
cause, as a result of your death or by you other than for Good Reason;
(2) a reduction in your annual base salary;
(3) any change in location of your place of employment to a
location other than Parsippany, New Jersey without your consent,
(4) the failure by GPU to pay to you any portion of your
current compensation or to pay to you any portion of an installment of deferred
compensation under any deferred compensation program of GPU in which you
participated, within seven (7) days of the date such compensation is due;
(5) the failure by GPU to (A) continue in effect (without
reduction in benefit level, and/or reward opportunities) any material
compensation or employee benefit plan in which you were participating
immediately prior to the Change in Control, unless a substitute or replacement
plan has been implemented which provides substantially identical compensation or
benefits to you or (B) provide you with compensation and benefits, in the
aggregate, at least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each other compensation or employee
benefit plan, program and practice in which you were participating immediately
prior to the Change in Control;
(6) the failure of GPU to obtain a satisfactory agreement from
any successors or assigns to assume and agree to honor and perform GPU's
obligations under this Agreement; or
Any event or condition described in clauses (1) through (6) which
occurs (1) within twelve (12) months prior to a Change in Control or (2) prior
to a Change in Control but which you reasonably demonstrate (A) was at the
request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who effectuates a Change
in Control or (B) otherwise arose in connection with, or in anticipation of a
Change in Control which has been threatened or proposed, shall constitute Good
Reason for purposes of this Agreement notwithstanding that it occurred prior to
a Change in Control.
A-4
