EXHIBIT 10-P
August 7, 1997
Xxxx X. Xxxxxx
00 Xxxxxxx Xxxx
Xxxxxxx Xxxxxxxx, Xxx Xxxxxx 00000
Dear Xxxx:
The purpose of this letter is to amend and restate the letter agreement
dated February 6, 1997 between you and GPU Service, Inc. ("GPUS"). That letter
(the "Prior Agreement") amended and restated a letter agreement dated November
1, 1996 between you and GPUS that in turn amended and restated a letter
agreement dated November 22, 1995 between you and GPUS which set forth the terms
and conditions of the supplemental pension that GPUS 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Prior Agreement shall be superseded and replaced in its entirety by the terms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 GPUS a supplemental
pension (your "Supplemental Pension"), which shall be in addition to the pension
payable to you under GPUS's Employee Pension Plan and GPUS's Supplemental and
Excess Benefits Plan (together, "GPUS's Retirement Plans").
(2) The Supplemental Pension payable to you hereunder, when expressed
as a single life annuity, shall be a monthly amount of income equal to the
amount, if any, by which either (a) $12,653.50 for each month beginning after
your Retirement Date and before the month beginning after your 62nd birthday, or
(b) $12,153.50 for each month beginning after the later of your Retirement Date
or your 62nd birthday, exceeds (c) the aggregate pension amount payable to you
for such month under GPUS's Retirement Plans, determined for this purpose
without taking into account (i) any Additional Pension amount payable to you
under GPUS's Employee Pension Plan and (ii) the 20% increase in the pension
amounts payable to you under GPUS's Retirement Plans
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August 7, 1997
Page 2
during the first 12 months following your retirement.
For purposes of the foregoing, if any part of the aggregate pension
amount payable to you under GPUS's Retirement Plans is not payable in the form
of a single life annuity commencing on the first day of the month following your
Retirement Date, the pension amount referred to in (c) above shall be determined
as if such part were so payable.
3. 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
GPUS's Employee Pension Plan, with your spouse as beneficiary.
4. If you should die before you start to receive your Supplemental
Pension, your surviving spouse, if any, shall be entitled to receive from GPUS
an annuity (the "Survivor's Annuity") payable to her for her lifetime in a
monthly 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.
5. Payment of your Supplemental Pension shall commence on the first day
of the month following your Retirement Date and shall end with the payment due
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 GPUS's Employee
Pension Plan, 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
payment due for the month in which your surviving spouse's death occurs.
6. With each monthly payment 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 amount of such monthly
payment; provided, however, that if clause (a) of Section 2 hereof applies in
calculating the Supplemental Pension amount payable for such month, the
additional amount payable to you for such month under
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August 7, 1997
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this Section 6 shall be equal to 20% of the Supplemental Pension amount that
would be payable to you for such month if clause (b) instead of clause (a) of
Section 2 were applicable in calculating the amount of your Supplemental Pension
payment for such month.
7. Notwithstanding any other provision of this Agreement to the
contrary, you may elect to have the Supplemental Pension that becomes payable to
you or your surviving spouse under Section 1 or 4 hereof paid in the form of a
single lump sum payment. The amount of such lump sum payment shall be determined
in the same manner as the amount of the lump sum payment payable pursuant to an
election by you under clause (a) of the first paragraph of Section 8 would be
determined, as provided in the third paragraph of Section 8.
Any election under this Section 7 shall be effective only if it is made
at least twenty-four (24) months (twelve (12) months, if the election is made on
or before August 31, 1997) prior to the termination of your employment with GPUS
and all other subsidiaries of GPU, Inc. (GPU, Inc. and its subsidiaries are
referred to herein as the "GPU Companies"). Any election so made may be revoked,
and a new election may be made under this Section 7, at any time; provided,
however, that any such revocation or new election shall be effective only if it
is made within the period specified in the preceding sentence. Any election, or
revocation of an election, that may be made by you under this Section 7 shall be
made in writing, on a form that is furnished to you for such purpose by the
Administrative Committee of GPUS's Employee Pension Plan (the "Administrative
Committee") and that is signed by you and delivered to the Administrative
Committee.
8. Notwithstanding any other provision of this Agreement or GPUS's
Retirement Plans to the contrary, or any other form of distribution or payment
provided for or optional form of distribution or payment otherwise elected under
this Agreement or GPUS's Retirement Plans, you shall be permitted to make either
one, or both, of the following special distribution elections: (a) 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
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August 7, 1997
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of your termination of employment with the GPU Companies for any reason within
the two (2) year period following the occurrence of a Change in Control, or (b)
if a Change in Control occurs after the termination of your employment with the
GPU Companies but before all payments required to be made hereunder with respect
to your Supplemental Pension have been made, to have the Supplemental Pension
payments that otherwise would be made hereunder after the date of such Change in
Control paid in the form of a single lump sum payment.
An election under clause (a) of the preceding paragraph shall be
effective only if it is made either at least twenty-four (24) months prior to
such termination of your employment, or 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. An election under clause (b)
of the preceding paragraph shall be effective only if it is made at least one
year prior to the Change in Control, and prior to the termination of your
employment. Any special election made under clause (a) or (b) of the preceding
paragraph may be revoked, and a new special election may be made thereunder, 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 this
paragraph. Any special election, or revocation of a special election, that may
be made hereunder shall be made in the same manner as provided in the last
sentence of the second paragraph of Section 7.
The lump sum payment to be made to you pursuant to your election under
clause (a) of the second preceding paragraph shall be in an amount that is
"Actuarially Equivalent" (as defined below and determined as of the first day of
the month following the date of your termination of employment) 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 GPUS's
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 to
your surviving spouse pursuant to your election under clause (a) of the second
preceding paragraph shall be in an amount that is Actuarially
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August 7, 1997
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Equivalent (as defined below and determined as of the first day of the month
following the date of your death) to the Survivor's Annuity that otherwise would
be payable to your surviving spouse pursuant to Section 4 hereof. The lump sum
payment to be made to you or your surviving spouse pursuant to your election
under clause (a) of the second preceding paragraph shall be made by no later
than thirty (30) days following the date of your termination of employment.
The lump sum payment to be made pursuant to your election under clause
(b) of the third preceding paragraph shall be in an amount that is Actuarially
Equivalent (as defined below and determined as of the first day of the month
coincident with or next following the date on which the Change in Control
occurs) to the payments that otherwise would be made hereunder with respect to
your Supplemental Pension after the date of such Change in Control. Such lump
sum payment shall be made by no later than thirty (30) days following the date
on which such Change in Control occurs.
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. In addition to the Supplemental Pension described above, you will
also receive (i) an extension of coverage in your and your family's health care
benefits under the Supplemental and Excess Medical Plan to the third anniversary
of the date of your retirement, or your attainment of age 62, whichever is
later, and (ii) an amended Split-Dollar Agreement with respect to your Senior
Executive Life Insurance policy to provide for eligibility to receive full
benefits under your policy at age 55 with 10 years of service.
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August 7, 1997
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10. You and your surviving spouse shall have the status of a mere
unsecured creditor of GPUS with respect to your, and her, right to receive any
payment under this Agreement. This Agreement shall constitute a mere promise by
GPUS to make payments 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.
11. 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 GPUS 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 GPUS on the one hand, and you, on the other.
GPU SERVICE , INC.
By: __________________________________
Xxxx X. Xxxxx, Chairman, President
& Chief Executive Officer
Xx. Xxxx X. Xxxxxx
August 7, 1997
Page 7
The foregoing correctly reflects my
understanding and is agreed to by me
as of the date of this letter
----------------------
Xxxx X. Xxxxxx
APPENDIX A
"Change in Control" shall mean:
(1) An acquisition (other than directly from GPU, Inc.
("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 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.
A-2
(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
with the GPU Companies (A) as a result of your death, (B) by any GPU Company,
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, 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;
A-3
(2) a reduction in the rate of 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 the GPU Companies 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 any GPU Company
in which you participated, within seven (7) days of the date such compensation
is due;
(5) the failure by the GPU Companies (A) to 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 such failure by the GPU Companies, unless a substitute or
replacement plan has been implemented which provides substantially identical
compensation or benefits to you or (B) to continue to 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 such failure by the GPU Companies;
(6) the failure of GPUS to obtain a satisfactory agreement
from any successors or assigns to assume and agree to honor and perform GPUS's
obligations under this Agreement; or
Any event or condition described in clauses (1) through (5) above which
occurs (A) within twelve (12) months prior to a Change in Control or (B) prior
to a Change in Control but which you reasonably demonstrate (x) 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 (y) 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
