Exhibit 10-O
Xx. Xxx X. Xxxxxx
November 1, 1996
Page 1
November 1, 1996
Xx. Xxx X. Xxxxxx
000 Xxxx Xxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xxx:
The purpose of this letter is to amend and restate the
letter agreement dated September 18, 1995 between you, GPU, Inc.
(GPU) and GPU Service, Inc. (GPUS). That letter (the "Prior
Agreement") amended and restated a letter agreement dated
September 8, 1994 between you, GPU and GPUS that in turn amended
and restated a letter agreement dated March 24, 1992 between you,
GPU and GPUS that in turn amended and restated a letter agreement
dated December 13, 1989 between you, GPU and GPUS that set forth
the terms of your employment, effective January 1, 1990, as
Senior Vice President and General Counsel of GPU and as Executive
Vice President and General Counsel of GPUS, as well as the
agreement between you, GPU and GPUS with respect to your pension
arrangements.
Upon your agreement to this amendment and restatement as
provided on the last page hereof, this letter agreement (the
"Agreement") shall supersede and replace, in its entirety, the
Prior Agreement.
Section 1. Election to Other GPU Offices and Source of Your
Compensation.
You will be a director of GPUS.
Your compensation and other benefits from the GPU System
will be paid to you by GPUS. You will not receive separate or
additional compensation for serving as a director or officer of
GPU or any GPU System company other than GPUS. Payment of your
compensation and the other benefits payable to you pursuant to
this Agreement shall be obligations of both GPU and GPUS. Your
other unfunded employee benefits payable by GPUS will be
guaranteed by GPU to the extent covered under the latter's
guarantee of unfunded benefits for all GPUS officers.
Section 2. Effective Date of Employment and Initial Base
Salary.
Your effective date of employment will be January 1, 1990.
Your Base Salary will be determined from time to time by the GPU
Board of Directors and initially will be $284,000.
Xx. Xxx X. Xxxxxx
November 1, 1996
Page 2
Section 3. Retirement Provisions.
(a) You will be a participant in the GPUS Employee Pension
Plan and the GPUS Supplemental and Excess Benefits Plan (the
"Retirement Plans") and, by reason of the services rendered by
you in accordance with this Agreement, you will accrue benefits,
commencing as of January 1, 1990, in accordance with the terms of
such Retirement Plans, as the Retirement Plans may be in effect
from time to time.
(b) Under the terms of the present Retirement Plans, your
Normal Retirement Date under those plans is the last day of the
month in which you reach your sixty-fifth birthday (December 12,
2003). It is anticipated that you will retire on your Normal
Retirement Date. If you do retire on or after that date, you
will receive an additional retirement pension from GPU System
sources, equal to the additional pension which would have been
paid under the Retirement Plans if, in addition to your actual
years of creditable service, you had an additional 20 years of
past creditable service. Payment of the additional retirement
pension will commence on the first day of the month following the
month in which you so retire.
(c) GPUS has in effect Short-Term and Long-Term Disability
Income Plans that provide coverage, up to your Normal Retirement
Date, for employees meeting the requirements of such Plans. If
you are receiving Disability Income under either such Plan at the
time you reach your Normal Retirement Date, you will thereafter
receive an additional retirement pension from GPU System sources
equal to the additional pension which would have been paid under
the Retirement Plans if, in addition to your actual years of
creditable service, you had an additional 20 years of past
creditable service.
(d) If your employment within the GPU System shall be
terminated (i) as a result of an "Involuntary Termination" (as
defined below) at any time within two (2) years following the
occurrence of a "Change in Control" (as defined in Appendix A
hereto), or (ii) by GPU or GPUS without "Cause" (as defined in
Appendix A hereto), then you will receive from GPU System sources
an additional retirement pension, equal to the additional pension
which would have been paid under the Retirement Plans if, in
addition to your actual years of creditable service, you had an
additional twenty (20) years of past creditable service. Payment
of the additional retirement pension will commence on the first
day of the month following the month in which your employment is
so terminated.
For purposes of clause (i) above, "Involuntary Termination"
shall mean (A) the termination of your employment within the GPU
System by GPU, or (B) a termination by you (x) for "Good Reason"
Xx. Xxx X. Xxxxxx
November 1, 1996
Page 3
(as defined in Appendix A hereto) or (y) as the result of any
other material adverse change in the conditions of your
employment within the GPU System. If the termination of your
employment by GPU is (1) within six (6) months prior to a Change
in Control or (2) prior to the date of a Change in Control but
you reasonably demonstrate that the termination (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 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, such termination shall be deemed to have
occurred after a Change in Control.
(e) If your employment within the GPU System shall
terminate for any reason, other than by death or retirement or
termination in accordance with paragraphs (b), (c) or (d) above,
you will receive from GPU System sources an additional retirement
pension equal to the additional pension which would have been
paid under the Retirement Plans if, in addition to your actual
years of creditable service, you had an additional number of
years of past creditable service determined in accordance with
the following table (employing straight-line interpolation for
fractional years of actual GPU employment):
Years of Actual Additional Number of Years
GPU Employment of Past Creditable Service
1 2.0
2 3.5
3 5.0
4 6.0
5 7.0
6 8.0
7 8.5
8 9.0
9 9.5
10 10.0
11 12.5
12 15.0
13 17.5
14 20.0
Payment of the additional retirement pension payable to you
under this paragraph (e) shall commence on the first day of the
month following the month in which your employment so terminates.
(f) For purposes of determining the amount of the
additional retirement pension payable to you under paragraphs
(b), (c), (d) or (e) above, it shall be assumed that the pension
Xx. Xxx X. Xxxxxx
November 1, 1996
Page 4
payable to you under the Retirement Plans is payable in the form
of a single life annuity, and that payment of such pension will
commence on the same date as payment of your additional
retirement pension hereunder will commence.
The additional retirement pension payable to you hereunder
shall be paid to you in the form of a single life annuity unless
you are married on the date as of which payment of such pension
is to commence, in which event it shall be paid in the form
described as Option 2 in Section 10.1 of the GPUS Employee
Pension Plan, with your spouse as your beneficiary.
(g) If you should die before you start to receive the
additional pension payable to you under paragraph (b), (c), (d)
or (e), your surviving spouse, if any, will receive, for the rest
of her life from GPU System sources, 100% of the pension which
would have been payable to you under the Retirement Plans and
100% of the additional retirement pension which would have been
payable to you in accordance with paragraph (e), had you
terminated employment on the date of your death. Such payments
to your surviving spouse shall commence on the first day of the
month following the month of your death.
To the extent your surviving spouse does not receive such
pension from the Retirement Plans, she will receive it from GPU
System sources.
(h) Retirement or pension benefits from prior employers to
which you are now, or may in the future be, entitled will not be
applied against the pension benefits payable to you pursuant to
this Section and you are free to elect to receive such other
pension benefits when, and in such manner as, you choose.
Section 4. Supplemental Pension.
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 System sources, in addition to the additional
retirement pension payable to you pursuant to Section 3 hereof, a
supplemental pension, which shall be payable upon the following
terms and conditions:
(a) 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 (i)
$10,825.75 for each month beginning after your Retirement Date
and before the month beginning after your 62nd birthday, or (ii)
$10,325.75 for each month beginning after the later of your
Retirement Date or your 62nd birthday, exceeds (iii) the
aggregate pension amount payable to you for such month under the
Xx. Xxx X. Xxxxxx
November 1, 1996
Page 5
Retirement Plans and Section 3 hereof, determined for this
purpose without taking into account (x) any Additional Pension
amount payable to you under the GPUS Employee Pension Plan, and
(y) the 20% increase in the pension amounts payable to you under
the Retirement Plans and Section 3 hereof 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
the Retirement Plans or Section 3 hereof 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 (iii) above shall be determined as if such part were so
payable.
(b) The supplemental pension shall be paid to you in the
same form, and payments shall commence at the same time, as
payment of the additional retirement pension provided for under
Section 3 hereof.
(c) If you should die before you start to receive your
supplemental pension, your surviving spouse, if any, shall be
entitled to receive from GPU System sources an annuity payable to
her for her lifetime in a monthly amount equal to 100% 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.
(d) 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 (i) of paragraph (a) above
applies in calculating the supplemental pension amount payable
for such month, the additional amount payable to you for such
month under this paragraph (d) shall be equal to 20% of the
supplemental pension amount that would be payable to you for such
month if clause (ii) instead of clause (i) of paragraph (a) were
applicable in calculating the amount of your supplemental pension
payment for such month.
Section 5. Special Distribution of Benefits.
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 additional retirement pension payable pursuant to
Section 3 hereof and the supplemental pension payable pursuant to
Section 4 hereof distributed in the form of a single lump sum
payment in the event of your termination of employment within the
Xx. Xxx X. Xxxxxx
November 1, 1996
Page 6
GPU System (a) by any GPU System company (1) within six (6)
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 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 due to your death or is the result of an
Involuntary Termination as defined in Section 3(d) hereof, 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. 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 purposes by the
Administrative Committee of the GPUS Employee Pension Plan. The
lump sum payment to be made to you hereunder shall be in an
amount that is "Actuarially Equivalent" (as defined below) to the
additional retirement pension and supplemental pension that
otherwise would be payable to you hereunder if payment of your
additional retirement pension and supplemental pension and the
pension payable to you under the Retirement Plans (i) were to
commence on your Normal Retirement Date or, if earlier, on the
earliest date as of which you could elect to have payment of your
pension under the Retirement Plans commence 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
pension and the annuity that otherwise would be payable to such
spouse pursuant to Section 3(g) and Section 4(c) 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.
For purposes of this Section 5, "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
Xx. Xxx X. Xxxxxx
November 1, 1996
Page 7
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.
Section 6. Other Benefits.
To the extent permitted by such plans without requiring
prior evidence of insurability or eligibility, you will
participate in all GPU benefit plans in which senior GPU
executives are eligible to participate, as such plans shall be in
effect from time to time. In the case of each such plan that
provides a benefit the amount of which depends, directly or
indirectly, on the number of years of a participant's service
within the GPU System, you shall receive the same benefit amount
that would be payable to you under such plan if you were treated
as having, in addition to your actual years of services, the
number of years of service determined under the table in Section
3(e). The number of additional years of service so determined
shall also be taken into account in determining your eligibility
to participate in any GPU benefit plan in which senior GPU
executives are eligible to participate that requires, as a
condition for eligibility, the completion of a specified number
of years of service within the GPU System.
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.
Section 7. Nature of Your Rights.
With respect to your right to receive an additional
retirement pension pursuant to Section 3 hereof and the
supplemental pension provided for under Section 4 hereof, you
shall have the status of a mere unsecured creditor of GPUS and
GPU; and this letter agreement shall constitute a mere promise by
GPUS and GPU to make payments in the future of such pensions in
accordance with the provisions of Sections 3, 4 and 5. It is the
intention of the parties hereto that the arrangements set forth
in Sections 3, 4 and 5 of this letter agreement regarding your
additional retirement pension and supplemental pension shall be
treated as unfunded for tax purposes and, if it should be
determined that Title I of ERISA is applicable to such
arrangements, for purposes of Title I of ERISA.
Xx. Xxx X. Xxxxxx
November 1, 1996
Page 8
Section 8. Nonassignability.
Your rights to receive payments with respect to the
additional retirement pension and supplemental pension provided
for under Sections 3 and 4 of this letter agreement shall not be
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or
garnishment by your creditors or creditors of your spouse or any
other beneficiary.
If the foregoing correctly reflects your understanding of
the agreement between you and GPU and GPUS, will you please so
indicate on the enclosed duplicate copy of this letter which will
then constitute a binding agreement between GPU and GPUS, on the
one hand, and you, on the other.
GPU, INC.
By: _____________________________
Xxxxx X. Xxxx, Chairman and
Chief Executive Officer
GPU SERVICE, INC.
By: ____________________________
Xxxxx X. Xxxx, Chairman and
Chief Executive Officer
The foregoing is agreed to by me as
of the date of this letter.
_________________________________
Xxx X. Xxxxxx
APPENDIX A
Cause. For purposes of this Agreement, a termination of
employment is for "Cause" if you have been convicted of a felony
or the termination is evidenced by a resolution adopted in good
faith by two-thirds of the GPU Board of Directors (the "Board")
that you:
(a) intentionally and continually failed substantially to
perform your reasonably assigned duties with GPU or GPUS (other
than a failure resulting from your incapacity due to physical or
mental illness or from your assignment of duties that would
constitute "Good Reason" as hereinafter defined) which failure
continued for a period of at least thirty (30) days after a
written notice of demand for substantial performance, signed by a
duly authorized officer of GPU, has been delivered to you
specifying the manner in which you have failed substantially to
perform, or
(b) intentionally engaged in conduct which is demonstrably
and materially injurious to GPU; provided, however, that no
termination of your employment shall be for Cause as set forth in
this clause (b) until (1) there shall have been delivered to you
a copy of a written notice, signed by a duly authorized officer
of GPU, setting forth that you were guilty of the conduct set
forth in this clause (b) and specifying the particulars thereof
in detail, and (2) you shall have been provided an opportunity to
be heard in person by the Board (with the assistance of your
counsel if you so desire).
No act, nor failure to act, on your part, shall be
considered "intentional" unless you have acted, or failed to act,
with a lack of good faith and with a lack of reasonable belief
that your action or failure to act was in the best interest of
GPU. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by you after a written notice of
termination is given by you shall constitute Cause for purposes
of this Agreement.
Change in Control. "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
1
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 (the "Incumbent Board"), cease for any
reason to constitute at least seventy percent (70%) of the
members of 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 involving GPU, unless
such merger, consolidation or
reorganization is a "Non-Control
Transaction." A "Non-Control
Transaction" shall mean a merger,
consolidation or reorganization of GPU
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
2
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.
(B) A complete liquidation or
dissolution of GPU; or
3
(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.
Good Reason. (a) For purposes of this Agreement, "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;
(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
4
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
(b) Any event or condition described in clauses (1) through
(6) which occurs (1) within six (6) 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 (a "Third Party") 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.
5
