Exhibit 10-I
INCENTIVE COMPENSATION PLAN FOR ELECTED OFFICERS OF
PENNSYLVANIA ELECTRIC COMPANY
(AS AMENDED AND RESTATED AUGUST 1, 1996)
1. Purpose.
The purpose of the Incentive Compensation Plan for
Elected Officers of Pennsylvania Electric Company (the "Plan") is
to attract and retain highly qualified employees, to obtain from
each the best possible performance, and to underscore the
importance to them of achieving particular business objectives
established for Pennsylvania Electric Company and its affiliates.
2. Definitions.
For the purposes of the Plan, the following terms shall
have the following meanings:
A. Awards. Incentive Compensation Awards made
pursuant to the Plan.
B. Board. The Board of Directors of GPU, Inc.
unless otherwise specified.
C. Change in Control. A "Change in Control"
shall mean the occurrence of:
(1) An acquisition (other than directly from
the Corporation) of any common stock of the
Corporation ("Common Stock") or other voting
securities of the Corporation entitled to vote
generally for the election of directors (the "Voting
Securities") by any "Person" (as the term person is
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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 the Corporation'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) the
Corporation 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 the Corporation
(for purposes of this definition, a "Subsidiary"),
(B) the Corporation 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
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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 the Corporation'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 Plan,
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 the Corporation, unless
such merger, consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control
Transaction" shall mean a merger, consolidation or
reorganization of the Corporation where:
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(i) the shareholders of the
Corporation, 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) the
Corporation, (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
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the Corporation 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 the Corporation, 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 the Corporation; or
(C) The sale or other disposition of
all or substantially all of the assets of the
Corporation 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 the Corporation
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
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(but for the operation of this sentence) as a result
of the acquisition of shares of Common Stock or
Voting Securities by the Corporation, and after such
share acquisition by the Corporation, 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.
D. Committee. The Personnel, Compensation and
Nominating Committee of the Board or any successor
thereto.
E. Company. Pennsylvania Electric Company.
F. Corporation. GPU, Inc.
G. Employee. An individual who was on the
active salaried payroll of the Company or a
subsidiary of the Company at any time during the
period for which an Award is made.
H. Executive Committee. The Executive Committee
of the Board of Directors of the Company.
I. Officer. An Officer of the Company who is
elected by the Company's Board of Directors and is
an Employee of the Company, but not including
Assistant Comptrollers, Assistant Secretaries and
Assistant Treasurers.
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J. Performance Period. The fiscal year
(currently the calendar year) for which Awards are
made.
3. Effective Date.
The effective date of the Plan is July 1, 1987.
4. Amounts Available for Awards.
A. The aggregate amount available for Awards for any
Performance Period shall be determined by the Board upon the
recommendation of the Committee.
B. No Awards shall be made for a Performance Period if
during such Performance Period no dividends were declared or paid
on shares of Common Stock.
5. Eligibility for Awards.
A. The Executive Committee shall determine the
Officers, if any, who are eligible for Awards for each
Performance Period, subject, in the case of the President and of
Officers who are also Officers of the Corporation, to the
concurrence of the Board.
B. The Executive Committee may include, among Officers
eligible for Awards for a Performance Period, Officers whose
employment terminated (whether by reason of retirement, death,
disability or other cause) during such Performance Period.
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6. Determination of Amounts of Awards.
A. The Executive Committee shall determine the amounts
of Awards subject, in the case of Officers who are also Officers
of the Corporation, to the concurrence of the Board, either at or
following the end of the Performance Period to which they relate.
The amount of the Awards to be made for any Performance Period
shall be so determined in accordance with the methods and
procedures set forth in the GPU System Officer Incentive
Compensation Plan Administrative Manual as in effect for such
Performance Period (the "Manual").
B. Notwithstanding the foregoing or any other provision
herein or in the Manual to the contrary, if a Change in Control
occurs, then in respect of the Performance Period in which the
Change in Control occurs (and in respect of the previous
Performance Period if the Change in Control occurs prior to the
time Awards for such Performance Period have been made), the
following provisions shall apply:
(i) each objective of the Company's for each such
Performance Period shall be deemed to have been 100% achieved;
(ii) the Company's Final Pool for each such
Performance Period shall be deemed to be 100% of the Company's
Target Pool for each such Performance Period (or if, as of the
date of the Change in Control, the Target Pool has not been
determined for the Performance Period, the Target Pool for the
immediately preceding Performance Period);
(iii) each Officer who, prior to the occurrence of
such Change in Control, was determined to be eligible for an
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Award for each such Performance Period ("Eligible Officer") shall
be entitled to receive an Award for each such Performance Period;
(iv) the amount of the Award to be made to each
Eligible Officer shall be determined by multiplying the Company's
Final Pool for each such Performance Period by a fraction the
numerator of which is the amount of the Eligible Officer's annual
base salary that was taken into account in determining the
Company's Target Pool for each such Performance Period, and the
denominator of which is the aggregate amount of the Annual Base
Salaries of all Eligible Officers so taken into account;
provided, however, that in the event an Eligible Officer is
terminated by the Company without "Cause" (as defined below)
during the Performance Period in which a Change in Control
occurs, the amount of the Award to be made to such Eligible
Officer in respect of that Performance Period shall be the amount
determined above multiplied by a fraction, the numerator of which
is the number of days that have elapsed since the end of the
immediately preceding Performance Period through the date of
termination and the denominator of which is 365.
A termination is for Cause if the Eligible Officer is convicted
of a felony or where the Eligible Officer (1) intentionally and
continually failed substantially to perform his or her reasonably
assigned duties with the Company (other than a failure resulting
from the Eligible Officer's incapacity due to
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physical or mental illness) 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, has
been delivered to the Eligible Officer specifying the manner in
which he or she has failed substantially to perform, or
(2) intentionally engaged in conduct which is demonstrably and
materially injurious to the Corporation or the Company. No act,
nor failure to act, on the Eligible Officer's part, shall be
considered "intentional" unless he or she has acted, or failed to
act, with a lack of good faith and with a lack of reasonable
belief that the Eligible Officer's action or failure to act was
in the best interest of the Corporation and the Company.
7. Form of Awards.
Awards shall be made in cash.
8. Payment of Awards.
Unless it has been deferred pursuant to the GPU System
Companies Deferred Compensation Plan, an Award shall be paid as
soon as practicable after it is made, but in any event by no
later than 60 days after the date on which the Award has been
made; provided, however, that if an Eligible Officer is entitled
to a pro-rated Award pursuant to the proviso in Section 6.B(iv),
such pro-rated Award shall be paid within twenty (20) days after
the Eligible Officer's date of termination.
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9. Special Awards and Other Plans.
Nothing contained in the Plan shall prohibit the Company
from granting special performance or recognition awards under
such conditions, and in such form and manner as it sees fit, or
from establishing other incentive compensation plans providing
for the payment of incentive compensation to Employees; provided,
however, that an Officer who receives an Award under this Plan
shall not receive an award for the same Performance Period under
any other annual incentive plan.
10. Amendment and Interpretation of the Plan.
A. Action to amend, modify, suspend or terminate the
Plan may be taken by the Company either by resolution duly
adopted by the Company's Board of Directors, or by an instrument
in writing executed by an Officer of the Company to whom
authority to adopt or approve amendments to the Plan has been
delegated pursuant to a resolution duly adopted by the Company's
Board of Directors; provided, however, that any amendment to
Section 4, Section 6 or this Section 10.A shall be subject to the
concurrence of the Board; provided further, however, that Section
2.C, Section 6 and this Section 10 may not be amended or
modified, and the Plan may not be suspended or terminated, (i) 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, (ii) within six (6)
months prior to, or otherwise in connection with, or in
anticipation of, a Change in Control
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which has been threatened or proposed and which actually occurs,
or (iii) following a Change in Control, if the amendment,
modification, suspension or termination adversely affects the
rights of any Eligible Officer under the Plan. No amendment or
termination of the Plan shall reduce or otherwise adversely
affect an Award already made hereunder without the consent of the
Officer affected.
B. The Executive Committee is authorized to determine
in its discretion all questions that may arise as to the
construction or interpretation of the Plan, and to resolve any
claims that may arise with respect to any Officer's rights or
entitlement to any payment under the Plan. The decision of the
Executive Committee with respect to any such questions or claims
shall be final, conclusive and binding on all parties.
Notwithstanding the foregoing, any decision made by the Executive
Committee after the occurrence of a Change in Control shall be
subject to judicial review under a "de novo", rather than a
deferential, standard.
11. Miscellaneous.
A. All expenses and costs in connection with the
operation of the Plan shall be borne by the Company.
B. All Awards under the Plan are subject to applicable
withholding for federal, state and local taxes.
C. The Participation of any Officer in the Plan may be
terminated at any time. No promise or representation, either
express or implied, is made to any Officer with respect to con-
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tinued employment, transfer or promotion because of his or her
participation in the Plan.
D. Each Officer who is a participant in the Plan shall
have the status of a general unsecured creditor of the Company
with respect to any amounts payable to the Officer hereunder.
The Plan shall constitute a mere promise by the Company to make
payments in the future of the Awards provided for herein. It is
the intention of the Company that the arrangements reflected in
this Plan 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.
E. An Officer's rights to payments under the Plan shall
not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors of the Officer or the Officer's
beneficiary.
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