EXHIBIT 10-I
INCENTIVE COMPENSATION PLAN FOR ELECTED OFFICERS OF
PENNSYLVANIA ELECTRIC COMPANY
(AS AMENDED AND RESTATED FEBRUARY 6, 1997)
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 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
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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 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 with or into the Corporation or in which
securities of the Corporation 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 the
Corporation or in which securities of the Corporation are
issued where:
(i) the shareholders of the
Corporation, immediately before such merger, consolidation
or reorganization, own directly or indirectly immediately
following such merger,
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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 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
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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 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 an affiliate 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.
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.
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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.
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 Award for each such
Performance Period ("Eligible Officer") shall be entitled to receive an Award
for each such Performance Period;
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(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
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),
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such pro-rated Award shall be paid within twenty (20) days after the Eligible
Officer's date of termination.
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 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.
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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 continued 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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