EXHIBIT 10-R
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
OF
GPU, INC.
As Amended and Restated as of
June 5, 1997
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
OF
GPU, INC.
As Amended and Restated as of
June 5, 1997
-----
1. Purpose
The Retirement Plan for Outside Directors of GPU, Inc. (the "Plan") is
designed to enhance the ability of GPU, Inc. (the "Corporation") to attract and
retain competent and experienced Outside Directors by providing retirement
benefits and death benefits for Eligible Outside Directors who retire or die
after the Plan's Effective Date.
2. Definitions
Except as otherwise specified or as the context may otherwise require,
the following terms have the meanings indicated below for all purposes of this
Plan:
"Board of Directors" means the board of directors of the Corporation.
"Outside Director" means a member of the Board of Directors who, during
the period involved, is not or was not an Officer or an employee of the
Corporation or a subsidiary thereof.
"Board Service" means service as an Outside Director of the Corporation
both before and after the Effective Date.
"Change in Control" means the occurrence during the term of the Plan of:
1. An acquisition (other than directly from the Corporation) of any
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
1
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
of Directors (the "Incumbent Board"), cease for any reason to constitute at
least seventy percent (70%) of the members of the Board of Directors; 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 of Directors (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 the 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, 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
2
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, 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 Person, 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.
3
"Compensation" means the sum of: (a) the monthly retainer paid in cash
to an Outside Director as compensation for services as a Director of the
Corporation, excluding any fees paid for attendance at meetings of the Board of
Directors or any committee of the Board of Directors, and also excluding any
additional retainer paid for service as a Committee Chairman, and (b)
one-twelfth of the cash value of all shares awarded to, the Outside Director
pursuant to the Restricted Stock Plan for Outside Directors as the annual award
thereunder for the year preceding his or her Retirement, and not subsequently
forfeited.
The cash value of a share shall be its closing price as reported for
New York Stock Exchange-Composite Transactions on the date of award.
"Effective Date" means the date of initial adoption of this Plan by the
Board of Directors.
"Retirement or Retires" means the cessation of service as an Outside
Director for any reason other than (i) acceptance of employment as an officer or
employee of the Corporation or a subsidiary thereof or (ii) death.
3. Eligibility
An Outside Director who has completed at least fifty-four (54) months
of Board Service, whether or not continuous, and who Retires or dies before
Retirement on or after the Effective Date shall be eligible for benefits as
provided herein. After the occurrence of a Change in Control, any person who was
an Outside Director immediately prior to such Change in Control shall be
eligible for benefits as provided herein upon Retirement or death before
Retirement, whether or not such Outside Director has completed at least
fifty-four (54) months of Board Service.
4. Pension Benefits of Eligible Retired Outside Directors Before Death
The accumulated amount of pension benefits payable to an Outside
Director eligible to receive benefits hereunder shall be equal to the product of
(a) the number of months of such Outside Director's Board Service under this
Plan times (b) the monthly compensation of such Outside Director at the date of
such Outside Director's Retirement under the Plan. Such pension benefits shall
be paid in monthly installments equal to the monthly compensation of each
Outside Director at the date of such Outside Director's Retirement. Such pension
benefits shall commence on the first day of the month following the Director's
60th birthday or the Director's Retirement under the Plan, whichever is later,
and shall continue during the Retired Outside Director's life
4
until the date when the total payments to the Retired Outside Director shall be
equal to the Outside Director's accumulated pension benefits at the date of such
Director's Retirement. Notwithstanding the foregoing, in the case of any retired
Outside Director who again becomes an Outside Director after payment of his
pension benefits hereunder has commenced, no further payments shall be made with
respect to his pension benefits after the date on which he resumes Board
Service, until his subsequent Retirement or death. The pension benefits payable
under this Section 4 or under Section 5 upon such Outside Director's subsequent
Retirement or death (i) shall be determined by taking into account only the
excess of (A) his total number of months of Board Service prior to July 1, 1997
over (B) the number of months for which he received pension benefit payments
hereunder prior to his resumption of Board Service, and (ii) shall be based on
his monthly compensation at the date of his subsequent Retirement or death.
Notwithstanding the provisions of the preceding paragraph, an Outside
Director may elect to have the accumulated amount of the pension benefits that
become payable hereunder upon his or her Retirement or death before Retirement
paid to the Outside Director, or to his or her surviving spouse (or, if
applicable, designated beneficiary) in the event of his or her death before
Retirement, in the form of a single lump sum payment. Such payment shall be in
an amount that is Actuarially Equivalent (as defined in the GPU Service, Inc.
Employee Pension Plan or any successor thereto and determined as of the first
day of the month next following the date of the Outside Director's Retirement or
earlier death) to the payments that otherwise would be made hereunder with
respect to the Outside Director's accumulated pension benefits if such payments
were made in the form, and if such payments commenced to be made at the time,
provided in the preceding paragraph or in Section 5(b), as applicable. Such lump
sum payment shall be made by no later than thirty (30) days following the date
of the Outside Director's Retirement or earlier death.
Any election made by an Outside Director under the preceding paragraph
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
Outside Director's Retirement or earlier death. Any election so made may be
revoked, and a new election may be made under the preceding paragraph, 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 the
preceding sentence. Any such election, or any such revocation of an election,
shall be made in writing, on a form that is furnished to the Outside Director
for such purpose by the Personnel, Compensation and
5
Nominating Committee and that is filed by the Outside Director with such
Committee.
5. Benefits Payable by Reason of Death of Eligible Outside Director
In the event that an Outside Director who is eligible to receive
benefits hereunder should die prior to receiving payment of the full amount of
his or her accumulated pension benefits, the remaining portion of such Outside
Director's accumulated pension benefits shall be paid as follows:
(a)If the Outside Director dies after Retirement and if, at the time of
his or her death, monthly installment payments were being made to the Outside
Director, such payments shall continue to be made to the Outside Director's
surviving spouse (or, if applicable, designated beneficiary) until the aggregate
of the payments to the Outside Director and such surviving spouse or beneficiary
shall be equal to the Outside Director's accumulated pension benefits at the
date of such Director's Retirement.
(b)If the Outside Director dies prior to Retirement, there shall be
paid to the Outside Director's surviving spouse (or, if applicable, designated
beneficiary) monthly installments equal to the monthly compensation of such
Outside Director at the date of such Outside Director's death until the
aggregate of the payments to such surviving spouse (or, if applicable,
designated beneficiary) shall be equal to the Outside Director's accumulated
amount of pension benefits at the date of the Outside Director's death. Payment
of such monthly installments shall begin on the first day of the month next
following the Outside Director's death or, if later, the first day of the month
in which the Outside Director's 60th birthday would have occurred if the outside
Director had survived. The provision of this Section 5(b) shall not apply if, at
the time of the Outside Director's death, there is in effect an election made by
the Outside Director under the second paragraph of Section 4.
6. Change in Control
Notwithstanding any other provision of the Plan to the contrary or any
other form of payment otherwise elected hereunder, each Outside Director shall
be permitted to make either one or both of the following special distribution
elections: (a) to have his or her pension benefits distributed in the form of a
single lump sum payment in the event of the Outside Director's Retirement
following a Change in Control, or (b) if a Change in Control occurs after the
Outside Director's Retirement or earlier death but before all payments required
to
6
be made with respect to his or her accumulated pension benefits pursuant to
Section 4 and Section 5(a) have been made, to have the payments that otherwise
would be made hereunder with respect to the Outside Director's accumulated
pension benefits after the date of such Change in Control paid in the form of a
single lump sum payment.
Any such election shall be effective only if it is made at least twelve
(12) months prior to such Change in Control, and prior to the Outside Director's
Retirement or earlier death. 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 period specified in
the preceding sentence. Any special election, or revocation of a special
election, that may be made hereunder shall be made in the manner provided in the
last sentence of the last paragraph of Section 4.
The lump sum payment to be made to an Outside Director pursuant to his
or her election under clause (a) of the second preceding paragraph shall be in
an amount that is Actuarially Equivalent (as defined in the GPU Service, Inc.
Employee Pension Plan or any successor thereto and determined as of the first
day of the month next following the date of the Outside Director's Retirement)
to the pension benefits that otherwise would be payable hereunder with respect
to the Outside Director if such pension benefits were to commence upon the
Outside Director's Retirement or 60th birthday, whichever is later. Such lump
sum payment shall be made by no later than thirty (30) days following the date
of the Outside Director's Retirement.
The lump sum payment to be made pursuant to an Outside Director's
election under clause (b) of the third preceding paragraph shall be in an amount
that is Actuarially Equivalent (as defined in the GPU Service, Inc. Employee
Pension Plan or any successor thereto 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
the Outside Director's accumulated pension benefits 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.
7. Designated Beneficiary of Eligible Outside Director
If an Eligible Outside Director shall die without leaving a surviving
spouse or if the Outside Director's surviving spouse shall die prior to payment
in full of the outside Director's accumulated pension benefits, the payments
which would otherwise
7
have been made to the Outside Director's surviving spouse shall be made to the
Outside Director's designated beneficiary (or beneficiaries). Such designations
shall be made in writing on forms provided by the Corporation to the Outside
Director. Any such designation by an Outside Director may be revoked by the
Outside Director at any time before or after Retirement. Any such revocation
shall be made in writing on a form provided by the Corporation to the Outside
Director.
8. Provision for Benefits
All benefits payable hereunder shall be provided from the general
assets of the Corporation. No Outside Director shall acquire any interest in any
specific assets of the Corporation by reason of this Plan. An Outside Director
shall have the status of a mere unsecured creditor of the Corporation with
respect to his or her right to receive any payment under the Plan. The Plan
shall constitute a mere promise by the Corporation to make payments in the
future of the benefits provided for herein. It is intended that the arrangements
reflected in this Plan be treated as unfunded for tax purposes.
9. Amendment and Termination
The Board of Directors reserves the right to terminate this Plan or
amend this Plan prospectively in any respect at any time, but no such amendment
may reduce (a) the benefits of any Outside Director who has previously Retired
hereunder, or (b) the benefits accrued hereunder by any Outside Director prior
to the effective date of such termination or amendment. In addition, the
definition of Change in Control in Section 2, the last sentence in Section 3,
the last paragraph in Section 4, this Section 9, and the last sentence of
Section 10 may not be amended or modified, and the Plan may not be terminated,
(i) at the request of a third party who has indicated an intention or taken
steps 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 or termination adversely affects the rights of any Outside Director
under the Plan.
10. Administration
This Plan shall be administered by the Personnel, Compensation, and
Nominating Committee of the Board of Directors. Such Committee's final decision,
in making any determination or construction under this Plan and in exercising
any discretionary power, shall in all instances be final and binding on all
persons
8
having or claiming any rights under this Plan. Notwithstanding the foregoing,
any determination made by the Committee after the occurrence of a Change in
Control that denies in whole or in part any claim made by any individual for
benefits under the Plan shall be subject to judicial review, under a "de novo,"
rather than a deferential, standard.
11. Miscellaneous
Nothing herein contained shall be deemed to give any Outside Director
the right to be retained as a director of the Corporation, nor shall it
interfere with the Outside Director's right to terminate such directorship at
any time. An Outside Director's rights to payments under this Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer (other than
transfer by will or by the laws of descent and distribution, in the absence of a
beneficiary designation), assignment, pledge, encumbrance, attachment or
garnishment by creditors of the Outside Director or his or her spouse or other
beneficiary.
12. Phase Out of Plan
Notwithstanding any other provision in this Plan to the contrary, the
provisions of this Section 11 shall apply on or after July 1, 1997.
(a) No individual who first becomes an Outside Director on or after
July 1, 1997 shall be entitled to receive any pension benefits under this Plan.
(b) For purposes of determining the amount of pension benefits payable
under Section 4, 5 or 6 with respect to any individual who is an Outside
Director on July 1, 1997, the number of months of such Outside Director's Board
Service shall be determined by taking into account only months of Board Service
completed prior to July 1, 1997.
(c) In the case of any individual who is an Outside Director on July 1,
1997, his or her Board Service on and after such date shall be taken into
account for purposes of determining his or her eligibility under Section 3 for
benefits payable under the Plan.
9