Exhibit A 10.92
CHANGE OF CONTROL AGREEMENT
(Officer Name)
This Agreement, entered into as of ________________
between Central Vermont Public Service Corporation
(hereinafter "Company") and the undersigned Executive
executing this Agreement (hereinafter "Executive").
WHEREAS, the Executive is providing valuable services
to the Company, and
WHEREAS, the Company wishes to assure continued
availability of the Executive's services and to create an
environment which will promote the Executive's giving
impartial and objective advice in the face of potentially
disturbing circumstances arising from the possibility of a
Change of Control of the Company (as herein defined);
NOW THEREFORE, the Company and the Executive in
consideration of the terms and conditions set forth hereby
mutually covenant and agree as follows:
1. GENERAL CONDITIONS No benefit shall be payable
hereunder pursuant to Section 4 of this Agreement unless
there shall have been both a Change of Control of the
Company, as set forth in Section 3 below, and a Termination
Event, as set forth in Section 4 below. In construing the
terms of the Agreement, it is the intent of the parties to
this Agreement to provide the Executive with financial
protection in the event significant changes in his
employment status occur following a Change of Control of the
Company, and it is agreed that provisions of the Agreement
are therefore to be construed using a reasonable man
standard and not on narrow technical grounds.
2. TERM OF AGREEMENT This Agreement shall commence on
the date hereof and shall continue in effect until the
earlier of (i) the fifth anniversary of such date or (ii)
the Executive's normal retirement date under the PENSION
PLAN OF CENTRAL VERMONT PUBLIC SERVICE CORPORATION AND ITS
SUBSIDIARIES or any successor retirement plan ("Normal
Retirement Date"); provided, however, that commencing on the
date three years after the date hereof, and on each annual
anniversary of such date (the "Renewal Date"), the term of
the Agreement shall automatically be extended so as to
terminate on the earlier of (x) three years from such
Renewal Date or (y) the Executive's Normal Retirement Date,
unless at least sixty days prior to the Renewal Date the
Company shall give written notice that the Agreement shall
not be so extended.
3. CHANGE OF CONTROL For purposes of this Agreement, a
Change of Control shall mean (a), (b), (c), (d) or (e)
below:
(a) The acquisition, directly or indirectly, of
securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding
securities by any third person including a "Group" as that
term is used in Section 13 (d)(3) of the Securities Exchange
Act of 1934 (the Exchange Act); or
(b) A change in the membership of the Board of
Directors over a period of two consecutive years in which
the members of the Board at the beginning of the period
cease for any reason to be at least two-thirds of the Board
at the end of the period provided, however, that this
section does not apply if the nomination of each new
director was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the
beginning of the period; or
(c) The acquisition by a third person either
directly or indirectly, of the right to own, control or hold
with power to vote 10% or more of the outstanding voting
securities of the Company, if immediately subsequent to the
acquisition of the Company's voting securities by such third
person: (A) such third person shall be a "public utility
holding company" within the meaning of the 1935 Act, whether
or not exempt from registration thereunder, or (B) the
Company shall be in danger of losing its exemption under the
1935 Act or shall otherwise be required to register under
the 1935 Act; or
(d) Consummation of a reorganization, merger or
consolidation, other than a reorganization, merger or
consolidation following which the individuals and entities
that were the beneficial owners of the outstanding voting
securities of the Company immediately prior to such
reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 60% of the outstanding
voting securities of the company resulting from such
reorganization, merger or consolidation, in substantially
the same proportions as their ownership immediately prior to
such reorganization, merger or consolidation; or
(e) Consummation of (i) a complete liquidation or
dissolution of the Company or (ii) the sale or other
disposition in one transaction or a series of related
transactions of all or substantially all of the assets of
the Company, as determined by the Board, other than a sale
or other disposition to a company, which following such sale
or other disposition, the individuals and entities that were
the beneficial owners of the outstanding voting securities
of the Company immediately prior to such sale or other
disposition, beneficially own, directly or indirectly, more
than 60% of the outstanding voting securities of such
company in substantially the same proportions as their
ownership in the Company, immediately prior to such sale or
other disposition.
4. TERMINATION EVENT
A. DEFINITION OF TERMINATION EVENT
A Termination Event shall mean any of the following
within the thirty-six month period following a Change of
Control:
(1) the loss by the Executive of his position by reason of
demotion, or the withholding, adverse alteration or
reduction of responsibility, authority, or compensation
(including any compensation or benefit plan in which the
Executive participates or substitute plans adopted prior to
the Change of Control) to which the Executive was entitled
immediately prior to a Change of Control of the Company or
to which he would normally be entitled from time to time by
reason of his office;
(2) the relocation of the Company's principal executive
offices more than 25 miles away from the current offices or
the Company requiring the executive to be based anywhere
other than within 25 miles of the Company's principal
executive offices except for the required travel on the
Company's business to an extent substantially consistent
with his present business travel obligations;
(3) the failure of any other company, business,
corporation, partnership, individual, or group which
succeeds substantially to the interest of the Company or
into which it is merged or consolidated, to expressly assume
all rights, duties, privileges and obligations set forth in
this Agreement;
(4) the termination of the Executive's employment for any
reason during the 30 day period commencing on the first
anniversary of the Change of Control if, on the first
anniversary of the Change of Control, a majority of the
Company's (or if the Company's shares are not publicly
traded, the Company's ultimate parent whose shares are
publicly traded) board of directors were not members of the
Board immediately prior to the Change of Control (a
Termination Event described in this Section 4A(4), a
"Voluntary Termination Event").
B. OTHER TERMINATIONS
Provided no preceding or coincident Termination
Event has occurred, no payments hereunder shall be made on
account of the Executive's termination because of (1) the
Executive's death, disability or retirement (other than a
retirement following or coincident with a termination by the
Company of the Executive's employment without Cause) ; or
(2) by the Company for Cause; or (3) the Executive's
voluntary termination.
(1) DISABILITY; RETIREMENT
If the Executive shall have been absent from the full-
time performance of his duties with the Company for six
consecutive months as the result of the Executive's
incapacity due to physical or mental illness, and the
Executive shall not have returned to the full-time
performance of his duties within thirty days after written
notice of termination, the Executive's employment may be
terminated for disability. Termination of the Executive's
employment based on retirement shall mean termination in
accordance with the Company's generally applicable
retirement policy or with any retirement arrangement
established with the Executive's consent.
(2) CAUSE
Cause means termination based on the willful and
continued failure by the Executive to perform his duties for
the Company or a subsidiary (other than any such failure
resulting from the Executive's incapacity due to physical or
mental illness), after a written demand for performance is
delivered to the Executive by the Chief Executive Officer of
the Company which specifically identifies the manner in
which the CEO believes the Executive has not performed his
duties; or an act or acts of dishonesty taken by the
Executive and intended to result in his personal enrichment
at the expense of the Company or a subsidiary.
5. SEVERANCE COMPENSATION
A. If within three (3) years following a Change of
Control, (i) a Termination Event shall have occurred or (ii)
the Company terminates the Executive's employment without
Cause (either of (i) or (ii) occurring within three years
following a Change of Control being a ("Payment Event"), the
Company agrees to make payment in a lump sum ("Severance
Compensation") to the Executive of an amount equal to (1)
times (2), where:
(1) Equals 2.999, and
(2) Equals the Base Amount (as defined in 280G(b)(3) of
the Internal Revenue Code of 1986, as amended, and the regulations
and proposed regulations promulgated thereunder); PROVIDED, HOWEVER
that the Base Amount, solely for purposes of this Section
5A.(2), shall be calculated without taking into account any taxable
income that the Executive recognized as a result of the exercise of
stock options during the two-year period prior to a Change of
Control.
B. The Company shall also pay the Executive all legal
fees and expenses incurred by the Executive as a result of
such termination, including all such fees and expenses, if
any, incurred in investigating the merits, contesting,
(including the cost of alternate dispute resolution
procedures to which the parties may agree), or disputing any
such termination or in seeking to determine, obtain or
enforce any right or benefit provided by this Agreement.
C. If the amounts of such payments cannot be finally
determined when due, the Company shall pay the Executive an
estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder
of such payments together with interest at the prime rate,
plus 2% in effect at the First National Bank of Boston, as
soon as the amount thereof can be determined.
D. The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 5 by
seeking other employment or otherwise, nor shall the amount
of any payment or benefit provided for in this Section 5 be
reduced by any compensation earned by the Executive as the
result of employment by another employer, by retirement
insurance or similar benefits, by offset against any amount
claimed to be owing by the Executive to the Company, or
otherwise.
6. TERMINATION DATE; PAYMENT OF SEVERANCE BENEFITS
A. PAYMENT OF COMPENSATION TO TERMINATION DATE
The Company shall pay the Executive full compensation and
all other amounts and benefits to which the Executive is
entitled through the Termination Date, including the payment
of such compensation, amounts and benefits during the time
of any extension of the Termination Date pursuant to Section
6C.(4) hereof.
B. DATE OF PAYMENT OF SEVERANCE BENEFITS
The Company shall pay to the Executive Severance
Compensation provided in Section 5 hereof within thirty days
of the Termination Date.
C. DEFINITION OF TERMINATION DATE
Termination Date means:
(1) FOR DISABILITY, that date thirty days after written
notice of termination if the Executive shall not have returned
to the full time performance of his duties, as described in
Section 4B.(1) hereof.
(2) FOR CAUSE, (i) due to performance, that date following
the notice to the Executive of performance failure, which ends
the period within which the Executive is given to correct his
performance as described in Section 4B.(2); or (ii) regarding acts of
dishonesty, thirty days after the Company's written notification
as described in Section 4B.(2) hereof.
(3) WITHOUT CAUSE, that date on which the Executive's
employment was terminated by the Company without Cause.
(4) FOR A TERMINATION EVENT, the date on which the
Executive notifies the Company a Termination Event as described in
Section 4A. has occurred.
If within thirty days following the Termination Date
described above, a party notifies the other party
that a dispute exists concerning the Termination Event,
the Termination Date shall be extended to the date the
dispute is fully determined; provided however, that
such notice must be given in good faith and the party
giving such notice pursues the resolution of the
dispute with reasonable diligence. The amount of
compensation and benefits paid to the Executive
during such period of dispute shall be subject to recovery
if the Company prevails on the dispute.
7. FUTURE SERVICES AND COMPENSATION
A. If a Payment Event has occurred, after which
Severance Compensation has been paid in accordance with
Section 5 hereof, the Executive agrees:
(1) To refrain from entering into competition with the
Company or from working for a competitor of the Company for a period
of one year following the date he gives notice of the Termination
Event, and
(2) To provide such consulting services as may be
reasonably requested by the Company for a period of one year following the
date he gives notice of the Termination Event.
B. As compensation to the Executive for his promises in
Section 7A hereof, the Company agrees to cause the following
actions to be carried out:
(1) As respects the status of the Executive as a
participant in the Company's Officers' Supplemental Retirement Plan, see
the Officers' Supplemental Retirement and Deferred
Compensation Plan as amended and restated effective August 1, 1984
signed December 1998.
(2) As respects the status of the Executive as a
participant in the Company's Officers Insurance Agreement:
(i) Cause such coverage to remain in force until the
Executive obtains life insurance coverage from a subsequent
employer, or for a period of three years from the termination
date, whichever comes first.
(3) If the Executive has less than ten years of service as
of the Termination Date, the Company shall also pay to the
Executive a lump sum amount, in cash, equal to the excess of (a)
the actuarial value of the benefits the Executive would commence
receiving on his 65th birthday under the Pension Plan of Central
Vermont Public Service Corporation and its subsidiaries in effect at
the Termination Date (the APlan@), calculated as if the
Executive had ten years of service with the Company, over (b) the
actuarial value of the benefits actually payable to the
Executive under the Plan commencing on his 65th birthday.
(4) As respects the status of the Executive as a
participant in any health or disability insurance plan in which the
Executive was participating as of the Termination Date, grant the
Executive a leave of absence for three years and cause the
Executive's participation in said health or disability insurance
plan or plans to continue during his leave of absence.
C. It is agreed that this Agreement will supersede any
other separation plan or practice maintained by the Company
for its officers to the extent there is any conflict.
Compensation earned but deferred under terms of its
Management Incentive Plan or any other executive
compensation plan which the Company may institute hereafter
shall specifically be paid to the Executive.
8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
A. Anything in this Agreement to the contrary
notwithstanding, but subject to Section 8H, in the event
that this Agreement shall become operative and it shall be
determined (as hereafter provided) that any payment (other
than the Gross-Up payments provided for in this Section 8)
or distribution by the Company or any of its subsidiaries to
or for the benefit of the Executive, whether paid or payable
or distributed or distributable pursuant to the terms of
this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock
appreciation right or similar right, restricted stock,
deferred stock or the lapse or termination of any
restriction on, deferral period or the vesting or
exercisability of any of the foregoing (a "Payment"), would
be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being
considered Acontingent on a change in ownership or control@
of the Company, within the meaning of Section 280G of the
Code (or any successor provision thereto) or to any similar
tax imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or taxes,
together with any such interest and penalties, being
hereafter collectively referred to as the AExcise Tax@),
then the Executive shall be entitled to receive an
additional payment or payments (collectively, a "Gross-Up
Payment"). The Gross-Up Payment shall be in an amount such
that, after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such
taxes), including any Excise Tax and any income tax imposed
upon the Gross-Up Payment, the Executive shall retain an
amount of Gross-Up Payment equal to the Excise Tax imposed
upon the Payment.
B. Subject to the provisions of Section 8F, all
determinations required to be made under this Section 8,
including whether an Excise Tax is payable by the Executive
and the amount of such Excise Tax and whether a Gross-Up
Payment is required to be paid by the Company to the
Executive and the amount of such Gross-Up Payment, if any,
shall be made by Xxxxxx Xxxxxxxx or any successor entity or
by such other nationally recognized accounting firm (the
"Accounting Firm") selected by the Executive with the
consent of the Company, which consent will not be
unreasonably withheld. The Executive shall direct the
Accounting Firm to submit its determination and detailed
supporting calculations to both the Company and the
Executive within 30 calendar days after the Change of
Control or the Termination Event, if applicable, and any
such other time or times as may be requested by the Company
or the Executive. If the Accounting Firm determines that
any Excise Tax is payable by the Executive, the Company
shall pay the required Gross-Up Payment to the Executive
within five business days after receipt of such
determination and calculations with respect to any Payment
to the Executive. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall, at the
same time as it makes such determination, furnish the
Company and the Executive an opinion that the Executive has
substantial authority not to report any Excise Tax on his
federal, state or local income or other tax return. As a
result of the uncertainty in the application of Section 4999
of the Code (or any successor provision thereto) and the
possibility of similar uncertainty regarding applicable
state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that a Gross-
Up Payment which will not have been made by the Company
should have been made (an "Underpayment"), consistent with
the calculations required to be made hereunder. In the
event that the Company exhausts or fails to pursue its
remedies pursuant to Section 8F and the Executive thereafter
is required to make a payment of any Excise Tax, the
Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit
its determination and detailed supporting calculations to
both the Company and the Executive as promptly as possible.
Any such Underpayment shall be promptly paid by the Company
to, or for the benefit of, the Executive within five
business days after the receipt of such determination and
calculations.
C. The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records
and documents in the possession of the Company or the
Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the
determinations and calculations contemplated by Section 8B.
Any determination by the Accounting Firm as to the amount of
the Gross-Up Payment shall be binding upon the Company and
the Executive.
D. The federal, state and local income or other tax
returns filed by the Executive shall be prepared and filed
on a consistent basis with the determination of the
Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive shall make proper payment of
the amount of any Excise Payment, and at the request of the
Company, provide to the Company true and correct copies
(with any amendments) of his federal income tax return as
filed with the Internal Revenue Service and corresponding
state and local tax returns, if relevant, as filed with the
applicable taxing authority, and such other documents
reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive's federal
income tax return, or corresponding state or local tax
return, if relevant, the Accounting Firm determines that the
amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company
the amount of such reduction.
E. The fees and expenses of the Accounting Firm for its
services in connection with the determinations and
calculations contemplated by Section 8B shall be borne by
the Company. If such fees and expenses are initially paid by
the Executive, the Company shall reimburse the Executive the
full amount of such fees and expenses within five business
days after receipt from the Executive of a statement thereof
and reasonable evidence of his payment thereof.
F. The Executive shall notify the Company in writing of
any claim, by the Internal Revenue Service or any other
taxing authority that, if successful, would require the
payment by the Company of a Gross-Up Payment or any
additional Gross-Up Payment. Such notification shall be
given as promptly as practicable but no later than l0
business days after the Executive actually receives notice
of such claim and the Executive shall further apprise the
Company of the nature of such claim and the date on which
such claim is requested to be paid (in each case, to the
extent known by the Executive). The Executive shall not pay
such claim prior to the earlier of (x) the expiration of the
30-calendar-day period following the date on which he gives
such notice to the Company and (y) the date that any payment
or amount with respect to such claim is due. If the Company
notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the
Executive shall:
(i) provide the Company with any written records or
documents in his possession relating to such claim
reasonably requested by the Company;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in
writing from time to time, including without
limitation accepting legal representation with
respect to such claim by an attorney competent in
respect of the subject matter and reasonably selected
by the Company;
(iii) cooperate with the Company in good faith in order to
effectively contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay
directly all costs and expenses (including interest and
penalties) incurred in connection with such contest and
shall indemnify and hold harmless the Executive, on an
after-tax basis, for and against any Excise Tax or income
tax, including interest and penalties with respect thereto,
imposed as a result of such contest and payment of costs and
expenses. Without limiting the foregoing provisions of this
Section 8F, the Company shall control all proceedings taken
in connection with the contest of any claim contemplated by
this Section 8F and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in
respect of such claim (PROVIDED, HOWEVER, that the Executive
may participate therein at his own cost and expense) and
may, at its option, either direct the Executive to pay the
tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine;
PROVIDED, HOWEVER, that if the Company directs the Executive
to pay the tax claimed and xxx for a refund, the Company
shall advance the amount of such payment to the Executive on
an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise
Tax or income or other tax, including interest or penalties
with respect thereto, imposed with respect to such advance;
and PROVIDED FURTHER, HOWEVER, that any extension of the
statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which the
contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of
any such contested claim shall be limited to issues with
respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
G. If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8F, the
Executive receives any refund with respect to such claim,
the Executive shall (subject to the Company's complying with
the requirements of Section 8F) promptly pay to the Company
the amount of such refund (together with any interest paid
or credited thereon after any taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 8F, a determination is made
that the Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial or
refund prior to the expiration of 30 calendar days after
such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of any
such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid by the Company to
the Executive pursuant to this Section 8.
H. Notwithstanding any provision of this Agreement to
the contrary, if (i) but for this sentence, the Company
would be obligated to make a Gross-Up Payment to the
Executive, and (ii) either (a) the aggregate "present value"
of the "parachute payments" to be paid or provided to the
Executive under this Agreement or otherwise does not exceed
1.10 multiplied by three times the Executive's "base
amount," or (b) the Executive's termination of employment
constitutes a Voluntary Termination Event, then the payments
and benefits to be paid or provided under this Agreement
will be reduced to the minimum extent necessary (but in no
event to less than zero) so that no portion of any payment
or benefit to the Executive, as so reduced, constitutes an
"excess parachute payment." For purposes of this Section 8H,
the terms "excess parachute payment," "present value,"
"parachute payment," and "base amount" will have the
meanings assigned to them by Section 280G of the Code. The
determination of whether any reduction in such payments or
benefits to be provided under this Agreement is required
pursuant to the preceding sentence will be made at the
expense of the Company, if requested by the Executive or the
Company, by the Accounting Firm. The fact that the
Executive's right to payments or benefits may be reduced by
reason of the limitations contained in this Section 8H will
not of itself limit or otherwise affect any other rights of
the Executive other than pursuant to this Agreement. In the
event that any payment or benefit intended to be provided
under this Agreement or otherwise is required to be reduced
pursuant to this Section 8H, the Executive will be entitled
to designate the payments and/or benefits to be so reduced
in order to give effect to this Section 8H. The Company will
provide the Executive with all information reasonably
requested by the Executive to permit the Executive to make
such designation. In the event that the Executive fails to
make such designation within l0 business days of the
Termination Date, the Companymay effect such reduction in
any manner it deems appropriate.
9. ARBITRATION In the event of any dispute arising between
the parties to this Agreement, the parties agree that such
controversy shall be settled by arbitration, in accordance
with the rules of the American Arbitration Association
applicable to employee benefit cases. If the parties are
unable to agree upon a mutually acceptable arbitrator, then
one arbitrator shall be named by each party involved in the
dispute, with an additional arbitrator to be chosen by the
other named arbitrators. In the event the arbitrator finds
that either party has breached its obligation under this
Agreement, the arbitrator may award such amount as is
necessary to remedy such breach.
10. WITHHOLDING Distribution of any benefit payments under
this Agreement will be reduced for the amounts required to
be withheld pursuant to any government law or regulation
with respect to taxes or similar provisions.
11. STATE LAW This Agreement shall be construed under the
laws of the State of Vermont.
12. REVOCABILITY This Agreement may be revoked or amended
in whole or in part only by a writing signed by both parties
hereto.
13. VALIDITY The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
ACKNOWLEDGEMENT OF ARBITRATION
The parties to this Agreement acknowledge the
arbitration provision of this Agreement, and acknowledge
that no lawsuit may be brought by either party concerning
any dispute that may arise which is covered by the
arbitration provision, unless it involves a question of
constitutional or civil rights, and that such dispute shall
be submitted to arbitration in accordance with the
arbitration provision as set forth in Paragraph 9.
DATED at Rutland, Vermont this ____ day of ___________,
.
IN PRESENCE OF:
________________________ ______________________________
Witness Central Vermont
Executive
CENTRAL VERMONT PUBLIC
SERVICE CORPORATION
________________________ ______________________________
Witness Xxxxxxxx X. Xxxxxxxx
Chairman of the Board
