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 of the company shall mean (a), (b), or (c) 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.
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 in Control:
(1) the loss by the Executive of his position by reason of
discharge or 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 in Control) to which the Executive was entitled
immediately prior to a Change in 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.
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; 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 both a Change of Control and a subsequent Termination
Event shall have occurred, 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 Executive's average annualized compensation paid
by the Company or an affiliate and includible in the Executive's
gross income for federal income tax purposes during the most
recent five taxable years (or, if fewer, the period of time
during which the Executive actually received compensation from
the Company or an affiliate) before the date on which a Change in
Control occurred.
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) 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 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 both a Change of Control and a subsequent Termination
Event have occurred, and 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 requested by
the Company for a period of one year reasonably following the
date he gives notice of the Termination Event.
B. As compensation to the Executive for his promises in Section
7(A) 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, which ever
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 actuarially equivalent to benefits the
Executive would have received at his 65th birthday under the
Pension Plan of Central Vermont Public Service Corporation and
its subsidiaries in effect at the Termination Date minus any
benefit paid under the Company's Pension Plan, based on crediting
the Executive with ten years service.
(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. Excise Tax Gross-Up Payment In the event the Executive
becomes entitled to any payments hereunder or any other payments
(whether paid by the Company or otherwise) in connection with a
Change in Control of the Company and a subsequent Termination
Event (the "Termination Payments"), and in the opinion of
independent tax counsel selected by the Executive and reasonably
acceptable to the Company any such payments will be subject to
the tax imposed by section 4999 of the Internal Revenue Code (the
"Excise Tax"), the Company shall pay to the Executive an
additional amount such that the net amount retained by the
Executive, after deduction of any Excise Tax on the Termination
Payments and any federal, state and local income tax (determined
at the highest marginal rate applicable) and Excise Tax upon the
payment provided for by this Section 8, shall be equal to the
Termination Payments that would have been retained by the
Executive if the Excise Tax was not applicable, but after
deduction of any federal, state and local income tax (determined
at the highest marginal tax rate applicable).
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
