EXHIBIT 10.31
UIL HOLDINGS CORPORATION
--------------------------------
CHANGE IN CONTROL SEVERANCE PLAN
--------------------------------
ARTICLE I
PURPOSE OF PLAN
1.1 The purpose of the UIL Holdings Corporation Change in Control
Severance Plan ("Plan") is to provide the officers and certain key employees of
UIL Holdings Corporation and its wholly-owned direct and indirect subsidiary
corporations (each a "Company") with appropriate assurances of continued income
and other benefits for a reasonable period of time in the event that the
individual's employment by a Company is terminated by such Company (or a
successor to such Company, whether direct or indirect, by purchase, merger,
consolidation or otherwise - a "Successor") under any of the circumstances
described herein, thereby encouraging the continued attention and dedication of
each such officer or key employee to the continued success of such Company.
ARTICLE II
ELIGIBILITY FOR PARTICIPATION
2.1 The Board of Directors of UIL Holdings Corporation (the "Board")
shall in its absolute discretion select the persons to be covered by the Plan
(each a "Participant") from time to time, and shall notify each Participant of
this selection and provide to each Participant a copy of the Plan.
2.2 Participation in the Plan shall not in any respect be deemed to
grant the Participant a right to continued participation in the Plan; nor shall
participation in the Plan be deemed to grant the Participant a right to
continued employment by a Company. A Participant may be a party to an Employment
Agreement with a Company that provides for the payment of benefits to such
Participant in the event of a Change in Control of such Company, as the term
Change in Control is defined herein, in which case and event the benefits
payable in aggregate to such Participant shall be the greater amount provided
for in the Plan or in such Participant's Employment Agreement.
<PAGE>
ARTICLE III
TERM
3.1 Except under the circumstances described in Section 3.3 below, the
Board (or the governing body of a Successor to UIL Holdings Corporation) may, by
written notice to all Participants that shall take effect not less than twelve
(12) months after the date of such notice, terminate or suspend the Plan, or
amend the Plan so as to impair the rights of all Participants in the Plan.
3.2 Except under the circumstances described in Section 3.3 below, the
Board (or such governing body) may, by written notice to any Participant that
shall take effect not less than twelve (12) months after the date of such
notice, terminate the participation of such Participant in the Plan, or amend
the Plan so as to impair the rights of such Participant in the Plan.
3.3 Termination or suspension of the Plan, or any amendment of the
Plan that impairs the rights of any Participant, occurring on or after a Change
in Control, as that term is defined herein, shall not take effect until
twenty-four (24) months after the occurrence of such Change in Control.
3.4 Subject to Sections 3.1, 3.2 and 3.3 above, the Board (or such
governing body) may, at any time and from time to time, modify or amend, in
whole or in part, any or all of the provisions of the Plan, or suspend or
terminate it entirely.
ARTCLE IV
ELIGIBILITY FOR BENEFITS
4.1 For the purpose of the Plan, Change in Control of a Company shal
mean any of the following events:
(a) any merger or consolidation of such Company with any
corporate shareowner or group of corporate shareowners holding twenty-five
percent (.25) or more of the Common Stock of UIL Holdings Corporation (or a
successor to UIL Holdings Corporation, whether direct or indirect, by purchase,
merger, consolidation or otherwise - a "Successor"), or with any other
corporation or group of corporations that is, or after such merger or
consolidation would be, or be affiliated with, a shareowner or group of
shareowners owning at least twenty-five percent (.25) of the Common Stock of UIL
Holdings Corporation or a Successor, or
(b) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of any assets of such Company having an aggregate fair market
value of $50 million or more to or with any shareowner or group of shareowners
holding twenty-five
2
<PAGE>
percent (.25) or more of the Common Stock of UIL Holdings Corporation or a
Successor, or to or with any affiliate of any such shareowner or group of
shareowners; or
(c) the issuance or sale by such Company, or the sale by UIL
Holdings Corporation or a Successor, in exchange for cash, securities or other
consideration having an aggregate fair market value of $50 million or more, of
any securities of such Company to any shareowner or group of shareowners holding
twenty-five percent (.25) or more of the Common Stock of UIL Holdings
Corporation or a Successor, or to any affiliate of any such shareowner or group
of shareowners; or
(d) the implementation of any plan or proposal for the
liquidation or dissolution of such Company, or of UIL Holdings Corporation or a
Successor, proposed by or on behalf of any shareowner or group of shareowners
owning at least twenty-five percent (.25) of the Common Stock of UIL Holdings
Corporation or a Successor, or by or on behalf of any affiliate of any such
shareowner or group of shareowners; or
(e) any reclassification of securities (including a reverse
stock split), or recapitalization, of UIL Holdings Corporation or a Successor,
or any other transaction, which has the effect, directly or indirectly, of
increasing the proportionate share of outstanding shares of any class of equity
securities, or securities convertible into any equity securities, of UIL
Holdings Corporation or a Successor, which class of securities is directly or
indirectly owned by a shareowner or group of shareowners owning at least
twenty-five percent (.25) of the Common Stock of UIL Holdings Corporation or a
Successor, or by any affiliate of any such shareowner or group of shareowners.
The Board of Directors of such Company may, from time to time, by the
affirmative vote of not less than a majority of the entire membership of said
Board of Directors, at a meeting of said Board of Directors called and held for
the purpose, modify the phrase "twenty-five percent (.25)" in one or more of the
foregoing Sections (7)(a), (7)(b), (7)(c), (7)(d) and/or (7)(e) to a lesser
percentage, but not less than twenty percent (.20).
4.2 If a Company (or its Successor) terminates a Participant's
employment involuntarily other than for Cause, as defined in Section 4.4 below,
during the twenty-four (24) months following a Change in Control, the benefits
described in Article V hereof shall become payable to the Participant.
4.3 Subject to the provisions of Section 4.5 below, if a Participant
terminates his or her employment during the twenty-four (24) months following a
Change in Control and within ninety (90) days following the occurrence of one or
more of the events constituting Constructive Termination, as herein defined, the
benefits described in Article V hereof shall become payable to the Participant.
For the purposes of the Plan, Constructive Termination shall mean any of the
following events:
3
<PAGE>
(a) The assignment to a Participant without his or her written
consent of any duties materially inconsistent with such Participant's position,
duties, responsibilities and status with a Company immediately prior to the
Change in Control, or any diminishment in such Participant's management
responsibilities, duties or powers as in effect immediately prior the Change in
Control, or the removal from or failure to re-elect him or her to any such
position or office, except in the event of termination of such Participant's
employment for Cause, death or mandatory retirement; or
(b) A reduction in the Participant's base annual salary rate,
unless such reduction is part of and consistent with a general reduction of the
base annual salary rates of the other officers and key employees of his or her
Company (or its Successor); or
(c) A failure to increase the Participant's base annual salary
rate on a basis consistent (as to frequency and amount) with the base annual
salary rates of the other officers and key employees of his or her Company (or
its Successor); or
(d) A failure to continue the Participant's participation in
the benefit plans of his or her Company (or its Successor) on substantially the
same basis, both in terms of the amount of benefits provided and the level of
the Participant's participation relative to other officers and key employees of
such Company.
4.4 For the purposes of the Plan, a Company (or its Successor) shall
be deemed to have Cause to terminate a Participant's employment only upon such
Participant's (A) conviction of a felony involving personal dishonesty or moral
turpitude, (B) total and permanent physical or mental disability, or (c) absence
from work on a full-time basis, due to physical or mental illness, for an
uninterrupted 365-day period.
4.5 The provisions of Section 4.3 above shall be inoperative unless,
(A) within thirty (30) days after an occurrence that the Participant considers
to be an event constituting Constructive Termination, the Participant gives
notice to the Board (or the governing body of a Successor to UIL Holdings
Corporation) stating that in his or her opinion such event has occurred and
setting forth in reasonable detail the relevant facts and circumstances, and (B)
within thirty (30) days after receipt of such notice (the "30-day cure period")
the Participant's Company (or its Successor) has failed to remedy or otherwise
cure the situation to the Participant's satisfaction or to persuade the
Participant that the facts and circumstances do not constitute an event
constituting Constructive Termination. If the Participant's Company (or its
Successor) shall, within such 30-day cure period, remedy or otherwise cure the
situation, a recurrence thereof or another occurrence constituting Constructive
Termination shall constitute a new event for purposes of Section 4.2 above and
the provisions of clause (B) of this Section 4.5 shall not apply upon such
recurrence or new occurrence.
In the event that a Participant and his or her Company (or its Successor) shall,
after expiration of the 30-day cure period (or, if there is no 30-day cure
period, ten (10) days after the giving of the notice referred to in clause (A)
of this Section 4.5) remain in
4
<PAGE>
substantial disagreement as to whether or not an event has occurred that
constitutes Constructive Termination, the disagreement shall be resolved by
arbitration, as follows: The non-employee members of the Board (or the governing
body of a Successor to UIL Holdings Corporation), by a majority vote of such
members, shall, promptly on the request of the Participant or his or her Company
(or its Successor), appoint an arbitrator, who shall not be a member of the
Board (or the governing body of a Successor to UIL Holdings Corporation) or an
officer or employee of any Company (or its Successor), to determine whether an
event constituting Constructive Termination has occurred. The person so
appointed shall determine all procedural matters relating to the arbitration.
The decision of the arbitrator shall be conclusive and binding upon the
Participant and his or her Company (or its Successor), and judgment upon such
determination may be entered in any court having jurisdiction.
Nothing herein shall require a Participant to remain in the employ of a Company
(or its Successor) beyond the expiration of any 30-day cure period in order to
qualify for compensation under Section 4.3 above; but if the Participant remains
in the employ of the Company (or such Successor) thereafter, the twenty-four
(24) month and ninety (90) day periods of Section 4.3 above shall be deemed
extended by the number of days elapsed from the earlier of (a) expiration of any
30-day cure period, or (b) the appointment of the arbitrator, to the date on
which notice of the arbitrator's decision is served on the Participant.
4.6 Any termination of a Participant by his or her Company (or its
Successor) for Cause shall be given in writing and shall specify the relevant
facts and circumstances.
4.7 In no event shall the voluntary resignation or retirement of a
Participant give rise to any benefits under the Plan.
ARTICLE V
BENEFITS
5.1 In the event of termination covered by Section 4.2 or Section 4.3
above, the Participant shall be entitled to receive:
(a) If the Participant is the Chief Executive Officer of a
Company (or its Successor), (i) such Company (or such Successor) shall pay such
Participant, within thirty (30) days, a lump sum amount equal to three (3) times
such Participant's Total Compensation immediately prior to the date of his or
her termination; and (ii) such Company (or such Successor) shall maintain in
full force and effect, for the continued benefit of such Participant for the
period ending on the third anniversary of the date of his or her termination,
all employee benefit plans and programs in which such Participant was entitled
to participate immediately prior to the date of his or her termination, provided
that such Participant's continued participation is possible under the general
terms and provisions of such plans and programs and applicable law and, if such
Participant's
5
<PAGE>
participation in any such plan or program is barred as a result of his or her
termination, such Company (or such Successor) shall arrange to provide such
Participant with benefits substantially similar on an after-tax basis to those
that he or she would have been entitled to receive under such plan or program;
and (iii) such Participant shall receive the addition of three (3) years of
service deemed as an employee of such Company (or such Successor) in the
calculation of the benefits payable to such Participant under the retiree
medical benefit plan(s) of such Company (or such Successor) and in the
calculation of any benefits payable to such Participant as a supplemental
retirement benefit under his or her Employment Agreement.
(b If the Participant is an Officer of a Company (or its
Successor) other than the Chief Executive Officer, (i) such Company (or such
Successor) shall pay such Participant, within thirty (30) days, a lump sum
amount equal to two (2) times such Participant's Total Compensation immediately
prior to the date of his or her termination; and (ii) such Company (or such
Successor) shall maintain in full force and effect, for the continued benefit of
such Participant for the period ending on the second anniversary of the date of
his or her termination, all employee benefit plans and programs in which such
Participant was entitled to participate immediately prior to the date of his or
her termination, provided that such Participant's continued participation is
possible under the general terms and provisions of such plans and programs and
applicable law and, if such Participant's participation in any such plan or
program is barred as a result of his or her termination, such Company (or such
Successor) shall arrange to provide such Participant with benefits substantially
similar on an after-tax basis to those that he or she would have been entitled
to receive under such plan or program; and (iii) such Participant shall receive
the addition of two (2) years of service deemed as an employee of such Company
(or such Successor) in the calculation of the benefits payable to such
Participant under the retiree medical benefit plan(s) of such Company (or such
Successor) and in the calculation of any benefits payable to such Participant as
a supplemental retirement benefit under his or her Employment Agreement.
(c) If the Participant is not an Officer of a Company (or its
Successor), (i) such Company (or such Successor) shall pay such Participant,
within thirty (30) days, a lump sum amount equal to such Participant's Total
Compensation immediately prior to the date of his or her termination; and (ii)
the Company (or such Successor) shall maintain in full force and effect, for the
continued benefit of such Participant for the period ending on the first
anniversary of the date of his or her termination, all employee benefit plans
and programs in which such Participant was entitled to participate immediately
prior to the date of his or her termination, provided that such Participant's
continued participation is possible under the general terms and provisions of
such plans and programs and applicable law and, if such Participant's
participation in any such plan or program is barred as a result of his or her
termination, the Company (or such Successor) shall arrange to provide such
Participant with benefits substantially similar on an after-tax basis to those
that he or she would have been entitled to receive under such plan or program;
and (iii) such Participant shall receive the addition of one (1) year of service
deemed as an employee of such Company (or such Successor) in the calculation of
the benefits payable to such Participant
6
<PAGE>
under the retiree medical benefit plan(s) of such Company (or such Successor)
and in the calculation of the benefit payable to such Participant under the
Pension Plan of such Company (or such Successor).
(d) For purposes of the Plan, Total Compensation is defined
as the sum of a Participant's base annual salary rate immediately prior to the
date of such Participant's termination and the target amount payable to such
Participant under any annual Executive Incentive Compensation Program of a
Company (or its Successor).
(e) The Participant will not be required to mitigate the
amount of any payment or health insurance benefit provided for in this Section
5.1 by seeking other employment or otherwise; provided, however, that if the
Participant obtains other employment that offers employee health insurance
benefit plans or programs to the Participant, the Participant shall enroll in
all such health insurance plans and programs and the employee health insurance
benefits payable under any corresponding health insurance plan or program
provided to the Participant under the Plan shall be reduced by the health
insurance benefits payable under such other plan or program.
5.2 If, for purposes of the excise tax imposed by Section 4999 of the
Internal Revenue Code:
(a) The payments that a Participant is entitled to receive
under the Plan, together with any other payment or distribution by a Company (or
its Successor) to or for the benefit of the Participant (whether paid or payable
or distributed or distributable) pursuant to the Plan or otherwise, would be
less than or equal to 3.2 times the "base amount" of such Participant's
compensation (as defined in Section 280G of the Internal Revenue Code, and not
governed by any term(s) defined in the Plan), any portion of such payments that
would constitute "excess parachute payments" (as defined in said Section 280G)
subject to such excise tax shall be reduced to the largest amount that will
result in no portion of such excess parachute payments being subject to such
excise tax.
(b) The payments that a Participant is entitled to receive
under the Plan, together with any other payment or distribution by a Company (or
its Successor) to or for the benefit of the Participant (whether paid or payable
or distributed or distributable) pursuant to the Plan or otherwise, would be
more than 3.2 times the "base amount" of such Participant's compensation (as
defined in Section 280G of the Internal Revenue Code, and not governed by any
term(s) defined in the Plan), but not more than 4.0 times such "base amount,"
such Participant shall be entitled to receive an additional payment (the
"Gross-Up Payment") in an amount equal to (i) the amount of the excise tax
imposed on the Participant in respect of the payments he or she is entitled to
receive (the "Excise Tax"), plus (ii) all federal, state and local income,
employment and excise taxes (including any interest or penalties imposed with
respect to such taxes) imposed on the Participant in respect of the Gross-Up
Payment, such that after payment of all such taxes (including any applicable
interest or penalties) on the Gross-Up Payment, the Participant retains a
portion of the Gross-Up Payment equal to the Excise Tax.
7
<PAGE>
(c) The payments that a Participant is entitled to receive
under the Plan, together with any other payment or distribution by a Company (or
its Successor) to or for the benefit of the Participant (whether paid or payable
or distributed or distributable) pursuant to the Plan or otherwise, would be
more than 4.0 times the "base amount" of such Participant's compensation (as
defined in Section 280G of the Internal Revenue Code, and not governed by any
term(s) defined in the Plan), the portion of such payments that would constitute
"excess parachute payments" (as defined in said Section 280G) subject to said
excise tax shall be reduced to the largest amount that will not cause the
payments that such Participant is entitled to receive to exceed 4.0 times such
"base amount," and the provisions of (b) above shall apply.
5.3 Not later than the day prior to the date of the Change in Control,
UIL Holdings Corporation will cause to be paid to the Trustee of The United
Illuminating Company Supplemental Retirement Benefit Trust established pursuant
to the Agreement, made as of the 1st day of June, 1995 and as amended effective
December 31, 1995 and December 13, 1999, between said Company and State Street
Bank and Trust Company, as Trustee, cash in an amount equal to a sum, calculated
by said Company's independent certified public accountants, reasonably
sufficient to pay and discharge each Company's future obligations, if any, to
all Participants in the Plan assuming, for purposes of such calculation, that
the employment of all of the Participants is terminated on the date of the
Change in Control.
ARTICLE VI
GENERAL PROVISIONS
6.1 UIL Holdings Corporation will use its best efforts to require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the businesses or assets of said
Company to assume and adopt the Plan. If said Company fails to obtain such
agreement prior to the effective date of any such succession, (a) any
Participant who is not offered a position, duties, responsibilities,
compensation and status that are equivalent in all material respects to his or
her position, duties, responsibilities, compensation and status with his or her
Company immediately prior to the succession may terminate his or her employment
within thirty (30) days of such succession and treat such termination as an
involuntary termination under Section 4.2 above after a Change in Control,
entitling such Participant to the benefits provided him or her in Article V
hereof in respect of such a termination; (b) any Participant who is offered a
position, duties, responsibilities, compensation and status that are equivalent
in all material respects to his or her position, duties, responsibilities,
compensation and status immediately prior to the succession shall thereafter
have no rights under the Plan, unless during the twenty-four (24) months
following such succession (i) the Participant's employment shall be terminated
otherwise than for Cause, as defined in Section 4.4 above, or (ii) such
Participant shall terminate his or her employment within ninety (90) days
following the occurrence of one or more of the events constituting Constructive
8
<PAGE>
Termination as described in Section 4.3 above, in either of which cases the
benefits to which such Participant would be entitled under Article V hereof in
respect of a Constructive Termination after a Change in Control under Section
4.3 above shall become payable to him or her; and (c) UIL Holdings Corporation
shall remain liable for the payment of any benefits to which the Participant may
become entitled under the foregoing clauses (a) and (b) of this Section 6.1
6.2 If any Participant receiving benefits under Article V of this Plan
should die while any amounts are still payable to him or her thereunder, all
such amounts shall be paid to the Participant's designated beneficiary or, if no
designation has been made, to his or her spouse, if any, and if none, to his or
her children then living, if any, in equal payments, and if none, to the
Participant's personal representatives.
6.3 In the event that a Participant institutes any legal action to
enforce his or her rights under the Plan, and provided that he or she is the
prevailing party, such Participant shall be entitled to recover from UIL
Holdings Corporation (or its Successor) any actual and documented expenses for
reasonable attorney's fees and disbursements incurred by him or her.
6.4 Any dispute or controversy, except a disagreement described in the
second paragraph of Section 4.5, arising under or in connection with the Plan
shall be settled exclusively by arbitration in New Haven, Connecticut, in
accordance with the rules of the American Arbitration Association then in
effect; and judgment may be entered on the arbitration award in any court having
jurisdiction.
6.5 Any notice or other communication pursuant to the Plan intended
for a Participant shall be deemed given when personally delivered to such
Participant or sent to such Participant by registered or certified mail, return
receipt requested, at such Participant's residence address as it appears on the
records of the Participant's Company (or its Successor), or at such other
address as such Participant shall have specified by notice to such Company (or
its Successor) in the manner herein provided. Any notice or other communication
pursuant to the Plan intended for the Participant's Company (or its Successor)
shall be deemed given when personally delivered to the Secretary or Assistant
Secretary of UIL Holdings Corporation (or its Successor), or sent to the
attention of the Secretary or Assistant Secretary by registered or certified
mail, return receipt requested, at its headquarters at 157 Church Street, New
Haven, Connecticut, or at such other address as said Company (or its Successor)
shall have specified by notice to all of the Participants in the manner herein
provided.
6.6 A Participant may not assign, anticipate, transfer, pledge,
hypothecate or alienate in any manner any interest arising under the Plan, nor
shall any such interest be subject to attachment, bankruptcy proceedings or to
any other legal processes or to the interference or control of creditors or
others.
9
<PAGE>
6.7 It is intended that the decision of the Board (or the governing
Board of a Successor to UIL Holdings Corporation) or its designated arbitrator
as specified in the Plan shall be exclusive and final with respect to the
interpretation or application of the Plan. If any body of law should be used or
applied in determining the meaning or effect of the Plan, it shall be the law of
the State of Connecticut.
6.8 In the event any provision of the Plan, if challenged, would be
declared invalid, illegal or unenforceable, such provision shall be construed
and enforced as if it had been more narrowly drawn so as not to be illegal,
invalid or unenforceable and the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby.
10
<PAGE>
