Exhibit 10.1
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CHANGE IN CONTROL AGREEMENT
This is an Agreement entered into between SEMCO Energy, Inc., a Michigan
corporation ("Company"), and ______________ ("Executive"). References to
employment by Executive with the Company include employment by the Company or
one of its subsidiaries.
BACKGROUND
A. Executive is a valued member of the Company's management team.
B. The Board of Directors of the Company desires to recognize the
contributions of the Executive to the Company and to assure continuous
harmonious management of the Company.
C. The Board of Directors of the Company believes that public companies in
the natural gas industry face the possibility of a Change in Control (as
hereinafter defined), and that the management uncertainty related to a Change in
Control can have potential adverse effects on the Company and its shareholders.
D. The Board of Directors of the Company believes that it is in the best
interests of the Company that the Executive remain in the employ of the Company
during an actual or threatened Change in Control of the Company, and that the
Executive be granted certain protection in the event that the Executive's
employment is involuntarily terminated or the Executive terminates employment
for Good Reason (as hereinafter defined) prior to or following a Change in
Control.
AGREEMENT
Executive and Company agree as follows:
SECTION 1. EFFECTIVE DATE OF AGREEMENT. This Agreement shall be effective
immediately upon its execution by both parties.
SECTION 2. TERMINATION OF AGREEMENT. This Agreement shall terminate upon
the earlier of:
(a) The termination of the Executive's employment with the Company for any
reason (i) prior to a Change in Control and (ii) not In Anticipation of a Change
in Control (excluding assignment of Executive to employment by the Company or a
subsidiary of the Company);
(b) Upon the Executive's assignment to a non-Executive position if said
assignment is (i) prior to a Change in Control and (ii) not In Anticipation of a
Change in Control;
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(c) The termination of Executive's employment because of death, disability,
voluntary retirement on or after age 65, or Cause (as defined in Section 6(b));
or
(d) April 1, 2003, unless extended by the Board of Directors of the Company.
SECTION 3. REQUIREMENTS FOR BENEFITS. The benefits set forth in Section 7
shall be provided in the event there has been a Change in Control as set forth
in Section 4 and within two years thereafter there is a Termination of
Employment of Executive, as described in Section 6. The benefits set forth in
Section 7 shall also be provided in the event there is a Termination of
Employment of Executive In Anticipation of a Change in Control as set forth in
Section 5. Benefits shall be provided only in response to a valid claim made
within sixty (60) days of such event or the Change in Control, whichever is
later, in accordance with the provisions of Section 14.
SECTION 4. CHANGE IN CONTROL. A "Change in Control" as used herein shall be
deemed to have occurred:
(a) if any "person," including a "group" as determined in accordance with
Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"), is
or becomes the beneficial owner, directly or indirectly, of securities of the
Company representing forty (40) percent or more of the combined voting power of
the Company's then outstanding securities;
(b) if the shareholders of the Company approve (i) the sale of all or
substantially all the Company's assets or (ii) any transaction which would
result in paragraph (a) above being true; or
(c) upon the addition of a majority of new members to the Board of Directors
within any twelve-month period.
SECTION 5. IN ANTICIPATION OF A CHANGE IN CONTROL. An action is taken "In
Anticipation of a Change in Control" if taken in preparation for a Change in
Control within six (6) months prior to an actual Change in Control. Subject to
reasonable rebuttal, any action by the Company taken within six (6) months prior
to a Change in Control shall be presumed to be an action taken In Anticipation
of a Change in Control.
SECTION 6. TERMINATION OF EMPLOYMENT.
(a) "Termination of Employment" means:
(1) Termination by the Company of the Executive's employment for any
reason other than death, disability, voluntary retirement on or after age 65 or
Cause (excluding assignment of Executive to employment by the Company or a
subsidiary of Company); or
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(2) Resignation by Executive for Good Reason.
(b) "Good Reason" means the occurrence of any of the following events
without Executive's express written consent:
(1) Any reduction in the Executive's salary;
(2) Any failure by the Company to continue any bonus plan, or other
incentive plan (without instituting a comparable plan) in which the Executive
participated;
(3) Any significant diminution of the Executive's authority, duties and
responsibilities,
(4) Any required relocation of the Executive's residence to a location
outside of the state of Michigan.
(c) "Cause" means an act of Executive constituting willful gross
misconduct, material breach of duties, or an act of material dishonesty or fraud
that is injurious to the Company.
SECTION 7. SEVERANCE BENEFIT. Upon the occurrence of the events described
in Section 3, Company shall provide the Executive the following benefits:
(a) An amount equal to one year's salary, computed as (i) Executive's
highest annual W-2 Compensation from the Company during the last three years, or
(ii), if Executive has not been employed by the Company for at least one full
calendar year upon the occurrence of the events described in Section 3, an
amount equal to Executive's annual base salary rate at the time of such
occurrence. "W-2 Compensation" shall exclude compensation derived from the
exercise of stock options and other income from the Company's stock based
incentive plan, signing bonuses, relocation expense reimbursement and awards
under the Short Term Incentive Plan or its successor.
(b) Continued participation in the Company's (or successor's) group life and
disability coverage (to the extent permitted by law and any applicable insurance
carrier), family medical, hospitalization and dental coverage, until the earlier
of the expiration of one (1) year or the commencement of a comparable coverage
from another employer; provided that any continuation of medical and dental
coverage shall run concurrently with the Executive's statutory COBRA period.
The Executive shall promptly notify the Company upon receipt of comparable
coverage from a new employer.
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(c) The Company shall provide and pay for services for an out placement
executive search firm for a period of six months following a Termination of
Employment of Executive.
(d) Benefits shall be reduced to the extent necessary to avoid loss of any
tax deduction or payment of non-deductible items under Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code").
SECTION 8. METHOD OF PAYMENT.
(a) In the case of a "Friendly Change in Control," as defined below,
the Benefit payable under Section 7(a) shall be paid over twelve months in equal
payments consistent with the Company's payroll practices, the first payment
being due on the first payday of the month following Termination of Employment.
Any late payments shall include interest at the prime rate (as published by
First of Michigan Bank) plus two percentage points. A "Friendly Change in
Control" means a transaction approved by (i) a majority of the members of the
Board of Directors who have been in office for at least twelve (12) months or
(ii) a Board whose majority consists of members in office twelve months, plus
members who were recommended or elected by a majority of incumbent directors.
(b) In any case other than a Friendly Change in Control, the Benefit
payable under Section 7(a) shall be paid in a lump sum within twenty (20) days
after Termination of Employment, with interest thereon accruing thereafter at
the rate described above.
SECTION 9. NO MITIGATION OR DUTY TO SEEK EMPLOYMENT. Executive shall be
under no obligation to seek or accept other employment after Termination of
Employment. Further, any Benefits, except as set forth in Section 7(b), shall
not be diminished as a result of subsequent employment.
SECTION 10. TAX WITHHOLDING. The Company may withhold or require Executive
to remit (at the time of receipt of Benefits) all applicable Federal, State,
local or other withholding taxes.
SECTION 11. BINDING EFFECT.
(a) This Agreement shall be binding upon successors and assigns of the
company.
(b) This Agreement shall be binding upon Executive and shall inure to
the benefit of Executive's legal representatives and heirs.
SECTION 12. AMENDMENT OR MODIFICATION OF AGREEMENT. This Agreement may not
be modified or amended except by instrument in writing signed by the parties
hereto.
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SECTION 13. VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision.
SECTION 14. CLAIMS PROCEDURE.
(a) The Administrator shall be the Company, whose address is SEMCO
Energy, Inc., 405 Water St., Port Huron, Michigan. The Company shall have the
right to designate one or more employees as Administrator at any time. The
Company shall give Executive written notice of any change. All notices shall be
in writing, and delivered to Executive in person or sent by certified mail to
Executive's last known address.
(b) The Administrator shall make all determinations as to Benefits.
Any denial of a claim for benefits shall be stated in writing and delivered or
mailed within ten (10) business days after receipt of the claim, unless special
circumstances require an extension of time. Written notice of an extension
shall be furnished prior to the termination of the initial 10-day period. Such
extension may not exceed ten (10) business days. Failure to provide any notice
within ten (10) business days constitutes acceptance of the claim. Notice of
denial shall set forth reasons for the denial, reference to provisions upon
which the denial is based, a description of additional material or information
necessary to perfect the claim, with an explanation of why such material or
information is necessary, and an explanation of claim review procedures, written
in a manner that may be understood without legal counsel.
(c) A claimant whose claim has been wholly or partially denied may
request, within ten (10) days following such denial in writing a review of such
denial. The claimant may submit comments in writing and may include a request
for a hearing in person before the administrator. Prior to submitting a
request, the claimant shall be entitled to review such documents as the
Administrator agrees are pertinent to the claim. The claimant may be
represented by counsel. The Administrator's decision with respect to any review
shall be in writing and shall be mailed not later than ten (10) days following
receipt of the request for review unless special circumstances, such as the need
to hold a hearing, require an extension of time, in which case the
Administrator's decision shall be delivered in person, or mailed by certified
mail, not later than twenty (20) days after receipt of such request.
(d) A claimant who has followed the procedure in paragraphs (b) and (c)
of this section, but who has not obtained full relief on Executive's claim may,
within sixty (60) days following receipt of the decision on review, apply in
writing to the Administrator for binding arbitration of Executive's claim before
three arbitrators in St. Clair County, Michigan, in accordance with the
commercial arbitration rules of the American Arbitration Association. The
Company shall designate one arbitrator, the Executive shall choose an arbitrator
and the two arbitrators jointly shall designate a third arbitrator. The
arbitrators' sole authority shall be to interpret and apply the provisions of
this Agreement; they shall not change, add to, or subtract from, any of its
provisions. The arbitrators shall have the power to compel attendance of
witnesses at the hearing. Once a claimant commences arbitration proceedings,
any right to commence litigation shall be waived, and the arbitration
proceedings shall continue to conclusion. Any court having jurisdiction may
enter a judgment based upon such arbitration. All decisions of the arbitrators
shall be final and binding without appeal to any court.
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SECTION 15. LEGAL FEES AND EXPENSES. To the extent that Executive is
successful in the above-described proceedings, the Company shall reimburse
Executive for legal fees and expenses incurred as the result of any controversy
over any provision in this Agreement. The Company shall reimburse the executive
within twenty (20) days following written demand therefor with interest accruing
thereafter in accordance with the provisions of Section 8(a).
SECTION 16. NON-ALIENATION OF BENEFITS. Except as may be protected by
applicable law, no transfer, pledge, or attachment of any Benefits shall be
valid.
SECTION 17. MISCELLANEOUS. A waiver of any breach shall not constitute a
waiver of any subsequent breach. The headings shall not be a part of, or
control or affect the meaning of, any provision hereof.
SECTION 18. GOVERNING LAW. To the extent not preempted by Federal law, this
agreement shall be governed and construed in accordance with the laws of the
state of Michigan.
SECTION 19. ENTIRE AGREEMENT. This document represents the entire agreement
and understanding of the parties with respect to its subject matter.
INTENDING TO BE LEGALLY BOUND, the parties hereto have executed this
Agreement as of the _____ day of ___________, _____.
SEMCO Energy, Inc.
By ___________________________________
William L. Johnson
Chairman and CEO
Executive
______________________________________
Signature
Printed name:
COCAGR.DOC(sla)
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*****
This form of Change in Control Agreement is in effect for the following
Executives of the Company:
- -- Samuel B. Dallas dated June 10, 1999
- -- Steven W. Warsinske dated March 20, 1998
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