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EXHIBIT 99.1
MCN ENERGY GROUP INC.
NONEMPLOYEE DIRECTORS' COMPENSATION PLAN
(AS AMENDED AND RESTATED EFFECTIVE MARCH 1, 1997)
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TABLE OF CONTENTS
Section Page
SECTION 1. TITLE 1..................................................... 1
Section 2. DEFINITIONS.......................................................... 1
2.01. "Account"............................................. 2
2.02. "Anniversary Date".................................... 2
2.03. "Beneficiary"......................................... 2
2.04. "Board of Directors".................................. 2
2.05. "Cash Deferral Account"............................... 2
2.06. "Code"................................................ 2
2.07. "Committee"........................................... 2
2.08. "Company"............................................. 2
2.09. "Covered Compensation"................................ 3
2.10. "Deferral"............................................ 3
2.11. "Deferral Election Agreement"......................... 3
2.12. "Effective Date"...................................... 3
2.13. "Eligible Board Member"............................... 3
2.14. "ERISA"............................................... 3
2.15. "In Pay Status"....................................... 3
2.16. "Participant"......................................... 3
2.17. "Performance Shares".................................. 3
2.18. "Performance Share Deferral Account".................. 3
2.19. "Plan"................................................ 4
2.20. "Plan Interest Rate".................................. 4
2.21. "Plan Year"........................................... 4
2.22. "Post-Retirement Survivor Benefit".................... 4
2.23. "Pre-Retirement Survivor Benefit"..................... 4
2.24. "Prior Plan".......................................... 4
2.25. "Retirement Date"..................................... 4
2.26. "Retirement Income Benefit"........................... 4
2.27. "SDBRIP Benefit"...................................... 5
2.28. "Spouse".............................................. 5
SECTION 3. PARTICIPATION......................................................... 5
3.01. Commencement of Participation......................... 5
SECTION 4. TRANSFER OF THE SDBRIP BENEFIT........................................ 5
4.01 Transfer of SDBRIP Benefit............................ 5
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SECTION 5. TRANSFER OF PRIOR PLAN BALANCES........................................ 6
5.01. Transfer of Prior Plan Balances........................ 6
5.02. Election to Transfer Prior Plan Balance to Performance
Share Deferral Account................................. 6
SECTION 6. DEFERRAL OF PERFORMANCE SHARES......................................... 6
6.01. Award of Performance Shares............................ 6
6.02. Establishment of Performance Share Deferral Account.... 7
6.03. Shares Issuable Under the Plan......................... 7
6.04. Capital Adjustments.................................... 7
SECTION 7. DEFERRAL OF RETAINER FEE.............................................. 8
7.01. Election of Deferral................................... 8
7.02. Establishment of a Cash Deferral Account............... 8
7.03. Deferrals.............................................. 8
7.04. Deferrals Limited By Section 6.03...................... 8
SECTION 8. FUNDING OF BENEFITS.................................................... 9
8.01. Unfunded Plan.......................................... 9
8.02. Interest............................................... 9
8.03. Dividend Equivalents................................... 9
SECTION 9. CLAIMS PROCEDURE...................................................... 10
9.01. Benefit Claims Procedure.............................. 10
9.02. Appeals Procedure..................................... 10
SECTION 10. FORM AND TIMING OF PAYMENT.......................................... 11
10.01. Normal Retirement Benefit............................. 11
10.02. Change in Payment Option.............................. 12
10.03. Termination Benefit................................... 12
10.04. Hardship Withdrawal Benefit........................... 12
SECTION 11. PRE-RETIREMENT SURVIVOR BENEFITS..................................... 13
11.01. Pre-Retirement Survivor Benefit....................... 13
11.02. Proof of Insurability................................. 14
11.03. Exclusion for Suicide or Self-Inflicted Injury........ 15
SECTION 12. POST-RETIREMENT SURVIVOR BENEFITS.................................... 15
12.01. Post-Retirement Survivor Benefit...................... 15
SECTION 13. VESTING OF BENEFITS.................................................. 15
13.01. Participant's Account................................. 15
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SECTION 14. ADMINISTRATION OF THE PLAN.......................................... 16
14.01. Duties and Powers..................................... 16
14.02. Benefit Statements.................................... 16
14.03. Deferral Election Agreement........................... 16
SECTION 15. AMENDMENT, SUSPENSION, AND TERMINATION............................... 16
15.01. Right to Amend or Terminate........................... 16
15.02. Right to Suspend...................................... 17
15.03. Non-ERISA Plan........................................ 17
15.04. Right to Accelerate.................................. 17
SECTION 16. MISCELLANEOUS....................................................... 17
16.01. Prohibition Against Alienation........................ 17
16.02. Savings Clause........................................ 18
16.03. Payment of Benefit of Incompetent..................... 18
16.04. Spouse's Interest..................................... 18
16.05. Successors............................................ 18
16.06. Compliance With Rule 16b-3............................ 18
16.07. Securities Law Restrictions........................... 19
16.08. Headings.............................................. 19
16.09. Choice of Law......................................... 19
SECTION 17. CHANGE IN CONTROL PROVISIONS........................................ 19
17.01. General............................................... 19
17.02. Transfer to Rabbi Trust............................... 19
17.03. Joint and Several Liability........................... 20
17.04. Dispute Procedures.................................... 20
17.05. Definition of Change in Control....................... 20
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MCN ENERGY GROUP INC.
NONEMPLOYEE DIRECTORS' COMPENSATION PLAN
(as amended and restated effective March 1, 1997)
WHEREAS, MCN ENERGY GROUP INC., a Michigan corporation (hereinafter
referred to as the "Company"), previously adopted the MCN Corporation Deferred
Fee Plan and the MCN Corporation Non-Officer Director Stock Award Plan and
desires to make certain changes to the plans.
NOW, THEREFORE, effective March 1, 1997, the MCN Corporation Deferred Fee
Plan and the MCN Corporation Non-Officer Director Stock Award Plan are hereby
amended and restated as follows:
SECTION 1
TITLE
The MCN Corporation Non-Officer Director Stock Award Plan is amended by
merging with the MCN Corporation Deferred Fee Plan. The title of the amended
plan shall be the "MCN Energy Group Inc. Nonemployee Directors' Compensation
Plan" (hereinafter referred to as the "Plan")
It is intended that the Plan provide benefits exclusively for individuals
who are not employees of the Company and, therefore, the Plan shall be exempt
from all provisions of the Employee Retirement Income Security Act of 1974, as
amended (hereinafter referred to as "ERISA").
SECTION 2
DEFINITIONS
The following words and terms as used herein shall, unless the context
clearly requires a different meaning, have the respective meanings hereinafter
set forth. Except as otherwise
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expressly provided, the masculine gender includes the feminine and the singular
includes the plural.
2.01. "Account" means the record maintained by or for the Company of each
Participant's Cash Deferral Account, as defined in Section 2.05, and
Performance Share Deferral Account, as defined in Section 2.18, under the Plan.
2.02. "Anniversary Date" means any April 1 after the Effective Date, as
defined in Section 2.12.
2.03. "Beneficiary" means the person, persons or entity designated in
writing by the Participant on forms provided by the Company to receive
distribution of certain death benefits under the Plan in the event of the
Participant's death. A Participant may change the designated Beneficiary by
filing a new written designation with the Committee, as defined in Section
2.07, and such designation shall be effective upon receipt by the Committee.
The designation of a Beneficiary other than the Participant's Spouse, as
defined in Section 2.28, must be consented to in writing by the Spouse. If a
Participant has not designated a Beneficiary, or if a designated Beneficiary is
not living at the time of a Participant's death, any death benefits payable
under the Plan shall be paid to the Participant's Spouse, if then living, and
if the Participant's Spouse is not then living, to the Participant's estate.
2.04. "Board of Directors" means the Board of Directors of the Company, as
defined in Section 2.08.
2.05. "Cash Deferral Account" means the record maintained by or for the
Company of each Participant's Deferrals, as defined in Section 2.10, (including
deferrals from the Prior Plan, as defined in Section 2.24), credited interest
and distributions under the Plan. A Participant's Deferrals shall be credited
to his Account as of the end of the month in which the Deferral is withheld
from the Participant's Covered Compensation.
2.06 "Code" means the Internal Revenue Code of 1986, as amended.
2.07. "Committee" means the Compensation Committee of the Board of
Directors which is responsible for the administration of the Plan.
2.08. "Company" means MCN Energy Group Inc., a Michigan corporation, its
successors and assigns.
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2.09. "Covered Compensation" means the annual retainer fee payable
quarterly to an Eligible Board Member, as defined in Section 2.13, in the
current Plan Year, as defined in Section 2.21.
2.10. "Deferral" means the portion of a Participant's Covered Compensation
that has been deferred in accordance with Section 701. Deferral amounts are
retained by the Company as part of its general assets.
2.11. "Deferral Election Agreement" means the benefit agreement described
in Section 14.03 relating to a Participant's commitment to defer Covered
Compensation.
2.12. "Effective Date" means March 1, 1997.
2.13. "Eligible Board Member" means a member of the Board of Directors of
the Company who is not an employee of the Company.
2.14. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
2.15 "In Pay Status" means, with respect to a benefit under the Plan, that
a Participant or Beneficiary has met all of the requirements to receive such
benefit and it is being paid or is about to be paid to such Participant or
Beneficiary.
2.16. "Participant" means an Eligible Board Member who has made a written
election to participate in the Plan in accordance with Section 3.01.
2.17 "Performance Shares" means the annual award of common stock
equivalents pursuant to Section 6.01 which shall (i) have a total value as
determined under Section 6.01, (ii) be rounded to the nearest 100, and (iii) be
credited quarterly to Eligible Board Members' Performance Share Deferral
Account, as defined in Section 2.18. Such Performance Shares will be valued at
an amount equal to the average of the high and low of the Company common stock
price on the New York Stock Exchange Composite Tape for the trading day
preceding the day on which a credit to this Plan is to be made.
2.18 "Performance Share Deferral Account" means the record maintained by
or for the Company of each Participant's (i) Deferrals (including deferrals
from the Prior Plan, as defined in Section 2.24 and the transfer of the
Participant's SDBRIP Benefit, as defined in Section 2.27, if any) which the
Participant has elected to be denominated in Company common stock equivalents
under Section 7.01, (ii) Performance Shares, (iii) credited dividend
equivalents, and (iv) distributions under the Plan. One fourth of a
Participant's annual award of Performance Shares
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shall be credited to his Performance Share Deferral Account as of the beginning
of each quarter in the Plan year. Dividend equivalents shall be credited to
the Participant's Performance Share Deferral Account in accordance with Section
8.03. As of the Valuation Date (defined in Section 10.01), the Participant's
Performance Share Deferral Account shall be valued on a cash basis with
interest credited monthly as provided in Section 8.02.
2.19. "Plan" means the MCN Energy Group Inc. Nonemployee Directors'
Compensation Plan, as described herein and as hereafter amended.
2.20. "Plan Interest Rate" for a Plan Year, as defined in Section 2.21,
means the average of the interest rates for the latest issue, as of the end of
the previous month, of ten-year U.S. Treasury Notes, or such other interest
rate as set by the Committee.
2.21. "Plan Year" means the period beginning April 1 and ending March 31
of each year (a fiscal year).
2.22. "Post-Retirement Survivor Benefit" means the benefit payable under
Section 12.01 to the Beneficiary of a Participant who dies after the
commencement of his Retirement Income Benefit, as defined in Section 2.26.
2.23. "Pre-Retirement Survivor Benefit" means the benefit payable, as
described in Section 11.01, to the Beneficiary of a Participant who dies prior
to the commencement of his Retirement Income Benefit, as defined in Section
2.26.
2.24. "Prior Plan" means the MCN Corporation Deferred Fee Plan and the MCN
Corporation Non-Officer Director Stock Award Plan as in effect prior to the
amendment and restatement of the Plan.
2.25. "Retirement Date" means the first day of the month following the
month in which a Participant ceases to be an Eligible Board Member for any
reason, but in no event later than the first day of the month following the
first annual Board meeting after the Participant attains age seventy (70). For
purposes of Section 11.01, the term Retirement Date shall mean the first day of
the month following the first annual Board meeting after the Participant
attains age seventy (70).
2.26. "Retirement Income Benefit" means the retirement benefit described
in Section 10.01.
2.27 "SDBRIP Benefit" means the actuarial value of an Eligible Board
Member's benefit under the MCN Energy Group Inc. Supplemental Death Benefit and
Retirement Income
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Plan as of March 31, 1997, which shall be credited to an Eligible Board
Member's Performance Share Deferral Account as of April 1, 1997, subject
Section 6.03
2.28. "Spouse" means an individual who is legally married to a Participant
under the laws of the State in which the Participant resides, on the day
immediately preceding the Participant's date of death.
SECTION 3
PARTICIPATION
3.01. Commencement of Participation. An Eligible Board Member shall
become a Participant hereunder upon execution of a Deferral Election Agreement
by the Eligible Board Member and the Committee, no later than the March 22
prior to the first day of a Plan Year, or upon election to the Board. A
properly executed Deferral Election Agreement shall be effective on the April 1
immediately following the execution of the Deferral Election Agreement, and
shall contain the items described in this Section and in Sections 5.02, 7.01,
10.01, 10.03, 11.01(C), and 14.03.
SECTION 4
TRANSFER OF THE SDBRIP BENEFIT
4.01. Transfer of SDBRIP Benefit. Effective March 31, 1997, the MCN
Energy Group Inc. Supplemental Death Benefit and Retirement Income Plan was
amended to remove the provisions which provide benefits to Eligible Board
Members. The actuarial value of an Eligible Board Member's SDBRIP Benefit as
of March 31, 1997, shall be credited to the Eligible Board Member's Performance
Share Deferral Account, which shall be established in accordance with Section
6.02. The transfer of such SDBRIP Benefit shall be phased into the Performance
Share Deferral Account, if necessary, to comply with Section 6.03. Any amount
subject to such a phase-in shall be credited to the Eligible Board Member's
Cash Deferral Account until such time as it may be transferred to the Eligible
Board Member's Performance Share Deferral Account, as provided under Section
7.04.
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SECTION 5
TRANSFER OF PRIOR PLAN BALANCES
5.01. Transfer of Prior Plan Balances. Effective April 1, 1997, an
Eligible Board Member's account balance in the Prior Plan, if any, shall be
credited to the Cash Deferral Account under the Plan, unless the Eligible Board
Member makes an election under Section 5.02 to have such Prior Plan balance
transferred to his Performance Share Deferral Account.
5.02 Election to Transfer Prior Plan Balance to Performance Share Deferral
Account. If an Eligible Board Member notifies the Company on or before March
31, 1997, the Eligible Board Member shall be permitted to elect to transfer any
balance in the Prior Plan to his Performance Share Deferral Account,
established in accordance with Section 6.02. Such election shall be made by
the Eligible Board Member on a properly executed Deferral Election Agreement.
The transfer of such Prior Plan balance shall be phased in, if necessary, to
comply with Section 6.03. Any amount subject to such a phase-in shall be
credited to the Eligible Board Member's Cash Deferral Account until such time
as it may be transferred to the Eligible Board Member's Performance Share
Deferral Account, as provided under Section 7.04.
SECTION 6
DEFERRAL OF PERFORMANCE SHARES
6.01. Award of Performance Shares. Each Eligible Board Member who was
elected at the Annual Meeting of the Shareholders or whose term continued
thereafter as an Eligible Board Member at such meeting shall be awarded
Performance Shares whose value shall be calculated at the beginning of the
fiscal year and rounded to the nearest 100 shares of Company common stock. The
total value of the award shall be established by the Board of Directors. The
number of shares to be awarded annually to each Eligible Board Member shall
initially be based on a total value of $30,000 per year, and that value may be
changed by a majority vote of the Board of Directors, provided, however, that
any changes shall be made no more often than once in any 12-month period. One
fourth of the total amount of the Performance Shares shall be credited
quarterly to the Participant's Performance Share Deferral Account as of July 1,
October 1, January 1 and April
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1. A Participant shall not have the option of receiving such Performance
Shares in cash or Company common stock prior to his Retirement Date. The shares
awarded pursuant to this Plan shall be in addition to, and not in lieu of, an
Eligible Board Member's annual retainer fee or other compensation payable to
each Eligible Board Member as a result of his or her service on the Board of
Directors.
6.02. Establishment of Performance Share Deferral Account. The Committee
shall establish a Performance Share Deferral Account for each Participant to
which (i) the Participant's Performance Shares shall be credited; (ii) the
Participant's SDBRIP Benefit, if any, shall be credited in accordance with
Section 4.01; and (iii) the Participant's account balance, if any, under the
Prior Plan shall be credited in accordance with Section 5.02.
6.03. Shares Issuable Under the Plan. Subject to adjustment as provided
in Section 6.04, the total number of Performance Shares which may be credited
under the Plan in each Plan Year during which the Plan is in effect shall be
the aggregate number of shares payable to the Eligible Board Members as set
forth in Section 6.01 of the Plan, not to exceed .03 percent of the total
number of outstanding shares of MCN Energy Group Inc. common stock as of the
first day of the Plan Year. Shares to be issued under the Plan may be
authorized and unissued shares or authorized and issued shares of common stock
which have been reacquired by the Company and held as treasury shares.
Provided, however, that the number of shares that may be issued under this Plan
may not exceed 1% of the number of shares issued and outstanding on March 1,
1994.
6.04. Capital Adjustments. The aggregate number and class of shares
subject to and authorized by the Plan shall be proportionately adjusted for any
increase or decrease in the number of issued shares of common stock resulting
from the payment of a stock dividend, stock split, recapitalization, merger,
consolidation, reorganization or any similar capital adjustment or other
increase or decrease in the number of outstanding shares effected without
receipt of consideration by the Company.
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SECTION 7
DEFERRAL OF RETAINER FEE
7.01. Election of Deferral. A Participant may elect, in his Deferral
Election Agreement, to defer all or a portion of his cash retainer fee for each
Plan Year in which he is a Participant. Such annual Deferral shall not exceed
the Participant's Covered Compensation. Except as provided in Section 10.04(C),
a Participant's election to defer all or a portion of his cash retainer fee for
a Plan Year shall be irrevocable for that Plan Year. A Participant shall
indicate on his Deferral Election Agreement whether his Deferral will be
credited to his Cash Deferral Account or his Performance Share Deferral
Account. Except as provided in Section 7.04, once an amount has been credited
to the Cash Deferral Account or the Performance Share Account, such amounts may
not subsequently be transferred to the other account.
7.02. Establishment of a Cash Deferral Account. If a Participant so
elects on his Deferral Election Agreement, the Committee shall establish a Cash
Deferral Account for such Participant to which (i) the Participant's Deferrals
shall be credited; and (ii) the Participant's account balance, if any, under
the Prior Plan shall be credited in accordance with Section 5.01.
7.03. Deferrals. A Participant may continue to make the annual Deferral
provided under Section 7.01 with respect to his Deferral Election Agreement
until he resigns or is otherwise removed from his membership on the Board of
Directors, or he receives a hardship withdrawal.
7.04 Deferrals Limited By Section 6.03. If a Participant elects in his
Deferral Election Agreement to have his Deferral credited to his Performance
Share Deferral Account and such election is limited due to Section 6.03, the
amount of the Participant's Deferral that cannot be credited to his Performance
Share Deferral Account due to Section 6.03 ("Limited Deferral") shall be
credited to the Participant's Cash Deferral Account. The amount of the Limited
Deferral shall be denoted by a bookkeeping entry. At such time as the limits
of Section 6.03 permit, the Limited Deferral, plus interest equivalents at the
Plan Interest Rate, shall be transferred from the Participant's Cash Deferral
Account to his Performance Share Deferral Account. The amount transferred
shall be converted to a number of common stock equivalents equal to the average
of
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the high and low of the Company common stock price on the New York Stock
Exchange Composite Tape for the trading day preceding the day on which a credit
to this Plan is to be made.
SECTION 8
FUNDING OF BENEFITS
8.01. Unfunded Plan. The Plan shall be unfunded. All benefits payable
under the Plan shall be paid from the Company's general assets. The Company
shall not be required to set aside or hold in trust any funds for the benefit
of a Participant or Beneficiary, who shall have the status of a general
unsecured creditor with respect to the Company's obligation to make benefit
payments pursuant to the Plan. Any assets of the Company available to pay Plan
benefits shall be subject to the claims of the Company's general creditors and
may be used by the Company in its sole discretion for any purpose.
8.02. Interest. Interest shall be credited and compounded monthly to each
Participant's Cash Deferral Account during each Plan Year based upon the Plan
Interest Rate in effect for such Plan Year for so long as there remains a Cash
Deferral Account balance.
8.03 Dividend Equivalents. Dividend equivalents equal to 50% of the
dividend rate payable on Company common stock shall be credited to a
Participant's Performance Share Deferral Account based on the number of
Performance Shares in such Participant's Performance Share Deferral Account.
Dividend equivalents shall be reinvested in Performance Shares based upon the
average of the high and low of the Company common stock price on the dividend
payment date.
SECTION 9
CLAIMS PROCEDURE
9.01. Benefit Claims Procedure. All applications for benefits under the
Plan shall be submitted to the Committee at the Company's principal place of
business. Applications for benefits must be in writing and must be signed by
the Participant or, in the case of a Pre-Retirement or Post-Retirement Survivor
Benefit, by the Beneficiary or legal representative of
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the deceased Participant. In the event of a Participant's death, a certified
copy of the death certificate will be required by the Committee. The Committee
reserves the right to require that the Participant furnish proof of his age
prior to processing any application. Each application shall be acted upon and
approved or disapproved within ninety (90) days following its receipt by the
Committee. In the event any application for benefits is denied in whole or in
part, the Committee shall notify the applicant in writing of such denial and of
his right to a review by the Committee and shall set forth, in a manner
calculated to be understood by the applicant, specific reasons for such denial,
specific references to pertinent Plan provisions on which the denial is based,
a description of any additional material or information necessary for the
applicant to perfect his application, an explanation of why such material or
information is necessary, and an explanation of the Plan's review procedure.
9.02. Appeals Procedure. Any person or his duly authorized representative
whose application for benefits is denied in whole or in part may appeal such
denial to the Committee for a review of the decision by submitting to the
Committee at the Company's principal place of business within ninety (90) days
after receiving written notice from the Committee of the denial of his claim, a
written statement:
(a) requesting a review by the Committee of his
application for benefits;
(b) setting forth all of the grounds upon which his
request for review is based and any facts in support thereof;
and
(c) setting forth any issues or comments that the
applicant deems pertinent to his application.
The Committee shall act upon each application within sixty (60) days after
receipt of the applicant's request for review by the Committee.
The Committee shall make a full and fair review of each such application
and any written materials submitted by the applicant or the Company in
connection therewith and may require the Company or the applicant to submit
such additional facts, documents, or other evidence as the Committee in its
sole discretion deems necessary or advisable in making such a review. On the
basis of its review, the Committee shall make an independent determination of
the applicant's eligibility for benefits under the Plan. The decision of the
Committee on any application for benefits shall be final and conclusive upon
all persons.
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In the event that the Committee denies an application in whole or in part,
the Committee shall give written notice of the Committee's decision to the
applicant setting forth, in a manner calculated to be understood by the
applicant, the specific reasons for such denial and specific references to the
pertinent Plan provisions on which the Committee's decision was based.
SECTION 10
FORM AND TIMING OF PAYMENT
10.01. Normal Retirement Benefit. Each Participant who retires on his
Retirement Date shall be entitled to a Retirement Income Benefit commencing on
the first of the month following the month in which his Retirement Date occurs
("Valuation Date"). As of the Valuation Date, the Participant's Account shall
be valued on a cash basis, using the average of the high and low of the Company
common stock price on the New York Stock Exchange Composite Tape on the day
before valuation is made, with interest credited monthly at the Plan Interest
Rate. Notwithstanding the fact that a Participant's Account will be valued on
a cash basis as of the Valuation Date, the distribution to a Participant of the
amount in his Performance Share Deferral Account shall be paid in Company
common stock equal to the number of shares of Company common stock deemed to be
held in the Participant's Account and valued at the average of the high and low
price of MCN Energy Group Inc. common stock on the New York Stock Exchange
Composite Tape on the day before payment is made. Payment of the vested
portion of a Participant's accounts shall be made in accordance with the
Participant's selection on his Benefit Agreement in monthly payments in one
year increments not to exceed 15 years, or as a lump sum distribution of the
Participant's Account. The amount of the monthly payments shall be calculated
to pay out over the specified period the entire balance in the Participant's
Account as of his Retirement Date with interest credited monthly on the
declining balance at the Plan Interest Rate. The Participant's Account shall
continue to be credited monthly with interest at the Plan Interest Rate and
charged with the monthly payments to the Participant. The amount of the
monthly payments to the Participant shall be adjusted on January 1 of each year
to reflect changes in the Plan Interest Rate and other changes in the
Participant's Account balance.
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10.02. Change in Payment Option. A Participant's payment election may be
changed at any time by the Participant submitting a new payment selection to
the Committee, but any change received by the Committee less than twelve months
prior to the Participant's Retirement Date shall be void.
10.03. Termination Benefit. A Participant who ceases to be an Eligible
Board Member prior to his Retirement Date shall receive payment of the
Participant's Account balance in accordance with the Participant's selection on
his Payment Election Form, either in monthly payments in one year increments
not to exceed 15 years, or as a lump sum distribution in an amount equal to the
Participant's Account. Payment of a Participant's termination benefit shall
begin no later than one hundred twenty (120) days after the Participant ceases
to an Eligible Board Member. After receiving a termination benefit, neither
the Participant, nor his spouse or Beneficiary shall be entitled to any further
benefit hereunder.
10.04. Hardship Withdrawal Benefit.
(A) At any time prior to the commencement of Retirement Income
Benefits hereunder, a Participant may request that the Committee make a
distribution to him of his Cash Deferral Account balance in a lump-sum
within 30 days. Such distribution shall be made only if the Committee
determines that the Participant is suffering from a financial hardship
that cannot be satisfied from his normal sources of income.
(B) Financial hardship is limited to the amount required to meet the
need created by any of the following situations:
1. Financial obligations incurred by the
Participant on account of death or disability in the
immediate family, which obligations the Participant is
not able to pay out of liquid assets or current cash
flow.
2. Inability to purchase out of liquid
assets, current cash flow, or otherwise reasonably
finance the purchase of necessary shelter, utilities,
equipment, furnishings and other necessities for the
Participant's immediate family.
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3. Inability to pay out of liquid assets, current cash
flow or otherwise reasonably finance, educational
expenses for a member of the Participant's immediate
family.
(C) For the 24-month period beginning on the first of the month
after receiving the hardship distribution, a Participant shall not be
eligible to defer any portion of the retainer fee under Section 7.01.
After receiving a hardship distribution in a Plan Year, neither the
Participant, nor his Spouse or Beneficiary shall be entitled to any
further benefit hereunder unless the Participant completes two years of
participation after the hardship distribution, in which event the
Pre-Retirement Survivor Benefit shall be based solely on Deferrals after
the hardship distribution. If a Participant dies during the two years of
participation after the hardship distribution, the Pre-Retirement
Survivor Benefit shall be computed as provided in Section 11.01, except
that the projection forward shall include hypothetical annual Deferrals
equal to zero.
SECTION 11
PRE-RETIREMENT SURVIVOR BENEFITS
11.01. Pre-Retirement Survivor Benefit. If a Participant dies prior to
his Retirement Date, his Beneficiary shall be entitled to receive an amount
equal to the Participant's Account balance as follows:
(A) Cash Deferral Account. The benefit from the Cash Deferral Account
shall be equal to the present value, at the Participant's date of death, of the
Participant's Cash Deferral Account projected forward to his Retirement Date.
This projection forward will be accomplished by valuing the Participant's Cash
Deferral Account as of the date of the Participant's death, crediting to his
Cash Deferral Account balance as of his date of death the amount of his annual
Deferral, if any, for the year of his death and for all subsequent years
through and including the year in which his Retirement Date falls and crediting
interest on the Account balance and projected Deferrals at the Plan Interest
Rate on his date of death in order to arrive at the projected value of his Cash
Deferral Account balance as of his Retirement Date. This projected Cash
Deferral Account balance then will be converted to its present value on the
Participant's date of death using 70% of the Plan Interest Rate on the
Participant's date of death.
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(B) Performance Share Deferral Account. The Participant's Performance
Share Deferral Account will be valued on a cash basis as of the date of the
Participant's death. Notwithstanding such cash valuation, the distribution to
a Beneficiary of the amount in the Participant's Performance Share Deferral
Account shall be paid in Company common stock equal to the number of shares of
Company common stock deemed to be held in the Participant's Account.
(C) Payment. The pre-retirement survivor benefit shall be paid, in
accordance with the Participant's selection in his Benefit Agreement, either in
equal monthly payments in one year increments not to exceed 15 years, or as a
lump sum distribution of the Participant's Account.
11.02 Proof of Insurability. If a new Participant is uninsurable, or does
not cooperate in the application for life insurance, such Participant's
Beneficiary shall not be entitled to receive a Pre-Retirement Survivor Benefit
under Section 11.01(A). The Beneficiary of such a Participant shall receive a
distribution of an amount equal to the Participant's Account balance as of the
Participant's date of death. Such distribution shall be paid in accordance
with the Participant's selection on his Benefit Agreement, either in monthly
payments in one year increments not to exceed 15 years, or as a lump sum
distribution.
If a Participant, who was insurable at the time participation in the Plan
commenced, elects to increase his Deferral, such increase shall not be
reflected in computing the Pre-Retirement Survivor Benefit under Section
11.01(A) if the Participant became uninsurable prior to electing the increased
Deferral or does not cooperate in the application for life insurance.
11.03. Exclusion for Suicide or Self-Inflicted Injury. Notwithstanding
any other provision of the Plan, no Pre-Retirement Survivor Benefits in excess
of a Participant's Account balance as of his date of death shall be paid to any
Participant or Beneficiary in the event the Participant dies as the result of
suicide or self-inflicted injury within two years after January 1 of the first
year of participation.
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SECTION 12
POST-RETIREMENT SURVIVOR BENEFITS
12.01. Post-Retirement Survivor Benefit. The Beneficiary, other than the
Participant's estate, of a Participant who dies after commencement of his
Retirement Income Benefit shall be entitled to continue to receive the
Retirement Income Benefit payments being made to the Participant under Section
10.01 for the remainder of the period over which payments were being made to
the Participant. If the Beneficiary is the Participant's estate, the
Retirement Income Benefit shall be paid in a lump sum distribution to the
estate within 120 days after the date of the Participant's death.
SECTION 13
VESTING OF BENEFITS
13.01. Participant's Account. A Participant shall be 100% vested in his
Account balance at all times and shall rank as an unsecured creditor of the
Company for his entire Account balance.
SECTION 14
ADMINISTRATION OF THE PLAN
14.01. Duties and Powers. The Committee shall be responsible for the
general administration and interpretation of the Plan and the proper execution
of its provisions. It shall cause to be maintained all necessary books of
accounts and records. It shall have power to establish, interpret, enforce,
amend, and revoke, from time to time, such rules and regulations for the
administration of the Plan and the conduct of its business as it deems
appropriate, including the right to remedy ambiguities, inconsistencies and
omissions (provided such rules and regulations are uniformly applied to all
persons similarly situated). Any section that the Committee is required or
authorized to take shall be final and binding upon each and every person who is
or may become a Plan Participant or Beneficiary.
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14.02. Benefit Statements. No later than 120 days after the end of each
Plan Year, the Company will provide each Participant with a statement setting
forth the Participant's Account balance as of the last day of the immediately
preceding Plan Year.
14.03. Deferral Election Agreement. The Committee shall provide to each
Eligible Board Member a form of Deferral Election Agreement, which shall set
forth the Eligible Board Member's acceptance of the terms provided hereunder,
his agreement to be bound by the terms of the Plan and such other matters as
are set forth in this Plan or deemed advisable by the Committee.
SECTION 15
AMENDMENT, SUSPENSION, AND TERMINATION
15.01. Right to Amend or Terminate. The Plan may be amended or terminated
by the Board of Directors at any time. Such amendment or termination may
modify or eliminate any benefit hereunder other than a benefit that is In Pay
Status, or the vested portion of a benefit that is not In Pay Status.
15.02. Right to Suspend. If the Board of Directors determines that
payments under the Plan would have a material adverse affect on the Company's
ability to carry on its business, the Board of Directors may suspend such
payments temporarily for such time as in its sole discretion it deems
advisable, but in no event for a period in excess of one year. The Company
shall pay such suspended payments in a lump sum immediately upon the expiration
of the period of suspension.
15.03. Non-ERISA Plan. The Plan is intended to provide benefits for
Eligible Board Members who are not employees of the Company and, therefore, to
be exempt from ERISA. Accordingly, the Plan may be terminated and, except for
existing Account balances and other benefits In Pay Status (which, at the
option of the Board of Directors, may be accelerated and the balance paid in a
single, actuarially equivalent lump-sum), no further benefits shall be paid
hereunder in the event it is determined by a court of competent jurisdiction or
by an opinion of
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counsel that the Plan constitutes an employee pension benefit plan within the
meaning of Section 3(2) of ERISA which is not so exempt.
15.04. Right to Accelerate. The Board of Directors in its sole discretion
may accelerate all vested benefits upon termination of the Plan, and pay such
benefits in a single, actuarially equivalent lump-sum.
SECTION 16
MISCELLANEOUS
16.01. Prohibition Against Alienation. Except as otherwise provided in
the Plan, no right or benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to so anticipate, alienate, sell, transfer, assign,
pledge, encumber, or charge the same shall be void. No such right or benefit
shall be liable for or subject to the debts, contracts, liabilities,
engagements, or torts of the person entitled to such right or benefit.
16.02. Savings Clause. If any provision of this instrument shall be
finally held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall continue to be fully
effective.
16.03. Payment of Benefit of Incompetent. In the event the Committee
finds that a Participant, former Participant, or Beneficiary is unable to care
for his affairs because of his minority, illness, accident, or other reason,
any benefits payable hereunder may, unless other claim has been made therefor
by a duly appointed guardian, committee or other legal representative, be paid
to a spouse, child, parent, or other blood relative or dependent or to any
person found by the Committee to have incurred expenses for the support and
maintenance of such Participant, former Participant, or Beneficiary; and any
such payments so made shall be a complete discharge of all liability therefor.
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16.04. Spouse's Interest. The interest in the benefits hereunder of a
spouse of a Participant who has predeceased the Participant shall automatically
pass to the Participant and shall not be transferable by such spouse in any
manner including but not limited to such spouse's will, nor shall such interest
pass under the laws of intestate succession.
16.05. Successors. In the event of any consolidation, merger, acquisition
or reorganization of the Company, the obligations of the Company under this
Plan shall continue and be binding upon the Company and its successors.
16.06. Compliance With Rule 16b-3. It is intended that the Plan be
applied and administered in compliance with Rule 16b-3 under the Securities and
Exchange Act of 1934. If any provision of the Plan would be in violation of
Rule 16b-3 if applied as written, such provision shall not have effect as
written and shall be given effect so as to comply with Rule 16b-3, as
determined by the Board of Directors.
16.07. Securities Law Restrictions. The Company may impose such other
restrictions on any shares of Company common stock granted pursuant to this
Plan as it may deem advisable including, but not limited to, restrictions
intended to achieve compliance with the Securities Act of 1933, as amended,
with the Securities and Exchange Act of 1934, as amended, with the requirements
of any stock exchange upon which the Company common stock is then listed, and
with any Blue Sky or state securities laws applicable to such Company common
stock.
16.08. Headings. Headings of sections and subsections as used herein are
inserted solely for convenience and reference and constitute no part of the
Plan.
16.09. Choice of Law. This Plan shall be governed by and construed in
accordance with the laws of the State of Michigan to the extent not superseded
by applicable federal statutes or regulations.
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SECTION 17
CHANGE IN CONTROL PROVISIONS
17.01. General. In the event of a Change in Control, as defined in
Section 17.05, then, notwithstanding any other provision of the Plan, the
provisions of this Section 17 shall be applicable and shall supersede any
conflicting provisions of the Plan.
17.02. Transfer to Rabbi Trust. The Company has established a trust
pursuant to a Trust Agreement dated January 3, 1991 (the "Rabbi Trust"). The
terms of the Rabbi Trust provide that, in the event of a Change in Control and
thereafter, assets are to be transferred to such Trust to provide benefits
under the Plan. The Company shall make all transfers of funds required by the
Rabbi Trust in a timely manner and shall otherwise abide by the terms of the
Rabbi Trust.
17.03. Joint and Several Liability. Upon and at all times after a Change
in Control, the liability under the Plan of the Company and each Affiliated
Employer that has adopted the Plan shall be joint and several so that the
Company and each such Affiliated Employer shall each be liable for all
obligations under the Plan to each employee covered by the Plan, regardless of
the corporation by which such employee is employed.
17.04. Dispute Procedures. In the event that, upon or at any time
subsequent to a Change in Control, a claim for benefits under the Plan of a
Participant or Beneficiary who has exhausted the claims and appeals procedures
set forth in Sections 9.01 and 9.02 is denied in whole or in part, the
following additional procedures shall be applicable:
(a) Any amount that is not in dispute shall be paid to the
Participant or Beneficiary at the time or times provided herein.
(b) The Company shall advance to such claimant from time to time
such amounts as shall be required to reimburse the claimant for reasonable
legal fees, costs and expenses incurred by such claimant in seeking a
judicial resolution of his or her claim, including reasonable fees, costs
and expenses relating to appeals; provided, however, that the Company
shall not be obligated to advance to the claimant any amounts under this
Section 17.04(b) unless and
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until the claimant agrees in writing to repay to the Company, immediately upon
the occurrences of a final judicial determination with respect to such dispute,
any amount of such fees, costs and expenses that is not awarded to such
claimant in a final order of a court of competent jurisdiction.
17.05. Definition of Change in Control. A "Change of Control" means:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either: (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock"); or (ii) the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided,
however, that the following acquisitions shall not constitute a
Change of Control: (A) any acquisition directly from the Company
(excluding any acquisition by virtue of the exercise of a
conversion privilege); (B) any acquisition by the Company; (C) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company; or (D) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation,
if, following such reorganization, merger or consolidation, the
conditions described in clauses (i), (ii) and (iii) of subsection
(c) of this Section 17.05 are satisfied; or
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11
of Regulation
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14A 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; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i) more
than 60% of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Voting Securities
immediately prior to such reorganization, merger or consolidation
in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation,
of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding
the Company, any employee benefit plan or related trust) of the
Company or such corporation resulting from such reorganization,
merger or consolidation and any Person beneficially owning,
immediately prior to such reorganization, mergers or
consolidation, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or Outstanding Voting Securities,
as the case may be, beneficially owns, directly or indirectly, 20%
or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors and (iii) at least a
majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of
the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(d) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with
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respect to which following such sale or other disposition, (A)
more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior
to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or
other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding the Company and any employee benefit plan (or
related trust) of the Company or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board
of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition
of assets of the Company.
IN WITNESS WHEREOF, MCN ENERGY GROUP INC. has caused this Plan to be
executed as of this 1st day of March, 1997.
MCN ENERGY GROUP INC.
BY /s/ Daniel L. Schiffer
-----------------------------
Daniel L. Schiffer,
Senior Vice President,
General Counsel and Secretary
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