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EXHIBIT 10.11
FOURTH RESTATEMENT OF
THE BENEFIT EQUALIZATION PLAN
FOR CERTAIN EMPLOYEES OF
THE DETROIT EDISON COMPANY
The Benefit Equalization Plan for Certain Employees of The Detroit Edison
Company (the "Plan"), established by The Detroit Edison Company (the "Company")
effective March 1, 1978, as amended and restated effective May 22, 1989, June
26, 1995, and January 1, 1996, is hereby amended and restated as of October 27,
1997, by this Fourth Restatement.
SECTION 1 - PURPOSE
The sole purpose of this Plan is to assure that all eligible persons who become
eligible to and do receive benefits under the Employees' Retirement Plan of The
Detroit Edison Company (the "Retirement Plan") will receive the same dollar
amount of benefits as they would have received but for the limitations on
contributions and benefits imposed from time to time solely by Section 415 of
the Internal Revenue Code. This Plan is not intended to and shall not be
construed so as to provide any person receiving benefits under the Retirement
Plan and, where applicable, this Plan with benefits in the aggregate which are
either larger or smaller than the benefit which would result from the
calculation made under the applicable provisions of the Retirement Plan without
giving effect to or recognition of solely the benefit limitation provisions of
Section 415 of the Internal Revenue Code. The benefit under this Plan provided
to any person shall be separate from and in addition to any benefit provided
under the Retirement Plan or any other plan or program maintained by the
Company.
SECTION 2 - ELIGIBILITY
Each retired employee of the Company and, as applicable, the spouse or
beneficiary of a former Company employee whose benefits under the Retirement
Plan are limited by the provisions set forth therein to conform to Section 415
of the Internal Revenue Code shall be eligible for the benefits provided by
this Plan. In no event shall a person who is not entitled to benefits under the
Retirement Plan be eligible for any benefits under this Plan.
SECTION 3 - AMOUNT OF BENEFITS
The benefits payable hereunder shall equal the excess, if any, of:
(a) the benefits which would have been paid to a retired employee, such
employee's spouse or beneficiary under the Retirement Plan if the
provisions of such plan were administered and benefits paid without
regard solely to the special benefit
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limitations added to such plan to conform it to Section 415 of the
Internal Revenue Code, over
(b) the benefits which would be otherwise payable to such retired
employee, such employee's spouse or beneficiary under the Retirement
Plan taking into account solely the special benefit limitations added
to such plan to conform it to Section 415 of the Internal Revenue
Code.
SECTION 4 - PAYMENT OF BENEFITS; AMENDMENTS
(a) Payment of benefits under this Plan shall be made coincident with the
payment of benefits under the Retirement Plan or as soon as
practicable thereafter.
(b) In the event an employee receives an assessment of income taxes from
the Internal Revenue Service which treats any amount payable under
this Plan as being includible in such employee's gross income prior to
the actual payment of such amount to such employee, the Company shall
pay an amount equal to such income taxes to such employee within
thirty days after written notice from such employee of such
assessment. The amount of income taxes paid to the employee hereunder
shall be considered an advance of and shall reduce the benefits
ultimately paid to the employee under this Plan.
(c) Each payment under this Plan shall be reduced by any federal, state,
or local taxes which the Detroit Edison Company determines should be
withheld from such payment.
(d) Benefits under this Plan shall be payable to or in respect of a
Company's former employees solely from the general assets of such
Company; provided, however, that no provision of the - Plan shall
preclude a Company from segregating assets which are intended to be a
source for payment of benefits under the Plan. Each participant in
this Plan shall have the status of a general unsecured creditor of the
Company. This Plan constitutes a promise by the Company to make
benefit payments in the future. It is intended that this Plan be
unfunded for tax purposes and that this Plan shall remain unfunded
during the entire period of its existence. The Company intends to
maintain this Plan similarly for a select group of management or
highly compensated employees.
SECTION 5 - RIGHTS OF EMPLOYEES
Except as to the extent provided in Section 7 herein, no employee or an
employee's spouse or beneficiary shall at any time have any vested right to
receive the benefits
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provided by this Plan. The rights of any participant to receive benefits under
this Plan are not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or garnishment by such
participant, the creditors of such participant, such participant's spouse or
such participant's beneficiary.
SECTION 6 - ADMINISTRATION; ARBITRATION
(a) This Plan shall be administered by the Organization and Compensation
Committee of the Board of Directors (the "Administrator") as an
unfunded plan which is not intended to meet the qualification
requirements of Section 401 of the Internal Revenue Code. The
Administrator's decisions in all matters involving the interpretation
and application of this Plan made prior to a Change in Control, as
defined in Addendum I, shall be conclusive.
(b) The Plan shall at all times be maintained by the Company and
administered by the Administrator as a plan wholly separate from the
Retirement Plan and any other plan or program maintained by the
Company.
(c) For purposes of the Plan, "Company" shall mean The Detroit Edison
Company and any Controlled Group Member which has adopted the Plan
with the approval of the Chairman of the Board of Directors and the
Chairman of the board of directors of the Controlled Group Member. As
a condition to participating in the Plan, such Controlled Group Member
shall authorize the Chairman of the Board of Directors and the
Administrator to act for it in all matters arising under the Plan and
shall agree to comply with such other terms and conditions as may be
imposed by the Chairman of the Board of Directors. Where the context
requires in respect of the liability for the payment of any benefit to
any former employee or spouse or beneficiary thereof, the term
"Company" shall mean The Detroit Edison Company or such other
Controlled Group Member who employed the employee. Unless otherwise
defined herein, all defined terms shall have the same meaning as
provided under the Retirement Plan. All corporate officers and other
administrative personnel referred to herein refer to officers and
administrative personnel of The Detroit Edison Company.
(d) Notwithstanding Section 6(a) hereof, in the event of any dispute,
claim, or controversy (the "Grievance") between an employee whose
eligible to elect to receive the benefits provided under this Plan and
the Company with respect to the payment of benefits to such employee
under this Plan, the computation of benefits under this Plan, or any
of the terms and conditions of this Plan, such Grievance shall be
resolved by arbitration and in accordance with this Section 6(d).
(1) Arbitration shall be the sole and exclusive remedy to redress any
Grievance.
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(2) The arbitration decision shall be final and binding, and a
judgment on the arbitration award may be entered in any court of
competent jurisdiction and enforcement may be had according to
its terms.
(3) The arbitration shall be conducted by the American Arbitration
Association in accordance with the Commercial Arbitration Rules
of the American Arbitration Association and expenses of the
arbitrators and the American Arbitration Association shall be
borne by the Company. Neither the Company nor such employee shall
be entitled to attorneys' fees, expert witness fees, or other
expenses expended in the course of such arbitration or the
enforcement of any award rendered thereunder.
(4) The place of the arbitration shall be the offices of the American
Arbitration Association in the Detroit Metropolitan area,
Michigan.
(5) The arbitrator(s) shall not have the jurisdiction or authority to
change any provisions of this Plan by alteration of, addition to,
or subtraction from the terms thereof. The arbitrator(s)' sole
authority shall be to apply any terms and conditions of this
Plan. Since arbitration is the exclusive remedy with respect to
any Grievance, no employee eligible to receive benefits provided
under this Plan has the right to resort to any federal court,
state court, local court, or administrative agency concerning
breeches of any terms and provisions hereunder, and the decision
of the arbitrator(s) shall be a complete defense to any suit,
action, or proceeding instituted in any federal court, state
court, local court, or administrative agency by such employee or
the Company with respect to any Grievance which is arbitrable as
herein set forth.
(6) The arbitration provision shall, with respect to any Grievance,
survive the termination of this Plan.
SECTION 7 - AMENDMENT AND DISCONTINUANCE
The Detroit Edison Company expects to continue this Plan indefinitely, but
reserves the right to amend or discontinue it. The Vice President, Human
Resources, or, should the Vice President, Human Resources, become a Participant
in this Plan, the Manager, Human Resources Operations, shall review the Plan
from time to time and as part of such review is hereby directed and authorized
to amend such Plan to the extent necessary for ease of administration and/or to
comply with applicable federal and state laws. If the Plan should be amended or
discontinued, the Company shall be liable for any benefits that have accrued
under this Plan (determined on the basis of each employee's presumed
termination of employment as of the date of such amendment or discontinuance)
as of the date of such action, and no amendment, discontinuance, withdrawal
from or termination of the Plan
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shall adversely affect the rights of any person to any such accrued
benefits without such person's prior written consent. Any Controlled Group
Member which has adopted the Plan may as to itself withdraw from the Plan at
any time by action of the Chairman of its board of directors. In the event of
the dissolution, merger, consolidation or reorganization of a Company, the Plan
shall terminate as to such Company unless the Plan is continued by a successor
thereto (subject to the consent of the Chairman of the Board of Directors).
SECTION 8 - CHANGE-IN-CONTROL BENEFIT FOR CERTAIN PERSONS
Notwithstanding the foregoing provisions of the Plan, an employee who has
entered into a Change-in-Control Severance Agreement with DTE Energy Company
("Change-in-Control Severance Agreement") shall receive a benefit as provided
in Addendum I to the Plan upon termination of employment in certain
circumstances following a Change in Control, as defined in Addendum I. In
addition, any former employee, spouse or beneficiary receiving a benefit under
the Plan at the time of the occurrence of a Change in Control, as defined in
Addendum I, shall receive payment as provided in Addendum I. If a benefit is
payable to any employee or former employee, spouse or beneficiary pursuant to
Addendum I, neither the employee or former employee or any spouse or
beneficiary thereof, shall be entitled to any payments or further payments, as
the case may be, under the foregoing provisions of the Plan.
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ADDENDUM I
CHANGE-IN-CONTROL BENEFITS
A change in control ("Change in Control") for purposes of the
Plan and this Addendum I shall have occurred if at any time on or after October
1, 1997 any of the following events shall occur:
(1) DTE Energy Company ("DTE") is merged, consolidated or
reorganized into or with another corporation or other legal
person, and as a result of such merger, consolidation or
reorganization less than 55% of the combined voting power of
the then-outstanding securities of such corporation or person
immediately after such transaction is held in the aggregate
by the holders of the then-outstanding securities entitled to
vote generally in the election of directors (the "Voting
Stock") of DTE immediately prior to such transaction;
(2) DTE sells or otherwise transfers all or substantially all of
its assets to another corporation or other legal person, and
as a result of such sale or transfer, less 55% of the
combined voting power of the then-outstanding Voting Stock of
such corporation or person immediately after such sale or
transfer is held in the aggregate (directly or through
ownership of Voting Stock of DTE or a Subsidiary (as
hereinafter defined)) by the holders of Voting Stock of DTE
immediately prior to such sale or transfer;
(3) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act) has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange
Act) of securities representing 20% or more of the combined
voting power of the then-outstanding Voting Stock of DTE;
(4) If, during any period of two consecutive years, individuals
who at the beginning of any such period constitute the
directors of DTE cease for any reason to constitute at least
a majority thereof; provided, however, that for purposes of
this paragraph (4) each
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director who is first elected, or first nominated for
election, by DTE's stockholders, by a vote of at least
two-thirds of the directors of DTE (or a committee thereof)
then still in office who were directors of DTE at the
beginning of any such period will be deemed to have been a
director of DTE at the beginning of such period; or
(5) The approval of the shareholders of DTE of a complete
liquidation or dissolution of DTE.
Notwithstanding the foregoing provisions of paragraph (3)
above, unless otherwise determined in a specific case by
majority vote of the Board of Directors of DTE, a "Change in
Control" shall not be deemed to have occurred for purposes of
paragraph (3) solely because (i) DTE, (ii) an entity in which
DTE directly or indirectly beneficially owns 50% or more of
the outstanding Voting Stock (a "Subsidiary"), or (iii) any
DTE-sponsored employee stock ownership plan or any other
employee benefit plan of DTE or any Subsidiary either files
or becomes obligated to file a report or a proxy statement
under or in response to Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report or item therein) under
the Exchange Act disclosing beneficial ownership by it of
shares of Voting Stock, whether in excess of 20% or
otherwise.
In the event a Change in Control occurs, any former employee,
spouse or beneficiary thereof who as of the date of the occurrence of the
Change in Control is receiving benefits under the Plan shall be paid in cash in
a lump sum an amount equal to the actuarial equivalent present value of the
remaining benefits, determined as of the date of payment, that are payable to
or in respect of such person under the Plan (including survivor benefits, if
applicable).
In the event a Change in Control occurs, any employee who has
entered into a Change-in-Control Severance Agreement and whose employment is
terminated after the occurrence of the Change in Control in circumstances
entitling the individual to severance compensation under Section 4 of the
Change-in-Control Severance Agreement shall be entitled to a cash lump sum
payment under the Plan. The amount of lump sum payment payable hereunder shall
be equal to the actuarial equivalent present value of the benefit that would
otherwise be payable to the employee under the Plan determined as otherwise
provided in the Plan.
Upon the foregoing payment, no further benefits shall be
payable under the Plan to such employee or former employee, spouse or
beneficiary thereof. Payments
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under this Addendum I shall be made within 30 days after the date on which the
Change in Control occurs or, if later, the date the employee terminates
employment.
For purposes of this Addendum I, the interest/discount rate
and mortality table used to determine actuarial equivalence shall be as
follows:
(1) Interest/discount Rate - an annual rate equal to the
Fed's Fund Rate (as of the first business day of the
calendar month in which the Change in Control or
termination, if later, occurs) plus 1%, but in no
event shall the interest/discount rate exceed 8% or
be less than 5%.
(2) Mortality Table - the unisex version of the
mortality table used for funding purposes of the
most recent actuarial valuation for the Plan issued
prior to the date of the Change in Control as
defined in the DTE Change-in-Control Severance
Agreements.
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