MCN
EXECUTIVE DEFERRED COMPENSATION PLAN
(as amended effective January 1, 1996)
TABLE OF CONTENTS
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SECTION PAGE
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SECTION 1.................................................................... 1
DEFINITIONS
1.01. "Account"................................................... 1
1.02. "Additional Pension Plan Benefit"........................... 1
1.03. "Additional Savings Plan Benefit"........................... 2
1.04. "Affiliated Employer........................................ 2
1.05. "Anniversary Date".......................................... 2
1.06. "Annual Base Salary"........................................ 2
1.07. "Annual Incentive Compensation"............................. 2
1.08. "Beneficiary"............................................... 2
1.09. "Benefit Agreement"......................................... 3
1.10. "Board of Directors"........................................ 3
1.11. "Code"...................................................... 3
1.12. "Committee"................................................. 3
1.13. "Company"................................................... 3
1.14. "Deferral".................................................. 3
1.15. "Deferral Period"........................................... 3
1.16. "Disability................................................. 3
1.17. "Effective Date"............................................ 3
1.18. "ERISA"..................................................... 3
1.19. "Executive"................................................. 4
1.20. "In Pay Status"............................................. 4
1.21. "Leave"..................................................... 4
1.22. "Participant"............................................... 4
1.23. "Pension Plan".............................................. 4
1.24. "Plan"...................................................... 4
1.25. "Plan Interest Rate"........................................ 4
1.26. "Plan Year"................................................. 4
1.27. "Post-Retirement Survivor Benefit".......................... 4
1.28. "Pre-Retirement Survivor Benefit"........................... 4
1.29. "Retirement Date"........................................... 4
1.30. "Retirement Income Benefit"................................. 5
1.31. "Savings Plan".............................................. 5
1.32. "Social Security Wage Base"................................. 5
1.33. "Spouse".................................................... 5
SECTION 2.................................................................... 5
PARTICIPATION
2.01. Commencement of Participation............................... 5
2.02. Deferrals................................................... 5
2.03. Election of Deferral........................................ 5
2.04. Forgo Deferral for a Plan Year.............................. 6
2.05. Increased Deferral.......................................... 6
2.06. Establishment of Account.................................... 6
2.07. Interaction with Other Plans................................ 7
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SECTION 3................................................................... 7
FUNDING OF BENEFITS
3.01. Unfunded Plan............................................... 7
3.02. Interest.................................................... 7
SECTION 4.................................................................... 8
CLAIMS PROCEDURE
4.01. Benefit Claims Procedure.................................... 8
4.02. Appeals Procedure........................................... 8
SECTION 5.................................................................... 9
RETIREMENT INCOME BENEFITS
5.01. Normal Retirement Benefit................................... 9
5.02. Termination Benefit......................................... 10
5.03. Disability.................................................. 11
5.04. Hardship Withdrawal Benefits................................ 11
SECTION 6.................................................................... 12
PRE-RETIREMENT SURVIVOR BENEFITS
6.01. Pre-Retirement Survivor Benefit............................. 12
6.02 Proof of Insurability....................................... 13
6.03. Exclusion for Suicide or Self-Inflicted
Injury..................................................... 13
SECTION 7.................................................................... 13
POST-RETIREMENT SURVIVOR BENEFITS
7.01. Post-Retirement Survivor Benefit............................ 13
SECTION 8.................................................................... 13
VESTING OF BENEFITS
8.01. Vesting of Benefits......................................... 13
SECTION 9.................................................................... 14
ADDITIONAL PROVISIONS AFFECTING BENEFITS
9.01. Benefit Agreement........................................... 14
9.02. Leave of Absence............................................ 14
9.03. Alternative Forms of Benefit................................ 14
9.04. Tax Withholding............................................. 14
SECTION 10................................................................... 14
ADMINISTRATION OF THE PLAN
10.01. Duties and Power............................................ 14
10.02. Benefit Statements.......................................... 15
SECTION 11................................................................... 15
AMENDMENT, SUSPENSION, AND TERMINATION
11.01. Right to Amend or Terminate................................. 15
11.02. Right to Surrender.......................................... 15
11.03. Non-ERISA Plan.............................................. 15
11.04. Right to Accelerate......................................... 16
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SECTION 12................................................................... 16
MISCELLANEOUS
12.01. Right to Continued Employment............................... 16
12.02. Prohibition Against Alienation.............................. 16
12.03. Sayings Clause.............................................. 16
12.04. Payments of Benefit of Incompetent.......................... 16
12.05. Spouse's Interest........................................... 17
12.06. Successors.................................................. 17
12.07. Gender, Number and Heading.................................. 17
12.08. Legal Fees and Expenses..................................... 17
12.09. Choice of Law............................................... 17
12.10. Affiliated Employees........................................ 17
SECTION 13................................................................... 18
CHANGE IN CONTROL PROVISIONS
13.01. General..................................................... 18
13.02. Transfer to Rabbi Trust..................................... 18
13.03. Joint and Several Liability................................. 18
13.04. Dispute Procedures.......................................... 18
13.05. Definition of Change in Control............................. 19
iii
MCN
EXECUTIVE DEFERRED COMPENSATION PLAN
(as amended effective January 1, 1996)
MCN Corporation, a Michigan corporation (hereinafter referred to as the
"Company"), has adopted the Executive Deferred Compensation Plan (hereinafter
referred to as the "Plan") to provide supplemental retirement income for certain
Executives (hereinafter defined) and to provide a measure of security for
certain Executives through the payment of death benefits to their Beneficiaries.
The Company previously adopted the MCN Management Incentive Bonus
Compensation Plan ("Incentive Plan") which permitted participants to defer
awards made to them under the Incentive Plan. Effective as of January 1, 1990,
deferrals under the Incentive Plan were discontinued and account balances under
the Incentive Plan were transferred to the Plan.
It is intended that this Plan provide benefits for "a select group of
management or highly compensated employees" within the meaning of Sections 201,
301 and 401 of ERISA (hereinafter defined), and therefore to be exempt from the
provisions of Parts 2, 3 and 4 of Title I of ERISA.
SECTION 1
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.
1.01. "Account" means the record maintained by the Company of each
Participant's Deferrals, credited interest, Additional Pension Plan Benefit,
Additional Savings Plan Benefit, and distributions under the Plan.
1.02. "Additional Pension Plan Benefit" means an additional benefit under
this Plan, equal to the present value at the date of retirement under the
qualified plan or other termination of employment of the difference between (1)
the benefit that the Participant would have been entitled to receive under the
Pension Plan if he had not elected to defer any amount under the Plan, and (2)
the benefit that the Participant is entitled to receive under the Pension Plan.
1
1.03. "Additional Savings Plan Benefit" means an additional monthly
benefit under this Plan, equal to the amount of any Company matching
contributions that would have been made on the Participant's deferred salary
under the terms of the Savings Plan plus (i) for periods from January 1, 1990 to
July 31, 1991, the income that would have been earned thereon based upon the
Participant's investment elections and the terms of the Savings Plan, and (ii)
for periods after July 31, 1991, interest based upon the Plan Interest Rate in
effect for such period which should be added to the Participant's account.
1.04 "Affiliated Employer" means any corporation while such corporation is
a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company or any other employing entity while
such entity is under common control (within the meaning of Section 414(c) of the
Code) with the Company.
1.05. "Anniversary Date" means any January 1 including or after the
Effective Date.
1.06. "Annual Base Salary" means annual base salary payable in the current
Plan Year before any 401(k) deferral or cafeteria plan election and before any
payroll deduction for taxes or any other purpose, but excluding any bonus,
fringe benefit or other form of remuneration.
1.07. "Annual Incentive Compensation" means the annual incentive plan cash
compensation earned in the current Plan Year and payable in the subsequent Plan
Year.
1.08. "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 from
time to time by filing a new written designation with the Committee, and such
designation shall be effective upon receipt by the Committee. The designation of
a Beneficiary other than the Participant's Spouse 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 or in existence 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
1.09. "Benefit Agreement" means the benefit agreement described in Section
9.01 relating to a Participant's commitment to defer Annual Base Salary, as
defined in Section 1.06, and/or Annual Incentive Compensation, as defined in
Section 1.07.
1.10. "Board of Directors" means the Board of Directors of the Company, as
defined in Section 1.13.
1.11. "Code" means the Internal Revenue Code of 1986, as amended.
1.12. "Committee" means the Savings Plan Committee under the MichCon
Savings and Stock Ownership Plan, or successor thereto. The Committee is
responsible for the administration of the Plan.
1.13. "Company" means MCN, a Michigan corporation, its successors and
assigns, and any direct or indirect subsidiary of MCN which has elected, with
the consent of MCN, to participate in the Plan.
1.14. "Deferral" means the portion of a Participant's Annual Base Salary
and/or Annual Incentive Compensation that has been deferred in accordance with
Section 2.03. Deferral amounts are retained by the Company as part of its
general assets.
1.15. "Deferral Period" means the period beginning with the date of the
Participant's commencement of participation in the Plan and ending on the
earlier of
(a) the fifth Anniversary Date after such date; or
(b) the Participant's Retirement Date, as defined in Section 1.29.
1.16. "Disability" means the total and permanent inability, caused by
disease or bodily injury and originating after his designation as a Participant,
of an Executive to do substantially all the material duties of his regular job,
except that
(a) after such inability has continued for two years, such Executive
shall be considered to be suffering Disability only if he cannot work for
pay or profit at another job for which he is reasonably fitted by
education, training or experience; and
(b) such Executive shall be considered to be suffering Disability
only for those periods during which he is not working for pay or profit.
1.17. "Effective Date" means January 1, 1990 and each January 1
thereafter.
1.18. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
3
1.19. "Executive" means a management or highly compensated employee of the
Company who has been specifically designated by the Chairman of the Board of
Directors to be eligible for Plan participation. Such an employee shall remain
an Executive so long as this designation is not revoked by the Chairman of the
Board of Directors. Upon such revocation, the former Executive shall be entitled
to receive only those benefits which have been vested.
1.20. "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.
1.21. "Leave" means any period during which an Executive who is employed
by the Company immediately prior to the commencement thereof is absent from the
Company pursuant to a leave of absence granted with the permission of the
Company.
1.22. "Participant" means an Executive who has made a written election to
participate in the Plan in accordance with Section 2.01.
1.23. "Pension Plan" means, with respect to a Participant, any Company-
sponsored qualified defined benefit plan under which the Participant is eligible
to participate.
1.24. "Plan" means the MCN EXECUTIVE DEFERRED COMPENSATION PLAN, as
described herein and as hereafter amended.
1.25. "Plan Interest Rate" means the interest rate for the latest issue,
as of the end of the previous month, of ten-year U.S. Treasury Notes, or such
other rate as set by the Chairman of the Board of Directors.
1.26. "Plan Year" means the period beginning January 1 and ending December
31 of each year (the calendar year).
1.27. "Post-Retirement Survivor Benefit", as described in Section 7.01,
means the benefit payable to the Beneficiary of a Participant who dies after the
commencement of his Retirement Income Benefit.
1.28. "Pre-Retirement Survivor Benefit", as described in Section 6.01,
means the benefit payable to the Beneficiary of a Participant who dies prior to
his Retirement Date.
1.29. "Retirement Date" for a Participant covered by a Pension Plan means
any normal or early retirement date specified in the Pension Plan, as defined in
Section 1.23; and for a Participant covered by a Savings Plan, but not covered
by a Pension Plan, means any normal or early retirement date specified in the
Savings Plan, as defined in Section 1.31.
4
1.30. "Retirement Income Benefit" means the retirement benefit described in
Section 5.
1.31. "Savings Plan" means, with respect to a Participant, any Company
sponsored qualified defined contribution plan under which the Participant is
eligible to participate.
1.32. "Social Security Wage Base" means the maximum amount of wages subject
to the old-age, survivor and disability portion of the Federal Insurance
Contributions Act tax.
1.33. "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 2
PARTICIPATION
2.01. Commencement of Participation. An Executive shall become a
Participant hereunder upon execution of a Benefit Agreement by the Executive no
later than the October 30 prior to its Effective Date. A properly executed
Benefit Agreement shall be effective on the January 1 immediately following the
execution of the Benefit Agreement, and shall contain the items described in
this Section and in Sections 5.01, 6.01 and 9.01. Subject to Sections 2.02, 2.04
and 2.05, the deferral election made in a Benefit Agreement shall be
irrevocable.
2.02. Deferrals. A Participant may continue to make the annual Deferral
provided under Section 2.03 with respect to his Benefit Agreement until his
designation as an Executive is revoked by the Chairman of the Board of
Directors, he terminates employment with the Company, he receives a hardship
withdrawal, or he revokes his Benefit Agreement after the completion of his
Deferral Period.
2.03. Election of Deferral. A Participant shall elect in his Benefit
Agreement, in multiples of $1,000 except for the $3,000 minimum, the annual
Deferral that he will make for each Plan Year in which he is a Participant. Such
annual Deferral shall not exceed 30% of Annual Base Salary and 100% of Annual
Incentive Compensation less the Federal Insurance Contributions Act tax on the
Annual Incentive Compensation and shall not be less than $3,000. An annual
Deferral of Annual Base Salary cannot reduce the Participant's Annual Base
Salary below the Social Security Wage Base for the Plan Year. An annual Deferral
of Annual Incentive
5
Compensation shall be stated as a flat amount and shall not be greater than 100%
of the Participant's current year target Annual Incentive Compensation less the
Federal Insurance Contributions Act tax on the Annual Incentive Compensation. A
Participant's election shall be irrevocable during the Deferral Period, subject
to Sections 2.02, 2.04 and 2.05. After a Participant's Deferral Period is
completed, the Participant may elect on an annual basis, before October 30,
whether he wishes to make a Deferral for the following Plan Year.
2.04. Forgo Deferral for a Plan Year. A Participant may elect, no later
than October 30 prior to its Effective Date, to forgo the Deferral for the
remainder of the Deferral Period. This election cannot be made for the first
year in the Deferral Period. If this election is made for a Plan Year, the
Participant shall not be permitted to participate in the Plan for the two year
period beginning with the January 1 immediately following the election to forgo
the Deferral. If the Participant thereafter elects to participate in the Plan,
such Participant shall begin a new Deferral Period. If a Participant dies prior
to his Retirement Date while employed by the Company and during a period that an
election to forgo Deferral is in effect, the Participant's Beneficiary shall not
be entitled to the Pre-Retirement Survivor Benefit under Section 6.01, but shall
receive a lump sum distribution of an amount equal to the Participant's Account
balance as of the Participant's date of death. Such lump sum payment shall be
made not later than one hundred twenty (120) days after the Participant's date
of death.
2.05. Increased Deferral. A Participant may elect to increase the annual
Deferral that he will make for each Plan Year in which he is a Participant by
filing a new Benefit Agreement to that effect with the Committee. The amount of
any such increase shall be in multiples of $1,000, and the increased annual
Deferral shall not exceed the limits set forth in Section 2.03. Such election
will be effective on the January 1 after the new Benefit Agreement is filed with
the Committee. A Participant's election to increase the amount deferred in a
Plan Year will not preclude the Participant from reducing the increased deferral
in subsequent Plan Years. However, in no event may the Deferral in subsequent
Plan Years of the Deferral Period be reduced to an amount less than the original
annual Deferral amount.
2.06. Establishment of Account. The Committee shall establish an Account
for each Participant to which the Participant's Deferrals shall be credited,
interest in accordance with Section 3.02 shall be credited, the Participant's
account balance, if any, under the Incentive Plan shall be credited, the
Additional Pension Plan Benefit shall be credited, the Additional Savings
6
Plan Benefit shall be credited, and distributions shall be debited. A
Participant's Deferrals shall be credited to his Account as of the date the
Deferral would have been paid to the Participant. The Additional Pension Plan
Benefit shall be credited to the Participant's Account as of the date of the
Participant's retirement under the qualified plan or other termination of
employment. The Additional Savings Plan Benefit shall be credited to the
Participant's Account as of the end of each month for which the Participant
makes a Deferral under the Plan. A Participant whose Account includes a transfer
of assets from the Incentive Plan shall be treated as having satisfied a year of
the Deferral Period for each of the Participant's years of participation in the
deferral portion of the Incentive Plan.
2.07. Interaction with Other Plans. The deferral of Annual Base Salary (but
not Annual Incentive Compensation) may result in a reduction of a Participant's
benefit under the Pension Plan and the Savings Plan due to restrictions imposed
by the IRS on qualified plans. In order to minimize the effect of this
reduction, a Participant's Account shall be credited with an Additional Pension
Benefit and an Additional Savings Plan Benefit.
SECTION 3
FUNDING OF BENEFITS
3.01. 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.
3.02. Interest. Interest shall be credited and compounded to each
Participant's Account, including that portion of the Account attributable to the
benefit described in Section 2.07, on the last day of each month during each
Plan Year based upon the Plan Interest Rate in effect for such Plan Year for so
long as there remains an Account balance.
7
SECTION 4
CLAIMS PROCEDURE
4.01. 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 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.
4.02. Appeals Procedure. Any person whose application for benefits is
denied in whole or in part may appeal such denial to the Committee by submitting
a written statement to the Committee within ninety (90) days after receiving
written notice from the Committee of the denial of the claim. A written
statement should:
(a) request a review by the Committee of the application for
benefits;
(b) set forth all of the grounds upon which the request
for review is based and any facts in support thereof; and
(c) set forth any issues or comments that the applicant deems
pertinent to his application.
The Committee shall regularly review appeals applications submitted to it.
The Committee shall act upon each appeal within sixty (60) days after receipt of
the applicant's request for review by the Committee .
8
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.
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 5
RETIREMENT INCOME BENEFITS
5.01. Normal Retirement Benefit
(a) Each Participant who retires under the Pension or Savings Plan on
his Retirement Date after the completion of his Deferral Period shall be
entitled to a Retirement Income Benefit commencing on the first of the month
following the month in which his Retirement Date occurs. The Participant's
Retirement Income Benefit shall be paid, in accordance with the Participant's
selection in his Benefit Agreement, either in monthly payments over 5, 10 or 15
years, or as a lump sum distribution of the Participant's Account. The payment
option selected by the Participant on his Benefit Agreement may be changed at
any time by the Participant by submitting a new payment selection to the
Committee, but a change shall be effective only if it is received by the
Committee at least 36 months before payments under the Plan commence. 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
9
January 1 of each year to reflect changes in the Plan Interest Rate and other
changes in the Participant's Account balance.
(b) Each Participant who retires under the Pension or Savings Plan on
his Retirement Date prior to the completion of his Deferral Period shall receive
a lump sum distribution in an amount equal to the Participant's Account balance
on his Retirement Date. Such distribution shall be made no later than one
hundred twenty (120) days after the Participant's Retirement Date.
(c) Notwithstanding subparagraph (b) above, a Participant whose
Deferral Period is less than five years may accelerate his Deferrals so that the
sum of the Deferrals at the end of his Deferral Period is equal to five times
his annual Deferral. This acceleration shall be effective beginning with the
Plan Year following the year a new Benefit Agreement indicating an increased
annual Deferral is filed with the Committee. The Participant's Retirement Income
Benefit shall be paid in accordance with the Participant's selection in his
Benefit Agreement.
5.02. Termination Benefit. A Participant who terminates employment prior to
retirement or whose designation as an Executive is revoked shall receive payment
of the Participant's Account balance in accordance with the Participant's
election on his Benefit Agreement, either in monthly payments over three (3)
years or as a lump sum distribution. If no election is indicated on the
Participant's Benefit Agreement for termination benefits, the Participant's
termination benefit shall be paid to him in monthly payments over three (3)
years beginning no later than one hundred twenty (120) days after termination of
employment or revocation of designation as an Executive. The termination
election selected by the Participant on his Benefit Agreement may be changed at
any time by the Participant by submitting a new termination election to the
Committee, but a change shall be effective only if it is received by the
Committee at least 36 months before payments under the Plan commence. The amount
of the monthly payments shall be calculated to pay out over the three-year
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
10
balance. After receiving a termination benefit, neither the Participant, nor the
Participant's Beneficiary shall be entitled to any further benefit hereunder.
5.03. Disability. A Participant who has suffered a Disability shall be
deemed to be an Executive during such period and shall continue to be eligible
for Retirement Income Benefits under Section 5.01 without reduction and Pre-
Retirement and Post-Retirement Survivor Benefits under Sections 6.01 and 7.01.
If the Disability occurs within a Deferral Period, and the disabled Participant
is determined by the Committee to be totally and permanently disabled prior to
the completion of the Deferral Period, the Committee shall excuse him from
making additional Deferrals under the applicable Benefit Agreement, or shall
reduce the amount of his required Deferrals, but no amounts shall be credited to
his Account with respect to such excused or reduced Deferral(s). For all other
Plan purposes, a Participant whose Deferrals have been excused shall be deemed
to have made all required Deferrals during his Deferral Period.
5.04. Hardship Withdrawal Benefits. 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 all or part of his Account balance
within 120 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, and the distribution
shall be limited to the amount required to meet the financial hardship. In
making these determinations, the Committee shall utilize the regulations
proposed or adopted by the U.S. Department of Treasury pursuant to Section
401(k) of the Code and the rules under the Savings Plan. A financial hardship
shall be satisfied from the Plan to the extent possible; then from the
Supplemental Savings Plan; and finally from the Savings Plan. After receiving a
hardship distribution, neither the Participant, nor his Beneficiary shall be
entitled to any Pre-Retirement Survivor 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 6.01, except that the
projection forward shall include hypothetical annual Deferrals equal to zero.
11
SECTION 6
PRE-RETIREMENT SURVIVOR BENEFITS
6.01. Pre-Retirement Survivor Benefit. Except as provided in Sections
2.04, 5.04 and 6.02, if a Participant dies prior to his Retirement Date while
employed by the Company, his Beneficiary shall be entitled to receive an amount
equal to the present value, at the Participant's date of death, of the
Participant's Account balance projected forward to his Normal Retirement Date.
This projection forward will be accomplished by crediting to his Account balance
as of his date of death the amount of a hypothetical Deferral equal to the
average of the Participant's annual Deferrals for the five years immediately
preceding the Participant's death for the year of the Participant's death and
for all subsequent years through and including the year in which the
Participant's Normal Retirement Date falls and crediting interest on the Account
balance and any subsequent hypothetical Deferrals at the Plan Interest Rate in
effect on his date of death in order to arrive at the projected value of his
Account balance as of the Participant's Retirement Date. If the Participant did
not participate in the Plan for five years preceding the year of death, the
average will be computed based on a numerator equal to the total deferral
election in effect for the Deferral Period in which death occurred and a
denominator equal to five. This projected Account balance then will be converted
to its present value on the Participant's date of death using 70% of the ten-
year U.S. Treasury Note interest rate on the latest date such notes were issued
before the Participant's date of death. The pre-retirement survivor benefit
shall be paid in accordance with the Participant's selection in his Benefit
Agreement, either in monthly payments over 5, 10 or 15 years, or as a lump sum
distribution. The payment option selected by the Participant on his Benefit
Agreement may be changed at any time by the Participant submitting a new payment
selection to the Committee, but a change shall be effective only if it is
received by the Committee at least 36 months before payments under the Plan
commence.
Notwithstanding the foregoing, the Chairman of the Board of Directors may,
at the time of declaring the Executive eligible, designate an Executive to be
eligible only for Retirement Income Benefits and not the Pre-Retirement Survivor
Benefit. In the event of such a designation, the beneficiary of such an
Executive shall not receive any Pre-Retirement Survivor Benefit under this
Section.
12
6.02. 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 6.01. 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
over 5, 10, or 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 6.01 if the
Participant became uninsurable prior to electing the increased Deferral or does
not cooperate in the application for life insurance.
6.03. 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.
SECTION 7
POST-RETIREMENT SURVIVOR BENEFITS
7.01. Post-Retirement Survivor Benefit. The Beneficiary 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 5.01 for the remainder of the period over which
benefits were being paid to the deceased Participant.
SECTION 8
VESTING OF BENEFITS
8.01. Vesting of Benefits. A Participant shall be 100% vested in his
benefits under the Plan at all times except as set forth in Sections 5.02, 6.01,
6.02, 6.03, 9.02, 9.03, 11.02, 11.03
13
and 11.04. A Participant shall rank as an unsecured creditor of the Company for
all benefits under the Plan.
SECTION 9
ADDITIONAL PROVISIONS AFFECTING BENEFITS
9.01. Benefit Agreement. The Committee shall provide to each Executive a
form of Benefit Agreement with respect to each Deferral Period for which the
Committee will permit the Executive to make Deferrals. The Benefit Agreement
shall set forth the Executive's acceptance of the benefits 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.
9.02. Leave of Absence. An Executive who is on Leave, with or without
salary, for a period of not more than one year, shall be deemed to be an
Executive employed by the Company during such Leave. An Executive who is on
Leave without salary for a period in excess of one year shall forfeit his Pre-
Retirement Survivor Benefit and shall not be entitled to any Pre-Retirement
Survivor Benefit hereunder unless the Participant completes five years of
participation after such leave in which event the Pre-Retirement Survivor
Benefit shall be based solely on Deferrals after the Leave.
9.03. Alternative Forms of Benefit. The Committee in its sole discretion,
at the written request of the recipient submitted to the Committee no later than
36 months prior to the commencement of benefit distributions to the recipient,
may elect to pay the Participant, Spouse or Beneficiary an actuarially
equivalent lump-sum, annuity or other form of benefit that it deems appropriate
in lieu of the form of benefit otherwise provided in Sections 5, 6 or 7.
9.04. Tax Withholding. Benefit payments hereunder shall be subject to
applicable federal, state or local tax withholding laws.
SECTION 10
ADMINISTRATION OF THE PLAN
10.01. Duties and Power. The Committee shall be responsible for the
general administration of the Plan and the proper execution of its provisions.
It shall also be responsible
14
for the interpretation of the Plan and the determination of all questions
arising thereunder. It shall maintain 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
action 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. The Committee may amend this Plan to comply with changes to the
Code, so long as the amendment does not materially increase the cost of
maintaining the Plan or change benefits to Participants or Beneficiaries.
10.02. Benefit Statements. No later than 120 days after the end of each
Plan Year, the Committee 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.
SECTION 11
AMENDMENT, SUSPENSION, AND TERMINATION
11.01. 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 except that such amendment or termination
shall not affect the rights of Participants or Beneficiaries to the vested
portion of a Participant's Account as of the date of such amendment or
termination.
11.02. Right to Surrender. 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.
11.03. Non-ERISA Plan. The Plan is intended to provide benefits for "a
select group of management or highly compensated employees" within the meaning
of Sections 201, 301 and 401 of ERISA, and therefore to be exempt from Sections
2, 3 and 4 of Title 1 of ERISA.
15
Accordingly, the Plan shall terminate and existing Account balances and other
benefits In Pay Status shall be paid in a single, actuarially equivalent lump-
sum and no further benefits, vested or non-vested, shall be paid hereunder in
the event it is determined by a court of competent jurisdiction or by an opinion
of counsel that the Plan constitutes an employee pension benefit plan within the
meaning of Section 3(2) of ERISA which is not so exempt.
11.04. 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 12
MISCELLANEOUS
12.01. Right to Continued Employment. Nothing in the Plan shall be
construed as giving any person employed by the Company the right to be retained
in the Company's employ. The Company expressly reserves the right to dismiss any
person at any time, with or without cause, without liability for the effect that
such dismissal might have upon him as a Participant in the Plan.
12.02. 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.
12.03. Sayings 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.
12.04. 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
16
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.
12.05. 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.
12.06. 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.
12.07. Gender, Number and Heading. Whenever any words are used herein in
the masculine gender, they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply. Whenever any words
used herein are in the singular form, they shall be construed as though they
were also used in the plural form in all cases where they would so apply.
Headings of sections and subsections as used herein are inserted solely for
convenience and reference and constitute no part of the Plan.
12.08. Legal Fees and Expenses. The Company shall pay all legal fees and
expenses that a Participant may incur as a result of the Company contesting the
validity, enforceability, or the Participant's interpretation of, or
determinations under this Plan, other than Section 5.04.
12.09. 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.
12.10. Affiliated Employees. An affiliate of the Company may adopt the
Plan, with the consent of the Company, in order to become a participating
employer under the Plan. A participating employer may withdraw from the Plan by
filing a notice with the Committee. Transfers of employment between
participating employers and the Company or other participating employers will be
treated as continuous and uninterrupted service under the Plan.
17
SECTION 13
CHANGE IN CONTROL PROVISIONS
13.01 General. In the event of a Change in Control, as defined in Section
13.05, then, notwithstanding any other provision of the Plan, the provisions of
this Section 13 shall be applicable and shall supersede any conflicting
provisions of the Plan. For purposes of Section 13.05 only, the term "Company"
shall mean MCN Corporation, its successors and assigns.
13.02 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.
13.03 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.
13.04 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 Section 4.01 and 4.02 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 13.04(b) unless and
until the claimant agrees in writing to repay to the Company, immediately upon
the occurrence of a final judicial determination with respect to such dispute,
any amount of such fees,
18
costs and expenses that is not awarded to such claimant in a final order of a
court of competent jurisdiction.
13.05 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 acquisition shall not constitute a Change
of Control: (A) any acquisition directly from the Company (excluding an
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 13.05 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 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
19
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 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, merger 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 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,
20
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 Corporation has caused this Plan to be executed as
of this 1st day of January, 1996.
MCN CORPORATION
By: /s/ Daniel L. Schiffer
---------------------------------
Daniel L. Schiffer, Vice President,
General Counsel and Secretary
Restated: March 11, 1996
21
MCN
EXECUTIVE DEFERRED COMPENSATION PLAN
DEFERRAL ELECTION FORM
================================================================================
Employee Name | Social Security No. | I.D.
Number
- --------------------------------------------------------------------------------
Address (Number/Street) | City | State |Zip Code
================================================================================
In accordance with the terms of the MCN Executive Deferred Compensation
Plan ("Plan") which is hereby incorporated by reference, I hereby accept
and agree to all the provisions of the Plan and irrevocably elect pursuant
to Section 2 of the Plan to defer a portion of my compensation as indicated
below.
Amount to be Deferred
---------------------
I designate the following amounts to be deferred under the terms of the
Plan:
$ .00 Annual Incentive Compensation (up to a maximum of 100% of the
current year's target Annual Incentive Compensation less the
applicable FICA tax)
$ .00 Annual Base Salary (a minimum required deferral of $3,000 up
to a maximum of 30% of Annual Base Salary in $1,000
increments, but in no event may Annual Base Salary be reduced
below the Social Security Wage Base)
Payment Election
----------------
That the amount deferred shall be paid to me after termination of my
employment with the Company and its subsidiaries by reason of retirement,
disability, or death, in the manner specified below:
____ Lump-sum payment
____ Payment in monthly installments over _____ years (in 5 year
increments, not to exceed 15 years)
I understand that, in addition to the above payment, I may be eligible for
a hardship withdrawal pursuant to Section 5 of the Plan.
Termination Election
--------------------
That the amount deferred shall be paid to me after termination of my
employment with the Company and its subsidiaries for any reason, other
than retirement, disability or death, or after my designation as an
Executive is revoked, in the manner specified below:
___ Lump-sum payment
___ Payment in monthly installments over 3 years.
================================================================================
Employee Signature | Date
- --------------------------------------------------------------------------------
Receipt Acknowledged By | Title | Date
================================================================================
Revised March 8, 1996
MCN
EXECUTIVE DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION FORM
- --------------------------------------------------------------------------------
Employee Name | Social Security No. |I.D.
Number | |
- --------------------------------------------------------------------------------
Address (Number/Street) | City | State |Zip Code
- --------------------------------------------------------------------------------
I HEREBY DESIGNATE, PURSUANT TO SUBSECTION 1.06 OF THE ABOVE-REFERENCED
PLAN, THE BELOW DESIGNATED PERSON(S) AS MY BENEFICIARY IN THE EVENT OF MY
DEATH:
- --------------------------------------------------------------------------------
BENEFICIARY'S NAME | ADDRESS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IN THE EVENT ANY OF THE ABOVE-NAMED BENEFICIARIES SHOULD PREDECEASE ME, OR
SHALL SURVIVE ME BUT DIE BEFORE RECEIVING ALL AMOUNTS TO BE PAID, I HEREBY
NAME THE FOLLOWING AS A CONTINGENT BENEFICIARY TO RECEIVE ANY SUCH UNPAID
AMOUNTS:
- --------------------------------------------------------------------------------
BENEFICIARY'S NAME | ADDRESS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IN THE EVENT NONE OF THE ABOVE-NAMED BENEFICIARIES SURVIVE ME, ANY UNPAID
AMOUNTS SHALL BE PAID TO MY LAWFUL SUCCESSOR IN INTEREST. I RESERVE THE
RIGHT TO CHANGE THIS BENEFICIARY DESIGNATION AT ANY TIME BY FILING WITH THE
COMMITTEE OR ITS DESIGNEE A NEW BENEFICIARY DESIGNATION FORM.
I UNDERSTAND THAT MY MOST RECENT ELECTION AS TO THE BENEFICIARY DESIGNATION
WILL APPLY TO ALL AWARD AMOUNTS DEFERRED BY ME AT ANY TIME.
- --------------------------------------------------------------------------------
Employee Signature | Date
- --------------------------------------------------------------------------------
Receipt Acknowledged By | Title | Date
- --------------------------------------------------------------------------------