SOUTHEASTERN MICHIGAN GAS ENTERPRISES, INC.
000 Xxxxx Xxxxxx
P.O. Box 5026
Port Huron, Michigan 48061-5026
(000) 000-0000
February 26, 1997
PERSONAL AND CONFIDENTIAL STOCK OPTION CERTIFICATE AND
AGREEMENT
Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxx 00000
Dear Xxxx,
In accordance with the terms of Paragraph 3 of my April 29, 1996
letter to you on behalf of the Board of Directors (the "Board"),
Southeastern Michigan Gas Enterprises, Inc. (the "Company") is
pleased to certify the grant to you effective as of January 3,
1997 the option (the "Option") to purchase shares of the
Company's common stock ("Common Stock") in such amounts and at
such times and such prices as are below set forth:
ACCUMULATED
NUMBER OF PURCHASE PRICE EXERCISE EXPIRATION
SHARES PER SHARE DATE DATE
30,000 $18.875 January 3, 2000 January 2, 2007
This grant is subject to the following terms and conditions:
1. The Option. This Option is awarded as a non-qualified stock
option ("Non-Qualified Stock Option") and is not an "Incentive
Stock Option" pursuant to Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
2. The Option Term. Your right to exercise the Option in whole
or in part shall first accrue upon the applicable Exercise Date
above provided (the "Exercise Date"), and shall continue until
January 2, 2007 (the "Expiration Date"), unless the Option is
earlier terminated under the terms of paragraph 9 below.
3. Conditions Precedent to Exercise of Option. Your right to
exercise the Option in whole or in part is subject to
satisfaction of the conditions precedent that you shall refrain
from engaging in any activity that, in the opinion of the
Compensation Committee (the "Committee") of the Board, is
competitive with any activity of the Company or any of its
affiliate subsidiaries (except that employment at the request of
the Company with an entity in which the Company has, directly or
indirectly, a substantial ownership interest, or other employment
specifically approved by the Committee, shall not be considered
to be an activity that is competitive with any activity of the
Company or any of its affiliated subsidiaries) and from otherwise
acting, either prior to or after termination of employment, in
any matter inimical or in any way contrary to the best interests
of the Company and that you shall furnish to the Company such
information with respect to the satisfaction of these conditions
precedent as the Committee shall reasonably request.
4. Option and Related Shares Not Registered. Neither the
Option nor the shares of Common Stock that may be issued upon
exercise of the Option have been registered under the Securities
Act of 1933 (the "Act"), the Michigan Uniform Securities Act, or
any other state securities act, and may not be sold, transferred,
or otherwise disposed of in the absence of an effective
registration statement under the Act and any applicable state
securities act, unless it is shown to the satisfaction of the
Company that such registration is not required.
5. Option and Related Shares Restricted. You are the sole
party in interest with respect to the Option and any shares of
Common Stock issued upon exercise of the Option, and are
acquiring the Option, and will acquire any shares of Common Stock
issued upon exercise of the Option, as an investment and not with
a view to offer publicly or distribute all or any part of the
Option or shares of Common Stock issued upon exercise thereof.
The Company may affix the following legend to any certificates
representing shares of Common Stock that are issued upon exercise
of the Option:
"LEGEND
The stock represented by this certificate has not been registered
under the Securities Act of 1933, the Michigan Uniform Securities
Act, or the securities laws of any other state, and may not be
sold, assigned or transferred unless a Registration Statement
under the Securities Act of 1933 and any applicable state
securities act with respect to said stock shall then be in
effect, or unless the availability of an exemption from
registration shall be established to the satisfaction of the
Company."
6. Exercise of the Option. The Option will be exercisable in
whole or in part at any time after the applicable Exercise Date
and before the applicable Expiration Date. Subject to the
provisions of this Agreement, shares not purchased on the
applicable Exercise Date shall accumulate and may be purchased
at any time on or before the applicable Expiration Date. Except
as provided in paragraph 9 below, the Option may not be
exercised unless you are an employee of the Company or of a
subsidiary at the time of exercise. During your lifetime, the
Option may be exercised only by you or your guardian or legal
representative.
7. Method of Exercise. Exercise of the Option shall be by
written notice ("Notice") to the Secretary of the Committee at
000 Xxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxx 00000. The date of
exercise of this Option shall be the date upon which the Notice
and payment are received by the Secretary of the Committee. The
Notice shall state the election to exercise the Option, the
number of shares in respect of which the Option is being
exercised and shall be signed by the person or persons so
exercising the Option. In the event the Option shall be
exercised, pursuant to paragraph 9 below, by any person or
persons other than you, the Notice shall be accompanied by
appropriate proof of the derivative right of such person or
persons to exercise the Option on your behalf.
8. Payment and Delivery. The Option price shall be payable
upon exercise of the Option (a) in cash or by personal check or
bank draft, or (b) by surrender of full shares of Common Stock
owned by you, in whole or in part (in combination with cash)
payment of the Option price. Payment by surrender of shares of
Common Stock, however, can be made only with the prior approval
of and upon conditions established by the Committee. You may not
purchase any shares under this Option by surrender of shares of
Common Stock obtained pursuant to the exercise of an "Incentive
Stock Option" unless the holding periods prescribed in Section
422(a)(1) of the Code for such shares surrendered has expired.
Further, you may not use shares acquired under any Non-Qualified
Stock Option for payment upon the exercise of this Option unless
you have held such shares for at least one year. If payment is
made in whole or in part in Common Stock, the fair market value
of the Common Stock on the date of exercise shall be credited
against the purchase price. Fair market value shall be the mean
between the highest and lowest sale prices for the Common Stock
reported on the NASDAQ National Market system for the date the
Common Stock certificate is surrendered. Surrender of the
shares of Common Stock shall be evidenced by delivery of
certificate(s) representing such shares, endorsed or accompanied
by appropriate stock powers, in the form specified by the
Committee. All shares that shall be purchased upon the exercise
of the Option as provided herein shall be fully paid and
non-assessable. The Company shall deliver a certificate or
certificates representing the shares of Common Stock as soon as
practicable after the Notice of exercise is received by the
Secretary of the Committee and payment has been tendered. The
certificate(s) for the shares of Common Stock as to which the
Option shall have been exercised shall be registered in your
name and shall be delivered to you.
9. Exercise After Termination of Employment or Death. The
provisions covering the exercise of this Option following
termination of your employment are as follows:
(a) If your employment is terminated either for cause
or voluntarily by you without the consent of the Company, any
Option held by you shall, to the extent not exercised,
immediately terminate.
(b) If your employment shall terminate with the
consent of the Company or by retirement, to the extent that the
Option was exercisable on the date of such termination of
employment, the Option may be exercised only until the earlier of
twelve (12) months after such termination or the original
Expiration Date of the Option.
(c) If your employment shall terminate as a result of
death or disability, your Non-Qualified Stock Option shall
terminate upon the earlier of twelve (12) months from the date of
such termination of employment or the original Expiration Date of
the Option. In such circumstances, the Non-Qualified Stock
Option may be exercised, to the extent exercisable, by your legal
representative, by a properly designated beneficiary, or by you
as the case may be.
10. Change of Control. Notwithstanding any other provisions to
the contrary in this Agreement, in the event of a Change of
Control (as defined in the Change of Control Employment
Agreement between you and the Company dated October 10, 1996),
to the extent this Option has not been exercised, the Option
then outstanding shall become immediately exercisable in full.
If you exercise the Option, all shares of Common Stock due to
you because of your exercise of the Option shall be distributed
to you as soon as practicable within sixty (60) days after the
date of the Change of Control. In any event, this Option will
continue and may be exercised at any time prior to the
Expiration Date of the Option following a Change of Control.
11. Adjustments. If there shall be any change in the Common
Stock underlying this Option, through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure, appropriate adjustments
and corrections shall be made within sixty (60) days by the
Committee (or if the Company is not the surviving corporation in
any such transaction, the Board of Directors of the surviving
corporation) in the number and kind of shares and the price per
share subject to the Option.
12. Non-Transferability. The Option shall not be subject to
execution, attachment or similar process, and may not be
assigned, transferred, pledged, or hypothecated in any way
except by will or the applicable laws of descent and
distribution. Any attempt to assign, transfer, pledge,
hypothecate or otherwise dispose of the Option contrary to the
provisions of this Agreement, or the levy of any execution,
attachment or similar process upon the Option shall be null and
void and without effect.
13. Rights as Stockholder. You shall not for any purpose be
deemed to be, or to have rights as, as stockholder of the
Company with respect to the shares covered by the Option until
you exercise the Option.
14. Consents and Compliance. The obligation of the Company to
sell and deliver shares under this Agreement is specifically
subject to (a) the obtaining of such consents and approvals as
required by public authorities, and (b) the satisfaction of the
Committee as to compliance with all other applicable legal
requirements.
15. Continued Employment. This Agreement shall not be construed
as giving you any right to be retained in the employ of the
Company or any subsidiary or restricting the right of the
Company or any subsidiary to terminate your employment.
16. Governance of Agreement and Committee. You hereby agree
that: (a) you will comply with and be bound by all of the terms
and conditions contained in this Agreement; (b) any dispute or
disagreement arising under or as a result of this Agreement
shall be determined by the Committee in the Committee's sole
discretion and judgment; and (c) any determination,
interpretation or other action taken by the Committee pursuant
to the provisions of this Agreement shall be binding and
conclusive for all purposes.
17. Governing Law. This Agreement and all determinations made
and actions taken pursuant thereto shall be governed by the laws
of the State of Michigan and construed in accordance therewith.
SOUTHEASTERN MICHIGAN GAS ENTERPRISES, INC.
By Xxxxx X. Xxxxxxxx
Chairman of the Board
Accepted:
Xxxxxxx X. Xxxxxxx
