Exhibit 10.14
EXECUTIVE SECURITY AGREEMENT
This Executive Security Agreement (hereinafter called
"Agreement") is made this ____ day of ______________ by and
between SEMCO Energy, a corporation, with principal offices and
place of business in the State of Michigan (hereinafter called
the "Company"), and ___________________ (hereinafter called
"Executive").
WITNESSETH:
WHEREAS, Executive is and has been employed in a
managerial capacity by the Company and has performed valuable
services; and
WHEREAS, Executive possesses an intimate knowledge of the
business and affairs of the Company, its policies, methods and
personnel; and
WHEREAS, the Company desires further to compensate
Executive for his past services, to secure his future services,
and to compensate him therefor,
NOW, THEREFORE, the Company and Executive mutually agree
as follows:
Article 1
Death Benefit
1.1 In the event Executive dies while this Agreement
is in effect and prior to his Retirement ("Retirement" and
"Retire" shall mean severance of employment, other than by death,
with the Company (i) at or after the attainment of age sixty-five
(65), (ii) after this Agreement has been in effect for five (5)
years or more, the Executive has not yet attained the age of
sixty-five (65) years but is at least fifty-five (55) years of
age, and such severance of employment has been favorably approved
by the Company as constituting Executive's early retirement from
the Company, or (iii) at such time that the Executive is deemed
to have Retired in accordance with Section 4.1 below due to the
Executive's total disability, as hereinafter defined), the
Company will cause to be paid to Executive's Beneficiary, in
accordance with the attached Split Dollar Agreement, a death
benefit (the "Pre-Retirement Death Benefit") equal to five
hundred percent (500%) of the Executive's Base Salary ("Base
Salary" is defined to not include any bonus or incentive
compensation to which the Executive may be entitled) for the Plan
Year ("Plan Year" is defined, for purposes of this Agreement, to
be the one (1) year period beginning on January 1 of each
calendar year and continuing through December 31 of the
subsequent calendar year) within which the Executive's death
occurs.
1.2 The Company will pay or cause to be paid such
Death Benefit only if the following conditions are satisfied:
(a) At the time of Executive's death, (i) he was
an Employee ("Employee" is defined in this
Agreement to mean any person who is in the
regular full time employment of the Company
as determined by the personnel rules and
practices of the Company); or (ii) he was
totally disabled (as hereinafter defined) and
was deemed to be an Employee of the Company
in accordance with Article 4 below; and
(b) Such death was due to causes other than
suicide within two years after the date of
this Agreement.
The Company shall be entitled to rely upon the decision(s)
of its insurance carrier(s) as to the determination of the
applicability of the foregoing clause (b).
Article 2
Retirement Benefit
2.1 If Executive remains an Employee of the Company
until age 65 and shall then Retire and if this Agreement has been
kept in force, the Company will pay or cause to be paid to
Executive, as a retirement benefit (the "Retirement Benefit"), an
annual amount equal to fifty percent (50%) of the Executive's
Base Salary for the Plan Year within which his Retirement occurs,
to be paid in equal monthly installments, commencing on the first
day of the month following the Executive's Retirement and
continuing on the first day of each month thereafter for a total
period of fifteen (15) years (or 180 monthly payments in total).
In the event that (i) the Executive Retires from the Company
after this Agreement has been in effect for five (5) years or
more, the Executive has not yet attained the age of sixty-five
(65) years but is at least fifty-five (55) years of age, and the
Executive's severance of employment has been favorably approved
by the Company as constituting Executive's early retirement from
the Company, or (ii) the Executive is deemed to have Retired in
accordance with Section 4.1 below due to the Executive's total
disability (as hereinafter defined), then the Retirement Benefit
that the Company will pay or cause to be paid to Executive in the
manner and for the duration described above shall equal the
percentage of the Executive's Base Salary for the Plan Year
within which his Retirement occurs, as set forth below, that
corresponds to the Executive's age at the time of his Retirement,
as set forth below:
Executive's Retirement Benefit As
Retirement Age Percentage of Base Salary
-------------- -------------------------
64 48%
63 46%
62 44%
61 42%
60 40%
59 38%
58 36%
57 34%
56 32%
55 30%
2.2 If Executive shall die after becoming entitled to
a Retirement Benefit but before all such payments are made, then
any Retirement Benefit payments remaining unpaid to Executive
shall be paid to his Beneficiary in accordance with his
Beneficiary Designation Form attached hereto as Exhibit 1.
2.3 If Executive shall die after becoming entitled to
a Retirement Benefit under the circumstances set forth in Section
2.2 above, then no Pre-Retirement Death Benefit as provided for
in Article 1 shall be payable to Executive's Beneficiary in
accordance with the attached Split Dollar Agreement.
Article 3
Beneficiary
Executive shall designate the Beneficiary to receive his
Pre-Retirement Death Benefit or Retirement Benefit provided in
this Agreement and/or in the attache Split Dollar Agreement, by
completing the appropriate space in the Beneficiary Designation
Form attached hereto as Exhibit 1. If more than one Beneficiary
is named, the shares and/or precedence of each Beneficiary shall
be indicated and, in the absence of any such designation, the
shares shall be equally divided without precedence to any one
Beneficiary. Executive shall have the right to change the
Beneficiary by submitting to the Company an amended or new
Beneficiary Designation Form; provided, however, no change of
Beneficiary shall be effective until acknowledged in writing by
the Company. If the Company has any doubt as to the proper
Beneficiary to receive payments hereunder, or if Executive shall
for any reason not have on file a valid Beneficiary Designation
Form, then Executive's estate shall be the Beneficiary. If the
Company has any doubt as to the manner of payment of the
Pre-Retirement Death Benefit to the Beneficiary, or if the
Executive shall not have on file a valid Beneficiary Designation
Form regarding the manner of payment of such Pre-Retirement Death
Benefit, then the Company shall have the absolute discretion to
pay such Pre-Retirement Death Benefit in one lump sum payment to
the Executive's estate. Any payment made by the Company, in good
faith and in accordance with this Agreement, shall fully
discharge the Company from all further obligations with respect
to such payment.
Article 4
Waiver of Contributions
4.1 If Executive (while an Employee of the Company)
becomes totally disabled after age 55 but before age 65 and,
therefore, ceases to be an Employee of the Company, then
Executive will be deemed to have Retired at such time and the
payment of his Retirement Benefit shall commence in accordance
with Section 2.1 above based upon Executive's age at such time;
provided, however, that notwithstanding anything to the contrary
contained herein, if Executive (while an Employee of the Company)
shall not then have attained 55 years of age when he becomes
totally disabled, then Executive will be deemed to be an Employee
of the Company for purposes of this Agreement (and the attached
Split Dollar Agreement) only until Executive attains age 55, at
which time Executive (if then living) will be deemed to have
Retired. If (as described above) the totally disabled Executive
is deemed to have Retired at age 55, then in such circumstances,
the Executive's Base Salary for the Plan Year within which such
Retirement is deemed to have occurred shall be deemed to be the
Executive's Base Salary for the Plan Year within which the
Executive's total disability occurred. For purposes of this
Agreement, "total disability" is defined to mean when, on the
basis of medical evidence, it is determined that Executive (i) is
disabled to such an extent that he is prevented from any
employment with the Company, including a disability resulting
from an occupational cause, and (ii) will be disabled
permanently.
4.2 In the event Executive dies prior to attaining age
55 while, being totally disabled, he is deemed to remain an
Employee of the Company in accordance with Section 4.1 above,
then the Pre-Retirement Death Benefit provided in Article 1 will
be paid to Executive's Beneficiary in accordance with the
attached Split Dollar Agreement. In such circumstances, the
Executive's Base Salary for the Plan Year within which the
Executive's death occurs shall be deemed to be the Executive's
Base Salary for the Plan Year within which the Executive's total
disability occurred.
4.3 The final determination of what constitutes total
disability and the continuance thereof, for purposes of this
Article, shall be made by the Company, and such determination
shall be conclusive. In the event the Company elects to utilize
insurance contracts on the life of Executive as a means for
making, offsetting or contributing to any payment specified
hereunder, it shall have the right to rely upon the decision of
such insurance carrier(s) as to the determination of the
applicability of this provision.
Article 5
Insurance
5.1 The Company will be obligated to make benefit
payments from time to time in accordance with the terms of this
Agreement. In the event the Company elects to utilize insurance
contracts on the life of Executive as a means for making,
offsetting or contributing to any payment, in full or in part,
which becomes due and payable by the Company under this
Agreement, Executive agrees to cooperate in the securing of life
insurance on his life by furnishing such information as the
Company and the insurance carrier may require, including the
results and reports of previous Company and other insurance
carrier physical examinations, and taking such additional
physical examinations as may be requested by the Company and the
insurance carrier to obtain such insurance coverage. If
Executive does not cooperate in the securing of such life
insurance, or if the Company for any reason is unable to obtain
life insurance in the requested amount on the life of Executive,
the Company shall have no further obligation to Executive under
this Agreement, and this Agreement between the Company and
Executive shall immediately terminate without the necessity of
any notice from either party to the other.
5.2 Except as may be provided to the contrary in the
attached Split Dollar Agreement, the Company shall be the sole
owner of any insurance policy or policies acquired on the life of
Executive, with all incidents of ownership therein, including
(but not limited to) the right to cash and loan values, dividends
(if any), death benefits, and the right of termination thereof.
In the event the Executive shall die under the circumstances
described in Article 1 and/or Section 4.2 above, then the Company
shall designate or cause to designate (i) Executive's Beneficiary
as the beneficiary of such insurance policies or annuity
contracts to the extent of the total amount of the Pre-Retirement
Death Benefit (as determined in accordance with Section 1.1
above) and (ii) with respect to the total amount of the
Pre-Retirement Death Benefit (as determined in accordance with
Section 1.1 above), a manner of payment under such insurance
policies or annuity contracts that corresponds with the manner of
payment designated by the Executive (in accordance with Article 3
above) in the Beneficiary Designation Form filed by the Executive
with the Company. Executive's ownership and/or rights in any
such insurance policies or annuity contracts acquired on the life
of Executive shall be limited in the manner set forth in this
Section 5.2 and in the attached Split Dollar Agreement.
5.3 Notwithstanding anything to the contrary contained
or implied herein, the Company shall not be required to fund, or
otherwise to segregate, assets to be used for the payment of any
benefits payable under either Article 1 or Article 2 of this
Agreement. The obligations which the Company incurs hereunder
are to be satisfied only out of its general corporate funds,
except to the extent described in this Article 5 with regard to
any Pre-Retirement Death Benefit which the Company has elected to
fund with insurance policies or annuity contracts on the life of
the Executive.
Article 6
Termination of Employment
This Agreement does not in any way obligate the Company to
continue the employment of Executive with the Company, nor does
this Agreement limit the right of the Company to terminate
Executive's employment with the Company at any time and for any
reason. Termination of Executive's employment with the Company
for any reason, other than for death which is provided for in
Article 1 above and other than for total disability which is
provided for in Article 4 above, whether by action of the Company
or Executive, (i) shall immediately result in Executive's
Retirement as provided in this Agreement (without the necessity
of any notice from either party to the other), provided that
Executive is then at least 65 years of age, and any further
obligations of either party to the other shall continue only as
expressly provided in this Agreement or (ii) shall immediately
result in termination of this Agreement, provided that Executive
is not then at least 65 years of age, and the parties shall
thereafter have no further obligations to each other pursuant to
this Agreement, unless at such time this Agreement has been in
effect for five (5) years or more, the Executive is at least
fifty-five (55) years of age and such severance of employment has
been favorably approved by the Company as constituting
Executive's early retirement from the Company, in which event any
further obligations of either party to the other shall continue
only as expressly provided in this Agreement. In no event shall
this Agreement by its terms or implications constitute an
employment contract of any nature between the Company and
Executive.
Article 7
Restrictive Covenants
Executive agrees (i) during the term of this Agreement
(including any time during which Executive is determined to be
totally disabled, as described in Article 4 above), and (ii)
during the time Executive is receiving any benefits provided for
under Article 2 hereof, that he will not, without the written
consent of the Board of Directors of the Company directly or
indirectly own, manage, operate, control or participate in the
ownership, management, operation or control of, or be connected
as an officer, employee, partner, director or otherwise with, or
have any financial interest in, or aid or assist anyone else in
the conduct of any business which competes with any business
conducted by the Company (or any of its subsidiary or affiliated
companies) in any area where such business of the Company (or any
of its subsidiary or affiliated companies) is being conducted.
Ownership of five percent (5%) or less of the voting stock of any
publicly-held corporation shall not constitute a violation
hereof.
Article 8
Other Benefits and Agreements
The benefits provided for Executive and his Beneficiary
under this Agreement are in addition to any other benefits
available to Executive under any other plan or program of the
Company for its employees, and, except as may otherwise be
expressly provided for, this Agreement shall supplement and shall
not supersede, modify or amend any other plan or program between
the Company and Executive.
Article 9
Restrictions on Alienation of Benefits
No right or benefit under this Agreement shall be subject
to anticipation, alienation, sale, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate,
sell, assign, pledge, encumber or charge the same shall be void.
No right or benefit hereunder shall in any manner be liable for
or subject to the debts, contracts, liabilities, or torts of the
person entitled to such benefit. If Executive or any of his
Beneficiaries under this Agreement shall become bankrupt or
attempt to anticipate, alienate, sell, assign, pledge, encumber
or charge any right to a benefit hereunder, then such right or
benefit, in the discretion of the Company, shall cease and, in
such event, the Company may hold or apply the same or any part
thereof for the benefit of Executive or such Beneficiary, his
spouse, children, or other dependents, or any of them, in such
manner and in such portions as the Company may deem proper.
Article 10
Administration of this Agreement
10.1 The general administration of this Agreement, as
well as construction and interpretation thereof, shall be vested
in the Company.
10.2 The Company shall have and retains the right in
its sole and absolute discretion (without any obligation
whatsoever) to approve or disapprove of Executive's severance of
employment with the Company (after this Agreement has been in
effect for five (5) years or more and provided that the Executive
has not yet attained the age of sixty-five (65) years but is at
least fifty-five (55) years of age) for any reason other than
Executive's death and total disability as constituting
Executive's early retirement from the Company. Such decision of
the Company shall be conclusive and binding upon all parties
having or claiming to have any right or interest in or under this
Agreement.
10.3 Subject to this Agreement, the Company shall from
time to time establish rules, forms and procedures for the
administration of this Agreement. Except as herein otherwise
expressly provided, the Company shall have the exclusive right to
interpret this Agreement and to decide any and all matters
arising thereunder or in connection with the administration of
this Agreement. The Company shall have the exclusive right to
determine (i) disability in respect of Executive and (ii) the
degree thereof, either or both determinations to be made on the
basis of such medical and/or other evidence as the Company, in
its sole judgment, may require. Such decisions, actions and
records of the Company shall be conclusive and binding upon all
persons having or claiming to have any right or interest in or
under this Agreement.
10.4 The officers and directors of the Company shall be
entitled to rely on all certificates and reports made by any duly
appointed accountants, and on all opinions given by any duly
appointed legal counsel. Such legal counsel may be counsel for
the Company and/or counsel responsible for the drafting of this
Agreement.
10.5 In addition to the powers hereinabove specified,
the Company shall have the power to compute and certify under
this Agreement the amount and kind of benefits from time to time
payable to Executive and his Beneficiaries and to authorize all
disbursements for such purposes.
10.6 The Company shall also have the power, in its sole
discretion, to change the manner and time of payments to be made
to Executive or his Beneficiaries from that set forth in the
Agreement Plan, if requested to do so by Executive or his
Beneficiaries.
Article 11
Miscellaneous
11.1 Any notice which shall be or may be given under
this Agreement shall be in writing and shall be mailed by United
States certified mail, postage prepaid. If notice is to be given
to the Company, such notice shall be addressed to the Company at
000 Xxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxx 00000; or, if notice to
Executive, addressed to Executive at the address shown on this
Agreement.
11.2 Any party may, from time to time, change the
address to which notices shall be mailed by given written notice
of such new address.
11.3 This Agreement shall be binding upon the Company
and its successors and assigns, and upon Executive, his
Beneficiaries, assigns, heirs, executors and administrators.
11.4 This Agreement shall be governed and construed
under the laws of the State of Michigan as in effect at the time
of its adoption and execution.
11.5 Masculine pronouns wherever used shall include
feminine pronouns and the singular shall include the plural.
11.6 Executive, by the execution of this Agreement,
acknowledges that he did not rely upon any oral or written
representations by the Company when deciding to enter into this
Agreement.
SEMCO Energy ("Company")
By_______________________________
____________________("Executive")
_________________________________
(Address)
EXHIBIT 1
BENEFICIARY DESIGNATION FORM RELATIVE TO THE
EXECUTIVE SECURITY AGREEMENT
BETWEEN
SEMCO ENERGY AND ___________________
I acknowledge that, as an Employee of SEMCO ENERGY (the
"Company"), I have entered into an Executive Security Agreement
("Agreement") with such Company described in the attached
Agreement, which is incorporated by this reference for all
purposes.
I hereby designate as Primary Beneficiary (to receive in
one lump sum payment at my death, unless specified
otherwise) under the Agreement:
__________________________________________________________
__________________________________________________________
and I hereby designate as Secondary Beneficiary (to
receive in one lump sum payment at my death, unless
specified otherwise) under the Agreement:
__________________________________________________________
__________________________________________________________
The term Beneficiary, as used herein, shall mean the
Primary Beneficiary if such Primary Beneficiary survives me by at
least thirty (30) days, and shall mean the Secondary Beneficiary
if Primary Beneficiary does not survive me by at least thirty
(30) days, and shall mean my estate if neither Primary
Beneficiary nor Secondary Beneficiary survives me by at least
thirty (30) days. I shall have the right to change my
designation of Primary Beneficiary and/or Secondary Beneficiary
from time to time in such manner as shall be required by the
Company, it being agreed that no change in Beneficiary shall be
effective until acknowledged in writing by the Company. (If
Beneficiary is to be irrevocable, I will strike and initial
previous sentence.)
_____________________________:
Employee
_____________________________
(Signature)
_____________________________
(Address)
SEMCO Energy hereby acknowledges receipt of this
Beneficiary Designation Form on this ____ day of
_________________.
SEMCO ENERGY
By:______________________________
[FN]
Executive Security Agreements are in effect for the following
Executives of the Company:
-- Xxxxxxx X. Xxxxxxxxx dated January 19, 1999
-- Xxxxxxxxx Xxxxxxx dated January 18, 1999
-- Xxxxxxx Hatches dated February 12, 1997 and amended
March 31, 1998
-- Xxxxxxx Xxxxxxx dated February 12, 1997 and amended
March 31, 1998
-- Xxxx X. Xxxxxx dated February 12, 1997 and amended
March 31, 1998
