Exhibit 10.8
EMPLOYMENT AGREEMENT
AGREEMENT by and between Southeastern Michigan Gas
Enterprises, Inc., a Michigan corporation (the "Company") and
Xxxxxxx X. Xxxxxxx (the "Executive"), dated as of the 10 day of
October, 1996.
The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and
its shareholders to assure that the Company will have the
exclusive dedication of the Executive for a reasonable period of
time to provide for continuity of Company management. Therefore,
in order to accomplish these objectives, the Board had caused the
Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall be May 1,
1996.
2. Employment Period. The Company hereby agrees to employ
the Executive, and the Executive hereby agrees to remain in the
employ of the Company subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and
ending on the date sixty (60) months thereafter (the "Employment
Period").
3. Terms of Employment. (a) Position and Duties. (i)(A)
During the Employment Period, the Executive shall serve as
President and Chief Executive Officer, with such authority,
duties and responsibilities as are commensurate with such
position and as may be consistent with such position as may be
assigned to him by the Board, and (B) the Executive shall be
elected a member of the Company's Board of Directors, and (C) the
Executive's services shall be performed at Port Huron, Michigan.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote substantially all of his
attention and time during normal business hours to the business
and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to
perform faithfully and efficiently such responsibilities. During
the Employment Period it shall not be a violation of this
Agreement for the Executive to (A) serve on corporate, civic or
charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C)
manage personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to
the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature
and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary
("Annual Base Salary"), which shall be paid at a monthly rate, at
least equal to $210,000. During the Employment Period, the
Annual Base Salary shall be reviewed at least annually. Any
increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase
and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "affiliated companies" shall include any
company controlled by or under common control with the Company.
(ii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be (A) eligible for an
annual incentive bonus in an amount not to exceed forty percent
(40%) of the Executive's Annual Base Salary and payable upon the
attainment of specific targets as agreed to annually by the
Executive and the Board, and (B) entitled to participate in all
other incentive, savings and retirement plans, practices,
policies and programs (including the Company's Supplemental
Retirement Plan for Certain Officers) applicable generally to
other senior executives of the Company and its affiliated
companies.
(iii) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent
applicable generally to other senior executives of the Company
and its affiliated companies.
(iv) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the Company's policies.
(v) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including,
without limitation, payment of the initiation fee (not to exceed
$5,000) for a country club membership of the Executive's choice
and use of a new natural gas automobile at the Crown Victoria
level and payment of related expenses, to the extent applicable
generally to other senior executives of the Company and its
affiliated companies.
(vi) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices
of a size and with furnishings and other appointments as provided
generally at any time thereafter with respect to other senior
executives of the Company and its affiliated companies and as are
commensurate with his position.
(vii) Vacation. During the Employment Period, the
Executive shall be entitled to four (4) weeks' paid vacation or
such longer period of paid vacation as warranted by the
Executive's seniority in accordance with the plans, policies,
programs and practices of the Company and its affiliated
companies as in effect generally at any time with respect to
other senior executives of the Company and its affiliated
companies.
(viii) Relocation Benefits. The Executive shall be
entitled to reimbursement of an after-tax equivalent amount for
ordinary and usual moving costs to move household furnishings and
personal effects to the Port Huron, Michigan metropolitan area,
and for the reasonable costs of house hunting trips, realtor
fees, and ordinary and usual temporary living expenses. For
these purposes, the term "after-tax equivalent amount" means such
amount that will provide the Executive with a reimbursement
amount, after the payment of federal income tax, equal to the
amount of reimbursement the Executive would have received if the
reimbursement were not subject to federal income taxation when
made.
(ix) Additional Life Insurance Benefit. During the
Employment Period, the Company shall provide additional term life
insurance on the life of the Executive in whatever face amount as
is available from a life insurance company as mutually agreed to
by the Company and the Executive, and as may be purchased with an
annual premium payment of $8,500, plus gross up costs.
4. Termination of Employment. (a) Death or Disability.
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition
of Disability set forth below), it may give to the Executive
written notice in accordance with Section 10(b) of this Agreement
of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice
by the Executive (the "Disability Effective Date"), provided
that, within the 30 days after such receipt, the Executive shall
not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean
the absence of the Executive from the Executive's duties with the
Company on a full-time basis for 180 consecutive business days as
a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or
the Executive's legal representative.
(b) Cause. the Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes
of this Agreement, "Cause" shall mean:
(i) the continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of
its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to the Executive
by the Board which specifically identifies the manner in which
the Board believes that the Executive has not substantially
performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to the Company, or
(iii) conviction of a felony or guilty or nolo contendere
plea by the Executive with respect thereto, or
(iv) a material breach of the covenants contained in
Section 8.
For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission
was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests
of the Company. The cessation of employment of the Executive
shall not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than two-thirds of
the outside members of the Board at a meeting of the Board called
and held for such purpose (after reasonable notice is provided to
the Executive and the Executive is given an opportunity, together
with counsel, to be heard before the Board) finding that, in the
good faith opinion of the Board, the Executive is guilty of the
conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
(c) Good Reason. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean in the absence of a
written consent of the Executive:
(i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 3(a) of this Agreement, or any other
action by the Company which results in a material diminution in
such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the
Executive;
(ii) any material failure by the Company to comply with any
of the provisions of Section 3(b) of this Agreement, other than
an isolated, insubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at
any office or location more than 35 miles from that provided in
Section 3(a)(i)(C) hereof or the Company's requiring the
Executive to travel on Company business to a substantially
greater extent than required immediately prior to the Effective
Date;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 9(c) of this Agreement.
For purposes of this Section 3(c), any good faith determination
of "Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 10(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date
(which date shall be not more than thirty days after the giving
of such notice). The failure by the Executive or the Company to
set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively,
hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i)
if the Executive's employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the date of receipt
of the Notice of Termination or any later date specified therein
within 30 days of such notice, as the case may be, (ii) if the
Executive's employment is terminated by the Company other than
for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such
termination and (iii) if the Executive's employment is terminated
by reason of death or Disability, the Date of Termination shall
be the date of death of the Executive or the Disability Effective
Date, as the case may be.
5. Obligations of the Company upon Termination. (a) Good
Reason; Other Than for Cause, Death or Disability. If, during
the Employment Period, the Company shall terminate the
Executive's employment other than for Cause or Disability or the
Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 60 days after the Date of Termination the aggregate
of the following amounts:
A. the sum of (1) the Executive's Annual Base salary
through the Date of Termination to the extent not theretofore
paid, and (2) any compensation previously deferred (other than
pursuant to a qualified plan) by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation
pay, in each case to the extent not theretofore paid (the sum of
the amounts described in clauses (1) and (2) shall be hereinafter
referred to as the "Accrued Obligations"); and
B. an amount equal to the Executive's Annual Base Salary.
(ii) for twelve months after the Executive's Date of
Termination the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which would
have been provided to them in accordance with the plans,
programs, practices and policies described in Section 3(b)(iii)
of this Agreement if the Executive's employment had not been
terminated or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other senior
executives of the Company and its affiliated companies and their
families, provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided
plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during
such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be
considered to have remained employed until twelve months after
the Date of Termination and to have retired on the last day of
such period; and
(iii) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the
Executive is eligible to receive under any plan, program, policy
or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other
than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid
to the Executive's estate or beneficiary, as applicable, in a
lump sum in cash within 60 days of the Date of Termination. With
respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(b) shall include death
benefits as in effect on the date of the Executive's death with
respect to other senior executives of the Company and its
affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the Executive in
a lump sum in cash within 60 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(c) shall include, and the
Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits as in effect at any
time thereafter generally with respect to other senior executives
of the Company and its affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause or the Executive
terminates his employment without Good Reason during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to
the Executive (i) his Annual Base Salary through the Date of
Termination, (ii) the amount of any compensation previously
deferred by the Executive, and (iii) Other Benefits, in each case
to the extent theretofore unpaid.
6. Non-exclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided
by the Company or any of its affiliated companies and for which
the Executive may qualify, nor, subject to Section 10(f), shall
anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated
companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program
or contract or agreement except as explicitly modified by this
Agreement.
7. Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder may be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others.
8. Confidential Information. (a) The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret
or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no
event shall an asserted violation of the provisions of this
Section 8 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
(b) In the event of a breach or threatened breach of this
Section 8, the Executive agrees that the Company shall be
entitled to injunctive relief in a court of appropriate
jurisdiction to remedy any such breach or threatened breach, and
the Executive acknowledges that damages would be inadequate and
insufficient.
(c) Any termination of the Executive's employment or of
this Agreement shall have no effect on the continuing operation
of this Section 8.
9. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
10. Miscellaneous. (a) This Agreement shall be governed
by and construed in accordance with the laws of the State of
Michigan. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxx 00000
If to the Company:
Xxxxx X. Xxxxxxxx
Chairman of the Board of Directors
Southeastern Michigan Gas Enterprises, Inc.
000 Xxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law
or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to
Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be
a waiver of such provision or right or any other provision or
right of this Agreement.
(f) The Executive and the Company acknowledge that, except
as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the
Executive by the Company is "at will". Either the Company or the
Executive may terminate the Executive's employment at any time,
with or without cause, subject to the provisions of this
Agreement. From and after the Effective Date this Agreement
shall supersede any other employment agreement, arrangement or
understanding between the parties with respect to the subject
matter hereof other than the Change of Control Employment
Agreement dated October 10, 1996 between the parties, which
shall, upon a Change of Control (as defined therein) supersede
this Agreement.
(g) Notwithstanding any provision of this Agreement, the
Company shall have no obligation to make any payments to the
Executive if or to the extent such payments are prohibited by any
applicable law or regulation.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to be
executed in its name on its behalf, all as of the day and year
first above written.
SOUTHEASTERN MICHIGAN GAS
ENTERPRISES, INC.
By: Xxxxx X. Xxxxxxxx
Chairman of the Board
Xxxxxxx X. Xxxxxxx
