Exhibit 10.9 - Prendeville Change in
Control Severance Agreement
CHANGE IN CONTROL SEVERANCE AGREEMENT
This Change in
Control Severance Agreement (the “Agreement”) is made
and entered into as of this 29th day of June, 2005 (the
“Effective Date”), by and between SEMCO Energy Inc., a
Michigan corporation (the “Company”), and Mark T.
Prendeville (“Executive”).
WHEREAS, among other
things, the Company believes that, in the event a transaction is
proposed that would, if consummated, constitute a Change in Control
(as defined below), it is important to the Company that Executive
be induced to remain in his position and focused on pursuing the
best interests of the Company and its shareholders and not be
distracted by personal uncertainties and risks created by the
prospect of such a Change in Control;
WHEREAS, the Company
desires to employ, or continue to employ, Executive, on the terms
and conditions set forth in this Agreement, which is intended to
supersede all prior such agreements and understandings between
Executive and the Company with respect to the subject-matter
hereof;
NOW, THEREFORE, in
consideration of the compensation and other benefits of
Executive’s employment and, if applicable, Executive’s
continued employment, by the Company, and the mutual covenants and
agreements hereinafter set forth, Executive and the Company agree
as follows:
1.1. Executive is
employed by the Company as Vice President and Deputy General
Counsel as of the Effective Date, and Executive hereby accepts and,
if applicable, continues such employment, upon the terms and
conditions hereinafter set forth. Executive shall report to the
Senior Vice President and General Counsel and have such functions,
authority, duties and responsibilities as are customarily given to
persons in such positions at a company with publicly-traded
securities.
1.2. Executive agrees
that, throughout Executive’s employment with the Company,
Executive will (i) faithfully render such services as may be
reasonably delegated to, or required of, Executive by the Company,
(ii) and devote Executive’s entire business time, best
efforts, ability, skill and attention, in good faith, to the
Company’s business, and (iii) follow and act in accordance
with the rules, policies, and procedures of the Company. Executive
shall serve on a full-time basis; provided, however, that it shall
not be a breach of this Agreement for Executive to serve on
corporate, industry trade group, civic or charitable boards or
committees or to engage in other activities, with the consent of
the President and Chief Executive Officer and so long as such
activities do not materially interfere with the performance of
Executive’s duties and responsibilities to the Company.
2. Employment
“At Will” . Executive and the Company agree that,
except as otherwise provided herein with respect to
Executive’s rights upon a Change in Control,
Executive’s employment with the Company is “at
will” and is not for any specified term.
|
3.
|
Certain Definitions. For purposes of
this Agreement, the following definitions shall apply:
|
3.1. “Change in
Control” shall mean:
3.1.1. the direct or
indirect sale, lease, exchange or other transfer of all or
substantially all of the assets of the Company to any Person or
entity or group of Persons or entities acting in concert as a
partnership or other group (a “Group of Persons”)
(other than a Person described in clause (i) of the definition of
Affiliate);
3.1.2. the consummation
of any consolidation or merger of the Company with or into another
corporation with the effect that the stockholders of the Company
immediately prior to the date of the consolidation or merger hold
less than 51% of the combined voting power of the outstanding
voting securities of the surviving entity of such merger or the
corporation resulting from such consolidation ordinarily having the
right to vote in the election of directors (apart from rights
accruing under special circumstances) immediately after such merger
or consolidation;
3.1.3. the stockholders
of the Company shall approve any plan or proposal for the
liquidation or dissolution of the Company;
3.1.4. a Person or Group
of Persons acting in concert as a partnership, limited partnership,
syndicate or other group shall, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or
otherwise, have become the direct or indirect beneficial owner
(within the meaning of Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”))
(“Beneficial Owner”) of securities of the Company
representing 30% or more of the combined voting power of the then
outstanding securities of the Company ordinarily (and apart from
rights accruing under special circumstances) having the right to
vote in the election of directors; or
3.1.5. a Person or Group
of Persons, together with any Affiliates thereof, shall succeed in
having a sufficient number of its nominees elected to the Board of
Directors such that such nominees, when added to any existing
director remaining on the Board of Directors after such election
who is an Affiliate of such Person or Group of Persons, will
constitute a majority of the Board of Directors.
3.1.6. For purposes of
this definition, “Affiliate” of any specified Person
shall mean (i) any other Person which, directly or indirectly, is
in control of, is controlled by or is under common control with
such specified Person or (ii) any other Person who is a director or
officer (A) of such specified Person, (B) of any subsidiary of such
specified Person or (C) of any Person described in clause (i) above
or (iii) any Person in which such Person has, directly or
indirectly, a five (5) percent or greater voting or economic
interest or the power to control. For the purposes of this
definition, “control” of a Person means the power,
direct or indirect, to direct or cause the direction of the
management or policies of such Person whether through the ownership
of voting securities, or by contract or otherwise; and the terms
“controlling” and “controlled” have
meanings correlative to the foregoing.
3.1.7.
“Person” shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act.
3.1.8. “Voting
power” shall mean the voting power of all securities of a
Person then outstanding generally entitled to vote for the election
of directors of the Person (or, where appropriate, for the election
of persons performing similar functions).
3.1.9. Nothwithstanding
the definitions set forth in this Section 3.1, the Board of
Directors may determine, after a review of the facts and
circumstances surrounding a particular transaction, in its sole
discretion, that consummation of the transaction shall constitute a
Change in Control for purposes of this Agreement.
3.2. “Base
Salary” shall mean the base cash compensation paid to
Executive.
3.3. “Target
Annual Bonus” shall mean a percentage applied to
Executive’s Base Salary that produces an annual lump sum
bonus payable to Executive in accordance with the Company’s
then-existing Short-Term Incentive Plan (the “STIP”).
The STIP shall afford Executive a reasonable opportunity to earn
the Target Annual Bonus and, depending on his performance and the
financial performance of the Company, such lesser or greater annual
lump sum payments as may be awarded under the STIP.
3.4. “Long-Term
Incentive Award Target” shall mean a percentage applied to
Executive’s Base Salary that produces an annual target for
grants to the Executive under the Company's then-existing Long-Term
Incentive Plan (the “LTIP”).
|
4.
|
Termination of Employment .
|
4.1. Prior to the
consummation of a transaction constituting a Change in Control and
subject to Section 4.3.2 hereof, either Executive or the Company
may terminate Executive’s employment relationship at any
time, with or without reason therefor or notice thereof.
4.2. In the event
that a transaction constituting a Change in Control has been
consummated within the 24 months preceding such termination,
Executive’s employment relationship may be terminated by the
Company for the following reasons:
4.2.1. Termination
Due to Death . Executive’s employment shall be terminated
immediately upon the death of the Executive.
4.2.2. Termination
Due to Disability . If the Company determines, in good faith,
that the Disability (as defined below) of Executive has occurred,
it may give Executive written notice of its intention to terminate
Executive’s employment. In such event, Executive’s
employment shall terminate effective on the 30 th day
after receipt of such notice by Executive (the “Disability
Effective Date”), if , within 30 days after such receipt,
Executive shall not have returned to the performance of his
essential functions, with or without reasonable accommodation. For
purposes of this Agreement, “Disability” shall mean the
inability of Executive to perform a material portion of his duties
for 180 consecutive days as a result of incapacity due to a mental
or physical condition, which is determined to be total and
permanent by a physician selected by the Company.
4.2.3. Termination
for Cause . The Company may terminate Executive’s
employment for Cause. For the purposes of this Agreement,
“Cause” shall mean:
4.2.3.1 Executive’s
continued failure or inability to perform any material duties
reasonably assigned to Executive (other than any such failure
resulting from Executive’s death or Disability) or
Executive’s substantial performance deficiencies, after (i)
Executive is given a written demand by the Board of Directors
identifying the manner in which the Company believes (a) Executive
has not performed such duties or, as applicable, (b) the reasons
for finding Executive’s performance to be deficient, and (ii)
Executive’s subsequent failure to (a) cure or (b) otherwise
address, to the reasonable satisfaction of the Board of Directors,
the matters set forth in such written demand within 60 days; or
4.2.3.2 a material breach
of this Agreement by Executive; or
4.2.3.3 Executive’s
commission of fraud against the Company or his engaging in willful
misconduct which is materially injurious to the Company, monetarily
or otherwise; or
4.2.3.4 Executive’s
willful misconduct involving a third party or conviction of a
felony or submission of a guilty or nolo contendere plea by
Executive with respect thereto.
4.2.3.5 For purposes of
this definition, no act or omission on Executive’s part shall
be considered “willful” unless done or omitted to be
done by Executive in bad faith, recklessly, or in the absence of a
reasonable belief that Executive’s act or omission was in the
best interests of the Company.
4.2.4 Termination
without Cause . The Company may terminate Executive’s
employment for any reason not amounting to Cause, upon not less
than 60 days’ prior written notice to Executive.
4.3. In the event
that a transaction constituting a Change in Control has been
consummated within the 24 months preceding such termination,
Executive’s employment relationship may be terminated by
Executive for the following reasons:
4.3.1. Termination by
Executive with Good Reason . Executive’s employment may
be terminated by Executive with Good Reason. For the purposes of
this Agreement, “Good Reason” shall mean any of the
following actions taken without Executive’s consent, in
writing:
4.3.1.1 the assignment to
Executive of any duties that are materially inconsistent with
Executive’s position (including status, office, titles and
reporting relationships), functions, authority, duties or
responsibilities as contemplated by this Agreement, or any other
action by the Company which results in a material diminution in
Executive’s position, functions, authority, duties, or
responsibilities, excluding an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by
the Company within 30 days after receipt of written notice thereof
given by Executive; or
4.3.1.2 a material breach
of this Agreement by the Company; or
4.3.1.3 a reduction in
Executive’s Base Salary, Target Annual Bonus, or Long-Term
Incentive Award Target; or
4.3.1.4 the relocation of
the Company’s headquarters by more than 50 miles or the
assignment of Executive to a work location that is more than 50
miles from his work location (as determined by his work location
immediately preceding the announcement of the transaction which,
when consummated, constituted the Change in Control referred to in
this Section 4.3); provided, however, that to the extent reasonably
required and substantially consistent with such travel immediately
prior to consummation of the transaction constituting a Change in
Control, travel by the Executive on Company business shall not be
deemed a change in his work location; or
4.3.1.5 the failure of
any successor to the Company to adopt and agree to be bound by this
Agreement, in writing, and thereafter honor the Company’s
obligations hereunder.
4.3.2 Anything in this
Agreement to the contrary notwithstanding, if (i) a transaction
constituting a Change in Control is consummated, (ii)
Executive’s employment with the Company is terminated within
one year prior to the date on which such consummation occurred, and
(iii) it is reasonably demonstrated by the Executive that such
termination of employment (a) was at the request of a third party
which had taken, or subsequently took, steps reasonably calculated
to effect a Change in Control, or (b) otherwise arose in connection
with or anticipation of a transaction which, if consummated, would
constitute a Change in Control, then, for purposes of this
Agreement and notwithstanding any other action taken by the Company
or Executive (including the execution of a general release of
claims), Executive’s termination shall be deemed to have
occurred with Good Reason after consummation of a transaction
constituting a Change in Control.
4.3.3 Termination by
Executive without Good Reason . Executive’s employment
may be terminated by Executive, for any reason not amounting to
Good Reason, upon not less than 60 days’ prior written notice
to the Company.
4.4. Notice of
Termination after Change in Control . Any termination of
Executive’s employment within 24 months after consummation of
a transaction constituting a Change in Control (other than by
death) shall be communicated to the other party by Notice of
Termination given in accordance with this section. For purposes of
this Agreement, a “Notice of Termination” means a
written notice which (i) states 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 Executive’s employment
under the provision so indicated, an
