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EXHIBIT 10-56
FORM OF CHANGE-IN-CONTROL SEVERANCE AGREEMENT
This
CHANGE-IN-CONTROL SEVERANCE AGREEMENT (the "Agreement") is made
and
entered into by and between DTE Energy
Company, a Michigan corporation (the
"Company"), and
(the "Executive"), effective as of the date
the Agreement has been executed by both
parties (the "Effective Date").
WITNESSETH:
WHEREAS,
the Executive is an executive or a key employee of the Company
or
one or more of its Subsidiaries and has
made and is expected to continue to make
major contributions to the short- and
long-term profitability, growth and
financial strength of the Company;
WHEREAS,
the Company recognizes that, as is the case for most publicly
held companies, the possibility of a Change
in Control (as defined below)
exists;
WHEREAS,
the Company desires to assure itself of both present and future
continuity of management and to establish
minimum severance benefits for certain
of its senior executives or key employees,
including the Executive, in the event
of a Change in Control;
WHEREAS,
the Company wishes to ensure that its senior executives and key
employees are able to discharge their
duties in respect of a proposed or actual
transaction involving a Change in Control;
and
WHEREAS,
the Company desires to provide additional inducement for the
Executive to continue to remain in the
ongoing employ of the Company.
NOW,
THEREFORE, the Company and the Executive agree as follows:
1. Certain Defined Terms.
In addition to terms defined elsewhere herein, the
following
terms have the indicated meanings when used in this Agreement
with
initial capital letters:
(a)
"Annual Bonus"
means the aggregate annual bonus, incentive or other
payments of cash compensation (determined without regard to any
deferral election) to which the Executive would have been
entitled
under the bonus, incentive, profit-sharing, performance,
discretionary pay or similar agreement, policy, plan, program
or
arrangement of the Company or Subsidiary in which the Executive
was
participating in the year of reference.
(b)
"Base Pay" means
the Executive's annual base salary (prior to any
deferrals or reductions) at a rate not less than the
Executive's
annual fixed or base compensation as in effect immediately prior
to
the occurrence of a Change in Control or such higher rate as may
be
determined thereafter from time to time by the Board or a
committee
thereof.
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(c)
"Board" means
the Board of Directors of the Company.
(d)
"Cause" means
that, prior to termination pursuant to Section 3(b),
the Executive shall have committed or engaged in:
(i) an
intentional act of fraud, embezzlement or theft in
connection with the Executive's duties or in the course of the
Executive's employment with the Company or a Subsidiary;
(ii) intentional
wrongful damage to property of the Company or a
Subsidiary;
(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or a Subsidiary;
(iv) intentional
wrongful engagement in any Competitive Activity;
or
(v) other
intentional activity which in the reasonable judgement
of the Board is significantly detrimental to the reputation,
goodwill or business of the Company or significantly disrupts
the workplace environment or operation of the Company's
business or administrative activities.
For purposes of this Agreement, no act or failure to act on the
part
of the Executive shall be deemed "intentional" if it was due
primarily to an error in judgment or negligence. An act shall
be
deemed "intentional" only if done or omitted to be done by the
Executive not in good faith and without reasonable belief that
the
Executive's action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not
be
deemed to have been terminated for "Cause" hereunder 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
three-quarters of the Board then in office at a meeting of the
Board
called and held for such purpose, after reasonable notice to
the
Executive
and an opportunity for the Executive, together with the
Executive's counsel (if the Executive chooses to have counsel
present at such meeting), to be heard before the Board, finding
that, in the good faith opinion of the Board, the Executive had
committed an act constituting "Cause" as herein defined and
specifying the particulars thereof in detail. Nothing herein
limits
the right of the Executive or the Executive's beneficiaries to
contest the validity or propriety of any such determination.
(e)
"Change-in-Control" means the occurrence during the Term of any
of
the following events:
i) The
Company is merged, consolidated or reorganized into or
with another corporation or other legal person, and as a
result of such merger, consolidation or reorganization less
than 55% of the combined voting power of the then-outstanding
Voting Stock of such corporation or person immediately after
such transaction is held in the aggregate by the holders of
Voting Stock of the Company immediately prior to such
transaction;
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(ii) The Company sells
or otherwise transfers all or substantially
all of its assets to another corporation or other legal
person, and as a result of such sale or transfer less than 55%
of the combined voting power of the then-outstanding Voting
Stock of such corporation or person immediately after such
sale or transfer is held in the aggregate (directly or through
ownership of Voting Stock of the Company or a Subsidiary) by
the holders of Voting Stock of the Company immediately prior
to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1
(or
any successor schedule, form or report), each as promulgated
pursuant to the Exchange Act, disclosing that any person (as
the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) has become the beneficial owner
(as the term "beneficial owner" is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the
Exchange Act) of securities representing 20% or more of the
combined voting power of the then-outstanding Voting Stock of
the Company;
(iv) The Company files
a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) that a
change in control of the Company will occur in the future
pursuant to a then-existing contract or transaction which when
consummated would be a Change in Control determined without
regard to this subsection (iv);
(v) If, during
any period of two consecutive years, individuals
who at the beginning of any such period constitute the
Directors of the Company cease for any reason to constitute at
least a majority thereof; provided, however, that for purposes
of this clause (v) each Director who is first elected, or
first nominated for election by the Company's stockholders, by
a vote of at least two-thirds of the Directors of the Company
(or a committee thereof) then still in office who were
Directors of the Company at the beginning of any such period
will be deemed to have been a Director of the Company at the
beginning of such period; or
(vi) The approval by
the shareholders of the Company of a complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing provisions of Section l(e)(iii)
or
l(e)(iv), unless otherwise determined in a specific case by
majority
vote of the Board, a "Change in Control" shall not be deemed to
have
occurred for purposes of Section l(e)(iii) or l(e)(iv) solely
because (A) the Company, (B) a Subsidiary, or (C) any
Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company or a Subsidiary either files
or
becomes obligated to file a report or a proxy statement under or
in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule
14A
(or any successor schedule, form or report or item therein)
under
the Exchange Act disclosing beneficial ownership by it of shares
of
Voting Stock,
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whether in excess of 20% or otherwise, or because the Company
reports that a Change in Control of the Company has occurred or
will
occur in the future by reason of such beneficial ownership.
(f)
"Competitive
Activity" means the Executive's participation, without
the written consent of the Chief Executive Officer of the
Company
(or, if the Executive
is the Chief Executive Officer, without the
affirmative vote of not less than a majority of the Board), in
the
management of any business enterprise if such enterprise engages
in
substantial and direct competition with the Company or any of
its
Subsidiaries and such enterprise's sales of any product or
service
competitive with any product or service of the Company or any of
its
Subsidiaries amounted to 10% of such enterprise's net sales for
its
most recently completed fiscal year and if the Company's or
Subsidiary's net sales of said product or service amounted to 10%
of
the Company's or Subsidiary's net sales for its most recently
completed fiscal year. "Competitive Activity" will not include
the
mere ownership of not more than 10% of the total combined
voting
power or aggregate value of all classes of stock or other
securities
in such enterprise and the exercise of rights appurtenant
thereto.
It shall be Executive's responsibility to provide the Company
with
information sufficient to make such determinations.
(g)
"Employee
Benefits" means the perquisites, benefits and service
credit for benefits as provided under any and all employee
retirement income and welfare benefit policies, plans, programs
or
arrangements in which Executive is entitled to participate,
including
without limitation any stock option, stock purchase, stock
appreciation, savings, pension, supplemental executive
retirement,
or other retirement income or welfare benefit, deferred
compensation, incentive compensation, group or other life,
health,
medical/hospital or other insurance (whether funded by actual
insurance or self-insured by the Company or a Subsidiary),
disability, salary continuation, expense reimbursement and
other
employee benefit policies, plans, programs or arrangements that
may
now exist or any equivalent successor policies, plans, programs
or
arrangements that may be adopted hereafter by the Company or a
Subsidiary, providing perquisites, benefits and service credit
for
benefits at least as great in the aggregate as are payable
thereunder prior to a Change in Control.
(h)
"Exchange Act"
means the Securities Exchange Act of 1934, as
amended.
(i)
"Incentive Pay"
means an aggregate annual bonus, incentive or other
payments of cash compensation (determined without regard to any
deferral election), in addition to Base Pay, pursuant to any
bonus,
incentive, profit-sharing, performance, discretionary pay or
similar
agreement, policy, plan, program or arrangement (whether or not
funded) of the Company or a Subsidiary, or any successor
thereto,
providing
benefits on a basis at least as favorable to the
Executive, in terms of each of the amount of benefits, levels
of
coverage and performance measures and levels of required
performance, as the benefits payable thereunder prior to the
Change
in Control.
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(j)
"Severance
Period" means, in respect of the occurrence of each and
every Change in Control, the period of time commencing on the
date
of the occurrence of such Change in Control and continuing until
the
earlier of (i) the second anniversary of the occurrence of such
Change-in-Control and (ii) the Executive's death; provided,
however,
that in the event of the occurrence of a Change in Control
resulting
from a filing of a report or proxy statement described in
subsection
1(e)(iv) of the definition of Change in Control, the Severance
Period in respect of such Change in Control shall continue until
the
later of (A) the date provided in this subsection 1(j)
determined
without regard to this proviso or (B) the earlier of (x) the
date
any transaction, occurrence or event described in such report
or
proxy statement (a "Transaction") is consummated or (y) the date
it
is determined that such Transaction will not be consummated.
The
Board may make the determination referred to in clause (y) by
resolution adopted in good faith.
(k)
"Subsidiary"
means an entity in which the Company directly or
indirectly beneficially owns 50% or more of the outstanding
Voting
Stock.
(l)
"Term" means the
period commencing as of the Effective Date and
expiring as of the later of (i) the close of business on the
day
before the third anniversary of the Effective Date or (ii) the
expiration of the Severance Period; provided, however, that (A)
commencing on the first anniversary of the Effective Date and
each
anniversary of the Effective Date thereafter, the term of this
Agreement will automatically be extended for an additional year
unless, not
later than 90 days preceding any anniversary of the
Effective Date, (1) the Company or the Executive shall have
given
notice that it or the Executive, as the case may be, does not
wish
to have the Term extended, or (2) the Company shall have given
notice that it wishes the Term to be extended for a period of
less
than one year, in which case the term of this Agreement will
automatically be extended for such shorter period and will then
terminate if not further extended by written agreement between
the
Company and the Executive and (B) if, prior to a Change in
Control,
the Executive ceases for any reason to be an employee of the
Company
and any Subsidiary, thereupon without further action the Term
shall
be deemed to have expired and this Agreement will immediately
terminate and be of no further effect. For purposes of this
Section
1(l), the Executive shall not be deemed to have ceased to be an
employee of the Company and any Subsidiary by reason of the
transfer
of Executive's employment between the Company and any Subsidiary,
or
among any Subsidiaries.
(m) Termination Date" means the
date on which the Executive's employment
is terminated (the effective date of which shall be the date of
termination, or such other date that may be specified by the
Executive if the termination is pursuant to Section 3(b)).
(n)
"Voting Stock,"
means securities entitled to vote generally in the
election of directors.
2. Operation of
Agreement. This Agreement will be effective and binding
immediately upon its execution, but, anything in this Agreement to
the
contrary
notwithstanding, this
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Agreement
will not be operative unless and until a Change in Control
occurs.
Upon the occurrence of a Change in Control at any time during
the
Term,
without further action, this Agreement shall become immediately
operative.
3. Termination Following
a Change in Control.
(a)
In the event of
the occurrence of a Change in Control, the
Executive's employment with the Company or a Subsidiary may be
terminated by the Company or a Subsidiary during the Severance
Period applicable to such Change in Control and the Executive
shall
be entitled to the benefits provided under Section 4 unless
such
termination is the result of the occurrence of one or more of
the
following events:
(i) the
Executive's death;
(ii) if the Executive
becomes permanently disabled within the
meaning of, and begins receiving disability benefits pursuant
to, the Company or Subsidiary sponsored long-term disability
plan in effect for, or applicable to, Executive immediately
prior to such Change in Control; or
(iii) Cause.
If, during the Severance Period applicable to such Change in
Control, the Executive's employment is terminated by the Company
or
a Subsidiary other than pursuant to Section 3(a)(i), 3(a)(ii),
or
3(a)(iii), the Executive will be entitled to the benefits
provided
under Section 4 hereof.
(b)
In the event of
the occurrence of a Change in Control, the Executive
may terminate employment with the Company and all Subsidiaries
during the Severance Period applicable to such Change in
Control,
with the right to severance compensation as provided in Section
4,
upon, or at any time (during such Severance Period) after, the
occurrence of one or more of the following events (regardless
of
whether any other reason, other than Cause as herein above
provided,
for such termination exists or has occurred, including without
limitation other employment):
(i) failure to
elect or reelect to the office, or otherwise
maintain the Executive in the position, or a substantially
equivalent office or position, of or with the Company and/or a
Subsidiary, as the case may be, which the Executive held
immediately prior to such Change in Control, or the removal of
the Executive as a Director of the Company (or any successor
thereto) if the Executive shall have been a Director of the
Company immediately prior to such Change in Control;
(ii) (A) a significant
adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties
attached to the position with the Company and its Subsidiaries
which the Executive held immediately prior to such Change in
Control, or (B) a reduction in the Executive's Base Pay or the
opportunity to earn Incentive Pay from the Company, its
Subsidiaries or the
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failure to pay the Executive Base Pay or Incentive Pay earned
when due, or (C) the termination or denial of the Executive's
rights to Employee Benefits or a reduction in the scope or
value thereof (unless, in the case of an insured "welfare
plan," within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended, such
termination, denial or reduction is pursuant to or the result
of a change in insurers or by an insurer in the terms or cost
of coverage under an insurance policy or other contract
relating to the plan, provided that such termination, denial
or reduction is applicable to all similarly situated employees
of the Company and its Subsidiaries), any of which is not
remedied by the Company within 10 calendar days after receipt
by the Company of written notice from the Executive of such
change, reduction or termination, as the case may be;
(iii) a determination by the Executive (which determination will
be
conclusive and binding upon the parties hereto provided it has
been made in good faith and in all events will be presumed to
have been made in good faith unless otherwise shown by the
Company by clear and convincing evidence) that a change in
circumstances has occurred following such Change in Control,
including, without limitation, a change in the scope of the
business or other activities for which the Executive was
responsible immediately prior to such Change in Control, which
has rendered the Executive substantially unable to carry out,
has substantially hindered Executive's performance of, or has
caused Executive to suffer a substantial reduction in, any of
the authorities, powers, functions, responsibilities or duties
attached to the position held by the Executive immediately
prior to such Change in Control, which situation is not
remedied within 10 calendar days after written notice to the
Company from the Executive of such determination;
(iv) the liquidation,
dissolution, merger, consolidation or
reorganization of the Company or transfer of all or
substantially all of its business and/or assets, unless the
successor or successors (by liquidation,
