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SPLIT DOLLAR AGREEMENT
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THIS AGREEMENT is made and entered into as of April 14, 2000 by and between
SEMCO Energy, Inc., a Michigan corporation with principal offices and place of
business at 405 Water Street, Port Huron, Michigan 48060 ("Company"), and the
undersigned individual ("Executive").
WHEREAS, the Executive is and has been employed in an executive or officer
capacity by the Company or one of its affiliates and has performed valuable
services;
WHEREAS, the Executive wishes to provide life insurance protection for his
or her family in the event of his or her death, under a policy of life insurance
insuring his or her life (hereinafter referred to as the "Policy"), which is
described in Exhibit A attached hereto and by this reference is made a part
hereof, and which is being issued by Transamerica Occidental Life Insurance
Company (hereinafter referred to as the "Insurer"); and
WHEREAS, in order to implement or continue a certain Executive Security
Agreement entered into as of the same date hereof by and between the Company and
the Executive, the Company is willing to pay the premiums due on the Policy as
an additional compensation benefit to the Executive on the terms and conditions
hereinafter set forth; and
WHEREAS, the Company is the owner of the Policy and, as such, possesses all
incidents of ownership in and to the Policy; and
WHEREAS, the Company wishes to retain such ownership rights, in order to
secure repayment of (i) the amounts which it will pay toward the premiums on the
Policy and (ii) such additional interest the Company may have in the Policy
pursuant to this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual promises
contained herein, the parties hereto agree as follows:
1. PURCHASE OF POLICY. The Company shall contemporaneously purchase
the Policy from the Insurer or continue the Policy in effect with the face
amount being subject to increases and/or decreases in dollar amount on the first
day of each Plan Year ("Plan Year" is defined, for purposes of this Agreement,
to be the one (1) year period beginning on April 1 of each year and continuing
through March 31 of the subsequent year), commencing with the Plan Year that
starts on April 1, 2000, and continuing for each Plan Year thereafter, in order
for the face amount of the Policy to always total at least the sum of (i) and
(ii) described in paragraph b of Section 9 below. If no Policy is in effect,
the parties shall take all necessary action to cause the Insurer to issue the
Policy, and in all cases shall take any further action which may be necessary to
cause the Policy to conform to the provisions of this Agreement.
2. OWNERSHIP OF POLICY. The Company shall be the sole and absolute
owner of the Policy, and may exercise all ownership rights granted to the owner
thereof by the terms of the Policy, except as may otherwise be provided herein.
3. ELECTION OF SETTLEMENT OPTION AND BENEFICIARY. The Executive may
select the settlement option for payment of the portion of the death benefit
provided under the Policy, and the beneficiary or beneficiaries to receive the
portion of Policy proceeds, to which the Executive is entitled hereunder, by
specifying the same in the Beneficiary Designation Form attached to the
above-referenced Executive Security Agreement entered into as of the same date
hereof by and between the Company and the Executive. Upon receipt of such
Beneficiary Designation Form, the Company shall execute and deliver to the
Insurer the forms necessary to elect the requested settlement option and to
designate the requested person, persons or entity as the beneficiary or
beneficiaries to receive the death proceeds of the Policy in the amount to which
the beneficiary or beneficiaries are entitled hereunder. The Company shall not
terminate, alter or amend such designation or election without the express
written consent of the Executive.
4. DIVIDENDS. The Company shall be entitled to any dividends declared
on the Policy.
5. PAYMENT OF PREMIUMS. On or before the due date of each Policy
premium, or within the grace period provided therein, the Company shall pay the
full amount of the premium to the Insurer, and shall, upon request, promptly
furnish the Executive evidence of timely payment of such premium. The Company
shall annually furnish the Executive a statement of the amount of income
reportable by the Executive for federal and state income tax purposes as a
result of the insurance protection provided the Policy beneficiary.
6. DESIGNATION OF POLICY BENEFICIARY/ENDORSEMENT. Contemporaneously
with the execution of this Agreement, the Company has executed a beneficiary
designation form and/or an endorsement to the Policy, under the form used by the
Insurer for such designations, in order to secure the Company's recovery of the
amount of the premiums on the Policy paid by the Company hereunder, plus such
additional beneficial interest the Company may have in the Policy pursuant to
this Agreement.
7. LIMITATIONS ON COMPANY'S RIGHTS IN POLICY. Except as otherwise
provided herein, the Company shall neither sell, assign, transfer, surrender or
cancel the Policy nor change the beneficiary designation provision thereof
without, in any such case, the express written consent of the Executive.
8. POLICY LOANS. The Company may pledge or assign the Policy, subject
to the terms and conditions of this Agreement, for the sole purpose of securing
a loan from the Insurer or from a third party. The amount of such loan,
including accumulated interest thereon, shall not exceed the cash surrender
value of the Policy as of the date to which premiums have been paid. Interest
charges on such loan shall be paid by the Company. If the Company so encumbers
the Policy, other than by a Policy loan from the Insurer, then, upon the death
of the Executive, the Company shall promptly take all action necessary to secure
the release or discharge of such encumbrances.
9. COLLECTION OF DEATH PROCEEDS.
a. Upon the death of the Executive, the Company shall cooperate
with the beneficiary or beneficiaries designated by the Executive to take
whatever action is necessary to collect the death benefit provided under the
Policy. When such benefit has been collected and paid as provided herein, this
Agreement shall thereupon terminate.
b. Upon the death of the Executive while the Policy and this
Agreement are in force,
(i) the Company shall have the unqualified right to receive a
portion of such death benefit equal to the total amount of the premiums paid by
the Company, reduced by any indebtedness against the Policy existing at the
death of the Executive (including any interest due on such indebtedness);
(ii) the Executive's Beneficiaries shall receive the lesser
of
(A) the balance (after (i) above has been satisfied) of
the death benefit provided under the Policy or
(B) an amount equal to five hundred percent (500%) of
the Executive's Base Salary (as defined in Executive's Executive Security
Agreement) less the amount of insurance otherwise payable to Executive's
Beneficiaries under other Company-paid insurance plans;
and the amount of such insurance shall be paid directly to
the beneficiary or beneficiaries designated by the Company at the direction of
the Executive, in the manner and in the amount or amounts provided in the
beneficiary designation provision of the Policy; and
(iii) the Company shall be entitled to receive the balance
(after (i) and (ii) above have been satisfied), if any, of the death benefit
provided under the Policy.
In no event shall the amount payable to the Company hereunder
exceed the Policy proceeds payable at the death of the Executive. No amount
shall be paid from such death benefit to the beneficiary or beneficiaries
designated by the Company at the direction of the Executive, until the total
amount of the premiums paid by the Company hereunder, reduced by any
indebtedness against the Policy existing at the death of the Executive
(including any interest due on such indebtedness), has been paid to the Company.
The parties hereto agree that the beneficiary designation provision of the
Policy shall conform to the provisions hereof.
10. TERMINATION OF THE AGREEMENT DURING THE EXECUTIVE'S LIFETIME. This
Agreement shall terminate, during the Executive's lifetime, without notice, upon
the occurrence of any of the following events: (a) total cessation of the
Company's business; (b) bankruptcy, receivership or dissolution of the Company;
or (c) termination of Executive's employment by the Company for any reason other
than Executive's death (whether such cessation of employment is due to the
Executive's disability, retirement, voluntary termination or involuntary
termination, etc.). However, notwithstanding anything to the contrary contained
herein, if the Executive (while an Employee of the Company, as defined in the
above-referenced Executive Security Agreement entered into as of the same date
hereof by and between the Company and the Executive) shall not then have
attained the age of fifty-five (55) years of age when he or she becomes totally
disabled, then Executive will be deemed to be an Employee of the Company for
purposes of this Agreement (and the above-referenced Executive Security
Agreement) only until Executive attains age 55, at which time Executive will be
deemed to have retired. 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 prevented from performing the duties of Executive's position
with the Company for a continuous period of at least 180 days, including a
disability resulting from an occupational cause and (ii) will be disabled
permanently.
11. INSURER NOT A PARTY. The Insurer shall be fully discharged from
its obligations under the Policy by payment of the Policy death benefit to the
beneficiary or beneficiaries named in the Policy, subject to the terms and
conditions of the Policy. In no event shall the Insurer be considered a party
to this Agreement, or any modification or amendment hereof. No provisions of
this Agreement, nor of any modification or amendment hereof, shall in any way be
construed as enlarging, changing, varying or in any other way affecting the
obligations of the Insurer as expressly provided in the Policy, except insofar
as the provisions hereof are made a part of the Policy by the beneficiary
designation executed by the Company and filed with the Insurer in connection
herewith.
12. ASSIGNMENT BY EXECUTIVE. Notwithstanding any provision hereof to
the contrary, the Executive shall have the right to absolutely and irrevocably
assign by gift all of his or her right, title and interest in and to this
Agreement and to the Policy to an assignee. This right shall be exercisable by
the execution and delivery to the Company of a written assignment, in
substantially the form attached hereto as Exhibit B, which by this reference is
made a part hereof. Upon receipt of such written assignment executed by the
Executive and duly accepted by the assignee thereof, the Company shall consent
thereto in writing, and shall thereafter treat the Executive's assignee as the
sole owner of all of the Executive's right, title and interest in and to this
Agreement and in and to the Policy. Thereafter, the Executive shall have no
right, title or interest in and to this Agreement or the Policy, all such rights
being vested in and exercisable only by such assignee.
13. NAMED FIDUCIARY, DETERMINATION OF BENEFITS, CLAIMS PROCEDURE AND
ADMINISTRATION.
a. The Company, operating through its Pension and Investment
Committee ("Committee"), is hereby designated as the named fiduciary under this
Agreement. The named fiduciary shall have authority to control and manage the
operation and administration of this Agreement, and it shall be responsible for
establishing and carrying out a funding policy and method consistent with the
objectives of this Agreement.
b. (1) Claim. A person who believes that he or she is being
denied a benefit to which he or she is entitled under this Agreement
(hereinafter referred to as a "Claimant") may file a written request for such
benefit with the Company, setting forth his or her claim. The request must be
addressed to the Committee at the Company's then principal place of business.
(2) Claim Decision. Upon receipt of a claim, the Committee
shall advise the Claimant that a reply will be forthcoming within ninety (90)
days and shall, in fact, deliver such reply within such period. The Company
may, however, extend the reply period for an additional ninety (90) days for
reasonable cause.
If the claim is denied in whole or in part, the Committee
shall adopt a written opinion, using language calculated to be understood by the
Claimant, setting forth: (a) the specific reason or reasons for such denial; (b)
the specific reference to pertinent provisions of this Agreement on which such
denial is based; (c) a description of any additional material or information
necessary for the Claimant to perfect his or her claim and an explanation of why
such material or such information is necessary; (d) appropriate information as
to the steps to be taken if the Claimant wishes to submit the claim for review;
and (e) the time limits for requesting a review under subsection (3) and for
review under subsection (4) hereof.
(3) Request for Review. Within sixty (60) days after the
receipt by the Claimant of the written opinion described above, the Claimant may
request in writing that the Committee review its determination. Such request
must be addressed to the Committee at the Company's then principal place of
business. The Claimant or his or her duly authorized representative may, but
need not, review the pertinent documents and submit issues and comments in
writing for consideration by the Committee. If the Claimant does not request a
review of the determination by the Committee within such sixty (60) day period,
he or she shall be barred and estopped from challenging the Committee's
determination.
(4) Review of Decision. Within sixty (60) days after the
Committee's receipt of a request for review, the Committee will review its
determination. After considering all materials presented by the Claimant, the
Committee will render a written opinion, written in a manner calculated to be
understood by the Claimant, setting forth the specific reasons for the decision
and containing specific references to the pertinent provisions of this Agreement
on which the decision is based. If special circumstances require that the sixty
(60) day time period be extended, the Committee will so notify the Claimant and
will render the decision as soon as possible, but no later than one hundred
twenty (120) days after receipt of the request for review.
14. AMENDMENT. This Agreement may not be amended, altered or modified,
except by a written instrument signed by the parties hereto, or their respective
successors or assigns, and may not be otherwise terminated except as provided
herein.
15. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, and the Executive,
his or her successors, assigns, heirs, executors, administrators and
beneficiaries.
16. NOTICES. Any notice, consent or demand required or permitted to be
given under the provisions of this Agreement shall be in writing, and shall be
signed by the party giving or making the same. If such notice, consent or
demand is mailed to a party hereto, it shall be sent by United States certified
mail, postage prepaid, addressed to such party's last know address as shown on
the records of the Company. The date of such mailing shall be deemed the date
of notice, consent or demand.
17. GOVERNING LAW. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws of the
State of Michigan.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
duplicate, as of the day and year first above written.
Executive SEMCO Energy, Inc.
_________________________________ By__________________________________
Signature
Its__________________________________
_________________________________
Printed Name
EXHIBIT A
The following life insurance policy is subject to the attached Split Dollar
Agreement:
Insurer Transamerica Occidental Life Insurance Company
Insured__________________________________________________________________
Policy Number___________________________________________________________
Initial Face Amount_______________________________________________________
Date of Issue_____________________________________________________________
EXHIBIT B
IRREVOCABLE ASSIGNMENT OF SPLIT-DOLLAR AGREEMENT
THIS ASSIGNMENT, dated this ________ day of __________________, _______.
WITNESSETH THAT:
WHEREAS, the undersigned (the "Assignor") is the Executive party to that certain
Split Dollar Agreement (the "Agreement"), dated as of ______________________, by
and between the undersigned and SEMCO Energy, Inc. (the "Company"), which
Agreement confers upon the undersigned certain rights and benefits with regard
to one or more policies of insurance insuring the Assignor's life; and
WHEREAS, pursuant to the provisions of said Agreement, the Assignor retained the
right, exercisable by the execution and delivery to the Company of a written
form of assignment, to absolutely and irrevocably assign all of the Assignor's
right, title and interest in and to said Agreement to an assignee; and
WHEREAS, the Assignor desires to exercise said right:
NOW, THEREFORE, the Assignor, without consideration, and intending to make a
gift, hereby absolutely and irrevocably assigns, gives, grants and transfers to
_____________________, (the "Assignee") all of the Assignor's right, title and
interest in and to the Agreement and said policies of insurance, intending that,
from and after this date, the Agreement be solely between the Company and the
Assignee and that hereafter the Assignor shall neither have nor retain any
right, title or interest therein.
____________________________________
Assignor
ACCEPTANCE OF ASSIGNMENT
The undersigned Assignee hereby accepts the above assignment of all right,
title and interest of the Assignor therein in and to the Agreement by and
between such Assignor and the Company, and the undersigned hereby agrees to be
bound by all of the terms and conditions of said Agreement, as if the original
Executive party thereto.
____________________________________
Assignee
Dated:_______________________________
CONSENT TO ASSIGNMENT
The undersigned Company hereby consents to the foregoing assignment of all
of the right, title and interest of the Assignor in and to the Agreement by and
between the Assignor and the Company to the Assignee designated therein. The
undersigned Company hereby agrees that, from and after the date hereof, the
undersigned Company shall look solely to such Assignee for the performance of
all obligations under said Agreement which were heretofore the responsibility of
the Assignor, shall allow all rights and benefits provided therein to the
Assignor to be exercised only by said Assignee, and shall hereafter treat said
Assignee in all respects as if the original Executive party thereto.
SEMCO Energy, Inc.
By:________________________________________
Dated:_____________________________