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EXHIBIT 10.16
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TRUST AGREEMENT
FOR
DTE ENERGY COMPANY
CHANGE-IN-CONTROL SEVERANCE AGREEMENTS
Between
DTE Energy Company
and
Wachovia Bank, N.A.
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October 1, 1997
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TABLE OF CONTENTS
(Not a part of the Agreement)
Page
I. TRUST FUND...........................................................2
II. PAYMENTS TO TRUST BENEFICIARIES.....................................10
III. THE TRUSTEE'S RESPONSIBILITY REGARDING PAYMENTS TO A TRUST
BENEFICIARY WHEN THE COMPANY IS INSOLVENT ...11
IV. PAYMENTS TO COMPANY.................................................13
V. INVESTMENT OF TRUST FUND............................................15
VI. INCOME OF THE TRUST.................................................16
VII. ACCOUNTING BY TRUSTEE...............................................16
VIII. RESPONSIBILITY AND INDEMNIFICATION OF TRUSTEE.......................18
IX. AMENDMENTS, ETC., TO PLANS AND EXHIBITS.............................23
X. REPLACEMENT OF TRUSTEE..............................................26
XI. AMENDMENT OR TERMINATION OF AGREEMENT...............................28
XII. SPECIAL DISTRIBUTIONS...............................................29
XIII. GENERAL PROVISIONS..................................................31
XIV. NOTICES.............................................................34
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TABLE OF DEFINITIONS
(Not a part of the Agreement)
Section
"Accounting Firm" 4.2
"Agreement" Introduction
"Board" 1.7
"CEO" 3.1
"Change in Control" 1.7
"Code" 1.6
"Company" Introduction
"ERISA" 1.6
"Exchange Act" 1.4(d)
"Executives" 4.3
"Fully Funded" 4.2
"Insolvent" Recitals
"Participants" Recitals
"Plan(s)" Recitals
"Potential Change in Control" 1.4(d)
"Subsidiary" 1.7
"Successor" 9.2.1
"Supplemental Benefits" Recitals
"Trust Beneficiaries" Recitals
"Trust" Recitals
"Trustee" Introduction
"Voting Stock" 1.7.1
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TRUST AGREEMENT
FOR
DTE ENERGY COMPANY
CHANGE-IN-CONTROL SEVERANCE AGREEMENTS
This trust agreement ("Agreement") made as of the 1st day of October
1997 by and between DTE Energy Company, a Michigan corporation (the "Company"),
and Wachovia Bank, N.A., a national banking association (the "Trustee").
WITNESSETH:
WHEREAS, the employees of the Company or of a Subsidiary (as that term
is defined in Section 1.7) listed on Exhibit A hereto (the "Participants") and
their beneficiaries may become entitled to benefits under the provisions of one
or more of the individual agreements listed on Exhibit B hereto (individually a
"Plan" and collectively the "Plans"), as the same have been or may hereafter be
amended or restated, or any successor thereto, copies of which are appended
hereto;
WHEREAS, the Plans provide for certain severance and/or other benefits,
and the Company wishes specifically to assure the payment to the Participants
and their beneficiaries (the Participants and their respective beneficiaries
being collectively referred to herein as the "Trust Beneficiaries") of amounts
due thereunder (other than for payment or reimbursement of legal fees and
expenses as provided in Section 7 of a Plan, or any successor provision
thereto), (the amounts so payable being collectively referred to herein as the
"Supplemental Benefits");
WHEREAS, the Company wishes to establish a trust (the "Trust") and to
transfer to the Trust assets which shall be held therein subject to the claims
of the creditors of the Company to
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the extent set forth in Article III hereof until (i) paid in full to all Trust
Beneficiaries as Supplemental Benefits in such manner and as specified herein
unless the Company is Insolvent (as that term is defined herein) at the time
that such Supplemental Benefits become payable or (ii) otherwise disposed of
pursuant to the terms of this Agreement; and
WHEREAS, the Company shall be considered "Insolvent" for purposes of
this Agreement at such time as the Company (i) is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code, as heretofore or
hereafter amended, or (ii) is unable to pay its debts as they become due;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
I. TRUST FUND
I.1 Subject to the claims of creditors to the extent set forth in
Article III hereof, the Company hereby deposits with the Trustee in trust Five
Thousand Dollars ($5,000), which shall become the principal of this Trust, to be
held, administered and disposed of by the Trustee as herein provided.
I.2 The Trust hereby established shall be revocable by the Company at
any time prior to the date on which the first of the following occurs: a Change
in Control (as that term is defined in Section 1.7) or a Potential Change in
Control (as that term is defined in Section 1.4(d)); on or after such date, this
Trust shall be irrevocable. In the event that a Change in Control or a Potential
Change in Control has occurred, the Treasurer of the
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Company or the Corporate Secretary of the Company shall so notify the Trustee
promptly. The Trustee shall be entitled to rely upon such notice or upon a
notice from the Executives (as that term is defined in Section 4.3) as to
whether and when a Change in Control or a Potential Change in Control has
occurred and shall not be required to make any independent verification of the
occurrence of a Change in Control or a Potential Change in Control.
I.3 The principal of the Trust and any earnings thereon shall be held
in trust separate and apart from other funds of the Company and shall be used
exclusively for the uses and purposes herein set forth. No Trust Beneficiary
shall have any preferred claim on, or any beneficial ownership interest in, any
assets of the Trust prior to the time that such assets are paid to a Trust
Beneficiary as Supplemental Benefits as provided herein. Any rights created
under the Plans and this Agreement shall be mere unsecured contractual rights of
Trust Beneficiaries with respect to the Company. The obligation of the Trustee
to pay Supplemental Benefits pursuant to this Agreement constitutes merely an
unfunded and unsecured promise to pay such Supplemental Benefits.
I.4 (a) The Company may at any time or from time to time make
additional deposits of cash or other property in the Trust or make provision for
cash or other property to be transferred to the Trust to augment the principal
to be held, administered and disposed of by the Trustee as herein provided, but
no payment of all or any portion of the principal of the Trust or earnings
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thereon shall be made to the Company or any other person or entity on behalf of
the Company except as herein expressly provided.
(b) Within 30 days following the occurrence of a Potential
Change in Control (as that term is defined in this Section 1.4), the Company
shall make a contribution to the Trust that is sufficient, taking into account
the assets of the Trust prior to such contribution, to provide for the payment
of all Supplemental Benefits and any other amounts that could become payable or
reimbursable pursuant to the terms of this Agreement including, without
limitation, the fees of the Trustee for a period of at least five years.
(c) Within 90 days after the end of any calendar year ending
after the Trust has become irrevocable, the Company shall make a contribution to
the Trust that is sufficient, taking into account the assets of the Trust prior
to such contribution, to provide for the payment of all Supplemental Benefits
and any other amounts that could become payable or reimbursable pursuant to the
terms of this Agreement.
(d) A "Potential Change in Control" means the occurrence of
any of the following events:
(i) The Company enters into a letter of intent,
agreement in principle or other agreement, the consummation of which
would constitute a Change in Control (as that term is defined in
Section 1.7);
(ii) Any person (including the Company) makes a public
announcement (including, without limitation, an
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announcement made by filing a Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as promulgated pursuant to
the Securities Exchange Act 1934 (the "Exchange Act")) stating a
present intention to take actions that, if consummated, would
constitute a Change in Control; or
(iii) Any person (other than the Company or Subsidiary
or any Company-sponsored or Subsidiary-sponsored employee stock
ownership plan or any other employee benefit plan of the Company or any
Subsidiary) is or becomes the beneficial owner (other than
inadvertently within the meaning of the following sentence), directly
or indirectly, of securities of the Company representing 10% or more of
the combined voting power of the Voting Stock (as that term is defined
in Section 1.7.1) of the Company. A person shall be considered to have
become a beneficial owner inadvertently for purposes of the preceding
sentence if the Board (as that term is defined in Section 1.7)
determines in good faith that the person became such inadvertently, and
such person divests as promptly as practicable a sufficient number of
shares of Voting Stock of the Company so that such person would no
longer is the beneficial owner, directly or indirectly, of securities
of the Company representing 10% or more of the combined voting power of
Voting Stock of the Company.
(e) In the event the Company fails to pay over to the
Trustee within seven days of notice and demand from the Trustee
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any amount Determined to be payable by the Company to the Trustee under Section
1.4(b) or 1.4(c), Section 8.7 or any other provision of the Trust, the Trustee
may commence legal action to compel the Company to pay to the Trustee any
amount determined to be payable to it under the Trust. The Trustee may bring
such action against the Company in any court of competent jurisdiction, and
shall be entitled to recover for the benefit of the Trust from the Company such
amount, plus interest for each day at the rate of interest per annum of two
percentage points in excess of the prime lending rate as announced by the
Trustee's banking department from the due date specified in the Trustee's
notice and demand to the date of payment, plus all costs of collection
including reasonable attorneys' fees and expenses of litigation.
I.5 Not later than the date on which the Trust has become irrevocable,
the Company shall (a) specify the nature, amounts and timing of the Supplemental
Benefits to which each Trust Beneficiary may become entitled, subject to Article
IX hereof, in an exhibit ("Exhibit C") which shall become a part of this
Agreement and be incorporated herein by this reference, (b) provide any
corresponding revisions to Exhibits A and B that may be required and (c) provide
the Trustee with copies of the Plans and any amendments thereto.
I.6 The Trust is intended to be a grantor trust, within the meaning of
section 671 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any successor provision thereto, and shall be construed accordingly. The purpose
of the Trust is to
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assure that the Company's obligations to the Participants pursuant to the Plans
are fulfilled. The Trust is neither intended nor designed to qualify under
section 401(a) of the Code or to be subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). The Trust
established under this Agreement does not fund and is not intended to fund the
Plans or any other employee benefit plan or program of the Company. Such Trust
is and is intended to be a depository arrangement with the Trustee for the
setting aside of cash and other assets of the Company for the meeting of part or
all of its future obligations with respect to Supplemental Benefits to some or
all of the Trust Beneficiaries under the Plans.
I.7 As used in this Agreement, the term "Change in Control" shall mean
the occurrence of any of the following events:
I.7.1 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 (the term "Voting
Stock" for purposes of this Agreement meaning securities entitled to
vote generally in the election of directors) of such corporation or
person immediately after such transaction are held in the aggregate by
the holders of Voting Stock of the Company immediately prior to such
transaction;
I.7.2 The Company sells or otherwise transfers all
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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;
I.7.3 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;
I.7.4 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 Section 1.7.4;
I.7.5 If, during any period of two consecutive
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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
Section 1.7.5 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
I.7.6 The approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing provisions of Section 1.7.3 or 1.7.4, unless
otherwise determined in a specific case by majority vote of the Board of
Directors of the Company (the "Board"), a "Change in Control" shall not be
deemed to have occurred for purposes of Section 1.7.3 or 1.7.4 solely because
(A) the Company, (B) an entity in which the Company directly or indirectly
beneficially owns 50% or more of the outstanding Voting Stock (a "Subsidiary"),
or (C) any Company-sponsored employee stock ownership plan or any other employee
benefit plan of the Company or any 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)
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under the Exchange Act disclosing beneficial ownership by it of shares of Voting
Stock, 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.
II. PAYMENTS TO TRUST BENEFICIARIES
II.1 Provided that the Company is not Insolvent and commencing with the
earlier to occur of (a) appropriate notice to the Trustee by the Company, or (b)
the date on which the Trustee has been notified in accordance with Section 1.2
that a Change in Control has occurred, the Trustee shall make payments of
Supplemental Benefits to each Trust Beneficiary from the assets of the Trust in
compliance and conformity with the terms of the Plans and in accordance with
Exhibit C, and subject to Article IX.
II.2 The Trustee shall continue to pay Supplemental Benefits to the
Trust Beneficiaries until the assets of the Trust are depleted, subject to
Section 11.2 hereof. If any current payment by the Trustee under the terms of
this Agreement would deplete the assets of the Trust below the amount necessary
to provide adequately for Supplemental Benefits known to the Trustee to be due
and payable thereafter, the Trustee shall nevertheless make the current payment
when due.
II.3 The Company may make payments of Supplemental Benefits to each
Trust Beneficiary. The Company shall notify the Trustee of its decision to pay
Supplemental Benefits directly at least 15 days prior to the time amounts are
due to be paid to a Trust
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Beneficiary.
II.4 Nothing in this Agreement shall in any way diminish any rights of
any Trust Beneficiary to pursue such Trust Beneficiary's rights as a general
creditor of the Company with respect to Supplemental Benefits or otherwise, and
the rights of each Trust Beneficiary under the respective Plan shall in no way
be affected or diminished by any provision of this Agreement or action taken
pursuant to this Agreement, except that any payment actually received by any
Trust Beneficiary hereunder shall reduce dollar-per-dollar amounts otherwise due
to such Trust Beneficiary pursuant to such Plan.
III. THE TRUSTEE'S RESPONSIBILITY REGARDING PAYMENTS TO
A TRUST BENEFICIARY WHEN THE COMPANY IS INSOLVENT
III.1 At all times during the continuance of this Trust, the principal
and income of the Trust shall be subject to claims of creditors of the Company
as set forth in this Section 3.1. The Board and the Chief Executive Officer of
the Company (the "CEO") shall have the duty to inform the Trustee in writing if
either the Board or the CEO believes that the Company is Insolvent. If the
Trustee receives a notice in writing from the Board or the CEO stating that the
Company is Insolvent or if a person claiming to be a creditor of the Company
alleges in writing to the Trustee that the Company has become Insolvent, the
Trustee shall independently determine within 30 days after receipt of such
notice whether the Company is Insolvent. Pending such determination, or if the
Trustee has actual knowledge or has determined that the Company is Insolvent,
the Trustee shall discontinue or refrain from making payments to any Trust
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Beneficiary and hold the Trust assets for the benefit of the general creditors
of the Company. The Trustee shall pay any undistributed principal and income in
the Trust to the extent necessary to satisfy the claims of the creditors of the
Company as a court of competent jurisdiction may direct. If the Trustee has
discontinued or refrained from making payments to any Trust Beneficiary pursuant
to this Section 3.1, the Trustee shall pay or resume payments to such Trust
Beneficiary in accordance with this Agreement if the Trustee has determined that
the Company is not Insolvent, or is no longer Insolvent (if the Trustee
initially determined the Company to be Insolvent), or pursuant to the order of a
court of competent jurisdiction. The Trustee shall have no duty to inquire as to
whether the Company is Insolvent and may rely on information concerning the
Insolvency of the Company that has been furnished to the Trustee by any creditor
of the Company or by any person (other than an employee or director of the
Company) acting with apparent or actual authority with respect to the Company.
III.2 If the Trustee is precluded from paying Supplemental Benefits
from the Trust assets pursuant to Section 3.1 hereof and such prohibition is
subsequently removed, the Trustee shall pay the aggregate amount of all
Supplemental Benefits that would have been paid to the Trust Beneficiaries in
accordance with this Agreement during the period of such prohibition, less the
aggregate amount of Supplemental Benefits paid to any Trust Beneficiary directly
by the Company during any such period, together with interest on the net amount
delayed determined at a
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rate equal to the rate actually earned (including, without limitation, market
appreciation or depreciation, plus receipt of interest and dividends) during
such period with respect to the assets of the Trust corresponding to such net
amount delayed.
IV. PAYMENTS TO COMPANY
IV.1 Except to the extent expressly contemplated by Section 1.2 hereof,
this Article IV and Section 11.3, the Company shall have no right or power to
direct the Trustee to return any of the Trust assets to the Company before all
payments of Supplemental Benefits have been made to all Trust Beneficiaries as
herein provided. Upon the written request of the Company made prior to the date
on which the Trust becomes irrevocable, the Trustee shall return to the Company
any Trust assets in excess of Five Thousand Dollars ($5,000) as may be specified
in such request by the Company.
IV.2 From time to time, but in no event before the second anniversary
of the date on which the Trust has become irrevocable, if and when requested by
the Company to do so, the Trustee shall engage the services of nationally
recognized independent accounting or consulting firm as may be mutually
satisfactory to the Company and to the Trustee (the "Accounting Firm") to
determine for purposes of this Section 4.2 the maximum present values of the
future Supplemental Benefits that could become payable under the Plans with
respect to the Trust Beneficiaries. The Trustee shall determine the fair market
value of the Trust assets. The Company shall pay the fees of the Accounting Firm
and of any appraiser engaged by the Trustee to
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value any property held in the Trust. The Accounting Firm shall make its
calculations based upon the assumptions set forth in Exhibit D hereto, or such
other assumptions as are recommended by the Accounting Firm and approved by the
Company and, if the Trust is irrevocable, by the Trustee. Thereafter, upon the
request of the Company, the Trustee shall pay to the Company the excess, if any,
of the balance in the Trust over 125% of the sum of (i) the aggregate of all of
the Fully Funded amounts and (ii) any other amounts, as determined by the
Trustee, that could become payable or reimbursable pursuant to the terms of this
Agreement including, without limitation, the fees of the Trustee. For purposes
of this Agreement the "Fully Funded" amount with respect to Participant shall be
equal to the maximum present value of the future Supplemental Benefits that
could become payable under the respective Plan with respect to the Trust
Beneficiaries of such Participant.
IV.3 For purposes of this Agreement, the term "Executives" shall refer
to the three Participants who, in the sole judgment of the Trustee, have the
greatest aggregate Fully Funded amounts and who have accepted such designation
in writing. The determination of which Participants should be the Executives
shall be made within 30 days after (and as of) each of the date on which the
Trust has become irrevocable and the first day of January of each year
thereafter; provided, however, that an acceptance is not required from a
Participant who is already serving as an Executive. The Trustee shall notify
each Participant who, as a result of such determination, is no longer
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an Executive. A Participant may resign as an Executive after providing not less
than 30 days' notice in writing to the other Executives and to the Trustee;
provided, however, that no such resignation shall become effective until the
successor Executive has accepted such designation in writing. In the event of
the resignation, death or incapacity of an Executive, the Trustee shall
designate a successor Executive, which shall be the Participant (other than an
Executive or a Participant who has declined to accept a designation as an
Executive) who has the greatest aggregate Fully Funded amount and who accepts
such designation in writing. Except as otherwise expressly provided herein, the
Executives shall be considered to have "agreed" or "consented" to, or "approved"
or "requested", a proposed action or decision under the terms of this Agreement
when two or more of the Executives so indicate in writing to the Trustee.
V. INVESTMENT OF TRUST FUND
V.1 Prior to the date on which the Trust becomes irrevocable, the
Trustee shall invest and reinvest the assets of the Trust as the Company or its
designee shall prescribe in writing from time to time.
V.2 On or after the date on which the Trust becomes irrevocable, or in
the absence of the instructions from the Company specified in Section 5.1, the
provisions of this Section 5.2 shall apply to the investment of the Trust
assets. The investment objective of the Trustee shall be to preserve the
principal of the Trust while obtaining a reasonable total rate of return,
measurement of which shall include, without limitation,
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market appreciation or depreciation plus receipt of interest and dividends. The
Trustee shall be mindful, in the course of its management of the Trust, of the
liquidity demands on the Trust.
V.3 The Trustee shall have the sole power to invest the assets of the
Trust, in accordance with the provisions of Sections 5.1 and 5.2. The Trustee
shall not be liable for any failure to maximize income on such portion of the
Trust assets as may be from time to time invested or reinvested as set forth
above, nor for any loss of principal or income due to the liquidation of any
investment that the Trustee, in its sole discretion, believes necessary to make
payments or to reimburse expenses under the terms of this Agreement. The Trustee
shall have the right to invest assets of the Trust for short-term investment
periods, pending distribution or long-term investment of such assets, as the
Trustee may deem proper and suitable in non-interest bearing deposit accounts
(including any such accounts offered or maintained by the Trustee or any
successor or affiliated corporation). Nothing in this Agreement shall preclude
the commingling of Trust assets for investment.
VI. INCOME OF THE TRUST
VI.1 Except as provided in Articles III and IV, during the continuance
of this Trust, all net income of the Trust shall be retained in the Trust.
VII. ACCOUNTING BY TRUSTEE
VII.1 The Trustee shall maintain such books, records and accounts as
may be necessary for the proper administration of the Trust assets, including
such specific records as shall be agreed
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upon in writing by the Company and the Trustee. Within 60 days following the
close of each calendar year that includes or commences after the date of this
Agreement until the termination of this Trust or the removal or resignation of
the Trustee (and within 60 days after the date of such termination, removal or
resignation), the Trustee shall render to the Company and, on or after the date
on which the Trust has become irrevocable, the Executives an accounting with
respect to the Trust assets as of the end of the then most recent calendar year
(and as of the date of such termination, removal or resignation, as the case may
be). The Trustee shall furnish to the Company on an annual basis (or as the
Company shall direct from time to time) and in a timely manner such information
regarding the Trust as the Company shall require for purposes of preparing its
statements of financial condition. Upon the written request of the Company or,
on or after the date on which the Trust has become irrevocable, an Executive,
the Trustee shall deliver to such Executive or the Company, as the case may be,
a written report setting forth the amount held in the Trust and a record of the
deposits made with respect thereto by the Company. Absent compelling
circumstances, the Trustee shall not be required to respond to more than one
such request made within any calendar year. Unless the Company or any Executive
shall have filed with the Trustee written exception or objection to the
statement and account furnished by the Trustee within 90 days after receipt
thereof, the Company and the Trust Beneficiaries shall be deemed to have
approved such statement and account, and in such case the Trustee shall be
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forever released and discharged with respect to all matters and things reported
in such statement and account as though it had been settled by a decree of a
court of competent jurisdiction in an action or proceeding to which the Company
and the Trust Beneficiaries were parties.
VIII. RESPONSIBILITY AND INDEMNIFICATION OF TRUSTEE
VIII.1 The duties and responsibilities of the Trustee shall be limited
to those expressly set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Trustee.
VIII.2 In addition to and without limiting any other provision of this
Agreement, on or after the date on which the Trust has become irrevocable, the
Trustee shall, in its sole discretion, based upon the information furnished to
it by the Company and/or the Participants and any additional information that it
may reasonably request, (a) make all decisions regarding whether a Trust
Beneficiary is eligible for the payment of Supplemental Benefits, the nature,
amount and timing of such Supplemental Benefits, and any other decisions
pertinent to the exercise of the Trustee's duties and responsibilities under
this Agreement, and (b) exercise any power or discretion granted pursuant to the
Plans to the Board, any committee of the Board, or to any other committee,
entity or person. In connection with the exercise of such duties,
responsibilities, power and discretion, the Trustee (i) shall be entitled to
rely upon any information furnished to it in accordance with the provisions of
this Agreement, (ii) shall not be required to make any
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independent verification of such information, and (iii) may, in its sole
discretion, waive any requirement to furnish information to it. The Company
hereby agrees that it will not contest, dispute or otherwise challenge any
decision made by the Trustee pursuant to the terms of this Agreement.
VIII.3 If all or any part of the Trust assets are at any time attached,
garnished, or levied upon by any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any order, judgment or decree
shall be made or entered by a court affecting such property or any part thereof,
then in any of such events the Trustee shall be authorized, in its sole
discretion, to rely upon and comply with any such order, judgment or decree, and
it shall not be liable to the Company or any Trust Beneficiary by reason of such
compliance even though such order, judgment or decree subsequently may be
reversed, modified, annulled, set aside or vacated.
VIII.4 The Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; provided, however, that the
Trustee shall incur no liability to anyone for any action taken pursuant to a
direction, request, or approval given by the Company or any Executive or Trust
Beneficiary contemplated by and complying with the terms of this Agreement. The
Trustee shall discharge its responsibility for the investment, management and
control of the
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Trust assets solely in the interest of the Trust Beneficiaries and for the
exclusive purpose of assuring that, to the extent of available Trust assets, and
in accordance with the terms of this Agreement, all payments of Supplemental
Benefits are made when due to the Trust Beneficiaries.
VIII.5 The Trustee may consult with legal counsel (who may be counsel
for the Company) to be selected by it, and the Trustee shall not be liable for
any action taken or suffered by it in accordance with the advice of such
counsel.
VIII.6 The Trustee shall be reimbursed by the Company for its
reasonable expenses incurred in connection with the performance of its duties
hereunder (including, but not limited to, the fees and expenses of counsel,
accountants and others incurred pursuant to Section 1.4(e), 8.5, 8.11 or 12.2)
and shall be paid reasonable fees for the performance of such duties in the
manner provided by Section 8.7.
VIII.7 The Company agrees to indemnify and hold harmless the Trustee
from and against any and all damages, losses, claims or expenses as incurred
(including expenses of investigation and fees and disbursements of counsel to
the Trustee and any taxes imposed on the Trust assets or income of the Trust)
arising out of or in connection with the performance by the Trustee of its
duties hereunder, other than such damages, losses, claims or expenses arising
out of the Trustee's gross negligence or willful misconduct. The Trustee shall
not be required to undertake or to defend any litigation arising in connection
with this Agreement unless it be first indemnified by the Company against its
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prospective costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto, and the Company hereby agrees to
indemnify the Trustee and be primarily liable for such costs, expenses, and
liabilities. Any amount payable to the Trustee under Section 1.4(e), Section 8.6
or this Section 8.7 shall be paid by the Company promptly upon demand therefor
by the Trustee or, in the event that the Company fails to make such payment
within 30 days of such demand, from the Trust assets. In the event that payment
is made hereunder to the Trustee from the Trust assets, the Trustee shall
promptly notify the Company in writing of the amount of such payment. The
Company agrees that, upon receipt of such notice, it will deliver to the Trustee
to be held in the Trust an amount in cash equal to any payments made from the
Trust assets to the Trustee pursuant to Section 1.4(e), Section 8.6 or this
Section 8.7. The failure of the Company to transfer any such amount shall not in
any way impair the Trustee's right to indemnification, reimbursement and payment
pursuant to Section 1.4(e), Section 8.6 or this Section 8.7.
VIII.8 The Trustee may vote any stock or other securities and exercise
any right appurtenant to any stock, other securities or other property held
hereunder, either in person or by general or limited proxy, power of attorney or
other instrument.
VIII.9 The Trustee may hold securities in bearer form and may register
securities and other property held in the Trust fund in its own name or in the
name of a nominee, combine
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certificates representing securities with certificates of the same issue held by
the Trustee in other fiduciary capacities, and deposit, or arrange for deposit
of, property with any depository; provided that the books and records of the
Trustee shall at all times show that all such securities are part of the assets
of the Trust.
VIII.10 The Trustee may and shall exercise all rights appurtenant to
any letter of credit made payable to the Trustee of the Trust for the benefit of
the Trust in accordance with the terms of such letter of credit.
VIII.11 The Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals, who may be agents,
accountants, actuaries, investment advisors, financial consultants, or otherwise
act in a professional capacity, as the case may be, for the Company or with
respect to any Plan, to assist the Trustee in performing any of its duties
hereunder.
VIII.12 The Trustee shall have, without exclusion, all powers conferred
on trustees by applicable law unless expressly provided otherwise herein.
VIII.13 Notwithstanding any other provision of this Agreement, in the
event of the termination of the Trust, or the resignation or discharge of the
Trustee, the Trustee shall have the right to a settlement of its accounts in
accordance with the procedures set forth in Section 7.1, which may be made, at
the option of the Trustee, either (a) by a judicial settlement in a court of
competent jurisdiction, or (b) by agreement of
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settlement, release and indemnity from the Company to the Trustee.
IX. AMENDMENTS, ETC., TO PLANS AND EXHIBITS
IX.1 Prior to the date on which the Trust becomes irrevocable and
provided that Exhibit A, Exhibit B or Exhibit C, as the case may be, has
previously been furnished to the Trustee, the provisions of this Section 9.1
shall apply.
IX.1.1 The Company shall furnish the Trustee with any
amendments, restatements, or other changes in the Plans, and the
Company shall prescribe or amend, as the case may be, Exhibit B or
Exhibit C hereto to reflect any such amendment, restatement, or other
change, or any changes in the compensation of the Participants, or
otherwise.
IX.1.2 At such time as may in the judgment of the Company be
appropriate, the Company shall furnish to the Trustee any amendment to
Exhibit A and/or Exhibit B that modifies one or more lists of
Participants and any corresponding amendment to Exhibit C required as a
result of such amendment to Exhibit A and/or Exhibit B.
IX.2 On or after the date on which the Trust becomes irrevocable, the
provisions of this Section 9.2 shall apply.
IX.2.1 Not later than 45 calendar days after the end of each
calendar year and at such other times as may in the judgment of the
Company be appropriate in view of a change in circumstances, the
Company and each Participant (or the personal representative of such
Participant (including the guardian, executor or administrator of such
Participant)
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(hereafter, the "Successor" of such Participant)) shall agree upon and
furnish any amendment to Exhibit C hereto (but only with respect to
such Participant's Supplemental Benefits) as shall be required to
reflect:
(a) any required change in the amounts of Supplemental
Benefits as a result of any change in such Participant's compensation
(or otherwise) during the prior calendar year, or
(b) any amendment, restatement or other change in or to the
Plans affecting such Participant, which agreements to amendments to
such Exhibit C shall be furnished to the Trustee by the Company or the
Participants (or their Successors) and thereafter be deemed to be a
part of, and to amend to the extent thereof, this Agreement; provided,
however, that in the event of the failure of the Company and any
Participant (or Successor) to reach such agreement, the provisions of
Section 9.2.2 shall control.
IX.2.2 The Company shall, and any Trust Beneficiary may,
promptly furnish the Trustee true and correct copies of any amendment,
restatement or successor to any of the Plans. The Company shall, and
any Trust Beneficiary may, also furnish the Trustee, upon the Trustee's
request, such evidence of changes in compensation of the Participants
and such other information as the Trustee shall deem necessary for its
determinations under this Section 9.2.2. Upon written notification to
the Trustee by the Company or any Participant (or Successor) of the
failure of the Company and
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such Participant (or Successor) to agree as provided in Section 9.2.1,
the Trustee shall, to the extent necessary in the sole judgment of the
Trustee, (a) recompute the amount payable hereunder as set forth in
Exhibit C to any Trust Beneficiary, and (b) notify the Company and the
Participant (or Successor) in writing of its computations. Thereafter,
this Agreement and all Exhibits hereto shall be amended to the extent
of such Trustee determinations without further action; provided,
however, that the failure of the Company to furnish any such amendment,
restatement, successor, compensation or other information shall in no
way diminish the rights of any Trust Beneficiary hereunder or
thereunder.
IX.2.3 On or after the date on which the Trust becomes
irrevocable, any amendment to Exhibit A (and any directly corresponding
amendment to Exhibit B) that modifies one or more lists of Participants
must be (a) agreed to by the Executives, and (b) in the case of an
amendment that adds a new Participant as a Trust Beneficiary,
accompanied by the deposit into the Trust by the Company, on or before
the effective date on which the new Participant would become a Trust
Beneficiary, an amount equal to the greater of (i) an amount certified
by the Accounting Firm as sufficient to pay such new Participant's
Supplemental Benefits hereunder (with such sufficiency determined on
the same basis as that used to determine sufficiency with respect to
the Supplemental Benefits as in effect hereunder immediately prior to
the addition of such new Participant) or (ii) an
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amount that is sufficient, taking into account the assets of the Trust
prior to such contribution, equal to the sum of (A) the amount
certified by the Accounting Firm as sufficient to provide for the
payment of all Supplemental Benefits, including such new Participant's
Supplemental Benefits, that could become payable pursuant to this
Agreement (with such sufficiency determined on the same basis as that
used to determine sufficiency with respect to the Supplemental Benefits
as in effect hereunder immediately prior to the addition of such new
Participant) and (B) any other amount, as determined by the Trustee,
that could become payable or reimbursable pursuant to the terms of this
Agreement including, without limitation, the fees of the Trustee;
provided, however, that no new Participant may be added if all of the
Participants added pursuant to this Section 9.2.3, including such new
Participant, would constitute a majority of the Participants.
IX.3 Notwithstanding the foregoing provisions of this Article IX, any
amendment, restatement, successor or other change in a Plan or the addition of a
new Plan that would materially increase the responsibilities or liabilities of
the Trustee or materially change its duties shall also require the consent of
the Trustee, which consent shall not be unreasonably withheld.
X. REPLACEMENT OF TRUSTEE
X.1 The Trustee may resign and be discharged from its duties hereunder
after providing not less than 90 days' notice in writing to the Company. On or
after the date on which the Trust
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becomes irrevocable, the Trustee shall also provide notice of its resignation to
all of the Executives. Prior to the date on which the Trust becomes irrevocable,
the Trustee may be removed at any time upon notice in writing by the Company. On
or after such date, such removal shall also require the agreement of the
Executives. Prior to the date on which the Trust becomes irrevocable, a
replacement or successor trustee shall be appointed by the Company. On or after
such date, such appointment shall also require the agreement of the Executives.
No such removal or resignation shall become effective until the effectiveness of
the acceptance of the trust by a successor trustee designated in accordance with
this Article X. If the Trustee should resign, and within 60 days of the notice
of such resignation the Company and, if required, the Executives shall not have
notified the Trustee of an agreement as to a replacement trustee, the Trustee
shall petition a court of competent jurisdiction to appoint a successor trustee.
Upon the acceptance of the trust by a successor trustee, the Trustee shall
release all of the moneys and other property in the Trust to its successor, who
shall thereafter for all purposes of this Agreement be considered to be the
"Trustee." In the event of its removal or resignation, the Trustee shall duly
file with the Company and, after the Trust becomes irrevocable, all of the
Executives, a written statement or statements of accounts and proceedings as
provided in Section 7.1 for the period since the last previous annual
accounting of the Trust, and if written objection to such account is not filed
as provided in Section
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7.1, the Trustee shall to the maximum extent permitted by applicable law be
forever released and discharged from all liability and accountability with
respect to the propriety of its acts and transactions shown in such account.
XI. AMENDMENT OR TERMINATION OF AGREEMENT
XI.1 This Agreement may be amended at any time and to any extent by a
written instrument executed by the Trustee and the Company and, after the Trust
has become irrevocable, approved by the Executives; provided, however, that no
amendment shall have the effect of (a) making the Trust revocable after it has
become irrevocable in accordance with Section 1.2 or (b) altering Section 11.2.
Notwithstanding the previous sentence, (i) amendments contemplated by Article IX
shall be made as therein provided, and (ii) the approval by the Executives shall
not be required for any amendment necessary in order to obtain a favorable
private letter ruling (if such ruling is sought) from the Internal Revenue
Service regarding the effect of the Trust on the taxation of the Company or the
Trust Beneficiaries.
XI.2 The Trust shall terminate (a) prior to the date on which the Trust
has become irrevocable, upon the written request of the Company, and (b) on or
after such date, upon the earliest to occur of (i) a determination by the
Trustee in its sole judgment made on or after the third anniversary of the date
on which the Trust becomes irrevocable that no Trust Beneficiary is or will be
entitled to any payment or further payment of Supplemental Benefits arising out
of a Change in Control or Potential Change in Control occurring prior to such
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determination; (ii) such time as the Trust no longer contains any assets, or
contains assets that, in the sole judgment of the Trustee, are insubstantial in
relation to the actual and potential liabilities of the Trustee to pay
Supplemental Benefits under the terms of this Agreement and any other amounts to
be paid from the assets of the Trust, including, without limitation, the fees
and expenses of the Trustee, the Accounting Firm, and counsel; or (iii) such
time as the Trustee shall have received consents from all of the Executives to
the termination of this Agreement. Notwithstanding the previous sentence (other
than clause (ii) thereof), if payments under a Plan with respect to a Trust
Beneficiary are the subject of litigation or arbitration, the Trust shall not
terminate and the funds held in the Trust with respect to such Trust Beneficiary
shall continue to be held by the Trustee until the final resolution of such
litigation or arbitration. The Trustee may assume that no Plan is the subject of
such litigation or arbitration unless the Trustee receives written notice from a
Trust Beneficiary or the Company with respect to such litigation or arbitration.
The Trustee may rely upon written notice from a Trust Beneficiary as to the
final resolution of such litigation or arbitration.
XI.3 Upon a termination of the Trust as provided in Section 11.2
hereof, any assets remaining in the Trust, less all payments, expenses, taxes
and other charges under this Agreement as of such date of termination, shall be
returned to the Company.
XII. SPECIAL DISTRIBUTIONS
XII.1 It is intended that (a) the creation of, transfer of
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assets to, and irrevocability of, the Trust will not cause any of the Plans to
be other than "unfunded" for purposes of title I of ERISA; (b) transfers of
assets to the Trust or the Trust becoming irrevocable will not be transfers of
property for purposes of section 83 of the Code, or any successor provision
thereto, nor will such transfers or irrevocability cause a currently taxable
benefit to be realized by a Trust Beneficiary pursuant to the "economic benefit"
doctrine; and (c) pursuant to section 451 of the Code, or any successor
provision thereto, amounts will be includible as compensation in the gross
income of a Trust Beneficiary in the taxable year or years in which such amounts
are actually distributed or made available to such Trust Beneficiary by the
Trustee.
XII.2 Notwithstanding anything to the contrary contained in any Plan,
if the Trustee obtains an opinion of tax counsel selected by the Trustee to the
effect that based upon any of the following occurring after the date of this
Agreement:
(a) a change in the federal tax or revenue laws, (b) a decision
in a controlling case, (c) a published ruling or similar announcement
issued by the Internal Revenue Service, (d) a regulation issued by the
Secretary of the Treasury, (e) a decision by a court of competent
jurisdiction involving a Trust Beneficiary, or (f) a closing
agreement made under section 7121 of the Code, or any successor
provision thereto, that is approved by the Internal Revenue Service
and involves a Trust Beneficiary, it is more likely than not that an
amount is includible in the gross income of
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a Trust Beneficiary in a taxable year that is prior to the taxable year
or years in which such amount would, but for this Section 12.2,
otherwise actually be distributed or made available to such Trust
Beneficiary by the Trustee, then the Trustee shall distribute to each
affected Trust Beneficiary an amount equal to the amount determined to
be includible in gross income in such prior taxable year. The Trustee
shall seek such an opinion of tax counsel if and only if requested to
do so by the Executives.
XII.3 Notwithstanding anything to the contrary contained in any Plan,
if a Trust Beneficiary provides evidence satisfactory to the Trustee
demonstrating that, as a result of an assertion by the Internal Revenue Service,
a final nonappealable binding determination has been made with respect to a
taxable year of such Trust Beneficiary that an amount is includible in the gross
income of such Trust Beneficiary in a taxable year that is prior to the taxable
year in which such amount would, but for this Section 12.3, otherwise actually
be distributed or made available to such Trust Beneficiary by the Trustee, then
the Trustee shall distribute to such Trust Beneficiary an amount equal to such
amount determined by the Internal Revenue Service to be includible in gross
income in such prior taxable year.
XIII. GENERAL PROVISIONS
XIII.1 The Company shall, at any time and from time to time, upon the
reasonable request of the Trustee, provide information, execute and deliver such
further instruments and do such further acts as may be necessary or proper to
effectuate the purposes of
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this Trust.
XIII.2 Each Exhibit referred to in this Agreement shall become a part
hereof and is expressly incorporated herein by reference.
XIII.3 This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior agreements, arrangements and understandings relating thereto. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and legal representatives.
XIII.4 This Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan, other than and without reference to any
provisions of such laws regarding choice of laws or conflict of laws.
XIII.5 In the event that any provision of this Agreement or the
application thereof to any person or circumstances shall be determined by a
court of competent jurisdiction to be invalid or unenforceable to any extent,
the remainder of this Agreement, or the application of such provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each provision of this
Agreement shall be valid and enforced to the maximum extent permitted by law.
XIII.6 (a) The preamble to this Agreement, including the definitions
provided therein, shall be considered a part of the agreement of the parties as
if set forth in a section of this Agreement.
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(b) The headings contained in this Agreement are solely
for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation
of this Agreement.
XIII.7 The right of any Trust Beneficiary to any benefit or to any
payment hereunder may not be anticipated, assigned (either at law or in equity),
alienated or subject to attachment, garnishment, levy, execution or other legal
or equitable process except as required by law. Any attempt by any Trust
Beneficiary to anticipate, alienate, assign, sell, transfer, pledge, encumber or
charge the same shall be void. The Trust assets shall not in any manner be
subject to the debts, contracts, liabilities, engagement or torts of any Trust
Beneficiary and payments hereunder shall not be considered an asset of the Trust
Beneficiary in the event of the insolvency or bankruptcy of such Trust
Beneficiary.
XIII.8 Any dispute between the Participants and the Company or the
Trustee as to the interpretation or application of the provisions of this
Agreement and amounts payable hereunder may, at the election of any party to
such dispute (or, if more than one Participant is such a party, at the election
of two-thirds of such Participants), be determined by binding arbitration within
the Detroit area in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court of competent jurisdiction. All fees and expenses of the Participants
and the Trustee of such arbitration shall be paid by the Trustee and considered
an
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expense of the Trust under Section 8.7.
XIII.9 Each Participant (and, where applicable, each Successor) is an
intended beneficiary under this Trust, and as an intended beneficiary shall be
entitled to enforce all terms and provisions hereof with the same force and
effect as if such person had been a party hereto.
XIII.10 The Trustee shall be permitted to withhold from any payment due
to a Participant hereunder the amount required by law to be so withheld under
federal, state and local withholding requirements or otherwise, and shall pay
over to the appropriate government authority the amounts so withheld. The
Trustee may rely on reasonable instructions from the Company as to any required
withholding and shall be fully protected under Section 8.7 in relying on such
instructions.
XIII.11 Notwithstanding any other provision hereof, the parties'
respective rights and obligations under Section 13.9 shall survive any
termination or expiration of this Agreement.
XIV. NOTICES
XIV.1 For all purposes of this Agreement, any communication, including
without limitation, any notice, consent, report, demand or waiver required or
permitted to be given hereunder shall be in writing and, unless otherwise
provided in this Agreement, shall be deemed to have been duly given when hand
delivered or dispatched by telegram or electronic facsimile transfer (confirmed
in writing by mail simultaneously dispatched), or two business days after having
been mailed by United States registered or certified mail, return receipt
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requested, postage prepaid, or one business day after having been dispatched by
a nationally recognized overnight courier service to the appropriate party at
the addressed specified below:
If to the Company, to: DTE Energy Company
2000 Second Avenue
Detroit, Michigan 48226
Attn: Treasurer
If to the Trustee, to: Wachovia Bank, N.A.
100 Main Street
Winston-Salem, North Carolina 27102
Attn: Executive Services
If to a Participant, to: the address of such Participant as listed
next to such Participant's name on Exhibit
A hereto,
provided, however, that if any party or such party's successors shall have
designated a different address by notice to the other parties, then to the last
address so designated.
IN WITNESS WHEREOF, the Company and the Trustee caused this Agreement
to be executed on its behalf as of the date first above written.
Attested DTE ENERGY COMPANY
By: By:
------------------------------ ---------------------------
Its: Assistant Corporate Its: Vice President and
Secretary Treasurer
Attested WACHOVIA BANK, N.A.
By: By:
------------------------------ ---------------------------
Its: Its:
-------------------------- -----------------------
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Exhibit A
Employee Address Soc. Sec. No.
- -------- ------- -------------
40
Exhibit B
[List of Change-in-Control Severance Agreements to be covered by the Trust.]
41
Exhibit C
---------
42
Exhibit D
Assumptions
The following assumptions are applicable to calculations under Articles
IV and VII and Section 9.2.3 of the Agreement, and may be deleted, revised or
otherwise amended only in accordance with Article IV of the Agreement.
1. Investment return is 3% per year.
2. Salaries increase at 4.5% per year.
3. A target bonus equal to:
% Base Salary Position
------------- --------
40% Chairman
35% President
30% Executive Vice President
30% Senior Vice President
25% Vice President
50% Other
4. The Accounting Firm shall also use such other assumptions as are
recommended by the Accounting Firm and approved by the Company and, if the Trust
is irrevocable, by the Executives.