EXHIBIT 10(m)
THE DOW CHEMICAL COMPANY
EXECUTIVE SPLIT DOLLAR LIFE INSURANCE PLAN AGREEMENT
________________________________________________
This amended and restated agreement is made this 19th day of December,
1994, by and between THE DOW CHEMICAL COMPANY, a Delaware corporation
having its principal place of business in Midland, Michigan (the
"Corporation"), and _______________________________(the "Executive").
WITNESSETH
WHEREAS, the Executive is a valued employee of the Corporation who has
attained the threshold job level for this plan; and
WHEREAS, the Corporation wishes to assist the Executive with his or her
personal life insurance program in recognition of the Executive's ongoing
valuable contribution to the business success of the Corporation; and
WHEREAS, the Executive is the owner of an insurance policy on his or her
life, including all supplemental riders or endorsements to such insurance
policy, which policy the Executive and Corporation wish to make subject to
a life insurance plan pursuant to the terms and conditions of this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
set forth below, the Corporation and Executive agree as follows:
ARTICLE I
OWNERSHIP OF POLICY
1.1 Executive as Owner.
The Executive (or the Trustee of a Trust, or other third party owner) shall
be the owner of the policy (including all supplemental riders or
endorsements) (the "Policy") and may exercise all ownership rights granted
to the owner by the terms of the Policy, except as may otherwise be
provided in this Agreement. When the Trustee of a Trust, or other third
party owner is owner, the word Trustee or Owner shall be substituted for
the word Executive throughout this Agreement where appropriate. The
Executive and the Corporation agree that the Policy shall be subject to the
terms and conditions of this Agreement.
1.2 Assignment.
The Executive agrees to execute an assignment (the "Assignment") to the
Corporation to secure the Corporation's rights under this Agreement, in the
form required by or acceptable to the issuer of the Policy, Metropolitan
Life Insurance Company (the "Issuer"), a copy of which is attached. The
Assignment shall set forth the rights of the Corporation in and with
respect to the Policy pursuant to the terms and conditions of this
Agreement. The Executive and the Corporation agree to be bound by the
terms of the Assignment.
1.3 Corporation's Rights.
The Corporation's Rights with respect to the Policy shall be limited to the
following:
(a) The right to obtain one or more loans or advances against the
cash surrender value of the Policy; however, such loans shall be
limited to the amount set forth in Section 4.3 below (the "Corporate
Interest");
(b) The sole right to pledge or assign the Corporate Interest as
security for loans or advances;
(c) The right to fully or partially surrender the Policy upon
termination of the Agreement;
(d) The sole right to realize up to the Corporate Interest in the
cash surrender value of the Policy on the full or partial
surrender of the Policy;
(e) The right to exercise all non-forfeiture or lapse option rights
permitted by the terms of the Policy;
(f) The right to realize the proceeds of the Policy as set forth in
Section 3.2 below (the "Corporation's Death Benefit Portion")
upon the Executive's death; and
(g) The right to release the Assignment upon receipt of the Corporate
Interest.
1.4 Executive's Rights.
The Executive shall retain all other rights as owner of the Policy,
including, but not limited to, the following:
(a) The right to designate and to change the beneficiary or
beneficiaries on the portion of the proceeds of the Policy
payable to the Executive's beneficiary pursuant to subsection 3.1
below (the "Executive's Death Benefit Portion") upon the Executive's
death;
(b) The right to elect any optional form of settlement available with
respect to the Executive's Death Benefit Portion; and
(c) The right to assign the Executive's rights in and with respect to
the Policy, including the right to assign ownership of the
Policy to a third party.
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ARTICLE II
INSURANCE PREMIUMS
2.1 Amount of Premium
For purposes of this Agreement, the term "premium" shall mean the yearly
premium necessary to provide a life insurance benefit at least equal to the
Executive's Death Benefit Portion (as defined in Section 3.1). "Premium"
shall also include all costs associated with all supplemental riders and
endorsements to the Policy. The premium shall be apportioned into two
parts known as the "Executive's Portion" and the "Corporation's Portion."
2.2 Payment of Premium
The Corporation shall pay the Premium (with respect to the Executive's
Portion, on behalf of the Executive) on or before the due date of each
Premium payment, and in any event, not later than the grace period under
the Policy for the Premium payment. If the Corporation fails to make any
premium payment within 20 days after it is due, the Executive may make the
Premium payment, in which case the Corporation shall reimburse the
Executive for such payment within ten days.
The Executive's Portion of the Premium shall be equal to the greater of:
(a) an amount equal to his annual salary as of July 1, or if retired,
his final annual salary, divided by 1000, multiplied by the
appropriate rate on the Executive Split Dollar Life Insurance
Premium Schedule then in effect (see attached Schedule A); or
(b) the amount of taxable income on the amount of the annual cost of
pure protection on the life of the Executive under the
Policy for the ensuing policy year calculated by using the lower
of the PS-58 rates or the applicable rates published by the Issuer
of the Policy.
The Corporation shall deduct the Executive's Portion of the Premium from
the Executive's salary by payroll deduction.
This is a U.S. dollar based program with premiums and benefits payable in
U.S. dollars. For the purposes of this program, the initial coverage level
for participants on a non-U.S. dollar payroll will be determined by taking
the salary in effect on July 1 of the Agreement year and applying the
intercompany exchange rate for the month of July. Any annual salary
increase for participants on a non-U.S. dollar payroll will be determined
by using the average increase of a U.S. peer.
ARTICLE III
RIGHTS UPON DEATH OF EXECUTIVE
3.1 Executive's Death Benefit Portion
Subject to the provisions of the Policy, upon the death of the Executive,
the Executive's designated beneficiary or beneficiaries shall be entitled
to receive the Executive's Death Benefit Portion. Prior to retirement, the
Executive's Death Benefit Portion will be an amount equal to two (2) times
the Executive's annual salary in effect on July 1 prior to the last plan
anniversary. After retirement, the Executive's Death Benefit Portion will
be an amount equal to two (2) times the Executive's annual salary at
retirement or, where applicable, as stated in the Executive's Deceleration
Agreement.
3.2 Corporation's Death Benefit Portion
Subject to the provisions of the Policy, upon the death of the Executive,
the Corporation shall be entitled to receive an amount equal to the
Corporation's Death Benefit Portion. The Corporation's Death Benefit
Portion shall be an amount equal to the remaining net death benefit under
the Policy after paying the Executive's Death Benefit Portion.
3.3 Beneficiary Designation
The Executive and the Corporation agree to conform the beneficiary
designation of the Policy to the provisions of this Agreement.
ARTICLE IV
TERMINATION OF AGREEMENT
4.1 Termination Defined
This Agreement shall automatically terminate upon the occurrence of any of
the following events:
(a) The bankruptcy, receivership or dissolution of the Corporation.
(b) The Executive's retirement from the Corporation; provided,
however, if the retirement occurs within ten years after the
date the Policy was issued or before the policy can be endowed at
age 95 (as described in Article 4.2) without creating a Modified
Endowment Contract (MEC) as described in Section 7702A of the
Internal Revenue Code of 1986 (Code) or before an amount equal to
the Corporate Interest can be withdrawn from the policy without
attracting tax under the Code Section 7702 (f)(7), the following
applies;
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(i) If the Executive waives all post-retirement life insurance
benefits from the Corporation, The Executive's
retirement shall be the termination event.
(ii) If the Executive does not waive all post-retirement life
insurance benefits from the Corporation, the termination
event shall be the latest of the tenth anniversary of the date
the Policy was issued or the Policy anniversary following the
final premium payment, with level premium payments made to
endow the Policy at age 95 (as described in Section 4.2) at the
earliest possible date without creating a MEC or the Policy
anniversary following the final premium payment before an
amount equal to the Corporate Interest can be withdrawn from the
Policy without attracting tax under Code Section 7702(f)(7).
(c) The termination of employment of the Executive with the
Corporation (other than by reasons of death or retirement).
(d) The mutual written agreement of the Executive and the
Corporation.
(e) The Corporation terminates the Agreement with regard to the
Executive for any reason; provided however, the Corporation
shall not have the right to terminate the Agreement with regard
to the Executive during any period that a change of control of the
Corporation (as defined in Section 5.3) is being
contemplated, negotiated or effected, except as provided in
Section 5.2.
For purposes of this Section, the term "retirement" means a termination of
employment with the Corporation after satisfying the requirements for an
early or normal retirement benefit. Also, if the Executive is receiving
long-term disability benefits under a plan sponsored by the Corporation,
the Executive shall not be deemed to have terminated employment with the
Corporation.
4.2 Rights Upon Termination
Upon termination of the Agreement pursuant to Section 4.1 (c), the
Executive shall pay to the Corporation the Corporate Interest determined
pursuant to Section 4.3. Upon termination of this Agreement pursuant to
Section 4.1 (a), (b), (d), or (e), the Executive shall pay to the
Corporation all amounts in excess of the amount required to endow the
Policy at the Executive's age of 95 assuming the Policy's then current face
amount, interest rate and mortality cost assumptions as of the date of
termination of employment and that the Executive will pay $l.62 per month
per thousand of 50% of the face amount until age 95. Upon receipt of such
amount from the Executive, the Corporation shall take all steps necessary
to release the Assignment so that the Executive (or his assignee as owner
of the Policy) shall own the Policy free of all encumbrances in favor of
the Corporation required by this Agreement. The Executive (or his
assignee) may then take any action with regard to the Policy that is
available under the terms of the Policy to the Policy's owner.
4.3 Corporate Interest
For purposes of this Agreement, the term "Corporate Interest" means an
amount payable from the cash surrender value of the Policy equal to the
amount of all premiums paid and expected to be paid by both parties
assuming that the Agreement will be terminated upon the retirement of the
Executive or as described in Section 4.1(b)(ii) minus the sum of any
indebtedness described in Section 1.3(a) and the surrender charges, if any,
imposed by the Issuer. In no event shall the Corporate Interest exceed the
amount of the Policy's cash surrender value.
The Corporate Interest shall be paid by the Executive as specified in
Section 4.2 above, or by the Issuer upon surrender of the Policy.
ARTICLE V
CHANGE OF CONTROL
5.1 Article Supersedes Other Provisions
Notwithstanding any other provision of this Agreement, the provisions in
this Article shall apply if the Corporation has change in control, as
defined in Section 5.3.
5.2 Effect of Change in Control
No later than 60 days after a change in control of the Corporation, this
Agreement shall terminate and the Corporation shall abandon its rights to
the Corporate Interest.
5.3 Definition of Change in Control
For purposes of the Agreement, a "change in control" of the Corporation
occurs when:
(a) Any person, partnership, corporation, trust or similar entity or
group acquires or controls more than 20% of the voting
securities of the Corporation in a transaction or series of
transactions; or
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(b) At any time during any two-year period a majority of the Board of
Directors of the Corporation is not comprised of individuals
who were members of the Board of Directors at the beginning of
the two-year period.
For purposes of this definition, the term "group" shall mean any person who
acts in concert within the meaning of Section 14(d)(2) of the Securities
Exchange Act of 1934, as amended.
ARTICLE VI
ADMINISTRATIVE PROVISION
6.1 No Other Life Insurance Provided by Corporation
The Corporation shall have no obligation to provide the Executive with life
insurance benefits, either during employment by the Corporation or after
retirement, other than pursuant to this Agreement.
6.2 Issuer's Responsibility
Except with regard to Section 6.12, no provision of this Agreement shall in
any way change the obligations of the Issuer as expressly provided in the
Policy, except as the Agreement may become a part of the Policy by the
Issuer's acceptance of the Assignment.
6.3 Amendment
This Agreement may be amended only by a written agreement signed by both
the Executive and a duly authorized representative of the Corporation.
6.4 Notice
Any and all notices required to be given under the terms of the Agreement
shall be given in writing and signed by the appropriate party, and shall be
sent by certified mail, postage prepaid, to the appropriate address set
forth below:
(a) To the Executive at:
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
(b) To the Corporation at:
The Dow Chemical Company
Global Compensation and Benefits Department
0000 Xxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Administrator, Executive Split Dollar Life Insurance
6.5 Heirs, Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the
Executive, his or her successors, heirs and the executors or administrators
of the Executive's estate, and to the Corporation and its successors. The
Executive and the Corporation agree that either party may assign its
interest under this Agreement upon the prior written consent of the other
party, and any assignee shall be bound by the terms and conditions of this
Agreement as if an original party to the Agreement.
6.6 Interpretation
This Agreement shall be governed by and construed in accordance with the
Employee's Retirement Income Security Act (ERISA). In the event that ERISA
does not preempt state law, the laws of the State of Michigan shall apply.
6.7 Terms
This Agreement shall be effective as of the date first above written, and
shall continue until terminated as provided in Section 4.1 or until all
covenants under the Agreement activated by the death of the Executive are
fully carried out.
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6.8 Headings
Any headings or captions in the Agreement are for reference purposes only,
and shall not change or affect the meaning of any provisions of this
Agreement.
6.9 Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which together shall constitute one
and the same Agreement.
6.10 Employment Rights
The existence of this Agreement shall not grant the Executive any legal
right to continue as an employee of the Corporation nor affect the right of
the Corporation to discharge the Executive.
6.11 Administrator
The administration of the Executive Split Dollar Life Insurance Plan (the
"Plan") shall be under the supervision of the Corporation as the Plan
Administrator ("Administrator"), except for the processing and approval of
claims, which shall be under the direction of the Issuer (the "Claims
Administrator"). The Administrator shall have full power to administer the
Plan as set forth in this Agreement in all of its details, subject,
however, to the requirements of ERISA or other applicable law. For this
purpose, the Administrator's powers will include, but will not be limited
to, the following discretionary authority:
(a) To make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of
the Plan;
(b) To have complete discretion to resolve any inconsistencies and
interpret the Plan, its interpretation thereof in good faith to be
final and conclusive, and its decisions shall be upheld absent any
arbitrary and capricious action on its part;
(c) To decide all questions concerning the Plan;
(d) To determine the eligibility of any person to participate in the
Plan;
(e) To appoint such agents, counsel, accountants, consultants and
actuaries as may be required to assist in administering the
Plan;
(f) To allocate and delegate its responsibilities under the Plan and
to designate other persons to carry out any of its
responsibilities under the Plan. The procedures for such
allocation, delegation or designation are:
(i) The Administrator shall review the qualifications of the
candidates for allocation, delegation or designation of
fiduciary responsibility to determine whether such candidate(s)
is capable and qualified to perform the subject fiduciary
responsibilities;
(ii) If the Administrator determines that Section 6.11(f)(i) has been
met, then the Administrator shall set forth the services the
Administrator expects the candidate to perform in writing and
require the candidate to agree in writing to provide such services.
Further, the Administrator shall require such candidate to
acknowledge in writing that it will comply with the standards
required of fiduciaries under ERISA.
6.12 Claims Appeal Procedure
The Claims Administrator is authorized to review claims, compute the
amounts of benefits which will be payable under the Plan, conclusively
determine beneficiaries, and authorize payment of benefits. The review of
a claim appealed by an Executive and final decision on a claim for benefits
under the Plan shall be made in accordance with the procedures set forth in
this Section 6.12 of this Agreement. The Claims Administrator (and not the
Plan Administrator) shall be the "named fiduciary" of the Plan with regard
to any review and final decision on a claim for benefits under this Plan.
The Claims Administrator shall be entitled to use its discretion in good
faith in reviewing claims submitted under this Plan, and its decisions
shall be upheld absent any arbitrary and capricious action on the part of
the Claims Administrator.
Any controversy arising out of a claim for benefits shall be filed with the
Claims Administrator, which shall make all determinations concerning the
claim. Any decision by the Claims Administrator denying the claim shall be
in writing and shall be delivered to all parties in interest in accordance
with the notice provisions of Section 6.4. The decision shall set forth
the reasons for denial in plain language. Pertinent provisions of the
Agreement shall be cited and, where appropriate, an explanation as to how
the Executive can perfect the claim will be provided. This notice of
denial of benefits shall be provided within 90 days of the Claims
Administrator's receipt of the Executive's claim for benefits. If the
Claims Administrator fails to notify the Executive of its decision
regarding his claim within the 90 day period, the claim shall be considered
denied, and the Executive shall then be permitted to proceed with his
appeal as provided in this Section.
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An Executive who has been completely or partially denied a benefit shall be
entitled to appeal this denial of his claim by filing a written statement
of his position with the Claims Administrator no later than 60 days after
receipt of the written notification of the claim denial. The Claims
Administrator shall schedule an opportunity for a full and fair review of
the issue within 30 days after receipt of the appeal.
Following its review of any additional information submitted by the
Executive, either through the hearing process or otherwise, the Claims
Administrator shall render a decision on its review of the denied claim in
the following manner:
(a) The Claims Administrator shall make its decision regarding the
merits of the denied claim within 60 day following its receipt of
the request for review (or within 120 days after receipt, in a case
where there are special circumstances requiring extension of time
for reviewing the appealed claim). The Claims Administrator
shall deliver the decision to the claimant in writing. If an
extension of time for reviewing the appealed claim is required
because of special circumstances, written notice of the extension
shall be furnished to the Executive prior to the commencement of
the extension. If the decision on review is not furnished within
the prescribed time, the claim shall be deemed denied on review.
(b) The decision on review shall set forth specific reasons for the
decision, and shall cite specific references to the pertinent
Agreement provisions on which the decision is based.
6.13 Reliance on Tables, Etc.
The Administrator is entitled to rely conclusively on all tables,
valuations, certificates, opinions and reports which are furnished by any
accountant, counsel or other expert who is employed or engaged by the
Administrator.
6.14 Gender
All pronouns or adjectives in the masculine gender in this Agreement
include the female gender, and the singular includes the plural, unless the
context clearly indicates otherwise.
IN WITNESS OF WHICH, the Corporation and Executive (and Trustee if Trust is
to be Owner, or third party owner) have duly executed this Agreement.
THE DOW CHEMICAL COMPANY
X_____________________________________________
The Dow Chemical Company, Chief Executive Office
X_______________________________________
Executive
Name of Trustee if Trust is to be Owner, or third party owner(s)
SCHEDULE A
Executive Split-Dollar Life Insurance Premium Schedule
Monthly Contribution per $1,000 of Coverage Rate
------------------------------------------- ----
Less than 30 years of age $0.06
30-34 years of age $0.06
35-39 years of age $0.08
40-44 years of age $0.12
45-49 years of age $0.18
50-54 years of age $0.28
55-59 years of age $0.40
60-64 years of age $0.45
65 years of age and older $1.62
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