Exhibit 10.15
SPLIT DOLLAR AGREEMENT
THIS AGREEMENT made and entered into as of this ____ day
of _________________, by and between SEMCO Energy, a corporation,
with principal offices and place of business in the State of
Michigan (hereinafter referred to as the "Company"), and
___________________, an individual residing in the State of
Michigan (hereinafter referred to as the "Executive"),
WITNESSETH THAT:
WHEREAS, the Executive is and has been employed in a
managerial capacity by the Company and has performed valuable
services;
WHEREAS, the Executive wishes to provide life insurance
protection for his family in the event of his death, under a
policy of life insurance insuring his 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 a certain Executive
Security Agreement entered into as of the same day 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 in the
initial face amount of $___________, which face amount shall be
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
January 1 of each calendar year and continuing through
December 31 of the subsequent calendar year), commencing with the
Plan Year that starts on January 1, _____ 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. The parties hereto agree that
they will take all necessary action to cause the Insurer to issue
the Policy, and shall take any further action which may be
necessary to cause the Policy to conform to the provisions of
this Agreement. The parties hereto agree that the Policy shall
be subject to the terms and conditions of this Agreement and of
the endorsement to the Policy filed with the Insurer.
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 day 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 parties hereto agree to take all
action necessary to cause the beneficiary designation and
settlement election provisions of the Policy to conform to the
provisions hereof. 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 have the option to
apply any dividend declared on the Policy either to purchase one
year term insurance on the life of the Executive or to purchase
paid-up additional insurance on the life of the Executive,
whichever the Company deems appropriate. The parties hereto
agree that the dividend election provisions of the Policy shall
conform to the provisions hereof.
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 for 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. Such
beneficiary designation or endorsement shall not be terminated,
altered or amended by the Company, without the express written
consent of the Executive. The parties hereto agree to take all
action necessary to cause such beneficiary designation or
endorsement to conform to the provisions of 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 defined therein) 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 lesser of the balance (after (i) above
has been satisfied) of the death benefit provided under the
Policy or an amount equal to five hundred percent (500%) of the
Executive's base salary (this does not include any bonus or
incentive compensation to which the Executive may be entitled)
for the Plan Year within which his death occurs 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.
c. Notwithstanding any provision hereof to the
contrary, in the event that, for any reason whatsoever, no death
benefit is payable under the Policy upon the death of the
Executive and in lieu thereof the Insurer refunds all or any part
of the premiums paid for the Policy, the Company and the
Executive's beneficiary or beneficiaries shall have the
unqualified right to share such premiums based (i) on their
respective cumulative contributions thereto, if Executive's death
is due to suicide within two years after the date of this
Agreement, or (ii) in all other situations, on their respective
shares of the death benefit that was otherwise to have been paid
under the Policy at the death of the Executive.
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 day 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 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 disabled to such an extent that he is prevented
from any employment with the Company, 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 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
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 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 is being denied a
benefit to which he 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 claim. The request must be addressed to the
President of the Company at its then principal place of
business.
(2) Claim Decision. Upon receipt of a claim, the Company
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 Company
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 claim and an explanation 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
Secretary of the Company review the determination of the
Company. Such request must be addressed to the Secretary
of the Company, at its then principal place of business.
The Claimant or his duly authorized representative may,
but need not, review the pertinent documents and submit
issues and comments in writing for consideration by the
Company. If the Company does not request a review of the
Company's determination by the Secretary of the Company
within such sixty (60) day period, he shall be barred and
estopped from challenging the Company's determination.
(4) Review of Decision. Within sixty (60) days after the
Secretary's receipt of a request for review, he will
review the Company's determination. After considering all
materials presented by the Claimant, the Secretary 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 Secretary 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 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 known 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.
SEMCO Energy ("Company")
By:______________________________
ATTEST:
_____________________________
Secretary
_________________________________
("Employee")
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 (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
By:______________________________
Date:_________________
[FN]
Split Dollar Agreements are in effect for the following
Executives of the Company:
-- Xxxxxxx X. Xxxxxxxxx dated January 19, 1999, in the
initial face amount of $625,000, subject to increases
and/or decreases commencing with the Plan Year starting
January 1, 2000.
-- Xxxxxxxxx Xxxxxxx dated January 18, 1999, in the initial
face amount of $950,000, subject to increases and/or
decreases commencing with the Plan Year starting
January 1, 2000.
-- Xxxxxxx Hatches dated February 12, 1997, and amended
March 31, 1998, in the initial face amount of $487,500,
subject to increases and/or decreases commencing with the
Plan Year starting January 1, 1999.
-- Xxxxxxx Xxxxxxx dated February 12, 1997, and amended
March 31, 1998, in the initial face amount of $1,150,000,
subject to increases and/or decreases commencing with the
Plan Year starting January 1, 1999.
-- Xxxx X. Xxxxxx dated February 12, 1997, and amended
March 31, 1998, in the initial face amount of $828,000,
subject to increases and/or decreases commencing with the
Plan Year starting January 1, 1999.
