Exhibit 10-2
OHIO CASUALTY INSURANCE COMPANY
SUPPLEMENTAL EXECUTIVE SAVINGS PLAN
Adopted August 16, 1990 Retroactive to January 1, 1989
Amended Effective June 1, 2002
April 1, 2002
FORWARD
Effective as of January 1, 1989, The Ohio Casualty Insurance Company has
adopted The Ohio Casualty Insurance Company Supplemental Executive Savings
Plan (the "Plan") for the benefit of certain of its employees. It is
intended that the Plan be a deferred compensation plan for "a select group
of management or highly compensated employees" as that term is used in the
Employee Retirement Income Security Act of 1974.
Beginning in 1989, under the provisions of Section 401(a)(17) of the
Internal Revenue Code, certain participants in The Ohio Casualty Insurance
Company Employee Savings Plan ("Savings Plan") have become subject to a
maximum limitation on Compensation that can be counted under the Savings
Plan. The purpose of this Plan is to protect any affected employee from
the direct loss of Company provided deferred compensation which would
otherwise result from the limitation on Compensation imposed by Code
Section 401(a)(17).
April 1, 2002 1
SECTION ONE
Definitions
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1.1 Except to the extent otherwise indicated herein, and to the extent
otherwise inappropriate to the context, the definitions contained in
Section 1 of the Savings Plan are applicable under the Plan.
1.2 "Board of Directors" means the Board of Directors of The Ohio
Casualty Insurance Company.
1.3 "Company" means The Ohio Casualty Insurance Company, or any entity
which shall be successor to it in ownership of substantially all of
its assets and which shall assume all of its rights and obligations
under the Plan.
1.4 "Plan" means The Ohio Casualty Insurance Company Supplemental
Executive Savings Plan as from time to time in effect.
1.5 "Savings Plan" means The Ohio Casualty Insurance Company Employee
Savings Plan.
1.6 "Supplemental Benefit" for each month means the excess, if any, of
(i) the Company Contribution that would have been made to the
Company Contribution Account to or with respect to a Participant that
month under the Savings Plan had the Participant's Compensation under
the Savings Plan been inclusive of amounts which are disregarded by
reason of the cost-of-living-adjusted $200,000 limit imposed under Code
Section 401(a)(17), referred to in subsection 1.12 of the Savings
Plan, over (ii) the Company Contribution allocated to the Participant
under the Savings Plan that month. In determining the amount of a
Supplemental Benefit, it shall be assumed that the Participant would
have contributed under the Savings Plan on his Compensation in excess
of the Code Section 401(a)(17) limit at the same rate as he
contributed on his Compensation up to that limit.
April 1, 2002 2
SECTION TWO
Participation
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Participation in the Plan shall be limited to those Participants in the
Savings Plan and their beneficiaries who, as a result of the limitation on
Compensation which may be taken into account under the Savings Plan by
reason of Section 401(a)(17) of the Internal Revenue Code, receive or will
receive a lesser Company Contribution under the Savings Plan than otherwise
would be paid or payable in the absence of such limitation.
April 1, 2002 3
SECTION THREE
Supplemental Benefits
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3.1 Vesting in Supplemental Benefits
--------------------------------
A Participant shall vest in each Supplemental Benefit credited to
him under this Plan in the same manner and at the same time that
he would have become vested in that amount under the Savings Plan
had there been no Code Section 401(a)(17) limitation.
3.2 General Provisions
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(a) The Company may make provisions for, or arrange for, the
advance funding of any Supplemental Benefits payable
hereunder to the extent that it, in its sole discretion,
deems necessary or appropriate, provided, however that no
such provision or arrangement shall be made which would cause
any such benefits to be "funded" (i.e., taxable prior to
actual receipt) for federal income tax purposes.
(b) In the event that the Company shall decide to make provision
for advance funding on its books against the future expense of
Supplemental Benefit payments, such decision shall under no
circumstances result in any amount being deemed to be an asset
of this Plan; at all times, any funds used to pay benefits
under the Plan shall be derived from the general assets of the
Company, subject to claims of the Company's creditors.
(c) No withdrawals or loans are permitted from the Plan during
employment.
(d) To the extent permitted by law, none of the benefits payable
under this Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge or encumbrance.
No benefits hereunder shall be subject to the claims of creditors
of the Participant or his beneficiary or to legal process.
Benefits hereunder, and any Supplemental Benefit Accounts, are
general obligations only of the Company and create no specific
asset or assets of the Company against which any individual may
claim any interest.
April 1, 2002 4
(e) The Supplemental Benefit with respect to a Participant shall
be paid to the Participant, or if he is deceased, his
designated beneficiary, or if none, his estate, in either
(i) whole shares of Ohio Casualty Corporation common stock,
with fractional shares paid in cash provided the market value
is 25 shares or more, or (ii) in a cash lump sum if the
market value is less than 25 shares. Effective April 1,
2002 all payments made under this Plan shall be in the form
of a lump sum cash distribution. The payment of such benefits
shall be made from the general assets of the Company.
The Participant's account will be valued and processed for
final distribution on the last trading day of the month in
which the Participant elected a final distribution from the
Savings Plan. Effective June 1, 2002 the Participant's account
will be valued and processed for final distribution on the last
trading day of the month in which the Participant's employment
with the Company has terminated.
Notwithstanding the foregoing to the contrary, effective June
1, 2002, a participant whose employment with the Company
terminated before June 1, 2002 and who has not received a final
distribution of such participant's account under this Plan as
of June 1, 2002 (a "pre-June1, 2002 terminated participant")
may elect the month end valuation date when payment of such
final distribution will occur; provided that such final
distribution occurs no later than November 30, 2002 or if
November 30, 2002 is not a trading day, the preceding trading
day in November, 2002. Except as described in the preceding
sentence, such pre-June 1, 2002 terminated participant's
account will be valued and processed for final distribution on
the last trading day of the month in which such participant's
election was made. If such pre-June 1, 2002 terminated
participant fails to elect to receive a final distribution of
such participant's account under this Plan before November 30,
2002, any such remaining amounts credited to such participant's
account shall be valued and processed on November 30, 2002 or,
if November 30, 2002 is not a trading day, the preceding
trading day in November, 2002.
(f) In the event that the Savings Plan or this Plan shall be
terminated, no further vesting in Supplemental Benefits shall
occur hereunder, unless the Company shall otherwise
specifically provide by action of its Board of Directors at
the time of termination of such Plan. However, any Supplemental
Benefits already vested shall remain vested and shall be payable
under this Plan in accordance with the foregoing provisions of
this Section Three.
3.3 Allocation of Supplemental Benefit
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April 1, 2002 5
Each month's Supplemental Benefit shall be converted into performance
shares (to the nearest one-thousandth of a share) by dividing the
Supplemental Benefit that month by the closing market value of a
common share of the Company's stock on the last trading day of that
month. Each performance share shall be deemed equivalent in value to
one share of the Company's common stock. However, performance shares
shall not entitle the recipient to any voting rights with respect to
such shares.
As of the last day of the month in which dividends are payable on
the Company's stock, each Participant's performance shares shall be
increased by additional performance shares (to the nearest one-
thousandth of a share) determined by dividing the cash value of the
dividend (i.e., the product of the dividend rate per share on the
dividend date times the performance shares then credited to the
Participant's account) by the closing market value of a common
share of the Company's stock on the last trading day of the month
the dividend was paid.
In the event there is any change in the common shares of the Company
resulting from a stock split, combination or exchange of shares,
merger, consolidation, or other reorganization or capital adjustment
(other than a dividend in shares taken into account under the
preceding sentence), equitable proportionate adjustment shall be
made immediately by the Committee to the performance shares credited
to the Supplemental Benefit Accounts under this Plan.
April 1, 2002 6
SECTION FOUR
Administration
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4.1 Plan Administrator
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The Ohio Casualty Insurance Company shall be the "administrator" of
the Plan within the meaning of ERISA.
4.2 Retirement Committee
--------------------
Subject to the provisions of Section 4.1, the Committee of the
Retirement Plan shall be vested with the general administration of
the Plan. The Committee shall have the exclusive right to interpret
the Plan. The decisions, actions and records of the Committee shall
be conclusive and binding upon the Company and all persons having or
claiming to have any right or interest in or under the Plan.
4.3 Claims Procedure
----------------
Any claims procedures outlined in the Savings Plan shall apply for
purposes of administering claims under this Plan.
April 1, 2002 7
SECTION FIVE
Accounts
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5.1 Supplemental Benefit Accounts
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For the purpose of reflecting the Supplemental Benefits of each
Participant, a general ledger account shall be established for each
eligible Participant, referred to herein as the Supplemental Benefit
Accounts. During the existence of this Plan, the Accounts shall be
credited monthly, commencing at the end of the first month in which
the Participant reaches the Compensation limit under the Savings
Plan and for each subsequent month in which the Participant's
Compensation for that plan year is in excess of the Code Section
401(a)(17) limit.
April 1, 2002 8
SECTION SIX
Amendment and Termination
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6.1 Amendment of the Plan
---------------------
Subject to the provisions of Section 6.3, the Plan may be wholly or
partially amended or otherwise modified at any time by the Board of
Directors.
6.2 Termination of the Plan
-----------------------
Subject to the provisions of Section 6.3, the Plan may be terminated
at any time by the Board of Directors.
6.3 No Impairment of Benefits
-------------------------
Notwithstanding the provisions of Section 6.1 and 6.2, no amendment
to or termination of the Plan shall impair any vested rights to
benefits which have accrued hereunder prior to such amendment or
termination.
April 1, 2002 9