Exhibit 10.2
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Supplemental Executive Retirement Plan
As Amended and Restated
as of July 10, 2000
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Supplemental Executive Retirement Plan
CONTENTS
Page
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ARTICLE 1 Purposes of Plan............................................... 1
ARTICLE 2 Definitions.................................................... 1
ARTICLE 3 Participation.................................................. 3
ARTICLE 4 Restoration of Benefits........................................ 3
ARTICLE 5 Administration and General Provisions............................7
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FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Supplemental Executive Retirement Plan
ARTICLE 1. Purposes of Plan.
1.1 Financial Security Assurance Inc. adopted the Financial Security Assurance
Inc. Supplemental Executive Retirement Plan (the "Plan"), effective
January 1, 1989, in order to restore the pension benefits of selected
current and future key employees whose benefits under the Financial
Security Assurance Inc. Money Purchase Plan are limited by reason of
certain limitations imposed by Section 401(a)(17), Section 415 and other
provisions of the Internal Revenue Code of 1986, as amended (the "Code").
The Plan was previously amended and restated in its entirety, and adopted
by Financial Security Assurance Holdings Ltd. effective as of January 1,
1995, and subsequently amended on February 12, 1997, and amended and
restated as of February 25, 1999. The Plan is hereby amended and restated
in its entirety, and adopted by Financial Security Assurance Holdings Ltd.
effective as of July 10, 2000. The benefits, if any, with respect to any
employee who terminated employment prior to the effective date of any
amendment shall be determined in accordance with the provisions of the
Plan as in effect as of such termination date.
ARTICLE 2. Definitions.
For purposes of the Plan, the following terms shall have the meanings set
forth below:
2.1 "Account" shall mean the account established for a Participant under the
Plan to which contributions and earnings are credited.
2.2 "Basic Plan" shall mean the Financial Security Assurance Inc. Money
Purchase Plan as adopted and amended.
2.3 "Beneficiary" shall mean the person or persons designated by the
Participant to receive benefits under the Plan in the event of the
Participant's death. If there is no Beneficiary surviving the Participant,
any death benefit payable hereunder shall be paid to the Participant's
estate.
2.4 "Board" shall mean the Board of Directors of the Company.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
2.6 "COLI" shall mean the corporate owned life insurance purchased by a
Participating Company on a Participant's life pursuant to the Plan.
2.7 "Committee" shall mean the Human Resources Committee of the Board acting
on the majority vote of such Committee.
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2.8 "Company" shall mean Financial Security Assurance Holdings Ltd., a New
York corporation.
2.9 "Compensation" shall mean, with respect to each Plan Year, the
Participant's annual base salary, cash bonus, any bonus in lieu of which
an "Equity Bonus" has been granted pursuant to the Company's 1993 Equity
Participation Plan or any successor plan and any amount deferred pursuant
to the Company's Deferred Compensation Plan (other than deferrals related
to "Performance Share" awards); provided, however, that in no case shall
such Compensation exceed $1 million in any Plan Year.
2.10 "Disability" shall mean the Participant's eligibility for disability
benefits under his or her Participating Company's long term disability
plan.
2.11 "Discharge for Cause" shall mean an Employee's termination of employment
by a Participating Company due to such Employee's willful misconduct or
gross negligence in respect of his or her duties of employment with the
Participating Company including, but not limited to, conviction for a
felony or perpetration of a common law fraud, which has resulted in or is
likely to result in material economic damage to a Participating Company.
2.12 "Employee" shall mean any individual employed by a Participating Company
on or after January 1, 1989 to whom benefits are payable under the Basic
Plan.
2.13 "Participant" shall mean an Employee who is a member of a select group of
management or highly compensated employees and who has been designated by
the Committee for participation in the Plan pursuant to Section 3.1.
2.14 "Participating Company" shall mean the Company or any subsidiary or
affiliate of the Company employing a Participant.
2.15 "Plan" shall mean the Financial Security Assurance Holdings Ltd.
Supplemental Executive Retirement Plan as set forth herein, previously
known as, and unless specifically provided to the contrary shall include,
the Financial Security Assurance Inc. Supplemental Executive Retirement
Plan.
2.16 "Plan Year" shall mean each calendar year beginning after December 31,
1988.
2.17 "SERP Election Change Form" shall mean the form prescribed or accepted by
the Committee by which a Participant may change a previous distribution
election.
2.18 "Years of Service" shall mean "Years of Service for Vesting" as defined
under the Basic Plan.
Where used herein, the masculine gender shall be deemed, where applicable,
to include the feminine gender, and references to the singular shall be
deemed, where applicable, to include the plural.
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ARTICLE 3. Participation.
3.1 At any time during the Plan Year, the Chief Executive Officer may
recommend an Employee to the Committee for participation in the Plan. Upon
receiving such recommendation, the Committee shall timely act upon it and
shall notify the Employee in the event he or she is designated a
Participant and the date as of which such participation commences. Unless
otherwise determined by the Chief Executive Officer or the Committee, each
Employee attaining the rank of Director, Managing Director, Associate
General Counsel, General Counsel, Executive Vice President, President or
Chairman shall be deemed to have been designated as a Participant by the
Committee for all purposes of the Plan. Unless otherwise determined by the
Committee, once an Employee has been approved by the Committee as a
Participant in the Plan, such Employee shall remain a Participant until
all of his or her benefits with respect to the Plan have been paid or
forfeited.
ARTICLE 4. Restoration of Benefits.
4.1 Amount of Restoration of Benefits. Subject to Sections 4.3(b), 4.5 and 5.2
of the Plan, the Account of a Participant who is in service with a
Participating Company on the last day of the Plan Year, and whose pension
benefits under the Basic Plan for such Plan Year are limited by the
application of Section 401(a)(17) of the Code, Section 415 of the Code and
other limits under the Code on the inclusion of deferred amounts for
contribution purposes, shall be credited with an amount equal to the
difference between:
(a) the amount of contribution related to Compensation which would have
been payable to or in respect of the Participant under the Basic
Plan without regard to the maximum annual pension limitation in
Section 415 of the Code or the pensionable compensation limitation
in Section 401(a)(17) of the Code or the exclusion of certain
deferred amounts, and
(b) the amount of contribution related to Compensation actually payable
to or in respect of the Participant under the Basic Plan.
4.2 Vesting. A Participant shall be 100% vested in his or her Account upon
attaining age 55, upon his or her death or Disability while in the employ
of a Participating Company or upon the termination of the Plan pursuant to
Section 5.2. Except as provided in Section 5.4, if a Participant
terminates employment prior to an event specified in the preceding
sentence, such Participant shall be vested in his or her Account in
accordance with the following schedule:
Completed Years of Service Percentage
-------------------------- ----------
Less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
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4.3 Crediting of Investment Gain/Loss.
(a) The balance of each Participant's Account shall be credited with
earnings and investment gains and losses as provided below. The
Committee may establish procedures permitting Participants to
designate one or more investment benchmarks specified by the Chief
Executive Officer or the Committee for the purpose of determining
the earnings or investment gains and losses to be credited or
debited to a Participant's Account. Investment benchmarks so
specified may be made available to all Participants or selected
Participants as the Chief Executive Officer or the Committee may
designate. The Committee shall have the sole discretion to make such
rules as it deems desirable with respect to the administration of
any such investment benchmark procedures, including rules permitting
the Participant to change the designation of investment benchmarks
to be used to measure the value of the Account. The Committee,
however, retains the discretion at any time to change the investment
benchmarks available to Participants, including any investment
benchmarks previously specified by the Chief Executive Officer, or
to discontinue the benchmark procedure. If the Committee fails to
implement an investment benchmark procedure or discontinues such
procedure, or if the Participant fails to designate properly an
investment benchmark, the Participant's Account shall be credited
with earnings at a rate determined by the Committee in its sole
discretion, utilizing whatever factors or indicia it deems
appropriate; provided, however, that the rate of return on a
Participant's Account in such circumstances shall not be less than
the Chase Bank prime rate plus one percent.
(b) Notwithstanding paragraph (a) above, if the COLI on a Participant's
life remains in effect (applicable to certain Participants in the
Plan prior to December 31, 1994), the amount credited to the
Participant's Account pursuant to Section 4.1 shall first be used to
pay the premiums on the COLI. Any amount credited pursuant to
Section 4.1 in excess of the amount needed to pay the premiums on
the COLI shall be credited with earnings and investment gains and
losses in the manner provided in paragraph (a) above.
(c) Nothing in this Section 4.3 or in the Committee's rules shall give a
Participant the right to require the Company or a Participating
Company to acquire any asset for the Account of the Participant, and
if the Company or a Participating Company acquires any asset, or
causes a trustee on its behalf to acquire any asset, to permit it to
satisfy its obligations to pay the balance of the Participant's
Account, the Participant shall have no right or interest in any such
asset, which shall be held by the Company or the Participating
Company subject to the rights of all unsecured creditors of the
Company or the Participating Company. The rights of the Participant
with respect to any designation of one or more investment benchmarks
for measuring the value of any Account hereunder shall be expressly
subject to the provisions of Section 5.6 of the Plan.
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4.4 Form and Timing of Election.
(a) Except as otherwise provided herein, payment of the Participant's
vested Account Balance shall be made as soon as administratively
practicable following the Participant's death, Disability or other
termination of employment (a "Distribution Event"). Effective
February 12, 1997, a Participant may elect a date subsequent to the
Participant's death, Disability or other termination of employment
on which all or any portion of the amounts previously credited to
his or her Account shall be distributed. Effective July 10, 2000, a
Participant may elect to extend, but not accelerate, a previously
elected distribution date at any time at least 12 months before such
previously elected distribution date by the execution of a SERP
Election Change Form, timely filed with the Company, provided that a
SERP Election Change Form shall only be effective in respect of
amounts that would not otherwise have been distributed at least 12
months after the filing of such Form.
(b) The Participant may elect that his or her vested Account Balance be
distributed in a lump sum or in installments payable over a
specified number of years, not longer than 15 years; provided,
however, that in no event may installment payments be elected over a
number of years that is more than the Participant's life expectancy
or the life expectancy of the designated primary Beneficiary,
whichever is greater, at the time the Participant elects a form of
distribution. If a Participant elects the installment option, the
Participant must also elect whether installments should be made
annually, quarterly or monthly. A Participant may specify different
payment options (i) for different percentages or dollar amounts of a
Participant's vested Account Balance; or (ii) in the event of the
death or Disability of the Participant. Distributions will be in the
form of a lump sum (i) if the Participant did not choose a different
distribution option or (ii) in the event of death or Disability, if
the Participant did not expressly choose a different distribution
option in the event of death or Disability.
(c) A Participant shall make an election with respect to the form of
distribution on or before the date three months after an Employee
becomes a Participant; provided, however, that a Participant shall
be entitled to change his or her form-of-distribution election with
respect to amounts thereafter contributed or earned on his or her
Account balance by making a new form-of-distribution election
applicable to such future balances. Effective July 10, 2000, at any
time at least 12 months before the date on which a Participant's
benefit under the Plan shall be distributed, a Participant may make
the following changes to the distribution option previously elected
with respect to such benefit:
(i) a Participant who previously elected a lump sum payment with
respect to certain amounts may elect an installment
payment option described in Section 4.4(b) of the Plan with
respect to such amounts; and
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(ii) a Participant who previously elected an installment payment
option described in Section 4.4(b) of the Plan with respect to
certain amounts may select a different installment payment
option described in Section 4.4(b) which provides for the
payment of installments over a longer, but not a shorter,
period of time with respect to such amounts.
Any such change in distribution options shall be made by the
execution of a valid SERP Election Change Form, timely filed with
the Company, provided that a SERP Election Change Form shall only be
effective in respect of amounts that would not otherwise have been
distributed at least 12 months after the filing of such Form.
(d) A form-of-distribution election and any change to a
form-of-distribution election shall be effective upon submission to
the Committee or its designee and compliance with all applicable
requirements established by the Committee, provided that the
Committee retains the right, at its election, to make payments in a
lump sum if it elects, in its sole discretion, to do so
notwithstanding any form-of-distribution election or any change
thereto requesting an installment option. Notwithstanding any
contrary provision in the Plan, the Committee, in its sole
discretion, retains the right, but shall have no obligation, to
distribute all or any portion of a Participant's vested Account
Balance in the form of any security or other investment chosen by
the Participant as an investment benchmark for measuring the value
of his or her Account pursuant to Section 4.3(a) of the Plan.
Further, notwithstanding any contrary provision in the Plan, any
distribution to a Participant otherwise payable hereunder shall be
deferred until no later than January 2 in the year following
termination of the Participant's employment with the Company (and
its subsidiaries) to the extent that such distribution, if not so
deferred, would be disallowed as a tax deduction by the Company
pursuant to Section 162(m) of the Code (or any successor provision).
4.5 Benefit Restoration With Respect to Certain Bonus Payments. In the event
that a Participating Company accelerates the payment of bonuses for any
Plan Year by paying bonuses which would otherwise be payable in the
following Plan Year, and such payment causes a Participant to be credited
with a lower total contribution under the Basic Plan and the Plan by
virtue of the limitations provided in the Basic Plan and the limitations
on the amount of Compensation provided in Section 2.9 of the Plan, then,
notwithstanding any such limitations, the Committee may, in its
discretion, credit an additional supplemental pension contribution under
the Plan for the Plan Year in which the bonuses were paid on an
accelerated basis up to the amount which would otherwise be lost to the
Participant by virtue of the application of the limitations in the Basic
Plan and in the Plan. The aggregate amounts credited under the Plan, and
the contributions actually payable to or in respect of the Participant
under the Basic Plan, over a two Plan Year period consisting of the Plan
Year into which the bonus was accelerated and the following Plan Year,
shall not be increased by virtue of the application of this Section 4.5.
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ARTICLE 5. Administration and General Provisions.
5.1 Administration.
(a) The Plan shall be administered by the Committee in accordance with
the administrative provisions of the Basic Plan. The Committee shall
have full power and authority to interpret, construe and administer
the Plan, and review claims for benefits under the Plan, and the
Committee's interpretations and constructions of the Plan and
actions thereunder shall be binding and conclusive on all persons
and for all purposes.
(b) The Committee shall establish and maintain Plan records and may
arrange for the engagement of such certified public accountants,
actuarial consultants or legal counsel, and make use of such agents
and clerical or other personnel, as they shall require or may deem
advisable for purposes of the Plan. The Committee may rely upon the
written opinion of such counsel and the consultants or accountants
engaged by the Committee and may delegate to any agent or to any
sub-committee or member of the Committee its authority to perform
any act hereunder, including, without limitation, those matters
involving the exercise of discretion, provided that such delegation
shall be subject to revocation at any time by the Committee.
(c) To the maximum extent permitted by applicable law, no member of the
Committee shall be personally liable by reason of any contract or
other instrument executed by him or her in his or her capacity as a
member of the Committee, nor for any mistakes of judgment made in
good faith, and the Company shall indemnify and hold harmless,
directly from its own assets (including the proceeds of any
insurance policy the premiums of which are paid from the Company's
own assets), each member of the Committee and each officer, employee
or director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan or to the engagement or
control of the assets of the Plan may be delegated or allocated,
against any cost or expense (including counsel fees) or liability
including any sum paid in settlement of a claim with the approval of
the Company arising out of any act or omission to act in connection
with the Plan.
5.2 Amendment and Termination. The Plan may be amended, suspended or
terminated, in whole or in part, by the Board, but no such action shall
retroactively impair or otherwise adversely affect the rights of any
person to receive benefits under the Plan which have accrued prior to the
date of such action, as determined by the Committee; provided, however,
that the amount of any future contribution payable to or in respect of a
Participant may be reduced by the amount of any increase in the amount of
pension actually payable to the Participant or Beneficiary under the Basic
Plan due to any increases in benefits payable under the Basic Plan
(whether due to changes in Code Sections 401(a)(17) and 415 limitations or
otherwise) subsequent to the Participant's retirement. Anything in Section
4.4
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to the contrary notwithstanding, in the event of the termination of the
Plan, the Committee may direct that all Account balances be distributed in
the form of a lump sum distribution.
5.3 Company's Right to Discharge Employees. Nothing contained herein will
confer upon any Participant or other employee the right to be retained in
the employ of any Participating Company, nor will it interfere with the
right of any Participating Company to discharge or otherwise administer
the employment and termination of Participants and other employees without
regard to the existence of the Plan.
5.4 Discharge for Cause. Notwithstanding any other provisions contained in the
Plan, in the event of a Participant's Discharge for Cause, such
Participant and his or her Beneficiary shall forfeit all rights to any
payments under the Plan.
5.5 Sale of Company. Nothing in the Plan shall preclude the Company from
consolidating with or merging into or with, or transferring all or
substantially all its assets to, another corporation which assumes the
Plan and all obligations of the Company hereunder. Under such a
consolidation, merger, or transfer of assets and assumption, the term
"Company" shall refer to such other corporation and the Plan shall
continue in full force and effect.
5.6 Source of Payments. Participants have the status of general unsecured
creditors of the Company and the Plan constitutes a mere promise by the
Company to make benefit payments in the future from its general assets;
provided, however, that such payments shall be reduced by the amount of
any payments made to the Participant or his or her Beneficiary from any
trust or special or separate fund established by the Company to assure
such payments, and if the Company shall make any investments to aid it in
meeting its obligations hereunder, the Participant and his or her
Beneficiary shall have no right, title or interest whatever in or to any
such investments except as may otherwise be expressly provided in a
separate written instrument relating to such investments. Nothing
contained in the Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind between the
Company and any Participant or Beneficiary. By action of its Board of
Directors, any Participating Company may assume joint and several
liability with the Company with respect to any obligations under the Plan
for Participants employed by the Participating Company.
5.7 Withholding. The Company may withhold from any benefits payable under the
Plan all Federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
5.8 Expenses. All expenses incurred in administering the Plan will be paid by
the Company and none will be paid by the Participant.
5.9 Assignment. No interest of any Participant or Beneficiary hereunder shall
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors
of the Participant or the Participant's Beneficiary. The Plan shall be
binding upon and inure to the benefit of the Company and its successors
and assigns and the Participant, his or her Beneficiary and estate.
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5.10 ERISA Status of Plan. The Plan is intended to constitute an "unfunded plan
for management or other highly compensated individuals" as defined in the
Employee Retirement Income Security Act of 1974, as amended from time to
time ("ERISA"), and is subject to certain provisions of ERISA, including
certain requirements relating to reporting, disclosure, enforcement and
claims.
5.11 Applicable Law. The Plan shall be construed, regulated and administered
according to ERISA (to the extent applicable), the Code and the laws of
the State of New York.
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