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Exhibit 10.15
FOLKSAMERICA HOLDING COMPANY, INC.
Deferred Benefit Plan
(As Adopted August [ ],1997)
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FOLKSAMERICA HOLDING COMPANY, INC.
DEFERRED BENEFIT PLAN
INDEX
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ARTICLE DESCRIPTION PAGE
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I. PURPOSE OF PLAN ....................................................1
II. DEFINITIONS ........................................................1
III. ELIGIBILITY ........................................................4
IV. PARTICIPATION ......................................................4
V. GENERAL PROVISIONS .................................................5
VI. DEFERRED BENEFIT ACCOUNTS ..........................................6
VII. PARTICIPANTS' RIGHTS UNSECURED .....................................12
VIII PAYMENT OF DEFERRED RETIREMENT BENEFITS ............................12
IX. VALUATION DATE .....................................................15
X. DEATH OF PARTICIPANT ...............................................15
XI. ALIENATION .........................................................16
XII. TAX WITHHOLDING ....................................................16
XIII. CONSENT ............................................................17
XIV. SEVERABILITY .......................................................17
XV. AMENDMENT AND TERMINATION ..........................................17
XVI. CHANGE OF CONTROL ..................................................18
XVII. PLAN ADMINISTRATION ................................................19
</Table>
(i)
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Folksamerica Holding Company, Inc.
Deferred Benefit Plan
ARTICLE I
PURPOSE OF PLAN
1.1 The purpose of this Plan is to provide eligible Officers and Key
Employees of the Company and its subsidiaries with deferred retirement
benefits. The Plan is also intended to establish a method of attracting
and retaining persons whose abilities, experience and judgment can
contribute to the long-term strategic objectives of the Company.
1.2 The Committee intends that the Plan be an unfunded non-qualified
deferred compensation plan maintained primarily for the purpose of
providing deferred retirement benefits for a select group of management
or highly compensated employees of the Company and its subsidiaries, and
that contributions to the Plan shall be deductible by the Company
pursuant to Section 404(a)(5) of the Internal Revenue Code of 1986, as
amended (the "Code").
ARTICLE II
DEFINITIONS
As used in this Plan, the following terms shall have the meanings hereinafter
set forth:
2.1 "Base Salary" means the annual salary paid to the Company's Officers and
Key Employees which is paid bi-weekly (or other regular interval) during
the calendar year.
2.2 "Beneficiary" means any person(s) or legal entity(ies) designated by the
Participant or otherwise determined in accordance with ARTICLE V.
2.3 "Board of Directors" means the Board of Directors of the Company.
2.4 "Cash Incentive Bonus" means the Participant's portion (if any) of the
Company's annual cash bonus pool normally awarded by the Board of
Directors to the Company's employees shortly after the close of the
calendar year, which is the relevant time frame used to judge such
performance.
2.5 "Committee" means the Human Resources Committee as initially appointed
by the Board of Directors and as appointed from time to time by written
action of the Board of Directors.
2.6 "Company" means Folksamerica Holding Company, Inc., a Delaware
corporation, and certain of its wholly-owned
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affiliates as designated by the Committee or the Board of Directors from
time to time, and their successors and assigns.
2.7 "Compensation" means Base Salary and Cash Incentive Bonuses (also
overtime pay and military pay if applicable). Compensation specifically
excludes performance units, stock appreciation rights, performance
shares, restricted stock, warrants, stock options and other qualifying
remuneration paid or otherwise payable by the Company. All annual cash
bonuses are includible in Compensation in the year earned rather than
paid.
2.8 "Deferral Period" means the total aggregate period of time, expressed in
Plan Years, for which Deferred Retirement Benefits awarded for a
particular Plan Year are to be invested in the Plan and not yet deemed
payable to the Participant or his Beneficiary.
2.9 "Deferred Retirement Benefit" means the retirement benefit, expressed in
U.S. dollars, deferred pursuant to ARTICLE VI of this Plan.
2.10 "Deferred Benefit Account" means the individual account maintained under
the Plan for a Participant as determined under ARTICLE VI.
2.11 "Deferred Benefit Election Form" means the standardized election form
that each Participant must execute in accordance with ARTICLE IV, a copy
which is attached hereto as EXHIBIT # 1.
2.12 "Director" means a director of the Company who is not an employee of the
Company.
2.13 "Final Average Pay" means the highest average Compensation of an
employee for any five (5) consecutive years falling within the ten (10)
year period ending on the employee's service separation date.
2.14 "Investment Option" means an option made available to Participants
pursuant to ARTICLE VI.
2.15 "Investment Option Election" means a Participant election made pursuant
to ARTICLE VI.
2.16 "Key Employee" means any executive employee or other overtime-exempt
employee of the Company or any subsidiary which participates in the
Plan, that the Committee in its sole discretion decides is important to
the ongoing business objectives of the Company.
2.17 "Market Price of Share(s)" on any day means (i) if Shares are listed on
the New York Stock Exchange, the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange
or, if Shares are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which Shares are listed or admitted to
trading or, if Shares are not listed or admitted to trading on any
national securities exchange, the last quoted
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sale price or, if not so quoted, the average of the high bid and the low
asked prices in the over-the-counter market, as reported by NASDAQ or
such other system then in use, or, if on any such date Shares are not
quoted by any such organization, the average of the closing bid and
asked prices as furnished by one or more professional market makers
making a market in Shares and (ii) if Shares are not publicly held or so
listed or publicly traded, the fully diluted book value per Share as
determined by the Committee in accordance with United States generally
accepted accounting principles.
2.18 "Officer" means an officer of the Company or any subsidiary which
participates in the Plan, as defined in the Corporate Bylaws.
2.19 "Participant" for any Plan Year means an Officer or Key Employee of the
Company or any subsidiary which participates in the Plan, designated by
the Committee as eligible to participate in the Plan.
2.20 "Plan" means the Folksamerica Holding Company, Inc. Deferred Benefit
Plan as embodied herein and as amended from time to time.
2.21 "Plan Year" means the twelve (12) month calendar year beginning January
1 and ending December 31, or shorter period as the case may be in the
year the Plan is adopted or terminated.
2.22 "Share(s)" means a share(s) of Folksamerica Holding Company, Inc. Common
Stock ($.01 par value).
2.23 "Valuation Date" means the last business day of either a calendar year
or calendar quarter, as the Committee will determine from time to time.
2.24 CONSTRUCTION. The masculine pronoun shall be deemed to include the
feminine, and the singular number shall be deemed to include the plural
unless a different meaning is plainly required by the context.
ARTICLE III
ELIGIBILITY
Each Officer and Key Employee of the Company or any subsidiary which
participates in the Plan, shall be eligible to participate in the Plan if
selected by the Committee. The Committee has total discretion to determine who
is eligible to participate on a Plan Year by Plan Year basis.
ARTICLE IV
PARTICIPATION
4.1 ELECTION FORM. Subject to Sections 4.2 and 4.3, an eligible Officer or
Key Employee should make a valid election by executing and filing with
the Committee, before the commencement of such Plan Year, a DEFERRED
BENEFIT ELECTION FORM, a copy of which is attached hereto as EXHIBIT #
1.
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4.2 NEW EMPLOYEES. Notwithstanding Section 4.1, a newly hired Officer or Key
Employee who becomes a Participant after the first day of the current
Plan Year may file a Deferred Benefit Election Form within fifteen (15)
days after his initial date of employment with respect to the Deferred
Retirement Benefit calculated on Compensation not yet earned for the
remaining portion of the Plan Year.
4.3 DEFAULT ELECTIONS. If a Participant fails to file a timely Deferred
Benefit Election Form in accordance with either Section 4.1 or 4.2, such
Participant will forego all opportunity to make an Investment Option
Election (Section 6.11), a Payment Method Election (Section 8.2) and a
Payment Period Election (Section 8.3). Accordingly, failure to file a
timely Deferred Benefit Election Form for a particular Plan Year will
result in default elections being automatically triggered, which provide
that:
(i) the current Plan Year's calculated Deferred Retirement Benefit will
be invested solely in the Prime Rate Investment Option;
(ii) commencement of benefits will occur upon the first day of the Plan
Year following the Plan Year in which termination of employment (for any
reason) occurs; and
(iii) the sole method of benefit payment to the Participant will be a
lump sum.
4.4 ELECTION NOT REVOCABLE. Except as provided in Section 8.5, a Deferred
Benefit Election Form, once executed and filed with the Committee,
cannot be revoked for such current Plan Year's calculated Deferred
Retirement Benefit.
4.5 VESTING. A Participant will be vested in his entire Deferred Benefit
Account balance at all times and will not be subject to forfeiture for
any reason.
4.6 PARTICIPATION IN DEFERRED COMPENSATION PLAN NOT REQUIRED. A Participant
need not also participate in the Folksamerica Holding Company, Inc.
Voluntary Deferred Compensation Plan in order to participate in this
Plan for a particular Plan Year.
4.7 NEW ELECTIONS PERMITTED FOR EACH YEAR. All elections made on a Deferred
Benefit Election Form for a particular Plan Year have no effect on, nor
are affected by, elections made for future or past Plan Years. Each Plan
Year election stands on its own.
ARTICLE V
GENERAL PROVISIONS
5.1 NO RIGHT TO PAYMENT EXCEPT AS PROVIDED IN PLAN. No Participant or
Beneficiary shall have any right to any payment or benefit hereunder
except to the extent provided in the Plan.
5.2 EMPLOYMENT RIGHTS. The employment rights of any Participant shall not be
enlarged, guaranteed or affected by
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reason of the provisions of the Plan.
5.3 INITIAL PARTICIPATING COMPANIES. Currently, no subsidiary other than
Folksamerica Reinsurance Company is permitted to participate in the
Plan. However, the Committee can decide at a future date to allow
inclusion of a new or previously excluded subsidiary(ies).
5.4 RECIPIENT UNDER A DISABILITY. If the Committee determines that any
person to whom a payment is due hereunder is a minor, or is adjudicated
incompetent by reason of physical or mental disability, the Committee
shall have the power to cause the payments becoming due to such person
to be made to the legal guardian for the benefit of the minor or
incompetent, without responsibility of the Company or the Committee to
see to the application of such payment, unless prior to such payment
claim is made therefor by a duly appointed legal representative.
Payments made pursuant to such power shall operate as a complete
discharge of the Company and the Committee.
5.5 DESIGNATION OF BENEFICIARY. Each Participant may designate any person(s)
or legal entity(ies), including his estate, as his Beneficiary under the
Plan in writing to the Committee. A Participant may at any time revoke
or change his designation of Beneficiary by writing to the Committee. If
no person or legal entity shall be designated by a Participant as his
Beneficiary, or if no designated Beneficiary survives him, his estate
shall be his Beneficiary.
5.6 ELECTIONS. Any election made or notice given by a Participant pursuant
to the Plan shall be in writing to the Committee, or to such
representative as may be designated by the Committee for such purpose.
Notice shall be deemed to have been made or given on the date received
by the Committee or its designated representative.
5.7 CONTROLLING LAW. The validity of the Plan or any of its provisions shall
be determined under, and it shall be construed and administered
according to, the laws of the State of New York.
ARTICLE VI
DEFERRED BENEFIT ACCOUNTS
6.1 ACCOUNTS. Upon receipt of a Participant's valid Deferred Benefit
Election Form, the Committee shall establish, as a bookkeeping entry
only, a Deferred Benefit Account for such Participant. The Committee
shall thereafter record to each Participant's Deferred Benefit Account,
as of the last day of the previous Plan Year, the Deferred Retirement
Benefit amount calculated pursuant to Section 6.3.
6.2 ADJUSTMENTS TO ACCOUNTS. The balance in a Participant's Deferred Benefit
Account at any time will be calculated on a daily basis by: (i)
aggregating all current or prior Plan Year Deferred Retirement Benefit
amounts calculated pursuant to Section 6.3; (ii) adding (subtracting)
thereto the cumulative interest equivalent, whether positive or
negative, earned on such Deferred Retirement Benefit amounts computed in
accordance with the rules of Sections 6.4, 6.5 and 6.6, 6.7 and 6.8; and
(iii) from such total obtained, subtracting the aggregate payments made
to the Participant in current or prior Plan Years in accordance with
ARTICLE VIII and ARTICLE X.
6.4 INVESTMENT OF DEFERRED RETIREMENT BENEFITS. Deferred Retirement Benefit
amounts shall be "theoretically invested"
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6.3 DEFERRED RETIREMENT BENEFIT. A Participant's total Deferred Retirement
Benefit amount for the current Plan Year shall be the sum of the
following components, each of which is considered a separate Deferred
Retirement Benefit solely for purposes of a Participant making an
Investment Option Election pursuant to Section 6.11:
(i) six percent (6%) of a Participant's Base Salary determined as of the
beginning of a Plan Year, subject to an inflation adjusted, maximum
annual dollar amoun as published by the Internal Revenue Service for a
tax qualified plan commonly referred to as a 401(k) plan; and,
(ii) the excess of: (a) the lump sum present value equivalent of the
normal retirement benefit (i.e. a monthly annuity starting at age 65)
computed as of the end of the CURRENT Plan Year, over (b) the lump sum
present value equivalent of the normal retirement benefit computed as of
the end of the PRIOR Plan Year.
Solely for purposes of this Section 6.3(ii), the calculation of each
Plan Year's normal retirement benefit shall employ recognized actuarial
principles and such other reasonable assumptions deemed necessary by the
Committee to achieve the stated objective of providing each Participant
with a retirement benefit which approximates the benefit that a
Participant would have been entitled under the Folksamerica Holding
Company Retirement Plan, but assuming that the mandatory "Top Heavy"
rules (i.e., internal revenue Code Sections 401 and 415) and maximum
compensation limits imposed on all qualified plans do not exist.
6.3(a) PROSPECTIVE CATCH-UP ADJUSTMENT. In recognition of the fact that the
calculation of the Deferred Retirement Benefit for a particular Plan
Year is based on estimates made as of the beginning of a Plan Year as to
what a Participant's Compensation will be for an entire Plan Year, a
prospective catch-up adjustment, either positive or negative, shall be
made if a Participant's actual Compensation differs from ESTIMATED
Compensation. Accordingly, such difference will be considered an
additional Deferred Retirement Benefit or Detriment, as the case may be,
but will be taken into account solely in determining the Deferred
Retirement Benefit amount for the Plan Year following the Plan Year to
which the adjustment relates.
6.4 INVESTMENT OF DEFERRED RETIREMENT BENEFITS. Deferred Retirement Benefit
amounts shall be "theoretically invested" under any of the investment
Options described below, as elected by the Participant.
6.5 PRIME RATE INVESTMENT OPTION. Interest equivalents, equal to the product
of (i) the Daily Prime Rate and (ii) the portion of the Deferred Benefit
Account balance existing as of the end of the previous day in the Prime
Rate Investment Option, shall be credited each day to a Participant's
Deferred Benefit Account.
6.5(a) DAILY PRIME RATE. Expressed as a percentage, the "Daily Prime Rate" as
described in Section 6.5 will be calculated by dividing the "base rate"
of interest announced publicly by Citibank, N.A. in New York, N.Y. (or
the prime or base rate of another large commercial bank selected by the
Committee), as in effect on the last business day of each month, by 360.
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6.6 PHANTOM SHARE INVESTMENT OPTION. Interest equivalents shall be credited
to (subtracted from) amounts in the Phantom Share Investment Option on a
daily basis. Such daily interest equivalents shall be equal to the
product of (i) the aggregate number of Phantom Shares in a Participant's
Phantom Share Investment Option at the close of business on the
PRECEDING calendar day and (ii) an amount equal to (a) the Market Price
of Shares on the CURRENT calendar day, plus (b) dividends paid or
payable, as defined in Section 6.5(c), with respect to a single Share on
such CURRENT calendar day, minus (c) the Market Price of Shares on the
PRECEDING calendar day. For purposes of comparability, the above
calculation shall be adjusted for any stock splits or stock dividends
occurring during the current calendar day which affects the number of
Phantom Shares a Participant held on the PRECEDING calendar day.
6.6(a) PHANTOM SHARES GRANTED TO PARTICIPANT. Subject to the Phantom Share
Cumulative Dollar Limitation contained at Section 6.11(b), the number of
Phantom Shares granted to a Participant will be determined by dividing
the dollar amount of Deferred Retirement Benefit allocated to the
Phantom Share Investment Option by the Conversion Price. Such total
amount of Phantom Shares determined will then be rounded to the next
one-tenth (1/10) Phantom Share.
6.6(b) CONVERSION PRICE. The Conversion Price of Shares used to calculate the
number of Phantom Shares to be added to a Participant's Deferred Benefit
Account as of the beginning of a Plan Year will be the closing Market
Price of Shares at the end of the last business day of the immediately
preceding Plan Year.
6.6(c) DIVIDENDS REINVESTED IN PHANTOM SHARE INVESTMENT OPTION. For purposes of
Section 6.6, dividends "paid or payable" shall mean either in cash or
property, but shall exclude stock dividends or stock splits, as the case
may be. Further, dividends paid or declared payable on the preceding day
will be treated as automatically reinvested in Shares as of the end of
such day at the closing Market Price of Shares; provided the
Participant's account held Phantom Shares on the last day the Company
declares as the date stockholders of record are entitled to receive such
dividend on Shares (i.e. the "ex-dividend" date).
6.6(d) OTHER DILUTIVE AND ANTI-DILUTIVE TRANSACTIONS AFFECTING PHANTOM SHARES.
In addition to Section 6.6(c), and subject to other provisions in the
Plan, the Committee has the discretion to make appropriate adjustments
to a Participant's account invested in the Phantom Share Investment
Option where a "capital transaction" or "corporate reorganization" has
the affect of changing the economic equivalent number of Phantom Shares
that a Participant has been credited under this Plan. The Committee
shall make an adjustment to the portion of each Participant's Deferred
Benefit Account invested in the Phantom Share Investment Option so
affected (if any), either positive or negative as the case may be, to
ensure that neither unintended economic benefits nor detriments are
conferred on a Participant solely by reason of such capital transaction
or corporate reorganization.
6.6(e) CAPITAL TRANSACTION OR CORPORATE REORGANIZATION. Solely for purposes of
Section 6.6(d), a "capital transaction" or "corporate reorganization"
shall not be limited to its ordinary meaning if in fact a Participant
would be conferred an economic benefit or detriment by some other
corporate transaction which is not literally considered a capital
transaction or corporate reorganization under common business usage of
said terms.
6.7 EQUITY FUND INVESTMENT OPTION. Interest equivalents, equal to the
product of (i) the daily published total return for the
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Oakmark Fund and (ii) the Deferred Benefit Account balance existing as
of the end of the previous day in the Equity Fund Investment Option,
shall be credited each day to a Participant's Deferred Benefit Account.
6.8 FIXED-INCOME FUND INVESTMENT OPTION. Interest equivalents, equal to the
product of (i) the daily published total return for the PIMCo Total
Return Fund and (ii) the Deferred Benefit Account balance existing as of
the end of the previous day in the Fixed-Income Fund Investment Option,
shall be credited each day to a Participant's Deferred Benefit Account.
6.9 OTHER INVESTMENT OPTIONS. The Committee may make other Investment
Options available under the Plan from time to time. Earnings (loss)
shall be credited to (subtracted from) amounts invested in such other
Investment Options on a daily basis as determined by the Committee.
6.10 INVESTMENT OPTION ELECTION. Amounts invested in any Investment Option
may be transferred annually among any available Investment Options
(including a transfer to/from the Phantom Share Investment Option) in
accordance with procedures established by the Committee. Such transfer
election may be made only within the 10-business day period commencing
on the third business day following release of the Company's third
quarter financial information.
An Investment Option election shall remain in effect for future Deferred
Compensation (including amounts deferred in subsequent Plan Years)
unless and until a new Investment Option Election is filed with the
Committee.
6.11(a) INVESTMENT OPTION ALLOCATION. Subject to the Phantom Share Cumulative
Dollar Limitation contained at Section 6.11(b), each Participant can
elect to allocate each component of a Plan Year's total Deferred
Retirement Benefit among the available Investment Options as described
in Sections 6.5, 6.6, 6.7, 6.8 and 6.9.
6.11(b) PHANTOM SHARE CUMULATIVE DOLLAR LIMITATION. Notwithstanding a
Participant's ability to allocate Deferred Retirement Benefits for a
Plan Year among the available Investment Options, a Participant's
election to invest Deferred Retirement Benefits in the Phantom Share
Investment Option may be limited (either in whole or in part) as
described herein: (i) Without requiring authorization from the Board of
Directors, but subject to all other provisions in this Plan, a
Participant may continue to invest Deferred Retirement Benefits in the
Phantom Share Investment Option to the extent the portion of a
Participant's Deferred Benefit Account balance invested in the Phantom
Share Investment Option does not have a fair market value which exceeds
five million dollars ($5,000,000.00).
(ii) Unless authorized by the Board of Directors, a Participant is
precluded from investing additional Deferred Retirement Benefits in the
Phantom Share Investment Option if the portion of a Participant's
Deferred Benefit Account balance previously invested in the Phantom
Share Investment Option has a fair market value which exceeds five
million dollars ($5,000,000.00).
6.12 DELETION OF INVESTMENT OPTIONS. Except as provided in Section 15.2, the
Committee cannot delete or alter the terms of an existing Investment
Option without the written permission of those Participants affected by
such proposed amendment whose Deferred Retirement Benefits is invested
in such Investment Option.
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ARTICLE VII
PARTICIPANTS' RIGHTS UNSECURED
7.1 UNSECURED CREDITORS. Amounts credited to Deferred Benefit Accounts shall
be dealt with in all respects as working capital of the Company.
Therefore the right of a Participant to receive any distribution
hereunder shall be an unsecured claim against the general assets of the
Company.
7.2 NO ACTUAL INVESTMENT REQUIRED. Subject to ARTICLE XVI, no assets of the
Company shall in any way be held in trust for, or be subject to, any
prior claim by an Officer or a Key Employee or his Beneficiary under the
Plan. Further, neither the Company nor the Committee shall have any duty
whatsoever to invest any amounts credited to any Deferred Benefit
Accounts established under the Plan.
ARTICLE VIII
PAYMENT OF DEFERRED RETIREMENT BENEFITS
8.1 COMMENCEMENT OF BENEFITS. Subject to Sections 4.3 and 8.1(a), when, and
at the same time, an eligible Participant elects to invest Deferred
Retirement Benefits for any particular Plan Year, he shall also elect on
the Deferred Retirement Benefits Election Form to have the portion of
his Deferred Benefit Account balance attributable to such current Plan
Year commence to be paid on the first day of the Plan Year following the
Plan Year in which the EARLIER event occurs:
(i) upon separation from service due to either termination, normal
retirement, death or disability; or
(ii) upon the date such Participant attains a selected age.
8.1 (a) 365 DAY MINIMUM DEFERRAL PERIOD. Notwithstanding the time for the
commencement of benefits pursuant to Section 8.1, commencement of
benefits will not occur prior to the expiration of a 365 day period
beginning the day after the date on which a Deferred Retirement Benefit
is awarded as provided in this Plan.
(i) one lump sum on the benefit commencement date;
8.2 PAYMENT METHOD ELECTION. At the time the Deferred Benefit Election Form
is filed pursuant to ARTICLE IV, Participants must also elect the method
of receiving payment of their Deferred Benefit Account balance upon the
first day of the Plan Year following the expiration of the elected
Deferral Period. Each Participant shall elect to receive payment of his
account either in:
(ii) annual installments, with interest, over a specified period
(determined in accordance with Section 8.3), beginning on the
commencement date; or
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(iii) an annual installment/lump-sum combination where 25%, 50% or 75%
of the Deferred Benefit Account balance is paid in annual
installments over a specified period (determined in accordance
with Section 8.3), beginning on the commencement date, and the
remaining balance paid in lump-sum, with accrued interest, at the
end of the elected payment period.
8.2(a) INSTALLMENT PAYOUT FORMULA. It a Participant selects payment option (ii)
or (iii) of Section 8.2, the annual installment amount for a particular
Plan Year will be computed as follows:
$W = ($X / [Y SUB(yr) - Z SUB(yr)] )
Where $W = Installment amount paid to the Participant in a particular
Plan Year.
Where $X = The Participant's Deferred Benefit Account balance at end of
the prior Plan Year.
Where Y SUB(yr) = The number of years originally elected by the
Participant for the payment period.
Where Z SUB(yr) = The number of years in the elected payment period
already elapsed.
8.2(b) DEFERRAL ELECTION OVERRIDE. Notwithstanding anything contained herein to
the contrary, with respect to any deferral election effective for
Compensation earned after 1996, in the event that any amounts payable to
a Participant hereunder (when aggregated with any other remuneration)
would not be deductible by the Company as a result of Section 162(m) of
the Code, such amounts shall not be paid until the first Plan Year in
which the amount would be deductible under Section 162(m) of the Code.
8.3 PAYMENT PERIOD ELECTION. At the time an Eligible Participant elects to
be a Participant for any Plan Year, he shall concurrently elect on the
Deferred Benefit Election Form the number of years, up to a maximum of
fifteen (15), over which his Deferred Benefit Account shall be paid out
upon the expiration of the Deferral Period.
8.3(a) AUTOMATIC PAYMENT PERIOD OVERRIDE. Notwithstanding the Participant's
payment period election pursuant to Section 8.3, in the case of
termination for cause (Section 8.6) or death of the Participant (ARTICLE
X), such payment period election will be automatically changed to the
lump-sum option contained at Section 8.2(i).
8.4 PAYMENT DENOMINATION. All payments made to Participants shall be paid
solely in cash.
8.5 CHANGE OF PRIOR ELECTIONS. Subject to the consent of the Committee, a
Participant may file a request to change his prior election with respect
to the timing of commencement of benefits (Section 8.1), payment method
(Section 8.2) and/or payment period (Section 8.3). Such new election
must be filed with the Committee at least 365 days prior to the date on
which payment of benefits would commence under either the original or
the revised election. Only one such request will be approved with
respect to any Participant.
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8.6 TERMINATION FOR CAUSE. Notwithstanding the payment period election made
under Section 8.3, if a Participant is terminated for cause as
determined by the Committee, payment of the entire amount remaining in
his Deferred Benefit Account for all Plan Years shall be made in one
lump sum on the first day after the end of the Plan Year in which
termination occurred. Termination for cause shall include gross
negligence, willful misconduct and fraud against the Company or any of
its subsidiaries.
8.7 HARDSHIP WITHDRAWAL. Upon application of any Participant and approval
thereof by the Committee, the Participant may withdraw, by reason of
hardship, part or all of his Deferred Benefit Account. "Hardship" shall
mean an unanticipated emergency situation in the Participant's financial
affairs beyond the Participant's control, including illness or an
accident involving the Participant, his dependents or other members of
his family, or other significant financial emergency, as determined by
the Committee in its sole discretion.
8.8 ACCRUED INTEREST PERIOD. For purposes of determining the benefits to be
paid to Participants under ARTICLES VIII and X, interest on such
Deferred Benefit Account balance will continue to accrue through the end
of November in the Plan Year prior to the Plan Year in which payment of
benefits will be made. Interest for the month of December in the Plan
Year prior to the Plan Year in which payment of benefits will be made is
calculated by using the following formula:
[$X x Y%]x30= $Z
Where $X = Participant's Deferred Benefit Account balance at November
30th.
Where Y% = Daily Prime Rate (see Section 6.5(a)) in effect on November
30th.
Where $Z = Additional accrued interest due Participant for the month of
December.
ARTICLE IX
VALUATION DATE
9.1 VALUATION. On each Valuation Date, the Deferred Benefit Account balance
of each Participant shall be valued by the Committee. The current value,
and the change in value from the prior Valuation Date (whether positive
or negative), shall be communicated in writing to each Participant
within forty-five (45) days after such Valuation Date.
9.2 VALUATION DATES. A Valuation Date shall, at a minimum, be four times
during a Plan Year ending on each of the quarterly periods March 31,
June 30, September 30 and December 31.
ARTICLE X
DEATH OF PARTICIPANT
Notwithstanding the payment period election made under Section 8.3, a
Participant's estate or designated Beneficiary
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shall be paid the value of his Deferred Benefit Account in one lump sum on the
first day after the end of the Plan Year in which his death occurred. Interest
on such balance shall be determined in accordance with the rules contained in
Section 8.8.
ARTICLE XI
ALIENATION
Other than as provided in ARTICLE X, anticipation, alienation, sale, transfer,
assignment, pledge or other encumbrance of any payments or benefits under the
Plan shall not be permitted or recognized, and to the extent permitted by law,
no such payments or benefits shall be subject to legal process or attachment for
the payment of any claim of any person entitled to receive the same.
ARTICLE XII
TAX WITHHOLDING
12.1 WITHHOLDING. Subject to Sections 12.2 and 12.3, the Company shall deduct
from all payments under the Plan each Participant's share of any taxes
required to be withheld by any Federal, state or local government. The
Participants and their Beneficiaries, distributees and personal
representatives will bear any and all Federal, FOREIGN, STATE, LOCAL
INCOME TAXES OR ANY OTHER TAXES IMPOSED ON PARTICIPANTS ON AMOUNTS UNDER
THIS PLAN.
12.2 FICA TAXES. Pursuant to Code Section 3121(v), Compensation deferred
pursuant to the Plan is subject to FICA withholding at the time of
deferral rather than at the time of distribution to the Participant.
Accordingly, each Participant who has not yet reached the maximum
compensation levels subject to FICA withholding at the time Compensation
is deferred herein will be required to pay (by payroll deduction or
check) to the Company his share of FICA taxes then due and payable.
12.3 TAXES DUE AT DEFERRAL DATE OTHER THAN FICA TAXES. If any of the taxes
referred to in Section 12.1 are due at the time of deferral, instead of
at the time of payout, the Participant will be required to pay (by
payroll deduction or check) to the Company the Participant's share of
any such taxes then due and payable.
ARTICLE XIII
CONSENT
By electing to become a Participant, each Officer and Key Employee shall
be deemed conclusively to have accepted and consented to all terms of
the Plan and all actions or decisions made by the Company, the Board or
the Committee with regard to the Plan. Such terms and consent shall also
apply to, and be binding upon, the Beneficiaries, distributees and
personal representatives and other successors in interest of each
Participant.
ARTICLE XIV
SEVERABILITY
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In the event any provision of the Plan would serve to invalidate the
Plan, that provision shall be deemed to be null and void, and the Plan
shall be construed as if it did not contain the particular provision
that would make it invalid.
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 BOARD MAY AMEND OR TERMINATE. Subject to Sections 15.2 and 15.3, the
Board of Directors, may at any time modify or amend any or ail of the
provisions of the Plan or may at any time terminate the Plan.
15.2 (i) INVESTMENT OPTIONS. Notwithstanding Section 15.1, the Board of
Directors cannot delete or alter the terms of the Investment Options,
contained herein at Sections 6.5, 6.6, 6.7, 6.8 and6.9, without the
written permission of those Participants whose Deferred Benefit Account
is invested in such Investment Option(s) who would be affected by such
proposed amendment. However, nothing contained herein shall prevent the
Board Directors from substituting a new investment option for the
Phantom Share Investment Option if the common stock of the Company
(currently Shares) is not publicly traded on a nationally recognized
stock exchange. In the event of such an occurrence, the Board of
Directors shall have the sole authority to substitute a new Investment
Option and allow only those Participants affected to transfer their
Phantom Share account balance to another Investment Option if the
substituted Investment Option is not acceptable to the particular
Participant.
(ii) FIDUCIARY GUIDELINES. Notwithstanding Section 15.1 and Section
15.2(i), the Board of Directors will not make amendments to or terminate
the Plan if such amendments or termination would reduce a Participant's
balance in his Deferred Benefit Account. Further, the Board of Directors
will not make amendments which would in any way eliminate the express
requirement in Section 16.1 requiring the establishment of a Rabbi Trust
in the event of a Change of Control if one has not previously been
established.
15.3 TERMINATION. In the event of termination of the Plan, the Committee
shall give written notice to each Participant that the entire balance in
his Deferred Benefit Account will be distributed in the manner initially
elected by each Participant pursuant to ARTICLE VIII. Further, pursuant
to the responsibility vested with the Committee as stated in Section
17.1, the Committee will evaluate the advisability of establishing a
Rabbi Trust, if one does not already exist, in light of the
circumstances that caused the Board of Directors to terminate the Plan.
ARTICLE XVI
CHANGE OF CONTROL
16.1 FUNDING OF TRUST. Notwithstanding ARTICLE VII, upon a "Change of
Control" as defined in Section 16.2, the Board of Directors is required
to cause the immediate contribution of funds to a trust, if not
previously established (i.e. "Rabbi Trust" established in accordance
with Rev. Proc. 92-64 (or any successor) or other funding mechanism
approved by the Internal Revenue Service which would not result in Plan
Participants being in constructive receipt of income), for the benefit
of each Plan Participant, as beneficiary. The assets of such trust shall
at all times be subject to the claims of general creditors of the
Company. Such contribution will be equal to the balance in each
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Participant's Deferred Benefit Account as of the Change of Control date.
Further, if the Plan is not terminated upon such Change of Control, the
Company will continue to contribute to the trust, on an annual basis, an
amount of cash equal to the Deferred Retirement Benefit awarded to each
Participant after the Change of Control.
16.2 CHANGE OF CONTROL. For purposes of this Plan, a "Change of Control"
shall occur if:
(i) any person or group (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934), other than Fund
American Enterprises Holdings, Inc. (through its affiliate White
Mountains Holdings, Inc.), Folksam Mutual General Insurance
Company, Wiener Staedtische Allgemeine Versicherung, P & V
Assurances S.C., Forsikringsaktieselskapet Samvirke or the
Company, becomes the beneficial owner (within the meaning of Rule
13d-3 under such Exchange Act) of fifty percent (50%) or more of
the Company's then outstanding Shares;
(ii) as defined in Section 16.3, the "Incumbent Board of Directors",
cease to constitute a majority of the Board of Directors of the
Company; or
(iii) the business of the Company for which the Participant's services
are principally performed is disposed of by the Company pursuant
to a sale or other disposition of all or substantially all of the
business or business related assets of the Company (including
stock of a subsidiary of the Company).
16.3 INCUMBENT BOARD OF DIRECTORS. Incumbent Board of Directors shall mean
those individuals who, as of January 1, 1997, constituted the Board of
Directors or, alternatively, those members elected or nominated after
January 1, 1997, who were approved for such election or nomination by a
vote of at least a majority of the directors then comprising the
Incumbent Board of Directors. Further, individuals shall be excluded
whose initial assumption of office is or was in connection with an
actual or threatened election contest relating to the election of the
directors of the Company (as used in rule 14a-11 under the Securities
Exchange Act of 1934).
ARTICLE XVII
PLAN ADMINISTRATION
17.1 COMMITTEE. The general administration of the Plan, the decision to
establish a trust and the responsibility for carrying out its provisions
shall be placed in the Committee.
17.2 DETERMINATIONS OF THE COMMITTEE. Subject to the limitations of the Plan,
the Committee shall from time to time establish rules for the
administration and interpretation of the Plan and the transaction of its
business. The determination of the Committee as to any disputed question
shall be conclusive.
17.3 MAJORITY VOTE. Any act which the Plan authorizes or requires the
Committee to do may be done by a majority (expressed from time to time
by a vote at a meeting or in writing without a meeting) and shall
constitute the action of the Committee, and shall have the same effect
for all purposes as if assented to by all members of the Committee.
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17.4 AUTHORIZATION OF COMMITTEE MEMBERS. The members of the Committee may
authorize one or more of their number to execute or deliver any
instrument, make any payment, or perform any other act which the Plan
authorizes or requires the Committee to do.
17.5 AGENTS. The Committee may employ or retain agents to perform such
clerical, accounting, and other services as it may require in carrying
out the provisions of the Plan.
17.6 Any and all such costs in administering this Plan will be paid and
incurred by the Company.
17.7 NOTICES. All written notices or elections as required herein shall be
sent either by U.S. mail, overnight carrier service or personal delivery
to the address below:
Folksamerica Holding Company, Inc..
ONE LIBERTY PLAZA, 19TH FLOOR
New York, NY 10006
Attention:[ ]
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EXHIBIT # 1
FOLKSAMERICA HOLDING COMPANY, INC.
DEFERRED BENEFIT PLAN ELECTION FORM
Participant Name:_________________________________ Soc. Sec. #:_________
Primary Beneficiary Name(s):_______________________ Relationship:
Contingent Beneficiary Name(s);____________________ Relationship:_______________
I. FUTURE COMPENSATION DEFERRAL ELECTION
This election is made pursuant to Article IV of the FOLKSAMERICA
HOLDING COMPANY, INC. DEFERRED BENEFIT PLAN (the 'Plan'), effective August (1.
1997. Effective for the 1997 Plan Year (1/1/97 to 12/31/97), the Participant
irrevocably consents to defer the following type(s) of compensation which would
otherwise be payable to the Participant in the amount(s) disclosed herein:
<Table>
<Caption>
Allocated To The Following:
% To % To % To PIMCo % To OakMark
Type Of Compensation Deferred Prime Rate Phantom Share Bond Fund Equity Fund
- ----------------------------- ---------- ------------- ---------- ------------
1 1996/1997 Pension Benefit
2. Other:
</Table>
EMPLOYEE NOTES & INSTRUCTIONS
________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
II. SIGNIFICANT PLAN LIMITATIONS
1 Participants cannot take cash up front in lieu of amounts being contributed
into the Plan.
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2 An Estimate of the annual Pension Benefit will be contributed to the Plan as
of the end of each Plan Year. Also at the end of the Plan year a corresponding
correction or "true-up' will be made (either plus or minus) without also
retroactively correcting any investment earnings earned during the Plan year on
such estimated contribution.
3. If a Participant separates from service due to death or termination for cause
(as defined in the Plan), a lump-sum distribution will be made notwithstanding
an alternative payment method and period selected by the Participant in Part IV
below.
4. Percentages must be in 10% increments.
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III. COMPENSATION DEFERRAL PERIOD ELECTION
The Participant hereby elects to defer the receipt of such compensation
(including interest credited during the deferral period) until the first day of
the Plan Year (the 'commencement date') following the Plan Year in which the
EARLIER of the following events occur:
1) separation from service from Folksamerica Holding Company, Inc. or its
subsidiaries due to retirement, death, termination or disability; or
2) attaining the age of________, (see note) selected by the Participant.
NOTE: Benefits credited in 1997 will commence payout no earlier than January 1,
1999.
IV. PAYMENT PERIOD & PAYMENT METHOD ELECTIONS
Participant understands that payment of the deferred compensation account
balance can be received: option #1) in one lump-sum on the commencement date:
option #2) in annual installments, with interest, over a maximum 15 year period
beginning on the commencement date (i.e. 1/15th of account balance is paid out
in the first year, 1/14th of remaining balance is paid out in the second year,
1/13th is paid out in the third year, etc.); or option #3) in a lump-sum/annual
installment combination where 25%, 50% or 75% is paid out in annual
installments, with interest, over a maximum 15 year period beginning on the
commencement date using the same payout formula as in option #2 (i.e. 1/15th,
1/14th, 1/13th, etc.) with the balance, with interest, paid out in-lump-sum at
the end of the payment period so elected.
Participant hereby elects option #______________(either 1, 2 or 3) over
__________ years (max. of 15); with____________% (either 25%, 50% or 75%) paid
out in annual installments; with the residual balance paid out in lump sum at
the end of the payout period.
V. PARTICIPANT ACKNOWLEDGMENT
Upon the execution of this election form, the Participant hereby acknowledges
receipt of a copy of the Plan, and more importantly, understands the rules and
restrictions contained in the Plan which effect the Participant's rights to
control over such amounts elected to be deferred herein.
PARTICIPANT SIGNATURE:______________________________Date:__________________
ACKNOWLEDGED BY:____________________________________Date:__________________
PLEASE RETURN THIS FORM TO THE PERSON BELOW:
Folksamerica Holding Company, Inc.
One Liberty Plaza, 19'h Floor
New York, NY 10006
Attention: [ ]