Exhibit 10.1

 

 

 

Argo Group International Holdings, Ltd.

Deferred Compensation Plan for Non-Employee Directors

Effective February 12, 2008

 

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CONTENTS

 

ARTICLE       PAGE

ARTICLE I

   References, Construction and Definitions    1

ARTICLE II

   Administration    4

ARTICLE III

   Participation    5

ARTICLE IV

  

Awards, Deferrals and Matching Contributions

   5

ARTICLE V

   Investments and Funding of Benefit Payments    6

ARTICLE VI

   Deferred Compensation Accounts    6

ARTICLE VII

   Distributions from the Plan    7

ARTICLE VIII

   Participant Rights    8

ARTICLE IX

   Miscellaneous    9

 

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ARGO GROUP AMENDED AND RESTATED DEFERRED COMPENSATION PLAN

FOR NON-EMPLOYEE DIRECTORS

Effective February 12, 2008

The purpose of this Plan is to provide certain deferred compensation benefits to
non-employee members of the board of directors of Argo Group International
Holdings, Ltd. (the “Company”). The Plan and benefits provided under the Plan
are intended to be in compliance with the requirements of Section 409A of the
Code. This Plan shall be deemed an unfunded promise to pay and the rights of any
Participant or Beneficiary to benefits under this Plan shall, at all times, be
no more than that of a general and unsecured creditor of the Company.

ARTICLE I

References, Construction and Definitions

This Plan and any other documents created under this Plan are intended to be
understood by Participants. Words used in this Plan, other than as specifically
defined in this Article I, have the meaning their context dictates. If, however,
a situation arises in which an undefined word has more that one meaning, the
ambiguity shall be resolved by the Plan Administrator, pursuant to its power
under Article II.

Unless otherwise indicated, all references made in this Plan shall be to
articles and sections contained in this Plan. The headings and subheadings have
been inserted for convenience of reference only and are to be ignored in
construction of the provisions of this Plan. In the construction of this Plan,
the singular shall include the plural wherever appropriate.

The following terms (in alphabetical order) shall have the meanings set forth
opposite such terms for purposes of this Plan:

 

1.01 Advisory Committee: A group of one or more individuals appointed by the
Company to perform the duties of the Plan Administrator, in accordance with the
terms of the Plan.

 

1.02 Beneficiary: the Spouse of the Participant as of the Participant’s date of
death or, if so named, any other person or legal entity designated by the
Participant in the Participant’s Enrollment Form. If a Participant fails to
designate a Beneficiary on an Enrollment Form or each of the Participant’s
designated Beneficiaries die before benefits become payable under this Plan,
then such Participant’s Beneficiary shall be the Participant’s estate.

 

1.03

Benefit Payment: a payment made to a Participant or Beneficiary triggered by a
Distribution Event under this Plan equal to the sum of (a) the market value of a
Participant’s Stock Unit Account determined by reference to the closing price of
the Company’s stock on the national stock exchange on which such stock is listed
as of the date of the Distribution Event or as of the date that is exactly six
(6) months after the date of the Distribution Event, whichever is higher,
(b) the principal value of the Cash Compensation Account as of the date of the
Distribution Event, and (c) interest as provided in Section 6.04 below on the
principal value contained in the Cash

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Compensation Account accrued from the date of the Distribution Event through the
date on which payment is made by the Plan Administrator.

 

1.04 Board: The Board of Directors of the Company.

 

1.05 Cash Compensation Account: An account balance shown on a separate
bookkeeping record which reflects the amount of cash compensation deferred by
each Participant that may become payable to a Participant or Beneficiary under
this Plan. The Account shall be a bookkeeping entry only and shall be utilized
solely as a devise to measure and determine the amount of any Benefit Payment to
the Participant or Beneficiary upon the occurrence of a Distribution Event.

 

1.06 Change in Control: The earliest of the following to occur:

 

  (a) The date that any one person or group (as that term is defined in Treasury
Regulation Section 1.409A-3(i)(5)(v)(B)) (“Group”), acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or Group) ownership of stock of the Company possessing 30% or more
of the total voting power of the stock of the Company; provided that if any one
person or Group is considered to effectively control the Company, the
acquisition of additional control of the Company by the same person or Group is
not considered to cause a Change in Control of the Company;

 

  (b) The date that any one person or Group acquires ownership of the stock of
the Company that, together with stock held by such person or Group, constitutes
more than 50% of the total fair market value or total voting power of the stock
of the Company; provided that if any one person or Group is considered to own
more than 50% of the total fair market value or total voting power of the
Company, the acquisition of additional control of the Company by the same person
or Group is not considered to cause a Change in Control of the Company; provided
further that this part (b) applies only when there is a transfer or issuance of
stock of the Company and the Company’s stock remains outstanding after the
transaction;

 

  (c) The date that a majority of the members of the Board of Directors of the
Company is replaced during any 12-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Board of Directors
of the Company; or

 

  (d) The date that any one person or Group acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person
or Group) assets from the Company that have a total “gross fair market value”
equal to or more than 40% of the total gross fair market value of all of the
assets of the Company immediately before such acquisition or acquisitions;
provided that a transfer of assets by the Company to a related person, as
described in Treasury Regulation Section 1.409A-3(i)(5)(vii)(B), is not
considered to cause a Change in Control of the Company. For this purpose, “gross
fair market value” means the value of the assets of the Company, or the assets
being disposed of, determined without regard to any liabilities associated with
such assets.

 

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       Notwithstanding anything contained herein to the contrary, it is intended
that there will be a Change in Control under this Plan only to the extent such
event or transaction would constitute a “change in control event” as such term
is defined in Treasury Regulation Section 1.409A-3(i)(5), and thus the
provisions of the definition of Change in Control shall be applied and
interpreted in a manner consistent with the provisions of such Treasury
Regulation, as amended from time to time.

 

1.07 Code: the Internal Revenue Code, as amended.

 

1.08 Company: Argo Group International Holdings, Ltd.

 

1.09 Deferred Compensation: the amount of compensation not yet earned which is
awarded to the Participant and which the Participant and the Company agree shall
be deferred in accordance with the Plan.

 

1.10 Distribution Event: the occurrence of an event set out in Section VII below
which entitles a Participant or Beneficiary to a Benefit Payment.

 

1.11 Effective Date: February 12, 2008.

 

1.12 Enrollment Form: the form made available by the Plan Administrator for each
Participant to acknowledge and accept participation in this Plan, defer fees,
and to designate a Beneficiary

 

1.13 ERISA: the Employee Retirement Income Security Act of 1974, as amended.

 

1.14 Participant: a non-employee member of the Board of Directors of the
Company. Each non-employee Board member, as of the Effective Date, shall be
deemed a Participant.

 

1.15 Plan: The Argo Group International Holdings, Ltd. Deferred Compensation
Plan for Non-Employee Directors, as may be amended from time to time.

 

1.16 Plan Administrator: The Company shall be the Plan Administrator. However,
certain individuals may be appointed to the Advisory Board pursuant to
Section 2.01 to perform the duties of Plan Administrator.

 

1.17 Plan Year: the 12-consecutive month period commencing January 1st of each
year and ending the following December 31st. The first Plan year shall be a
short plan year, beginning February 12, 2008 and ending December 31, 2008.

 

1.18 Spouse: the individual to whom the Participant is legally married as of the
date the Participant terminates services as a member of the Board.

 

1.19

Stock Units: bookkeeping entry units which mirror Company stock in value and are
awarded to Participants pursuant to the terms of the Plan. The value of Stock
Units shall fluctuate on an equal basis with the Company’s common stock based
upon the market price of the Company’s common stock on the national stock
exchange on which such stock is listed. Dividends awarded on Company common
stock shall be treated as awarded on Stock Units on an equal basis. The value of
such dividends shall be

 

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converted into additional Stock Units (in the method described above) as of the
date such dividends are declared.

 

1.20 Stock Unit Account: An account balance shown on a separate bookkeeping
record, reflecting an accumulation of Stock Units for each Participant that may
become payable to a Participant or Beneficiary under this Plan. The Account
shall be a bookkeeping entry only and shall be utilized solely as a device to
measure and determine the amount of any Benefit Payment to the Participant or
Beneficiary upon the occurrence of a Distribution Event.

 

1.21 Termination With Cause: Termination of the Participant’s service as a
member of the Board as a result of the Participant’s dishonesty, wrongful
conduct, or willful malfeasance. Such conduct may include theft, fraud or any
act that reflects negatively on the Board, Company and/or the Company’s
employees, Advisory Committee, shareholders, or any affiliate, as determined by
the Plan Administrator in its sole and absolute discretion.

 

1.22 Total Disability: any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months and that renders the
participant unable to engage in any substantial gainful activity.

ARTICLE II

Administration

 

2.01 Plan Administrator. The Company shall be the Plan Administrator and named
fiduciary of this Plan for purposes of ERISA. To perform its duties as Plan
Administrator, however, the Company may appoint one or more individuals to the
Advisory Committee to perform the duties of the Plan Administrator. Any
individual appointed to the position of Advisory Committee Member shall not be
permitted to participate in this Plan.

 

2.02 Duties and Powers. It shall be the principal duty of the Plan Administrator
to see that the Plan is carried out in accordance with its terms. The
performance of this duty may be accomplished by, but is not limited to, the
following actions:

 

  (a) The Plan Administrator may exercise any and all powers necessary to
fulfill all responsibilities under the Plan.

 

  (b) The Plan Administrator may seek advice from others in exercising its
duties under the Plan. Individuals providing such advice to the Plan
Administrator shall not be deemed to serve in an official capacity and,
therefore, will not be disqualified from participating in the Plan.

 

  (c) The Plan Administrator shall interpret the Plan and establish such rules
and documentation as deemed reasonable, necessary and proper to implement any
and all purposes of the Plan.

 

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  (d) Any decision made, or action taken, by the Plan Administrator arising out
of or in connection with the interpretation and administration of the Plan shall
be in the Plan Administrator’s sole discretion, except as expressly limited by
this Plan, and shall be final and conclusive in all cases.

 

  (e) The Plan Administrator may correct any defect, supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent deemed
necessary.

ARTICLE III

Participation

 

3.01 Eligibility. All non-employee members of the Board are eligible participate
in the Plan.

 

3.02 Continued Participation. A Participant shall remain a Participant until the
earlier of the Participant’s Total Disability, retirement, death, or termination
of services as a member of the Board.

 

3.03 Agreement. A Participant’s acceptance of the terms and conditions of this
Plan shall be evidenced by the Enrollment Form executed by the Participant and
the Plan Administrator. Such Enrollment Form shall incorporate the provisions of
this Plan by reference and shall be considered part of this Plan.

ARTICLE IV

Awards, Deferrals and Matching Contributions

 

4.01 Awards. The Compensation Committee, at its discretion, may provide non-cash
compensation awards to Participants, which shall be credited to each individual
Participant’s Account in the form of Stock Units as of the date such award is
granted, (“Awards”).

 

4.02 Deferral Contributions. A Participant may defer all or part of the
Participant’s anticipated cash compensation for service as a member of the Board
within the limitations described in this Article IV. Such deferrals must be made
in writing, in accordance with the requirements of the Enrollment Form, prior to
the beginning of any Plan Year during which such cash compensation is
anticipated to be earned or within thirty (30) days after becoming a Participant
in the Plan, and such election shall be irrevocable for the applicable Plan
Year.

 

4.03 Deferral Amounts. A Participant may defer either fifty percent (50%) or one
hundred percent (100%) of the Participant’s anticipated cash compensation for
service as a Director each Plan Year; provided, however, that any deferral
election shall apply only to compensation for services rendered as a Director
subsequent to the date on which a deferral election is made.

 

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4.04 Matching Contributions. The Company shall grant a matching Award equal to
75% on all cash compensation deferred. The Award shall be converted into Stock
Units (on an equal basis with Company common stock) based upon the fair market
value of the Company’s common stock on the date the deferral amount would
otherwise have been earned as determined by the closing price of the stock on
the national stock exchange on which the stock is listed.

ARTICLE V

Investments and Funding of Benefit Payments

 

5.01 Source of Distributions. All distributions under this Plan shall be made by
the Company in cash.

 

5.02 Company Assets. The Company, at its discretion, may acquire assets in
connection with its liabilities assumed under this Plan. Such assets, if any,
acquired or held to pay benefits under the Plan shall not be deemed to be held
for the benefit of any Participant or Beneficiary, except to the extent that
such assets are restricted under the terms of a trust created to hold such
assets. To the extent any assets are held by the Company in a separate fund or
trust in connection with its liabilities assumed under this Plan, such assets
shall continue to be subject to the Company’s creditors in the event of
bankruptcy or insolvency of the Company. All assets acquired or held in
connection with the Company’s liabilities under this Plan shall remain the sole
property of the Company and part of the unpledged and unrestricted general
assets of the Company, subject only to the claims of the Employer’s general
creditors. In no event shall any Participant or Beneficiary have a greater
interest or status than that of a general and unsecured creditor as to any
assets of the Company in connection with this Plan.

 

5.03 Investment Risk. The Company, its officers, directors and employees shall
not be liable to any Participant or Beneficiary for any loss on the value to
Stock Units because of changes in market value, regardless if such market value
change is the result of action (or inaction) taken by the Company, its officers,
directors or employees.

ARTICLE VI

Deferred Compensation Accounts

 

6.01 Status of Accounts. Stock Unit Accounts and Cash Compensation Accounts
shall be established via booking entries only. The Participant shall be a
general creditor of the Company and shall not have a vested interest, a secured
position or a preferred position as to the amounts shown in such accounts. No
account established under this Plan shall be construed to be a trust account for
any Participant or Beneficiary.

 

6.02 Opening Balance of Stock Unit Account: Each Participant’s Stock Unit
account shall be credited with an initial balance of 1,650 Stock Units.

 

6.03 Value of Stock Unit Account. At any specific date the value of a
Participant’s Stock Unit Account shall be equal to the hypothetical market value
of the Stock Units recorded therein using the closing price of the Company’s
stock on the national stock exchange on which such stock is listed.

 

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6.04 Interest. All amounts recorded in the Cash Compensation Account shall be
credited with bookkeeping entries for interest, compounded annually, earned at a
rate two (2) percent above the prime commercial lending rate published in the
Wall Street Journal on such date or the last preceding business day, first using
the rate in effect on the date the Plan was adopted and using the prime rate in
effect on May 1 each year thereafter.

 

6.05 Non-Assignability of Accounts.

 

  (a) The interests of the Participant in the Stock Unit Account or the Cash
Compensation Account shall not be assignable or otherwise available to the
Participant until actually paid to the Participant or Beneficiary following a
Distribution Event under this Plan.

 

  (b) The interests of the Participant in the Stock Unit Account and Cash
Compensation Account shall not be subject to the rights of creditors of the
Participant and shall be exempt from execution, attachment and all other legal
or equitable process of such creditors.

ARTICLE VII

Distributions from the Plan

 

7.01 Distribution Events. A Participant or Beneficiary under this Plan shall be
eligible to receive a Benefit Payment under this Plan only upon the occurrence
of a Distribution Event, which shall be deemed to occur on:

 

  (a) The date on which a Participant ceases to be a member of the Board due to
the Participant’s retirement and such cessation of membership constitutes a
“separation from service” within the meaning of Section 409A of the Code.

 

  (b) The date on which a Participant ceases to be a member of the Board due to
death or Total Disability.

 

  (c) The date on which a Participant ceases to be a member of the Board for any
reason other than for death, retirement, Total Disability or Termination with
Cause and such cessation of membership constitutes a “separation from service”
within the meaning of Section 409A of the Code;

 

  (d) The date on which a Change in Control becomes effective.

 

7.02 Benefit Payments.

 

  (a)

Upon Retirement or Termination Without Cause. Upon the occurrence of a
Distribution Event due to retirement or because the Participant ceases to be a
member of the Board for any reason other than for retirement, death, Total
Disability or Termination with Cause, the Plan Administrator shall distribute
the

 

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resulting Benefit Payment to the Participant or the Participant’s Beneficiary as
soon as administratively possible following the date which is six (6) months
(the “Six (6) Month Date”) after the date of the Distribution Event and in no
event later than December 31 of the calendar year in which the Six (6) Month
Date occurs.

 

  (b) Upon Death or Total Disability. Upon the occurrence of a Distribution
Event due to death or Total Disability, the Plan Administrator shall distribute
the resulting Benefit Payment to the Participant or Participant’s Beneficiary as
soon as administratively possible immediately following the date of
Participant’s death or Total Disability and in no event later than December 31
of the calendar year in which such date occurs.

 

  (c) Change of Control. Upon the occurrence of a Distribution Event relating to
a Change of Control, the Plan Administrator shall distribute the resulting
Benefit Payment to the Participant or Participant’s Beneficiary as soon as
administratively possible following the Six (6) Month Date after the date of the
Distribution Event and in no event later than December 31 of the calendar year
in which the Six (6) Month Date occurs.

 

7.03 Termination With Cause. If a Participant ceases to be a member of the Board
as a result of Termination With Cause, then the Participant’s participation in
this Plan shall terminate automatically as of the date the Participant ceases to
be a member of the Board, and the Participant shall not be entitled to any
Benefit Payment under this Plan.

 

7.04 Mental or Legal Incompetence. The Company, in its sole discretion, may make
a Benefit Payment to the guardian or other legal representative of a Participant
or Beneficiary, if the Participant or Beneficiary is determined by a court of
proper jurisdiction to be mentally or legally incompetent to receive such
benefit distribution. Any such distribution shall be in full and complete
satisfaction of all claims whatsoever by or on behalf of such Participant under
this Plan against the Company, the Plan Administrator, any member of the Board,
other Participants, shareholders of the Company, and any other person acting on
behalf such persons or the Company.

ARTICLE VIII

Participant Rights

 

8.01 Rights to Benefits. The rights and status of a Participant or Beneficiary
to the distribution of benefits or the payment of amounts under this Plan shall
be the same as the rights and status of any other general and unsecured creditor
of the Company. If the Company segregates assets in a separate fund or trust for
the payment of amounts under this Plan, such fund or trust does not create in
any Participant or Beneficiary a greater interest or status than that of a
general and unsecured creditor.

 

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8.02 Director Rights. No member of the Board shall have any claim or right to
benefits under this Plan, except as specifically provided in this Plan and
authorized by the Plan Administrator.

 

8.03 Fiduciary Indemnity. No Participant or Beneficiary shall look to, or have
any claim whatsoever against any person acting on behalf of the Company for the
distribution or payment of benefits under this Plan.

ARTICLE IX

Miscellaneous

 

9.01 Not an Employment Contract. THIS PLAN IS NOT AN EMPLOYMENT CONTRACT.
Participants are and shall continue to be non-employee directors. Nothing in
this Plan shall be construed to limit in any way the right of a Participant to
terminate the Participant’s services as a member of the Board, or the right of
the shareholders or Board to terminate the director’s services as a member of
the Board.

 

9.02 Amendment or Termination. The Company shall have the right to amend or
terminate this Plan at any time. However, any such action shall not modify the
obligation of the Company to pay a benefit to any Participant, determined as of
the date of such amendment or termination, except to the extent that such
modification is mutually agreed to by the Participant and the Company. Absent a
mutual agreement, the benefit of a Participant shall not be less than the
benefit such Participant would be entitled to receive under this Plan, as of the
date of such amendment or termination of this Plan.

 

9.03 Indemnification. The Company shall indemnify and hold harmless any employee
who may act on behalf of the Company in the administration of this Plan from and
against liability, loss, cost or expense (including reasonable attorneys’ fees)
incurred at any time as a result of or in connection with any claims, demands,
actions or causes of action of any person, Participant or Beneficiary, any
person claiming a benefit through or under any of them, or any other person,
party or authority claiming to have an interest in this Plan or standing to act
for any persons or groups having an interest in this Plan, for or on account of,
any of the acts or omissions (or alleged acts or omissions) of any employee,
director or officer of the Company, the Plan Administrator, or any individual
acting on behalf of the Plan Administrator, except to the extent resulting from
such person’s willful misconduct.

 

9.04 Tax Effects. The Company makes no warranties or representations with regard
to the tax effects or results of this Plan. Any Participant participating under
this Plan shall be deemed to have relied upon the Participant’s own tax advisors
with regard to such effects.

 

9.05 No Assignment; Binding Effect. Neither Participants nor Beneficiaries shall
have the right to alienate, assign, commute or otherwise encumber an Account or
potential benefit due under this Plan for any purpose whatsoever, and any
attempt to do so shall be disregarded completely as null and void. The
provisions of this Plan shall be binding on each Participant and on any other
person or entity that claims a benefit under this Plan.

 

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9.06 Governing Law. This Plan shall be construed in accordance with the laws of
the State of Texas to the extent that such laws are not preempted by ERISA or
other federal laws.

 

9.07 Expenses. The Company shall pay all costs, expenses and fees incurred in
providing services to the Plan and all other costs and expenses of administering
and operating the Plan.

 

9.08 No Funding Required. The Company is not required to fund this Plan. It is
the Company’s intention that this Plan be construed as an unfunded deferred
compensation plan maintained for non-employee members of the Board.

 

9.09 It is the intention that the provisions of this Plan comply with
Section 409A of the Code and the rules, regulations and other authorities
promulgated thereunder (including the transition rules thereof) and all
provisions of this Plan will be construed and interpreted in a manner consistent
with Section 409A of the Code.

 

9.10 Entire Agreement. This Plan, as amended from time to time and supplemented
with a properly completed and executed Enrollment Form, represents the entire
agreement made between such Participant and the Company with regard to all
matters contained herein.

 

9.11 Severability. If any provision of this Plan is held to be illegal or
invalid for any reason, such illegality or invalidity shall not affect the
remaining parts of this Plan, and the remaining parts of this Plan shall be
construed and enforced as if such illegal and invalid provisions had never been
included.

IN WITNESS WHEREOF, the Company has executed this Plan as of this 12th day of
February, 2008.

Argo Group International Holdings, Ltd.

 

By:   /s/ Mark E. Watson III     Attest:   /s/ Barbara C. Bufkin Title:  
President and CEO     Title:   Senior Vice President

 

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