TRIGON BLUE CROSS BLUE SHIELD
LIMITED FIXED RETURN DEFERRAL FOR 1996
1996 DEFERRED BENEFIT AGREEMENT
FOR AN OFFICER
AGREEMENT between (the "Officer") and Trigon Blue
Cross Blue Shield (the "Company").
1. Purpose and Effective Date. The Officer, who is a member of a
select group of management and highly compensated employees, has
deferred payment of part of his unearned compensation. This
Agreement sets forth the understanding of the Company and the
Officer with respect to the deferred compensation. This Agreement
supersedes the Distribution Election Form previously executed by the
Officer. The effective date of this Agreement is January 1, 1996.
The Board has determined that the benefits to be paid to the Officer
under this Agreement constitute reasonable compensation for the
services rendered and to be rendered by the Officer.
2. Definitions.
(a) Affiliate. A parent or subsidiary corporation of the
Company or an entity that is otherwise related to the Company and is
designated by the Committee as an Affiliate.
(b) Agreement. This Trigon Blue Cross Blue Shield Deferred
Benefit Agreement for an Officer.
(c) Beneficiary. A person or persons or other entity
designated by the Officer to receive payment of the Officer's benefits
under this Agreement. If there is no valid designation by the Officer,
or if the designated Beneficiary is not living or, if a trust is not in
existence at the time of the Officer's death, the Officer's Beneficiary
is the personal representative of the Officer's estate.
(d) Board. The Board of Directors of the Company.
(e) Committee. The Human Resources Compensation and Employee
Benefits Committee of the Board.
(f) Company. Trigon Blue Cross Blue Shield.
(g) Deferral Period. The period beginning on January 1, 1996
and ending on December 31, 1997.
(h) Deferred Benefit. The balance credited to the Officer's
bookkeeping account from time to time pursuant to Section 4 of this
Agreement.
(i) Officer. .
3. Administration. This Agreement is administered by the Committee.
Subject to the Agreement's provisions, the Committee may adopt rules
and regulations necessary to carry out the Agreement's purposes.
The Committee's determinations, interpretation and construction of
Agreement provisions are final and conclusive. If the Officer is a
member of the Committee, he shall not participate in any decisions
regarding this Agreement.
4. Deferral Elections and Earnings on Deferrals.
(a) The Officer has elected to defer payment of $
of the compensation that he otherwise would be entitled to
receive during the Deferral Period. The compensation shall be deferred
at a rate of $ a year (approximately $ a month) over the Deferral
Period. The Company shall credit the Officer's deferred compensation to
a bookkeeping account as of the last day of the calendar month in which
the Officer would have received his compensation but for the deferral
election.
(b) Earnings shall be credited to the bookkeeping account
established for the Officer until the entire account balance has been
paid to the Officer. Earnings shall be credited as of the last day of
each calendar month based on the balance credited to the bookkeeping
account as of the last day of the prior calendar month.
Except as provided in subsection (c) below:
(i) For the four-year period ending December 31, 1999,
earnings shall be credited to the bookkeeping account at the rate of
8.5% per annum, compounded monthly (which is a rate of approximately
0.7083% per month).
(ii) The Committee shall determine the rate of earnings to be
credited to the bookkeeping account after December 31, 1999, and shall
have complete discretion to specify whatever rates it deems appropriate
from time-to-time. However, the interest rate shall not be less than
the rate at which interest would have been earned on the amounts
credited to the bookkeeping account if such amounts had earned interest
at a rate equal to the average Federal Funds rate as published in the
Wall Street Journal plus .65 percent, compounded monthly.
(c) If the Officer's employment with the Company and its
Affiliates terminates before the end of the Deferral Period, other than
on account of his death, the rate at which earnings have been credited
to his bookkeeping account shall be recomputed as follows:
(i) The earnings credited to the Bookkeeping account shall be
recomputed for the entire period since the bookkeeping account was
established. The interest rate used to recompute the earnings shall be
determined as of the end of each calendar quarter and shall be the rate
at which interest would have been earned on the amounts credited to the
bookkeeping account if such amounts had earned interest at a rate equal
to the average Federal Funds rate as published in the Wall Street
Journal plus .65 percent, compounded monthly. Earnings at this interest
rate shall be credited as of the last day of each calendar month based
on the balance credited to the bookkeeping account as of the last day
of the prior calendar month.
(ii) Any earnings credited to the bookkeeping account pursuant
to subsection (b) that exceed the recomputed earnings under this
subsection (c) shall be withdrawn from the Officer's bookkeeping
account upon his termination of employment. If the earnings recomputed
under this subsection (c) exceed the earnings credited to the
bookkeeping account pursuant to subsection (b), no adjustment shall be
made to the bookkeeping account.
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5. Deferred Benefit.
(a) Payment of Deferred Benefit At Age 55.
(i) Except as provided in subsections (b) and (c) below, the
Officer's Deferred Benefit will begin to be paid to him on the first
day of the month coinciding with or immediately following the date the
Officer attains age 55. The Officer will receive his Deferred Benefit
in annual installments over a -year period.
(ii) If the Officer begins receiving his Deferred Benefit and
then dies before he has received Deferred Benefit payments for a year
period, the balance of any payments due him shall be paid to the
Officer's Beneficiary. Payments to the Officer's Beneficiary shall be
made in annual installments over the remainder of the year period.
(b) Death before Commencement of Benefit.
(i) Except as provided below and except as provided in
subsection (c) below, if the Officer dies before he begins receiving
his Deferred Benefit and before January 1, 2006, the Officer's
Beneficiary will receive an annual survivor benefit equal to $ a year
for a 15-year period. This survivor benefit will be paid in lieu of the
Officer's Deferred Benefit. Payment shall begin within 60 days after
the Officer's death. However, if the Officer dies by suicide before
July 1, 1997, the amount payable to his Beneficiary will be limited to
the deferrals made and interest earned using the method outlined in
subsection 4(b) above.
(ii) Except as provided in subsection (c) below, if the
Officer dies before he begins receiving his Deferred Benefit but on or
after January 1, 2006, his Beneficiary will receive a survivor benefit
equal to his Deferred Benefit, provided that the Committee, in its sole
discretion, may determine that a greater survivor benefit shall be
paid. The survivor benefit will be paid in annual installments over a
15-year period. Payment shall begin within 60 days after the Officer's
death.
(c) Termination of Employment Before the End of the Deferral
Period. If the Officer's employment with the Company and its Affiliates
terminates before the end of the Deferral Period, other than on account
of his death, the Officer's Deferred Benefit (determined pursuant to
subsection 4(c) above) will be paid to him in a lump sum payment within
five days after he terminates employment. If the Officer's employment
terminates before the end of the Deferral Period and the Officer dies
before he receives his Deferred Benefit, the Officer's Beneficiary will
receive a survivor benefit equal to the Officer's Deferred Benefit
(determined pursuant to subsection 4(c) above). The survivor benefit
will be paid in a lump sum payment within five days after the Officer's
death.
(d) Installment Payments. When annual installments are paid
under this Agreement, each installment payment will be an amount equal
to the Deferred Benefit (or survivor benefit under subsection 4(b) (ii)
above, as the case may be) divided by the number of remaining payments
to be made.
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(e) Alternate Payment Forms. The Committee shall have
discretion to distribute an Officer's Deferred Benefit over a shorter
or earlier period of time than the term described above, if the
Committee determines that the Officer has incurred financial hardship
that necessitates a shorter or earlier payment or if the Committee
determines that a shorter or earlier payment is in the best interest of
the Company. The Committee shall have no obligation whatsoever to
authorize distribution over a shorter or earlier period of time, and
the Committee's decision shall be binding on all persons for all
purposes.
6. Designation of Beneficiary.
(a) The Officer may designate a Beneficiary to receive any
benefits due under the Agreement upon the Officer's death. The
Beneficiary designation shall be made by executing a Beneficiary
designation form provided by the Committee.
(b) The Officer may change a previous Beneficiary designation
by executing another Beneficiary designation form. A Beneficiary
designation is not binding on the Company until the Committee receives
the Beneficiary designation form.
7. Obligation of the Company. This Agreement is unfunded. The amounts
payable under the Agreement are to be satisfied solely out of the
general assets of the Company, which shall remain subject to the claims
of its creditors. A benefit is at all times a mere contractual
obligation of the Company. The Company will not segregate any funds for
benefits or issue any notes as security for the payment of any
benefits.
8. Obligation of the Officer. The Officer agrees to provide certain
personal information and pass certain health examinations necessary for
participation in the Limited Fixed Return Deferred Benefit Program.
9. Restrictions on Transfer. Any benefits to which the Officer or his
Beneficiary may become entitled under this Agreement are not subject
in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt to do so
is void. Benefits are not subject to attachment or legal process
for the debts, contracts, liabilities, engagements, or torts of the
Officer or his Beneficiary. This Agreement does not give the
Officer any interest, lien, or claim against any specific asset of
the Company. The Officer and his Beneficiary have only the rights
of a general creditor of the Company.
10. Claims Procedure. If for any reason a benefit due under this
Agreement is not paid when due, the individual entitled to such
benefit may file a written claim with the Committee. If the claim
is denied or no response is received within 90 days (in which case
the claim will be deemed to have been denied), the individual may
appeal the denial to the Committee within 60 days of the denial. In
pursuing an appeal, an individual may request that a responsible
Officer review the denial, may review pertinent documents, and may
submit issues and comments in writing. A decision on appeal will be
made within 60 days after the appeal is made, unless special
circumstances require the Committee to extend the period for another
60 days.
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11. Amendment or Termination. The Board may amend or terminate this
Agreement at any time. However, no amendment or termination of the
Plan shall divest the Officer or his Beneficiary of deferred
compensation or a survivor benefit earned as of the date of the
modification or termination.
12. Construction. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Virginia. The headings in this
Agreement have been inserted for convenience or reference only and
are to be ignored in any construction of the provisions. If a
provision of this Agreement is not valid, that invalidity does not
affect other provisions.
13. Successors and Assigns. This Agreement shall be binding on the
Company and its successors and assigns and on the Officer, his
Beneficiary and their personal representatives.
WITNESS the following signatures:
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(NAME OF OFFICER)
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(SIGNATURE)
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(DATE)
TRIGON BLUE CROSS BLUE SHIELD
(NAME OF COMPANY)
BY: __________________________________
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(DATE)
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