Exhibit 10.17

 

ESURANCE HOLDINGS, INC.

AMENDED AND RESTATED TOP HAT DEFERRED COMPENSATION PLAN

 

ARTICLE I

 

PURPOSE

 

SECTION 1.01.            PURPOSE.  THE PURPOSE OF THIS PLAN IS TO PROVIDE KEY
EMPLOYEES WITH THE ABILITY TO DEFER THE RECEIPT OF CERTAIN TYPES OF
COMPENSATION.  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.

 

SECTION 1.02.            UNFUNDED PLAN.  THE COMPANY INTENDS THAT THE PLAN BE AN
UNFUNDED NON-QUALIFIED DEFERRED COMPENSATION PLAN MAINTAINED PRIMARILY FOR THE
PURPOSE OF PROVIDING DEFERRED BENEFITS FOR A SELECT GROUP OF MANAGEMENT OR
HIGHLY COMPENSATED SERVICE PROVIDERS OF THE COMPANY AND ITS SUBSIDIARIES.  THE
COMPANY INTENDS FOR THE PLAN TO QUALIFY AS A “TOP HAT” PLAN FOR PURPOSES OF
ERISA.

 

SECTION 1.03.            SPECIFIED EMPLOYEES.  AS PERMITTED BY TREAS. REG. §
1.409A-1(I)(5), THE ADMINISTRATOR SHALL TREAT ALL PARTICIPANTS IN THE PLAN AS
“SPECIFIED EMPLOYEES.”

 

SECTION 1.04.            EFFECTIVE DATE.   THE AMENDMENT AND RESTATEMENT OF THIS
PLAN IS EFFECTIVE AS OF JANUARY 1, 2009.

 

ARTICLE II

 

DEFINITIONS

 

The following terms when used in this Plan have the designated meanings unless a
different meaning is clearly required by the context.

 

SECTION 2.01.            “ACCOUNT” MEANS THE RECORDS MAINTAINED ON THE BOOKS OF
THE COMPANY TO REFLECT DEFERRALS OF COMPENSATION BY A PARTICIPANT PURSUANT TO
SECTION 3.03.

 

SECTION 2.02.            “ADMINISTRATOR” MEANS THE PERSON OR COMMITTEE
DESIGNATED BY THE BOARD AS RESPONSIBLE FOR THE DAY-TO-DAY ADMINISTRATION OF THE
PLAN.

 

SECTION 2.03.            “AFFILIATE” OF ANY PERSON MEANS ANY OTHER PERSON
CONTROLLED BY, CONTROLLING OR UNDER COMMON CONTROL WITH SUCH PERSON.

 

SECTION 2.04.            “AFTER-TAX” MEANS, WITH RESPECT TO ANY AMOUNT, (I) SUCH
AMOUNT MULTIPLIED BY (II) 1 MINUS THE HIGHEST MARGINAL TAX RATE FOR CORPORATIONS
APPLICABLE UNDER THE CODE.

 

SECTION 2.05.            “AVERAGE DEPLOYED CAPITAL” MEANS, FOR ANY PERIOD, THE
AVERAGE DAILY AMOUNT OF CAPITAL INVESTED IN, LOANED TO, OR GUARANTEED ON BEHALF
OF (INCLUDING

 

--------------------------------------------------------------------------------

 

REINSURANCE CAPITAL AND SUNK COSTS) THE ESURANCE SEGMENT BY ITS AFFILIATES IN
SUCH PERIOD, AS DETERMINED BY THE BOARD.  CAPITAL DEPLOYED BY AFFILIATES IN THE
ESURANCE SEGMENT AT DECEMBER 31, 2006 WAS $449.6 MILLION, CONSISTING OF $190.3
MILLION OF EQUITY, $40.2 MILLION OF DEBT AND ACCRUED INTEREST AND $219.1 MILLION
OF REINSURANCE CAPITAL.

 

SECTION 2.06.            “BENEFICIARY” MEANS THE PERSON OR PERSONS DESIGNATED
PURSUANT TO ARTICLE 5 TO RECEIVE A BENEFIT PURSUANT TO SECTION 4.04(A) IN THE
EVENT OF A PARTICIPANT’S DEATH BEFORE HIS BENEFIT UNDER THIS PLAN HAS BEEN PAID.

 

SECTION 2.07.            “BOARD” MEANS THE BOARD OF DIRECTORS OF THE COMPANY.

 

SECTION 2.08.            “CAUSE” MEANS (I) AN ACT OR OMISSION BY THE PARTICIPANT
THAT CONSTITUTES A FELONY, (II) WILLFUL GROSS NEGLIGENCE OR WILLFUL GROSS
MISCONDUCT BY THE PARTICIPANT IN CONNECTION WITH HIS EMPLOYMENT BY THE COMPANY
OR BY A SUBSIDIARY WHICH CAUSES, OR IS LIKELY TO CAUSE, MATERIAL LOSS OR DAMAGE
OR SUBSTANTIAL PUBLIC DISGRACE OR DISREPUTE TO THE COMPANY, (III) THE COMMISSION
OF ANY OTHER ACT OR OMISSION BY THE PARTICIPANT INVOLVING DISHONESTY, DISLOYALTY
OR FRAUD WITH RESPECT TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR (IV) THE
PARTICIPANT’S SUBSTANTIAL AND REPEATED FAILURE TO PERFORM DUTIES AS REASONABLY
DIRECTED BY THE BOARD OR SUPERVISOR, AS APPLICABLE.

 

SECTION 2.09.            “CHANGE IN CONTROL” SHALL MEAN, WITH RESPECT TO ANY
PARTICIPANT, A CONTROL EVENT OCCURRING WITH RESPECT TO (I) THE CONTROLLED GROUP
ENTITY FOR WHOM SUCH PARTICIPANT PRINCIPALLY PERFORMS SERVICES AT THE TIME OF
SUCH CONTROL EVENT, (II) THE CONTROLLED GROUP ENTITY THAT IS LIABLE FOR THE
PAYMENT OF SUCH PARTICIPANT’S ACCOUNT OR (III) ANY CONTROLLED GROUP ENTITY THAT
IS EITHER A MAJORITY EQUITY HOLDER OF ANY CONTROLLED GROUP ENTITY DESCRIBED IN
CLAUSES (I) OR (II) ABOVE OR THAT IS IN A CHAIN OF ENTITIES THAT EACH ARE
MAJORITY EQUITY HOLDERS OF ANOTHER ENTITY IN THE CHAIN, ENDING IN A CONTROLLED
GROUP ENTITY DESCRIBED IN CLAUSES (I) OR (II), ABOVE.  FOR PURPOSES HEREOF, A
“MAJORITY EQUITY HOLDER” IS A PERSON OWNING MORE THAN 50% OF THE TOTAL FAIR
MARKET VALUE AND TOTAL VOTING POWER OF THE APPLICABLE CONTROLLED GROUP ENTITY
AND TO WHICH THE COMPANY GROUP COLLECTIVELY REPRESENTS AT LEAST 75% OF SUCH
PERSON’S TOTAL REVENUES ( AS DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES AND REPORTED IN THE CONTROLLED GROUP SECURITIES AND
EXCHANGE COMMISSION FILINGS (AS DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES). NOTWITHSTANDING THE FOREGOING, A CHANGE IN CONTROL SHALL
NOT BE DEEMED TO OCCUR IF SUCH EVENT WOULD NOT BE CONSIDERED TO BE A “CHANGE IN
CONTROL EVENT” WITHIN THE MEANING OF SECTION 409A OF THE CODE.

 

SECTION 2.10.            “CODE” MEANS THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.

 

SECTION 2.11.            “COMPANY” MEANS ESURANCE HOLDINGS, INC. AND ANY
SUCCESSOR THERETO.

 

SECTION 2.12.            “COMPANY GROUP” MEANS THE COMPANY AND ITS DIRECT AND
INDIRECT SUBSIDIARIES OF WHICH IT OWNS MORE THAN 50% OF THE TOTAL FAIR MARKET
VALUE AND TOTAL VOTING POWER.

 

SECTION 2.13.            “COMPENSATION” MEANS, FOR ANY PLAN YEAR, (I) CASH
AMOUNTS PAYABLE TO KEY EMPLOYEES UNDER THE ESURANCE PUP OR WHITE MOUNTAINS LTIP
IN SUCH

 

2

--------------------------------------------------------------------------------

 

PLAN YEAR, (II) ANY APPRECIATION ON ACCOUNT BALANCES IN THIS PLAN; AND (III) ANY
OTHER CASH PAYMENT OR TRANSFER OF PROPERTY THAT MAY BE EARNED BY KEY EMPLOYEES
FROM SERVICES PERFORMED FOR THE CONTROLLED GROUP THAT IS DESIGNATED BY THE BOARD
OR THE ADMINISTRATOR AS “COMPENSATION” UNDER THIS PLAN.

 

SECTION 2.14.            “CONTROLLED GROUP ENTITY” MEANS ANY ENTITY WITHIN THE
CONTROLLED GROUP.

 

SECTION 2.15.            “CONTROLLED GROUP” MEANS THE COMPANY AND EACH ENTITY
THAT IS TREATED WITH THE COMPANY AS A SINGLE “SERVICE RECIPIENT” UNDER TREAS.
REG. § 1.409A-1(H)(3) EXCEPT THAT “GREATER THAN 50 PERCENT” SHALL BE USED
INSTEAD OF “AT LEAST 80 PERCENT” IN EACH PLACE IT APPEARS IN CODE SECTIONS
1563(A)(1), (2), AND (3).

 

SECTION 2.16.            “CONTROL EVENT” SHALL OCCUR WITH RESPECT TO A
CONTROLLED GROUP ENTITY IF:

 

(A)  ANY PERSON OR PERSONS ACTING AS A GROUP (AS DEFINED IN TREAS. REG. §
1.409A-3(I)(5)(V)(B), OR ANY AMENDED OR SUCCESSOR REGULATIONS, FOR PURPOSES OF
THIS SECTION 2.16), OTHER THAN (X) A CONTROLLED GROUP ENTITY, (Y) AN UNDERWRITER
TEMPORARILY HOLDING EQUITY OF A CONTROLLED GROUP ENTITY IN CONNECTION WITH A
PUBLIC ISSUANCE OF SUCH EQUITY OR (Z) AN EMPLOYEE BENEFIT PLAN OF THE CONTROLLED
GROUP ENTITY (EACH, AN “EXEMPT PERSON”) ACQUIRES OWNERSHIP (EXCEPT WHERE SUCH
ACQUISITION IS NOT CONSIDERED TO CAUSE A CHANGE IN OWNERSHIP UNDER TREAS. REG. §
1.409A-3(I)(5)(V)) OF EQUITY SECURITIES OF THE CONTROLLED GROUP ENTITY THAT,
TOGETHER WITH EQUITY SECURITIES HELD BY SUCH PERSON OR PERSONS PRIOR TO THE
ACQUISITION, CONSTITUTE MORE THAN 50% OF THE TOTAL FAIR MARKET VALUE OF THE
OUTSTANDING EQUITY SECURITIES OF THE CONTROLLED GROUP ENTITY OR THE TOTAL VOTING
POWER OF THE OUTSTANDING EQUITY SECURITIES OF THE CONTROLLED GROUP ENTITY; OR

 

(B)    THE CONTROLLED GROUP ENTITY FOR WHICH THE PARTICIPANT’S SERVICES ARE
PRINCIPALLY PERFORMED IS DISPOSED OF FROM THE CONTROLLED GROUP PURSUANT TO A
SALE, SERIES OF RELATED SALES OR OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL
OF THE BUSINESS OR BUSINESS-RELATED ASSETS OF SUCH CONTROLLED GROUP ENTITY
DURING A 12-MONTH PERIOD ENDING ON THE DATE OF THE LAST DISPOSITION TRANSACTION
TO THE EXTENT SUCH OCCURRENCE WOULD BE CONSIDERED TO BE A “CHANGE OF CONTROL
EVENT” WITHIN THE MEANING OF SECTION 409A OF THE CODE.

 

(C)  NOTWITHSTANDING CLAUSE (A) ABOVE, A CONTROL EVENT SHALL NOT BE DEEMED TO
OCCUR SOLELY BECAUSE ANY PERSON OR PERSONS (THE “SUBJECT PERSON”) ACQUIRED MORE
THAN 50% OF THE OUTSTANDING EQUITY SECURITIES AS A RESULT OF THE ACQUISITION OF
EQUITY SECURITIES BY A MEMBER OF THE CONTROLLED GROUP WHICH, BY REDUCING THE
NUMBER OF SECURITIES OUTSTANDING, INCREASES THE PROPORTIONAL NUMBER OF EQUITY
SECURITIES HELD BY THE SUBJECT PERSON; PROVIDED THAT IF A CONTROL EVENT WOULD
OCCUR (BUT FOR THE OPERATION OF THIS SENTENCE) AS A RESULT OF THE ACQUISITION OF
SECURITIES BY A MEMBER OF THE CONTROLLED GROUP, AND AFTER SUCH ACQUISITION BY
THE MEMBER OF THE CONTROLLED GROUP, THE SUBJECT PERSON BECOMES THE OWNER OF ANY
ADDITIONAL EQUITY SECURITIES THAT INCREASES THE PERCENTAGE OF THE THEN
OUTSTANDING EQUITY SECURITIES OWNED BY THE SUBJECT PERSON, THEN A CHANGE IN
CONTROL SHALL OCCUR IF SUCH OCCURRENCE WOULD BE CONSIDERED TO BE A “CHANGE IN
CONTROL EVENT” WITHIN THE MEANING OF SECTION 409A OF THE CODE.

 

SECTION 2.17.            “DIRECTOR” MEANS ANY MEMBER OF THE BOARD.

 

3

--------------------------------------------------------------------------------

 

SECTION 2.18.            “ECONOMIC NET INCOME” MEANS, FOR ANY PERIOD, THE
AFTER-TAX NET INCOME (AFTER ALL COMPENSATION EXPENSES) OF THE ESURANCE SEGMENT
FOR SUCH PERIOD DETERMINED IN ACCORDANCE WITH GAAP, ADJUSTED TO (I) STANDARDIZE
INVESTMENT RETURNS AT THE TEN-YEAR TREASURY YIELD PLUS 100 BASIS POINTS, AND
(II) AMORTIZE POLICY ACQUISITION EXPENSES OVER THE TERM OF THE POLICY AND ITS
EXPECTED RENEWALS, IN EACH CASE AS DETERMINED BY THE BOARD.  AS USED IN THIS
DEFINITION, “COMPENSATION EXPENSES” INCLUDE (W) SALARIES AND BONUSES, (X) CASH
LONG TERM INCENTIVE PLAN AWARDS, (Y) APPRECIATION ON ALL DEFERRED COMPENSATION
BALANCES REGARDLESS OF INVESTMENT CHOICE AND (Z) ALL OTHER COMPENSATION
EXPENSES.

 

SECTION 2.19.            “ECONOMIC RETURN” MEANS, FOR ANY PERIOD, (I) ECONOMIC
NET INCOME FOR SUCH PERIOD, PLUS (II) FRANCHISE VALUE ADDED FOR SUCH PERIOD.

 

SECTION 2.20.            “EDU VALUE” MEANS (I) THE VALUE OF AN EDU AS DETERMINED
BY THE BOARD AT THE TIME OF THE DEFERRAL OF COMPENSATION, AND (II) THEREAFTER AS
THE BOARD DETERMINES PERIODIC NET EROAC, THE PRODUCT OF (A) EDU VALUE
IMMEDIATELY PRIOR TO SUCH VALUATION DATE, AND (B) THE SUM OF (X) ONE AND (Y) NET
EROAC FOR THE LATEST PERIOD.  FOR EXAMPLE, IF THE EDU VALUE AT THE TIME OF
DEFERRAL WAS $1,000, AND IF THE NEXT PERIODIC NET EROAC DETERMINED EQUALS 2.0%,
THEN EDU VALUE WOULD GROW TO $1,020.00.  IF THE NEXT SUBSEQUENT PERIODIC NET
EROAC WAS DETERMINED TO EQUAL -0.5%, THEN EDU VALUE BE REDUCED TO $1,014.90.  
NET EROAC IS INTENDED AS A MEASURE OF ECONOMIC VALUE ADDED TO (OR SUBTRACTED
FROM) THE ESURANCE SEGMENT DURING THE RELEVANT PERIOD.  AT ANY TIME THE BOARD
MAY, AND AT LEAST ANNUALLY THE BOARD WILL, ASSESS THE APPROPRIATENESS OF USING
NET EROAC IN SUCH CAPACITY AND, IN ITS DISCRETION, THE BOARD MAY (X) AMEND THE
CALCULATION OF NET EROAC OR ANY OF ITS COMPONENTS, OR (Y) ESTABLISH AN ENTIRELY
NEW CRITERIA FOR DETERMINING FUTURE EDU VALUE.  THESE ACTIONS SHALL BE DEEMED
WITHIN THE BOARD’S AMENDMENT AUTHORITY UNDER SECTION 6.12.

 

SECTION 2.21.            “ERISA” MEANS THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED.

 

SECTION 2.22.            “ESURANCE DEFERRED UNIT” OR “EDU” MEANS A PHANTOM UNIT
UNDER THIS PLAN WITH A VALUE AT ANY TIME EQUAL TO THE EDU VALUE THEN IN EFFECT.

 

SECTION 2.23.            “ESURANCE PUP” MEANS THE COMPANY’S 2005 ESURANCE
PERFORMANCE UNIT PLAN, AS AMENDED FROM TIME TO TIME, AND EACH SUCCESSOR PLAN
THEREAFTER, ACCORDING TO ITS TERMS.

 

SECTION 2.24.            “ESURANCE SEGMENT” MEANS THE COMPANY AND ITS
SUBSIDIARIES ON A CONSOLIDATED BASIS, TOGETHER WITH THE ASSETS AND LIABILITIES
OF OTHER DIRECT OR INDIRECT SUBSIDIARIES OF WHITE MOUNTAINS INSURANCE GROUP,
LTD. WHICH ARE MAINTAINED IN SUPPORT OF THE BUSINESS OF THE COMPANY AND ITS
SUBSIDIARIES (INCLUDING, WITHOUT LIMITATION, QUOTA SHARED BUSINESS AND
REINSURANCE).

 

SECTION 2.25.            “FISCAL YEAR” MEANS THE CALENDAR YEAR.

 

SECTION 2.26.            “FRANCHISE VALUE ADDED” MEANS, FOR ANY PERIOD, THE
PRODUCT, AFTER-TAX, OF (I) THE FRANCHISE VALUE MULTIPLE IN EFFECT FOR SUCH
PERIOD, AND (II) THE EXCESS OF THE ESURANCE SEGMENT’S DIRECT WRITTEN PREMIUM AS
OF THE LAST DAY IN SUCH PERIOD OVER DIRECT WRITTEN PREMIUM AS OF THE FIRST DAY
IN SUCH PERIOD, AS DETERMINED BY THE BOARD.

 

4

--------------------------------------------------------------------------------

 

SECTION 2.27.            “FRANCHISE VALUE MULTIPLE” MEANS, INITIALLY, 0.3, OR
SUCH OTHER NUMBER AS IS DETERMINED BY THE BOARD, IN ITS SOLE DISCRETION, IN
FOLLOWING ANY REASSESSMENT EVENT

 

SECTION 2.28.            “FUND” MEANS ANY INVESTMENT FUND SELECTED BY THE
ADMINISTRATOR IN ITS SOLE DISCRETION TO BE OFFERED UNDER THE PLAN.

 

SECTION 2.29.            “KEY EMPLOYEE” MEANS ANY EXECUTIVE EMPLOYEE, OR OTHER
OVERTIME-EXEMPT EMPLOYEE, OF THE CONTROLLED GROUP WHO (A) IS IMPORTANT TO THE
ONGOING BUSINESS OBJECTIVES OF THE ESURANCE SEGMENT, (B) IS A MEMBER OF A SELECT
GROUP OF MANAGEMENT OR HIGHLY COMPENSATED EMPLOYEE, AND (C) THE ADMINISTRATOR,
IN HIS SOLE DISCRETION, DESIGNATES AS ELIGIBLE TO PARTICIPATE IN THE PLAN.

 

SECTION 2.30.            “NET EROAC” INITIALLY MEANS, FOR ANY PERIOD, A FRACTION
(WHICH MAY BE GREATER THAN OR LESS THAN ONE), THE NUMERATOR OF WHICH IS THE
ECONOMIC RETURN FOR SUCH PERIOD AND THE DENOMINATOR OF WHICH IS THE AVERAGE
DEPLOYED CAPITAL FOR SUCH PERIOD.

 

SECTION 2.31.            “MARKET PRICE” ON ANY DAY MEANS (I) IF SHARES ARE
LISTED ON THE NEW YORK STOCK EXCHANGE, THE AVERAGE OF THE HIGH AND LOW SALES
PRICE, OR, IN CASE NO SUCH SALE TAKES PLACE ON SUCH DAY, THE AVERAGE OF THE LAST
QUOTED 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 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 CONVERTED BOOK VALUE
PER SHARE AS DETERMINED IN GOOD FAITH BY THE BOARD IN ACCORDANCE WITH UNITED
STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.

 

SECTION 2.32.            “PARTICIPANT” MEANS A KEY EMPLOYEE WHO HAS AN ACCOUNT
UNDER THIS PLAN TO WHICH COMPENSATION STANDS CREDITED.

 

SECTION 2.33.            “PAYMENT DATE” MEANS, WHERE APPLICABLE, THE DATE
DESIGNATED BY A PARTICIPANT IN ACCORDANCE WITH SECTION 3.04 FOR THE DISTRIBUTION
OF HIS OR HER ACCOUNT.

 

SECTION 2.34.            “PERSON” MEANS AN INDIVIDUAL, A PARTNERSHIP, A
CORPORATION, A LIMITED LIABILITY COMPANY, AN ASSOCIATION, A JOINT STOCK COMPANY,
A TRUST, A JOINT VENTURE, AN UNINCORPORATED ORGANIZATION AND A GOVERNMENTAL
ENTITY OR ANY DEPARTMENT, AGENCY OR POLITICAL SUBDIVISION THEREOF.

 

SECTION 2.35.            “PLAN” MEANS THIS “ESURANCE HOLDINGS, INC. TOP HAT
DEFERRED COMPENSATION PLAN” AS AMENDED FROM TIME TO TIME IN ACCORDANCE WITH ITS
TERMS.

 

5

--------------------------------------------------------------------------------

 

SECTION 2.36.            “PLAN YEAR” MEANS THE CALENDAR YEAR.

 

SECTION 2.37.            “REASSESSMENT EVENT” MEANS ANY EVENT, TRANSACTION, FACT
OR CIRCUMSTANCE AFFECTING THE BUSINESS OF THE ESURANCE SEGMENT WHICH THE BOARD
IN ITS SOLE DISCRETION AND IN BELIEVES JUSTIFIES A CHANGE TO THE FRANCHISE VALUE
MULTIPLE.

 

SECTION 2.38.            “SHARE(S)” MEANS A COMMON SHARE(S) OF THE WHITE
MOUNTAINS INSURANCE GROUP, LTD., PAR VALUE $1.00.

 

SECTION 2.39.            “TERMINATION OF SERVICE” MEANS A KEY EMPLOYEE’S
SEPARATION FROM SERVICE (WITHIN THE MEANING OF SECTION 409A(A)(2)(A)(I) OF THE
CODE) FROM THE CONTROLLED GROUP FOR ANY REASON SUCH THAT THERE IS A REDUCTION IN
THE LEVEL OF SERVICES (WHETHER AS AN EMPLOYEE OR INDEPENDENT CONTRACTOR) TO A
LEVEL NO MORE THAN 20% OF THE AVERAGE LEVEL OF SERVICES PERFORMED FOR THE
CONTROLLED GROUP DURING THE IMMEDIATELY PRECEDING 36-MONTH PERIOD (OR THE FULL
PERIOD OF SERVICE, IF SHORTER THAN 36 MONTHS).  HOWEVER, THE EMPLOYMENT
RELATIONSHIP IS TREATED AS CONTINUING WHILE THE INDIVIDUAL IS ON MILITARY LEAVE,
SICK LEAVE, OR OTHER BONA FIDE LEAVE OF ABSENCE IF THE PERIOD OF SUCH LEAVE DOES
NOT EXCEED SIX MONTHS OR, IF LONGER, SO LONG AS THE INDIVIDUAL’S RIGHT TO
REEMPLOYMENT IS PROVIDED EITHER BY STATUTE OR BY CONTRACT.

 

SECTION 2.40.            “VALUATION DATE” MEANS THE LAST BUSINESS DAY OF EACH
CALENDAR YEAR AND THE LAST DAY OF ANY APPLICABLE VALUATION PERIOD THAT THE
ADMINISTRATOR USES TO MAKE A NEW DETERMINATION OF ACCOUNT VALUES.

 

SECTION 2.41.            “WHITE MOUNTAINS LTIP” MEANS THE WHITE MOUNTAINS
INSURANCE GROUP, LTD. LONG-TERM INCENTIVE PLAN, AS AMENDED FROM TIME TO TIME
ACCORDING TO ITS TERMS.

 

ARTICLE III

 

ELIGIBILITY AND DEFERRALS

 

SECTION 3.01.            ELIGIBILITY.  EACH KEY EMPLOYEE DESIGNATED BY THE BOARD
OR ADMINISTRATOR AS ELIGIBLE TO PARTICIPATE IN THE PLAN SHALL BE ELIGIBLE TO BE
A PARTICIPANT HEREUNDER.  THE BOARD OR THE ADMINISTRATOR HAVE THE SOLE AND
COMPLETE DISCRETION TO DETERMINE WHICH KEY EMPLOYEES ARE ELIGIBLE TO PARTICIPATE
AND NO KEY EMPLOYEE SHALL HAVE A RIGHT TO BE DESIGNATED AS A PARTICIPANT.

 

SECTION 3.02.            ACCOUNTS.  THE ADMINISTRATOR SHALL ESTABLISH AN ACCOUNT
FOR EACH ELIGIBLE KEY EMPLOYEE WHO ELECTS TO DEFER COMPENSATION PURSUANT TO
SECTION 3.03 OR WITH RESPECT TO WHOM THE BOARD OTHERWISE DETERMINES TO ESTABLISH
AN ACCOUNT BALANCE AND THE VALUE DETERMINED PURSUANT TO SECTION 3.05 SHALL BE
CREDITED TO SUCH ACCOUNT.

 

SECTION 3.03.            DEFERRAL OF COMPENSATION; PERMITTED INVESTMENTS.

 

(A)  LTIPS.  ELIGIBLE KEY EMPLOYEES WHO ARE PARTICIPANTS IN THE ESURANCE PUP OR
WHITE MOUNTAINS LTIP MAY ELECT TO REDUCE THE COMPENSATION OTHERWISE PAYABLE TO
THEM UNDER SUCH PLANS, TO THE EXTENT PERMITTED BY THE COMPANY.  A DEFERRAL
ELECTION SHALL BE MADE IN WRITING

 

6

--------------------------------------------------------------------------------

 

AT SUCH TIME AND IN SUCH MANNER AS THE ADMINISTRATOR SHALL PRESCRIBE BUT MUST IN
ANY EVENT BE MADE IN ACCORDANCE WITH THE RULES SET FORTH IN SECTION 3.03 (C).

 

(B)  OTHER PERMITTED DEFERRALS.

 

(I)  IF PERMITTED BY THE BOARD UNDER CIRCUMSTANCES OTHER THAN PURSUANT TO
SECTIONS 3.03(A), AN ELIGIBLE KEY EMPLOYEE MAY ELECT TO REDUCE OTHER
COMPENSATION OTHERWISE PAYABLE TO HIM IN RESPECT OF A PLAN YEAR AND TO HAVE SUCH
COMPENSATION CREDITED TO HIS OR HER ACCOUNT.

 

(II)  IN THE EVENT THE BOARD DETERMINES TO ADJUST THE FRANCHISE VALUE MULTIPLE
FOLLOWING ANY REASSESSMENT EVENT, THE AMOUNT EQUAL TO ANY INCREASE IN THE ANNUAL
INVESTMENT GAINS THAT WOULD BE CREDITED TO A PARTICIPANT’S ACCOUNT RESULTING
DIRECTLY FROM THE BOARD’S ADJUSTMENT OF THE FRANCHISE VALUE MULTIPLE WILL BE
DEEMED ADDITIONAL COMPENSATION TO THE PARTICIPANT AND AUTOMATICALLY DEFERRED TO
THE PARTICIPANT’S ACCOUNT PURSUANT TO SECTION 3.05 OF THE PLAN.

 

(C)  TIMING OF DEFERRAL ELECTIONS.  A DEFERRAL ELECTION SHALL BE MADE IN WRITING
AT SUCH TIME AND IN SUCH MANNER AS THE ADMINISTRATOR SHALL PRESCRIBE BUT MUST IN
ANY EVENT BE MADE BEFORE THE APPLICABLE DEADLINE FOR MAKING SUCH A DEFERRAL
ELECTION PURSUANT TO SECTION 409A OF THE CODE.  ACCORDINGLY, DEFERRAL ELECTIONS
MUST BE MADE NO LATER THAN BY ONE OF THE FOLLOWING TIMES:

 

(I)  A DEFERRAL ELECTION WITH RESPECT TO COMPENSATION EARNED BY A PARTICIPANT
MUST BE MADE PRIOR TO THE FIRST DAY OF THE PLAN YEAR IN WHICH THE SERVICES
RELATED TO SUCH COMPENSATION WILL BE RENDERED

 

(II)  IN THE CASE OF A KEY EMPLOYEE WHO IS FIRST ELIGIBLE TO PARTICIPATE IN THE
PLAN DURING A PLAN YEAR, SUCH KEY EMPLOYEE MAY ELECT WITHIN 30 DAYS OF BECOMING
ELIGIBLE TO PARTICIPATE IN THE PLAN TO DEFER ANY UNEARNED PORTION OF HIS
COMPENSATION RELATED TO SERVICES TO BE PERFORMED AFTER THE DATE OF SUCH
ELECTION, TO THE EXTENT PERMITTED UNDER TREAS. REG. § 1.409A-2(A)(7).

 

(III)  IN THE CASE OF ANY COMPENSATION THAT CONSTITUTES “PERFORMANCE-BASED
COMPENSATION” WITHIN THE MEANING OF TREAS. REG. § 1.409A-1(E), THE ADMINISTRATOR
MAY PERMIT A PARTICIPANT TO MAKE A DEFERRAL ELECTION, WITH RESPECT TO SUCH
COMPENSATION, THAT DOES NOT BECOME IRREVOCABLE UNTIL THE DATE THAT IS SIX MONTHS
PRIOR TO THE END OF THE APPLICABLE PERFORMANCE PERIOD, TO THE EXTENT PERMITTED
UNDER TREAS. REG. § 1.409A-2(A)(8).   IN ANY EVENT, AT THE TIME OF THE DEFERRAL
ELECTION, IN ORDER FOR THE ELECTION TO BE IN COMPLIANCE WITH CODE SECTION 409A,
(I) THE KEY EMPLOYEE MUST PERFORM SERVICES CONTINUOUSLY FOR THE PERIOD BEGINNING
ON THE LATER OF THE FIRST DAY OF THE PERFORMANCE PERIOD OR THE DATE THE
PERFORMANCE CRITERIA ARE ESTABLISHED, AND ENDING ON THE DATE OF ELECTION WITH
RESPECT TO THE PERFORMANCE-BASED COMPENSATION AND (II) THE ELECTION IS NOT MADE
AFTER THE AMOUNT OF THE PERFORMANCE-BASED COMPENSATION BECOMES REASONABLY
ASCERTAINABLE

 

7

--------------------------------------------------------------------------------

 

NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, ANY ELECTION TO DEFER
COMPENSATION THAT IS NOT MADE IN ACCORDANCE WITH SECTION 409A(A)(4) OF THE CODE
SHALL BE INEFFECTIVE AND VOID AB INITIO.

 

(D)  APPLICABILITY; NO REVOCATION.  A DEFERRAL ELECTION SHALL APPLY ONLY WITH
RESPECT TO COMPENSATION EARNED DURING THE PLAN YEAR (OR PERFORMANCE PERIOD, AS
APPLICABLE) FOR WHICH IT IS MADE AND SHALL NOT CONTINUE IN EFFECT FOR
COMPENSATION EARNED DURING ANY SUBSEQUENT PLAN YEAR (OR PERFORMANCE PERIOD, AS
APPLICABLE).  SUCH DIRECTIONS AND ELECTIONS, ONCE EXECUTED AND FILED WITH THE
ADMINISTRATOR, CANNOT BE REVOKED AFTER THE DATE SPECIFIED BY THE ADMINISTRATOR
OR THE DATE FOR A VALID DEFERRAL ELECTION AS REQUIRED BY SECTION 409A OF THE
CODE, WHICHEVER IS EARLIER.

 

SECTION 3.04.            PAYMENTS.

 

(A)           DESIGNATION OF DATE.  EACH DEFERRAL ELECTION GIVEN PURSUANT TO
SECTION 3.03(A) AND (B) SHALL INCLUDE THE DESIGNATION OF A SINGLE PAYMENT DATE
WITH RESPECT TO THE COMPENSATION DEFERRED.  A DESIGNATED PAYMENT DATE MAY ONLY
BE THE FIRST DAY OF A CALENDAR QUARTER, SUBJECT TO THE LIMITATION SET FORTH IN
SECTION 3.04(B).

 

(B)  LIMITATION.  A PARTICIPANT MAY DESIGNATE AN ORIGINAL PAYMENT DATE THAT IS
NO SOONER THAN THE FIRST ANNIVERSARY OF THE DATE OF SUCH ELECTION AND NO LATER
THAN THE DATE WHICH IS THREE MONTHS AFTER SUCH PARTICIPANT ATTAINS AGE 65.

 

(C)  ADJUSTMENT OF PAYMENT DATE.  TO THE EXTENT PERMITTED BY SECTION 409A OF THE
CODE, THE ADMINISTRATOR MAY PERMIT A PARTICIPANT TO IRREVOCABLY ELECT, NO LATER
THAN ONE YEAR BEFORE THE PAYMENT DATE INITIALLY DESIGNATED PURSUANT TO
SECTION 3.04(A), TO ADJUST SUCH PAYMENT DATE TO THE FIRST DAY OF ANY SUBSEQUENT
CALENDAR QUARTER; PROVIDED THAT THE FOLLOWING CONDITIONS ARE MET:

 

(I)            THE REDEFERRAL ELECTION MAY NOT TAKE EFFECT UNTIL AT LEAST TWELVE
(12) MONTHS AFTER THE DATE ON WHICH SUCH REDEFERRAL ELECTION IS MADE;

 

(II)           THE FIRST PAYMENT WITH RESPECT TO WHICH SUCH REDEFERRAL ELECTION
IS MADE MUST BE DEFERRED FOR A PERIOD OF NOT LESS THAN FIVE (5) YEARS FROM THE
DATE SUCH PAYMENT WOULD OTHERWISE HAVE BEEN MADE BASED ON THE PRIOR DEFERRAL
ELECTION; AND

 

(III)          THE ADJUSTED PAYMENT DATE IS NOT LATER THAN THE DATE WHICH IS
THREE MONTHS AFTER SUCH PARTICIPANT ATTAINS AGE 65.

 

NOTWITHSTANDING THE FOREGOING, THE BOARD OR THE ADMINISTRATOR MAY, IN ITS/HIS
SOLE DISCRETION, PERMIT CERTAIN PARTICIPANTS TO CHANGE THEIR DEFERRAL ELECTIONS
UNDER THE PLAN WITHOUT MEETING THE CONDITIONS SET FORTH IN
SECTION 3.04(C) ABOVE, PROVIDED SUCH DEFERRED ELECTION CHANGES COMPLY WITH THE
TRANSITIONAL RELIEF RULES PROMULGATED BY THE TREASURY DEPARTMENT UNDER
SECTION 409A OF THE CODE.

 

(D)           METHOD OF PAYMENTS.  ALL AMOUNTS BECOMING PAYABLE TO A PARTICIPANT
UNDER THIS PLAN ON A SPECIFIED PAYMENT DATE SHALL BE PAID IN A SINGLE PAYMENT.

 

8

--------------------------------------------------------------------------------

 

(E)           IRREVOCABILITY.  EXCEPT AS SET FORTH IN ARTICLE IV, THE
DESIGNATION OF A PAYMENT DATE SHALL BE IRREVOCABLE, IT BEING UNDERSTOOD THAT
PAYMENT MAY ACTUALLY BE MADE ON AN EARLIER DATE AS PROVIDED IN SECTION 4.04
(TERMINATION OF SERVICE), SECTION 4.05 (WITHDRAWAL FOR UNFORESEEN EMERGENCY
NEED) AND SECTION 4.06 (CHANGE IN CONTROL).

 

SECTION 3.05.            VALUE OF PARTICIPANTS’ ACCOUNTS.  COMPENSATION
DEFERRALS SHALL BE ALLOCATED TO EACH PARTICIPANT’S ACCOUNT ON THE FIRST BUSINESS
DAY FOLLOWING THE DATE SUCH COMPENSATION WOULD OTHERWISE BE PAYABLE TO SUCH
PARTICIPANT IF NOT DEFERRED HEREUNDER OR, IF APPLICABLE, THE DATE ON WHICH
ACCOUNT BALANCES ARE DEEMED CREATED BY THE BOARD, AND SHALL BE DEEMED INVESTED
PURSUANT TO THIS SECTION 3.05, AS SOON AS PRACTICABLE THEREAFTER.

 

(A)           CREDITING OF INCOME, GAINS AND LOSSES.  IN GENERAL, AS OF EACH
VALUATION DATE, NOTATIONAL EQUIVALENTS FOR INCOME, GAIN AND LOSS (DETERMINED AS
IF THE ACCOUNT IS DEEMED INVESTED IN THE MANNER SET FORTH BELOW) ATTRIBUTABLE TO
THE PERIOD FOLLOWING THE IMMEDIATELY PRECEDING VALUATION DATE SHALL BE CREDITED
TO AND/OR DEDUCTED FROM THE ACCOUNT.

 

(B)           INVESTMENT OF ACCOUNT BALANCE.  THE PARTICIPANT MAY SELECT FROM
VARIOUS FUNDS MADE AVAILABLE HEREUNDER FROM TIME TO TIME IN THE ADMINISTRATOR’S
DISCRETION IN WHICH ALL OR PART OF PARTICIPANT’S ACCOUNT SHALL BE DEEMED TO BE
INVESTED, PROVIDED THAT:

 

(I)  WITH RESPECT TO ALL AMOUNTS DEFERRED HEREUNDER, EACH PARTICIPANT SHALL MAKE
AN INVESTMENT DESIGNATION ON A FORM PROVIDED BY THE ADMINISTRATOR, WHICH SHALL
REMAIN EFFECTIVE UNTIL ANOTHER VALID DESIGNATION HAS BEEN MADE BY THE
PARTICIPANT AS PROVIDED HEREIN.  IF A PARTICIPANT ELECTS TO INVEST ACCOUNT
BALANCES IN EDUS, SUCH AN ELECTION WILL BE IRREVOCABLE AND THE AMOUNTS SO
INVESTED (INCLUDING APPRECIATION THEREON) MUST REMAIN INVESTED IN EDUS UNTIL THE
DATE OF DISTRIBUTION FOR SUCH AMOUNTS AS PROVIDED HEREIN.  IF A PARTICIPANT
ELECTS TO INVEST ACCOUNT BALANCES IN SHARES, SUCH AMOUNTS (INCLUDING
APPRECIATION THEREON) CAN NEVER BE REINVESTED IN EDUS.  IN OTHER CASES WITH THE
BOARD’S CONSENT, THE PARTICIPANT MAY AMEND HIS INVESTMENT DESIGNATION BY GIVING
WRITTEN DIRECTION TO THE ADMINISTRATOR IN ACCORDANCE WITH PROCEDURES ESTABLISHED
BY THE ADMINISTRATOR.  A TIMELY CHANGE TO A PARTICIPANT’S INVESTMENT DESIGNATION
SHALL BECOME EFFECTIVE ON THE DATE DETERMINED UNDER THE APPLICABLE PROCEDURES
ESTABLISHED BY THE ADMINISTRATOR.

 

(II)  ANY CHANGES TO THE FUNDS TO BE MADE AVAILABLE TO THE PARTICIPANT, AND ANY
LIMITATION ON THE MAXIMUM OR MINIMUM PERCENTAGES OF THE PARTICIPANT’S ACCOUNT
THAT MAY BE INVESTED IN ANY PARTICULAR MEDIUM, SHALL BE DETERMINED IN THE SOLE
DISCRETION OF THE ADMINISTRATOR AND COMMUNICATED FROM TIME TO TIME TO THE
PARTICIPANT BY THE ADMINISTRATOR.

 

INITIALLY, THE ONLY INVESTMENT OPTIONS OFFERED UNDER THE PLAN WILL BE EDUS AND
SHARES.  IN THE FUTURE, IF OTHER INVESTMENT OPTIONS ARE OFFERED UNDER THE PLAN,
A PARTICIPANT WILL NOT BE PERMITTED TO NOTIONALLY INVEST IN SHARES (X) ANY
AMOUNTS DEFERRED UNDER THE PLAN THAT INITIALLY WERE DEEMED TO BE INVESTED IN AN
INVESTMENT OTHER THAN SHARES OR (Y) AMOUNTS CREDITED TO PARTICIPANT’S ACCOUNT
THAT ARE DEEMED TO BE TRANSFERRED OUT OF SHARES INTO ANOTHER INVESTMENT
ALTERNATIVE.  A PARTICIPANT WOULD, HOWEVER, BE ABLE TO DEFER FUTURE AMOUNTS OF
COMPENSATION INTO DEEMED INVESTMENT IN SHARES.

 

9

--------------------------------------------------------------------------------

 

(C)           DEFAULT PROVISION.  EXCEPT AS PROVIDED BELOW, EACH PARTICIPANT’S
ACCOUNT SHALL BE DEEMED TO BE INVESTED IN ACCORDANCE WITH HIS INVESTMENT
DESIGNATIONS, PROVIDED SUCH DESIGNATIONS CONFORM TO THE PROVISIONS OF THIS
SECTION.  NOTWITHSTANDING THE ABOVE, THE BOARD, IN ITS SOLE DISCRETION, MAY
DISREGARD A PARTICIPANT’S ELECTION AND DETERMINE THAT ALL COMPENSATION DEFERRALS
SHALL BE DEEMED TO BE INVESTED IN A FUND DETERMINED BY THE BOARD.  IN THE EVENT
THAT ANY FUND UNDER WHICH ANY PORTION OF A PARTICIPANT’S ACCOUNT IS DEEMED TO BE
INVESTED CEASES TO EXIST, SUCH PORTION OF THE ACCOUNT THEREAFTER SHALL BE DEEMED
HELD IN A FUND SELECTED BY SUCH PARTICIPANT OR, IN THE ABSENCE OF ANY
INSTRUCTIONS FROM SUCH PARTICIPANT, BY THE BOARD, SUBJECT TO SUBSEQUENT DEEMED
INVESTMENT ELECTIONS.

 

(D)           DETERMINATIONS OF ACCOUNT VALUE.  FROM TIME TO TIME IN ITS
DISCRETION OR AS OTHERWISE REQUIRED BY THIS PLAN (BUT NOT LESS THAN ANNUALLY AS
OF DECEMBER 31), THE BOARD SHALL DETERMINE ACCOUNT VALUES UNDER THE PLAN IN THE
MANNER PRESCRIBED IN THIS PLAN.  WITH RESPECT TO EDU-INVESTED BALANCES, THE
BOARD SHALL AT SUCH TIMES MAKE A DETERMINATION OF THE NET EROAC FOR THE
APPLICABLE PERIOD ENDING ON SUCH VALUATION DATE AND ADJUST EDU VALUE
ACCORDINGLY.  NET EROAC FOR CALENDAR YEAR 2005 SHALL BE CALCULATED AS IF THE
YEAR COMMENCED ON JULY 1, 2005.  DETERMINATIONS OF ACCOUNT VALUES, NET EROAC AND
EDU VALUE BY THE BOARD ARE FINAL AND CANNOT BE CHALLENGED BY PARTICIPANTS.

 

(E)           PAYMENT OF ACCOUNT BALANCES.

 

(I)  DISTRIBUTIONS FROM THE PLAN WHICH RELATE TO ACCOUNT BALANCES INVESTED IN
SHARES SHALL BE PAID BASED ON ACCOUNT VALUES DETERMINED AS OF THE END OF THE
MONTH PRECEDING THE MONTH OF THE PAYMENT DATE.

 

(II)  DISTRIBUTIONS OF EDU-INVESTED BALANCES FROM THE PLAN WHICH RELATE TO
DESIGNATED PAYMENT DATES SHALL BE PAID BASED ON ACCOUNT VALUES AS OF THE
IMMEDIATELY PRECEDING YEAR-END VALUATION DATE.

 

(III)  SUBJECT TO SECTION 3.05(F), DISTRIBUTIONS OF EDU-INVESTED BALANCES FROM
THE PLAN WHICH OCCUR WITHIN THE FIRST THREE MONTHS OF ANY CALENDAR YEAR WILL BE
PAID BASED ON ACCOUNT VALUES AS OF THE IMMEDIATELY PRECEDING YEAR-END VALUATION
DATE.  THE DATE OF A DISTRIBUTION PURSUANT TO SECTION 4.05 SHALL BE CONSIDERED
THE “EVENT” FOR PURPOSES OF THIS PARAGRAPH.

 

(IV)  DISTRIBUTIONS OF EDU-INVESTED BALANCES WHICH OCCUR AFTER THE END OF THE
THIRD MONTH IN ANY CALENDAR YEAR AND TO WHICH SECTIONS 3.05(E)(II) OR (III) DO
NOT APPLY (“NON-STANDARD DISTRIBUTIONS”), THE BOARD WILL CALCULATE A SPECIAL NET
EROAC FOR THE PERIOD COMMENCING WITH THE IMMEDIATELY PRECEDING ANNUAL VALUATION
DATE THROUGH THE LAST DAY OF THE QUARTER IMMEDIATELY PRECEDING THE DATE OF
NON-STANDARD DISTRIBUTION AND UPDATE THE VALUE OF SUCH PARTICIPANT’S ACCOUNT
ACCORDINGLY FOR PURPOSES OF MAKING SUCH DISTRIBUTION.  SUCH SPECIAL
DETERMINATIONS WILL BE UNIQUE TO THE PARTICIPANT FOR WHOM THEY WERE MADE, AND DO
NOT REPRESENT OFFICIAL VALUATION DATE CALCULATIONS FOR ANY OTHER PARTICIPANT
WITH EDU-INVESTED BALANCES OR ANY OTHER PURPOSE.  FOR THE AVOIDANCE OF DOUBT,
ACCOUNT VALUES FOR DISTRIBUTIONS MADE IN COMPLIANCE WITH SECTION 4.04(B) SHALL
BE DETERMINED IN ACCORDANCE WITH SECTION 3.05(E) IN THE ORDINARY COURSE BASED ON
THE ACTUAL DATE OF DISTRIBUTION.

 

10

--------------------------------------------------------------------------------

 

(V)  DISTRIBUTIONS OF AMOUNTS INVESTED IN INVESTMENTS OTHER THAN SHARES OR EDUS,
SHALL BE PAID BASED ON ACCOUNT VALUES DETERMINED AS OF THE DAY PRECEDING THE
PAYMENT DATE.

 

(F)            REASSESSMENT EVENT.  THE BOARD MAY IN ITS SOLE DISCRETION
DETERMINE FROM TIME TO TIME THAT AN EVENT, TRANSACTION, FACT OR CIRCUMSTANCE
AFFECTING THE BUSINESS OF THE ESURANCE SEGMENT HAS OCCURRED WHICH VALIDATES THE
USE OF A HIGHER OR LOWER MULTIPLE IN DETERMINING THE “FRANCHISE VALUE ADDED”
COMPONENT OF NET EROAC.  THE DETERMINATION OF THE NEW FRANCHISE VALUE MULTIPLE
AND THE MANNER IN WHICH NET EROAC WILL BE ADJUSTED TO REFLECT SUCH NEW FRANCHISE
VALUE MULTIPLE WILL BE IN THE BOARD’S SOLE DISCRETION.

 

(G)           STATEMENTS.  THE COMPANY SHALL PROVIDE AN ANNUAL STATEMENT TO EACH
PARTICIPANT SHOWING SUCH INFORMATION AS THE BOARD DEEMS APPROPRIATE INCLUDING,
WITHOUT LIMITATION, THE AGGREGATE AMOUNT CREDITED TO SUCH PARTICIPANT’S ACCOUNT
AS OF A REASONABLY CURRENT DATE.

 

SECTION 3.06.            LIMIT ON ACCOUNT BALANCE.   THE ADMINISTRATOR SHALL
SUSPEND A PARTICIPANT FROM MAKING NEW DEFERRAL ELECTIONS FOR A SUBSEQUENT PLAN
YEAR IF THE ADMINISTRATOR DETERMINES THAT THE AMOUNT CREDITED TO A PARTICIPANT’S
ACCOUNT UNDER THIS PLAN, TOGETHER WITH THE AMOUNTS CREDITED TO PARTICIPANT’S
OTHER ACCOUNTS UNDER SIMILAR PLANS, WOULD BE REASONABLY LIKELY TO EXCEED
$40,000,000 OR SUCH OTHER NUMBER AS MAY BE DESIGNATED BY THE BOARD.

 

ARTICLE IV

 

PAYMENT OF BENEFITS

 

SECTION 4.01.            NONFORFEITABILITY.  A PARTICIPANT’S RIGHT TO THE VALUE
OF HIS ACCOUNT SHALL BE FULLY VESTED AND NONFORFEITABLE AT ALL TIMES.

 

SECTION 4.02.            INCOME; PAYMENT AMOUNT.  ANY PAYMENT MADE PURSUANT TO
SECTIONS 4.03, 4.04, 4.05 OR 4.06 SHALL REFLECT THE INCOME, GAINS AND LOSSES
CREDITED TO THE APPLICABLE ACCOUNT IN THE MANNER DESCRIBED IN SECTION 3.05.

 

SECTION 4.03.            TIME OF PAYMENT.  EXCEPT AS PROVIDED IN SECTIONS 4.04,
4.05 AND 4.06, THE AMOUNT CREDITED TO THE ACCOUNT OF EACH PARTICIPANT SHALL
BECOME PAYABLE TO THE PARTICIPANT WITHIN THIRTY DAYS AFTER THE PAYMENT DATE. 
THE COMPANY HAS THE SOLE DISCRETION TO DETERMINE WHEN, WITHIN SUCH 30 DAY
PERIOD, THE PAYMENT WILL BE MADE.

 

SECTION 4.04.            TERMINATION OF SERVICE.  IN THE EVENT OF A
PARTICIPANT’S TERMINATION OF SERVICE WHILE AMOUNTS STAND CREDITED TO HIS
ACCOUNT, SUCH AMOUNTS SHALL BE PAID AS PROVIDED IN THIS SECTION 4.04.

 

(A)           DEATH OF PARTICIPANT.  IF THE PARTICIPANT’S TERMINATION OF SERVICE
IS ON ACCOUNT OF HIS DEATH, HIS ACCOUNT SHALL BE PAID TO HIS BENEFICIARY AS A
SINGLE PAYMENT AS SOON AS PRACTICABLE, BUT NOT LATER THAN THIRTY DAYS AFTER THE
PARTICIPANT’S DEATH.

 

11

--------------------------------------------------------------------------------

 

(B)           OTHER TERMINATION.  IF THE PARTICIPANT’S TERMINATION OF SERVICE IS
FOR A REASON OTHER THAN DEATH, HIS ACCOUNT SHALL BE PAID TO HIM AS A SINGLE
PAYMENT ON THE FIRST BUSINESS DAY FOLLOWING THE DATE THAT IS SIX MONTHS AFTER
THE TERMINATION OF SERVICE (THE “SIX MONTH DATE”) OR AS SOON AS PRACTICABLE
THEREAFTER, BUT IN NO EVENT LATER THAN THE END OF THE CALENDAR YEAR THAT
INCLUDES THE SIX MONTH DATE.

 

SECTION 4.05.            WITHDRAWAL AND/OR CANCELLATION OF DEFERRAL ELECTION FOR
UNFORESEEABLE EMERGENCY NEED.

 

(A)  AUTHORIZATION.  TO THE EXTENT CONSISTENT WITH SECTION 409A OF THE CODE, THE
BOARD MAY PERMIT A PARTICIPANT WHO DEMONSTRATES AN UNFORESEEABLE EMERGENCY NEED
TO (I) WITHDRAW FROM THE PLAN AN AMOUNT NO GREATER THAN THE AMOUNT DETERMINED BY
THE BOARD TO BE REASONABLY NECESSARY TO SATISFY SUCH EMERGENCY NEED TO THE
EXTENT PERMITTED UNDER SECTION 409A(A)(2)(B)(II) OF THE CODE, AND/OR (II) CANCEL
A DEFERRAL ELECTION (WITH THE EFFECT OF CEASING ALL SUBSEQUENT DEFERRALS OF
COMPENSATION WITH RESPECT TO SUCH ELECTION) TO THE EXTENT PERMITTED UNDER TREAS.
REG. §1-409A-3(J)(4)(VIII).

 

(B)  EMERGENCY NEED.  FOR PURPOSES OF THIS SECTION 4.05, AN UNFORESEEABLE
EMERGENCY NEED IS A SEVERE FINANCIAL HARDSHIP OF A PARTICIPANT RESULTING FROM
(I) A SUDDEN AND UNEXPECTED ILLNESS OF OR ACCIDENT TO THE PARTICIPANT OR THE
PARTICIPANT’S SPOUSE, BENEFICIARY OR A DEPENDENT (AS DEFINED IN
SECTION 152(A) OF THE CODE WITHOUT REGARD TO SECTION 152(B)(1), (B)(2), AND
(D)(1)(B)), (II) A CASUALTY LOSS TO THE PARTICIPANT’S PROPERTY OR (III) OTHER
SIMILAR EXTRAORDINARY AND UNFORESEEABLE CIRCUMSTANCES ARISING AS A RESULT OF
EVENTS BEYOND THE PARTICIPANT’S CONTROL, IN EACH CASE, ONLY TO THE EXTENT SUCH
EVENT IS CONSIDERED TO BE AN “UNFORESEEABLE EMERGENCY” UNDER
SECTION 409A(A)(2) OF THE CODE.  A NEED IS NOT AN UNFORESEEABLE EMERGENCY NEED
TO THE EXTENT THAT IT IS OR WILL BE RELIEVED BY REIMBURSEMENT OR COMPENSATION BY
INSURANCE OR OTHERWISE, OR BY LIQUIDATION OF THE PARTICIPANT’S ASSETS INSOFAR AS
SUCH LIQUIDATION WOULD NOT CAUSE SEVERE FINANCIAL HARDSHIP, OR BY CESSATION OF
DEFERRALS UNDER THE PLAN.  THE BOARD SHALL DETERMINE IN ITS SOLE DISCRETION
WHETHER AND TO WHAT EXTENT AN UNFORESEEABLE EMERGENCY NEED EXISTS.

 

(C)  PRIORITY.               PRIOR TO RECEIVING ANY WITHDRAWAL FROM THE PLAN FOR
A FINANCIAL HARDSHIP, A PARTICIPANT MUST FIRST CANCEL ANY DEFERRAL ELECTIONS IF,
IN THE ADMINISTRATOR’S SOLE DISCRETION, THE CESSATION OF DEFERRALS RELATING TO
SUCH ELECTIONS WOULD CONTRIBUTE TO THE RELIEF OF THE FINANCIAL HARDSHIP.

 

SECTION 4.06.            CHANGE IN CONTROL.  UNLESS OTHERWISE ELECTED BY A
PARTICIPANT IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY THE ADMINISTRATOR, EACH
PARTICIPANT’S ACCOUNT SHALL BE DISTRIBUTED IN FULL IN A CASH LUMP SUM WITHIN 30
DAYS OF A CHANGE IN CONTROL.

 

SECTION 4.07.            SOURCE OF PAYMENT.  THE COMPENSATION DEFERRED PURSUANT
TO THIS PLAN (AND THE INCOME, GAINS AND LOSSES CREDITED THEREON) SHALL BE A
GENERAL OBLIGATION OF THE COMPANY.  THE CLAIM OF A PARTICIPANT OR BENEFICIARY TO
A BENEFIT SHALL AT ALL TIMES BE MERELY THE CLAIM OF AN UNSECURED CREDITOR OF THE
COMPANY.  NO TRUST, SECURITY, ESCROW, OR SIMILAR ACCOUNT NEED BE ESTABLISHED FOR
THE PURPOSE OF PAYING BENEFITS HEREUNDER.  THE COMPANY SHALL NOT BE REQUIRED TO
PURCHASE, HOLD OR DISPOSE OF ANY INVESTMENTS PURSUANT TO THIS PLAN; HOWEVER, IF
IN ORDER TO COVER ITS OBLIGATIONS HEREUNDER THE COMPANY ELECTS TO PURCHASE ANY
INVESTMENTS THE SAME SHALL CONTINUE FOR ALL PURPOSES TO BE A PART OF THE GENERAL
ASSETS AND PROPERTY OF THE

 

12

--------------------------------------------------------------------------------

 

COMPANY, SUBJECT TO THE CLAIMS OF ITS GENERAL CREDITORS AND NO PERSON OTHER THAN
THE COMPANY SHALL BY VIRTUE OF THE PROVISIONS OF THIS PLAN HAVE ANY INTEREST IN
SUCH ASSETS OTHER THAN AN INTEREST AS A GENERAL CREDITOR.

 

SECTION 4.08.            WITHHOLDING.  ALL AMOUNTS CREDITED TO PARTICIPANTS’
ACCOUNTS PURSUANT TO THIS PLAN AND ALL PAYMENTS UNDER THE PLAN SHALL BE SUBJECT
TO ANY APPLICABLE WITHHOLDING REQUIREMENTS IMPOSED BY ANY TAX (INCLUDING,
WITHOUT LIMITATION, FICA) OR OTHER LAW.  IF ANY OF THE TAXES REFERRED TO ABOVE
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.

 

SECTION 4.09.            RIGHT OF OFFSET.  ANY AMOUNT PAYABLE PURSUANT TO THIS
PLAN SHALL BE REDUCED AT THE DISCRETION OF THE ADMINISTRATOR CONSISTENT WITH THE
PROVISIONS OF TREAS. REG. SECTION 1.409A-3(J)(4)(XIII) (OR ANY SUCCESSOR
REGULATION THERETO) TO TAKE ACCOUNT OF ANY AMOUNT DUE, AND NOT PAID, BY THE
PARTICIPANT TO THE COMPANY.

 

SECTION 4.10.            PAYMENT DENOMINATION.  EXCEPT AS SET FORTH IN THIS
SECTION 4.10 OR AS OTHERWISE DETERMINED BY THE ADMINISTRATOR IN ITS SOLE AND
ABSOLUTE DISCRETION, ALL DISTRIBUTIONS UNDER THE PLAN (INCLUDING ALL
DISTRIBUTIONS MADE PURSUANT TO SECTIONS 4.03, 4.04, 4.05 AND 4.06) MAY BE MADE
IN WHOLE OR IN PART IN (I) CASH, (II) SUBJECT TO THE CONSENT OF THE WHITE
MOUNTAINS INSURANCE GROUP, LTD. BOARD OF DIRECTORS, SHARES HAVING A MARKET PRICE
AS OF THE TRADING DAY IMMEDIATELY PRECEDING THE DATE OF SUCH DISTRIBUTION EQUAL
TO THE VALUE OF SUCH DISTRIBUTION, AND/OR (III) IF AN ENTITY REPRESENTING THE
ESURANCE SEGMENT HAS HAD A PUBLIC OFFERING AND A REGULAR AND LIQUID PUBLIC
MARKET FOR THE COMMON SHARES OF SUCH ENTITY EXISTS AT THE TIME OF PAYMENT, IN
COMMON SHARES OF SUCH PUBLIC ENTITY HAVING A VALUE AS OF THE TRADING DAY
IMMEDIATELY PRECEDING THE DATE OF SUCH DISTRIBUTION EQUAL TO THE VALUE OF SUCH
DISTRIBUTION; PROVIDED THAT THE FIRST $1,000,000 (OR SUCH OTHER AMOUNT AS MAY BE
DESIGNATED BY THE ADMINISTRATOR OR THE BOARD) DISTRIBUTED TO A PARTICIPANT (OR
HIS BENEFICIARY) IN ANY PLAN YEAR AND ALL DISTRIBUTIONS MADE PURSUANT TO
SECTION 4.06 SHALL BE MADE IN CASH.

 

SECTION 4.11.            REASSESSMENT EVENT LOOK-BACK PAYMENT.  IN THE EVENT A
REASSESSMENT EVENT OCCURS WITHIN THE TWELVE MONTHS FOLLOWING A PARTICIPANT’S
TERMINATION OF SERVICE DUE TO A TERMINATION OF THE PARTICIPANT’S EMPLOYMENT OR
SERVICE BY A COMPANY IN THE CONTROLLED GROUP WITHOUT CAUSE, THE COMPANY WILL
MAKE A PAYMENT TO SUCH PARTICIPANT (SUBJECT TO APPLICABLE TAX WITHHOLDING) IN AN
AMOUNT WHICH, IN THE BOARD’S DETERMINATION, REPRESENTS THE ADDITIONAL AMOUNT (ON
A PRE-TAX BASIS) WHICH SUCH PARTICIPANT WOULD HAVE RECEIVED IN RESPECT OF HIS OR
HER ACCOUNT IF THE BOARD’S ADJUSTMENT TO THE FRANCHISE VALUE MULTIPLE IN THE
MANNER APPLICABLE TO ALL OTHER PARTICIPANTS HAD BEEN IN EFFECT AT THE TIME THE
ORIGINAL LIQUIDATION VALUE OF THE PARTICIPANT’S ACCOUNT WAS DETERMINED, PROVIDED
THAT ANY SUCH PAYMENT HEREUNDER SHALL BE MADE NO LATER THAN MARCH 15TH OF THE
CALENDAR YEAR FOLLOWING THE CALENDAR YEAR IN WHICH THE BOARD MAKES SUCH
DETERMINATION.  THE BOARD SHALL HAVE THE SOLE DISCRETION TO DETERMINE WHEN
DURING SUCH PERIOD OF TIME BEFORE THE MARCH 15TH DATE THAT PAYMENT WILL BE MADE.

 

13

--------------------------------------------------------------------------------

 

ARTICLE V

 

BENEFICIARIES

 

SECTION 5.01.            BENEFICIARY DESIGNATION.

 

(A)           DESIGNATION.  A PARTICIPANT MAY FROM TIME TO TIME DESIGNATE, IN
THE MANNER SPECIFIED BY THE ADMINISTRATOR, A BENEFICIARY TO RECEIVE PAYMENT
PURSUANT TO SECTION 4.04 IN THE EVENT OF HIS DEATH.  ANY BENEFICIARY DESIGNATION
MUST BE IN WRITING, SIGNED BY THE PARTICIPANT, ON THE FORM PRESCRIBED BY THE
ADMINISTRATOR AND DELIVERED TO THE ADMINISTRATOR PRIOR TO THE PARTICIPANT’S
DEATH.

 

(B)           ABSENCE OF BENEFICIARY.  IN THE EVENT THAT THERE IS NO PROPERLY
DESIGNATED BENEFICIARY LIVING AT THE TIME OF A PARTICIPANT’S DEATH, HIS BENEFIT
HEREUNDER SHALL BE PAID TO HIS ESTATE.

 

SECTION 5.02.            PAYMENT TO INCOMPETENT.  IF ANY PERSON ENTITLED TO
BENEFITS UNDER THIS PLAN SHALL BE A MINOR OR SHALL BE PHYSICALLY OR MENTALLY
INCOMPETENT IN THE JUDGMENT OF THE ADMINISTRATOR, SUCH BENEFITS MAY BE PAID IN
ANY ONE OR MORE OF THE FOLLOWING WAYS, AS THE ADMINISTRATOR IN HIS SOLE
DISCRETION SHALL DETERMINE:

 

(A)           TO THE LEGAL REPRESENTATIVES OF SUCH MINOR OR INCOMPETENT PERSON;

 

(B)           DIRECTLY TO SUCH MINOR OR INCOMPETENT PERSON; OR

 

(C)           TO A PARENT OR GUARDIAN OF SUCH MINOR OR INCOMPETENT PERSON, TO
THE PERSON WITH WHOM SUCH MINOR OR INCOMPETENT PERSON RESIDES, OR TO A CUSTODIAN
FOR SUCH MINOR UNDER THE UNIFORM GIFTS TO MINORS ACT (OR SIMILAR STATUTE) OF ANY
JURISDICTION.

 

Payment to any person in accordance with the foregoing provisions of this
Section 5.02 shall to that extent discharge the Company, which shall not be
required to see to the proper application of any such payment.

 

SECTION 5.03.            DOUBT AS TO RIGHT TO PAYMENT.

 

(A)  IF ANY DOUBT EXISTS AS TO THE RIGHT OF ANY PERSON TO ANY BENEFITS UNDER
THIS PLAN OR THE AMOUNT OR TIME OF PAYMENT OF SUCH BENEFITS (INCLUDING, WITHOUT
LIMITATION, ANY CASE OF DOUBT AS TO IDENTITY, OR ANY CASE IN WHICH ANY NOTICE
HAS BEEN RECEIVED FROM ANY OTHER PERSON CLAIMING ANY INTEREST IN AMOUNTS PAYABLE
HEREUNDER, OR ANY CASE IN WHICH A CLAIM FROM OTHER PERSONS MAY EXIST BY REASON
OF COMMUNITY PROPERTY OR SIMILAR LAWS), THE ADMINISTRATOR MAY, IN ITS
DISCRETION, DIRECT THAT PAYMENT OF SUCH BENEFITS BE DEFERRED IN A MANNER
CONSISTENT WITH SEC. 409A.

 

(B)  A PAYMENT IS DEEMED TO BE MADE ON THE DATE SCHEDULED UNDER THE PLAN IF:
(I) THE PARTICIPANT (OR BENEFICIARY, IF APPLICABLE) ACCEPTS A PORTION OF THE
PAYMENT THAT THE COMPANY IS WILLING TO MAKE (UNLESS SUCH ACCEPTANCE WOULD RESULT
IN A FORFEITURE OR RELINQUISHMENT), (II) THE SERVICE PROVIDER MAKES PROMPT AND
REASONABLE, GOOD FAITH EFFORTS TO COLLECT THE AMOUNT, AND (III) ANY FURTHER
PAYMENT IS MADE NO LATER THAN THE END OF THE FIRST TAXABLE YEAR OF THE
PARTICIPANT (OR

 

14

--------------------------------------------------------------------------------

 

BENEFICIARY, IF APPLICABLE) IN WHICH THE PARTIES HAVE ENTERED INTO A LEGALLY
BINDING SETTLEMENT OF THE DISPUTE.

 

SECTION 5.04.            SPENDTHRIFT CLAUSE.  NO BENEFIT, DISTRIBUTION OR
PAYMENT UNDER THE PLAN MAY BE ANTICIPATED, ASSIGNED (EITHER AT LAW OR IN
EQUITY), ALIENATED OR SUBJECT TO ATTACHMENT, GARNISHMENT, LEVY, EXECUTION OR
OTHER LEGAL OR EQUITABLE PROCESS, UNLESS REQUIRED UNDER A “QUALIFIED DOMESTIC
RELATIONS ORDER” AS DEFINED IN SECTION 414(P) OF THE CODE.

 

ARTICLE VI

 

ADMINISTRATION AND RESERVATION OF RIGHTS

 

SECTION 6.01.            POWERS OF THE BOARD.  THE BOARD SHALL HAVE THE POWER
AND SOLE AND ABSOLUTE DISCRETION TO

 

(A)           DETERMINE ALL QUESTIONS ARISING IN LAW OR FACT IN THE
INTERPRETATION AND APPLICATION OF THE PLAN;

 

(B)           DETERMINE THE PERSON OR PERSONS TO WHOM BENEFITS UNDER THE PLAN
SHALL BE PAID;

 

(C)           DECIDE ANY DISPUTE ARISING HEREUNDER;

 

(D)           CORRECT DEFECTS, SUPPLY OMISSIONS AND RECONCILE INCONSISTENCIES TO
THE EXTENT NECESSARY TO EFFECTUATE THE PLAN; AND

 

(E)           HAVE ALL SUCH OTHER POWERS AS MAY BE NECESSARY TO DISCHARGE ITS
DUTIES HEREUNDER; PROVIDED THAT ANY DETERMINATION INVOLVING A PARTICIPANT WHO IS
A MEMBER OF THE BOARD SHALL BE MADE BY THE OTHER MEMBERS OF THE BOARD.

 

SECTION 6.02.            POWERS OF THE ADMINISTRATOR.  THE ADMINISTRATOR SHALL
HAVE THE POWER AND SOLE AND ABSOLUTE DISCRETION TO

 

(A)           PROMULGATE AND ENFORCE SUCH RULES, REGULATIONS AND PROCEDURES AS
SHALL BE PROPER FOR THE EFFICIENT ADMINISTRATION OF THE PLAN;

 

(B)           DETERMINE ALL QUESTIONS ARISING IN THE ADMINISTRATION OF THE PLAN;

 

(C)           COMPUTE THE AMOUNT OF BENEFITS AND OTHER PAYMENTS WHICH SHALL BE
PAYABLE TO ANY PARTICIPANT IN ACCORDANCE WITH THE PROVISIONS OF THE PLAN;

 

(D)           MAKE RECOMMENDATIONS TO THE BOARD WITH RESPECT TO PROPOSED
AMENDMENTS TO THE PLAN;

 

(E)           ADVISE THE BOARD REGARDING THE KNOWN FUTURE NEED FOR FUNDS TO BE
AVAILABLE FOR DISTRIBUTION;

 

15

--------------------------------------------------------------------------------

 

(F)            FILE ALL REPORTS WITH GOVERNMENT AGENCIES, PARTICIPANTS AND OTHER
PARTIES AS MAY BE REQUIRED BY LAW, WHETHER SUCH REPORTS ARE INITIALLY THE
OBLIGATION OF THE COMPANY OR THE PLAN; AND

 

(G)           HAVE ALL SUCH OTHER POWERS AS MAY BE NECESSARY TO DISCHARGE ITS
DUTIES HEREUNDER.

 

16

--------------------------------------------------------------------------------

 

SECTION 6.03.            CLAIMS PROCEDURE.

 

(A)  FILING A CLAIM.  EACH INDIVIDUAL WHO CLAIMS TO BE ELIGIBLE FOR BENEFITS
UNDER THIS PLAN (A “CLAIMANT”) MAY SUBMIT A WRITTEN CLAIM FOR BENEFITS (A
“CLAIM”) TO THE ADMINISTRATOR OR ITS DELEGATE WHERE THE INDIVIDUAL BELIEVES A
BENEFIT HAS NOT BEEN PROVIDED UNDER THE PLAN TO SUCH INDIVIDUAL TO WHICH SUCH
INDIVIDUAL IS ELIGIBLE.  A CLAIM MUST BE SET FORTH IN WRITING ON A FORM PROVIDED
OR OTHERWISE APPROVED BY THE ADMINISTRATOR OR ITS DELEGATE AND MUST BE SUBMITTED
TO THE ADMINISTRATOR OR ITS DELEGATE NO LATER THAN SIX (6) MONTHS AFTER THE DATE
ON WHICH THE CLAIMANT OR OTHER INDIVIDUAL CLAIMS TO HAVE BEEN FIRST ENTITLED TO
SUCH CLAIMED BENEFIT.

 

(B)  REVIEW OF CLAIM.  THE ADMINISTRATOR OR ITS DELEGATE SHALL EVALUATE EACH
PROPERLY FILED CLAIM AND NOTIFY THE CLAIMANT OF THE DENIAL OF THE CLAIM (IF
APPLICABLE) WITHIN 90 DAYS AFTER THE ADMINISTRATOR OR ITS DELEGATE RECEIVES THE
CLAIM, UNLESS SPECIAL CIRCUMSTANCES REQUIRE AN EXTENSION OF TIME FOR PROCESSING
THE CLAIM.  IF AN EXTENSION OF TIME FOR PROCESSING THE CLAIM IS REQUIRED, THE
ADMINISTRATOR OR ITS DELEGATE SHALL PROVIDE THE CLAIMANT WITH WRITTEN NOTICE OF
THE EXTENSION BEFORE THE EXPIRATION OF THE INITIAL 90-DAY PERIOD, SPECIFYING THE
CIRCUMSTANCES REQUIRING AN EXTENSION AND THE DATE BY WHICH A FINAL DECISION WILL
BE REACHED (WHICH DATE SHALL NOT BE LATER THAN 180 DAYS AFTER THE DATE ON WHICH
THE ADMINISTRATOR OR ITS DELEGATE RECEIVED THE CLAIM).

 

(C)  NOTICE OF CLAIM DENIAL.  IF A CLAIM IS DENIED IN WHOLE OR IN PART, THE
ADMINISTRATOR OR ITS DELEGATE SHALL PROVIDE THE CLAIMANT WITH A WRITTEN NOTICE
SETTING FORTH (I) THE SPECIFIC REASONS FOR THE DENIAL, (II) REFERENCES TO
PERTINENT PLAN PROVISIONS UPON WHICH THE DENIAL IS BASED, (III) A DESCRIPTION OF
ANY ADDITIONAL MATERIAL OR INFORMATION NEEDED AND AN EXPLANATION OF WHY SUCH
MATERIAL OR INFORMATION IS NECESSARY, AND (IV) A DESCRIPTION OF THE PLAN’S
REVIEW PROCESS AND THE TIME LIMITS FOR SUCH PROCESS, INCLUDING A STATEMENT OF
THE CLAIMANT’S RIGHT TO BRING A CIVIL ACTION UNDER SECTION 502(A) OF ERISA
FOLLOWING AN ADVERSE DETERMINATION ON REVIEW.

 

(D)  REVIEW OF CLAIM DENIAL.  IF A CLAIM IS DENIED, IN WHOLE OR IN PART, THE
CLAIMANT SHALL HAVE THE RIGHT TO FILE A REQUEST FOR A REVIEW OF THE INITIAL
CLAIM DENIAL.  A CLAIMANT WILL HAVE 60 DAYS FOLLOWING THE RECEIPT OF
NOTIFICATION OF AN ADVERSE BENEFIT DETERMINATION WITHIN WHICH TO APPEAL THE
DECISION.  AS PART OF THE REVIEW PROCESS, THE CLAIMANT WILL HAVE THE FOLLOWING
RIGHTS: (I) THE OPPORTUNITY TO SUBMIT WRITTEN COMMENTS, DOCUMENTS, RECORDS, AND
OTHER INFORMATION RELATING TO THE CLAIM FOR BENEFITS, (II) TO BE PROVIDED, UPON
REQUEST AND FREE OF CHARGE, REASONABLE ACCESS TO, AND COPIES OF, ALL DOCUMENTS,
RECORDS, AND OTHER INFORMATION RELEVANT (THAT IS NOT PRIVILEGED OR PROTECTED) TO
THE CLAIMANT’S CLAIM FOR BENEFITS, AND (III) A REVIEW THAT TAKES INTO ACCOUNT
ALL COMMENTS, DOCUMENTS, RECORDS, AND OTHER INFORMATION SUBMITTED BY THE
CLAIMANT RELATING TO THE CLAIM, WITHOUT REGARD TO WHETHER SUCH INFORMATION WAS
SUBMITTED OR CONSIDERED IN THE INITIAL BENEFIT DETERMINATION.

 

(E)  TIMING AND NOTICE OF REVIEW OF CLAIM DENIAL.  .  THE ADMINISTRATOR OR ITS
DELEGATE SHALL EVALUATE EACH PROPERLY FILED CLAIM ON REVIEW AND NOTIFY THE
CLAIMANT OF THE APPROVAL OR DENIAL OF THE CLAIM ON REVIEW WITHIN 60 DAYS AFTER
THE ADMINISTRATOR OR ITS DELEGATE RECEIVES THE CLAIM ON REVIEW, UNLESS SPECIAL
CIRCUMSTANCES REQUIRE AN EXTENSION OF TIME FOR

 

17

--------------------------------------------------------------------------------

 

PROCESSING THE CLAIM.   IF AN EXTENSION OF TIME FOR PROCESSING THE CLAIM ON
REVIEW IS REQUIRED, THE ADMINISTRATOR OR ITS DELEGATE SHALL PROVIDE THE CLAIMANT
WITH WRITTEN NOTICE OF THE EXTENSION BEFORE THE EXPIRATION OF THE INITIAL 60-DAY
PERIOD, SPECIFYING THE CIRCUMSTANCES REQUIRING AN EXTENSION AND THE DATE BY
WHICH A FINAL DECISION WILL BE REACHED (WHICH DATE SHALL NOT BE LATER THAN 120
DAYS AFTER THE DATE ON WHICH THE ADMINISTRATOR OR ITS DELEGATE RECEIVED THE
CLAIM ON REIVEW).

 

IF THE CLAIM ON REVIEW IS DENIED IN WHOLE OR IN PART, THE ADMINISTRATOR OR ITS
DELEGATE SHALL PROVIDE THE CLAIMANT WITH WRITTEN NOTICE THAT SETS FORTH THE
FOLLOWING: (I) THE SPECIFIC REASON(S) FOR THE DENIAL ON REVIEW, (II) REFERENCE
TO THE SPECIFIC PLAN PROVISIONS ON WHICH THE BENEFIT DETERMINATION WAS MADE,
(III) A STATEMENT THAT THE CLAIMANT IS ENTITLED TO RECEIVE, UPON REQUEST AND
FREE OF CHARGE, REASONABLE ACCESS TO, AND COPIES OF, ALL DOCUMENTS, RECORDS, AND
OTHER INFORMATION RELEVANT (THAT IS NOT PRIVILEGED OR PROTECTED) TO THE
CLAIMANT’S CLAIM ON REVIEW, AND (IV) A STATEMENT DESCRIBING ANY VOLUNTARY APPEAL
PROCEDURES OFFERED BY THE PLAN AND THE CLAIMANT’S RIGHT TO OBTAIN THE
INFORMATION ABOUT SUCH PROCEDURES, AND A STATEMENT OF THE CLAIMANT’S RIGHT TO
BRING AN ACTION UNDER SECTION 502(A) OF ERISA.

 

(F)  REQUIREMENT TO EXHAUST ADMINISTRATIVE PROCEDURES.  NO CLAIMANT OR OTHER
INDIVIDUAL MAY FILE ANY CLAIM FOR BENEFITS OR REQUEST A REVIEW OF A DENIAL OF
ANY CLAIM UNLESS SUCH PERSON FOLLOWS THE PROVISIONS AND TIMEFRAMES OF THIS
SECTION.  A CLAIMANT OR OTHER INDIVIDUAL SHALL NOT BE ENTITLED TO BRING ANY
ACTION IN ANY COURT UNLESS SUCH PERSON HAS EXHAUSTED SUCH PERSON’S RIGHTS UNDER
THESE PROCEDURES BY TIMELY SUBMITTING A CLAIM AND REQUESTING A REVIEW OF A
DECISION WITH RESPECT TO SUCH CLAIM.

 

SECTION 6.04.            DETERMINATIONS OF THE ADMINISTRATOR.  THE
DETERMINATIONS, INTERPRETATIONS, RULES AND DECISIONS OF THE ADMINISTRATOR OR ITS
DELEGATE SHALL BE FINAL, BINDING AND CONCLUSIVE ON THE COMPANY AND UPON EACH
PARTICIPANT, BENEFICIARY AND EACH OTHER PERSON OR PARTY INTERESTED OR CONCERNED.

 

SECTION 6.05.            CONSENT.  BY ELECTING TO BECOME A PARTICIPANT, EACH
PARTICIPANT SHALL BE DEEMED CONCLUSIVELY TO (I) HAVE ACCEPTED AND CONSENTED TO
ALL TERMS OF THE PLAN AND ALL ACTIONS OR DECISIONS MADE BY THE ADMINISTRATOR OR
THE BOARD WITH REGARD TO THE PLAN AND (II) HAVE AGREED THAT THE COMPANY, THE
ADMINISTRATOR AND THE BOARD (AND ANY PERSON WHO IS EMPLOYED BY, IS A MEMBER OF,
OR PROVIDES SERVICES TO OR ON BEHALF OF, ANY OF THE FOREGOING) SHALL NOT HAVE
ANY LIABILITY RELATED TO, OR BE RESPONSIBLE FOR ANY CLAIM RELATED TO, THE
INCURRENCE BY THE PARTICIPANT OF ANY TAX, INTEREST EXPENSE, LOSS OF DEFERRAL
BENEFIT, OR ANY OTHER OBLIGATION, LIABILITY OR DAMAGE, IN EACH CASE, ARISING
UNDER OR RELATED TO SECTION 409A OF THE CODE.  THIS SECTION 6.04 SHALL APPLY TO,
AND BE BINDING UPON, THE BENEFICIARIES, DISTRIBUTEES AND PERSONAL
REPRESENTATIVES AND OTHER SUCCESSORS IN INTEREST OF EACH PARTICIPANT.

 

SECTION 6.06.            AGENTS AND EXPENSES.  THE ADMINISTRATOR OR THE BOARD
MAY EMPLOY AGENTS AND PROVIDE FOR SUCH CLERICAL, LEGAL, ACTUARIAL, ACCOUNTING,
MEDICAL, ADVISORY OR OTHER SERVICES AS IT DEEMS NECESSARY TO PERFORM ITS DUTIES
UNDER THIS PLAN.  THE COST OF SUCH SERVICES AND ALL OTHER EXPENSES INCURRED BY
THE ADMINISTRATOR OR THE BOARD IN CONNECTION WITH THE ADMINISTRATION OF THE PLAN
SHALL BE PAID BY THE COMPANY.

 

18

--------------------------------------------------------------------------------

 

SECTION 6.07.            ALLOCATION OF DUTIES.  THE DUTIES, POWERS AND
RESPONSIBILITIES RESERVED TO THE BOARD MAY BE ALLOCATED AMONG ITS MEMBERS SO
LONG AS SUCH ALLOCATION IS PURSUANT TO WRITTEN PROCEDURES ADOPTED BY THE BOARD,
IN WHICH CASE NO BOARD MEMBER SHALL HAVE ANY LIABILITY, WITH RESPECT TO ANY
DUTIES, POWERS OR RESPONSIBILITIES NOT ALLOCATED TO HIM, FOR THE ACTS OR
OMISSIONS OF ANY OTHER BOARD MEMBER.

 

SECTION 6.08.            DELEGATION OF DUTIES.  THE ADMINISTRATOR AND THE BOARD
MAY DELEGATE ANY OF THEIR RESPECTIVE DUTIES TO EMPLOYEES OF THE COMPANY OR ITS
SUBSIDIARIES.

 

SECTION 6.09.            ACTIONS CONCLUSIVE.  ANY ACTION ON MATTERS WITHIN THE
DISCRETION OF THE ADMINISTRATOR OR THE BOARD SHALL BE FINAL, BINDING AND
CONCLUSIVE.

 

SECTION 6.10.            RECORDS AND REPORTS.  THE ADMINISTRATOR AND THE BOARD
SHALL MAINTAIN ADEQUATE RECORDS OF THEIR RESPECTIVE ACTIONS AND PROCEEDINGS IN
ADMINISTERING THIS PLAN AND SHALL FILE ALL REPORTS AND TAKE ALL OTHER ACTIONS AS
ARE DEEMED APPROPRIATE IN ORDER TO COMPLY WITH ANY FEDERAL OR STATE LAW. 
WITHOUT LIMITING THE FOREGOING, UPON REQUEST, THE ADMINISTRATOR SHALL PROVIDE TO
THE BOARD A LIST OF THE INVESTMENT ALTERNATIVES MADE AVAILABLE UNDER THE PLAN,
THE AGGREGATE AMOUNTS DEEMED INVESTED UNDER THE PLAN IN EACH SUCH ALTERNATIVE
AND SUCH OTHER INFORMATION REQUESTED BY THE BOARD.

 

SECTION 6.11.            LIABILITY AND INDEMNIFICATION.  THE ADMINISTRATOR AND
THE BOARD SHALL PERFORM ALL DUTIES REQUIRED OF THEM UNDER THIS PLAN IN A PRUDENT
MANNER.  THE ADMINISTRATOR AND THE BOARD SHALL NOT BE RESPONSIBLE IN ANY WAY FOR
ANY ACTION OR OMISSION OF THE COMPANY, ITS SUBSIDIARIES OR THEIR EMPLOYEES IN
THE PERFORMANCE OF THEIR DUTIES AND OBLIGATIONS AS SET FORTH IN THIS PLAN.  THE
ADMINISTRATOR AND THE BOARD ALSO SHALL NOT BE RESPONSIBLE FOR ANY ACT OR
OMISSION OF ANY OF THEIR RESPECTIVE AGENTS PROVIDED THAT SUCH AGENTS WERE
PRUDENTLY CHOSEN BY THE ADMINISTRATOR OR THE BOARD AND THAT THE ADMINISTRATOR OR
THE BOARD RELIED IN GOOD FAITH UPON THE ACTION OF SUCH AGENTS.

 

SECTION 6.12.            RIGHT TO AMEND OR TERMINATE.  THE BOARD MAY AT ANY TIME
AMEND THE PLAN IN ANY RESPECT, RETROACTIVELY OR OTHERWISE, OR TERMINATE THE PLAN
IN WHOLE OR IN PART FOR ANY OTHER REASON TO THE EXTENT PERMITTED UNDER TREAS.
REG. § 1.409A-3(J)(4)(IX) (INCLUDING, WITHOUT LIMITATION, FOLLOWING ANY CHANGE
IN CONTROL EVENT WITHIN THE MEANING OF SECTION 409A OF THE CODE).  HOWEVER,
EXCEPT AS PERMITTED PURSUANT TO THE TERMS OF THIS PLAN, NO SUCH AMENDMENT OR
TERMINATION SHALL REDUCE THE AMOUNT STANDING CREDITED TO ANY PARTICIPANT’S
ACCOUNT AS OF THE DATE OF SUCH AMENDMENT OR TERMINATION.  FOLLOWING A
TERMINATION OF THE PLAN, INCOME, GAINS AND LOSSES SHALL CONTINUE TO BE CREDITED
TO EACH ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF THIS PLAN UNTIL THE TIME
SUCH ACCOUNTS ARE PAID OUT.

 

SECTION 6.13.            USAGE.  WHENEVER APPLICABLE, THE MASCULINE GENDER, WHEN
USED IN THE PLAN, INCLUDES THE FEMININE GENDER, AND THE SINGULAR INCLUDES THE
PLURAL.

 

SECTION 6.14.            SEVERABILITY.  IF ANY PROVISION OF THE PLAN IS HELD
INVALID OR UNENFORCEABLE, ITS INVALIDITY OR UNENFORCEABILITY SHALL NOT AFFECT
ANY OTHER PROVISIONS OF THE PLAN, AND THE PLAN SHALL BE CONSTRUED AND ENFORCED
AS IF SUCH PROVISION HAD NOT BEEN INCLUDED THEREIN.

 

SECTION 6.15.            CAPTIONS.  THE CAPTIONS IN THIS DOCUMENT ARE INSERTED
ONLY AS A MATTER OF CONVENIENCE AND FOR REFERENCE AND IN NO WAY DEFINE, LIMIT,
ENLARGE OR DESCRIBE THE

 

19

--------------------------------------------------------------------------------

 

SCOPE OR INTENT OF THE PLAN AND SHALL IN NO WAY AFFECT THE PLAN OR THE
CONSTRUCTION OF ANY PROVISION THEREOF.

 

SECTION 6.16.            RIGHT OF DISCHARGE RESERVED.  NOTHING CONTAINED IN THIS
PLAN SHALL BE CONSTRUED AS A GUARANTEE OR RIGHT OF ANY PARTICIPANT TO BE
CONTINUED AS A EMPLOYEE OR CONSULTANT OF THE COMPANY OR ITS SUBSIDIARIES (OR OF
A RIGHT OF A KEY EMPLOYEE OR PARTICIPANT TO ANY SPECIFIC LEVEL OF COMPENSATION)
OR AS A LIMITATION OF THE RIGHT OF THE COMPANY OR ITS SUBSIDIARIES TO TERMINATE
ANY KEY EMPLOYEE OR PARTICIPANT.

 

SECTION 6.17.            GOVERNING LAW AND CONSTRUCTION.  THE PLAN IS INTENDED
TO CONSTITUTE AN UNFUNDED, NONQUALIFIED DEFERRED COMPENSATION ARRANGEMENT. 
EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW, ALL RIGHTS UNDER THE PLAN SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.  NO ACTION SHALL BE
BROUGHT BY OR ON BEHALF OF ANY PARTICIPANT OR BENEFICIARY FOR OR WITH RESPECT TO
BENEFITS DUE UNDER THIS PLAN UNLESS THE PERSON BRINGING SUCH ACTION HAS TIMELY
EXHAUSTED THE PLAN’S CLAIM REVIEW PROCEDURE.

 

SECTION 6.18.            SECTION 409A OF THE CODE.  THE PLAN IS INTENDED TO
COMPLY WITH THE REQUIREMENTS OF SECTION 409A OF THE CODE AND WILL BE INTERPRETED
BY THE BOARD AND THE ADMINISTRATOR, EACH IN THEIR SOLE AND ABSOLUTE DISCRETION,
IN A MANNER INTENDED TO COMPLY WITH SECTION 409A OF THE CODE.  NOTWITHSTANDING
ANYTHING IN THE PLAN TO THE CONTRARY, THE ADMINISTRATOR AND THE BOARD ARE HEREBY
AUTHORIZED TO TAKE SUCH ACTION AS EITHER DETERMINES NECESSARY OR APPROPRIATE TO
MODIFY THE PROVISIONS OF THIS PLAN TO ENSURE THAT THE PLAN SO COMPLIES.  IN
FURTHERANCE THEREOF, NO PAYMENTS MAY BE ACCELERATED UNDER THE PLAN IF SUCH
ACCELERATION WOULD CAUSE AMOUNTS DEFERRED UNDER THE PLAN TO BECOME SUBJECT TO
(I) THE GROSS INCOME INCLUSION SET FORTH WITHIN CODE SECTION 409A(A)(1)(A) (THE
“GROSS INCOME INCLUSION”) OR (II) THE INTEREST AND ADDITIONAL TAX SET FORTH
WITHIN CODE SECTION 409A(A)(1)(B) (THE “INTEREST AND ADDITIONAL TAXES” AND
TOGETHER, WITH THE GROSS INCOME INCLUSION REFERRED TO HEREIN AS THE
“SECTION 409A PENALTIES”).  ALL REFERENCES IN THE PLAN TO SECTION 409A OF THE
CODE SHALL INCLUDE ANY SUCCESSOR PROVISION THERETO AND ANY GUIDANCE (WHETHER IN
THE FORM OF NOTICES, REGULATIONS OR OTHERWISE) PROMULGATED THEREUNDER.  SUBJECT
TO SECTION 6.12, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, ANY
PROVISION OF THIS PLAN OR ANY ADMINISTRATIVE PROCEDURE PROMULGATED WITH RESPECT
TO THE PLAN THAT IS INCONSISTENT WITH OR VIOLATES SECTION 409A OF THE CODE SO AS
TO CAUSE AMOUNTS DEFERRED UNDER THE PLAN TO BECOME SUBJECT TO SECTION 409A
PENALTIES, SUCH PROVISION SHALL BE AUTOMATICALLY DEEMED REFORMED OR STRICKEN TO
THE MINIMUM EXTENT NECESSARY TO COMPLY WITH SECTION 409A OF THE CODE AND TO
PRESERVE THE INTENT HEREOF.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IF
ANY PAYMENTS DUE TO A PARTICIPANT HEREUNDER COULD GIVE RISE TO SECTION 409A
PENALTIES, SUCH PAYMENTS OR OTHER BENEFITS SHALL BE DEFERRED IF THE BOARD OR THE
ADMINISTRATOR, EACH IN THEIR SOLE AND ABSOLUTE DISCRETION, DETERMINES THAT
DEFERRAL WILL MAKE SUCH PAYMENT COMPLIANT UNDER SECTION 409A OF THE CODE SO AS
TO AVOID SECTION 409A PENALTIES WITH RESPECT TO THE PAYMENT, OR OTHERWISE SUCH
PAYMENT SHALL BE RESTRUCTURED, TO THE EXTENT POSSIBLE, IN A MANNER, DETERMINED
BY THE BOARD OR THE ADMINISTRATOR, EACH IN THEIR SOLE AND ABSOLUTE DISCRETION,
THAT DOES NOT CAUSE APPLICATION OF SECTION 409A PENALTIES.  THE BOARD AND THE
ADMINISTRATOR SHALL IMPLEMENT THE PROVISIONS OF THIS SECTION 6.18 IN GOOD FAITH.

 

20

--------------------------------------------------------------------------------

 

Adopted November       , 2008

 

 

 

 

 

By:

 

 

 

 

Name: Gary C. Tolman

 

 

 

Title: Chief Executive Officer

 

 

21

--------------------------------------------------------------------------------