______________________________________________________________________________
 

PICO DEFERRED HOLDINGS, LLC
DEFERRED COMPENSATION PLAN

 
EFFECTIVE AS OF JANUARY 1, 2009
 

 
______________________________________________________________________________
 

 
 

 

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TABLE OF CONTENTS

 Page

 
ARTICLE I
DEFINITIONS 
1

 
 
1.1
Account 
1

 
1.2
Affiliate 
1

 
1.3
Aggregated Plan 
1

 
1.4
Beneficiary 
2

 
1.5
Benefit Benchmarks 
2

 
1.6
Board 
2

 
1.7
Change in Control Event 
2

 
1.8
Code 
5

 
1.9
Compensation 
6

 
1.10
Compensation Deferral Agreement 
6

 
1.11
Compensation Deferrals 
6

 
1.12
Corporate Dissolution 
6

 
1.13
Distributable Event 
6

 
1.14
Domestic Partner 
6

 
1.15
Domestic Relations Order 
6

 
1.16
Effective Date 
6

 
1.17
Eligible Individual 
6

 
1.18
ERISA 
7

 
1.19
Income Inclusion Under Code § 409A 
7

 
1.20
Interim Distribution Date 
7

 
1.21
Investment Credits and Debits 
7

 
1.22
Nonqualified Deferred Compensation Plan 
7

 
1.23
Participant 
7

 
1.24
Performance-Based Compensation 
7

 
1.25
Plan 
8

 
1.26
Plan Administrator 
8

 
1.27
Plan Sponsor 
8

 
1.28
Plan Termination Following a Change in Control Event 
8

 
1.29
Plan Termination Following a Corporate Dissolution 
8

 
1.30
Plan Termination in Connection with Termination of Certain Similar Arrangements 
8

 
1.31
Regular Salary 
8

 
1.32
Separation from Service 
8

 
1.33
Specified Employee 
9

 
1.34
Spouse 
10

 
1.35
Taxable Year 
10

 
1.36
Trust 
10

 
1.37
Trustee 
10

 
1.38
Unforeseeable Emergency 
10

 
1.39
Valuation Date 
10

 
 
ARTICLE II
ELIGIBILITY AND PARTICIPATION 
10

 
 
2.1
Eligibility 
10

 
2.2
Participation 
10

 
2.3
Compensation Deferral Agreement 
10

 
2.4
Subsequent Changes in Time and Form of Payment 
12

 
2.5
Establishing a Reserve for Plan Liabilities 
12

 
 
ARTICLE III
PARTICIPANT ACCOUNTS AND REPORTS 
12

 
 
3.1
Establishment of Accounts 
12

 
3.2
Account Maintenance 
13

 
3.3
Investment Credits and Debits 
13

 
3.4
Participant Statements 
14

 
 
ARTICLE IV
WITHHOLDING OF TAXES 
14

 
 
4.1
Withholding from Compensation 
14

 
4.2
Withholding from Benefit Distributions 
14

 
 
ARTICLE V
VESTING 
14

 
 
5.1
Vesting 
14

 
 
ARTICLE VI
PAYMENTS 
15

 
 
6.1
Benefits 
15

 
6.2
Separation from Service Payment 
15

 
6.3
Death Benefit 
15

 
6.4
Domestic Relations Order Payment 
15

 
6.5
Unforeseeable Emergency Distribution 
16

 
6.6
Election to Receive Interim Distributions 
16

 
6.7
Payment upon Income Inclusion Under § 409A 
16

 
6.8
Permissible Delay in Payments 
16

 
6.9
Beneficiary Designation 
17

 
6.10
Claims Procedure 
18

 
 
ARTICLE VII
CANCELLATION OF DEFERRALS 
21

 
 
7.1
Unforeseeable Emergency 
21

 
 
ARTICLE VIII
ARTICLE VIII PLAN ADMINISTRATION 
22

 
 
8.1
Appointment 
22

 
8.2
Duties of Plan Administrator 
22

 
8.3
Plan Sponsor 
22

 
8.4
Administrative Fees and Expenses 
22

 
8.5
Plan Administration and Interpretation 
23

 
8.6
Powers, Duties, Procedures 
23

 
8.7
Information 
23

 
8.8
Indemnification of Plan Administrator 
23

 
8.9
Plan Administration Following a Change in Control Event 
23

 
 
ARTICLE IX
TRUST FUND 
24

 
 
9.1
Trust 
24

 
9.2
Unfunded Plan 
24

 
9.3
Assignment and Alienation 
24

 
 
ARTICLE X
AMENDMENT AND PLAN TERMINATION 
24

 
 
10.1
Amendment 
24

 
10.2
Plan Termination 
24

 
10.3
Plan Termination Following a Change in Control Event 
25

 
10.4
Plan Termination Following a Corporate Dissolution 
25

 
10.5
Plan Termination in Connection with Termination of Certain Similar Arrangements 
26

 
10.6
Effect of Payment 
26

 
 
ARTICLE XI
MISCELLANEOUS 
26

 
 
11.1
Total Agreement 
26

 
11.2
Employment Rights 
27

 
11.3
Non-Assignability 
27

 
11.4
Binding Agreement 
27

 
11.5
Receipt and Release 
27

 
11.6
Furnishing Information 
27

 
11.7
Compliance with Code § 409A 
27

 
11.8
Insurance 
28

 
11.9
Governing Law 
28

 
11.10
Headings and Subheadings 
28

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PICO DEFERRED HOLDINGS, LLC
DEFERRED COMPENSATION PLAN

Whereas, PICO Holdings, Inc., a diversified holding company formed under the
laws of the state of California, (“PICO”) established a nonqualified deferred
compensation plan as of December, 2004 to reflect certain deferral arrangements
with certain executive management employees, and with certain nonemployee
directors (the “Plan”);
 
Whereby effective September 30, 2006, the Board of Directors of PICO transferred
sponsorship of the Plan to Pico Deferred Holdings, LLC (the “Plan Sponsor”);
 
Whereby, effective January 1, 2009, PICO hereby amends and restates the Plan to
comply with Section 409A of the Internal Revenue Code of 1986, as amended (Code
Section 409A”);
 
Whereby, the Plan is intended to be “a plan which is unfunded and is maintained
by an employer primarily for the purpose of providing deferred compensation for
a select group of management or highly compensated employees” within the meaning
of ERISA §§201(2) and 301(a)(3), is intended to comply with the requirements of
Code §409A and the regulations and binding guidance issued thereunder to avoid
adverse tax consequences and shall be interpreted and administered to the extent
possible in a manner consistent with that intent; and,
 
Whereby, Participants in the Plan shall have no right, either directly or
indirectly, to anticipate, sell, assign or otherwise transfer any benefit
accrued under the Plan. In addition, no Participant shall have any interest in
any assets set aside as a source of funds to satisfy benefit obligations under
the Plan. Participants shall have the status of general unsecured creditors of
the Plan Sponsor, and the Plan shall constitute an unsecured promise by the Plan
Sponsor to make benefit payments in the future.
 
Now therefore, the Company hereby amends and restates the Plan in its entirety,
as follows:
 

 
ARTICLE I                      
 

 
DEFINITIONS
 
1.1  
Account The bookkeeping account established for each Participant to record his
or her benefit under the Plan.

 
1.2  
Affiliate Any corporation or business entity that would be considered a single
employer with the Plan Sponsor pursuant to Code §§ 414(b) or 414(c).

 
1.3  
Aggregated Plan A nonqualified deferred compensation plan that is required to be
aggregated and treated with the Plan as a single plan under Code § 409A.

 
1.4  
Beneficiary An individual, individuals, trust or other entity designated by the
Participant to receive his or her benefit in the event of the Participant’s
death. If more than one Beneficiary survives the Participant, the Participant’s
benefit shall be divided equally among all such Beneficiaries, unless otherwise
provided in the Beneficiary Designation form. Nothing herein shall prevent the
Participant from designating primary and contingent Beneficiaries.

 
1.5  
Benefit Benchmarks Hypothetical investment funds or benchmarks made available to
Participants by the Plan Administrator for purposes of valuing benefits under
the Plan.

 
1.6  
Board The Board of Directors of PICO or the Plan Sponsor, as applicable, or
similar governing body if such Plan Sponsor has no Board of Directors.

 
1.7  
Change in Control Event A Change in Ownership, Change in Effective Control or
Change in Ownership of a Substantial Portion of Assets, as elected by the Plan
Sponsor of a corporation identified in Section 1.8(e).

 
(a)  
Change in Effective Control of the Corporation

 
(i)  
Notwithstanding that a corporation has not undergone a Change in Ownership, a
Change in Effective Control occurs on the date that either:

 
(1)  
any one person or Persons Acting as a Group, acquires (or has acquired during
the 12-month period ending on the date of the most recent acquisition by such
person or Persons Acting as a Group) ownership of stock of the corporation
possessing 30 percent or more of the total voting power of the stock of such
corporation; or

 
(2)  
a majority of members of the corporation’s board of directors is replaced during
any 12-month period by directors whose appointment or election is not endorsed
by a majority of the members of the corporation’s board of directors prior to
the date of the appointment or election, provided that for purposes of this
Section 1.8(a)(i)(2) the term corporation refers solely to the relevant
corporation identified in Section 1.8(e) for which no other corporation is a
majority shareholder for purposes of that section.

 
In the absence of an event described in Section 1.8(a)(i)(1) or Section
1.8(a)(i)(2) a Change in Effective Control will not have occurred.
 
(ii)  
A Change in Effective Control may occur in any transaction in which either of
the two corporations involved in the transaction has a Change in Ownership or a
Change in Ownership of a Substantial Portion of Assets.

 
(iii)  
If any one person or Persons Acting as a Group, is considered to effectively
control a corporation (within the meaning of this Section 1.8(a)), the
acquisition of additional control of the corporation by the same person or
Persons Acting as a Group is not considered to cause a Change in Effective
Control (or to cause a Change in Ownership within the meaning of Section
1.8(b)).

 
(b)  
Change in the Ownership of the Corporation.  A Change in Ownership occurs on the
date that any one person or Persons Acting as a Group, acquires ownership of
stock of the corporation that, together with stock held by such person or
Persons Acting as a Group, constitutes more than 50 percent of the total fair
market value or total voting power of the stock of such corporation. However, if
any one person or Persons Acting as a Group, is considered to own more than 50
percent of the total fair market value or total voting power of the stock of a
corporation, the acquisition of additional stock by the same person or Persons
Acting as a Group is not considered to cause a Change in Ownership (or to cause
a Change in Effective Control). An increase in the percentage of stock owned by
any one person or Persons Acting as a Group, as a result of a transaction in
which the corporation acquires its stock in exchange for property will be
treated as an acquisition of stock for purposes of a Change in Ownership. A
Change in Ownership applies only when there is a transfer of stock of a
corporation (or issuance of stock of a corporation) and stock in such
corporation remains outstanding after the transaction.

 
(c)  
Change in the Ownership of a Substantial Portion of a Corporation’s Assets

 
(i)  
A Change in Ownership of a Substantial Portion of Assets occurs on the date that
any one person or Persons Acting as a Group acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person
or Persons Acting as a Group) assets from the corporation that have a total
gross fair market value equal to or more than 40 percent of the total gross fair
market value of all of the assets of the corporation immediately prior to such
acquisition or acquisitions. For this purpose, gross fair market value means the
value of the assets of the corporation, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets.

 
(ii)  
There is no Change in Ownership of a Substantial Portion of Assets when there is
a transfer to an entity that is controlled by the shareholders of the
transferring corporation immediately after the transfer, as provided in this
Section 1.8(c)(ii). A transfer of assets by a corporation is not treated as a
change in the ownership of such assets if the assets are transferred to:

 
(1)  
a shareholder of the corporation (immediately before the asset transfer) in
exchange for or with respect to its stock;

 
(2)  
an entity, 50 percent or more of the total value or voting power of which is
owned, directly or indirectly, by the corporation;

 
(3)  
a person or Persons Acting as a Group, that owns, directly or indirectly, 50
percent or more of the total value or voting power of all the outstanding stock
of the corporation; or

 
(4)  
an entity, at least 50 percent of the total value or voting power of which is
owned, directly or indirectly, by a person described in Section 1.8(c)(ii)(c.).

 
For purposes of this Section 1.8(c)(ii) and except as otherwise provided, a
person’s status is determined immediately after the transfer of the assets.
 
(d)  
Persons Acting as a Group

 
(i)  
With regards to Change in the Ownership, persons will not be considered to be
acting as a group solely because they purchase or own stock of the same
corporation at the same time, or as a result of the same public offering.
However, persons will be considered to be acting as a group if they are owners
of a corporation that enters into a merger, consolidation, purchase or
acquisition of stock or similar business transaction with the corporation. If a
person, including an entity, owns stock in both corporations that enter into a
merger, consolidation, purchase or acquisition of stock, or similar transaction,
such shareholder is considered to be acting as a group with other shareholders
only with respect to the ownership in that corporation before the transaction
giving rise to the change and not with respect to the ownership interest in the
other corporation.

 
(ii)  
With regards to Change in Effective Control, persons will not be considered to
be acting as a group solely because they purchase or own stock of the same
corporation at the same time, or as a result of the same public offering.
However, persons will be considered to be acting as a group if they are owners
of a corporation that enters into a merger, consolidation, purchase or
acquisition of stock or similar business transaction with the corporation. If a
person, including an entity, owns stock in both corporations that enter into a
merger, consolidation, purchase or acquisition of stock, or similar transaction,
such shareholder is considered to be acting as a group with other shareholders
in a corporation only with respect to the ownership in that corporation before
the transaction giving rise to the change and not with respect to the ownership
interest in the other corporation.

 
(iii)  
With regards to Change in Ownership of a Substantial Portion of Assets, persons
will not be considered to be acting as a group solely because they purchase
assets of the same corporation at the same time. However, persons will be
considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of assets or
similar business transaction with the corporation. If a person, including an
entity shareholder owns stock in both corporations that enter into a merger,
consolidation, purchase or acquisition of stock, or similar transaction, such
shareholder is considered to be acting as a group with other shareholders in a
corporation only to the extent of the ownership in that corporation before the
transaction giving rise to the change and not with respect to the ownership
interest in the other corporation.

 
(e)  
To constitute a Change in Control Event as to a Participant, the Change in
Control Event must relate to:

 
(i)  
the corporation with respect to which the Participant is an Eligible Individual
at the time of the Change in Control Event;

 
(ii)  
the corporation that is liable for the payment of the Account (or all
corporations liable for the payment if more than one corporation is liable) but
only if either the Participant’s benefits under the Plan are attributable to the
performance of services by the Participant for such corporation (or
corporations) or there is a bona fide business purpose for such corporation or
corporations to be liable for such payment and, in either case, no significant
purpose in making such corporation or corporations liable for such payment is
the avoidance of Federal income tax; or

 
(iii)  
a corporation that is a majority shareholder of a corporation identified in
Sections 1.8(e)(i) or 1.8(e)(ii), or any corporation in a chain of corporations
in which each corporation is a majority shareholder of another corporation in
the chain, ending in a corporation identified in Section 1.8(e)(i) or Section
1.8(e)(ii). With regard to a relevant corporation, a majority shareholder is a
shareholder owning more than 50% of the total fair market value and total voting
power of such corporation.

 
(f)  
Stock Ownership. For the purposes of this Section 1.8, ownership of stock will
be determined by the application of Code §318(a). Stock underlying a vested
option is considered owned by the individual who holds the vested option (and
the stock underlying an unvested option is not considered owned by the
individual who holds the unvested option). For purposes of the preceding
sentence, however, if a vested option is exercisable for stock that is not
substantially vested (as defined by Treasury Regulation §§ 1.83-3(b) and (j)),
the stock underlying the option is not treated as owned by the individual who
holds the option. In addition, mutual and cooperative corporations are treated
as having stock for purposes of this Section 1.8(f).

 
1.8  
Code The Internal Revenue Code of 1986, as amended from time to time. Reference
to any section or subsection of the Code includes reference to any comparable or
succeeding provisions of any legislation which amends, supplements or replaces
such section or subsection.

 
1.9  
Compensation Shall mean a Participant’s Regular Salary, bonuses,
Performance-Based Compensation, and director fees, as applicable.

 
1.10  
Compensation Deferral Agreement The written agreement between an Eligible
Individual and the Plan Sponsor to defer receipt by the Eligible Individual of
Compensation. Such agreement shall state the deferral amount or percentage of
Compensation to be withheld from the Eligible Individual’s Compensation and
shall state the date on which the agreement is effective, as provided at Section
2.3.

 
1.11  
Compensation Deferrals That portion of a Participant’s Compensation which is
deferred under the terms of this Plan.

 
1.12  
Corporate Dissolution A corporate dissolution taxed pursuant to Code §331 or
with the approval of a bankruptcy court pursuant to section 503(b)(1)(A) of
title 11, United States Code.

 
1.13  
Distributable Event The events entitling a Participant or Beneficiary to a
payment of benefits under the Plan, which shall be: Separation from Service;
death; the occurrence of an Interim Distribution Date; the occurrence of an
Unforeseeable Emergency; Plan Termination Following a Change of Control Event,
if applicable; Plan Termination Following a Corporate Dissolution; Plan
Termination in Connection with Termination of Certain Similar Arrangements;
Domestic Relations Order; and Income Inclusion Under Code § 409A.

 
1.14  
Domestic Partner The Plan Administrator in its sole discretion shall determine
whether an individual meets the requirements of a Domestic Partner and shall
have the right to request documentary proof of the existence of a Domestic
Partner relationship, which proof may include, but is not limited to, a joint
checking account, a joint mortgage or lease, driver’s licenses showing the same
address, the registration of a domestic partnership or civil union in states
that recognize such relationships or such other proof as the Plan Administrator
may determine.

 
1.15  
Domestic Relations Order Any judgment, decree or order (including approval of a
property settlement agreement) which relates to the provision of child support,
alimony payments or marital property rights to a Spouse, former Spouse, child or
other dependent of a Participant and is made pursuant to a State domestic
relations law (including a community property law).

 
1.16  
Effective Date The Effective Date of the restatement of this Plan shall be
January 1, 2009.

 
1.17  
Eligible Individual Any common-law employee or non-employee director who
provides services to the Plan Sponsor and is designated by the Plan Sponsor as
eligible to participate in the Plan in accordance with Section 2.1. Only those
individuals who are part of a select group of management or highly compensated
individuals, as determined by PICO or the Plan Sponsor in its sole discretion,
may be designated as Eligible Individuals under the Plan.

 
1.18  
ERISA The Employee Retirement Income Security Act of 1974, as amended. Reference
to any section or subsection of ERISA includes reference to any comparable or
succeeding provisions of any legislation which amends, supplements or replaces
such section or subsection.

 
1.19  
Income Inclusion Under Code § 409A Shall have the meaning set forth in Section
6.9.

 
1.20  
Interim Distribution Date Shall be a date that is prior to the Participant’s
Separation from Service elected by the Participant to receive a distribution
from the Plan

 
1.21  
Investment Credits and Debits Bookkeeping adjustments to Participants’ Accounts
to reflect the hypothetical interest, earnings, appreciation, losses and
depreciation that would be accrued or realized if assets equal to the value of
such Accounts were invested in accordance with such Participants’ Benefit
Benchmarks.

 
1.22  
Nonqualified Deferred Compensation Plan A pension plan, within the meaning of
ERISA §201(2), the purpose of which is to permit a select group of management or
highly compensated Eligible Individuals to defer receipt of a portion of their
Compensation to a future date.

 
1.23  
Participant An Eligible Individual who is currently deferring a portion of his
or her Compensation under this Plan, or an Eligible Individual or former
Eligible Individual who is still entitled to the payment of benefits under the
Plan.

 
1.24  
Performance-Based Compensation Compensation, the amount of which, or entitlement
to which, is contingent on the satisfaction of pre-established organizational or
individual performance criteria relating to a performance period of at least 12
consecutive months. Organizational or individual performance criteria are
considered pre-established if established in writing by no later than 90 days
after the commencement of the period of service to which the criteria relates,
provided that the outcome is substantially uncertain at the time the criteria
are established. Performance-Based Compensation does not include any amount, or
portion of any amount, that will be paid either regardless of performance or
based upon a level of performance that is substantially certain to be met at the
time the criteria is established. If payments are based upon the satisfaction of
subjective criteria, the subjective performance criteria must be bona fide and
relate to the performance of the Participant, a group that includes the
Participant or a business unit for which the Participant provides services, and
the determination that any subjective performance criteria have been met must
not be made by the Participant, a family member of the Participant or a person
under the effective control of the Participant or a family member of the
Participant or where any amount of the compensation of the person making such
determination is effectively controlled in whole or in part by the Participant
or family member of the Participant. Compensation determined by reference to the
value of the Plan Sponsor or an Affiliate, or the stock of the Plan Sponsor or
an Affiliate, shall be Performance Based Compensation only as provided under
Code § 409A and the regulations and binding guidance issued
thereunder.  Performance Based Compensation shall include but not be limited to
annual incentive awards granted a Participant.

 
1.25  
Plan The Nonqualified Deferred Compensation Plan established by the Plan Sponsor
under the terms of this Plan Document.

 
1.26  
Plan Administrator The individual(s) or committee appointed by the Plan
Sponsor  to administer the Plan as provided herein. If no such appointment is
made, the Chief Executive Officer of the Plan Sponsor (or the most senior
officer of such Plan Sponsor if the Plan Sponsor does not have a Chief Executive
Officer) shall serve as the Plan Administrator. In no event shall a Plan
Administrator who is a Participant be permitted to make decisions regarding his
or her benefits under this Plan; rather, such decisions shall be made by the
other members of any committee appointed to act as the Plan Administrator or, if
no such committee has been appointed, the most senior officer of the Plan whose
benefits are not at issue in the decision. If a Change in Control Event occurs
with respect to the Plan Sponsor or PICO, the existing Plan Administrator shall
be removed, and a new Plan Administrator shall be appointed as provided in
Section 8.9.

 
1.27  
Plan Sponsor  PICO Deferred Holdings, LLC, or any successor thereto, or any
other entity appointed by PICO.  The term Plan Sponsor shall also include, where
appropriate, any entity affiliated with the Plan Sponsor which adopts the Plan
with the consent of the Plan Sponsor.  Only the Plan Sponsor or PICO shall have
the power to amend this Plan, appoint the Plan Administrator, or exercise any of
the powers described in Section 8.3 hereof.

 
1.28  
Plan Termination Following a Change in Control Event Shall have the meaning set
forth in Section 10.3.

 
1.29  
Plan Termination Following a Corporate Dissolution Shall have the meaning set
forth in Section 10.4.

 
1.30  
Plan Termination in Connection with Termination of Certain Similar Arrangements
Shall have the meaning set forth in Section 10.5.

 
1.31  
Regular Salary The Participant’s gross income paid by the Plan Sponsor during
the Taxable Year as reportable on Internal Revenue Service Form W-2, including
amounts excludible from gross income that are contributed by the Participant on
a pre-tax basis to a salary reduction retirement or welfare plan (including
amounts contributed to this Plan), but excluding bonuses, Performance-Based
Compensation, director fees, or any other irregular payments.

 
1.32  
Separation from Service A Participant shall have a Separation from Service under
the circumstances described below.

 
(a)  
Employees A Participant who is a common law employee has a Separation from
Service if the Participant voluntarily or involuntarily terminates employment
with the Plan Sponsor and all Affiliates, for any reason other than Disability
or death. A termination of employment occurs if the facts and circumstances
indicate that the Plan Sponsor and the Participant reasonably anticipate that no
further services will be performed after a certain date or that the level of
bona fide services the Participant will perform after such date (whether as an
employee or an independent contractor) will decrease to no more than 20 percent
of the average level of bona fide services performed (whether as an employee or
an independent contractor) over the immediately preceding 36-month period (or
the full period of services if the Participant has been providing services for
less than 36 months). Notwithstanding the foregoing, the employment relationship
is treated as continuing while the Participant is on military leave, sick leave
or other bona fide leave of absence if the period of leave does not exceed 6
months, or if longer, so long as the Participant retains the right to
reemployment with the Plan Sponsor or an Affiliate under an applicable statute
or contract. When a leave of absence is due to any medically determinable
physical or mental impairment that can be expected to result in death or to last
for a period of at least 6 months and such impairment causes the Participant to
be unable to perform the duties of his or her position or any substantially
similar position, a 29-month period of absence shall be substituted for the
6-month period above.

 
(b)  
Directors Except as otherwise provided hereunder, a Participant who is a member
of the Board shall be considered to be an Independent Contractor for purposes of
determining whether the Participant has had a Separation from Service.

 
(c)  
Dual Status If a Participant provides services to the Plan Sponsor and any
Affiliates as an employee and as an independent contractor, the Participant must
have a Separation from Service with the Plan Sponsor and all Affiliates both as
an employee and an independent contractor to have a Separation from Service.
Notwithstanding the foregoing, if a Participant provides services to the Plan
Sponsor and any Affiliates as an employee and as a director, (1) the services
provided as a director are not taken into account in determining whether the
Participant has a Separation from Service as an employee under the Plan if the
Participant participates in the Plan as an employee, provided the Participant
does not participate in any other nonqualified deferred compensation plan as a
director that is aggregated with the Plan under Code §409A, and (2) the services
provided as an employee are not taken into account in determining whether the
Participant has a Separation from Service as a director under the Plan if the
Participant participates in the Plan as a director, provided the Participant
does not participate in any other nonqualified deferred compensation plan as an
employee that is aggregated with the Plan under Code §409A.

 
1.33  
Specified Employee A key employee (as defined in Code § 416(i) without regard to
paragraph (5) thereof) of a Plan Sponsor or its Affiliates, any stock of which
is publicly traded on an established securities market or otherwise. A
Participant is a key employee if the Participant meets the requirements of Code
§416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations
thereunder and disregarding Code §416(i)(5)) at any time during the 12-month
period ending each December 31. If a Participant is a key employee at any time
during the 12-month period ending on such December 31, the Participant is
treated as a Specified Employee for the 12-month period beginning on the
following April 1. Whether any stock of a Plan Sponsor or its Affiliates is
publicly traded on an established securities market or otherwise must be
determined as of the date of the Participant’s Separation from Service.

 
1.34  
Spouse The individual to whom a Participant is married, or was married in the
case of a deceased Participant who was married at the time of his or her death.

 
1.35  
Taxable Year The 12-consecutive-month period beginning each January 1 and ending
each December 31.

 
1.36  
Trust The agreement, if any, between the Plan Sponsor and the Trustee under
which assets may be delivered by the Plan Sponsor to the Trustee to offset
liabilities assumed by the Plan Sponsor under the Plan. Any assets held under
the terms of the Trust shall be the exclusive property of the Plan Sponsor and
shall be subject to the creditor claims of the Plan Sponsor with respect to whom
such Trust has been established. Participants shall have no right, secured or
unsecured, to any assets held under the terms of the Trust.

 
1.37  
Trustee The institution named by the Plan Sponsor in the Trust agreement, if
any, and any corporation which succeeds the Trustee by merger or by acquisition
of assets or operation of law.

 
1.38  
Unforeseeable Emergency A severe financial hardship to the Participant resulting
from an illness or accident of the Participant or the Participant’s Spouse,
Beneficiary or dependent (as defined in Code §152 without regard to §§
152(b)(1), (b)(2) and (d)(1)(B)), loss of the Participant’s property due to
casualty or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant.

 
1.39  
Valuation Date The date on which Participant Accounts under the Plan are valued.
The Valuation Date shall be each business day of the Taxable Year on which the
New York Stock Exchange and, if a Trust has been established in connection with
the Plan, the Trustee are open for business.

 
ARTICLE II                                
 

 
ELIGIBILITY AND PARTICIPATION
 
2.1  
Eligibility The Plan Sponsor will designate those persons who shall be
considered Eligible Individuals under the Plan.

 
2.2  
Participation The Plan Administrator shall provide written notification to each
Eligible Individual of his or her eligibility to participate in the Plan.

 
2.3  
Compensation Deferral Agreement In order to defer Compensation under the Plan
for a given Taxable Year, an Eligible

 
Individual must enter into a Compensation Deferral Agreement with the Plan
Sponsor authorizing the deferral of all or part of the Participant’s
Compensation for such Taxable Year. The Compensation Deferral Agreement shall
also specify the method of payment for benefits under the Plan and any Interim
Distribution Date that shall apply with respect to amounts credited to the
Participant’s Account for such Taxable Year.
 
Upon receipt of a properly completed and executed Compensation Deferral
Agreement, the Plan Administrator shall notify the Plan Sponsor to withhold that
portion of the Participant’s Compensation specified in the Agreement.
 
The Compensation Deferral Agreement shall remain in effect for the duration of
the Taxable Year to which it relates.
 
Except as provided below, a Compensation Deferral Agreement must be completed
and returned to the Plan Sponsor prior to the first day of the Taxable Year in
which services are performed for the Compensation deferred and shall be
irrevocable except as otherwise provided hereunder.
 
(a)  
Initial Eligibility If an individual becomes an Eligible Individual on a date
other than the first day of a Taxable Year and such individual has not at any
time been eligible to participate in the Plan or any Aggregated Plan, the
Compensation Deferral Agreement may be completed and returned to the Plan
Sponsor within 30 days after the Effective Date or within 30 days after the
Eligible Individual’s initial eligibility date. In no event shall a Participant
be permitted to defer Compensation with respect to services performed before the
date on which the Compensation Deferral Agreement is signed by the Participant
and accepted by the Plan Administrator.

 
(b)  
Former Participants With No Account Balance If an Eligible Individual who is a
former Participant has been paid all amounts deferred under the Plan and any
Aggregated Plan and, on and before the date of the last payment, is not eligible
to continue (or elect to continue) to participate in the Plan or any Aggregated
Plan for periods after the last payment (other than through an election of a
different time and form of payment with respect to the amounts paid), the
Eligible Individual may be treated as initially eligible to participate in the
Plan pursuant to subsection (a) above as of the first date following such last
payment that the Eligible Individual again becomes eligible to participate in
the Plan.

 
(c)  
Participants Ineligible for Two Years If an Eligible Individual who is a
Participant or former Participant ceases being eligible to participate in the
Plan and any Aggregated Plan, regardless of whether all amounts deferred under
such plans have been paid, and subsequently becomes eligible to participate in
the Plan again, the Eligible Individual may be treated as being initially
eligible to participate in the Plan pursuant to subsection (a) above if the
Eligible Individual has not been eligible to participate in the Plan or an
Aggregated Plan (other than through the accrual of earnings) at any time during
the twenty-four (24) month period ending on the date the Eligible Individual
again becomes eligible to participate in the Plan.

 
(d)  
Performance-Based Compensation A Compensation Deferral Agreement with respect to
Performance-Based Compensation may be completed and returned to the Plan Sponsor
no later than the date that is six months before the end of the performance
period to which the Performance-Based Compensation relates, provided the
Participant performs services continuously from the later of the beginning of
the performance period or the date upon which the performance criteria are
established through the date upon which the Participant makes an initial
deferral election, and further provided that in no event may an election to
defer Performance-Based Compensation be made with respect to Compensation that
has become readily ascertainable.

 
2.4  
Subsequent Changes in Time and Form of Payment A Participant may elect to change
the time or form of payment of amounts distributable upon a Separation from
Service or elect to change the time of payment of amounts distributable upon an
Interim Distribution Date, provided, however, that any such election shall be
effective only if:

 
(a)  
the election does not accelerate the time or schedule of any payment within the
meaning of Code § 409A;

 
(b)  
the election does not take effect until at least twelve 12 months after the date
on which the election is made;

 
(c)  
the first payment with respect to which such election is made is deferred for a
period of 5 years from the date such payment would otherwise have been made; and

 
(d)  
for a change to a payment made upon an Interim Distribution Date, such election
is made at least 12 months before such Interim Distribution Date.

 
The Plan Administrator shall have sole and absolute discretion to decide whether
such a request shall be approved but may approve no more than one such request
for any Participant with respect to any Compensation Deferral or Matching or
Discretionary Credit.
 
2.5  
Establishing a Reserve for Plan Liabilities The Plan Sponsor may, but is not
required to, establish one or more Trusts to which the Plan Sponsor may transfer
such assets as the Plan Sponsor determines in its sole discretion to assist in
meeting its obligations under the Plan. Any such assets shall be the property of
the Plan Sponsor and remain subject to the claims of the Plan Sponsor’s
creditors, to the extent provided under any Trust established with respect to
such Plan Sponsor. The Trustee shall have no duty to determine whether the
amounts forwarded by the Plan Sponsor are the correct amount or that they have
been transmitted in a timely manner.

 
ARTICLE III                                
 

 
PARTICIPANT ACCOUNTS AND REPORTS
 
3.1  
Establishment of Accounts The Plan Administrator shall establish and maintain
individual recordkeeping accounts and subaccounts, as applicable, on behalf of
each Participant for purposes of determining each Participant’s benefits under
the Plan. A Participant’s Account does not represent the Participant’s ownership
of, or any ownership interest in, any assets which may be set aside to satisfy
the Plan Sponsor’s obligations under the Plan.

 
3.2  
Account Maintenance As of each Valuation Date, the Plan Administrator shall
credit each Participant’s Account with the following:

 
(a)  
An amount equal to any Compensation Deferrals made by the Participant since the
last Valuation Date;

 
(b)  
An amount equal to deemed Investment Credits under Section 3.3 below since the
last Valuation Date. As of each Valuation Date, the Plan Administrator shall
debit each Participant’s Account with the following:

 
(c)  
An amount equal to any distributions from the Plan to the Participant or
Beneficiary since the last Valuation Date; and

 
(d)  
An amount equal to deemed Investment Debits under Section 3.3 below since the
last Valuation Date; and

 
(e)  
An amount equal to any forfeitures incurred by the Participant since the last
Valuation Date.

 
3.3  
Investment Credits and Debits The Accounts of Participants shall be adjusted for
Investment Credits and Debits in accordance with this Section 3.3.

 
Participants shall have the right to specify one or more Benefit Benchmarks in
which their Compensation Deferrals shall be deemed to be invested. The Benefit
Benchmarks shall be utilized solely for purposes of adjusting their Accounts in
accordance with procedures adopted by the Plan Administrator. The Plan
Administrator shall provide the Participant with a list of the available Benefit
Benchmarks. From time to time, in the sole discretion of the Plan Administrator,
the Benefit Benchmarks available within the Plan may be revised. All Benefit
Benchmark selections must be denominated in whole percentages unless the Plan
Administrator determines that lower increments are acceptable. A Participant may
make changes in the manner in which future Compensation Deferrals are deemed to
be invested among the various Benefit Benchmarks within the Plan in accordance
with procedures established by the Plan Administrator. A Participant may
re-direct the manner in which earlier Compensation Deferrals, as well as any
appreciation (or depreciation) to-date, are deemed to be invested among the
Benefit Benchmarks available in the Plan in accordance with procedures
established by the Plan Administrator.
 
As of each Valuation Date, the Plan Administrator shall adjust the Account of
each Participant for interest, earnings or appreciation (less losses and
depreciation) with respect to the then balance of the Participant’s Account
equal to the actual results of the Participant’s deemed Benefit Benchmark
elections.
 
All notional acquisitions and dispositions of Benefit Benchmarks which occur
within a Participant’s Account, pursuant to the terms of the Plan, shall be
deemed to occur at such times as the Plan Administrator shall determine to be
administratively feasible in its sole discretion and the Participant’s Account
shall be adjusted accordingly. Accordingly, if a distribution or reallocation
must occur pursuant to the terms of the Plan and all or some portion of the
Account must be valued in connection with such distribution or reallocation (to
reflect Investment Credits and Debits), the Plan Administrator may in its sole
discretion, unless otherwise provided for in the Plan, select a date or dates
which shall be used for valuation purposes.
 
Notwithstanding anything to the contrary, any Investment Credits or Debits made
to any Participant’s Account following a Plan Termination or a Change in Control
Event shall be made in a manner no less favorable to Participants than the
practices and procedures employed under the Plan, or as otherwise in effect, as
of the date of the Plan Termination or the Change in Control Event.
 
Notwithstanding the Participant’s deemed Benefit Benchmark elections under the
Plan, the Plan Sponsor shall be under no obligation to actually invest any
amounts in such manner, or in any manner, and such Benefit Benchmark elections
shall be used solely to determine the amounts by which the Participant’s Account
shall be adjusted under this Article III.
 
3.4  
Participant Statements  The Plan Administrator shall provide each Participant
with a statement showing the credits and debits from his or her Account during
the period from the last statement date. Such statement shall be provided to
Participants as soon as administratively feasible following the end of each
Taxable Year and on such other dates as agreed to by the Plan Sponsor and the
party maintaining Participant records.

 
ARTICLE IV                                
 

 
WITHHOLDING OF TAXES
 
4.1  
Withholding from Compensation For any Taxable Year in which Compensation
Deferrals are made to or vested within the Plan (as applicable), the Plan
Sponsor shall withhold the Participant’s share of income, FICA and other
employment taxes from the portion of the Participant’s Compensation not
deferred. If deemed appropriate by the Plan Sponsor, all or any portion of a
benefit under the Plan may be distributed in certain instances where necessary
to facilitate compliance with applicable withholding requirements to the extent
such distribution would not result in adverse tax consequences under Code §
409A. The amount of any such distribution shall not exceed the amount necessary
to comply with applicable withholding requirements.

 
4.2  
Withholding from Benefit Distributions The Plan Sponsor (or the Trustee of the
Trust, as applicable) shall withhold from any payments made to a Participant
under this Plan all federal, state and local income, employment and other taxes
required to be withheld by the Plan Sponsor, in connection with such payments,
in amounts and in a manner to be determined in the sole discretion of the Plan
Sponsor.

 
ARTICLE V                                
 

 
VESTING
 
5.1  
Vesting A Participant shall be immediately vested in (i.e., shall have a
non-forfeitable right to) all Compensation Deferrals credited to his or her
Account, including any Investment Credits or Debits associated therewith.

 
ARTICLE VI                                
 

 
PAYMENTS
 
6.1  
Benefits Except as otherwise provided under the Plan, a Participant’s or
Beneficiary’s benefit payable under the Plan shall be the value of the
Participant’s vested Account at the time a Distributable Event occurs with
respect to such Participant or Beneficiary. In no event, will a Participant’s
right to a benefit under this Plan give such Participant a secured right or
claim on any assets set aside by the Plan Sponsor to meet its obligations under
the Plan. All payments from the Plan shall be subject to applicable tax
withholding and shall commence (or be fully paid, in the event a lump sum form
of distribution was selected) no later than ninety (90) days after the
occurrence of the Distributable Event, except as otherwise provided herein.

 
6.2  
Separation from Service Payment In the event of a Participant’s Separation from
Service, the Participant’s vested Account shall be paid in the form of a cash
lump sum or, if elected by the Participant, in annual cash payments (over a
period of two(2), five (5), or ten (10) years). For purposes of Code § 409A,
installment payments shall be treated as a single payment. If applicable, the
initial installment shall be based on the value of the Participant’s vested
Account, measured on the date of his or her Separation from Service, and shall
be equal to 1/n (where ‘n’ is equal to the total number of annual benefit
payments not yet distributed). Subsequent installment payments shall be computed
in a consistent fashion, with the measurement date being the anniversary of the
original measurement date. Election of the form of the Separation from Service
Payment must be provided to the Plan Administrator at the time the Participant
first enters into a Compensation Deferral Agreement.

 
Notwithstanding the foregoing, a distribution resulting from a Separation from
Service by a Participant who is a Specified Employee on the date of Separation
from Service shall be made within the ninety (90) days following the date that
is 6 months after the Separation from Service or, if earlier, within the ninety
(90) days following the death of the Specified Employee. The first payment made
following the 6-month period described in the preceding sentence shall include
all payments that otherwise would have been made after Separation from Service
but for the delay required by this paragraph.
 
6.3  
Death Benefit In the event of the Participant’s death, whether before or after
the Participant has otherwise incurred a Distributable Event or commenced
receiving payments from the Plan, the Participant’s Beneficiary shall receive
the balance of the Participant’s vested Account in a single lump-sum cash
payment.

 
6.4  
Domestic Relations Order Payment If it is necessary to satisfy a Domestic
Relations Order, whether before or after the Participant has otherwise incurred
a Distributable Event or commenced receiving payments from the Plan, the Plan
Administrator shall pay to the Spouse, former Spouse, child, or other dependent
of the Participant, as specified in the Domestic Relations Order, the amount
from the Participant’s vested Account required to fulfill the Domestic Relations
Order. The Plan Administrator shall have complete discretion to determine
whether the circumstances of the Participant meet the requirements for a
Domestic Relations Order Payment under this Section. If the request for a
payment due to a Domestic Relations Order is approved, the distribution shall be
made at such time and in such form as shall be necessary to satisfy the Domestic
Relations Order.

 
6.5  
Unforeseeable Emergency Distribution If a Participant has an Unforeseeable
Emergency, as defined herein, the Plan Administrator may pay to the Participant
that portion of his or her vested Account which the Plan Administrator
determines is reasonably necessary to satisfy the emergency. The amounts
distributed to the Participant as a result of an Unforeseeable Emergency may not
exceed the amounts reasonably necessary to satisfy such emergency plus amounts
necessary to pay taxes reasonably anticipated as a result of the distribution,
after taking into account the extent to which such hardship is or may be
relieved through reimbursement or compensation by insurance or otherwise, by
liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship) or by cancellation of
Compensation Deferrals pursuant to Section 7.1. A Participant requesting an
Unforeseeable Emergency Distribution shall apply for the payment in writing on a
form approved by the Plan Administrator and shall provide such additional
information as the Plan Administrator may require. The Plan Administrator shall
have complete discretion to determine whether the financial hardship of the
Participant constitutes an Unforeseeable Emergency under the Plan. If, subject
to the sole discretion of the Plan Administrator, the request for a withdrawal
is approved, the distribution shall be made within ninety (90) days after the
date of approval by the Plan Administrator.

 
6.6  
Election to Receive Interim Distributions A Participant may make an election, at
the time he or she files a Compensation Deferral Agreement for a given Taxable
Year, to have those Compensation Deferrals to which the agreement relates paid
to him or her at an Interim Distribution Date designated by the Participant.
Such Compensation Deferrals, adjusted to reflect Investment Credits and Debits,
shall be payable in a single cash lump sum, or an installment payment
commencing, within ninety (90) days after an applicable Interim Distribution
Date. The Participant’s selection of an Interim Distribution Date is
irrevocable, except as provided in Section 2.4, and must comply with the
definition of Interim Distribution Date under Section 1.25. Notwithstanding a
Participant’s advance election to designate Interim Distribution Dates, the
amounts which would otherwise be subject to such Interim Distribution Dates
shall be distributable upon a Distributable Event pursuant to the Plan, if such
Distributable Event occurs prior to an applicable Interim Distribution Date.

 
6.7  
Payment upon Income Inclusion Under § 409A If the Plan Administrator determines
at any time that the Plan fails to meet the requirements of Code § 409A with
respect to a Participant, the Plan Administrator shall distribute to the
Participant the amount from the Participant’s vested Account that is required to
be included in income as a result of such failure in a single lump-sum payment.

 
6.8  
Permissible Delay in Payments A payment may be delayed beyond the distribution
date otherwise provided for under the Plan in one or more of the circumstances
below

 
(a)  
Subject to Code § 162(m) A payment, including any portion thereof, will be
delayed when the Plan Sponsor reasonably anticipates that its deduction with
respect to such payment otherwise would be eliminated by application of Code §
162(m), provided that the payment is made either during the Participant’s first
Taxable Year in which the Plan Sponsor reasonably anticipates (or should
reasonably anticipate) that if the payment is made during such year the
deduction of such payment will not be barred by Code § 162(m) or during the
period beginning with the date of the Participant’s Separation from Service and
ending on the later of the last day of the Plan Sponsor’s taxable year in which
the Participant has a Separation from Service or the 15th day of the third month
following the Participant’s Separation from Service, and provided further that
when any scheduled payment to a Participant in the Plan Sponsor’s taxable year
is delayed in accordance with this Section, all scheduled payments to such
Participant that could be delayed in accordance with this Section are also
delayed. When a payment is delayed to a date on or after the Participant’s
Separation from Service, the payment shall be treated as a payment upon a
Separation from Service and, in the case of a Specified Employee, the date that
is 6 months after a Participant’s Separation from Service is substituted for any
reference to a Participant’s Separation from Service in the foregoing provisions
of this Section.

 
(b)  
Violation of Federal Securities Laws or Other Applicable Law A payment will be
delayed when the Plan Sponsor reasonably anticipates that the making of the
payment will violate Federal securities laws or other applicable law, provided
that the payment will be made at the earliest date at which the Plan Sponsor
reasonably anticipates that the making of the payment will not cause such
violation. The making of a payment that would cause inclusion in gross income or
the application of any penalty provision or other provision of the Code is not
treated as a violation of applicable law.

 
6.9  
Beneficiary Designation A Participant shall have the right to designate a
Beneficiary and to amend or revoke such designation at any time in writing. Such
designation, amendment or revocation shall be effective upon receipt by the Plan
Administrator. If the Beneficiary is a minor or incompetent, benefits may be
paid to a legal guardian, trustee, or other proper representative of the
Beneficiary, and such payment shall completely discharge the Plan Sponsor and
the Plan of all further obligations hereunder.

 
If no Beneficiary designation is made, or if the Beneficiary designation is held
invalid, or if no Beneficiary survives the Participant and benefits are
determined to be payable following the Participant’s death, the Plan
Administrator shall direct that payment of benefits be made to the person or
persons in the first of the below categories in which there is a survivor. The
categories of successor beneficiaries, in order, are as follows:
 
(a)  
Participant’s Spouse;

 
(b)  
Participant’s Domestic Partner

 
(c)  
Participant’s descendants, per stirpes (eligible descendants shall be determined
by the intestacy laws of the state in which the decedent was domiciled);

 
(d)  
Participant’s parents;

 
(e)  
Participant’s brothers and sisters (including step brothers and step sisters);
and

 
(f)  
Participant’s estate.

 
6.10  
Claims Procedure All claims for benefits under the Plan, and all questions
regarding the operation of the Plan, shall be submitted to the Plan
Administrator in writing. The Plan Administrator has complete discretion and
authority to interpret and construe any provision of the Plan, and its decisions
regarding claims for benefits hereunder are final and binding.

 
(a)  
Presentation of Claim. Any Participant, Beneficiary or person claiming benefits
under the Plan (such Participant, Beneficiary or other person being referred to
below as a “Claimant”) may deliver to the Plan Administrator a written claim for
a determination with respect to benefits distributable to such Claimant from the
Plan. The claim must state with particularity the determination desired by the
Claimant.

 
Any claim by a Participant that a payment made under the Plan is less than the
amount to which the Participant is entitled must be made in writing pursuant to
the foregoing provisions of this Section within 180 days after the date of such
payment. Notwithstanding any other provision of the Plan, a Participant shall
forfeit all rights to any amounts claimed if the Participant fails to make claim
as provided in the preceding sentence.
 
(b)  
Notification of Decision The Plan Administrator shall consider a Claimant’s
claim within a reasonable time, and shall notify the Claimant in writing:

 
(i)  
that the Claimant’s requested determination has been made, and that the claim
has been allowed in full; or

 
(ii)  
that the Plan Administrator has reached a conclusion contrary, in whole or in
part, to the Claimant’s requested determination, and such notice must set forth
in a manner calculated to be understood by the Claimant:

 
(1)  
the specific reason(s) for the denial of the claim, or any part of it;

 
(2)  
specific reference(s) to pertinent provisions of the Plan upon which such denial
was based;

 
(3)  
a description of any additional material or information necessary for the
Claimant to perfect the claim, and an explanation of why such material or
information is necessary;

 
(4)  
a description of the claim review procedure set forth in Section 6.12(c) below,
including information regarding any applicable time limits and a statement
regarding the Claimant’s right to bring an action under ERISA §502(a) following
an adverse determination on review; and

 
(5)  
if the decision involved the Disability of the Participant, information
regarding whether an internal rule or procedure was relied upon in making its
decision and that the Claimant can request a copy of such rule or procedure,
free of charge, upon request.

 
The Plan Administrator will notify the Claimant of an adverse decision within
ninety (90) days after the date the claim was received, unless the Plan
Administrator determines there are special circumstances that require an
extension of time in which to make a decision. If an extension of time is
needed, the Plan Administrator shall notify the Claimant of the extension before
the expiration of the original 90-day period. The notice will include a
description of the special circumstances requiring an extension of time and an
estimate of the date it expects a decision to be made. The extension shall not
exceed an additional 90-day period.
 
If the adverse decision relates to a claim involving the Disability of the
Participant, the Plan Administrator will notify the Claimant of an adverse
decision within forty-five (45) days after the date the claim was received,
unless the Plan Administrator determines that matters beyond its control require
an extension of time in which to make a decision. If an extension of time is
needed, the Plan Administrator shall notify the Claimant of the extension before
the expiration of the original 45-day period. The notice will include a
description of the circumstances necessitating the extension and an estimate of
the date it expects a decision to be made. The extension shall not exceed an
additional 30-day period unless, within the 30-day period the Plan Administrator
again determines that more time is needed due to matters beyond its control, in
which case notice of the need for not more than an additional thirty (30) days
is provided to the Claimant before the first 30-day period expires. The notice
will include a description of the circumstances requiring the extension and an
estimate of the date it expects a decision to be made. Any extension notice will
include information regarding the standards on which a determination of
Disability will be made, the outstanding issues which prevent a decision from
being made, and any additional information which is needed in order to reach a
decision. The Claimant will have forty-five (45) days to supply any additional
information.
 
If the Plan Administrator notifies the Claimant of the need for an extension of
time to make a decision regarding his or her claim in accordance with this
Section 6.12(b), and the extension is needed due to the Claimant’s failure to
provide information necessary to decide the claim, the period of time in which
the Plan Administrator must make a decision does not include the time between
the date the notice of the extension was sent to the Claimant and the date the
Claimant responds to the request for additional information.
 
(c)  
Review of a Denied Claim Within sixty (60) days after receiving a notice from
the Plan Administrator that a claim has been denied, in whole or in part, a
Claimant (or the Claimant’s duly authorized representative) may file with the
Plan Administrator a written request for a review of the denial of the claim.
During the 60-day review period, the Claimant (or the Claimant’s duly authorized
representative):

 
(i)  
may review relevant documents;

 
(ii)  
may submit written comments or other documents relating to the claim;

 
(iii)  
may request access to and copies of all relevant documents, free of charge;

 
(iv)  
may request a hearing, which the Plan Administrator, in its sole discretion, may
grant.

 
The Plan Administrator will consider all documents and other information
submitted by the Claimant in reviewing its previous decision, including
documents not available to or considered by it during its initial determination.
 
If the appeal relates to a determination of the Plan Administrator involving the
Disability of the Participant, the Claimant will have one-hundred-eighty (180)
days following receipt of a denial to file a written request for review. In such
event, no deference shall be given to the initial benefit determination, and the
review shall be conducted by an appropriate fiduciary who is someone other than
the individual who made the initial determination or a subordinate of such
individual. If the initial determination was based in whole or in part on a
medical judgment, the reviewer shall consult with an appropriately trained and
experienced health care professional, and shall disclose the identity of any
experts who provided advice with regard to the initial decision. The health care
professional whose advice is sought during the appeal process will not be an
individual who was consulted during the initial determination, nor a subordinate
of such an individual.
 
(d)  
Decision on Review The Plan Administrator shall render its decision on review
promptly, and not later than sixty (60) days after the filing of a written
request for review of the denial, unless a hearing is held or other special
circumstances require additional time, in which case the Plan Administrator’s
decision must be rendered within one-hundred-twenty (120) days after such date.
If an extension of time is needed, the Plan Administrator shall notify the
Claimant of the extension before the expiration of the original 60-day period.
The notice will include a description of the circumstances requiring the
extension and an estimate of the date it expects a decision to be made. Such
decision must be written in a manner calculated to be understood by the
Claimant, and if the decision on review is adverse it must contain:

 
(i)  
specific reasons for the decision;

 
(ii)  
specific reference(s) to the pertinent Plan provisions upon which the decision
was based;

 
(iii)  
a statement that the Claimant may receive, upon request and free of charge,
access to and copies of relevant documents and information;

 
(iv)  
a statement describing any voluntary appeal procedures under the Plan and the
Claimant’s right to bring an action under ERISA §502(a);

 
(v)  
if the decision involved the Disability of the Participant, information
regarding whether an internal rule or procedure was relied upon in making its
decision and that the Claimant can request a copy of such rule or procedure,
free of charge, upon request;

 
(vi)  
if the decision involved the Disability of the Participant, a statement that the
Claimant and the Plan may have other voluntary alternative dispute resolution
options, such as mediation, and that the Claimant may find out what options are
available by contacting the local U.S. Department of Labor Office and the state
insurance regulatory agency; and

 
(vii)  
such other matters as the Plan Administrator deems relevant.

 
If the appeal involves the Disability of the Participant, the decision of the
Plan Administrator will be made within forty-five (45) days after the filing of
the written request for review, unless special circumstances require additional
time, in which case the Plan Administrator’s decision will be made within ninety
(90) days after the date the request was filed. If an extension of time is
needed, the Plan Administrator shall notify the Claimant of the extension before
the expiration of the original 45-day period. The notice will include a
description of the circumstances requiring the extension and an estimate of the
date it expects a decision to be made.
 
If the Plan Administrator notifies the Claimant of the need for an extension of
time to make a decision regarding his or her appeal in accordance with this
Section 6.12(d), and the extension is needed due to the Claimant’s failure to
provide information necessary to decide the appeal, the period of time in which
the Plan Administrator must make a decision does not include the time between
the date the notice of the extension was sent to the Claimant and the date the
Claimant responds to the request for additional information.
 
ARTICLE VII                                
 

 
CANCELLATION OF DEFERRALS
 
7.1  
Unforeseeable Emergency If a Participant has an Unforeseeable Emergency, as
defined herein, the Plan Administrator may cancel all future Compensation
Deferrals pertaining to Compensation not yet earned and required to be made
pursuant to the Participant’s current Compensation Deferral Agreement if
reasonably necessary to satisfy the Participant’s financial hardship subject to
the standards and requirements for an Unforeseeable Emergency Distribution set
forth in Section 6.5. If a Participant receives a hardship distribution from a
qualified plan of the Plan Sponsor pursuant to Code § 401(k)(2)(B)(IV), the Plan
Administrator shall cancel all future Compensation Deferrals pertaining to
Compensation not yet earned and required to be made pursuant to the
Participant’s current Compensation Deferral Agreement, and the Participant will
be prohibited from making Compensation Deferrals under the Plan for at least six
(6) months after receipt of the hardship distribution or such longer period as
may be prescribed by the qualified plan.

 
ARTICLE VIII                                
 

 
ARTICLE VIII PLAN ADMINISTRATION
 
8.1  
Appointment The Plan Administrator shall serve at the pleasure of the Plan
Sponsor, who shall have the right to remove the Plan Administrator at any time
upon thirty (30) days’ written notice. The Plan Administrator shall have the
right to resign upon thirty (30) days’ written notice to the Plan Sponsor.

 
8.2  
Duties of Plan Administrator The Plan Administrator shall be responsible to
perform all administrative functions of the Plan. These duties include but are
not limited to:

 
(a)  
Communicating with Participants in connection with their rights and benefits
under the Plan;

 
(b)  
Reviewing Benefit Benchmark elections received from Participants;

 
(c)  
Arranging for the payment of taxes (including income tax withholding), expenses
and benefit payments to Participants under the Plan;

 
(d)  
Filing any returns and reports due with respect to the Plan;

 
(e)  
Interpreting and construing Plan provisions and settling claims for Plan
benefits; and

 
(f)  
Serving as the Plan’s designated representative for the service of notices,
reports, claims or legal process.

 
8.3  
Plan Sponsor The Plan Sponsor has sole responsibility for the establishment and
maintenance of the Plan. The Plan Sponsor through its Board shall have the power
and authority to appoint the Plan Administrator, Trustee and any other
professionals as may be required for the administration of the Plan. The Plan
Sponsor shall also have the right to remove any individual or party appointed to
perform administrative, investment, fiduciary or other functions under the Plan.
The Plan Sponsor may delegate any of its powers to the Plan Administrator, Board
member or a committee of the Board.

 
8.4  
Administrative Fees and Expenses All reasonable costs, charges and expenses
incurred by the Plan Administrator or the Trustee in connection with the
administration of the Plan or the Trust shall be paid by the Plan Sponsor. If
not so paid, such costs, charges and expenses shall be charged to the Trust, if
any, established in connection with the Plan. The Trustee shall be specifically
authorized to charge its fees and expenses directly to the Trust. If the Trust
has insufficient liquid assets to cover the applicable fees, the Trustee shall
have the right to liquidate assets held in the Trust to pay any fees or expenses
due. Notwithstanding the foregoing, no Compensation other than reimbursement for
expenses shall be paid to a Plan Administrator who is an employee of the Plan
Sponsor.

 
8.5  
Plan Administration and Interpretation The Plan Administrator shall have
complete discretionary control and authority to determine the rights and
benefits and all claims, demands and actions arising out of the provisions of
the Plan or any Participant, Beneficiary, deceased Participant, or other person
having or claiming to have any interest under the Plan. The Plan Administrator
shall have complete discretion to interpret the Plan and to decide all matters
under the Plan. Such interpretation and decision shall be final, conclusive, and
binding on all Participants and any person claiming under or through any
Participant. Any individual serving as Plan Administrator who is a Participant
will not vote or act on any matter relating solely to himself or herself. When
making a determination or calculation, the Plan Administrator shall be entitled
to rely on information furnished by a Participant, a Beneficiary, the Plan
Sponsor, or other party. The Plan Administrator shall have the responsibility
for complying with any reporting and disclosure requirements of ERISA.

 
8.6  
Powers, Duties, Procedures The Plan Administrator shall have such powers and
duties, may adopt such rules, may act in accordance with such procedures, may
appoint such officers or agents, may delegate such powers and duties, may
receive such reimbursement and compensation, and shall follow such claims and
appeal procedures with respect to the Plan as it may establish, each
consistently with the terms of the Plan.

 
8.7  
Information To enable the Plan Administrator to perform its functions, the Plan
Sponsor shall supply full and timely information to the Plan Administrator on
all matters relating to the Compensation of Participants, their employment,
retirement, death, Separation from Service, and such other pertinent facts as
the Plan Administrator may require.

 
8.8  
Indemnification of Plan Administrator The Plan Sponsor agrees to indemnify and
to defend to the fullest extent permitted by law any officer(s), employee(s) or
Board members who serve as Plan Administrator (including any such individual who
formerly served as Plan Administrator) against all liabilities, damages, costs
and expenses (including reasonable attorneys’ fees and amounts paid in
settlement of any claims approved by the Plan Sponsor) occasioned by any act or
omission to act in connection with the Plan, if such act or omission is in good
faith.

 
8.9  
Plan Administration Following a Change in Control Event Notwithstanding anything
to the contrary in this Article VIII or elsewhere in the Plan or Trust, upon a
Change in Control Event with respect to the Plan Sponsor or PICO the individual
serving as Chief Executive Officer of such Plan Sponsor immediately prior to
such Change in Control Event who is also a Participant in the Plan, or if the
Plan Sponsor has no Chief Executive Officer who is also a Participant in the
Plan, the Plan Sponsor’s most senior officer who is also a Participant in the
Plan, shall have the right to appoint an individual, third party or committee to
serve as Plan Administrator. Such appointment shall be made in writing and
copies thereof shall be delivered to the Board, to the existing Plan
Administrator, to the Trustee, and to all Plan Participants. The Trustee and all
other service providers shall be entitled to rely fully on instructions received
from the successor Plan Administrator and shall be indemnified to the fullest
extent permitted by law for acting in accordance with the proper instructions of
the successor Plan Administrator.

 
ARTICLE IX                                
 

 
TRUST FUND
 
9.1  
Trust The Plan Sponsor may establish a Trust for the purpose of accumulating
assets which may, but need not be used, by the Plan Sponsor to satisfy some or
all of its financial obligations to provide benefits to Participants under this
Plan. Any trust created under this Section 9.1 shall be domiciled in the United
States of America, and no assets of the Plan shall be held or transferred
outside the United States. All assets held in the Trust shall remain the
exclusive property of the Plan Sponsor and shall be available to pay creditor
claims of the Plan Sponsor in the event of insolvency, to the extent provided
under any Trust established with respect to such Plan Sponsor. The assets held
in Trust shall be administered in accordance with the terms of the separate
Trust Agreement between the Trustee and the Plan Sponsor.

 
9.2  
Unfunded Plan In no event will the assets accumulated by the Plan Sponsor in the
Trust be construed as creating a funded Plan under the applicable provisions of
ERISA or the Code, or under the provisions of any other applicable statute or
regulation. Any funds set aside by the Plan Sponsor in Trust shall be
administered in accordance with the terms of the Trust.

 
9.3  
Assignment and Alienation No Participant or Beneficiary of a deceased
Participant shall have the right to anticipate, assign, transfer, sell,
mortgage, pledge or hypothecate any benefit under this Plan. The Plan
Administrator shall not recognize any attempt by a third party to attach,
garnish or levy upon any benefit under the Plan except as may be required by
law.

 
ARTICLE X                                
 

 
AMENDMENT AND PLAN TERMINATION
 
10.1  
Amendment The Plan Sponsor or PICO shall have the right to amend this Plan
without the consent of any Participant or Beneficiary hereunder, provided that
no such amendment shall have the effect of reducing any of the vested benefits
to which a Participant or Beneficiary has accrued a right as of the effective
date of the amendment. Notwithstanding the foregoing, the Plan Sponsor shall
have the right to amend this Plan in any manner whatsoever without the consent
of any Participant or Beneficiary to comply with the requirements of Code §409A
and any binding guidance thereunder to avoid adverse tax consequences even if
such amendment has the affect of reducing a vested benefit or existing right of
a Participant or Beneficiary hereunder.

 
10.2  
Plan Termination The Plan Sponsor may terminate or discontinue the Plan in whole
or in part at any time. No further Compensation Deferrals shall be permitted
after the Taxable Year in which the Plan Termination occurs, except that the
Plan Sponsor shall be responsible to pay any benefit attributable to vested
amounts credited to the Participant’s Account as of the effective date of
termination (following any adjustments to such Accounts in accordance with
Article III hereof). If the Plan is terminated in accordance with this Section
10.2, the Plan Administrator shall make distribution of the Participant’s vested
benefit upon the occurrence of a Distributable Event with respect to a
Participant. A Participant’s vested benefit shall be adjusted to reflect
Investment Credits and Debits for all Valuation Dates between Plan Termination
and the occurrence of a Participant’s Distributable Event.

 
10.3  
Plan Termination Following a Change in Control Event If, within the 30 days
preceding or the 12 months following a Change in Control Event, the Plan Sponsor
takes irrevocable action to terminate the Plan,

 
the Plan will be terminated and liquidated with respect to the Participants of
each corporation that experienced the Change in Control Event. The Plan will be
terminated under this Section 10.3 only if all other arrangements sponsored by
the Plan Sponsor experiencing the Change in Control Event that would be
aggregated with the Plan as a single plan under Code § 409A are also terminated,
so all participants under such aggregated arrangements are required to receive
all amounts of compensation deferred under the terminated arrangements within 12
months after the date the Plan Sponsor takes all necessary action to terminate
the Plan and the other arrangements. For purposes of this Section 10.3, when the
Change of Control Event results from an asset purchase transaction, the
applicable Plan Sponsor with the discretion to terminate the Plan and the other
arrangements is the Plan Sponsor that is primarily liable immediately after the
transaction for the payment of deferred compensation. Upon a Plan Termination
Following a Change in Control Event, no further Compensation Deferrals  shall be
made, and the Plan Administrator shall be responsible to pay any benefit
attributable to vested amounts credited to the Participant’s Account as soon as
practicable following date on which the Plan Sponsor irrevocably takes all
necessary action to terminate the Plan (following any final adjustments to such
Accounts in accordance with Article III hereof), but not later than 12 months
following such date.
 
10.4  
Plan Termination Following a Corporate Dissolution The Plan Sponsor in its
discretion may terminate and liquidate the Plan and make the payments provided
below within 12 months after a Corporate Dissolution provided that the value of
the Participants’ vested benefits is included in the Participants’ gross incomes
in the latest of the following years (or, if earlier, the year in which the
amount is actually or constructively received):

 
(a)  
the calendar year in which the Plan Termination occurs;

 
(b)  
the first calendar year in which the amount is no longer subject to a
substantial risk of forfeiture; or

 
(c)  
the first calendar year in which the payment is administratively practicable.

 
Upon a Plan Termination Following a Corporate Dissolution, no further
Compensation Deferrals shall be made, and the Plan Administrator shall be
responsible to pay any benefit attributable to vested amounts credited to the
Participant’s Account as of the effective date of termination (following any
final adjustments to such Accounts in accordance with Article III hereof).
 
10.5  
Plan Termination in Connection with Termination of Certain Similar
Arrangements  The Plan Sponsor in its discretion may terminate the Plan and make
the distribution provided below provided that

 
(a)  
the termination does not occur proximate to a downturn in the financial health
of the Plan Sponsor and its Affiliates;

 
(b)  
the Plan Sponsor terminates all other arrangements that would be aggregated with
the Plan as a single plan under Code § 409A if the same Participant had
deferrals of compensation under all of the other arrangements;

 
(c)  
no payments in liquidation of the Plan are made within 12 months after the date
the Plan Sponsor takes all necessary action to irrevocably terminate the Plan,
other than payments that would be payable under the terms of the Plan if action
to terminate the Plan had not occurred;

 
(d)  
all payments are made within 24 months after the date the Plan Sponsor takes all
necessary action to irrevocably terminate the Plan; and

 
(e)  
neither the Plan Sponsor nor any Affiliate adopts a new plan that would be
aggregated with any terminated plan or arrangement under the definition of what
constitutes a plan for purposes of Code §409A if the same Participant
participated in both arrangements, at any time within 3 years following the date
the Plan Sponsor takes all necessary action to irrevocably terminate the Plan.

 
Upon a Plan Termination in Connection with the Termination of Certain Similar
Arrangements, no further Employer Discretionary Credits or Employer Matching
Credits shall be made, and no further Compensation Deferrals shall be made after
the Taxable Year in which the Plan Termination in Connection with the
Termination of Certain Similar Arrangements occurs. The Plan Administrator shall
be responsible to pay any benefit attributable to vested amounts credited to the
Participant’s Account as soon as practicable after distributions are permissible
under Code § 409A (following any final adjustments to such Accounts in
accordance with Article III hereof).
 
10.6  
Effect of Payment The full payment of the balance of a Participant’s vested
Account under the provisions of the Plan shall completely discharge all
obligations to a Participant and his designated Beneficiaries under this Plan
and each of the Participant’s Compensation Deferral Agreements shall terminate.

 
ARTICLE XI                                
 

 
MISCELLANEOUS
 
11.1  
Total Agreement This Plan document and the Compensation Deferral Agreement,
Beneficiary designation and other administration forms shall constitute the
total agreement or contract between the Plan Sponsor and the Participant
regarding the Plan. No oral statement regarding the Plan may be relied upon by a
Participant or Beneficiary. The Plan Sponsor or Plan Administrator shall have
the right to establish such procedures as are necessary for the administration
or operation of the Plan or Trust, and such procedures shall also be considered
a part of the Plan unless clearly contrary to the express provisions thereof.

 
11.2  
Employment Rights Neither the establishment of this Plan nor any modification
thereof, nor the creation of any Trust or Account, nor the payment of any
benefits, shall be construed as giving a Participant or other person a right to
employment with the Plan Sponsor or any Affiliate or any other legal or
equitable right against the Plan Sponsor of any Affiliate except as provided in
the Plan. In no event shall the terms of employment of any Eligible Individual
be modified or in any way be affected by the Plan.

 
11.3  
Non-Assignability None of the benefits, payments, proceeds or claims of any
Participant or Beneficiary shall be subject to attachment or garnishment or
other legal process by any creditor of such Participant or Beneficiary, nor
shall any Participant or Beneficiary have the right to alienate, commute,
pledge, encumber or assign any of the benefits or payments or proceeds which he
or she may expect to receive, contingently or otherwise under the Plan.

 
11.4  
Binding Agreement Any action with respect to the Plan taken by the Plan
Administrator or the Plan Sponsor or the Trustee or any action authorized by or
taken at the direction of the Plan Administrator, the Plan Sponsor or other
authorized party shall be conclusive upon all Participants and Beneficiaries
entitled to benefits under the Plan.

 
11.5  
Receipt and Release Any payment to any Participant or Beneficiary in accordance
with the provisions of the Plan shall, to the extent thereof, be in full
satisfaction of all claims against the Plan Sponsor, the Plan Administrator and
the Trustee under the Plan, and the Plan Administrator may require such
Participant or Beneficiary, as a condition precedent to such payment, to execute
a receipt and release to such effect. If any Participant or Beneficiary is
determined by the Plan Administrator to be incompetent by reason of physical or
mental disability (including not being the age of majority) to give a valid
receipt and release, the Plan Administrator may cause payment or payments
becoming due to such person to be made to a legal guardian, trustee, or other
proper representative of the Participant or Beneficiary without responsibility
on the part of the Plan Administrator, the Plan Sponsor or the Trustee to follow
the application of such funds.

 
11.6  
Furnishing Information A Participant or Beneficiary will cooperate with the Plan
Administrator or any representative thereof by furnishing any and all
information requested by the Plan Administrator and take such other actions as
may be requested in order to facilitate the administration of the Plan and the
payments of benefits hereunder, including but not limited to taking such
physical examinations as the Plan Administrator may deem necessary.

 
11.7  
Compliance with Code § 409A Notwithstanding any provision of the Plan to the
contrary, all provisions of the Plan will be interpreted and applied to comply
with the requirements of Code §409A and any regulations and applicable binding
guidance so as to avoid adverse tax consequences. No provision of the Plan,
however, is intended or shall be interpreted to create any right with respect to
the tax treatment of the amounts paid or payable hereunder, and neither the Plan
Sponsor nor any Affiliate shall under any circumstances have any liability to a
Participant or Beneficiary for any taxes, penalties or interest due on amounts
paid or payable under the Plan, including taxes, penalties or interest imposed
under Code § 409A.

 
11.8  
Insurance The Plan Sponsors, on their own behalf or on behalf of the trustee of
the Trust, and, in their sole discretion, may apply for and procure insurance on
the life of the Participant, in such amounts and in such forms as they may
choose. The Plan Sponsors or the trustee of the Trust, as the case may be, shall
be the sole owner and beneficiary of any such insurance. The Participant shall
have no interest whatsoever in any such policy or policies, and at the request
of the Plan Sponsor shall submit to medical examinations and supply such
information and execute such documents as may be required by the insurance
company or companies to which the Plan Sponsor have applied for insurance.

 
11.9  
Governing Law Construction, validity and administration of this Plan shall be
governed by applicable Federal law and applicable state law of California,
without regard to the conflict of law provisions of such state law. If any
provision shall be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall continue to be fully
effective.

 
11.10  
Headings and Subheadings Headings and subheadings in this Plan are inserted for
convenience only and are not to be considered in the interpretation of the
provisions hereof.

 
IN WITNESS WHEREOF, PICO Deferred Holdings, LLC has adopted the amendment and
restatement of this Plan as of the Effective Date in accordance with the
resolutions of the Compensation Committee o f he Board of Directors of PICO
Holdings Inc. attached hereto.
 

 

WEST\21629892.2                                                                    
328146-151900
 
 

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