**Exhibit 10.7.2**

 

TRUST AGREEMENT

Dated as of November 14, 2006

between

FUND AMERICAN ENTERPRISES HOLDINGS, INC.

and

WHITE MOUNTAINS CAPITAL, INC., as Trustee

 

 

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TABLE OF CONTENTS
|                            | ** **                      | ** ** | **Page**   |
|----------------------------|---------------------------------|------------|------------|
| ** **                 | ** **                      | ** ** | ** ** |
| ARTICLE I                  |                            |       |
|                       |                            |       |       |
| DEFINITIONS                |                            |       |
|                       |                            |       |       |
| SECTION 1.01.              | Definitions                     |       | 4          |
|                       |                            |       |       |
| ARTICLE II                 |                            |       |
|                       |                            |       |       |
| TRUST                      |                            |       |
|                       |                            |       |       |
| SECTION 2.01.              | Establishment                   |       | 5          |
| SECTION 2.02.              | Revocation                      |       | 5          |
| SECTION 2.03.              | Grantor Trust                   |       | 5          |
| SECTION 2.04.              | Trust Assets                    |       | 5          |
|                       |                            |       |       |
| ARTICLE III                |                            |       |
|                       |                            |       |       |
| DISBURSEMENTS              |                            |       |
|                       |                            |       |       |
| SECTION 3.01.              | Disbursements to Zenith         |       | 6          |
| SECTION 3.02.              | Limitations                     |       | 6          |
|                       |                            |       |       |
| ARTICLE IV                 |                            |       |
|                       |                            |       |       |
| INSOLVENCY OF  THE COMPANY |                            |       |
|                       |                            |       |       |
| SECTION 4.01.              | Insolvency                      |       | 6          |
| SECTION 4.02.              | Procedures                      |       | 6          |
|                       |                            |       |       |
| ARTICLE V                  |                            |       |
|                       |                            |       |       |
| PAYMENTS TO THE  COMPANY   |                            |       |
|                       |                            |       |       |
| SECTION 5.01.              | Payments to the Company         |       | 7          |
|                       |                            |       |       |
| ARTICLE VI                 |                            |       |
|                       |                            |       |       |
| INVESTMENT OF  TRUST       |                            |       |
|                       |                            |       |       |
| SECTION 6.01.              | Limitations on Rights of Zenith |       | 7          |
| SECTION 6.02.              | Contributed Assets.             |       | 7          |

 

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|                                                            |                                     |   |   |
|------------------------------------------------------------|------------------------------------------|--------|--------|
| ARTICLE VII                                                |                                     |   |
|                                                       |                                     |   |   |
| RECORDKEEPING  AND ADMINISTRATIVE SERVICES TO BE PERFORMED |                                     |   |
|                                                       |                                     |   |   |
| SECTION 7.01.                                              | General                                  |   | 8      |
| SECTION 7.02.                                              | Accounts                                 |   | 8      |
| SECTION 7.03.                                              | Inspection and Audit                     |   | 8      |
|                                                       |                                     |   |   |
| ARTICLE VIII                                               |                                     |   |
|                                                       |                                     |   |   |
| TRUSTEE POWERS                                             |                                     |   |
|                                                       |                                     |   |   |
| SECTION 8.01.                                              | Trustee Powers                           |   | 8      |
|                                                       |                                     |   |   |
| ARTICLE IX                                                 |                                     |   |
|                                                       |                                     |   |   |
| COMPENSATION AND  EXPENSES OF THE TRUSTEE                  |                                     |   |
|                                                       |                                     |   |   |
| SECTION 9.01.                                              | Compensation and Expenses of the Trustee |   | 9      |
|                                                       |                                     |   |   |
| ARTICLE X                                                  |                                     |   |
|                                                       |                                     |   |   |
| RESIGNATION OR  REMOVAL OF THE TRUSTEE                     |                                     |   |
|                                                       |                                     |   |   |
| SECTION 10.01.                                             | Resignation                              |   | 10     |
| SECTION 10.02.                                             | Removal                                  |   | 10     |
| SECTION 10.03.                                             | Successor                                |   | 10     |
|                                                       |                                     |   |   |
| ARTICLE XI                                                 |                                     |   |
|                                                       |                                     |   |   |
| SUCCESSOR  TRUSTEE                                         |                                     |   |
|                                                       |                                     |   |   |
| SECTION 11.01.                                             | Appointment                              |   | 10     |
| SECTION 11.02.                                             | Acceptance                               |   | 10     |
| SECTION 11.03.                                             | Corporate Action                         |   | 10     |
|                                                       |                                     |   |   |
| ARTICLE XII                                                |                                     |   |
|                                                       |                                     |   |   |
| CONFIDENTIALITY                                            |                                     |   |
|                                                       |                                     |   |   |
| SECTION 12.01.                                             | Confidentiality                          |   | 11     |
|                                                       |                                     |   |   |
| ARTICLE XIII                                               |                                     |   |
|                                                       |                                     |   |   |
| AMENDMENT,  REVOCATION OR TERMINATION                      |                                     |   |
|                                                       |                                     |   |   |
| SECTION 13.01                                              | Amendment                                |   | 11     |
| SECTION 13.02.                                             | Revocation or Termination.               |   | 11     |

 

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|                                               |                                                 |   |   |
|-----------------------------------------------|------------------------------------------------------|--------|--------|
| ARTICLE XIV                                   |                                                 |   |
|                                          |                                                 |   |   |
| LIMITATION OF  LIABILITY; INDEMNIFICATION     |                                                 |   |
|                                          |                                                 |   |   |
| SECTION 14.01.                                | Limitation of Liability                              |   | 12     |
| SECTION 14.02.                                | Indemnification                                      |   | 12     |
|                                          |                                                 |   |   |
| ARTICLE XV                                    |                                                 |   |
|                                          |                                                 |   |   |
| RESIGNATION,  REMOVAL AND TERMINATION NOTICES |                                                 |   |
|                                          |                                                 |   |   |
| SECTION 15.01.                                | Resignation, Removal and Termination Notices         |   | 12     |
|                                          |                                                 |   |   |
| ARTICLE XVI                                   |                                                 |   |
|                                          |                                                 |   |   |
| DURATION                                      |                                                 |   |
|                                          |                                                 |   |   |
| SECTION 16.01.                                | Duration                                             |   | 13     |
|                                          |                                                 |   |   |
| ARTICLE XVII                                  |                                                 |   |
|                                          |                                                 |   |   |
| GENERAL                                       |                                                 |   |
|                                          |                                                 |   |   |
| SECTION 17.01.                                | Performance by the Trustee, its Agents or Affiliates |   | 13     |
| SECTION 17.02.                                | Entire Agreement                                     |   | 13     |
| SECTION 17.03.                                | Waiver                                               |   | 13     |
| SECTION 17.04.                                | Non-Assignment                                       |   | 13     |
| SECTION 17.05.                                | Successors and Assigns                               |   | 13     |
| SECTION 17.06.                                | Partial Invalidity                                   |   | 13     |
| SECTION 17.07.                                | Section Headings                                     |   | 13     |
| SECTION 17.08.                                | Counterparts                                         |   | 14     |
| SECTION 17.09.                                | Facsimile and Electronic Communications Permitted    |   | 14     |
|                                          |                                                 |   |   |
| ARTICLE XVIII                                 |                                                 |   |
|                                          |                                                 |   |   |
| GOVERNING LAW                                 |                                                 |   |
|                                          |                                                 |   |   |
| SECTION 18.01.                                | Delaware Law Controls                                |   | 14     |
| SECTION 18.02.                                | Trust Agreement Controls                             |   | 14     |

 

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TRUST AGREEMENT dated asof November 14, 2006, between FUND AMERICAN ENTERPRISES HOLDINGS, INC., aDelaware corporation (the “Company”) and WHITE MOUNTAINS CAPITAL, INC., aDelaware corporation (the “Trustee”).

W IT N E S S E T H:

WHEREAS Zenith Insurance Company (“Zenith”) owns $20million liquidation preference of preferred stock of the Company (“the ZenithPreferred Stock”);

WHEREAS the Company wishes to establish a trust and tocontribute to the trust assets (the “Contributed Assets”) that shall be heldtherein, subject to the claims of the Company’s creditors in the event of theCompany’s Insolvency (as herein defined), until paid to Zenith in such mannerand at such times as specified under the terms of the Zenith Preferred Stock;

WHEREAS it is the intention of the parties that theContributed Assets be sufficient to pay when due all amounts required under theterms of the Zenith Preferred Stock; and

WHEREAS the Trustee is willing to hold the aforesaidContributed Assets in trust.

NOW, THEREFORE, the partiesdo hereby establish the Trust and agree that the Trust shall be composed, heldand disposed of as follows:

# ARTICLE IDEFINITIONS

## SECTION 1.01.  Definitions.  The following terms as used in this Agreementhave the meaning indicated unless the context clearly requires otherwise:

 “Agreement”shall mean this Trust Agreement, as the same may be amended and in effect fromtime to time.

“Code” shall mean the Internal Revenue Code of 1986,as it has been or may be amended from time to time.

“Company” shall mean Fund American EnterprisesHoldings, Inc., a Delaware corporation, or any successor to all orsubstantially all its businesses that, by agreement, operation of law orotherwise, assumes the responsibility of the Company under this Agreement.

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“Contributed Assets” shall mean the cash contributedto the Trust by the Company, which cash will be used to acquire a portfolio offixed maturity securities issued by the U.S. government or government-sponsoredenterprises, the scheduled interest and principal payments of which areintended to be sufficient to pay when due all amounts required under the termsof the Zenith Preferred Stock.

“Reporting Date” shall mean the last day of eachcalendar quarter and the date as of which the Trustee resigns or is removedpursuant to this Agreement.

“Trust” shall mean this Fund American EnterprisesHoldings, Inc. Trust established by the Company and the Trustee pursuant to theprovisions of this Agreement.

“Trustee” shall mean White Mountains Capital, Inc., aDelaware corporation, or any successor trustee appointed pursuant toArticle XI to the extent such successor agrees to serve as Trustee underthis Agreement.

“Zenith” shall mean Zenith Insurance Company, aCalifornia Corporation.

“Zenith Preferred Stock” shall mean the $20 millionliquidation preference of preferred stock of the Company owned by Zenith.

# ARTICLE IITRUST

## SECTION 2.01.  Establishment.  The Company hereby deposits with the Trusteein trust the Contributed Assets, which shall become the principal of the Trustto be held, administered and disposed of by the Trustee as provided in thisAgreement.  The Company may from time totime deposit additional assets with the Trustee in trust that shall thereuponbe added to the principal of the Trust.

## SECTION 2.02.  Revocation.  The Trust hereby established shall not berevocable by the Company.

## SECTION 2.03.  Grantor Trust.  The Trust is intended to be a grantor trust,of which the Company is the grantor, within the meaning of subpart E, part I,subchapter J, chapter 1, subtitle A of the Code, and shall be construedaccordingly.

## SECTION 2.04.  Trust Assets.  The principal of the Trust and any earningsthereon shall be held separate and apart from funds of the Company and shall beused exclusively for the uses and purposes described herein and for the generalcreditors of the Company as herein set forth. Zenith shall have no preferred claim on, or any beneficial ownershipinterest in, any assets of the Trust. Any assets held by the Trust will be subject to the claims of theCompany’s general creditors under Federal and state law in the event ofInsolvency.

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# ARTICLE IIIDISBURSEMENTS

## SECTION 3.01.  Disbursementsto Zenith.  The Company shall deliverto the Trustee a schedule (the “Payment Schedule”) that indicates the amountspayable by the Company in respect of the Zenith Preferred Stock and the datesfor payments of such amounts.  TheTrustee shall, on behalf of the Company, disburse moneys from the Trust toZenith in accordance with the Payment Schedule. The Trustee shall have no responsibility to ascertain whether thePayment Schedule complies with the terms of the Zenith Preferred Stock or ofany applicable law.  The Company shall beresponsible for any Federal or state income tax reporting or withholdingarising out of any transactions relating to the Trust.

If the principal of the Trust, and any earningsthereon, are not sufficient to make payments to Zenith in accordance with thePayment Schedule, the Trustee shall notify the Company.

## SECTION 3.02.  Limitations.  The Trustee shall not be required to make anydisbursement in excess of the net realizable value of the assets of the Trustat the time of the disbursement.

# ARTICLE IVINSOLVENCY OF THE COMPANY

## SECTION 4.01.  Insolvency.  The Trustee shall cease disbursement of fundsto Zenith if the Trustee has become aware of the Company’s Insolvency inaccordance with the procedures described in Section 4.02.  The Company shall be considered “Insolvent”for purposes of this Agreement if (a) the Company is unable to pay its debts asthey become due or (b) the Company is subject to a pending proceeding as adebtor under the United States Bankruptcy Code.

## SECTION 4.02.  Procedures.  At all times during the continuance of theTrust, the principal and income of the Trust shall be subject to claims ofgeneral creditors of the Company under Federal and state law as set forthbelow.

### (a)  The Board of Directors andthe President of the Company shall have the duty to inform the Trustee inwriting of the Company’s Insolvency.  Ifa person claiming to be a creditor of the Company alleges in writing to theTrustee that the Company has become Insolvent, the Trustee shall determinewhether the Company is Insolvent and, pending such determination, the Trusteeshall discontinue disbursements of funds to Zenith.

### (b)  Unless the Trustee hasactual knowledge of the Company’s Insolvency, or has received notice from theCompany or a person claiming to be a creditor alleging that the Company isInsolvent, the Trustee shall have no duty to inquire 

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### whether theCompany is Insolvent.  The Trustee may inall events rely on such evidence concerning the Company’s solvency as may befurnished to the Trustee and that provides the Trustee with a reasonable basisfor making a determination concerning the Company’s solvency; provided,however, that the Trustee may in all events rely conclusively on the assertionof the Company as to whether it is or is not Insolvent.

### (c)  If at any time the Trusteehas determined that the Company is Insolvent, the Trustee shall discontinuedisbursements of funds to Zenith and shall hold the assets of the Trust for thebenefit of the Company’s general creditors.

### (d)  The Trustee shall resumedisbursement of funds to Zenith in accordance with Article III only afterthe Trustee has determined that the Company is not Insolvent (or is no longerInsolvent).

# ARTICLE VPAYMENTS TO THE COMPANY

## SECTION 5.01.  Payments to theCompany.  Except as provided underArticles III and IV and Section 13.02(b) the Company shall have no right to retainor divert to others any of the Trust assets.

# ARTICLE VIINVESTMENT OF TRUST

## SECTION 6.01. Limitations on Rights of Zenith.  As provided in Section 2.04, Zenith will nothave any preferential claim to or beneficial ownership interest in any asset orinvestment of the Trust, and the rights of Zenith under the Trust are solelythose rights afforded to Zenith with respect to the assets of the Company asthe holder of the Zenith Preferred Stock. Subject to the other provisions of this Article VI, all rightsassociated with assets of the Trust shall be exercised by the Trustee or theperson designated by the Trustee, and shall in no event be exercisable by orrest with any person, including Zenith and the Company.

## SECTION 6.02.  ContributedAssets.

### (a)  Investments.  The Trustee shall not invest the principaland income of the Trust and shall hold the Contributed Assets and the scheduledinterest and principal payments thereon solely for the purpose of makingdisbursements to Zenith in accordance with the terms of the Zenith PreferredStock; provided, that, the Trustee shall use the Contributed Assets toacquire fixed maturity securities issued by the U.S. government orgovernment-sponsored enterprises as the Trustee is instructed in writing by theCompany from time to time.

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# ARTICLE VIIRECORDKEEPING AND ADMINISTRATIVE SERVICES TO BE PERFORMED

## SECTION 7.01.  General.  The Trustee shall perform such recordkeepingand administrative functions as are agreed to in writing between the Companyand the Trustee.

## SECTION 7.02.  Accounts.  The Trustee shall keep accurate accounts ofall investments, receipts, disbursements and other transactions hereunder, andshall report the value of the assets held in the Trust as of the last day ofeach fiscal quarter of the Company and, if not on the last day of a fiscalquarter or the date on which the Trustee resigns or is removed as provided inArticle X or this Agreement is terminated as provided in ArticleXIII.  Within 30 days following eachReporting Date or within 60 days in the case of a Reporting Date caused by theresignation or removal of the Trustee or the termination of this Agreement, theTrustee shall provide to the Company a written account setting forth allinvestments, receipts, disbursements and other transactions effected by theTrustee between the Reporting Date and the prior Reporting Date, and settingforth the value of the Trust as of the Reporting Date.

## SECTION 7.03.  Inspection andAudit.  All records generated by theTrustee in accordance with Sections 7.01 and 7.02 shall be open toinspection and audit, during the Trustee’s regular business hours prior to thetermination of this Agreement, by the Company or any person designated by theCompany.

# ARTICLE VIIITRUSTEE POWERS

## SECTION 8.01.  Trustee Powers.  The Trustee shall have the following powersand authority:

#### (a)  to sell, exchange, convey, transfer orotherwise dispose of any property held in the Trust, by private contract or atpublic auction; no person dealing with the Trustee shall be bound to see to theapplication of the purchase money or other property delivered to the Trustee orto inquire into the validity, expediency or propriety of any such sale or otherdisposition;

#### (b)  to cause any securities or other propertyheld as part of the Trust to be registered in the Trustee’s own name, in thename of one or more of its nominees and to hold any investments in bearer form,but the books and records of the Trustee shall at all times show that all suchinvestments are part of the Trust;

#### (c)  to keep that portion of the Trust in cash orcash balances as the Trustee may, from time to time, deem to be in the bestinterest of the Trust;

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#### (d)  to make, execute, acknowledge and deliver anyand all documents of transfer or conveyance and to carry out the powers hereingranted;

#### (e)  to borrow funds from a bank not affiliatedwith the Trustee in order to provide sufficient liquidity to make disbursementsto Zenith in accordance with the Zenith Preferred Stock in a timely fashion;

#### (f)  to settle, compromise or submit toarbitration any claims (other than claims of creditors of the Company in theevent of the Company’s Insolvency), debts or damages due to or arising from theTrust; to commence or defend suits or legal or administrative proceedings; torepresent the Trust in all suits and legal and administrative hearings; and topay all reasonable expenses arising from any such action from the Trust if notpaid by the Company;

#### (g)  to employ legal, accounting, clerical andother assistance as may be required in carrying out the provisions of thisAgreement and to pay their reasonable expenses and compensation from the Trustif not paid by the Company; and

#### (h)  to do all other acts, although notspecifically mentioned herein, as the Trustee may deem necessary to carry outany of the foregoing powers and the purposes of the Trust.

Notwithstanding any powers granted to the Trusteepursuant to this Agreement or to applicable law, the Trustee shall not have anypower that could give the Trust the objective of carrying on a business anddividing the gains therefrom, within the meaning of Section 301.7701-2 of theProcedure and Administrative Regulations promulgated pursuant to the Code.  The Company may provide the Trustee with anopinion of counsel whether an annual fiduciary tax return should be filed forthe Trust; in the absence of such opinion, the Trustee may consult with counselto the extent it deems appropriate on such issue, and any resulting counselfees shall be charged to the Trust to the extent not paid by the Company.

# ARTICLE IXCOMPENSATION AND EXPENSES OF THE TRUSTEE

## SECTION 9.01.  Compensationand Expenses of the Trustee.  TheCompany shall not be required to pay a fee to the Trustee in connection withthe services provided by the Trustee in accordance with this Agreement.

All expenses of the Trustee relating directly to themanagement of the assets of the Trust and disbursement of funds to Zenith shallbe paid by the Company.

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The Company shall, from time to time, pay taxes of anyand all kinds whatsoever that at any time are lawfully levied or assessed uponor become payable in respect of the assets of the Trust.

# ARTICLE XRESIGNATION OR REMOVAL OF THE TRUSTEE

## SECTION 10.01.  Resignation.  The Trustee may resign at any time upon 90days’ notice in writing to the Company, unless a shorter period of notice isagreed upon by the Company.

## SECTION 10.02.  Removal.  The Company may not remove the Trustee exceptin the event of gross negligence or willful misconduct by the Trustee inconnection with the performance of its obligations under this Agreement andupon 90 days’ notice in writing to the Trustee, unless a shorter period ofnotice is agreed upon by the Trustee.

## SECTION 10.03.  Successor.  If the Trustee resigns or is removed, asuccessor shall be appointed, in accordance with Article XI, by the effectivedate of resignation or removal under Section 10.01 or 10.02.  If no such appointment has been made, theTrustee may apply to a court of competent jurisdiction for appointment of asuccessor or for instructions.  Allexpenses of the Trustee in connection with any such proceeding shall be paid bythe Company.

# ARTICLE XISUCCESSOR TRUSTEE

## SECTION 11.01.  Appointment.  If the office of Trustee becomes vacant forany reason, the Company may in writing appoint a successor trustee under thisAgreement.  The successor trustee shallhave all the rights, powers, privileges, obligations, duties, liabilities andimmunities granted to the Trustee under this Agreement.  The successor trustee and predecessor trusteeshall not be liable for the acts or omissions of the other with respect to theTrust.

## SECTION 11.02.  Acceptance.  When the successor trustee accepts itsappointment under this Agreement, title to and possession of the Trust assetsshall immediately vest in the successor trustee without any further action onthe part of the predecessor trustee.  Thepredecessor trustee shall execute all instruments and do all acts thatreasonably may be necessary or reasonably may be requested in writing by theCompany or the successor trustee to vest title to all Trust assets in thesuccessor trustee or to deliver all Trust assets to the successor trustee.

## SECTION 11.03.  CorporateAction.  Any successor of the Trusteeor successor trustee, through sale or transfer of the business or trustdepartment of the Trustee 

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## or successortrustee, or through reorganization, consolidation or merger, or any similartransaction, shall, upon consummation of the transaction, become the successortrustee under this Agreement.

# ARTICLE XIICONFIDENTIALITY

## SECTION 12.01.  Confidentiality.  The parties to this Agreement recognize that,in the course of implementing and providing the services defined herein, eachparty may disclose to the other confidential information.  All such confidential information and otherproprietary information disclosed by any party shall remain the sole propertyof the party disclosing the same, and any receiving party shall have nointerest or rights with respect thereto if so designated by the disclosingparty to the receiving party.  Each partyagrees to maintain all such confidential information in trust and confidence tothe same extent that it protects its own proprietary information, and not todisclose such confidential information to any third party without the writtenconsent of the party that originally disclosed such proprietaryinformation.  Each party further agreesto take all reasonable precautions to prevent any unauthorized disclosure ofsuch confidential information.  Inaddition, each party agrees not to disclose or make public to anyone, in anymanner, the terms of this Agreement, except to its legal and accountingadvisers, or as required by law, or in connection with a potential corporatetransaction, without the prior written consent of the other parties.

All information received and all records prepared andmaintained by the Trustee shall be held in confidence by the Trustee, except asrequired by applicable law.  Except tothe extent expressly authorized under this Agreement, the Trustee shall not holditself out as a representative or agent of the Company.

# ARTICLE XIIIAMENDMENT, REVOCATION OR TERMINATION

## SECTION 13.01.  Amendment.  This Agreement may not be amended.

## SECTION 13.02.  Revocation orTermination.

### (a)  Except as set forth inparagraph (b) of this Section 13.02, the Trust may not be revoked and thisAgreement may not be terminated.

### (b)  On the date when the ZenithPreferred Stock is redeemed in full and the Company has no further obligationswith respect to such stock, the Trust shall automatically be revoked and thisAgreement shall terminate.  At such time,the Trustee shall forthwith transfer and deliver to such individual or entityas the Company shall designate in writing all cash and assets then constitutingthe Trust.  If by the termination 

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### date, theCompany has not notified the Trustee in writing as to whom the assets and cashare to be transferred and delivered, the Trustee may bring an appropriateaction or proceeding for leave to deposit the assets and cash in a court ofcompetent jurisdiction.  The Trusteeshall be reimbursed by the Company for all costs and expenses of the action orproceeding including, without limitation, reasonable attorneys’ fees anddisbursements.

# ARTICLE XIVLIMITATION OF LIABILITY; INDEMNIFICATION

## SECTION 14.01. Limitation of Liability.  Trustee shall not be liable for any claims,losses, liabilities, damages or expenses (including attorneys’ fees andexpenses) (collectively referred to herein as “Losses”) or action taken oromitted or for any loss or injury resulting from its actions or its performanceor lack of performance of its duties hereunder in the absence of its grossnegligence or willful misconduct.  In noevent shall Trustee be liable (i) for special, consequential or punitivedamages, or (ii) any Losses due to forces beyond the control of Trustee,including without limitation strikes, work stoppages, acts of war or terrorism,insurrection, revolution, nuclear or natural catastrophes or acts of God, andinterruptions, loss or malfunctions of utilities, communications or computer(software and hardware) services.

## SECTION 14.02. Indemnification. The Company shall be liable for, and shall indemnify Trustee and holdTrustee harmless from and against, any and all Losses howsoever arising from orin connection with this Agreement or the performance of Trustee’s dutieshereunder, the enforcement of this Agreement and disputes between the partieshereto, provided, however, that nothing contained herein shall require thatTrustee be indemnified for its gross negligence or willful misconduct.

# ARTICLE XVRESIGNATION, REMOVAL AND TERMINATION NOTICES

## SECTION 15.01.  Resignation,Removal and Termination Notices.  Allnotices of resignation, removal or termination under this Agreement must be inwriting and mailed to the party to which the notice is being given by certifiedor registered mail, return receipt requested, to the Company c/o Thomas L.Forsyth, Esq., OneBeacon Insurance Group LLC, One Beacon Street, Boston, MA02108, and to the Trustee c/o White Mountains Capital, Inc., 80 South Main St.,Hanover, NH 03755, or to such other addresses as the parties have notified eachother of in the foregoing manner.

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# ARTICLEXVI

# DURATION

## SECTION 16.01.  Duration.  The Trust shall continue in effect until theZenith Preferred Stock is redeemed in full and the Company has no furtherobligations with respect to such stock subject, however, to the provisions ofthis Agreement relating to amendment or termination.

# ARTICLEXVII

# GENERAL

## SECTION 17.01.  Performance by the Trustee, its Agents orAffiliates.  The Company acknowledgesand authorizes that the services to be provided under this Agreement shall beprovided by the Trustee, its agents or affiliates, and that certain of suchservices may be provided pursuant to one or more other contractual agreementsor relationships.

## SECTION 17.02.  Entire Agreement.  This Agreement contains all the terms agreedupon between the parties with respect to the subject matter hereof.

## SECTION 17.03.  Waiver.  No waiver by either party of any failure orrefusal to comply with an obligation hereunder shall be deemed a waiver of anyother or subsequent failure or refusal to so comply.

## SECTION 17.04.  Non-Assignment.  Payments to Zenith under the Trust, if any,may not be anticipated, assigned (either at law or in equity), alienated,pledged, encumbered or subjected to attachment, garnishment, levy, execution orother legal or equitable process.

## SECTION 17.05.  Successors and Assigns.  The stipulations in this Agreement shallinure to the benefit of, and shall bind, the successors and assigns of therespective parties.

## SECTION 17.06.  Partial Invalidity.  If any term or provision of this Agreement orthe application thereof to any person or circumstances shall, to any extent, beinvalid or unenforceable, the remainder of this Agreement, or the applicationof such term or provision to persons or circumstances other than those as towhich it is held invalid or unenforceable, shall not be affected thereby, andeach term and provision of this Agreement shall be valid and enforceable to thefullest extent permitted by law.

## SECTION 17.07.  Section Headings.  The headings of the various sections andsubsections of this Agreement have been inserted only for the purposes ofconvenience and are not part of this Agreement and shall not be deemed in anymanner to modify, explain, expand or restrict any of the provisions of thisAgreement.

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## SECTION 17.08.  Counterparts.  This Agreement may be executed in one or morecounterparts (including via facsimile), each of which shall be deemed to be anoriginal, but all of which together shall constitute one and the sameinstrument and shall become effective when one or more counterparts have beensigned by each party and delivered to the other party.  The signature of any of the parties to anycounterpart or copy of this Agreement shall be sufficient evidence of itsjoining in the creation of the Trust and of its designation of the Trusteenamed herein.

## SECTION 17.09.  Facsimile and Electronic CommunicationsPermitted.  All requirements in thisAgreement that notifications, directions or other communications be in writingmay be satisfied by facsimile and/or electronic delivery to the facsimilenumber, e-mail or other electronic address as shall have been provided by oneparty to the other in writing, except for (a) the requirement relating tonotices of resignation, removal or termination as described in Section 15.01and (b) the initial notice by one party to the other of an acceptable facsimilenumber, e-mail or other address.  Anychanges by one party to any facsimile number, e-mail or other addresspreviously provided to the other party pursuant to this Section 17.09 shallalso be transmitted in writing.

# ARTICLEXVIII

# GOVERNINGLAW

## SECTION 18.01.  Delaware Law Controls.  This Agreement is being made in the State ofDelaware, and the Trust shall be administered as a Delaware trust.  The validity, construction, effect and administrationof this Agreement shall be governed by and interpreted in accordance with thelaws of the State of Delaware.

## SECTION 18.02.  Trust Agreement Controls.  The Trustee is not subject to the terms ofthe Zenith Preferred Stock and, in the event of any conflict between the termsof the Zenith Preferred Stock and the provisions of this Agreement, theprovisions of this Agreement shall control.

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IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be executed by their duly authorized officers as of the dayand year first above written.
|        | FUND AMERICAN ENTERPRISES HOLDINGS, INC., |
|--------|-------------------------------------------|
|   |                                      |   |
|   |                                      | By: | /s/ Frederick J. Turcotte |
|   |                                      |   | Name: | Frederick J. Turcotte |
|   |                                      |   | Title: | Vice President and Treasurer |
|        |                                           |  |  |  |  |

 
|        | WHITE MOUNTAINS CAPITAL, INC. (solely in its  capacity as Trustee of the Trust), |
|--------|----------------------------------------------------------------------------------|
|   |                                                                             |   |
|   |                                                                             | By: | /s/ Reid T. Campbell |
|   |                                                                             |   | Name: | Reid T. Campbell |
|   |                                                                             |   | Title: | Managing Director and President |
|        |                                                                                  |  |  |  |  |

 

 

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