Exhibit
10.16


 


ESURANCE HOLDINGS, INC.


SELECT DEFERRED COMPENSATION PLAN


 


ARTICLE I


 


Purpose


 


SECTION 1.01.            Purpose.  The purpose of this Plan is to provide Key
Employees with the ability to defer the receipt of certain types of
Compensation.  The Plan is also intended
to establish a method of attracting and retaining persons whose abilities,
experience and judgment can contribute to the long-term strategic objectives of
the Company.


 


SECTION 1.02.            Unfunded Plan.  The Company intends that the Plan be an unfunded
non-qualified deferred compensation plan maintained primarily for the purpose
of providing deferred benefits for a select group of management or highly
compensated service providers of the Company and its subsidiaries.  The Company intends for the Plan to qualify
as a “top hat” plan for purposes of ERISA.


 


ARTICLE
II


 


Definitions


 


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


 


SECTION 2.01.            “Account”
means the records maintained on the books of the Company to reflect deferrals
of Compensation by a Participant pursuant to Section 3.03.


 


SECTION 2.02.            “Administrator” means the
person or committee designated by the Board as responsible for the day-to-day
administration of the Plan.


 


SECTION 2.03.            “Affiliate” of any Person
means any other Person controlled by, controlling or under common control with
such Person.


 


SECTION 2.04.            “After-Tax” means, with
respect to any amount, (i) such amount multiplied by (ii) 1 minus the
highest marginal tax rate for corporations applicable under the Code.


 


SECTION 2.05.            “Average Deployed Capital”
means, for any period, the average daily amount of capital invested in, loaned
to, or guaranteed on behalf of (including reinsurance capital and sunk costs)
the Esurance Segment by its Affiliates in such period, as determined by the
Board.  Capital deployed by Affiliates in
the Esurance Segment at June 30, 2005 was $224.6 million, consisting of
$49.3 million of equity, $73.4 million of debt and accrued interest and $101.9
million of reinsurance capital.


 

















 


SECTION 2.06.            “Beneficiary”
means the person or persons designated pursuant to Article 5 to receive a
benefit pursuant to Section 4.04(a) in the event of a Participant’s
death before his benefit under this Plan has been paid.


 


SECTION 2.07.            “Board”
means the Board of Directors of the Company.


 


SECTION 2.08.            “Cause” means (i) an act
or omission by the Participant that constitutes a felony, (ii) willful
gross negligence or willful gross misconduct by the Participant in connection
with his employment by the Company or by a subsidiary which causes, or is
likely to cause, material loss or damage or substantial public disgrace or
disrepute to the Company, (iii) the commission of any other act or omission
by the Participant involving dishonesty, disloyalty or fraud with respect to
the Company or any of its subsidiaries, or (iv) the Participant’s
substantial and repeated failure to perform duties as reasonably directed by
the Board or supervisor, as applicable.


 


SECTION 2.09.            A “Change in Control” shall
have occurred when (i) any person or group (within the meaning of sections
13(d) or 14(d)2 of the Securities Exchange Act of 1934, as amended) other
than White Mountains Insurance Group, Ltd 
(“WTM”) or any of its subsidiary or affiliated companies, an underwriter
temporarily holding securities of the Company in connection with a public
issuance thereof, or an employee benefit plan of the Company or its affiliates,
shall become the beneficial owner (within the meaning of rule 13d-3 under
the Exchange Act) of more than 50% of the fair market value or total voting
power of the then outstanding common stock of the  Company, or (ii) the Company shall have
disposed of all or substantially all of the assets of the Company to any person
or group other than WTM or its subsidiary or affiliated companies, provided,
however, that a Change in Control shall not be deemed to have occurred for
purposes of this Plan if a change in the ownership or effective control of the
Company, or in the ownership of a substantial portion of the assets of the
Company, has not occurred for purposes of Section 409A of the Code.


 


SECTION 2.10.            “Code” means the Internal
Revenue Code of 1986, as amended.


 


SECTION 2.11.            “Company” means Esurance Holdings, Inc.
and any successor thereto.


 


SECTION 2.12.            “Compensation” means (i) consideration
due to Key Employees in connection with their sale of EINC shares and surrender
of EINC options pursuant to the 2005 Restructuring  Plan, and (ii) appreciation on deferred
compensation balances under this Plan.


 


SECTION 2.13.            “Director” means any member
of the Board who is not an employee of the Company or any of its subsidiaries.


 


SECTION 2.14.            “Economic Net Income” means,
for any period, the After-Tax net income (after all compensation expenses) of
the Esurance Segment for such period determined in accordance with GAAP,
adjusted to (i) standardize investment returns at the ten-year treasury
yield plus 100 basis points, and (ii) amortize policy acquisition expenses
over the term of the policy and its expected renewals, in each case as
determined by the Board.  As used 


 


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in this definition, “compensation expenses” include (w) salaries
and bonuses, (x) cash long term incentive plan awards, (y) appreciation
on all deferred compensation balances regardless of investment choice and (z) all
other compensation expenses.


 


SECTION 2.15.            “Economic Return” means, for
any period, (i) Economic Net Income for such period, plus (ii) Franchise
Value Added for such period.


 


SECTION 2.16.            “EDU Value” means (i) initially
(e.g., with respect to amounts credited to Accounts in connection with the 2005
Restructuring Plan), $1,000.00, and (ii) thereafter as the Board
determines periodic Net EROAC, the product of (A) EDU Value immediately
prior to such Valuation Date, and (B) the sum of (x) one and (y) Net
EROAC for the latest period.  For
example, if the first periodic Net EROAC determined following the initial
creation of Accounts equals 2.0%, then EDU Value would grow to $1,020.00.  If the next subsequent periodic Net EROAC was
determined to equal -0.5%, then EDU Value be reduced to $1,014.90.  Net EROAC is intended as a measure of
economic value added to (or subtracted from) the Esurance Segment during the
relevant period.  At any time the Board
may, and at least annually the Board will, assess the appropriateness of using
Net EROAC in such capacity and, in its discretion, the Board may (x) amend
the calculation of Net EROAC or any of its components, or (y) establish an
entirely new criteria for determining future EDU Value.  These actions shall be deemed within the
Board’s amendment authority under Section 6.11.


 


SECTION 2.17.            “EINC” means Esurance Inc., a
Delaware corporation.


 


SECTION 2.18.            “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.


 


SECTION 2.19.            “Esurance Deferred Unit” or “EDU”
means a phantom unit under this Plan with a value at any time equal to the EDU
Value then in effect.


 


SECTION 2.20.            “Esurance Segment” means the
Company and its subsidiaries on a consolidated basis, together with the assets
and liabilities of other direct or indirect subsidiaries of White Mountains
Insurance Group, Ltd. which are maintained in support of the business of the Company
and its subsidiaries (including, without limitation, quota shared business and
reinsurance).


 


SECTION 2.21.            “Fiscal Year”
means the calendar year.


 


SECTION 2.22.            “Franchise Value Added”
means, for any period, the product, After-Tax, of (i) the Franchise Value
Multiple in effect for such period, and (ii) the excess of the Esurance
Segment’s direct written premium as of the last day in such period over direct
written premium as of the first day in such period, as determined by the Board.


 


SECTION 2.23.            “Franchise Value Multiple”
means, initially, 0.3, or such other number as is determined by the Board in
its sole discretion following any Reassessment Event.


 


SECTION 2.24.            “Fund” means any investment
fund selected by the Administrator to be offered under the Plan.


 


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SECTION 2.25.            “Key Employee” means any
executive employee, other overtime-exempt employee or consultant of the Company
or its participating subsidiaries who the Administrator, in its sole discretion,
decides is important to the ongoing business objectives of the Esurance
Segment.


 


SECTION 2.26.            “Net
EROAC” initially means, for any period, a fraction (which may be greater
than or less than one), the numerator of which is the Economic Return for such
period and the denominator of which is the Average Deployed Capital for such
period.


 


SECTION 2.27.            “Participant”
means a Key Employee who has an Account under this Plan to which amounts stand
credited.


 


SECTION 2.28.            “Person” means an individual,
a partnership, a corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization
and a governmental entity or any department, agency or political subdivision
thereof.


 


SECTION 2.29.            “Plan”
means this “Esurance Holdings, Inc. Deferred Compensation Plan” as amended
from time to time in accordance with its terms.


 


SECTION 2.30.            “Plan Year” means the
calendar year.


 


SECTION 2.31.            “Reassessment Event” means
any event, transaction, fact or circumstance affecting the business of the
Esurance Segment which the Board in its sole discretion believes justifies a
change to the Franchise Value Multiple.


 


SECTION 2.32.            “Specified Employee Release Date” has the meaning set forth in
Section 4.04(c).


 


SECTION 2.33.            “Termination of Service”
means a Key Employee’s separation from service from any company within the
White Mountains Insurance Group, Ltd. family of companies within the meaning of
Section 409A(a)(2) of the Code for any reason.


 


SECTION 2.34.            “Valuation Date”
means the last business day of each calendar year  and any other day that the Administrator makes a new
determination of Account values.


 


SECTION 2.35.            “1999 Option Plan” means the
Esurance Inc. 1999 Stock Plan.


 


SECTION 2.36.            “2001 Option Plan” means the
Esurance Inc. 2001 Stock Plan.


 


SECTION 2.37.            “2005 Restructuring Plan”
means the establishment of balances under this Plan for certain Key Employees
in exchange for their sale of shares of, and surrender of options to acquire,
common stock of Esurance Inc.


 


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ARTICLE
III


 


Eligibility and Deferrals


 


SECTION 3.01.            Eligibility.  Each Key Employee designated by the Board as
eligible to participate in the Plan shall be eligible to be a Participant hereunder.  The Board has the sole and complete
discretion to determine which Key Employees are eligible to participate and no
Key Employee shall have a right to be designated as a Participant.


 


SECTION 3.02.            Accounts.  The Administrator shall establish an Account
for each Key Employee who elects to defer Compensation pursuant to Section 3.03(a) or
with respect to whom the Board otherwise determines to establish an account
balance and the value determined pursuant to Section 3.05 shall be
credited to such Account.


 


SECTION 3.03.            Deferral
of Compensation; Permitted Investments.


 


(a)  Restructuring Plan.  Account balances created in connection with
the 2005 Restructuring Plan shall be invested pursuant to Section 3.05(b).  No payment date election shall be permitted
with respect such Account balances.


 


(b)  No Revocation.  Such directions and elections, once executed
and filed with the Administrator, cannot be revoked after the date specified by
the Administrator.


 


SECTION 3.04.            Payment
Date.


 


(a)           2005 Restructuring Plan.  Payments in respect of the portion of
Accounts attributable to initial balances created in connection with the 2005
Restructuring Plan shall be made according to Article IV.


 


(b)           Method of Payments.  All amounts becoming payable to a Participant
under this Plan shall be paid in a single payment.


 


SECTION 3.05.            Value of
Participants’ Accounts. 
The initial Account balances hereunder shall be deemed invested in EDUs
as of the date of the closing of the 2005 Restructuring Plan.


 


(a)           Crediting of Income, Gains and Losses.  As of each Valuation Date, income, gain and
loss equivalents (determined as if the Account is invested in the manner set
forth below) attributable to the period following the next preceding Valuation
Date shall be credited to and/or deducted from the Account.


 


(b)           Investment of Account Balance.   100% of Account balances in the Plan shall
at all times prior to distribution be deemed invested in EDUs.


 


(c)           Default Provision.  Notwithstanding subparagraph (b) above,
the Board, in its sole discretion, may determine that all Compensation
deferrals shall be deemed to be invested in a Fund determined by the Board
other than EDUs.


 


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(d)           Determinations  of Account
Value.  From time to time
in its discretion but not less than annually as of December 31, the Board
shall determine Account values under the Plan. 
At such times the Board shall make a determination of the Net EROAC for
the applicable period ending on such Valuation Date and adjust EDU Value
accordingly.  Net EROAC for calendar year
2005 shall be calculated as if the year commenced on July 1, 2005.  Determinations of Net EROAC
and EDU Value by the Board are final and cannot be challenged by Participants.


 


(e)           Payment of Account Balances.


 


(i) 
Subject to Section 3.05(f), distributions from the Plan triggered by
events which occur within the first three months of any calendar year will be
paid based on Account values as of the immediately preceding year-end Valuation
Date.  The date of a distribution
pursuant to Section 4.05 shall be considered the “event” for purposes of
this paragraph.


 


(ii) 
For
distributions which occur after the end of the third month in any calendar year
and to which Section 3.05(e)(i) does not apply (“Non-standard Distributions”),
the Board will calculate a special Net EROAC for the period commencing with the
immediately preceding annual Valuation Date through the last day of the quarter
immediately preceding the date of Non-standard Distribution and update the
value of such Participant’s Account accordingly for purposes of making such
distribution.  Such special
determinations will be unique to the Participant for whom they were made, and
do not represent official Valuation Date calculations for any other Participant
or any other purpose.


 


(f)            Reassessment
Event.  The Board may in its
discretion determine from time to time that an event, transaction, fact or
circumstance affecting the business of the Esurance Segment has occurred which
validates the use of a higher or lower multiple in determining the “Franchise
Value Added” component of Net EROAC.  The
determination of the new Franchise Value Multiple and the manner in which Net
EROAC will be adjusted to reflect such new Franchise Value Multiple will be in
the Board’s sole discretion.


 


(g)           Statements.  The Company shall provide an annual statement
to each Participant showing such information as the Board deems appropriate
including, without limitation, the aggregate amount credited to such
Participant’s Account as of a reasonably current date.


 


ARTICLE
IV


 


Payment of Benefits


 


SECTION 4.01.            Nonforfeitability.  A Participant’s right to the value of his
Account shall be fully vested and nonforfeitable at all times.


 


SECTION 4.02.            Income;
Payment Amount.  Any
payment made pursuant to Sections 4.03, 4.04, 4.05 or 4.06 shall reflect
the income, gains and losses calculated in the manner described in Section 3.05.


 


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SECTION 4.03.            Time of
Payment.  The amount
credited to the Account of each Participant shall become payable to the
Participant only as provided in Sections 4.04, 4.05 and 4.06.


 


SECTION 4.04.            Termination
of Service.  In the
event of a Participant’s Termination of Service while amounts stand credited to
his Account, such amounts shall be paid as provided in this Section 4.04.


 


(a)           Death of Participant.  If the Participant’s Termination of Service
is on account of his death, his Account shall be paid to his Beneficiary as a
single payment as soon as practicable, but not later than thirty days after the
Participant’s death.


 


(b)           Other Termination.  If the Participant’s Termination of Service
is for a reason other than death, his Account shall be paid to him as a single
payment as soon as practicable, but in no event later than thirty days after
the date on which such Termination of Service occurs.


 


(c)           Specified
Employees.  Notwithstanding anything
to the contrary in Section 4.04, to the extent required to comply with Section 409A
of the Code, in the case of any Participant who is deemed a “specified employee”
for purposes of Section 409A of the Code, such Participant’s Account
balance shall not be paid to him prior to the date (the “Specified Employee
Release Date”) that is six months after the date of Termination of Service, and
shall be paid as a single payment as soon as practicable following such
Specified Employee Release Date.


 


SECTION 4.05.            Withdrawal
for Emergency Need.


 


(a)  Authorization.  To the extent consistent with Section 409A
of the Code, the Board may permit a Participant who demonstrates an emergency
need to withdraw from the Plan an amount no greater than the amount determined
by the Board to be reasonably necessary to satisfy such emergency need.


 


(b)  Emergency
Need.  For purposes of
this Section 4.05, an emergency need is a severe financial hardship of a
Participant resulting from (i) a sudden and unexpected illness of or
accident to the Participant or a dependent within the meaning of Section 152(a) of
the Code, (ii) a casualty loss to the Participant’s property or (iii) other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the Participant’s control. 
A need is not an emergency need to the extent that it is relieved by
reimbursement or compensation by insurance or otherwise, or by liquidation of
the Participant’s assets insofar as such liquidation would not cause severe
financial hardship, or by cessation of deferrals under the Plan.    The Board shall determine in its sole
discretion whether and to what extent an emergency need exists.


 


SECTION 4.06.            Change in Control.  Unless otherwise elected by a Participant in
accordance with procedures established by the Administrator, each Participant’s
Account shall be distributed in full in a cash lump sum upon a Change in
Control.


 


SECTION 4.07.            Source of
Payment.  The
Compensation deferred pursuant to this Plan (and the income, gains and losses
credited thereon) shall be a general obligation of 


 


7

















 


the Company.  The claim of a
Participant or Beneficiary to a benefit shall at all times be merely the claim
of an unsecured creditor of the Company. 
No trust, security, escrow, or similar account need be established for
the purpose of paying benefits hereunder. 
The Company shall not be required to purchase, hold or dispose of any
investments pursuant to this Plan; however, if in order to cover its
obligations hereunder the Company elects to purchase any investments the same
shall continue for all purposes to be a part of the general assets and property
of the Company, subject to the claims of its general creditors and no person
other than the Company shall by virtue of the provisions of this Plan have any
interest in such assets other than an interest as a general creditor.


 


SECTION 4.08.            Withholding.  All amounts credited to Participants’
Accounts pursuant to this Plan and all payments under the Plan shall be subject
to any applicable withholding requirements imposed by any tax (including,
without limitation, FICA) or other law.  If
any of the taxes referred to above are due at the time of deferral, instead of
at the time of payout, the Participant will be required to pay (by payroll
deduction or check) to the Company the Participant’s share of any such taxes
then due and payable.


 


SECTION 4.09.            Right of
Offset.  Any amount
payable pursuant to this Plan shall be reduced at the discretion of the
Administrator to take account of any amount due, and not paid, by the
Participant to the Company at the time payment is to be made hereunder.


 


SECTION 4.10.            Payment Denomination.  All distributions under the Plan shall be
made in cash.


 


SECTION 4.11.            Defeasance.  Subject to Section 4.07, the Board may
instruct the Company to defease the Company’s obligations under the Plan.


 


SECTION 4.12.            Reassessment Event Look-Back
Payment.  In the event a Reassessment
Event occurs within the twelve months following a Participant’s Termination of
Service due to a termination of the Participant’s employment or service by the
Company or its subsidiaries without Cause, the Company will make a payment to
such Participant (subject to applicable tax withholding) in an amount which, in
the Board’s determination, represents the additional amount (on a pre-tax
basis) which such Participant would have received in respect of his or her
Account if the Board’s adjustment to the Franchise Value Multiple in the manner
applicable to all other Participants had been in effect at the time the
original liquidation value of the Participant’s Account was determined.


 


ARTICLE V


 


Beneficiaries


 


SECTION 5.01.            Beneficiary
Designation.


 


(a)           Designation.  A Participant may from time to time
designate, in the manner specified by the Administrator, a Beneficiary to
receive payment pursuant to Section 4.04 in the event of his death.


 


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(b)           Absence of Beneficiary.  In the event that there is no properly
designated Beneficiary living at the time of a Participant’s death, his benefit
hereunder shall be paid to his estate.


 


SECTION 5.02.            Payment
to Incompetent.  If any
person entitled to benefits under this Plan shall be a minor or shall be
physically or mentally incompetent in the judgment of the Administrator, such
benefits may be paid in any one or more of the following ways, as the
Administrator in his sole discretion shall determine:


 


(a)           to
the legal representatives of such minor or incompetent person;


 


(b)           directly
to such minor or incompetent person; or


 


(c)           to
a parent or guardian of such minor or incompetent person, to the person with
whom such minor or incompetent person resides, or to a custodian for such minor
under the Uniform Gifts to Minors Act (or similar statute) of any jurisdiction.


 


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


 


SECTION 5.03.            Doubt as
to Right To Payment. 
If any doubt exists as to the right of any person to any benefits under
this Plan or the amount or time of payment of such benefits (including, without
limitation, any case of doubt as to identity, or any case in which any notice
has been received from any other person claiming any interest in amounts
payable hereunder, or any case in which a claim from other persons may exist by
reason of community property or similar laws), the Administrator may, in its
discretion, direct that payment of such benefits be deferred until such right
or amount or time is determined, or pay such benefits into a court of competent
jurisdiction in accordance with appropriate rules of law, or direct that
payment be made only upon receipt of a bond or similar indemnification (in such
amount and in such form as is satisfactory to the Administrator).


 


SECTION 5.04.            Spendthrift
Clause.  No benefit,
distribution or payment under the Plan may be anticipated, assigned (either at
law or in equity), alienated or subject to attachment, garnishment, levy,
execution or other legal or equitable process whether pursuant to a “qualified
domestic relations order” as defined in Section 414(p) of the Code or
otherwise.


 


ARTICLE
VI


 


Administration and Reservation of Rights


 


SECTION 6.01.            Powers of
the Board.  The Board
shall have the power and discretion to


 


(a)           determine
all questions arising in the interpretation and application of the Plan;


 


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(b)           determine
the person or persons to whom benefits under the Plan shall be paid;


 


(c)           decide
any dispute arising hereunder;


 


(d)           correct
defects, supply omissions and reconcile inconsistencies to the extent necessary
to effectuate the Plan; and


 


(e)           have
all such other powers as may be necessary to discharge its duties hereunder; provided
that any determination involving a Participant who is a member of the
Board shall be made by the other members of the Board.


 


SECTION 6.02.            Powers of the Administrator.  The Administrator shall have the power and
discretion to


 


(a)           promulgate
and enforce such rules, regulations and procedures as shall be proper for the
efficient administration of the Plan;


 


(b)           determine
all questions arising in the administration of the Plan;


 


(c)           compute
the amount of benefits and other payments which shall be payable to any
Participant in accordance with the provisions of the Plan;


 


(d)           make
recommendations to the Board with respect to proposed amendments to the Plan;


 


(e)           advise
the Board regarding the known future need for funds to be available for
distribution;


 


(f)            file
all reports with government agencies, Participants and other parties as may be
required by law, whether such reports are initially the obligation of the
Company or the Plan; and


 


(g)           have
all such other powers as may be necessary to discharge its duties hereunder.


 


SECTION 6.03.            Claims
Procedure.  If the
Board denies any Participant’s or Beneficiary’s claim for benefits under the
Plan:


 


(a)           the
Board shall notify such Participant or Beneficiary of such denial by written
notice which shall set forth the specific reasons for such denial; and


 


(b)           the
Participant or Beneficiary shall be afforded a reasonable opportunity for a
full and fair review by the Board of the decision to deny his claim for Plan
benefits.


 


SECTION 6.04.            Consent.  By electing to become a Participant, each
Participant shall be deemed conclusively to (i) have accepted and
consented to all terms of the Plan and all actions or decisions made by the
Administrator or the Board with regard to the Plan 


 


10

















 


and (ii) have agreed that the Company, the Administrator and the
Board (and any person who is employed by, is a member of, or provides services
to or on behalf of, any of the foregoing) shall not have any liability related
to, or be responsible for any claim related to, the incurrence by the
Participant of any tax, interest expense, loss of deferral benefit, or any
other obligation, liability or damage, in each case, arising under or related
to Section 409A of the Code.  This Section 6.04
shall apply to, and be binding upon, the Beneficiaries, distributees and personal
representatives and other successors in interest of each Participant.


 


SECTION 6.05.            Agents
and Expenses.  The
Administrator or the Board may employ agents and provide for such clerical,
legal, actuarial, accounting, medical, advisory or other services as it deems
necessary to perform its duties under this Plan.  The cost of such services and all other
expenses incurred by the Administrator or the Board in connection with the
administration of the Plan shall be paid by the Company.


 


SECTION 6.06.            Allocation
of Duties.  The duties,
powers and responsibilities reserved to the Board may be allocated among its
members so long as such allocation is pursuant to written procedures adopted by
the Board, in which case no Board member shall have any liability, with respect
to any duties, powers or responsibilities not allocated to him, for the acts or
omissions of any other Board member.


 


SECTION 6.07.            Delegation
of Duties.  The
Administrator and the Board may delegate any of their respective duties to
employees of the Company or its subsidiaries.


 


SECTION 6.08.            Actions
Conclusive.  Any action
on matters within the discretion of the Administrator or the Board shall be
final, binding and conclusive.


 


SECTION 6.09.            Records
and Reports.  The
Administrator and the Board shall maintain adequate records of their respective
actions and proceedings in administering this Plan and shall file all reports
and take all other actions as are deemed appropriate in order to comply with
any Federal or state law.  Without
limiting the foregoing, upon request, the Administrator shall provide to the
Board the aggregate amounts deemed invested under the Plan and such other
information requested by the Board.


 


SECTION 6.10.            Liability
and Indemnification. 
The Administrator and the Board shall perform all duties required of
them under this Plan in a prudent manner. 
The Administrator and the Board shall not be responsible in any way for
any action or omission of the Company, its subsidiaries or their employees in
the performance of their duties and obligations as set forth in this Plan.  The Administrator and the Board also shall
not be responsible for any act or omission of any of their respective agents
provided that such agents were prudently chosen by the Administrator or the
Board and that the Administrator or the Board relied in good faith upon the
action of such agents.


 


SECTION 6.11.            Right to
Amend or Terminate. 
The Board may at any time amend the Plan in any respect, retroactively
or otherwise, or terminate the Plan in whole or in part for any other reason
(including, without limitation, following any Change in Control Event within
the meaning of Section 409A of the Code). 
However, except as permitted pursuant to the terms of this Plan, no such
amendment or termination shall reduce the amount standing credited 


 


11

















 


to any Participant’s Account as of the date of such amendment or
termination.  Following a termination of
the Plan, income, gains and losses shall continue to be credited to each
Account in accordance with the provisions of this Plan until the time such
Accounts are paid out.  In the event that
WTM’s beneficial ownership of the Company’s then outstanding common stock falls
below thirty-five percent, the Plans will be terminated and Account balances
will be distributed upon the next occurring event or series of events that
would permit such actions to be taken in compliance with Section 409A of
the Code (i.e., without causing Participants to incur penalty taxes as a result
of the distribution).


 


SECTION 6.12.            Usage.  Whenever applicable, the masculine gender,
when used in the Plan, includes the feminine gender, and the singular includes
the plural.


 


SECTION 6.13.            Separability.  If any provision of the Plan is held invalid
or unenforceable, its invalidity or unenforceability shall not affect any other
provisions of the Plan, and the Plan shall be construed and enforced as if such
provision had not been included therein.


 


SECTION 6.14.            Captions.  The captions in this document are inserted
only as a matter of convenience and for reference and in no way define, limit,
enlarge or describe the scope or intent of the Plan and shall in no way affect
the Plan or the construction of any provision thereof.


 


SECTION 6.15.            Right of
Discharge Reserved. 
Nothing contained in this Plan shall be construed as a guarantee or
right of any Participant to be continued as a employee or consultant of the
Company or its subsidiaries (or of a right of a Key Employee or Participant to
any specific level of Compensation) or as a limitation of the right of the
Company or its subsidiaries to terminate any Key Employee or Participant.


 


SECTION 6.16.            Governing
Law and Construction. 
The Plan is intended to constitute an unfunded, nonqualified deferred
compensation arrangement.  Except to the
extent preempted by Federal law, all rights under the Plan shall be governed by
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of law. 
No action shall be brought by or on behalf of any Participant or
Beneficiary for or with respect to benefits due under this Plan unless the
person bringing such action has timely exhausted the Plan’s claim review
procedure.


 


SECTION 6.17.            Section 409A
of the Code. The Plan is intended to comply with
the requirements of Section 409A of the Code, and, notwithstanding
anything in the Plan to the contrary, the Administrator and the Board are
hereby authorized to take such action as either determines necessary or
appropriate to modify the provisions of this Plan to ensure that the Plan so
complies.  All references in the Plan to Section 409A
of the Code shall include any successor provision thereto and any guidance
(whether in the form of notices, regulations or otherwise) promulgated thereunder.  Subject to Section 6.11, notwithstanding
anything to the contrary contained herein, any provision of this Plan or any
administrative procedure promulgated with respect to the Plan that is
inconsistent with Section 409A of the Code (excluding, for this purpose, Section 6.04
hereof) shall be automatically deemed amended to the minimum extent necessary
to comply with Section 409A of the Code.


 


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