exv10w208






Exhibit 10.208




OPTIONAL
LIFE INSURANCE PLAN




     The Liberty Mutual Insurance Company OPTIONAL LIFE INSURANCE PLAN is adopted effective
this 1st day of January, 1994. The Plan is established and maintained by the Liberty Mutual
Insurance Company (hereinafter in its capacity as the Employer referred to as the
“Company”) for the purpose of assisting a select group or management and highly compensated
employees in paying for life insurance.


WITNESSETH:




     WHEREAS, the Company has determined that this assistance can best be provided under a “split
dollar” arrangement and the Company will purchase an insurance policy or policies (hereinafter
individually and collectively referred to as the “Policy”) on the life of each Participant; and



     WHEREAS, the Company and the Participants agree to make said Policy subject to this
Optional Life Insurance Plan.



     NOW, THEREFORE, the Company hereby adopts the OPTIONAL LIFE INSURANCE PLAN effective
as of January 1, 1994, as set forth below:




	1.	 	Eligibility. As of the effective date of this Plan, any employee who is a Vice-President of the Company or above will be eligible to participate in the Plan;
provided, however, that the Company, in its sole discretion, shall determine
eligibility for participation in the Plan including but without limitation, the right
to limit or expand participation in the Plan, the right to set classifications or categories of employee groups eligible to participate in the Plan and the right to terminate
the Plan.
	 
	2.	 	Insurance Policy. The Company shall purchase one or more policies on the life
of each Participant to be issued by the Liberty Life Assurance Company of
Boston (hereinafter referred to as the Insurer) and the Company shall be the
applicant and owner thereof. The Company may exercise all of the ownership
rights of said policy or policies except as hereinafter provided. This Plan shall
extend to and shall include all additional policies issued pursuant to this Plan.
Any employee who becomes eligible to participate in the Plan shall not be
required to submit evidence of insurability to the Insurer, provided, however, that
if an employee elects not to participate in the Plan after initially becoming
eligible and thereafter elects to participate in the Plan, such employee shall be
required to submit evidence of insurability to become a Participant in the Plan. If
an employee elects coverage under both the Liberty Mutual Employee Life
Insurance Plan and this Plan, all benefits under this Plan shall be forfeited and the
employee shall not be considered a Participant in this Plan.




 









 












	3.	 	Premium Payments. As long as this Plan is in force, the Participant and the
Company agree to share in the payment of premiums on the Policy in such
amounts and in the manner set forth below:






	 	(a)	 	The Company shall be responsible for the remittance of the entire premium
due to the Insurer on or before the date the premium is due or within the grace
period allowed by the Policy for the payment of premiums. Premiums shall be paid
annually.
	 
	 	(b)	 	Contribution by the Participant:






	 	i.	 	Prior to retirement — The Participant shall remit to the Company
that portion of the premium equal to the cost for the amount of insurance
determined in accordance with subparagraph (iii) of this Paragraph three (3)(b)
payable to the Participant’s beneficiary under the Part A beneficiary of the
Policy, as provided in Paragraph four (4) hereof.
	 
	 	ii.	 	Following retirement — The Participant shall not be required to
contribute to the premium on the Policy.
	 
	 	iii.	 	The Participant’s contribution prior to retirement or tax cost
following retirement, as the case may be, shall be calculated each year in
accordance with the U. S. Treasury Department rules using the lower of the
Insurer’s one year term rates or the so-called P.S. 58 rates published in Rev.
Rul. 55-747, 1955-2 C.B. 228.






	4.	 	Election of Participant Benefits. In the event of the death of the Participant
while the Policy and this Plan are in force and benefits have not terminated under
Paragraph seven (7), the proceeds of the Policy shall be divided into two parts
and paid by the Insurer as follows:






	 	(a)	 	Part A — This part shall be paid to the Participant’s beneficiary in an amount
equal to a multiple of the Participant’s total annual compensation as follows:






	 	i.	 	Prior to retirement — One (1), two (2), three (3), four (4) or five
(5) times the Participant’s total annual compensation, as elected by the
Participant on a Benefit Election Form filed with the Company and accepted by
the Insurer.
	 
	 	 	 	In determining a Participant’s coverage, a highest ever rule shall apply such
that the Participant’s coverage shall never be reduced below the highest level
attained at any time during the Participant’s employment with the Company while
a Participant in the Plan as long as the participant’s coverage election does
not change. In the event of a change in election, the highest ever rule begins
again with respect to that level of coverage.




 









 












	 	ii.	 	After retirement






	 	(1)	 	Retirement on or before age sixty-five (65) — In the year of a
Participant’s retirement, an amount equal to one times total annual
compensation rounded to the nearest $1,000 to a maximum of one hundred
thousand dollars ($100,000). For the five (5) consecutive years beginning on
the first anniversary of a Participant’s retirement date, such amount shall be
reduced each year by fifteen percent (15%). Thereafter, on the Participant’s
seventy-first (71st) birthday, such amount shall be reduced to 50% of the
coverage in effect immediately before the 71st birthday. On the Participant’s
seventy-fifth (75th) birthday, such amount shall be reduced to 60% of the
coverage in effect immediately before the 75th birthday, but in no event less
than $5,000.
	 
	 	(2)	 	Retirement after age sixty-five (65) — an amount based upon
the provisions of paragraph 4(a)(ii)(1) above, determined as if the
Participant had actually retired on the Participant’s sixty-fifth (65th)
birthday.






	 	 	 	Eligibility for the post-retirement benefit provided by the Company and the option to
purchase an additional amount of coverage as provided in subparagraph (g) of this Paragraph
four (4), shall be dependent upon the Participant having been employed with the Company on a
continuous basis for the ten (10) year period prior to the date of the employee’s retirement.






	 	(b)	 	Part B  —  The balance of the death benefit shall be paid to the Company.
	 
	 	(c)	 	The Company shall execute a policy endorsement adding provisions to the Policy to divide the
proceeds as provided above.
	 
	 	(d)	 	Prior to retirement, the Participant’s total annual compensation shall mean the sum of the
Participant’s annual base salary as of the date of the Participant’s death plus the amount of
the last twelve (12) months of paid bonuses prior to the date of the Participant’s death.
Following retirement, the Participant’s total annual compensation shall mean the
Participant’s base salary as of the date of the Participant’s retirement plus the last twelve
(12) months of paid bonuses prior to the date of the Participant’s retirement. In the case of
the Company’s short term incentive plan, only the most recent bonus is included.
	 
	 	(e)	 	A Participant’s retirement shall mean the actual retirement of a Participant from the
Company in accordance with either the early or normal retirement provisions of the Liberty
Mutual Retirement Benefit Plan.




 









 












	 	(f)	 	Following retirement from the Company, a Participant may also elect within
thirty (30) days to purchase an additional amount of coverage from the Insurer without
evidence of insurability up to but not exceeding an amount equal to the lesser of the
Participant’s death benefit as elected under Section (a) of Paragraph four (4) at
retirement or two (2) times the Participant’s total annual compensation at retirement.
The Participant will be required to pay the full premium for such additional coverage.
	 
	 	(g)	 	Prior to retirement, a Participant may elect to decrease or increase coverage
once each year at such time and in such manner as determined by the Company. Any
increase in coverage shall require and be contingent upon the Participant furnishing
evidence of insurability to the Insurer.






	5.	 	Policy Dividends. All dividends on said Policy shall be applied as provided in the Policy
application or as subsequently elected by the Company.
	 
	6.	 	Company Rights. The Company will have and may exercise all ownership rights in the Policy
except that it will not exercise any such rights under the Policy which will compromise or
reduce the benefits payable to the Part A beneficiary under Paragraph four (4) hereof as long
as this Plan is in force.
	 
	7.	 	Termination of Participant Benefits. Participant’s benefits under this Plan shall terminate
on the occurrence of any of the following events:






	 	(a)	 	Termination of employment of the Participant other than by reason of the
Participant’s death or retirement;
	 
	 	(b)	 	Non-payment by the Participant of his or her portion of the premium cost as
provided under Paragraph three (3) hereof.






	 	 	In the event of a termination of Participant Benefits pursuant to this Paragraph seven (7),
a Participant may elect within thirty (30) days of such termination to purchase from the
Insurer an individually owned cash value conversion policy of a type then offered by the
Insurer in group term insurance conversions in a face amount equal to or less than the
amount of coverage that had been provided under the Plan. No evidence of insurability will
be required for such coverage.
	 
	8.	 	Plan Termination. The Company, by action of its Board of Directors or the Board’s delegee,
reserves the right to alter, amend or terminate this Plan at any time in its sole discretion.
	 
	9.	 	Policy Ownership Following Plan or Benefit Termination. Upon the termination of this Plan or
termination of the Participant’s employment other than by reason of the Participant’s death
or retirement, the Company shall become sole owner of the Policy on the Participant’s life
and shall become the beneficiary of the Part A portion of the death proceeds of the Policy.




 









 












	10.	 	Binding Effect; Governing Law. This Plan shall be binding upon the Company, its
legal representatives, successors and assigns. This Plan will be governed by and be construed
in accordance with the laws of the Commonwealth of Massachusetts,
where it is made and to be
performed.
	 
	11.	 	Not A Contract of Employment. This Plan shall not be deemed to constitute a contract of
employment between any Participant and the Company nor shall any provision restrict the right
of the Company to discharge the Participant, or restrict the right of the Participant to
terminate employment.
	 
	12.	 	Claims Procedure. The following Claims Procedures shall control the determination of benefit
payments under this Plan:






	 	(a)	 	In the event that benefits under this Plan are not paid to the beneficiary, and
such person feels entitled to receive them, a claim shall be made in writing to the
Plan Administrator within sixty (60) days from the date payments are not made. Such
claims shall be reviewed by the Plan Administrator. If the claim is denied, in full or
in part, the Plan Administrator shall provide a written notice within ninety (90) days
setting forth the specific reasons for the denial, specific reference to the provisions
of this Plan upon which the denial is based, and any additional material or information
necessary to perfect the claim, if any. Also, such written notice shall indicate the
steps to be taken if a review of the denial is desired.
	 
	 	(b)	 	If a claim is denied and a review is desired, the beneficiary shall notify the
Plan Administrator in writing within sixty (60) days and a claim shall be deemed denied
if the Plan Administrator does not take any action with the aforesaid ninety (90) day
period. In requesting a review, the Participant’s beneficiary may review this Plan or
any documents relating to it and submit any written issues and comments he or she may
feel appropriate. In its sole discretion, the Plan Administrator shall then review the
claim and provide a written decision within sixty (60) days. This decision likewise
shall state the specific reasons for the decision and shall include reference to
specific provisions of this Plan on which the decision is based.
	 
	 	(c)	 	To the extent necessary for purposes of implementing this claims procedure (but
not for any other purpose), the Company is hereby designated as the named fiduciary and
Plan Administrator of this Plan.






	13.	 	Assignment of Participant Rights. The Participant may assign his rights under
the Plan to a third party such as the trustee of a revocable insurance trust, the
trustee of an irrevocable insurance trust or such Participant’s spouse. Following
such assignment, the assignee shall assume sole responsibility for all obligations
of the Participant under this Plan, and shall be entitled to all rights and benefits
with respect to the Policy provided under this Plan.




 









 












	14.	 	Not A Plan of Group Insurance. This Plan and the insurance policy or policies
issued in connection therewith shall not constitute group life insurance or a group life
policy or policies within the meaning of Section 79 of the Internal Revenue Code of 1986, as
amended from time to time, and the regulations issued thereunder.
	 
	15.	 	Plan Year; Plan Administration. The Plan Year shall be the calendar year. Participant premium
contributions and payroll withholding amounts for the same shall be based upon the
Participant’s elected coverage and total annual compensation as of the first day of each Plan
Year. The Company shall be responsible for the administration of the Plan. The Company may
employ such advisors, consultants, attorneys or other professionals as it sees fit to assist
in the administration of the Plan. Whenever, in the administration of the Plan, the Company
deems it necessary to take any action it deems necessary or reasonable, the Company shall have
full authority to take such action, in its absolute discretion, even if, in the exercise of
such authority, all Participants would not receive substantially the same treatment. The
company has the authority, in its sole discretion, to construe the terms of this Plan and to
determine benefit eligibility. Decisions of the Company regarding construction of the terms of
this Plan and benefit eligibility are conclusive and binding.




 









 











     IN WITNESS WHEREOF, Liberty Mutual Insurance Company, has caused this instrument to
be executed by its duly authorized officer.



	 	 	 	 	 
	ATTEST: 	Liberty Mutual Insurance Company

 	 
	 	By:  	/s/ Helen E.R. Sayles

 	 
	 	 	Title: 	Sr.  Vice President & Mgr.  — Corp.  
HR & Admin. 	 
	 	 	 	 



 









 






	 	 	 	 	 



AMENDMENT NO. 1

TO THE

LIBERTY MUTUAL INSURANCE COMPANY

OPTIONAL LIFE INSURANCE PLAN



WHEREAS, the Compensation Committee of the Board of Directors of Liberty Mutual Insurance Company,
pursuant to a Vote dated March 11, 1997 amended the Optional Life Insurance Plan; and



WHEREAS, the Committee authorized the Senior Vice President, Manager Human Resources and
Administration to execute plan amendments necessary or desirable to effectuate such Vote;



NOW THEREFORE, effective April 1, 1997, the Plan is amended as follows:



1. Subparagraph 4(a)(ii) is deleted in its entirety, and the following substituted
therefore:





	(ii)	 	After Retirement






	 	(1)	 	Eligibility.






	 	 	An employee shall be eligible for a post retirement benefit under this subparagraph
4(a)(ii) if the employee satisfies both of the following requirements:






(A) The employee has been employed by the Company on a continuous basis for the ten
(10) year period prior to the date of the employees’ retirement, and




(B) The employee was a Participant in this Plan immediately prior to his or her
retirement.




	 	(2)	 	Amount of Benefit






	 	 	The eligible retiree may elect a Company provided post retirement benefit of up to one
times pre-retirement pay, with no subsequent reductions. Subject to subparagraph 4(g),
eligible retirees can continue to purchase an additional amount of coverage which, when
added to the Company-provided coverage does not exceed two times pre-retirement pay.
	 
	 	 	This Amendment shall also apply to retirees covered under the Plan on April 1, 1997.




 









 










Executed this 15th day of May, 2003.




	 	 	 	 	 
	LIBERTY MUTUAL INSURANCE COMPANY

 	 	 
	By:  	/s/ Helen E.R. Sayles
 	 	 
	 	Helen E.R. Sayles 	 	 
	 	Senior Vice President & Manager — 
HR & Administration 	 	 



 









 






	 	 	 	 	 



AMENDMENT NO. 2

TO THE

LIBERTY MUTUAL INSURANCE COMPANY

OPTIONAL LIFE INSURANCE PLAN



WHEREAS, the Compensation Committee of the Board of Directors of Liberty Mutual Insurance
Company, pursuant to a Vote dated December 7, 1999, amended the Optional Life Insurance Plan;
and



WHEREAS, the Committee authorized the Senior Vice President, Manager Human Resources and
Administration to execute plan amendments necessary or desirable to effectuate such Vote;



NOW THEREFORE, the following Plan Amendments are adopted, effective with respect to employees
retiring on or after January 1, 2000:



1. Subparagraph 4(a)(ii) is deleted in its entirety, and the following substituted
therefore:





	(ii)	 	After Retirement






	 	(1)	 	Eligibility.






	 	 	An employee shall be eligible for a Company provided post retirement benefit under
this subparagraph 4(a)(ii) if the employee satisfies both of the following
requirements:






(A) The employee has been employed by the Company (including Affiliated Employers
as defined in the Company’s Retirement Benefit Plan) on a continuous basis for the
ten (10) year period prior to the date of the employees’ retirement, and




(B) The employee was a Participant in this Optional Life Insurance Plan immediately
prior to his or her retirement.




	 	(2)	 	Amount of Benefit






(A) The Company provided post retirement benefit for Select Participants, as determined by Management,
shall be one, two, three, four, or five times the Participant’s total annual pay, as elected by the Participant on
a benefit election form filed with the Company. The Participant shall be eligible to elect an amount up to the level of his
or her pre-retirement death benefit without evidence of insurability. Prior to retirement, the Participant shall be eligible to elect
an amount in excess of his or her pre-retirement death




 











 






benefit only if the Participant can establish evidence of insurability
satisfactory to the Insurer and submits such evidence to the Insurer during the
 time period established by the Insurer.




(B) For Participants other than those described in (A) above, the Company provided
post retirement death benefit shall be, at the Participant’s election, up to one
times total annual pay, in $1,000 increments.




The “highest ever” rule set forth in subparagraph 4(a)(i) shall also apply, in
the manner prescribed by the Company, in determining the maximum benefit
available to a Participant under this subparagraph 4(a)(ii).




	2.	 	Subparagraph 4(f) is amended by adding the following at the end thereof:






This Paragraph 4(f) shall not apply to Participants classified by the Company
as “Executives C or above.”




The “highest ever” rule set forth in subparagraph 4(a)(i) shall also apply, in
the manner prescribed by the Company, in determining the maximum benefit
available to a Participant under this subparagraph 4(f).




	3.	 	Subparagraph 4(g) is amended by adding the following at the end thereof:






After retirement, a Participant may elect to reduce his or her benefit at such time
or times as permitted by the Company. A Participant may not elect to increase his
or her benefit after retirement.


Adopted this 15th day of May, 2003.




	 	 	 	 	 
	LIBERTY MUTUAL INSURANCE COMPANY

 	 	 
	By:  	/s/ Helen E.R. Sayles
 	 	 
	 	Helen E.R. Sayles 	 	 
	 	Senior Vice President & Manager — 
HR & Administration 	 	 



 









 






	 	 	 	 	 



AMENDMENT NO. 3

TO THE

LIBERTY MUTUAL INSURANCE COMPANY

OPTIONAL LIFE INSURANCE PLAN



WHEREAS, the Compensation Committee of the Board of Directors of Liberty Mutual Holding Company
Inc., pursuant to a Vote dated June 10, 2003, amended the Optional Life Insurance Plan; and



WHEREAS, the Committee authorized the Senior Vice President, Manager Human Resources and
Administration to execute plan amendments necessary or desirable to effectuate such Vote;



NOW THEREFORE, effective July 1, 2003, the Plan is amended as follows:





	1.	 	Section 1 is deleted in its entirety and the following substituted therefore:
	 
	 	 	Eligibility. As of the effective date of this Amendment, any employee who is a Vice
President or above of the Company or of affiliated companies admitted to the Plan will be
eligible to participate in the Plan; provided, however, that the Company, in its sole
discretion, shall determine eligibility for participation in the Plan, the right to set
classifications or categories of employee groups eligible to participate in the Plan and
the right to terminate the Plan.
	 
	2.	 	The fourth sentence of Section 2 is deleted in its entirety and the following is added
to Section 2.
	 
	 	 	An employee who becomes eligible to participate in the Plan shall not be required to submit
evidence of insurability to the Insurer except as follows:






(i) An employee who does not participate in the Plan when first eligible and thereafter
applies to participate in the Plan must first submit evidence of insurability satisfactory
to the Insurer. Notwithstanding the paragraph (iii) below, if the employee fails to submit
such evidence, the employee shall not become a Participant in the Plan.




(ii) An employee who first applies for less than the maximum amount of coverage available
to the employee under the Plan and thereafter applies for increased coverage must first
submit evidence of insurability satisfactory to the Insurer. Notwithstanding the following
paragraph, if the employee fails to submit such evidence, the increased coverage shall not
go into effect. Subject to the limits in the next paragraph, an employee will continue to
receive increases in coverage resulting solely from increases in salary.




(iii) An amount of coverage on a Participant who (1) is an active employee and (2) for whom
the Insurer’s reinsurer has not required evidence of insurability satisfactory to the
reinsurer before July 1, 2003, shall become effective only when the employee



 









 






submits such evidence as to enable the Insurer to procure reinsurance from the
reinsurer for such coverage and fulfills any other requirement of the Insurer. Subject to
the two immediately preceding paragraphs, if the employee fails to submit such evidence,
the employee’s amount of coverage shall not exceed the amount of coverage that is available
from the reinsurer at that time without providing evidence of insurability. In the event
the reinsurer increases its guaranteed issue limits, the coverage under the Plan of any
affected employee shall be increased at the employee’s written election to the higher
limit, subject to other Plan limits, as of the next January 1.




(iv) An employee who applies for post-retirement coverage in excess of the employee’s
coverage amount in effect immediately before retirement must submit evidence of
insurability satisfactory to the Insurer. The employee must submit any such evidence to the
Insurer before the employee’s retirement during the time period established by the Insurer.
If the employee fails to submit such evidence, the excess coverage
shall not go into effect.




(v) In all cases evidence of insurability may include a physical exam.




	3.	 	Section 3(b)(iii) is deleted in its entirety and the following is substituted therefore:






(iii) The Participant’s contribution prior to retirement or tax cost following retirement,
as the case may be, shall be calculated each year in accordance with the U.S. Treasury
Department rules using the lowest of the Insurer’s one year term rates, the so-called P.S.
58 rates published in Rev. Rul. 55-747, 1955-2 C.B. 228 and such other rates as permitted
by regulations issued (or to be issued) in accordance with IRS Notice 2002-8.


Executed this 7th day of August, 2003.




	 	 	 	 	 
	LIBERTY MUTUAL INSURANCE COMPANY

 	 	 
	By:  	/s/ Helen E. R. Sayles
 	 	 
	 	Helen E.R. Sayles 	 	 
	 	Senior Vice President & Manager — 
 HR & Administration