ENTITY IN CONNECTION WITH A
PUBLIC ISSUANCE OF SUCH EQUITY OR (Z) AN EMPLOYEE BENEFIT PLAN OF THE CONTROLLED
GROUP ENTITY (EACH, AN "EXEMPT PERSON") ACQUIRES OWNERSHIP (EXCEPT WHERE SUCH
ACQUISITION IS NOT CONSIDERED TO CAUSE A CHANGE IN OWNERSHIP UNDER TREAS. REG. §
1.409A-3(I)(5)(V)) OF EQUITY SECURITIES OF THE CONTROLLED GROUP ENTITY THAT,
TOGETHER WITH EQUITY SECURITIES HELD BY SUCH PERSON OR PERSONS PRIOR TO THE
ACQUISITION, CONSTITUTE MORE THAN 50% OF THE TOTAL FAIR MARKET VALUE OF THE
OUTSTANDING EQUITY SECURITIES OF THE CONTROLLED GROUP ENTITY OR THE TOTAL VOTING
POWER OF THE OUTSTANDING EQUITY SECURITIES OF THE CONTROLLED GROUP ENTITY; OR
(B)
THE CONTROLLED GROUP ENTITY FOR WHICH THE PARTICIPANT'S SERVICES ARE
PRINCIPALLY PERFORMED IS DISPOSED OF FROM THE CONTROLLED GROUP PURSUANT TO A
SALE, SERIES OF RELATED SALES OR OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL
OF THE BUSINESS OR BUSINESS-RELATED ASSETS OF SUCH CONTROLLED GROUP ENTITY
DURING A 12-MONTH PERIOD ENDING ON THE DATE OF THE LAST DISPOSITION TRANSACTION
TO THE EXTENT SUCH OCCURRENCE WOULD BE CONSIDERED TO BE A "CHANGE OF CONTROL
EVENT" WITHIN THE MEANING OF SECTION 409A OF THE CODE.
(C)
NOTWITHSTANDING CLAUSE (A) ABOVE, A CONTROL EVENT SHALL NOT BE DEEMED TO
OCCUR SOLELY BECAUSE ANY PERSON OR PERSONS (THE "SUBJECT PERSON") ACQUIRED MORE
THAN 50% OF THE OUTSTANDING EQUITY SECURITIES AS A RESULT OF THE ACQUISITION OF
EQUITY SECURITIES BY A MEMBER OF THE CONTROLLED GROUP WHICH, BY REDUCING THE
NUMBER OF SECURITIES OUTSTANDING, INCREASES THE PROPORTIONAL NUMBER OF EQUITY
SECURITIES HELD BY THE SUBJECT PERSON; PROVIDED THAT IF A CONTROL EVENT WOULD
OCCUR (BUT FOR THE OPERATION OF THIS SENTENCE) AS A RESULT OF THE ACQUISITION OF
SECURITIES BY A MEMBER OF THE CONTROLLED GROUP, AND AFTER SUCH ACQUISITION BY
THE MEMBER OF THE CONTROLLED GROUP, THE SUBJECT PERSON BECOMES THE OWNER OF ANY
ADDITIONAL EQUITY SECURITIES THAT INCREASES THE PERCENTAGE OF THE THEN
OUTSTANDING EQUITY SECURITIES OWNED BY THE SUBJECT PERSON, THEN A CHANGE IN
CONTROL SHALL OCCUR IF SUCH OCCURRENCE WOULD BE CONSIDERED TO BE A "CHANGE IN
CONTROL EVENT" WITHIN THE MEANING OF SECTION 409A OF THE CODE.
SECTION 2.17.
"DIRECTOR" MEANS ANY MEMBER OF THE BOARD.
3
SECTION 2.18.
"ECONOMIC NET INCOME" MEANS, FOR ANY PERIOD, THE
AFTER-TAX NET INCOME (AFTER ALL COMPENSATION EXPENSES) OF THE ESURANCE SEGMENT
FOR SUCH PERIOD DETERMINED IN ACCORDANCE WITH GAAP, ADJUSTED TO (I) STANDARDIZE
INVESTMENT RETURNS AT THE TEN-YEAR TREASURY YIELD PLUS 100 BASIS POINTS, AND
(II) AMORTIZE POLICY ACQUISITION EXPENSES OVER THE TERM OF THE POLICY AND ITS
EXPECTED RENEWALS, IN EACH CASE AS DETERMINED BY THE BOARD.
AS USED IN THIS
DEFINITION, "COMPENSATION EXPENSES" INCLUDE (W) SALARIES AND BONUSES, (X) CASH
LONG TERM INCENTIVE PLAN AWARDS, (Y) APPRECIATION ON ALL DEFERRED COMPENSATION
BALANCES REGARDLESS OF INVESTMENT CHOICE AND (Z) ALL OTHER COMPENSATION
EXPENSES.
SECTION 2.19.
"ECONOMIC RETURN" MEANS, FOR ANY PERIOD, (I) ECONOMIC
NET INCOME FOR SUCH PERIOD, PLUS (II) FRANCHISE VALUE ADDED FOR SUCH PERIOD.
SECTION 2.20.
"EDU VALUE" MEANS (I) THE VALUE OF AN