Document:

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.

 

8

 

(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;

 

9

 

(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.

 

12Exhibit
10.17

 

ESURANCE HOLDINGS, INC.

AMENDED AND RESTATED TOP HAT 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.

 

SECTION 1.03.            Specified Employees.  As permitted by Treas. Reg. § 1.409A-1(i)(5),
the Administrator shall treat all Participants in the Plan as “specified
employees.”

 

SECTION 1.04.            Effective Date.   The amendment and restatement of this Plan
is effective as of January 1, 2009.

 

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 December 31, 2006 was $449.6 million, consisting of
$190.3 million of equity, $40.2 million of debt and accrued interest and $219.1
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.            “Change in Control” shall
mean, with respect to any Participant, a Control Event occurring with respect
to (i) the Controlled Group Entity for whom such Participant principally
performs services at the time of such Control Event, (ii) the Controlled
Group Entity that is liable for the payment of such Participant’s Account or (iii) any
Controlled Group Entity that is either a Majority Equity Holder of any
Controlled Group Entity described in clauses (i) or (ii) above or
that is in a chain of entities that each are Majority Equity Holders of another
entity in the chain, ending in a Controlled Group Entity described in clauses (i) or
(ii), above.  For purposes hereof, a “Majority
Equity Holder” is a Person owning more than 50% of the total fair market value
and total voting power of the applicable Controlled Group Entity and to which
the Company Group collectively represents at least 75% of such Person’s total
revenues ( as determined in accordance with generally accepted accounting
principles and reported in the controlled group securities and exchange
commission filings (as determined in accordance with generally accepted
accounting principles). Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur if such event would not be considered to be a “change
in control event” within the meaning 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.            “Company Group” means the
Company and its direct and indirect subsidiaries of which it owns more than 50%
of the total fair market value and total voting power.

 

SECTION 2.13.            “Compensation” means, for any
Plan Year, (i) cash amounts payable to Key Employees under the Esurance
PUP or White Mountains LTIP in such 

 

2

 

Plan Year, (ii) any appreciation on Account balances in this Plan;
and (iii) any other cash payment or transfer of property that may be
earned by Key Employees from services performed for the Controlled Group that
is designated by the Board or the Administrator as “Compensation” under this
Plan.

 

SECTION 2.14.            “Controlled Group Entity”
means any entity within the Controlled Group.

 

SECTION 2.15.            “Controlled Group” means the
Company and each entity that is treated with the Company as a single “service
recipient” under Treas. Reg. § 1.409A-1(h)(3) except that “greater than 50
percent” shall be used instead of “at least 80 percent” in each place it
appears in Code Sections 1563(a)(1), (2), and (3).

 

SECTION 2.16.            “Control Event” shall occur
with respect to a Controlled Group Entity if:

 

(a)  Any Person or Persons acting as a
group (as defined in Treas. Reg. § 1.409A-3(i)(5)(v)(B), or any amended or
successor regulations, for purposes of this Section 2.16), other than (x) a
Controlled Group Entity, (y) an underwriter temporarily holding equity of
a Controlled Group 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 EDU as determined by the Board at the time of the deferral of
Compensation, 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 EDU
Value at the time of deferral was $1,000, and if the next periodic Net EROAC
determined 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 6.12.

 

SECTION 2.21.            “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.

 

SECTION 2.22.            “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 2.23.            “Esurance PUP” means the
Company’s 2005 Esurance Performance Unit Plan, as amended from time to time,
and each successor plan thereafter, according to its terms.

 

SECTION 2.24.            “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 2.25.            “Fiscal Year” means the calendar year.

 

SECTION 2.26.            “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.

 

4

 

SECTION 2.27.            “Franchise Value Multiple”
means, initially, 0.3, or such other number as is determined by the Board, in
its sole discretion, in following any Reassessment Event

 

SECTION 2.28.            “Fund” means any investment
fund selected by the Administrator in its sole discretion to be offered under
the Plan.

 

SECTION 2.29.            “Key Employee” means any
executive employee, or other overtime-exempt employee, of the Controlled Group
who (a) is important to the ongoing business objectives of the Esurance
Segment, (b) is a member of a select group of management or highly
compensated employee, and (c) the Administrator, in his sole discretion,
designates as eligible to participate in the Plan.

 

SECTION 2.30.            “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 2.31.            “Market Price” on any day
means (i) if Shares are listed on the New York Stock Exchange, the average
of the high and low sales price, or, in case no such sale takes place on such
day, the average of the last quoted closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if Shares are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which Shares are listed or admitted to trading or, if
Shares are not listed or admitted to trading on any national securities
exchange, the last quoted sale price or, if not so quoted, the average of the
high bid and the low asked prices in the over-the-counter market, as reported
by NASDAQ or such other system then in use, or, if on any such date Shares are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by one or more professional market makers making a market
in Shares and (ii) if Shares are not publicly held or so listed or
publicly traded, the fully converted book value per Share as determined in good
faith by the Board in accordance with United States generally accepted
accounting principles.

 

SECTION 2.32.            “Participant” means a Key Employee who
has an Account under this Plan to which Compensation stands credited.

 

SECTION 2.33.            “Payment Date” means, where applicable,
the date designated by a Participant in accordance with Section 3.04 for
the distribution of his or her Account.

 

SECTION 2.34.            “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 2.35.            “Plan” means this “Esurance Holdings, Inc. Top
Hat Deferred Compensation Plan” as amended from time to time in accordance with
its terms.

 

5

 

SECTION 2.36.            “Plan Year” means the
calendar year.

 

SECTION 2.37.            “Reassessment Event” means
any event, transaction, fact or circumstance affecting the business of the
Esurance Segment which the Board in its sole discretion and in believes
justifies a change to the Franchise Value Multiple.

 

SECTION 2.38.            “Share(s)” means a common
share(s) of the White Mountains Insurance Group, Ltd., par value $1.00.

 

SECTION 2.39.            “Termination of Service” means a Key Employee’s
separation from service (within the meaning of Section 409A(a)(2)(A)(i) of
the Code) from the Controlled Group for any reason such that there is a
reduction in the level of services (whether as an employee or independent
contractor) to a level no more than 20% of the average level of services
performed for the Controlled Group during the immediately preceding 36-month
period (or the full period of service, if shorter than 36 months).  However, the employment relationship is
treated as continuing while the individual is on military leave, sick leave, or
other bona fide leave of absence if the period of such leave does not exceed
six months or, if longer, so long as the individual’s right to reemployment is
provided either by statute or by contract.

 

SECTION 2.40.            “Valuation Date” means the last business day
of each calendar year  and the last
day of any applicable valuation period that the Administrator uses to make a
new determination of Account values.

 

SECTION 2.41.            “White Mountains LTIP” means
the White Mountains Insurance Group, Ltd. Long-Term Incentive Plan, as amended
from time to time according to its terms.

 

ARTICLE
III

 

Eligibility and Deferrals

 

SECTION 3.01.            Eligibility.  Each Key Employee designated by the Board or
Administrator as eligible to participate in the Plan shall be eligible to be a
Participant hereunder.  The Board or the
Administrator have 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 eligible Key Employee who elects to defer Compensation pursuant to Section 3.03
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)  LTIPs.  Eligible Key Employees who are participants
in the Esurance PUP or White Mountains LTIP may elect to reduce the
Compensation otherwise payable to them under such plans, to the extent
permitted by the Company.  A deferral
election shall be made in writing 

 

6

 

at such time and in such manner as the Administrator shall prescribe
but must in any event be made in accordance with the rules set forth in Section 3.03
(c).

 

(b)  Other Permitted Deferrals.

 

(i) 
If permitted by the Board under circumstances other than pursuant to Sections
3.03(a), an eligible Key Employee may elect to reduce other Compensation
otherwise payable to him in respect of a Plan Year and to have such
Compensation credited to his or her Account.

 

(ii) 
In the event the Board determines to adjust the Franchise Value Multiple
following any Reassessment Event, the amount equal to any increase in the annual
investment gains that would be credited to a Participant’s Account resulting
directly from the Board’s adjustment of the Franchise Value Multiple will be
deemed additional Compensation to the Participant and automatically deferred to
the Participant’s Account pursuant to Section 3.05 of the Plan.

 

(c)  Timing of Deferral
Elections.  A deferral election shall
be made in writing at such time and in such manner as the Administrator shall
prescribe but must in any event be made before the applicable deadline for
making such a deferral election pursuant to Section 409A of the Code.  Accordingly, deferral elections must be made
no later than by one of the following times:

 

(i) 
A deferral election with respect to Compensation earned by a Participant must
be made prior to the first day of the Plan Year in which the services related
to such Compensation will be rendered

 

(ii) 
In the case of a Key Employee who is first eligible to participate in the Plan
during a Plan Year, such Key Employee may elect within 30 days of becoming
eligible to participate in the Plan to defer any unearned portion of his
Compensation related to services to be performed after the date of such
election, to the extent permitted under Treas. Reg. § 1.409A-2(a)(7).

 

(iii) 
In the case of any Compensation that constitutes “performance-based
compensation” within the meaning of Treas. Reg. § 1.409A-1(e), the
Administrator may permit a Participant to make a deferral election, with
respect to such Compensation, that does not become irrevocable until the date
that is six months prior to the end of the applicable performance period, to
the extent permitted under Treas. Reg. § 1.409A-2(a)(8).   In any event, at the time of the deferral
election, in order for the election to be in compliance with Code Section 409A,
(i) the Key Employee must perform services continuously for the period
beginning on the later of the first day of the performance period or the date
the performance criteria are established, and ending on the date of election
with respect to the performance-based compensation and (ii) the election
is not made after the amount of the performance-based compensation becomes
reasonably ascertainable

 

7

 

Notwithstanding anything
contained herein to the contrary, any election to defer Compensation that is
not made in accordance with Section 409A(a)(4) of the Code shall be
ineffective and void ab initio.

 

(d)  Applicability; No Revocation.  A deferral election shall apply only with
respect to Compensation earned during the Plan Year (or performance period, as
applicable) for which it is made and shall not continue in effect for
Compensation earned during any subsequent Plan Year (or performance period, as
applicable).  Such directions and
elections, once executed and filed with the Administrator, cannot be revoked
after the date specified by the Administrator or the date for a valid deferral
election as required by Section 409A of the Code, whichever is earlier.

 

SECTION 3.04.            Payments.

 

(a)           Designation
of Date.  Each deferral election
given pursuant to Section 3.03(a) and (b) shall include the
designation of a single Payment Date with respect to the Compensation
deferred.  A designated Payment Date may
only be the first day of a calendar quarter, subject to the limitation set
forth in Section 3.04(b).

 

(b)  Limitation.  A Participant may designate an original
Payment Date that is no sooner than the first anniversary of the date of such
election and no later than the date which is three months after such Participant
attains age 65.

 

(c)  Adjustment
of Payment Date.  To
the extent permitted by Section 409A of the Code, the Administrator may
permit a Participant to irrevocably elect, no later than one year before the
Payment Date initially designated pursuant to Section 3.04(a), to adjust
such Payment Date to the first day of any subsequent calendar quarter; provided
that the following conditions are met:

 

(i)            the redeferral
election may not take effect until at least twelve (12) months after the date
on which such redeferral election is made;

 

(ii)           the first payment
with respect to which such redeferral election is made must be deferred for a
period of not less than five (5) years from the date such payment would
otherwise have been made based on the prior deferral election; and

 

(iii)          the adjusted
Payment Date is not later than the date which is three months after such
Participant attains age 65.

 

Notwithstanding the
foregoing, the Board or the Administrator may, in its/his sole discretion,
permit certain Participants to change their deferral elections under the Plan
without meeting the conditions set forth in Section 3.04(c) above,
provided such deferred election changes comply with the transitional relief rules promulgated
by the Treasury Department under Section 409A of the Code.

 

(d)           Method of Payments.  All amounts becoming payable to a Participant
under this Plan on a specified Payment Date shall be paid in a single payment.

 

8

 

(e)           Irrevocability.  Except as set forth in Article IV, the
designation of a Payment Date shall be irrevocable, it being understood that
payment may actually be made on an earlier date as provided in Section 4.04
(Termination of Service), Section 4.05 (Withdrawal for Unforeseen
Emergency Need) and Section 4.06 (Change in Control).

 

SECTION 3.05.            Value of Participants’ Accounts.  Compensation deferrals shall be allocated to
each Participant’s Account on the first business day following the date such
Compensation would otherwise be payable to such Participant if not deferred
hereunder or, if applicable, the date on which Account balances are deemed
created by the Board, and shall be deemed invested pursuant to this Section 3.05,
as soon as practicable thereafter.

 

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

 

(b)           Investment of Account Balance.  The Participant may select from various Funds
made available hereunder from time to time in the Administrator’s discretion in
which all or part of Participant’s Account shall be deemed to be invested, provided
that:

 

(i) 
With respect to all amounts deferred hereunder, each Participant shall make an
investment designation on a form provided by the Administrator, which shall
remain effective until another valid designation has been made by the
Participant as provided herein.  If a
Participant elects to invest Account balances in EDUs, such an election will be
irrevocable and the amounts so invested (including appreciation thereon) must
remain invested in EDUs until the date of distribution for such amounts as
provided herein.  If a Participant elects
to invest Account balances in Shares, such amounts (including appreciation
thereon) can never be reinvested in EDUs. 
In other cases with the Board’s consent, the Participant may amend his
investment designation by giving written direction to the Administrator in
accordance with procedures established by the Administrator.  A timely change to a Participant’s investment
designation shall become effective on the date determined under the applicable
procedures established by the Administrator.

 

(ii) 
Any changes to the Funds to be made available to the Participant, and any
limitation on the maximum or minimum percentages of the Participant’s Account
that may be invested in any particular medium, shall be determined in the sole
discretion of the Administrator and communicated from time to time to the
Participant by the Administrator.

 

Initially, the only
investment options offered under the Plan will be EDUs and Shares.  In the future, if other investment options
are offered under the Plan, a Participant will not be permitted to notionally
invest in Shares (x) any amounts deferred under the Plan that initially
were deemed to be invested in an investment other than Shares or (y) amounts
credited to Participant’s Account that are deemed to be transferred out of
Shares into another investment alternative. 
A Participant would, however, be able to defer future amounts of
Compensation into deemed investment in Shares.

 

9

 

(c)           Default Provision.  Except as provided below, each Participant’s
Account shall be deemed to be invested in accordance with his investment
designations, provided such designations conform to the provisions of this
Section.  Notwithstanding the above, the
Board, in its sole discretion, may disregard a Participant’s election and
determine that all Compensation deferrals shall be deemed to be invested in a
Fund determined by the Board.  In the
event that any Fund under which any portion of a Participant’s Account is
deemed to be invested ceases to exist, such portion of the Account thereafter
shall be deemed held in a Fund selected by such Participant or, in the absence
of any instructions from such Participant, by the Board, subject to subsequent
deemed investment elections.

 

(d)           Determinations  of Account
Value.  From time to time
in its discretion or as otherwise required by this Plan (but not less than
annually as of December 31), the Board shall determine Account values
under the Plan in the manner prescribed in this Plan.  With respect to EDU-invested balances, the
Board shall at such times 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 Account
values, Net EROAC and EDU Value by the Board are final and cannot be challenged
by Participants.

 

(e)           Payment of Account Balances.

 

(i) 
Distributions from the Plan which relate to Account balances invested in Shares
shall be paid based on Account values determined as of the end of the month
preceding the month of the Payment Date.

 

(ii) 
Distributions of EDU-invested balances from the Plan which relate to designated
Payment Dates shall be paid based on Account values as of the immediately
preceding year-end Valuation Date.

 

(iii) 
Subject to Section 3.05(f), distributions of EDU-invested balances from
the Plan 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.

 

(iv) 
Distributions
of EDU-invested balances which occur after the end of the third month in any
calendar year and to which Sections 3.05(e)(ii) or (iii) do 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 with EDU-invested
balances or any other purpose.  For the
avoidance of doubt, Account values for distributions made in compliance with Section 4.04(b) shall
be determined in accordance with Section 3.05(e) in the ordinary
course based on the actual date of distribution.

 

10

 

(v) 
Distributions of amounts invested in investments other than Shares or EDUs, shall
be paid based on Account values determined as of the day preceding the Payment
Date.

 

(f)            Reassessment
Event.  The Board may in its sole
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.

 

SECTION 3.06.            Limit on Account Balance.   The Administrator shall suspend a
Participant from making new deferral elections for a subsequent Plan Year if
the Administrator determines that the amount credited to a Participant’s
Account under this Plan, together with the amounts credited to Participant’s
other accounts under similar plans, would be reasonably likely to exceed
$40,000,000 or such other number as may be designated by the Board.

 

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 credited to the applicable Account in the manner
described in Section 3.05.

 

SECTION 4.03.            Time of
Payment.  Except as
provided in Sections 4.04, 4.05 and 4.06, the amount credited to the
Account of each Participant shall become payable to the Participant within
thirty days after the Payment Date.  The
Company has the sole discretion to determine when, within such 30 day period,
the payment will be made.

 

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.

 

11

 

(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 on the first business day following the date that is six months after
the Termination of Service (the “Six Month Date”) or as soon as practicable
thereafter, but in no event later than the end of the calendar year that
includes the Six Month Date.

 

SECTION 4.05.            Withdrawal
and/or Cancellation of Deferral Election for Unforeseeable Emergency Need.

 

(a)  Authorization.  To the extent consistent with Section 409A
of the Code, the Board may permit a Participant who demonstrates an
unforeseeable emergency need to (i) withdraw from the Plan an amount no
greater than the amount determined by the Board to be reasonably necessary to
satisfy such emergency need to the extent permitted under Section 409A(a)(2)(B)(ii) of
the Code, and/or (ii) cancel a deferral election (with the effect of
ceasing all subsequent deferrals of Compensation with respect to such election)
to the extent permitted under Treas. Reg. §1-409A-3(j)(4)(viii).

 

(b)  Emergency
Need.  For purposes of
this Section 4.05, an unforeseeable 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 the Participant’s spouse,
Beneficiary or a dependent (as defined in Section 152(a) of the Code
without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)), (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, in each case, only to the extent such event
is considered to be an “unforeseeable emergency” under Section 409A(a)(2) of
the Code.  A need is not an unforeseeable
emergency need to the extent that it is or will be 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 unforeseeable emergency need exists.

 

(c)  Priority.               Prior to receiving any withdrawal from the Plan for a financial
hardship, a Participant must first cancel any deferral elections if, in the
Administrator’s sole discretion, the cessation of deferrals relating to such
elections would contribute to the relief of the financial hardship.

 

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 within 30 days of 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 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 

 

12

 

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 consistent with the provisions of Treas. Reg. section
1.409A-3(j)(4)(xiii) (or any successor regulation thereto) to take account of
any amount due, and not paid, by the Participant to the Company.

 

SECTION 4.10.            Payment Denomination.  Except as set forth in this Section 4.10
or as otherwise determined by the Administrator in its sole and absolute
discretion, all distributions under the Plan (including all distributions made
pursuant to Sections 4.03, 4.04, 4.05 and 4.06) may be made in whole or in
part in (i) cash, (ii) subject to the consent of the White Mountains
Insurance Group, Ltd. board of directors, Shares having a Market Price as of
the trading day immediately preceding the date of such distribution equal to
the value of such distribution, and/or (iii) if an entity representing the
Esurance Segment has had a public offering and a regular and liquid public market
for the common shares of such entity exists at the time of payment, in common
shares of such public entity having a value as of the trading day immediately
preceding the date of such distribution equal to the value of such
distribution; provided  that the first $1,000,000 (or such other
amount as may be designated by the Administrator or the Board) distributed to a
Participant (or his Beneficiary) in any Plan Year and all distributions made
pursuant to Section 4.06 shall be made in cash.

 

SECTION 4.11.            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 a
company in the Controlled Group 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,
provided that any such payment hereunder shall be made no later than March 15th of the calendar year following the calendar
year in which the Board makes such determination.  The Board shall have the sole discretion to
determine when during such period of time before the March 15th date that payment will be made.

 

13

 

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.  Any Beneficiary designation must be in
writing, signed by the Participant, on the form prescribed by the Administrator
and delivered to the Administrator prior to the Participant’s death.

 

(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.

 

(a)  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 in a manner consistent with Sec. 409A.

 

(b)  A payment is deemed to be made on
the date scheduled under the Plan if: (i) the Participant (or Beneficiary,
if applicable) accepts a portion of the payment that the Company is willing to
make (unless such acceptance would result in a forfeiture or relinquishment), (ii) the
service provider makes prompt and reasonable, good faith efforts to collect the
amount, and (iii) any further payment is made no later than the end of the
first taxable year of the Participant (or 

 

14

 

Beneficiary, if applicable) in which the parties have entered into a
legally binding settlement of the dispute.

 

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, unless required under a “qualified
domestic relations order” as defined in Section 414(p) of the Code.

 

ARTICLE
VI

 

Administration and Reservation of Rights

 

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

 

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

 

(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
sole and absolute 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;

 

15

 

(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.

 

16

 

SECTION 6.03.            Claims
Procedure.

 

(a)  Filing a Claim.  Each
individual who claims to be eligible for benefits under this Plan (a “Claimant”)
may submit a written claim for benefits (a “Claim”) to the Administrator or its
delegate where the individual believes a benefit has not been provided under
the Plan to such individual to which such individual is eligible.  A Claim
must be set forth in writing on a form provided or otherwise approved by the
Administrator or its delegate and must be submitted to the Administrator or its
delegate no later than six (6) months after the date on which the Claimant
or other individual claims to have been first entitled to such claimed benefit.

 

(b)  Review of Claim.  The
Administrator or its delegate shall evaluate each properly filed Claim and
notify the Claimant of the denial of the Claim (if applicable) within 90 days
after the Administrator or its delegate receives the Claim, unless special
circumstances require an extension of time for processing the Claim.  If
an extension of time for processing the Claim is required, the Administrator or
its delegate shall provide the Claimant with written notice of the extension
before the expiration of the initial 90-day period, specifying the
circumstances requiring an extension and the date by which a final decision
will be reached (which date shall not be later than 180 days after the date on
which the Administrator or its delegate received the claim).

 

(c)  Notice of Claim Denial.
 If a Claim is denied in whole or in part, the Administrator or its
delegate shall provide the Claimant with a written notice setting forth (i) the
specific reasons for the denial, (ii) references to pertinent Plan
provisions upon which the denial is based, (iii) a description of any
additional material or information needed and an explanation of why such
material or information is necessary, and (iv) a description of the Plan’s
review process and the time limits for such process, including a statement of
the Claimant’s right to bring a civil action under section 502(a) of ERISA
following an adverse determination on review.

 

(d)  Review of Claim Denial.
 If a Claim is denied, in whole or in part, the Claimant shall have the
right to file a request for a review of the initial claim denial.  A Claimant will have 60 days following the
receipt of notification of an adverse benefit determination within which to appeal
the decision.  As part of the review
process, the Claimant will have the following rights: (i) the opportunity
to submit written comments, documents, records, and other information relating
to the claim for benefits, (ii) to be provided, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other
information relevant (that is not privileged or protected) to the Claimant’s
claim for benefits, and (iii) a review that takes into account all
comments, documents, records, and other information submitted by the Claimant
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination.

 

(e)  Timing and Notice of Review of
Claim Denial.  .  The Administrator
or its delegate shall evaluate each properly filed Claim on review and notify
the Claimant of the approval or denial of the Claim on review within 60 days
after the Administrator or its delegate receives the Claim on review, unless
special circumstances require an extension of time for 

 

17

 

processing the Claim.   If an extension of time for processing the
Claim on review is required, the Administrator or its delegate shall provide
the Claimant with written notice of the extension before the expiration of the
initial 60-day period, specifying the circumstances requiring an extension and
the date by which a final decision will be reached (which date shall not be
later than 120 days after the date on which the Administrator or its delegate
received the claim on reivew).

 

If the claim on review is denied in whole or in
part, the Administrator or its delegate shall provide the Claimant with written
notice that sets forth the following: (i) the specific reason(s) for
the denial on review, (ii) reference to the specific Plan provisions on
which the benefit determination was made, (iii) a statement that the
Claimant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of, all documents, records, and other information
relevant (that is not privileged or protected) to the Claimant’s claim on
review, and (iv) a statement describing any voluntary appeal procedures
offered by the Plan and the Claimant’s right to obtain the information about
such procedures, and a statement of the Claimant’s right to bring an action
under section 502(a) of ERISA.

 

(f)  Requirement to Exhaust
Administrative Procedures.  No
Claimant or other individual may file any claim for benefits or request a
review of a denial of any claim unless such person follows the provisions and
timeframes of this Section.  A Claimant or other individual shall not be
entitled to bring any action in any court unless such person has exhausted such
person’s rights under these procedures by timely submitting a Claim and
requesting a review of a decision with respect to such Claim.

 

SECTION 6.04.            Determinations of the
Administrator.  The determinations,
interpretations, rules and decisions of the Administrator or its delegate
shall be final, binding and conclusive on the Company and upon each
participant, beneficiary and each other person or party interested or
concerned.

 

SECTION 6.05.            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 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 6.06.            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.

 

18

 

SECTION 6.07.            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 6.08.            Delegation
of Duties.  The
Administrator and the Board may delegate any of their respective duties to
employees of the Company or its subsidiaries.

 

SECTION 6.09.            Actions
Conclusive.  Any action
on matters within the discretion of the Administrator or the Board shall be
final, binding and conclusive.

 

SECTION 6.10.            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 a list of the investment alternatives made available under the Plan, the
aggregate amounts deemed invested under the Plan in each such alternative and
such other information requested by the Board.

 

SECTION 6.11.            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 6.12.            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 to
the extent permitted under Treas. Reg. § 1.409A-3(j)(4)(ix) (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 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.

 

SECTION 6.13.            Usage.  Whenever applicable, the masculine gender,
when used in the Plan, includes the feminine gender, and the singular includes
the plural.

 

SECTION 6.14.            Severability.  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 6.15.            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 

 

19

 

scope or intent of the Plan and shall in no way affect the Plan or the
construction of any provision thereof.

 

SECTION 6.16.            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 6.17.            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 6.18.            Section 409A
of the Code. 
The Plan is intended to comply with the requirements of Section 409A
of the Code and will
be interpreted by the Board and the Administrator, each in their sole and
absolute discretion, in a manner intended to comply with Section 409A of
the Code.  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.  In furtherance thereof, no payments may be accelerated
under the Plan if such acceleration would cause amounts deferred under the Plan
to become subject to (i) the gross income inclusion set forth within Code Section 409A(a)(1)(A) (the
“Gross Income Inclusion”) or (ii) the interest and additional tax set
forth within Code Section 409A(a)(1)(B) (the “Interest and Additional
Taxes” and together, with the Gross Income Inclusion referred to herein as the “Section 409A
Penalties”).  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 6.12,
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 or violates Section 409A of the Code so as to
cause amounts deferred under the Plan to become subject to Section 409A
Penalties, such provision shall be automatically deemed reformed or stricken to
the minimum extent necessary to comply with Section 409A of the Code and
to preserve the intent hereof.  Notwithstanding anything herein to the
contrary, if any payments due to a Participant hereunder could give rise to Section 409A
Penalties, such payments or other benefits shall be deferred if the Board or
the Administrator, each in their sole and absolute discretion, determines that
deferral will make such payment compliant under Section 409A of the Code
so as to avoid Section 409A Penalties with respect to the payment, or
otherwise such payment shall be restructured, to the extent possible, in a
manner, determined by the Board or the Administrator, each in their sole and
absolute discretion, that does not cause application of Section 409A
Penalties.  The Board and the Administrator
shall implement the provisions of this Section 6.18 in good faith.

 

20

 

	
  Adopted
  November       , 2008

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:
  Gary C. Tolman

  	
   

  
	
   

  	
   

  
	
  Title:
  Chief Executive Officer

  	
   

  
			

 

21

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