Document:

EX-10.8 EMPLOYMENT AGREEMENT/PAUL R. BUTRUS

 

Exhibit 10.8

EMPLOYMENT AGREEMENT

          This Employment Agreement (the “Agreement”) is made and entered into by and between
ProAssurance Corporation, a Delaware corporation (“ProAssurance”) and Paul R. Butrus, an individual
(the “Butrus”) effective as of January 1, 2008 (the “Effective Date”).

RECITALS:

          Butrus has served as an executive officer of ProAssurance and its predecessors and
subsidiaries, Medical Assurance, Inc. (“MAI”) and The Medical Assurance Company, Inc. (“TMAC”)
since their respective dates of organization. Butrus intends to resign each of his positions as an
officer or director of ProAssurance’s subsidiaries. Butrus will continue as an employee of
ProAssurance (or a subsidiary) in a non-executive capacity, and he will continue as a director on
Board of ProAssurance’s Board of Directors. ProAssurance and Butrus desire to to enter into this
agreement to set forth the terms and conditions of Butrus’s employment with ProAssurance from and
after his resignation.

          NOW, THEREFORE, THESE PREMISES CONSIDERED, Butrus and ProAssurance hereby agree as follows:

     1. Resignation. Butrus hereby resigns as an officer and director of each of the
direct and indirect subsidiaries of ProAssurance of which he is an officer or director Effective
Date.

     2. Employment Term. ProAssurance hereby employs Butrus, and Butrus accepts
employment, upon the terms and conditions of this Agreement for the term running from the Effective
Date to and including December 31, 2008 (the “Term”).

     3. Offices; Directorship; Other Activities.

     3.1 Office and Duties.

          (a) From and after the Effective Date, Butrus shall perform such duties as may be requested
from time to time by the Chief Executive Officer of ProAssurance, which duties shall be related to
and consistent with the areas of responsibility and duties assigned to Butrus as an executive
officer of ProAssurance.

          (b) Butrus shall devote such attention and time to the business and affairs of ProAssurance as
may be reasonably required to discharge his duties under this Agreement.

     3.2 Other Activities. Butrus may directly or indirectly participate in other business
ventures, investments or charitable organizations, and may also deliver lectures, fulfill speaking
engagements or teach at educational institutions and may manage personal investments, so long as
such activities do not materially interfere with Butrus’s responsibilities to ProAssurance;
provided that Butrus may not invest in any business that does business with, or competes with,
ProAssurance except for investment in a business where Butrus’s percentage of ownership is
insignificant; and provided further that Butrus shall remain subject to the restrictions set forth
in the ProAssurance Code of Ethics and Conduct.

1

 

     4. Compensation and Benefits.

     4.1 Base Salary. Butrus will continue his 2007 base salary through December 31, 2007.
For the 2008 calendar year, ProAssurance will pay to Butrus a base salary at the rate of $300,000
per annum (“Base Salary”). Base Salary will be payable in periodic installments in accordance with
ProAssurance’s customary practices. Amounts payable will be reduced by standard withholding and
other authorized deductions.

     4.2 Other Incentive Compensation. ProAssurance will pay Butrus the annual incentive
compensation for the calendar year ending December 31, 2007, if and to the extent that the
incentive compensation is earned in accordance with the 2007 Incentive Award Guidelines as adopted
by the Board on March 7, 2007. The annual incentive compensation will be paid at such time and
manner as the annual incentive compensation is paid to ProAssurance’s senior executive officers
consistent with past practice but not later than March 15, 2008; provided that payment of such
incentive compensation shall be subject to and conditioned upon Butrus’s employment with
ProAssurance with ProAssurance on December 31, 2007.

     4.3 Outstanding Equity Compensation. During the Term, Butrus shall continue as a
participant under the 1995 Incentive Compensation Stock Plan, as amended (the “1995 Plan”) and the
2004 Equity Incentive Plan, as amended (the “2004 Plan”). All grant agreements for stock options
granted under the 1995 Plan and the 2004 Plan and performance share agreements for performance
shares granted under the 2004 Plan in effect on the Effective Date shall continue and remain in
effect in accordance with their respective terms.

     4.4 Other Savings and Retirement Plans. During the Term, Butrus shall be entitled to
participate in all savings and retirement plans, practices, policies and programs applicable
generally to other employees of ProAssurance. The current savings and retirement plans, all of
which may be terminated or amended by the Board, include the Equity Plan, the Executive
Non-Qualified Excess Plan and Trust, the Amended and Restated ProAssurance Corporation Stock
Ownership Plan, and the ProAssurance Group Savings and Retirement Plan.

     4.5 Welfare Benefit Plans. During the Term, Butrus shall be eligible for
participation in and shall receive all benefits under welfare benefit plans (including group
health, disability and life insurance plans and programs) as shall be in effect from time to time,
to the extent applicable to other employees of ProAssurance.

     4.6 Reimbursement of Expenses. Butrus shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by Butrus in accordance with the policies,
practices and procedures generally applicable to senior executive officers of ProAssurance.

     4.7 Office and Support Staff. ProAssurance shall provide Butrus an office and
clerical support.

2

 

     4.8 Vacations and Leave. Butrus shall be entitled to vacation and sick leave (without
loss of pay) in accordance with ProAssurance’s policies in effect from time to time, and other
personal and family leave as may be provided by law.

     4.9 Conflict. In the event of any conflict between this Agreement and the terms of
any benefit, severance, deferred compensation, incentive or similar plan or agreement in which
Butrus is or becomes a participant during the Term (other than a stockholder-approved plan or ERISA
plan), the provisions of this Agreement shall apply unless Butrus makes specific written election
otherwise, but Butrus shall not be entitled to duplicative payments or benefits.

     5. Termination of Employment.

     5.1 Death, Disability or Retirement. Butrus’s employment shall terminate upon
Butrus’s death, Disability or Retirement during the Term.

          (a) For purposes of this Agreement, “Disability” means a serious injury or illness that
requires Butrus to be under regular care of a licensed medical physician and renders Butrus
incapable of performing the essential function of Butrus’s position for twelve (12) consecutive
months as determined by the Board in good faith and upon receipt of and in reliance on competent
medical advice from one or more individuals selected by the Board, who are qualified to give
professional medical advice. Butrus will submit to such medical or psychiatric examinations and
tests as such medical professional deems necessary to make any determination of Butrus’s Disability
and consent to such medical professional sharing the results of such examination with a
representative of the Board.

          (b) For purposes of this Agreement, “Retirement” means voluntary retirement by Butrus when
eligible to receive retirement benefits under a retirement plan then in effect for ProAssurance,
Butrus having reached the age of mandatory retirement (if such requirement then exists for
ProAssurance’s senior Executive officers) or any other retirement by Butrus with the consent of the
Board. ProAssurance acknowledges that Butrus is eligible for retirement at his election.

     5.2 Termination by ProAssurance with Cause. ProAssurance may terminate Butrus’s
employment during the Term for Cause. For purposes of this Agreement, the term “Cause” means: (i)
Butrus has been convicted in a federal or state court of a crime classified as a felony; (ii)
action or inaction by Butrus (A) that constitutes embezzlement, theft, misappropriation or
conversion of assets of ProAssurance or its subsidiaries which alone or together with related
actions or inactions involve assets of more than a de minimus amount or that constitutes
intentional fraud, gross malfeasance of duty, or conduct grossly inappropriate to Butrus’s office,
and (B) such action or inaction has adversely affected or is likely to adversely affect the
business of ProAssurance or its subsidiaries, taken as a whole, or has resulted or is intended to
result in a direct or indirect gain or personal enrichment of Butrus to the detriment of
ProAssurance; or (iii) Butrus has been grossly inattentive to, or in a grossly negligent manner
failed to competently perform, Butrus’s job duties and the failure was not cured within 45 days
after written notice from ProAssurance. Any termination of Butrus’s employment by ProAssurance for
Cause shall

3

 

be communicated by a Notice of Termination (as defined in Section 5.4 below) to Butrus, which
Notice of Termination shall be in writing and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Butrus’s employment under this
provision. Butrus shall not be deemed to have been terminated for Cause unless and until (x) he
receives a Notice of Termination from ProAssurance; (y) he is given the opportunity to be heard
before the Board; and (z) the Board finds in its good faith opinion, Butrus was guilty of the
conduct set forth in the Notice of Termination.

     5.3 Termination by Butrus for Good Reason. Butrus may terminate his employment with
ProAssurance for Good Reason. For purposes of this Agreement, “Good Reason” shall constitute any
of the following circumstances if they occur without Butrus’ express written consent during the
Term: (i) a material reduction in Butrus’s Base Salary as set forth in Section 4.1 hereof; or (ii)
a breach by ProAssurance of any provision of this Agreement in any material respect; or (iii) the
occurrence of a Change of Control (as herein defined). Except with respect to a Change of Control,
Butrus must provide ProAssurance with a Notice of Termination no later than 45 calendar days after
Butrus knows or should have known that Good Reason has occurred. Following delivery of Butrus’s
Notice of Termination, ProAssurance shall have 45 calendar days to rectify the circumstances
causing the Good Reason. If ProAssurance fails to rectify the events causing Good Reason within
said 45 day period, or if ProAssurance delivers to Butrus written notice stating that the
circumstances cannot or shall not be rectified, Butrus shall be entitled to assert Good Reason and
terminate employment as of the expiration of the 45 day period after delivery of Butrus’s Notice of
Termination. Should Butrus fail to provide the required Notice of Termination in a timely manner,
Good Reason shall not be deemed to have occurred as a result of the event. The Term shall not be
deemed to have expired during the notice period, however, as long as Butrus has provided Notice of
Termination within the Term.

          For purposes of this Agreement, the following terms have the meanings set forth below:

          (a) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (b) “Person” is used as such term is used for purposes of Section 13(d) or 14(d) of the
Exchange Act.

          (c) “Beneficial Ownership” is used as such term is used within the meaning of Rule 13d-3
promulgated under the Exchange Act.

          (d) “Change of Control” shall mean the occurrence during the Term of any one of the following
events:

               (i) an acquisition of the voting securities of ProAssurance by any Person, immediately after
which such Person has Beneficial Ownership of more than 50.1% of the combined voting power of
ProAssurance’s then outstanding voting securities;

               (ii) a merger, consolidation or reorganization involving ProAssurance in which an entity other
than ProAssurance is the surviving entity or in which ProAssurance is the surviving entity and the
stockholders of ProAssurance immediately preceding such transaction will own less than 50.1% of the
outstanding voting securities of the surviving entity; or

4

 

               (iii) the sale or other disposition of substantially all of the assets of ProAssurance (as
defined in the regulations under Section 409A of the Code) and ProAssurance ceases to function on a
going forward basis as an insurance holding company system that provides medical professional
liability insurance.

          The transactions as described in (i), (ii) and (iii) shall be referred to as “Change of
Control Transactions.” In no event shall a Change of Control be deemed to have occurred, with
respect to Butrus, if Butrus is part of a purchasing group which consummates a Change of Control
Transaction. Butrus shall be deemed “part of a purchasing group” for purposes of the preceding
sentence if Butrus is an equity participant or has agreed to become an equity participant in the
purchasing company or group (except for passive ownership of less than 5% of the stock of the
purchasing company or ownership of equity participation in the purchasing company or group as a
result of the conversion or exchange of ProAssurance’s common stock beneficially owned by Butrus.

     5.4 Notice and Date of Termination. Any termination by ProAssurance, or by Butrus,
shall be communicated by Notice of Termination to the other party given in accordance with Section
10 hereof. For purposes of this Agreement, a “Notice of Termination” is a written notice which
indicates the specific termination provision in this Agreement relied upon and sets forth such
additional information as may be required in Section 5.2 or Section 5.3 hereof, to the extent
applicable. The “Date of Termination” means (i) if Butrus’s employment is terminated by
ProAssurance for Cause, the Date of Termination shall be as of the date of Butrus’s receipt of
ProAssurance’s Notice of Termination; (ii) if Butrus’s employment is terminated by Butrus for Good
Reason, the Date of Termination shall be the last day of the 45 day period after delivery of
Butrus’s Notice of Termination; (iii) if Butrus’s employment is terminated due to a Change of
Control, the Date of Termination shall be the date of closing of the Change of Control Transaction;
(iv) if Butrus’s employment is terminated by reason of death of Butrus, the date of death shall be
the Date of Termination; or (v) if Butrus’s employment is terminated by reason of Disability, the
Date of Termination shall be the date of determination of Disability by the Board; (vi) if Butrus’s
employment is terminated by reason of Retirement, the Date of Termination shall be the last day of
employment of Butrus; (vii) if Butrus’s employment is terminated by ProAssurance other than for
Cause, death, Disability or Retirement, the Date of Termination shall be the date of receipt of the
Notice of Termination by Butrus.

     6. Certain Benefits Upon Termination.

     6.1 Accrued Salary and Benefits. Butrus shall be entitled to receive the following
upon any termination of employment: (i) accrued and unpaid Base Salary as of the Date of
Termination; (ii) if the termination occurs during 2008, unpaid annual incentive compensation
payable under Section 3.2(a) hereof; (iii) accrued vacation and sick leave, if any, on Date of
Termination in accordance with the then current policy of ProAssurance with respect to terminated
employees generally; and (iv) benefits under ProAssurance’s employee benefit plans in which Butrus
was a participant on the Date of Termination, which benefits shall be vested, paid or provided in
accordance with the terms of said employee benefit plans.

5

 

     6.2 Severance Benefits.

          (a) If at any time prior to December 31, 2008, ProAssurance terminates the employment of
Butrus for any reason other than Cause, death, Disability or Retirement, or if Butrus terminates
his employment with ProAssurance for Good Reason, and Butrus, within sixty (60) days after the Date
of Termination, signs the release form that is attached to this Agreement as Exhibit A (the
"Release”), Butrus shall receive an amount equal to a sum of the amounts that would otherwise be
payable hereunder as Base Salary during the period commencing on the Date of Termination and ending
on December 31, 2008 (the “Severance Benefits”). Subject to the delivery of the executed Release
by Butrus, the Severance Benefits shall be paid by continuing the payment of Butrus’ Base Salary in
each payroll period through December 31, 2008, except that payment of Severance Benefits shall be
deferred until seven (7) days after the execution of the Release at which time any deferred amounts
shall be paid. Notwithstanding anything herein it to the contrary, unpaid Severance Benefits shall
be subject to termination under provisions of Section 7.2 hereof in the event Butrus should violate
the covenant set forth therein and unpaid Severance Benefits shall be payable in lump sum by
ProAssurance on termination of this Agreement by Butrus for Good Reason as a result of a Change of
Control seven (7) days after the execution of the Release. ProAssurance shall withhold from any
amounts payable under this Agreement all federal, state, city or other income and employment taxes
that shall be required. Notwithstanding the foregoing, if Butrus is a “specified employee” within
the meaning of Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended, the
payment schedule for Severance Benefits shall be modified or adjusted to provide that no payments
shall be made until the expiration of six (6) months following the Date of Termination. In the
event payments are so delayed, a lump sum payment of the accumulated unpaid amounts attributable to
the six (6) month period shall be made to Butrus on the first day of the seventh month following
the Date of Termination. This six month delay shall not apply to any Severance Benefits which are
not subject to the requirements of Code Section 409A by reason of their being separation pay upon
an involuntary separation from service and their meeting the requirements and imitations of the
regulations under the above referenced Code section. In no event shall the aggregate amount of the
Severance Benefits be reduced as a result of such modification or adjustment.

          (b) Butrus shall be under no duty or obligation to seek or accept other employment and shall
not be required to mitigate the amount of severance benefits provided under this Agreement by
seeking employment or otherwise.

     6.3 Parachute Payment Tax Reimbursement.

          (a) If any payment or benefit within the meaning of Section 280G(b)(2) of the Internal Revenue
Code of 1986, as amended (the “Code”), to Butrus for his benefit paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising
out of, his employment with ProAssurance or a Change of Control (as defined in Section 5.3(d)
hereof) (a “Payment” or “Payments”), will be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by Butrus with respect to such excise tax (such
excise tax, together with such interest and penalties are collectively referred to as the “Excise
Tax”), then Butrus will be entitled to receive an additional payment (a “Gross Up Payment”). The
amount of the Gross Up Payment will be such that after payment by Butrus of all taxes (including
any interest or penalties, other than interest and

6

 

penalties imposed by reason of Butrus’s failure to file a timely tax return or pay taxes shown
due on his return, imposed with respect to such taxes and the Excise Tax), including any Excise Tax
imposed upon the Gross Up Payment, Butrus retains an amount of the Gross Up Payment equal to the
Excise Tax imposed upon the Payments.

          (b) An initial determination as to whether a Gross Up Payment is required pursuant to this
Agreement and the amount of such Gross Up Payment shall be made by the income tax accountants of
ProAssurance. The tax accountants shall provide their determination (“Determination”) together
with detailed supporting calculations and documentation to ProAssurance and Butrus within a
reasonable time after the Date of Termination and if the tax accountants determine that no Excise
Tax is payable by Butrus with respect to a Payment or Payments, it shall furnish Butrus with an
opinion reasonably acceptable to Butrus that no Excise Tax will be imposed with respect to any
Payment or Payments. Within ten days of the delivery of the Determination to Butrus, Butrus shall
have the right to dispute the Determination. The Gross Up Payment, if any, as determined pursuant
to this Section 6.3(b) shall be paid by ProAssurance to Butrus within 30 days of the receipt of the
Determination. The existence of the Dispute shall not in any way affect Butrus’s right to receive
Gross Up Payments in accordance with the Determination. Upon the final resolution of a Dispute,
ProAssurance shall promptly pay Butrus any additional amount required by such resolution. If there
is no Dispute, the Determination shall be binding, final and conclusive upon ProAssurance and
Butrus.

          7. Non-Competition.

     7.1 Non-Competition; Nonsolicitation of Employee. Butrus will not during the
Restricted Period (herein defined):

          (a) become Employed by a Competitor Company that offers, sells or markets medical professional
liability insurance in the primary market area of the Companies, except that Butrus may be employed
with a Competitor Company so long as and on the condition that Butrus does not participate in the
medical professional liability insurance business of the Competitor Company; or

          (b) solicit or induce any employees of the Companies to leave such employment or accept
employment with any other person or entity, or solicit or induce any insurance agent of the
Companies to offer, sell or market medical professional liability insurance for a competitor
company in the primary market area of the Companies;

          “Companies” means any direct or indirect subsidiary of ProAssurance that, now or in the
future, offers medical professional liability insurance or non-risk bearing products and services
related to underwriting, claims or risk management, or indemnification for medical professional
liability, and any other company that has succeeded to the business of any of the Companies.

          “Competitor Company” means an insurance company, insurance agency, business, for profit or not
for profit organization (other than the Companies) that provides, or offers to provide medical
professional liability insurance to health care providers.

7

 

          “Employed” includes activities as an owner, proprietor, employee, agent, solicitor, partner,
member, manager, principal, shareholder (owning more than 1% of the outstanding stock), consultant,
officer, director or independent contractor.

          “Health care providers” means physicians, dentists, podiatrists, physician assistants, nurse
practitioners, other individual health care providers and hospital and other institutional health
care providers.

          “Medical professional liability insurance” means medical malpractice insurance and
reinsurance, and equivalent self-insured services such as administration of self-insured trusts,
claims management services and risk management services for health care providers. “Medical
professional liability insurance” does not include services provided as an employee of a health
care provider if such services are rendered solely for the purpose of servicing medical
professional liability risk of the employer or that of its employees.

          “Primary market area” means any state in which any one or more of the Companies derived more
than $15 million in revenues from the sale of medical professional liability insurance and non-risk
bearing medical professional liability services or products to health care providers in the most
recent complete fiscal year prior to the Date of Termination.

          “Restricted Period” means a period of 12 months from the Date of Termination.

     7.2 Remedies for Breach. If Butrus is deemed to have materially breached the
non-competition covenants set forth in Section 7.1 of this Agreement, ProAssurance may, in addition
to seeking an injunction or any other remedy they may have, withhold or cancel any remaining
payments of Severance Benefits due to Butrus pursuant to Section 6.2 of this Agreement.
ProAssurance shall give prior or contemporaneous written notice of such withholding or cancellation
of payments in accordance with Section 6.2 hereof. If Butrus violates any of these restrictions,
the Companies shall be further entitled to an immediate preliminary and permanent injunctive
relief, without bond, in addition to any other remedy which may be available to ProAssurance.

     7.3 Reasonableness of Restrictions. ProAssurance and Butrus agree that the
restrictions in this Agreement are fair and reasonable in all respects, including the geographic
and temporal restrictions, and that the benefits described in this Agreement, to the extent any
separate or special consideration is necessary, are fully sufficient consideration for Butrus’s
obligations under this Agreement.

     7.4 Confidentiality. Butrus will remain obligated under any confidentiality or
nondisclosure agreement with the Companies (or any of them) that is currently in effect or to which
Butrus may in the future be bound. In the event that Butrus is at any time not the subject of a
separate confidentiality or nondisclosure agreement with the Companies (or any of them), Butrus
expressly agrees that Butrus shall not use for Butrus’s personal benefit, or disclose, communicate
or divulge to, or use for the direct or indirect benefit of any person, firm, association or
company any confidential or competitive material or information of the Companies or their
subsidiaries, including without limitation, any information regarding insureds or other customers,
actual or prospective, and the contents of their files; marketing, underwriting

8

 

or financial plans or analyses which is not a matter of public record; claims practices or
analyses which are not matters of public record; pending or past litigation in which the Companies
have been involved and which is not a matter of public record; and all other strategic plans,
analyses of operations, computer programs, personnel information and other proprietary information
with respect to the Companies which are not matters of public record. Butrus shall return to the
Companies promptly, and in no event later than the Date of Termination, all items, documents, lists
and other materials belonging to the Companies or their subsidiaries, including but not limited to,
credit, debit or service cards, all documents, computer tapes, or other business records or
information, keys and all other items in Butrus’s possession or control.

     8. Indemnification. In addition to any indemnification required by law, under the
Certificate of Incorporation or Bylaws of ProAssurance or any of the Companies (as defined in
Section 6.1 hereof), or under a policy of insurance owned by ProAssurance or the Companies,
ProAssurance shall provide Butrus indemnification under the terms and conditions of his current
Indemnification Agreement with ProAssurance.

     9. Notice. For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
delivered by hand or commercial courier or mailed by certified or registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses as set forth below or to such
other address as one party may have furnished to the other in writing in accordance herewith.

          Notice to Butrus:

          Notice to the Companies:

ProAssurance Corporation

Mailing Address:

P. O. Box 590009

Birmingham, Alabama 35259-0009

Street Address:

100 Brookwood Place

Birmingham, Alabama 35209

Attention: Corporate Secretary

     10. Arbitration. ProAssurance and Butrus agree that final and binding arbitration
shall be the sole recourse to settle any claim or controversy arising out of or relating to a
breach or the interpretation of this Agreement, except as either party may be seeking injunctive
relief. Either party may file a demand for arbitration. The arbitration shall be held at a
mutually agreeable location, and shall be subject to and in accordance with the Employment
Arbitration Rules of the American Arbitration Association then in effect; provided that if the
location cannot be agreed upon the arbitration shall be held in Birmingham, Alabama. The
arbitrator may award

9

 

any and all remedies allowable by the cause of action subject to the arbitration, but the
arbitrator’s sole authority shall be to interpret and apply the provisions of this Agreement. In
reaching its decision the arbitrator shall have no authority to change or modify any provision of
this Agreement or other written agreement between the parties. The arbitrator shall have the power
to compel the attendance of witnesses at the hearing. Any court having jurisdiction may enter a
judgment based upon such arbitration. All decisions of the arbitrator shall be final and binding
on the parties without appeal to any court. Upon execution of this Agreement, Butrus shall be
deemed to have waived any right to commence litigation proceedings regarding this Agreement outside
of arbitration or injunctive relief without the express consent of ProAssurance. ProAssurance
shall pay all arbitration fees and the arbitrator’s compensation. If Butrus prevails in the
arbitration proceeding, ProAssurance shall reimburse to Butrus the reasonable fees and expenses of
Butrus’s personal counsel for his or her professional services rendered to Butrus in connection
with the enforcement of this Agreement.

     11. Miscellaneous.

     (a) Except insofar as this provision may be contrary to applicable law, no sale, transfer,
alienation, assignment, pledge, collateralization or attachment of any benefits under this
Agreement shall be valid or recognized by ProAssurance.

     (b) This Agreement sets forth the entire agreement between the parties with respect to the
matters set forth herein. This Agreement may not be modified or amended except by written
agreement intended as such and signed by all parties.

     (c) This Agreement shall benefit and be binding upon the parties and their respective
directors, officers, employees, representatives, agents, heirs, successors, assigns, devisees, and
legal or personal representatives.

     (d) ProAssurance, from time to time, shall provide government agencies with such reports
concerning this Agreement and copies thereof as may be required by law, and shall provide Butrus
with such disclosure concerning this Agreement as may be required by law or as ProAssurance may
deem appropriate.

     (e) Butrus and ProAssurance respectively acknowledge that each of them has read and understand
this Agreement, that they have each had adequate time to consider this Agreement and discuss it
with each of their attorneys and advisors, that each of them understands the consequences of
entering into this Agreement, that each of them is knowingly and voluntarily entering into this
Agreement, and that they are each competent to enter into this Agreement.

     (f) If any provision of this Agreement is determined to be unenforceable, at the discretion of
ProAssurance the remainder of this Agreement shall not be affected but each remaining provision
shall continue to be valid and effective and shall be modified so that it is enforceable to the
fullest extent permitted by law.

     (g) This Agreement will be interpreted as a whole according to its fair terms. It will not be
construed strictly for or against either party.

10

 

     (h) Except to the extent that federal law controls, this Agreement is to be construed
according to Delaware law.

[Signatures on following page]

11

 

          IN WITNESS WHEREOF, the parties have duly executed this Agreement on February 26, 2008 to be
effective as of the Effective Date

	 	 	 	 	 	 	 
	 
	 	 	 	 	 
	 	 	Paul R. Butrus	 	 
	 
	 	 	 	 	 	 
	 	 	PROASSURANCE CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Victor T. Adamo, President	 	 

12

 

EXHIBIT A

RELEASE IN CONJUNCTION WITH SEVERANCE COMPENSATION

          This Release of Claims (“Release”) is between ProAssurance Corporation (“ProAssurance”), and
any successor company that has assumed the Agreement to which this Release was an attachment (all
such organizations being referred to in this Release as the “Companies”) and Paul R. Butrus
(“Butrus”).

          The Companies and Butrus have agreed to terminate their employment relationship. To effect an
orderly termination, Butrus, and the Companies are entering into this Release.

     1. For the purposes of this Release, “Date of Termination” is the effective date of Butrus’s
termination of employment from Companies. Butrus hereby waives any and all rights Butrus may
otherwise have to continued employment with or re-employment by the Companies or any parent,
subsidiary or affiliate of Companies.

     2. Effective with the Date of Termination, Butrus is relieved of all duties and obligations to
the Companies, except as provided in this Release or any applicable provisions of the Employment
Agreement between Companies and Butrus, effective as of ___, 2007 (“Agreement”), which survive
termination of the employment relationship.

     3. Butrus agrees that this Release and its terms are confidential and shall not be disclosed
or published directly or indirectly to third persons, except as necessary to enforce its terms, by
Butrus or to Butrus’s immediate family upon their agreement not to disclose the fact or terms of
this Release, or to Butrus’s attorney, financial consultant or accountant, except that Butrus may
disclose, as necessary, the fact that Butrus has terminated Butrus’s employment with the Companies.

     4. Any fringe benefits that Butrus has received or currently is receiving from the Companies
or its affiliates shall cease effective with the Date of Termination, except as otherwise provided
for in this Release, in the Agreement or by law.

     5. The parties agree that the terms contained and payments provided for in the Agreement are
compensation for and in full consideration of Employee’s release of claims under this Release, and
Butrus’s confidentiality, non-compete, non-solicitation and non-disclosure agreements contained in
the Agreement.

     6. Butrus shall be under no duty or obligation to seek or accept other employment and shall
not be required to mitigate the amount of the Severance Benefits (as defined and provided under
the Agreement) by seeking employment or otherwise, provided, however, that Butrus shall be required
to notify the Companies if Butrus becomes covered by a health or dental care program providing
substantially similar coverage, at which time health or dental care continuation coverage provided
under the Agreement shall cease.

     7. Butrus waives, releases, and forever discharges the Companies and each of their direct or
indirect parents, subsidiaries, affiliates, and any partnerships, joint ventures or other entities
involving or related to any of the Companies, their parents, subsidiaries or affiliates, and

A-1

 

all present or former employees, officers, agents, directors, successors, assigns and
attorneys of any of these corporations, persons or entities (all collectively referred to in this
Release as the “Released”) from any and all claims, charges, suits, causes of action, demands,
expenses and compensation whatsoever, known or unknown, direct or indirect, on account of or
growing out of Butrus’s employment with and termination from the Companies, or relationship or
termination of such relationship with any of the Released, or arising out of related events
occurring through the date on which this Release is executed. This includes, but is not limited to,
claims for breach of any employment contract; handbook or manual; any express or implied contract;
any tort; continued employment; loss of wages or benefits; attorney fees; employment discrimination
arising under any federal, state, or local civil rights or anti-discrimination statute, including
specifically any claims Butrus may have under the federal Age Discrimination in Employment Act, as
amended, 29 USC §§ 621, et seq.; emotional distress; harassment; defamation; slander; and
all other types of claims or causes of action whatsoever arising under any other state or federal
statute or common law of the United States.

     8. Butrus does not waive or release any rights or claims that may arise under the federal Age
Discrimination in Employment Act, as amended, after the date on which this Release is executed by
Butrus.

     9. Butrus acknowledges and agrees that Butrus has been advised in writing by this Release, and
otherwise, to CONSULT WITH AN ATTORNEY before Butrus executes this Release.

     10. Butrus agrees that Butrus received a copy of this Release prior to executing the
Agreement, that this Release incorporates the Companies’ FINAL OFFER; that Butrus has been given a
period of at least twenty-two (22) calendar days within which to consider this Release and its
terms and to consult with an attorney should Butrus so elect.

     11. Butrus shall have seven (7) calendar days following Butrus’s execution of this Release to
revoke this Release. Any revocation of this Release shall be made in writing by Butrus and shall be
received on or before the time of close of business on the seventh calendar day following the date
of the Employee’s execution of this Release at ProAssurance’s address at 100 Brookwood Place, P. O.
Box 590009, Birmingham, Alabama 35259-0009, Attention: Chairman, or such other place as the
Companies may notify Butrus in writing. This Release shall not become effective or enforceable
until the eighth (8th) calendar day following Butrus’s execution of this Release.

     12. Butrus and the Companies acknowledge that they have read and understand this Release, that
they have had adequate time to consider this Release and discuss it with their attorneys and
advisors, that they understand the consequences of entering into this Release, that they are
knowingly and voluntarily entering into this Release, and that they are competent to enter into
this Release.

     13. This Release shall benefit and be binding upon the parties and their respective directors,
officers, employees, agents, heirs, successors, assigns, devisees and legal or personal
representatives.

A-2

 

     14. This Release, along with the attached Agreement, sets forth the entire agreement between
the parties at the time and date these documents are executed, and fully supersedes any and all
prior agreements or understandings between them pertaining to the subject matter in this Release.
This Release may not be modified or amended except by a written agreement intended as such, and
signed by all parties.

     15. Except to the extent that federal law controls, this Release is to be construed according
to the law of the state of Delaware.

     16. If any provision of this Release is determined to be unenforceable, at the discretion of
ProAssurance the remainder of this Release shall not be affected but each remaining provision or
portion shall continue to be valid and effective and shall be modified so that it is enforceable to
the fullest extent permitted by law.

     17. To signify their agreement to the terms of this Release, the parties have executed it on
the date set forth opposite their signatures, or those of their authorized agents, which follow.

	 	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Paul R. Butrus	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	PROASSURANCE CORPORATION
	 
	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

A-3EX-10.12 AMENDMENT OF NON-QUALIFIED EXCESS PLAN

 

Oct. 25, 2007

NOTE: Execution of this Adoption Agreement creates a legal liability of the Employer with
significant tax consequences to the Employer and Participants. The Employer should obtain legal
and tax advice from its professional advisors before adopting the Plan. Principal Life Insurance
Company disclaims all liability for the legal and tax consequences which result from the elections
made bv the Employer in this Adoption Agreement.

Principal Life Insurance Company, Raleigh, NC 27612 
A
member of the Principal Financial Group®

THE EXECUTIVE NONQUALIFIED “EXCESS” PLAN

AMENDED AND RESTATED

ADOPTION AGREEMENT

     THIS AGREEMENT is the adoption by ProAssurance Group Services Corporation (the
“Company”) of the Executive Nonqualified Excess Plan (“Plan”).

W
I T N E S S E
T H :

     WHEREAS, the Company desires to adopt the Plan as an unfunded, nonqualified deferred
compensation plan; and

     WHEREAS, the provisions of the Plan are intended to comply with the requirements of Section
409A of the Code and the regulations thereunder and shall apply to amounts subject to section 409A;
and

     WHEREAS, the Company has been advised by Principal Life Insurance Company to obtain legal and
tax advice from its professional advisors before adopting the Plan,

     NOW, THEREFORE, the Company hereby adopts the Plan in accordance with the terms and conditions
set forth in this Adoption Agreement:

ARTICLE I

     Terms used in this Adoption Agreement shall have the same meaning as in the Plan, unless some
other meaning is expressly herein set forth. The Employer hereby represents and warrants that the
Plan has been adopted by the Employer upon proper authorization and the Employer hereby elects to
adopt the Plan for the benefit of its Participants as referred to in the Plan. By the execution of
this Adoption Agreement, the Employer hereby agrees to be bound by the terms of the Plan.

ARTICLE II

The Employer hereby makes the following designations or elections for the
purpose of the Plan:

	 	 	 	 	 	 	 	 	 	 
	2.6	 	Committee:	 	The duties of the Committee set forth in the Plan shall be satisfied by:
	 
	 	 	 	 	 	 	 	 
	 	 	—	 	(a)	 	Company.
	 
	 	 	 	 	 	 	 	 
	 	 	XX	 	(b)	 	The administrative committee appointed by the Board to serve at the pleasure of the Board.
	 
	 	 	 	 	 	 	 	 
	 	 	—	 	(c)	 	Board.
	 
	 	 	 	 	 	 	 	 
	 	 	—	 	(d)	 	Other (specify):	.
	 

	 	 	 	 	 	 	 	 
 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	2.8	 	Compensation:	 	The “Compensation” of a Participant shall mean all of a Participant’s:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	XX	 	(a)	 	Base salary.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	—	 	(b)	 	Service Bonus.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	—	 	(c)	 	Performance-Based Compensation earned in a period of 12 months or more.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	—	 	(d)	 	Commissions.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	XX	 	(e)	 	Compensation received as an Independent Contractor reportable on Form 1099.
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	—	 	(f)	 	Other:	 	 	 	.
	 
	 	 	 	 	 	 	 	 	 

2.9  Crediting Date: The Deferred Compensation Account of a Participant shall be credited
with the amount of any Participant Deferral to such account at the time designated below:

	 	 	 	 	 	 	 	 	 	 
	 	 	—	 	(a)	 	The last business day of each Plan Year.
	 
	 	 	 	 	 	 	 	 
	 	 	—	 	(b)	 	The last business day of each calendar quarter during the Plan Year.
	 
	 	 	 	 	 	 	 	 
	 	 	—	 	(c)	 	The last business day of each month during the Plan Year.
	 
	 	 	 	 	 	 	 	 
	 	 	—	 	(d)	 	The last business day of each payroll period during the Plan Year.
	 
	 	 	 	 	 	 	 	 
	 	 	—	 	(e)	 	Each pay day as reported by the Employer.
	 
	 	 	 	 	 	 	 	 
	 	 	XX	 	(f)	 	Any business day on which Participant Deferrals are received by the Provider.
	 
	 	 	 	 	 	 	 	 
	 

	 	—
	 	(g)
	 	Other:	 	 	.
	 

	 	 	 	 	 	 	 	 
 

	 	 	 	 	 	 	 
	2.13	 	Effective Date:	 
	 
	 	 	 	 	 	 
	 

	 	—
	 	(a)
	 	This is a newly-established Plan, and the Effective Date of the Plan is
	 

	 	 	 	 	 	                                                            .
	 
	 	 	 	 	 	 
	 

	 	XX
	 	(b)
	 	This is an amendment and restatement of a plan named The Executive
Nonqualified Excess Plan of ProAssurance Group with an effective date of
January 1, 2005, amended January 1, 2007, The Effective Date of this
amended and restated Plan is January 1, 2008. This is amendment number 3.

	 	 	 	 	 	 	 
	 	 	 	 	 	 	See Exhibit A.
	 
	 	 	 	 	 	 
	 

	 	XX
	 	(i)
	 	All amounts in Deferred Compensation Accounts shall be
subject to the provisions of this amended and restated
Plan.
	 
	 	 	 	 	 	 
	 

	 	—
	 	(ii)
	 	Any Grandfathered Amounts shall be subject to the Plan
rules in effect on October 3, 2004.

2

 

	2.20	 	Normal Retirement Age: The Normal Retirement Age of a Participant shall be:

	 	 	 	 	 	 	 
	 

	 	___
	 	(a)
	 	Age ___.
	 
	 	 	 	 	 	 
	 

	 	___
	 	(b)
	 	The later of age ___ or
the ___ anniversary of the participation
commencement date. The participation commencement date
is the first day of the first Plan Year in which the
Participant commenced participation in the Plan.
	 
	 	 	 	 	 	 
	 

	 	 XX 
	 	(c)
	 	Other: Age 55 and 5 Years of
Service.

	2.23	 	Participating Employer(s): As of the Effective Date, the following Participating Employer(s) are parties to the Plan:

	 	 	 	 	 	 	 
	Name of Employer	 	Address	 	Telephone No.	 	EIN
	 	 	 	 	 	 	 
	ProAssurance Group 

Services Corporation
	 	100 Brookwood Place

Suite 300
	 	(205) 877-4400
	 	63-12185505
	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 
	 
	 	Birmingham, AL 35209	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 
	ProAssurance Corporation
	 	100 Brookwood Place

Suite 300
	 	(205) 877-4400
	 	63-1261433
	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 
	 
	 	Birmingham, AL 35209	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	The Medical Assurance 

Company, Inc.
	 	100 Brookwood Place

Suite 300
	 	(205) 877-4400
	 	63-0720042
	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 
	 
	 	Birmingham, AL 35209	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Woodbrook Casualty 

Insurance, Inc.
	 	100 Brookwood Place

Suite 300
	 	(205) 877-4400
	 	55-0666866
	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 
	 
	 	Birmingham, AL 35209	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	IAO, Inc. dba Mutual 

Assurance Agency
	 	100 Brookwood Place

Suite 300
	 	(205) 877-4400
	 	63-0725911
	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 
	 
	 	Birmingham, AL 35209	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	ProNational Insurance 

Company
	 	100 Brookwood Place

Suite 300
	 	(205) 877-4400
	 	38-2317569
	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 
	 
	 	Birmingham, AL 35209	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Red Mountain Casualty 

Insurance Company, Inc.
	 	100 Brookwood Place

Suite 300
	 	(205)877-4400
	 	36-3990058
	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 
	 
	 	Birmingham, AL 35209	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	NCRIC, Inc.
	 	100 Brookwood Place

Suite 300
	 	(205) 877-4400
	 	52-1194407
	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 
	 
	 	Birmingham, AL 35209	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 

3

 

	 	 	 	 	 	 	 
	Name of Employer	 	Address	 	Telephone No.	 	EIN
	 	 	 	 	 	 	 
	Physicians Insurance 

Company of Wisconsin, Inc.
	 	100 Brookwood Place

Suite 300
	 	(205) 877-4400
	 	39-1567580
	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 
	 
	 	Birmingham, AL 35209	 	 	 	 
	 
	 	 	 	 	 	 

	2.26	 	Plan: The name of the Plan is The Executive Nonqualified Excess Plan of ProAssuranee
Group.
	 
	2.28	 	Plan Year: The Plan Year shall end each year on the last day of the month of December.
	 
	2.30	 	Seniority Date: The date on which a Participant has:

	 	 	 	 	 	 	 
	 

	 	 XX 
	 	(a)
	 	Attained age 55.
	 
	 	 	 	 	 	 
	 

	 	___
	 	(b)
	 	Completed ___Years of Service from First Date of Service.
	 
	 	 	 	 	 	 
	 

	 	___
	 	(c)
	 	Attained age ___ and
completed ___ Years of Service from First Date of
Service.
	 
	 	 	 	 	 	 
	 

	 	___
	 	(d)
	 	Attained an age as elected by the Participant.
	 
	 	 	 	 	 	 
	 

	 	___
	 	(e)
	 	Not applicable — distribution elections for Separation from Service
are not based on Seniority Date.

4.1
Participant  Deferral Credits: 
Subject to the limitations in Section 4.1 of the Plan, a
Participant may elect to have his Compensation (as selected in Section 2.8 of this Adoption Agreement)

deferred within the annual limits below by the following  percentage or amount as designated in
writing to the Committee:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	XX	 	(a)	 	Base salary:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	minimum deferral:
	 	     1%     
	 

	 	 	 	 	 	 	 	maximum deferral:
	 	$                     or      75     %
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	____	 	(b)	 	Service Bonus:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	minimum deferral:
	 	                    %
	 

	 	 	 	 	 	 	 	maximum deferral:
	 	$                     or                     %
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	____	 	(c)	 	Performance-Based Compensation:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	minimum deferral:
	 	                    %
	 

	 	 	 	 	 	 	 	maximum deferral:
	 	$                     or                     %
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	____	 	(d)	 	 Commissions:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	minimum deferral:
	 	                    %
	 

	 	 	 	 	 	 	 	maximum deferral :
	 	$                     or                     %
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	XX	 	(e)	 	Form 1099 Compensation:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	minimum deferral:
	 	                    %
	 

	 	 	 	 	 	 	 	maximum deferral:
	 	$                     or      100     %

4

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	____	 	(f)	 	Other:                                                            	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	minimum deferral:
	 	                    %
	 

	 	 	 	 	 	 	 	maximum deferral:
	 	$                     or                     %
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	____	 	(g)	 	Participant deferrals not allowed.	 	 

	4.2	 	Employer Credits: Employer Credits will be made in the following manner:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	XX	 	(a)	 	Employer Discretionary Credits: The Employer may make discretionary credits to the
Deferred Compensation Account of each Active Participant in an amount determined as
follows:
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	___
	 	(i)
	 	An amount determined each Plan Year by the Employer.
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	XX
	 	(ii)
	 	Other: See attached
Exhibit C.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	___	 	(b)	 	Other Employer Credits: The Employer may make other credits to the Deferred
Compensation Account of each Active Participant in an amount determined as follows:
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	___
	 	(i)
	 	An amount determined each Plan Year by the Employer.
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	___
	 	(ii)
	 	Other:                                                            
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	___	 	(c)	 	Employer Credits not allowed.

	5.2	 	Disability of a Participant:

	 	 	 	 	 	 	 
	 

	 	XX
	 	(a)
	 	Participants may elect upon initial
enrollment to have accounts distributed
upon becoming Disabled.
	 
	 	 	 	 	 	 
	 

	 	___
	 	(b)
	 	Participants may not elect to have
accounts distributed upon becoming
Disabled.

5.3  
Death of a Participant: If the Participant dies while in Service,
the Employer shall pay a benefit
to the Beneficiary in an amount equal to the vested balance in the Deferred Compensation Account of the
Participant determined as of the date payments to the Beneficiary commence, plus:

	 	 	 	 	 	 	 
	 

	 	___
	 	(a)
	 	An amount to be determined by the Committee.
	 
	 	 	 	 	 	 
	 

	 	___
	 	(b)
	 	Other:                                                            
	 
	 	 	 	 	 	 
	 

	 	XX
	 	(c)
	 	No additional benefits.

 

 

	 	 	 	 	 	 	 	 	 	 	 
	5.4	 	In-Service or Education Distributions: In-Service and Education Accounts are permitted under the Plan:
	 
	 	 	___	 	(a)	 	In-Service Accounts are allowed with respect to:	 	 
	 

	 	 	 	 	 	___
	 	Participant Deferral Credits only.	 	 
	 

	 	 	 	 	 	___
	 	Employer Credits only.	 	 
	 

	 	 	 	 	 	___
	 	Participant Deferral and Employer Credits.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	In-service distributions may be made in the following manner:	 	 
	 

	 	 	 	 	 	___
	 	Single lump sum payment.	 	 
	 

	 	 	 	 	 	___
	 	Annual installments over a term certain not to exceed ___years.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Education Accounts are allowed with respect to:	 	 
	 

	 	 	 	 	 	___
	 	Participant Deferral Credits only.	 	 
	 

	 	 	 	 	 	___
	 	Employer Credits only.	 	 
	 

	 	 	 	 	 	___
	 	Participant Deferral and Employer Credits.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Education Accounts distributions may be made in the following manner:	 	 
	 

	 	 	 	 	 	___
	 	Single lump sum payment.	 	 
	 

	 	 	 	 	 	___
	 	Annual installments over a term certain not to exceed ___years.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	If applicable, amounts not vested at the time payments due under this Section cease will be:	 	 
	 

	 	 	 	 	 	___
	 	Forfeited.	 	 
	 

	 	 	 	 	 	___
	 	Distributed at Separation from Service if vested at that time.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	XX	 	(b)	 	No In-Service or Education Distributions permitted.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	5.5	 	Change in Control Event:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	XX	 	(a)	 	Participants may elect upon initial enrollment to have accounts distributed upon a Change in Control Event.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(b)	 	Participants may not elect to have accounts distributed upon a Change in Control Event.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	5.6	 	Unforeseeable Emergency Event:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	XX	 	(a)	 	Participants may apply to have accounts distributed upon an Unforeseeable Emergency event.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	___	 	(b)	 	Participants may not apply to have accounts distributed upon a Unforeseeable Emergency event.	 	 

6

 

 6. Vesting: An Active Participant shall be fully vested in the Employer Credits made to the Deferred Compensation Account upon the first to occur of the following events:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	___	 	(a)	 	Normal Retirement Age.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	___	 	(b)	 	Death.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	___	 	(c)	 	Disability.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	___	 	(d)	 	Change in Control Event.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	___	 	(e)	 	Other:                                                                       
                                                                                
              .
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	XX	 	(f)	 	Satisfaction of the vesting requirement as specified below:
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	XX	 	Employer Discretionary Credits:
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	XX	 	 	(i)	 	 	Immediate 100% vesting.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	___	 	(ii)
	 	100% vesting after ___ Years of Service.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	___	 	(iii)
	 	100% vesting at age ___.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	___	 	(iv)
	 	Number of Years	 	 	 	Vested
	 

	 	 	 	 	 	 	 	 	 	 	 	      
of Service
	 	 	 	 	 	 	 	Percentage
	 
	 

	 	 	 	 	 	 	 	 	 	 	 	Less than
	 	 	1	 	 	 	 	___%
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1	 	 	 	 	___%
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2	 	 	 	 	___%
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3	 	 	 	 	___%
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4	 	 	 	 	___%
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5	 	 	 	 	___%
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	6	 	 	 	 	___%
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	7	 	 	 	 	___%
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	8	 	 	 	 	___%
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	9	 	 	 	 	___%
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10	 or more	 	 
	 	___%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	For this purpose, Years of Service of a Participant shall be calculated from the date designated below:
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	___	 	 	(1	)	 	First Day of Service.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	___	 	 	(2	)	 	Effective Date of Plan Participation.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	___	 	 	(3	)	 	Each Crediting Date. Under this option (3), each Employer Credit shall vest based on the Years of Service
of a Participant from the Crediting Date on which
each Employer Discretionary Credit is made to his
or her Deferred Compensation Account.

7

 

	 	 	 	 	 	 	 	 	 
	`	 	____	 	Other Employer Credits:
	 
	 

	 	 	 	____
	 	(i)
	 	Immediate 100% vesting.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	____
	 	(ii)
	 	100% vesting after Years of Service.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	____
	 	(iii)
	 	100% vesting at age .
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	____
	 	(iv)
	 	Number of Years

of Service

							
	 	 	 	 	 	 	Vested 
	 	 		 	Percentage
	Less than

	 	 	1	 	 	____%

	

	 	 	1	 	 	____%

	 

	 	 	2	 	 	____%
	 

	 	 	3	 	 	____%
	 

	 	 	4	 	 	____%
	 

	 	 	5	 	 	____%
	 

	 	 	6	 	 	____%
	 

	 	 	7	 	 	____%
	 

	 	 	8	 	 	____%
	 

	 	 	9	 	 	____%
	 

	 	10 or more
	 	____%

For this purpose, Years of Service of a Participant shall be calculated
from the date designated below:

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	____
	 	 	(1	)	 	 	 	First Day of Service.
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	____
	 	 	(2	)	 	 	 	Effective Date of Plan Participation.
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	____
	 	 	(3	)	 	 	 	Each Crediting Date. Under this option (3), each Employer
Credit shall vest based on the Years of Service of a Participant from the
Crediting Date on which each Employer Discretionary Credit is made to his
or her Deferred Compensation Account.

7.1 Payment Options: Any benefit payable under the Plan upon a permitted Qualifying
Distribution Event may be made to the Participant or his Beneficiary (as applicable) in any of
the following payment forms, as selected by the Participant in the Participation Agreement:

	 	(a)	 	 Separation from Service prior to Seniority
Date, or Separation from Service if Seniority Date is Not Applicable

	 	 	 	 	 	 	 
	 

	 	XX
	 	(i)
	 	A lump sum.
	 
	 	 	 	 	 	 
	 

	 	XX
	 	(ii)
	 	Annual installments over a term certain as elected by
the Participant not to exceed 10 years.
	 
	 	 	 	 	 	 
	 

	 	____
	 	(iii)
	 	Other:

8

 

	 	 	 	 	 	 	 	 	 
	(b)	 	Separation from Service on or After Seniority Date, If Applicable
	 
	 	 	 	 	 	 	 	 
	 	 	XX	 	(i)	 	A lump sum.
	 
	 	 	 	 	 	 	 	 
	 	 	XX	 	(ii)	 	Annual installments over a term certain as
elected by the Participant not to exceed 10 years.
	 
	 	 	 	 	 	 	 	 
	 

	 	___
	 	(iii)
	 	Other:	 	                                                                             
                                                          .
	 
	 	 	 	 	 	 	 	 
	(c)	 	Separation from Service Upon a Change in Control Event
	 
	 	 	 	 	 	 	 	 
	 	 	XX	 	(i)	 	A lump sum.
	 
	 	 	 	 	 	 	 	 
	 	 	XX	 	(ii)	 	Annual installments over a term certain as elected by the Participant not to exceed
10 years.
	 
	 	 	 	 	 	 	 	 
	 

	 	___
	 	(iii)
	 	Other:	 	                                                                             
                                                          .
	 
	 	 	 	 	 	 	 	 
	(d)	 	Death
	 
	 	 	 	 	 	 	 	 
	 	 	XX	 	(i)	 	A lump sum.
	 
	 	 	 	 	 	 	 	 
	 	 	XX	 	(ii)	 	Annual installments over a term certain as
elected by the Participant not to exceed 10 years.
	 
	 	 	 	 	 	 	 	 
	 

	 	___
	 	(iii)
	 	Other:	 	                                                                             
                                                          .
	 
	 	 	 	 	 	 	 	 
	(e)	 	Disability
	 
	 	 	 	 	 	 	 	 
	 	 	XX	 	(i)	 	A lump sum.
	 
	 	 	 	 	 	 	 	 
	 	 	XX	 	(ii)	 	Annual installments over a term certain as
elected by the Participant not to exceed 10 years.
	 
	 	 	 	 	 	 	 	 
	 

	 	___
	 	(iii)
	 	Other:	 	                                                                             
                                                          .
	 
	 	 	 	 	 	 	 	 
	 	 	If applicable, amounts not vested at the time payments due under this Section cease will be:
	 
	 	 	 	 	 	 	 	 
	 	 	__	 	Forfeited.
	 	 	__	 	Distributed at Separation from Service if vested at that time.
	 
	 	 	 	 	 	 	 	 
	(f)	 	Change in Control Event
	 
	 	 	 	 	 	 	 	 
	 	 	XX	 	(i)	 	A lump sum.
	 
	 	 	 	 	 	 	 	 
	 	 	XX	 	(ii)	 	Annual installments over a term certain as
elected by the Participant not to exceed 10 years.
	 
	 	 	 	 	 	 	 	 
	 

	 	___
	 	(iii)
	 	Other:	 	                                                                             
                                                          .
	 
	 	 	 	 	 	 	 	 
	 	 	__	 	(iv)	 	Not applicable.
	 
	 	 	 	 	 	 	 	 
	 	 	If applicable, amounts not vested at the time payments due under this Section cease will be:
	 
	 	 	 	 	 	 	 	 
	 	 	__	 	Forfeited.
	 	 	__	 	Distributed at Separation from Service if vested at that time.

 9 

 

7.4 De Minimis Amounts.

	 	 	 	 	 	 	 
	 

	 	—
	 	(a)
	 	Notwithstanding any payment election made by
the Participant, the vested balance in the
Deferred Compensation Account of the
Participant will be distributed in a single
lump sum payment at the time designated
under the Plan if at the time of a permitted
Qualifying Distribution Event that is either
a Separation from Service, death, Disability
(if applicable) or Change in Control Event
(if applicable) the vested balance does not
exceed $                     . In addition, the
Employer may distribute a Participant’s
vested balance at any time if the balance
does not exceed the limit in Section
402(g)(l)(B) of the Code and results in the
termination of the Participant’s entire
interest in the Plan.
	 
	 	 	 	 	 	 
	 

	 	XX
	 	(b)
	 	There shall be no pre-determined de minimis
amount under the Plan; however, the Employer
may distribute a Participant’s vested
balance at any time if the balance does not
exceed the limit in Section 402(g)(l)(B) of
the Code and results in the termination of
the Participant’s entire interest in the
Plan.

10.1 Contractual Liability: Liability for payments under the Plan shall be the responsibility
of the:

	 	 	 	 	 	 	 
	 

	 	XX
	 	(a)
	 	Company.
	 
	 	 	 	 	 	 
	 

	 	—
	 	(b)
	 	Employer or Participating Employer who
employed the Participant when amounts were
deferred.

14. Amendment and Termination of Plan: Notwithstanding any provision in this
Adoption Agreement or the Plan to the contrary, Sections 2.23 of the Plan shall be
amended to read as provided in attached Exhibit A, Section 2.32, 7.1, 17.8 of
the Plan shall be amended to read as provided in attached Exhibit B, and Section
4.2 of the Plan shall be amended to read as provided in
attached Exhibit C.

	 	 	 	 	 
	 

	 	—
	 	There are no amendments to the Plan.

17.9 Construction: The provisions of the Plan shall be construed and enforced
according to the laws of the State of Delaware, except to the extent that such laws are
superseded by ERISA and the applicable provisions of the Code.

     IN WITNESS WHEREOF, this Agreement has been executed as of the day and year stated below.

	 	 	 	 	 
	 	 	ProAssurance Group Services Corporation
Name of Employer
	 
	 	 	 	 
	 

	 	By:
	 	
	 

	 	 	 	Autorized Person, President
	 	 	Date: October 25, 2007

The Plan is adopted by the following Participating Employers:

	 	 	 	 	 
	 	 	ProAssurance Corporation
Name of Employer
	 
	 	 	 	 
	 

	 	By:
	 	
	 

	 	 	 	Autorized Person, President
	 	 	Date: October 25,
2007

10

 

	 	 	 	 	 
	 	 	The Medical
Assurance Company, Inc.
Name of Employer
	 
	 	 	 	 
	 

	 	By:
	 	
	 

	 	 	 	Autorized Person, President
	 	 	Date: October 25,
2007

	 	 	 	 	 
	 	 	Woodbrook Caualty
Issurance Company, Inc.

Name of Employer
	 
	 	 	 	 
	 

	 	By:
	 	
	 

	 	 	 	Autorized Person, President
	 	 	Date: October 25,
2007
	 
	 	 	 	 
	 	 	IAO, Inc. dba Mutual Assurance Agency.
Name of Employer
	 
	 	 	 	 
	 

	 	By:
	 	
	 

	 	 	 	Autorized Person, President
	 	 	Date: October 25,
2007
	 
	 	 	 	 
	 	 	ProNational Inssurance Company
Name of Employer
	 
	 	 	 	 
	 

	 	By:
	 	
	 

	 	 	 	Autorized Person, President
	 	 	Date: October 25,
2007
	 
	 	 	 	 
	 	 	Red Mountain
Casualty Insurance Company, Inc.
Name of Employer
	 
	 	 	 	 
	 

	 	By:
	 	
	 

	 	 	 	Autorized Person, President
	 	 	Date: October 25, 2007
	 
	 	 	 	 
	 	 	NCRIC, Inc.
Name of Employer
	 
	 	 	 	 
	 

	 	By:
	 	
	 

	 	 	 	Autorized Person, President
	 	 	Date: October 25, 2007
	 
	 	 	 	 
	 	 	Physicians Insurance Company of Wisconsin, Inc.
Name of Employer
	 
	 	 	 	 
	 

	 	By:
	 	
	 

	 	 	 	Autorized Person, President
	 	 	Date: October 25, 2007

11

 

EXHIBIT A

Plan Section 2.13:

The restatement of the Plan on 01/01/2007 was for the purpose of adding Physicians Insurance
Company of Wisconsin, Inc. as a Participating Employer.

The restatement of the Plan on 01/01/2008 was for the purpose of complying with the final
regulations promulgated under Section 409A of the Internal Revenue Code. The restatement of the
Plan applies to (1) deferrals made on and after January 1, 2008, and (2) deferrals made on or after
January 1, 2005, and prior to January 1, 2008, which remain in the plan after December 31, 2007
(and earnings on such amounts)

12

 

EXHIBIT B

Plan Section 2.32 shall be amended and superseded to read as follows:

“Service” means employment by the Employer as an Employee, For purposes of the Plan, the
employment relationship is treated as continuing intact while the Employee is on military
leave, sick leave, or other bona fide leave of absence if the period of such leave does not
exceed six months (which may, in the discretion of the Committee, be extended to as much as
twelve months), or if longer, so long as the Employee’s right to reemployment is provided
by either statute or contract. If the Participant is an Independent Contractor, “Service”
shall mean the period during which the contractual relationship exists between the Employer
and the Participant. The contractual relationship is not terminated if the Participant
anticipates a renewal of the contract or becomes an Employee.

Plan Section 17.8 shall be amended and superseded to read as follows:

Merger or Consolidation; Assumption of Plan. Subject to Section 5.5, nothing herein shall
prohibit the assumption of the obligations and liabilities of the Employer under the Plan
by any successor entity.

Adoption Agreement Section 7.1 shall be amended by adding the following at the conclusion thereof:

Notwithstanding the foregoing, a Participant may elect a different distribution option with
respect to each Plan Year’s Participant Deferral Credits and Employer Credits provided that such
election is made prior to the beginning of the Plan Year.

13

 

EXHIBIT C

Section 4.2

     Make
Up Matching Credits. Effective on and after January 1, 2005, the Employer will
“make up” any matching contributions lost by a Participant under the ProAssurance Group Savings
and Retirement Plan (the “Savings Plan”) as a result of such Participant having elected to make
salary deferrals to this Plan. This will be accomplished as follows:

     In the event that the Participant elects to make salary deferrals to this Plan during any
calendar year and such deferrals result in the Participant not receiving Matching Contributions to
the Savings Plan that he or she otherwise would have received in such calendar year, then, the
Employer will make matching credits to the Deferred Compensation Account of such Participant. The
amount of the matching credit will be equal to (a) the amount of Matching Contributions that would
have been allocated to the Participant’s account in the Savings Plan for such calendar year had
salary deferrals not been made to this Plan during such year, less (b) the amount of Matching
Contributions actually allocated to the Participant’s account for such year. The determination of
the amount of Matching Contributions shall be made in accordance with the terms of the Plan in
effect for the year in question and by applying the limitation on compensation imposed by Section
401(a)(17) of the Code. Matching credits hereunder will be made as soon as possible after the close
of the year to which they relate.

     Additional Matching Credits. Effective on and after January 1, 2006, the Employer
will
make additional matching credits equal to 100% of a Participant’s deferrals under this Plan, but
not to exceed a matching credit of 10% of the Participant’s Compensation which is in excess of the
compensation limit imposed by Section 401(a)(17) of the Internal Revenue Code. For purposes hereof,
“Compensation” means the total base compensation of a Participant that is actually paid to the
Participant for personal services rendered during the Plan Year, adjusted as hereinafter provided.
“Compensation” will be adjusted to include the amount of the Participant’s deferrals under this
Plan and any compensation which is not currently includible in the Participant’s gross income by
reason of the application of Sections 125, 132(f)(4), or 402(g)(3) of the Code.

     The matching credits will be fully vested when made.

14

 

THE EXECUTIVE NONQUALIFIED EXCESS PLAN

PLAN DOCUMENT

 

 

THE EXECUTIVE NONQUALIFIED EXCESS PLAN

     Section 1.
Purpose:

     By execution of the Adoption Agreement, the Employer has adopted the Plan set forth herein,
and in the Adoption Agreement, to provide a means by which certain management Employees or
Independent Contractors of the Employer may elect to defer receipt of current Compensation from the
Employer in order to provide retirement and other benefits on behalf of such Employees or
Independent Contractors of the Employer, as selected in the Adoption Agreement. The Plan is
intended to be a nonqualified deferred compensation plan that complies with the provisions of
Section 409A of the Internal Revenue Code (the “Code”). The Plan is also intended to be an unfunded
plan maintained primarily for the purpose of providing deferred compensation benefits for a select
group of management or highly compensated employees under
Sections 201(2), 301(a)(3) and 401(a)(1)
of the Employee Retirement Income Security Act of 1974 (“ERISA”) and independent contractors.
Notwithstanding any other provision of this Plan, this Plan shall be interpreted, operated and
administered in a manner consistent with these intentions.

     Section 2. Definitions:

     As used in the Plan, including this Section 2, references to one gender shall include
the other, unless otherwise indicated by the context:

     2.1 “Active Participant” means, with respect to any day or date, a Participant who is in
Service on such day or date; provided, that a Participant shall cease to be an Active Participant
(i) immediately upon a determination by the Committee that the Participant has ceased to be an
Employee or Independent Contractor, or (ii) at the end

1

 

     of the Plan Year that the Committee determines the Participant no longer meets the
eligibility requirements of the Plan.

     2.2 “Adoption Agreement” means the written agreement pursuant to which
the Employer adopts the Plan. The Adoption Agreement is a part of the Plan as applied to
the Employer.

     2.3 “Beneficiary” means the person, persons, entity or entities designated or
determined pursuant to the provisions of Section 13 of the Plan.

     2.4 “Board” means the Board of Directors of the Company, if the Company
is a corporation. If the Company is not a corporation, “Board” shall mean the Company.

     2.5 “Change in Control Event” means an event described in Section
409A(a)(2)(A)(v) of the Code (or any successor provision thereto) and the regulations
thereunder.

     2.6 “Committee” means the persons or entity designated in the Adoption
Agreement to administer the Plan. If the Committee designated in the Adoption
Agreement is unable to serve, the Employer shall satisfy the duties of the Committee
provided for in Section 9.

     2.7 “Company” means the company designated in the Adoption Agreement
as such.

     2.8 “Compensation” shall have the meaning designated in the Adoption
Agreement.

     2.9 “Crediting Date” means the date designated in the Adoption Agreement
for crediting the amount of any Participant Deferral Credits to the Deferred
Compensation Account of a Participant. Employer Credits may be credited to the

2

 

Deferred Compensation Account of a Participant on any day that securities are traded on a
national securities exchange.

     2.10 “Deferred Compensation Account” means the account maintained with
respect to each Participant under the Plan. The Deferred Compensation Account shall be
credited with Participant Deferral Credits and Employer Credits, credited or debited for
deemed investment gains or losses, and adjusted for payments in accordance with the
rules and elections in effect under Section 8. The Deferred Compensation Account of a
Participant shall include any In-Service or Education Account of the Participant, if
applicable.

     2.11 “Disabled” means Disabled within the meaning of Section 409A of the
Code and the regulations thereunder. Generally, this means that the Participant is unable
to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or is, by reason of any
medically determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12 months,
receiving income replacement benefits for a period of not less than three months under an
accident and health plan covering Employees of the Employer.

     2.12 “Education Account” is an In-Service Account which will be used by the
Participant for educational purposes.

     2.13 “Effective Date” shall be the date designated in the Adoption Agreement.

     2.14 “Employee” means an individual in the Service of the Employer if the
relationship between the individual and the Employer is the legal relationship of

3

 

employer and employee and if the individual is a highly compensated or management employee of the
Employer. An individual shall cease to be an Employee upon the Employee’s separation from Service.

     2.15 “Employer” means the Company, as identified in the Adoption
Agreement, and any Participating Employer which adopts this Plan. An Employer may be
a corporation, a limited liability company, a partnership or sole proprietorship.

     2.16 “Employer Credits” means the amounts credited to the Participant’s
Deferred Compensation Account by the Employer pursuant to the provisions of Section
4.2.

     2.17 “Grandfathered Amounts” means, if applicable, the amounts that were
deferred under the Plan and were earned and vested within the meaning of Section 409A
of the Code and regulations thereunder as of December 31, 2004. Grandfathered
Amounts shall be subject to the terms designated in the Adoption Agreement.

     2.18 “Independent Contractor” means an individual in the Service of the
Employer if the relationship between the individual and the Employer is not the legal
relationship of employer and employee. An individual shall cease to be an Independent
Contractor upon the termination of the Independent Contractor’s Service. An Independent
Contractor shall include a director of the Employer who is not an Employee.

     2.19 “In-Service Account” means a separate account to be kept for each
Participant that has elected to take in-service distributions as described in Section 5.4.
The In-Service Account shall be adjusted in the same manner and at the same time as the
Deferred Compensation Account under Section 8 and in accordance with the rules and
elections in effect under Section 8.

4

 

     2.20 “Normal Retirement Age” of a Participant means the age designated in
the Adoption Agreement.

     2.21 “Participant” means with respect to any Plan Year an Employee or
Independent Contractor who has been designated by the Committee as a Participant and
who has entered the Plan or who has a Deferred Compensation Account under the Plan.

     2.22 “Participant Deferral Credits” means the amounts credited to the
Participant’s Deferred Compensation Account by the Employer pursuant to the provisions
of Section 4.1.

     2.23 “Participating Employer” means any trade or business (whether or not
incorporated) which adopts this Plan with the consent of the Company identified in the
Adoption Agreement.

     2.24 “Participation Agreement” means a written agreement entered into
between a Participant and the Employer pursuant to the provisions of Section 4.1

     2.25 “Performance-Based Compensation” means compensation where the
amount of, or entitlement to, the compensation is contingent on the satisfaction of
preestablished organizational or individual performance criteria relating to a performance
period of at least twelve months. Organizational or individual performance criteria are
considered preestablished if established in writing within 90 days after the
commencement of the period of service to which the criteria relates, provided that the
outcome is substantially uncertain at the time the criteria are established. Performance-based compensation may include payments based upon subjective performance criteria as
provided in regulations and administrative guidance promulgated under Section 409A of
the Code.

5

 

     2.26 “Plan” means The Executive Nonqualified Excess Plan, as herein set out and as set out in
the Adoption Agreement, or as duly amended. The name of the Plan as applied to the Employer shall
be designated in the Adoption Agreement.

     2.27 “Plan-Approved Domestic Relations Order” shall mean a judgment, decree, or order
(including the approval of a settlement agreement) which is:

     2.27.1 Issued pursuant to a State’s domestic relations law;

     2.27.2 Relates to the provision of child support, alimony payments or marital property rights
to a Spouse, former Spouse, child or other dependent of the Participant;

     2.27.3 Creates or recognizes the right of a Spouse, former Spouse, child or other dependent of
the Participant to receive all or a portion of the Participant’s benefits under the Plan;

     2.27.4 Requires payment to such person of their interest in the Participant’s benefits
in an immediate lump payment; and

     2.27.5 Meets such other requirements established by the Committee.

     2.28 “Plan Year” means the twelve-month period ending on the last day of the month designated
in the Adoption Agreement; provided that the initial Plan Year may have fewer than twelve months.

     2.29 “Qualifying Distribution Event” means (i) the Separation from Service of the Participant,
(ii) the date the Participant becomes Disabled, (iii) the death of the Participant, (iv) the time
specified by the Participant for an In-Service or Education Distribution, (v) a Change in Control
Event, or (vi) an Unforeseeable Emergency, each to the extent provided in Section 5.

     2.30 “Seniority Date” shall have the meaning designated in the Adoption Agreement.

6

 

     2.31 “Separation from Service” or “Separates from Service” means a “separation from
service” within the meaning of Section 409A of the Code.

     2.32 “Service” means employment by the Employer as an Employee. For purposes of the Plan, the
employment relationship is treated as continuing intact while the Employee 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 Employee’s right to reemployment is provided either by statute
or contract. If the Participant is an Independent Contractor, “Service” shall mean the period
during which the contractual relationship exists between the Employer
and the Participant. The
contractual relationship is not terminated if the Participant anticipates a renewal of the contract
or becomes an Employee.

     2.33 “Service Bonus” means any bonus paid to a Participant by the Employer which is not
Performance-Based Compensation.

     2.34 “Specified Employee” means an employee who meets the requirements for key employee
treatment under Section 416(i)(l)(A)(i), (ii) or (iii) of the Code (applied in accordance with the
regulations thereunder and without regard to Section 416(i)(5) of the Code) at any time during the
twelve month period ending on December 31 of each year (the “identification date”). Unless binding
corporate action is taken to establish different rules for determining Specified Employees for all
plans of the Company and its controlled group members that are subject to Section 409A of the Code,
the foregoing rules and the other default rules under the regulations of Section 409A of the Code
shall apply. If the person is a key employee as of any identification date, the person is treated

7

 

as a Specified Employee for the twelve-month period beginning on the first day of the fourth month
following the identification date.

     2.35 “Spouse” or “Surviving Spouse” means, except as otherwise provided in the Plan, a person
who is the legally married spouse or surviving spouse of a Participant.

     2.36 “Unforeseeable Emergency” means an “unforeseeable emergency” within the meaning of
Section 409A of the Code.

     2.37 “Years of Service” means each Plan Year of Service completed by the Participant. For
vesting purposes, Years of Service shall be calculated from the date designated in the Adoption
Agreement and Service shall be based on service with the Company and all Participating Employers.

     Section 3. Participation:

     The Committee in its discretion shall designate each Employee or Independent Contractor who is
eligible to participate in the Plan. A Participant who separates from Service with the Employer and
who later returns to Service will not be an Active Participant under the Plan except upon
satisfaction of such terms and conditions as the Committee shall establish upon the Participant’s
return to Service, whether or not the Participant shall have a balance remaining in the Deferred
Compensation Account under the Plan on the date of the return to Service.

     Section 4. Credits to Deferred Compensation Account:

     4.1 Participant Deferral Credits. To the extent provided in the Adoption Agreement, each
Active Participant may elect, by entering into a Participation Agreement with the Employer, to
defer the receipt of Compensation from the Employer by a dollar amount or percentage specified in
the Participation Agreement. The amount of

8

 

Compensation the Participant elects to defer, the Participant Deferral Credit, shall be
credited by the Employer to the Deferred Compensation Account maintained for the Participant
pursuant to Section 8. The following special provisions shall apply with respect to the
Participant Deferral Credits of a Participant:

     4.1.1 The Employer shall credit to the Participant’s Deferred Compensation Account on each
Crediting Date an amount equal to the total Participant Deferral Credit for the period ending on
such Crediting Date.

     4.1.2 An election pursuant to this Section 4.1 shall be made by the Participant by executing
and delivering a Participation Agreement to the Committee. Except as otherwise provided in this
Section 4.1, the Participation Agreement shall become effective with respect to such Participant as
of the first day of January following the date such Participation Agreement is received by the
Committee. A Participant’s election may be changed at any time prior to the last permissible date
for making the election as permitted in this Section 4.1, and shall thereafter be irrevocable. The
election of a Participant shall continue in effect for subsequent years until modified by the
Participant as permitted in this Section 4.1.

     4.1.3 A Participant may execute and deliver a Participation Agreement to the Committee within
30 days after the date the Participant first becomes eligible to participate in the Plan to be
effective as of the first payroll period next following the date the Participation Agreement is
fully executed. Whether a Participant is treated as newly eligible for participation under this
Section shall be determined in accordance with Section 409A of the Code and the regulations
thereunder, including (i) rules that treat all elective deferral account balance plans as one plan,
and (ii) rules that treat a previously eligible employee as newly eligible if his benefits had been
previously distributed or if he has been ineligible for 24 months. For Compensation that is earned
based upon a specified performance period (for example, an annual bonus), where a deferral election
is made under this Section but after the beginning of the performance period, the election will
only apply to the portion of the Compensation equal to the total amount of the Compensation for the
service period multiplied by the ratio of the number of days remaining in the performance period
after the election over the total number of days in the performance period.

     4.1.4 A Participant may unilaterally modify a Participation Agreement (either to terminate,
increase or decrease the portion of his future Compensation which is subject to deferral within the
percentage limits set forth in Section 4.1 of the Adoption Agreement) by providing a written
modification of the Participation Agreement to the Committee. The modification shall become
effective as of the first day of January following the date such written modification is received
by the Committee.

9

 

     4.1.5 If the Participant performed services continuously from the later of the beginning of
the performance period or the date upon which the performance criteria are established through the
date upon which the Participant makes an initial deferral election, a Participation Agreement
relating to the deferral of Performance-Based Compensation may be executed and delivered to the
Committee no later than the date which is 6 months prior to the end of the performance period,
provided that in no event may an election to defer Performance-Based Compensation be made after
such Compensation has become readily ascertainable.

     4.1.6 If the Employer has a fiscal year other than the calendar year, Compensation relating to
Service in the fiscal year of the Employer (such as a bonus based on the fiscal year of the
Employer), of which no amount is paid or payable during the fiscal year, may be deferred at the
Participant’s election if the election to defer is made not later than the close of the Employer’s
fiscal year next preceding the first fiscal year in which the Participant performs any services for
which such Compensation is payable.

     4.1.7 Compensation payable after the last day of the Participant’s taxable year solely for
services provided during the final payroll period containing the last day of the Participant’s
taxable year (i.e., December 31) is treated for purposes of this Section 4.1 as Compensation for
services performed in the subsequent taxable year.

     4.1.8 The Committee may from time to time establish policies or rules consistent with the
requirements of Section 409A of the Code to govern the manner in which Participant Deferral Credits
may be made.

     4.1.9 If a Participant becomes Disabled or applies for and is eligible for a distribution on
account of an Unforeseeable Emergency during a Plan Year, his deferral election for such Plan Year
shall be cancelled.

     4.2 Employer Credits. If designated by the Employer in the Adoption Agreement, the
Employer shall cause the Committee to credit to the Deferred Compensation Account of each Active
Participant an Employer Credit as determined in accordance with the Adoption Agreement. A
Participant must make distribution elections with respect to any Employer Credits credited to his
Deferred Compensation Account by the deadline that would apply under Section 4.1 for distribution
elections with respect to Participant Deferral Credits credited at the same time, on a
Participation

10

 

Agreement that is timely executed and delivered to the Committee pursuant to Section 4.1.

     4.3 Deferred Compensation Account. All Participant Deferral Credits and Employer Credits
shall be credited to the Deferred Compensation Account of the Participant as provided in Section 8.

     Section 5. Qualifying Distribution Events:

     5.1 Separation from Service. If the Participant Separates from Service with the Employer, the
vested balance in the Deferred Compensation Account shall be paid to the Participant by the
Employer as provided in Section 7. Notwithstanding the foregoing, no distribution shall be made
earlier than six months after the date of Separation from Service (or, if earlier, the date of
death) with respect to a Participant who as of the date of Separation from Service is a Specified
Employee of a corporation the stock in which is traded on an established securities market or
otherwise. Any payments to which a Specified Employee would be entitled during the first six months
following the date of Separation from Service shall be accumulated and paid on the first day of the
seventh month following the date of Separation from Service.

     5.2 Disability. If the Employer designates in the Adoption Agreement that distributions are
permitted under the Plan when a Participant becomes Disabled, and the Participant becomes Disabled
while in Service, the vested balance in the Deferred Compensation Account shall be paid to the
Participant by the Employer as provided in Section 7.

11

 

     5.3 Death. If the Participant dies while in Service, the Employer shall pay a benefit to the
Participant’s Beneficiary in the amount designated in the Adoption Agreement. Payment of such
benefit shall be made by the Employer as provided in Section 7.

     5.4 In-Service or Education Distributions. If the Employer designates in the Adoption
Agreement that in-service or education distributions are permitted under the Plan, a Participant
may designate in the Participation Agreement to have a specified amount credited to the
Participant’s In-Service or Education Account for in-service or education distributions at the date
specified by the Participant. In no event may an in- service or education distribution of an amount
be made before the date that is two years after the first day of the year in which such amount was
credited to the In-Service or Education Account. Notwithstanding the foregoing, if a Participant
incurs a Qualifying Distribution Event prior to the date on which the entire balance in the
In-Service or Education Account has been distributed, then the balance in the In-Service or
Education Account on the date of the Qualifying Distribution Event shall be paid as provided under
Section 7.1 for payments on such Qualifying Distribution Event.

     5.5 Change in Control Event. If the Employer designates in the Adoption Agreement that
distributions are permitted under the Plan upon the occurrence of a Change in Control Event, the
Participant may designate in the Participation Agreement to have the vested balance in the Deferred
Compensation Account paid to the Participant upon a Change in Control Event by the Employer as
provided in Section 7.

     5.6 Unforeseeable Emergency. If the Employer designates in the Adoption Agreement that
distributions are permitted under the Plan upon the occurrence of an

12

 

Unforeseeable Emergency event, a distribution from the Deferred Compensation Account may be made to
a Participant in the event of an Unforeseeable Emergency, subject to the following provisions:

     5.6.1 A Participant may, at any time prior to his Separation from Service for any reason, make
application to the Committee to receive a distribution in a lump sum of all or a portion of the
vested balance in the Deferred Compensation Account (determined as of the date the distribution, if
any, is made under this Section 5.6) because of an Unforeseeable Emergency. A distribution because
of an Unforeseeable Emergency shall not exceed the amount required to satisfy the Unforeseeable
Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of such
distribution, after taking into account the extent to which the Unforeseeable Emergency may be
relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the
Participant’s assets (to the extent the liquidation of such assets would not itself cause severe
financial hardship) or by stopping current deferrals under the Plan pursuant to Section 4.1.9.

     5.6.2 The Participant’s request for a distribution on account of Unforeseeable Emergency must
be made in writing to the Committee. The request must specify the nature of the financial hardship,
the total amount requested to be distributed from the Deferred Compensation Account, and the total
amount of the actual expense incurred or to be incurred on account of the Unforeseeable Emergency.

     5.6.3 If a distribution under this Section 5.6 is approved by the Committee, such distribution
will be made as soon as practicable following the date it is approved. The processing of the
request shall be completed as soon as practicable from the date on which the Committee receives the
properly completed written request for a distribution on account of an Unforeseeable Emergency. If
a Participant’s Separation from Service occurs after a request is approved in accordance with this
Section 5.6.3, but prior to distribution of the full amount approved, the approval of the request
shall be automatically null and void and the benefits which the Participant is entitled to receive
under the Plan shall be distributed in accordance with the applicable distribution provisions of
the Plan.

     5.6.4 The Committee may from time to time adopt additional policies or rules consistent with
the requirements of Section 409A of the Code to govern the manner in which such distributions may
be made so that the Plan may be conveniently administered.

     Section 6. Vesting:

     A Participant shall be fully vested in the portion of his Deferred Compensation

13

 

Account attributable to Participant Deferral Credits, and all income, gains and losses attributable
thereto. A Participant shall become fully vested in the portion of his Deferred Compensation
Account attributable to Employer Credits, and income, gains and losses attributable thereto, in
accordance with the vesting schedule and provisions designated by the Employer in the Adoption
Agreement. If a Participant’s Deferred Compensation Account is not fully vested upon Separation
from Service, the portion of the Deferred Compensation Account that is not fully vested shall
thereupon be forfeited.

     Section 7. Distribution Rules:

     7.1 Payment Options. The Employer shall designate in the Adoption Agreement the payment
options which may be elected by the Participant (lump sum, annual installments, or a combination of
both). Different payment options may be made available for each Qualifying Distribution Event, and
different payment options may be available for different types of Separations from Service, all as
designated in the Adoption Agreement. The Participant shall elect in the Participation Agreement
the method under which the vested balance in the Deferred Compensation Account will be distributed
from among the designated payment options. The Participant may at such tune elect a different
method of payment for each Qualifying Distribution Event as specified in the Adoption Agreement. If
the Participant is permitted by the Employer in the Adoption Agreement to elect different payment
options and does not make a valid election, the vested balance in the Deferred Compensation Account
will be distributed as a lump sum.

14

 

     Notwithstanding the foregoing, if certain Qualifying Distribution Events occur prior to the
date on which the vested balance of a Participant’s Deferred Compensation Account is completely
paid pursuant to this Section 7.1 following the occurrence of certain initial Qualifying
Distribution Events, the following rules apply:

     7.1.1 If the initial Qualifying Distribution Event is a Separation from Service or Disability,
and the Participant subsequently dies, the remaining unpaid vested balance of a Participant’s
Deferred Compensation Account shall be paid as a lump sum.

     7.1.2 If the initial Qualifying Distribution Event is a Change in Control Event, and any
subsequent Qualifying Distribution Event occurs (except an In-Service or Education Distribution
described in Section 2.29(iv)), the remaining unpaid vested balance of a Participant’s Deferred
Compensation Account shall be paid as provided under Section 7.1 for payments on such subsequent
Qualifying Distribution Event.

     7.2
Timing of Payments. Payment shall be made in the manner elected by the Participant and
shall commence as soon as practicable after (but no later than 60 days after) the distribution date
elected for the Qualifying Distribution Event. In the event the Participant fails to make a valid
election of the payment method, the distribution will be made in a single lump sum payment as soon
as practicable after (but no later than 60 days after) the Qualifying Distribution Event. A payment
may be further delayed to the extent permitted in accordance with regulations and guidance under
Section 409A of the Code.

     7.3 Installment Payments. If the Participant elects to receive installment payments upon a
Qualifying Distribution Event, the payment of each annual installment shall be made on the
anniversary of the date of the first installment payment, and the amount of the annual installment
shall be adjusted on such anniversary for credits or debits to the Participant’s account pursuant
to Section 8 of the Plan. Such adjustment shall be made by dividing the balance in the Deferred
Compensation Account on such date by the number of annual installments remaining to be paid
hereunder; provided that the last

15

 

annual installment due under the Plan shall be the entire amount credited to the
Participant’s account on the date of payment.

     7.4 De Minimis Amounts. Notwithstanding any payment election made by the Participant, if the
Employer designates a pre-determined de minimis amount in the Adoption Agreement, the vested
balance in the Deferred Compensation Account of the Participant will be distributed in a single
lump sum payment if at the time of a permitted Qualifying Distribution Event the vested balance
does not exceed such pre-determined de minimis amount; provided, however, that such distribution
will be made only where the Qualifying Distribution Event is a Separation from Service, death,
Disability (if applicable) or Change in Control Event (if applicable). Such payment shall be made
on or before the later of (i) December 31 of the calendar year in which the Qualifying Distribution
Event occurs, or (ii) the date that is 2-1/2 months after the Qualifying Distribution Event occurs.
In addition, the Employer may distribute a Participant’s vested balance at any time if the balance
does not exceed the limit in Section 402(g)(l)(B) of the Code and results in the termination of the
Participant’s entire interest in the Plan as provided under Section 409A of the Code.

     7.5 Subsequent Elections. With the consent of the Committee, a Participant may delay or change
the method of payment of the Deferred Compensation Account subject to the following requirements:

     7.5.1 The new election may not take effect until at least 12 months after the date on which
the new election is made.

     7.5.2 If the new election relates to a payment for a Qualifying Distribution Event other than
the death of the Participant, the Participant becoming Disabled, or an Unforeseeable Emergency, the
new election must provide for the deferral of the payment for a period of at least five years from
the date such payment would otherwise have been made.

16

 

     7.5.3 If the new election relates to a payment from the In-Service or Education Account,
the new election must be made at least 12 months prior to the date of the first scheduled payment
from such account.

     For
purposes of this Section 7.5 and Section 7.6. a payment is each separately identified amount to
which the Participant is entitled under the Plan; provided, that entitlement to a series of
installment payments is treated as the entitlement to a single payment.

     7.6 Acceleration Prohibited. The acceleration of the time or schedule of any payment due
under the Plan is prohibited except as expressly provided in regulations and administrative
guidance promulgated under Section 409A of the Code (such as accelerations for domestic relations
orders and employment taxes). It is not an acceleration of the time or schedule of payment if the
Employer waives or accelerates the vesting requirements applicable to a benefit under the Plan.

     Section 8.
Accounts; Deemed Investment; Adjustments to Account:

     8.1 Accounts. The Committee shall establish a book reserve account, entitled the “Deferred
Compensation Account,” on behalf of each Participant. The Committee shall also establish an
In-Service or Education Account as a part of the Deferred Compensation Account of each Participant,
if applicable. The amount credited to the Deferred Compensation Account shall be adjusted pursuant
to the provisions of Section 8.3.

     8.2 Deemed Investments. The Deferred Compensation Account of a Participant shall be credited
with an investment return determined as if the account were invested in one or more investment
funds made available by the Committee. The Participant shall elect the investment funds in which
his Deferred Compensation Account shall be deemed to be invested. Such election shall be made in
the manner prescribed by

17

 

the Committee and shall take effect upon the entry of the Participant into the Plan. The investment
election of the Participant shall remain in effect until a new election is made by the Participant.
In the event the Participant fails for any reason to make an effective election of the investment
return to be credited to his account, the investment return shall be determined by the Committee.

     8.3 Adjustments to Deferred Compensation Account. With respect to each Participant who
has a Deferred Compensation Account under the Plan, the amount credited to such account shall be
adjusted by the following debits and credits, at the times and in the order stated:

     8.3.1 The Deferred Compensation Account shall be debited each business day with the total
amount of any payments made from such account since the last preceding business day to him or for
his benefit.

     8.3.2 The Deferred Compensation Account shall be credited on each Crediting Date with the
total amount of any Participant Deferral Credits and Employer Credits to such account since the
last preceding Crediting Date.

     8.3.3 The Deferred Compensation Account shall be credited or debited on each day securities
are traded on a national stock exchange with the amount of deemed investment gain or loss resulting
from the performance of the investment funds elected by the Participant in accordance with Section
8.2. The amount of such deemed investment gain or loss shall be determined by the Committee and
such determination shall be final and conclusive upon all concerned.

     Section 9. Administration by Committee:

     9.1 Membership of Committee. If the Committee consists of individuals appointed by the Board,
they will serve at the pleasure of the Board. Any member of the Committee may resign, and his
successor, if any, shall be appointed by the Board.

     9.2 General Administration. The Committee shall be responsible for the operation and
administration of the Plan and for carrying out its-provisions. The Committee shall have the full
authority and discretion to make, amend, interpret, and

18

 

enforce all appropriate rules and regulations for the administration of this Plan and decide or
resolve any and all questions, including interpretations of this Plan, as may arise in connection
with this Plan. Any such action taken by the Committee shall be final and conclusive on any party.
To the extent the Committee has been granted discretionary authority under the Plan, the
Committee’s prior exercise of such authority shall not obligate it to exercise its authority in a
like fashion thereafter. The Committee shall be entitled to rely conclusively upon all tables,
valuations, certificates, opinions and reports furnished by any actuary, accountant, controller,
counsel or other person employed or engaged by the Employer with respect to the Plan. The Committee
may, from time to time, employ agents and delegate to such agents, including employees of the
Employer, such administrative or other duties as it sees fit.

     9.3 Indemnification. To the extent not covered by insurance, the Employer shall
indemnify the Committee, each employee, officer, director, and agent of the Employer, and all
persons formerly serving in such capacities, against any and all liabilities or expenses, including
all legal fees relating thereto, arising in connection with the exercise of their duties and
responsibilities with respect to the Plan, provided however that the Employer shall not indemnify
any person for liabilities or expenses due to that person’s own gross negligence or willful
misconduct

     Section 10. Contractual Liability:

     10.1 Contractual Liability. Unless otherwise elected in the Adoption Agreement, the
Company shall be obligated to make all payments hereunder. This obligation shall constitute a
contractual liability of the Company to the Participants, and such payments shall be made from the
general funds of the Company. The Company

19

 

shall not be required to establish or maintain any special or separate fund, or otherwise to
segregate assets to assure that such payments shall be made, and the Participants shall not have
any interest in any particular assets of the Company by reason of its obligations hereunder. To the
extent that any person acquires a right to receive payment from the Company, such right shall be no
greater than the right of an unsecured creditor of the Company.

     10.2 Trust. The Employer may establish a trust to assist it in meeting its obligations
under the Plan, Any such trust would be treated as a grantor trust for purposes of the Code and all
assets of the trust would be held in the United States. The establishment of such a trust would not
be intended to cause Participants to realize current income on amounts contributed thereto, and the
trust would be so interpreted and administered.

     Section 11. Allocation of Responsibilities:

     The persons responsible for the Plan and the duties and responsibilities allocated to each are
as follows:

     11.1 Board.

	 	(i)	 	To amend the Plan;
	 
	 	(ii)	 	To appoint and remove members of the Committee; and
	 
	 	(iii)	 	To terminate the Plan as permitted in Section 14.
	 
	 	11.2	 	Committee.
	 
	 	(i)	 	To designate Participants;
	 
	 	(ii)	 	To interpret the provisions of the Plan and to determine the rights
of the Participants under the Plan, except to the extent otherwise provided in
Section 16 relating to claims procedure;
	 
	 	(iii)	 	To administer the Plan in accordance with its terms, except to the
extent powers to administer the Plan are specifically delegated to another person
or persons as provided in the Plan;

20

 

	 	(iv)	 	To account for the amount credited to the Deferred Compensation
Account of a Participant; and
	 
	 	(v)	 	To direct the Employer in the payment of benefits.
	 
	 	(vi)	 	To file such reports as may be required with the United States
Department of Labor, the Internal Revenue Service and any other government agency to
which reports may be required to be submitted from time to time; and
	 
	 	(vii)	 	To administer the claims procedure to the extent provided in Section 16.

     Section 12. Benefits Not Assignable; Facility of Payments:

     12.1 Benefits Not Assignable. No portion of any benefit credited or paid under the Plan with
respect to any Participant shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt so to anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge the same shall be void, nor shall any portion of
such benefit be in any manner payable to any assignee, receiver or any one trustee, or be liable
for his debts, contracts, liabilities, engagements or torts. Notwithstanding the foregoing, in the
event that all or any portion of the benefit of a Participant is transferred to the former Spouse
of the Participant incident to a divorce, the Committee shall maintain such amount for the benefit
of the former Spouse until distributed in the manner required by an order of any court having
jurisdiction over the divorce, and the former Spouse shall be entitled to the same rights as the
Participant with respect to such benefit.

     12.2 Plan-Approved Domestic Relations Orders. The Committee shall establish procedures for
determining whether an order directed to the Plan is a Plan- Approved Domestic Relations Order. If
the Committee determines that an order is a Plan-Approved Domestic Relations Order, the Committee
shall cause the payment of

21

 

amounts pursuant to or segregate a separate account as provided by (and to prevent any payment or
act which might be inconsistent with) the Plan-Approved Domestic Relations Order.

     12.3 Payments to Minors and Others. If any individual entitled to receive a payment under
the Plan shall be physically, mentally or legally incapable of receiving or acknowledging receipt
of such payment, the Committee, upon the receipt of satisfactory evidence of his incapacity and
satisfactory evidence that another person or institution is maintaining him and that no guardian or
committee has been appointed for him, may cause any payment otherwise payable to him to be made to
such person or institution so maintaining him. Payment to such person or institution shall be in
full satisfaction of all claims by or through the Participant to the extent of the amount thereof.

     Section 13. Beneficiary:

     The Participant’s beneficiary shall be the person, persons, entity or entities designated by
the Participant on the beneficiary designation form provided by and filed with the Committee or its
designee. If the Participant does not designate a beneficiary, the beneficiary shall be his
Surviving Spouse. If the Participant does not designate a beneficiary and has no Surviving Spouse,
the beneficiary shall be the Participant’s estate. The designation of a beneficiary may be changed
or revoked only by filing a new beneficiary designation form with the Committee or its designee. If
a beneficiary (the “primary beneficiary”) is receiving or is entitled to receive payments under the
Plan and dies before receiving all of the payments due him, the balance to which he is entitled
shall be paid to the contingent beneficiary, if any, named in the Participant’s current beneficiary
designation form. If there is no contingent beneficiary, the balance shall be

22

 

paid to the estate of the primary beneficiary. Any beneficiary may disclaim all or any part of any
benefit to which such beneficiary shall be entitled hereunder by filing a written disclaimer with
the Committee before payment of such benefit is to be made. Such a disclaimer shall be made in a
form satisfactory to the Committee and shall be irrevocable when filed. Any benefit disclaimed
shall be payable from the Plan in the same manner as if the beneficiary who filed the disclaimer
had predeceased the Participant.

     Section 14. Amendment and Termination of Plan:

     The Company may amend any provision of the Plan or terminate the Plan at any time; provided,
that in no event shall such amendment or termination reduce the balance in any Participant’s
Deferred Compensation Account as of the date of such amendment or termination, nor shall any such
amendment affect the terms of the Plan relating to the payment of such Deferred Compensation
Account. Notwithstanding the foregoing, the following special provisions shall apply:

     14.1 Termination in the Discretion of the Employer. Except as otherwise provided in
Sections 14.2, the Company in its discretion may terminate the Plan and distribute benefits to
Participants subject to the following requirements and any others specified under Section 409A of
the Code:

     14.1.1 All arrangements sponsored by the Employer that would be aggregated with the Plan under
Section 1.409A-l(c) of the Treasury Regulations are terminated.

     14.1.2 No payments other than payments that would be payable under the terms of the Plan if
the termination had not occurred are made within 12 months of the termination date.

     14.1.3 All benefits under the Plan are paid within 24 months of the termination date.

     14.1.4 The Employer does not adopt a new arrangement that would be aggregated with the Plan
under Section 1.409A-l(c) of the Treasury Regulations providing for the

23

 

deferral of compensation at any time within 3 years following the date of termination of the Plan.

     14.1.5 The termination does not occur proximate to a downturn in the financial health of the
Employer.

     14.2 Termination Upon Change in Control Event. If the Company terminates the Plan within
thirty days preceding or twelve months following a Change in Control Event, the Deferred
Compensation Account of each Participant shall become fully vested and payable to the Participant
in a lump sum within twelve months following the date of termination, subject to the requirements
of Section 409A of the Code.

     Section 15. Communication to Participants:

     The Employer shall make a copy of the Plan available for inspection by Participants and their
beneficiaries during reasonable hours at the principal office of the Employer.

     Section 16. Claims Procedure:

     The following claims procedure shall apply with respect to the Plan:

     16.1 Filing of a Claim for Benefits. If a Participant or Beneficiary (the “claimant”) believes
that he is entitled to benefits under the Plan which are not being paid to him or which are not
being accrued for his benefit, he shall file a written claim therefore with the Committee.

     16.2 Notification to Claimant of Decision. Within 90 days after receipt of a claim by the
Committee (or within 180 days if special circumstances require an extension of time), the Committee
shall notify the claimant of the decision with regard to the claim. In the event of such special
circumstances requiring an extension of time, there shall be furnished to the claimant prior to
expiration of the initial 90-day period written notice of

24

 

the extension, which notice shall set forth the special circumstances and the date by which the
decision shall be furnished. If such claim shall be wholly or partially denied, notice thereof
shall be in writing and worded in a manner calculated to be understood by the claimant, and shall
set forth: (i) the specific reason or reasons for the denial; (ii) specific reference to pertinent
provisions of the Plan on which the denial is based; (iii) a description of any additional material
or information necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and (iv) an explanation of the procedure for review of the
denial and the time limits applicable to such procedures, including a statement of the claimant’s
right to bring a civil action under ERISA following an adverse benefit determination on review.
Notwithstanding the foregoing, if the claim relates to a disability determination, the Committee
shall notify the claimant of the decision within 45 days (which may be extended for an additional
30 days if required by special circumstances).

     16.3 Procedure for Review. Within 60 days following receipt by the claimant of notice denying
his claim, in whole or in part, or, if such notice shall not be given, within 60 days following the
latest date on which such notice could have been timely given, the claimant may appeal denial of
the claim by filing a written application for review with the Committee. Following such request for
review, the Committee shall fully and fairly review the decision denying the claim. Prior to the
decision of the Committee, the claimant shall be given an opportunity to review pertinent documents
and to submit issues and comments in writing.

     16.4 Decision on Review. The decision on review of a claim denied in whole or in part by the
Committee shall be made in the following manner:

25

 

     16.4.1 Within 60 days following receipt by the Committee of the request for review (or within
120 days if special circumstances require an extension of time), the Committee shall notify the
claimant in writing of its decision with regard to the claim. In the event of such special
circumstances requiring an extension of time, written notice of the extension shall be furnished to
the claimant prior to the commencement of the extension. Notwithstanding the foregoing, if the
claim relates to a disability determination, the Committee shall notify the claimant of the
decision within 45 days (which may be extended for an additional 45 days if required by special
circumstances).

     16.4.2 With respect to a claim that is denied in whole or in part, the decision on review
shall set forth specific reasons for the decision, shall be written in a manner calculated to be
understood by the claimant, and shall set forth:

	 	(i)	 	the specific reason
or reasons for the adverse determination;
	 
	 	(ii)	 	specific reference to pertinent Plan
provisions on which the adverse determination is based;
	 
	 	(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 to the
claimant’s claim for benefits; 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, as well as a statement
of the claimant’s right to bring an action under ERISA section
502(a).

     16.4.3 The decision of the Committee shall be final and conclusive.

     16.5 Action by Authorized Representative of Claimant. All actions set forth in this
Section 16 to be taken by the claimant may likewise be taken by a representative of the claimant
duly authorized by him to act in his behalf on such matters. The Committee may require such
evidence as either may reasonably deem necessary or advisable of the authority to act of any such
representative.

     Section 17.
Miscellaneous Provisions:

     17.1 Set off. Notwithstanding any other provision of this Plan, the Employer may reduce
the amount of any payment otherwise payable to or on behalf of a Participant

26

 

hereunder (net of any required withholdings) at the time payment is due by the amount of any loan,
cash advance, extension of credit or other obligation of the Participant to the Employer that is
then due and payable, and the Participant shall be deemed to have consented to such reduction. In
addition, the Employer may at any time offset a Participant’s Deferral Compensation Account by an
amount up to $5,000 to collect any such amount in accordance with the requirements of Section 409A
of the Code.

     17.2 Notices. Each Participant who is not in Service and each Beneficiary shall be responsible
for furnishing the Committee or its designee with his current address for the mailing of notices
and benefit payments. Any notice required or permitted to be given to such Participant or
Beneficiary shall be deemed given if directed to such address and mailed by regular United States
mail, first class, postage prepaid. If any check mailed to such address is returned as
undeliverable to the addressee, mailing of checks will be suspended until the Participant or
Beneficiary furnishes the proper address. This provision shall not be construed as requiring the
mailing of any notice or notification otherwise permitted to be given by posting or by other
publication.

     17.3 Lost Distributees. A benefit shall be deemed forfeited if the Committee is unable to
locate the Participant or Beneficiary to whom payment is due on or before the fifth anniversary of
the date payment is to be made or commence; provided, that the deemed investment rate of return
pursuant to Section 8.2 shall cease to be applied to the Participant’s account following the first
anniversary of such date; provided further, however, that such benefit shall be reinstated if a
valid claim is made by or on behalf of the Participant or Beneficiary for all or part of the
forfeited benefit.

27

 

     17.4 Reliance on Data. The Employer and the Committee shall have the right to rely on any data
provided by the Participant or by any Beneficiary. Representations of such data shall be binding
upon any party seeking to claim a benefit through a Participant, and the Employer and the Committee
shall have no obligation to inquire into the accuracy of any representation made at any time by a
Participant or Beneficiary.

     17.5 Receipt and Release for Payments. Subject to the provisions of Section 17.1, any payment
made from the Plan to or with respect to any Participant or Beneficiary, or pursuant to a
disclaimer by a Beneficiary, shall, to the extent thereof, be in full satisfaction of all claims
hereunder against the Plan and the Employer with respect to the Plan. The recipient of any payment
from the Plan may be required by the Committee, as a condition precedent to such payment, to
execute a receipt and release with respect thereto in such form as shall be acceptable to the
Committee.

     17.6 Headings. The headings and subheadings of the Plan have been inserted for convenience of
reference and are to be ignored in any construction of the provisions hereof.

     17.7
Continuation of Employment. The establishment of the Plan shall not be construed as
conferring any legal or other rights upon any Employee or any persons for continuation of
employment, nor shall it interfere with the right of the Employer to discharge any Employee or to
deal with him without regard to the effect thereof under the Plan.

     17.8 Merger or Consolidation; Assumption of Plan. No Employer shall consolidate or merge into
or with another corporation or entity, or transfer all or substantially all of its assets to
another corporation, partnership, trust or other entity (a

28

 

“Successor Entity”) unless such Successor Entity shall assume the rights, obligations and
liabilities of the Employer under the Plan and upon such assumption, the Successor Entity shall
become obligated to perform the terms and conditions of the Plan. Nothing herein shall prohibit the
assumption of the obligations and liabilities of the Employer under the Plan by any Successor
Entity.

     17.9 Construction. The Employer shall designate in the Adoption Agreement the state according
to whose laws the provisions of the Plan shall be construed and enforced, except to the extent that
such laws are superseded by ERISA and the applicable requirements of the Code.

     17.10 Taxes. The Employer or other payor may withhold a benefit payment under the Plan or a
Participant’s wages, or the Employer may reduce a Participant’s Account balance, in order to meet
any federal, state, or local tax withholding obligations with respect to Plan benefits, as
permitted under Section 409A of the Code. The Employer or other payor shall report Plan payments
and other Plan-related information to the appropriate governmental agencies as required under
applicable laws.

     Section 18. Transition Rules: 

This Section 18 does not apply to plans newly
established on or after January 1, 2008.

     18.1 2005 Election Termination. Notwithstanding Section 4.1.4, at any time during 2005, a
Participant may terminate a Participation Agreement, or modify a Participation Agreement to reduce
the amount of Compensation subject to the deferral election, so long as the Compensation subject to
the terminated or modified Participation Agreement is includible in the income of the Participant
in 2005 or, if later, in the taxable year in which the amounts are earned and vested.

29

 

     18.2 2005 Deferral Election. The requirements of Section 4.1.2 relating to the timing of the
Participation Agreement shall not apply to any deferral elections made on or before March 15, 2005,
provided that (a) the amounts to which the deferral election relate have not been paid or become
payable at the time of the election, (b) the Plan was in existence on or before December 31, 2004,
(c) the election to defer compensation is made in accordance with the terms of the Plan as in
effect on December 31, 2005 (other than a requirement to make a deferral election after March 15,
2005), and (d) the Plan is otherwise operated in accordance with the requirements of Section 409A
of the Code.

     18.3 2005 Termination of Participation; Distribution. Notwithstanding anything in this Plan to
the contrary, at any time during 2005, a Participant may terminate his or her participation in the
Plan and receive a distribution of his Deferred Compensation Account balance on account of that
termination, so long as the full amount of such distribution is includible in the Participant’s
income in 2005 or, if later, in the taxable year of the Participant in which the amount is earned
and vested.

     18.4 Payment Elections. Notwithstanding the provisions of Sections 7.1 or 7.5 of the Plan, a
Participant may elect on or before December 31, 2007, the time or form of payment of amounts
subject to Section 409A of the Code provided that such election applies only to amounts that would
not otherwise be payable in the year of the election and does not cause an amount to paid in the
year of the election that would not otherwise be payable in such year.

30

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}]]