Document:

Exhibit
10.16

 

ONEBEACON
PERFORMANCE UNIT PLAN

 

1.  Purpose of the Plan.  The purpose of the Plan is to advance the
interests of the Company and its members by providing incentives in the form of
Performance Units to certain selected executives and key employees of the
Company and its Subsidiaries.

 

2.  Definitions.  The following capitalized terms used in the
Plan have the respective meanings set forth in this Section.

 

(a)  Actual Units.  The number of Target Units multiplied by the
applicable Performance Percentage.

 

(b)  Actual Value.  The value of each Actual Unit determined by
multiplying the Initial Value by the sum of (i) 100% and (ii) the aggregate
standard pre-tax insurance return-on-equity of the Company and its subsidiaries
over the Award Period, as determined in good faith by the Committee.  By way of example, if the standard pre-tax
insurance return-on-equity of the Company were to be 22% for each year in a
three-year Award Period, the aggregate standard pre-tax insurance
return-on-equity of the Company and its subsidiaries over the Award Period
would be 81.6% (i.e., 22% compounded annually in each of the three years
comprising the Award Period) and the Actual Value of each Actual Unit would be
$181.60 (i.e., $100 x 181.6%).

 

(c)  Adverse Change in the Plan.  The occurrence of any of the following
events:

 

(i)  termination of the Plan;

 

(ii)  amendment of the Plan that materially
diminishes the value of Awards that may be granted under the Plan, either to
individual Participants or in the aggregate, unless there is substituted
concurrently a plan or arrangement providing for the grant of long-term
incentive awards of comparable value to individual Participants in the Plan or
in the aggregate, as the case may be; or

 

(iii)  in respect of any holder of an Award, a
material diminution in his rights held under an Award (except as may occur
under the terms of the Award as originally granted) unless there is substituted
concurrently a long-term incentive award with a value at least comparable to
the loss in value attributable to such diminution in rights.

 

(d)  Affiliate.  In respect of an entity or person, any entity under the control
of, in control of, or under common control with, such entity or person.

 

(e)  Award.  An award of Performance Units granted pursuant to the Plan.

 

(f)  Award Agreement.  The agreement between the Participant and
the Company specifying the applicable terms of an Award.

 

(g)  Award Period.  A period in respect of any Award, commencing
as of the beginning of the fiscal year of the Company in which such Award is
made.  An Award Period may contain any
number of Performance Periods.

 

(h)  Board.  The Board of Managers of the Company.

 

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(i)  Change in Control.  The occurrence of any of the following
events:

 

(i)  Any person or group (within the meaning of
Section 13(d) and 14(d)(2) of the Exchange Act), other than John J. Byrne,
Berkshire Hathaway, Inc. or one of its wholly owned subsidiaries, an
underwriter temporarily holding Parent Shares in connection with a public
issuance thereof or an employee benefit plan of Parent or its Affiliates,
becomes the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of thirty-five percent (35%) or more of the then outstanding
Parent Shares;

 

(ii)  the Continuing Directors cease for any
reason to constitute a majority of the Board of Directors of Parent; or

 

(iii)  Parent or the Company disposes of the
business for which the Participant’s services are principally performed pursuant
to a sale or other disposition of all or substantially all of that business or
assets of Parent or the Company relating to that business (including stock of a
subsidiary of Parent or the Company).

 

(j)  Code.  The Internal Revenue Code of 1986, as amended, or any successor
thereto.

 

(k)  Committee.  The Human Resources Committee of the Board.

 

(l)  Company.  OneBeacon Insurance Group LLC.

 

(m)  Constructive Termination.  A termination of employment with the Company
and its Affiliates at the initiative of the Participant that the Participant
declares, by prior written notice delivered to the Secretary of the Company, to
be a Constructive Termination by the Company or an Affiliate and which follows
(i) a material decrease in his salary or (ii) a material diminution in the
authority, duties or responsibilities of his position as a result of which the
Participant determines in good faith that he cannot continue to carry out his
job in substantially the same manner as it was intended to be carried out immediately
before such diminution.  Notwithstanding
anything herein to the contrary, a Constructive Termination shall not occur
until and unless 30 days have elapsed from the date the Company receives such
written notice from the Participant and, during that period, the Company fails
to cure, or cause to be cured, the circumstance serving as the basis on which
the declaration of Constructive Termination is given.

 

(n)  Continuing Director.  A member of the Board of Directors of Parent
(i) who is not an employee of Parent or its subsidiaries or of a holder of, or
an employee or an Affiliate of an entity or group that holds, thirty-five (35%)
or more of the Parent Shares and (ii) who either was a member of the Board of
Directors of Parent on December 31, 2002, or who subsequently became a
director of the Parent and whose election, or nomination for election, by
Parent’s shareholders was approved by a vote of a majority of the Continuing
Directors then on Board of Directors of Parent (which term, for purposes of this
definition, shall mean the whole Board of Directors of Parent and not any
committee thereof).

 

(o)  Earned Payment.  With respect to each Award, the amount
determined pursuant to Section 5(c) or Section 7, as applicable.

 

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(p)  Employee.  Any employee of the Company or of any Subsidiary.

 

(q)  Exchange Act.  The Securities Exchange Act of 1934, as
amended.

 

(r)  Initial Value.  The initial value of each Actual Unit, which
shall be $100 unless otherwise specified in the applicable Award Agreement.

 

(s)  Officer.  An Employee who is considered an officer of Parent under Rule
16a-1(f) (or any successor rule) promulgated under the Exchange Act.

 

(t)  Parent.  White Mountains Insurance Group, Ltd. or any successor thereto.

 

(u)  Parent Shares.  Common Shares, par value of $1.00, of
Parent.

 

(v)  Participant.  An Employee who is selected by the Committee
pursuant to Section 4 to participate in the Plan.

 

(w)  Performance Goal(s).  The applicable performance measure(s)
selected by the Committee to determine the applicable Performance Percentage.

 

(x)  Performance Percentage.  The percentage of Target Units earned by a
Participant, which shall be from 0% to 200%, based upon the level of
fulfillment of the Performance Goals(s) established with respect to an Award
for an Award Period.  The method of
determining the applicable Performance Percentage shall be determined by the
Committee and shall be specified in the applicable Award Agreement.

 

(y)  Performance Period.  The calendar year or any other period that
the Committee, in its sole discretion, may determine, provided that each
Performance Period must commence on or after the first day of the Award Period
and shall end no later than the last day of the Award Period.

 

(z)  Performance Units.  Notional units which represent the right to
receive cash if specified Performance Goals established by the Committee are
satisfied with respect to an Award.

 

(aa)  Plan.  This OneBeacon Performance Unit Plan, as amended from time to
time.

 

(bb)  Qualifying Event.  With respect to a Participant, the
occurrence of either (i) a Termination Without Cause; (ii) a Constructive
Termination; or (iii) an Adverse Change in the Plan.

 

(cc)  Subsidiary.  A subsidiary of the Company, as defined in Section 242(f) of
the Code (or any successor section thereto), or as determined by the
Committee, that in either case adopts the Plan in accordance with
Section 12.

 

(dd)  Target Units.  The number of Performance Units initially
awarded to a Participant on the date of grant with respect to an Award Period.

 

(ee)  Termination Without Cause.  A termination of the Participant’s
employment with the Company or a subsidiary by the Company or the subsidiary
other than (i) due to the Participant’s death or total permanent disability or
(ii) for Cause.   A transfer of a
Participant’s employment to an Affiliate of the Company shall not, by itself,
be considered

 

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a
Termination without Cause hereunder. 
For this purpose, “Cause” shall mean (a) an act or omission by the
Participant that constitutes a felony or any crime involving moral turpitude;
or (b) wilful gross negligence or wilful gross misconduct by the Participant in
connection with his employment by the Company or by a subsidiary which causes,
or is likely to cause, material loss or damage to the Company.  Notwithstanding anything herein to the
contrary, a termination of a Participant’s employment with the Company or one
of its subsidiaries due solely to the consummation of a corporate transaction
described in clause (iii) of the definition of Change in Control shall not be
deemed to be a “Termination Without Cause” if the purchaser formally assumes
the Company’s obligations under this Plan or places the Participant in a
similar or like plan with no diminution of the value of the awards granted.

 

3.  Administration.  The Plan shall be administered by the
Committee or such other persons or entities designated by the Board.  The Committee may delegate its duties and
powers in whole or in part to any subcommittee thereof or to the Board of
Directors of any Subsidiary.  All
references to the Committee hereafter shall be deemed to be references to the
Committee and/or the applicable other persons, entities or subcommittee(s) to
whom administrative duties and/or powers hereunder have been so delegated.  The Committee shall have the authority to
select the Employees who shall be Participants, to determine the size and terms
of an Award (subject to the limitations imposed on Awards in Section 5),
to modify the terms of any Award that has been granted, to determine the time
when Awards will be made, to determine the Award Periods and Performance
Periods applicable to an Award to determine the Performance Percentages applicable
to an Award,  to determine the terms of
a Participant’s Award Agreement (which need not be identical or uniform), to
establish Performance Goals in respect of such Performance Periods, to certify
whether such Performance Goals were attained and to make such other
determinations that are not prohibited by this Plan.  The Committee is authorized to interpret the Plan, to establish,
amend and rescind any rules and regulations relating to the Plan, and to make
any other determinations that it deems necessary or desirable.  Any decision of the Committee in the
interpretation and administration of the Plan, as described herein, shall lie
within its sole and absolute discretion and shall be final, conclusive and binding
on all parties concerned. Determinations made by the Committee under the Plan
need not be uniform and may be made selectively among Participants, regardless
of whether such Participants are similarly situated.  The Committee shall have the right to deduct from any payment
made under the Plan any federal, state, local or foreign income or other taxes
required by law to be withheld with respect to such payment.

 

4.  Eligibility and Participation.  The Committee shall designate those
Employees who shall be Participants. 
Participants shall be selected from among the Employees who are in a
position to have a material impact on the results of the operations of the
Company or of one or more of its subsidiaries. 
The designation of the Participants may be made individually or by
groups or classifications of Employees, as the Committee deems
appropriate.  Employees shall not have a
right to be designated as Participants and the designation of an Employee as a
Participant shall not obligate the Committee to continue such Employee as a
Participant in subsequent periods.

 

5.  Awards.

 

(a)  Grant.  In each Award Agreement, the Committee shall specify (i) the
number of Target Units, (ii) the Performance Goal(s) to be attained within
specified Performance Periods and/or Award Period, (iii) the Award Period, and
(iv) the method for determining the applicable Performance Percentage based
upon the level of achievement of the applicable Performance Goal(s).

 

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(b)  Performance Goals.  The performance goals for any Award shall be
based upon one or more of the following criteria:  (i) consolidated earnings before or after taxes (including
earnings before interest, taxes, depreciation and amortization); (ii) net
income; (iii) operating income; (iv) book value; (v) return on stockholders’
equity; (vi) expense management; (vii) return on investment; (viii)
improvements in capital structure; (ix) combined ratios (GAAP or SAP); (x)
operating ratios; (xi) profitability of an identifiable business unit or
product; (xii) maintenance or improvement of profit margins; (xiii) market
share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow; (xvii) working
capital; (xviii) return on assets; (xix) customer satisfaction; (xx) employee
satisfaction or (xxi) any other performance measure selected by the Committee
in its sole discretion.  The foregoing
criteria, as applicable, may relate to the Company, one or more of its
Affiliates, one or more of its divisions, units, partnerships, joint venturers,
minority investments, product lines or products, or to any combination of the
foregoing, and may be applied on an absolute basis and/or be relative to one or
more peer group companies or indices, or any combination thereof, all as the
Committee shall determine.  In addition,
the Performance Goals may be calculated without regard to extraordinary items.

 

(c)  Payment.  As soon as practicable after the end of the Award Period or such
earlier date as the Committee in its sole discretion may designate, the
Committee shall determine and certify to the Board (i) whether the applicable
Performance Goal(s) have been attained in whole or in part with respect to a
given Participant’s Award and (ii) the Performance Percentage applicable to a
given Participant’s Award.  At the end
of the Award Period, the Committee shall ascertain the Actual Value and the
number of Actual Units.  Unless
otherwise determined by the Committee, a Participant’s Earned Payment with
respect to an Award shall be equal to the Actual Value multiplied by the number
of Actual Units.  A Participant’s Earned
Payment shall be settled through a cash payment to the Participant.  Payment of any Earned Payment shall be made
by the Company as promptly as practicable or deferred to such other time or
times as the Committee shall determine.

 

6.  Termination of Employment.   Except as set forth in Section 7 or
otherwise set forth in an Award Agreement, a Participant shall immediately
forfeit all outstanding Awards upon any termination of employment prior to the
end of the applicable Award Period.  The
Committee may, at its discretion, provide that if a Participant dies, retires,
is assigned to a different position, or is granted a leave of absence, or if
the Participant’s employment is otherwise terminated, during an Award Period,
then all or a portion of the Participant’s Award, as determined by the
Committee, may be paid to the Participant (or his or her beneficiary) after the
end of the Performance Period in which the such event occurs.

 

7.  Change in Control.

 

(a)  If a Qualifying Event occurs with respect to
a Participant after a Change in Control, then each Award held by such
Participant that was granted prior to the Change in Control shall be canceled
and such Participant shall be entitled to receive in respect of each such
canceled Award a payment equal to the product of (i) the Applicable Target
Units, (ii) the Applicable Performance Percentage and (iii) the Applicable
Actual Value.  For this purpose, (A) the
“Applicable Target Units” is equal to the number of Target Units for each
canceled Award multiplied by a fraction, the numerator of which is the number
of full months that has elapsed since the first day of the applicable Award
Period to the date of the applicable Qualifying Event and the denominator of
which is the total number of months in the Award Period, (B) the “Applicable
Performance Percentage” is equal to 100% and (C) the “Applicable Actual Value”
is equal to the greater of the Actual Value

 

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determined
as of the last day of the calendar quarter ending prior to the date of the
applicable Qualifying Event or the Actual Value determined by the Board in
connection with the Change in Control. 
Payment of any amount in respect of an Award as described above in
this Section 7(a) shall be made as promptly as possible after the
occurrence of the Qualifying Event.

 

(b)  Notwithstanding anything herein to the
contrary, if, following a Change in Control, a Participant’s employment remains
continuous through the end of an Award Period, then the Participant shall be
paid with respect to those Awards for which he would have been paid had there
not been a Change in Control and the Earned Payment shall be determined in
accordance with Section 5(c).

 

8.  Amendments or Termination.  The Board may amend, alter or discontinue
the Plan, but no amendment, alteration or discontinuation shall be made which
would impair any of the accrued rights or obligations under any Award
theretofore granted to a Participant without such Participant’s consent;
provided, however, that the Committee may amend the Plan in such manner as it
deems necessary to permit the granting of Awards meeting the requirements of
the Code or other applicable laws.

 

9.  No Right to Employment.  Neither the Plan nor any action taken
hereunder shall be construed as giving any Participant or other person any
right to continue to be employed by, or to continue to perform services for,
the Company or any subsidiary, and the right to terminate the employment of or
performance of services by any Participant at any time and for any reason is
specifically reserved to the Company and its subsidiaries.

 

10.  Nontransferability of Awards.  An Award shall not be transferable or
assignable by the Participant otherwise than by will or by the laws of descent
and distribution.

 

11.  Reduction of Awards.  Notwithstanding anything to the contrary
herein, the Committee, in its sole discretion (but subject to applicable law),
may reduce any amounts payable to any Participant hereunder in order to satisfy
any liabilities owed to the Company or any of its Subsidiaries by the
Participant.

 

12.  Participation of Subsidiaries.  If a subsidiary wishes to participate in the
Plan and its participation shall have been approved by the Board, the Board of
Directors of the Subsidiary shall adopt a resolution in form and substance
satisfactory to the Committee authorizing participation by the subsidiary in
the Plan.  A Subsidiary that adopts the
Plan in accordance with the Section shall be permitted to rename the Plan
under the name of such Subsidiary.  A
Subsidiary may cease to participate in the Plan at any time by action of the
Board or by action of the Board of Directors of such Subsidiary, which latter
action shall be effective not earlier than the date of delivery to the Secretary
of the Company of a certified copy of a resolution of the Subsidiary’s Board of
Directors taking such action. 
Termination of participation in the Plan shall not relieve a Subsidiary
of any obligations theretofore incurred by it under the Plan.  The Board in its discretion may waive
compliance with any provisions in this section.

 

13.  Claims Procedure.  In general, any claim for benefits under the
Plan shall be filed by a Participant or beneficiary (“claimant”) on the form
prescribed for such purpose with the Committee.  If a claim for benefits under the Plan is wholly or partially
denied, notice of the decision shall be furnished to the claimant by the
Committee within a reasonable period of time after receipt of the claim by the
Committee.  The claims procedure shall
be as follows:

 

6

 

(a)  Any claimant who is denied a claim for
benefits shall be furnished written notice setting forth:

 

(i)  the specific reason or reasons for the
denial;

 

(ii)  specific reference to the pertinent
provision of the Plan upon which the denial is based;

 

(iii)  a description of any additional material or
information necessary for the claimant to perfect the claim; and

 

(iv)  an explanation of the claim review procedure
under the Plan.

 

(b)  In order that a claimant may appeal a denial
of a claim, the claimant’s duly authorized representative may:

 

(i)  request a review by written application to
the Committee, or its designate, no later than sixty (60) days after receipt by
the claimant of written notification of denial of a claim;

 

(ii)  review pertinent documents; and

 

(iii)  submit issues and comments in writing.

 

(c)  A decision on review of a denied claim shall
be made not later than sixty (60) days after receipt of a request for review,
unless special circumstances require an extension of time for processing, in
which case a decision shall be rendered within a reasonable period of time, but
not later than one hundred and twenty (120) days after receipt of a request for
review.  The decision on a review shall
be in writing and shall include the specific reason(s) for the decision and the
specific reference(s) to the pertinent provisions of the Plan on which the
decision is based.

 

14.  Miscellaneous Provisions.  The Company is the sponsor and legal obligor
under the Plan and shall make all payments hereunder, other than any payments
to be made by any of the Subsidiaries, as described below (in which case such
payments shall be made by such Subsidiary, as appropriate).  If a Subsidiary adopts the Plan in
accordance with Section 12, the Subsidiary shall be responsible for all
payments made under the Plan for Awards granted by the Board of Directors of
the Subsidiary including expenses involved in administering the Plan at the
Subsidiary level.  The Plan is
unfunded.  The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to ensure the payment of any amounts under the Plan, and
the Participant’s rights to any payment hereunder shall be no greater than the
rights of the Company’s (or the applicable Subsidiary’s) unsecured
creditors.  All references to Sections
herein shall be deemed to be references to the specified sections of this Plan.

 

15.  Taxes.  The Company and its Subsidiaries shall have the right to deduct
from any payment made under the Plan 
any federal, state or local income, payroll or other taxes required by
law to be withheld with respect to such payment.

 

16.  Choice of Law.  The Plan shall be governed by and construed
in accordance with the laws of the Delaware applicable to contracts made and to
be performed in the State of New York.

 

7

 

17.  Designation of Beneficiary by
Participant.  A Participant may name
a beneficiary to receive any payment to which he may be entitled in respect of
Performance Units or  in the event of
his death, on a form to be provided by the Committee.  A Participant may change his beneficiary from time to time in the
same manner.  If no designated
beneficiary is living on the date on which any amount becomes payable to a
Participant’s executors or administrators, the term “beneficiary” as used in
the Plan shall include such person or persons.

 

18.  Effectiveness of the Plan.  The Plan shall be effective as of
February 12, 2003.

 

8Exhibit 10.18

 

ONEBEACON

DEFERRED COMPENSATION PLAN

 

ARTICLE I

 

Purpose

 

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

 

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

 

ARTICLE II

 

Definitions

 

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

 

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

 

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

 

SECTION 2.03.                                           “Beneficiary”
means the person or persons designated pursuant to Article 5 to receive a
benefit pursuant to Section 4.04(a) in the event of a Participant’s death
before his benefit under this Plan has been paid.

 

SECTION 2.04.              “Board” means the Board of Directors of the
Company.

 

SECTION 2.05.              “Change in Control” means a “Change in Control”
as defined in the White Mountains Long-Term Incentive Plan.

 

SECTION 2.06.                                           “Committee”
means the OneBeacon Benefits Committee; provided  that any
determination involving a Participant who is a member of the Committee shall be
made by the Board.

 

SECTION 2.07.                                           “Company”
means OneBeacon Insurance Company and any successor thereto.

 

SECTION 2.08.                                           “Compensation”
means, for any Plan Year, (i) the base salary to be paid to an eligible
employee for such Plan Year, the annual bonus, if any, to be

 

 

paid to an eligible employee in such Plan Year, the long-term incentive
compensation, if any, to be paid to an eligible employee in such Plan Year or
any other compensation to be paid to an eligible employee during that Plan Year
that is designated as “Compensation” hereunder by the Administrator or (ii) any
fee or other compensation to be paid to an eligible consultant by the Company
or its subsidiaries for such Plan Year that it is designated as “Compensation”
hereunder by the Administrator.

 

SECTION 2.09.                                           “Fiscal
Year” means the calendar year.

 

SECTION 2.10.                                           “Fund”
means any investment fund selected by the Administrator to be offered under the
Plan.

 

SECTION 2.11.                                           “Key
Employee” means any executive employee, other overtime-exempt employee or
consultant of the Company or its participating subsidiaries who the
Administrator, in its sole discretion, decides is important to the ongoing
business objectives of the Company.

 

SECTION 2.12.                                           “Market
Price” on any day means (i) if Shares are listed on the New York Stock
Exchange, the average of the high and low sales price, or, in case no such sale
takes place on such day, the average of the last quoted closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if Shares are not listed or admitted
to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which Shares are listed or
admitted to trading or, if Shares are not listed or admitted to trading on any
national securities exchange, the last quoted sale price or, if not so quoted,
the average of the high bid and the low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or, if on any
such date Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by one or more professional market
makers making a market in Shares and (ii) if Shares are not publicly held or so
listed or publicly traded, the fully diluted book value per Share as determined
by the Administrator in accordance with United States generally accepted
accounting principles.

 

SECTION 2.13.                                           “Participant”
means a Key Employee who has deferred Compensation pursuant to this Plan and
who has an Account to which amounts stand credited.

 

SECTION 2.14.                                           “Payment
Period” means the month and year designated pursuant to Section 3.04
for payment of some portion or all of a Participant’s Account.

 

SECTION 2.15.                                           “Plan”
means this “OneBeacon Deferred Compensation Plan” as set forth herein and as
amended from time to time.

 

SECTION 2.16.                                           “Plan
Year” means the calendar year.

 

SECTION 2.17.                                           “Share(s)”
means a common share(s) of White Mountains Insurance Group, Ltd., par value
$1.00.

 

SECTION 2.18.                                           “Termination
of Service” means, as applicable, cessation for any reason of a Key
Employee’s (i) service as an employee of the Company and its

 

2

 

subsidiaries or (ii) status as a consultant to the Company and its
subsidiaries as determined by the Committee in its sole discretion.

 

SECTION 2.19.                                           “Valuation
Date” means the date that the Administrator makes a valuation of an
Account.  Unless otherwise provided by
the Administrator, each deemed investment alternative within each Account shall
be valued as of each day on which a value for such deemed investment alternative
reasonably is available to the Administrator.

 

ARTICLE III

 

Eligibility
and Deferrals

 

SECTION 3.01.                                           Eligibility.  Each Key Employee designated by the
Administrator as eligible to participate in the Plan shall be eligible to be a
Participant hereunder.  The
Administrator has the sole and complete discretion to determine which Key
Employees are eligible to participate on a Plan Year by Plan Year basis.  No Key Employee shall have a right to be
designated as a Participant and the designation of a Key Employee as a
Participant in one Plan Year shall not obligate the Administrator to continue
such Key Employee as a Participant in subsequent Plan Years.

 

SECTION 3.02.                                           Accounts.  The Administrator shall establish an Account
for each Key Employee who elects to defer Compensation pursuant to
Section 3.03. Amounts deferred pursuant to Section 3.03, and the
value thereof determined pursuant to Section 3.05, shall be credited to
such Account.

 

SECTION 3.03.                                           Deferral
of Compensation.  A Key Employee may
elect to reduce the Compensation otherwise payable to him during a Plan Year
and to have such amount credited to his Account.  A deferral direction pursuant to this Section 3.03 shall be
made in writing at such time and in such manner as the Administrator shall prescribe
but must in any event be made before the first day of the Plan Year in which
such Compensation would otherwise be paid. 
A deferral election shall apply only with respect to the Plan Year for
which it is made and shall not continue in effect for any subsequent Plan
Year.  A deferral election, once
executed and filed with the Administrator, cannot be revoked after the date
specified by the Administrator. 
Notwithstanding the foregoing, (i) any Key Employee who is first
hired by the Company or a participating subsidiary during a Plan Year may elect
within 30 days after becoming a Key Employee to defer any unpaid portion
of his Compensation in respect of such Plan Year and (ii) Key Employees
may elect to defer any unpaid Compensation for the Plan Year in which this Plan
is first adopted by the Board.

 

SECTION 3.04.                                           Payment
Period.  (a)  Designation.  Each deferral direction given pursuant to
Section 3.03 shall include designation of the Payment Period for the value
of the amount deferred, subject to the limitation set forth in
Section 3.04(c).

 

(b)                                 Adjustment.  The Committee may permit a Participant to
irrevocably elect, no later than one year before the first day of the Payment
Period initially designated pursuant to Section 3.04(a), to adjust such
Payment Period, subject to the limitation set forth in Section 3.04(c).

 

3

 

(c)                                  Limitation.  A Participant may select a Payment Period
(or adjusted Payment Period) that begins no sooner than the first anniversary
of the date of such election.

 

(d)                                 Methods
of Payments.  A Participant may
elect, at the time a Payment Period is selected, to receive the amount which
will become payable as of such Payment Period in no more than 10 annual
installments.  Except as may be elected
pursuant to this Section 3.04(d), all amounts becoming payable under this
Plan shall be paid in a single payment.

 

(e)                                  Irrevocability.  Except as provided in Section 3.04(b)
or as set forth in Article IV, a designation of a Payment Period and an election
of installment payments shall be irrevocable; provided, however,
that payment may be made at a different time as provided in Section 4.04.

 

SECTION 3.05.                                           Value
of Participants’ Accounts. 
Compensation deferrals shall be allocated to each Participant’s Account
on the first business day following the date such Compensation is withheld from
the Participant’s Compensation and shall be deemed invested pursuant to this
Section 3.05, as soon as practicable thereafter.

 

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

 

(b)                                 Investment
of Account Balance.  The Participant
may select, from various Funds made available hereunder, the Funds in which all
or part of his Account shall be deemed to be invested.

 

(i)               The Participant shall make an investment
designation on a form provided by the Administrator, which shall remain
effective until another valid designation has been made by the Participant as
herein provided.  The Participant may
amend his investment designation by giving written direction to the Administrator
in accordance with procedures established by the Administrator.  A timely change to a Participant’s
investment designation shall become effective on the date determined under the
applicable procedures established by the Administrator.

 

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

 

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

 

4

 

(d)                                 Statements.  The Company shall provide an annual
statement to the Participant showing such information as is appropriate,
including the aggregate amount credited to the Account, as of a reasonably
current date.

 

SECTION 3.06.                                           Limit
on Account Balance.  Notwithstanding
anything to the contrary contained herein, the maximum aggregate amount that
may be credited to a Participant’s Account (including, without limitation,
Compensation deferrals and investment gains thereon) as of any Valuation Date
shall be $50,000,000 or such other amount as may be designated by the
Committee.  Any amount credited to a
Participant’s Account in excess of the applicable limit hereunder shall be
promptly distributed to the Participant in (as determined by the Committee)
cash or Shares having a Market Price as of the trading day immediately
preceding the date of such distribution equal to the value of such
distribution.  The Administrator may
suspend a Participant from deferring additional Compensation under the Plan if
the Administrator determines that the amount credited to a Participant’s
Account will exceed the applicable limit hereunder.

 

ARTICLE IV

 

Payment of Benefits

 

SECTION 4.01.                                           Nonforfeitability.  Subject to Section 4.06, Participant’s
right to a deferred amount of Compensation and his right to the income and
gains credited thereon, shall be fully vested and nonforfeitable at all times.

 

SECTION 4.02.                                           Income.  Any payment made pursuant to
Sections 4.03, 4.04, 4.05, 4.06 or 4.07 shall include the income, gains
and losses calculated in the manner described in Section 3.05 through the
date of payment (or, if not administratively practicable, as of the most recent
Valuation Date next preceding the date of payment).

 

SECTION 4.03.                                         Time of Payment.  Except as provided in Section 4.04, the
amount credited to the Account of each Participant shall become payable to the
Participant during the Payment Period designated pursuant to Section 3.04.
If the Participant has elected installment payments, such payments shall begin
within thirty days following the expiration of the Payment Period.  In any other case, payment shall be made as
a single sum within thirty days following the expiration of the Payment Period.

 

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

 

(a)                                  Death of Participant.  If the Participant’s Termination of Service
is on account of his death, or if he dies following Termination of Service but
while receiving installment payments, his Account shall be paid to his
Beneficiary as a single payment as soon as practicable, but not later than 30
days following the immediately succeeding Valuation Date following the
Participant’s death.

 

(b)                                 Other
Termination.  If the Participant’s
Termination of Service is for a reason other than death, his Account shall be
paid to him as a single payment; provided, however, that if the Participant had
elected installment payments pursuant to Section 3.04(d) for

 

5

 

any deferred
Compensation, the amount of such deferred Compensation and income, gains and
losses credited thereon shall be paid in the number of installments thus
elected.  All payments pursuant to this
Section 4.04(b) shall be made or begin no more than three months after the
end of the Fiscal Year in which Termination of Service occurs.

 

SECTION 4.05.                                         Withdrawal
for Emergency Need.  (a)  Authorization.  The Committee may permit a Participant who
demonstrates an emergency need to withdraw from the Plan an amount no greater
than the amount determined by the Committee to be reasonably necessary to
satisfy such emergency need.

 

(b)                                 Emergency
Need.  For purposes of this
Section 4.05, an emergency need is a severe financial hardship of a
Participant resulting from (i) a sudden and unexpected illness of or
accident to the Participant or a dependent within the meaning of
Section 152(a) of the Internal Revenue Code of 1986, as amended (the
“Code”), (ii) a casualty loss to the Participant’s property or
(iii) other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the Participant’s control.  A need is not an emergency need to the
extent that it is relieved by reimbursement or compensation by insurance or
otherwise, or by liquidation of the Participant’s assets insofar as such
liquidation would not cause severe financial hardship, or by cessation of
deferrals under the Plan.

 

SECTION 4.06.                                         Other
Withdrawal.  Subject to this
Section 4.06, a Participant may elect to withdraw all or any portion of
his Account at any time by filing an appropriate request with the
Administrator; provided  that, prior to making any distribution
provided under this Section 4.06, the Participant shall irrevocably
forfeit an amount equal to 10% of the aggregate value of the Participant’s
Account and the Participant shall not be permitted to make any additional
Compensation deferrals for the remainder of the year of such withdrawal and the
next calendar year.  Amounts shall be
distributed pursuant to this Section 4.06 as soon as reasonably practicable
after the Valuation Date occurring after the submission of the Participant’s
election hereunder.

 

SECTION 4.07.                                         Change in
Control.  Unless otherwise elected
by a Participant in accordance with procedures established by the
Administrator, a Participant’s Account shall be distributed in full in a cash
lump sum immediately prior to a Change in Control.

 

SECTION 4.08.                                         Source of
Payment.  The Compensation deferred
pursuant to this Plan (and the income, gains and losses credited thereon) shall
be a general obligation of the Company. 
The claim of a Participant or Beneficiary to a benefit shall at all
times be merely the claim of an unsecured creditor of the Company.  No trust, security, escrow, or similar
account need be established for the purpose of paying benefits hereunder.  The Company shall not be required to
purchase, hold or dispose of any investments pursuant to this Plan; however, if
in order to cover its obligations hereunder the Company elects to purchase any
investments the same shall continue for all purposes to be a part of the general
assets and property of the Company, subject to the claims of its general
creditors and no person other than the Company shall by virtue of the
provisions of this Plan have any interest in such assets other than an interest
as a general creditor.

 

SECTION 4.09.                                         Withholding.  All amounts credited to Participants’
Accounts pursuant to this Plan and all payments under the Plan shall be subject
to any applicable withholding requirements imposed by any tax (including,
without limitation, FICA) or other law.

 

6

 

If any of the taxes referred to above are due at the time of deferral,
instead of at the time of payout, the Participant will be required to pay (by
payroll deduction or check) to the Company the Participant’s share of any such
taxes then due and payable.

 

SECTION 4.10.                                         Right of
Offset.  Any amount payable pursuant
to this Plan shall be reduced at the discretion of the Administrator to take
account of any amount due, and not paid, by the Participant to the Company at
the time payment is to be made hereunder.

 

SECTION 4.11.                                         Payment
Denomination.  Except as set forth
in this Section 4.11 or as otherwise determined by the Committee in its
sole and absolute discretion, all distributions under the Plan (including all
distributions made pursuant to Sections 4.03, 4.04, 4.05 and 4.06) shall
be made in Shares having a Market Price as of the trading day immediately
preceding the date of such distribution equal to the value of such
distribution; provided  that the first $1,000,000 (or such other
amount as may be designated by the Committee) distributed to a Participant (or
his beneficiary) in any Plan Year and all distributions made pursuant to
Section 4.07 shall be made in cash.

 

SECTION 4.12.                                         Distribution
Limitation.  Notwithstanding
anything to the contrary contained herein, the Committee may defer to any date
it selects any distribution to any Participant that it determines in its sole
and absolute discretion would not be deductible by the Company or its
affiliates solely by reason of the applicability of Section 162(m) of the
Code.

 

SECTION 4.13.                                         Defeasance.  Subject to Section 4.08, the Committee
may instruct the Company to defease the Company’s obligations under the Plan.

 

ARTICLE V

 

Beneficiaries

 

SECTION 5.01.                                         Beneficiary
Designation.  (a)  Designation.  A Participant may from time to time
designate, in the manner specified by the Administrator, a Beneficiary to
receive payment pursuant to Section 4.04 in the event of his death.

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

ARTICLE VI

 

Administration
and Reservation of Rights

 

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

 

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

 

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

 

(c)                                  decide
any dispute arising hereunder;

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 6.04.                                         Action by
the Committee.  The Committee may
elect a Chairman and Secretary from among its members and may adopt rules for
the conduct of its business.  A majority
of the members then serving shall constitute a quorum for the transacting of business.  All resolutions or other action taken by the
Committee shall be by vote of a majority of those present at such meeting and
entitled to vote.  Resolutions may be
adopted or other action taken without a meeting upon written consent signed by
at least a majority of the members.  All
documents, instruments, orders, requests, directions, instructions and other
papers shall be executed on behalf of the Committee by either the Chairman or
the Secretary of the Committee, if any, or by any member or agent of the
Committee duly authorized to act on the Committee behalf.

 

SECTION 6.05.                                         Consent.  By electing to become a Participant, each
Participant shall be deemed conclusively to have accepted and consented to all
terms of the Plan and all actions or decisions made by the Administrator, the
Committee or the Board with regard to the Plan.  Such terms and consent shall also apply to, and be binding upon,
the Beneficiaries, distributees and personal representatives and other
successors in interest of each Participant.

 

SECTION 6.06.                                         Agents and
Expenses.  The Administrator or the
Committee may employ agents and provide for such clerical, legal, actuarial,
accounting, medical, advisory or other services as it deems necessary to
perform its duties under this Plan.  The
cost of such services and all other expenses incurred by the Administrator or
the Committee in connection with the administration of the Plan shall be paid
by the Company.

 

9

 

SECTION 6.07.                                         Allocation
of Duties.  The duties, powers and
responsibilities reserved to the Committee may be allocated among its members
so long as such allocation is pursuant to written procedures adopted by the
Committee, in which case no Committee member shall have any liability, with
respect to any duties, powers or responsibilities not allocated to him, for the
acts or omissions of any other Committee member.

 

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

 

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

 

SECTION 6.10.                                         Records and
Reports.  The Administrator and the
Committee shall maintain adequate records of their respective actions and
proceedings in administering this Plan and shall file all reports and take all
other actions as are deemed appropriate in order to comply with any Federal or
state law.  Without limiting the
foregoing, the Administrator shall provide to the Committee no less frequently
than annually a list of the investment alternatives made available under the
Plan, the aggregate amounts deemed invested under the Plan in each such alternative
and such other information requested by the Committee.

 

SECTION 6.11.                                         Liability
and Indemnification.  The
Administrator and the Committee shall perform all duties required of them under
this Plan in a prudent manner.  The
Administrator and the Committee shall not be responsible in any way for any
action or omission of the Company, its subsidiaries or their employees in the
performance of their duties and obligations as set forth in this Plan.  The Administrator and the Committee also
shall not be responsible for any act or omission of any of their respective
agents provided that such agents were prudently chosen by the Administrator or
the Committee and that the Administrator or the Committee relied in good faith
upon the action of such agents.

 

SECTION 6.12.                                         Right to
Amend or Terminate.  The Committee
may at any time amend the Plan in any respect, retroactively or otherwise, or
terminate the Plan in whole or in part for any other reason.  However, no such amendment or termination
shall reduce the amount standing credited to any Participant’s Account as of
the date of such amendment or termination. 
In the event of the termination of the Plan, the Committee, in its sole
discretion, may choose to pay out Participants’ Accounts prior to the
designated Payment Periods (a “Termination Distribution”).  Each Participant shall be compensated for
the early distribution of his/her Account pursuant to a Termination
Distribution by a payment from the Company in an amount determined by the
Committee to be appropriate to make the Participant whole for such Termination
Distribution.  Otherwise, following a
termination of the Plan, income, gains and losses shall continue to be credited
to each Account in accordance with the provisions of this Plan until the time
such Accounts are paid out.

 

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

 

SECTION 6.14.                                         Separability.  If any provision of the Plan is held invalid
or unenforceable, its invalidity or unenforceability shall not affect any other
provisions of the Plan, and the Plan shall be construed and enforced as if such
provision had not been included therein.

 

10

 

SECTION 6.15.                                         Captions.  The captions in this document and in the
table of contents are inserted only as a matter of convenience and for
reference and in no way define, limit, enlarge or describe the scope or intent
of the Plan and shall in no way affect the Plan or the construction of any
provision thereof.

 

SECTION 6.16.                                         Right of
Discharge Reserved.  Nothing
contained in this Plan shall be construed as a guarantee or right of any
Participant to be continued as a employee of the Company or its subsidiaries
(or of a right of a Key Employee or Participant to any specific level of
Compensation) or as a limitation of the right of the Company or its
subsidiaries to terminate any Key Employee or Participant.

 

SECTION 6.17.                                         Governing
Law and Construction.  The Plan is
intended to constitute an unfunded, nonqualified deferred compensation
arrangement.  Except to the extent
preempted by Federal law, all rights under the Plan shall be governed by and
construed in accordance with the laws of the State of New York without regard
to principles of conflicts of law.  No
action shall be brought by or on behalf of any Participant or Beneficiary for
or with respect to benefits due under this Plan unless the person bringing such
action has timely exhausted the Plan’s claim review procedure.

 

11

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