Document:

exhibit10-7.htm

TRUST FOR

PICO DEFERRED HOLDINGS, LLC

NON-EMPLOYEE DIRECTOR DEFERRED COMPENSATION

This Agreement made this 25th day of November, 2008, by and between PICO Deferred Holdings, LLC (“PICO”) and Union Bank of California, N.A. (“Trustee”);

WHEREAS, PICO Holdings, Inc., which is the sole owner of PICO, and certain of its affiliates have entered into deferred compensation arrangements (“Deferral Agreements”) with certain of their non-employee directors;

WHEREAS, PICO and certain of its affiliates have incurred or expect to incur liability to pay deferred compensation under the terms of the Deferral Agreements;

WHEREAS, effective September 30, 2006, PICO assumed sponsorship of the September 25, 2001 deferred compensation plan from PICO Holdings, Inc. along with all liabilities to provide benefit payments to participants and beneficiaries thereunder, although PICO Holdings, Inc. remained and remains a participating employer;

WHEREAS, PICO wishes to establish a Trust (“Trust”) and to contribute to the Trust assets that, shall be held therein, subject to the claims of creditors in the event of Insolvency (as herein defined) of PICO or any affiliate, until paid to non-employee directors and their beneficiaries in such manner and at such times as specified
in the Deferral Agreements;

WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Deferral Agreements as unfunded agreements maintained for the purpose of providing deferred compensation for a select group of management or highly compensated non-employee directors for purposes of
Title I of the Employee Retirement Income Security Act of 1974;

WHEREAS, PICO wishes to appoint Trustee, and Trustee wishes to accept appointment, as the successor Trustee to Huntington National Bank, N.A.;

WHEREAS, it is the intention of PICO to hold assets in this Trust to provide a source of funds to assist it in the meeting of the liabilities under the Deferral Agreements;

NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows:

Section 1.                      ESTABLISHMENT OF TRUST.

(a) PICO hereby deposits with Trustee in Trust the cash sum of $100.00, which shall become the principal of the Trust to be held, administered and disposed of by Trustee as provided in this Trust Agreement.

 

(b) The Trust hereby established shall initially be, revocable by PICO.  The Trust shall become irrevocable upon a Change of Control of PICO, as defined herein.  For purposes of this Trust, Change of Control shall
be deemed to have occurred in the reasonable discretion of the Board of Directors in consideration of the following guidelines: (i) any person (as the term is used in Sections 13(d) and 14(d) of the Securities Exchange Act) is or becomes the beneficial owner (as defined in Rule 13 d-3 under the Exchange Act), directly or indirectly of securities of  PICO representing thirty percent (30%) or more of PICO’s outstanding securities; or (ii) individuals who are members of PICO’s Board of Directors
on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least two-thirds of the directors comprising the Incumbent Board, or whose nomination for election by the stockholders of PICO was approved by the nominating committee serving under an Incumbent Board, shall be considered a member of the Incumbent Board.

 

(c) The Trust is intended to be a grantor trust, of which PICO and any affiliate participating in the Plan, are the grantors, within the meaning of subpart E, part 1, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of
1986, as amended, and shall be construed accordingly.

 

(d) The principal of the Trust and any earnings thereon shall be held separate and apart from other funds of PICO and shall be used exclusively for the uses and purposes of paying amounts due under the Deferral Agreements and general
creditors as herein set forth.  Non-employee directors entering into Deferral Agreements and their beneficiaries shall have no preferred claim on, or any beneficial-ownership interest in, any assets of the Trust.  Any rights created under the Deferral Agreements and this Trust Agreement shall be mere unsecured contractual rights of non-employee directors and their beneficiaries against PICO or any affiliate.  Any assets held by the Trust will be subject to the claims of the general
creditors of PICO and any affiliate (to the extent of each entity’s proportionate interest in the Trust) under federal and state law in the event of Insolvency, as set forth in Section 3(a) herein.

 

(e) Within thirty (30) days after the initial establishment of the Trust, PICO and its affiliates shall deposit into the Trust cash in an amount equal to the total amount deferred under all Deferral Arrangements with non-employee directors
from the effective date of such Deferral Agreements to the date of establishment of the Trust.  In addition, within fifteen (15) days after each subsequent calendar month following the establishment of this Trust, PICO (and any participating affiliate) shall be required to deposit into the Trust cash in an amount equal to the amount deferred from all non-employee directors’ Deferral Agreements for such month.  PICO in its sole discretion, may at any time, or from time to time, make additional
deposits of cash or other property in Trust with Trustee.  Upon a Change of Control PICO shall as soon as possible but in no event later than thirty (30) days following the Change of Control make an irrevocable contribution to the Trust in an amount that is sufficient to pay each non-employee director the amount (as adjusted for earnings and losses) to which he or she would be entitled pursuant to the terms of the non-employee director’s Deferral Agreement as of the date of the Change of Control.  Notwithstanding
anything herein to the contrary, the Trustee shall have no authority or obligation to enforce the collection of any contribution or transfer to the Trust.

 

(f) Signing Authority; Trustee’s Reliance.  The PICO shall certify in writing to the Trustee the names and specimen signatures of all those who are authorized
to act as or on behalf of PICO (“Authorized Person”), and those names and specimen signatures shall be updated as necessary by a duly authorized officer of PICO.  The PICO shall promptly notify the Trustee if any person so designated is no longer authorized to act on its behalf.  Until the Trustee receives written notice that an Authorized Person is no longer authorized to act on behalf of PICO, the Trustee may continue to rely on PICO’s designation of such person.

 

  

  

  

	
Section 2.
	
PAYMENTS TO EXECUTIVE NON-EMPLOYEE DIRECTORS AND THEIR BENEFICIARIES.

(a) PICO shall deliver to Trustee a schedule (the “Payment Schedule”) that indicates the amounts payable in respect of each non-employee director, and that contains such other instructions as to enable, the Trustee to make
any distributions to each non-employee director as required under his or her Deferral Agreement.  Except as otherwise provided herein, Trustee shall make payments in accordance with such Payment Schedule.  No set-off from any amounts payable to a non-employee director hereunder shall be permitted without the non-employee director’s written consent.  No changes shall be made by PICO to the Payment Schedule without the written consent of the affected non-employee director (except
for a change permitted under a non-employee director’s Deferral Agreement or a change to an immediate lump sum payment of all remaining benefits upon termination of all Deferral Agreements).

 

(b) Tax Payments and Reporting.  PICO and not the Trustee shall be responsible for all calculations and payment of income tax, inheritance, estate, or other taxes,
and all income tax reporting in connection with the Trust and any contributions thereto and distributions therefrom, as well as all earnings and gains or losses of the Trust.  Unless otherwise agreed in writing by the parties, the Trustee shall prepare annually the grantor tax advice information letter for the Trust and promptly provide it to PICO for use in preparing its corporate income tax return.  With respect to the payments to Participants, the Trustee shall withhold the appropriate
federal, state and local taxes required to be withheld and shall properly report and remit such payments to the proper taxing authorities only to the extent directed by PICO and agreed to by the Trustee.  PICO agrees to indemnify and defend Trustee against any liability for any taxes, interest or penalties resulting from or relating to the Trust.

 

(c) The entitlement of an non-employee director or his or her beneficiaries to deferred amounts under the non-employee director’s Deferral Agreement shall be certified by the Compensation Committee of the Board of Directors of PICO
or such party as it shall designate and any claim for such benefits shall be considered and reviewed under the procedures set out in the Deferral Agreement.

 

(d) PICO (or any affiliate) may make payment of deferred compensation directly to non-employee directors or their beneficiaries as they become due under the terms of the Deferral Agreements, PICO shall notify Trustee of its decision to
make payment of benefits directly prior to the time amounts are payable to non-employee directors or their beneficiaries.  In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of any Deferral Agreement, PICO shall make the balance of each such payment in accordance with the terms of the Deferral Agreement.  Trustee shall notify PICO where principal and earnings are not sufficient.

 

	
Section 3.
	
TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN PICO IS INSOLVENT.

(a) Trustee shall cease payment of benefits to all non-employee directors and their beneficiaries if PICO or any other affiliate participating in the Trust is Insolvent.  “Insolvent” for purposes of this Trust Agreement
shall mean if (i) an entity is unable to pay its debts as they become due, or (ii) an entity is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

 

(b) At all times during the continuance of this Trust, as provided in Section l(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of PICO and any participating affiliate under federal and
state law as set forth below.

 

(1) The Board of Directors and the Chief Executive Officer of PICO and any participating affiliate shall have the duty to inform Trustee in writing of such entity’s Insolvency.  If a person claiming to be a creditor of
PICO or a participating affiliate alleges in writing to Trustee that such entity has become Insolvent, Trustee shall determine whether such entity is Insolvent and, pending such determination, Trustee shall discontinue payment of benefits to non-employee directors and beneficiaries.

 

(2) Unless Trustee has actual knowledge of the Insolvency of PICO or any participating affiliate, or has received notice from any of such entities or from a person claiming to be a creditor alleging that any of such entities is Insolvent,
Trustee shall have no duty to inquire whether the entity is Insolvent.  Trustee may in all events rely on such evidence concerning the entity’s solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning the entity’s solvency.

 

(3) If at any time Trustee has determined that PICO or a participating affiliate is Insolvent, Trustee shall discontinue payments to non-employee directors or their beneficiaries and shall hold the assets of the Trust for the benefit
of such entity’s general creditors.  The Trust assets set aside for the benefit of the Insolvent entity’s general creditors shall not exceed the Insolvent entity’s proportionate interest in the Trust.  The Insolvent entity’s proportionate interest in the Trust shall be determined in accordance with the ratio of Trust assets held for the benefit of the Insolvent entity’s non-employee directors to the total assets of the Trust.  Nothing in this Trust Agreement
shall in any way diminish any rights of non-employee directors or their beneficiaries to pursue their rights as general creditors of the Insolvent entity with respect to benefits due under the Deferral Agreement or otherwise.

 

(4) Trustee shall resume the payment of benefits to non-employee directors or their beneficiaries in accordance with Section 2 of this Trust Agreement only after Trustee has determined that PICO and/or the participating affiliate (as
applicable) are not Insolvent (or are no longer Insolvent).

 

(c) Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall
include the aggregate amount of all payments due to non-employee directors or their beneficiaries under the terms of the Deferral Agreements for the period of such discontinuance, less the aggregate amount of any payments made to non-employee directors or their beneficiaries by PICO (or any affiliate) in lieu of the payments provided for hereunder during any such period of discontinuance.

 

Section 4.                      PAYMENTS TO PICO.

Except as provided in Section 3 hereof after the Trust has become irrevocable, PICO shall have no right or power to direct Trustee to retain to PICO or to divert to others any of the Trust assets before all payment of benefits have been made to non-employee directors and their beneficiaries pursuant to the terms of the Deferral Agreement.  Notwithstanding
the preceding sentence, the Trustee may reimburse PICO (or any affiliate) for benefits paid directly by PICO (or any affiliate) to non-employee directors and beneficiaries.

Section 5.                      INVESTMENT AUTHORITY.

PICO shall provide investment direction to the Trustee.  All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with non-employee directors.  Notwithstanding the preceding sentence, PICO may permit non-employee
directors who have entered into Deferral Agreements to select specific investments for such deferred amounts, subject to its approval in accord with the attached Exhibit A.  Trustee shall be notified if such delegation of investment direction has been made to the non-employee directors.  In the event that PICO (or its designee) shall fail to provide investment direction, Trustee shall invest the assets of the Trust in federally insured savings accounts or certificates of deposits (in amounts
not in excess of insured limits) or in a money market mutual fund.

Section 6.                      CHANGE IN CONTROL.

Upon a Change in Control, the Trustee shall become responsible for maintaining a separate Account for each Participant under the Plan based upon segregating the Accounts using PICO’s latest statements of value for each Participant’s Account.  The Trustee shall thereafter periodically adjust such Accounts pursuant
to the procedures described in the Plan.  The Trustee may appoint a third-party administrator to maintain such Accounts.  The full expense incurred by the Trustee in maintaining such Accounts shall be reimbursed to the Trustee out of Trust assets.  PICO shall reimburse the Trust for such expense, provided, however, that the Trustee shall have no duty to enforce the Employer’s obligation for such reimbursement.

Upon and following a Change in Control, the Trustee shall have full responsibility for the investment and reinvestment of all Trust assets except for Employer Securities and insurance contracts, and PICO’s powers to invest, manage and control such assets, including the power to appoint Investment Managers and issue investment guidelines
with respect to the Trust, shall be limited to Employer Securities and insurance contracts.  The Trustee may, in its sole discretion, appoint one or more Investment Managers with respect to the Trust or any part thereof and may establish and issue to such Investment Managers investment guidelines.

Section 7.                      DISPOSITION OF INCOME.

During the term of this Trust, all of the income received by the Trust shall be accumulated in the Trust.

Section 8.                    ACCOUNTING BY TRUSTEE.

Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between PICO and Trustee.  Within thirty (30) days following the close
of each calendar year and within thirty (30) days after the removal or resignation of the Trustee, Trustee shall deliver to PICO a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, income, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds
of such purchases or sales, and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be.  Upon the expiration of such period, the account shall be deemed approved by the PICO, except with respect to any act or transaction as to which the PICO files a written objection with the Trustee within such thirty-day period.  Nothing in this Section 8 is intended to deprive PICO of any rights to which
it may be entitled by law.  With respect to the written account statement, the Trustee shall correct any error it has made to the extent such error occurred within the applicable statue of limitations period.  If such error is discovered more than sixty days after the end of an accounting period and beyond the timeframe for electronic records retention or for ability to reconcile balances on the Trustee’s trust accounting system, the correction of such error may be reflected on a trust
accounting statement subsequent to the statement for the period in which the error occurred.

Notwithstanding anything herein to the contrary, the Trustee shall have no duty or responsibility to obtain valuations of any assets of the Trust Fund, the value of which is not readily determinable on an established market.  PICO shall bear sole responsibility for determining said valuations and shall be responsible for providing
said valuations to the Trustee in a timely manner.  The Trustee may conclusively rely on such valuations provided by PICO and shall be indemnified and held harmless by PICO with respect to such reliance.

Notwithstanding anything herein to the contrary, the Trustee shall accept the unit price provided periodically by PICO:  for the PICO Holdings, Inc. Income Oriented Investments Unit Fund, the PICO Holdings, Inc. Value Stocks Unit Fund and any other unitized fund invested covered under this Trust Agreement.  The Trustee
may conclusively rely on such unit prices provided by PICO and shall be indemnified and held harmless by PICO with respect to such reliance.  The Trustee shall not be required to certify the accuracy of the unit prices on any financial statement.

Section 9.                      RESPONSIBILITY OF TRUSTEE.

(a) Trustee shall act with the care, skill prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims, provided, however, that Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by PICO which is contemplated by, and in conformity with, the terms of this Trust and is given in writing by PICO.  In the event of a dispute between PICO and a party, Trustee may apply, at the expense of the Trust, to a court of competent jurisdiction to resolve the dispute.

 

(b) If Trustee undertakes or defends any litigation or threatened litigation arising in connection with this Trust, PICO agrees to indemnify Trustee against Trustee’s costs, expenses and liabilities (including without limitation,
attorneys’ fees and expenses) relating thereto and to be primarily liable for such payments.  If PICO does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee may obtain payment from the Trust.  Notwithstanding the preceding sentences, in no event shall PICO indemnify Trustee (nor shall any payments be made from the Trust on behalf of Trustee) if the Trustee is determined to have acted negligently in carrying out its duties with respect to the Trust.

 

(c) Trustee may consult with legal counsel (who may also be counsel for PICO generally) with respect to any of its duties or obligations hereunder.

 

(d) Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder.  Trustee shall pay, from the Trust,
the fees and expenses relating to hiring of such agents, accountants and other profession.  Reasonable and customary expenses may be incurred by Trustee without approval.

 

(e) Trustee shall have, without exclusion, all powers conferred on Trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an balance policy is held as an asset of the Trust, Trustee shall have
no power to name a beneficiary of an insurance policy other than the Trust, to assign such policy (as distinct from conversion of such policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy.

 

(f) Notwithstanding any powers granted to Trustee pursuant to this Trust Agreement or to applicable law, Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom,
within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code.

 

(g) To invest funds in any type of interest-bearing account including, without limitation, time certificates of deposit or interest-bearing accounts issued by UNION BANK OF CALIFORNIA, N.A.  To use other services or facilities
provided by the UnionBanCal Corporation (UNBC), its subsidiaries or affiliates, including but not limited to Union Bank of California, N.A. (Bank), to the extent allowed by applicable law and regulation.  Such services may include but are not limited to (1) the placing of orders for the purchase, exchange, investment or reinvestment of securities through any brokerage service conducted by, and (2) the purchase of units of any registered investment company managed or advised by Bank, UNBC, or their subsidiaries
or affiliates and/or for which Bank, UNBC or their subsidiaries or affiliates act as custodian or provide other services for a fee, including, without limitation, the HighMark Group of mutual funds.  The parties hereby acknowledge that the Bank may receive fees for such services in addition to the fees payable under this Agreement.  Fee schedules for additional services shall be delivered to the appropriate party in advance of the provisions of such services.  Independent fiduciary
approval of compensation being paid to the Bank will be sought in advance to the extent required under applicable law and regulation. If Union Bank of California, N.A. does not have investment discretion, the services referred to above, as well as any additional services, shall be utilized only upon the appropriate direction of an authorized party.

 

(h) To cause all or any part of the Trust to be held in the name of the Trustee (which is such instance need not disclose its fiduciary capacity), or, as permitted by law, in the name of any nominee, including the nominee name of any
depository, and to acquire for the Trust any investment in bearer form; but the books and records of the Trust shall at all times show that all such investments are a part of the Trust and the Trustee shall hold evidences of title to all such investments as are available;

 

(i) To serve as custodian with respect to the Trust assets, to hold assets or to hold eligible assets at the Depository Trust Company or other depository;

 

(j) To permit such inspections of documents at the principal office of the Trustee as are required by law, subpoena or demand by United States or state agency during normal business hours of the Trustee;

 

(k) To seek written instructions from PICO on any matter and await written instructions without incurring any liability.  If at any time PICO should fail to give directions to the Trustee, the Trustee may act in the manner that
in its discretion it deems advisable under the circumstances for carrying out the purposes of this Trust.  Such actions shall be conclusive on PICO and the Participants on any matter if written notice of the proposed action is given to PICO five (5) days prior to the action being taken, and the Trustee receives no response;

 

(l) To impose a reasonable charge to cover the cost of furnishing to Participants statements or documents;

 

(m) To act upon proper written directions of PICO or any Participant, as applicable, including directions given by photostatic teletransmission using facsimile signature.  If oral instructions are given, to act upon those in
Trustee’s discretion prior to receipt of written instructions.  Trustee’s recording or lack of recording of any such oral instructions taken in Trustee’s ordinary course of business shall constitute conclusive proof of Trustee’s receipt or non-receipt of the oral instructions;

 

(n) To pay from the Trust the expenses reasonably incurred in the administration of the Trust;

 

(o) To maintain insurance for such purposes, in such amounts and with such companies as PICO shall elect, including insurance to cover liability or losses occurring by reason of the acts or omissions of fiduciaries (but only if such insurance
permits recourse by the insurer against he fiduciary in the case of a breach of a fiduciary obligation by such fiduciary);

 

(p) As directed by PICO to cause the benefits provided under the Plan to be paid directly to the persons entitled thereto under the Plan, and in the amounts and at the times and in the manner specified by the Plan, and to charge such
payments against the Trust and Accounts with respect to which such benefits are payable;

 

(q) To exercise and perform any and all of the other powers and duties specified in this Trust Agreement or the Plans; and in addition to the powers listed herein, to do all other acts necessary or desirable for the proper administration
of the Trust, as though the absolute owner thereof.

 

Section 10.                      COMPENSATION AND EXPENSES  OF TRUSTEE.

PICO shall pay all administrative and Trustee’s fees and approved expenses relating to the operation of the Trust.  If not so paid, the fees and expenses shall be paid from the Trust.  However, all brokerage commissions shall be charged to the non-employee director’s account for whom the trade was made.

Section 11.                      RESIGNATION AND REMOVAL OF TRUSTEE.

(a) Trustee may resign at any time by written notice to PICO, which shall be effective thirty (30) days after receipt of such notice unless PICO and Trustee agree otherwise.

 

(b) Trustee may be removed by PICO on thirty (30) days notice or upon shorter notice accepted by Trustee.

 

(c) Upon resignation or removal of Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within thirty (30) days after receipt of notice
of resignation, removal or transfer, and upon receipt by the Trustee of all proper documentation unless PICO extends the time limit.

 

(d) If Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 12 hereof, by the effective date of resignation or removal under paragraph(s) (a) or (b) of this Section.  Further, if no successor
Trustee is designated within thirty (30) days of notice of the Trustee’s resignation or removal, then the chief executive officer and chief financial officer of PICO are hereby designated as the successor Co-Trustees.  Further, if no such appointment has been made, Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions.  All expenses of Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust.

 

Section 12.                      APPOINTMENT OF SUCCESSOR.

(a) If Trustee resigns or is removed in accordance with Section 10(a) or (b) hereof, PICO may appoint any third party, such as a bank trust department or other party that may be granted trustee powers under state law, as a successor to
replace Trustee upon resignation or removal.  Notwithstanding the preceding sentence, if the Trustee resigns or is, removed within one (1) year after a Change in Control of PICO, the Trustee shall select the Successor Trustee.  The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust assets.  The former Trustee shall execute any instrument necessary or
reasonably requested by PICO or the successor Trustee to evidence the transfer.

 

(b) The successor Trustee need not examine the records and acts of any prior Trustee.  The successor Trustee shall not be responsible for and PICO shall indemnify and defend the successor Trustee from any claim or liability
resulting from any action or inaction of any prior Trustee or from any other past event, or any condition existing at the time it becomes successor’ Trustee.  Notwithstanding the preceding sentence, this indemnification shall not include liability resulting from actions or inactions of the successor Trustee after it becomes aware (or should have become aware) of any past event or other condition that requires corrective action on the part of the successor Trustee.

 

Section 13.                      AMENDMENT OR TERMINATION.

(a) This Trust Agreement may be amended by a written instrument executed by Trustee and PICO.  Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Deferral Agreement or shall make the Trust
revocable after it has become irrevocable in accordance with Section I (b) hereof.  In addition, no such amendment shall alter the terms of the Trust relating to the special requirements imposed hereunder on or after a Change of Control of PICO without the written approval of non-employee directors who have entered into Deferral Agreements.

 

(b) The Trust shall not terminate until the date on which non-employee directors and their beneficiaries are no longer entitled to benefits pursuant to the terms of their Deferral Agreements.  Upon termination of the Trust,
any sets remaining in the Trust after distribution of all benefits to non-employee directors’ beneficiaries shall be returned to PICO.

 

Section 14.                      MISCELLANEOUS.

(a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof.

(b) Benefits payable to non-employee directors and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.

(c) This Trust Agreement shall be governed by and construed in accordance with the laws of California.

  

  

  

Section 15.                      EFFECTIVE DATE

The effective date of this Trust Agreement shall be November 25, 2008.

IN WITNESS WHEREOF, executed as of the Effective Date by:

	  	
“PICO”

 

PICO DEFERRED HOLDINGS, LLC

 

By:  /s/ James F. Mosier

James F. Mosier, Secretary

Dated:  November 25, 2008

 

 

By:  /s/ Richard H. Sharpe

Richard H. Sharpe, President

Dated:  December 3, 2008

 

	  	
“TRUSTEE”

 

UNION BANK OF CALIFORNIA, N.A.

 

 

By:  /s/ John Fulton

John Fulton, Vice President

Dated:  November 25, 2008

 

 

By:  /s/ Jane L. Erwin

Jane L. Erwin, VP and Trust Officer

Dated:  November 25, 2008

  

  

  

Exhibit A

Noneexhibit10-8.htm

  

______________________________________________________________________________

 

PICO DEFERRED HOLDINGS, LLC

DEFERRED COMPENSATION PLAN

 

EFFECTIVE AS OF JANUARY 1, 2009

 

 

______________________________________________________________________________

 

 

 

 

WEST\21629892.2

328146-151900                                                                    

  

  

  

TABLE OF CONTENTS

 Page

 

	
ARTICLE I
	
DEFINITIONS 
	
1

 

	
  
	
1.1
	
Account 
	
1

	
  
	
1.2
	
Affiliate 
	
1

	
  
	
1.3
	
Aggregated Plan 
	
1

	
  
	
1.4
	
Beneficiary 
	
2

	
  
	
1.5
	
Benefit Benchmarks 
	
2

	
  
	
1.6
	
Board 
	
2

	
  
	
1.7
	
Change in Control Event 
	
2

	
  
	
1.8
	
Code 
	
5

	
  
	
1.9
	
Compensation 
	
6

	
  
	
1.10
	
Compensation Deferral Agreement 
	
6

	
  
	
1.11
	
Compensation Deferrals 
	
6

	
  
	
1.12
	
Corporate Dissolution 
	
6

	
  
	
1.13
	
Distributable Event 
	
6

	
  
	
1.14
	
Domestic Partner 
	
6

	
  
	
1.15
	
Domestic Relations Order 
	
6

	
  
	
1.16
	
Effective Date 
	
6

	
  
	
1.17
	
Eligible Individual 
	
6

	
  
	
1.18
	
ERISA 
	
7

	
  
	
1.19
	
Income Inclusion Under Code § 409A 
	
7

	
  
	
1.20
	
Interim Distribution Date 
	
7

	
  
	
1.21
	
Investment Credits and Debits 
	
7

	
  
	
1.22
	
Nonqualified Deferred Compensation Plan 
	
7

	
  
	
1.23
	
Participant 
	
7

	
  
	
1.24
	
Performance-Based Compensation 
	
7

	
  
	
1.25
	
Plan 
	
8

	
  
	
1.26
	
Plan Administrator 
	
8

	
  
	
1.27
	
Plan Sponsor 
	
8

	
  
	
1.28
	
Plan Termination Following a Change in Control Event 
	
8

	
  
	
1.29
	
Plan Termination Following a Corporate Dissolution 
	
8

	
  
	
1.30
	
Plan Termination in Connection with Termination of Certain Similar Arrangements 
	
8

	
  
	
1.31
	
Regular Salary 
	
8

	
  
	
1.32
	
Separation from Service 
	
8

	
  
	
1.33
	
Specified Employee 
	
9

	
  
	
1.34
	
Spouse 
	
10

	
  
	
1.35
	
Taxable Year 
	
10

	
  
	
1.36
	
Trust 
	
10

	
  
	
1.37
	
Trustee 
	
10

	
  
	
1.38
	
Unforeseeable Emergency 
	
10

	
  
	
1.39
	
Valuation Date 
	
10

 

 

	
ARTICLE II
	
ELIGIBILITY AND PARTICIPATION 
	
10

 

	
  
	
2.1
	
Eligibility 
	
10

	
  
	
2.2
	
Participation 
	
10

	
  
	
2.3
	
Compensation Deferral Agreement 
	
10

	
  
	
2.4
	
Subsequent Changes in Time and Form of Payment 
	
12

	
  
	
2.5
	
Establishing a Reserve for Plan Liabilities 
	
12

 

 

	
ARTICLE III
	
PARTICIPANT ACCOUNTS AND REPORTS 
	
12

 

	
  
	
3.1
	
Establishment of Accounts 
	
12

	
  
	
3.2
	
Account Maintenance 
	
13

	
  
	
3.3
	
Investment Credits and Debits 
	
13

	
  
	
3.4
	
Participant Statements 
	
14

 

 

	
ARTICLE IV
	
WITHHOLDING OF TAXES 
	
14

 

	
  
	
4.1
	
Withholding from Compensation 
	
14

	
  
	
4.2
	
Withholding from Benefit Distributions 
	
14

 

 

	
ARTICLE V
	
VESTING 
	
14

 

	
  
	
5.1
	
Vesting 
	
14

 

 

	
ARTICLE VI
	
PAYMENTS 
	
15

 

	
  
	
6.1
	
Benefits 
	
15

	
  
	
6.2
	
Separation from Service Payment 
	
15

	
  
	
6.3
	
Death Benefit 
	
15

	
  
	
6.4
	
Domestic Relations Order Payment 
	
15

	
  
	
6.5
	
Unforeseeable Emergency Distribution 
	
16

	
  
	
6.6
	
Election to Receive Interim Distributions 
	
16

	
  
	
6.7
	
Payment upon Income Inclusion Under § 409A 
	
16

	
  
	
6.8
	
Permissible Delay in Payments 
	
16

	
  
	
6.9
	
Beneficiary Designation 
	
17

	
  
	
6.10
	
Claims Procedure 
	
18

 

 

	
ARTICLE VII
	
CANCELLATION OF DEFERRALS 
	
21

 

	
  
	
7.1
	
Unforeseeable Emergency 
	
21

 

 

	
ARTICLE VIII
	
ARTICLE VIII PLAN ADMINISTRATION 
	
22

 

	
  
	
8.1
	
Appointment 
	
22

	
  
	
8.2
	
Duties of Plan Administrator 
	
22

	
  
	
8.3
	
Plan Sponsor 
	
22

	
  
	
8.4
	
Administrative Fees and Expenses 
	
22

	
  
	
8.5
	
Plan Administration and Interpretation 
	
23

	
  
	
8.6
	
Powers, Duties, Procedures 
	
23

	
  
	
8.7
	
Information 
	
23

	
  
	
8.8
	
Indemnification of Plan Administrator 
	
23

	
  
	
8.9
	
Plan Administration Following a Change in Control Event 
	
23

 

 

	
ARTICLE IX
	
TRUST FUND 
	
24

 

	
  
	
9.1
	
Trust 
	
24

	
  
	
9.2
	
Unfunded Plan 
	
24

	
  
	
9.3
	
Assignment and Alienation 
	
24

 

 

	
ARTICLE X
	
AMENDMENT AND PLAN TERMINATION 
	
24

 

	
  
	
10.1
	
Amendment 
	
24

	
  
	
10.2
	
Plan Termination 
	
24

	
  
	
10.3
	
Plan Termination Following a Change in Control Event 
	
25

	
  
	
10.4
	
Plan Termination Following a Corporate Dissolution 
	
25

	
  
	
10.5
	
Plan Termination in Connection with Termination of Certain Similar Arrangements 
	
26

	
  
	
10.6
	
Effect of Payment 
	
26

 

 

	
ARTICLE XI
	
MISCELLANEOUS 
	
26

 

	
  
	
11.1
	
Total Agreement 
	
26

	
  
	
11.2
	
Employment Rights 
	
27

	
  
	
11.3
	
Non-Assignability 
	
27

	
  
	
11.4
	
Binding Agreement 
	
27

	
  
	
11.5
	
Receipt and Release 
	
27

	
  
	
11.6
	
Furnishing Information 
	
27

	
  
	
11.7
	
Compliance with Code § 409A 
	
27

	
  
	
11.8
	
Insurance 
	
28

	
  
	
11.9
	
Governing Law 
	
28

	
  
	
11.10
	
Headings and Subheadings 
	
28

WEST\21629892.2

328146-151900                                                                     

  

  

  

PICO DEFERRED HOLDINGS, LLC

DEFERRED COMPENSATION PLAN

Whereas, PICO Holdings, Inc., a diversified holding company formed under the laws of the state of California, (“PICO”) established a nonqualified deferred compensation plan as of December, 2004 to reflect certain deferral arrangements with certain executive management employees,
and with certain nonemployee directors (the “Plan”);

 

Whereby effective September 30, 2006, the Board of Directors of PICO transferred sponsorship of the Plan to Pico Deferred Holdings, LLC (the “Plan Sponsor”);

 

Whereby, effective January 1, 2009, PICO hereby amends and restates the Plan to comply with Section 409A of the Internal Revenue Code of 1986, as amended (Code Section 409A”);

 

Whereby, the Plan is intended to be “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of ERISA §§201(2) and 301(a)(3),
is intended to comply with the requirements of Code §409A and the regulations and binding guidance issued thereunder to avoid adverse tax consequences and shall be interpreted and administered to the extent possible in a manner consistent with that intent; and,

 

Whereby, Participants in the Plan shall have no right, either directly or indirectly, to anticipate, sell, assign or otherwise transfer any benefit accrued under the Plan. In addition, no Participant shall have any interest in any assets set aside as a source of funds to satisfy benefit obligations
under the Plan. Participants shall have the status of general unsecured creditors of the Plan Sponsor, and the Plan shall constitute an unsecured promise by the Plan Sponsor to make benefit payments in the future.

 

Now therefore, the Company hereby amends and restates the Plan in its entirety, as follows:

 

 

ARTICLE I                      

 

 

DEFINITIONS

 

	
1.1  
	
Account The bookkeeping account established for each Participant to record his or her benefit under the Plan.

 

	
1.2  
	
Affiliate Any corporation or business entity that would be considered a single employer with the Plan Sponsor pursuant to Code §§ 414(b) or 414(c).

 

	
1.3  
	
Aggregated Plan A nonqualified deferred compensation plan that is required to be aggregated and treated with the Plan as a single plan under Code § 409A.

 

	
1.4  
	
Beneficiary An individual, individuals, trust or other entity designated by the Participant to receive his or her benefit in the event of the Participant’s death. If more than one Beneficiary survives the Participant, the Participant’s benefit shall be divided equally
among all such Beneficiaries, unless otherwise provided in the Beneficiary Designation form. Nothing herein shall prevent the Participant from designating primary and contingent Beneficiaries.

 

	
1.5  
	
Benefit Benchmarks Hypothetical investment funds or benchmarks made available to Participants by the Plan Administrator for purposes of valuing benefits under the Plan.

 

	
1.6  
	
Board The Board of Directors of PICO or the Plan Sponsor, as applicable, or similar governing body if such Plan Sponsor has no Board of Directors.

 

	
1.7  
	
Change in Control Event A Change in Ownership, Change in Effective Control or Change in Ownership of a Substantial Portion of Assets, as elected by the Plan Sponsor of a corporation identified in Section 1.8(e).

 

	
(a)  
	
Change in Effective Control of the Corporation

 

	
(i)  
	
Notwithstanding that a corporation has not undergone a Change in Ownership, a Change in Effective Control occurs on the date that either:

 

	
(1)  
	
any one person or Persons Acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or Persons Acting as a Group) ownership of stock of the corporation possessing 30 percent or more of the total voting power of the stock of such corporation; or

 

	
(2)  
	
a majority of members of the corporation’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of directors prior to the date of the appointment or election, provided that for purposes of this Section 1.8(a)(i)(2) the term
corporation refers solely to the relevant corporation identified in Section 1.8(e) for which no other corporation is a majority shareholder for purposes of that section.

 

In the absence of an event described in Section 1.8(a)(i)(1) or Section 1.8(a)(i)(2) a Change in Effective Control will not have occurred.

 

	
(ii)  
	
A Change in Effective Control may occur in any transaction in which either of the two corporations involved in the transaction has a Change in Ownership or a Change in Ownership of a Substantial Portion of Assets.

 

	
(iii)  
	
If any one person or Persons Acting as a Group, is considered to effectively control a corporation (within the meaning of this Section 1.8(a)), the acquisition of additional control of the corporation by the same person or Persons Acting as a Group is not considered to cause a Change in Effective Control (or to cause a Change in Ownership within the meaning
of Section 1.8(b)).

 

	
(b)  
	
Change in the Ownership of the Corporation.  A Change in Ownership occurs on the date that any one person or Persons Acting as a Group, acquires ownership of stock of the corporation that, together with stock held by such person or Persons Acting as a Group, constitutes
more than 50 percent of the total fair market value or total voting power of the stock of such corporation. However, if any one person or Persons Acting as a Group, is considered to own more than 50 percent of the total fair market value or total voting power of the stock of a corporation, the acquisition of additional stock by the same person or Persons Acting as a Group is not considered to cause a Change in Ownership (or to cause a Change in Effective Control). An increase in the percentage of stock owned
by any one person or Persons Acting as a Group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of a Change in Ownership. A Change in Ownership applies only when there is a transfer of stock of a corporation (or issuance of stock of a corporation) and stock in such corporation remains outstanding after the transaction.

 

	
(c)  
	
Change in the Ownership of a Substantial Portion of a Corporation’s Assets

 

	
(i)  
	
A Change in Ownership of a Substantial Portion of Assets occurs on the date that any one person or Persons Acting as a Group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or Persons Acting as a Group) assets from the corporation that have a total gross fair market value equal to or
more than 40 percent of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

	
(ii)  
	
There is no Change in Ownership of a Substantial Portion of Assets when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer, as provided in this Section 1.8(c)(ii). A transfer of assets by a corporation is not treated as a change in the ownership of such assets if the assets
are transferred to:

 

	
(1)  
	
a shareholder of the corporation (immediately before the asset transfer) in exchange for or with respect to its stock;

 

	
(2)  
	
an entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the corporation;

 

	
(3)  
	
a person or Persons Acting as a Group, that owns, directly or indirectly, 50 percent or more of the total value or voting power of all the outstanding stock of the corporation; or

 

	
(4)  
	
an entity, at least 50 percent of the total value or voting power of which is owned, directly or indirectly, by a person described in Section 1.8(c)(ii)(c.).

 

For purposes of this Section 1.8(c)(ii) and except as otherwise provided, a person’s status is determined immediately after the transfer of the assets.

 

	
(d)  
	
Persons Acting as a Group

 

	
(i)  
	
With regards to Change in the Ownership, persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of stock or similar business transaction with the corporation. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

 

	
(ii)  
	
With regards to Change in Effective Control, persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of stock or similar business transaction with the corporation. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

 

	
(iii)  
	
With regards to Change in Ownership of a Substantial Portion of Assets, persons will not be considered to be acting as a group solely because they purchase assets of the same corporation at the same time. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or
acquisition of assets or similar business transaction with the corporation. If a person, including an entity shareholder owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only to the extent of the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

 

	
(e)  
	
To constitute a Change in Control Event as to a Participant, the Change in Control Event must relate to:

 

	
(i)  
	
the corporation with respect to which the Participant is an Eligible Individual at the time of the Change in Control Event;

 

	
(ii)  
	
the corporation that is liable for the payment of the Account (or all corporations liable for the payment if more than one corporation is liable) but only if either the Participant’s benefits under the Plan are attributable to the performance of services by the Participant for such corporation (or corporations) or there is a bona fide business purpose
for such corporation or corporations to be liable for such payment and, in either case, no significant purpose in making such corporation or corporations liable for such payment is the avoidance of Federal income tax; or

 

	
(iii)  
	
a corporation that is a majority shareholder of a corporation identified in Sections 1.8(e)(i) or 1.8(e)(ii), or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in Section 1.8(e)(i) or Section 1.8(e)(ii). With regard to a relevant corporation,
a majority shareholder is a shareholder owning more than 50% of the total fair market value and total voting power of such corporation.

 

	
(f)  
	
Stock Ownership. For the purposes of this Section 1.8, ownership of stock will be determined by the application of Code §318(a). Stock underlying a vested option is considered owned by the individual who holds the vested option (and the stock underlying an unvested option
is not considered owned by the individual who holds the unvested option). For purposes of the preceding sentence, however, if a vested option is exercisable for stock that is not substantially vested (as defined by Treasury Regulation §§ 1.83-3(b) and (j)), the stock underlying the option is not treated as owned by the individual who holds the option. In addition, mutual and cooperative corporations are treated as having stock for purposes of this Section 1.8(f).

 

	
1.8  
	
Code The Internal Revenue Code of 1986, as amended from time to time. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection.

 

	
1.9  
	
Compensation Shall mean a Participant’s Regular Salary, bonuses, Performance-Based Compensation, and director fees, as applicable.

 

	
1.10  
	
Compensation Deferral Agreement The written agreement between an Eligible Individual and the Plan Sponsor to defer receipt by the Eligible Individual of Compensation. Such agreement shall state the deferral amount or percentage of Compensation to be withheld from the Eligible Individual’s
Compensation and shall state the date on which the agreement is effective, as provided at Section 2.3.

 

	
1.11  
	
Compensation Deferrals That portion of a Participant’s Compensation which is deferred under the terms of this Plan.

 

	
1.12  
	
Corporate Dissolution A corporate dissolution taxed pursuant to Code §331 or with the approval of a bankruptcy court pursuant to section 503(b)(1)(A) of title 11, United States Code.

 

	
1.13  
	
Distributable Event The events entitling a Participant or Beneficiary to a payment of benefits under the Plan, which shall be: Separation from Service; death; the occurrence of an Interim Distribution Date; the occurrence of an Unforeseeable Emergency; Plan Termination Following
a Change of Control Event, if applicable; Plan Termination Following a Corporate Dissolution; Plan Termination in Connection with Termination of Certain Similar Arrangements; Domestic Relations Order; and Income Inclusion Under Code § 409A.

 

	
1.14  
	
Domestic Partner The Plan Administrator in its sole discretion shall determine whether an individual meets the requirements of a Domestic Partner and shall have the right to request documentary proof of the existence of a Domestic Partner relationship, which proof may include,
but is not limited to, a joint checking account, a joint mortgage or lease, driver’s licenses showing the same address, the registration of a domestic partnership or civil union in states that recognize such relationships or such other proof as the Plan Administrator may determine.

 

	
1.15  
	
Domestic Relations Order Any judgment, decree or order (including approval of a property settlement agreement) which relates to the provision of child support, alimony payments or marital property rights to a Spouse, former Spouse, child or other dependent of a Participant and
is made pursuant to a State domestic relations law (including a community property law).

 

	
1.16  
	
Effective Date The Effective Date of the restatement of this Plan shall be January 1, 2009.

 

	
1.17  
	
Eligible Individual Any common-law employee or non-employee director who provides services to the Plan Sponsor and is designated by the Plan Sponsor as eligible to participate in the Plan in accordance with Section 2.1. Only those individuals who are part of a select group of management
or highly compensated individuals, as determined by PICO or the Plan Sponsor in its sole discretion, may be designated as Eligible Individuals under the Plan.

 

	
1.18  
	
ERISA The Employee Retirement Income Security Act of 1974, as amended. Reference to any section or subsection of ERISA includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection.

 

	
1.19  
	
Income Inclusion Under Code § 409A Shall have the meaning set forth in Section 6.9.

 

	
1.20  
	
Interim Distribution Date Shall be a date that is prior to the Participant’s Separation from Service elected by the Participant to receive a distribution from the Plan

 

	
1.21  
	
Investment Credits and Debits Bookkeeping adjustments to Participants’ Accounts to reflect the hypothetical interest, earnings, appreciation, losses and depreciation that would be accrued or realized if assets equal to the value of such Accounts were invested in accordance
with such Participants’ Benefit Benchmarks.

 

	
1.22  
	
Nonqualified Deferred Compensation Plan A pension plan, within the meaning of ERISA §201(2), the purpose of which is to permit a select group of management or highly compensated Eligible Individuals to defer receipt of a portion of their Compensation to a future date.

 

	
1.23  
	
Participant An Eligible Individual who is currently deferring a portion of his or her Compensation under this Plan, or an Eligible Individual or former Eligible Individual who is still entitled to the payment of benefits under the Plan.

 

	
1.24  
	
Performance-Based Compensation Compensation, the amount of which, or entitlement to which, is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months. Organizational or
individual performance criteria are considered pre-established if established in writing by no later than 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 does not include any amount, or portion of any amount, that will be paid either regardless of performance or based upon a level of performance that is substantially certain to be met at the time
the criteria is established. If payments are based upon the satisfaction of subjective criteria, the subjective performance criteria must be bona fide and relate to the performance of the Participant, a group that includes the Participant or a business unit for which the Participant provides services, and the determination that any subjective performance criteria have been met must not be made by the Participant, a family member of the Participant or a person under the effective control of the Participant or
a family member of the Participant or where any amount of the compensation of the person making such determination is effectively controlled in whole or in part by the Participant or family member of the Participant. Compensation determined by reference to the value of the Plan Sponsor or an Affiliate, or the stock of the Plan Sponsor or an Affiliate, shall be Performance Based Compensation only as provided under Code § 409A and the regulations and binding guidance issued thereunder.  Performance
Based Compensation shall include but not be limited to annual incentive awards granted a Participant.

 

	
1.25  
	
Plan The Nonqualified Deferred Compensation Plan established by the Plan Sponsor under the terms of this Plan Document.

 

	
1.26  
	
Plan Administrator The individual(s) or committee appointed by the Plan Sponsor  to administer the Plan as provided herein. If no such appointment is made, the Chief Executive Officer of the Plan Sponsor (or the most senior officer of such Plan Sponsor if the Plan Sponsor
does not have a Chief Executive Officer) shall serve as the Plan Administrator. In no event shall a Plan Administrator who is a Participant be permitted to make decisions regarding his or her benefits under this Plan; rather, such decisions shall be made by the other members of any committee appointed to act as the Plan Administrator or, if no such committee has been appointed, the most senior officer of the Plan whose benefits are not at issue in the decision. If a Change in Control Event occurs with respect
to the Plan Sponsor or PICO, the existing Plan Administrator shall be removed, and a new Plan Administrator shall be appointed as provided in Section 8.9.

 

	
1.27  
	
Plan Sponsor  PICO Deferred Holdings, LLC, or any successor thereto, or any other entity appointed by PICO.  The term Plan Sponsor shall also include, where appropriate, any entity affiliated with the Plan Sponsor which adopts the Plan with the consent of the
Plan Sponsor.  Only the Plan Sponsor or PICO shall have the power to amend this Plan, appoint the Plan Administrator, or exercise any of the powers described in Section 8.3 hereof.

 

	
1.28  
	
Plan Termination Following a Change in Control Event Shall have the meaning set forth in Section 10.3.

 

	
1.29  
	
Plan Termination Following a Corporate Dissolution Shall have the meaning set forth in Section 10.4.

 

	
1.30  
	
Plan Termination in Connection with Termination of Certain Similar Arrangements Shall have the meaning set forth in Section 10.5.

 

	
1.31  
	
Regular Salary The Participant’s gross income paid by the Plan Sponsor during the Taxable Year as reportable on Internal Revenue Service Form W-2, including amounts excludible from gross income that are contributed by the Participant on a pre-tax basis to a salary reduction
retirement or welfare plan (including amounts contributed to this Plan), but excluding bonuses, Performance-Based Compensation, director fees, or any other irregular payments.

 

	
1.32  
	
Separation from Service A Participant shall have a Separation from Service under the circumstances described below.

 

	
(a)  
	
Employees A Participant who is a common law employee has a Separation from Service if the Participant voluntarily or involuntarily terminates employment with the Plan Sponsor and all Affiliates, for any reason other than Disability or death. A termination of employment occurs if
the facts and circumstances indicate that the Plan Sponsor and the Participant reasonably anticipate that no further services will be performed after a certain date or that the level of bona fide services the Participant will perform after such date (whether as an employee or an independent contractor) will decrease to no more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period
of services if the Participant has been providing services for less than 36 months). Notwithstanding the foregoing, the employment relationship is treated as continuing while the Participant is on military leave, sick leave or other bona fide leave of absence if the period of leave does not exceed 6 months, or if longer, so long as the Participant retains the right to reemployment with the Plan Sponsor or an Affiliate under an applicable statute or contract. When a leave of absence is due to any medically determinable
physical or mental impairment that can be expected to result in death or to last for a period of at least 6 months and such impairment causes the Participant to be unable to perform the duties of his or her position or any substantially similar position, a 29-month period of absence shall be substituted for the 6-month period above.

 

	
(b)  
	
Directors Except as otherwise provided hereunder, a Participant who is a member of the Board shall be considered to be an Independent Contractor for purposes of determining whether the Participant has had a Separation from Service.

 

	
(c)  
	
Dual Status If a Participant provides services to the Plan Sponsor and any Affiliates as an employee and as an independent contractor, the Participant must have a Separation from Service with the Plan Sponsor and all Affiliates both as an employee and an independent contractor
to have a Separation from Service. Notwithstanding the foregoing, if a Participant provides services to the Plan Sponsor and any Affiliates as an employee and as a director, (1) the services provided as a director are not taken into account in determining whether the Participant has a Separation from Service as an employee under the Plan if the Participant participates in the Plan as an employee, provided the Participant does not participate in any other nonqualified deferred compensation plan as a director that
is aggregated with the Plan under Code §409A, and (2) the services provided as an employee are not taken into account in determining whether the Participant has a Separation from Service as a director under the Plan if the Participant participates in the Plan as a director, provided the Participant does not participate in any other nonqualified deferred compensation plan as an employee that is aggregated with the Plan under Code §409A.

 

	
1.33  
	
Specified Employee A key employee (as defined in Code § 416(i) without regard to paragraph (5) thereof) of a Plan Sponsor or its Affiliates, any stock of which is publicly traded on an established securities market or otherwise. A Participant is a key employee if the Participant
meets the requirements of Code §416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Code §416(i)(5)) at any time during the 12-month period ending each December 31. If a Participant is a key employee at any time during the 12-month period ending on such December 31, the Participant is treated as a Specified Employee for the 12-month period beginning on the following April 1. Whether any stock of a Plan Sponsor or its Affiliates is publicly traded on
an established securities market or otherwise must be determined as of the date of the Participant’s Separation from Service.

 

	
1.34  
	
Spouse The individual to whom a Participant is married, or was married in the case of a deceased Participant who was married at the time of his or her death.

 

	
1.35  
	
Taxable Year The 12-consecutive-month period beginning each January 1 and ending each December 31.

 

	
1.36  
	
Trust The agreement, if any, between the Plan Sponsor and the Trustee under which assets may be delivered by the Plan Sponsor to the Trustee to offset liabilities assumed by the Plan Sponsor under the Plan. Any assets held under the terms of the Trust shall be the exclusive property
of the Plan Sponsor and shall be subject to the creditor claims of the Plan Sponsor with respect to whom such Trust has been established. Participants shall have no right, secured or unsecured, to any assets held under the terms of the Trust.

 

	
1.37  
	
Trustee The institution named by the Plan Sponsor in the Trust agreement, if any, and any corporation which succeeds the Trustee by merger or by acquisition of assets or operation of law.

 

	
1.38  
	
Unforeseeable Emergency A severe financial hardship to the Participant resulting from an illness or accident of the Participant or the Participant’s Spouse, Beneficiary or dependent (as defined in Code §152 without regard to §§ 152(b)(1), (b)(2) and (d)(1)(B)),
loss of the Participant’s property due to casualty or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

 

	
1.39  
	
Valuation Date The date on which Participant Accounts under the Plan are valued. The Valuation Date shall be each business day of the Taxable Year on which the New York Stock Exchange and, if a Trust has been established in connection with the Plan, the Trustee are open for business.

 

ARTICLE II                                

 

 

ELIGIBILITY AND PARTICIPATION

 

	
2.1  
	
Eligibility The Plan Sponsor will designate those persons who shall be considered Eligible Individuals under the Plan.

 

	
2.2  
	
Participation The Plan Administrator shall provide written notification to each Eligible Individual of his or her eligibility to participate in the Plan.

 

	
2.3  
	
Compensation Deferral Agreement In order to defer Compensation under the Plan for a given Taxable Year, an Eligible

 

Individual must enter into a Compensation Deferral Agreement with the Plan Sponsor authorizing the deferral of all or part of the Participant’s Compensation for such Taxable Year. The Compensation Deferral Agreement shall also specify the method of payment for benefits under the Plan and any Interim Distribution Date that shall apply
with respect to amounts credited to the Participant’s Account for such Taxable Year.

 

Upon receipt of a properly completed and executed Compensation Deferral Agreement, the Plan Administrator shall notify the Plan Sponsor to withhold that portion of the Participant’s Compensation specified in the Agreement.

 

The Compensation Deferral Agreement shall remain in effect for the duration of the Taxable Year to which it relates.

 

Except as provided below, a Compensation Deferral Agreement must be completed and returned to the Plan Sponsor prior to the first day of the Taxable Year in which services are performed for the Compensation deferred and shall be irrevocable except as otherwise provided hereunder.

 

	
(a)  
	
Initial Eligibility If an individual becomes an Eligible Individual on a date other than the first day of a Taxable Year and such individual has not at any time been eligible to participate in the Plan or any Aggregated Plan, the Compensation Deferral Agreement may be completed
and returned to the Plan Sponsor within 30 days after the Effective Date or within 30 days after the Eligible Individual’s initial eligibility date. In no event shall a Participant be permitted to defer Compensation with respect to services performed before the date on which the Compensation Deferral Agreement is signed by the Participant and accepted by the Plan Administrator.

 

	
(b)  
	
Former Participants With No Account Balance If an Eligible Individual who is a former Participant has been paid all amounts deferred under the Plan and any Aggregated Plan and, on and before the date of the last payment, is not eligible to continue (or elect to continue) to participate
in the Plan or any Aggregated Plan for periods after the last payment (other than through an election of a different time and form of payment with respect to the amounts paid), the Eligible Individual may be treated as initially eligible to participate in the Plan pursuant to subsection (a) above as of the first date following such last payment that the Eligible Individual again becomes eligible to participate in the Plan.

 

	
(c)  
	
Participants Ineligible for Two Years If an Eligible Individual who is a Participant or former Participant ceases being eligible to participate in the Plan and any Aggregated Plan, regardless of whether all amounts deferred under such plans have been paid, and subsequently becomes
eligible to participate in the Plan again, the Eligible Individual may be treated as being initially eligible to participate in the Plan pursuant to subsection (a) above if the Eligible Individual has not been eligible to participate in the Plan or an Aggregated Plan (other than through the accrual of earnings) at any time during the twenty-four (24) month period ending on the date the Eligible Individual again becomes eligible to participate in the Plan.

 

	
(d)  
	
Performance-Based Compensation A Compensation Deferral Agreement with respect to Performance-Based Compensation may be completed and returned to the Plan Sponsor no later than the date that is six months before the end of the performance period to which the Performance-Based Compensation
relates, provided the Participant performs 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, and further provided that in no event may an election to defer Performance-Based Compensation be made with respect to Compensation that has become readily ascertainable.

 

	
2.4  
	
Subsequent Changes in Time and Form of Payment A Participant may elect to change the time or form of payment of amounts distributable upon a Separation from Service or elect to change the time of payment of amounts distributable upon an Interim Distribution Date, provided, however,
that any such election shall be effective only if:

 

	
(a)  
	
the election does not accelerate the time or schedule of any payment within the meaning of Code § 409A;

 

	
(b)  
	
the election does not take effect until at least twelve 12 months after the date on which the election is made;

 

	
(c)  
	
the first payment with respect to which such election is made is deferred for a period of 5 years from the date such payment would otherwise have been made; and

 

	
(d)  
	
for a change to a payment made upon an Interim Distribution Date, such election is made at least 12 months before such Interim Distribution Date.

 

The Plan Administrator shall have sole and absolute discretion to decide whether such a request shall be approved but may approve no more than one such request for any Participant with respect to any Compensation Deferral or Matching or Discretionary Credit.

 

	
2.5  
	
Establishing a Reserve for Plan Liabilities The Plan Sponsor may, but is not required to, establish one or more Trusts to which the Plan Sponsor may transfer such assets as the Plan Sponsor determines in its sole discretion to assist in meeting its obligations under the Plan. Any
such assets shall be the property of the Plan Sponsor and remain subject to the claims of the Plan Sponsor’s creditors, to the extent provided under any Trust established with respect to such Plan Sponsor. The Trustee shall have no duty to determine whether the amounts forwarded by the Plan Sponsor are the correct amount or that they have been transmitted in a timely manner.

 

ARTICLE III                                

 

 

PARTICIPANT ACCOUNTS AND REPORTS

 

	
3.1  
	
Establishment of Accounts The Plan Administrator shall establish and maintain individual recordkeeping accounts and subaccounts, as applicable, on behalf of each Participant for purposes of determining each Participant’s benefits under the Plan. A Participant’s Account
does not represent the Participant’s ownership of, or any ownership interest in, any assets which may be set aside to satisfy the Plan Sponsor’s obligations under the Plan.

 

	
3.2  
	
Account Maintenance As of each Valuation Date, the Plan Administrator shall credit each Participant’s Account with the following:

 

	
(a)  
	
An amount equal to any Compensation Deferrals made by the Participant since the last Valuation Date;

 

	
(b)  
	
An amount equal to deemed Investment Credits under Section 3.3 below since the last Valuation Date. As of each Valuation Date, the Plan Administrator shall debit each Participant’s Account with the following:

 

	
(c)  
	
An amount equal to any distributions from the Plan to the Participant or Beneficiary since the last Valuation Date; and

 

	
(d)  
	
An amount equal to deemed Investment Debits under Section 3.3 below since the last Valuation Date; and

 

	
(e)  
	
An amount equal to any forfeitures incurred by the Participant since the last Valuation Date.

 

	
3.3  
	
Investment Credits and Debits The Accounts of Participants shall be adjusted for Investment Credits and Debits in accordance with this Section 3.3.

 

Participants shall have the right to specify one or more Benefit Benchmarks in which their Compensation Deferrals shall be deemed to be invested. The Benefit Benchmarks shall be utilized solely for purposes of adjusting their Accounts in accordance with procedures adopted by the Plan Administrator. The Plan Administrator shall provide the
Participant with a list of the available Benefit Benchmarks. From time to time, in the sole discretion of the Plan Administrator, the Benefit Benchmarks available within the Plan may be revised. All Benefit Benchmark selections must be denominated in whole percentages unless the Plan Administrator determines that lower increments are acceptable. A Participant may make changes in the manner in which future Compensation Deferrals are deemed to be invested among the various Benefit Benchmarks within the Plan in
accordance with procedures established by the Plan Administrator. A Participant may re-direct the manner in which earlier Compensation Deferrals, as well as any appreciation (or depreciation) to-date, are deemed to be invested among the Benefit Benchmarks available in the Plan in accordance with procedures established by the Plan Administrator.

 

As of each Valuation Date, the Plan Administrator shall adjust the Account of each Participant for interest, earnings or appreciation (less losses and depreciation) with respect to the then balance of the Participant’s Account equal to the actual results of the Participant’s deemed Benefit Benchmark elections.

 

All notional acquisitions and dispositions of Benefit Benchmarks which occur within a Participant’s Account, pursuant to the terms of the Plan, shall be deemed to occur at such times as the Plan Administrator shall determine to be administratively feasible in its sole discretion and the Participant’s Account shall be adjusted
accordingly. Accordingly, if a distribution or reallocation must occur pursuant to the terms of the Plan and all or some portion of the Account must be valued in connection with such distribution or reallocation (to reflect Investment Credits and Debits), the Plan Administrator may in its sole discretion, unless otherwise provided for in the Plan, select a date or dates which shall be used for valuation purposes.

 

Notwithstanding anything to the contrary, any Investment Credits or Debits made to any Participant’s Account following a Plan Termination or a Change in Control Event shall be made in a manner no less favorable to Participants than the practices and procedures employed under the Plan, or as otherwise in effect, as of the date of the
Plan Termination or the Change in Control Event.

 

Notwithstanding the Participant’s deemed Benefit Benchmark elections under the Plan, the Plan Sponsor shall be under no obligation to actually invest any amounts in such manner, or in any manner, and such Benefit Benchmark elections shall be used solely to determine the amounts by which the Participant’s Account shall be adjusted
under this Article III.

 

	
3.4  
	
Participant Statements  The Plan Administrator shall provide each Participant with a statement showing the credits and debits from his or her Account during the period from the last statement date. Such statement shall be provided to Participants as soon as administratively
feasible following the end of each Taxable Year and on such other dates as agreed to by the Plan Sponsor and the party maintaining Participant records.

 

ARTICLE IV                                

 

 

WITHHOLDING OF TAXES

 

	
4.1  
	
Withholding from Compensation For any Taxable Year in which Compensation Deferrals are made to or vested within the Plan (as applicable), the Plan Sponsor shall withhold the Participant’s share of income, FICA and other employment taxes from the portion of the Participant’s
Compensation not deferred. If deemed appropriate by the Plan Sponsor, all or any portion of a benefit under the Plan may be distributed in certain instances where necessary to facilitate compliance with applicable withholding requirements to the extent such distribution would not result in adverse tax consequences under Code § 409A. The amount of any such distribution shall not exceed the amount necessary to comply with applicable withholding requirements.

 

	
4.2  
	
Withholding from Benefit Distributions The Plan Sponsor (or the Trustee of the Trust, as applicable) shall withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld by the Plan Sponsor,
in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Plan Sponsor.

 

ARTICLE V                                

 

 

VESTING

 

	
5.1  
	
Vesting A Participant shall be immediately vested in (i.e., shall have a non-forfeitable right to) all Compensation Deferrals credited to his or her Account, including any Investment Credits or Debits associated therewith.

 

ARTICLE VI                                

 

 

PAYMENTS

 

	
6.1  
	
Benefits Except as otherwise provided under the Plan, a Participant’s or Beneficiary’s benefit payable under the Plan shall be the value of the Participant’s vested Account at the time a Distributable Event occurs with respect to such Participant or Beneficiary.
In no event, will a Participant’s right to a benefit under this Plan give such Participant a secured right or claim on any assets set aside by the Plan Sponsor to meet its obligations under the Plan. All payments from the Plan shall be subject to applicable tax withholding and shall commence (or be fully paid, in the event a lump sum form of distribution was selected) no later than ninety (90) days after the occurrence of the Distributable Event, except as otherwise provided herein.

 

	
6.2  
	
Separation from Service Payment In the event of a Participant’s Separation from Service, the Participant’s vested Account shall be paid in the form of a cash lump sum or, if elected by the Participant, in annual cash payments (over a period of two(2), five (5), or ten
(10) years). For purposes of Code § 409A, installment payments shall be treated as a single payment. If applicable, the initial installment shall be based on the value of the Participant’s vested Account, measured on the date of his or her Separation from Service, and shall be equal to 1/n (where ‘n’ is equal to the total number of annual benefit payments not yet distributed). Subsequent installment payments shall be computed in a consistent fashion, with the measurement date being the
anniversary of the original measurement date. Election of the form of the Separation from Service Payment must be provided to the Plan Administrator at the time the Participant first enters into a Compensation Deferral Agreement.

 

Notwithstanding the foregoing, a distribution resulting from a Separation from Service by a Participant who is a Specified Employee on the date of Separation from Service shall be made within the ninety (90) days following the date that is 6 months after the Separation from Service or, if earlier, within the ninety (90) days following the
death of the Specified Employee. The first payment made following the 6-month period described in the preceding sentence shall include all payments that otherwise would have been made after Separation from Service but for the delay required by this paragraph.

 

	
6.3  
	
Death Benefit In the event of the Participant’s death, whether before or after the Participant has otherwise incurred a Distributable Event or commenced receiving payments from the Plan, the Participant’s Beneficiary shall receive the balance of the Participant’s
vested Account in a single lump-sum cash payment.

 

	
6.4  
	
Domestic Relations Order Payment If it is necessary to satisfy a Domestic Relations Order, whether before or after the Participant has otherwise incurred a Distributable Event or commenced receiving payments from the Plan, the Plan Administrator shall pay to the Spouse, former
Spouse, child, or other dependent of the Participant, as specified in the Domestic Relations Order, the amount from the Participant’s vested Account required to fulfill the Domestic Relations Order. The Plan Administrator shall have complete discretion to determine whether the circumstances of the Participant meet the requirements for a Domestic Relations Order Payment under this Section. If the request for a payment due to a Domestic Relations Order is approved, the distribution shall be made at such time
and in such form as shall be necessary to satisfy the Domestic Relations Order.

 

	
6.5  
	
Unforeseeable Emergency Distribution If a Participant has an Unforeseeable Emergency, as defined herein, the Plan Administrator may pay to the Participant that portion of his or her vested Account which the Plan Administrator determines is reasonably necessary to satisfy the emergency.
The amounts distributed to the Participant as a result of an Unforeseeable Emergency may not exceed the amounts reasonably necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise, by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause
severe financial hardship) or by cancellation of Compensation Deferrals pursuant to Section 7.1. A Participant requesting an Unforeseeable Emergency Distribution shall apply for the payment in writing on a form approved by the Plan Administrator and shall provide such additional information as the Plan Administrator may require. The Plan Administrator shall have complete discretion to determine whether the financial hardship of the Participant constitutes an Unforeseeable Emergency under the Plan. If, subject
to the sole discretion of the Plan Administrator, the request for a withdrawal is approved, the distribution shall be made within ninety (90) days after the date of approval by the Plan Administrator.

 

	
6.6  
	
Election to Receive Interim Distributions A Participant may make an election, at the time he or she files a Compensation Deferral Agreement for a given Taxable Year, to have those Compensation Deferrals to which the agreement relates paid to him or her at an Interim Distribution
Date designated by the Participant. Such Compensation Deferrals, adjusted to reflect Investment Credits and Debits, shall be payable in a single cash lump sum, or an installment payment commencing, within ninety (90) days after an applicable Interim Distribution Date. The Participant’s selection of an Interim Distribution Date is irrevocable, except as provided in Section 2.4, and must comply with the definition of Interim Distribution Date under Section 1.25. Notwithstanding a Participant’s advance
election to designate Interim Distribution Dates, the amounts which would otherwise be subject to such Interim Distribution Dates shall be distributable upon a Distributable Event pursuant to the Plan, if such Distributable Event occurs prior to an applicable Interim Distribution Date.

 

	
6.7  
	
Payment upon Income Inclusion Under § 409A If the Plan Administrator determines at any time that the Plan fails to meet the requirements of Code § 409A with respect to a Participant, the Plan Administrator shall distribute to the Participant the amount from the Participant’s
vested Account that is required to be included in income as a result of such failure in a single lump-sum payment.

 

	
6.8  
	
Permissible Delay in Payments A payment may be delayed beyond the distribution date otherwise provided for under the Plan in one or more of the circumstances below

 

	
(a)  
	
Subject to Code § 162(m) A payment, including any portion thereof, will be delayed when the Plan Sponsor reasonably anticipates that its deduction with respect to such payment otherwise would be eliminated by application of Code § 162(m), provided that the payment is
made either during the Participant’s first Taxable Year in which the Plan Sponsor reasonably anticipates (or should reasonably anticipate) that if the payment is made during such year the deduction of such payment will not be barred by Code § 162(m) or during the period beginning with the date of the Participant’s Separation from Service and ending on the later of the last day of the Plan Sponsor’s taxable year in which the Participant has a Separation from Service or the 15th day
of the third month following the Participant’s Separation from Service, and provided further that when any scheduled payment to a Participant in the Plan Sponsor’s taxable year is delayed in accordance with this Section, all scheduled payments to such Participant that could be delayed in accordance with this Section are also delayed. When a payment is delayed to a date on or after the Participant’s Separation from Service, the payment shall be treated as a payment upon a Separation from Service
and, in the case of a Specified Employee, the date that is 6 months after a Participant’s Separation from Service is substituted for any reference to a Participant’s Separation from Service in the foregoing provisions of this Section.

 

	
(b)  
	
Violation of Federal Securities Laws or Other Applicable Law A payment will be delayed when the Plan Sponsor reasonably anticipates that the making of the payment will violate Federal securities laws or other applicable law, provided that the payment will be made at the earliest
date at which the Plan Sponsor reasonably anticipates that the making of the payment will not cause such violation. The making of a payment that would cause inclusion in gross income or the application of any penalty provision or other provision of the Code is not treated as a violation of applicable law.

 

	
6.9  
	
Beneficiary Designation A Participant shall have the right to designate a Beneficiary and to amend or revoke such designation at any time in writing. Such designation, amendment or revocation shall be effective upon receipt by the Plan Administrator. If the Beneficiary is a minor
or incompetent, benefits may be paid to a legal guardian, trustee, or other proper representative of the Beneficiary, and such payment shall completely discharge the Plan Sponsor and the Plan of all further obligations hereunder.

 

If no Beneficiary designation is made, or if the Beneficiary designation is held invalid, or if no Beneficiary survives the Participant and benefits are determined to be payable following the Participant’s death, the Plan Administrator shall direct that payment of benefits be made to the person or persons in the first of the below
categories in which there is a survivor. The categories of successor beneficiaries, in order, are as follows:

 

	
(a)  
	
Participant’s Spouse;

 

	
(b)  
	
Participant’s Domestic Partner

 

	
(c)  
	
Participant’s descendants, per stirpes (eligible descendants shall be determined by the intestacy laws of the state in which the decedent was domiciled);

 

	
(d)  
	
Participant’s parents;

 

	
(e)  
	
Participant’s brothers and sisters (including step brothers and step sisters); and

 

	
(f)  
	
Participant’s estate.

 

	
6.10  
	
Claims Procedure All claims for benefits under the Plan, and all questions regarding the operation of the Plan, shall be submitted to the Plan Administrator in writing. The Plan Administrator has complete discretion and authority to interpret and construe any provision of the Plan,
and its decisions regarding claims for benefits hereunder are final and binding.

 

	
(a)  
	
Presentation of Claim. Any Participant, Beneficiary or person claiming benefits under the Plan (such Participant, Beneficiary or other person being referred to below as a “Claimant”) may deliver to the Plan Administrator a written claim for a determination with respect
to benefits distributable to such Claimant from the Plan. The claim must state with particularity the determination desired by the Claimant.

 

Any claim by a Participant that a payment made under the Plan is less than the amount to which the Participant is entitled must be made in writing pursuant to the foregoing provisions of this Section within 180 days after the date of such payment. Notwithstanding any other provision of the Plan, a Participant shall forfeit all rights to
any amounts claimed if the Participant fails to make claim as provided in the preceding sentence.

 

	
(b)  
	
Notification of Decision The Plan Administrator shall consider a Claimant’s claim within a reasonable time, and shall notify the Claimant in writing:

 

	
(i)  
	
that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or

 

	
(ii)  
	
that the Plan Administrator has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:

 

	
(1)  
	
the specific reason(s) for the denial of the claim, or any part of it;

 

	
(2)  
	
specific reference(s) to pertinent provisions of the Plan upon which such denial was based;

 

	
(3)  
	
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;

 

	
(4)  
	
a description of the claim review procedure set forth in Section 6.12(c) below, including information regarding any applicable time limits and a statement regarding the Claimant’s right to bring an action under ERISA §502(a) following an adverse determination on review; and

 

	
(5)  
	
if the decision involved the Disability of the Participant, information regarding whether an internal rule or procedure was relied upon in making its decision and that the Claimant can request a copy of such rule or procedure, free of charge, upon request.

 

The Plan Administrator will notify the Claimant of an adverse decision within ninety (90) days after the date the claim was received, unless the Plan Administrator determines there are special circumstances that require an extension of time in which to make a decision. If an extension of time is needed, the Plan Administrator shall notify
the Claimant of the extension before the expiration of the original 90-day period. The notice will include a description of the special circumstances requiring an extension of time and an estimate of the date it expects a decision to be made. The extension shall not exceed an additional 90-day period.

 

If the adverse decision relates to a claim involving the Disability of the Participant, the Plan Administrator will notify the Claimant of an adverse decision within forty-five (45) days after the date the claim was received, unless the Plan Administrator determines that matters beyond its control require an extension of time in which to
make a decision. If an extension of time is needed, the Plan Administrator shall notify the Claimant of the extension before the expiration of the original 45-day period. The notice will include a description of the circumstances necessitating the extension and an estimate of the date it expects a decision to be made. The extension shall not exceed an additional 30-day period unless, within the 30-day period the Plan Administrator again determines that more time is needed due to matters beyond its control, in
which case notice of the need for not more than an additional thirty (30) days is provided to the Claimant before the first 30-day period expires. The notice will include a description of the circumstances requiring the extension and an estimate of the date it expects a decision to be made. Any extension notice will include information regarding the standards on which a determination of Disability will be made, the outstanding issues which prevent a decision from being made, and any additional information which
is needed in order to reach a decision. The Claimant will have forty-five (45) days to supply any additional information.

 

If the Plan Administrator notifies the Claimant of the need for an extension of time to make a decision regarding his or her claim in accordance with this Section 6.12(b), and the extension is needed due to the Claimant’s failure to provide information necessary to decide the claim, the period of time in which the Plan Administrator
must make a decision does not include the time between the date the notice of the extension was sent to the Claimant and the date the Claimant responds to the request for additional information.

 

	
(c)  
	
Review of a Denied Claim Within sixty (60) days after receiving a notice from the Plan Administrator that a claim has been denied, in whole or in part, a Claimant (or the Claimant’s duly authorized representative) may file with the Plan Administrator a written request for
a review of the denial of the claim. During the 60-day review period, the Claimant (or the Claimant’s duly authorized representative):

 

	
(i)  
	
may review relevant documents;

 

	
(ii)  
	
may submit written comments or other documents relating to the claim;

 

	
(iii)  
	
may request access to and copies of all relevant documents, free of charge;

 

	
(iv)  
	
may request a hearing, which the Plan Administrator, in its sole discretion, may grant.

 

The Plan Administrator will consider all documents and other information submitted by the Claimant in reviewing its previous decision, including documents not available to or considered by it during its initial determination.

 

If the appeal relates to a determination of the Plan Administrator involving the Disability of the Participant, the Claimant will have one-hundred-eighty (180) days following receipt of a denial to file a written request for review. In such event, no deference shall be given to the initial benefit determination, and the review shall be
conducted by an appropriate fiduciary who is someone other than the individual who made the initial determination or a subordinate of such individual. If the initial determination was based in whole or in part on a medical judgment, the reviewer shall consult with an appropriately trained and experienced health care professional, and shall disclose the identity of any experts who provided advice with regard to the initial decision. The health care professional whose advice is sought during the appeal process
will not be an individual who was consulted during the initial determination, nor a subordinate of such an individual.

 

	
(d)  
	
Decision on Review The Plan Administrator shall render its decision on review promptly, and not later than sixty (60) days after the filing of a written request for review of the denial, unless a hearing
is held or other special circumstances require additional time, in which case the Plan Administrator’s decision must be rendered within one-hundred-twenty (120) days after such date. If an extension of time is needed, the Plan Administrator shall notify the Claimant of the extension before the expiration of the original 60-day period. The notice will include a description of the circumstances requiring the extension and an estimate of the date it expects a decision to be made. Such decision must be written
in a manner calculated to be understood by the Claimant, and if the decision on review is adverse it must contain:

 

	
(i)  
	
specific reasons for the decision;

 

	
(ii)  
	
specific reference(s) to the pertinent Plan provisions upon which the decision was based;

 

	
(iii)  
	
a statement that the Claimant may receive, upon request and free of charge, access to and copies of relevant documents and information;

 

	
(iv)  
	
a statement describing any voluntary appeal procedures under the Plan and the Claimant’s right to bring an action under ERISA §502(a);

 

	
(v)  
	
if the decision involved the Disability of the Participant, information regarding whether an internal rule or procedure was relied upon in making its decision and that the Claimant can request a copy of such rule or procedure, free of charge, upon request;

 

	
(vi)  
	
if the decision involved the Disability of the Participant, a statement that the Claimant and the Plan may have other voluntary alternative dispute resolution options, such as mediation, and that the Claimant may find out what options are available by contacting the local U.S. Department of Labor Office and the state insurance regulatory agency; and

 

	
(vii)  
	
such other matters as the Plan Administrator deems relevant.

 

If the appeal involves the Disability of the Participant, the decision of the Plan Administrator will be made within forty-five (45) days after the filing of the written request for review, unless special circumstances require additional time, in which case the Plan Administrator’s decision will be made within ninety (90) days after
the date the request was filed. If an extension of time is needed, the Plan Administrator shall notify the Claimant of the extension before the expiration of the original 45-day period. The notice will include a description of the circumstances requiring the extension and an estimate of the date it expects a decision to be made.

 

If the Plan Administrator notifies the Claimant of the need for an extension of time to make a decision regarding his or her appeal in accordance with this Section 6.12(d), and the extension is needed due to the Claimant’s failure to provide information necessary to decide the appeal, the period of time in which the Plan Administrator
must make a decision does not include the time between the date the notice of the extension was sent to the Claimant and the date the Claimant responds to the request for additional information.

 

ARTICLE VII                                

 

 

CANCELLATION OF DEFERRALS

 

	
7.1  
	
Unforeseeable Emergency If a Participant has an Unforeseeable Emergency, as defined herein, the Plan Administrator may cancel all future Compensation Deferrals pertaining to Compensation not yet earned and required to be made pursuant to the Participant’s current Compensation
Deferral Agreement if reasonably necessary to satisfy the Participant’s financial hardship subject to the standards and requirements for an Unforeseeable Emergency Distribution set forth in Section 6.5. If a Participant receives a hardship distribution from a qualified plan of the Plan Sponsor pursuant to Code § 401(k)(2)(B)(IV), the Plan Administrator shall cancel all future Compensation Deferrals pertaining to Compensation not yet earned and required to be made pursuant to the Participant’s
current Compensation Deferral Agreement, and the Participant will be prohibited from making Compensation Deferrals under the Plan for at least six (6) months after receipt of the hardship distribution or such longer period as may be prescribed by the qualified plan.

 

ARTICLE VIII                                

 

 

ARTICLE VIII PLAN ADMINISTRATION

 

	
8.1  
	
Appointment The Plan Administrator shall serve at the pleasure of the Plan Sponsor, who shall have the right to remove the Plan Administrator at any time upon thirty (30) days’ written notice. The Plan Administrator shall have the right to resign upon thirty (30) days’
written notice to the Plan Sponsor.

 

	
8.2  
	
Duties of Plan Administrator The Plan Administrator shall be responsible to perform all administrative functions of the Plan. These duties include but are not limited to:

 

	
(a)  
	
Communicating with Participants in connection with their rights and benefits under the Plan;

 

	
(b)  
	
Reviewing Benefit Benchmark elections received from Participants;

 

	
(c)  
	
Arranging for the payment of taxes (including income tax withholding), expenses and benefit payments to Participants under the Plan;

 

	
(d)  
	
Filing any returns and reports due with respect to the Plan;

 

	
(e)  
	
Interpreting and construing Plan provisions and settling claims for Plan benefits; and

 

	
(f)  
	
Serving as the Plan’s designated representative for the service of notices, reports, claims or legal process.

 

	
8.3  
	
Plan Sponsor The Plan Sponsor has sole responsibility for the establishment and maintenance of the Plan. The Plan Sponsor through its Board shall have the power and authority to appoint the Plan Administrator, Trustee and any other professionals as may be required for the administration
of the Plan. The Plan Sponsor shall also have the right to remove any individual or party appointed to perform administrative, investment, fiduciary or other functions under the Plan. The Plan Sponsor may delegate any of its powers to the Plan Administrator, Board member or a committee of the Board.

 

	
8.4  
	
Administrative Fees and Expenses All reasonable costs, charges and expenses incurred by the Plan Administrator or the Trustee in connection with the administration of the Plan or the Trust shall be paid by the Plan Sponsor. If not so paid, such costs, charges and expenses shall
be charged to the Trust, if any, established in connection with the Plan. The Trustee shall be specifically authorized to charge its fees and expenses directly to the Trust. If the Trust has insufficient liquid assets to cover the applicable fees, the Trustee shall have the right to liquidate assets held in the Trust to pay any fees or expenses due. Notwithstanding the foregoing, no Compensation other than reimbursement for expenses shall be paid to a Plan Administrator who is an employee of the Plan Sponsor.

 

	
8.5  
	
Plan Administration and Interpretation The Plan Administrator shall have complete discretionary control and authority to determine the rights and benefits and all claims, demands and actions arising out of the provisions of the Plan or any Participant, Beneficiary, deceased Participant,
or other person having or claiming to have any interest under the Plan. The Plan Administrator shall have complete discretion to interpret the Plan and to decide all matters under the Plan. Such interpretation and decision shall be final, conclusive, and binding on all Participants and any person claiming under or through any Participant. Any individual serving as Plan Administrator who is a Participant will not vote or act on any matter relating solely to himself or herself. When making a determination or calculation,
the Plan Administrator shall be entitled to rely on information furnished by a Participant, a Beneficiary, the Plan Sponsor, or other party. The Plan Administrator shall have the responsibility for complying with any reporting and disclosure requirements of ERISA.

 

	
8.6  
	
Powers, Duties, Procedures The Plan Administrator shall have such powers and duties, may adopt such rules, may act in accordance with such procedures, may appoint such officers or agents, may delegate such powers and duties, may receive such reimbursement and compensation, and
shall follow such claims and appeal procedures with respect to the Plan as it may establish, each consistently with the terms of the Plan.

 

	
8.7  
	
Information To enable the Plan Administrator to perform its functions, the Plan Sponsor shall supply full and timely information to the Plan Administrator on all matters relating to the Compensation of Participants, their employment, retirement, death, Separation from Service,
and such other pertinent facts as the Plan Administrator may require.

 

	
8.8  
	
Indemnification of Plan Administrator The Plan Sponsor agrees to indemnify and to defend to the fullest extent permitted by law any officer(s), employee(s) or Board members who serve as Plan Administrator (including any such individual who formerly served as Plan Administrator)
against all liabilities, damages, costs and expenses (including reasonable attorneys’ fees and amounts paid in settlement of any claims approved by the Plan Sponsor) occasioned by any act or omission to act in connection with the Plan, if such act or omission is in good faith.

 

	
8.9  
	
Plan Administration Following a Change in Control Event Notwithstanding anything to the contrary in this Article VIII or elsewhere in the Plan or Trust, upon a Change in Control Event with respect to the Plan Sponsor
or PICO the individual serving as Chief Executive Officer of such Plan Sponsor immediately prior to such Change in Control Event who is also a Participant in the Plan, or if the Plan Sponsor has no Chief Executive Officer who is also a Participant in the Plan, the Plan Sponsor’s most senior officer who is also a Participant in the Plan, shall have the right to appoint an individual, third party or committee to serve as Plan Administrator. Such appointment shall be made in writing and copies thereof shall
be delivered to the Board, to the existing Plan Administrator, to the Trustee, and to all Plan Participants. The Trustee and all other service providers shall be entitled to rely fully on instructions received from the successor Plan Administrator and shall be indemnified to the fullest extent permitted by law for acting in accordance with the proper instructions of the successor Plan Administrator.

 

ARTICLE IX                                

 

 

TRUST FUND

 

	
9.1  
	
Trust The Plan Sponsor may establish a Trust for the purpose of accumulating assets which may, but need not be used, by the Plan Sponsor to satisfy some or all of its financial obligations to provide benefits to Participants under this Plan. Any trust created under this Section
9.1 shall be domiciled in the United States of America, and no assets of the Plan shall be held or transferred outside the United States. All assets held in the Trust shall remain the exclusive property of the Plan Sponsor and shall be available to pay creditor claims of the Plan Sponsor in the event of insolvency, to the extent provided under any Trust established with respect to such Plan Sponsor. The assets held in Trust shall be administered in accordance with the terms of the separate Trust Agreement between
the Trustee and the Plan Sponsor.

 

	
9.2  
	
Unfunded Plan In no event will the assets accumulated by the Plan Sponsor in the Trust be construed as creating a funded Plan under the applicable provisions of ERISA or the Code, or under the provisions of any other applicable statute or regulation. Any funds set aside by the
Plan Sponsor in Trust shall be administered in accordance with the terms of the Trust.

 

	
9.3  
	
Assignment and Alienation No Participant or Beneficiary of a deceased Participant shall have the right to anticipate, assign, transfer, sell, mortgage, pledge or hypothecate any benefit under this Plan. The Plan Administrator shall not recognize any attempt by a third party to
attach, garnish or levy upon any benefit under the Plan except as may be required by law.

 

ARTICLE X                                

 

 

AMENDMENT AND PLAN TERMINATION

 

	
10.1  
	
Amendment The Plan Sponsor or PICO shall have the right to amend this Plan without the consent of any Participant or Beneficiary hereunder, provided that no such amendment shall have the effect of reducing any of the vested benefits to which a Participant or Beneficiary has accrued
a right as of the effective date of the amendment. Notwithstanding the foregoing, the Plan Sponsor shall have the right to amend this Plan in any manner whatsoever without the consent of any Participant or Beneficiary to comply with the requirements of Code §409A and any binding guidance thereunder to avoid adverse tax consequences even if such amendment has the affect of reducing a vested benefit or existing right of a Participant or Beneficiary hereunder.

 

	
10.2  
	
Plan Termination The Plan Sponsor may terminate or discontinue the Plan in whole or in part at any time. No further Compensation Deferrals shall be permitted after the Taxable Year in which the Plan Termination occurs, except that the Plan Sponsor shall be responsible to pay any
benefit attributable to vested amounts credited to the Participant’s Account as of the effective date of termination (following any adjustments to such Accounts in accordance with Article III hereof). If the Plan is terminated in accordance with this Section 10.2, the Plan Administrator shall make distribution of the Participant’s vested benefit upon the occurrence of a Distributable Event with respect to a Participant. A Participant’s vested benefit shall be adjusted to reflect Investment Credits
and Debits for all Valuation Dates between Plan Termination and the occurrence of a Participant’s Distributable Event.

 

	
10.3  
	
Plan Termination Following a Change in Control Event If, within the 30 days preceding or the 12 months following a Change in Control Event, the Plan Sponsor takes irrevocable action to terminate the Plan,

 

the Plan will be terminated and liquidated with respect to the Participants of each corporation that experienced the Change in Control Event. The Plan will be terminated under this Section 10.3 only if all other arrangements sponsored by the Plan Sponsor experiencing the Change in Control Event that would be aggregated with the Plan as
a single plan under Code § 409A are also terminated, so all participants under such aggregated arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within 12 months after the date the Plan Sponsor takes all necessary action to terminate the Plan and the other arrangements. For purposes of this Section 10.3, when the Change of Control Event results from an asset purchase transaction, the applicable Plan Sponsor with the discretion to terminate the Plan
and the other arrangements is the Plan Sponsor that is primarily liable immediately after the transaction for the payment of deferred compensation. Upon a Plan Termination Following a Change in Control Event, no further Compensation Deferrals  shall be made, and the Plan Administrator shall be responsible to pay any benefit attributable to vested amounts credited to the Participant’s Account as soon as practicable following date on which the Plan Sponsor irrevocably takes all necessary action
to terminate the Plan (following any final adjustments to such Accounts in accordance with Article III hereof), but not later than 12 months following such date.

 

	
10.4  
	
Plan Termination Following a Corporate Dissolution The Plan Sponsor in its discretion may terminate and liquidate the Plan and make the payments provided below within 12 months after a Corporate Dissolution provided that the value of the Participants’ vested benefits is included
in the Participants’ gross incomes in the latest of the following years (or, if earlier, the year in which the amount is actually or constructively received):

 

	
(a)  
	
the calendar year in which the Plan Termination occurs;

 

	
(b)  
	
the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or

 

	
(c)  
	
the first calendar year in which the payment is administratively practicable.

 

Upon a Plan Termination Following a Corporate Dissolution, no further Compensation Deferrals shall be made, and the Plan Administrator shall be responsible to pay any benefit attributable to vested amounts credited to the Participant’s Account as of the effective date of termination (following any final adjustments to such Accounts
in accordance with Article III hereof).

 

	
10.5  
	
Plan Termination in Connection with Termination of Certain Similar Arrangements  The Plan Sponsor in its discretion may terminate the Plan and make the distribution provided below provided that

 

	
(a)  
	
the termination does not occur proximate to a downturn in the financial health of the Plan Sponsor and its Affiliates;

 

	
(b)  
	
the Plan Sponsor terminates all other arrangements that would be aggregated with the Plan as a single plan under Code § 409A if the same Participant had deferrals of compensation under all of the other arrangements;

 

	
(c)  
	
no payments in liquidation of the Plan are made within 12 months after the date the Plan Sponsor takes all necessary action to irrevocably terminate the Plan, other than payments that would be payable under the terms of the Plan if action to terminate the Plan had not occurred;

 

	
(d)  
	
all payments are made within 24 months after the date the Plan Sponsor takes all necessary action to irrevocably terminate the Plan; and

 

	
(e)  
	
neither the Plan Sponsor nor any Affiliate adopts a new plan that would be aggregated with any terminated plan or arrangement under the definition of what constitutes a plan for purposes of Code §409A if the same Participant participated in both arrangements, at any time within 3 years following the date the Plan Sponsor takes all necessary action
to irrevocably terminate the Plan.

 

Upon a Plan Termination in Connection with the Termination of Certain Similar Arrangements, no further Employer Discretionary Credits or Employer Matching Credits shall be made, and no further Compensation Deferrals shall be made after the Taxable Year in which the Plan Termination in Connection with the Termination of Certain Similar Arrangements
occurs. The Plan Administrator shall be responsible to pay any benefit attributable to vested amounts credited to the Participant’s Account as soon as practicable after distributions are permissible under Code § 409A (following any final adjustments to such Accounts in accordance with Article III hereof).

 

	
10.6  
	
Effect of Payment The full payment of the balance of a Participant’s vested Account under the provisions of the Plan shall completely discharge all obligations to a Participant and his designated Beneficiaries under this Plan and each of the Participant’s Compensation
Deferral Agreements shall terminate.

 

ARTICLE XI                                

 

 

MISCELLANEOUS

 

	
11.1  
	
Total Agreement This Plan document and the Compensation Deferral Agreement, Beneficiary designation and other administration forms shall constitute the total agreement or contract between the Plan Sponsor and the Participant regarding the Plan. No oral statement regarding the Plan
may be relied upon by a Participant or Beneficiary. The Plan Sponsor or Plan Administrator shall have the right to establish such procedures as are necessary for the administration or operation of the Plan or Trust, and such procedures shall also be considered a part of the Plan unless clearly contrary to the express provisions thereof.

 

	
11.2  
	
Employment Rights Neither the establishment of this Plan nor any modification thereof, nor the creation of any Trust or Account, nor the payment of any benefits, shall be construed as giving a Participant or other person a right to employment with the Plan Sponsor or any Affiliate
or any other legal or equitable right against the Plan Sponsor of any Affiliate except as provided in the Plan. In no event shall the terms of employment of any Eligible Individual be modified or in any way be affected by the Plan.

 

	
11.3  
	
Non-Assignability None of the benefits, payments, proceeds or claims of any Participant or Beneficiary shall be subject to attachment or garnishment or other legal process by any creditor of such Participant or Beneficiary, nor shall any Participant or Beneficiary have the right
to alienate, commute, pledge, encumber or assign any of the benefits or payments or proceeds which he or she may expect to receive, contingently or otherwise under the Plan.

 

	
11.4  
	
Binding Agreement Any action with respect to the Plan taken by the Plan Administrator or the Plan Sponsor or the Trustee or any action authorized by or taken at the direction of the Plan Administrator, the Plan Sponsor or other authorized party shall be conclusive upon all Participants
and Beneficiaries entitled to benefits under the Plan.

 

	
11.5  
	
Receipt and Release Any payment to any Participant or Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Plan Sponsor, the Plan Administrator and the Trustee under the Plan, and the Plan Administrator
may require such Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect. If any Participant or Beneficiary is determined by the Plan Administrator to be incompetent by reason of physical or mental disability (including not being the age of majority) to give a valid receipt and release, the Plan Administrator may cause payment or payments becoming due to such person to be made to a legal guardian, trustee, or other proper representative of the Participant
or Beneficiary without responsibility on the part of the Plan Administrator, the Plan Sponsor or the Trustee to follow the application of such funds.

 

	
11.6  
	
Furnishing Information A Participant or Beneficiary will cooperate with the Plan Administrator or any representative thereof by furnishing any and all information requested by the Plan Administrator and take such other actions as may be requested in order to facilitate the administration
of the Plan and the payments of benefits hereunder, including but not limited to taking such physical examinations as the Plan Administrator may deem necessary.

 

	
11.7  
	
Compliance with Code § 409A Notwithstanding any provision of the Plan to the contrary, all provisions of the Plan will be interpreted and applied to comply with the requirements of Code §409A and any regulations and applicable binding guidance so as to avoid adverse tax
consequences. No provision of the Plan, however, is intended or shall be interpreted to create any right with respect to the tax treatment of the amounts paid or payable hereunder, and neither the Plan Sponsor nor any Affiliate shall under any circumstances have any liability to a Participant or Beneficiary for any taxes, penalties or interest due on amounts paid or payable under the Plan, including taxes, penalties or interest imposed under Code § 409A.

 

	
11.8  
	
Insurance The Plan Sponsors, on their own behalf or on behalf of the trustee of the Trust, and, in their sole discretion, may apply for and procure insurance on the life of the Participant, in such amounts and in such forms as they may choose. The Plan Sponsors or the trustee of
the Trust, as the case may be, shall be the sole owner and beneficiary of any such insurance. The Participant shall have no interest whatsoever in any such policy or policies, and at the request of the Plan Sponsor shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to which the Plan Sponsor have applied for insurance.

 

	
11.9  
	
Governing Law Construction, validity and administration of this Plan shall be governed by applicable Federal law and applicable state law of California, without regard to the conflict of law provisions of such state law. If any provision shall be held by a court of competent jurisdiction
to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective.

 

	
11.10  
	
Headings and Subheadings Headings and subheadings in this Plan are inserted for convenience only and are not to be considered in the interpretation of the provisions hereof.

 

IN WITNESS WHEREOF, PICO Deferred Holdings, LLC has adopted the amendment and restatement of this Plan as of the Effective Date in accordance with the resolutions of the Compensation Committee o f he Board of Directors of PICO Holdings Inc. attached hereto.

 

 

WEST\21629892.2                                                                    

328146-151900

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