Document:

Exhibit 10.19

The William Carter
Company Severance Plan

SECTION 1   Purpose
of the Plan

The William Carter Company
(the “Company”) will provide severance benefits to eligible employees who are
involuntarily separated from employment under qualifying conditions. The terms
and conditions for payment of severance benefits are those set forth in The
William Carter Company Severance Plan (the “Plan”). This Plan will be effective
as of the date it is executed by an authorized Company official and it will
supercede and replace the Oshkosh B’Gosh, Inc. Severance Pay Plan dated as
of April 25, 2005, and any other prior severance pay plan or arrangement
(whether written or oral) with respect to the eligible employees who are or may
become participants in this Plan. The Plan is intended to constitute an
employee welfare benefit plan (as defined in Section 3(1) of ERISA)
and to comply with the applicable requirements of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”) and the Internal Revenue Code
of 1986, as amended (the “Code”).

SECTION 2   Eligibility

Eligibility for severance benefits is limited to
Covered Employees who are terminated under conditions that qualify as a Covered
Termination.

A.   Covered
Employees

The Plan is
intended to cover all employees of The William Carter Company or any of its
direct or indirect subsidiaries, except:

a.      Employees classified as temporary, occasional, on-call, or
seasonal;

b.      Employees covered by a collective bargaining agreement; and

c.      Employees employed pursuant to a written employment contract
for a definite term of employment.

B.   Covered
Terminations

To be eligible for
severance benefits, a Covered Employee must be involuntarily terminated due to:

a.      Permanent shutdown or closing of a facility where the Covered
Employee is employed at the time of the shutdown or closing, with no offer to
transfer the employee;

b.      Sale of the facility to another company where the Covered
Employee is employed at the time of the sale, and the employee is not offered
continued employment with the purchaser of the facility;

c.      Elimination of the Covered Employee’s job position without
available reassignment; or

d.      A voluntary termination when the Covered Employee declines a
transfer or relocation of his or her principal work location that is more than
35 miles from the Covered Employee’s former principal work location.

A Covered Employee’s
termination of employment for any other reason shall not be considered as a
Covered Termination.

 1
 

SECTION 3   Conditions

Severance benefits
are subject to the following conditions:

1.                An eligible
employee must sign and return to the Company a release agreement in a form to
the reasonable satisfaction of the Company releasing the Company from all
claims or liabilities relating to his or her employment or termination of
employment; and must not revoke such agreement within the seven (7) day
period provided in such  agreement.

2.                All Company
property, including, but not limited to, keys, credit cards, documents,
records, identification cards, office equipment, portable computers, car/mobile
telephones, pagers, hand-held electronic devices, and parking cards, must be
returned to the Company on the last day of employment.

3.                The employee must
execute such documents as are necessary to assign to the Company all rights to
inventions, patents, or other intellectual property belonging to the Company.

4.                The employee must
not disclose confidential information or trade secrets of the Company. “Confidential
information” includes, but is not limited to, information, knowledge, or data
concerning any technique, plan, procedure, process, apparatus, method, or
product manufactured, used, or developed by the Company; information about
suppliers and/or customers of the Company; information about the finances of
the Company and information which is a trade secret. If this condition is
violated, all severance benefits will cease immediately.

5.                The employee must
not recruit or solicit employees to leave the employment of the Company while
receiving severance payments. If this condition is violated, all severance
benefits will cease immediately.

6.                If
an employee is rehired by the Company before the end of the severance period,
in any position, all severance pay will cease immediately.

SECTION 4   Severance
Payments

Severance pay is based on three (3) factors:
years of continuous service; the employee’s classification; and whether the
employee was employed by Oshkosh B’Gosh, Inc. as of July 14, 2005.

A.   Years of Continuous Service.   An employee will be credited with one year of continuous service for
each twelve (12) month period of continuous employment with the Company.

B.   Amount of Severance Pay.

1.   Salaried exempt employees.   Salaried exempt employees will receive one week
of severance pay for each year of continuous service, with a minimum of two (2) weeks
of severance and a maximum of twenty-six (26)* weeks of severance. A week of
severance pay is calculated by dividing the employee’s annual base salary in
effect immediately prior to termination by 52 weeks and multiplying the amount
by the number of years of continuous service. Bonuses, commissions, overtime,
and other compensation are not included in the calculation of severance pay.

*Note:   In the case of a
change in control of the Company (acquisition, merger, takeover, etc.) the 26
weeks maximum cap will be changed to a maximum of 52 weeks for exempt salaried
employees if a covered termination occurs within 2 calendar years of the change
of control.

2.   Non-exempt and Hourly Employees.   Non-exempt and hourly employees will receive one
week of severance pay for each year of continuous service with a minimum of two

 2
 

(2) weeks of severance and a maximum of eight (8) weeks
of severance pay. A week of severance pay is based on the standard hours per
week, excluding overtime, bonuses or commissions.

3.   Oshkosh B’Gosh, Inc. Employees.   Covered Employees who were employees
of Oshkosh B’Gosh, Inc. as of July 14, 2005 when Oshkosh B’Gosh, Inc.
was acquired by The William Carter Company will be eligible to elect
optional  severance pay and benefits for
a Covered Termination that occurs prior to July 15, 2008. Attached as
Appendix A is the schedule for optional severance pay and benefits for
Covered  Employees of Oshkosh B’Gosh, Inc.
as of July 14, 2005. Employees of retail stores are specifically excluded
from the optional severance pay and benefits described in Appendix A.

C.   Distribution.   Severance payments will begin on the
first payroll period after all of the conditions to payment are satisfied and
will be paid according to normal payroll practices  until the severance is fully paid. The
Company may elect, in its sole discretion, to make severance payments as a lump
sum payment.

D.   Tax
Treatment.   Severance
payments are subject to required federal and state income and employment tax
and withholdings.

E.   Payments
Made By Mistake.   An
employee shall be required to return to the Plan Administrator any severance
payments, or portion thereof, made due to a mistake of fact or law.

F.   No Assignment.   Under no circumstances may severance
payments be subject to anticipation, alienation, pledge, sale, assignment,
garnishment, attachment, execution, encumbrance, levy, lien, or charge, and any
attempt to cause any such severance payments to be so subjected shall not be
recognized, except to such extent as may be required by law.

SECTION 5   Other
Benefits

All benefits cease at date of termination or on the
date provided by the plan documents for such benefits. Coverage for medical,
dental, and vision insurance may be continued under COBRA. Group life insurance
may be continued pursuant to the terms and conditions of that plan.

In addition to the
severance payments described in Section 4, during the period of severance,
eligible employees can receive medical, dental, vision, or group life insurance
coverage for the employee (and any eligible dependants) at the cost of the
employee-portion of such coverage. In order to receive the Company’s subsidy
for these benefits, the eligible 
employee (and any dependants) must qualify for continued coverage under
the terms and conditions of the plans or by law; must elect to continue the
coverage; and must pay through payroll deduction the employee-portion of such
coverage. The Company’s subsidy for these benefits will expire with the end of
the severance payments.

SECTION 6   General
Provisions

6.1 Allocation of
Responsibilities Among Named Fiduciaries:

(a)   The named
fiduciaries (as defined in ERISA) with respect to the Plan and the fiduciary
duties and responsibilities allocated to each (which duties and
responsibilities shall be carried out in accordance with the other terms and
provisions of the Plan and applicable law) shall be as follows:

(1)          Board: To appoint and
remove members of the Committee.

(2)          Committee:

 3
 

(i)    To
administer the Plan in accordance with its terms, except to the extent powers
to administer the Plan are specifically delegated to another named fiduciary
(including the Plan Administrator) or other person or persons as provided in
the Plan; and

(ii)   To
administer the claims procedure under Section 7 of the Plan.

(3)   Plan
Administrator:

(i)    To assume
the responsibility for the day-to-day operation and administration of the Plan,
unless and until otherwise provided by the Committee;

(ii)   To file
such reports as may be required by the United States Department of Labor,
Internal Revenue Service and any other government agency to which reports may
be required to be submitted from time to time;

(iii) To comply
with the requirements of applicable law for disclosure of plan provisions and
other information relating to the Plan to employees  and other interested parties;

(iv)  To
administer the claims procedure under Section 7 of the Plan; and

(v)   To engage
any technical advisers and employ such clerical and related personnel to assist
in the day-to-day operation and administration of the Plan as he or she deems
requisite or desirable.

(b)   Except as
otherwise provided in ERISA, a named fiduciary shall not be responsible or
liable for any act or omission of another named fiduciary with respect to
fiduciary responsibilities allocated to such other named fiduciary. A named
fiduciary of the Plan shall be responsible and liable only for acts or
omissions with respect to fiduciary duties specifically allocated to and
designated as the responsibility of a named fiduciary.

(c) All fiduciaries
with respect to the Plan shall discharge their duties as such solely in the
interest of eligible employees and their successors in interest, and (i) for
the exclusive purpose of providing benefits to eligible employees and defraying
reasonable expenses of administering the Plan, (ii) with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in
the conduct of an enterprise of like character and with like aims, and (iii) in
accordance with the terms of the Plan, except to the extent the terms of the
Plan may be inconsistent with applicable law.

6.2   Rights Against the Company:   Neither
the establishment of the Plan nor any modification thereof shall be construed
as giving to any employee or other person any legal or equitable right against
the Company, any officer or employee of the Company, the Board, the Committee,
the Plan or the Plan Administrator, except to the extent of enforcement of a
claim for benefits as herein provided.

6.3   Facility of Payment:   If
any eligible employee entitled to a benefit under the Plan shall, in the
judgment of the Plan Administrator, be physically, mentally or legally
incapable of receiving or acknowledging receipt of any payment under the Plan
to which he or she is entitled, the Plan Administrator, upon the receipt of
satisfactory evidence of the eligible employee’s incapacity and that another
person or institution is maintaining him or her and that no guardian or
committee has been appointed for him or her, may cause any payment otherwise
payable to him or her to be made to such person or institution. Any payment
made pursuant to this Section 6.3 shall fully discharge the Company, the
Committee, the Plan Administrator and the Plan to the extent of such payment.

6.4   Communications to Participants:   In
accordance with the requirements of ERISA, the Plan Administrator shall communicate
the principal terms of the Plan to employees. In addition, to the extent
required by ERISA, the Plan Administrator shall furnish a copy to or make
available for examination by employees of any document pertaining to the
establishment or the operation of the Plan. Any such 

 4
 

document shall be made
available for examination by employees during regular office hours of the
Company, at the principal office of the Plan Administrator and at such other
places as may be required by ERISA. The Plan Administrator may make a
reasonable charge to cover the cost of furnishing complete copies of any
document.

6.5   Assignment:   No
benefit payable to or with respect to any eligible employee at any time under
the Plan shall be subject in any manner to alienation, sale, transfer,
assignment, execution, levy, garnishment, pledge, attachment, or encumbrance of
any kind, either voluntary or involuntary, and any attempt to do so shall be
void and of no effect. No benefit under the Plan shall in any manner be liable
for or subject to the debts, contracts, liabilities, engagements or torts of
any employee. If any employee entitled to benefits under the Plan becomes
bankrupt or attempts to anticipate, alienate, sell, transfer, assign, pledge,
encumber or charge or otherwise dispose of any benefit under the Plan, or if
any attempt is made to subject any such benefit to the debts, contracts,
liabilities, engagements or torts of such employee, then such benefit shall
cease and terminate in the discretion of the Plan Administrator, and the Plan
Administrator may hold or apply the same or any part thereof in such manner as
the Plan Administrator may deem proper.

SECTION 7   Claims
Procedure

The Plan shall be
administered with a claims procedure that complies with the requirements of
Section 503 of ERISA and the regulations thereunder, as set forth in the
document entitled The William Carter Company Severance Plan Administrative
Provisions and Claims Procedure, the provisions of which are incorporated
herein by reference.

SECTION 8   Plan
Amendment or Termination

The Plan may be amended or
terminated in any respect at any time, retroactively or otherwise, either by
the Company’s Executive Committee or in a writing signed by the Chief Executive
Officer of the Company. Notwithstanding the foregoing, no amendment of the Plan
may reduce the severance benefits of any employee who has previously executed
the Agreement and complied with the conditions as set forth in the Plan.

SECTION 9   Representations
Contrary to the Plan

No employee, officer,
director, or agent of the Company has the authority to alter, vary, modify, or
waive the terms or conditions of the Plan, except as set forth in Sections 6
and 8 above. No verbal or written representations that are in addition to or
contrary to the terms of the Plan and its written amendments shall be binding
upon the Plan, the Plan Administrator, or the Company.

SECTION 10   No
Employment Rights

The Plan shall not confer
employment rights upon any person. No person shall be entitled, by virtue of
the Plan, to remain in the employ of the Company, and nothing in the Plan shall
restrict the right of the Company to terminate the employment of any employee
at any time.

SECTION 11   Applicable
Law and Severability

The Plan shall be governed and construed in accordance
with the law of the state of Georgia and the Employee Retirement Income
Security Act of 1974, as amended. If any provision of the Plan is found, held,
or deemed by a court of competent jurisdiction to be void, unlawful, or
unenforceable under any applicable statute or other controlling law, the
remainder of the Plan shall continue in full force and effect.

 5

Appendix A

Optional Severance Pay and Benefits for Employees

of Oshkosh B’Gosh, Inc. as of July 14, 2005

Covered Employees who were employed with Oshkosh B’Gosh, Inc.
as of July 14, 2005, and who are eligible for severance benefits due to a
Covered Termination that occurs prior to July 15, 2008, may elect to
receive either (a) severance pay and benefits under The William Carter
Company Severance Plan or (b) the following severance pay and related
benefits. Employees of retail stores are not eligible for the optional
severance pay and benefits described below.

	
  Status

  	
   

  	
   

  	
   

  	
  Formula

  (Weeks of

  Severance per

  year of

  continuous

  service)

  	
   

  	
  Min

  Wks

  	
   

  	
  Max

  Wks

  	
   

  	
  100% COBRA

  Subsidy*

  For Medical

  Insurance

  	
   

  	
  Outplacement

  (# days)

  	
   

  
	
  Nonexempt
  Employees

  	
   

  	
   

  	
  1

  	
   

  	
   

  	
  4

  	
   

  	
   

  	
  12

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
   

  	
   

  	
  30

  	
   

  	
   

  
	
  Plant
  Non-bargaining Employees

  	
   

  	
   

  	
  1

  	
   

  	
   

  	
  2

  	
   

  	
   

  	
  8

  	
   

  	
   

  	
   

  	
  No

  	
   

  	
   

  	
   

  	
  2

  	
   

  	
   

  
	
  Exempt

  	
   

  	
   

  	
  2

  	
   

  	
   

  	
  4

  	
   

  	
   

  	
  16

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
   

  	
   

  	
  90

  	
   

  	
   

  
	
  Mgrs (not on ICP)

  	
   

  	
   

  	
  2

  	
   

  	
   

  	
  8

  	
   

  	
   

  	
  24

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
   

  	
   

  	
  90

  	
   

  	
   

  
	
  Dir or Mgrs (on
  ICP)

  	
   

  	
   

  	
  4

  	
   

  	
   

  	
  16

  	
   

  	
   

  	
  36

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
   

  	
   

  	
  120

  	
   

  	
   

  
	
  Sr. VP/VP

  	
   

  	
   

  	
  N/A

  	
   

  	
   

  	
  N/A

  	
   

  	
   

  	
  52

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
   

  	
   

  	
  180

  	
   

  	
   

  

*                    The Company
will pay 100% of the COBRA premium for medical insurance during the severance
period.

“COBRA” means the group health continuation
requirements of section 4980B of the Internal Revenue Code of 1986, as amended,
and applicable regulations thereunder. The COBRA subsidy shall apply only if
the Covered Employee (and, to the extent applicable, his or her covered
dependents) is eligible for and elects COBRA coverage and shall apply for the
period commencing on the date of the Covered Termination and ending on the
earlier of (i) the end of the severance period or (ii) the date on
which COBRA continuation coverage terminates by its terms. Any benefits
provided pursuant the Plan shall be provided as part of, and not in addition
to, the benefits to which a Covered Employee (or his or her covered dependents)
is entitled under COBRA.

 6

THE WILLIAM CARTER
COMPANY SEVERANCE PLAN

ADMINISTRATIVE PROVISIONS AND CLAIMS PROCEDURE

Section 1:   Administrative
Provisions.

1.1   Committee:

(a)   Except as
otherwise provided in this Section 1.1, Section 1.2 and Section 2,
the Plan shall be administered by the Committee. The Committee shall be
responsible for the general administration, operation and interpretation of the
Plan and for carrying out its provisions, except to the extent all or any of
such obligations specifically are imposed on the Board or another person
(including the Plan Administrator) or persons or entity. Unless and until
otherwise provided by the Committee, the responsibility for the day-to-day
operation and administration of the Plan shall be and hereby is delegated to
the Company’s Senior Vice President of Human Resources as the Plan
Administrator.

(b)   The
Committee shall be responsible for recommending to the Board, or its authorized
officer, any amendments to the Plan or the termination of the Plan.

(c)   The members
of the Committee shall elect a chairman and may elect an acting chairman. The
members of the Committee shall elect a secretary who may or may not be a member
of the Committee. The Committee may appoint from its membership such
subcommittees with such powers as the Committee determines, and may authorize
one or more of its members or any agent to execute or deliver any instruments
or to make any payment on behalf of the Committee.

(d)   The
Committee shall hold meetings upon such notice and at such places and intervals
as it may determine from time to time. Notice of meetings shall not be required
if notice is waived in writing by all members of the Committee in office at the
time, or if all such members are present at the meeting.

(e)   A majority
of the members of the Committee in office at the time shall constitute a quorum
for the transaction of business. All resolutions or other actions taken by the
Committee at any meeting shall be by vote of a majority of those present and
entitled to vote at such meeting. Resolutions may be adopted or other action
taken without a meeting upon written consent thereto signed by all members of
the Committee.

(f)    The
Committee shall maintain full and complete records of its deliberations and
decisions. The records of the Committee shall contain all relevant data
pertaining to individual participants and their rights under the Plan.

(g)   Subject to
the limitations of the Plan and applicable law, including ERISA, the Age
Discrimination in Employment Act of 1967, as amended, the Americans with
Disabilities Act of 1990, as amended, the Family and Medical Leave Act of 1993,
the Uniformed Services Employment and Reemployment Rights Act of 1994, and
COBRA, the Committee from time to time may establish rules, regulations,
guidelines or by-laws for the administration of the Plan and the transaction of
its business. Any power or authority which the Committee has discretion to
exercise under the Plan shall be exercised in a nondiscriminatory manner.

(h)   No
individual member of the Committee shall have any right to vote or decide upon
any matter relating solely to himself or any of his rights or benefits under
the Plan, except that such member may sign a unanimous written consent to
resolutions adopted or other action taken without a meeting.

(i)    Subject to
the objective Plan terms and the claims procedure set forth in Section 2,
and except as otherwise provided in this Section 1.1 and Section 1.2,
the Committee shall have the duty and discretionary authority to interpret and
construe the provisions of the Plan and decide any dispute which may arise
regarding the rights of participants, including the discretionary authority to
interpret the Plan and to make determinations as to any Employee’s eligibility
to enter the Plan and a participant’s benefits under the 

 1
 

Plan. Interpretations and
determinations made by the Committee shall apply uniformly to all persons
similarly situated and shall be binding and conclusive upon all interested
persons. Such interpretations and determinations shall only be set aside if the
Committee is found to have acted arbitrarily and capriciously in interpreting
and construing the provisions of the Plan.

(j)    No fee or
compensation shall be paid to any member of the Committee for his services as
such.

(k)   The
Committee shall be entitled to reimbursement by the Company for its reasonable
expenses properly and actually incurred in the performance of its duties in the
administration of the Plan.

(l)    The
Committee in its discretion may waive any notice requirements in the Plan. A
waiver of notice in one or more cases shall not be deemed to constitute a
waiver of notice in any other case. Any power or authority which the Committee
has discretion to exercise under the Plan shall be exercised in a
nondiscriminatory manner.

(m)  To the
maximum extent permitted by ERISA, no member of the Committee shall be
personally liable by reason of any contract or other instrument executed by him
or on his behalf as a member of the Committee or for any mistake of judgment
made in good faith. The Company shall indemnify and hold harmless, directly
from its own assets (including the proceeds of any insurance policy the
premiums for which are paid from the Company’s assets), each member of the
Committee and other officer, Employee or director of the Company to whom any duty
or power relating to the administration or interpretation of the Plan may be
delegated or allocated by the Committee against any unreimbursed or uninsured
cost or expense (including any sum paid in settlement of a claim with the prior
written approval of the Board) arising out of any act or omission to act in
connection with the Plan, unless arising out of such person’s own fraud, bad
faith, willful misconduct or gross negligence.

1.2   Plan
Administrator:

(a)   The Plan
Administrator shall be responsible for the day-to-day operation and
administration of the Plan and the compliance of the Plan with all requirements
of ERISA and the Code. The Plan Administrator shall be the agent for service of
legal process on the Plan.

(b)   The Plan
Administrator shall have all powers necessary to administer the Plan in all of
its details, subject to the requirements of applicable law. By way of
illustration and not limitation, the powers of the Plan Administrator shall
include the following:

(i)    To
establish and enforce such rules, regulations, guidelines or by-laws as he
deems necessary or proper for the efficient administration of the Plan, except
as otherwise provided by the Committee in accordance with the provisions of Section 6.1
of the Plan;

(ii)   To
interpret and construe the provisions of the Plan and determine the rights of
participants under the Plan, as more fully set forth in Section 1.2(c);

(iii)  To engage
any actuary, attorney, accountant, insurance Company or similar entity,
consultant, or any other technical adviser to assist in the day-to-day
operation and administration of the Plan and to perform such other duties as
are required in connection therewith, and to employ such clerical and related
personnel as he deems requisite or desirable in carrying out the provisions of
the Plan;

(iv)  To review
the financial condition of the Plan and determine the financial needs of the
Plan in relation to the liabilities and obligations thereof at least annually. The
Plan Administrator shall communicate such financial needs to the Company so
that the funding policy may be appropriately coordinated to meet such needs;
and

 2
 

(v)    To
allocate and delegate his responsibilities under the Plan and to designate
other persons to carry out any of his responsibilities under the Plan, any such
allocation, delegation, or designation to be in writing.

(c)   Subject to
the objective Plan terms, and except as otherwise provided in Section 1.1
and Section 2, the Plan Administrator shall have the duty and
discretionary authority to interpret and construe the provisions of the Plan
and decide any dispute which may arise regarding the rights of participants,
including the discretionary authority to interpret the Plan and to make
determinations as to any Employee’s eligibility to enter the Plan and a participant’s
benefits under the Plan. Interpretations and determinations made by the Plan
Administrator shall apply uniformly to all persons similarly situated and shall
be binding and conclusive upon all interested persons. Such interpretations and
determinations shall only be set aside if the Plan Administrator is found to
have acted arbitrarily and capriciously in interpreting and construing the
provisions of the Plan.

(d)   The Plan
Administrator shall be responsible for disclosing certain documents and information
concerning the Plan to participants in accordance with Section 6.4 of the
Plan.

(e)   In
administering the Plan, the Plan Administrator shall be entitled to the extent
permitted by law to rely conclusively on all tables, valuations, certificates,
opinions and reports which are furnished by, or in accordance with the
instructions of, any actuary, attorney, accountant, insurance Company or
similar entity, consultant, or any other technical adviser engaged by the Plan
Administrator.

(f)    No fee or
compensation shall be paid to the Plan Administrator for his services as such.

(g)   The Plan
Administrator shall be entitled to reimbursement by the Company for his
reasonable expenses properly and actually incurred in the performance of his
duties in the administration of the Plan.

(h)   To the
maximum extent permitted by ERISA, the Plan Administrator shall not be
personally liable by reason of any contract or other instrument executed by him
as Plan Administrator or for any mistake of judgment made in good faith. The
Company shall indemnify and hold harmless, directly from its own assets
(including the proceeds of any insurance policy the premiums for which are paid
from the Company’s assets), the Plan Administrator and any other Employee of
the Company to whom any duty or power relating to the administration or
interpretation of the Plan may be delegated or allocated by the Plan
Administrator against any unreimbursed or uninsured cost or expense (including
any sum paid in settlement of a claim with the prior written approval of the
Committee) arising out of any act or omission to act in connection with the
Plan, unless arising out of such person’s own fraud, bad faith, willful
misconduct or gross negligence.

(i)    The Plan
Administrator may correct errors and, so far as practical, may adjust any
payment accordingly. In the event that a payment made to or for the benefit of
a participant is less than the amount to which the participant is entitled, the
Plan Administrator shall adjust the underpayment as soon as practicable. In the
event that an overpayment is made to or for the benefit of a participant, or in
the event a payment is made to or for the benefit of an individual who is not
entitled to payments under the Plan, the Plan Administrator shall take all
reasonable steps as soon as practicable to recover the overpayment, including
the institution of judicial proceedings.

Section 2:    Claims
Procedure.

2.1   Filing a
Claim for Benefits:   If (a) a participant
whose employment is terminated does not receive any benefits under the Plan or
does not receive all of the benefits to which he believes he is entitled under
the Plan, or (b) a claim that is deemed to have been automatically filed
on behalf of the participant is denied by the Plan Administrator, the
participant (the “claimant”) may nonetheless make a claim for benefits provided
under the Plan by filing a written claim with the Plan Administrator in
accordance with 

 3
 

procedures and guidelines
established from time to time by the Plan Administrator. The Plan Administrator
shall decide whether such claim shall be allowed.

2.2   Notification
to Claimant of Decision:   Within 90 days after
receipt of a claim by the Plan Administrator, or within 180 days if special
circumstances require an extension of time, the Plan Administrator shall notify
the claimant of his decision with regard to the claim. In the event of special
circumstances requiring an extension of time, written notice of extension shall
be furnished to the claimant prior to the expiration of the initial 90-day
period, setting forth the special circumstances and the date by which notice of
decision with respect to the claim shall be furnished. If such claim shall be
wholly or partially denied, notice thereof shall be in writing and worded in a
manner calculated to be understood by the claimant. Such notice shall set
forth:  (a)  the specific reason or
reasons for the denial; (b) specific reference to pertinent provisions of
the Plan on which the denial is based; (c) a description of any additional
material or information necessary for the claimant to perfect the claim and an
ex­planation of why such material or information is necessary; and (d) an
explanation of the procedure for review of the denied claim. If the Plan
Administrator fails to notify the claimant of the decision in a timely manner,
the claim shall be deemed denied as of the close of the initial 90-day
period, or the close of the extension period, if applicable.

2.3   Procedure
for Review:   Within 60 days following receipt by
the claimant of notice denying the claim, in whole or in part, or, if such
notice shall not be given, within 60 days following the latest date on which
such notice could have been timely given, the claimant may appeal denial of the
claim by filing a written application for review with the Committee. Following
such request for review, the Committee shall fully and fairly review the
decision denying the claim. Prior to the decision of the Committee pursuant to Section 2.4,
the claimant shall be given an opportunity to review pertinent documents and to
submit issues and comments in writing.

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

(a)   Within 60
days following receipt by the Committee of the request for review, or within
120 days if special circumstances require an extension of time, the Committee
shall notify the claimant in writing of its decision with regard to the claim. In
the event of special circumstances requiring an extension of time, written
notice of the extension shall be furnished to the claimant prior to the
commencement of the extension. If the decision on review is not furnished in a
timely manner, the claim shall be deemed denied as of the close of the initial
60-day period, or the close of the extension period, if applicable.

(b)   With
respect to a claim that is denied in whole or in part, the decision on review
shall set forth specific reasons for the decision, shall be written in a manner
calculated to be understood by the claimant, and shall cite specific references
to the pertinent Plan provisions on which the decision is based.

(c)   The
decision of the Committee shall be final and conclusive.

2.5   Action by
Authorized Representative of Claimant:   All
actions set forth in this Section 2 to be taken by the claimant may
likewise be taken by a representative of the claimant duly authorized by him to
act in his behalf on such matters. The Plan Administrator and the Committee may
require such evidence as either may reasonably deem necessary or advisable to
verify the authority of any such representative to act.

 4Exhibit 10.2.3

INVESTMENT
MANAGEMENT AGREEMENT

WHITE
MOUNTAINS ADVISORS LLC, a Delaware limited liability company (the “Advisor”),
having an address at 370 Church Street, Guilford, Connecticut 06437, and                                                                           , a                      
corporation (the “Client”), having an address at One Beacon Street,
Boston, Massachusetts 02108, hereby enter into this Investment Management
Agreement, dated as of November 14, 2006 (this “Agreement”), and hereby
agree that the Advisor shall act as discretionary adviser with respect to the
assets of the Client described below (the “Investment Account”) on the
following terms and conditions:

1.                                       Investment Account.  The Investment Account shall consist of cash and
the securities of the Client.

2.                                       Services of Advisor.  By execution of this Agreement, the Advisor
accepts appointment as adviser for the Investment Account with full discretion
and agrees to supervise and direct the investments of the Investment Account in
accordance with the investment objectives, policies and restrictions described
in the investment guidelines to be furnished by the Client to the Advisor from
time to time (the “Investment Guidelines”).  The Investment Guidelines are for the stated
purpose of assisting the Advisor in the performance of its investment
duties.  The Advisor will manage the
Investment Account in accordance with such Investment Guidelines as provided to
the Advisor from time to time.  In
addition, the Advisor agrees to provide treasury management advisory services
specific to the Investment Account (“Treasury Management Services”), as
directed by the Client.  The Treasury
Management Services include, without limitation, (i) executing investment
transactions to support short-term treasury cash requirements, (ii) settling
inter-company and dividend treasury transactions with cash and securities,
(iii) settling quarterly tax liability payments from the Investment Account,
(iv) providing preliminary valuation for securities supporting treasury
transactions, (v) assisting the Client in evaluating securities lending
programs administered by custodians designated by the Client and acceptable to
the Advisor, and (vi) collaborating with the Client to provide treasury
transaction support to custodians and accounting servicing providers designated
by the Client and acceptable to the Advisor.

3.                                       Discretionary Authority.  Advisor shall have full discretion and
authority, without obtaining any prior approval, as the Client’s agent and
attorney-in-fact: (a) to make all investment decisions in
respect of the Investment Account on the Client’s behalf and at the Client’s
sole risk; (b) to buy, sell, exchange, convert, liquidate or otherwise
trade in any stock, bond and other securities in respect of the Investment
Account; (c) to place orders with respect to, and to arrange for, any of
the foregoing; and (d) in furtherance of the foregoing, to do anything
which the Advisor shall deem requisite, appropriate or advisable in connection
therewith, including, without limitation, the selection of such brokers,
dealers, and others as the Advisor shall determine in its absolute
discretion.  

4.                                       Liability.  In the performance of its services, the
Advisor will not be liable for any error in judgment or any acts or failures to
act except those resulting from the Advisor’s gross negligence, willful
misconduct or malfeasance.  Nothing
herein shall in any way constitute a waiver or limitation of any right of any
person under the federal securities laws. 
The Advisor shall have no

 1
 

responsibility whatsoever for
the management of any assets of the Client other than the Investment Account.

5.                                       Custody.  The assets of the Investment Account shall be
held in one or more separately identified accounts in the custody of one or
more banks, trust companies, brokerage firms or other entities designated by
the Client and acceptable to the Advisor. 
The Advisor will communicate its investment purchase, sale and delivery
instructions directly with the Client’s custodian or other qualified
depository.  The Client shall be
responsible for all custodial arrangements and the payment of all custodial
charges and fees, and the Advisor shall have no responsibility or liability
with respect to custody arrangements or the acts, omissions or other conduct of
the custodians.

6.                                       Brokerage.  When placing orders for the execution of
transactions for the Investment Account, the Advisor may allocate all
transactions to such brokers or dealers, for execution on such markets, at such
prices and commission rates, as are selected by the Advisor in its sole
discretion.  In selecting brokers or
dealers to execute transactions, the Advisor need not solicit competitive bids
and does not have an obligation to seek the lowest available commission
cost.  It is not the Advisor’s practice
to negotiate “execution only” commission rates, and, in negotiating commission
rates, the Advisor shall take into account the financial stability and
reputation of brokerage firms and brokerage and research services provided by
such brokers.  The Client may be deemed
to be paying for research provided or paid for by the broker which is included
in the commission rate although the Client may not, in any particular instance,
be the direct or indirect beneficiary of the research services provided.  Research furnished by brokers may include,
but is not limited to, written information and analyses concerning specific
securities, companies or sectors; market, finance and economic studies and forecasts;
financial publications; statistics and pricing services; discussions with
research personnel; and software and data bases utilized in the investment
management process.  The Client
acknowledges that since commission rates are generally negotiable, selecting
brokers on the basis of considerations which are not limited to applicable
commission rates may at times result in higher transaction costs than would
otherwise be obtainable.  The Advisor is
hereby authorized to, and the Client acknowledges that the Advisor may,
aggregate orders on behalf of the Investment Account with orders on behalf of
other clients of the Advisor.  In such
event, allocation of the securities purchased or sold, as well as expenses
incurred in the transaction, shall be made in a manner which the Advisor
considers to be the most fair and equitable to all of its clients, including
the Client.

                                                7.                                       Representations and Warranties.

(a)          The
Client represents, warrants, covenants and agrees that:

(i)                             it has full legal power and authority to enter into this Agreement;

(ii)                          the appointment of the Advisor hereunder is permitted by the Client’s
governing documents and has been duly authorized by all necessary corporate or
other action, and

(iii)                       it will indemnify the Advisor and hold it harmless against any and
all  losses, costs, claims and
liabilities which the Advisor may suffer or

 2
 

incur arising out of any material breach of these representations and
warranties of the Client.

(b)         The Advisor represents, warrants, covenants
and agrees that:

(i)                             it has full legal power and authority to
enter into this Agreement;

(ii)                          it is registered as an investment adviser
with the Securities and Exchange Commission pursuant to the Investment Advisers
Act of 1940, as amended (the “Advisers Act”);

(iii)                       entering into this Agreement has been duly authorized
by all necessary corporate or other action under the Advisor’s governing
document, and

(iv)                      it will indemnify the Client and hold it
harmless against any and all losses, costs, claims and liabilities which the
Client may suffer or incur arising out of any material breach of any
representations and warranties of the Advisor.

8.                                       Reports.  The Advisor shall provide the Client with
reports containing the status of the Investment Account at least monthly, and
will provide written advisory report letters to the Client on a quarterly
basis.  The Advisor shall also provide
the Client with preliminary valuation of the Investment Account on a monthly
basis.  The preliminary valuation will be
determined in accordance with the Advisor’s valuation policies and procedures,
a copy of which shall be provided to the Client at least annually.  All records maintained pursuant to this
Agreement shall be subject to examination by the Client and by persons
authorized by it, or by appropriate governmental authorities, at all times upon
reasonable notice.  The Advisor shall
provide copies of trade tickets, custodial reports and other records the Client
reasonably requires for accounting or tax purposes.

9.                                       Management Fee,
Treasury Management Fee and Expenses.

(a)   The Advisor will be paid a quarterly
management and treasury management fee (the “Management Fee”) for its
investment advisory and treasury management services provided hereunder,
determined in accordance with Schedule A to this Agreement.  During the term of this Agreement, the
Management Fee shall be billed and payable in arrears on a quarterly basis
within 10 days after the last day of each calendar quarter based upon the value
of the Investment Account as of the last day of the immediately preceding
calendar quarter.  The Management Fee
shall be pro-rated for any partial quarter. 
Capital inflows and outflows result in an adjustment to the value of
assets under management that serves as the base of the Management Fee.  This adjustment has the effect of time-weighting
capital flows in the account resulting in the Management Fee being properly
charged for only the period of time such assets are actually managed by the
Advisor.  It is understood that, in the
event that the Management Fee is to be paid by the custodian out of the
Investment Account, the Client will provide written authorization to the
custodian to pay the Management Fee directly from the Investment Account.

(b)   The Client shall be responsible for all
expenses incurred directly in connection with transactions effected on behalf
of the Client pursuant to this Agreement and shall include:  custodial fees; PAM accounting service fees,
Charles River compliance service fees, investment expenses such as commissions;
and other expenses reasonably related to the purchase, sale or 

 3
 

transmittal of Investment
Account assets (other than research fees and expenses with respect to the
Investment Account).

10.                                 Confidential
Relationship.  All information and advice
furnished by either party to the other party pursuant to this Agreement shall
be treated by the receiving party as confidential and shall not be disclosed to
third parties except as required by law.

11.                                 Assignment.  This agreement may not be
assigned (within the meaning of the Advisers Act) by either party without the
written consent of the other party, and any assignment without such consent
shall automatically cause the termination hereof.

12.                                 Directions to the
Advisor.  All directions by or on behalf of the Client
to the Advisor shall be in writing signed by or on behalf of the Client.  The Advisor shall be fully protected in
relying upon any such writing which the Advisor believes to be genuine and
signed or presented by the proper person or persons, shall be under no duty to
make any investigation or inquiry as to any statement contained therein and may
accept the same as conclusive evidence of the truth and accuracy of the
statements therein contained.

13.                                 Services to Other
Clients.  It is understood that the Advisor acts as
investment adviser to other clients and may give advice and take action with
respect to such clients that differs from the advice given or the action taken
with respect to the Investment Account. 
Nothing in this Agreement shall restrict the right of the Advisor, its
members, managers, officers, employees or affiliates to perform investment
management or advisory services for any other person or entity, and the
performance of such service for others shall not be deemed to violate or give
rise to any duty or obligation to the Client.

14.                                 Investment by the
Advisor for Its Own Account.  Nothing in this
Agreement shall limit or restrict the Advisor or any of its members, managers,
officers, employees or affiliates from buying, selling or trading any
securities for its or their own account or accounts.  The Client acknowledges that the Advisor and
its members, managers, officers, employees, affiliates and other clients may at
any time have, acquire, increase, decrease or dispose of securities which are
at or about the same time acquired or disposed of for the account of the
Client.  The Advisor shall have no
obligation to purchase or sell for the Investment Account or to recommend for
purchase or sale by the Investment Account any security that the Advisor or its
members, managers, officers, employees or affiliates may purchase or sell for
itself or themselves or for any other client.

15.                                 Proxies.  Subject to any other written instructions of
the Client, the Advisor is hereby appointed as the Client’s agent and
attorney-in-fact in its discretion to vote, convert or tender in an exchange or
tender offer any securities in the Investment Account, to execute proxies,
waivers, consents and other instruments with respect to such securities, to
endorse, transfer or deliver such securities and to participate in or consent
to any plan of reorganization, merger, combination, consolidation, liquidation
or similar plan with reference to such securities, and the Advisor shall not
incur any liability to the Client by reason of any exercise of, or failure to exercise,
any such discretion.

16.                                 Notices.  All notices and instructions with respect to
securities transactions or any other matters contemplated by this Agreement
shall be deemed duly given when delivered in writing, via electronic
communications or deposited by first-class mail to the following addresses:

 4
 

(a) if to the Advisor, at its
address set forth above, Attention: Chief Financial Officer, or (b) if to the
Client, at its address set forth above, Attention: Chief Financial
Officer.  The Advisor or the Client may
change its address or specify a different manner of addressing itself by giving
notice of such change in writing to the other party.

17.                                 Entire Agreement;
Amendment.  This Agreement sets forth the entire
agreement of the parties with respect to management of the Investment Account,
supersedes any previous Investment Management Agreement between the Advisor and
the Client and shall not be amended except by an instrument in writing signed
by the parties hereto.

18.                                 Arbitration.  Any controversy or claim arising out of or
relating to this Agreement, or the breach of the same, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction. 
All arbitration expenses shall be borne equally by the Advisor and the
Client.

19.                                 Termination.  This Agreement shall continue in force in
accordance with paragraph 21, Effective Date and Term of this
Agreement.  During such term, this
Agreement may be terminated by the Client upon written notice to the Advisor at
least sixty (60) days prior to the date upon which such termination is to
become effective only (i) for cause (including material non-performance by the
Advisor), (ii) if there is a change in control of the Advisor (for this
purpose, a change in control represents 50% or more of voting interest of the
Advisor) or (iii) if White Mountains Insurance Group, Ltd.’s voting interest in
Client falls below 50%.  Following the
end of the initial fixed term and any extensions, as provided by paragraph 21, Effective
Date and Term of this Agreement, the Agreement may be terminated by either
party without penalty by written notice to the other party at least sixty (60)
days prior to the date upon which such termination is to become effective,
provided that the Client shall honor any trades executed but not settled before
the date of any such termination.  Upon
termination of this Agreement, any accrued and unpaid Management Fee and
Treasury Management Fee hereunder shall be paid by the Client to the Advisor.

20.                                 Governing Law.  To
the extent that the interpretation or effect of this Agreement shall depend on
state law, this Agreement shall be governed
by and construed in accordance with the laws of the State of New York.

21.                                 Effective Date and
Term.  This Agreement shall become effective on the
first date written above for an initial fixed term of three years, which will
be extendible by the Client for an additional one year (a fourth year) at/prior
to the end of the second year of the term, and if so extended, for a second
additional year (a fifth year) at/prior to the end of the third year of the
term.

22.                                 Receipt of Disclosure
Statement.  The Client acknowledges receipt of a copy of
Part II of the Advisor’s Form ADV in compliance with Rule 204-3(b) under the
Investment Advisers Act of 1940, as amended, more than 48 hours prior to the
date of execution of this Agreement.  The
Advisor shall annually and without charge, upon request by the Client, deliver
to the Client the current version of such form or a written document containing
at least the information then required to be contained in such form.

 5
 

23.                                 Counterparts.  This Agreement may be executed in two
counterparts, each one of which shall be deemed to be an original.

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed by their respective
duly authorized representatives as of the date first written above.

	
  ADVISOR:

  	
   

  	
  CLIENT:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WHITE MOUNTAINS ADVISORS, LLC

  	
   

  	
  [see client schedule]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mark K. Dorcus

  	
   

  	
  By:

  	
  /s/ Frederick J. Turcotte

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print:

  	
  Mark K. Dorcus

  	
   

  	
  Print:

  	
  Frederick J. Turcotte

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title: 

  	
  President and Managing Director

  	
   

  	
  Title: 

  	
  Vice President, Investor Relations, Treasurer 

  
	
   

  	
   

  	
   

  	
   

  	
  and Tax Director

  
									

 6
 

SCHEDULE A

FEE SCHEDULE

1.                                       Investment Account.

	
  Assets Under Management

  	
   

  	
  Value

  	
   

  	
  Annual Fee

  	
   

  	
  Quarterly Fee

  	
   

  
	
  Investment Grade Fixed
  Income:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  — Up to $999
  million

  	
   

  	
  Market

  	
   

  	
  10.0
  basis points (0.1% or 0.001)

  	
   

  	
  2.5
  basis points (0.025% or 0.00025)

  	
   

  
	
  — Next $1 -
  $1.999 billion

  	
   

  	
  Market

  	
   

  	
  8.5
  basis points

  	
   

  	
  2.125
  basis points

  	
   

  
	
  — Amounts over
  $2 billion

  	
   

  	
  Market

  	
   

  	
  7.5
  basis points

  	
   

  	
  1.875
  basis points

  	
   

  
	
  High Yield Debt

  	
   

  	
  Market

  	
   

  	
  25.0
  basis points

  	
   

  	
  6.25
  basis points

  	
   

  
	
  Fully Funded Hedge
  Funds, Limited Partnerships and Limited Liability Companies

  	
   

  	
  Market

  	
   

  	
  100.0
  basis points

  	
   

  	
  25.0
  basis points

  	
   

  
	
  Private Equities and
  Other Deferred Fundings:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  — First 2 Years
  of Fund’s Life

  	
   

  	
  Committed

  	
   

  	
  100.0
  basis points

  	
   

  	
  25.0
  basis points

  	
   

  
	
  — Thereafter

  	
   

  	
  Market

  	
   

  	
  100.0 basis points

  	
   

  	
  25.0 basis points

  	
   

  

 

For purposes of calculating
the fee for Investment Grade Fixed Income investments as provided above, the
assets under management of OneBeacon Insurance Group, Ltd. and all of its
direct and indirect subsidiaries will be aggregated.

2.                     Treasury Management Services.  The
Advisor will be paid a quarterly fee for the Treasury Management Services
computed at the annual rate of 1.75 basis points (0.0175%) of the aggregate
value of the net assets of the Client’s Investment Account on an annual basis
utilizing the methodologies described in Paragraph 1 of Exhibit A.  In the first year of the Agreement, the
Treasury Management Services fee shall not exceed $500,000 on an annual basis.

 7
 

 

	
  Client Schedule:

  
	
   

  
	
   

  
	
  Pennsylvania General Insurance Company

  
	
   

  
	
  OneBeacon Insurance Group, Ltd.

  
	
   

  
	
  Potomac Insurance Company

  

 

 8

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