Proassurnace Group Employee Benefit Plan

PROASSURANCE GROUP


EMPLOYEE BENEFIT PLAN


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TABLE OF CONTENTS


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ARTICLE I
DEFINITIONS


ARTICLE II
PARTICIPATION


SECTION 2.01 ELIGIBILITY.............................................. 3


SECTION 2.02 EFFECTIVE DATE OF PARTICIPATION.......................... 4


SECTION 2.03 APPLICATION TO PARTICIPATE............................... 4


SECTION 2.04 TERMINATION OF PARTICIPATION............................. 4


SECTION 2.05 CHANGE OF EMPLOYMENT STATUS.............................. 4


SECTION 2.06 TERMINATION OF EMPLOYMENT................................ 5


SECTION 2.07 DEATH.................................................... 5


ARTICLE III
CONTRIBUTIONS TO THE PLAN


SECTION 3.01 SALARY REDIRECTION....................................... 6


SECTION 3.02 APPLICATION OF CONTRIBUTIONS............................. 6


SECTION 3.03 PERIODIC CONTRIBUTIONS................................... 6


ARTICLE IV
BENEFITS


SECTION 4.01 BENEFITS................................................. 7


SECTION 4.02 HEALTH CARE REIMBURSEMENT PROGRAM........................ 7


SECTION 4.03 DEPENDENT CARE ASSISTANCE PROGRAM........................ 7


SECTION 4.04 HEALTH INSURANCE BENEFIT................................. 7


SECTION 4.05 GROUP LIFE INSURANCE BENEFIT............................. 8


SECTION 4.06 DISABILITY INSURANCE BENEFIT............................. 8


SECTION 4.07 EXECUTIVE SUPPLEMENTAL LIFE INSURANCE BENEFIT............ 8


SECTION 4.08 NONDISCRIMINATION REQUIREMENTS........................... 8


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ARTICLE V
PARTICIPANT ELECTIONS FOR CAFETERIA BENEFITS


SECTION 5.01 INITIAL ELECTIONS........................................ 9


SECTION 5.02 SUBSEQUENT ANNUAL ELECTIONS.............................. 9


SECTION 5.03 FAILURE TO ELECT......................................... 10


SECTION 5.04 CHANGE OF ELECTIONS...................................... 10


ARTICLE VI
HEALTH CARE REIMBURSEMENT PROGRAM


SECTION 6.01 ESTABLISHMENT OF PROGRAM................................. 13


SECTION 6.02 DEFINITIONS.............................................. 13


SECTION 6.03 FORFEITURES.............................................. 14


SECTION 6.04 LIMITATION ON ALLOCATIONS................................ 14


SECTION 6.05 NONDISCRIMINATION REQUIREMENTS........................... 14


SECTION 6.06 COORDINATION WITH CAFETERIA PLAN......................... 15


SECTION 6.07 HEALTH CARE REIMBURSEMENT CLAIMS......................... 15


ARTICLE VII
DEPENDENT CARE ASSISTANCE PROGRAM


SECTION 7.01 ESTABLISHMENT OF PROGRAM................................. 16


SECTION 7.02 DEFINITIONS.............................................. 16


SECTION 7.03 DEPENDENT CARE ASSISTANCE ACCOUNTS....................... 17


SECTION 7.04 INCREASES IN DEPENDENT CARE ASSISTANCE ACCOUNTS.......... 18


SECTION 7.05 DECREASES IN DEPENDENT CARE ASSISTANCE ACCOUNTS.......... 18


SECTION 7.06 ALLOWABLE DEPENDENT CARE ASSISTANCE REIMBURSEMENT........ 18


SECTION 7.07 STATEMENT OF BENEFITS.................................... 18


SECTION 7.08 FORFEITURES.............................................. 18


SECTION 7.09 LIMITATION ON PAYMENTS................................... 18


SECTION 7.10 NONDISCRIMINATION REQUIREMENTS........................... 18


SECTION 7.11 COORDINATION WITH CAFETERIA PLAN......................... 19


SECTION 7.12 DEPENDENT CARE ASSISTANCE PROGRAM CLAIMS................. 19


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ARTICLE VIII
EXECUTIVE SUPPLEMENTAL LIFE INSURANCE PROGRAM


SECTION 8.01 ESTABLISHMENT OF PLAN.................................... 20


SECTION 8.02 PARTICIPATION & TERMINATION.............................. 20


SECTION 8.03 COORDINATION WITH CAFETERIA PLAN......................... 21


ARTICLE IX
ERISA PROVISIONS


SECTION 9.01 CLAIM FOR BENEFITS....................................... 21


SECTION 9.02 APPLICATION OF BENEFIT PLAN SURPLUS...................... 23


SECTION 9.03 NAMED FIDUCIARY.......................................... 24


SECTION 9.04 GENERAL FIDUCIARY RESPONSIBILITIES....................... 24


SECTION 9.05 NONASSIGNABILITY OF RIGHTS............................... 24


ARTICLE X
ADMINISTRATION


SECTION 10.01 PLAN ADMINISTRATION...................................... 24


SECTION 10.02 EXAMINATION OF RECORDS................................... 25


SECTION 10.03 PAYMENT OF EXPENSES...................................... 25


SECTION 10.04 INSURANCE CONTROL CLAUSE................................. 25


SECTION 10.05 INDEMNIFICATION OF ADMINISTRATOR......................... 25


ARTICLE XI
AMENDMENT OR TERMINATION OF PLAN


SECTION 11.01 AMENDMENT................................................ 26


SECTION 11.02 TERMINATION.............................................. 26


ARTICLE XII
MISCELLANEOUS


SECTION 12.01 PLAN INTERPRETATION...................................... 26


SECTION 12.02 GENDER AND NUMBER........................................ 26


SECTION 12.03 WRITTEN DOCUMENT......................................... 27


SECTION 12.04 EXCLUSIVE BENEFIT........................................ 27


SECTION 12.05 PARTICIPANT'S RIGHTS..................................... 27


SECTION 12.06 ACTION BY THE EMPLOYER................................... 27


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SECTION 12.07 EMPLOYER'S PROTECTIVE CLAUSES............................ 27


SECTION 12.08 NO GUARANTEE OF TAX CONSEQUENCES......................... 28


SECTION 12.09 INDEMNIFICATION OF EMPLOYER BY PARTICIPANTS.............. 28


SECTION 12.10 FUNDING.................................................. 28


SECTION 12.11 GOVERNING LAW............................................ 28


SECTION 12.12 SEVERABILITY............................................. 28


SECTION 12.13 CAPTIONS................................................. 29


SECTION 12.14 CONTINUATION OF COVERAGE................................. 29


SECTION 12.15 FAMILY AND MEDICAL LEAVE ACT............................. 29


SECTION 12.16 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT...... 29


SECTION 12.17 UNIFORM SERVICES EMPLOYMENT AND
REEMPLOYMENT RIGHTS ACT.................................. 29


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PROASSURANCE GROUP


EMPLOYEE BENEFIT PLAN


INTRODUCTION


Effective January 1, 1995, Mutual Assurance, Inc. established the Mutual Assurance, Inc. and Affiliated Companies Employee Benefit Plan (the "Plan") for the benefit of its and its Affiliated Companies' eligible employees and their dependents. At the time of its initial establishment, the Plan had three components: group medical insurance, long term disability insurance, and a cafeteria program under Code Section 125. Effective January 1, 2002, the name of the Plan was changed to the ProAssurance Corporation Employee Benefit Plan, and the Plan was expanded to include a fourth component - group life and accidental death and dismemberment insurance. Effective October 1, 2003, the Plan was restated and amended in its entirety. Pursuant to the restated Plan, ProAssurance Group Services Corporation became the sponsor of the Plan and the name of the Plan was changed to the ProAssurance Group Employee Benefit Plan. The restated Plan also contains provisions adding a fifth component to the Plan - - executive supplemental life insurance - which such addition is effective May 1, 2003.


The purpose of the Plan is to recognize the contribution made to the Employers who have adopted the Plan by its Employees. The Plan's purpose is to reward them by providing benefits for those Employees who shall qualify hereunder and their dependents and beneficiaries.


ARTICLE I
DEFINITIONS


SECTION 1.01 "Administrator" means the individual(s) or corporation appointed by the Employer to carry out the administration of the Plan. The Employer shall be empowered to appoint and remove the Administrator from time to time as it deems necessary for the proper administration of the Plan. In the event the Administrator has not been appointed, or resigns from a prior appointment, the Employer shall be deemed to be the Administrator.


SECTION 1.02 "Affiliated Employer" means the Employer and any corporation which is a member of a controlled group of corporations (as defined in Code Section 414(b)) which includes the Employer; any trade or business (whether or not incorporated) which is under common control (as defined in Code Section 414(c)) with the Employer; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Code Section 414(m)) which includes the Employer; and any other entity required to be aggregated with the Employer pursuant to Treasury regulations under Code Section 414(o).


SECTION 1.03 "Benefit" includes "Plan Benefits" and "Cafeteria Benefits." "Plan Benefit" means any of the benefits provided to Eligible Employees by the Employer at no cost to the Employee as outlined in Section 4.01(b). "Cafeteria Benefit" means any of the optional contributory benefit choices available to a Participant as outlined in Section 4.01(a).


SECTION 1.04 "Cafeteria Plan" means the component of this Plan which provides for a cafeteria program under Section 125 of the Code.


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SECTION 1.05 "Cafeteria Plan Benefit Dollars" means the amount available to Participants, pursuant to Article III, to purchase Cafeteria Benefits. Each dollar contributed through Salary Redirection to this Plan shall be converted into one Cafeteria Plan Benefit Dollar.


SECTION 1.06 "Code" means the Internal Revenue Code of 1986, as amended or replaced from time to time.


SECTION 1.07 "Compensation" means the amounts received by the Participant from the Employer during a Plan Year.


SECTION 1.08 "Dependent" means any individual who qualifies as a dependent under an Insurance Contract or under Code Section 152 (as modified by Code Section 105(b)).


SECTION 1.09 "Effective Date" means January 1, 1995.


SECTION 1.10 "Election Period" means the period immediately preceding the beginning of each Plan Year established by the Administrator, such period to be applied on a uniform and nondiscriminatory basis for all Employees and Participants. However, an Employee's initial Election Period shall be determined pursuant to Section 5.01.


SECTION 1.11 "Eligible Employee" means any Employee who has satisfied the provisions of Section 2.01.


An individual shall not be an "Eligible Employee" if such individual is not reported on the payroll records of the Employer as a common law employee. In particular, it is expressly intended that individuals not treated as common law employees by the Employer on its payroll records are not "Eligible Employees" and are excluded from Plan participation even if a court or administrative agency determines that such individuals are common law employees and not independent contractors.


However, any Employee who is a "part-time" Employee shall not be eligible to participate in this Plan. A "part-time" Employee is any Employee who works, or is expected to work on a regular basis, less than 30 hours a week.


SECTION 1.12 "Employee" means any person who is employed by the Employer. The term Employee shall include leased employees within the meaning of Code Section 414(n)(2).


SECTION 1.13 "Employer" means ProAssurance Group Services Corporation and any successor which shall maintain this Plan; and any predecessor which has maintained this Plan.


SECTION 1.14 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.


SECTION 1.15 "Insurance Contract" means any contract issued by an Insurer underwriting a Benefit.


SECTION 1.16 "Insurance Premium Payment Program" means the plan of benefits contained in Section 4.01 of this Plan, which provides for the payment of Premium Expenses.


SECTION 1.17 "Insurer" means any insurance company that underwrites a Benefit under this Plan.


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SECTION 1.18 "Key Employee" means an Employee described in Code Section 416(i)(1) and the Treasury regulations thereunder.


SECTION 1.19 "Participant" means any Eligible Employee who elects to become a Participant pursuant to Section 2.03 and has not for any reason become ineligible to participate further in the Plan.


SECTION 1.20 "Plan" means this instrument, including all amendments thereto.


SECTION 1.21 "Plan Year" means the 12-month period beginning January 1 and ending December 31. The Plan Year shall be the coverage period for the Benefits provided for under this Plan. In the event a Participant commences participation during a Plan Year, then the initial coverage period shall be that portion of the Plan Year commencing on such Participant's date of entry and ending on the last day of such Plan Year.


SECTION 1.22 "Premium Expenses" or "Premiums" mean the Participant's cost for the Cafeteria Benefits described in Section 4.01(a)(3) .


SECTION 1.23 "Premium Reimbursement Account" means the account established for a Participant pursuant to this Plan to which part of his Cafeteria Plan Benefit Dollars may be allocated and from which Premiums of the Participant may be paid or reimbursed. If more than one type of insured Cafeteria Benefit is elected, sub-accounts shall be established for each type of insured Cafeteria Benefit.


SECTION 1.24 "Salary Redirection" means the contributions made by the Employer on behalf of Participants pursuant to Section 3.01. These contributions shall be converted to Cafeteria Plan Benefit Dollars and allocated to the funds or accounts established under the Plan pursuant to the Participants' elections made under Article V.


SECTION 1.25 "Salary Redirection Agreement" means an agreement between the Participant and the Employer under which the Participant agrees to reduce his Compensation or to forego all or part of the increases in such Compensation and to have such amounts contributed by the Employer to the Plan on the Participant's behalf. The Salary Redirection Agreement shall apply only to Compensation that has not been actually or constructively received by the Participant as of the date of the agreement (after taking this Plan and Code Section 125 into account) and, subsequently does not become currently available to the Participant.


SECTION 1.26 "Spouse" means the legally married husband or wife of a Participant, unless legally separated by court decree.


ARTICLE II
PARTICIPATION


SECTION 2.01 ELIGIBILITY


Except as otherwise provided herein, any Eligible Employee shall be eligible to participate hereunder on his date of employment (or the Effective Date of the Plan, if later). Notwithstanding the foregoing, an Eligible Employee shall be eligible to participate hereunder with respect to insured Benefits as of the date he is eligible under the relevant Insurance


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Contract. However, any Eligible Employee who was a Participant in the Plan on the effective date of this amendment shall continue to be eligible to participate in the Plan.


SECTION 2.02 EFFECTIVE DATE OF PARTICIPATION


An Eligible Employee shall become a Participant effective as of the first day of the month coinciding with or next following the date on which he met the eligibility requirements of Section 2.01.


SECTION 2.03 APPLICATION TO PARTICIPATE


An Employee who is eligible to participate in this Plan shall, during the applicable Election Period, complete an application to participate and election of Cafeteria Benefits form which the Administrator shall furnish to the Employee. The Cafeteria Benefits election made on such form shall be irrevocable until the end of the applicable Plan Year unless the Participant is entitled to change his Benefit elections pursuant to Section 5.04 hereof.


An Eligible Employee shall also be required to execute a Salary Redirection Agreement during the Election Period for the Plan Year during which he wishes to participate in this Plan. Any such Salary Redirection Agreement shall be effective for the first pay period beginning on or after the Employee's effective date of participation pursuant to Section 2.02.


SECTION 2.04 TERMINATION OF PARTICIPATION


Except with respect to benefits under Article VIII, a Participant shall no longer participate in this Plan upon the occurrence of any of the following events:


(a) His termination of employment, subject to the provisions of
Section 2.06;


(b) The end of the Plan Year during which he became a limited
Participant because of a change in employment status pursuant to
Section 2.05;


(c) His death, subject to the provisions of Section 2.07; or


(d) The termination of this Plan, subject to the provisions of
Section 11.02.


SECTION 2.05 CHANGE OF EMPLOYMENT STATUS


If a Participant ceases to be eligible to participate because of a change in employment status or classification (other than through termination of employment), the Participant shall become a limited Participant in this Plan for the remainder of the Plan Year in which such change of employment status occurs. As a limited Participant, no further Salary Redirection may be made on behalf of the Participant, and, except as otherwise provided herein, all further Benefit elections shall cease, subject to the limited Participant's right to continue coverage under any Insurance Contracts. However, any balances in the limited Participant's Dependent Care Assistance Account may be used during such Plan Year to reimburse the limited Participant for any allowable Employment-Related Dependent Care incurred during the Plan Year. Subject to the provisions of Section 2.06, if the limited Participant later becomes an Eligible Employee, then the limited Participant may again become a full Participant in this Plan, provided he otherwise satisfies the participation requirements set forth in this Article II as if he were a new Employee and made an election in accordance with


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Section 5.01. Notwithstanding the foregoing, a Participant's rights to benefits under Article VIII shall be determined in accordance with that Article.


SECTION 2.06 TERMINATION OF EMPLOYMENT


If a Participant's employment with the Employer is terminated for any reason other than death, his participation in the Plan shall be governed in accordance with the following:


(a) With regard to Benefits which are insured, the Participant's
participation in the Plan shall cease, subject to the Participant's
right to continue coverage under any Insurance Contract for which
premiums have already been paid.


(b) With regard to the Dependent Care Assistance Program, the
Participant's participation in the Plan shall cease and no further
Salary Redirection contributions shall be made. However, such
Participant may submit claims for employment related Dependent Care
Expense reimbursements for 60 days after termination, based on the
level of his Dependent Care Assistance Account as of his date of
termination.


(c) With regard to the Health Care Reimbursement Plan, the
Participant's participation in the Plan shall cease and no further
Salary Redirection contributions shall be made. However, such
Participant may submit claims for expenses incurred prior to date of
termination of employment up to 30 days after his termination date.


(d) In the event a Participant terminates his participation in
the Health Care Reimbursement Program during the Plan Year, if Salary
Redirections are made other than on a pro rata basis, upon termination
the Participant shall be entitled to a reimbursement for any Salary
Redirection previously paid for coverage or benefits relating to the
period after the date of the Participant's separation from service
regardless of the Participant's claims or reimbursements as of such
date.


(e) This Section shall be applied and administered consistent
with such further rights a Participant and his Dependents may be
entitled to pursuant to Code Section 4980B and Section 12.14 of the
Plan.


(f) Notwithstanding the foregoing, a Participant's right to
benefits under Article VIII shall be determined in accordance with the
provisions of that Article.


SECTION 2.07 DEATH


If a Participant dies, his participation in the Plan shall cease. However, such Participant's beneficiaries, or the representative of his estate, may submit claims for expenses or benefits for the remainder of the Plan Year or until the Cafeteria Plan Benefit Dollars allocated to each specific Cafeteria Benefit are exhausted. A Participant may designate a specific beneficiary for this purpose. If no such beneficiary is specified, the Administrator may designate the Participant's Spouse, one of his Dependents or a representative of his estate.


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ARTICLE III
CONTRIBUTIONS TO THE PLAN


SECTION 3.01 SALARY REDIRECTION


Benefits under the Plan shall be financed by Salary Redirections sufficient to support Cafeteria Benefits that a Participant has elected hereunder and to pay the Participant's Premium Expenses. The salary administration program of the Employer shall be revised to allow each Participant to agree to reduce his pay during a Plan Year by an amount determined necessary to purchase the elected Cafeteria Benefit. The amount of such Salary Redirection shall be specified in the Salary Redirection Agreement and shall be applicable for a Plan Year. Notwithstanding the above, for new Participants, the Salary Redirection Agreement shall only be applicable from the first day of the pay period following the Employee's entry date up to and including the last day of the Plan Year. However, in no event shall a Participant's Salary Redirection per Plan Year exceed the sum of (a) the amount specified in Section 6.04, (b) the amount specified in Section 7.09, plus (c) the amount of the required contribution for the Health Insurance Benefit which is described in Section 4.40. These contributions shall be converted to Cafeteria Plan Benefit Dollars and allocated to the funds or accounts established under the Plan pursuant to the Participants' elections made under Article V.


Any Salary Redirection shall be determined prior to the beginning of a Plan Year (subject to initial elections pursuant to Section 5.01) and prior to the end of the Election Period and shall be irrevocable for such Plan Year. However, a Participant may revoke a Benefit election or a Salary Redirection Agreement after the Plan Year has commenced and make a new election with respect to the remainder of the Plan Year, if both the revocation and the new election are on account of and consistent with a change in status and such other permitted events as determined under Article V of the Plan and consistent with the rules and regulations of the Department of the Treasury. Salary Redirection amounts shall be contributed on a pro rata basis for each pay period during the Plan Year. All individual Salary Redirection Agreements are deemed to be part of this Plan and incorporated by reference hereunder.


SECTION 3.02 APPLICATION OF CONTRIBUTIONS


As soon as reasonably practical after each payroll period, the Employer shall apply the Salary Redirection to provide the Cafeteria Benefits elected by the affected Participants. Any contribution made or withheld for the Health Care Reimbursement Fund or Dependent Care Assistance Account shall be credited to such fund or account. Amounts designated for the Participant's Premium Expense Reimbursement Account shall likewise be credited to such account for the purpose of paying Premium Expenses.


SECTION 3.03 PERIODIC CONTRIBUTIONS


Notwithstanding the requirement provided above and in other Articles of this Plan that Salary Redirections be contributed to the Plan by the Employer on behalf of an Employee on a level and pro rata basis for each payroll period, the Employer and Administrator may implement a procedure in which Salary Redirections are contributed throughout the Plan Year on a periodic basis that is not pro rata for each payroll period. However, with regard to the Health Care Reimbursement Program, the payment schedule for the required contributio ...