Exhibit 10.1

 

 

New Century Financial Corporation

 

Deferred Compensation Plan

 

Amended and Restated July 1, 2004

 

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ARTICLE 1

 

 

In recognition of the services provided by certain key employees, the Board of
Directors of New Century Financial Corporation hereby adopts a deferred
compensation plan (the “Plan”) to make additional retirement benefits and
increased financial security, on a tax favored basis, available to those
individuals effective January 1, 1999 and amended effective July 1, 2004.  This
Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.

 

ARTICLE 2
DEFINITIONS

 

Affiliate.  “Affiliate” means any firm, partnership, or corporation that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with the Company.  “Affiliate” also
includes any other organization similarly related to the Company that is
designated as such by the Board.

 

Annual Bonus.  “Annual Bonus” means any compensation, in addition to Base Annual
Salary, paid in respect of a Plan Year to a Participant as an Employee under the
Company’s Incentive Plan, or otherwise as a bonus in the discretion of the
Company.

 

Annual Deferral Amount.  “Annual Deferral Amount” shall mean that portion of a
Participant’s Base Salary, Annual Bonus, Commissions, and/or Excess Deferrals
that a Participant elects to have, and is, deferred, in accordance with Article
4 for any one Plan Year.  In the event of Retirement, Disability, death or a
Termination of Employment prior to the end of a Plan Year, such year’s Annual
Deferral Amount shall be the actual amount withheld prior to such event.

 

Base Annual Salary.  “Base Annual Salary” means the annual compensation
(excluding bonuses, commissions, overtime, incentive payments, welfare benefits,
including, without limitation, severance benefits, non-monetary awards or
payments, Directors Fees and other fees, stock options and phantom stock grants,
and car allowances) paid to a Participant for services rendered to any Employer,
before reduction for compensation deferred pursuant to all tax-qualified,
non-qualified and Code Section 125 plans (other than compensation deferred under
individual employment Contracts) of any Employer.  The Committee may, in its
discretion, with respect to any one or more Participants establish for any Plan
Year a limit on the amount of Base Annual Salary to be taken into account under
this Plan.

 

Beneficiary.  “Beneficiary” means the person or persons designated as such in
accordance with Section 15.2.

 

Board.  “Board” means the Board of Directors of the Corporation.

 

Change in Control.  “Change in Control” means any of the following:

 

(a)                                  The acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (a “Person”)) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under

 

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the Securities Exchange Act of 1934, as amended) of 25% or more of either (1)
the then-outstanding shares of common stock of the Corporation (the “Outstanding
Company Common Stock”) or (2) the combined voting power of the then-outstanding
voting securities of the Corporation entitled to vote generally in the election
of directors (the “Outstanding Company Voting Securities”); provided, however,
that, for purposes of this definition, the following acquisitions shall not
constitute a Change in Control; (A) any acquisition directly from the
Corporation, (B) any acquisition by the Corporation, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any affiliate of the Corporation or a successor, or (D) any
acquisition by any entity pursuant to a transaction that complies with Sections
(a), (b), and (c) below;

 

(b)                                 Individuals who, as of July 1, 2004,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to July 1, 2004 whose election, or nomination for
election by the Corporation’s stockholders, was approved by a vote of at least
two-thirds of the directors then comprising the Incumbent Board (including for
these purposes, the new members whose election or nomination was so approved,
without counting the member and his predecessor twice) shall be considered as
though such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;

 

(c)                                  Consummation of a reorganization, merger,
statutory share exchange or consolidation or similar corporate transaction
involving the Corporation or any of its subsidiaries, a sale or other
disposition of all or substantially all of the assets of the Corporation, or the
acquisition of assets or stock of another entity by the Corporation or any of
its subsidiaries (each, a “Business Combination”), in each case unless,
following such Business Combination, (1) all or substantially all of the
individuals and entities that were the beneficial owners of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of the then-outstanding shares of common stock and the combined
voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without limitation, an
entity that, as a result of such transaction, owns the Corporation or all or
substantially all of the Corporation’s assets directly or through one or more
subsidiaries (a “Parent”)) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities, as the case
may be, (2) no Person (excluding any entity resulting from such Business
Combination or a Parent or any employee benefit plan (or related trust) of the
Corporation or such entity resulting from such Business Combination or Parent)
beneficially owns, directly or indirectly, 25% or more of, respectively, the
then-outstanding shares of common stock of the entity resulting from such
Business Combination or the combined voting power of the then-outstanding voting
securities of such entity, except to the extent that the ownership in excess of
25% existed

 

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prior to the Business Combination, and (3) at least a majority of the members of
the board of directors or trustees of the entity resulting from such Business
Combination or a Parent were members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of the Board providing for
such Business Combination; or

 

(d)                                 Approval by the stockholders of the
Corporation of a complete liquidation or dissolution of the Corporation other
than in the context of a transaction that does not constitute a Change in
Control under clause (c) above.

 

Claimant.  “Claimant” shall have the meaning set forth in Section 13.1.

 

Code.  “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

 

Commissions.  “Commissions” means an Eligible Employee’s commissions for any
Plan Year, as determined in accordance with an Employer’s policies and
procedures regarding compensation.

 

Committee.  “Committee” means the persons appointed by the Plan Administrator,
and which also may act for the Company or the Board in making decisions and
performing specified duties under the Plan.

 

Company.  “Company” means the Corporation and any Affiliate which is authorized
by the Plan Administrative Committee to adopt the Plan and cover its Eligible
Employees and whose designation as such has become effective upon acceptance of
such status by the board of directors of the Affiliate.  An Affiliate may revoke
its acceptance of such designation at any time, but until such acceptance has
been revoked, all the provisions of the Plan and amendments thereto shall apply
to the Eligible Employees of the Affiliate.  In the event the designation is
revoked by the board of directors of an Affiliate, the Plan shall be deemed
terminated only with respect to such Affiliate.

 

Compensation.  “Compensation” means the total amount of cash remuneration paid
by the Company to an Eligible Employee for any calendar year of employment as
wages, commissions, bonuses and other monetary incentives, including the
Participant’s contributions under this Plan and under any other plan of deferred
compensation maintained by the Company or an Affiliate but not taking into
account any Company contributions to benefit plans, all fringe benefits, moving
and relocation expenses and other forms of welfare benefits.

 

Compensation Deferral.  “Compensation Deferral” means that portion of
Compensation as to which a Participant has made an annual irrevocable election
to defer receipt until the date specified under the In-Service Distribution
Option or the Retirement Option.

 

Corporation.  “Corporation” means New Century Financial Corporation, a Delaware
corporation, and any successor.

 

Deduction Limitation.  “Deduction Limitation” means the following described
limitation on the annual benefit that may be distributed pursuant to the
provisions of this Plan.  The limitation shall be applied to distributions under
this Plan as expressly set forth in this Plan.  If the Company determines in
good faith prior to a Change in Control that there is a reasonable

 

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likelihood that any compensation paid to a Participant for a taxable year of the
Company would not be deductible by the Company solely by reason of the
limitation under Code Section 162(m), then to the extent deemed necessary by the
Company to ensure that the entire amount of any distribution to the Participant
pursuant to this Plan prior to the Change in Control is deductible, the Company
may, in its sole discretion, defer all or any portion of the distribution.  Any
amounts deferred pursuant to this limitation shall continue to be credited (or
debited) with earnings, gains, losses, and changes in value of the Deemed
Investment Options in accordance with Section 5.3.  The amounts so deferred and
interest thereon shall be distributed to the Participant or his or her
Beneficiary (in the event of the Participant’s death) at the earliest possible
date, as determined by the Company in good faith, on which the deductibility of
compensation paid or payable to the Participant for the taxable year of the
Company during which the distribution is made will not be limited by Section
162(m), or if earlier, the effective date of a Change in Control

 

Disabled.  “Disabled” means a mental or physical condition which qualifies a
Participant for benefits under the Company’s Long-Term Disability Plan.

 

Discretionary Company Contribution.  “Discretionary Company Contribution” are
those credited to the Participant’s Retirement Distribution Account and/or
In-Service Distribution Account by the Company pursuant to Section 4.4.

 

Discretionary Company Contribution Account.  “Discretionary Company Contribution
Account” shall mean the sum of (i) the Participant’s Discretionary Company
Contribution Amount plus (ii) earnings, gains, losses, and changes in value of
the Earnings Crediting Options hereon credited (or debited) in accordance with
Section 5.3, net of all distributions from such account.  This account shall be
a bookkeeping entry only and shall be utilized solely as a device for the
measurement and determination of the amounts to be paid to the Participant
pursuant to the Plan.

 

Discretionary Matching Contribution.  “Discretionary Matching Contribution” are
those credited to the Participant’s Retirement Distribution Account and/or
In-Service Distribution Account by the Company pursuant to Section 4.5.

 

Discretionary Matching Contribution Account.  “Discretionary Matching
Contribution Account” shall mean the sum of (i) the Participant’s Discretionary
Matching Contribution Amount plus (ii) earnings, gains, losses, and changes in
value of the Earnings Crediting Options hereon credited (or debited) in
accordance with Section 5.3, net of all distributions from such account.  This
account shall be a bookkeeping entry only and shall be utilized solely as a
device for the measurement and determination of the amounts to be paid to the
Participant pursuant to the Plan.

 

Distribution Option.  “Distribution Option” means the two (2) distribution
options which are available under the Plan, consisting of the Retirement
Distribution Option and the In-Service Distribution Option.

 

Distribution Option Account.  “Distribution Option Account” or “Accounts” means,
with respect to a Participant, the Retirement Distribution Account and/or the
In-Service Distribution

 

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Account established on the books of account of the Company, pursuant to Section
5.1, for each Distribution Option Period.

 

Distribution Option Period.  “Distribution Option Period” means a period of five
(5) Plan Years for which an Eligible Employee elects, in the Enrollment
Agreement, the time and manner of payment of amounts credited to the Eligible
Employee’s In-Service Distribution Option Account for such Plan Years.

 

Earnings Crediting Options.  “Earnings Crediting Options” means the deemed
investment options selected by the Participant from time to time pursuant to
which deemed earnings are credited to the Participant’s Distribution Option
Accounts pursuant to Section 5.2

 

Effective Date.  “Effective Date” means the effective date of the Amended Plan
which is July 1, 2004.

 

Elective Deferral Account.  “Elective Deferral Account” shall mean the sum of
(i) a Participant’s Deferral Amount, plus (ii) earnings, gains, losses, and
changes in value of the Earnings Crediting Options hereon credited (or debited)
in accordance with Section 5.3, net of all distributions from such account. 
This account shall be a bookkeeping entry only and shall be utilized solely as a
device for the measurement and determination of the amounts to be paid to the
Participant pursuant to the Plan.

 

Eligible Employee.  “Eligible Employee” means an Employee who is a member of the
group of selected management and/or highly compensated Employees of the Company
and who is designated by the Committee as eligible to participate in the Plan
for a Plan Year.

 

Employee.  “Employee” means any individual employed by the Company on a regular,
full time basis (in accordance with the personnel policies and practices of the
Employer), including citizens of the United States employed outside of their
home country and resident aliens employed in the United States; provided,
however, that to qualify as an “Employee” for purposes of the Plan, the
individual must be a member of a group of “key management or other highly
compensated employees” within the meaning of Sections 201, 301 and 401 of the
Employee Retirement Income Security Act of 1974, as amended.

 

End Termination Date.  “End Termination Date” means the date of termination of a
Participant’s Service with the Company and its Affiliates and shall be
determined without reference to any compensation continuation arrangement or
severance benefit arrangement that may be applicable.

 

Enrollment Agreement.  “Enrollment Agreement” means a written agreement, as may
be amended from time to time, which is entered into by and between the Company
and a Participant.  The terms of any Enrollment Agreement may vary any of the
terms set forth in this Plan and such changes shall be binding on the Company
and the Participant if the Enrollment Agreement is signed by the Participant and
accepted by the Committee.  Each Enrollment Agreement executed by a Participant
shall provide for the entire benefit to which such Participant is entitled to
under the Plan, and shall specify, the Company liable for the Participant’s
benefits hereunder and the magnitude or extent of such liability.  The
Enrollment Agreement bearing the latest date of acceptance by the Committee
shall govern such entitlement

 

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and each Employer’s liability.  Upon the complete payment of a Participant’s
Account Balance, each individual’s Enrollment Agreement and his or her status as
a Participant shall terminate.

 

ERISA.  “ERISA” means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.

 

Excess Deferrals.  “Excess Deferrals” means amounts equal to the amounts of a
Participant’s Employee Before-Tax Contributions under the 401(k) Plan (i) which
are limited to Section 402(g) of the Code but which would otherwise have been
made to the 401(k) Plan pursuant to a Participant’s election under the 401(k)
Plan, and/or (ii) which are distributed to a Participant from the 401(k) Plan in
order to satisfy the limitations of Section 401(k) of the Code.

 

In-Service Distribution Account.  “In-Service Distribution Account” means the
Account maintained for a Participant for each Distribution Option Period to
which compensation Deferrals are credited pursuant to the In-Service
Distribution Option.

 

In-Service Distribution Option.  “In-Service Distribution Option” means the
Distribution Option pursuant to which benefits are payable in accordance with
Section 7.2.

 

Participant.  “Participant” means an Eligible Employee who has filed a completed
and executed Enrollment Agreement with the Committee or its designee and is
participating in the Plan in accordance with the provisions of Article 4.  In
the event of the death or incompetency of a Participant, the term shall mean his
personal representative or guardian.  An individual shall remain a Participant
until that individual has received full distribution of any amount credited to
the Participant’s Account.

 

Plan.  “Plan” means this plan, called the New Century Financial Corporation
Deferred Compensation Plan, as amended from time to time.

 

Plan Administrator.  “Plan Administrator” means the Compensation Committee of
the Board when acting as the administrator of the Plan.

 

Plan Year.  “Plan Year” means the 12 month period beginning on each January 1
and ending on the following December 31, except that the first Plan Year shall
begin on the Effective Date, and end on December 31.

 

Retirement.  “Retirement” means the termination of the Participant’s Service
with the Employer (for reasons other than death) at or after age 65, or, if the
Participant has 5 or more years of Service, at or after age 55.

 

Retirement Distribution Account.  “Retirement Distribution Account” means the
Account maintained for a Participant to which compensation Deferrals and Company
Matching Contributions are credited pursuant to the Retirement Distribution
Option.

 

Retirement Distribution Option.  “Retirement Distribution Option” means the
Distribution Option pursuant to which benefits are payable in accordance with
Section 7.1.

 

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Savings Plan.  “Savings Plan” means the New Century Financial Corporation
Employee 401(k) Plan, as it may be amended from time to time.

 

Trust.  “Trust” shall mean the trust established pursuant to that certain Trust
Agreement between the Company and the trustee named therein, as amended from
time to time.

 

Years of Service.  “Years of Service” means the period of time during which an
employment relationship exists between an Employee and the Company, including
any period during which the Employee is on an approved leave of absence, whether
paid or unpaid.  “Years of Service” also includes employment with an Affiliate
if an Employee transfers directly between the Company and the Affiliate.  For
purposes of this definition, a year of employment shall be a 365 day period (or
366 day period in the case of a leap year) that, for any subsequent year,
commences on an anniversary of that hiring date.  Any partial year of employment
shall not be counted.  Notwithstanding the previous sentence, a Participant’s
first Year of Service shall be treated as a full Year of Service for purposes of
this definition, even if it is only a partial Year of Service.

 

ARTICLE 3
ADMINISTRATION OF THE PLAN AND DISCRETION

 

3.1                                 The Plan Administrator shall have full power
and authority to interpret the Plan, to prescribe, amend and rescind any rules,
forms and procedures as it deems necessary or appropriate for the proper
administration of the Plan and to make any other determinations and to take any
other such actions as it deems necessary or advisable in carrying out its duties
under the Plan.  All action taken by the Plan Administrator arising out of, or
in connection with, the administration of the Plan or any rules adopted
thereunder, shall, in each case, lie within its sole discretion, and shall be
final, conclusive and binding upon the Company, the Board, the Committee, all
Employees, all Beneficiaries of Employees and all persons and entities having an
interest therein.

 

3.2                                 Members of the Committee and the Plan
Administrator shall serve without compensation for their services unless
otherwise determined by the Board.  All expenses of administering the Plan shall
be paid by the Company.

 

3.3                                 The Company shall indemnify and hold
harmless each member of the Committee and the Plan Administrator from any and
all claims, losses, damages, expenses (including counsel fees) and liability
(including any amounts paid in settlement of any claim or any other matter with
the consent of the Board) arising from any act or omission of such member,
except when the same is due to gross negligence or willful misconduct.

 

3.4                                 Any decisions, actions or interpretations to
be made under the Plan by the Company, the Board or Committee shall be made in
its respective sole discretion, not as a fiduciary and need not be uniformly
applied to similarly situated individuals and shall, except as expressly
provided in Section 13.6 with respect to an arbitrator’s de novo review of
determinations related to claims arising upon or following the occurrence of a
Change in Control, be final, binding and conclusive on all persons interested in
the Plan.

 

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ARTICLE 4
PARTICIPATION

 

4.1                                 Deferred Compensation.  For each Plan Year,
a Participant may elect to defer Base Salary, Annual Bonus, Commissions, and/or
Compensation.  If no election is made, the amount deferred shall be zero.

 

In no event shall the maximum amount of Base Salary that a Participant may defer
to this Plan in any one year exceed (i) the Participant’s total Base Salary,
less (ii) the sum of the maximum amount that the Participant could elect to
defer to the Savings Plan for that year plus the amount(s) that the Participant
may elect to contribute to any qualified welfare benefit plan of the Company for
that year for medical, healthcare, insurance, or similar benefits coverage.  The
minimum deferral limits of Section 4.1 shall not apply with respect to a
Participant for a Plan Year if the amount determined pursuant to the preceding
sentence is less than the applicable minimum amount determined in accordance
with Section 4.1.

 

4.2                                 Election to Participate.   Each Employee who
is an Eligible Employee for a Plan Year will be offered the opportunity to defer
Compensation to be earned in that Plan Year.  Any Eligible Employee may enroll
in the Plan effective as of the first day of that Plan Year by filing a
completed and fully executed Enrollment Agreement with the Committee by a date
set by the Committee but in any event prior to the first day of that Plan Year. 
Pursuant to said Enrollment Agreement, the Eligible Employee shall irrevocably
elect (a) the percentages, in whole percentages, by which (as a result of
payroll reduction) an amount equal to any whole percentage of the Participant’s
Compensation to be earned during that Plan Year, in each case after required
nondeferrable payroll tax deductions, will be deferred, and (b) the Distribution
Option Accounts to which such amounts will be credited, and shall provide such
other information as the Plan Administrator shall require.  The first Enrollment
Agreement filed by an Eligible Employee during any Distribution Option Period
must also set forth the Participant’s election as to the time and manner of
distribution from the Retirement Distribution Account and In-Service
Distribution Account and of amounts credited for that Distribution Option Period
and related earnings.  The Committee may establish minimum or maximum amounts
that may be deferred under this Section and may change such standards from time
to time.  Any such limits shall be communicated by the Committee to the Plan
Administrator and by the Plan administrator to the Participants prior to the
commencement of a Plan Year.

 

4.3                                 New Eligible Employees.  The Committee may,
in its discretion, permit individuals who first become Employees after the
beginning of a Plan Year and who are selected as Eligible Employees to enroll in
the Plan for that Plan Year by filing a completed and fully executed Enrollment
Agreement, in accordance with Section 4.1, as soon as practicable following the
date the individual first becomes an Eligible Employee but, in any event, within
30 days after such date.  Notwithstanding the foregoing, however, any election
by an Eligible Employee, pursuant to this Section, to defer Compensation shall
apply only to such amounts as are earned by the Eligible Employee after the date
on which such Enrollment Agreement is filed.

 

4.4                                 Discretionary Company Contributions.  The
Company, in its sole discretion, may, but is not required to, credit any amount
it desires to any Participant’s Retirement Distribution Account and/or
In-Service Distribution Account under this Plan.  The amount so credited to a

 

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Participant may be smaller or larger than the amount credited to any other
Participant, and the amount credited to any Participant for a Plan Year may be
zero (0).  Any Discretionary Company Contributions approved by the Company will
be credited as frequently as determined by the Committee acting on behalf of the
Company.

 

4.5                                 Discretionary Matching Contributions.  If a
Participant has deferred Compensation during any Plan Year, the Company shall
reserve the right to credit to such Participant’s Retirement Distribution
Account and/or In-Service Distribution Account a Matching Contribution, as
defined above.  Any Discretionary Matching Contributions approved by the Company
will be credited as frequently as determined by the Committee, acting on behalf
of the Company.

 

ARTICLE 5
DISTRIBUTION OPTION ACCOUNTS

 

5.1                                 Distribution Option Accounts.  The Committee
shall establish and maintain separate Distribution Option Accounts with respect
to a Participant for each Distribution Option Period.

 

A Participant’s Distribution Option Accounts shall consist of the Retirement
Distribution Account and/or one or more In-Service Distribution Accounts.  The
amount of Compensation deferred pursuant to Sections 4.1, 4.2 or 4.3 shall be
credited by the Company to the Participant’s Distribution Option Accounts as
soon as administratively practicable after such compensation would otherwise
have been paid, but in no event later than the fifteenth day of the month
following the month in which such Compensation would otherwise have been paid,
in accordance with the Distribution Option irrevocably elected by the
Participant in the Enrollment Agreement.  Any amount once taken into account as
Compensation for purposes of this Plan shall not be taken into account
thereafter.  The Participant’s Distribution Option Accounts shall be reduced by
the amount of the payments made by the Company to the Participant or the
Participant’s Beneficiary pursuant to this Plan.

 

5.2                                 Earnings on Distribution Option Accounts.  A
Participant’s Distribution Option Accounts shall be credited with earnings
according to the Earnings Crediting Options elected by the Participant. 
Participants may allocate their Retirement Distribution Account and/or each of
their In-Service Distribution Accounts among the Earnings Crediting Options
available under the Plan only in whole percentages of not less than five percent
(5%) for any one Earnings Crediting Option and provided that allocation must
total 100%.   The Committee shall select the Earnings Crediting Options whose
performance will measure the amounts to be credited under Section 5.3 to the
Distribution Option Accounts of Participants.  The selection of Earnings
Crediting Options shall be for bookkeeping purposes only, and the Company shall
not be obligated actually to invest any money in the Earnings Crediting Options,
or to acquire or maintain any actual investment.  The Committee may, in its
discretion, change its selection of the Earnings Crediting Options at any time;
provided that following a Change in Control, the number and general type(s) of
Earnings Crediting Options offered shall not be substantially diminished.  If a
Participant or Beneficiary has elected pursuant to this Section to invest all or
a portion of his Distribution Accounts in a Earnings Crediting Option which the
Committee decided to discontinue, his Distribution Accounts shall be invested
after such discontinuance in the

 

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continuing Earnings Crediting Options which the Committee determines, in its
discretion, most nearly resembles the discontinued Earnings Crediting Options. 
The Committee shall provide each Participant (or Beneficiary in the event of a
Participant’s death) with a list of the Earnings Crediting Options available for
hypothetical investment, and the Participant (or Beneficiary in the event of a
Participant’s death) shall designate, on a form provided by the Committee, or on
the Plan’s website, one or more of such Earnings Crediting Options in which he
or she wishes his or her Distribution Option Accounts to be “invested”. 
Notwithstanding the foregoing, the Participant’s Distribution Accounts on July
1, 2004 shall be deemed to be invested in an Earnings Crediting Option that is
similar to a money market fund.  The Committee, in its discretion, shall
designate the times, procedures, and limitations for the designation of
hypothetical investments by Participants or Beneficiaries of their Distribution
Option Accounts among the Earnings Crediting Options (including, but not limited
to, the times when a Participant or Beneficiary may change his hypothetical
investments, the increments expressed as a dollar amount or as a percentage of
the Participant’s Distribution Accounts in which a Participant or Beneficiary
may choose to make a hypothetical investment in a Earnings Crediting Option, and
any minimum increment expressed as a dollar amount or as a percentage of the
Participant’s Distribution Accounts that may be deemed to be invested in a
Earnings Crediting Option); provided, however, that (i) a Participant or
Beneficiary may make a selection of a hypothetical investment in a Earnings
Crediting Option on a prospective basis only, and (ii) the times, procedures and
limitations for the selection of hypothetical investments in the Earnings
Crediting Options in effect at any time shall be uniform among all Participants
and Beneficiaries.

 

5.3                                 Crediting of Earnings, Gains, Losses, and
Changes in Value of Earnings Crediting Options.  The Committee shall determine,
in its discretion, the exact times and methods for (i) crediting or charges to
each Participant’s Distribution Accounts with the earnings, gains, losses, and
changes in value of the Earnings Crediting Options selected by the Participant,
(ii) crediting each Participant’s Distribution Accounts with such Participant’s
Annual Deferral Amount, Discretionary Company Contribution, and Discretionary
Matching Contribution, and (iii) debiting each Participant’s Distribution
Accounts with the payment of benefits or withdrawals under this Plan; provided
that any such credits, debits or other charges shall be made no less frequently
than annually.  The Committee may, at any time, change the timing or methods for
crediting or debiting earnings, gains, losses, and changes in value of Earnings
Crediting Options, Annual Deferral Amounts, Discretionary Company Contribution,
Discretionary Matching Contribution, and payments of benefits under this Plan;
provided, however, that the times and methods for crediting or debiting such
items in effect at any particular time shall be uniform among all Participants
and Beneficiaries and such crediting or debiting shall occur no less frequently
than annually.

 

5.4                                 Changes in Earnings Crediting Options.  A
Participant may change the Earnings Crediting Options to which his Distribution
Option Accounts are deemed to be allocated, in the manner prescribed by the
Committee, with whatever frequency is determined by the Committee provided that
each Participant shall have the right to elect at least one such change per
year.  Each such change may include (a) reallocation of Participant’s existing
Accounts in whole percentages of not less than five percent (5%), and/or (b)
change in investment allocation of amounts to be credited to the Participant’s
Accounts in the future, as the Participant may elect, provided that the
allocations remain in whole percentages of not less than five percent (5%).

 

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5.5                                 Valuation of Accounts.  The value of a
Participant’s Distribution Option Accounts as of any date shall equal the
amounts therefore credited to such Accounts, including any earnings (positive or
negative) deemed to be earned on such Accounts in accordance with Section 5.2
through the day preceding such date, less the amounts therefore deducted from
such Accounts.

 

5.6                                 Statement of Accounts.  The Committee shall
provide to each Participant, not less frequently than quarterly, a statement in
such form as the Committee deems desirable setting forth the balance standing to
the credit of each Participant in each of his Distribution Option Accounts as of
the end of the preceding calendar quarter.

 

5.7                                 Distribution from Accounts.  Any
distribution made to or on behalf of a Participant from one or more of his
Distribution Option Accounts in an amount which is less than the entire balance
of any such Account shall be made pro rata from each of the Earnings Crediting
Options to which such Account is then allocated.

 

ARTICLE 6
DISTRIBUTION OPTIONS

 

6.1                                 Election of Distribution Option.  In the
first completed and fully executed Enrollment Agreement filed with the Committee
for each Distribution Option Period, an Eligible Employee shall elect the time
and manner of payment pursuant to which the Eligible Employee’s Distribution
Option Accounts for that Distribution Option Period will be distributed. 
Annually, the Eligible Employee shall allocate his or her deferrals between the
Distribution Options in increments of five percent, provided, however that 100
percent of such deferrals must be allocated to one or the other of the
Distribution Options.

 

6.2                                 Retirement Distribution Option.  Subject to
Section 7.1 distribution of the Participant’s Retirement Distribution Account,
if any,  shall commence upon (a) the Participant’s Retirement,  or (b) if later,
the Participant’s attainment of age 65, as elected by the Participant in the
Enrollment Agreement pursuant to which such Retirement Distribution Account was
established or otherwise as permitted under Section 7.1(a).

 

6.3                                 In-Service Distribution Option.  Subject to
Section 7.2, the Participant’s In-Service Distribution Account for any
Distribution Option Period shall be distributed commencing in the year elected
by the Participant in the Enrollment Agreement pursuant to which such In-Service
Distribution Account was established.  Notwithstanding the foregoing, a
Participant shall not be entitled to allocate any deferrals to an In-Service
Distribution Account for two Plan Years preceding the Plan Year which includes
the date on which such Account is to be distributed and such additional
deferrals shall instead be allocated to the Retirement Distribution Account.

 

ARTICLE 7
BENEFITS TO PARTICIPANTS

 

7.1                                 Benefits Under the Retirement Distribution
Option.  Benefits under the Retirement Distribution Option shall be paid to a
Participant as follows.

 

12

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(a)                                  Benefits Upon Retirement.  In the case of a
Participant whose Service with the Employer terminates on account of his
Retirement, the Participant’s Retirement Distribution Account shall be
distributed in the following methods, as elected by the Participant in writing
either in the Enrollment Agreement or in a separate election made prior to the
first day of the Plan Year immediately preceding the Plan Year in which the
Participant’s Retirement occurs:  (i) in a lump sum; (ii) in annual
installments; or (iii) by any other formula that is mathematically derived and
is acceptable to the Committee.  Any lump-sum benefit payable in accordance with
this paragraph shall be paid in, but not later than January 31 of, the Plan Year
following the Plan Year in which occurs the Participant’s Retirement or, if
later, attainment of age 65 as elected by the Participant in accordance with
this Section or Section 6.2, in an amount equal to the value of such Retirement
Distribution Account as of the last business day of the Plan Year preceding the
date of payment.  Annual installment payments, if any, shall commence no later
than January 31 of the Plan Year following the Plan Year in which occurs the
Participant’s Retirement or if later, attainment of age 65, as elected by the
Participant in accordance with this Section or Section 6.2, in an amount equal
to (i) the value of such Retirement Distribution Account as of the last business
day of the Plan Year preceding the date of payment, divided by (ii) the number
of annual installment payments elected by the Participant in the Enrollment
Agreement pursuant to which such Retirement Distribution Account was
established.  The remaining annual installments shall be paid not later than
January 31 of each succeeding Plan Year in an amount equal to (i) the value of
such Retirement Distribution Account as of the last business day of the
immediately preceding Plan Year divided by (ii) the number of installments
remaining.   A Participant may change the election regarding the manner of
payments as described in Section 6.1 of the Participant’s account at any time
prior to the first day of the Plan Year immediately preceding the Plan Year in
which the Participant’s Retirement occurs, and elected as the distribution date
by the Participant in accordance with Section 6.1.

 

(b)                                 Benefits Upon Termination of Employment.  In
the case of a Participant whose Service with the Employer terminates prior to
the earliest date on which the Participant is eligible for Retirement, other
than on account of becoming Disabled or by reason of death, the vested portion
of a Participant’s Retirement Distribution Account shall be distributed (i) in a
lump sum by February 28 of the year following the Participant’s End Termination
Date or (ii) beginning at age 65, as irrevocably elected by the Participant in
the Enrollment Agreement pursuant to which such Retirement Distribution Account
was established; provided, however, that the Company may override Participant’s
election and cause a distribution under clause (i) notwithstanding any other
election by the Participant.

 

7.2                                 Benefits Under the In-Service Distribution
Option.  Benefits under the In-Service Distribution Option shall be paid to a
Participant as follows:

 

(a)                                  In-Service Distributions.  In the case of a
Participant who continues in Service with the Employer, the Participant’s
In-Service Distribution Account for any Distribution Option Period shall be paid
to the Participant commencing no later than January 31 of the Plan Year elected
by the Participant in the Enrollment Agreement pursuant to which such In-Service
Distribution Account was established, which may be no earlier than the third
Plan Year following the end of the last Plan Year in the Distribution Option
Period in which deferrals are to be credited to the In-Service Distribution
Account for that Distribution Option Period in one lump sum or in annual
installments payable over 2, 3, 4 or 5 years.   Any lump-sum benefit

 

13

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payable in accordance with this paragraph shall be paid not later than January
31 of the Plan Year elected by the Participant in accordance with Section 6.3,
in an amount equal to the value of such In-Service Distribution Account as of
the last business day of the Plan Year preceding the date of the payment. 
Annual installment payments, if any, shall commence not later than January 31 of
the Plan Year as elected by the Participant in accordance with Section 6.3, in
an amount equal (i) the value of such In-Service Distribution Account as of the
last business day of the Plan Year preceding the date of payment, divided by
(ii) the number of installments remaining.  In accordance with procedures
established by the Plan Administrator, not later than twelve months prior to the
Participant’s designated In-Service Distribution date, the Participant may elect
in writing to extend the designated In-Service Distribution date into the future
but such extension will not result in an extension of less than five years.

 

(b)                                 Benefits Upon Termination of Employment.  In
the case of a Participant whose Service with the Employer terminates prior to
the date on which the Participant’s In-Service Distribution Account would
otherwise be distributed, other than on account of becoming Disabled or by
reason of death, such In-Service Distribution Account shall be distributed (i)
in a lump sum by February 28 of the year following the Participant’s End
Termination Date; (ii) in annual installments commencing on the date such
In-Service Distribution Account would have been distributed; or (iii) in a lump
sum on the date such In-Service Distribution Account would otherwise have been
distributed, all as irrevocably elected by the Participant in the Enrollment
Agreement pursuant to which such In-Service Distribution Account was
established; provided, however, that the Company may override a Participant’s
election and cause a distribution under clause (i) notwithstanding any other
election by the Participant.

 

ARTICLE 8
DISABILITY

 

In the event a Participant becomes Disabled, the Participant’s right to make any
further deferrals under this Plan shall terminate as of the date for which the
Participant first receives benefits under the Company’s Long-Term Disability
Benefit Plan, as amended from time to time.   The Participant’s Distribution
Option Accounts shall continue to be credited with earnings in accordance with
Section 5.2 until such Accounts are fully distributed.  For purposes of this
Plan, a Disabled Participant will not be treated as having terminated Service. 
The Participant’s Retirement Distribution Account, if any, shall be distributed
to the Participant in accordance with Section 7.1(a), provided, however, that
distribution of the Participant’s Retirement Distribution Accounts, if any,
shall commence not later than January 31 of the Plan Year immediately following
the later of (a) the Plan Year in which the Participant first becomes eligible
for Retirement, or (b) the Plan Year in which the Participant first received
benefits under the Company’s Long-Term Disability Plan, as amended from time to
time.  The Participant’s In-Service Distribution Accounts, if any, will be
distributed to the Participant in accordance with Section 7.2(a) without regard
to the fact that the Participant became Disabled.

 

ARTICLE 9
SURVIVOR BENEFITS

 

9.1                                 Death of Participant Prior to the
Commencement of Benefits.  In the event of a Participant’s death prior to the
commencement of benefits in accordance with Article 7, benefits

 

14

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shall be paid to the Participant’s Beneficiary, as determined under Section
12.4, pursuant to Section 9.2 or 9.3, whichever is applicable, in lieu of any
benefits otherwise payable under the Plan to or on behalf of such Participant.

 

9.2                                 Survivor Benefits Under the Retirement
Distribution Option.  In the case of a Participant with respect to whom the
Company has established a Retirement Distribution Account, and who dies prior to
the commencement of benefits under such Retirement Distribution Account pursuant
to Section 7.1, distribution of such Retirement Distribution Account shall be
made (a) in a lump sum as soon as practicable following the Participant’s death,
or (b) in the manner and at such time as such Retirement Distribution Account
would otherwise have been distributed in accordance with Section 7.1 had the
Participant lived, as elected by the Participant in the Enrollment Agreement
pursuant to which such Retirement Distribution Account was established or as may
have been changed by the Participant.  The amount of any lump sum benefit
payable in accordance with this Section shall equal the value of such Retirement
Distribution Account as of the last business day of the calendar month
immediately preceding the date on which such benefit is paid.  The amount of any
annual installment benefit payable in accordance with this Section shall equal
(a) the value of such Retirement Distribution Account as of the last business
day of the calendar month immediately preceding the date on which such
installment is paid, divided by (b) the number of annual installments remaining
to be paid pursuant to the election of the Participant in the Enrollment
Agreement pursuant to which such Retirement Distribution Account was established
or as may have been changed by the Participant.

 

9.3                                 Survivor Benefits Under the In-Service
Distribution Option.  In the case of a Participant with respect to whom the
Company has established one or more In-Service Distribution Accounts, and who
dies prior to the date on which such In-Service Distribution Accounts are to be
paid pursuant to Section 7.2, distribution of such In-Service Distribution
Accounts shall be made (a) in a lump sum as soon as practicable following the
Participant’s death, or (b) at such time and in such form as such In-Service
Distribution Accounts would otherwise have been distributed in accordance with
Section 7.2 had the Participant lived, as irrevocably elected by the Participant
in the Enrollment Agreement pursuant to which such In-Service Distribution
Accounts were established.  The amount of any lump sum benefit payable in
accordance with this Section shall equal the value of such In-Service
Distribution Accounts as of the last business day of the calendar month
immediately preceding the date on which such benefit is paid.

 

9.4                                 Death of Participant After Benefits Have
Commenced.  In the event a Participant who elected the Retirement Distribution
Option dies after annual installment benefits payable under Section 7.1 from the
Participant’s Retirement Distribution Account has commenced, but before the
entire balance of such Retirement Distribution Account has been paid, any
remaining installments shall continue to be paid to the Participant’s
Beneficiary, as determined under Section 15.2, at such times and in such amounts
as they would have been paid to the Participant had he survived.

 

15

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ARTICLE 10
EMERGENCY BENEFIT

 

In the event that the Committee, upon written request of a Participant,
determines, in its sole discretion, that the Participant has suffered an
unforeseeable financial emergency, the Company shall pay to the Participant from
the vested portion of his Distribution Option Account, as soon as practicable
following such determination, an amount necessary to meet the emergency, after
deduction of any and all taxes as may be required pursuant to Section 15.8 (the
“Emergency Benefit”).  For purposes of this Plan, an unforeseeable financial
emergency is an unexpected need for cash arising from an illness, casualty loss,
sudden financial reversal, or other such unforeseeable occurrence.  Cash needs
arising from foreseeable events such as the purchase of a house or education
expenses for children shall not be considered to be the result of an
unforeseeable financial emergency.  Emergency Benefits shall be paid first from
the Participant’s In-Service Distribution Accounts, if any, to the extent the
balance of one or more of such In-Service Distribution Accounts is sufficient to
meet the emergency, in the order in which such Accounts would otherwise be
distributed to the Participant.  If the distribution exhausts the In-Service
Distribution Accounts, the Retirement Distribution Account may be accessed.
 With respect to that portion of any Distribution Option Account which is
distributed to a Participant as an Emergency Benefit, in accordance with this
Article, no further benefit shall be payable to the Participant under this
Plan.  Notwithstanding anything in this Plan to the contrary, a Participant who
receives an Emergency Benefit in any Plan Year shall not be entitled to make any
further deferrals for the remainder of such Plan Year or the following Plan
Year.  It is intended that the Committee’s determination as to whether a
Participant has suffered an “unforeseeable financial emergency” shall be made
consistent with the requirements under section 457(d) of the Code.

 

ARTICLE 11
ACCELERATED DISTRIBUTION

 

11.1                           Availability of Withdrawal Prior to Retirement. 
Upon the Participant’s written election, the Participant may elect to withdraw
all or a portion of the Participant’s Distribution Option Account at any time
prior to the time such Distribution Option Account otherwise becomes payable
under the Plan, provided the conditions specified in Section 11.3,  Section
11.4, and Section 11.5 are satisfied.

 

11.2                           Acceleration of Periodic Distributions.  Upon the
Participant’s written election, the Participant or Participant’s Beneficiary who
is receiving installment payments under the Plan may elect to have all or a
percentage of the remaining installments distributed in the form of an
immediately payable lump sum, provided the condition specified in Section 11.3
is satisfied.

 

11.3                           Forfeiture Penalty.  In the event of a withdrawal
pursuant to Section 11.1, or an accelerated distribution pursuant to Section
11.2, the Participant shall forfeit from his Distribution Option Account from
which the withdrawal is made an amount equal to ten percent (10%) of the amount
of the withdrawal or accelerated distribution, as the case may be.  The
forfeited amount shall be deducted from the applicable Distribution Option
Account prior to giving effect to the requested withdrawal or acceleration.  The
Participant and the Participant’s Beneficiary shall not have any right or claim
to the forfeited amount, and the Company shall

 

16

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have no obligation whatsoever to the Participant, the Participant’s Beneficiary
or any other person with regard to the forfeited amount.

 

11.4                           Minimum Withdrawal.  In no event shall the amount
withdrawn in accordance with Section 11.1 be less than 25% of the amount
credited to the Participant’s Distribution Option Account immediately prior to
the withdrawal.

 

11.5                           Suspension from Deferrals.  In the event of a
withdrawal pursuant to Section 11.1, a Participant who is otherwise eligible to
make deferrals under Article 4 shall be prohibited from making any deferrals
with respect to the Plan Year immediately following the Plan Year during which
the withdrawal was made, and any election previously made by the Participant
with respect to deferrals for the Plan Year of the withdrawal shall be void and
of no effect with respect to subsequent deferrals for such Plan Year.

 

ARTICLE 12
VESTING

 

12.1                           A Participant shall at all times be one hundred
percent (100%) vested in his or her Elective Deferral Account.

 

12.2                           A Participant shall be vested in his or her
Discretionary Company Contribution Account in accordance with the following
schedule:

 

Years Discretionary
Company Contribution
has been credited to account

 

Vested Percentage

 

Less than 1 year

 

50

%

1 year but less than 2 years

 

75

%

2 years or more

 

100

%

 

 

12.3                           A Participant shall be vested in his or her
Discretionary Matching Contribution Account in accordance with the following
schedule:

 

Years of Service

 

Vested Percentage

 

Less than 1 year

 

0

%

1 year but less than 2 years

 

20

%

2 years but less than 3 years

 

40

%

3 years but less than 4 years

 

60

%

4 years but less than 5 years

 

80

%

5 years or more

 

100

%

 

17

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12.4                           Notwithstanding anything to the contrary
contained in this Section, in the event of a Change in Control, Retirement, or
Death, a Participant’s Discretionary Company Contribution Account and
Discretionary Matching Contribution Account shall immediately become one hundred
percent (100%) vested (if it is not already vested in accordance with the above
vesting schedules).

 

ARTICLE 13
CLAIMS PROCEDURE

 

13.1                           Presentation of Claim.  Any Participant or
Beneficiary of a deceased Participant (such Participant or Beneficiary being
referred to below as a “Claimant”) may deliver to the Committee a written claim
for a determination with respect to the amounts distributable to such Claimant
from the Plan.  If such a claim relates to the contents of a notice received by
the Claimant, the claim must be made within sixty (60) days after such notice
was received by the Claimant.  The claim must state with particularity the
determination desired by the Claimant.  All other claims must be made within one
hundred eighty (180) days of the date on which the event that caused the claim
to arise occurred.  The claim must state with particularity the determination
desired by the Claimant.

 

13.2                           Notification of Decision.  The Committee shall
consider a Claimant’s claim within a reasonable time, and shall notify the
Claimant in writing but not later than ninety (90) days after receiving the
claim.  If the Committee determines that special circumstances require an
extension of time for processing the claim, written notice of the extension
shall be furnished to the Claimant prior to the termination of the initial
ninety (90) day period.  In no event shall such extension exceed a period of
ninety (90) days from the end of the initial period.  The extension notice shall
indicate the special circumstances requiring an extension of time and the date
by which the Committee expects to render the benefit determination.  The
Committee shall notify the Claimant in writing:

 

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

 

(b)                                 That the Committee 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:

 

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

 

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

 

(iii)                               a description of any additional material or
information necessary for the Claimant to perfect the claim, and an explanation
of why such material or information is necessary; and

 

(iv)                              an explanation of the claim review procedure
set forth in Section 13.3 below or, to the extent required by law, a civil
action under ERISA Section 502(a) following an adverse benefit determination on
review.

 

18

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

 

(a)                                  may, upon request and free of charge, have
reasonable access to, and copies of, all documents, records and other
information relevant to the claim for benefits;

 

(b)                                 may submit written comments or other
documents;

 

(c)                                  may request a hearing, which the Committee,
in its sole discretion, may grant.

 

13.4                           Decision on Review.  The Committee 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 of the claim.  If the
Committee determines that special circumstances require an extension of time for
processing the claim, written notice of the extension shall be furnished to the
Claimant prior to the termination of the initial sixty (60) day period.  In no
event shall such extension exceed a period of sixty (60) days from the end of
the initial period.  The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the Committee
expects to render the benefit determination.  In rendering its decision, the
Committee shall take into account all comments, documents, records and other
information submitted by the Claimant relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit
determination.  The decision must be written in a manner calculated to be
understood by the Claimant, and it must contain:

 

(a)                                  specific reasons for the decision;

 

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

 

(c)                                  a statement that the Claimant is entitled
to receive, upon request and free of charge, reasonable access to and copies of,
all documents, records and other information relevant (as defined in applicable
ERISA regulations) to the Claimant’s claim for benefits; and

 

(d)                                 to the extent required by law, a statement
of the Claimant’s right to bring a civil action under ERISA Section 502(a).

 

13.5                           Legal Action.  With respect to claims made prior
to the occurrence of a Change in Control, a Claimant’s compliance with the
foregoing provisions of this Article 13 is a mandatory prerequisite to a
Claimant’s right to commence arbitration pursuant to Section 13.6 with respect
to any claim for benefits under this Plan.  With respect to claims made upon and
after the occurrence of a Change in Control, the Claimant may proceed directly
to arbitration in accordance with Section 13.6 and need not first satisfy the
foregoing provisions of this Article 13.

 

13.6                           Arbitration.  All claims or controversies arising
out of or in connection with this Plan, that any Company may have against any
Claimant, or that any Claimant may have against

 

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any Company or against any of their respective officers, directors, employees or
agents acting in their capacity as such, shall, subject to the initial review
provided for in the foregoing provisions of this Article 13 that are effective
with respect to claims brought prior to the occurrence of a Change in Control,
be resolved through arbitration as provided in this Section 13.6.  The decision
of an arbitrator on any issue, dispute, claim or controversy submitted for
arbitration, shall be final and binding upon each Company and the Claimant and
that judgment may be entered on the award of the arbitrator in any court having
proper jurisdiction.  With respect to claims arising upon or following the
occurrence of a Change in Control (but not with respect to any determination
made by the Committee prior to the Change in Control), the arbitrator shall
review de novo any claim previously considered by the Committee pursuant to this
Article 13.

 

Except as otherwise provided in this procedure or by mutual agreement of the
parties, any arbitration shall be conducted in Orange County, California before
a sole arbitrator selected from Judicial Arbitration and Mediation Services,
Inc., Orange County, California, or its successor (“JAMS”), or if JAMS is no
longer able to supply the arbitrator, such arbitrator shall be selected from the
American Arbitration Association, and shall be conducted in accordance with the
provisions of California Code of Civil Procedure §§ 1280 et seq. as the
exclusive forum for the resolution of such dispute.  The party desiring to
initiate arbitration shall do so by sending written notice of an intention to
arbitrate to the other party, which notice shall include a description of the
nature of all claims or controversies asserted and a description of the facts
upon which such claims are based.  Pursuant to California Code of Civil
Procedure § 1281.8, provisional injunctive relief may, but need not, be sought
by either party to this Agreement in a court of law while arbitration
proceedings are pending, and any provisional injunctive relief granted by such
court shall remain effective until the matter is finally determined by the
arbitrator.  Final resolution of any dispute through arbitration may include any
remedy or relief which the arbitrator deems just and equitable, including any
and all remedies provided by applicable state or federal statutes.  At the
conclusion of the arbitration, the arbitrator shall issue a written decision
that sets forth the essential findings and conclusions upon which the
arbitrator’s award or decision is based.  Any award or relief granted by the
Arbitrator hereunder shall be final and binding on the parties hereto and may be
enforced by any court of competent jurisdiction.  The parties acknowledge and
agree that they are hereby waiving any rights to trial by jury in any action,
proceeding or counterclaim brought by either of the parties against the other in
connection with any matter whatsoever arising out of or in any way connected
with this Plan.

 

All forum costs of the arbitration (including, but not limited to, the fees and
expenses of the arbitrator) shall be advanced and borne by the Company. 
Further, the fees and expenses of the counsel for the Claimant shall be advanced
and borne by the Company; provided, however, that if it is determined by the
arbitrator that the Claimant did not commence the arbitration in good faith and
had no reasonable basis therefore, the Claimant shall repay to the Company all
amounts advanced by the Company to cover the Claimant’s fees and expenses of
counsel and shall reimburse the Company for its reasonable legal fees and
expenses (other than forum costs) in connection with the arbitration.

 

The arbitrator shall interpret this Plan, any applicable Company policy or rules
and regulations, any applicable substantive law (and the law of remedies, if
applicable) of the state in which the claim arose or applicable federal law (any
such law to be applicable only to the extent

 

20

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consistent with Section 15.11).  In reaching his or her decision, the arbitrator
shall have no authority to change or modify any lawful Company policy, rule or
regulation, or this Plan.  The arbitrator, and not any federal, state or local
court or agency, shall have exclusive and broad authority to resolve any dispute
relating to the interpretation, applicability, enforceability or formation of
this Plan, including but not limited to, any claim that all or any part of this
Plan is voidable.

 

The arbitrator shall have authority to entertain a motion to dismiss and/or
motion for summary judgment by any party and shall apply the standards governing
such motions under the Federal Rules of Civil Procedure.

 

ARTICLE 14
TRUST

 

14.1                           Establishment of Trust.  The Company shall
establish the Trust, and the Employers shall transfer over to the Trust such
assets, if any, as the Committee determines, from time to time and in its sole
discretion, are appropriate.

 

14.2                           Interrelationship of the Plan and the Trust.  The
provisions of the Plan shall govern the rights of a Participant to receive
distributions pursuant to the Plan.  The provisions of the Trust shall govern
the rights of the Participant and the creditors of the Employers to the assets
transferred to the Trust.  The Employers shall at all times remain liable to
carry out their obligations under the Plan.  The Employers’ obligations under
the Plan may be satisfied with Trust assets distributed pursuant to the terms of
the Trust.  Any such distribution shall reduce the Employer’s obligations under
this Agreement.

 

ARTICLE 15
MISCELLANEOUS

 

15.1                           Amendment and Termination.  The Plan may be
amended, suspended, discontinued or terminated at any time by the Committee;
provided, however, that no such amendment, suspension, discontinuance or
termination shall reduce or in any manner adversely affect the rights of any
Participant with respect to benefits that are payable or may become payable
under the Plan based upon the balance of the Participant’s Accounts as of the
effective date of such amendment, suspension, discontinuance or termination.
Notwithstanding anything else contained herein or in the New Century Financial
Corporation Supplemental Benefit and Deferred Compensation Trust Agreement II to
the contrary, the Company may at any time terminate the Plan and pay out the
Distribution Option Accounts in the form of lump sum payments

 

15.2                           Designation of Beneficiary.  Each Participant may
designate a Beneficiary or Beneficiaries (which Beneficiary may be an entity
other than a natural person) to receive any payments which may be made following
the Participant’s death.  Such designation may be changed or canceled at any
time without the consent of any such Beneficiary(1).  Any such designation,
change or cancellation must be made in a form approved by the Committee and

 

--------------------------------------------------------------------------------

(1)  In Community Property States, in order for a married participant to
designate someone other than his/her spouse as the primary beneficiary, consent
of each spouse is required.

 

21

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shall not be effective until received by the Committee, or its designee.  If no
Beneficiary has been named, or the designated Beneficiary or Beneficiaries shall
have predeceased the Participant, the Beneficiary shall be the Participant’s
estate.  If a Participant designates more than one Beneficiary, the interests of
such Beneficiaries shall be paid in equal shares, unless the Participant has
specifically designated otherwise.

 

15.3                           Limitation of Participant’s Right.  Nothing in
this Plan shall be construed as conferring upon any Participant any right to
continue in the employment of the Company, nor shall it interfere with the
rights of the Company to terminate the employment of any Participant and/or to
take any personnel action affecting any Participant without regard to the effect
which such action may have upon such Participant as a recipient or prospective
recipient of benefits under the Plan.  Any amounts payable hereunder shall not
be deemed salary or other compensation to a Participant for the purposes of
computing benefits to which the Participant may be entitled under any other
arrangement established by the Employer for the benefit of its employees.

 

15.4                           No Limitation on Company Actions.  Nothing
contained in the Plan shall be construed to prevent the Company from taking any
action which is deemed by it to be appropriate or in its best interest.  No
Participant, Beneficiary, or other person shall have any claim against the
Employer as a result of such action.

 

15.5                           Obligations to Company.  If a Participant becomes
entitled to a distribution of benefits under the Plan, and if at such time the
Participant has outstanding any debt, obligation, or other liability
representing an amount owing to the Employer, then the Employer may offset such
amount owed to it against the amount of benefits otherwise distributable.  Such
determination shall be made by the Committee.

 

15.6                           Nonalienation of Benefits.  Except as expressly
provided herein, no Participant or Beneficiary shall have the power or right to
transfer (otherwise than by will or the laws of descent and distribution),
alienate, or otherwise encumber the Participant’s interest under the Plan.  The
Company’s obligations under this Plan are not assignable or transferable except
to (a) any corporation or partnership which acquires all or substantially all of
the Company’s assets or (b) any corporation or partnership into which the
Company may be merged or consolidated.  The provisions of the Plan shall inure
to the benefit of each Participant and the Participant’s Beneficiaries, heirs,
executors, administrators or successors in interest.

 

15.7                           Protective Provisions.  Each Participant shall
cooperate with the Employer by furnishing any and all information requested by
the Employer in order to facilitate the payment of benefits hereunder, taking
such physical examinations as the Employer may deem necessary and taking such
other relevant action as may be requested by the Employer.  If a Participant
refuses to cooperate, the Employer shall have no further obligation to the
Participant under the Plan, other than payment to such Participant of the then
current balance of the Participant’s Distribution Option Accounts in accordance
with his prior elections.

 

15.8                           Withholding Taxes.  The Company may make such
provisions and take such action as it may deem necessary or appropriate for the
withholding of any taxes which the Company is required by any law or regulation
of any governmental authority, whether Federal,

 

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state or local, to withhold in connection with any benefits under the Plan,
including, but not limited to, the withholding of appropriate sums from any
amount otherwise payable to the Participant (or his Beneficiary).  Each
Participant, however, shall be responsible for the payment of all individual tax
liabilities relating to any such benefits.

 

15.9                           Unfunded Status of Plan.  The Plan is intended to
constitute an “unfunded” plan of deferred compensation for Participants. 
Benefits payable hereunder shall be payable out of the general assets of the
Company, and no segregation of any assets whatsoever for such benefits shall be
made.  Notwithstanding any segregation of assets or transfer to a grantor trust,
with respect to any payments not yet made to a Participant, nothing contained
herein shall give any such Participant any rights to assets that are greater
than those of a general creditor of the Company.

 

15.10                     Severability.  If any provision of this Plan is held
unenforceable, the remainder of the Plan shall continue in full force and effect
without regard to such unenforceable provision and shall be applied as though
the unenforceable provision were not contained in the Plan.

 

15.11                     Governing Law.  Subject to ERISA, the Plan shall be
construed in accordance with and governed by the laws of the State of
California, without reference to the principles of conflict of laws.

 

15.12                     Headings.  Headings are inserted in this Plan for
convenience of reference only and are to be ignored in the construction of the
provisions of the Plan.

 

15.13                     Gender, Singular and Plural.  All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, or
neuter, as the identity of the person or persons may require.  As the context
may require, the singular may read as the plural and the plural as the singular.

 

15.14                     Notice.  Any notice or filing required or permitted to
be given to the Plan Administrator or the Committee under the Plan shall be
sufficient if in writing and hand delivered, or sent by registered or certified
mail, to the Human Resources Department, or to such other entity as the Plan
Administrator or the Committee may designate from time to time.  Any notice or
filing required or permitted to be given to a Participant under the Plan shall
be sufficient if in writing and hand delivered, or sent by registered or
certified mail, to the Participant at the Participant’s last address reflected
on the payroll records of the Company, or to such other address as the
Participant may specify from time to time (any such other address to be sent by
the Participant in a written notice that satisfies this Section 15.14 and which
notice shall make express reference to the purpose of the notice).    In either
case, any such notice shall be deemed given as to the date of delivery, or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.

 

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Dated at Irvine, State of California, on June 22, 2004.

 

 

 

/s/ Stergios Theologides

 

(Signature of Representative of New Century Financial Corp.)

 

 

 

 

 

 

Witness:

/s/ Amy Gossin

 

 

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