Exhibit 10.8

SECOND AMENDED AND RESTATED FINANCIAL SECURITY PLAN

OF

CHAPARRAL STEEL COMPANY

Effective January 1, 2007

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SECOND AMENDED AND RESTATED FINANCIAL SECURITY PLAN

OF

CHAPARRAL STEEL COMPANY

TABLE OF CONTENTS

 

ARTICLE I

  

PREAMBLE AND PURPOSE

   1

ARTICLE II

  

DEFINITIONS AND CONSTRUCTION

   1

ARTICLE III

  

ELIGIBILITY AND MEMBERSHIP

   4

ARTICLE IV

  

RETIREMENT BENEFIT AND BENEFIT UPON SEPARATION FROM SERVICE

   6

ARTICLE V

  

DEATH BENEFIT

   8

ARTICLE VI

  

DISABILITY

   9

ARTICLE VII

  

SOURCE OF BENEFITS

   9

ARTICLE VIII

  

AMENDMENT AND TERMINATION OF THE PLAN

   10

ARTICLE IX

  

OTHER BENEFITS AND AGREEMENTS

   12

ARTICLE X

  

RESTRICTIONS ON ALIENATION OF BENEFITS

   12

ARTICLE XI

  

ADMINISTRATION OF THIS PLAN

   13

ARTICLE XII

  

NON-COMPETE

   14

ARTICLE XIII

  

NAMED FIDUCIARY AND CLAIMS PROCEDURE

   14

ARTICLE XIV

  

ADOPTION OF PLAN BY SUBSIDIARY, AFFILIATED OR ASSOCIATED COMPANIES

   17

ARTICLE XV

  

MISCELLANEOUS

   17

 

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SECOND AMENDED AND RESTATED FINANCIAL SECURITY PLAN

OF

CHAPARRAL STEEL COMPANY

ARTICLE I

PREAMBLE AND PURPOSE

 

1.1

Preamble. Chaparral Steel Company, a Delaware corporation (the “Company”),
established that certain Financial Security Plan of Chaparral Steel Company (the
“July 2005 Plan”) effective July 29, 2005 pursuant to Section 5.18(b)(i) of that
certain Separation and Distribution Agreement, dated July 6, 2005, between the
Company and Texas Industries, Inc. (the “Separation Agreement”) to provide for
the payment of benefits as provided in the Separation Agreement which accrued
prior to July 29, 2005 in the Texas Industries, Inc. Financial Security Plan
(the “TXI FSP”) with respect “Chaparral Business Employees” as that term is
defined in the Separation Agreement and to provide for the payment of benefits
to Eligible Employees employed by the Company and its Subsidiaries on and after
July 29, 2005.

By this instrument, the Company is amending and restating the January 2006 Plan
as of the Effective Date to comply with the provisions of section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) and to incorporate
certain design changes desired by the Company.

The Company may purchase insurance or adopt one or more trusts to serve as a
possible source of funds for the payment of benefits under this Plan.

 

1.2

Purpose. Through this Plan, the Company intends to permit the deferral of
compensation and to provide certain benefits to a select group of management or
highly compensated employees of the Company and its Subsidiaries.

ARTICLE II

DEFINITIONS AND CONSTRUCTION

 

2.1

Definitions. Capitalized terms used but not otherwise defined herein will have
the meaning set forth in this Section 2.1, unless a different meaning is
required by the context in which the word or phrase is used.

 

 

(a)

“Administrative Committee” means those members of the Committee appointed
pursuant to Article XI for the purpose of administering this Plan with respect
to Participants who are not Executive Officers of the Company.

 

 

(b)

“Beneficiary” means an individual entitled to receive benefits under this Plan
upon the death of a Participant.

 

 

(c)

“Beneficiary Designation” means the form of written agreement, attached hereto
as Appendix C, by which a Participant designates a Beneficiary or Beneficiaries.
All Beneficiary Designations will apply to this Plan until the Participant
amends or revokes such Beneficiary Designation.

 

 

(d)

“Cause” means any action involving willful malfeasance or gross negligence or
material non-feasance.

 

 

(e)

“Committee” means (i) with respect to Participants who are not Executive
Officers, the Administrative Committee appointed to manage and administer this
Plan in accordance with the provisions of Article XI, and (ii) with respect to
Participants who are Executive Officers of the Company, the Board of Directors
of the Company or a committee of directors selected by the Board of Directors.

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(f)

“Covered Salary” means a Participant’s base annual salary excluding bonuses or
other fringe benefits, if any, which the Participant chooses in the
Participant’s Plan Agreement (at a level of either fifty percent (50%) or one
hundred percent (100%)) as the basis for computation of the Retirement or Death
Benefit pursuant to the terms and conditions of this Plan.

 

 

(g)

“Death Benefit” means any benefit to which a Participant is entitled as
described in Article V.

 

 

(h)

“Deferrals” means those amounts of Covered Salary the Participant elects to
defer under this Plan as set forth in the Participant’s Election to Participate
and Plan Agreement.

 

 

(i)

“Deferred Retirement Benefit” means the benefit described in Section 4.4.

 

 

(j)

“Disability” or “Disabled” means that the Participant is totally and permanently
disabled within the meaning of the long-term disability plan sponsored by the
Employer.

 

 

(k)

“Disability Benefit” means the benefit described in Section 6.1.

 

 

(l)

“Early Retirement Age” means age fifty-five (55). However, as required by
Internal Revenue Service Notice 2006-79, a Participant who terminates employment
in 2007 and is between the ages of fifty-five (55) and fifty-nine (59) is not
eligible for the Early Retirement Benefit. Such a Participant’s benefits will be
payable pursuant to Section 4.4.

 

 

(m)

“Early Retirement Benefit” means the benefit described in Section 4.3.

 

 

(n)

“Early Retirement Date” means the first day of any month following the month in
which the Participant has attained Early Retirement Age and has Retired;
provided such day occurs prior to the day the Participant attains Normal
Retirement Age.

 

 

(o)

“Effective Date” means January 1, 2007.

 

 

(p)

“Election Form” means the form of written agreement attached as Appendix D
entered into by the Participant irrevocably electing to delay payment of his
Early Retirement Benefit or Normal Retirement Benefit for a period of five
(5) years.

 

 

(q)

“Election to Participate” means the form of written agreement attached as
Appendix A that will be executed and entered into between a Participant and the
Employer specifying the amount of Covered Salary to be deferred under this Plan
as provided in Article III. A Participant’s Election to Participate will apply
to this Plan until the applicable Participant amends or revokes such Election to
Participate.

 

 

(r)

“Eligible Employee” means any Employee who is hereafter selected by the
Committee and who is in the regular full time employment of the Company or one
of its Subsidiaries as determined by the personnel rules and practices of the
Company or the Subsidiary.

 

 

(s)

“Employee” means an individual employed by the Employer in the relationship of
employer and employee. The term does not include persons who are retained as
consultants, leased or contract employees or other independent contractors even
if such persons are determined by the Employer, the Internal Revenue Service,
the Department of Labor or a court of competent jurisdiction to be common law
employees of the Employer.

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(t)

“Employer” means the Company or any Subsidiary who has adopted this Plan as a
participating employer who has one or more Eligible Employees who have been
selected by the Committee to participate in this Plan as provided in
Article III. Where the context dictates, the term “Employer” as used herein
refers to a particular Employer which has entered into an Election to
Participate and a Plan Agreement with a specific Participant.

 

 

(u)

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

 

(v)

“Executive Officers” means (i) the persons designated as “Executive Officers” by
the Board of Directors of the Company and (ii) those persons described in Rule
16a-1(f) of the Securities Exchange Act of 1934, as amended.

 

 

(w)

“Five Percent Owner” means a five percent (5%) owner within the meaning of
section 416(i) of the Code.

 

 

(x)

“Key Employee” means a key employee within the meaning of section 416(i) of the
Code.

 

 

(y)

“Late Retirement Benefit” means the benefit to be paid to a Participant pursuant
to Section 4.2.

 

 

(z)

“Level of Participation” means the percentage of Covered Salary (either fifty
percent (50%) or one hundred percent (100%)) selected by a Participant in
connection with the Participant’s participation in this Plan.

 

 

(aa)

“Normal Retirement Age” means age sixty-five (65) except for Transfer
Participants who were Texas Industries, Inc. executive officers prior to the
Texas Industries, Inc. /Chaparral Steel Company merger whose Normal Retirement
Age is sixty (60).

 

 

(bb)

“Normal Retirement Benefit” means the benefit described in Section 4.1.

 

 

(cc)

“Normal Retirement Date” means the first day of the month following the month in
which the Participant attains Normal Retirement Age.

 

 

(dd)

“Open Enrollment Period” means the period occurring each year during which an
Eligible Employee may select his or her Level of Participation and elect to
defer Covered Salary for a subsequent Plan Year pursuant to Article III.

 

 

(ee)

“Original Entry Date” means with respect to Plan A, B or C Participants, the
date the Participant commenced participation in the Plan and with respect to
Plan D Participants, the date such Participant first became an employee of Texas
Industries, Inc. or one of its subsidiaries.

 

 

(ff)

“Participant” means any Eligible Employee who was or is hereafter selected by
the Committee and elected to participate in the Plan as provided in Article III.

 

 

(gg)

“Plan” means this Second Amended and Restated Financial Security Plan of
Chaparral Steel Company, which will be evidenced by this instrument and by each
Election to Participate and Plan Agreement. Except as otherwise required by the
context, references to “this Plan” will be deemed to include the TXI FSP, the
Financial Security Plan of Chaparral Steel Company effective July 29, 2005, and
the Financial Security Plan of Chaparral Steel Company adopted January 12, 2006
and effective July 29, 2005.

 

 

(hh)

“Plan Agreement” means, the written agreement in the form attached hereto as
Appendix B which is entered into by and between an Employer and a Participant.

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(ii)

“Plan Entry Date” means, with respect to Participants who were Participants in
the TXI FSP (Plan D), the date the Participant commenced participation in the
TXI FSP. The Plan Entry Date is only applicable in the event this Plan is
terminated and liquidated pursuant to Section 8.2(b).

 

 

(jj)

“Plan Year” means each twelve (12) month period (beginning January 1 and ending
December 31) included within the term of this Plan or any predecessor plan.

 

 

(kk)

“Retirement” and “Retire” means a Participant’s separation from service with the
Company and its Subsidiaries after having become fully Vested and on or after
his or her attainment of Early Retirement Age or Normal Retirement Age.

 

 

(ll)

“Retirement Benefit” means any benefit to which a Participant is entitled as
described in Article IV.

 

 

(mm)

“Special Enrollment Period” means the thirty (30) day period after an Eligible
Employee is employed by the Employer and advised of his or her eligibility to
participate in this Plan during which the Eligible Employee may select his or
her Level of Participation and elect to defer his or her Covered Salary earned
after such election pursuant to Article III. The Committee may also designate
certain periods as Special Enrollment Periods to the extent permitted under
section 409A of the Code.

 

 

(nn)

“Subsidiary” means any business organization in which the Company, directly or
indirectly, owns an ownership interest, excluding ownership interests the
Company may hold in its fiduciary capacity as trustee or otherwise, and any
other business organization that the Board of Directors designates as a
Subsidiary for purposes of this Plan.

 

 

(oo)

“TXI FSP” means the Texas Industries, Inc. Financial Security Plan.

 

 

(pp)

“Vested” or “Vesting” means the status that a Participant obtains with respect
to benefits selected under this Plan that is based on either such Participant’s
years of Plan participation or the occurrence of a specified event (e.g.,
Disability or death). Generally, a Participant will become Vested with respect
to the benefits attributable to each Level of Participation selected under this
Plan once he or she has completed five (5) consecutive years of Plan
participation, with such status accruing at the rate of twenty percent
(20%) each year. However, the Committee, in its sole and absolute discretion,
may prescribe alternative conditions under which a Participant will become
Vested; provided, such conditions are set forth in the Participant’s Plan
Agreement.

 

 

(qq)

“Vested Percentage” means the percent to which a Participant is Vested in the
benefits to be provided under this Plan (i.e., twenty percent (20%), forty
percent (40%), sixty percent (60%), eighty percent (80%) or one hundred percent
(100%)).

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2.2

Construction. If any provision of this Plan is determined to be for any reason
invalid or unenforceable, the remaining provisions of this Plan will continue in
full force and effect. All of the provisions of this Plan will be construed and
enforced in accordance with the laws of the State of Texas and will be
administered according to the laws of such state, except as otherwise required
by ERISA, the Code or other applicable federal law. Headings and subheadings of
this Plan are for the purpose of reference only and are not to be considered in
the construction of this Plan.

ARTICLE III

ELIGIBILITY AND MEMBERSHIP

 

3.1

Open Enrollment Period. The Committee will have the sole discretion to determine
the Eligible Employees who are eligible to become Participants in accordance
with the purpose of this Plan. During the Open Enrollment Period, each Eligible
Employee will be contacted and informed that he or she may select a Level of
Participation and elect to defer portions of his or her Covered Salary to this
Plan for the following Plan Year and will be provided with an Election to
Participate and a Plan Agreement. An Eligible Employee will become a Participant
by completing such forms and selecting a Level of Participation and making a
Deferral election pursuant to Section 3.3.

 

3.2

Eligibility on Initial Employment. If an Eligible Employee is first designated
by the Committee to be a Participant after the commencement of a Plan Year, then
as permitted pursuant to section 409A of the Code, such Eligible Employee may
elect to participate in this Plan during the Special Enrollment Period for the
remainder of such Plan Year.

 

3.3

Level of Participation and Deferral of Covered Salary. Each Eligible Employee
who elects to participate in this Plan must select a Level of Participation and
must elect to defer an associated amount of Covered Salary. Such Deferral
election will become effective as of the first day of the immediately following
Plan Year, in the case of enrollment pursuant to Section 3.1, and effective for
the remainder of the Plan Year, in the case of enrollment pursuant to
Section 3.2, and will continue in force for all subsequent Plan Years unless it
is modified or revoked by the Participant prior to the beginning of each Plan
Year. By making a Deferral election, the Participant agrees that all amounts of
Covered Salary deferred thereby will be irrevocably deferred and that the
Participant will be entitled solely to the benefits provided under this Plan.

A Participant may elect to change his or her Level of Participation for any
subsequent Plan Year to either modify such Level of Participation from fifty
percent (50%) to one hundred percent (100%) of Covered Salary, or visa versa.
Additionally, a Participant may elect to forego additional increases in Covered
Salary. Any such change in the Level of Participation or Deferral election will
be reflected in a new Plan Agreement and Election to Participate and will become
effective as of January 1 of the immediately following Plan Year. A Participant
who changes his or her Level of Participation will continue to be Vested with
respect to the new Level of Participation to the same extent the Participant was
Vested in the prior Level of Participation. A Participant’s Deferral election
will cease as of the earlier of his or her separation from service (including a
deemed separation from service on account of Disability as provided in Article
VI), Retirement, or at the end of the Plan Year in which his or her Plan
Agreement is terminated. The amount of each Participant’s Covered Salary
deferred pursuant to this Article III, will be and remain solely the property of
the Employer, and a Participant will have no right thereto, nor will the
Employer be obligated to use such amounts in any specific manner. In the event a
Participant changes his or her Level of Participation, such change will affect
(in a pro-rata manner) the Participant’s Deferrals and the Participant’s
projected benefits under this Plan. The affect of such change will be reflected
on the Participant’s Election to Participate and Plan Agreement with respect to
both the Participant’s Deferrals and the Participant’s projected benefits.

 

3.4

Loss of Eligibility Status. A Participant under this Plan who separates from
service with the Employer prior to Retirement for a reason other than death,
Disability or Cause, or who ceases to be an Eligible

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Employee after having become fully or partially Vested will be entitled to a
Deferred Retirement Benefit pursuant to Article IV. Conversely, a Participant
under this Plan who separates from service with the Employer for Cause
regardless of whether such Participant has become fully or partially Vested,
will not be entitled to any benefits under this Plan. Likewise, a Participant
under this Plan who separates from service with the Employer for a reason other
than death or who ceases to be an Eligible Employee, before having become fully
or partially Vested will not be entitled to any benefits under this Plan except
as provided in Article VIII regarding termination of this Plan.

ARTICLE IV

RETIREMENT BENEFIT AND BENEFIT UPON

SEPARATION FROM SERVICE

 

4.1

Normal Retirement Benefit. An Eligible Employee will be entitled to a Normal
Retirement Benefit under this Plan if he or she continues in the employment of
the Employer as a Participant in this Plan until the Participant’s Normal
Retirement Age (i.e., the Participant’s Election to Participate and Plan
Agreement have been kept in force), has fully Vested and Retires (i.e., Retires
at his or her Normal Retirement Date). Such Normal Retirement Benefit will equal
the total amount specified in the Participant’s Plan Agreement as a Retirement
Benefit and will be divided into a Part A Benefit and a Part B Benefit:

 

 

(a)

Part A Benefit. The Part A Benefit is a monthly Retirement Benefit which will
equal the amount and will be paid for the duration of time specified in the
Participant’s Plan Agreement commencing as of the first day of the month
following the Participant’s Retirement subject to the provisions of Section 4.6
for Key Employees and pursuant to Section 4.5 for Participants who elect to
delay payment of retirement benefits.

 

 

(b)

Part B Benefit. The Part B Benefit is a Post Retirement Death Benefit for the
amount specified in the Participant’s Plan Agreement and will be paid to the
Participant’s Beneficiary in a lump sum upon the death of the Participant.

 

4.2

Late Retirement Benefit. A Participant who satisfies the criteria set forth in
Section 4.1 and who continues employment with the Employer after his or her
Normal Retirement Age will be entitled to payment of his or her Normal
Retirement Benefit upon his or her Retirement in accordance with Section 4.1.

 

4.3

Early Retirement Benefit. An Eligible Employee will be entitled to an Early
Retirement Benefit under this Plan if he or she continues in the employment of
the Employer as a Participant in this Plan until the Participant’s Early
Retirement Age (i.e., the Participant’s Election to Participate and Plan
Agreement have been kept in force), has fully vested and Retires (i.e., Retires
on or after his or her Early Retirement Date but before his or her Normal
Retirement Date). In such event, the Participant’s Early Retirement Benefit will
be the Part A Benefit described in Section 4.1(a) multiplied by a fraction,
which will not exceed one (1), the numerator of which is the number of whole
years between the Participant’s Original Entry Date and the date of his or her
Retirement and the denominator of which is the number of whole years between the
Participant’s Original Entry Date and the Participant’s Normal Retirement Date.
The said amount will be the only benefit to which such Participant will be
entitled prior to his or her death and will be paid in accordance with
Section 4.1(a) above.

The Part B Death Benefit, payable by reason of the Participant’s early
Retirement will be calculated in accordance with the formula as stated in this
Section 4.3. Such Part B Death Benefit, will be paid to the Participant’s
Beneficiary in a lump sum at the time of the Participant’s death.

 

4.4

Deferred Retirement Benefit. A Participant who ceases to be a Participant after
becoming fully or partially Vested before his or her Retirement Date (other than
as a result of death, Disability or separation from service for Cause), will
receive a Deferred Retirement Benefit which will be payable in the manner

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specified in Section 4.1 upon the earlier of (a) the Participant’s death or
(b) the Participant’s separation from service and attainment of Normal
Retirement Age, subject to the provisions of Section 4.7 regarding de minimis
payments.

The Part A Deferred Retirement Benefit payable to the Participant pursuant to
this Section 4.4 will be the Part A Benefit described in Section 4.1(a)
multiplied (i) by a fraction which will not exceed one (1), the numerator of
which is the number of whole years between the Participant’s Original Entry Date
and the date the Employee ceases to be a Participant as described above and the
denominator of which is the number of whole years between the Participant’s
Original Entry Date and the Participant’s Normal Retirement Date and by (ii) the
Participant’s Vested Percentage as of the date the Participant ceased to be a
Participant. The Part B Post Retirement Death Benefit, payable to the
Participant pursuant to this Section 4.4 will be the Part B Death Benefit
described in Section 4.1(b) calculated in accordance with the formula as stated
in this Section 4.4.

Such prorated Part A Benefit amount and prorated Part B Benefit will be the only
benefit to which such Participant will be entitled if the Participant lives to
the Participant’s Normal Retirement Age. If the Participant dies prior to such
date, such prorated Part B Benefit will be paid to the Participant’s Beneficiary
in a lump sum upon the death of the Participant and said prorated Part A Benefit
will commence upon the death of the Participant and be paid to the Participant’s
Beneficiary pursuant to Section 4.1(a).

Notwithstanding the foregoing provisions of this Section 4.4, a Participant who
ceases to be an Employee after becoming fully or partially Vested due to Cause
will not be entitled to any benefits under this Plan, and the Employer will have
no obligation to such Participant.

 

4.5

Election to Delay Payment of Retirement Benefit. As permitted by section 409A of
the Code, the Participant may irrevocably elect (by filing with the Company an
Election Form) to delay the commencement of his or her Early Retirement Benefit
payable pursuant to Section 4.3 or Normal Retirement Benefit payable pursuant to
Section 4.1 to the date which is five (5) years after the date such payment
would have otherwise been made (i.e., the first day of the month following the
Participant’s Retirement (or the date specified in the Participant’s Plan
Agreement)) provided that such election is made at least twelve (12) months
before the payment would have otherwise been made (i.e., is made at least twelve
(12) months prior to Retirement (or the date specified in the Participant’s Plan
Agreement)). For example, if a Participant makes such election at age sixty
(60) and Retires at age sixty-two (62), payment of his or her Normal Retirement
Benefit will not be made until age sixty-seven (67). Similarly, if a Participant
makes such election and Retires at age sixty-five (65), payment of his or Normal
Retirement Benefit will not commence until age seventy (70).

If a Participant makes an election pursuant to this Section 4.5 and Retires less
than twelve (12) months thereafter, such election will be of no effect and
payment of his or her Retirement Benefit will be made pursuant to Section 4.1
regarding the Normal Retirement Benefit or Section 4.3 regarding the Early
Retirement Benefit, subject to Section 4.6. Likewise, if a Participant does not
elect to delay the payment of his or her Early Retirement Benefit or Normal
Retirement Benefit pursuant to this Section 4.5, payment of such Early
Retirement Benefit or Normal Retirement Benefit, will, subject to Section 4.6,
commence as of the first day of the month following the Participant’s Retirement
as provided in Section 4.1 regarding the Normal Retirement Benefit or
Section 4.3 regarding the Early Retirement Benefit.

The election provided pursuant to this Section 4.5 will not be applicable to the
Deferred Vested Retirement Benefit payable pursuant to Section 4.4.

 

4.6

Termination Distributions to Key Employees. Notwithstanding the foregoing
provisions of this Article IV, distributions under this Plan that are payable to
a Key Employee on account of Retirement will be delayed for a period of six
(6) months and one (1) day following such Participant’s Retirement. This
restriction will not apply, or will cease to apply, with respect to a
distribution to a Participant’s Beneficiary by reason of the death of the
Participant.

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4.7

De Minimis Distributions. Notwithstanding the foregoing provisions of this
Article IV, in the event that a Participant ceases participation in this Plan
and the Participant’s Vested Percentage in his Retirement Benefit does not
exceed ten thousand dollars ($10,000) (or such other amount as may be prescribed
pursuant to regulations issued under section 409A of the Code), such benefit
will be paid to the Participant in the form of a lump sum cash payment upon the
earlier of (a) his or her separation from service with the Company and its
Subsidiaries or (b) December 31 of the fifth (5th) year after the year in which
the Participant ceased participation in the Plan. Such lump sum payment will be
made, subject to the provisions of Section 4.6, as soon as practicable following
the date set forth above but no later than the later of December 31 of the
calendar year in which the Participant separates from service or the fifteenth
(15th) day of the third (3rd) month following the Participant’s separation from
service. At the time the Participant receives such distribution his non-Vested
Percentage in his Retirement Benefit will be forfeited and such Participant will
be precluded from recommencing participation in this Plan for a period of five
(5) years following the date of such distribution.

ARTICLE V

DEATH BENEFIT

 

5.1

Amount and Payment of Death Benefit. If a Participant dies before Retirement and
this Plan is in effect at the time, the Employer will pay or cause to be paid a
Death Benefit to such Participant’s Beneficiary. The Death Benefit will be the
greater of (a) the Early Retirement Benefit payable pursuant to the provisions
of Section 4.3 determined as if the Participant were fully Vested or (b) one
hundred percent (100%) of the Participant’s Covered Salary as set forth in the
Participant’s Plan Agreement for the first twelve (12) months after such death
and fifty percent (50%) of the said Covered Salary for the next one hundred and
eight (108) months or until the Participant’s Normal Retirement Age, whichever
is later. Such payments will commence as of the first day of the month following
the date of death after notification of death has been given to the Employer.

 

5.2

Entitlement to Death Benefit. The obligation of the Employer to pay the Death
Benefit will exist only if:

 

 

(a)

at the time of death the Participant was an Employee, Disabled, or on an
authorized leave of absence;

 

 

(b)

the Plan Agreement was in force on the date of death;

 

 

(c)

the Participant’s death was not a result of suicide within two (2) years after
the date of the Participant’s original Plan Agreement, or within two (2) years
of the date of any subsequent Plan Agreement which is the result of additional
benefits granted because of an increase in the Participant’s Covered Salary or a
change in the Level of Participation, but the amount of the Death Benefit which
the Employer will not be obligated to pay will be limited to additional benefits
granted within two (2) years prior to the date of such suicide;

 

 

(d)

the Participant’s death was determined not to be from a bodily or mental cause
or causes, the information about which was withheld, or knowingly concealed, or
falsely provided by the Participant when requested by the Employer to furnish
evidence of good health upon the Participant’s enrolling in this Plan or for any
increase in the Participant’s Covered Salary, but the amount of the Death
Benefit which the Employer will not be obligated to pay will be limited to
additional benefits granted within two (2) years prior to the date of such last
increment of Covered Salary; and

 

 

(e)

proof of death in such form as determined acceptable by the Committee is
furnished.

 

5.3

Beneficiary Designation. A Participant may designate a Beneficiary by completing
and filing a Designation of Beneficiary Form with the Committee. If more than
one Beneficiary is named, the shares

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and preference of each will be indicated. If the Participant is married, his or
her spouse will automatically be his or her Beneficiary unless another
Beneficiary is designated under this Section 5.3 and the Participant’s spouse
consents in writing to such other Beneficiary designation. The effective date of
a Beneficiary Designation will be the date such Designation of Beneficiary Form
was executed by the Participant.

If the Committee has any doubt as to the proper Beneficiary to receive payments
pursuant to this Plan, it will have the right to withhold such payments until
the matter is finally adjudicated. Any payment made by the Employer in
accordance with this Plan in good faith will fully discharge the Employer from
all further obligations with respect to such payment.

ARTICLE VI

DISABILITY

 

6.1

Entitlement to Disability Benefit. A Participant who becomes Disabled while in
the employ of the Employer will be entitled, subject to the provisions of
Section 4.6, to payment of a Disability Benefit pursuant to this Article VI.
During the first six (6) months of such Disability, the Participant’s Deferrals
will continue under this Plan and such six (6) month period will be included in
any calculation of the Participant’s Vested Percentage. At the end of such six
(6) month period, the Participant will be deemed to have incurred a separation
from service for purposes of section 409A of the Code and such Deferrals will
cease. A Disability Benefit will be paid as a pro rated Normal Retirement
Benefit pursuant to Section 4.1 upon (a) the Participant’s attainment of Normal
Retirement Age, if the Participant becomes Disabled before attaining Early
Retirement Age or (b) the first of the month following the Participant’s deemed
separation from service pursuant to this Section 6.1 (i.e., the end of the first
six (6) months of Disability), if the Participant becomes Disabled on or after
the attainment of Early Retirement Age subject to an election made under Section
4.5).

The amount of the above-referenced pro rated Normal Retirement Benefit otherwise
payable pursuant to Section 4.1 will be determined by multiplying the Normal
Retirement Benefit otherwise payable pursuant to Section 4.1 by (i) a fraction
which will not exceed one (1), the numerator of which is the number of whole
years between the Participant’s Original Entry Date and the date six (6) months
subsequent to the date on which the Employee became Disabled and the denominator
of which is the number of whole years between the Participant’s Original Entry
Date and the Participant’s Normal Retirement Date and (ii) the Participant’s
Vested Percentage as of the first day of the seventh (7th) month subsequent to
the date on which the Participant became Disabled.

 

6.2

Recovery from Disability. If a Participant recovers from his or her Disability
and is reemployed by the Employer as an Eligible Employee, such Participant will
not be permitted to reenter the Plan. Any benefits the Participant is receiving
under the Plan during his prior period of employment will continue to be paid.

 

6.3

Death while Disabled. If a Participant, while Disabled, dies prior to the
commencement of his or her Retirement Benefit pursuant to Article IV, the Death
Benefit provided in Article V will be paid in accordance with the provisions of
that Article.

ARTICLE VII

SOURCE OF BENEFITS

 

7.1

Source of Benefits. Amounts payable to a Participant will be paid exclusively
from the general assets of the Employer; provided, that the Employer may
purchase insurance or establish a rabbi trust to serve as a source of funds for
the benefits payable under this Plan. The Employer’s liability for the payment
of benefits will be evidenced only by this Plan and the Plan Agreement entered
into between the Employer and a Participant.

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7.2

Creditor Status. Participants and their Beneficiaries will be general unsecured
creditors of their respective Employer with respect to the payment of any
benefit under this Plan. No Participant or Beneficiary entitled to any payment
will have any claim, right, security or other interest in any particular asset
of the Employer.

 

7.3

Evidence of Insurability. The Employer has purchased and may continue to
purchase corporate owned life insurance as a source of funds for the payment of
benefits under this Plan. Each Participant’s Level of Participation is
(a) designed to be commensurate with the amount of insurance that may be
obtained on the Participant’s life at standard rates and (b) conditioned upon
the Employer being able to obtain life insurance with respect to the life of a
Participant at standard rates in an amount sufficient to fund the payment of
benefits under this Plan. Accordingly, the Employer may require that a
Participant furnish evidence of good health when first enrolling in this Plan
and upon electing any additional increment of participation.

 

 

(a)

Obligation of Participant. The Participant agrees to cooperate by furnishing
such information as the Employer may require, including but not limited, to
physical examination reports of any previous employer; taking such additional
physical examinations as may be requested by the Employer; and doing any other
act which may be requested by the Employer.

 

 

(b)

Adjustment of Participation Levels or Deferrals Prior to Enrollment. If, prior
to acceptance of an Eligible Employee’s election to participate in this Plan or
to increase his or her Level of Participation, the Employer makes application
for life insurance on the Eligible Employee’s life and the Eligible Employee
cannot provide evidence of good health at standard rates or for the amounts
initially contemplated in connection with his or her contemplated Level of
Participation in this Plan, the Employer may, at its sole discretion, prior to
the acceptance of an Eligible Employee’s election to participate in this Plan,
permit the Eligible Employee to enroll in this Plan pursuant to the requirements
of Article III at a modified Level of Participation (i.e., other than fifty
percent (50%) or one hundred percent (100%) of the Participant’s Covered Salary)
upon such Deferral of his or her Covered Salary as the Employer may, in its sole
discretion, deem appropriate.

 

 

(c)

Adjustment of Participation Levels or Deferrals After Enrollment. If, after the
Participant has elected to participate in this Plan, selected a Level of
Participation and commenced the Deferral of Covered Salary pursuant to
Article III, the Employer makes application for life insurance on the
Participant’s life and the Participant cannot provide evidence of good health at
standard rates or for the amounts initially contemplated in connection with his
or her selected Level of Participation in this Plan, the Committee may determine
that the Participant’s participation in this Plan will be terminated for all
future years, may require the Participant to increase the amount of his or her
Covered Salary Deferrals for future Plan Years to enable the Participant to
continue his or her previously selected Level of Participation or may reduce the
Participant’s Level of Participation to an amount commensurate with the level of
insurance that may be procured with respect to such Participant at standard
rates.

ARTICLE VIII

AMENDMENT AND TERMINATION OF THE PLAN

 

8.1

Amendment of Plan. Both the Company, through an action of its Board of Directors
or an authorized committee of such Board, and the Committee reserve the right in
their sole and absolute discretion to amend the prospective application of this
Plan in any respect at any time. Other than termination of this Plan and as
otherwise required by law, no amendment to this Plan may materially and
adversely affect the then accrued and Vested rights of a Participant.

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8.2

Termination of Plan. Either the Company, through an action of its Board of
Directors or an authorized committee of such Board, or the Committee may
terminate this Plan in whole or in part at the end of any Plan Year. Following
such termination, the benefits payable under this Plan will be paid as set forth
in Section 8.2(a), unless the Company or Committee elects to liquidate this Plan
pursuant to Section 8.2(b); provided, however, that, except as required to
comply with section 409A of the Code in the case of the liquidation of this
Plan, no termination of this Plan will affect the benefits payable to
Participants who as of the date of termination have already become entitled to
receive payment of benefits pursuant to this Plan (e.g., Participants who have
Retired prior to the termination of this Plan, etc.).

 

 

(a)

No Early Plan Liquidation. Each Participant who is fully or partially Vested as
of the date on which this Plan is terminated and who has been a Participant in
this Plan for at least one (1) full calendar year will be entitled to receive a
Retirement Benefit payable upon the earlier of the Participant’s death or the
distribution date determined pursuant to Article IV subject to the provisions of
Section 4.6 regarding distributions to Key Employees, Section 4.7 regarding de
minimis payments and Article VI regarding Disability. The Part A Benefit payable
to the Participant pursuant to this Section 8.2(a) will be the Part A Benefit
described in Section 4.1(a) multiplied (i) by a fraction which will not exceed
one (1), the numerator of which is the number of whole years between the
Participant’s Original Entry Date and the date on which this Plan is terminated
and the denominator of which is the number of whole years between the
Participant’s Original Entry Date and the Participant’s Normal Retirement Date
and by (ii) the Participant’s Vested Percentage as of the date on which this
Plan is terminated and by (iii) the fraction determined under Section 4.3 if the
Participate is eligible for an Early Retirement Benefit. The Part B Benefit
payable to the Participant pursuant to this Section 8.2(a) will be the Part B
Benefit described in Section 4.1(b) calculated in accordance with the formula as
stated in this Section 8.2(a) (i.e., the Part B amount set forth in the
Participant’s Plan Agreement multiplied by the fraction and Vested Percentage
referenced above).

If the Participant lives to such Participant’s distribution date, the
Participant will receive the Part A Benefit and, upon his or her death, the Part
B Benefit both prorated in accordance with this Section 8.2(a). If the
Participant dies prior to such distribution date, such prorated Part B Benefit
will be paid to the Participant’s Beneficiary in a lump sum upon the death of
the Participant and said prorated Part A Benefit will commence upon the death of
the Participant and be paid to the Participant’s Beneficiary in the installments
set forth in Section 4.1.

Each Participant who is fully or partially Vested as of the date on which this
Plan is terminated and who has not been a Participant in this Plan for at least
one (1) full calendar year will be entitled to receive an amount equal to the
amount of his or her Covered Salary Deferrals plus ten percent (10%) of such
Covered Salary Deferrals. Such amount will be paid upon the earlier of the
Participant’s death or Retirement subject to the provisions of Section 4.6
regarding distributions to Key Employees and Section 4.7 regarding de minimis
payments.

 

 

(b)

Early Liquidation of Plan. If, however, the Company or the Committee elects to
liquidate this Plan in connection with such termination within the period
prescribed by section 409A of the Code, each affected Participant will be
entitled to a benefit the amount of which will be determined as follows: (i) if
the Participant participated in this Plan for less than one (1) year, the
Participant will be entitled to an amount equal to the amount of his or her
Covered Salary Deferrals plus ten percent (10%) of such Covered Salary Deferrals
and (ii) if the Participant participated in this Plan for more than one
(1) year, the Participant will receive the present value of the amount of his or
her Part A Benefit that would otherwise be payable at his or her Normal
Retirement Date in accordance with Article IV determined pursuant to this
Section 8.2(b) using the discount rate used by the Company in the preparation of
the portion of its most recent annual financial statements describing its
obligations pursuant to this Plan. Such Part A benefit will equal the Part A
Benefit described in Section 4.1(a) multiplied (A) by a fraction which will not
exceed one (1), the numerator of which is the number of whole years between the
Participant’s Original Entry Date and the date on which this Plan is terminated
and the denominator of which is the number of whole years between the
Participant’s Original Entry Date and the Participant’s Normal

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

 

Retirement Date and by (B) the Participant’s Vested Percentage as of the date on
which this Plan is terminated; provided, however, with respect to Participants
who are Plan D Participants, when calculating the Part A Benefit payable to such
a Participant, the Plan Entry Date set forth in such Plan Agreement will be
substituted for the Original Entry Date in the above-fraction. The Company
warrants that any such liquidation will comply with the requirements of section
409A of the Code and will not take any action that will result in the imposition
of an excise tax to Participants pursuant to section 409A of the Code.
Notwithstanding the foregoing, if permitted by guidance issued pursuant to
section 409A of the Code, no liquidation of this Plan will affect the benefits
payable to Participants who as of the date of liquidation have already become
entitled to receive payment of benefits pursuant to this Plan (e.g.,
Participants who have retired prior to the liquidation of this Plan, etc.).

 

8.3

Amendment or Termination of Plan Agreement. Either the Employer or the Committee
may amend a Participant’s Plan Agreement or terminate a Participant’s further
participation in this Plan, subject to the requirements of section 409A of the
Code regarding the cessation of Deferrals set forth in Article III; provided,
that no such amendment or termination will reduce the then Vested benefits
accrued by such Participant under such Plan Agreement as of the date of the
amendment or termination, except as required by law.

 

8.4

Notice of Amendment or Termination. No action to terminate, amend, modify or
supplement this Plan or terminate any Plan Agreement will be taken except upon
written notice to each Participant to be affected thereby not less than thirty
(30) days prior to such action or as soon as practicable thereafter if advance
notification is not possible due to applicable law.

ARTICLE IX

OTHER BENEFITS AND AGREEMENTS

 

9.1

Other Benefits. The benefits provided for a Participant and a Participant’s
Beneficiary under this Plan are in addition to any other benefits available to
such Participant under any other plan or program for employees of the Employer
and this Plan will supplement and will not supersede, modify or amend any other
such plan or program except as may otherwise be expressly provided. Benefits
under this Plan will not be considered compensation for the purpose of computing
contributions or benefits under any plan maintained by the Company or any of its
Subsidiaries which is qualified under sections 401(a) and 501(a) of the Code.

ARTICLE X

RESTRICTIONS ON ALIENATION OF BENEFITS

 

10.1

Non-Alienation of Benefits. To the extent permitted by law, benefits payable
under this Plan will not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution,
or levy of any kind, either voluntary or involuntary except that a Participant
may designate a Beneficiary and such Beneficiary may acquire rights under this
Plan or a Plan Agreement. In addition, this Plan will recognize the division of
benefits between the Participant and his or her spouse in connection with a
divorce. However, no benefit awarded to the spouse pursuant to such divorce will
be payable to such spouse until the time the Participant is entitled to receive
a distribution of benefits from this Plan in which case such benefit will be
paid to the spouse at the same time and in the same manner as the Participant.

Any unauthorized attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, charge or otherwise dispose of any right to benefits payable
hereunder will be void. No part of the assets of the Employer will be subject to
seizure by legal process resulting from any attempt by creditors of or claimants
against any Participant (or Beneficiary), or any person claiming under or
through the foregoing, to attach his or her interest under this Plan.

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

10.2

Legal Disability. If a person entitled to any payment under this Plan is, in the
sole judgment of the Committee, under a legal disability, or otherwise is unable
to apply such payment to his or her own interest and advantage, the Committee,
in the exercise of its discretion, may direct the Employer or payor of the
benefit to make any such payment in any one or more of either directly to such
person, to the Participant’s legal guardian or conservator, or to the
Participant’s spouse or to any person charged with the duty of the Participant’s
support, to be expended for the Participant’s benefit and/or that of the
Participant’s dependents. The decision of the Committee will in each case be
final and binding upon all persons in interest, unless the Committee reverses
its decision due to changed circumstances.

 

10.3

Withholding. The Employer or its designee will withhold from any benefit
payments made under this Plan, the required amounts of federal, state or local
income or other applicable taxes.

ARTICLE XI

ADMINISTRATION OF THIS PLAN

 

11.1

Plan Administration. The general administration of this Plan, as well as
construction and interpretation thereof, will be vested in the Committee. The
members of the Administrative Committee will be designated and appointed from
time to time by, and will serve at the pleasure of the President of the Company.
Any member of the Committee may resign by notice in writing filed with the
Secretary of the Committee.

 

11.2

Secretary of the Committee. The Committee will appoint a Secretary who need not
be a member of the Committee. The Secretary will keep minutes of the proceedings
of the Committee and all data, records and documents relating to the
administration of this Plan by the Committee. The Committee may appoint from its
number such subcommittees with such powers as the Committee will determine and
may authorize one or more members of the Committee or any agent to execute or
deliver any instrument or make any payment on behalf of the Committee.

 

11.3

Action of the Administrative Committee. All resolutions or other actions taken
by the Administrative Committee will be by the vote of a majority of those
present at a meeting at which a majority of the members are present, or in
writing by all the members in office at the time if they act without a meeting.

 

11.4

Authority of the Committee. Subject to the provisions of this Plan, the
Committee will have full authority from time to time to establish, modify and
rescind rules, forms and procedures for the administration of this Plan, to
interpret this Plan, to determine each Employee who will participate in this
Plan and to determine the terms and provisions of each Plan Agreement and the
form of each Plan Agreement and to decide any and all matters arising thereunder
or in connection with the administration of this Plan. In addition, the
Committee will have the power to compute and certify under this Plan the amount
and kind of benefits from time to time payable to Participants and their
Beneficiaries and to authorize all disbursements for such purposes. All
decisions, actions and records of the Committee will be conclusive and binding
upon the Employer, the Participants and all persons having or claiming to have
any right or interest in or under this Plan.

 

11.5

Information and Reliance. To enable the Committee to perform its functions, the
Company will supply full and timely information to the Committee on all matters
relating to the Covered Salary of all Participants, their Retirement, death or
other cause for separation from service or cessation of Plan participation, and
such other pertinent facts as the Committee may require. The members of the
Committee and the officers and directors of the Company will be entitled to rely
on all certificates and reports made by any duly appointed accountants or legal
counsel retained by the Company or the Committee. Such legal counsel may be
counsel for the Company.

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

11.6

Indemnification. No member of the Administrative Committee will be liable for
any act or omission of any other member of the Administrative Committee, nor for
any act or omission on his or her own part, excepting only his or her own
willful misconduct. The Company will indemnify and save harmless each member of
the Administrative Committee, while serving on the Administrative Committee and
at all times thereafter, against any and all expenses and liabilities arising
out of his or her membership on the Administrative Committee, excepting only
expenses and liabilities arising out of his or her own willful misconduct.
Expenses against which a member of the Administrative Committee will be
indemnified hereunder will include, without limitation, the amount of any
settlement or judgment, costs, counsel fees and related charges reasonably
incurred in connection with a claim asserted or a proceeding brought or
settlement thereof. The foregoing right of indemnification will be in addition
to any other rights to which any such member may be entitled as a matter of law
or otherwise.

ARTICLE XII

NON-COMPETE

 

12.1

Covenant not to Compete. Each Participant agrees that, following his or her
separation from service with the Employer for any reason, the Participant will
not, for a period of two (2) years after the date of such separation from
service, directly or indirectly, carry on or conduct, in competition with the
Employer, any business of the nature in which the Employer is then engaged, and
of the nature in which the Participant was employed by the Employer for any
portion of the period of two (2) years immediately prior to such separation from
service, in any geographic area or territory in which the Employer is then
engaged in such business. Without limiting the generality of the foregoing, the
Participant agrees that the solicitation or acceptance of orders outside any
such geographic area or territory for shipment or delivery into any such
geographic area or territory will constitute conducting or engaging in business
in such geographic area or territory within the meaning of this Article XII. The
Participant agrees that he or she will not conduct or engage in any such
business, either as an individual on his or her own account or as a partner or
joint venturer or as an employee, agent, consultant or salesman for any other
person or entity, or as an officer or director of a corporation or as a
stockholder in a corporation of which the Participant or Participant’s spouse or
their descendants, parents or siblings will then own in the aggregate ten
percent (10%) or more of any class of stock.

 

12.2

Remedy for Breach of Covenant. Each Participant agrees that, in the event of a
breach of the terms and conditions of this Article XII by the Participant, the
Employer will be entitled, if it so elects, to institute and prosecute
proceedings, either in law or in equity, against the Participant, to obtain
damages for any such breach or to enjoin the Participant from performing
services for any competitor of the Employer in violation hereof, or to suspend
or terminate any and all benefits which would otherwise be payable to the
Participant and his or her Beneficiaries under the provisions of this Plan.
Notwithstanding the foregoing, nothing contained herein will be deemed to
require any Participant to take any action in violation of applicable legal
requirements or professional ethical obligations.

ARTICLE XIII

NAMED FIDUCIARY AND CLAIMS PROCEDURE

 

13.1

Named Claim Fiduciary. The Named Fiduciary of this Plan for purposes of the
claims procedure under this Agreement is the Committee. The Company will have
the right to change the Named Fiduciary at any time.

 

13.2

Claims for Benefits.

 

 

(a)

Initial Claim. In the event that an Employee, Eligible Employee, Participant or
his or her Beneficiary claims to be eligible for benefits, or claims any rights
under this Plan, such claimant

 

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

 

    

must complete and submit such claim forms and supporting documentation as will
be required by the Committee, in its sole and absolute discretion. Likewise, any
Participant or Beneficiary who feels unfairly treated as a result of the
administration of this Plan, must file a written claim, setting forth the basis
of the claim, with the Committee. In connection with the determination of a
claim, or in connection with review of a denied claim, the claimant may examine
this Plan, and any other pertinent documents generally available to Participants
that are specifically related to the claim.

 

 

    

A written notice of the disposition of any such claim will be furnished to the
claimant within ninety (90) days after the claim is filed with the Committee.
Such notice will refer, if appropriate, to pertinent provisions of this Plan,
will set forth in writing the reasons for denial of the claim if a claim is
denied (including references to any pertinent provisions of this Plan) and,
where appropriate, will describe any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary. If the claim is denied, in whole or in
part, the claimant will also be notified of this Plan’s claim review procedure
and the time limits applicable to such procedure, including the claimant’s right
to arbitration following an adverse benefit determination on review as provided
below. All benefits provided in this Plan as a result of the disposition of a
claim will be paid as soon as practicable following receipt of proof of
entitlement, if requested.

 

 

(b)

Request for Review. Within ninety (90) days after receiving written notice of
the Committee’s disposition of the claim, the claimant may file with the
Committee, a written request for review of his or her claim. In connection with
the request for review, the claimant will be entitled to be represented by
counsel and will be given, upon request and free of charge, reasonable access to
all pertinent documents for the preparation of his or her claim. If the claimant
does not file a written request for review within ninety (90) days after
receiving written notice of the Committee’s disposition of the claim, the
claimant will be deemed to have accepted the Committee’s written disposition,
unless the claimant was physically or mentally incapacitated so as to be unable
to request review within the ninety (90) day period.

 

 

(c)

Decision on Review. After receipt by the Committee of a written application for
review of a claim, the Committee will review the claim taking into account all
comments, documents, records and other information submitted by the claimant
regarding the claim without regard to whether such information was considered in
the initial benefit determination. The Committee will notify the claimant of its
decision by delivery or by certified or registered mail to his or her last known
address. A decision on review of the claim will be made by the Committee at its
next meeting following receipt of the written request for review. If no meeting
of the Committee is scheduled within forty-five (45) days of receipt of the
written request for review, then the Committee will hold a special meeting to
review such written request for review within such forty-five (45) day period.
If special circumstances require an extension of the forty-five (45) day period,
the Committee will so notify the claimant and a decision will be rendered within
ninety (90) days of receipt of the request for review. In any event, if a
decision is not determined by the Committee within ninety (90) days of receipt
of written submission for review, it will be deemed to be denied.

 

 

    

The decision of the Committee will be provided to the claimant as soon as
possible but no later than five (5) days after the benefit determination is
made. The decision will be in writing and will include the specific reasons for
the decision presented in a manner calculated to be understood by the claimant
and will contain references to all relevant Plan provisions on which the
decision was based. Such decision will also advise the claimant that he or she
may receive upon request, and free of charge, reasonable access to and copies of
all documents, records and other information relevant to his or her claim and
will inform the claimant of his or her right to arbitration in the case of an
adverse decision regarding the appeal. The decision of the Committee will be
final and conclusive.

 

13.3

Arbitration. Subject to the provisions of Section 12.2, all disputes arising
under or related to this Plan or the administration of this Plan will, following
exhaustion of the claims procedure set forth in Section 13.2,

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

be resolved by arbitration conducted in accordance with this Section 13.3. A
claimant dissatisfied with any denial or deemed denial of a claim for benefits
must appeal to an arbitrator within sixty (60) days after receiving the
Committee’s denial or deemed denial of his or her request for review and before
bringing suit in court. A claimant’s Failure to initiate arbitration within this
sixty (60) day period will serve as evidence of the claimant’s agreement with
and acceptance of the Committee’s decision issued pursuant to Section 13.2.

The arbitrator will be mutually selected by the claimant and the Committee from
a list of arbitrators who are experienced in nonqualified deferred compensation
plan benefit matters that is provided by the American Arbitration Association
(“AAA”). If the parties are unable to agree on the selection of an arbitrator
within ten (10) days of receiving the list from the AAA, the AAA will appoint an
arbitrator. The arbitrator’s review will be limited to interpretation of the
Plan document in the context of the particular facts involved. The claimant, the
Committee and the Employer agree to accept the award of the arbitrator as
binding, and all exercises of power by the arbitrator hereunder will be final,
conclusive and binding on all interested parties, unless found by a court of
competent jurisdiction, in a final judgment that is no longer subject to review
or appeal, to be arbitrary and capricious. The claimant, the Committee and the
Employer agree that the venue for the arbitration will be in Dallas Texas. The
costs of arbitration will be paid by the Employer; the costs of legal
representation for the claimant or witness costs for the claimant will be borne
by the claimant; provided, that, as part of his or her award, the Arbitrator may
require the Employer to reimburse the claimant for all or a portion of such
amounts.

The Employer and claimant each may submit in writing to the other party, and the
other party shall respond to a maximum of five (5) (none of which may be
subparts) of the following: interrogatories, demands to produce documents and
requests for admissions. The Employer and claimant each may also take the oral
deposition of no more than five (5) individuals. Additional discovery may be
permitted upon mutual agreement of the Employer and claimant. The arbitrator
will resolve any discovery disputes by such pre hearing conferences as may be
needed. The Employer, Committee and claimant agree that the arbitrator will have
the power of subpoena process as provided by law. Disagreements concerning the
scope of depositions or document production, its reasonableness and enforcement
of discovery requests will be subject to agreement by the Employer and claimant
or will be resolved by the arbitrator. All discovery requests will be subject to
the proprietary rights and rights of privilege and other protections granted by
applicable law to the Employer and claimant and the arbitrator will adopt
procedures to protect such rights. With respect to any dispute, the Employer,
Committee and claimant agree that all discovery activities will be expressly
limited to matters directly relevant to the dispute and the arbitrator will be
required to fully enforce this requirement.

The arbitrator will have no power to add to, subtract from, or modify any of the
terms of this Plan, or to change or add to any benefits provided by this Plan,
or to waive or fail to apply any requirements of eligibility for a benefit under
this Plan. Nonetheless, the arbitrator will have absolute discretion in the
exercise of its powers in this Plan. Arbitration decisions will not establish
binding precedent with respect to the administration or operation of this Plan.
The Arbitrator will issue a final written decision no later than one hundred and
twenty (120) days after the matter is submitted to arbitration. The arbitrator
will not have the power to address/resolve claims presented in the form of a
“class action” (i.e., the arbitrator will only have the power to resolve
disputes involving only a single Participant).

 

13.4

Receipt and Release of Necessary Information. In implementing the terms of this
Plan, the Committee, may, without the consent of or notice to any person,
release to or obtain from any other insuring entity or other organization or
person any information, with respect to any person, which the Committee deems to
be necessary for such purposes. Any Participant or Beneficiary claiming benefits
under this Plan will furnish to the Committee, such information as may be
necessary to determine eligibility for and amount of benefit, as a condition of
claiming and receiving such benefit.

 

13.5

Overpayment and Underpayment of Benefits. The Committee may adopt, in its sole
and absolute discretion, whatever rules, procedures and accounting practices are
appropriate in providing for the collection of any overpayment of benefits. If a
Participant or Beneficiary receives an underpayment of

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

benefits, the Committee will direct that payment be made as soon as practicable
to make up for the underpayment. If an overpayment is made to a Participant or
Beneficiary, for whatever reason, the Committee may, in its sole and absolute
discretion, withhold payment of any further benefits under this Plan until the
overpayment has been collected or may require repayment of benefits paid under
this Plan without regard to further benefits to which the Participant or
Beneficiary may be entitled.

ARTICLE XIV

ADOPTION OF PLAN BY SUBSIDIARY,

AFFILIATED OR ASSOCIATED COMPANIES

 

14.1

Adoption of Plan by Subsidiaries. Any corporation which is a Subsidiary of the
Company may, with the approval of the Committee, adopt this Plan and thereby
come within the definition of Employer stated in Article II hereof. A Subsidiary
may evidence its adoption of this Plan either by a formal action of its
governing body or by commencing Deferrals and taking other administrative
actions with respect to this Plan on behalf of its Employees. An entity will
cease to be an Employer as of the date such entity ceases to be a Subsidiary.

 

14.2

Termination of Subsidiary Participation. A Subsidiary may terminate its
participation in this Plan at any time by an action of its governing body and
providing written notice to the Committee. Likewise, the Committee may terminate
a Subsidiary’s participation in this Plan at any time and will provide written
notice to the Subsidiary. The effective date of any such termination will be the
later of the date specified in the notice of the termination of participation or
the date on which the Committee can administratively implement such termination.
In the event that a Subsidiary’s participation in this Plan is terminated, the
rights of each Participant employed by such Subsidiary to a Retirement Benefit
will be determined pursuant to Article IV.

ARTICLE XV

MISCELLANEOUS

 

15.1

No Guarantee of Employment. Neither this Plan nor any Plan Agreement, either
singly or collectively, obligates the Employer to continue the employment of a
Participant or limits the right of the Employer at any time and for any reason
to terminate a Participant’s employment. In no event will this Plan or the
Participant’s Plan Agreement, either singly or collectively, by their terms or
implications constitute an employment contract of any nature whatsoever between
the Employer and a Participant.

 

15.2

Notice. Any notice which will or may be given under this Plan or a Plan
Agreement will be in writing and will, unless provided otherwise herein, be
mailed by United States mail, postage prepaid. The term “delivered to the
Committee,” as used in this Plan, will include delivery to a person or persons
designated by the Committee for the disbursement and the receipt of
administrative forms. Delivery will be deemed to have occurred only when the
form or other communication is actually received. If notice is to be given to
the Company or the Committee, such notice will be addressed to Chaparral Steel
Company, 300 Ward Road, Midlothian, Texas 76065-9661, marked for the attention
of the Vice President—Human Resources; or, if notice to a Participant, addressed
to the address shown on such Participant’s Plan Agreement. Any party may change
the address to which notices will be mailed from time to time by giving written
notice of such new address.

 

15.3

Plan Binding. This Plan will be binding upon the Company and each Subsidiary
which is an Employer and their respective successors and assigns, and upon a
Participant, his or her Beneficiary, assigns, heirs, executors and
administrators.

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

 

(a)

Successors of Employer. The Employer will require any successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business and/or assets of the Employer,
expressly to agree to adopt this Plan and to perform each Plan Agreement to
which the Employer is a party in the same manner and to the same extent the
Employer would be required to perform if no such succession had taken place.
This Plan and any Plan Agreement will be binding upon and inure to the benefit
of each Employer and any successor of the Employer, including without limitation
any persons acquiring directly or indirectly all or substantially all of the
business and/or assets of the Employer whether by purchase, merger,
consolidation, reorganization or otherwise (and such successor will thereafter
be deemed the “Employer,” as applicable, for the purposes of this Plan and any
Plan Agreement) but will not otherwise be assignable, transferable or delegable
by the Employer.

 

 

(b)

Successors of Participant. This Plan and any Plan Agreement will inure to the
benefit of and be enforceable by the Participant’s Beneficiary, personal or
legal representatives, executors, administrators, successors, heirs,
distributors and/or legatees.

 

15.4

Expenses. The Employer will pay all costs and expenses incurred in operating and
administering this Plan. Such costs and expenses will be paid by the Employer
from its general assets or any trust established by the employer under this
Plan.

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

IN WITNESS WHEREOF, Chaparral Steel Company has caused this Plan to be executed
by its duly authorized officer as of the date set forth above.

 

CHAPARRAL STEEL COMPANY

By:

 

 

Its:

 

 

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

APPENDIX A

SECOND AMENDED AND RESTATED

FINANCIAL SECURITY PLAN

OF CHAPARRAL STEEL COMPANY

ELECTION TO PARTICIPATE

 

TO:

Chaparral Steel Company

I acknowledge that I have received a copy of the Second Amended and Restated
Financial Security Plan of Chaparral Steel Company (the “Plan”), effective as of
the date hereof, and that I am familiar with the provisions of the Plan (all
capitalized terms herein will have the same meaning as set forth in the Plan,
unless otherwise expressly provided in this Agreement). I elect to be a
Participant according to the Plan provisions.

Please defer $             per              of my Covered Salary for the     
next succeeding Plan Year (in the case of my enrollment during the Open
Enrollment Period) or      the remainder of the Plan Year (in the case of my
enrollment during a Special Enrollment Period) (select as applicable) and each
Plan Year after that until this election to participate is modified or revoked
by me pursuant to this Election to Participate.

I understand that this deferral election applies to Covered Salary earned by me
from my Employer from (select as applicable):

 

¨

January 1, 2     (in the case of my enrollment during the Open Enrollment
Period) or

 

¨

            , 2     (in the case of my enrollment during a Special Enrollment
Period)

and that such election will continue in effect for all future years of my
participation in the Plan until modified or revoked by me by written request. I
understand that any such modification or revocation is not effective for the
Plan Year in which it is made but rather will be effective as of January 1 of
the following Plan Year and that my Deferral elections are irrevocable for any
Plan Year (or portion thereof) to which they apply.

I also understand that, in executing this Election to Participate, I agree to be
bound by the terms and conditions of the Plan and agree that such terms and
conditions are binding upon my Beneficiary, distributee, and personal
representative.

 

Participant:

 

 

Signature

 

 

Type or print name

Date:

 

 

 

Chaparral Steel Company

By:

 

 

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APPENDIX B

SECOND AMENDED AND RESTATED

CHAPARRAL STEEL COMPANY

FINANCIAL SECURITY PLAN

PLAN AGREEMENT

The undersigned Employee acknowledges that, as an Employee of Chaparral Steel
Company or a subsidiary (collectively the “Employer”), he or she has been
offered an opportunity to participate in the Second Amended and Restated
Financial Security Plan of Chaparral Steel Company (the “Plan”) described in the
attached document (all capitalized terms herein will have the same meaning as
set forth in the Plan, unless otherwise expressly provided in this Agreement)
and subject to the terms and conditions stated therein, and that Employee has
elected one of the two alternatives set forth below as indicated by the space
checked:

 

 

            

To participate in the Plan (if selected, complete the remainder of this
Agreement).

 

 

            

Not to participate in the Plan (if selected, do not complete the remainder of
this Agreement, but sign below).

Plan Participation (A, B, C or D):                     

Covered Salary, Retirement Benefits, and Death Benefits are agreed to be as
follows:

 

1.

Covered Salary: $                     per month.

This represents      50% or      100% (select one) of my Covered Salary as of
the date of my initial enrollment or the date of any application for an
increased Level of Participation in the Plan.

 

2.

Retirement Benefit (Article IV):

 

 

(a)

Normal Retirement Benefit at age             . Payable at the Participant’s
Normal Retirement Date, as specified by Section 4.1 of the Plan. (For Plan A
Participants: based on the Participant’s Total Benefit which is
$                    ).

Part A Benefit.

Plan A Participants: Retirement Benefit (90% of Total Benefit). To be paid in
monthly installments equal to 80% of the Participant’s monthly Covered Salary
until such benefit has been paid in full (i.e., until 90% of the Participant’s
Total Benefit has been paid). In the event of the Participant’s death prior to
the complete payment of such benefit, such monthly payments will continue to be
paid to his or her Beneficiary until such benefit has been paid in full.

Plan B, C and D Participants: (            % of Covered Salary):
$                     per month for life or one hundred and eighty (180) months
certain.

Part B Benefit.

Plan A Participants: Post Retirement Death Benefit (10% of Total Benefit)
$                     to be paid in a lump sum pursuant to Section 4.1 of the
Plan.

Plan B, C and D Participants: (             % of Covered Salary): Post
Retirement Death Benefit: $                     to be paid in a lump sum
pursuant to Section 4.1.

 

 

(b)

Retirement After Normal Retirement Date: Late Retirement Benefit payable in
accordance with Section 4.2 of the Plan.

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

 

(c)

Early Retirement Benefit: Reduced amounts to be determined and paid as specified
by Section 4.3 of the Plan.

 

 

(d)

Deferred Retirement Benefit: Amounts to be determined and paid as specified in
Section 4.4 of the Plan; provided, that for Plan A Participants, the Part A
Benefit may not exceed 50% of Covered Salary.

 

3.

Death Benefit (Article V):

The greater of

 

 

(a)

Death Benefit under Section 5.1

 

 

(i)

One hundred percent (100%) of Covered Salary: $             per month for the
first 12 months after death, plus

 

 

(ii)

Fifty percent (50%) of Covered Salary: $             per month for the next 108
months or until the Participant’s Normal Retirement Age, whichever is later; or

 

 

(b)

Early Retirement Benefit under Section 4.3

The Participant hereby authorizes the Employer to reduce his or her monthly
Covered Salary by              ($            ) per month, commencing
                    , 2     and continuing thereafter pursuant to the provisions
of Article III of the Plan. The Participant understands that such election will
continue in effect for all future years of his or her participation in the Plan
until modified or revoked by the Participant by written request. The Participant
understands that any such modification or revocation is not effective for the
Plan Year in which it is made but rather will be effective as of January 1 of
the following Plan Year and that this election is irrevocable for any Plan Year
(or portion thereof) to which it applies.

The Participant further acknowledges, agrees and understands that:

 

 

(a)

Any rights of the Participant or any Beneficiary will be solely those of an
unsecured-creditor of the Employer. If the Employer purchases an insurance
policy or any other asset in connection with the liabilities assumed by it under
the Plan, then, except as otherwise expressly provided, such policy or other
assets will not be deemed to be held under any trust for the benefit of the
Participant or his or her Beneficiary or to be collateral security for the
performance of the obligations of the Employer, but will be, and remain, a
general, unpledged, unrestricted asset of the Employer.

 

 

(b)

Neither the Employer, its officers, its employees nor its agents have any
responsibility whatsoever for any changes made by the Participant in other
personal plans or programs as a result of the Participant’s decision to
participate or not to participate in the Plan, and they are fully released to
such extent.

 

 

(c)

The Plan or this Plan Agreement may be amended or terminated by the Employer at
any time, to the extent provided in Article VIII of the Plan.

 

 

(d)

If the Participant incurs a separation from service with the Employer or his or
her participation in the Plan is terminated prior to Retirement, then except as
provided in Article IV (regarding Retirement Benefits), Article V (regarding
Death), Article VI (regarding Disability) and Article VIII (regarding
termination of the Plan), the Participant will forfeit the right to receive any
benefits under the Plan and that all Covered Salary Deferrals made by the
Participant under the Plan pursuant to his or her Election to Participate or
this Plan Agreement will be forfeited. Additionally, if the Participant incurs a
separation from service for Cause, all rights under the Plan will be forfeited.

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

 

(e)

Any dispute or claim for benefits under this Plan must be resolved through the
claims procedure set forth in Article XIII which procedure culminates in binding
arbitration. By electing to participate in this Plan, the Participant hereby
agrees to binding arbitration as the final means of dispute resolution with
respect to the Plan.

IN WITNESS WHEREOF, the Employer, and the Employee have executed this Plan
Agreement as of                                         .

 

     

EMPLOYER:

     

By:

 

 

     

Title:

 

 

     

EMPLOYEE:

Original Entry Date:

 

 

   

 

 

     

(Signature)

Plan Entry Date:

 

 

   

 

 

(Plan D Participants Only)

   

(Type or print name under signature)

     

 

 

     

(Address of Employee)

 

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

APPENDIX C

SECOND AMENDED AND RESTATED

FINANCIAL SECURITY PLAN

OF CHAPARRAL STEEL COMPANY

BENEFICIARY DESIGNATION

 

1.

Participant:                                         
                                        
                                        
                                                                 

 

2.

Scope:

This Beneficiary Designation applies to all benefits of the Plan to which the
above-named Participant has the right to name the Beneficiary.

 

3.

COUNSEL:

THE DESIGNATION OF A BENEFICIARY OR BENEFICIARIES MAY HAVE SIGNIFICANT ESTATE
AND GIFT TAX CONSEQUENCES TO THE PARTICIPANT. ACCORDINGLY, THE PARTICIPANT
SHOULD SEEK THE ADVICE OF PROFESSIONAL COUNSEL WHO IS FAMILIAR WITH THE ESTATE
AND GIFT TAX ASPECTS OF NONQUALIFIED RETIREMENT AND SALARY CONTINUATION PLANS
BEFORE COMPLETING THIS FORM.

 

4.

Identification of Beneficiaries:

 

 

A.

Primary Beneficiary:                                         
                                        
                                        
                                        

                                                                               
                                        
                                        
                                           

 

 

B.

Secondary Beneficiary:                                         
                                        
                                                                             

                                                                               
                                        
                                        
                                           

 

5.

Spousal Consent: (only complete if spouse is not primary Beneficiary)

If you are married (or deemed to be married under state common law), your spouse
must complete this section of the form unless you have named your spouse as your
sole (100%) primary Beneficiary.

I, the undersigned spouse, am married (or deemed under applicable state law to
be married) to                                          (the “Participant”). I
hereby consent to the Participant’s designation of the primary Beneficiary or
Beneficiaries as set forth above.

I hereby represent that I have read and understand this form and, further, that
I understand that the effect of my consent is that I will not receive from the
Plan the benefits which I otherwise could have received upon the Participant’s
death.

 

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

Spouse’s Signature

 

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

Date

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

Spouse’s Printed Name

 

(Spousal Consent, if applicable, must be notarized.)

The person whose signature is set forth above as the spouse of the Participant
appeared before me this day and completed or affirmed such signature in my
presence as his or her free and voluntary act given under my hand and notarial
seal this              day of                     , 20    .

 

 

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

Notary Public’s Printed Name

 

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

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

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

Notary Public’s Signature

 

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

Notary Public’s Address

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

Commission Expires

 

 

6.

Methods of Payment (Check One):

 

 

            

Alternative 1 – Beneficiary Includes Estate of Beneficiary.

Beneficiary means the Primary Beneficiary if such Primary Beneficiary survives
the Participant, and means the Primary Beneficiary’s estate if such Primary
Beneficiary survives the Participant but thereafter dies. The term Beneficiary
means the Secondary Beneficiary if the Primary Beneficiary fails to survive the
Participant, and means the estate of the Secondary Beneficiary when the
Secondary Beneficiary thereafter dies. If both the Primary and Secondary
Beneficiaries fail to survive the Participant, the term Beneficiary means the
estate of the Participant.

 

 

            

Alternative 2 – Beneficiary Does not Include Estate of Beneficiary.

Beneficiary means the Primary Beneficiary if such Primary Beneficiary survives
the Participant, and means the Secondary Beneficiary if either the Primary
Beneficiary fails to survive the Participant or the Primary Beneficiary survives
the Participant but thereafter dies. If both the Primary and Secondary
Beneficiaries fail to survive the Participant, the term Beneficiary means the
estate of the Participant.

 

 

            

Alternative 3 – To Be Specified by Participant.

                                                                               
                                        
                                                                               

                                                                               
                                        
                                                                               

                                                                               
                                        
                                                                               

 

7.

Survivorship (Check One):

 

 

            

Alternative 1 – Beneficiary Must Survive Participant by 30 Days.

For purposes of this Beneficiary Designation, no person will be deemed to have
survived the Participant if that person dies within thirty (30) days of the
Participant.

 

 

            

Alternative 2 – Spouse Deemed to Survive Participant in Certain Circumstances.

If the Participant and the spouse die under circumstances such that there is
insufficient evidence to determine the order of their deaths or if the spouse
outlives the Participant for any time whatsoever, the spouse will be deemed to
have survived the Participant. For all other purposes of this Beneficiary
Designation, no person will be deemed to have survived the Participant if that
person dies within thirty (30) days of the death of the Participant.

 

8.

Duration:

This Beneficiary Designation is effective until the Participant files another
such Designation with the Committee pursuant to Section 5.3 of the Plan. Any
previous Beneficiary Designations are hereby revoked.

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

9.

Execution:

 

Date:

 

 

 

Participant:

 

 

Witness:

 

 

   

 

10.

Approval:

This Beneficiary Designation is acknowledged and approved this              day
of                     , 20     and will be effective as of the date executed by
the Participant above.

 

CHAPARRAL STEEL COMPANY

By:

 

 

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

APPENDIX D

SECOND AMENDED AND RESTATED

FINANCIAL SECURITY PLAN

OF CHAPARRAL STEEL COMPANY

ELECTION TO DELAY PAYMENT OF RETIREMENT BENEFIT

In order to comply with section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), the Financial Security Plan of Chaparral Steel Company
(the “Plan”) limits your ability to elect to change the date on which your
Retirement Benefits will be paid under the Plan (all capitalized terms herein
will have the same meaning as set forth in the Plan, unless otherwise expressly
provided in this Election Form). Specifically, unless specified otherwise in
your Plan Agreement, if you Retire from the Company on or after your Early
Retirement Date, payment of your Retirement Benefits will begin as of the first
of the month following your Retirement subject to the provisions of Section 4.6,
regarding the six (6) month and one (1) day delay in payment applicable to Key
Employees. However, you may make a one-time irrevocable election to delay the
payment of your Retirement Benefits by completing this Election Form.

Any such election (i) must not take effect until at least 12 months after the
date on which the election is made and (ii) must delay the benefit commencement
date for five (5) years from the date the payments would have otherwise begun.
If your election does not comply with these requirements, it will be null and
void and will have no impact on the payment of your Retirement Benefits (i.e.,
your Retirement Benefits will be paid at your Retirement as described above).

Note: This election does not apply to the payment of the Deferred Vested
Retirement Benefit under the Plan (i.e., the benefit payable to you if you
terminate participation in the Plan prior to your Early Retirement Age and have
a vested interest in the Plan). Payment of your Deferred Vested Retirement
Benefit will be made once you terminate employment and reach Normal Retirement
Age (i.e., age 65 unless specified otherwise in your Agreement).

Examples. If you file this election and you Retire at age 62, payment of your
Early Retirement Benefits will not begin until you have attained age 67.
Similarly, if after filing this election you continue working until age 65,
payment of your Normal Retirement Benefits will not begin until you reach age
70. Conversely, if you do not file this election, then payment of your Early
Retirement Benefits in the first scenario described above would begin at age 62
and payment of your Normal Retirement Benefit would begin at age 65 in the
second scenario described above. Thus, you should not file this election unless
you are certain that you wish to delay the payment of your Retirement Benefits
for a period of five (5) years following your Retirement.

Election:

 

¨

I hereby elect to delay payment of my Retirement Benefits pursuant to the terms
of the Plan for five (5) years following my Retirement on or after my Early
Retirement Date, as described above.

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

I understand that once made this election is irrevocable and may not be changed.

 

   

Participant:

   

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

Signature

   

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

Type or print name

   

Date:

 

 

Chaparral Steel Company

   

By: