EXHIBIT 10-3
 

 

 

 

 
2008 HALLIBURTON ELECTIVE DEFERRAL PLAN
 

 

 

 

 

 

 
As Amended and Restated
 
Effective January 1, 2008
 

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TABLE OF CONTENTS
 
I.        Definitions and Construction
1
1.1           Definitions
1
1.2           Number and Gender
4
1.3           Headings
4
 II.         Participation
5
2.1           Participation
5
2.2           Cessation of Active Participation
5
  III.         Deferral Account Credits; Investment Elections
5
3.1           Base Salary Deferrals
5
3.2           Bonus Compensation Deferrals
6
3.3           Long-Term Incentive Compensation Deferrals
6
3.4           Investment of Deferral Accounts
7
  IV.         Emergency Withdrawals
8
 V.         Payment of Benefits
8
5.1           Payment Election Generally
8
5.2           Subsequent Payment Elections
8
5.3           Time of Benefit Payment
9
5.4           Form of Benefit Payment
9
5.5           Total and Permanent Disability
10
5.6           Death
10
5.7           Designation of Beneficiaries
10
5.8           Other Separation from Service
10
5.9           Payment of Benefits
11
5.10         Unclaimed Benefits
11
5.11         No Acceleration of Bonus or Long-Term Incentive
 
                                    Compensation
11
  VI.         Administration of the Plan
11
6.1           Committee Powers and Duties
11
6.2           Self-Interest of Participants
12
6.3           Claims Review
12
6.4           Employer to Supply Information
13
6.5           Indemnity
13
   VII.         Administration of Funds
14
7.1           Payment of Expenses
14
7.2           Trust Fund Property
14
  VIII.           Nature of the Plan
14
IX.            Participating Employers
15

      
        
    

(i)

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X.          Miscellaneous
16
10.1           Not Contract of Employment
16
10.2           Alienation of Interest Forbidden
16
10.3           Withholding
16
10.4           Amendment and Termination
16
10.5           Severability
17
10.6           Governing Laws
17
10.7           Section 409A Compliance
17
APPENDIX A
18
  III.        Grandfathered Plan Account Credits; Investment Elections
19
3.1           Base Salary Deferrals
19
3.2           Bonus Compensation Deferrals
19
3.3           Long-Term Incentive Compensation Deferrals
19
3.4           Investment of Grandfathered Plan Accounts
19
 IV.           Withdrawals
20
4.1           Emergency Withdrawals
20
4.2           Non-Emergency Withdrawals
21
V.          Payment of Benefits
22
5.1           Payment Election Generally
22
5.2           Subsequent Payment Elections
22
5.3           Time of Benefit Payment
22
5.4           Form of Benefit Payment
23
5.5           Total and Permanent Disability
23
5.6           Death
24
5.7           Designation of Beneficiaries
24
5.8           Other Termination of Employment
24
5.9           Change in the Company’s Credit Rating
24
5.10          Payment of Benefits
25
5.11          No Acceleration of Bonus or Long-Term Incentive
 
 Compensation
25

 

      
              
    
(ii)

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2008 HALLIBURTON ELECTIVE DEFERRAL PLAN
 
W I T N E S S E T H:
 
WHEREAS, Halliburton Company (the “Company”), desiring to aid certain of its
employees in making more adequate provision for their retirement, has adopted
the Halliburton Elective Deferral Plan (the “Plan”), as most recently amended
and restated effective May 1, 2002; and
 
WHEREAS, the Company desires to continue to provide participants with an
opportunity to make deferrals of amounts earned on or after January 1, 2005,
consistent with the provisions of Section 409A of the Internal Revenue Code, as
amended; and
 
WHEREAS, certain participants in the Plan made transition elections related to
amounts earned on or after January 1, 2005, as permitted in accordance with
guidance under Section 409A of the Internal Revenue Code; and
 
WHEREAS, the Company desires to preserve the material terms of the Plan as in
effect on December 31, 2004 (the “Grandfathered Plan”) in order that the
Grandfathered Plan qualify as a grandfathered plan for purposes of Section 409A
of the Internal Revenue Code, as amended; and
 
WHEREAS, certain provisions applicable solely to the Grandfathered Plan are
preserved in Appendix A, which provisions shall be substituted for the
corresponding provisions of the Plan for purposes of determining the terms
applicable to amounts deferred under the Grandfathered Plan.
 
NOW THEREFORE, the Plan is hereby renamed the 2008 Halliburton Elective Deferral
Plan and is hereby amended and restated to read as follows, effective as of
January 1, 2008:
 
I.
 
Definitions and Construction
 
         1.1           Definitions.  Where the following words and phrases
appear in the Plan, they shall have the respective meanings set forth below,
unless their context clearly indicates to the contrary.
 
(1)  
Act:  The Employee Retirement Income Security Act of 1974, as amended.

 
(2)  
Affiliate:  Any entity of which an aggregate of 50% or more of the ownership
interest is owned of record or beneficially, directly or indirectly, by the
Company or any other Affiliate.

 

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(3)  
Base Salary:  The base rate of cash compensation paid by the Employer to or for
the benefit of a Participant for services rendered or labor performed while a
Participant, including base pay a Participant could have received in cash in
lieu of (a) deferrals pursuant to Section 3.1 and (b) contributions made on his
or her behalf to any qualified plan maintained by the Employer or to any
cafeteria plan under Section 125 of the Code maintained by the Employer.

 
(4)  
Bonus Compensation:  With respect to any Participant for a Plan Year,
remuneration based on calendar year performance under an annual incentive
compensation plan maintained by the Employer that is payable to the Participant
in cash.

 
(5)  
Credited Investment Return:  The hypothetical gain or loss credited to a
Participant’s Deferral Account or Grandfathered Plan Account, as applicable,
pursuant to the applicable provisions of Section 3.4(e) hereof.

 
(6)  
Code:  The Internal Revenue Code of 1986, as amended.

 
(7)  
Compensation Committee:  The Compensation Committee of the Directors.

 
(8)  
Committee:  The administrative committee appointed by the Compensation Committee
to administer the Plan.

 
(9)  
Company:  Halliburton Company.

 
(10)  
Deemed Investment Elections:  The investment elections described in Section 3.4
hereof.

 
(11)  
Deferral Account:  A memorandum bookkeeping account established on the records
of the Employer for a Participant that is credited with specified deferrals, and
the Credited Investment Return determined in accordance with Section 3.4(e) of
the Plan, made and earned after December 31, 2004.  A Participant shall have a
100% nonforfeitable interest in his or her Deferral Account at all times.

 
(12)  
Deferral and Investment Election Form:  The form or procedure prescribed by the
Committee pursuant to which a Participant elects for a particular Plan Year (a)
the deferral of a portion of his or her Base Salary, Bonus Compensation and/or
Long-Term Incentive Compensation, and (b) one or more Deemed Investment Options
into which amounts to be allocated to his or her Deferral Account in respect of
such deferrals for such Plan Year will be deemed invested.

 
(13)  
Determination Date:  The date on which the amount of a Participant’s Deferral
Account or Grandfathered Plan Account is determined as provided in Section 3.4
hereof, as applicable.  The last day of each month shall be a Determination
Date.  As of any Determination Date, a Participant’s aggregate benefit under the
Plan shall be equal to the amount credited to his or her Deferral Account and
Grandfathered Plan Account, if applicable, as of such date.

 

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(14)  
Directors:  The Board of Directors of the Company.

 
(15)  
Eligible Employee:  Any Employee who is (a) a permanent Full-Time Active
Employee, (b) paid in United States dollars and subject to the income tax laws
of the United States, and (c) an officer or member of a select group of highly
compensated employees of the Employer.

 
(16)  
Employee:  Any person employed by the Employer.

 
(17)  
Employer:  The Company and each eligible organization designated as an Employer
in accordance with the provisions of Article IX of the Plan.

 
(18)  
Full-Time Active Employee:  An Employee whose employment with the Employer
requires, and who regularly and actively performs, 30 or more hours of service
for the Employer each week at a usual place of business of the Employer or at a
location to which such Employee is required or permitted to travel on behalf of
the Employer for which such Employee is paid regular compensation.

 
(19)  
Grandfathered Plan:  The Halliburton Elective Deferral Plan as in effect on
December 31, 2004, the material terms of which have not been materially modified
(within the meaning of Section 409A) after October 3, 2004, and are preserved
and continued in the Plan as reflected in Appendix A.

 
(20)  
Grandfathered Plan Account:  A memorandum bookkeeping account established on the
records of the Employer for a Participant that is credited with specified
deferrals made prior to January 1, 2005, and the Credited Investment Return on
such amounts determined in accordance with Section 3.4(e) of the Grandfathered
Plan.  A Participant shall have a 100% nonforfeitable interest in his or her
Grandfathered Plan Account at all times.

 
(21)  
Investment Election Change Form:  The form or procedure prescribed by the
Committee pursuant to which a Participant may make changes to his or her Deemed
Investment Elections applicable to future allocations to his or her Deferral
Account or Grandfathered Plan Account and/or to his or her current Deferral
Account balance or Grandfathered Plan Account balance.

 
(22)  
Investment Options:  One or more alternatives designated from time to time by
the Committee for purposes of crediting earnings or losses to Deferral Accounts
and Grandfathered Plan Accounts.

 
(23)  
Long-Term Incentive Compensation:  Awards earned under the Company’s Performance
Unit Program and such other plans or programs as the Compensation Committee may,
from time to time, designate that are payable in cash.

 
(24)  
Participant:  Each individual who has been selected for participation in the
Plan and who has become a Participant pursuant to Article II.

 

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(25)  
Plan:  The 2008 Halliburton Elective Deferral Plan, as amended from time to
time.

 
(26)  
Plan Year:  The twelve consecutive month period commencing January 1 of each
year.

 
(27)  
Retirement:  The date the Participant separates from service with the Employer
after attaining age 55 or after the sum of the Participant’s age and years of
service is 70 or greater.

 
(28)  
Section 409A:  Section 409A of the Code and applicable Treasury authorities.

 
(29)  
Trust:  The trust, if any, established under the Trust Agreement.

 
(30)  
Trust Agreement:  The agreement, if any, entered into between the Employer and
the Trustee pursuant to Article VIII.

 
(31)  
Trust Fund:  The funds and properties, if any, held pursuant to the provisions
of the Trust Agreement, together with all income, profits and increments
thereto.

 
(32)  
Trustee:  The trustee or trustees appointed by the Committee who are qualified
and acting under the Trust Agreement at any time.

 
(33)  
Unforeseeable Emergency:  A severe financial hardship to the Participant or
beneficiary resulting from an illness or accident of the Participant or
beneficiary, the Participant’s or beneficiary’s spouse or of a dependent (as
defined in Section 152(a) of the Code) of the Participant; loss of the
Participant’s or beneficiary’s property due to casualty (including the need to
rebuild a home following damage to a home not otherwise covered by insurance);
or other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant or beneficiary; provided,
however, that such circumstances meet the definition of “unforeseeable
emergency” under Section 409A, related Treasury pronouncements and any successor
thereto.

 
1.2           Number and Gender.  Wherever appropriate herein, words used in the
singular shall be considered to include the plural and words used in the plural
shall be considered to include the singular.  The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender.
 
1.3           Headings.  The headings of Articles and Sections herein are
included solely for convenience, and if there is any conflict between such
headings and the text of the Plan, the text shall control.
 

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II.

 
Participation
 
2.1           Participation.  Participants in the Plan are those Eligible
Employees who are selected by the Committee, in its sole discretion, as
Participants.  The Committee shall notify each Participant of his or her
selection as a Participant.  Subject to the provisions of Section 2.2, a
Participant shall remain eligible to defer Base Salary and/or Bonus Compensation
hereunder for each Plan Year following his or her initial year of participation
in the Plan.
 
2.2           Cessation of Active Participation.  Notwithstanding any provision
herein to the contrary, an individual who has become a Participant in the Plan
shall cease to be entitled to defer Base Salary and/or Bonus Compensation
hereunder effective as of the date he or she ceases to be an Eligible Employee
or any earlier date designated by the Committee.  Any such Committee action
shall be communicated to the affected individual prior to the effective date of
such action.
 
III.

 
Deferral Account Credits; Investment Elections
 
3.1  
Base Salary Deferrals.

 
(a)  Any Participant may elect to defer receipt of an integral percentage of
from 5% to 75% of his or her Base Salary, in 5% increments, for any Plan
Year.  A Participant’s election to defer receipt of a percentage of his or her
Base Salary for any Plan Year shall be made on or before the last day of the
preceding Plan Year.  Notwithstanding the foregoing, if an individual initially
becomes eligible to participate in the Plan other than on the first day of a
Plan Year, such Participant’s election to defer receipt of a percentage of his
or her Base Salary for such Plan Year may be made no later than 30 days after
the date he or she becomes eligible to participate in the Plan, but such
election shall be prospective only.  The reduction in a Participant’s Base
Salary pursuant to his or her election shall be effected by Base Salary
reductions as of each payroll period within the election period.  Deferrals of
Base Salary under this Plan shall be made before elective deferrals or
contributions of Base Salary under any other plan maintained by the
Employer.  Base Salary deferrals made by a Participant shall be credited to such
Participant’s Deferral Account as of the date the Base Salary deferred would
have been received by such Participant had no deferral been made pursuant to
this Section.  Except as provided in Paragraph (b) of this Section, deferral
elections for a Plan Year pursuant to this Section shall be irrevocable.
 

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(b)  If a revocation would not result in taxation under Section 409A, a
Participant shall be permitted to revoke his or her election to defer receipt of
his or her Base Salary under Section 3.1(a) for any Plan Year in the event of an
Unforeseeable Emergency, as determined by the Committee in its sole
discretion.  For purposes of the Plan, the decision of the Committee regarding
the existence or nonexistence of an Unforeseeable Emergency of a Participant
shall be final and binding.  Further, the Committee shall have the authority to
require a Participant to provide such proof as it deems necessary to establish
the existence and significant nature of the Participant’s Unforeseeable
Emergency.  A Participant who is permitted to revoke his or her Base Salary
deferral election during a Plan Year shall not be permitted to resume Base
Salary deferrals under the Plan until the next following Plan Year.
 
3.2           Bonus Compensation Deferrals.  Any Participant may elect to defer
receipt of an integral percentage of from 5% to 75% of his or her Bonus
Compensation, in 5% increments, for any Plan Year.  A Participant’s election to
defer receipt of a percentage of his or her Bonus Compensation attributable to
services performed in any Plan Year shall be made on or before the last day of
the preceding Plan Year; provided, however, that to the extent Bonus
Compensation satisfies the requirements for performance-based compensation under
Section 409A, the Committee may allow a Participant to make a deferral election
no later than the date that is six months before the end of the performance
period for which the Bonus Compensation is paid.  Notwithstanding the foregoing,
if any individual initially becomes eligible to participate in the Plan other
than on the first day of a Plan Year, such Participant’s election to defer
receipt of a percentage of his or her Bonus Compensation for such Plan Year may
be made no later than 30 days after the date he or she becomes eligible to
participate in the Plan.  Deferrals of Bonus Compensation under this Plan shall
be made before elective deferrals or contributions of Bonus Compensation under
any other plan maintained by the Employer.  Bonus Compensation deferrals made by
a Participant shall be credited to such Participant’s Deferral Account as of the
date the Bonus Compensation deferred would have been received by such
Participant had no deferral been made pursuant to this Section 3.2.  Deferral
elections for a Plan Year pursuant to this Section shall be irrevocable.
 
3.3           Long-Term Incentive Compensation Deferrals.  Any Participant may
elect to defer receipt of an integral percentage of from 5% to 75% of his or her
Long-Term Incentive Compensation, in 5% increments, payable in any Plan Year.  A
Participant’s election to defer receipt of a percentage of his or her Long-Term
Incentive Compensation payable with respect to any performance cycle shall be
made on or before the date that is six months prior to the end of such
performance cycle.  Long-Term Incentive Compensation deferrals made by a
Participant shall be credited to such Participant’s Deferral Account as of the
date the Long-Term Incentive Compensation deferred would have been received by
such Participant had no deferral been made pursuant to this Section
3.3.  Deferral elections pursuant to this Section shall be irrevocable.
 

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3.4           Investment of Deferral Accounts.
 
(a)  As of any Determination Date, each Participant’s Deferral Account shall
consist of the balance of the Participant’s Deferral Account as of the
immediately preceding Determination Date adjusted for:
 
(1)  
additional deferrals pursuant to Sections 3.1, 3.2 and/or 3.3;

 
(2)  
distributions (if any); and

 
(3)  
the appropriate Credited Investment Return.

 
All adjustments will be recorded to the Participants’ Deferral Accounts as of
each Determination Date.
 
(b)  The Committee shall designate from time to time one or more Investment
Options in which the Deferral Accounts may be deemed invested. The Committee
shall have the sole discretion to determine the number of Investment Options to
be designated hereunder and the nature of the Investment Options and may change
or eliminate any of the Investment Options from time to time.  In the event of
such change or elimination, the Committee shall give each Participant timely
notice and opportunity to make a new election. No such change or elimination of
any Investment Options shall be considered to be an amendment to the Plan
pursuant to Section 10.4.  A Participant may request that his or her Deferral
Account be allocated among the deemed Investment Options.
 
(c)  A Participant shall, in connection with his or her election to defer Base
Salary, Bonus Compensation and/or Long-Term Incentive Compensation for a
particular Plan Year, elect one or more Investment Options into which amounts to
be allocated to his or her Deferral Account in respect of deferrals for such
Plan Year shall be deemed invested by submitting on or before the last day of
the preceding Plan Year a Deferral and Investment Election Form in accordance
with the procedures prescribed by the Committee.
 
(d)  A Participant may request a change to his or her Deemed Investment
Elections for future amounts allocated to his or her Deferral Account and
amounts already allocated to his or her Deferral Account.  Any such change shall
be made by filing with the Committee an Investment Election Change Form. The
Committee shall establish procedures relating to changes in Deemed Investment
Elections, which may include limiting the percentage, amount and frequency of
such changes and specifying the effective date for any such changes.
 
(e)  Each Participant’s Deferral Account shall be credited monthly with the
Credited Investment Return attributable to his or her Deferral Account.  The
Credited Investment Return is the amount which the Participant’s Deferral
Account would have earned if the amounts credited to the Deferral Account had,
in fact, been invested in accordance with the Participant’s Deemed Investment
Elections.
 

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IV.

 
Emergency Withdrawals
 
Participants shall be permitted to make withdrawals from the Plan, without
penalty, only in the event of an Unforeseeable Emergency, as determined by the
Committee in its sole discretion.  No withdrawal shall be allowed to the extent
that such Unforeseeable Emergency is or may be relieved (a) through
reimbursement or compensation by insurance or otherwise, (b) by liquidation of
the Participant’s assets (other than from any nonqualified deferred compensation
plan or qualified employee plan), to the extent the liquidation of such assets
would not itself cause severe financial hardship or (c) by cessation of Base
Salary deferrals under the Plan pursuant to Section 3.1(b).  Further, the
Committee shall permit a Participant to withdraw only the amount it determines,
in its sole discretion, to be reasonably needed to satisfy the Unforeseeable
Emergency.
 
V.

 
Payment of Benefits
 
5.1           Payment Election Generally.  In conjunction with each deferral
election made by a Participant pursuant to Article III for a Plan Year, such
Participant shall elect, subject to Sections 5.5, 5.6 and 5.8, the time and the
form of payment with respect to such deferral and the Credited Investment
Returns attributable thereto.
 
5.2           Subsequent Payment Elections.  A Participant may revise his or her
election regarding the time and form of payment of deferred amounts provided
that (i) the subsequent deferral election is made no later than twelve months
prior to the date upon which the deferred amount would have been paid had no
subsequent deferral election been made and (ii) the subsequent deferral election
defers payment for a period of not less than five years from the date such
payment would otherwise have been paid had no subsequent deferral election been
made.  A subsequent deferral election under this Section 5.2 shall not be
effective until the date that is twelve months after such subsequent deferral
election is made.  Subsequent deferral elections under this Section 5.2 must
comply with all applicable requirements for subsequent deferral elections under
Section 409A.
 
Notwithstanding anything to the contrary herein, once a Participant elects
payout upon “Retirement” any future payment election revisions are
prohibited.  Additionally, a participant may not revise an existing election,
under Section 5.3 below, from a specific future month and year to “Retirement”.
 

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5.3           Time of Benefit Payment.  With respect to each deferral election
made by a Participant pursuant to Article III, such Participant shall elect to
commence payment of such deferral and the Credited Investment Returns
attributable thereto on one of the following dates:
 
(a)  Retirement; or
 
(b)  A specific future month and year, but not earlier than five years from the
date of the deferral if the Participant has not attained age fifty-five at the
time of the deferral or one year from the date of the deferral if the
Participant has attained age fifty-five at the time of the deferral, and not
later than the first day of the year in which the Participant attains age
seventy.
 
In the case of a “specified employee” within the meaning of Section
409A(a)(2)(B)(i) of the Code, any payments payable as a result of the Employee’s
termination of employment (other than death) shall not be payable before the
earlier of (i) the date that is six months after the Employee’s termination of
employment, (ii) the date of the Employee’s death, or (iii) the date that
otherwise complies with the requirements of Section 409A.  For purposes of
determining the identify of “specified employees”, the Committee may establish
procedures as it deems appropriate in accordance with Section 409A.
 
5.4           Form of Benefit Payment.  With respect to each deferral election
made by a Participant pursuant to Article III, such Participant shall elect the
form of payment with respect to such deferral and the Credited Investment
Returns attributable thereto from one of the following forms:
 
(a)  A lump sum; or
 
(b)  Annual installment payments for a period of full years not to exceed ten
years.
 
Annual installment payments shall be paid on the first business day of January
of each Plan Year.  Each installment payment shall be determined by multiplying
the deferral and the Credited Investment Returns attributable thereto at the
time of the payment by a fraction, the numerator of which is one and the
denominator of which is the number of remaining installment payments to be made
to Participant.
 
Notwithstanding any provision of the Plan to the contrary, in the event the
aggregate amount credited to a Participant’s Deferral Account and Grandfathered
Plan Account does not exceed $100,000, the Deferral Account shall be paid only
in the form of a lump sum.
 

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5.5           Total and Permanent Disability.  If a Participant becomes totally
and permanently disabled while employed by the Employer, payment of the amounts
credited to such Participant’s Deferral Account shall commence on the first
business day of the second calendar quarter following the date the Committee
makes a determination that the Participant is totally and permanently disabled,
in the form of payment determined in accordance with Section 5.4.  The above
notwithstanding, if such Participant is already receiving payments pursuant to
Section 5.3(b) and Section 5.4(b), such payments shall continue.  For purposes
of the Plan, a Participant shall be considered totally and permanently disabled
if the Committee determines, based on a written medical opinion (unless waived
by the Committee as unnecessary), that such Participant is disabled within the
meaning of Section 409A(a)(2)(C) of the Code.
 
5.6           Death.  In the event of a Participant’s death at a time when
amounts are credited to such Participant’s Deferral Account, such amounts shall
be paid to such Participant’s designated beneficiary or beneficiaries in a lump
sum within sixty (60) days of the date of such Participant’s death.
 
5.7           Designation of Beneficiaries.
 
(a)  Each Participant shall have the right to designate the beneficiary or
beneficiaries to receive payment of his or her benefit in the event of his or
her death.  Each such designation shall be made by executing and submitting the
beneficiary designation form prescribed by the Committee.  Any such designation
may be changed at any time by execution of a new designation in accordance with
this Section.
 
(b)  If no such designation is on file with the Committee at the time of the
death of the Participant or such designation is not effective for any reason as
determined by the Committee, then the designated beneficiary or beneficiaries to
receive such benefit shall be as follows:
 
(1)  
If a Participant leaves a surviving spouse, his or her benefit shall be paid to
such surviving spouse.

 
(2)  
If a Participant leaves no surviving spouse, his or her benefit shall be paid to
such Participant’s executor or administrator, or to his or her heirs at law if
there is no administration of such Participant’s estate.

 
5.8           Other Separation from Service.  Subject to the provisions of
Section 5.3, if a Participant has a separation from service within the meaning
of Section 409A(a)(2)(A)(i) of the Code before Retirement for a reason other
than total and permanent disability or death, the amounts credited to such
Participant’s Deferral Account shall be paid to the Participant in a lump sum
thirty days after the Participant’s date of separation from service.  For
purposes of this Section, transfers of employment between and among the Company
and its Affiliates shall not be considered a separation from service.
 

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5.9           Payment of Benefits.  To the extent the Trust Fund, if any, has
sufficient assets, the Trustee shall pay benefits to Participants or their
beneficiaries, except to the extent the Employer pays the benefits directly and
provides adequate evidence of such payment to the Trustee.  To the extent the
Trustee does not or cannot pay benefits out of the Trust Fund, the benefits
shall be paid by the Employer.  Any benefit payments made to a Participant or
for his or her benefit pursuant to any provision of the Plan shall be debited to
such Participant’s Deferral Account or Grandfathered Plan Account, as
applicable.  All benefit payments shall be made in cash to the fullest extent
practicable.
 
5.10           Unclaimed Benefits.  In the case of a benefit payable on behalf
of a Participant, if the Committee is unable to locate the Participant or
beneficiary to whom such benefit is payable, upon the Committee’s determination
thereof, such benefit shall be forfeited to the Employer.  Notwithstanding the
foregoing, if subsequent to any such forfeiture the Participant or beneficiary
to whom such benefit is payable makes a valid claim for such benefit, such
forfeited benefit shall be paid by the Employer or restored to the Plan by the
Employer.
 
5.11           No Acceleration of Bonus or Long-Term Incentive
Compensation.  The time of payment of any Bonus Compensation or Long-Term
Incentive Compensation that the Participant has elected to defer but that has
not yet been credited to the Participant’s Deferral Account because it is not
yet payable without regard to the deferral shall not be accelerated as a result
of the provisions of this Article.  If, pursuant to the provisions of this
Article, payment of such Bonus Compensation or Long-Term Incentive Compensation
would no longer be deferred at the time it becomes payable, such Bonus
Compensation or Long-Term Incentive Compensation shall be paid to the
Participant as soon as practicable following the date it would have been payable
had the Participant not made a deferral election.
 
VI.

 
Administration of the Plan
 
6.1           Committee Powers and Duties.  The general administration of the
Plan shall be vested in the Committee.  The Committee shall supervise the
administration and enforcement of the Plan according to the terms and provisions
hereof and shall have all powers necessary to accomplish these purposes,
including, but not by way of limitation, the right, power, authority, and duty:
 
(a)  To make rules, regulations, procedures and bylaws for the administration of
the Plan that are not inconsistent with the terms and provisions hereof, and to
enforce the terms of the Plan and the rules and regulations promulgated
thereunder by the Committee;
 
(b)  To designate, change and eliminate Investment Options in which Deferral
Accounts and Grandfathered Plan Accounts may be deemed invested and to establish
procedures relating to elections of Investment Options by Participants;
 

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(c)  To construe in its discretion all terms, provisions, conditions, and
limitations of the Plan;
 
(d)  To correct any defect or to supply any omission or to reconcile any
inconsistency that may appear in the Plan in such manner and to such extent as
it shall deem in its discretion expedient to effectuate the purposes of the
Plan;
 
(e)  To employ and compensate such accountants, attorneys, investment advisors,
and other agents, employees, and independent contractors as the Committee may
deem necessary or advisable for the proper and efficient administration of the
Plan;
 
(f)  To determine in its discretion all questions relating to eligibility;
 
(g)  To determine whether and when a Participant has incurred a separation from
service with the Employer, and the reason for such separation;
 
(h)  To make a determination in its discretion as to the right of any person to
a benefit under the Plan and to prescribe procedures to be followed by
distributees in obtaining benefits hereunder; and
 
(i)  To receive and review reports from the Trustee as to the financial
condition of the Trust Fund, if any, including its receipts and disbursements.
 
6.2           Self-Interest of Participants.  No member of the Committee shall
have any right to vote or decide upon any matter relating solely to himself
under the Plan (including, without limitation, Committee decisions under Article
II) or to vote in any case in which his or her individual right to claim any
benefit under the Plan is particularly involved.  In any case in which a
Committee member is so disqualified to act and the remaining members cannot
agree, the Compensation Committee shall appoint a temporary substitute member to
exercise all the powers of the disqualified member concerning the matter in
which he or she is disqualified.
 
6.3           Claims Review.  In any case in which a claim for Plan benefits of
a Participant or beneficiary is denied or modified, the Committee shall furnish
written notice to the claimant within ninety days (or within 180 days if
additional information requested by the Committee necessitates an extension of
the ninety-day period), which notice shall:
 
(a)  State the specific reason or reasons for the denial or modification;
 
(b)  Provide specific reference to pertinent Plan provisions on which the denial
or modification is based;
 
(c)  Provide a description of any additional material or information necessary
for the Participant, his or her beneficiary, or representative to perfect the
claim and an explanation of why such material or information is necessary; and
 

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(d)  Explain the Plan’s claim review procedure as contained herein.
 
In the event a claim for Plan benefits is denied or modified, if the
Participant, his or her beneficiary, or a representative of such Participant or
beneficiary desires to have such denial or modification reviewed, he or she
must, within sixty days following receipt of the notice of such denial or
modification, submit a written request for review by the Committee of its
initial decision.  In connection with such request, the Participant, his or her
beneficiary, or the representative of such Participant or beneficiary may review
any pertinent documents upon which such denial or modification was based and may
submit issues and comments in writing.  Within sixty days following such request
for review the Committee shall, after providing a full and fair review, render
its final decision in writing to the Participant, his or her beneficiary or the
representative of such Participant or beneficiary stating specific reasons for
such decision and making specific references to pertinent Plan provisions upon
which the decision is based.  If special circumstances require an extension of
such sixty-day period, the Committee’s decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the request for
review.  If an extension of time for review is required, written notice of the
extension shall be furnished to the Participant, beneficiary, or the
representative of such Participant or beneficiary prior to the commencement of
the extension period.
 
6.4           Employer to Supply Information.  The Employer shall supply full
and timely information to the Committee, including, but not limited to,
information relating to each Participant’s compensation, age, retirement, death,
or other cause of separation from service to the Employer and such other
pertinent facts as the Committee may require.  The Employer shall advise the
Trustee, if any, of such of the foregoing facts as are deemed necessary for the
Trustee to carry out the Trustee’s duties under the Plan and the Trust
Agreement.  When making a determination in connection with the Plan, the
Committee shall be entitled to rely upon the aforesaid information furnished by
the Employer.
 
6.5           Indemnity.  The Company shall indemnify and hold harmless each
member of the Committee against any and all expenses and liabilities arising out
of his or her administrative functions or fiduciary responsibilities, including
any expenses and liabilities that are caused by or result from an act or
omission constituting the negligence of such member in the performance of such
functions or responsibilities, but excluding expenses and liabilities that are
caused by or result from such member’s own gross negligence or willful
misconduct.  Expenses against which such member shall be indemnified hereunder
shall include, without limitation, the amounts 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.
 

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VII.

 
Administration of Funds
 
7.1           Payment of Expenses.  All expenses incident to the administration
of the Plan and Trust, including but not limited to, legal, accounting, Trustee
fees, and expenses of the Committee, may be paid by the Employer and, if not
paid by the Employer, shall be paid by the Trustee from the Trust Fund, if any.
 
7.2           Trust Fund Property.  All income, profits, recoveries,
contributions, forfeitures and any and all moneys, securities and properties of
any kind at any time received or held by the Trustee, if any, shall be held for
investment purposes as a commingled Trust Fund pursuant to the terms of the
Trust Agreement.  The Committee shall maintain one or more Deferral Accounts
and/or Grandfathered Plan Accounts, as necessary, in the name of each
Participant, but the maintenance of any such account designated as the account
of a Participant shall not mean that such Participant shall have a greater or
lesser interest than that due him or her by operation of the Plan and shall not
be considered as segregating any funds or property from any other funds or
property contained in the commingled fund.  No Participant shall have any title
to any specific asset in the Trust Fund, if any.
 
VIII.

 
Nature of the Plan
 
The Employer intends and desires by the adoption of the Plan to recognize the
value to the Employer of the past and present services of employees covered by
the Plan and to encourage and assure their continued service with the Employer
by making more adequate provision for their future retirement security.  The
Plan is intended to constitute an unfunded, unsecured plan of deferred
compensation for a select group of management or highly compensated employees of
the Employer.  Plan benefits herein provided are to be paid out of the
Employer’s general assets.  The Plan constitutes a mere promise by the Employers
to make benefit payments in the future and Participants have the status of
general unsecured creditors of the Employers.  Nevertheless, subject to the
terms hereof and of the Trust Agreement, if any, the Employers, or the Company
on behalf of the Employers, may transfer money or other property to the Trustee
and the Trustee shall pay Plan benefits to Participants and their beneficiaries
out of the Trust Fund.
 

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The Committee, in its sole discretion, may establish the Trust and direct the
Employers to enter into the Trust Agreement and adopt the Trust for purposes of
the Plan.  In such event, the Employers shall remain the owner of all assets in
the Trust Fund and the assets shall be subject to the claims of each Employer’s
creditors if such Employer ever becomes insolvent.  For purposes hereof, an
Employer shall be considered “insolvent” if (a) the Employer is unable to pay
its debts as they become due, or (b) the Employer is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code (or any successor
federal statute).  The chief executive officer of the Employer and its board of
directors shall have the duty to inform the Trustee in writing if the Employer
becomes insolvent.  Such notice given under the preceding sentence by any party
shall satisfy all of the parties’ duty to give notice.  When so informed, the
Trustee shall suspend payments to the Participants and hold the assets for the
benefit of the Employer’s general creditors.  If the Trustee receives a written
allegation that the Employer is insolvent, the Trustee shall suspend payments to
the Participants and hold the Trust Fund for the benefit of the Employer’s
general creditors, and shall determine within the period specified in the Trust
Agreement whether the Employer is insolvent.  If the Trustee determines that the
Employer is not insolvent, the Trustee shall resume payments to the
Participants.  No Participant or beneficiary shall have any preferred claim to,
or any beneficial ownership interest in, any assets of the Trust Fund.
 
IX.

 
Participating Employers
 
The Committee may designate any entity or organization eligible by law to
participate in this Plan as an Employer by written instrument delivered to the
Secretary of the Company and the designated Employer.  Such written instrument
shall specify the effective date of such designated participation, may
incorporate specific provisions relating to the operation of the Plan which
apply to the designated Employer only and shall become, as to such designated
Employer and its employees, a part of the Plan.  Each designated Employer shall
be conclusively presumed to have consented to its designation and to have agreed
to be bound by the terms of the Plan and any and all amendments thereto upon its
submission of information to the Committee required by the terms of or with
respect to the Plan; provided, however, that the terms of the Plan may be
modified so as to increase the obligations of an Employer only with the consent
of such Employer, which consent shall be conclusively presumed to have been
given by such Employer upon its submission of any information to the Committee
required by the terms of or with respect to the Plan.  Except as modified by the
Committee in its written instrument, the provisions of this Plan shall be
applicable with respect to each Employer separately, and amounts payable
hereunder shall be paid by the Employer which employs the particular
Participant, if not paid from the Trust Fund.
 

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X.

 
Miscellaneous
 
10.1           Not Contract of Employment.  The adoption and maintenance of the
Plan shall not be deemed to be a contract between the Employer and any person or
to be consideration for the employment of any person.  Nothing herein contained
shall be deemed to give any person the right to be retained in the employ of the
Employer or to restrict the right of the Employer to discharge any person at any
time nor shall the Plan be deemed to give the Employer the right to require any
person to remain in the employ of the Employer or to restrict any person’s right
to terminate his or her employment at any time.
 
10.2           Alienation of Interest Forbidden.  Except as hereinafter
provided, the interest of a Participant or his or her beneficiary or
beneficiaries hereunder may not be sold, transferred, assigned, or encumbered in
any manner, either voluntarily or involuntarily, and any attempt so to
anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the
same shall be null and void; neither shall the benefits hereunder be liable for
or subject to the debts, contracts, liabilities, engagements or torts of any
person to whom such benefits or funds are payable, nor shall they be an asset in
bankruptcy or subject to garnishment, attachment or other legal or equitable
proceedings.  Plan provisions to the contrary notwithstanding, the Committee
shall comply with the terms and provisions of an order that satisfies the
requirements for a “qualified domestic relations order” as such term is defined
in Section 206(d)(3)(B) of the Act, including an order that requires
distributions to an alternate payee prior to a Participant’s “earliest
retirement age” as such term is defined in Section 206(d)(3)(E)(ii) of the Act.
 
10.3           Withholding.  All deferrals and payments provided for hereunder
shall be subject to applicable withholding and other deductions as shall be
required of the Employer under any applicable local, state or federal law.
 
10.4           Amendment and Termination.  The Compensation Committee may from
time to time, in its discretion, amend, in whole or in part, any or all of the
provisions of the Plan; provided, however, that no amendment may be made that
would impair the rights of a Participant with respect to amounts already
allocated to his or her Deferral Account and Grandfathered Plan Account, as
applicable.  The Compensation Committee may terminate the Plan at any time.  In
the event that the Plan is terminated, the balance in a Participant’s Deferral
Account and Grandfathered Plan Account shall be paid to such Participant or his
or her designated beneficiary in a single lump sum payment of cash in full
satisfaction of all of such Participant’s or beneficiary’s benefits hereunder if
such distribution is permitted under Section 409A.  Any such amendment to or
termination of the Plan shall be in writing and signed by a member of the
Compensation Committee.  Notwithstanding the above, any action taken under this
Section is subject to the limitations provided in Appendix A.
 

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10.5           Severability.  If any provision of this Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining provisions hereof; instead, each provision shall be fully
severable and the Plan shall be construed and enforced as if said illegal or
invalid provision had never been included herein.
 
10.6           Governing Laws.  All provisions of the Plan shall be construed in
accordance with the laws of Texas except to the extent preempted by federal law.
 
10.7           Section 409A Compliance.  It is intended that the provisions of
this Plan satisfy the requirements of Section 409A and that the Plan be operated
in a manner consistent with such requirements to the extent
applicable.  Therefore, the Committee may make adjustments to the Plan and may
construe the provisions of the Plan in accordance with the requirements of
Section 409A.
 

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APPENDIX A                                
 
The Grandfathered Plan contains the provisions governing the deferrals of
accounts earned and vested by Eligible Employees on or before December 31,
2004.  This Appendix A preserves the material terms of the Grandfathered Plan as
in effect on December 31, 2004, and is intended to satisfy the requirements of
Section 409A as to grandfathered amounts.  The provisions of this Appendix A
shall apply to, and be effective only with respect to, the deferral of earned
and vested amounts under the Grandfathered Plan before January 1, 2005, and the
Credited Investment Return on such deferrals credited at any time.  The Plan
provides for separate accounting of such amounts deferred, earned, and vested
before January 1, 2005, and the Credited Investment Return thereon.
 
No amendment to the Plan shall be deemed to amend this Appendix A and the
relevant provisions of the Plan in effect prior to such amendment unless
otherwise specifically set forth therein.  Pursuant to Section 1.409A-6(a)(4) of
the Proposed Treasury Regulations, a modification is material “if a benefit or
right existing as of October 3, 2004 is materially enhanced or a new material
benefit or right is added.”  Section 5.8 of the Grandfathered Plan was removed
because that section does not relate to the Company or to the rights of Eligible
Employees under the Plan.  The removal of Section 5.8, below, is hereunder
intended to be in good faith compliance with Section 409A, and is not intended
to materially modify the benefits existing as of October 3, 2004 under the
Grandfathered Plan.
 
The provisions of the Plan applicable to the Grandfathered Plan Accounts shall
be administered in a manner consistent with the Grandfathered Plan and Appendix
A.  Wherever the Plan has added, changed, or otherwise altered any terms of the
Grandfathered Plan that were in effect on December 31, 2004, in a manner that
would constitute a material modification, as described above, such changes will
be disregarded in the administration of the Grandfathered Plan Accounts herein.
 
APPLICABLE GRANDFATHERED PLAN TERMS
 
With respect to amounts deferred prior to January 1, 2005, and the Credited
Investment Return on such amounts credited at any time, the following
definitions and Articles in this Appendix A shall be substituted for the
corresponding definitions and Articles of the Plan:
 
Retirement:  The date the Participant retires in accordance with the terms of
his or her Employer’s retirement policy as in effect at that time.
 

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Unforeseeable Emergency:  A severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident of the Participant or
of a dependent (as defined in Section 152(a) of the Code) of the Participant,
loss of the Participant’s property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant.  For purposes of the Grandfathered Plan,
the decision of the Committee regarding the existence or nonexistence of an
Unforeseeable Emergency of a Participant shall be final and binding.  Further,
the Committee shall have the authority to require a Participant to provide such
proof as it deems necessary to establish the existence and significant nature of
the Participant’s Unforeseeable Emergency.
 
III.

 
Grandfathered Plan Account Credits; Investment Elections
 
3.1  Base Salary Deferrals.  Effective from and after January 1, 2005, no
deferrals of Base Salary shall be credited to a Participant’s Grandfathered Plan
Account.
 
3.2  Bonus Compensation Deferrals.  Effective from and after January 1, 2005, no
deferrals of Bonus Compensation shall be credited to a Participant’s
Grandfathered Plan Account.
 
3.3  Long-Term Incentive Compensation Deferrals.  Effective from and after
January 1, 2005, no deferrals of Long-Term Incentive Compensation shall be
credited to a Participant’s Grandfathered Plan Account.
 
3.4  Investment of Grandfathered Plan Accounts.
 
(a)  As of any Determination Date, each Participant’s Grandfathered Plan Account
shall consist of the balance of the Participant’s Grandfathered Plan Account as
of the immediately preceding Determination Date adjusted for:
 
(1)           distributions (if any); and
 
(2)           the appropriate Credited Investment Return.
 
All adjustments will be recorded to the Participants’ Grandfathered Plan
Accounts as of each Determination Date.
 

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(b)  The Committee shall designate from time to time one or more Investment
Options in which the Grandfathered Plan Accounts may be deemed invested.  The
Committee shall have the sole discretion to determine the number of Investment
Options to be designated hereunder and the nature of the Investment Options and
may change or eliminate any of the Investment Options from time to time.  In the
event of such change or elimination, the Committee shall give each Participant
timely notice and opportunity to make a new election.  No such change or
elimination of any Investment Options shall be considered to be an amendment to
the Plan pursuant to Section 10.4.  A Participant may request that his or her
Grandfathered Plan Account be allocated among the deemed Investment Options.  If
a Participant fails to make an election, his or her Grandfathered Plan Account
shall be invested in a single fund selected by the Committee.
 
(c)  Except as changed under Section 3.4(d), the Participant’s Deemed Investment
Elections designated in the Participant’s initial deferral election shall remain
in effect with respect to his or her Grandfathered Plan Account and any
additional amounts credited thereto.
 
(d)  A Participant may request a change to his or her Deemed Investment
Elections for future amounts allocated to his or her Grandfathered Plan Account
and amounts already allocated to his or her Grandfathered Plan Account.  Any
such change shall be made by filing with the Committee an Investment Election
Change Form.  The Committee shall establish procedures relating to changes in
Deemed Investment Elections, which may include limiting the percentage, amount
and frequency of such changes and specifying the effective date for any such
changes.
 
(e)  Each Participant’s Grandfathered Plan Account shall be credited monthly
with the Credited Investment Return attributable to his or her Grandfathered
Plan Account.  The Credited Investment Return is the amount which the
Participant’s Grandfathered Plan Account would have earned if the amounts
credited to the Grandfathered Plan Account had, in fact, been invested in
accordance with the Participant’s Deemed Investment Elections.
 
IV.

 
Withdrawals
 
4.1  Emergency Withdrawals.  Participants shall be permitted to make withdrawals
from the Grandfathered Plan Account, without penalty, only in the event of an
Unforeseeable Emergency, as determined by the Committee in its sole
discretion.  No withdrawal shall be allowed to the extent that such
Unforeseeable Emergency is or may be relieved (a) through reimbursement or
compensation by insurance or otherwise or (b) by liquidation of the
Participant’s assets, to the extent the liquidation of such assets would not
itself cause severe financial hardship.  Further, the Committee shall permit a
Participant to withdraw only the amount it determines, in its sole discretion,
to be reasonably needed to satisfy the Unforeseeable Emergency.
 

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4.2  Non-Emergency Withdrawals. A Participant may make withdrawals from his or
her Grandfathered Plan Accounts at any time for reasons other than an
Unforeseeable Emergency, subject to the following:
 
(a)  the minimum amount that may be withdrawn is $5,000;
 
(b)  only one such withdrawal may be made during any Plan Year;
 
(c)  the withdrawal shall be in cash in a lump sum and taken from the
Grandfathered Plan Accounts and Investment Options designated by the
Participant;
 
(d)  the withdrawal must be designated in a whole percentage or a whole dollar
amount; and
 
(e)  upon such withdrawal, a portion of the Participant’s Grandfathered Plan
Account balance shall be forfeited based on the amount withdrawn from the
Grandfathered Plan, determined as follows:
 
With Respect to the Amount
Withdrawn from the Following
Percentiles of the Grandfathered Plan
Percentage of Amount
Withdrawn from the Percentile to be
Forfeited from the Grandfathered Plan
First 50%
10%
Second 50%
25%

 
The withdrawal amount shall be reduced to the extent necessary for the sum of
the amount of the withdrawal and the forfeiture not to exceed 100% of the
Participant’s Grandfathered Plan Account balance.
 

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Notwithstanding the foregoing, if such a withdrawal is made on or within one
year following a Corporate Change (as defined below), the amount of the
Participant’s Grandfathered Plan Accounts forfeited upon such withdrawal shall
be equal to 10% of the amount of such withdrawal.  A Corporate Change means one
of the following events occurs: (i) the merger, consolidation or other
reorganization of the Company in which the outstanding common stock of the
Company is converted into or exchanged for a different class of securities of
the Company, a class of securities of any other issuer (except a direct or
indirect wholly owned subsidiary of the Company), cash or other property; (ii)
the sale, lease or exchange of all or substantially all of the assets of the
Company to any other corporation or entity (except a direct or indirect wholly
owned subsidiary of the Company); (iii) the adoption of the stockholders of the
Company of a plan of liquidation and dissolution; (iv) the acquisition (other
than any acquisition pursuant to any other clause of this definition) by any
person or entity, including, without limitation, a “group” as contemplated by
Section 13(d)(3) of the Securities Exchange Act of 1934, of beneficial
ownership, as contemplated by such Section, of more than twenty percent (based
on voting power) of the Company’s outstanding capital stock; or (v) as a result
of or in connection with a contested election of directors of the Company, the
persons who were directors of the Company before such election shall cease to
constitute a majority of the Board of Directors of the Company.
 
Withdrawals shall be paid as soon as reasonably practicable following the
Participant’s request, which must be in such form or manner as the Company may
prescribe from time to time.
 
V.

 
Payment of Benefits
 
5.1  Payment Election Generally.  Pursuant to Article III hereof, no additional
deferrals are allowed under the Grandfathered Plan.
 
5.2  Subsequent Payment Elections.  A Participant may revise his or her election
regarding the time and form of payment of deferred amounts, but such revised
election shall not be effective until one year from the date of the revised
election and shall be effective only if payment has not been made or commenced
pursuant to Section 5.2 prior to the expiration of such one-year period.
 
5.3  Time of Benefit Payment.  With respect to each deferral election made by a
Participant pursuant to Article III, such Participant shall elect to commence
payment of such deferral and the Credited Investment Returns attributable
thereto on one of the following dates:
 

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(a)  Retirement; or
 
(b)  A specific future month and year, but not earlier than five years from the
date of the deferral if the Participant has not attained age fifty-five at the
time of the deferral or one year from the date of the deferral if the
Participant has attained age fifty-five at the time of the deferral, and not
later than the first day of the year in which the Participant attains age
seventy.
 
5.4  Form of Benefit Payment.  With respect to each deferral election made by a
Participant pursuant to Article III, such Participant shall elect the form of
payment with respect to such deferral and the Credited Investment Returns
attributable thereto from one of the following forms:
 
(a)  A lump sum; or
 
(b)  Installment payments for a period not to exceed ten years.
 
Installment payments shall be paid annually on the first business day of January
of each Plan Year; provided however, that not later than sixty days prior to the
date payment is to commence, a Participant may elect to have his or her
installment payments paid quarterly on the first business day of each calendar
quarter.  Each installment payment shall be determined by multiplying the
deferral and the Credited Investment Returns attributable thereto at the time of
the payment by a fraction, the numerator of which is one and the denominator of
which is the number of remaining installment payments to be made to Participant.
 
In the event the aggregate amount credited to a Participant’s Deferral Account
and Grandfathered Plan Account does not exceed $50,000, the Committee may, in
its sole discretion, pay the Grandfathered Plan Account in the form of a lump
sum.
 
5.5  Total and Permanent Disability.  If a Participant becomes totally and
permanently disabled while employed by the Employer, payment of the amounts
credited to such Participant’s Grandfathered Plan Account shall commence on the
first business day of the second calendar quarter following the date the
Committee makes a determination that the Participant is totally and permanently
disabled, in the form of payment determined in accordance with Section 5.4.  The
above notwithstanding, if such Participant is already receiving payments
pursuant to Section 5.3(b) and Section 5.4(b), such payments shall
continue.  For purposes of the Plan, a Participant shall be considered totally
and permanently disabled if the Committee determines, based on a written medical
opinion (unless waived by the Committee as unnecessary), that such Participant
is permanently incapable of performing his or her job for physical or mental
reasons.
 

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5.6  Death.  In the event of a Participant’s death at a time when amounts are
credited to such Participant’s Grandfathered Plan Account, such amounts shall be
paid to such Participant’s designated beneficiary or beneficiaries in five
annual installments commencing as soon as administratively feasible after such
Participant’s date of death.  However, the Participant’s designated beneficiary
or beneficiaries may request a lump sum payment based upon hardship, and the
Committee, in its sole discretion, may approve such request.
 
5.7  Designation of Beneficiaries.
 
(a)  Each Participant shall have the right to designate the beneficiary or
beneficiaries to receive payment of his or her benefit in the event of his or
her death.  Each such designation shall be made by executing and submitting the
beneficiary designation form prescribed by the Committee.  Any such designation
may be changed at any time by execution of a new designation in accordance with
this Section.
 
(b)  If no such designation is on file with the Committee at the time of the
death of the Participant or such designation is not effective for any reason as
determined by the Committee, then the designated beneficiary or beneficiaries to
receive such benefit shall be as follows:
 
 
(1)
If a Participant leaves a surviving spouse, his or her benefit shall be paid to
such surviving spouse.

 
 
(2)
If a Participant leaves no surviving spouse, his or her benefit shall be paid to
such Participant’s executor or administrator, or to his or her heirs at law if
there is no administration of such Participant’s estate.

 
5.8  Other Termination of Employment.  If a Participant terminates his or her
employment with the Employer before Retirement for a reason other than total and
permanent disability or death, the amounts credited to such Participant’s
Grandfathered Plan Account shall be paid to the Participant in a lump sum no
less than thirty days and no more than one year after the Participant’s date of
termination of employment.  For purposes of this Section, transfers of
employment between and among KBR, Inc., the Company and any of their Affiliates
shall not be considered a termination of employment.
 
5.9  Change in the Company’s Credit Rating.  Removed.
 

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5.10  Payment of Benefits.  To the extent the Trust Fund, if any, has sufficient
assets, the Trustee shall pay benefits to Participants or their beneficiaries,
except to the extent the Employer pays the benefits directly and provides
adequate evidence of such payment to the Trustee.  To the extent the Trustee
does not or cannot pay benefits out of the Trust Fund, the benefits shall be
paid by the Employer.  Any benefit payments made to a Participant or for his or
her benefit pursuant to any provision of the Grandfathered Plan shall be debited
to such Participant’s Grandfathered Plan Account.  All benefit payments shall be
made in cash to the fullest extent practicable.
 
5.11  No Acceleration of Bonus or Long-Term Incentive Compensation.  The time of
payment of any Bonus Compensation or Long-Term Incentive Compensation that the
Participant has elected to defer but that has not yet been credited to the
Participant’s Grandfathered Plan Account because it is not yet payable without
regard to the deferral shall not be accelerated as a result of the provisions of
this Article.  If, pursuant to the provisions of this Article, payment of such
Bonus Compensation or Long-Term Incentive Compensation would no longer be
deferred at the time it becomes payable, such Bonus Compensation or Long-Term
Incentive Compensation shall be paid to the Participant within 90 days of the
date it would have been payable had the Participant not made a deferral
election.
 

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