Exhibit 10.4
Waste Management, Inc.

409A Deferral Savings Plan
As Effective January 1, 2005

 

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TABLE OF CONTENTS

                      Page  
ARTICLE 1 INTRODUCTION
  1    
1.1
  Purpose of Plan     1  
1.2
  Status of Plan     1    
ARTICLE 2 DEFINITIONS
  1    
2.1
  “Account”     1  
2.2
  “Base Salary”     1  
2.3
  “Beneficiary”     1  
2.4
  “Bonus”     1  
2.5
  “Bonus Deferral”     2  
2.6
  “Change in Control”     2  
2.7
  “Code”     2  
2.8
  “Company”     2  
2.9
  “Deferral Form”     2  
2.10
  “Effective Date”     2  
2.11
  “Elective Deferral”     2  
2.12
  “Eligible Employee”     2  
2.13
  “Employee”     2  
2.14
  “Employer”     2  
2.15
  “ERISA”     2  
2.16
  “Limit”     2  
2.17
  “Matched Deferral”     2  
2.18
  “Matching Allocation”     3  
2.19
  “Participant”     3  
2.20
  “Payment Form”     3  
2.21
  “Plan”     3  
2.22
  “Plan Administrator”     3  
2.23
  “Plan Committee”     3  
2.24
  “Plan Year”     3  
2.25
  “Qualified Plan”     3  
2.26
  “Total Compensation”     3    
ARTICLE 3 ELIGIBILITY AND PARTICIPATION
  4    
3.1
  Eligibility     4  
3.2
  Participation     4  
3.3
  Suspension of Participation     4    
ARTICLE 4 DEFERRALS AND CONTRIBUTIONS
  4    
4.1
  Elective Deferrals     4  

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TABLE OF CONTENTS
(continued)

                      Page  
4.2
  Bonus Deferrals     5  
4.3
  Elections     5  
4.4
  Matching Allocations     6    
ARTICLE 5 ACCOUNTS
  6    
5.1
  Accounts     6  
5.2
  Investments     7  
5.3
  Statements     7    
ARTICLE 6 VESTING
  7    
ARTICLE 7 DISTRIBUTION OF ACCOUNTS
  7    
7.1
  Election as to Time and Form of Payment     7  
7.2
  Death     8  
7.3
  Unforeseeable Emergency     9  
7.4
  Taxes     9    
ARTICLE 8 PLAN ADMINISTRATION
  9    
8.1
  Plan Administration and Interpretation     9  
8.2
  Powers, Duties, Procedures     10  
8.3
  Information     10  
8.4
  Indemnification of Plan Administrator     10    
ARTICLE 9 AMENDMENT AND TERMINATION
  10    
9.1
  Authority to Amend and Terminate     10  
9.2
  Existing Rights     10    
ARTICLE 10 MISCELLANEOUS
  11    
10.1
  No Funding     11  
10.2
  General Creditor Status     11  
10.3
  Non-assignability     11  
10.4
  Limitation of Participant’s Rights     11  
10.5
  Participants Bound.     11  
10.6
  Satisfaction of Claims; Unclaimed Benefits     11  
10.7
  Governing Law and Severability     12  
10.8
  Not Contract of Employment     12  
10.9
  Severability     12  
10.10
  Headings     12  

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Waste Management, Inc.
409A Deferral Savings Plan
As Effective January 1, 2005
ARTICLE 1
INTRODUCTION
     1.1 Purpose of Plan. Waste Management, Inc. (the “Company”) established the
Waste Management, Inc. 409A Deferral Savings Plan (the “Plan”) to provide
certain eligible employees a means to defer a portion of their base salary
and/or their bonus that vests on or after January 1, 2005 in compliance with
Section 409A of the Internal Revenue Code so as to save for retirement The Plan
is primarily designed to give these eligible employees an additional avenue to
defer amounts that are in addition to and otherwise limited from deferral under
the Waste Management Retirement Savings Plan due to certain limitations
established under the Internal Revenue Code for such plan. The Plan is effective
January 1, 2005.
     1.2 Status of Plan. The Plan is intended to be an unfunded plan maintained
by the Company “primarily for the purpose of providing deferred compensation for
a select group of management or highly compensated employees” within the meaning
of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and the Plan shall be
interpreted and administered consistent with this intent.
ARTICLE 2
DEFINITIONS
     Wherever used herein, the following terms have the meanings set forth
below, unless a different meaning is clearly required by the context:
     2.1 “Account".means an account established for the benefit of a Participant
under Section 5.1, which may include one or more sub-accounts.
     2.2 “Base Salary".means the annual base salary rate payable by an Employer
to an Eligible Employee for services performed during any Plan Year that would
be includible in the Eligible Employee’s gross income for such year determined
before deductions made with respect to this Plan, the Qualified Plan, or any
other plan maintained by an Employer permitting pre-tax contributions, such as
an Employer-sponsored plan established under Code Section 125. Base Salary does
not include income from stock option exercises, Bonuses and Bonus Deferrals
under this Plan, or any other type of incentive award.
     2.3 “Beneficiary".means the beneficiary or beneficiaries designated by a
Participant or otherwise under Section 7.2 to receive an amount, if any, payable
from such Participant’s Account upon the death of the Participant.
     2.4 “Bonus”.means the annual bonus payable under the Company’s management
incentive plan.

 

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     2.5 “Bonus Deferral”.means the portion of a Bonus that is deferred by a
Participant under Section 4.2 with respect to a Plan Year.
     2.6 “Change in Control”.means a Change in Control as such term is defined
in the Company’s 1996 Stock Option Plan for Non-Employee Directors, as amended
from time to time.
     2.7 “Code”.means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations and rulings issued thereunder. Reference to any
section or subsection of the Code includes reference to any comparable or
succeeding provisions of any legislation that amends, supplements or replaces
such section or subsection.
     2.8 “Company”.means Waste Management, Inc., a Delaware corporation, or any
successor corporation thereto.
     2.9 “Deferral Form”..means the document or documents, voice response or
electronic media prescribed by the Plan Administrator pursuant to which a
Participant may make elections to defer a portion of the Participant’s Base
Salary and/or all or a portion of the Participant’s Bonus.
     2.10 “Effective Date”.means January 1, 2005, the date of the establishment
of the Plan.
     2.11 “Elective Deferral”.means the portion of Base Salary the receipt of
which is deferred by a Participant under Section 4.1 with respect to a Plan
Year.
     2.12 “Eligible Employee”.means an Employee who satisfies the eligibility
requirements set forth in Article 3.
     2.13 “Employee”.means an employee of an Employer who is an eligible
employee within the meaning of the Qualified Plan.
     2.14 “Employer”.means the Company or an affiliated corporation of the
Company that is an adopting employer under the Qualified Plan.
     2.15 “ERISA”.means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and rulings issued thereunder.
Reference to any section or subsection of ERISA includes reference to any
comparable or succeeding provisions of any legislation that amends, supplements
or replaces such section or subsection.
     2.16 “Limit”.means the Code Section 402(g) limit under the Qualified Plan.
     2.17 “Matched Deferral”.means a Participant’s Elective Deferrals and Bonus
Deferrals under the Plan after the Participant reaches the Limit.

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     2.18 “Matching Allocation”.means an allocation by the Employer for the
benefit of a Participant who is an Eligible Employee, as described in
Section 4.4.
     2.19 “Participant”.means a current or former Eligible Employee who
participates in the Plan in accordance with Article 3 or maintains an Account
balance hereunder.
     2.20 “Payment Form”.means the document or documents, voice response or
electronic media prescribed by the Plan Administrator pursuant to which a
Participant shall elect the time and form for distribution of his or her Account
balance, as provided under Article 7.
     2.21 “Plan”.means the Waste Management, Inc. 409A Deferral Savings Plan as
provided herein and as amended from time to time.
     2.22 “Plan Administrator”.means the individual, individuals or committee
designated by the Company as responsible for the administration of the Plan.
Unless the Company determines otherwise, the Administrative Committee of the
Waste Management Employee Benefit Plans (the “Administrative Committee”) shall
be the Plan Administrator. Notwithstanding the foregoing, in the event of a
Change in Control, the Plan Administrator shall be those individuals who were
members of the Board of Directors of the Company immediately prior to the Change
in Control and who continue as directors of the Company thereafter, but if there
are no continuing directors, the Plan Administrator shall be the Compensation
Committee of the Board of Directors of the Company as constituted prior to the
Change in Control.
     2.23 “Plan Committee”.means the committee designated by the Company as
having the authority to amend and/or terminate the Plan. Unless the Company
determines otherwise, the Plan Committee shall consist of the same members as
the Administrative Committee.
     2.24 “Plan Year”.means the calendar year; provided, that, for
administrative purposes the initial Plan year shall begin on the Effective Date
and end on December 31, 2005.
     2.25 “Qualified Plan”.means the Waste Management Retirement Savings Plan,
as amended from time to time.
     2.26 “Total Compensation".means for a Plan Year the sum of an Eligible
Employee’s Base Salary and Bonus.

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ARTICLE 3
ELIGIBILITY AND PARTICIPATION
     3.1 Eligibility.
     (a) An Employee shall be eligible to participate in the Plan for a Plan
Year if his or her stated Base Salary for the year before the Plan Year equals
or exceeds $170,000, or if the Employee is hired during the Plan Year, his or
her stated Base Salary on the Employee’s date of hire equals or exceeds
$170,000.
     (b) Prior to each Plan Year, the Plan Administrator shall determine the
identity of those Employees who are eligible to commence their participation in
the Plan pursuant to Section 3.1(a) and those Participants who may continue
their participation in the Plan for such Plan Year pursuant to Section 3.1(a).
The Plan Administrator will notify those Employees of their eligibility to
participate (or continue participation) in the Plan and provide them with a
Deferral Form. The Plan Administrator shall have the sole discretion to
determine eligibility pursuant to the Plan.
     3.2 Participation. An Eligible Employee who properly completes a Deferral
Form shall become a Participant in the Plan on the first date as of which an
Elective Deferral or Bonus Deferral is credited to his or her Account. A
Participant in the Plan shall continue to be a Participant so long as any amount
remains credited to his or her Account.
     3.3 Suspension of Participation. If the Plan Administrator determines that
a Participant currently making Elective Deferrals or receiving Matching
Allocations no longer satisfies the eligibility requirements of Section 3.1(a)
during the Plan Year, the Plan Administrator may suspend the Participant’s
Elective Deferrals and Matching Allocations until the next following Plan Year
as of which the Participant again satisfies such eligibility requirements. In
such circumstance, the Plan Administrator shall notify the Participant of such
suspension. If the Participant’s participation is suspended as described in this
Section 3.3 and the Plan Administrator determines that the Participant again
satisfies the eligibility requirements of Section 3.1(a), the Plan Administrator
shall notify the Participant, and the Participant shall be permitted to resume
active participation in the Plan as of the next following Plan Year.
ARTICLE 4
DEFERRALS AND CONTRIBUTIONS
     4.1 Elective Deferrals. With respect to any Plan Year, an Eligible Employee
may irrevocably elect to defer, on a pre-tax basis, up to 25% (in whole
percentages) of his or her Base Salary. Such an election is a separate and
independent election from an election to defer compensation under the Qualified
Plan.

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     4.2 Bonus Deferrals. With respect to any Plan Year, an Eligible Employee
may irrevocably elect to defer all or a portion of his or her Bonus (in whole
percentages). Notwithstanding the foregoing, the amount of an Eligible
Employee’s Bonus eligible for deferral in a given Plan Year shall not exceed the
Bonus reduced by sum of any before-tax contributions made to the Qualified Plan
and the amount necessary to satisfy the tax due for FICA with respect to such
Bonus.
     4.3 Elections.
     (a) Time for Making Deferral Elections.

  (i)   Elective Deferrals.

  (A)   Base Salary Deferral. An election to defer Base Salary shall be made
prior to the calendar year in which the Base Salary is earned. The Plan
Administrator will notify each Eligible Employee of the applicable election
period and deadline for filing such elections.

  (B)   Newly Eligible Employees. In the case of an Eligible Employee in his or
her first year of employment, an election to defer Base Salary must be made
within 30 days after the Eligible Employee begins employment and at least five
business days before the commencement of the first payroll period for which the
election is effective. Such elections are effective only with respect to Base
Salary earned after the effective date of the election.

  (ii)   Bonus Deferrals. An election to defer a Bonus must be made prior to the
calendar year in which the bonus is earned; provided, as the Plan Administrator
may permit, that for any portion of a Bonus that constitutes “performance based
compensation,” within the meaning assigned that term under Section 409A of the
Internal Revenue Code, the election may be made as late as six months and one
day prior to the expiration of the performance measurement period.

     (b) Deferral Forms; Irrevocability. All Deferral Forms for Elective and
Bonus Deferrals must be timely filed, recorded or otherwise made in the manner
prescribed by the Plan Administrator. An Eligible Employee may change a prior
election up to the date established under Section 4.3(i) or (ii), as applicable.
However, from and after the last date permitted for making such elections, all
deferral elections pursuant to this Article 4 shall be irrevocable.
     (c) No Election. A Deferral Form for a Plan Year shall not apply to
subsequent Plan Years. If no election to defer Base Salary or Bonuses is made
for a given Plan Year, no deferrals shall be made for such Plan Year.

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     4.4 Matching Allocations.
     (a) No later than the latest date permitted by Code Section 404 for
matching contributions under the Qualified Plan with respect to each Plan Year
thereunder (or such later date that the need for a matching contribution is
determined), the Employer shall credit a Matching Allocation to the Account of
each Participant who is an Eligible Employee and is entitled to such a
contribution pursuant to Section 4.4(b).
     (b) With respect to each payroll period after a Participant reaches the
Limit, such Participant shall receive a Matching Allocation equal to (i) 100% of
the Participant’s Matched Deferrals up to 3% of the Participant’s Total
Compensation, plus (ii) 50% of the Participant’s Matched Deferrals in excess of
3% of the Participant’s Total Compensation, up to 6% of the Participant’s Total
Compensation. Notwithstanding the foregoing, the Committee, in its sole and
absolute discretion, may adjust a Participant’s Matching Allocation to the
extent necessary to ensure that he or she does not receive matching
contributions under this Plan and the Qualified Plan that exceed the sum of
(i) 100% of the Participant’s deferrals under this Plan and elective
contributions under the Qualified Plan up to 3% of Total Compensation and
(ii) 50% of the Participant’s deferrals under this Plan and elective
contributions under the Qualified Plan in excess of 3% of Total Compensation, up
to 6% of Total Compensation.
ARTICLE 5
ACCOUNTS
     5.1 Accounts. The Plan Administrator shall establish an Account for each
Participant to reflect Elective Deferrals, Bonus Deferrals and Matching
Allocations, if any, made for the Participant’s benefit together with any
adjustments for income, gain or loss and any payments from the Account. A
separate sub-account shall be established for Elective Deferrals, Bonus
Deferrals, if any, and Matching Allocations, if any. Elective Deferrals shall be
credited as of the end of each payroll period, and Bonus Deferrals shall be
credited as of the date on which the Bonus would otherwise be paid. The Accounts
are established solely for the purposes of tracking Elective Deferrals, Bonus
Deferrals, Matching Allocations and any income adjustments thereto. The Accounts
shall not be used to segregate assets for payment of any amounts deferred or
allocated under the Plan.
     5.2 Investments.
     (a) Amounts credited to each Participant’s Account shall be deemed
invested, in accordance with the Participant’s directions, in one or more
investment funds that are available under the Plan. If a Participant does not
make investment elections with respect to amounts credited to his or her
Account, such amounts shall be deemed invested in the Moderate Asset Allocation
Fund or such other investment fund as the Investment Committee of the Waste
Management Employee Benefit Plans may direct.
     (b) A Participant shall make his or her investment fund selections at such
time as he or she files the Deferral Form, as described in Article 4.
Investments must be

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made in whole percentages. A Participant may change his or her investment
elections at any time, or may reallocate amounts invested among the investment
funds available under the Plan.
     (c) Expense charges for transactions performed for each Participant’s
sub-account shall be debited against each respective sub-account and shall be
listed on the quarterly statement. Other Plan charges and administrative
expenses will be paid by the Employer without debit against Participant
Accounts.
     5.3 Statements. As soon as practicable following the last business day of
each calendar quarter, the Plan Administrator (or its designee) shall provide
the Participant with a statement of such Participant’s Account reflecting the
deemed income, gains and losses (realized and unrealized), amounts of deferrals
and distributions with respect to such Account since the prior statement.
ARTICLE 6
VESTING
     Subject to the provisions of Sections 7.4 and 8.1, a Participant shall at
all times have a fully vested and nonforfeitable right to all Elective
Deferrals, Bonus Deferrals, if any, and Matching Allocations, if any, credited
to the Participant’s Account, adjusted for deemed income, gain and loss
attributable thereto.
ARTICLE 7
DISTRIBUTION OF ACCOUNTS
     7.1 Election as to Time and Form of Payment.
     (a) General Payment Options. A Participant must elect, on the deferral
election form, one of the following payment options for all amounts credited to
a Participant’s Account:

  (i)   a lump sum payment in February of the calendar year following either
(A) a future date or age that occurs on or after termination of employment, or
(B) retirement at age 65; or

  (ii)   annual installments over a period of up to ten years (as elected by the
Participant), to begin in February of the calendar year following a specific
date or age.

     Any such election shall be made in accordance with procedures and rules
established by the Plan Administrator.
     If a Participant does not make an election, distribution shall be made in a
single lump sum in February of the calendar year following the Participant’s
termination of employment. Payments from a Participant’s Account may be in cash
or in property, as determined by the Plan Administrator or the trustee of any
existing trust from which payment is made.

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     For purposes of the Plan, a Participant shall terminate employment when the
Participant separates from service with the Company and all majority-owned
subsidiaries of the Company. However, temporary absence from employment because
of illness, vacation, approved leaves of absences, and transfers of employment
among the Company and its majority-owned subsidiaries shall not be considered a
termination of employment or an interruption of employment.
     (b) Distributions to Key Employees. Notwithstanding any provision in this
Plan to the contrary, distributions to “key employees,” as such term is defined
under Section 409A of the Internal Revenue Code, shall not commence until at
least a date six months and one day from date on which the Participant separates
from service with the Company and all majority-owned subsidiaries of the
Company; provided, however, that such a delay in commencement of payments shall
not apply to distributions resulting from death, disability, unforeseeable
emergency or change in control.
     (c) Scope of Elections. The elections under this Section 7 shall apply to
all amounts credited to a Participant’s Account.
     (d) Permitted Changes.

  (i)   Acceleration of Payment. Except as provided herein or as permitted by
Section 409A of the Internal Revenue Code, a Participant may not elect to modify
an existing election to accelerate the time or form of payment.

  (ii)   Election to Further Defer Payment. Subject to approval by the Plan
Administrator and in a form consistent with Section 409A of the Internal Revenue
Code, a Participant may change the payment form or date elected for distribution
with respect to an existing election by properly completing a form provided by
the Plan Administrator provided that:

  (A)   the first payment date under the new election is at least five years
after the date payment would have begun under the original election;

  (B)   such election is filed with the Plan Administrator at least twelve
months before the first payment is due under the election to be modified; and

  (C)   the modified election does not take effect until at least twelve months
after the modification is made.

     7.2 Death.
     (a) If a Participant dies before payment or complete distribution (in the
case of installment payouts) of his or her Account, all amounts credited to the
Participant’s Account shall be paid to the Participant’s designated Beneficiary,
according to the Participant’s distribution election.

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     (b) A Participant may designate a Beneficiary by notifying the Plan
Administrator in writing, at any time before Participant’s death, on a form
prescribed by the Plan Administrator for that purpose. A Participant may revoke
any Beneficiary designation or designate a new Beneficiary at any time without
the consent of a Beneficiary or any other person. If no Beneficiary is
designated or no Beneficiary survives the Participant, payment shall be made to
the Participant’s surviving spouse, or, if none, to the Participant’s estate.
     7.3 Unforeseeable Emergency. If a Participant experiences an unforeseeable
emergency, the Plan Administrator, in its sole discretion, may pay to the
Participant only that portion, if any, of the Participant’s Account that the
Plan Administrator determines is necessary to satisfy such emergency, including
any amounts necessary to pay any federal, state or local income taxes reasonably
anticipated to result from the distribution. A Participant requesting a
distribution due to an unforeseeable emergency shall apply for the distribution
in writing using a form prescribed by the Plan Administrator for that purpose
and shall provide such additional information as the Plan Administrator may
require. For purposes of the Plan, an “unforeseeable emergency” means a severe
financial hardship resulting from:
     (a) Illness or accident of the Participant, his or her spouse, or a
dependent of the Participant;
     (b) Loss of Participant’s property due to casualty; or
     (c) Any other similar extraordinary and unforeseeable circumstance arising
from events beyond the Participant’s control that constitutes an unforeseeable
emergency within the meaning assigned that term by Section 409A of the Internal
Revenue Code.
     7.4 Taxes. Income taxes and other taxes payable with respect to an Account
shall be deducted from such Account. All federal, state or local taxes that the
Plan Administrator determines are required to be withheld from any payments made
pursuant to this Article 7 shall be withheld.
ARTICLE 8
PLAN ADMINISTRATION
     8.1 Plan Administration and Interpretation. The Plan Administrator shall
oversee the administration of the Plan. The Plan Administrator shall have
complete control and authority to determine the rights and benefits and all
claims, demands and actions arising out of the provisions of the Plan of any
Participant, Beneficiary, deceased Participant, or other person having or
claiming to have any interest under the Plan. Benefits under the Plan shall be
paid only if the Plan Administrator decides in its discretion that the Eligible
Employee, Participant or

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Beneficiary is entitled to them. Notwithstanding any other provision of the Plan
to the contrary, the Plan Administrator shall have complete discretion to
interpret the Plan and to decide all matters under the Plan. Such interpretation
and decision shall be final, conclusive and binding on all Participants and any
person claiming under or through any Participant, in the absence of clear and
convincing evidence that the Plan Administrator acted arbitrarily and
capriciously. Any individual serving as Plan Administrator who is a Participant
shall not vote or act on any matter relating solely to himself or herself. When
making a determination or calculation, the Plan Administrator shall be entitled
to rely on information furnished by a Participant, a Beneficiary, the Employer
or a trustee (if any). The Plan Administrator shall have the responsibility for
complying with any reporting and disclosure requirements of ERISA.
     8.2 Powers, Duties, Procedures. .The Plan Administrator shall have such
powers and duties, may adopt such rules and tables, may act in accordance with
such procedures, may appoint such officers or agents, may delegate such powers
and duties, may receive such reimbursements and compensation, and shall follow
such claims and appeal procedures with respect to the Plan as the Plan
Administrator may establish.
     8.3 Information. To enable the Plan Administrator to perform its functions,
the Employer shall supply full and timely information to the Plan Administrator
on all matters relating to the compensation of Participants, their employment,
retirement, death, termination of employment, and such other pertinent facts as
the Plan Administrator may require.
     8.4 Indemnification of Plan Administrator. The Employer agrees to indemnify
and to defend to the fullest extent permitted by law any director, officer or
employee who serves as Plan Administrator (including any such individual who
formerly served as Plan Administrator) against all liabilities, damages, costs
and expenses (including reasonable attorneys’ fees and amounts paid in
settlement of any claims approved by the Employer in writing in advance)
occasioned by any act or omission to act in connection with the Plan, if such
act or omission is in good faith.
ARTICLE 9
AMENDMENT AND TERMINATION
     9.1 Authority to Amend and Terminate. Subject to Section 9.2, the Plan
Committee shall have the right to amend or terminate the Plan at any time. If
the Plan is terminated and a trust is established (as described in
Section 10.1), the trust will pay benefits hereunder as they become due as if
the Plan had not terminated.
     9.2 Existing Rights. No amendment or termination of the Plan shall
adversely affect the rights of any Participant with respect to amounts that have
been credited to his or her Account prior to the later of the date such
amendment or termination is adopted or effective.

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ARTICLE 10
MISCELLANEOUS
     10.1 No Funding. The Company intends that the Plan constitute an “unfunded”
plan for tax purposes and for purposes of Title I of ERISA; provided that the
Plan Administrator may authorize the creation of trusts and deposit therein cash
or other property, or make other arrangements to meet the Company’s obligations
under the Plan, and further provided that such a trust shall be established upon
a Change in Control, if none has previously been established, and the Company
shall make a contribution to such trust effective as of the date of the Change
in Control in an amount equal to the sum of the value of all Participant
Accounts (including deemed investment gains) under the Plan as of such date and
all contributions made to the Trust as of the date of the Change in Control
shall thereafter be irrevocable until all Accounts under the Plan have been paid
in full. Such trusts or other arrangements shall be consistent with the unfunded
status of the Plan, unless the Plan Administrator otherwise determines with the
consent of each Participant. In the event that such a trust or other arrangement
is established, any Matching Allocations under the Plan may be made in cash or
in property (either in part or in whole), including common stock of the Company.
     10.2 General Creditor Status. The Plan constitutes a mere promise by the
Company to make payments in accordance with the terms of the Plan and
Participants and Beneficiaries shall have the status of general unsecured
creditors of the Company. Nothing in the Plan will be construed to give any
employee or any other person rights to any specific assets of the Company or of
any other person.
     10.3 Non-assignability. None of the benefits, payments, proceeds or claims
of any Participant or Beneficiary shall be subject to any claim of any creditor
of any Participant or Beneficiary and, in particular, the same shall not be
subject to attachment or garnishment or other legal process by any creditor of
such Participant or Beneficiary, nor shall any Participant or Beneficiary have
any right to alienate, anticipate, commute, pledge, encumber or assign any of
the benefits or payments or proceeds that he or she may expect to receive,
contingently or otherwise under the Plan.
     10.4 Limitation of Participant’s Rights. Nothing contained in the Plan
shall confer upon any person a right to be employed or to continue in the employ
of an Employer, or to interfere, in any way, with an Employer’s right to
terminate the employment of a Participant in the Plan at any time, with or
without cause.
     10.5 Participants Bound. Any action with respect to the Plan taken by the
Plan Administrator or a trustee (if any), or any action authorized by or taken
at the direction of the Plan Administrator or a trustee (if any), shall be
conclusive upon all Participants and Beneficiaries entitled to benefits under
the Plan.
     10.6 Satisfaction of Claims; Unclaimed Benefits. Any payment to any
Participant or Beneficiary in accordance with the provisions of the Plan shall,
to the extent thereof, be in full satisfaction of all claims under the Plan
against the Employer, the Plan Administrator and a trustee (if any) under the
Plan, and the Plan Administrator

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may require such Participant or Beneficiary, as a condition precedent to such
payment, to execute a receipt and release to such effect. If any Participant or
Beneficiary is determined by the Plan Administrator to be incompetent by reason
of physical or mental disability (including minority) to give a valid receipt
and release, the Plan Administrator may cause the payment or payments becoming
due to such person to be made to another person for his or her benefit without
responsibility on the part of the Plan Administrator, the Employer or a trustee
(if any) to follow the application of such funds. In the case of a benefit
payable on behalf of a Participant, if the Plan Administrator is unable to
locate the Participant or beneficiary to whom such benefit is payable, upon the
Plan Administrator’s determination thereof, such benefit shall be forfeited to
the Company. 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 restored to the Plan by
the Company.
     10.7 Governing Law and Severability. The Plan shall be construed,
administered, and governed in all respects under and by the laws of the State of
Texas. If any provision is held by a court of competent jurisdiction to be
invalid or unenforceable, the remaining provisions hereof shall continue to be
fully effective.
     10.8 Not Contract of Employment. The adoption and maintenance of the Plan
shall not be deemed to be a contract between the Company 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
Company or to restrict the right of the Company to discharge any person at any
time nor shall the Plan be deemed to give the Company the right to require any
person to remain in the employ of the Company or to restrict any person’s right
to terminate his employment at any time.
     10.9 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.
     10.10 Headings. Headings and subheading in the Plan are inserted for
convenience only and are not to be considered in the construction of the
provisions hereof.

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