Exhibit 10.3(a)

 

NABORS INDUSTRIES, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

 

 

 

Amended and Restated Effective as of April 1, 2017

 

 

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TABLE OF CONTENTS

 

 

 

 

ARTICLE

PAGE

 

 

 

 

I

–

Definitions and Construction

I-1

 

 

 

 

II

–

Participation

II-1

 

 

 

 

III

–

Account Credits and Allocations of Income or Loss

III 1

 

 

 

 

IV

–

Deemed Investment of Funds

IV-1

 

 

 

 

V

–

Determination of Vested Interest and Forfeitures

V-1

 

 

 

 

VI

–

In-Service Withdrawals and Loans

VI-1

 

 

 

 

VII

–

Benefit Payment

VII-1

 

 

 

 

VIII

–

Administration of the Plan

VIII-1

 

 

 

 

IX

–

Administration of Funds

IX-1

 

 

 

 

X

–

Nature of the Plan

X-1

 

 

 

 

XI

–

Miscellaneous

XI-1

 

 

-i-

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NABORS INDUSTRIES, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

 

W I T N E S S E T H :

WHEREAS,  Nabors Industries, Inc. (the “Company”)  has heretofore
established the Nabors Industries, Inc. Executive Deferred Compensation Plan,
hereinafter referred to as the “Plan,” to aid certain of its executive employees
in making more adequate provision for their retirement; and

WHEREAS, the Company desires to amend the Plan in certain respects and to
restate the Plan in its entirety, intending thereby to provide an uninterrupted
and continuing program of benefits.

NOW THEREFORE, the Plan is hereby amended and restated in its entirety as
follows, with no interruption in time, effective as of April 1, 2017, except as
otherwise provided herein:

 

 

 

 

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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)       Account:  The account established for each Participant’s benefit under
Article III, including the amounts credited thereto.

(2)       Affiliate:  Each trade or business (whether or not incorporated) that
together with the Company would be deemed to be a “single employer” within the
meaning of subsections (b) or (c) of Section 414 of the Code, in each case,
determined by application of an 80% control standard.    

(3)       As soon as administratively practicable:  For purposes of benefit
distributions, a date of distribution that is as soon as administratively
practicable, as determined by the Board, following a permissible payment event,
which shall occur no later than the 90th day following the date of the
permissible payment event and in no event shall a Participant or his Beneficiary
be permitted to designate the taxable year of the payment.

(4)       Beneficiary:  The person or entity who, pursuant to Section 7.4, will
receive payment of a Participant’s benefit in the event of such
Participant’s death.

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

(6)       Bonus Agreement:  An employment agreement or deferred bonus agreement
between an Eligible Employee and the Employer that provides for participation in
a “deferred bonus program.”

(7)       Bonus Agreement Deferrals:  Deferrals made by the Employer on a
Participant’s behalf pursuant to Section 3.1.

(8)       Bonus Deferrals:  Deferrals made by the Employer on a Participant’s
behalf pursuant to Article III, which may be Bonus Agreement Deferrals or
Discretionary Bonus Deferrals.

(9)       Cause:  Cause for termination of a Participant’s employment with the
Employer, as defined in such Participant’s Bonus Agreement, or, in the case of a
Participant who is not a party to a Bonus Agreement:   (i) a material act or
acts of dishonesty or disloyalty by the Participant which could or has adversely
affected the Employer or the Company; (ii) the Participant’s breach of any of
the Company’s personnel policies which, if correctable, remains uncorrected for
90 days following written notice specifying such breach given to the Participant
by the Board; (iii) the Participant’s gross negligence or willful misconduct in
performance of the duties and services required of him in his position,
including any intentional acts of discrimination or harassment; (iv) the
Participant’s conviction of any felony; (v) the Participant’s conviction of any
crime involving moral turpitude; or (vi) the Participant’s act or acts which are
detrimental to the image or reputation of the Employer

I-1

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or the Company or acts which did or could result in material financial loss to
the Employer or the Company.

(10)     Change in Control:  A “change in control event” within the meaning of
Treasury Regulation § 1.409A-3(i)(5).

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

(12)     Company:  Nabors Industries, Inc.

(13)     Constructive Termination Without Cause:  A Participant’s termination of
his employment with the Employer under circumstances constituting a
“Constructive Termination Without Cause,” as defined in his Bonus Agreement.

(14)     Disability:  A Participant’s Disability as defined under his Bonus
Agreement, or, in the case of a Participant who is not a party to a Bonus
Agreement, the Participant’s becoming incapacitated or disabled by accident,
sickness or other circumstance which creates an impairment (despite reasonable
accommodation) that renders him mentally or physically incapable of performing
the duties and services required of him hereunder for a period of at least six
months during any 12-month period as determined in good faith by the Plan
Administrator.

(15)     Discretionary Bonus Deferrals:  Deferrals made by the Employer on a
Participant’s behalf pursuant to Section 3.2.

(16)     Effective Date:  April 1, 2017 as to this amendment and
restatement.  The original effective date of the Plan was December 31, 2008.

(17)     Eligible Employee:  Each employee of the Employer who is selected by
the Board for participation in the Plan.

(18)     Employer:  The Company and any other entity designated by the Plan
Administrator as eligible to participate in the Plan pursuant to the provisions
of Section 2.3.

(19)     ERISA:   The Employee Retirement Income Security Act of 1974, as
amended.

(20)     FICA Amount:  The term “FICA Amount” has the meaning set forth in
Section 7.8(c).

(21)     Funds:  The investment funds, if any, designated from time to time by
the Plan Administrator for the deemed investment of Accounts pursuant to Section
4.1.

(22)     Interest Credit Option:  A Fund made available by the Plan
Administrator pursuant to Section 4.1(a) that provides a fixed rate of interest
that is established, and subject to change from time to time, by the Company.

(23)     In-Service Payment Date:  The date, if any, specified in a
Participant’s Bonus Agreement or at the time of a Discretionary Bonus Deferral
is credited to a Participant’s Account (or otherwise determined in accordance
with Section 3.1 or 3.2, as applicable) for payment of

I-2

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the Participant’s Vested Interest under the Plan (or, with respect to any Bonus
Agreement entered into on or after March 15, 2009, payment of the Participant’s
Vested Interest in a specified Subaccount under the Plan) while the Participant
remains employed by the Employer or one of its Affiliates.

(24)     Noncompetition Covenants:  The non-competition and non-solicitation
covenants included in a Participant’s Bonus Agreement, Confidentiality and
Noncompetition Agreement or other written agreement, if any, with such
Participant’s Employer.

(25)     Other Arrangements:  The term “Other Arrangements” has the meaning set
forth in Section 11.5(b)(ii)(C).

(26)     Other Taxes:  The term “Other Taxes” has the meaning set forth in
Section 7.8(e).

(27)     Participant:  Each Eligible Employee for whom a Bonus Deferral has been
made pursuant to Section 3.1.

(28)     Plan:  The Nabors Industries, Inc. Executive Deferred Compensation
Plan, as amended from time to time.

(29)     Plan Administrator:  The person, persons or entity designated by the
Board to administer the Plan.

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

(31)     Specified Employee:  An individual who on the date of his Termination
of Service is considered a “key employee” within the meaning of Section 416(i)
of the Code (applied in accordance with the Treasury Regulations promulgated
thereunder and without regard to subparagraph (5) thereof) if, as of the date of
his Termination of Service, the Company or any Affiliate is publicly traded on
an established securities market or otherwise.  The identification of Specified
Employees for purposes of distributions upon Termination of Service pursuant to
Article VII shall be made in accordance with the general requirements of Section
409A(a)(2)(B)(i) of the Code pursuant to any method elected by the Plan
Administrator or, if no such election is made, under the default rules under
such Code Section.

(32)     Subaccount:  A subaccount established under the Participant’s Account
to which a specified Bonus Agreement Deferral or Discretionary Bonus Deferral is
credited.  Reference to an Account shall include all Subaccounts included in
such Account unless otherwise provided herein.

(33)     Termination of Service:  The termination of a Participant’s employment
with the Employer and all Affiliates for any reason whatsoever or for no reason
at all.  Notwithstanding anything to the contrary herein, a Participant shall
not be considered to have incurred a Termination of Service for purposes of the
Plan if his termination does not constitute a “separation from service” within
the meaning of Section 409A(a)(2)(A)(i) of the Code.    

I-3

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(34)     Trust:  The trust established under the Trust Agreement.

(35)     Trust Agreement:  The agreement entered into between the Employer and
the Trustee pursuant to Article X.

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

(37)     Trustee:  The trustee or trustees qualified and acting under the Trust
Agreement at any time.

(38)     Vested Interest:  The portion of a Participant’s Account which,
pursuant to the Plan, is nonforfeitable.

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       References to Statutes and Regulations.  References herein to
provisions of the Code and ERISA or the regulations promulgated thereunder shall
include any successor statute or regulation and any applicable authoritative
guidance promulgated thereunder.

1.4       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.

 

 

I-4

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II.

Participation

2.1       Participation.

(a)       The Board, in its sole discretion, shall select and notify those
management or highly compensated employees of the Employer who shall become
Eligible Employees.  An Eligible Employee shall become a Participant upon the
crediting by the Employer of a Bonus Deferral to his Account pursuant to Article
III.  Notwithstanding the foregoing, each Eligible Employee who has entered into
a Bonus Agreement with an Employer shall become a Participant upon the effective
date of such agreement.

(b)       Subject to the provisions of Section 2.2, a Participant shall remain
eligible to receive Bonus Deferrals hereunder for each Plan Year following his
commencement of participation in the Plan until his Termination of Service.

2.2       Cessation of Active Participation.  Notwithstanding any provision
herein to the contrary, an Eligible Employee who has become a Participant shall
cease to be eligible to receive Bonus Deferrals hereunder effective as of any
date designated by the Plan Administrator; provided, however, that an Eligible
Employee who is party to a Bonus Agreement shall be eligible to receive Bonus
Agreement Deferrals under the Plan as provided in his Bonus Agreement.  Any such
Plan Administrator action shall be communicated to the affected individual prior
to the effective date of such action.  Such an individual may again become
eligible to receive Bonus Deferrals hereunder as determined by the Board in its
sole discretion.

2.3       Participating Employers.  It is contemplated that other entities may
be designated by the Plan Administrator as eligible to participate in the Plan
and thereby become an Employer.  Any such entity, whether or not presently
existing, may become an Employer hereunder by written designation of the Plan
Administrator delivered to the Secretaries of the Company and the designated
Employer.  Such written designation shall specify the effective date of the
Employer’s participation and may incorporate specific provisions relating to the
operation of the Plan that apply to such Employer and its Eligible Employees. 
Except as otherwise provided herein and in an Employer’s written designation of
participation pursuant to this Section 2.3, the provisions of the Plan shall
apply separately and equally to each Employer and its employees in the same
manner as is expressly provided for the Company and its employees, except that
the power to appoint or otherwise affect the Plan Administrator and the Trustee
and the power to amend or terminate the Plan or amend the Trust Agreement shall
be exercised by the Board alone.  Transfer of employment among Employers and
Affiliates shall not be considered a Termination of Service hereunder and
service with one Employer shall be considered service with all others.  Any
Employer may, by appropriate action of its officers without the need for
approval of its board of directors (or noncorporate counterpart) or the Plan
Administrator or the Board, terminate its participation in the Plan.  Moreover,
the Board may, in its discretion, terminate an Employer’s Plan participation at
any time.  Notwithstanding the foregoing, the termination of an Employer’s Plan
participation may be effective only as of the last day of the last payroll
period beginning during a Plan Year if the Employer remains an Affiliate of the
Company following such termination (provided, however, that any Bonus Deferral
already in effect for such Plan Year shall remain in effect, even if the

II-1

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crediting of the amount to an Account with respect to such Bonus Deferral occurs
after such Plan Year), or if the Employer does not remain as an Affiliate of the
Company at such time, the termination shall be effective only at a time that
complies with Section 409A of the Code.  Further, notwithstanding the foregoing,
distributions pursuant to any such termination of an Employer’s participation in
the Plan shall be subject to the provisions of Section 11.5 and Treasury
Regulation § 1.409A-3(j)(4)(ix). 

 

 

II-2

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III.

Account Credits and Allocations of Income or Loss

3.1       Bonus Agreement Deferrals.  For each Participant who is a party to a
Bonus Agreement, as soon as practicable following each date specified by such
Bonus Agreement, the Employer shall credit such Participant’s Account with a
Bonus Agreement Deferral in the amount specified in the Bonus Agreement.  Any
Bonus Agreement Deferral credited by the Employer to the Participant’s Account
pursuant to this Section 3.1 with respect to a particular Plan Year shall be
credited to a separate Subaccount established within his Account with respect to
such Plan Year.  Each such Subaccount shall be referred to by a distinct name
chosen by the Plan Administrator, relating to the Plan Year for which the Bonus
Agreement Deferral was made pursuant to the Participant’s Bonus Agreement (such
as the “2008 Bonus Agreement Deferral Subaccount”).  Each such Subaccount shall
be subject to separate deemed investment designations pursuant to Section 4.1.
 Each Bonus Agreement entered into on or after March 15, 2009 may specify an
In-Service Payment Date upon which the Subaccount to which such Bonus Agreement
Deferral will be credited shall be paid (except as otherwise provided pursuant
to Article VII).  If no such date is specified in such Bonus Agreement at the
time it is entered into, such Subaccount and any earnings related thereto will
be distributed at the Participant’s Termination of Service (except as otherwise
provided pursuant to Article VII).

3.2       Discretionary Bonus Deferrals.  As of any date selected by the
Employer, the Employer may credit a Participant’s Account with one or more
Discretionary Bonus Deferral(s) in such amount(s), if any, as the Employer shall
determine in its sole discretion.  Such credits may be made on behalf of some
Participants but not others, and such credits may vary among individual
Participants in amount.  Any amount credited by the Employer to a Participant’s
Account pursuant to this Section 3.2 shall be credited to a separate Subaccount
within his Account.  Each such Subaccount shall be referred to by a distinct
name chosen by the Plan Administrator (such as the “2008 Discretionary Bonus
Deferral Subaccount” for a Discretionary Bonus Deferral credited on a date
during calendar year 2008).  At each time the Employer credits a Participant’s
Account with a Discretionary Bonus Deferral, the Employer may specify an
In-Service Payment Date upon which the Subaccount to which such Discretionary
Bonus Deferral will be credited shall be paid (except as otherwise provided
pursuant to Article VII).  If no such date is specified at the time such
Discretionary Bonus Deferral is credited pursuant to this Section, such
Subaccount will be distributed at the Participant’s Termination of
Service (except as otherwise provided pursuant to Article VII).

3.3       Valuation of Accounts.  All amounts credited to an Account shall be
deemed invested in accordance with Article IV on the date such amount is
credited to such Account, and the balance of each Account shall reflect the
result of the daily pricing of the assets in which such Account is deemed
invested from the time of such crediting until the time of distribution.  
 Notwithstanding the foregoing, in the case of any Subaccounts  within an
Account that are invested in the Interest Credit Option, interest shall be
credited to such Subaccounts at the frequency established by the Plan
Administrator in its discretion and such Subaccount shall not be adjusted to
reflect any other amounts.

 

 

III-1

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IV.

Deemed Investment of Funds

4.1       Participant Directions.

(a)       Each Participant may designate, in accordance with the procedures
established from time to time by the Plan Administrator, the manner in which the
amounts allocated to his Account or Subaccounts shall be deemed to be invested
from among the Funds made available from time to time for such purpose by the
Plan Administrator.  Such Participant may be permitted to designate one of such
Funds for the deemed investment of all the amounts allocated to his Account or
he may be permitted to split the deemed investment of the amounts allocated to
his Account or Subaccounts between such Funds in such increments as the Plan
Administrator may prescribe.  If a Participant fails to make investment
designations with respect to the deemed investment of his Account or any
Subaccount thereunder,  then his Account or such Subaccount shall be deemed to
be invested in the Fund or Funds designated by the Plan Administrator from time
to time in a uniform and nondiscriminatory manner. 

(b)       A  Participant may change his deemed investment designation for future
amounts to be allocated to his Account or Subaccounts.  Any such change shall be
made in accordance with the procedures established by the Plan Administrator and
the frequency of such changes may be limited by the Plan Administrator.

(c)       A  Participant may elect to convert his deemed investment designation
with respect to the amounts already allocated to his Account or
Subaccounts.  Any such conversion shall be made in accordance with the
procedures established by the Plan Administrator and the frequency of such
conversions may be limited by the Plan Administrator.

(d)       Notwithstanding anything to the contrary in Sections 4.1(a), 4.1(b)
and 4.1(c), if a Participant designates the Plan’s Interest Credit Option with
respect to a Subaccount established to hold a particular year’s Bonus Agreement
Deferrals or Discretionary Bonus Deferrals on his behalf,  all such amounts in
such Subaccount must be designated for investment in the Interest Credit Option.

 

 

 

IV-1

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V.

Determination of Vested Interest and Forfeitures

5.1       Bonus Agreement Deferrals.    

(a)       With respect to a Bonus Agreement entered into prior to March 15,
2009, a Participant shall have a 100% Vested Interest in the portion of his
Account attributable to Bonus Agreement Deferrals pursuant to such Bonus
Agreement and all earnings attributable thereto. 

(b)       With respect to a Bonus Agreement entered into on or after March 15,
2009 and prior to April 1, 2014, a Participant shall have a 100% Vested Interest
in the Subaccount to which a particular Bonus Agreement Deferral has been
credited pursuant to such Bonus Agreement (i) on the In-Service Payment Date
specified with respect to such Bonus Agreement Deferral in such Bonus
Agreement or (ii) if no In-Service Payment Date with respect to a particular
Bonus Agreement Deferral has been specified in the Bonus Agreement at the time
it is entered into, the Subaccount into which such Bonus Agreement Deferral was
credited will vest upon the fifth anniversary of the date that the Bonus
Agreement is executed and such anniversary date shall be deemed to be the
In-Service Payment Date with respect to the Subaccount to which such Bonus
Agreement Deferral is credited.

(c)       With respect to a Bonus Agreement entered into on or after April 1,
2014 and prior to April 1, 2017,  (i) a Participant shall have a 100% Vested
Interest in the Subaccount to which a particular Bonus Agreement Deferral has
been credited pursuant to such Bonus Agreement (x) on the date specified with
respect to such Bonus Agreement Deferral in such Bonus Agreement or (y) if no
vesting date with respect to a particular Bonus Agreement Deferral has been
specified in the Bonus Agreement at the time it is entered into, on the third
anniversary of the date that the Bonus Agreement is executed; and (ii) the
applicable vesting date determined pursuant to clause (i) of this Section 5.1(c)
shall be deemed to be the In-Service Payment Date with respect to the Subaccount
to which such Bonus Agreement Deferral is credited.

(d)       With respect to a Bonus Agreement entered into on or after April 1,
2017, a Participant shall have a 100% Vested Interest in the Subaccount to which
a particular Bonus Agreement Deferral has been credited pursuant to such Bonus
Agreement (i) on the date(s) specified with respect to such Bonus Agreement
Deferral in such Bonus Agreement or (ii) if no vesting date(s) with respect to a
particular Bonus Agreement Deferral has been specified in such Bonus Agreement
at the time it is entered into, determined based upon the annual anniversary of
the date that such Bonus Agreement is executed in accordance with the following
schedule:

V-1

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Annual Anniversary

Vested Interest

 

 

Less than 5

0%

 

 

5

50%

 

 

6

60%

 

 

7

70%

 

 

8

80%

 

 

9

90%

 

 

10 or more

100%

 

 

 

The Subaccount described in the preceding sentence shall not have an In-Service
Payment Date unless such a date has been specified in the applicable Bonus
Agreement.

5.2       Discretionary Bonus Deferrals.  On each occasion, if any, upon which
the Employer has credited a Participant with a Discretionary Bonus Deferral
under Section 3.2, the Employer shall designate the vesting schedule applicable
to the separate Subaccount to which such amount shall have been credited.  A
Participant’s Vested Interest in such separate Subaccount shall be determined in
accordance with the vesting schedule so designated.  If no vesting schedule
shall have been designated with respect to a particular Subaccount established
prior to April 1, 2017 with respect to a Discretionary Bonus Deferral credited
pursuant to Section 3.2, a Participant shall have a 100% Vested Interest in such
Subaccount upon the third anniversary of the date such Discretionary Bonus
Deferral was so credited and such anniversary date shall be deemed to be the
In-Service Payment Date with respect to such Subaccount.  If no vesting schedule
shall have been designated with respect to a particular Subaccount established
on or after April 1, 2017 with respect to a Discretionary Bonus Deferral
credited pursuant to Section 3.2, a Participant shall obtain a Vested Interest
in such Subaccount based upon the annual anniversary of the date such
Discretionary Bonus Deferral was so credited in accordance with the following
schedule:

 

 

Annual Anniversary

Vested Interest

 

 

Less than 5

0%

 

 

5

50%

 

 

6

60%

 

 

7

70%

 

 

8

80%

 

 

9

90%

 

 

10

100%

 

 

V-2

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The Subaccount described in the preceding sentence shall not have an In-Service
Payment Date unless such a date has been specified by the Employer and
communicated to the Participant in writing at the time the applicable
Discretionary Bonus Deferral is credited to such Subaccount.

5.3       Accelerated Vesting.    Notwithstanding any contrary provisions of
this Article V, a Participant’s Accounts (or Subaccounts, if applicable, as
provided below) shall vest at the time of the following event if such event
occurs earlier than the vesting events described in the preceding provisions of
this Article V:

(a)       A Participant whose Termination of Service with the Employer (i) is
initiated by the Employer for reasons other than Cause, (ii) occurs in a
Constructive Termination Without Cause (only if and to the extent provided in
such Participant’s Bonus Agreement) or (iii) occurs on account of the
Participant’s death or Disability shall have a 100% Vested Interest in his
Account upon such termination.

(b)       A Participant who has not incurred a Termination of Service shall have
a 100% Vested Interest in his Account immediately prior to his Employer becoming
insolvent (as defined in Article X), in which case, such Participant will have
the same rights as a general creditor of the Employer with respect to his or her
Account balance.

5.4       Forfeitures.

(a)       A  Participant who has a Vested Interest in any Subaccount that is
less than 100% as of the date of his Termination of Service shall forfeit to the
Employer the unvested portion of such Subaccount as of such date.

(b)       Notwithstanding anything to the contrary in Section 5.1 or Section
5.2, in the event that the Participant’s employment with the Employer is
terminated by the Employer for Cause at any time prior to the payment of the
Participant’s Plan benefit, the Participant shall forfeit to the Employer his
entire interest in his Account as of the date of such termination; (2) with
respect to the portion, if any, of the Participant’s Account attributable to
Bonus Agreement Deferrals, if the Participant terminates his employment with the
Employer and its Affiliates prior to an applicable In-Service Payment Date
relating to such Bonus Agreement Deferrals, the Participant shall forfeit to the
Employer such portion of his Account as of the date of such termination;
provided, however, that clause (2) of this Section 5.4(b) shall not be
applicable to the extent that such Participant’s Bonus Agreement(s) provide for
accelerated vesting or payment of Plan benefits in connection with his
Constructive Termination Without Cause and the Participant terminates his
employment under circumstances constituting a Constructive Termination Without
Cause in accordance with his Bonus Agreement(s); and (3) with respect to the
portion, if any, of a Participant’s Account attributable to any Discretionary
Bonus Deferral, if the Participant terminates his employment with the Employer
and its Affiliates prior to an applicable In-Service Payment Date with respect
to such Discretionary Bonus Deferral, the Participant shall forfeit to the
Employer such portion of his Account as of the date of such termination unless
specifically provided to the contrary in writing by the Employer at the time
such Discretionary Bonus Deferral was credited to his or her Account pursuant to
Section 3.2.

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(c)       Notwithstanding the preceding provisions of this Article V, the vested
portion of a Participant’s Account may be forfeited to the Employer pursuant to
the provisions of Section 7.5 or 7.7.

5.5       Transfers of Employment.  Notwithstanding anything to the contrary
herein, transfers of employment among Employers and their Affiliates shall not
be considered a Termination of Service.   Continuous service with the Employer
and any of its Affiliates shall constitute continuous service for purposes of
determining a Participant’s Vested Interest in his Account.

 

 

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VI.

In-Service Withdrawals and Loans

6.1       Restrictions on In-Service Withdrawals and Loans.  Except in
connection with distributions relating to applicable In-Service Payment Dates,
Participants shall not be permitted to make withdrawals from the Plan prior to
incurring a Termination of Service.  Participants shall not, at any time, be
permitted to borrow from the Trust Fund.

 

 

VI-1

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VII.

Benefit Payment

7.1       Amount of Benefit.  Upon the earliest to occur of (a) a Participant’s
In-Service Payment Date or (b) a Participant’s Termination of Service, such
Participant, or, in the event of the death of a Participant while employed by
the Employer or an Affiliate, such Participant’s designated Beneficiary, shall
be entitled to a benefit equal in value to such Participant’s Vested Interest in
the balance in his Account as of the date the payment of such benefits is to
occur pursuant to Section 7.2.  Notwithstanding the foregoing, with respect to a
Participant who first entered into a Bonus Agreement with the Employer on or
after March 15, 2009 or whose Account was first credited with a Discretionary
Bonus Deferral on or after such date, the amount of any benefit payable with
respect to a particular In-Service Payment Date shall be limited to the value of
the Participant’s Vested Interest in the balance of his Subaccount(s) to which
such In-Service Payment Date relates as of the date the payment of such benefits
is to occur pursuant to Section 7.2.

7.2       Time of Payment.

(a)       Except as provided in Section 7.2(c), payment of a Participant’s
benefit under Section 7.1 shall be made on the earliest to occur of such
Participant’s In-Service Payment Date or, subject to the delayed payment
requirement for Specified Employees described in Section 7.2(b), Termination of
Service.  A payment will be considered to have been paid at the time provided in
the preceding sentence if payment is made as soon as administratively
practicable (as defined in Section 1.1(3)) following such payment time.

(b)       Notwithstanding anything to the contrary herein,  but subject to
Section 7.2(c), in the case of a Participant who is a Specified Employee, a
distribution upon such Participant’s Termination of Service (other than a
termination in the event of his death) shall be made on the date that is six
months after the date of such Participant’s Termination of Service (or, if
earlier, as soon as administratively practicable following the death of the
Participant).

(c)       If allowed by the Plan Administrator, a Participant may irrevocably
elect to delay the payment date pertaining to his Account or Subaccount(s), as
applicable, for a minimum period of five years from the originally scheduled
date of payment, provided that such election to delay payment (i) is not
effective until at least 12 months after the date on which the election is made
and (ii) in the case of an election that relates to an In-Service Payment Date,
is made at least 12 months before such In-Service Payment Date.  A re-deferral
election pursuant to this Section 7.2(c) must be made in accordance with the
procedures and rules established by the Plan Administrator, which shall be
construed and administered in accordance with Section 409A of the Code.

(d)       Notwithstanding the foregoing provisions of this Section 7.2, in the
event of the death of a Participant (including but not limited to a Specified
Employee) prior to the distribution of his Account, the remaining balance of the
Participant’s Vested Interest in his Account shall be paid to his designated
Beneficiaries upon his death.  A payment will be considered to have been paid at
the time provided in the preceding sentence if payment is made as

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soon as administratively practicable (as defined in Section 1.1(3)) following
the Participant’s death.    

7.3       Form of Payment.    A Participant shall receive payment of his benefit
under the Plan as a single lump sum payment; provided, however, that in the case
of a Participant who first entered into a Bonus Agreement with the Employer on
or after March 15, 2009 or whose Account was first credited with a Discretionary
Bonus Deferral on or after such date, payment with respect to each Subaccount
under the Plan to which he is entitled to a benefit shall be paid as a single
lump sum payment.  For purposes of compliance with Section 409A of the Code,
payments to which a Participant may be entitled with respect to each of his
Subaccounts under the Plan shall be considered separate payments. 

7.4       Beneficiaries.

(a)       Each Participant shall have the right to designate the Beneficiary or
Beneficiaries to receive payment of his benefit in the event of his death.  Each
such designation with respect to a Participant shall be made by executing the
Beneficiary designation form prescribed by the Plan Administrator and filing the
same with the Plan Administrator during such Participant’s lifetime.  Any such
designation may be changed at any time by execution of a new designation in
accordance with this Section during such Participant’s lifetime.

(b)       If no such designation is on file with the Plan Administrator at the
time of the death of the Participant or such designation is not effective for
any reason as determined by the Plan Administrator, then the Beneficiary or
Beneficiaries to receive such benefit shall be as follows:

(i)       If a Participant leaves a surviving spouse, his benefit shall be paid
to such surviving spouse;

(ii)      If a Participant leaves no surviving spouse but leaves issue, then his
benefit shall be paid to such issue per stirpes; and

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

7.5       Repayment Obligation for Violation of Noncompetition
Obligations.  Notwithstanding anything to the contrary herein, in the event that
a  Participant violates his Noncompetition Covenant, if any, such Participant
shall be obligated to repay to the Employer the gross amount of his Account
balance paid to him pursuant to the preceding provisions of this Article VII. 
Such payment shall be due on the date that is three business days following any
such violation.  In the event that any Participant who incurs a repayment
obligation pursuant to this Section 7.5 fails to make complete and timely
repayment, such Participant shall also be liable to the Employer for interest at
the then-applicable federal rate for underpayments of tax and shall be obligated
to indemnify the Employer against and hold it harmless from the Employer’s costs
of enforcement of this Section 7.5 (including, without limitation, attorney’s
fees, court costs and expenses related thereto).

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7.6       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 to
Participants or their Beneficiaries 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 and
reimbursed by the Trustee.  Any benefit payments made to a Participant or for
his benefit pursuant to any provision of the Plan shall be debited to such
Participant’s Account.  All benefit payments shall be made in cash to the
fullest extent practicable.

7.7       Unclaimed Benefits.  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
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 (without any adjustment for
earnings or loss after the time of such forfeiture) shall be restored to the
Plan by the Employer and paid in accordance with the Plan.

7.8       Permitted Accelerated Payments.  Notwithstanding anything to the
contrary in the Plan, the Plan Administrator may direct the accelerated payment
of Plan benefits under the following circumstances:

(a)       A  Participant shall be entitled to receive distribution of all or
such portion of the Vested Interest in his Account, in a single lump sum
payment, to the extent necessary for any Federal officer or employee in the
executive branch to comply with an ethics agreement with the Federal government;

(b)       A Participant shall be entitled to receive distribution of all or such
portion of the Vested Interest in his Account, in a single lump sum payment, to
the extent reasonably necessary to avoid the violation of an applicable Federal,
state, local or bona fide foreign ethics law or conflicts of interest law;

(c)       A Participant shall be entitled to receive a distribution of such
portion of  the Vested Interest in his Account, in a single lump sum payment, as
is necessary to pay (i) the Federal Insurance Contributions Act (FICA) tax
imposed under Sections 3101, 3121(a) and 3121(v)(2) of the Code, where
applicable, on Bonus Deferrals (the “FICA Amount”), (ii) the income tax at
source on wages imposed under Section 3401 of the Code, or the corresponding
withholding provisions of applicable state, local, or foreign tax laws as a
result of the payment of the FICA Amount, and (iii) the additional income tax at
source on wages attributable to the pyramiding Section 3401 wages and taxes;
provided, however, that the total payment under this Section 7.8(c) shall not
exceed the aggregate of the FICA Amount and the income tax withholding related
to such FICA Amount;

(d)       A Participant shall be entitled to receive distribution of such
portion of the Vested Interest in his Account, in a single lump sum payment, as
is required to be included in the Participant’s income as a result of the
failure of the Plan to comply with Section 409A of the Code; provided, however,
that such distribution shall not exceed the amount required to be included in
the Participant’s income as a result of such failure;

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(e)       A Participant shall be entitled to receive distribution of all or such
portion of the Vested Interest in his Account, in a single lump sum payment, to
reflect payment of state, local or foreign tax obligations arising from
participation in the Plan that apply to an amount deferred under the Plan before
the amount is paid or made available to the Participant.  Any such payment may
not exceed (i) the amount of such taxes as are due as a result of participation
in the Plan (the “Other Taxes”) and may be made in the form of withholding
pursuant to the provisions of the applicable law or by distribution directly to
the Participant and (ii) the income tax at source on wages imposed under Section
3401 of the Code as a result of the distribution of the Other Taxes and to pay
the additional income tax at source on wages imposed under Section 3401 of the
Code attributable to the payment of such additional Section 3401 wages and Other
Taxes;

(f)       A Participant shall be entitled to receive distribution of all or such
portion of the Vested Interest in his Account, in a single lump sum payment, in
connection with the settlement of an arm’s length bona fide dispute between the
Employer and the Participant as to the Participant’s right to benefits under the
Plan to the extent contemplated under Section 409A of the Code without causing
such distribution to be treated as an impermissible acceleration;

(g)       A  Participant shall be entitled to receive distribution of all or
such portion of the Vested Interest in his Account, in a single lump sum
payment, under any other circumstance permitted under Treasury Regulation §
1.409A-3(j)(4) (except in connection with a qualified domestic relations order)
or any successor regulation thereto or prescribed by the Commissioner of
Internal Revenue in generally applicable guidance published in the Internal
Revenue Bulletin; and

(h)       The Board may direct, in its discretion, that the Vested Interest of
each Participant in his Account under the Plan be distributed in connection with
a termination of the Plan in accordance with Section 11.5.

Any distribution to be made pursuant to Sections 7.8 (a) through (g) shall be
made as soon as administratively practicable (as defined in Section 1.1(3))
following the determination that such distribution should be made.

 

 

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VIII.

Administration of the Plan

8.1       Appointment of Plan Administrator.  The general administration of the
Plan shall be vested in the Plan Administrator which shall be appointed by the
Board and shall consist of one or more persons or entities.  If no such
person(s) or entity is appointed, the Company shall be the Plan Administrator.

8.2       Term, Vacancies, Resignation, and Removal.  Each individual member of
the Plan Administrator shall serve until he resigns, dies, or is removed by the
Board.  At any time during his term of office, an individual member of the Plan
Administrator may resign by giving written notice to the Board and the Plan
Administrator, such resignation to become effective upon the appointment of a
substitute member or, if earlier, the lapse of 30 days after such notice is
given as herein provided.  At any time during his term of office, and for any
reason, a member of the Plan Administrator may be removed by the Board with or
without cause, and the Board may in its discretion fill any vacancy that may
result therefrom.  Any member of the Plan Administrator who is an employee of
the Employer or any Affiliate shall automatically cease to be a member of the
Plan Administrator as of the date he ceases to be employed by the Employer and
all Affiliates, regardless of the reason for such termination.

8.3       Self-Interest of Participants.  No member of the Plan Administrator
shall have any right to vote or decide upon any matter relating solely to
himself under the Plan or to vote in any case in which his individual right to
claim any benefit under the Plan is particularly involved.  In any case in which
a Plan Administrator member is so disqualified to act and the remaining members
cannot agree, the Board shall appoint a temporary substitute member to exercise
all the powers of the disqualified member concerning the matter in which he is
disqualified.

8.4       Plan Administrator Powers and Duties.  The Plan Administrator 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, and
authority:

(a)       To establish, amend, suspend or waive rules, regulations, 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 Plan Administrator;

(b)       To construe in its discretion all terms, provisions, conditions, and
limitations of the Plan;

(c)       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;

(d)       To employ and compensate such accountants, attorneys, investment
advisors, and other agents, employees, and independent contractors as the Plan

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Administrator may deem necessary or advisable for the proper and efficient
administration of the Plan;

(e)       To determine in its discretion all questions relating to eligibility;

(f)       To determine whether and when a Participant has incurred a Termination
of Service, the reason for such Termination of Service, and the extent, if any,
to which such Termination of Service results in an acceleration of any unvested
portion of any of such Participant’s Subaccounts;

(g)       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
Participants and Beneficiaries in obtaining benefits hereunder;

(h)       To receive and review reports from the Trustee as to the financial
condition of the Trust Fund, including its receipts and disbursements; and

(i)        To establish or designate Funds as investment options as provided in
Section 4.1.

8.5       Claims Review.  Claims for Plan benefits and reviews of Plan benefit
claims which have been denied or modified will be processed in accordance with
the written Plan claims procedures established by the Plan Administrator, which
procedures are hereby incorporated by reference as a part of the Plan as such
procedures may be amended from time to time by the Plan Administrator.

8.6       Employer to Supply Information.  The Employer shall supply full and
timely information to the Plan Administrator, including, but not limited to,
information relating to each Participant’s compensation, retirement, death, or
other cause of Termination of Service and such other pertinent facts as the Plan
Administrator 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 Plan Administrator shall be
entitled to rely upon the aforesaid information furnished by the Employer or any
information furnished by a Participant, Beneficiary or the Trustee.

8.7       Indemnity.  To the extent permitted by applicable law, the Company
shall indemnify and hold harmless each individual serving as a member of the
Plan Administrator against any and all expenses, liabilities and claims arising
out of their discharge in good faith of responsibilities under or incident to
the Plan including any such expenses, liabilities and claims as may arise based
upon such individual’s negligence.  Expenses and liabilities arising out of such
individual’s own gross negligence or willful misconduct shall not be covered
under this indemnity.  Expenses against which such individual 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.  This indemnity shall not preclude such further indemnities
as may be available under insurance purchased by the Company or provided by the
Company under any articles of

VIII-2

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incorporation, bylaw, agreement, vote of stockholders or disinterested directors
or otherwise, as such indemnities are permitted under applicable law.

 

 

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IX.

Administration of Funds

9.1       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 Plan Administrator, may be paid by the Employer and,
if not paid by the Employer, shall be paid by the Trustee, at the direction of
the Plan Administrator, from the Trust Fund, if any.

9.2       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 Plan Administrator shall maintain an Account in the name of each
Participant, but the maintenance of an 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 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.  The assets of the Trust Fund shall be invested in such
investments as the Trustee shall determine, in accordance with the terms of the
Trust Agreement.  The Trustee may (but is not required to) consider the
Employer’s or a Participant’s investment preferences when investing the assets
attributable to the Participant’s Account.

 

 

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X.

Nature of the Plan

10.1      Establishment of Trust Fund.  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 a contractual obligation of the Employer which shall be paid
out of the Trust Fund or the Employer’s general assets.  Nevertheless, subject
to the terms hereof and of the Trust Agreement, the Employer shall transfer
money or other property to the Trustee to provide Plan benefits hereunder,
and the Trustee shall pay the Plan benefits to Participants and Beneficiaries
out of the Trust in accordance with the terms of the Plan and the Trust
Agreement as in effect from time to time.  To the extent that the Employer
transfers assets to the Trustee pursuant to the Trust Agreement, the Plan
Administrator may, but need not, establish procedures for the Trustees to invest
the Trust Fund in accordance with each Participant’s designated deemed
investments pursuant to Section 4.1 respecting the portion of the Trust Fund
assets equal to such Participant’s Account.

10.2      Ownership of Trust Fund Assets.  The Employer shall remain the owner
of all assets in the Trust Fund and the assets shall be subject to the claims of
the Employer’s creditors if the Employer ever becomes insolvent.  For purposes
hereof, the Employer shall be considered “insolvent” if (a) the Employer is
unable to pay its debts as such debts become due or (b) the Employer is subject
to a pending proceeding as a debtor under the United Sates 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
Beneficiaries 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
Beneficiaries and hold the Trust Fund for the benefit of the Employer’s general
creditors, and shall determine in the manner 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 and
Beneficiaries.  No Participant or Beneficiary shall have any preferred claim to,
or any beneficial ownership interest in, any assets of the Trust Fund, and, upon
commencement of participation in the Plan, each Participant shall have agreed to
waive his priority credit position, if any, under applicable state law with
respect to the assets of the Trust Fund.

10.3      Limitation on Funding.  Notwithstanding anything to the contrary
herein or in the Trust Agreement, in no event shall money and/or property be
transferred to the Trust if such transfer would result in adverse tax
consequences to a Participant pursuant to Section 409A(b) of the Code.

 

 

X-1

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XI.

Miscellaneous

11.1      No Contract of Employment.  The adoption and maintenance of the Plan
shall not be deemed to be a contract of employment or for other services between
the Employer and any person or to be consideration for the employment of any
person.  Nothing herein contained shall be deemed to (a) give any person the
right to be retained in the employ or other service of the Employer, (b)
restrict the right of the Employer to discharge any person or terminate any
service relationship at any time, (c) give the Employer the right to require
that any person remain in the employ or service of the Employer, (d) restrict
any person’s right to terminate his employment or service relationship with the
Employer at any time, or (e) be a commitment on the part of the Employer to
continue the rate of compensation of a Participant for any period.

11.2      Alienation of Interest Forbidden.  The interest of a Participant or
his Beneficiary or Beneficiaries hereunder may not be sold, transferred,
assigned, or encumbered in any manner, either voluntarily or involuntarily, and
any attempt 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.

11.3      Payments of Benefits to Others.  Notwithstanding anything to the
contrary in Section 11.10, if any Participant or Beneficiary to whom a benefit
is payable under the Plan is unable to care for his affairs because of illness
or accident, any payment due (unless prior claim therefore shall have been made
by a duly qualified guardian or other legal representative) may be paid to the
spouse, parent, brother, or sister, or any other individual deemed by the Plan
Administrator to be maintaining or responsible for the maintenance of such
person.  Any payment made in accordance with the provisions of this Section 11.3
shall be a complete discharge of any liability of the Plan with respect to the
benefit so paid.

11.4      Withholding.  All Bonus 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.

11.5      Amendment and Termination.

(a)      The Board 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 Accounts and in which such Participant has a
100% Vested Interest; provided further, however, that, notwithstanding the
foregoing (and without constituting an impermissible impairment of Participant
rights in violation of this sentence), (i) the Board may make such amendments to
the Plan as are necessary or advisable, as determined by the Board in its
discretion, to enable the Plan and the Accounts of the Participants established
hereunder to comply with the requirements of Section 409A of the Code and
(ii) the Board may decide to amend the Plan to prospectively eliminate
Participants’ rights to make deemed investment designations pursuant to Section
4.1(a)

XI-1

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provided that the Board specifies, at the time of any such elimination, an
alternative method for the crediting of earnings with respect to amounts
allocated to Participants’ Accounts.

(b)      Notwithstanding anything to the contrary, the Board may, in its sole
discretion (and without constituting an impermissible impairment of Participant
rights in violation of Paragraph (a)), terminate the Plan and accelerate the
time and form of payment of all Vested Interests in Accounts under the Plan,
under the following circumstances:

(i)      The Board may terminate and liquidate the Plan within 12 months of a
corporate dissolution taxed under Section 331 of the Code, or with the approval
of a bankruptcy court, provided that the balance of all of the Participants’
Accounts under the Plan are included in the Participants’ respective gross
incomes in the latest of (A) the calendar year in which the Plan termination and
liquidation occurs; (B) the calendar year in which the Participant attains a
100% Vested Interest in such amount, or (C) the first calendar year in which the
payment is administratively practicable;

(ii)     The Board may, in its discretion, terminate and liquidate the Plan in
connection with a Change in Control of the Company (or, with respect to a
Participant who is employed by an Employer other than the Company, a Change in
Control of such Employer), provided that the following requirements are
satisfied:

(A)      The Board (or its appropriate counterpart with respect to any Employer
other than the Company) takes irrevocable action to terminate and liquidate the
Plan within 30 days preceding or 12 months following such Change in Control;

(B)      The Vested Interest of each Participant in his Account under the
Plan and all Other Arrangements is distributed within 12 months following the
date that all necessary actions to terminate and liquidate the Plan and the
Other Arrangements are irrevocably taken; and

(C)      All plans, agreements, methods, programs and other arrangements that
are sponsored by the “service recipient” (within the meaning of Section 409A of
the Code), as determined immediately following such Change in Control, with
respect to which deferrals of compensation are treated as having been deferred
under a single plan under Treasury Regulation § 1.409A-1(c)(2) (collectively,
the “Other Arrangements”), are terminated and liquidated with respect to each
Participant who experienced such Change in Control.  For purposes of this
Section 11.5(b)(ii), the applicable “service recipient” with the discretion to
liquidate and terminate the Plan and the Other Arrangements shall be the
“service recipient” that is primarily liable immediately after the transaction
for the payment of the Plan benefits.

(iii)   The Board may, in its discretion, terminate and liquidate the Plan,
provided that:

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(A)      The termination and liquidation does not occur proximate to a downturn
in the financial health of the Company and all entities that would be considered
a single “service recipient” along with the Company under Section 409A of the
Code;

(B)      Such “service recipient” terminates and liquidates all plans,
agreements, methods, programs and other arrangements sponsored by the service
recipient that would be aggregated with any terminated and liquidated plans,
agreements, methods, programs and other arrangements under Treasury Regulation §
1.409A-1(c) as if there was one service provider that had deferrals of
compensation under every such plan, agreement, method, program and other
arrangement sponsored by the service recipient;

(C)      No payments in liquidation of the Plan are made within 12 months of the
date that the Company takes all necessary action to irrevocably terminate and
liquidate the Plan, other than payments that would be payable under the terms of
such arrangements if the action to terminate and liquidate the Plan had not
occurred;

(D)      All payments are made within 24 months of the date that the Company
takes all necessary action to irrevocably terminate and liquidate the Plan; and

(E)      The Company and all other entities required to be considered a single
“service recipient” within the meaning of Section 409A of the Code do not adopt
any new plan, agreement, method, program or other arrangement described in
Section 11.5(b)(iii)(B) at any time within three years following the date that
the service recipient took all necessary action to irrevocably terminate and
liquidate the Plan.

(iv)      The Board may, in its discretion, terminate and liquidate the Plan
upon such other events or conditions as the Commissioner of Internal Revenue may
prescribe in generally applicable guidance published in the Internal Revenue
Bulletin. 

In the event that the Plan is terminated, the Vested Interest in the balance in
a Participant’s Account shall be paid to such Participant or his Beneficiary in
the manner specified by the Board (but subject to the distribution timing
requirements described above), which may include the payment of a single lump
sum payment in full satisfaction of all of such Participant’s or Beneficiary’s
benefits hereunder. After Participants and their Beneficiaries are paid all Plan
benefits in which they had a 100% Vested Interest, all remaining assets of the
Trust Fund which were not fully vested at the time of the Plan termination shall
be returned to the Employer.

11.6      Severability.  If any provision of the 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.

XI-3

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11.7      Guaranty.  Notwithstanding any provisions of the Plan to the contrary,
in the event any Employer fails to make payment of the benefits due under the
Plan on behalf of its Participants, whether directly or through the Trust, the
Company shall be liable for and shall make payment of such benefits due as a
guarantor of such entity’s obligations hereunder.  The guaranty obligations
provided herein shall be satisfied directly and not through the Trust.

11.8      Provisions Binding.    All of the provisions of the  Plan shall be
binding upon all persons who will be entitled to any benefit hereunder,
including but not limited to all Participants and their heirs and personal
representatives.

11.9      Timing of Payments.  Payment of Plan benefits may be subject to
administrative or other delays that result in payment to the Participant or his
Beneficiaries on a date later than the date specified in the Plan or any
agreement or notice relating to the Participant’s Bonus Deferrals.  Any such
payment delays will comply with Section 409A of the Code, including, without
limitation Treasury Regulation § 1.409A-2(b)(7).  No Participant or Beneficiary
shall be entitled to any additional earnings or interest in respect of any such
payment delays, nor shall any Participant or Beneficiary be provided any
election with respect to the timing of any delayed payment.

11.10    Receipt and Release.  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 against the Employer, the Plan Administrator and
the Trustee under the Plan and the Plan Administrator 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 or minority to give a valid receipt and release, the Plan
Administrator may cause the payment or payments that become due to such person
to be made to another person for his benefit without responsibility on the part
of the Plan Administrator, the Employer or the Trustee to follow the application
of such funds.  Notwithstanding any requirement of a receipt and release in
accordance with this Section, payment of a Participant’s or Beneficiary’s
benefit under the Plan shall be made no later than the latest time such payment
may be made without causing the imposition of the tax under Section 409A of the
Code.

11.11    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.

11.12    Section 409A Generally.  The provisions of the Plan are intended in all
respects to comply with Section 409A of the Code and the authoritative guidance
promulgated thereunder and shall be construed and applied as necessary to comply
with Section 409A and such authoritative guidance.  At all times the Company
intends to operate and administer the Plan in compliance with the requirements
of Section 409A of the Code and such authoritative guidance.  In the case of any
conflict with Section 409A of the Code or any Bonus Agreement or ambiguity in
the Plan’s or such Bonus Agreement’s terms, the Plan and such Bonus Agreement
shall be construed and applied in a manner that complies with Section 409A and
the administrative guidance promulgated thereunder.  Notwithstanding the
foregoing, the tax treatment of the benefits provided under the Plan is not
warranted or guaranteed.  Neither the Employer, its Affiliates nor their
respective directors or trustees, officers, employees or advisors (other than in
his or her individual capacity

XI-4

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as a Participant with respect to his or her individual liability for taxes,
interest, penalties or other monetary amounts) shall be held liable for any
taxes, interest, penalties or other monetary amounts owed by any Participant,
any Beneficiary or any other taxpayer as a result of the Plan.

 

XI-5

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