EXHIBIT 10(cf)
 

 

 

 

 

NATIONAL WESTERN LIFE INSURANCE COMPANY
NON-QUALIFIED DEFERRED COMPENSATION PLAN

 

 

 
As Amended and Restated Effective as of
January 1, 2009

 

 

 
 

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

 

NATIONAL WESTERN LIFE INSURANCE COMPANY
NON-QUALIFIED DEFERRED COMPENSATION PLAN

Table of Contents
 

   
Page
     
ARTICLE I – PURPOSE, DEFINITIONS AND CONSTRUCTION
 
1
1.1     Purpose of the Plan
 
1
1.2     Definitions
 
1
1.3     Construction
 
4
     
ARTICLE II - ELIGIBILITY
 
5
2.1     Initial Eligibility Requirements
 
5
2.2     Loss of Eligible Employee Status
 
5
2.3     Termination of Participation
 
5
     
ARTICLE IV – DEFERRAL ELECTIONS
 
6
3.1     Deferral Elections
 
6
3.2     Deferral Election for First Year of Eligibility
 
7
3.3     Deferral Elections for Subsequent Plan years
 
8
3.4     Cancellation of Deferral Elections
 
8
     
ARTICLE IV – CONTRIBUTIONS TO THE PLAN
 
9
4.1     Participant Contributions
 
9
4.2     Employer Mandatory Matching Contributions
 
9
4.3     Employer Discretionary Matching Contributions
 
9
4.4     Employer Mandatory Non-Matching Contributions
 
10
4.5     Employer Additional Discretionary Contributions
 
10
     
ARTICLE V – ALLOCATION AND INVESTMENT
 
11
5.1     Establishment of Account
 
11
5.2     Allocation
 
11
5.3     Establishment of Trust
 
12
5.4     Allocation of Investment and Losses
 
12
     
ARTICLE VI – DETERMINATION OF PAYMENT OF ACCOUNT
 
14
6.1     Vesting of Account
 
14
6.2     Determination of Account
 
15
6.3     Timing of Payment
 
15
6.4     Form of Payment
 
16
6.5     Cashout of Small Benefits
 
17

 
i

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

 

 

     
ARTICLE VII – MISCELLANEOUS
 
18
7.1     Administration of the Plan
 
18
7.2     Benefit Claims
 
19
7.3     Designation of a Beneficiary
 
20
7.4     Amendment of the Plan
 
21
7.5     Termination of the Plan
 
21
7.6      Notices to participants
 
21
7.7     Non-Alienation
 
21
7.8     Payments to Incompetents
 
21
7.9     Severability
 
21
7.10   Governing Law
 
22
7.11   Taxes
 
22
7.12   Waiver
 
22
7.13   Compliance With Code Section 109A
 
22
     

 
ii

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

 

ARTICLE I
 
PURPOSE, DEFINITIONS AND CONSTRUCTION
 
1.1           Purpose of the Plan
 
This Plan was established by the Employer effective as of the Original Effective
Date to permit certain select management employees, who are defined below, to
defer the payment of a percentage of their Compensation, and in addition
thereto, to provide for certain Employer contributions to augment such
employees' retirement income.  This Plan is not intended to, and does not,
qualify under sections 401(a) and 501(a) of the Internal Revenue Code, and is
designed and intended to be a plan described in section 201(2) of ERISA (as
defined below).
 
This Plan is subject to section 409A of the Code and is intended to provide for
post-2004 benefit accruals in lieu of continued benefit accruals under the
Grandfathered Plan.  However, this Plan is a separate plan from the
Grandfathered Plan, and nothing herein shall be construed to constitute a
material modification of the Grandfathered Plan or to otherwise cause the
Grandfathered Plan to be subject to section 409A of the Code.  Benefit accruals
and service crediting under the Grandfathered Plan were frozen effective as of
the Freeze Date.
 
This Plan is intended to comply with the requirements of Code section 409A and,
notwithstanding anything herein to the contrary, shall be administered,
operated, and interpreted in compliance with such requirements.  The Plan is
amended and restated as set forth herein effective as of the Effective Date to
make certain clarifying changes to comply with the final regulations under Code
section 409A.  For periods on and after the Original Effective Date and prior to
the Effective Date, each Participant’s benefit shall be determined in accordance
with the Plan as in effect at such time subject to any modifications necessary
to satisfy a good faith interpretation of the requirements of Code section 409A.
 
1.2           Definitions
 
The following terms, when found in the Plan, shall have the meanings set forth
below:
 
(a)           Account:  The account established for a Participant pursuant to
Section 5.1.
 
(b)           Beneficiary:  The person or persons designated (or deemed
designated) by a Participant under Section 7.3 to receive any benefits payable
hereunder after the death of the Participant.
 
(c)           Code:  The Internal Revenue Code of 1986, as it may be amended
from time to time, including any successor and including applicable Treasury
regulations.
 
(d)           Committee:  The individuals appointed by the Board of Directors of
the Employer, and known as the Pension Committee, to manage and direct the
operation and administration of the Plan.
 

 
1

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

 

 
(e)           Compensation:  Compensation shall be the total cash remuneration
paid by the Employer during each Plan Year, as reported on Form W-2 or its
subsequent equivalent.  Notwithstanding the foregoing, “Compensation” shall
include director’s fees; amounts deferred under Code sections 125, 132(f)(4), or
401(k); and nonqualified elective deferrals, and “Compensation” shall exclude
reimbursements or other expense allowances, moving expenses, welfare benefits,
imputed value of insurance, stock option income, commissions, bonuses, and any
other extraordinary remuneration.  Compensation hereunder shall not be subject
to any limitations applicable to tax-qualified plans, such as pursuant to Code
sections 401(a)(17) or 415.
 
(f)            Deferral Election:  An election described in Section 3.1.
 
(g)           Disability or Disabled:  The inability of a Participant to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months;
provided that a Participant will be considered Disabled for purposes of the Plan
if and only if he is determined to be totally disabled by the Social Security
Administration.  A Participant’s Disability shall be considered to have ended at
such time as a determination is made by the Social Security Administration that
no further disability benefits shall be payable to the Participant under the
Social Security Act.
 
(h)           Effective Date:  January 1, 2009.
 
(i)            Eligible Employee:  A person (other than the Chairman of the
Employer) employed by the Employer in the position of Senior Vice President or
above, or an employee of the Employer who has been designated by the President
of the Employer, by name, position, or in any other manner, as being in the
class of persons who are eligible to participate in the Plan.  Such latter
designation shall be made in writing by the President of the Employer.  However,
no person who is an employee of the Employer shall be selected as an Eligible
Employee except an individual whose taxable year is the Plan Year and who is a
member of the select group of management or highly compensated employees of the
Employer, as defined under section 201 of ERISA.
 
(j)            Employer:  National Western Life Insurance Company, a corporation
organized and existing under the laws of the State of Texas, and any successor
or successors.  For purposes of Section 1.2(y), the term “Employer” includes all
persons with whom such Employer would be considered a single employer under Code
sections 414(b) and/or 414(c), determined by using the 80% ownership threshold
specified in Code sections 1563(a)(1), (2), and (3) and in Treasury regulation
section 1.414(c)-2, rather than the default 50% ownership threshold specified in
Treasury regulation 1.409A-1(h)(3).
 
(k)           ERISA:  The Employee Retirement Income Security Act of 1974, as it
may be amended from time to time, including any successor.
 

 
2

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

 

 
(l)            Excess Compensation:  The portion of a Participant’s Compensation
that exceeds, on a year-to-date basis, the applicable limitation under Code
section 401(a)(17)(A), as adjusted in accordance with Code section
401(a)(17)(B).
 
(m)          Freeze Date:  December 31, 2004.
 
(n)           Grandfathered Plan:  The National Western Life Insurance Company
Grandfathered Non-Qualified Deferred Compensation Plan, originally adopted
effective as of April 1, 1995 and as it may be amended from time to time.
 
(o)           Hour of Service:  An Hour of Service is each hour for which an
Eligible Employee is paid by virtue of his employment with the Employer,
including hours paid but not worked, and including hours completed prior to the
date he actually becomes a Participant hereunder.
 
(p)           Initial Participation Period:  The time period beginning when the
Eligible Employee first completes an Hour of Service until the first day of the
Plan Quarter which is coincident with or next follows the date he completes one
Year of Service.
 
(q)           Normal Retirement Age:  The date on which a Participant attains
age sixty-five (65).
 
(r)            Original Effective Date:  January 1, 2005.
 
(s)            Other Plans:  All other plans required to be aggregated with this
Plan for purposes of determining compliance with applicable requirements of Code
section 409A.
 
(t)            Participant:  An Eligible Employee who has met the requirements
of Section 2.1 hereof, and whose participation has not been terminated in
accordance with Section 2.3.
 
(u)           Plan:  The National Western Life Insurance Company Non-Qualified
Deferred Compensation Plan, as set forth herein, and as it may be amended from
time to time.
 
(v)           Plan Quarter:  The three-month period beginning on each January 1,
April 1, July 1 or October 1 and ending, respectively, on the immediately
following March 31, June 30, September 30 or December 31.
 
(w)           Plan Year:  The twelve-month period beginning each January 1 and
ending the immediately following December 31.
 
(x)            Qualified Plan:  The National Western Life Insurance Company
401(k) Plan, as amended from time to time, and any successor or replacement
plan.
 

 
3

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

 

 
(y)           Separates from Service or Separation from Service:  A
Participant’s “separation from service” with the Employer within the meaning of
Code section 409A(a)(2)(A)(i).  For this purpose, a Participant shall be
considered to have separated from service with the Employer if the facts and
circumstances indicate that the Employer and the Participant reasonably
anticipated that no further services would be performed after the date of
separation or that the level of bona fide services the Participant would perform
after such date would permanently decrease to an amount that is less than fifty
percent (50%) of the average level of bona fide services performed over the
immediately preceding thirty-six (36)-month period.  To the extent permitted by
Treasury regulation section 1.409A-1(h)(5), a Participant may be considered to
have such a separation from service even if he continues to provide services as
an independent contractor or non-employee director of the Employer.  
 
(z)           Valuation Date:  Each date as of which the Plan is valued and
gains or losses allocated, which shall be the last day of each Plan Quarter or
such other dates as the Committee may determine in its discretion; provided,
however, that if a date that would otherwise be a Valuation Date falls on a date
on which NASDAQ (or any successor exchange) is not open for business, the
Valuation Date shall be the immediately following date on which NASDAQ (or any
successor exchange) is open for business.
 
(aa)         Years of Service:  The period of an Eligible Employee's employment
considered in the calculation of the vested amount of his benefits and the
determination of the Initial Participation Period.  An Eligible Employee's
service shall be determined in twelve (12) month periods, based on Plan Years,
including the Plan Year within which falls his date of hire.  During such twelve
(12) month periods, a Year of Service will be granted if the Eligible Employee
completes at least one thousand (1,000) Hours of Service.
 
1.3           Construction
 
The masculine gender, where appearing in the Plan, shall be deemed to include
the feminine gender, and the singular may indicate the plural, unless the
context clearly indicates the contrary.  The words "hereof', "herein",
"hereunder" and other similar compounds of the word "here" shall, unless
otherwise specifically stated, mean and refer to the entire Plan, not to any
particular provision or Section.  Article and Section headings are included for
convenience of reference and are not intended to add to, or subtract from, the
terms of the Plan.
 

 

 
4

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

 

 
ARTICLE II
 
ELIGIBILITY
 
2.1           Initial Eligibility Requirements
 
(a)           Each Eligible Employee who was a Participant in the Plan
immediately prior to the Effective Date shall continue as a Participant until
the date participation terminates in accordance with Section 2.2,
 
(b)           Each individual who becomes an Eligible Employee on or after the
Effective Date shall become a Participant hereunder on the date he first
completes an Hour of Service as an Eligible Employee.
 
2.2           Loss of Eligible Employee Status
 
In the event of the demotion of a participating Eligible Employee, such that the
employee is no longer an Eligible Employee within the meaning of Section 1.2(i)
herein, the employee shall cease to be eligible to receive additional
contributions under Sections 4.2, 4.3, 4.4, and 4.5, but except as specifically
provided in Section 3.4, such loss of Eligible Employee status shall not result
in the cancellation of a Deferral Election under Section 4.1 prior to the end of
the Plan Year in which such demotion occurs.  No distribution shall be permitted
as a result of a loss of Eligible Employee status except to the extent specified
in Section 6.3 in connection with a Separation from Service.
 
2.3           Termination of Participation
 
An individual who was a Participant shall cease to be a Participant when the
individual is no longer an Eligible Employee and has ceased to have an Account
balance under the Plan due to distribution and/or forfeiture.
 

 

 
5

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

 

 
ARTICLE III
 
DEFERRAL ELECTIONS
 
3.1           Deferral Elections
 
(a)           A Deferral Election is an election to defer Compensation under
Section 4.1 and/or to elect a form of payment under Section 6.4 that is made or
deemed made by a Participant on a form and in a manner approved by the
Committee.  A Deferral Election must be in writing, which may include an
electronic format approved by the Committee.
 
A Deferral Election is considered made on the date the completed and valid
election is received by the Committee.  A Deferral Election shall not be
effective unless made by the close of business on the latest date specified for
such election.  An initial Deferral Election under Section 3.2 shall become
irrevocable for the remainder of the Plan Year to which it applies as of the
date such election is made and may not be changed or cancelled during such Plan
Year except as specified in Section 3.4.  A subsequent Deferral Election under
Section 3.3 shall become irrevocable for the Plan Year to which it applies as of
the latest date for such election and may not be changed or cancelled during
such Plan Year except as specified in Section 3.4.  Such a subsequent Deferral
Election that is made prior to such latest date may be revoked or changed prior
to becoming irrevocable by making a new Deferral Election on or before such
latest date.
 
A Deferral Election cannot be conditioned upon a Participant making or not
making elective deferral contributions under the Qualified Plan.  Deferral
Elections shall be independent of any elections made under the Qualified Plan.
 
(b)           A Deferral Election under Section 4.1 shall apply only to
Compensation paid after the effective date of the election for services
performed after the date the election is made.  For this purpose, (i)
Compensation with respect to the payroll period containing the last day of the
immediately preceding Plan Year (including directors fees payable with respect
to the same time period) that is paid during the immediately following Plan Year
in accordance with the Employer’s normal payroll and compensation practices is
considered Compensation for services performed in such following Plan Year and
(ii) an initial Deferral Election under Section 3.2(a) shall apply to a portion
of the Compensation that is earned based upon a specified performance period
beginning prior to the date the initial election is made.  Such portion shall
equal the total amount of such Compensation for the performance period
multiplied by the ratio of the number of days remaining in the performance
period after the election to the total number of days in the performance period.
 

 
6

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

 

 
A Participant’s Deferral Election under Section 6.4 shall apply only to
contributions (and related earnings and losses) made after the date the election
is made, and shall not affect or change the form of payment for contributions
(and related earnings and losses) made prior to such election.  A Deferral
Election under Section 6.4 shall not apply to benefits payable to a Beneficiary
after the death of a Participant.  Such benefits are payable solely in the form
of a single lump sum cash payment in accordance with Section 6.4(a).
 
(c)           The balance of a Participant’s Account attributable to Employer
contributions under Sections 4.4 and 4.5 that are allocated to the Participant
and that are not subject to an effective Deferral Election under Section 6.4
shall be payable in the default form of annual installments over a five-year
period in accordance with Section 6.4.  
 
3.2           Deferral Election for First Year of Eligibility
 
(a)           For the first Plan Year in which an Eligible Employee becomes a
Participant in the Plan, the Participant may make a Deferral Election within 30
days after becoming a Participant.  A Deferral Election made after the end of
such 30-day period shall not be effective during such first Plan Year of
participation.
 
If an individual previously was a Participant in the Plan but ceased to be a
Participant following a distribution of the Participant’s entire Account, the
individual shall be treated as initially eligible to participate in the Plan as
of the first date the individual becomes a Participant after receiving such
distribution.  If an individual becomes an Eligible Employee and was not an
Eligible Employee at any time during the preceding 24 months, such individual
shall be treated as initially eligible to participate in the Plan after
completing an Hour of Service as a newly Eligible Employee notwithstanding that
such individual may already be a Participant due to an undistributed Account
balance from an earlier period of participation in the Plan.
 
For purposes determining whether a Participant is initially eligible to
participate in the Plan, the Plan and all Other Plans providing for elective
deferrals shall be treated as a single plan.
 
(b)           If a Participant does not make an initial Deferral Election under
Section 4.1 within the specified period, the Participant shall be deemed to have
elected not to make any Participant contributions for such initial Plan Year of
participation.  If a Participant does not make an initial Deferral Election
under Section 6.4 within the specified period, the Participant shall be deemed
to have elected to receive any contributions under ARTICLE IV for such initial
Plan Year and for all future Plan Years in the default form specified in Section
3.1(c).
 

 
7

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

 

 
3.3           Deferral Elections for Subsequent Plan Years
 
(a)           A Deferral Election other than an initial Deferral Election
described in Section 3.2 shall be effective as of the first day of the Plan Year
that is at least 15 days after the date the election is made.  A Deferral
Election made less than 15 days before the beginning of a Plan Year shall not
apply to such immediately following Plan Year.  A new Deferral Election shall
apply prospectively and shall not change the form of payment elected or deemed
elected under Section 6.4.
 
(b)           If a Participant who is an Eligible Employee does not make an
affirmative Deferral Election under Section 4.1 for a Plan Year following the
initial Plan Year of participation, the Participant shall be deemed to have made
the same Deferral Election or deemed Deferral Election for such Plan Year as was
in effect for the Participant as of the last day of the immediately preceding
Plan Year.
 
3.4           Cancellation of Deferral Elections
 
(a)           After a Deferral Election becomes irrevocable in accordance with
Section 3.1, the election shall remain in effect until the end of the Plan Year
to which the election applies.  If the Participant is no longer an Eligible
Employee as of the last day of such Plan Year, the Deferral Election shall be
cancelled and shall not apply to a subsequent Plan Year notwithstanding Section
3.3(b).
 
(b)           Notwithstanding the foregoing, a Deferral Election shall be
cancelled during a Plan Year as follows.
 
(i)           A Participant’s Deferral Election under Section 4.1 shall be
cancelled effective as of the date on which the Participant takes a hardship
withdrawal from the Qualified Plan.
 
(ii)          A Participant’s Deferral Election under Section 4.1 shall be
cancelled effective as of the date that is 30 days following the date the
Participant incurs a disability.  Solely for purposes of this subsection, the
term “disability” means any medically determinable physical or mental impairment
resulting in the Participant’s inability to perform the duties of his or her
position or any substantially similar position, where such impairment can be
expected to result in death or can be expected to last for a continuous period
of not less than six months.  Determinations of disability shall be made by the
Committee in its sole discretion.
 
A Deferral Election that is cancelled in accordance with the foregoing shall not
be reinstated during the same Plan Year.  A cancelled election may only be
replaced by a new election under Section 3.3 that is effective as of a
subsequent Plan Year, and, in the case of a cancellation under subsection (b)(i)
above, such new election cannot apply to a Plan Year that commences earlier than
six months after the date of such hardship withdrawal.
 

 
8

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

 

 
ARTICLE IV
 
CONTRIBUTIONS TO THE PLAN
 
4.1           Participant Contributions
 
A Participant may make a Deferral Election to reduce his Compensation subject to
such election from one-quarter percent (1/4% or 0.25%) to fifty percent (50%),
in increments of one-quarter percent (1/4% or 0.25%), and to contribute such
amount to the Plan as a Participant contribution.
 
4.2           Employer Mandatory Matching Contributions
 
(a)           For periods other than a Participant’s Initial Participation
Period, the Employer shall make an Employer mandatory matching contribution as
of the last day of each Plan Quarter equal to fifty percent (50%) of each
eligible Participant's contributions made under Section 4.1 of this Plan during
such Plan Quarter; provided, however, that the mandatory matching contribution
for a Participant shall not exceed an amount equal to two percent (2%) of the
Participant's Excess Compensation for the Plan Quarter that is subject to a
Deferral Election under Section 4.1.
 
(b)           During a Participant's Initial Participation Period, the Employer
shall make an Employer mandatory matching contribution as of the last day of
each Plan Quarter equal to fifty percent (50%) of each eligible Participant's
contributions made under Section 4.1 during such Plan Quarter; provided,
however, that the mandatory matching contribution for a Participant shall not
exceed an amount equal to two percent (2%) of the Participant's Compensation for
the Plan Quarter that is subject to a Deferral Election under Section 4.1.
 
4.3           Employer Discretionary Matching Contributions
 
The Employer may make an additional discretionary matching contribution as of
the last day of each Plan Quarter equal to fifty percent (50%) of each eligible
Participant's contributions made under Section 4.1 during such Plan Quarter;
provided, however, that the discretionary matching contribution for a
Participant shall not exceed an amount equal to two percent (2%) of the
Participant's Compensation for the Plan Quarter that is subject to a Deferral
Election under Section 4.1.
 
The determination as to whether an Employer discretionary matching contribution
shall be made to the Plan is in the sole discretion of the President of the
Employer, determined on a quarterly basis.
 

 
9

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

 

 
4.4           Employer Mandatory Non-Matching Contributions
 
(a)           For periods other than a Participant’s Initial Participation
Period, the Employer shall make an Employer mandatory non-matching contribution
as of the last day of each Plan Quarter equal to two percent (2%) of each
eligible Participant's Excess Compensation for the Plan Quarter.
 
(b)           During an eligible Participant's Initial Participation Period, the
Employer shall make an Employer mandatory non-matching contribution as of the
last day of each Plan Quarter equal to two percent (2%) of the Participant's
Compensation for the Plan Quarter.
 
4.5           Employer Additional Discretionary Contributions
 
The Employer may make an additional discretionary contribution as of the last
day of each Plan Quarter.  The determination as to which Participant(s) receives
the contribution, the amount of the contribution and the timing of the
contribution is in the sole discretion of the President of the Employer,
determined on a quarterly basis.
 

 

 
10

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

 

 
ARTICLE V
 
ALLOCATION AND INVESTMENT
 
5.1           Establishment of Account
 
(a)           Each Participant herein shall have maintained in his name an
Account, to which shall be credited his Participant contributions, as well as
his share of Employer contributions allocable under Section 5.2.  A
Participant's Account shall reflect his share of such contributions, including
his allocable share of any gains and losses pursuant to Section 5.4.  All
distributions and forfeitures from the Account pursuant to Section 6.2 shall be
charged against the Account as of the date of such distribution or forfeiture.
 
(b)           If a Participant had a nonvested account balance under the
Grandfathered Plan as of the Freeze Date, an amount equal to such nonvested
account balance shall be credited to the Participant’s Account under this Plan
as of the Original Effective Date.  Such balance shall be considered a
contribution other than a Participant contribution and shall be subject to the
vesting rules of Section 6.1(c) and 6.1(d), as applicable.
 
5.2           Allocation
 
(a)           Contributions made pursuant to Section 4.1 hereof shall be
allocated to the Account of the Participant from whose Compensation such amounts
were reduced, as soon as administratively practicable following the date of
actual salary reduction.
 
(b)           Any contribution made pursuant to Section 4.2, or 4.3 shall be
allocated to each Participant (i) who made matched Participant Contributions
during the Plan Quarter and (ii) who is an Eligible Employee as of the last day
of the Plan Quarter for which such contribution was made or ceased to be an
Eligible Employee during such Plan Quarter due to death, Disability, or
Separation from Service after attainment of Normal Retirement Age.
 
(c)           Any contribution made pursuant to Section 4.4 shall be allocated
to each Participant who is an Eligible Employee as of the last day of the Plan
Quarter for which such contribution was made or who ceased to be an Eligible
Employee during such Plan Quarter due to death, Disability, or Separation from
Service after attainment of Normal Retirement Age.
 
(d)           Any contribution made pursuant to Section 4.5 shall be allocated
to the Participant or Participants designated by the Employer in accordance with
such Section, provided, however, that no contribution shall be allocated to a
Participant unless the Participant is an Eligible Employee as of the last day of
the Plan Quarter for which such contribution was made or ceased to be an
Eligible Employee during such Plan Quarter due to death, Disability, or
Separation from Service after attainment of Normal Retirement Age.
 

 
11

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

 

 
5.3           Establishment of Trust
 
The Employer may establish a trust fund with regard to the Accounts hereunder,
designed to be an irrevocable grantor trust under Code section 671.  However, if
the assets of such trust are not available or are insufficient to pay such
benefits or if no such trust is established or funded, then benefits hereunder
shall be paid from the general assets of the Employer.  The rights of each
Participant and any Beneficiary hereunder shall be solely those of an unsecured
general creditor of the Employer.
 
5.4           Allocation of Investment Earnings and Losses
 
(a)           As of each Valuation Date, the Committee shall credit to each
Participant's Account the deemed income or losses attributable thereto, as
provided in Section 5.4(b) below, as well as any other credits to or charges
against such Account, including any withdrawals or other distributions made to
or on behalf of the Participant.  All payments from an Account between Valuation
Dates shall be charged against the Account as of the preceding Valuation
Date.  Contributions to a Participant’s Account shall not be adjusted for deemed
investment experience for periods prior to the Valuation Date on which the
Contributions are credited to the Account (even if the Contribution amount is
known prior to such date).  No amount shall be adjusted for deemed investment
experience after the Valuation Date coincident with or immediately preceding the
date on which the amount is distributed from the Participant’s Account.
 
12

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

 
 
(b)          Each Participant, upon becoming a Participant in the Plan, may, on
a form prescribed by the Committee, designate the manner in which he wishes his
Account to be deemed invested among the various options designated by the
Committee for this purpose.  The Committee shall not be obligated to follow such
deemed investment election in the event such action on the part of the Committee
would result in a failure of the Plan or Trust to be considered unfunded for
purposes of the Code or ERISA.  Such designation may be changed as of any
Valuation Date, with respect to future contributions and transfers among
investment options, by making a new deemed election, in the method prescribed by
the Committee, and within the period of time prior to such Valuation Date as is
established by the Committee.  The Participant must designate, in such minimum
percentages or amounts as may be prescribed by the Committee, that portion of
his Account which the Participant deems allocated to each investment option
offered hereunder.  The investment designation will continue until changed by
the timely submission of a new deemed investment election, which change will be
effective within the time period established by the Committee.  In the absence
of any such deemed investment designation, a Participant's Account shall be
deemed to be invested in such property as the Committee, in its sole and
absolute discretion, shall determine.  The Committee shall be authorized at any
time and from time to time to modify, alter, delete or add to the deemed
investment options hereunder.  In the event a modification occurs, the Committee
shall notify those Participants whom the Committee, in its sole and absolute
discretion, determines are affected by the change, and shall give such persons
such additional time as is determined necessary by the Committee to designate
the manner and percentage in which amounts thereby affected shall be deemed
invested.  The Committee shall not be obligated to substitute investment options
with similar deemed investment criteria for existing investment options, nor
shall it be obligated to continue the types of deemed investment options
presently available to the Participants.
 
(c)           The crediting of earnings and losses under the Plan does not mean
and shall not be construed to mean that the Account of a Participant is actually
invested in any security, fund or other investment, and no Participant or
Beneficiary shall have any security or other interest in any security, fund or
investment, even if the Employer maintains actual investments that mirror or are
substantially similar to liabilities under the Plan.
 

 

 
13

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

 

 
ARTICLE VI
 
DETERMINATION OF PAYMENT OF ACCOUNT
 
6.1           Vesting of Account
 
(a)           The portion of a Participant's Account derived from contributions
made under Section 4.1 hereof shall be one hundred percent (100%) vested and
non-forfeitable at all times.
 
(b)           As to a Participant who is at the level of Executive Vice
President or above of the Employer, his total Account shall be one hundred
percent (100%) vested and non-forfeitable at all times.
 
(c)           As to all other Participants, and as to the amount of such a
Participant's Account other than that derived from contributions made pursuant
to Section 4.1, such Account shall become one hundred percent (100%) vested and
non-forfeitable upon the first to occur of the following:
 
(i)           the Participant’s Separation from Service upon or after reaching
Normal Retirement Age;
 
(ii)          the Participant’s Disability, as determined in accordance with
Section 1.2(f);
 
(iii)         the death of the Participant; and
 
(iv)         the Participant’s promotion to a position described in Section
6.1(b).
 
(d)           Prior to the occurrence of any of the foregoing, a Participant
shall become vested in the portion of his Account other than that derived from
contributions made pursuant to Section 4.1 in accordance with the following
schedule:
 
Years of Service
   
With the Employer
 
Vested Percentage
Less than 3
 
    0%
3
 
  20%
4
 
  40%
5
 
  60%
6
 
  80%
7 or more
 
100%

 
14

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

 

 
6.2           Determination of Account
 
As of the date of a Participant's Separation from Service with the Employer
(including termination due to any of the events specified under Section 6.1
hereof), his vested Account balance shall be determined in accordance with the
provisions of Section 6.1 above.  Thereafter, as of the Valuation Date
coincident with or next following the Participant’s Separation from Service, the
nonvested portion of his Account shall be forfeited.  Such forfeited amount
shall be used first to reduce any Employer contributions specified under
Sections 4.2, 4.3, and 4.4 hereof and any remaining amounts shall be reallocated
among all Participants eligible to receive Employer contributions as of such
date under Section 5.2(c) hereof, in the proportion that each such eligible
Participant’s Compensation for the Plan Quarter bears to the Compensation for
the Plan Quarter of all other Participants eligible to receive an allocation of
such forfeiture.
 
6.3           Timing of Payment
 
(a)           Payment of the vested Account balance of a Participant shall
commence on or as soon as administratively practicable after the first Valuation
Date that is at least 30 days after the earlier to occur of (i) the
Participant’s Separation from Service, subject to subsection (b) below and (ii)
the Participant’s death.  Such payment shall in any event be made within 90 days
after such Valuation Date, and no Participant or Beneficiary shall have a right
to designate the taxable year of such payment.  A Participant may not
subsequently elect to defer the date of such distribution.  
 
(b)           Payment to a Participant shall be delayed to the extent required
by Code section 409A(a)(2)(B)(i).  Accordingly, if a Participant is a “specified
employee” as defined by Code section 409A(a)(2)(B)(i) (determined by applying
the default rules applicable under such Code section except to the extent such
rules are modified by a written resolution that is adopted by the Board of
Directors of the Employer and that applies for purposes of all applicable
nonqualified deferred compensation plans of the Employer and its affiliates
described in the second sentence of Section 1.2(j)), any payments which the
Participant is otherwise entitled to receive under Section 6.2 and this Section
6.3 during the six (6)-month period beginning on the date the Participant
Separates from Service for any reason other than death shall be accumulated and
paid effective as of the earlier to occur of (i) the first Valuation Date that
occurs on or after the date that is six (6) months after the date the
Participant so Separates from Service and (ii) the first Valuation Date that is
at least 30 days after the date of the Participant’s death.  This subsection (b)
is intended to satisfy the minimum requirements of Code section 409A(a)(2)(B)(i)
and shall not be construed to accelerate or defer or otherwise apply to
distributions to the extent those distributions are not subject to the
requirements of such Code section.
 

 
15

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

 

 
6.4           Form of Payment
 
(a)           In the event of the Participant’s death the Participant’s entire
Account shall be paid to his Beneficiary in the form of a single lump sum
payment in cash.  If a Participant dies after commencing installment payments,
the Participant’s entire remaining Account shall be paid to his Beneficiary in
the form of a single lump sum payment in cash in accordance with Section 6.3(a)
as to the time of payment.
 
(b)           By making a Deferral Election (including a deemed Deferral
Election), a Participant may select from among the following optional forms of
payment for the portion of the Participant’s Account subject to such election
and not payable in accordance with subsection (a), above:
 
(i)           A single cash lump sum payment; and
 
(ii)          Annual cash installments over a period of two to ten years.
 
Payment of the portion of a Participant’s Account subject to a Deferral Election
or deemed Deferral Election shall occur in the form specified by such
election.  If a Participant does not specify an optional form of payment on a
Deferral Election or if a Participant’s Account is not subject to a Deferral
Election or deemed Deferral Election that designates an optional form of payment
under this Section, the Participant shall be deemed to have elected payment in
the form of annual installments over a period of five years.  A Participant may
not subsequently elect to change the optional form of payment elected or deemed
elected with respect to contributions subject to the Deferral Election.  Once
made or deemed made, a Deferral Election under this Section may not be changed
with respect to prior or future contributions for so long as the individual
remains a Participant.
 
Each installment under an installment form of payment shall be calculated by
dividing the Account balance subject to such form of payment as of the preceding
Valuation Date by the total number of installments remaining to be paid.  Annual
installments shall be paid on the payment commencement date under Section 6.3
and each anniversary of that date.  For purposes of Code section 409A, the
entitlement to a series of installment payments is treated as the entitlement to
a single payment.
 

 
16

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

 

 
6.5           Cashout of Small Benefits
 
If payment has commenced or is to commence under this ARTICLE VI, then
notwithstanding any contrary Deferral Election under Section 6.4, all remaining
payments shall be accelerated and paid in the form of a single lump sum if the
following requirements are satisfied as of the date of payment:
 
(a)           the value of the aggregate benefit of the Participant under this
Plan and all Other Plans does not exceed the applicable dollar amount under Code
section 402(g)(1)(B) (as adjusted from time to time); and
 
(b)           the accelerated lump sum payment (and payments made at the same
time under any Other Plans) results in the termination and liquidation of the
entirety of the Participant’s benefits under this Plan and all Other Plans.
 

 

 
17

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

 

 
ARTICLE VII
 
MISCELLANEOUS
 
7.1           Administration of the Plan
 
(a)           The Plan shall be administered by the Committee.  The books and
records of the Plan shall be maintained by the Employer at its expense, and no
member of the Board of Directors of the Employer, or any employee of the
Employer acting on its behalf, shall be liable to any person for any action
taken or omitted in connection with the administration of the Plan, unless
attributable to his own fraud or willful misconduct.
 
(b)           The Employer shall appoint the members of the Committee and may
terminate a Committee member at any time by providing written notice of such
termination to the member.  Any member of the Committee may resign by delivering
his written resignation to the Employer and to the other members of the
Committee.
 
(c)           The Committee shall perform any act which the Plan
authorizes.  The Committee may, by a writing signed by a majority of its
members, appoint any member of the Committee to act on behalf of the Committee.
 
(d)           The Committee may designate in writing other persons to carry out
its responsibilities under the Plan, and may remove any person designated to
carry out its responsibilities under the Plan by notice in writing to that
person.  The Committee may employ persons to render advice with regard to any of
its responsibilities.  All usual and reasonable expenses of the Committee shall
be paid by the Employer.
 
(e)           No member of the Board of Directors of the Employer or of the
Committee, or any employee of the Employer acting on behalf of either, shall be
liable to any person for any action taken or omitted in connection with the
administration of the Plan, unless attributable to his own willful neglect or
willful misconduct.  The Employer shall indemnify and hold harmless each member
of the Committee from and against any and all claims and expenses (including,
without limitation, attorney's fees and related costs), in connection with the
performance by such member of his duties in that capacity, other than any of the
foregoing arising in connection with the willful neglect or willful misconduct
of the person so acting.
 
(f)           The members of the Committee shall serve without bond or security
for the performance of their duties hereunder unless applicable law makes the
furnishing of such bond or security mandatory or unless required by the Company.
 

 
18

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

 

 
(g)           The Committee shall establish rules, not contrary to the
provisions of the Plan, for the administration of the Plan and the transaction
of its business.  The Committee shall have the authority to interpret the Plan
in its sole and absolute discretion, and shall determine all questions arising
in the administration, interpretation and application of the Plan, including all
claims for benefit hereunder.  All determinations of the Committee shall be
conclusive and binding on all concerned.
 
7.2           Benefit Claims
 
The Committee shall administer the claims procedures set forth in this Section
7.2 in accordance with section 503 of ERISA.  The Committee shall automatically
direct the distribution of all benefits to which a Participant is entitled
hereunder.  In the event that a Participant believes that he has been denied
benefits to which he is entitled under the provisions of the Plan, the Committee
shall, upon the request of the Participant, provide to the Participant written
notice of the denial which shall set forth:
 
(a)           the specific reason or reasons for the denial;
 
(b)           specific references to pertinent Plan provisions on which the
Committee based its denial;
 
(c)           a description of any additional material or information needed for
the Participant to perfect the claim and an explanation of why the material or
information is needed;
 
(d)           a statement that the Participant or his authorized representative
may (i) request a review upon written application to the Committee; (ii) review
pertinent Plan documents; and (iii) submit issues and comments in writing;
 
(e)           a statement that any appeal the Participant wishes to make of the
adverse determination must be made in writing to the Committee within sixty (60)
days (one hundred eighty (180) days in the case of a claim relating to
Disability benefits) after receipt of the Committee's notice of denial of
benefits and that failure to appeal the initial determination to the Committee
in writing within such sixty (60)-day period (one hundred eighty (180)-day
period in the case of a claim relating to Disability benefits) will render the
Committee's determination final, binding, and conclusive; and
 

 
19

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

 

 
(f)           the address to which the Participant must forward any request for
review.
 
If a Participant should appeal to the Committee, he, or his duly authorized
representative, may submit, in writing, whatever issues and comments he, or his
duly authorized representative, feels are pertinent.  The Committee shall
re-examine all facts related to the appeal and make a final determination as to
whether the denial of the claim is justified under the circumstances.  The
Committee shall advise the Participant in writing of its decision on appeal, the
specific reasons for the decision, and the specific Plan provisions on which the
decision is based.  The notice of the decision shall be given within sixty (60)
days (forty-five (45) days in the case of a claim relating to Disability
benefits) after the Participant's written request for review is received, unless
special circumstances (such as a hearing) would make the rendering of a decision
within such sixty (60)-day period (forty-five (45)-day period in the case of a
claim relating to Disability benefits) impracticable.  In such case, notice of
an extension shall be provided to the Participant within the original sixty
(60)-day period (forty-five (45)-day period in the case of a claim relating to
Disability benefits), and notice of a final decision regarding the denial of a
claim for benefits will be provided within one hundred twenty (120) days (ninety
(90) days in the case of a claim relating to Disability benefits) after receipt
of the original request for review.
 
7.3           Designation of a Beneficiary
 
(a)           A Participant may designate one or more Beneficiaries to receive
any benefits payable under the Plan after the death of the Participant.  A
Participant may revoke or change a prior beneficiary designation by filing a new
beneficiary designation with the Committee.  To be effective, any beneficiary
designation or revocation of a beneficiary designation must be on a form
acceptable to the Committee and must be received by the Committee prior to the
date of the Participant’s death.
 
(b)           Any designation of a person as a Beneficiary shall be deemed to be
contingent upon the person’s surviving the Participant.  Any designation of a
class or group of Beneficiaries shall be deemed to be a designation of only
those members of the class or group who are living at the time of the
Participant’s death.  Any designation of a trust as a Beneficiary shall be
invalid if the trust is not in existence at the time of the Participant’s
death.  A Participant may designate (in the manner provided in subsection (a),
above) one or more persons as a contingent Beneficiary or Beneficiaries to
receive, upon the Participant’s death, the benefit that the primary Beneficiary
would have received had the primary Beneficiary survived the Participant.
 
(c)           If a Participant does not make an effective beneficiary
designation prior to death or if no designated Beneficiary survives the
Participant, the Participant’s estate shall be deemed to be his Beneficiary.
 
(d)           References hereunder to a benefit payable to or with respect to a
Participant include any benefit payable to the Participant’s Beneficiary.
 

 
20

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

 

 
7.4           Amendment of the Plan
 
The Plan may be amended, in whole or in part, from time-to-time, by the Board of
Directors of the Employer, without the consent of any other party.
 
7.5           Termination of the Plan
 
The Plan may be terminated, at any time, by action of the Board of Directors,
without the consent of any other party.  The termination of this Plan shall not
result in the granting of any additional rights to any Participant, such as, to
the extent not funded, full vesting of his Account, and Plan benefits shall be
payable solely as provided under Section 6.3 and, if applicable, Section
7.13(c)(iv).
 
7.6           Notices to Participants
 
From time-to-time, the Employer shall provide a Participant with an accounting
of the value of his Account.  Further, a Participant will be provided written
notice of any amendment of the Plan that affects his rights herein, and of the
termination of the Plan.
 
7.7           Non-Alienation
 
Except as required by ERISA, the right of any Participant or Beneficiary in his
Account balance hereunder shall not be subject in any manner to attachment or
other legal process for the debts of such Participant or Beneficiary, and any
such Account balance shall not be subject to anticipation, alienation, sale,
transfer, assignment or encumbrance.
 
7.8           Payments to Incompetents
 
Whenever any benefit which shall be payable under the Plan is to be paid to or
for the benefit of any person who is then a minor or determined by the
Committee, on the basis of qualified medical advice, to be incompetent, the
Committee need not require the appointment of a guardian or custodian, but shall
be authorized to cause the same to be paid over to the person having custody of
the minor or incompetent, or to cause the same to be paid to the minor or
incompetent without the intervention of a guardian or custodian, or to cause the
same to be paid to a legal guardian or custodian of the minor or incompetent, if
one has been appointed, or to cause the same to be used for the benefit of the
minor or incompetent.
 
7.9           Severability
 
In the event that any provision of this Plan shall be declared illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions of this Plan but shall be fully severable and this Plan
shall be construed and enforced as if said illegal or invalid provision had
never been inserted herein.
 

 
21

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

 

 
7.10           Governing Law
 
The validity and effect of this Plan and the rights and obligations of all
persons affected hereby shall be construed and determined in accordance with the
internal laws of the State of Texas except to the extent superseded by federal
law
 
7.11           Taxes
 
All amounts payable hereunder shall be reduced by any and all federal, state and
local taxes imposed upon the Participant which are required to be paid or
withheld by the Employer or any other payor of Plan benefits.
 
7.12           Waiver
 
Neither the failure nor any delay on the part of the Employer or the Committee
to exercise any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise or waiver of any such right,
power or privilege preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege available to the Employer or the
Committee at law or in equity.
 
7.13           Compliance With Code Section 409A
 
(a)           To the extent any provision of this Plan or any omission from the
Plan would (absent this Section 7.13(a)) cause amounts to be includable in
income under Code section 409A(a)(1), the Plan shall be deemed amended to the
extent necessary to comply with the requirements of Code section 409A; provided,
however, that this Section 7.13(a) shall not apply and shall not be construed to
amend any provision of the Plan to the extent this Section 7.13(a) or any
amendment required thereby would itself cause any amounts to be includable in
income under Code section 409A(a)(1).
 
(b)           If any provision of this Plan would cause a Participant to occur
any additional tax under Code section 409A, the parties will in good faith
attempt to reform the provision in a manner that maintains, to the extent
possible, the original intent of the applicable provision without violating the
provisions of Code section 409A.
 
(c)           Except as provided in this Section and Section 6.5 and
notwithstanding anything herein to the contrary, the payment of benefits under
the Plan shall not be accelerated in a manner that would cause such benefits to
be includable in income under Code section 409A.
 

 
22

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

 

 
(i)           The Committee may establish a procedure for the Plan to administer
qualified domestic relations orders.  Such procedure shall comply with the
applicable requirements of ERISA Sections 206(d)(3) and 514(b)(7).  The
Committee may approve immediate payment to an alternative payee (who is not the
Participant) pursuant to the terms of a qualified domestic relations order, as
defined under ERISA sections 206(d)(3) and 514(b)(7).  Any such payment shall
not be prohibited by Section 7.7 and shall not be subject to the six-month delay
requirement under Section 6.3(b).
 
(ii)          If a benefit hereunder is required to be included in the income of
a Participant under Code section 409A as a result of the failure to comply with
the requirements of Code section 409A, the benefit amount so includable shall be
paid to the Participant as of the Valuation Date next following such compliance
failure.  This subsection shall not accelerate the payment of a benefit that is
subject to the six-month delay requirement under Section 6.3(b).
 
(iii)         The Committee may accelerate the payment of amounts credited to a
Participant's Account (i) to the extent necessary for any Federal officer or
employee in the executive branch to comply with an ethics agreement with the
Federal government and (ii) to the extent reasonably necessary to avoid the
violation of an applicable Federal, state, local, or foreign ethics law or
conflicts of interest law.  Any such payment shall be made in a single lump sum
cash payment to the Participant on or as soon as administratively practicable
after the first Valuation Date that occurs on or after the Committee’s
determination.  Any such payment shall not be subject to the six-month delay
requirement under Section 6.3(b).
 
(iv)         The entire amount credited to a Participant’s Account shall be paid
to the Participant if the Plan is terminated in accordance with Section 7.5 and
the Committee determines that the requirements of Treasury regulation
1.409A-3(j)(4)(ix) have been and will be satisfied in connection with such
termination.  Any such payment shall be made in a single lump sum cash payment
to the Participant on or as soon as administratively practicable after the first
Valuation Date that occurs on or after the Plan termination and the Committee’s
determination.  This subsection shall not accelerate the payment of a benefit
that is subject to the six-month delay requirement under Section 6.3(b).
 

 

 

 
23

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

 

IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing
instrument comprising the National Western Life Insurance Company Non-Qualified
Deferred Compensation Plan as amended and restated effective as of the Effective
Date, NATIONAL WESTERN LIFE INSURANCE COMPANY, as the Employer, has caused its
seal to be affixed hereto and these presents to be duly executed in its name and
behalf by its proper officers thereunto authorized this 18th day of December,
2008.
 

 
ATTEST:
 
NATIONAL WESTERN LIFE
   
INSURANCE COMPANY
           
/S/Margaret M. Simpson
 
/S/James P. Payne
Asst. Secretary
       
Name:  James P. Payne
   
Title:  Senior VP-Secretary
     

 

 

 
24

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