EXHIBIT 10.9(kk)

 

PEDIATRIC SERVICES OF AMERICA, INC.

 

NON-QUALIFIED DEFERRED COMPENSATION PLAN

 

(As Amended and Restated Effective January 1, 2006)

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

THIS AMENDED AND RESTATED NON-QUALIFIED DEFERRED COMPENSATION PLAN, adopted by
PEDIATRIC SERVICES OF AMERICA, INC., a Georgia corporation (the “Company”),
effective as of January 1, 2006 (the “Effective Date”);

 

W I T N E S S E T H:

 

WHEREAS, the Company established this Plan effective January 1, 2000, to provide
key employees a non-qualified deferred compensation program and subsequently
amended the Plan as of January 1, 2004 and January 1, 2005;

 

WHEREAS, this Plan is intended to provide benefits to a select group of
management or highly compensated personnel in order to attract and retain the
highest quality executives and, therefore, is not intended to be a qualified
plan within the meaning of sections 401(a) and 501(a) of the Internal Revenue
Code of 1986, as amended (the “Code”);

 

WHEREAS, this Plan is intended to be an unfunded plan for purposes of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), although
Company contributions and voluntary compensation deferrals shall be held in a
“rabbi trust,” viz. an irrevocable grantor trust, the assets of which can be
used only to pay benefits under this Plan or, in the case of the Company’s
insolvency, to pay claims of Company creditors;

 

WHEREAS, the Plan, as amended and restated as of January 1, 2005, includes
provisions that are inconsistent with Code Section 409A, as added by the
American Jobs Creation Act of 2004.

 

WHEREAS, the Company now desires to amend and restate the Plan to reflect the
changes required by Code Section 409A and to make certain other modifications;

 

NOW, THEREFORE, the Company hereby adopts this amendment and restatement of the
PEDIATRIC SERVICES OF AMERICA, INC. NON-QUALIFIED DEFERRED COMPENSATION PLAN on
the following terms and conditions:

 

1. Definitions. Whenever used in this Plan, the following words and phrases
shall have the meaning set forth below, unless a different meaning is expressly
provided or plainly required by the context in which the words or phrases are
used

 

Active Participant means a Participant who has a currently-effective Written
Election to defer a portion of his Plan Year Compensation in accordance with
Section 3.1.

 

Beneficiary means a person designated by a Participant pursuant to Section 9.1
to receive Plan benefits in the event of the Participant’s death.

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

Board means the Board of Directors of the Company and its successors.

 

Change in Control means, as to Pre-AJCA Accounts:

 

(A) a change in ownership, holding or power to vote more than fifty percent
(50%) of the voting stock of the Company;

 

(B) the shareholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company, other than in connection with a
transfer of substantially all of the assets of the Company to parties in the
“controlled group of corporations” (as defined in section 1563 of the Internal
Revenue Code of 1986) in which the Company is a member;

 

(C) substantially all of the assets of the Company are sold or otherwise
transferred to parties that are not within the “controlled group of
corporations” (as defined in section 1563 of the Internal Revenue Code of 1986)
in which the Company is a member;

 

(D) the Company voluntarily files a petition for bankruptcy under federal
bankruptcy law, or an involuntary bankruptcy petition is filed against the
Company under federal bankruptcy law, which is not dismissed within 120 days of
the filing;

 

(E) the Company makes a general assignment for the benefit of creditors;

 

(F) the Company seeks or consents to the appointment of a trustee, receiver,
liquidator or similar person;

 

(G) a merger, consolidation or reorganization of the Company with or involving
any other corporation, other than a merger, consolidation or reorganization that
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the combined voting power of the voting securities of the
Company (or such surviving entity) outstanding immediately after such merger,
consolidation, or reorganization; or

 

(H) during any period of two consecutive years, individuals who at the beginning
of such period constitute the Board cease for any reason to constitute at least
a majority thereof; unless the election or the nomination for election by the
Company’s shareholders of each new director was approved by a vote of at least
three quarters of the directors still in office of the Company who were
directors at the beginning of the period.

 

Change in Control, as to Post-AJCA Accounts, shall have the meaning prescribed
by Regulations pursuant to Code Section 409A(2)(A).

 

Company means Pediatric Services of America, Inc., a Georgia corporation.

 

Company Contribution Account means an account under the Plan to which amounts
which the Company contributes under Section 3.2 with respect to a Participant,
together with adjustments pursuant to Section 3.5(C), are credited in accordance
with Section 3.5.

 

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

Crediting Date means the date specified by the Committee for crediting the
amount of any Participant contributions to the Participant Deferral Account of a
Participant.

 

Designated Participant means a Participant whom the Board has authorized to
defer a portion of his/her cash discretionary bonus compensation/incentive
pursuant to this Plan.

 

Disability means, as to Pre-AJCA Accounts, (A) “disability” as defined in any
group long-term disability policy or program sponsored by the Company and in
effect at the time a Participant who has suffered a physical or mental
impairment makes application under this Plan for a disability distribution, or
(B) if no such policy or program is in force at such time, “disability” as
defined in section 1382c(a)(3) of volume 42 of the United States Code and
regulations promulgated thereunder, provided, however, that the disability
(whether under the definition in (A) or in (B)) must be of a duration of at
least six (6) consecutive months from the date the Participant suffers the
disability, notwithstanding any different requirements of duration under either
definition in the actual policy or program or in the United States Code,
respectively. A Participant who has suffered a Disability shall be referred to
as “Disabled” under this Plan. Notwithstanding anything in this definition to
the contrary, a Participant shall also be deemed to be Disabled under this Plan
without regard to the six month waiting period described in this section if the
Plan Committee receives from the physician treating the Participant for the
disabling condition written evidence satisfactory to the Plan Committee (in its
sole discretion) to the effect that the Participant has incurred a disabling
condition described in clauses (A) or (B) of this section and a certification
that, in his/her professional opinion, such condition will continue for a
duration of at least six months. For purposes of this section, the term
“physician” means a doctor of medicine who is licensed and authorized to treat
the type of condition which the Participant claims is disabling.

 

Disability means, as to Post-AJCA Accounts, a medically determinable physical or
mental impairment that (A) renders the Participant unable to engage in any
substantial gainful activity, provided that such impairment can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, or (B) is expected to result in death or can be expected to last
for a continuous period of not less than 12 months, provided that the
Participant is, on account of such impairment, receiving income replacement
benefits for a period of not less than 3 months under an accident and health
plan covering employees of the Company.

 

Entry Date means the date a Participant’s participation in the Plan commences,
as specified in Section 2.2.

 

Key Employee means an employee of the Company, selected by the Board, who is a
member of a select group of management or highly compensated employees within
the meaning of §2520.104-23 of the Department of Labor ERISA Regulations. In
addition, “Key Employee” shall also mean any member of the Board,
notwithstanding that Board members are not employees of the Company by virtue of
their status as Board members.

 

Life Insurance Contract means a life insurance policy described in Section 3.8.

 

3

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

Non-Qualified Deferred Compensation Grant means additional remuneration to the
Participant for his or her prior year fiscal service as a member of the Board
made during the first quarter of the Company’s fiscal year. Notwithstanding the
foregoing, to the extent that a Participant is a Key Employee by virtue of being
a member of the Board, the Participant’s compensation shall be, for purpose of
the elections under Section 2.4 of the Plan, the amount designated by the
Company as a Non-Qualified Deferred Compensation Grant to that Participant,
which grant is additional remuneration to the Participant for his or her service
as a member of the Board.

 

Participant means (A) a Key Employee designated by the Board, in writing, to
participate in the benefits under the Plan who timely files a written election
pursuant to Section 2.4, below, and (B) a former Employee who, at the time of
his termination from employment, retirement, death, or occurrence of Disability,
retains, or whose Beneficiary retains, benefits earned under the Plan in
accordance with its terms.

 

Participant Deferral Account means an account under the Plan to which amounts
which a Participant elects to defer under Section 3.1, together with adjustments
pursuant to Section 3.5(C), are credited in accordance with Section 3.5.

 

Performance-based Compensation means Plan Year Compensation that constitutes
performance-based compensation within the meaning of Code
Section 409A(a)(4)(B)(iii) and the Regulations thereunder, and that is based on
services performed over a period of at least twelve months.

 

Plan means the Pediatric Services of America, Inc. Non-Qualified Deferred
Compensation Plan, as amended from time to time, and the Trust Agreement
established in connection herewith.

 

Plan Committee means the body of individuals appointed by the Board to handle
the day-to-day responsibilities of administering the Plan. The Committee shall
consist of at least three individuals who shall be appointed by the Board to
serve at the pleasure of the Board. Unless the Board specifies otherwise, the
Committee members shall be the Company’s Chief Executive Officer; Chief
Financial Officer; and Vice President, Human Resources, and each member shall be
removed from the Committee immediately upon the termination of his service in
such capacity and assumed by any successor to the designated office. Any member
of the Committee may resign, and his successor, if any, shall be appointed by
the Board. The Committee shall be responsible for the general administration and
interpretation of the Plan and for carrying out its provisions, except to the
extent all or any of such obligations are specifically imposed on the Board. Any
Committee member who is an employee of the Company shall be deemed to have been
removed by the Board immediately as of his termination of employment with the
Company, without the necessity of further action by the Board.

 

Plan Year means the twelve (12) consecutive month period beginning each
January 1 and ending each December 31.

 

Plan Year Compensation means for purposes of the elections under Section 2.4 of
the Plan, the annual base salary paid to a Participant by the Company during any
Plan Year, or portion thereof during which he is a Participant in this Plan, as
reflected on the Participant’s form W-2. In addition, for

 

4

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

Designated Participants (as defined above), Plan Year Compensation shall include
cash bonus compensation, if any, in addition to base salary and subject to the
provisions of Section 3.1(C); provided that a Participant shall be a Designated
Participant for purposes of making deferrals out of bonus compensation only for
such Plan Year or Plan Years as the Board may determine in its sole discretion.

 

Post-AJCA Account shall mean the portion of each Participant’s Participant
Deferral Account that is attributable to compensation that would, but for the
existence of a Written Election under this Plan, have been paid to the
Participant in Plan Years beginning on and after January 1, 2005, as such
amounts are adjusted for earnings and losses pursuant to Section 3.5. The Post
–AJCA Account also shall include the portion of each Participant’s Company
Contribution Account that is attributable to Company contributions that are made
to the Plan on and after January 1, 2005, except to the extent allowable under
Regulations pursuant to which the Plan may treat amounts contributed in 2005 as
having been made before January 1, 2005, for purposes of Code Section 409A
because, for example, such amounts were attributable to Participant
Contributions made before January 1, 2005.

 

Retirement Benefit means, with respect to a particular Written Election, the
unpaid balance of a Participant’s Participant Deferral Account and his Company
Contribution Account attributable to such Written Election, which equals the
total of (i) all contributions made by the Participant and allocated to his
Participant Deferral Account pursuant to such Written Election, (ii) all
contributions made by the Company and allocated to his Company Contribution
Account with respect to contributions described in clause (i) of this section
and (iii) all earnings deemed credited to his Participant Deferral Account and
his Company Contribution Account from time to time in accordance with
Section 3.5(C) with respect to amounts described in clauses (i) and (ii) of this
section, reduced by (iv) losses and expenses deemed charged against such
accounts from time to time in accordance with Section 3.5(C) with respect to
amounts described in clauses (i) and (ii) of this section and (v) any
distributions already paid from amounts described in clauses (i) through (iv) of
this section.

 

Retirement means termination of employment with the Company on or after
attainment of age 65.

 

Separation from Service shall mean the Participant’s termination of employment
with the Company for any reason, as such definition is modified by Code
Section 409A or any Regulations thereunder that address transfers of employment
to affiliates or other issues. In the case of a Board member, such a Participant
shall be deemed to have experienced a Separation from Service as to the portion
of his Account attributable to Non-Qualified Deferred Compensation Grants, as
adjusted for earnings and losses, when his term as a member of the Boards ends
and is not immediately followed by a his election to a new term.

 

Trust means the grantor (or “rabbi”) trust established by the Company in
connection with this Plan.

 

Trust Agreement means the agreement between the Trustee and the Company
establishing the Trust.

 

Trustee means Banker’s Life, or any successor trustee named to succeed such
Trustee under the terms of the Trust Agreement established in connection with
this Plan.

 

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

Written Election means the written deferral election document described in
Section 2.4.

 

2. Participation.

 

2.1. Eligibility. A Key Employee of the Company is eligible to participate in
this Plan on the Entry Date first following the date as of which each of the
following events has occurred:

 

(A) the Board has designated him in writing as a Participant in the Plan;

 

(B) the Key Employee has made a Written Election in accordance with the terms of
Section 2.4 below; and

 

(C) the Key Employee has completed the lesser of either: (i) twelve months of
continuous service, or (ii) another number of months of continuous service
determined and approved by the President of the Company.

 

2.2. Entry Date. Any Key Employee who is already participating in this Plan or
who has met the Eligibility requirements specified in Section 2.1 as of the
Effective Date shall remain a Participant in the Plan as of the Effective Date.
Any Key Employee of the Company who meets the Eligibility requirements specified
in Section 2.1 on or after the Effective Date of this Plan shall become a
Participant on the first day of the payroll period immediately following the
date on which he has met the Eligibility requirements.

 

2.3. Designation. The Board shall designate from time to time, in writing, the
name of each Key Employee who shall be entitled to participate as an Active
Participant in the Plan. The Board’s designation shall specify: (i) the tier
(for purposes of Section 3.1) to which each such Key Employee shall be assigned;
(ii) whether the Key Employee will be a Designated Participant; and (iii) the
effective date of the designation.

 

The Board’s designations shall continue as if reaffirmed each Plan Year without
further action of the Board until the earliest of the Participant’s termination
of employment from the Company for any reason, the Board’s written rescission of
such designation (which may not be retroactive from the date of the Board’s
action) or the termination of this Plan.

 

The Board generally shall make its designations in its meeting during the first
quarter (October-December) of the Company’s fiscal year (October 1 through
September 30), to be effective as of the first day of the following Plan Year.
The Board also, however, may designate that individuals may

 

6

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

become Active Participants as of any date other than the first day of the Plan
Year. Individuals so designated shall, as set forth in Section 2.4, have 30 days
to submit a Written Election.

 

In the case of an individual who is a Key Employee by virtue of his or her
status as a member of the Board, the Board member shall be deemed to be a Key
Employee as to compensation payable on account of his or her service as a Board
member, immediately upon the commencement of his or her term on the Board or, if
later, May 3, 2006. Such designation shall continue until his or her term on the
Board ends. Board members may not be Designated Participants.

 

2.4. Written Election by Participant. Except as set forth below, each Key
Employee designated by the Board as a Participant for a Plan Year shall submit
to the Plan Committee a Written Election before the first day of the Plan Year
for which he has been designated as a Participant. If a Key Employee will become
a Participant after the first day of Plan Year, he shall have 30 days before or
after his Entry Date to submit the Written Election. If a Participant fails to
submit a Written Election within the period specified in this Section 2.4, he
may not participate in the Plan until the first Entry Date of the next
succeeding Plan Year (provided that he continues to be eligible under
Section 2.1). Notwithstanding the foregoing, any Written Election to defer Plan
Year Compensation that is Performance-based Compensation shall be made not later
than six months before the end of the period over which the services to which it
applies are performed. Also notwithstanding the foregoing, any Written Election
to defer a Non-Qualified Deferred Compensation Grant that is attributable to
services performed in a Plan Year prior to the Plan Year in which the
Non-Qualified Deferred Compensation Grant is paid but that is not
Performance-based Compensation shall be made not later than the end of the Plan
Year before the Plan Year in which the services are performed. For example, a
bonus that is not Performance-based Compensation but that is paid in February,
2007, for services performed in 2006, may be deferred pursuant to a Written
Election submitted before December 31, 2005.

 

(A) Each Written Election shall be made on the form or in the manner specified
by the Plan Committee for this purpose and shall set forth:

 

  (1) the percentage of Plan Year Compensation or the dollar amount the Key
Employee has determined to defer under the Plan for the Plan Year, pursuant to
Section 3.1 below;

 

  (2) the investment vehicles into which the Key Employee directs that his
Participant Deferral Account and his Company Contribution Account be invested
and the percentage of his Participant Deferral Account and his Company
Contribution Account allocated to each elected investment vehicle;

 

  (3) the date on which his benefit is to be distributed (or a distribution will
commence) which is the earlier of the date specified by the Participant or when
he has a Separation from Service with the Company;

 

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

  (4) the form in which his benefit with respect to the Written Election in
question is to be distributed, which form must be available for selection on the
Written Election form provided by Committee.

 

(B) The Written Election shall become effective with respect to such Participant
as of the first day of the Plan Year that occurs after the date such Written
Election is received by the Committee; provided, that a Participant who first
becomes a Participant in the Plan during a Plan Year may enter into a Written
Election to be effective as of the first payroll period next following the date
he enters the Plan or, if later, the first payroll period that begins after the
Participant submits his Written Election to the Committee. Unless earlier
modified by the Participant under the terms of this Plan, a Participant’s
election shall continue in effect until the Participant’s employment with the
Company is terminated or, if earlier, until the Participant ceases to be an
Active Participant under the Plan. Notwithstanding the foregoing, the portion of
a Written Election directing the investment of the Participant’s Participant
Deferral Account and Company Contribution Account shall remain in effect until
modified by the Participant, notwithstanding the Participant’s termination of
employment or cessation of active participation in the Plan.

 

(C) A Participant may change a submitted Written Election in accordance with the
following:

 

  (1) A Participant may change the investment vehicle(s) and the percentage
allocation of his Participant Deferral Account and his Company Contribution
Account allocated to each investment vehicle in the manner and frequency and as
of the dates specified by the Committee, and only in such funds as designated by
the Plan Committee and as included in the Plan. Such a change may be made by the
Beneficiary of a deceased Participant to the extent that the Beneficiary is
entitled to a benefit under this Plan.

 

  (2) A Participant may change the date or form of distribution as to his
Pre-AJCA Account by submitting a new Written Election to the Plan Committee,
provided that such change is submitted at least ninety (90) days prior to the
original date of distribution, the new date of distribution is subsequent to the
original date of distribution, and only one such change may be made after the
original election. Notwithstanding anything contained herein to the contrary,
the date and form of distribution selected on the Written Election made for the
Plan Year beginning January 1, 2004, shall supercede any contrary election for
any previous Plan Year.

 

A Participant may change the date or form of distribution as to his Post-AJCA
Account only as set forth in Section 6.3.

 

  (3) The portion of Plan Year Compensation deferred pursuant to Section 3.1 and
specified in the Written Election for a given Plan Year (or part of a Plan Year)
may not be changed.

 

(D) Notwithstanding anything as set forth above, including (A)(1), to the extent
that a Participant is a Participant by virtue of his or her status as a member
of the Board,

 

8

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

the Participant shall be deemed to have elected to defer 100 percent of his or
her Plan Year Non-Qualified Deferred Compensation Grant for each Plan Year in
which he or she is an Active Participant in this Plan. Such a Participant shall
nevertheless be required to submit a Written Election solely selecting for the
purpose of investment vehicles, a distribution date and a form of distribution
in the same manner as any other Participant.

 

2.5. Duration of Participation/Designated Participation. Any Key Employee who
has become a Participant at any time shall remain a Participant, even though he
is no longer an Active Participant, until his entire benefit under the terms of
the Plan has been paid to him (or to his Beneficiary in the event of his death),
at which time he ceases to be a Participant. Once identified by the Board as a
Designated Participant, a Participant shall remain in that status for purposes
of this Plan until the earlier of (i) the termination of the Participant’s
employment with the Company for any reason, (ii) the Board’s revocation of the
Participant’s status as such or as a Designated Participant or (iii) the
termination of this Plan by the Company.

 

2.6. Maintenance of Records. Records regarding the designation of Participants
by the Board shall be maintained in the corporate minute book. The Written
Elections by Participants shall be maintained in the corporate records with all
other files pertaining to this Plan.

 

3. Contributions and Allocation.

 

3.1. Participant Contributions.

 

(A) A Participant may elect to defer a portion of his Plan Year Compensation
each Plan Year (described either as a percentage of Plan Year compensation or a
flat dollar amount), up to the maximum amount allowed pursuant to following
schedule for the tier to which such Participant belongs (as determined by the
Board pursuant to Section 2.3):

 

Tier

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

   Maximum Deferral %

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

Tier 1

   100%

Tier 2

     25%

Tier 3

     12%

Tier 4

     10%

Tier 5

   100%

 

In the case of a Participant in Tier 5, which shall be limited to Participants
who are Board members, and notwithstanding the preceding paragraph, to the
extent that the Participant is a Participant because he or she is a Board
member, in accordance with Section 2.4(D) he or she shall not have an election
to defer Non-Qualified Deferred Compensation Grant attributable to his or her
status as a Board member. Instead, each such Participant shall be deemed to have
elected to defer 100 percent of the Non-Qualified Deferred Compensation Grant he
or she receives on account of his or her Board membership.

 

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

(B) If the Participant has elected to defer a specified dollar amount for a
given Plan Year in accordance with Sections 2.4 and 3.1(A), once a Participant’s
contributions for that Plan Year have reached such elected dollar amount, such
Participant shall not be allowed to defer additional portions of his Plan Year
Compensation for the remainder of the Plan Year. Any deferred amounts in excess
of his elected dollar amount can be refunded to the Participant as soon as
practicable.

 

(C) Subject to the limitations of Section 3.1(A), for purposes of the elections
under Section 2.4 and the limitations under Section 3.1 of the Plan, the
election by Designated Participants to defer amounts out of cash bonus
compensation shall be made, if at all:

 

(1) by Written Election but separately from the election to defer out of base
salary, but subject to the same maximum deferral percentage applicable to
regular Plan Year Compensation;

 

(2) prior to both (i) the date a discretionary bonus is declared and (ii) the
beginning of the Plan Year in which the bonus is paid.

 

(3) If a bonus constitutes performance-based compensation within the meaning of
Code Section 409A(a)(4)(B)(iii), and is based on services performed over a
period of at least 12 months, then notwithstanding (2) above, a Participant may
make a Written Election as to such bonus no later than six months before the end
of the period over which it is based. The rule in this paragraph (3) regarding
the timing of a Written Election shall take precedence over the timing rule in
(2) above if the bonus constitutes performance-based compensation subject to
this paragraph (3). As to performance-based compensation paid in 2005, the Plan
shall apply any transition rules as the IRS may prescribe by regulation or
otherwise, to ensure that Participants may make deferral elections from
performance-based bonuses paid in 2005 that are attributable to service in 2004
or earlier periods.

 

(4) The percentage limitation on deferrals in Section 3.1(A) shall apply
separately to deferrals from base compensation and bonus compensation (in the
case of Designated Participants); accordingly, bonuses shall not be taken into
account when determining the maximum deferral from base compensation and
vice-versa.

 

(D) Participant deferral contributions (including without limitation bonus
deferral contributions described in Section 3.1(C)) shall be collected by
payroll deduction. In the case of a Written Election that specifies a flat
dollar amount, the amount specified (other than amounts deferred from cash
bonuses by Designated Participants) shall be deducted on pro-rated basis over
the payroll periods during the affected Plan Year; in the case of a Written
Election to defer a flat dollar amount of a cash bonus, the specified amount
shall be deducted from the bonus payment.

 

3.2. Company Contributions. On behalf of each Participant for any Plan Year, the
Company may contribute to the Plan an amount equal to a percentage of the amount
each Participant contributes to the Plan as a Participant Contribution. The
applicable percentage of the amount contributed by each Participant shall be
determined and authorized by the Board in its sole discretion. The contribution
rate may (1) differ among Participants in the various Tiers; (2) differ as to
Participant

 

10

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

Contributions from base compensation or bonus; (3) be limited to Participant
Contributions that do not exceed a specified percentage of Plan Year
Compensation or a particular dollar amount; or (4) be allocated taking into
account any combination of (1)-(3) preceding or in any other manner specified by
the Board. Notwithstanding the foregoing, each Plan Year, the Company shall
contribute, on behalf of each Participant who is a member of the Board, an
amount equal to fifty percent (50%) of each such Participant’s contributions to
the Plan from his or her Non-Qualified Deferred Compensation Grant to the extent
that such deferrals are made from Non-Qualified Deferred Compensation Grant paid
on account of his or her Board membership.

 

3.3. Allocation of Participant Contributions. All amounts which a Participant
elects to defer under the terms of this Plan shall be allocated to his
Participant Deferral Account. Each such Participant Deferral Account shall be
credited with earnings as provided in Section 3.5 below.

 

3.4. Allocation of Company Contributions. In each Plan Year, the amount of any
contribution determined for each Participant under Section 3.1 above shall be
allocated to the Company Contribution Account of each Participant by the first
day of the month following the time in which the deferral from pay was made.
Each such Company Contribution Account shall be credited with earnings as in
Section 3.5 below.

 

3.5. Adjustments to Participant Deferral Account and Company Contribution
Account. With respect to each Participant who has a Participant Deferral Account
or a Company Contribution Account under the Plan, the amount credited to each
such account shall be adjusted by the following debits and credits, at the times
and in the order stated:

 

  (A) Each account shall be debited each business day with the total amount of
any payments made from such account since the last preceding business day.

 

  (B) The Participant Deferral Account shall be credited on each Crediting Date
with the total amount of any Participant deferrals to such account since the
last preceding Crediting Date.

 

  (C) The Company Contribution Account shall be credited on each date specified
by the Committee with the total amount of Company Contributions to such account
since the last date that Company Contributions were credited.

 

  (D) The Participant Deferral Account and the Company Contribution Account
shall be credited or debited on each day securities are traded on a national
stock exchange with the amount of deemed investment gain or loss resulting from
the performance of the investment funds elected by the Participant in accordance
with Section 2.4. The amount of such deemed investment gain or loss shall be
determined by the Committee and such determination shall be final and conclusive
upon all concerned.

 

  (E) A Participant, by electing to participate in this Plan, agrees that
neither the Company nor the Plan Committee has any liability for the investment
results of the assets set aside in the Trust.

 

11

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

PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

  (F) The Trustee, as directed by the Plan Committee, shall have the duty and
sole authority to invest the Trust assets and funds in accordance with the terms
of the Trust Agreement, and all rights associated with the Trust assets shall be
exercised by the Trustee, as designated by the Board.

 

3.6. Forfeitures. If any amount of Participant Contributions are forfeited in
any year, such forfeited amounts shall be used to reduce future Company
Contributions.

 

3.7. Funding. The assets of the Plan shall be held under the Trust Agreement (a
“grantor” or “rabbi” trust). As such, the Plan is intended to be an unfunded
plan for purposes of the requirements of ERISA and the Code. Notwithstanding the
provisions under the terms of the Plan that amounts contributed to this Plan,
plus earnings thereon, shall be allocated to separate accounts of Participants
or that such amounts may become “vested”, all such amounts credited to such
individual accounts shall remain the general assets of the Company, and as such
shall remain subject to the claims of the general creditors of the Company. This
Plan and the related Trust Agreement do not create, nor does any Employee,
Participant or Beneficiary have any right with respect to any specific assets of
the Company.

 

Under no circumstances shall the assets of the Plan, whether held under the
Trust Agreement or otherwise, be located outside the United States.

 

3.8 Insurance Contracts. In connection with this Plan, the Company may, in its
sole discretion, direct the Trustee to purchase life insurance contracts
insuring Participants in this Plan but owned solely by the Trust (“Life
Insurance Contract(s)”). All premiums with respect to Life Insurance Contracts
shall be paid out of contributions to the Plan that have been transferred to the
Trustee, and the Trust shall be the sole beneficiary under such policies. The
Company has no obligation to direct the purchase of a Life Insurance Contract
with respect to any Participant. Whether a given life insurance policy owned by
the Trust and covering a Participant in this Plan is a Life Insurance Contract
under this Plan with respect to such Participant shall be determined by the Plan
Committee in its sole discretion.

 

4. Vesting of Benefits.

 

4.1. Vesting of Participant Deferral Accounts. The Participant Deferral Account
of each Participant shall be one hundred percent (100%) vested in such
Participant at all times, provided, however, that in the event of a Haircut
Withdrawal, a portion of such account shall be forfeited in accordance with
Section 5.5.

 

4.2. Company Contribution Account. The Company Contribution Account of each
Participant shall be one hundred percent (100%) vested in such Participant at
all times, provided, however, that in the event of a Haircut Withdrawal
described in Section 5.5, a portion of such account shall be forfeited in
accordance with Section 5.5.

 

12

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

5. Types of Benefits.

 

5.1. Age 65 Benefit. If a Participant so elects in his Written Election, he
shall receive his Retirement Benefit(s) with respect to all his Written
Election(s) upon Retirement in the form(s) specified on the respective Written
Election(s) governing such benefit.

 

5.2 Termination of Service Benefit. If a Participant’s employment with or
service to the Company terminates prior to distribution, he will receive his
Retirement Benefit calculated under the definition of Retirement Benefit under
Section 1 in the manner specified in Section 6.1(B).

 

5.3. Disability Benefit.

 

(A) If a Participant is determined to be Disabled as defined in the definition
of Disabled in Section 1, he will receive his Retirement Benefit with respect to
all his Written Elections, in the applicable form(s) elected by the Participant
in his Written Election(s), commencing as soon as practical after the
Committee’s determination that the Participant is disabled.

 

(B) The determination of whether a Participant is Disabled shall be made by the
Plan Committee as follows:

 

  (1) A Participant who believes he has suffered a Disability shall make
application to the Plan Committee, on a form prescribed by the Plan Committee,
for a determination of whether he is Disabled. The Participant shall make such
written application to the Plan Committee on or after the date which is at least
five (5) consecutive months following the date he first suffered the impairment
under consideration. Any determination by the Plan Committee that a Disability
exists shall be effective only after the date the Disability has continued for
six (6) consecutive months.

 

  (2) The Plan Committee shall notify each Participant who has made application
under this Section 5.3(B), in writing, of its determination within three
(3) months of the date the Plan Committee receives the Participant’s application
hereunder. The Participant shall cooperate in providing any information to the
Plan Committee which it requires in making its determination, including, but not
limited to, access to the Participant’s medical records, direct contact with his
physician and physical examination by a physician selected by the Company. Any
Participant who does not fully cooperate shall be deemed not Disabled by the
Plan Committee and so notified.

 

  (3)

Notwithstanding anything in Sections 5.3(B)(1) and (2) to the contrary, a
Participant may file a claim for Disability benefits at any time after incurring
a Disability and prior to the dates specified in such sections, provided that
the physician treating the Participant for the disabling condition submits the
evidence and certification described in the definition of Disabled in Section 1,
and provided further that the Participant must still file the written
application contemplated in Section 5.3(B)(1) and provide the requisite
cooperation described in Section 5.3(B)(2) in order to receive such benefits.
Any determination by the Plan

 

13

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

PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

 

Committee that a Disability exists under this Section 5.3(B)(3) will be
effective on the date of such determination.

 

  (4) Except to the extent an appeal is available under this Plan, all
determinations made by the Plan Committee shall be final, and no Participant
shall be considered Disabled for any purpose whatsoever under the provisions of
this Plan if determined not to be Disabled by the Plan Committee under the
procedures set forth in this Section 5.3(B).

 

5.4. Death Benefit.

 

(A) If a Participant dies after a distribution under Sections 5.1, 5.2, 5.3, 5.5
or 5.6 of this Plan has commenced, the payments of such distribution otherwise
due to the Participant will continue to his designated Beneficiary, in the
applicable form elected by the Participant in his Written Election.

 

(B) If a Participant dies before a distribution under this Plan has commenced
and the Trustee has not purchased a Life Insurance Contract in connection with
such Participant’s participation in this Plan, the Participant’s designated
Beneficiary will receive the Participant’s Retirement Benefit with respect to
all his Written Elections, in the applicable form(s) elected by the Participant
in his Written Election(s).

 

(C) If a Participant dies before a distribution under this Plan has commenced
the Participant’s designated Beneficiary will receive the group term life
insurance policy benefit ($200,000 for 2004) and the vested balance of all
accounts under this Plan.

 

5.5 Haircut Withdrawals. A Participant, while he is employed by the Company, may
make one withdrawal from his Deferred Compensation Account by written request to
the Committee; provided, however, that a Participant who requests a withdrawal
under this Section 5.5 shall incur a penalty (the “haircut”) equal to the
greater of $500 or 5% of the amount withdrawn, and this penalty shall be
forfeited from the Deferred Compensation Account of the Participant. The
Participant must also forgo participation in the Plan until the beginning of the
first Plan Year that begins at least six months after the date of the
withdrawal. At that time, the Participant must make a new Written Election to
make deferrals under the Plan as of the beginning of a Plan Year, provided he is
still eligible to do so, as his previous election will not automatically be
reinstated.

 

Notwithstanding the foregoing, a Participant may not make the withdrawal
described in the previous paragraph from any amounts deferred under the Plan on
and after January 1, 2005.

 

5.6 Financial Hardship Withdrawals. A distribution from a Participant’s Deferral
Account and/or Company Contribution Account may be made to a Participant on
account of financial hardship, subject to the following provisions:

 

(A) A Participant may, at any time prior to his Retirement or termination of
employment with the Company for any reason, including Disability, make
application to the Committee to receive a distribution in a lump sum of all or a
portion of his Deferred Compensation and Participant

 

14

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

PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

Contribution Accounts (determined as of the date the distribution, if any, is
made under this Section 5.6) because of an unforeseeable emergency that results
in severe financial hardship to the Participant. A distribution because of an
unforeseeable emergency shall not exceed the amount required to meet the
immediate financial need created by the unforeseeable emergency and not
otherwise reasonably available from other resources of the Participant.

 

(B) The Participant’s request for a distribution on account of financial
hardship must be made in writing to the Plan Committee. The request must specify
the nature of the financial hardship, the total amount requested to be
distributed from the Deferred Compensation or Participant Contribution Account,
and the total amount of the actual expense incurred on account of financial
hardship.

 

(C) If a distribution under this Section 5.6 is approved by the Committee, such
distribution will be made as soon as practicable following the date it is
approved. The processing of the request shall be completed as soon as
practicable from the date on which the Committee receives the properly completed
written request for a distribution on account of a financial hardship. If a
Participant’s termination of service occurs after a request is approved in
accordance with this Section 5.6, but prior to distribution of the full amount
approved, the approval of the request shall be automatically null and void and
the benefits which the Participant is entitled to receive under the Plan shall
be distributed in accordance with the applicable distribution provisions of the
Plan. Only one financial hardship distribution shall be made within any Plan
Year.

 

(D) The Committee may from time to time adopt additional policies or rules
governing the manner in which such distributions may be made so that the Plan
may be conveniently administered.

 

(E) As to a hardship withdrawal from a Participant’s Post-AJCA Account, an
unforeseeable emergency means a severe financial hardship to the Participant
resulting from an illness or accident of the Participant, the Participant’s
spouse or a dependent (as defined in Code Section 152(a)) of the Participant,
loss of the Participant’s property due to casualty or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant. The Committee may, but is not required,
to impose the definition of an unforeseeable emergency under this paragraph
(E) on any withdrawal from a Participant’s Pre-AJCA Account.

 

(F) A distribution from a Participant’s Post-AJCA Account because of a hardship
under this Section 5.6 shall not exceed the amount necessary to satisfy such
emergency, plus amounts necessary to pay taxes reasonably anticipated as a
result of the distribution, after taking into account the extent to which such
hardship is or may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the Participant’s assets (to the
extent the liquidation of such assets would not itself cause severe financial
hardship).

 

15

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

PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

6. Distributions.

 

6.1. Form of Benefits. Benefits under the Plan shall be paid in the form
associated with Type of Benefit to be received by the Participant under
Section 5, and to the extent a Type of Benefit may be distributed in various
forms, the Company shall pay benefits in the form elected by the Participant in
his Written Election. Where yearly installments are contemplated, such
installments shall be as nearly equal as possible. The forms of benefits
associated with the Types of Benefits are the following:

 

(A) Benefits upon Retirement (Section 5.1), Disability (Section 5.3) or death
(Section 5.4) may be paid in (i) one lump sum; (ii) 5 yearly installments;
(iii) 10 yearly installments; or (iv) 15 yearly installments, as elected by the
Participant in his Written Election deferring such amounts. The form of payment
elected by a Participant in his Written Election for any Plan Year shall apply
both to Participant Contributions and to Company Contributions that are made in
or are allocable to such Plan Year.

 

(B) Benefits from a Participant’s Pre-AJCA Account shall, upon the Participant’s
termination of employment with the Company for reasons other than Retirement,
Disability or death (Section 5.2), be paid in one lump sum or five yearly
installments, notwithstanding the pay-out election on the Participant’s Written
Election. Within thirty days after the Participant’s termination of employment
with the Company for a reason other than Retirement, Disability or death, the
Participant shall elect to have his Pre-AJCA Account paid in one lump sum or in
five yearly installments. If the Participant does not make an election during
this thirty-day period, he shall receive his entire Pre-AJCA Account in a single
lump sum.

 

Benefits from a Participant’s Post-AJCA Account shall, upon the Participant’s
termination of employment with the Company for reasons other than Retirement,
Disability or death, be paid in the form and at the time specified by the
Participant in the applicable Written Election, except to the extent that the
Participant has amended such directions where such a change is otherwise
allowable under this Plan.

 

(C) A Haircut Withdrawal (Section 5.5) shall be paid in one lump sum; and

 

(D) Financial Hardship Benefit (Section 5.6) shall be paid in one lump sum.

 

6.2. Commencement of Payments. Payment of benefits under this Plan to the
Participant will commence in accordance with the following:

 

(A) Retirement Benefit (Section 5.1), Disability Benefit (Section 5.3) and Death
Benefit (Section 5.4) payments shall commence no later than January 15 of the
Plan Year following the Plan Year in which the Participant retires, becomes
disabled or dies, as the case may be. Termination of Service Benefits (Section
5.2) shall commence no earlier than the end of the seventh month that begins
after the month in which the Participant’s termination of service occurs.
Notwithstanding the foregoing, as to Post-AJCA Deferrals, Retirement Benefits
and Termination of Service Benefits shall not be paid to any Specified Employee
earlier than (i) six months after the date of the Participant’s Separation from
Service (as defined by Regulations) or, (ii) if earlier, the date of the
Participant’s death. A Specified Employee is any Participant who is a key
employee of the Company or any affiliate of the Company, as “key employee” is
defined in Code Section 416(i) without regard to paragraph (5) thereof, and as
affiliate is defined in Regulations.

 

(B) Financial Hardship Benefit (Section 5.6 and 5.6A) payments and Haircut
Withdrawals (Section 5.5) payments shall commence no later than sixty (60) days
after a request is approved by the Plan Committee.

 

16

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

PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

6.3 Changes to Form and Time of Distribution. Changes to the form and time of
distribution a Participant specified in his Written Election as to Post-AJCA
Deferrals may be made only as set forth in this Section 6.3. Such an election
shall be effective only if:

 

(A) The election does not take effect until at least twelve months after the
date on which the election is made. An election is deemed to have been made for
this purpose on the date it is received by the Committee or its designee.

 

(B) The first payment with respect to which the election shall apply is deferred
for a period of not less than five years from the date as of which it would
otherwise have been made.

 

(C) The election does not accelerate the distribution.

 

(D) If the election related to a distribution that was to have been made
pursuant to the Participant’s selection of a specific date for the distribution
to be made or to commence, the election is made not less than twelve months
prior to the date of the first scheduled payment.

 

7. Amendment, Termination of Plan, Change in Control.

 

7.1. Amendment. The Company reserves the right to amend the Plan at any time by
resolution of the Board. The Board will determine the effective date of any such
amendment. The amendment may not deprive any Participant or Beneficiary of any
portion of a benefit accrued under the terms of this Plan at the time of the
amendment.

 

7.2. Termination of Plan. The Company reserves the right to terminate the Plan
at any time by resolution of the Board. In the event of Plan termination, the
Company will calculate the Retirement Benefit of each Participant as of the
effective date of the termination and distribute such amounts to the Participant
or Beneficiary in a lump sum within thirty (30) days of the Plan’s termination.
This Section 7.2 shall not apply to the extent not allowable under Regulations.

 

7.3. Change in Control. In the event of a Change in Control, the Plan shall
automatically terminate and the provisions of Section 7.2 shall control.

 

8. Benefits not Funded.

 

(A) Participants Unsecured Creditors. Participants and Beneficiaries have the
status of unsecured creditors of the Company, and the Plan constitutes a mere
promise by the Company to make benefit payments in the future. A Participant’s
or Beneficiary’s interest in the Plan is an unsecured claim against the general
assets of the Company, and neither the Participant nor a Beneficiary has any
right against the Participant’s account balances until the Plan has distributed
the Participant’s benefit.

 

(B) Deposits to Trust. Notwithstanding anything in Section 8(A) to the contrary,
the Company will make a transfer of cash to the Trust in the amount necessary to
fund the deferred compensation. A copy of the Trust Agreement is attached to
this Plan. However, such Trust created by

 

17

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

PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

the Company is intended to be a grantor or “rabbi” trust, and any assets held by
such Trust to be used to assist the Company in meeting its obligations under the
Plan, provided that all such assets shall at all times remain subject to the
claims of creditors of the Company.

 

(C) “Top Hat” Plan. It is the intention of the Company that this Plan and the
accompanying Trust shall constitute an unfunded arrangement maintained for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees for purposes of Title I of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations promulgated
thereunder.

 

9. Miscellaneous.

 

9.1. Designation of Beneficiary.

 

(A) Designation. Each Participant shall designate, in writing, prior to the date
he first becomes a Participant in the Plan, one or more Beneficiaries to receive
his benefit under the provisions of Section 5.4. The Participant shall file the
written designation with the Plan Committee. The Participant may revoke a
previous Beneficiary designation by filing a new written beneficiary designation
with the Plan Committee, which shall be effective upon receipt by the Plan
Committee.

 

(B) No Designated Beneficiary. If a Participant fails to file a valid
designation of beneficiary with the Plan Committee under the provisions of this
Section 9.1, or if no designated Beneficiary survives the Participant, then the
death benefit under this Plan shall be payable to the Participant’s spouse or,
if no spouse survives, then to the Participant’s estate. If a Participant names
more than one primary Beneficiary, one or more primary Beneficiary(ies) does not
survive the Participant, and the Participant has not named a contingent
Beneficiary for the share allocated to the deceased Beneficiary, the portion
allocable to the deceased Beneficiary(ies) shall pass as if there is no
surviving Beneficiary (i.e., to the Participant’s spouse or estate, as
applicable).

 

(C) Secondary Beneficiaries. If a Beneficiary becomes entitled to payments under
this Plan as the result of having survived the Participant, the Beneficiary may
designate his own Beneficiary to receive such Plan benefits as may be due to him
and unpaid at the time of his death. Any Beneficiary designation under this
Section 9.1(C) shall be subject to the same terms and conditions applicable to a
Beneficiary designation by a Participant (as specified in this Section 9.1),
including the default beneficiary designations described in 9.1(B).

 

(D) Automatic Revocation Upon Divorce. Notwithstanding anything in this
Section 9.1 to the contrary, if a Participant or Beneficiary who has designated
another Beneficiary under Section 9.2 is subsequently divorced, all beneficiary
designations executed by such Participant or Beneficiary prior to the effective
date of the dissolution of marriage are automatically revoked under the terms of
this Section 9.1. In such event, the Participant or Beneficiary may thereafter
designate one or more Beneficiaries in accordance with the terms of this
Section 9.1. If none is made following the effective date of the dissolution of
the marriage, the individual’s benefit shall be distributed upon his death
pursuant to the terms of Section 9.1(B).

 

18

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

PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

9.2. Benefits Not Assignable. The rights of each Participant or Beneficiary are
not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Participant or any Beneficiary. Neither the Participant nor Beneficiary may
assign, transfer or pledge the benefits under this Plan. Any attempt to assign,
transfer or pledge a Participant’s benefits under this Plan is void.

 

9.3. Benefit. This Plan constitutes an agreement between the Company and each of
the Participants which is binding upon and inures to the Company, its successors
and assigns and upon the Participant and his heirs and legal representatives.

 

9.4. Headings. The headings of the Articles and Sections of this Plan are
included for purposes of convenience only, and shall not affect the construction
or interpretation of any of its provisions.

 

9.5. Notices. All notices, requests, demands, and other communications under
this Plan shall be in writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom notice is to be given,
or (except as otherwise specified in this Plan) on the third day after mailing
if mailed to the party to whom notice is to be given, by first class mail,
registered or certified (return receipt requested), postage prepaid, and
properly addressed to the last known address to each party as set forth on the
first page thereof. Any party may change its address for purposes of this
Section by giving the other parties written notice of the new address in the
manner set forth above.

 

9.6. No Loans. The Plan does not permit any loans to be made to any Participant
or Beneficiary.

 

9.7. Gender Usage. The use of the masculine gender includes the feminine gender
for all purposes of this Plan.

 

9.8. Expenses. Costs of administration of the Plan shall be paid by the Company.

 

9.9. Claims Review Procedure.

 

(A) A claim for benefits must be filed, in writing, with the Company’s Human
Resources Department. A written disposition of a claim shall be furnished to the
claimant within ninety (90) days (forty-five (45) days in the case of a
Disability claim) after the claim for benefits is filed, subject to an extension
of up to ninety (90) days (for Disability claims, two, thirty (30) day
extensions). In the event that an extension is required, the Human Resources
Department will notify the Participant in writing (including a statement of the
reasons for the extension) before the expiration of the then-pending response
period. In the event a claim for benefits is denied, the Human Resources
Department shall provide the claimant with the reasons for denial (including,
without limitation, a reference to any section of the Plan that may be
implicated and/or any additional information needed to perfect the claim and the
reason it is required) and notification of his rights of appeal under this Plan
(and such other applicable information of documentation germane to the decision
as may be required by law).

 

19

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

PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

(B) A claimant whose claim for benefits is denied in whole or in part may file
for a review of such denial with the Plan Committee, no later than sixty
(60) days (one hundred eighty (180) days for Disability cases) after he has
received written notification of the denial.

 

(C) The Plan Committee shall give a request for review a full and fair review,
without deference to the initial review of the Human Resources Department. No
person who participated in the initial review of the claim (or any subordinate
of such person) may participate in the decision on the appeal of the claim. If
the claim for benefits is denied upon completion of a full and fair review,
notice of such denial shall be provided to the claimant within sixty (60) days
(forty-five (45) days in the case of a Disability claim) after the Plan
Committee’s receipt of such written claim for review. This initial period may be
extended by a period of equal length in the event of special circumstances. Such
special circumstances shall be communicated to the claimant in writing within
the initial period. If there is an extension, a decision shall be made as soon
as possible, but not later than 120 days (90 days for Disability claims) after
receipt by the Plan Committee of such claim for review. In the case of an
appealed Disability claim, the determination of which is based in whole or in
part on medical judgment, the Plan Committee shall consult with a health care
professional with appropriate training in the applicable field of medicine and
shall identify those consulted, provided that the selected health care
professional may not be any individual who was consulted in connection with the
initial adverse decision (or any subordinate of such individual).

 

(D) If benefits are provided or administered by an insurance company, insurance
service, or other similar organization which is subject to regulation under the
insurance laws, the claims procedure relating to these benefits may provide for
review. If so, that company, service, or organization will be the entity to
which claims are addressed.

 

9.10. No Other Agreements or Understandings. This Plan represents the sole
agreement between the Company and Participants concerning its subject matter and
it supersedes all prior agreements, arrangements, understandings, warranties,
representations, and statements between the parties concerning its subject
matter.

 

10. Administration.

 

10.1 Responsible Parties. The persons responsible for the Plan and the duties
and responsibilities allocated to each are as follows:

 

(A) Board.

 

  (i) To amend the Plan;

 

  (ii) To appoint and remove member of the Committee;

 

  (iii) To designate Participants; and

 

  (iv) To terminate the Plan.

 

20

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

PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

(B) Committee.

 

  (i) To interpret the provisions of the Plan and to determine the rights of the
Participants under the Plan, except to the extent otherwise provided in
Section 9.9 relating to claims review procedures;

 

  (ii) To administer the Plan in accordance with its terms, except to the extent
powers to administer the Plan are specifically delegated to another person or
persons as provided in the Plan;

 

  (iii) To account for the Retirement Benefits of Participants; and

 

  (iv) To direct the Company in the payment of benefits.

 

  (v) To file such reports as may be required with the United States Department
of Labor, the Internal Revenue Service and any other government agency to which
reports may be required to be submitted from time to time; and

 

  (vi) To administer the claims procedure to the extent provided in Section 9.9.

 

10.2 Authority to Interpret Plan. Subject to the claims procedure set forth in
Section 9.9, the Committee shall have the duty and discretionary authority to
interpret and construe the provisions of the Plan and to decide any dispute
which may arise regarding the rights of Participants hereunder, including the
discretionary authority to construe the Plan and to make determinations as to
eligibility and benefits under the Plan. Determinations by the Committee shall
apply uniformly to all persons similarly situated and shall be binding and
conclusive upon all interested persons.

 

10.3 Third Party Advisors. The Committee may engage an attorney, accountant,
actuary or any other technical advisor on matters regarding the operation of the
Plan and to perform such other duties as shall be required in connection
therewith, and may employ such clerical and related personnel as the Committee
shall deem requisite or desirable in carrying out the provisions of the Plan.
The Committee shall from time to time, but no less frequently than annually,
review the financial condition of the Plan and determine the financial and
liquidity needs of the Plan. The Committee shall communicate such needs to the
Company so that its policies may be appropriately coordinated to meet such
needs.

 

10.4 Compensation of Members. No fee or compensation shall be paid to any member
of the Committee for his service as such.

 

10.5 Indemnification. No member of the Committee shall be personally liable by
reason of any contract or other instrument executed by him or on his behalf as a
member of the Committee nor for any mistake of judgment made in good faith, and
the Company shall indemnify and hold harmless, directly from its own assets
(including the proceeds of any insurance policy the premiums for which are paid
from the Company’s own assets), each member of the Committee and each other
officer, employee, or director of the Company to whom any duty or power relating
to the administration or interpretation of the Plan may be delegated or
allocated, against any unreimbursed or uninsured cost or expense (including any
sum paid in settlement of a claim with the prior written approval of the Board)
arising out of any act or omission to act in connection with the Plan unless
arising out of such person’s own fraud, bad faith, willful misconduct or gross
negligence.

 

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PEDIATRIC SERVICES OF AMERICA, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2006)

 

10.6. Liability. To the extent permitted by law, neither the Plan Committee nor
any other person shall incur any liability for any acts or for any failure to
act except for liability arising out of such person’s own willful misconduct or
willful breach of the Plan.

 

IN WITNESS WHEREOF, the Company has adopted this amended and restated Plan
effective on January 1, 2006.

 

PEDIATRIC SERVICES OF AMERICA, INC. By:  

/s/ Daniel J. Kohl

   

Daniel J. Kohl

   

President and Chief Executive Officer

 

Approved by the Compensation Committee of the Board of Directors

on May 3, 2006

 

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