exhibit_10-3.htm


    EXHIBIT
      10-3

     

    


     

    


     

    


     

    


     

    2008
      HALLIBURTON ELECTIVE DEFERRAL PLAN

     

    


     

    


     

    


     

    


     

    


     

    


     

    As
      Amended and Restated

     

    Effective
      January 1, 2008

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    TABLE
      OF CONTENTS

     

    
      	
              I.        Definitions
                and Construction

            	
              1

            
	
              1.1           Definitions

            	
              1

            
	
              1.2           Number
                and Gender

            	
              4

            
	
              1.3           Headings

            	
              4

            
	
               II.         Participation

            	
              5

            
	
              2.1           Participation

            	
              5

            
	
              2.2           Cessation
                of Active Participation

            	
              5

            
	
               
                III.         Deferral Account
                Credits; Investment Elections

            	
              5

            
	
              3.1           Base
                Salary Deferrals

            	
              5

            
	
              3.2           Bonus
                Compensation Deferrals

            	
              6

            
	
              3.3           Long-Term
                Incentive Compensation Deferrals

            	
              6

            
	
              3.4           Investment
                of Deferral Accounts

            	
              7

            
	
               
                IV.         Emergency
                Withdrawals

            	
              8

            
	
               V.         Payment
                of Benefits

            	
              8

            
	
              5.1           Payment
                Election Generally

            	
              8

            
	
              5.2           Subsequent
                Payment Elections

            	
              8

            
	
              5.3           Time
                of Benefit Payment

            	
              9

            
	
              5.4           Form
                of Benefit Payment

            	
              9

            
	
              5.5           Total
                and Permanent Disability

            	
              10

            
	
              5.6           Death

            	
              10

            
	
              5.7           Designation
                of Beneficiaries

            	
              10

            
	
              5.8           Other
                Separation from Service

            	
              10

            
	
              5.9           Payment
                of Benefits

            	
              11

            
	
              5.10         Unclaimed
                Benefits

            	
              11

            
	
              5.11         No
                Acceleration of Bonus or Long-Term Incentive

            	 
	
                                                
                 Compensation

            	
              11

            
	
               
                VI.         Administration of
                the Plan

            	
              11

            
	
              6.1           Committee
                Powers and Duties

            	
              11

            
	
              6.2           Self-Interest
                of Participants

            	
              12

            
	
              6.3           Claims
                Review

            	
              12

            
	
              6.4           Employer
                to Supply Information

            	
              13

            
	
              6.5           Indemnity

            	
              13

            
	
                
                VII.         Administration
                of Funds

            	
              14

            
	
              7.1           Payment
                of Expenses

            	
              14

            
	
              7.2           Trust
                Fund Property

            	
              14

            
	
               
                VIII.           Nature
                of the Plan

            	
              14

            
	
              IX.            Participating
                Employers

            	
              15

            


    


    
      
              

                  
    

        
        

      

      
        (i)

        
          

        

      

      
        
        

      

    


    


    
      	
              X.          Miscellaneous

            	
              16

            
	
              10.1           Not
                Contract of Employment

            	
              16

            
	
              10.2           Alienation
                of Interest Forbidden

            	
              16

            
	
              10.3           Withholding

            	
              16

            
	
              10.4           Amendment
                and Termination

            	
              16

            
	
              10.5           Severability

            	
              17

            
	
              10.6           Governing
                Laws

            	
              17

            
	
              10.7           Section
                409A Compliance

            	
              17

            
	
              APPENDIX
                A

            	
              18

            
	
               
                III.        Grandfathered Plan
                Account Credits; Investment Elections

            	
              19

            
	
              3.1           Base
                Salary Deferrals

            	
              19

            
	
              3.2           Bonus
                Compensation Deferrals

            	
              19

            
	
              3.3           Long-Term
                Incentive Compensation Deferrals

            	
              19

            
	
              3.4           Investment
                of Grandfathered Plan Accounts

            	
              19

            
	
               IV.           Withdrawals

            	
              20

            
	
              4.1           Emergency
                Withdrawals

            	
              20

            
	
              4.2           Non-Emergency
                Withdrawals

            	
              21

            
	
              V.          Payment
                of Benefits

            	
              22

            
	
              5.1           Payment
                Election Generally

            	
              22

            
	
              5.2           Subsequent
                Payment Elections

            	
              22

            
	
              5.3           Time
                of Benefit Payment

            	
              22

            
	
              5.4           Form
                of Benefit Payment

            	
              23

            
	
              5.5           Total
                and Permanent Disability

            	
              23

            
	
              5.6         
                 Death

            	
              24

            
	
              5.7          
                Designation of Beneficiaries

            	
              24

            
	
              5.8           Other
                Termination of Employment

            	
              24

            
	
              5.9           Change
                in the Company’s Credit Rating

            	
              24

            
	
              5.10          Payment
                of Benefits

            	
              25

            
	
              5.11          No
                Acceleration of Bonus or Long-Term Incentive

            	 
	
               Compensation

            	
              25

            


    

    


     


    
      
              

                        
    

        (ii)

      

      
        
        

        
          

        

      

      
        
        

      

    


    2008
      HALLIBURTON ELECTIVE DEFERRAL PLAN

     

    W
      I T N E S S E T H:

     

    WHEREAS,
      Halliburton Company (the “Company”), desiring to aid certain of its employees in
      making more adequate provision for their retirement, has adopted the Halliburton
      Elective Deferral Plan (the “Plan”), as most recently amended and restated
      effective May 1, 2002; and

     

    WHEREAS,
      the Company desires to continue to provide participants with an opportunity
      to
      make deferrals of amounts earned on or after January 1, 2005, consistent with
      the provisions of Section 409A of the Internal Revenue Code, as amended;
      and

     

    WHEREAS,
      certain participants in the Plan made transition elections related to amounts
      earned on or after January 1, 2005, as permitted in accordance with guidance
      under Section 409A of the Internal Revenue Code; and

     

    WHEREAS,
      the Company desires to preserve the material terms of the Plan as in effect
      on
      December 31, 2004 (the “Grandfathered Plan”) in order that the Grandfathered
      Plan qualify as a grandfathered plan for purposes of Section 409A of the
      Internal Revenue Code, as amended; and

     

    WHEREAS,
      certain provisions applicable solely to the Grandfathered Plan are preserved
      in
      Appendix A, which provisions shall be substituted for the corresponding
      provisions of the Plan for purposes of determining the terms applicable to
      amounts deferred under the Grandfathered Plan.

     

    NOW
      THEREFORE, the Plan is hereby renamed the 2008 Halliburton Elective
      Deferral Plan and is hereby amended and restated to read as follows, effective
      as of January 1, 2008:

     

    I.

     

    Definitions
      and Construction

     

            
      1.1           Definitions.  Where
      the following words and phrases appear in the Plan, they shall have the
      respective meanings set forth below, unless their context clearly indicates
      to
      the contrary.

     

    
      	
              (1)  

            	
              Act:  The
                Employee Retirement Income Security Act of 1974, as
                amended.

            


    

     

    
      	
              (2)  

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

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
              (3)  

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

            


    

     

    
      	
              (4)  

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

            


    

     

    
      	
              (5)  

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

            


    

     

    
      	
              (6)  

            	
              Code:  The
                Internal Revenue Code of 1986, as
                amended.

            


    

     

    
      	
              (7)  

            	
              Compensation
                Committee:  The Compensation Committee of the
                Directors.

            


    

     

    
      	
              (8)  

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

            


    

     

    
      	
              (9)  

            	
              Company:  Halliburton
                Company.

            


    

     

    
      	
              (10)  

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

            


    

     

    
      	
              (11)  

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

            


    

     

    
      	
              (12)  

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

            


    

     

    
      	
              (13)  

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

            


    

     


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    
      	
              (14)  

            	
              Directors:  The
                Board of Directors of the Company.

            


    

     

    
      	
              (15)  

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

            


    

     

    
      	
              (16)  

            	
              Employee:  Any
                person employed by the Employer.

            


    

     

    
      	
              (17)  

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

            


    

     

    
      	
              (18)  

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

            


    

     

    
      	
              (19)  

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

            


    

     

    
      	
              (20)  

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

            


    

     

    
      	
              (21)  

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

            


    

     

    
      	
              (22)  

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

            


    

     

    
      	
              (23)  

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

            


    

     

    
      	
              (24)  

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

            


    

     


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    
      	
              (25)  

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

            


    

     

    
      	
              (26)  

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

            


    

     

    
      	
              (27)  

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

            


    

     

    
      	
              (28)  

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

            


    

     

    
      	
              (29)  

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

            


    

     

    
      	
              (30)  

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

            


    

     

    
      	
              (31)  

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

            


    

     

    
      	
              (32)  

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

            


    

     

    
      	
              (33)  

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

            


    

     

    1.2           Number
      and Gender.  Wherever appropriate herein, words used in
      the singular shall be considered to include the plural and words used in the
      plural shall be considered to include the singular.  The masculine
      gender, where appearing in the Plan, shall be deemed to include the feminine
      gender.

     

    1.3           Headings.  The
      headings of Articles and Sections herein are included solely for convenience,
      and if there is any conflict between such headings and the text of the Plan,
      the
      text shall control.

     


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    II.


     

    Participation

     

    2.1           Participation.  Participants
      in the Plan are those Eligible Employees who are selected by the Committee,
      in
      its sole discretion, as Participants.  The Committee shall notify each
      Participant of his or her selection as a Participant.  Subject to the
      provisions of Section 2.2, a Participant shall remain eligible to defer Base
      Salary and/or Bonus Compensation hereunder for each Plan Year following his
      or
      her initial year of participation in the Plan.

     

    2.2           Cessation
      of Active Participation.  Notwithstanding any provision
      herein to the contrary, an individual who has become a Participant in the Plan
      shall cease to be entitled to defer Base Salary and/or Bonus Compensation
      hereunder effective as of the date he or she ceases to be an Eligible Employee
      or any earlier date designated by the Committee.  Any such Committee
      action shall be communicated to the affected individual prior to the effective
      date of such action.

     

    III.


     

    Deferral
      Account Credits; Investment Elections

     

    
      	
              3.1  

            	
              Base
                Salary
                Deferrals.

            


    

     

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

     


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    (b)  If
      a
      revocation would not result in taxation under Section 409A, a Participant shall
      be permitted to revoke his or her election to defer receipt of his or her Base
      Salary under Section 3.1(a) for any Plan Year in the event of an Unforeseeable
      Emergency, as determined by the Committee in its sole discretion.  For
      purposes of the Plan, the decision of the Committee regarding the existence
      or
      nonexistence of an Unforeseeable Emergency of a Participant shall be final
      and
      binding.  Further, the Committee shall have the authority to require a
      Participant to provide such proof as it deems necessary to establish the
      existence and significant nature of the Participant’s Unforeseeable
      Emergency.  A Participant who is permitted to revoke his or her Base
      Salary deferral election during a Plan Year shall not be permitted to resume
      Base Salary deferrals under the Plan until the next following Plan
      Year.

     

    3.2           Bonus
      Compensation Deferrals.  Any Participant may elect to
      defer receipt of an integral percentage of from 5% to 75% of his or her Bonus
      Compensation, in 5% increments, for any Plan Year.  A Participant’s
      election to defer receipt of a percentage of his or her Bonus Compensation
      attributable to services performed in any Plan Year shall be made on or before
      the last day of the preceding Plan Year; provided, however, that to the extent
      Bonus Compensation satisfies the requirements for performance-based compensation
      under Section 409A, the Committee may allow a Participant to make a deferral
      election no later than the date that is six months before the end of the
      performance period for which the Bonus Compensation is
      paid.  Notwithstanding the foregoing, if any individual initially
      becomes eligible to participate in the Plan other than on the first day of
      a
      Plan Year, such Participant’s election to defer receipt of a percentage of his
      or her Bonus Compensation for such Plan Year may be made no later than 30 days
      after the date he or she becomes eligible to participate in the
      Plan.  Deferrals of Bonus Compensation under this Plan shall be made
      before elective deferrals or contributions of Bonus Compensation under any
      other
      plan maintained by the Employer.  Bonus Compensation deferrals made by
      a Participant shall be credited to such Participant’s Deferral Account as of the
      date the Bonus Compensation deferred would have been received by such
      Participant had no deferral been made pursuant to this Section
      3.2.  Deferral elections for a Plan Year pursuant to this Section
      shall be irrevocable.

     

    3.3           Long-Term
      Incentive Compensation Deferrals.  Any Participant may
      elect to defer receipt of an integral percentage of from 5% to 75% of his or
      her
      Long-Term Incentive Compensation, in 5% increments, payable in any Plan
      Year.  A Participant’s election to defer receipt of a percentage of
      his or her Long-Term Incentive Compensation payable with respect to any
      performance cycle shall be made on or before the date that is six months prior
      to the end of such performance cycle.  Long-Term Incentive
      Compensation deferrals made by a Participant shall be credited to such
      Participant’s Deferral Account as of the date the Long-Term Incentive
      Compensation deferred would have been received by such Participant had no
      deferral been made pursuant to this Section 3.3.  Deferral elections
      pursuant to this Section shall be irrevocable.

     


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    3.4           Investment
      of Deferral Accounts.

     

    (a)  As
      of any
      Determination Date, each Participant’s Deferral Account shall consist of the
      balance of the Participant’s Deferral Account as of the immediately preceding
      Determination Date adjusted for:

     

    
      	
              (1)  

            	
              additional
                deferrals pursuant to Sections 3.1, 3.2 and/or
                3.3;

            


    

     

    
      	
              (2)  

            	
              distributions
                (if any); and

            


    

     

    
      	
              (3)  

            	
              the
                appropriate Credited Investment
                Return.

            


    

     

    All
      adjustments will be recorded to the Participants’ Deferral Accounts as of each
      Determination Date.

     

    (b)  The
      Committee shall designate from time to time one or more Investment Options
      in
      which the Deferral Accounts may be deemed invested. The Committee shall have
      the
      sole discretion to determine the number of Investment Options to be designated
      hereunder and the nature of the Investment Options and may change or eliminate
      any of the Investment Options from time to time.  In the event of such
      change or elimination, the Committee shall give each Participant timely notice
      and opportunity to make a new election. No such change or elimination of any
      Investment Options shall be considered to be an amendment to the Plan pursuant
      to Section 10.4.  A Participant may request that his or her Deferral
      Account be allocated among the deemed Investment Options.

     

    (c)  A
      Participant shall, in connection with his or her election to defer Base Salary,
      Bonus Compensation and/or Long-Term Incentive Compensation for a particular
      Plan
      Year, elect one or more Investment Options into which amounts to be allocated
      to
      his or her Deferral Account in respect of deferrals for such Plan Year shall
      be
      deemed invested by submitting on or before the last day of the preceding Plan
      Year a Deferral and Investment Election Form in accordance with the procedures
      prescribed by the Committee.

     

    (d)  A
      Participant may request a change to his or her Deemed Investment Elections
      for
      future amounts allocated to his or her Deferral Account and amounts already
      allocated to his or her Deferral Account.  Any such change shall be
      made by filing with the Committee an Investment Election Change Form. The
      Committee shall establish procedures relating to changes in Deemed Investment
      Elections, which may include limiting the percentage, amount and frequency
      of
      such changes and specifying the effective date for any such
      changes.

     

    (e)  Each
      Participant’s Deferral Account shall be credited monthly with the Credited
      Investment Return attributable to his or her Deferral Account.  The
      Credited Investment Return is the amount which the Participant’s Deferral
      Account would have earned if the amounts credited to the Deferral Account had,
      in fact, been invested in accordance with the Participant’s Deemed Investment
      Elections.

     


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    IV.


     

    Emergency
      Withdrawals

     

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

     

    V.


     

    Payment
      of Benefits

     

    5.1           Payment
      Election Generally.  In conjunction with each deferral
      election made by a Participant pursuant to Article III for a Plan Year,
      such Participant shall elect, subject to Sections 5.5, 5.6 and 5.8, the time
      and
      the form of payment with respect to such deferral and the Credited Investment
      Returns attributable thereto.

     

    5.2           Subsequent
      Payment Elections.  A Participant may revise his or her
      election regarding the time and form of payment of deferred amounts provided
      that (i) the subsequent deferral election is made no later than twelve months
      prior to the date upon which the deferred amount would have been paid had no
      subsequent deferral election been made and (ii) the subsequent deferral election
      defers payment for a period of not less than five years from the date such
      payment would otherwise have been paid had no subsequent deferral election
      been
      made.  A subsequent deferral election under this Section 5.2 shall not
      be effective until the date that is twelve months after such subsequent deferral
      election is made.  Subsequent deferral elections under this Section
      5.2 must comply with all applicable requirements for subsequent deferral
      elections under Section 409A.

     

    Notwithstanding
      anything to the contrary herein, once a Participant elects payout upon
“Retirement” any future payment election revisions are
      prohibited.  Additionally, a participant may not revise an existing
      election, under Section 5.3 below, from a specific future month and year to
      “Retirement”.

     


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    5.3           Time
      of Benefit Payment.  With respect to each deferral
      election made by a Participant pursuant to Article III, such Participant shall
      elect to commence payment of such deferral and the Credited Investment Returns
      attributable thereto on one of the following dates:

     

    (a)  Retirement;
      or

     

    (b)  A
      specific future month and year, but not earlier than five years from the date
      of
      the deferral if the Participant has not attained age fifty-five at the time
      of
      the deferral or one year from the date of the deferral if the Participant has
      attained age fifty-five at the time of the deferral, and not later than the
      first day of the year in which the Participant attains age seventy.

     

    In
      the
      case of a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of
      the Code, any payments payable as a result of the Employee’s termination of
      employment (other than death) shall not be payable before the earlier of
      (i) the date that is six months after the Employee’s termination of
      employment, (ii) the date of the Employee’s death, or (iii) the date
      that otherwise complies with the requirements of Section 409A.  For
      purposes of determining the identify of “specified employees”, the Committee may
      establish procedures as it deems appropriate in accordance with Section
      409A.

     

    5.4           Form
      of Benefit Payment.  With respect to each deferral
      election made by a Participant pursuant to Article III, such Participant shall
      elect the form of payment with respect to such deferral and the Credited
      Investment Returns attributable thereto from one of the following
      forms:

     

    (a)  A
      lump
      sum; or

     

    (b)  Annual installment
      payments for a period of full years not to exceed ten years.

     

    Annual
      installment payments shall be paid on the first business day of January of
      each
      Plan Year.  Each installment payment shall be determined by
      multiplying the deferral and the Credited Investment Returns attributable
      thereto at the time of the payment by a fraction, the numerator of which is
      one
      and the denominator of which is the number of remaining installment payments
      to
      be made to Participant.

     

    Notwithstanding
      any provision of the Plan to the contrary, in the event the aggregate amount
      credited to a Participant’s Deferral Account and Grandfathered Plan Account does
      not exceed $100,000, the Deferral Account shall be paid only in the form of
      a
      lump sum.

     


    
      
        
        

      

      
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    5.5           Total
      and Permanent Disability.  If a Participant becomes
      totally and permanently disabled while employed by the Employer, payment of
      the
      amounts credited to such Participant’s Deferral Account shall commence on the
      first business day of the second calendar quarter following the date the
      Committee makes a determination that the Participant is totally and permanently
      disabled, in the form of payment determined in accordance with Section
      5.4.  The above notwithstanding, if such Participant is already
      receiving payments pursuant to Section 5.3(b) and Section 5.4(b), such payments
      shall continue.  For purposes of the Plan, a Participant shall be
      considered totally and permanently disabled if the Committee determines, based
      on a written medical opinion (unless waived by the Committee as unnecessary),
      that such Participant is disabled within the meaning of Section 409A(a)(2)(C)
      of
      the Code.

     

    5.6           Death.  In
      the event of a Participant’s death at a time when amounts are credited to such
      Participant’s Deferral Account, such amounts shall be paid to such Participant’s
      designated beneficiary or beneficiaries in a lump sum within sixty (60) days
      of
      the date of such Participant’s death.

     

    5.7           Designation
      of Beneficiaries.

     

    (a)  Each
      Participant shall have the right to designate the beneficiary or beneficiaries
      to receive payment of his or her benefit in the event of his or her
      death.  Each such designation shall be made by executing and
      submitting the beneficiary designation form prescribed by the
      Committee.  Any such designation may be changed at any time by
      execution of a new designation in accordance with this Section.

     

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

     

    
      	
              (1)  

            	
              If
                a Participant leaves a surviving spouse, his or her benefit shall
                be paid
                to such surviving spouse.

            


    

     

    
      	
              (2)  

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

            


    

     

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

     


    
      
        
        

      

      
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    5.9           Payment
      of Benefits.  To the extent the Trust Fund, if any, has
      sufficient assets, the Trustee shall pay benefits to Participants or their
      beneficiaries, except to the extent the Employer pays the benefits directly
      and
      provides adequate evidence of such payment to the Trustee.  To the
      extent the Trustee does not or cannot pay benefits out of the Trust Fund, the
      benefits shall be paid by the Employer.  Any benefit payments made to
      a Participant or for his or her benefit pursuant to any provision of the Plan
      shall be debited to such Participant’s Deferral Account or Grandfathered Plan
      Account, as applicable.  All benefit payments shall be made in cash to
      the fullest extent practicable.

     

    5.10           Unclaimed
      Benefits.  In the case of a benefit payable on behalf of
      a Participant, if the Committee is unable to locate the Participant or
      beneficiary to whom such benefit is payable, upon the Committee’s determination
      thereof, such benefit shall be forfeited to the
      Employer.  Notwithstanding the foregoing, if subsequent to any such
      forfeiture the Participant or beneficiary to whom such benefit is payable makes
      a valid claim for such benefit, such forfeited benefit shall be paid by the
      Employer or restored to the Plan by the Employer.

     

    5.11           No
      Acceleration of Bonus or Long-Term Incentive
      Compensation.  The time of payment of any Bonus
      Compensation or Long-Term Incentive Compensation that the Participant has
      elected to defer but that has not yet been credited to the Participant’s
      Deferral Account because it is not yet payable without regard to the deferral
      shall not be accelerated as a result of the provisions of this
      Article.  If, pursuant to the provisions of this Article, payment of
      such Bonus Compensation or Long-Term Incentive Compensation would no longer
      be
      deferred at the time it becomes payable, such Bonus Compensation or Long-Term
      Incentive Compensation shall be paid to the Participant as soon as practicable
      following the date it would have been payable had the Participant not made
      a
      deferral election.

     

    VI.


     

    Administration
      of the Plan

     

    6.1           Committee
      Powers and Duties.  The general administration of the
      Plan shall be vested in the Committee.  The Committee shall supervise
      the administration and enforcement of the Plan according to the terms and
      provisions hereof and shall have all powers necessary to accomplish these
      purposes, including, but not by way of limitation, the right, power, authority,
      and duty:

     

    (a)  To
      make
      rules, regulations, procedures and bylaws for the administration of the Plan
      that are not inconsistent with the terms and provisions hereof, and to enforce
      the terms of the Plan and the rules and regulations promulgated thereunder
      by
      the Committee;

     

    (b)  To
      designate, change and eliminate Investment Options in which Deferral Accounts
      and Grandfathered Plan Accounts may be deemed invested and to establish
      procedures relating to elections of Investment Options by
      Participants;

     


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


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

     

    (d)  To
      correct any defect or to supply any omission or to reconcile any inconsistency
      that may appear in the Plan in such manner and to such extent as it shall deem
      in its discretion expedient to effectuate the purposes of the Plan;

     

    (e)  To
      employ
      and compensate such accountants, attorneys, investment advisors, and other
      agents, employees, and independent contractors as the Committee may deem
      necessary or advisable for the proper and efficient administration of the
      Plan;

     

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

     

    (g)  To
      determine whether and when a Participant has incurred a separation from service
      with the Employer, and the reason for such separation;

     

    (h)  To
      make a
      determination in its discretion as to the right of any person to a benefit
      under
      the Plan and to prescribe procedures to be followed by distributees in obtaining
      benefits hereunder; and

     

    (i)  To
      receive and review reports from the Trustee as to the financial condition of
      the
      Trust Fund, if any, including its receipts and disbursements.

     

    6.2           Self-Interest
      of Participants.  No member of the Committee shall have
      any right to vote or decide upon any matter relating solely to himself under
      the
      Plan (including, without limitation, Committee decisions under Article II)
      or to
      vote in any case in which his or her individual right to claim any benefit
      under
      the Plan is particularly involved.  In any case in which a Committee
      member is so disqualified to act and the remaining members cannot agree, the
      Compensation Committee shall appoint a temporary substitute member to exercise
      all the powers of the disqualified member concerning the matter in which he
      or
      she is disqualified.

     

    6.3           Claims
      Review.  In any case in which a claim for Plan benefits
      of a Participant or beneficiary is denied or modified, the Committee shall
      furnish written notice to the claimant within ninety days (or within 180 days
      if
      additional information requested by the Committee necessitates an extension
      of
      the ninety-day period), which notice shall:

     

    (a)  State
      the
      specific reason or reasons for the denial or modification;

     

    (b)  Provide
      specific reference to pertinent Plan provisions on which the denial or
      modification is based;

     

    (c)  Provide
      a
      description of any additional material or information necessary for the
      Participant, his or her beneficiary, or representative to perfect the claim
      and
      an explanation of why such material or information is necessary;
      and

     


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    (d)  Explain
      the Plan’s claim review procedure as contained herein.

     

    In
      the
      event a claim for Plan benefits is denied or modified, if the Participant,
      his
      or her beneficiary, or a representative of such Participant or beneficiary
      desires to have such denial or modification reviewed, he or she must, within
      sixty days following receipt of the notice of such denial or modification,
      submit a written request for review by the Committee of its initial
      decision.  In connection with such request, the Participant, his or
      her beneficiary, or the representative of such Participant or beneficiary may
      review any pertinent documents upon which such denial or modification was based
      and may submit issues and comments in writing.  Within sixty days
      following such request for review the Committee shall, after providing a full
      and fair review, render its final decision in writing to the Participant, his
      or
      her beneficiary or the representative of such Participant or beneficiary stating
      specific reasons for such decision and making specific references to pertinent
      Plan provisions upon which the decision is based.  If special
      circumstances require an extension of such sixty-day period, the Committee’s
      decision shall be rendered as soon as possible, but not later than 120 days
      after receipt of the request for review.  If an extension of time for
      review is required, written notice of the extension shall be furnished to the
      Participant, beneficiary, or the representative of such Participant or
      beneficiary prior to the commencement of the extension period.

     

    6.4           Employer
      to Supply Information.  The Employer shall supply full
      and timely information to the Committee, including, but not limited to,
      information relating to each Participant’s compensation, age, retirement, death,
      or other cause of separation from service to the Employer and such other
      pertinent facts as the Committee may require.  The Employer shall
      advise the Trustee, if any, of such of the foregoing facts as are deemed
      necessary for the Trustee to carry out the Trustee’s duties under the Plan and
      the Trust Agreement.  When making a determination in connection with
      the Plan, the Committee shall be entitled to rely upon the aforesaid information
      furnished by the Employer.

     

    6.5           Indemnity.  The
      Company shall indemnify and hold harmless each member of the Committee against
      any and all expenses and liabilities arising out of his or her administrative
      functions or fiduciary responsibilities, including any expenses and liabilities
      that are caused by or result from an act or omission constituting the negligence
      of such member in the performance of such functions or responsibilities, but
      excluding expenses and liabilities that are caused by or result from such
      member’s own gross negligence or willful misconduct.  Expenses against
      which such member shall be indemnified hereunder shall include, without
      limitation, the amounts of any settlement or judgment, costs, counsel fees,
      and
      related charges reasonably incurred in connection with a claim asserted or
      a
      proceeding brought or settlement thereof.

     


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    


     

    VII.


     

    Administration
      of Funds

     

    7.1           Payment
      of Expenses.  All expenses incident to the administration
      of the Plan and Trust, including but not limited to, legal, accounting, Trustee
      fees, and expenses of the Committee, may be paid by the Employer and, if not
      paid by the Employer, shall be paid by the Trustee from the Trust Fund, if
      any.

     

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

     

    VIII.


     

    Nature
      of the Plan

     

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

     


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


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

     

    IX.


     

    Participating
      Employers

     

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

     


    
      
        
        

      

      
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    X.


     

    Miscellaneous

     

    10.1           Not
      Contract of Employment.  The adoption and maintenance of
      the Plan shall not be deemed to be a contract between the Employer and any
      person or to be consideration for the employment of any
      person.  Nothing herein contained shall be deemed to give any person
      the right to be retained in the employ of the Employer or to restrict the right
      of the Employer to discharge any person at any time nor shall the Plan be deemed
      to give the Employer the right to require any person to remain in the employ
      of
      the Employer or to restrict any person’s right to terminate his or her
      employment at any time.

     

    10.2           Alienation
      of Interest Forbidden.  Except as hereinafter provided,
      the interest of a Participant or his or her beneficiary or beneficiaries
      hereunder may not be sold, transferred, assigned, or encumbered in any manner,
      either voluntarily or involuntarily, and any attempt so to anticipate, alienate,
      sell, transfer, assign, pledge, encumber, or charge the same shall be null
      and
      void; neither shall the benefits hereunder be liable for or subject to the
      debts, contracts, liabilities, engagements or torts of any person to whom such
      benefits or funds are payable, nor shall they be an asset in bankruptcy or
      subject to garnishment, attachment or other legal or equitable
      proceedings.  Plan provisions to the contrary notwithstanding, the
      Committee shall comply with the terms and provisions of an order that satisfies
      the requirements for a “qualified domestic relations order” as such term is
      defined in Section 206(d)(3)(B) of the Act, including an order that requires
      distributions to an alternate payee prior to a Participant’s “earliest
      retirement age” as such term is defined in Section 206(d)(3)(E)(ii) of the
      Act.

     

    10.3           Withholding.  All
      deferrals and payments provided for hereunder shall be subject to applicable
      withholding and other deductions as shall be required of the Employer under
      any
      applicable local, state or federal law.

     

    10.4           Amendment
      and Termination.  The Compensation Committee may from
      time to time, in its discretion, amend, in whole or in part, any or all of
      the
      provisions of the Plan; provided, however, that no amendment may be made that
      would impair the rights of a Participant with respect to amounts already
      allocated to his or her Deferral Account and Grandfathered Plan Account, as
      applicable.  The Compensation Committee may terminate the Plan at any
      time.  In the event that the Plan is terminated, the balance in a
      Participant’s Deferral Account and Grandfathered Plan Account shall be paid to
      such Participant or his or her designated beneficiary in a single lump sum
      payment of cash in full satisfaction of all of such Participant’s or
      beneficiary’s benefits hereunder if such distribution is permitted under Section
      409A.  Any such amendment to or termination of the Plan shall be in
      writing and signed by a member of the Compensation
      Committee.  Notwithstanding the above, any action taken under this
      Section is subject to the limitations provided in Appendix A.

     


    
      
        
        

      

      
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    10.5           Severability.  If
      any provision of this Plan shall be held illegal or invalid for any reason,
      said
      illegality or invalidity shall not affect the remaining provisions hereof;
      instead, each provision shall be fully severable and the Plan shall be construed
      and enforced as if said illegal or invalid provision had never been included
      herein.

     

    10.6           Governing
      Laws.  All provisions of the Plan shall be construed in
      accordance with the laws of Texas except to the extent preempted by federal
      law.

     

    10.7           Section
      409A Compliance.  It is intended that the provisions of
      this Plan satisfy the requirements of Section 409A and that the Plan be operated
      in a manner consistent with such requirements to the extent
      applicable.  Therefore, the Committee may make adjustments to the Plan
      and may construe the provisions of the Plan in accordance with the requirements
      of Section 409A.

     


    
      
        
        

      

      
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    APPENDIX
      A                                

     

    The
      Grandfathered Plan contains the provisions governing the deferrals of accounts
      earned and vested by Eligible Employees on or before December 31,
      2004.  This Appendix A preserves the material terms of the
      Grandfathered Plan as in effect on December 31, 2004, and is intended to satisfy
      the requirements of Section 409A as to grandfathered amounts.  The
      provisions of this Appendix A shall apply to, and be effective only with respect
      to, the deferral of earned and vested amounts under the Grandfathered Plan
      before January 1, 2005, and the Credited Investment Return on such deferrals
      credited at any time.  The Plan provides for separate accounting of
      such amounts deferred, earned, and vested before January 1, 2005, and the
      Credited Investment Return thereon.

     

    No
      amendment to the Plan shall be deemed to amend this Appendix A and the relevant
      provisions of the Plan in effect prior to such amendment unless otherwise
      specifically set forth therein.  Pursuant to Section 1.409A-6(a)(4) of
      the Proposed Treasury Regulations, a modification is material “if a benefit or
      right existing as of October 3, 2004 is materially enhanced or a new material
      benefit or right is added.”  Section 5.8 of the Grandfathered Plan was
      removed because that section does not relate to the Company or to the rights
      of
      Eligible Employees under the Plan.  The removal of Section 5.8, below,
      is hereunder intended to be in good faith compliance with Section 409A, and
      is
      not intended to materially modify the benefits existing as of October 3, 2004
      under the Grandfathered Plan.

     

    The
      provisions of the Plan applicable to the Grandfathered Plan Accounts shall
      be
      administered in a manner consistent with the Grandfathered Plan and Appendix
      A.  Wherever the Plan has added, changed, or otherwise altered any
      terms of the Grandfathered Plan that were in effect on December 31, 2004, in
      a
      manner that would constitute a material modification, as described above, such
      changes will be disregarded in the administration of the Grandfathered Plan
      Accounts herein.

     

    APPLICABLE
      GRANDFATHERED PLAN TERMS

     

    With
      respect to amounts deferred prior to January 1, 2005, and the Credited
      Investment Return on such amounts credited at any time, the following
      definitions and Articles in this Appendix A shall be substituted for the
      corresponding definitions and Articles of the Plan:

     

    Retirement:  The
      date the Participant retires in accordance with the terms of his or her
      Employer’s retirement policy as in effect at that time.

     


    
      
        
        

      

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

     

    III.


     

    Grandfathered
      Plan Account Credits; Investment Elections

     

    3.1  Base
      Salary Deferrals.  Effective from and
      after January 1, 2005, no deferrals of Base Salary shall be credited to a
      Participant’s Grandfathered Plan Account.

     

    3.2  Bonus
      Compensation Deferrals.  Effective from and after January
      1, 2005, no deferrals of Bonus Compensation shall be credited to a Participant’s
      Grandfathered Plan Account.

     

    3.3  Long-Term
      Incentive Compensation Deferrals.  Effective from and
      after January 1, 2005, no deferrals of Long-Term Incentive Compensation shall
      be
      credited to a Participant’s Grandfathered Plan Account.

     

    3.4  Investment
      of Grandfathered Plan Accounts.

     

    (a)  As
      of any
      Determination Date, each Participant’s Grandfathered Plan Account shall consist
      of the balance of the Participant’s Grandfathered Plan Account as of the
      immediately preceding Determination Date adjusted for:

     

    (1)           distributions
      (if any); and

     

    (2)           the
      appropriate Credited Investment Return.

     

    All
      adjustments will be recorded to the Participants’ Grandfathered Plan Accounts as
      of each Determination Date.

     


    
      
        
        

      

      
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    (b)  The
      Committee shall designate from time to time one or more Investment Options
      in
      which the Grandfathered Plan Accounts may be deemed invested.  The
      Committee shall have the sole discretion to determine the number of Investment
      Options to be designated hereunder and the nature of the Investment Options
      and
      may change or eliminate any of the Investment Options from time to
      time.  In the event of such change or elimination, the Committee shall
      give each Participant timely notice and opportunity to make a new
      election.  No such change or elimination of any Investment Options
      shall be considered to be an amendment to the Plan pursuant to Section
      10.4.  A Participant may request that his or her Grandfathered Plan
      Account be allocated among the deemed Investment Options.  If a
      Participant fails to make an election, his or her Grandfathered Plan Account
      shall be invested in a single fund selected by the Committee.

     

    (c)  Except
      as
      changed under Section 3.4(d), the Participant’s Deemed Investment Elections
      designated in the Participant’s initial deferral election shall remain in effect
      with respect to his or her Grandfathered Plan Account and any additional amounts
      credited thereto.

     

    (d)  A
      Participant may request a change to his or her Deemed Investment Elections
      for
      future amounts allocated to his or her Grandfathered Plan Account and amounts
      already allocated to his or her Grandfathered Plan Account.  Any such
      change shall be made by filing with the Committee an Investment Election Change
      Form.  The Committee shall establish procedures relating to changes in
      Deemed Investment Elections, which may include limiting the percentage, amount
      and frequency of such changes and specifying the effective date for any such
      changes.

     

    (e)  Each
      Participant’s Grandfathered Plan Account shall be credited monthly with the
      Credited Investment Return attributable to his or her Grandfathered Plan
      Account.  The Credited Investment Return is the amount which the
      Participant’s Grandfathered Plan Account would have earned if the amounts
      credited to the Grandfathered Plan Account had, in fact, been invested in
      accordance with the Participant’s Deemed Investment Elections.

     

    IV.


     

    Withdrawals

     

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

     


    
      
        
        

      

      
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    4.2  Non-Emergency
      Withdrawals. A Participant may make withdrawals from his or her
      Grandfathered Plan Accounts at any time for reasons other than an Unforeseeable
      Emergency, subject to the following:

     

    (a)  the
      minimum amount that may be withdrawn is $5,000;

     

    (b)  only
      one
      such withdrawal may be made during any Plan Year;

     

    (c)  the
      withdrawal shall be in cash in a lump sum and taken from the Grandfathered
      Plan
      Accounts and Investment Options designated by the Participant;

     

    (d)  the
      withdrawal must be designated in a whole percentage or a whole dollar amount;
      and

     

    (e)  upon
      such
      withdrawal, a portion of the Participant’s Grandfathered Plan Account balance
      shall be forfeited based on the amount withdrawn from the Grandfathered Plan,
      determined as follows:

     

    
      	
              With
                Respect to the Amount

              Withdrawn
                from the Following

              Percentiles
                of the Grandfathered Plan

            	
              Percentage
                of Amount

              Withdrawn
                from the Percentile to be

              Forfeited
                from the Grandfathered Plan

            
	
              First
                50%

            	
              10%

            
	
              Second
                50%

            	
              25%

            


    

     

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

     


    
      
        
        

      

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

     

    Withdrawals
      shall be paid as soon as reasonably practicable following the Participant’s
      request, which must be in such form or manner as the Company may prescribe
      from
      time to time.

     

    V.


     

    Payment
      of Benefits

     

    5.1  Payment
      Election Generally.  Pursuant to Article III hereof, no
      additional deferrals are allowed under the Grandfathered Plan.

     

    5.2  Subsequent
      Payment Elections.  A Participant may revise his or her
      election regarding the time and form of payment of deferred amounts, but such
      revised election shall not be effective until one year from the date of the
      revised election and shall be effective only if payment has not been made or
      commenced pursuant to Section 5.2 prior to the expiration of such one-year
      period.

     

    5.3  Time
      of Benefit Payment.  With respect to each deferral
      election made by a Participant pursuant to Article III, such Participant shall
      elect to commence payment of such deferral and the Credited Investment Returns
      attributable thereto on one of the following dates:

     


    
      
        
        

      

      
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    (a)  Retirement;
      or

     

    (b)  A
      specific future month and year, but not earlier than five years from the date
      of
      the deferral if the Participant has not attained age fifty-five at the time
      of
      the deferral or one year from the date of the deferral if the Participant has
      attained age fifty-five at the time of the deferral, and not later than the
      first day of the year in which the Participant attains age seventy.

     

    5.4  Form
      of Benefit Payment.  With respect to each deferral
      election made by a Participant pursuant to Article III, such Participant shall
      elect the form of payment with respect to such deferral and the Credited
      Investment Returns attributable thereto from one of the following
      forms:

     

    (a)  A
      lump
      sum; or

     

    (b)  Installment
      payments for a period not to exceed ten years.

     

    Installment
      payments shall be paid annually on the first business day of January of each
      Plan Year; provided however, that not later than sixty days prior to the date
      payment is to commence, a Participant may elect to have his or her installment
      payments paid quarterly on the first business day of each calendar
      quarter.  Each installment payment shall be determined by multiplying
      the deferral and the Credited Investment Returns attributable thereto at the
      time of the payment by a fraction, the numerator of which is one and the
      denominator of which is the number of remaining installment payments to be
      made
      to Participant.

     

    In
      the
      event the aggregate amount credited to a Participant’s Deferral Account and
      Grandfathered Plan Account does not exceed $50,000, the Committee may, in its
      sole discretion, pay the Grandfathered Plan Account in the form of a lump
      sum.

     

    5.5  Total
      and Permanent Disability.  If a Participant becomes
      totally and permanently disabled while employed by the Employer, payment of
      the
      amounts credited to such Participant’s Grandfathered Plan Account shall commence
      on the first business day of the second calendar quarter following the date
      the
      Committee makes a determination that the Participant is totally and permanently
      disabled, in the form of payment determined in accordance with Section
      5.4.  The above notwithstanding, if such Participant is already
      receiving payments pursuant to Section 5.3(b) and Section 5.4(b), such payments
      shall continue.  For purposes of the Plan, a Participant shall be
      considered totally and permanently disabled if the Committee determines, based
      on a written medical opinion (unless waived by the Committee as unnecessary),
      that such Participant is permanently incapable of performing his or her job
      for
      physical or mental reasons.

     


    
      
        
        

      

      
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    5.6  Death.  In
      the event of a Participant’s death at a time when amounts are credited to such
      Participant’s Grandfathered Plan Account, such amounts shall be paid to such
      Participant’s designated beneficiary or beneficiaries in five annual
      installments commencing as soon as administratively feasible after such
      Participant’s date of death.  However, the Participant’s designated
      beneficiary or beneficiaries may request a lump sum payment based upon hardship,
      and the Committee, in its sole discretion, may approve such
      request.

     

    5.7  Designation
      of Beneficiaries.

     

    (a)  Each
      Participant shall have the right to designate the beneficiary or beneficiaries
      to receive payment of his or her benefit in the event of his or her
      death.  Each such designation shall be made by executing and
      submitting the beneficiary designation form prescribed by the
      Committee.  Any such designation may be changed at any time by
      execution of a new designation in accordance with this Section.

     

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

     

    
      	
               

            	
              (1)

            	
              If
                a Participant leaves a surviving spouse, his or her benefit shall
                be paid
                to such surviving spouse.

            


    

     

    
      	
               

            	
              (2)

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

            


    

     

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

     

    5.9  Change
      in the Company’s Credit Rating.  Removed.

     


    
      
        
        

      

      
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    5.10  Payment
      of Benefits.  To the extent the Trust Fund, if any, has
      sufficient assets, the Trustee shall pay benefits to Participants or their
      beneficiaries, except to the extent the Employer pays the benefits directly
      and
      provides adequate evidence of such payment to the Trustee.  To the
      extent the Trustee does not or cannot pay benefits out of the Trust Fund, the
      benefits shall be paid by the Employer.  Any benefit payments made to
      a Participant or for his or her benefit pursuant to any provision of the
      Grandfathered Plan shall be debited to such Participant’s Grandfathered Plan
      Account.  All benefit payments shall be made in cash to the fullest
      extent practicable.

     

    5.11  No
      Acceleration of Bonus or Long-Term Incentive
      Compensation.  The time of payment of any Bonus
      Compensation or Long-Term Incentive Compensation that the Participant has
      elected to defer but that has not yet been credited to the Participant’s
      Grandfathered Plan Account because it is not yet payable without regard to
      the
      deferral shall not be accelerated as a result of the provisions of this
      Article.  If, pursuant to the provisions of this Article, payment of
      such Bonus Compensation or Long-Term Incentive Compensation would no longer
      be
      deferred at the time it becomes payable, such Bonus Compensation or Long-Term
      Incentive Compensation shall be paid to the Participant within 90 days of the
      date it would have been payable had the Participant not made a deferral
      election.

     


    
      
        
        

      

      
        25