Exhibit
10.23.2


 


ORIGINAL FOR EXECUTION


APPROVED VP, HR DECEMBER 29, 2005


 


KEY EMPLOYEE DEFERRED COMPENSATION PLAN OF


CONOCOPHILLIPS


 


TITLE II


(Effective for benefits earned or vested after


December 31, 2004)


 


PURPOSE


 


The
purpose of the Key Employee Deferred Compensation Plan of ConocoPhillips (the “Plan”) is to attract and retain key
employees by providing them with an opportunity to defer receipt of cash
amounts which otherwise would be paid to them under various compensation
programs or plans by the Company. Title
I of this Plan is effective with regard to benefits earned and vested prior to
January 1, 2005, while Title II of this Plan is effective with regard to
benefits earned or vested after December 31, 2004. Earnings, gains, and losses
shall be allocated to the Title of the Plan to which the underlying obligations
giving rise to them are allocated.


 


This
Title II of the Plan is intended (1) to comply with Code section 409A, as
enacted as part of the American Jobs Creation Act of 2004, and official guidance
issued thereunder, and (2) to be “a plan which is unfunded and is maintained by
an employer primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees” within the meaning
of sections 201(2), 301(a)(3), and 401(a)(1) of ERISA. Notwithstanding any
other provision of this Plan, this Plan shall be interpreted, operated, and
administered in a manner consistent with these intentions.


 

















 


SECTION
1. Definitions.


 


(a)           “Affiliated Company” shall mean any corporation or other entity
that is treated as a single employer with the Company under section 414(b) or
(c) of the Code.


 


(b)           “Affiliated
Group” shall mean the Company plus other subsidiaries and affiliates in which
it owns, directly or through a subsidiary or affiliate, a 5% or more equity
interest.


 


(c)           “Award” shall mean the United States cash
dollar amount (i) allotted to an Employee under the terms of an Incentive
Compensation Plan or a Long Term
Incentive Plan, or (ii) required to be credited to an Employee’s Deferred
Compensation Account pursuant to the terms of an Award or of an Incentive Compensation Plan, the Long Term
Incentive Compensation Plan, the Strategic Incentive Plan, a Long Term Incentive Plan, or any similar
plans, or any administrative procedure adopted pursuant thereto, or (iii) credited as a result of an Employee’s
voluntary reduction of Salary, or
(iv) any other amount determined by the Committee to be an Award under the
Plan.


 


(d)           “Code” shall mean the Internal Revenue Code
of 1986, as amended from time to time, or any successor statute.


 


(e)           “Committee” shall mean the Compensation
Committee of the Board of Directors of the Company.


 


(f)            “Company” shall mean ConocoPhillips.


 


(g)           “Deferred Compensation Account” shall mean an
account established and maintained for each Participant in which is recorded
the amounts of Awards deferred by a Participant, the deemed gains, losses, and
earnings accrued thereon, and payments made therefrom all in accordance with
the terms of the Plan.


 


2

















 


(h)           “Election Form” shall mean a written form,
including one in electronic format, provided by the Plan Administrator pursuant
to which a Participant may elect the time and form of payment of his or her
Benefit.


 


(i)            “Employee” shall mean any individual who is a
salaried employee of the Company or of a Participating Subsidiary who is
eligible to receive an Award from an Incentive Compensation Plan and is
classified as a ConocoPhillips salary grade 19 or above or any
equivalent salary grade at a
Participating Subsidiary.


 


(j)            “ERISA” shall mean the Employee Retirement
Income Security Act of 1974, as amended from time to time, or any successor statute.


 


(k)           “Heritage
Conoco Employee” shall mean an individual employed by Conoco Inc., Conoco Pipe
Line Company, or Louisiana Gas Systems Inc. prior to January 1, 2003; provided,
however, that an individual who has been terminated from employment with a
member of the Affiliated Group at any time and rehired by a member of the
Affiliated Group after January 1, 2003, shall not be considered a Heritage
Conoco Employee for purposes of this Plan.


 


(l)            “Incentive
Compensation Plan” shall mean the ConocoPhillips Variable Cash Incentive
Program, the Incentive Compensation Plan of Phillips Petroleum Company, or the
Annual Incentive Compensation Plan of Phillips Petroleum Company, the Special
Incentive Plan for Former Tosco Executives, the Conoco Inc. Global Variable
Compensation Plan, or a similar plan of a Participating Subsidiary, or any
similar or successor plans, or all, as the context may require.


 


(m)          “Long-Term
Incentive Compensation Plan” shall mean the Long-Term Incentive Compensation
Plan of Phillips Petroleum Company, which was terminated December 31,
1985.


 


3

















 


(n)           “Long-Term
Incentive Plan” shall mean the ConocoPhillips Performance Share Program, the
ConocoPhillips Restricted Stock Program, the Phillips Petroleum Company
Long-Term Incentive Plan, or a similar or successor plan of any of them,
established under an Omnibus Securities Plan.


 


(o)           “Omnibus
Securities Plan” shall mean the 2004 Omnibus Stock and Performance Incentive
Plan of ConocoPhillips, the 2002 Omnibus Securities Plan of Phillips Petroleum
Company, the Omnibus Securities Plan of Phillips Petroleum Company, the 1998
Stock and Performance Incentive Plan of ConocoPhillips, the 1998 Key Employee
Stock Plan of ConocoPhillips, or a similar or successor plan of any of them.


 


(p)           “Participant” shall mean a person for whom a
Deferred Compensation Account is maintained.


 


(q)           “Participating Subsidiary” shall mean a
subsidiary of the Company, of which the Company beneficially owns, directly or
indirectly, more than 50% of the aggregate voting power of all outstanding
classes and series of stock, where such subsidiary has adopted one or more
plans making participants eligible for participation in this Plan and one or
more Employees of which are Potential Participants.


 


(r)            “Plan
Administrator” shall mean the Vice President, Human Resources of the Company,
or his or her successor.


 


(s)           “Potential Participant” shall mean a person
who has received a notice specified in Section 2.


 


(t)            “Restricted Stock” and “Restricted Stock
Units” shall mean respectively shares of Stock and units each of which shall
represent a hypothetical share of Stock, which have certain restrictions
attached to the ownership thereof or the delivery of shares pursuant thereto.


 


4

















 


(u)           “Retirement”
or “Retire” or “Retiring” shall mean termination of employment with the Company
or any subsidiary of the Company on or after age 55 or above and on or after
the earliest early retirement date as defined in applicable title of the
ConocoPhillips Retirement Plan or of the applicable retirement plan of a
Participating Company.


 


(v)           “Schedule A Employee” shall mean an Employee
whose name appears in Schedule A attached to and made a part of this Plan.


 


(w)          “Separation from Service” shall mean the date
on which the Participant terminates employment with the Company and its
Affiliated Companies within the meaning of Code section 409A, whether by reason
of death, disability, retirement, or otherwise.


 


(x)            “Settlement Date” shall mean the date on
which all acts under an Incentive
Compensation Plan or the Long-Term Incentive Compensation Plan or actions
directed by the Committee, as the case may be, have been taken which are
necessary to make an Award payable to the Participant.


 


(y)           “Salary” shall mean the monthly equivalent
rate of pay for an Employee before adjustments for any before-tax voluntary
reductions.


 


(z)            “Stock” means shares of common stock of
ConocoPhillips, par value $.01.


 


(aa)         “Strategic Incentive Plan” shall mean the
Strategic Incentive Plan portion of the 1986 Stock Plan of Phillips
Petroleum Company, of the 1990 Stock
Plan of Phillips Petroleum
Company, of the Phillips Petroleum Company Omnibus Securities Plan, and of any
successor plans of similar nature.


 


(bb)         “Trustee” shall mean the trustee of the grantor
trust established by the Trust Agreement between the Company and Wachovia Bank,
N.A. dated as of June 1, 1998, or any successor trustee.


 


5

















 


SECTION
2. Notification of Potential Participants.


 


(a)           Incentive Compensation Plan. With regard to each year, at such times as
the Plan Administrator may determine, Employees who are eligible to receive an
Award in the immediately following calendar year under an Incentive Compensation Plan will be notified
and given the opportunity to make an election, using the Election Form or in
such other manner prescribed by the Plan Administrator, to defer all or part of
such Award.


 


(b)           Salary Reduction. With regard to each year, at such times as
the Plan Administrator may determine, Employees on the U.S. dollar payroll will
be notified and given the opportunity to make an election, using the Election
Form or in such other manner prescribed by the Plan Administrator, to make a
voluntary reduction of Salary for each pay period of the following calendar
year, in which case the Company will credit a like amount as an Award
hereunder, provided that the amount of such voluntary reduction shall not be
less than 1% nor more than 50% of the Employee’s Salary per pay period.


 


SECTION
3. Election to Defer Award or Reduce Salary.


 


(a)           Incentive Compensation Plan. If a Potential Participant elects to defer
under this Plan all or any part of the Award to which a notice received under
Section 2(a) pertains, the Potential Participant must make such election, using
the Election Form or in such other manner prescribed by the Plan Administrator.
The Potential Participant’s election shall become irrevocable on December 31 of
the year in which said Section 2(a) notice was received (except in the case of
an election for an Award under an Incentive Compensation Plan determined by the
Plan Administrator to be “performance-based compensation” under Code section
409A, the election shall become irrevocable on June 30 of the year in which
said Section 2(a) notice was received), subject to the provisions Section 5(d).
If an election is not properly made and timely received, the Potential Participant will be deemed to have elected to
receive and not to defer any such Incentive Compensation Plan Award.


 


6

















 


(b)           Salary Reduction. If a Potential Participant elects to
voluntarily reduce Salary to which a notice received under Section 2(b)
pertains and receive an Award hereunder in lieu thereof, the Potential
Participant must make an election, using the Election Form or in such other
manner prescribed by the Plan Administrator, which must be received on or
before December 31 (or such earlier time as may be prescribed by the Plan
Administrator) prior to the beginning of the calendar year of the elected
deferral. Such election must be in writing signed by the Potential Participant,
and must state the amount of the salary reduction the Potential Participant
elects. Such election becomes irrevocable on December 31 prior to the beginning
of the calendar year, subject to the provisions Section 5(d). If an election is
not properly made and timely received, the
Potential Participant will be deemed to have elected to receive and not
to defer any such Salary.


 


SECTION
4. Deferred Compensation Accounts.


 


(a)           Credit for Deferral. Amounts deferred pursuant to Section 3(a)
will be credited to a Deferred Compensation Account for the Participant for the
calendar year in which the amounts are deferred as soon as practicable, but not
less than 30 days after the Settlement Date of the Incentive Compensation Plan.


 


If
an Award in the form of Restricted Stock or Restricted Stock Units provides
that, in certain instances the Restricted Stock or Restricted Stock Units shall
be cancelled and a market value in lieu thereof be credited to a Deferred
Compensation Account for the Participant, then the market value shall be
credited to a Deferred Compensation Account for the Participant as of the day
that the Award in the form of Restricted Stock or Restricted Stock Units is
cancelled. The market value of the underlying Restricted Stock or the shares
represented by the Restricted Stock Units awarded under a Long Term Incentive
Plan, under an Incentive Compensation Plan that began on or after January 1, 2003,
under an Omnibus Securities Plan (with regard to awards made on or after
January 1, 2003), and for the Special Stock Awards issued on


 


7

















 


October
22, 2002, shall be the monthly average Fair Market Value of the Stock during
the calendar month preceding the month in which the restrictions lapse or
shares are to be delivered as applicable. The monthly average Fair Market Value
of the Stock is the average of the daily Fair Market Value of the Stock for
each trading day of the month. For Awards made prior to those times, the market
value of the underlying Restricted Stock or the shares represented by the
Restricted Stock Units, as applicable, shall be based on the higher of (i) the
average of the high and low selling prices of the Stock on the date the
restrictions lapse or the last trading day before the day the restrictions
lapse if such date is not a trading day or (ii) the average of the high three
monthly Fair Market Values of the Stock during the twelve calendar months
preceding the month in which the restrictions lapse. The monthly Fair Market
Value of the Stock is the average of the daily Fair Market Value of the Stock
for each trading day of the month. The daily Fair Market Value of the Stock
shall be deemed equal to the average of the high and low selling prices of the
Stock on the New York Stock Exchange.


 


Amounts
deferred pursuant to other provisions of this Plan shall be credited to a
Deferred Compensation Account for the Participant for the calendar year in
which such amounts are deferred as soon as practicable but not later than 30
days after the date the Award or Salary would otherwise be payable.


 


(b)           Designation of Investments. The amount in each Deferred Compensation
Account of a Participant shall be deemed to have been invested and reinvested
from time to time, in such “eligible securities” as the Participant shall
designate. Prior to or in the absence of a Participant’s designation, the
Company shall designate an “eligible security” in which the Participant’s
Deferred Compensation Account shall be deemed to have been invested until
designation instructions are received from the Participant. Eligible securities
are those securities designated by the Chief Financial Officer of the Company,
or his successor. The Chief Financial Officer of the Company may include as
eligible securities, stocks listed on a national securities exchange and bonds,
notes, debentures, corporate or governmental, either listed on a national
securities exchange


 


8

















 


or
for which price quotations are published in The Wall Street Journal and shares
issued by investment companies commonly known as “mutual funds.”  The Deferred Compensation Accounts of a
Participant will be adjusted to reflect the deemed gains, losses, and earnings as though the amount deferred
was actually invested and reinvested in the eligible securities for each
Deferred Compensation Account of the Participant.


 


Notwithstanding
anything to the contrary in this section 4(b), in the event the Company
(or any trust maintained for this purpose) actually purchases or sells such securities in the quantities and at
the times the securities are deemed to be purchased or sold for a Deferred
Compensation Account of a Participant, the Account shall be adjusted
accordingly to reflect the price actually paid or received by the Company for
such securities after adjustment for all transaction expenses incurred
(including without limitation brokerage fees and stock transfer taxes).


 


In
the case of any deemed purchase not actually made by the Company, the Deferred
Compensation Account shall be charged with a dollar amount equal to the
quantity and kind of securities deemed to have been purchased multiplied by the
fair market value of such security on the date of reference and shall be
credited with the quantity and kind of securities so deemed to have been
purchased. In the case of any deemed sale not actually made by the Company, the
account shall be charged with the quantity and kind of securities deemed to
have been sold, and shall be credited with a dollar amount equal to the
quantity and kind of securities deemed to have been sold multiplied by the fair
market value of such security on the date of reference. As used in this
paragraph “fair market value” means in the case of a listed security the
closing price on the date of reference, or if there were no sales on such date,
then the closing price on the nearest preceding day on which there were such
sales, and in the case of an unlisted security the mean between the bid and
asked prices on the date of reference, or if no such prices are available for
such date, then the mean between the bid and asked prices to the nearest
preceding day for which such prices are available.


 


9

















 


The
Plan Administrator may designate a third party to provide services that may include record keeping, Participant
accounting, Participant communication, payment of installments to the
Participant, tax reporting, and any other
services specified in an agreement with such third party.


 


(c)           Payments. A Participant’s Deferred Compensation Account shall be debited with
respect to payments made from the account pursuant to this Plan as of the date
such payments are made from the account. The payment shall be made as soon as
practicable, but no later than 2 1⁄2 
months after the end of the calendar year in which the payment date
falls.


 


If
any person to whom a payment is due hereunder is under legal disability as
determined in the sole discretion of the Plan Administrator, the Plan
Administrator shall have the power to cause the payment due such person to be
made to such person’s guardian or other legal representative for the person’s
benefit, and such payment shall constitute a full release and discharge of the
Company, the Plan Administrator, and any
fiduciary of the Plan.


 


(d)           Statements. At least one time per year the Plan Administrator (or a third party
acting for the Plan Administrator) will furnish each Participant a written
statement setting forth the current balance in the Participant’s Deferred
Compensation Account, the amounts credited or debited to such account since the
last statement and the payment schedule of deferred Awards, and deemed gains,
losses, and earnings accrued thereon as
provided by the deferred payment option selected by the Participant. This
provision shall be deemed satisfied if the Plan Administrator (or a third party
acting for the Plan Administrator) makes such information available through
electronic means, such as a web site, and informing affected Participants of
the availability of the information and the manner of accessing it.


 


10

















 


SECTION
5. Payments from Deferred Compensation Accounts.


 


(a)           Election of Method of Payment. At the time a Potential Participant submits
an election to defer all or any part of an Award under an Incentive
Compensation Plan as provided in Section 3(a) above or to reduce any part of
salary as provided in Section 3(b) above, the Potential Participant shall also
elect, using the Election Form or in such other manner prescribed by the Plan
Administrator, which of the payment options, provided for in Paragraph (b) of
this Section, shall apply to the deferred portion of said Award or salary
adjusted for any deemed gains, losses, and earnings accrued thereon credited to
the Participant’s Deferred Compensation Account under this Plan. Subject to
Paragraph (d) of this Section, the election of the method of payment of the
amount deferred shall become irrevocable on December 31 of the year in which
the applicable Section 2(a) or (b) notice was received (except in the case of
an election for an Award under an Incentive Compensation Plan determined by the
Plan Administrator to be “performance-based compensation” under Code section
409A, the election shall become irrevocable on June 30 of the year in which
said Section 2(a) or (b) notice was received). If an election does not properly
indicate a time and method of payment, the
Potential Participant will be deemed to have elected to receive such payment in
a single lump sum at the earlier of death or six months after Separation from
Service other than by death.


 


(b)           Payment Options. A Potential Participant may elect, using an
Election Form or in such other manner prescribed by the Plan Administrator, to
have the deferred portion of an Incentive Compensation Plan Award or salary
adjusted for any deemed gains, losses, and
earnings accrued thereon paid:


 


(i)        (After Separation from Service) in 1 to 15 annual installments, in 2 to 30
semi-annual installments, or in 4 to 60 quarterly installments, the payment of
the first of any of such installments to commence on the first day of the first
calendar quarter which is on or after six months from the Participant’s
Separation from Service, subject to Paragraph (d) of this Section, or


 


(ii)       (Date Certain) with regard only to the deferred portion of an Incentive


 


11

















 


Compensation Award, in 1 to 15 annual installments, in 2 to 30
semi-annual installments, or in 4 to 60 quarterly installments, the payment of
the first of any of such installments to commence on the first day of calendar
quarter which is designated by the Participant, is at least one year after the
date on which the election is made, and is not later than the 65th
birthday of the Participant, subject to Paragraph (d) of this Section.


 


(iii)      In the event that no election is properly and
timely made with regard to the time and method of payment under Section
5(b)(i), payment shall be made on the earlier of the death or the date which is
the first of the calendar quarter following six months after the date of
Separation from Service, whether by retirement, disability, or otherwise (other
than by death), of the Participant, subject to Paragraph (d) of this Section.


 


(c)           Method of Payment of the Value of Restricted
Stock and Restricted Stock Units. If an Award in the form of Restricted Stock or Restricted Stock Units
provides that, in certain instances the Restricted Stock or Restricted Stock
Units shall be cancelled and a market value in lieu thereof be credited to a
Deferred Compensation Account for the Participant, payment of such Deferred
Compensation Account shall be made on the earlier of the death or the date
which is the first of the calendar quarter following six months after the date
of Separation from Service, whether by retirement, disability, or otherwise
(than death), of the Participant, subject to Paragraphs (d) of this Section.


 


(d)           Change in Time or Form of Payment. A Participant may make an election to
change the time or form of payment elected or set under Section 5 (including
this Paragraph (d)), but only if the following rules are satisfied:


 


(1)         The election to change the time or form of
payment may not take effect until at least twelve months after the date on
which such election is made;


 


(2)         Payment under such election may not be made
earlier than at least five years from the date the payment would have otherwise
been made or commenced;


 


12

















 


(3)         Such payment may commence as of the beginning
of any calendar quarter;


 


(4)         An election to receive payments in
installments shall be treated as a single payment for purposes of these rules;


 


(5)         The election may not result in an
impermissible acceleration of payment prohibited under Code section 409A;


 


(6)         No more than four such elections shall be
permitted with respect to each Deferred Compensation Account of a Participant;
and


 


(7)         No payment may be made after the date that is
twenty (20) years after the date of the Participant’s Separation from Service.


 


(e)           Effect of Taxation. If a portion of a Participant’s Benefit
(and earnings, gains, and losses thereon) is includible in income under Code section
409A, such portion shall be distributed immediately to the Participant.


 


(f)            Installment Amount. The amount of each installment shall be
determined by dividing the balance in the Participant’s Deferred Compensation
Account as of the date the installment is to be paid, by the number of
installments remaining to be paid (inclusive of the current installment).


 


(g)           Death of Participant. Upon the death of a Participant, the
Participant’s beneficiary or beneficiaries designated in accordance with
Section 8, or in the absence of an effective beneficiary designation, the
surviving spouse, surviving children (natural or adopted) in equal shares, or
the Estate of the deceased Participant, in that order of priority, shall
receive payments in accordance with the payment option selected by the
Participant or, if no payment option was properly and timely selected by the
Participant with regard to a Deferred Compensation Account, upon the death of
the Participant.


 


SECTION
6. Special Provisions for Former ARCO Alaska Employees.


 


Notwithstanding
any provisions to the contrary, in order to comply with the terms of the


 


13

















 


Master
Purchase and Sale Agreement (“Sale Agreement”) by which the Company acquired
certain Alaskan assets of Atlantic Richfield Company (“ARCO”), a Participant
who was eligible to participate in the ARCO employee benefit plans immediately
prior to becoming an Employee and who was not employed by ARCO Marine, Inc. (a “former
ARCO Alaska employee”) and who was classified as a grade 7 or 8 under ARCO’s
job classification system and was eligible under ARCO’s Executive Deferral Plan
to voluntarily reduce salary and defer the amount of the voluntary salary
reduction and who was classified as a grade 31 or below at that time under
Phillips Petroleum Company’s job classification system may, in a manner
prescribed by the Plan Administrator, make an election to voluntarily reduce
salary and defer the amount of the voluntary salary reduction for salary
received for 2005 and receive a salary deferral credit under this Plan;
provided, that all of the Plan provisions (other than eligibility to
participate) shall apply to such an election.


 


SECTION
7. Schedule A Employees.


 


Notwithstanding
any earlier election or indication of preference to participate in voluntary
salary reductions to be deferred into the Plan in 2005 or deferrals into the
Plan in 2005 of Awards under an Incentive Compensation Plan, Schedule A
Employees shall have their participation in the Plan for 2005 revoked as to the
salary reductions or Incentive Compensation Plan Award or both, as indicated on
Schedule A to this Plan. Any such deferrals made in 2005 for such Schedule A
Employees shall be returned to them (together with any earnings, gains, or losses
thereon) on or before December 31, 2005.


 


SECTION
8. Designation of Beneficiary.


 


Each
Participant shall designate a beneficiary or beneficiaries to receive the
entire balance of the Participant’s Deferred Compensation Account by giving
signed written notice of such designation to the Plan Administrator. The
Participant may from time to time change or cancel any previous beneficiary
designation in the same manner. The last beneficiary designation received by
the Plan Administrator shall be controlling over any prior designation and over
any testamentary or other disposition. After acceptance by the Plan


 


14

















 


Administrator
of such written designation, it shall take effect as of the date on which it
was signed by the Participant, whether the Participant is living at the time of
such receipt, but without prejudice to the Company or any member of the
Affiliated Group or the Plan Administrator or their respective employees and
agents on account of any payment made under this Plan before receipt of such
designation.


 


SECTION
9. Nonassignability.


 


The
right of a Participant, or beneficiary, or other person who becomes entitled to
receive payments under this Plan, shall not be assignable or subject to
garnishment, attachment, or any other legal process by the creditors of, or
other claimants against, the Participant, beneficiary, or other such person.


 


SECTION
10. Administration.


 


(a)           The Plan shall be administered by the Plan
Administrator. The Plan Administrator may delegate to employees of the Company
or any Affiliated Company the authority to execute and deliver such instruments
and documents, to do all such acts and things, and to take such other steps
deemed necessary, advisable, or convenient for the effective administration of
the Plan in accordance with its terms and purpose, except that the Plan
Administrator may not delegate any discretionary authority with respect to
substantive decisions or functions regarding the Plan or Benefits hereunder. The
Plan Administrator may adopt such rules, regulations, and forms as deemed
desirable for administration of the Plan and shall have the discretionary
authority to allocate responsibilities under the Plan to such other persons as
may be designated.


 


(b)           Any claim for benefits hereunder shall be
presented in writing to the Plan Administrator for consideration, grant, or
denial. Claimants will be notified in writing of approved claims, which will be
processed as claimed. A claim is considered approved only if its approval is
communicated in writing to a claimant.


 


15

















 


(c)           In the case of a denial of a claim respecting
benefits paid or payable with respect to a Participant, a written notice will
be furnished to the claimant within 90 days of the date on which the claim is
received by the Plan Administrator. If special circumstances (such as for a
hearing) require a longer period, the claimant will be notified in writing,
prior to the expiration of the 90-day period, of the reasons for an extension
of time; provided, however, that no extensions will be permitted beyond 90 days
after the expiration of the initial 90-day period. A denial or partial denial
of a claim will be dated and signed by the Plan Administrator and will clearly
set forth:


 


(1)           the specific reason or reasons for the
denial;


 


(2)           specific reference to pertinent Plan
provisions on which the denial is based;


 


(3)           a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why such material or information is necessary; and


 


(4)           an explanation of the procedure for review of
the denied or partially denied claim set forth below, including the claimant’s
right to bring a civil action under ERISA section 502(a) following an adverse
benefit determination on review.


 


(d)           Upon denial of a claim, in whole or in part,
a claimant or his duly authorized representative will have the right to submit
a written request to the Trustee for a full and fair review of the denied claim
by filing a written notice of appeal with the Trustee within 60 days of the
receipt by the claimant of written notice of the denial of the claim. A
claimant or the claimant’s authorized representative will have, upon request
and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claimant’s claim for benefits
and may submit issues and comments in writing. The review will take into
account all comments, documents, records, and other information submitted by
the claimant relating to the claim, without regard to whether such information
was submitted or considered in the initial benefit determination. If the
claimant fails to file a request for review within 60 days of the denial
notification, the claim will be deemed abandoned and the claimant precluded


 


16

















 


from
reasserting it. If the claimant does file a request for review, his request
must include a description of the issues and evidence he deems relevant. Failure
to raise issues or present evidence on review will preclude those issues or
evidence from being presented in any subsequent proceeding or judicial review
of the claim.


 


(e)           The Trustee will provide a prompt written
decision on review. If the claim is denied on review, the decision shall set
forth:


 


(1)           the specific reason or reasons for the
adverse determination;


 


(2)           specific reference to pertinent Plan
provisions on which the adverse determination is based;


 


(3)           a statement that the claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to the claimant’s claim
for benefits; and


 


(4)           a statement describing any voluntary appeal
procedures offered by the Plan and the claimant’s right to obtain the
information about such procedures, as well as a statement of the claimant’s
right to bring an action under ERISA section 502(a).


 


(f)            A decision will be rendered no more than 60
days after the Trustee’s receipt of the request for review, except that such
period may be extended for an additional 60 days if the Trustee determines that
special circumstances (such as for a hearing) require such extension. If an
extension of time is required, written notice of the extension will be
furnished to the claimant before the end of the initial 60-day period.


 


(g)           To the extent permitted by law, decisions
reached under the claims procedures set forth in this Section shall be final
and binding on all parties. No legal action for benefits under the Plan shall
be brought unless and until the claimant has exhausted his remedies under this
Section. In any such legal action, the claimant may only present evidence and
theories which the claimant presented during the claims procedure. Any claims
which the claimant does not in good faith pursue through the review stage of
the procedure shall be treated as having been irrevocably waived. Judicial
review of a 


 


17

















 


claimant’s
denied claim shall be limited to a determination of whether the denial was an
abuse of discretion based on the evidence and theories the claimant presented
during the claims procedure.


 


SECTION
11. Employment not Affected by Plan.


 


Participation
or nonparticipation in this Plan shall neither adversely affect any person’s
employment status nor confer any special rights on any person other than those
expressly stated in the Plan. Participation in the Plan by an Employee of the
Company or of a Participating Subsidiary shall not affect the Company’s or the
Participating Subsidiary’s right to terminate the Employee’s employment or to
change the Employee’s compensation or position.


 


SECTION
12. Determination of Recipients of Awards.


 


The
determination of those persons who are entitled to Awards under an Incentive Compensation Plan and any other such
plans shall be governed solely by the terms and provisions of the applicable
plan or program, and the selection of an Employee as a Potential Participant or
the acceptance of an indication of preference to defer an Award hereunder shall
not in any way entitle such Potential Participant to an Award.


 


SECTION
13. Method of Providing Payments.


 


(a)           Nonsegregation. Amounts deferred pursuant to this Plan and
the crediting of amounts to a Participant’s Deferred Compensation Account shall
represent the Company’s unfunded and unsecured promise to pay compensation in
the future. With respect to said amounts, the relationship of the Company and a
Participant shall be that of debtor and general unsecured creditor. While the
Company may make investments for the purpose of measuring and meeting its
obligations under this Plan such investments shall remain the sole property of
the Company subject to claims of its creditors


 


18

















 


generally,
and shall not be deemed to form or be included in any part of the Deferred
Compensation Account.


 


(b)           Funding. It is the intention of the Company that this Plan shall be unfunded
for federal tax purposes and for purposes of Title I of ERISA; provided,
however, that the Company may establish a grantor trust to satisfy part or all
of its Plan payment obligations so long as the Plan remains unfunded for
federal tax purposes and for purposes of Title I of ERISA.


 


SECTION
14. Amendment or Termination of Plan.


 


The
Company reserves the right to amend this Plan from time to time or to terminate
the Plan entirely, provided, however, that no amendment may affect the balance
in a Participant’s account on the effective date of the amendment.


 


SECTION
15. Miscellaneous Provisions.


 


(a)           Except as otherwise provided herein, the Plan
shall be binding upon the Company, its successors and assigns, including but
not limited to any corporation which may acquire all or substantially all of
the Company’s assets and business or with or into which the Company may be
consolidated or merged.


 


(b)           This Plan shall be construed, regulated, and
administered in accordance with the laws of the State of Texas except to the
extent that said laws have been preempted by the laws of the United States.


 


SECTION
16. Effective Date of the Restated Plan.


 


This
Plan is amended and restated effective as of January 1, 2005.


 


19

















 


Executed
this 29th day of December 2005, effective as of January 1, 2005,
with respect to benefits earned and vested prior to January 1, 2005.


 


 


	
  /s/
  Carin S. Knickel

  	
   

  
	
  Carin
  S. Knickel

  
	
  Vice
  President, Human Resources

  



 


20