Document:

exv10w226

 

EXHIBIT 10.226

EMPLOYMENT AGREEMENT

     This Agreement (the “Agreement”) is made and entered into as of this 5th day of March, 2005 by
and between Mark Sicilia, an individual resident of the State of Mississippi (the “Executive”) and
Lakes Entertainment, Inc., a Minnesota corporation, including its subsidiaries and affiliates
(collectively, “Employer” or the “Company”).

RECITALS

     WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the
best interests of the Company to employ and retain Executive as its Vice President of Food &
Beverage; and

     WHEREAS, Executive has accepted this position with the Company; and

     WHEREAS, the Board and the Executive wish to enter into this Agreement to document the terms
of the Executive’s employment with the Company; and

     WHEREAS, the Board wishes to encourage the Executive to continue his employment with the
Company subject to the terms and conditions of this Agreement, and the Board believes that this
objective can be best achieved by providing for a compensation arrangement for the Executive upon
the Executive’s termination of employment under certain circumstances (as hereinafter defined).

     NOW, THEREFORE, in consideration of the mutual promises and covenants and the respective
undertakings of the Company and Executive set forth below, the Company and Executive agree as
follows:

AGREEMENT

     1. Employment. The Company hereby employs Executive as its Vice President of Food & Beverage,
and Executive accepts such employment and agrees to perform services for the Company, for the
period and upon the other terms and conditions set forth in this Agreement.

     2. Term. Executives employment by the Company will be for a term of three years, commencing
January 24, 2005 (the “Initial Term”), unless earlier terminated as provided in Section 8 below.
If either Company or Executive desires to continue the employment relationship beyond the Initial
Term, such party will give the other party written notice by November 1, 2007. The Initial Term
will be automatically extended for successive one-year periods, unless either party gives written
notice to the other at least 90 days prior to the expiration of the Initial Term or applicable
one-year extension that such party elects not to extend the period of employment. Like the Initial
Term, any one-year extension may be earlier terminated as provided in Section 8 below.

     3. Base Salary. Employer shall pay Executive an annualized base salary (“Base Salary”) in the
amount of $200,000, or such higher amount as may from time-to-time be determined by Employer in its
sole discretion. Such salary shall be paid in equal installments in the manner and at the times as
other employees of Employer are paid.

 

 

     4. Incentive Compensation/Stock.

     a) Incentive Compensation. Except as provided in Section 8(b) below, Executive will
receive an annual bonus in an amount equal to at least 40%, and up to 60%, of Executive’s Base
Salary. The amount of the bonus will be subject to the recommendation of Employer’s senior
management and the approval of the Compensation Committee of Employer’s Board of Directors.

     b) Stock. Pursuant to the Lakes Entertainment, Inc. 1998 Stock Option and
Compensation Plan, Executive will be granted a nonqualified stock option for the purchase of 75,000
shares of common stock of the Company, provided that Executive executes the Non-Qualified Stock
Option Agreement in form and content substantially similar to Exhibit A attached hereto.

     5. Benefits. The Company shall provide to Executive such benefits as are provided by Employer
to its other vice presidents. Executive shall pay for the portion of the cost of such benefits as
is from time-to-time established by Employer as the portion of such cost to be paid by its vice
presidents. Employer will also reimburse Executive for the reasonable costs that he incurs to
relocate to the Twin Cities metropolitan area pursuant to Employer’s relocation policy.

     6. Costs and Expenses. Employer will reimburse Executive for reasonable travel and other
business expenses incurred while performing Executive’s duties under this Agreement upon Executive
submitting suitable documentation.

     7. Duties. The duties to be performed by Executive during the term of this Agreement shall be
designated from time-to-time by the President or his designee(s).

     8. Termination.

     a) Without Cause or Constructive Termination. In the event Company terminates
Executive’s employment “Without Cause,” or Executive terminates Executive’s employment and such
termination constitutes a “Constructive Termination” (as both quoted terms are defined in Section 9
below), Executive shall be entitled to receive the benefits in subsections (1) through (5) below.
All payments are subject to applicable federal and state income tax and other legally required
withholdings and any other deductions that Executive voluntarily authorizes in writing. All
payments in subsections (1), (2), and (3) will be on a regular basis pursuant to Sections 3 and 4
of this Agreement. The payments in subsections (2) through (5) are conditioned on Executive
executing a General Release of legal claims in form and content satisfactory to Employer.

	 	(1)	 	Executive’s Base Salary through the last day of Executive’s employment;
	 
	 	(2)	 	An amount equal to 12 months of Executive’s Base Salary;
	 
	 	(3)	 	An amount equal to the average bonus that Executive received in the Company’s fiscal
year(s) prior to the fiscal year in which Executive’s employment terminated;
	 
	 	(4)	 	All outstanding options to purchase shares of stock in the Company shall immediately vest
and become immediately exercisable and, Executive or Executive’s legal

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	 	 	 	representative shall have until the date that is two years after the date on which Executive
ceases to be employed by the Company to exercise Executive’s right to purchase shares of stock of
the Company under any such option agreements (whether entered into before or after the date of this
Agreement); and

	 	(5)	 	Executive and Executive’s dependents will have the right under applicable law to continue
coverage for all medical and dental insurance benefits of the type that they received immediately
prior to the date of such termination (or, in the event their participation in a plan pursuant to
which any such benefits are provided is barred by the terms of such plan, benefits that are not
less favorable to them than the benefits under such plan). Employer will pay its share of the cost
of such benefits for 12 months from the last day of Executive’s employment, or until Executive
obtains essentially equivalent and no less favorable benefits from a subsequent employer, whichever
occurs first. Executive and his dependents will continue to bear the same portion of the cost of
such benefits, if any, as they bore immediately prior to the date of such termination. Executive
will complete and submit the necessary paperwork to continue the above benefits.

     b) With Cause or Voluntary Resignation. In the event Company terminates Executive’s
employment other than “Without Cause,” or Executive voluntarily terminates employment and such
termination is not a “Constructive Termination,” Executive shall be entitled to receive only the
payments set forth in Section 8(a)(1) above. In either event, Executive’s bonus for the fiscal
year in which such termination occurred will be deemed to have been not earned and due and owing.

     9. Certain Definitions.

     a) Termination Without Cause.

     Termination “Without Cause” shall mean termination of the Executive’s employment by the
Company for reasons other than:

	 	(1)	 	the commission of a felony;
	 
	 	(2)	 	the theft or embezzlement of property of Employer or the commission of any similar act
involving moral turpitude;
	 
	 	(3)	 	the failure of Executive to substantially perform his material duties and responsibilities
under this Agreement for any reason other than the Executive’s death or disability, which failure
if, in the opinion of the Company such failure is curable, is not cured within 30 days after
written notice of such failure from the Company’s Board of Directors specifying such failure;
	 
	 	(4)	 	the Executive’s material violation of a significant Company policy; which violation the
Executive fails to cure within 30 days after written notice of such violation from the Company
specifying such failure; or which violation the Company, in its opinion, deems noncurable; or

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	 	(5)	 	the revocation of any gaming license issued by any governmental entity to Executive as a
result of any act or omission by the Executive.

     b) Constructive Termination.

          “Constructive Termination” shall mean termination of the Executive’s employment by Executive,
exercising good faith, and for any of the following reasons, which Company fails to cure or resolve
within 30 days after written notice of such matter from the Executive specifying such matter:

	 	(1)	 	a material, adverse change of Executive’s responsibilities, authority, status, position,
offices, titles, duties or reporting requirements;
	 
	 	(2)	 	a material adverse change in Executive’s annual compensation or benefits (but not if such
change is the result of a general reduction in the annual compensation or benefits of the Company’s
other vice presidents;
	 
	 	(3)	 	a requirement to relocate in excess of 50 miles from Executive’s then current place of
employment without Executive’s consent; or
	 
	 	(4)	 	the breach by the Company of any material provision of this Agreement or failure to
fulfill any other contractual duties owed to the Executive.

     For the purposes of this definition, Executive’s responsibilities, authority, status,
position, offices, titles, duties and reporting requirements are to be determined as of the date of
this Agreement.

     11. Confidentiality.

     Except to the extent required by law, Executive shall keep confidential and shall not, without
the Company’s prior, express written consent, disclose to any third party, other than as reasonably
necessary or appropriate in connection with Executive’s performance of his duties under this
Agreement or any employment agreement, if any, any information regarding the Company, its business,
methods of operation, employees, projects, plans and prospects, which information has not been
released to the public by the Company. The provisions of this Section 11 shall remain in full
force and effect beyond the date of termination of Executive’s employment for any reason.

     12. Agreement Not to Compete.

     a) Noncompetition. Executive will not directly or indirectly engage in any of the
following actions on or before the date that is two years after the date on which Executive’s
employment by the Company is terminated by either party for any reason:

	 	(1)	 	Own any interest in, manage, operate, join, control, lend money or render other financial
assistance to, participate in or be connected with, as an officer, employee, partner, stockholder,
consultant or otherwise, any entity that has a gaming operation within 50 miles of

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	 	 	 	any of the Company’s existing operations or proposed sites which are under contract at the
time of such termination; or
	 	(2)	 	Solicit for employment, endeavor to entice away from the Company or otherwise interfere
with the Company’s relationship with any person who is employed by or otherwise engaged to perform
services for the Company, whether for Executive’s own account or for the account of any other
individual, partnership, firm or corporation or other business entity.

     b) Blue Pencil Doctrine. If the scope of the restrictions in this Section 12 is
determined by any court of competent jurisdiction to be too broad to permit the enforcement of all
of the provisions of this Section 12 to their fullest extent, then the provisions of this Section
12 shall be construed (and each of the parties hereto hereby confirm that its/his intent is that
such provisions be so construed) to be enforceable to the fullest extent permitted by applicable
law. To the maximum extent permitted by applicable law, Executive hereby consents to the judicial
modification of the provisions of this Section 12 in any proceeding brought to enforce such
provisions in such a manner that renders such provisions enforceable to the maximum extent
permitted by applicable law.

     c) Survival of Terms. The provisions of this Section 12 shall remain in full force
and effect beyond the date of termination of Executive’s employment for any reason.

     13. Acknowledgments; Irreparable Harm.

     Executive agrees that the restrictions on competition, solicitation and disclosure in this
Agreement are fair, reasonable and necessary for the protection of the legitimate interests of the
Company. Executive further agrees that a breach of any of the covenants set forth in Sections 11
and 12 of this Agreement will result in irreparable injury and damage to the Company for which the
Company would have no adequate remedy at law, and Executive further agrees that in the event of a
breach, the Company will be entitled to an immediate restraining order and injunction to prevent
such violation or continued violation, without having to prove damages, in addition to any other
remedies to which the Company may be entitled to at law or in equity.

     14. Notification to Subsequent Employers.

     Executive grants the Company the right to notify any future employer or prospective employer
of Executive concerning the existence of and terms of this Agreement and grants the Company the
right to provide a copy of this Agreement to any such subsequent employer or prospective employer.

     15. Resolution of Disputes.

     Any controversy, claim, or dispute of any kind arising out of or relating to this Agreement,
its interpretation, or alleged breach shall be settled by binding arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, and a judgment upon the
award rendered by the arbitrator(s) may be entered in any court having jurisdiction. The parties
acknowledge that binding arbitration offers the opportunity to have any dispute resolved in the
fairest possible manner. Both sides would give up any right to a jury trial, but the parties
believe that the benefits of arbitration significantly outweigh any disadvantage.

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     The parties also believe arbitration is likely to be both less expensive and less
time-consuming than litigation of any dispute there might be. Arbitration will be conducted in the
Minneapolis-St. Paul metropolitan area. An arbitration panel will be created, consisting of one
arbitrator whom Executive selects, one arbitrator selected by the Company, and a neutral arbitrator
selected by the other two arbitrators. The Company will pay the fees of the arbitrator whom it
selects and the neutral arbitrator, and Executive will pay the fees of the arbitrator whom he
selects.

     16. Withholding.

     The Company may withhold from any amounts payable under this Agreement the minimum federal,
state and local taxes and other legally required withholdings as shall be required pursuant to any
applicable law, statute or regulation.

     17. Successors and Assigns.

     This Agreement is binding upon, and shall inure to the benefit of the Company and the
Executive, and all successors and assigns of the Company. This Agreement shall be binding upon and
inure to the benefit of the Executive and his heirs and personal representatives. The Company may
assign this Agreement.

     18. Miscellaneous.

     a) Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Minnesota, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified except by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

     b) Notices. All notices and other communications under this Agreement shall be in
writing and shall be given by hand to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

IF TO THE EXECUTIVE:

Mark Sicilia

Lakes Entertainment, Inc.

130 Cheshire Lane

Minnetonka, MN 55305-1062

IF TO THE COMPANY:

Lakes Gaming, Inc.

Attn: Timothy J. Cope, President and Chief Financial Officer

130 Cheshire Lane

Minnetonka, MN 55305

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WITH A REQUIRED COPY TO:

Maslon Edelman Borman & Brand, LLP

Attn: Neil I. Sell

3300 Wells Fargo Center

90 South Seventh Street

Minneapolis, MN 55402-4140

or to such other address as either party furnishes to the other in writing in accordance with this
paragraph (b) of Section 18. Notices and communications shall be effective when actually received
by the addressee.

     c) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining
portion of such provision, together with all other provisions of this Agreement, shall remain valid
and enforceable and continue in full force and effect to the fullest extent consistent with the
law.

     d) Withholding. Notwithstanding any other provision of this Agreement, the Company
may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes
that are required to be withheld by applicable laws or regulations.

     e) No Waiver. The Executive’s or the Company’s failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement shall not be deemed
to be a waiver of such provision or right or of any other provision of or right under this
Agreement.

     f) Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but one and the same
instrument.

     19. Entire Agreement.

     This Agreement constitutes the entire agreement between the parties, supersedes all prior
agreements and understandings between the parties with respect to the subject matter hereof and may
not be modified or terminated orally. No modification, termination or attempted waiver of this
Agreement shall be valid unless in writing and signed by the party against whom the same is sought
to be enforced.

     20. Voluntary Agreement.

     Executive acknowledges that he has had the opportunity to review this Agreement and confer
with legal counsel of his choice prior to executing it. Executive enters into this Agreement
voluntarily and has not relied on any statements or representations by the Company except as set
forth in this Agreement.

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     IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and pursuant to the
due authorization of its Board, the Company has caused this Agreement to be executed in its name
and on its behalf, all as of the day and year first written above.

	 	 	 
	LAKES ENTERTAINMENT, INC	 	
EXECUTIVE:
	By:  /S/ Timothy Cope
 

Its:  President	 	
/S/ Mark Sicilia
 

Mark Sicilia

-8-exv10w42

 

Exhibit 10.42

NONQUALIFIED

DEFERRED COMPENSATION PLAN

BASIC PLAN DOCUMENT

(Including Code §409A provisions)

 

 

Nonqualified Deferred Compensation Prototype Plan

NONQUALIFIED

DEFERRED COMPENSATION PLAN

BASIC PLAN DOCUMENT

     By execution of the Adoption Agreement associated with this Basic Plan Document, the Employer
establishes this Nonqualified Deferred Compensation Plan (“Plan”) for the benefit of certain
Employees and Contractors the Employer designates in its Adoption Agreement. The primary purpose of
the Plan is to provide additional compensation to Participants upon termination of employment or
service with the Employer. The Employer will pay benefits under the Plan only in accordance with
the terms and conditions set forth in the Plan.

PREAMBLE

     Plan Type. The Employer in its Adoption Agreement will specify whether it establishes the Plan
as a nonqualified deferred compensation plan or as an ineligible Code §457(f) plan. A nonqualified
deferred compensation plan is an unfunded plan that may be: (i) an “excess benefit plan”; (ii) a
plan maintained “primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees” (“top-hat plan”); or (iii) a plan for Contractors. A
top-hat plan includes a supplemental executive retirement plan (“SERP”).

     Possible Nonuniformity. The Employer in its Adoption Agreement will specify such Plan terms as
will apply to all Participants uniformly or as may apply to a given Participant. The Employer need
not provide the same Plan benefits or apply the same Plan terms and conditions to all Participants,
even as to Participants who are of similar pay, title and other status with the Employer. The
elections the Employer makes in its Adoption Agreement apply uniformly to all Participants, except
to the extent the Employer adopts inconsistent provisions with respect to one or more Participants
in a separate attachment designated as “Exhibit A” and attached to the Adoption Agreement. The
Employer may create a separate Exhibit A for one or more Participants, specifying such terms and
conditions as are applicable to a given Participant. The Employer, in Exhibit A, may modify any
Plan provision or any Adoption Agreement election as to one or more Participants.

I. DEFINITIONS

     1.01 “Account” means the account the Employer establishes under the Plan for each Participant
and, as applicable, means a Participant’s Elective Deferral Account, Nonelective Contribution
Account or Matching Contribution Account.

     1.02 “Accrued Benefit” means the total dollar amount credited to a Participant’s Account.

     1.03 “Adoption Agreement” means the document the Employer executes to establish the Plan and
includes all Exhibits and other documents referenced therein.

     1.04 “Aggregated Plans” means this Plan and any other like-type plan or arrangement (account
balance plan or separation pay arrangement) of the Employer in which a Participant participates and
as to which the Plan or Applicable Guidance requires the aggregation of all such nonqualified
deferred compensation in applying Code §409A.

     1.05 “Applicable Guidance” means as the context requires Code §§83, 409A and 457, Treas. Reg.
§1.83, Prop. Treas. Reg. §1.409A, Treas. Reg. §1.457-11, or other written Treasury or IRS guidance
regarding or affecting Code §§83, 409A or 457(f). Applicable Guidance also includes, through
December 31, 2006, or other applicable date, Notice 2005-1.

     1.06 “Base Salary” means a Participant’s Compensation consisting only of regular salary and
excluding any other Compensation.

     1.07 “Basic Plan Document” means this Nonqualified Deferred Compensation Plan document.

1

 

Nonqualified Deferred Compensation Prototype Plan

     1.08 “Beneficiary” means the person or persons entitled to receive Plan benefits in the event
of a Participant’s death.

     1.09 “Bonus” means a Participant’s Compensation consisting only of bonus and excluding any
other Compensation. A Bonus also may be Performance-Based Compensation under Section 1.36.

     1.10 “Change in Control” means, as to an Employer which is a corporation, a change: (i) in the
ownership of the Employer; (ii) in the effective control of the Employer; or (iii) in the ownership
of a substantial portion of the assets of the Employer, within the meaning of Prop. Treas. Reg.
§1.409A-3(g)(5) or in Applicable Guidance. The Employer in its Adoption Agreement will elect
whether a Change in Control includes any or all the events described in clauses (i), (ii) or (iii)
and also may elect to increase the percentage change required under any such event to constitute a
Change in Control. Pending the issuance of Applicable Guidance as to the application of the Change
in Control provisions to partnerships (or to other unincorporated Employers), if the Employer
elects in its Adoption Agreement to permit Change in Control as a payment event, the Employer will
apply clauses (i) and (iii) by analogy.

     1.11 “Change in the Employer’s Financial Health” means an adverse change in the Employer’s
financial condition as described in Applicable Guidance.

     1.12 “Code” means the Internal Revenue Code of 1986, as amended.

     1.13 “Commissions” means Compensation or portions of Compensation a Participant earns if: (i)
a substantial portion of Participant’s services to the Employer consists of the direct sale of a
product or a service to a customer; (ii) the Compensation the Employer pays to the Participant
consists either of a portion of the purchase price for the product or service or of an amount
calculated solely by reference to volume of sales; and (iii) payment is contingent upon the
Employer receiving payment for the product or services from a customer who is unrelated to the
Employer or to the Participant. A customer is related if treated as related under Prop. Treas. Reg.
§§1.409A-1(f)(3)(ii) or -1(f)(3)(iv).

     “Compensation” with respect to any Participant means such Participant’s wages, salaries, fees
for professional services and other amounts received (without regard to whether or not an amount is
paid in cash) for personal services actually rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are includible in gross income (including, but
not limited to, commissions paid salesmen, compensation for services on the basis of a percentage
of profits, commissions on insurance premiums, tips, regular bonuses as described in the Employer’s
payroll records, fringe benefits, and reimbursements or other expense allowances under a
nonaccountable plan as described in Regulation 1.62-2(c)) for a Plan Year.

     Compensation shall exclude (a)(1) contributions made by the Employer to a plan of deferred
compensation to the extent that, the contributions are not includible in the gross income of the
Participant for the taxable year in which contributed, (2) Employer contributions made on behalf of
an Employee to a simplified employee pension plan described in Code Section 408(k) to the extent
such contributions are excludable from the Employee’s gross income, (3) any distributions from a
plan of deferred compensation; (b) amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by an Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture; (c) amounts realized from
the sale, exchange or other disposition of stock acquired under a qualified stock option; and (d)
other amounts which receive special tax benefits, or contributions made by the Employer (whether or
not under a salary reduction agreement) towards the purchase of any annuity contract described in
Code Section 403(b) (whether or not the contributions are actually excludable from the gross income
of the Employee); and (e) any bonuses, other than regular bonuses (as described in the
Employer’s payroll records).

     For purposes of this Section, the determination of Compensation shall be made by including
amounts which are contributed by the Employer pursuant to a salary reduction agreement and which
are not includible in the gross income of the Participant under Code Sections 125, 132(f)(4),
402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code Section
414(h)(2) that are treated as Employer contributions.

     For a Participant’s initial year of participation, Compensation shall be recognized
for the entire Plan Year.

     The Employer, in its Adoption Agreement, may modify the definition of Compensation or may
specify a different definition of Compensation either as to Employees, as to Contractors or both.

2

 

Nonqualified Deferred Compensation Prototype Plan

     1.15 “Contractor” means a person or entity (as described in Prop. Treas. Reg. §1.409A-1(f)(1),
and which is not on the accrual method of accounting for Federal income tax purposes) providing
services to the Employer and who is not an Employee. For this Plan, a Contractor excludes a
Contractor providing significant services to the Employer and to at least two unrelated entities as
described in Prop. Treas. Reg. §1.409A-1(f)(3) or other Applicable Guidance.

     1.16 “Disability” means a physical or mental condition of a Participant resulting from bodily
injury, disease, or mental disorder which renders such Participant incapable of continuing any
gainful occupation and which condition constitutes total disability under the federal Social
Security Acts.

     1.17. “Deferred Compensation” means the Participant’s Account Balance attributable to Elective
Deferrals and Employer Contributions and includes Earnings on such amounts. “Compensation Deferred”
is Compensation that the Participant or the Employer has deferred under this Plan. Compensation is
Deferred Compensation if: (i) under the terms of the Plan and the relevant facts and circumstances,
the Participant has a Legally Binding Right to Compensation during a Taxable Year that the
Participant has not actually or constructively received and included in gross income; and (ii)
pursuant to the Plan terms, the Compensation is payable to or on behalf of the Participant in a
later Taxable Year. Deferred Compensation includes Separation Pay paid pursuant to a
Separation Pay Arrangement except as otherwise described in Prop. Treas. Reg. §1.409A-1(b)(9) which
excludes: (i) certain collectively bargained Separation Pay Arrangements; (ii) payments based upon
an involuntary Separation from Service or pursuant to a Window Program where the payments do not
exceed certain dollar limitations and are paid no later than December 31 of the second calendar
year which follows the calendar year in which the Separation from Service occurs; and (iii) certain
reimbursements, in-kind benefits, direct payments to the provider of goods and services on behalf
of the Participant, or de minimis payments where the expenses incurred and the reimbursements are
paid no later than December 31 of the second calendar year following the calendar year in which the
Separation from Service occurs. Deferred Compensation for purposes of this Plan does not
include: (i) Compensation payable after the last day of the Participant’s Taxable Year pursuant
to the normal timing of the Employer’s payroll period as provided in Prop. Treas. Reg.
§1.409A-1(b)(3); (ii) certain short-term deferrals as provided in Prop. Treas. Reg.
§1.409A-1(b)(4); (iii) certain restricted property as described in Prop. Treas. Reg.
§1.409A-1(b)(6); (iv) certain foreign arrangements as described in Prop. Treas. Reg.
§1.409A-1(b)(8); and (v) any other amounts which under Applicable Guidance are not a Grandfathered
Amount or a 409A Amount under Article VII.

     1.18 “Earnings” means Trust earnings, gain or loss applicable to a Participant’s Account. In
the absence of a Trust, Earnings means the Plan’s actual or notional earnings, gain and loss
applicable to a Participant’s Account as described in Section 5.02.

     1.19 “Effective Date” of the Plan is the date the Employer specifies in the Adoption
Agreement.

     1.20 “Elective Deferral” means Compensation a Participant elects to defer into the
Participant’s Account under the Plan.

     1.21 “Elective Deferral Account” means the portion of a Participant’s Account attributable to
Elective Deferrals and Earnings thereon.

     1.22 “Employee” means a person or entity (as described in Prop. Treas. Reg. §1.409A-1(f)(1),
and which is not on the accrual method of accounting for Federal income tax purposes) providing
services to the Employer in the capacity of a common law employee of the Employer.

     1.23 “Employer” means the person or entity: (i) receiving the services of the Participant;
(ii) with respect to whom the Legally Binding Right to Compensation arises; and (iii) who or which
executes an Adoption Agreement establishing the Plan. The Employer includes all persons with whom
the Employer would be considered a single employer under Code §§414(b) or (c). In the case of an
Ineligible 457 Plan, Employer means a State or a Tax-Exempt Organization.

3

 

Nonqualified Deferred Compensation Prototype Plan

     1.24 “Employer Contribution” means amounts the Employer contributes or credits to an Account
under the Plan, including Nonelective Contributions and Matching Contributions but not including
Elective Deferrals.

     1.25 “Employer Contribution Account” means the portion of a Participant’s Account attributable
to Employer Contributions and Earnings thereon.

     1.26 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     1.27 “409A Amount” means: (i) any Compensation Deferred prior to January 1, 2005, unless such
Deferred Compensation is a Grandfathered Amount; and (ii) any Compensation Deferred in Taxable
Years beginning after December 31, 2004. In determining 409A Amounts, the rules of Section 1.04
regarding Aggregated Plans apply.

     1.28 “Grandfathered Amount” means prior to January 1, 2005, a Participant: (i) had a Legally
Binding Right to be paid Deferred Compensation; and (ii) such Deferred Compensation is Vested,
unless the Employer after October 3, 2004, materially modifies the Plan (within the meaning of
Section 7.04). For purposes of determining whether Deferred Compensation is Vested, the
conditioning of payment of the Deferred Compensation on the completion of services in 2005 for a
payroll period that includes December 31, 2004, does not constitute a requirement to render
additional services or a Substantial Risk of Forfeiture. If the Plan is a Separation Pay
Arrangement, the Employer will determine any Grandfathered Amount in accordance with the Preamble
to the Prop. Treas. Reg. §1.409A and Applicable Guidance. In determining Grandfathered Amounts, the
rules of Section 1.04 regarding Aggregated Plans apply.

     1.29 “Ineligible 457 Plan” means this Plan which is subject to Code §457(f) and that is not an
eligible 457 plan under Code §457(b).

     1.30 “Legally Binding Right” means, in reference to Compensation, the grant by the Employer to
the Participant of a right to Compensation where, after the Participant has performed the services
which created the Legally Binding Right, the Compensation is not subject to unilateral reduction or
elimination by the Employer or any other person, The Employer, based on the facts and circumstances
and in accordance with Prop. Treas. Reg. §1.409A-1(b)(1), will determine: (i) whether a Legally
Binding Right exists; or (ii) whether a Legally Binding Right does not exist on account of the
existence of negative discretion which has substantive significance to reduce or eliminate the
Compensation.

     1.31 “Matching Contribution” means a fixed or discretionary Employer contribution made with
respect to a Participant’s Elective Deferral.

     1.32 “Matching Contribution Account” means the portion of a Participant’s Account attributable

to Matching Contributions and Earnings thereon.

     1.33 “Nonelective Contribution” means a fixed or discretionary Employer Contribution that is
unrelated to a Participant’s Elective Deferrals.

     1.34 “Nonelective Contribution Account” means the portion of a Participant’s Account
attributable to Nonelective Contributions and Earnings thereon.

     1.35 “Participant” means an Employee or Contractor the Employer designates under Adoption
Agreement Section 2.01 to participate in the Plan.

     1.36 “Performance-Based Compensation” means Compensation (including a Bonus) where the amount
of, or entitlement to, the Compensation is contingent on satisfaction of preestablished
organizational or individual performance criteria relating to a performance period of at least 12
consecutive months during which the Participant performs services. The Employer must establish the
organizational or individual performance criteria in writing not later than 90 days after
commencement of the performance period and the outcome must be substantially uncertain at the time
that the Employer establishes the performance criteria. The Employer may establish performance
criteria without the necessity of action by its shareholders, board of directors,
compensation committee or similar entities. Performance-Based Compensation may be based on

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Nonqualified Deferred Compensation Prototype Plan

subjective performance criteria provided: (i) the criteria relate the Participant’s performance, a
group of service providers that includes the Participant or a business unit for which the
Participant provides services which may include the Employer; and (ii) the person who decides
whether the subjective performance criteria have been met is someone other than the Participant,
the Participant’s family member (within the meaning of Code §267(c)(4) applied as if the family of
an individual includes the spouse of any member of the family), a person under the supervision of
the Participant or such a family member, or where the compensation of the decision maker is
controlled in whole or in part by the Participant or such a family member. The Employer will
determine the status of Compensation as Performance-Based Compensation in accordance with Prop.
Treas. Reg. §1.409A-1(e) and Applicable Guidance.

     1.37 “Plan” means the Nonqualified Deferred Compensation Plan of the Employer established by
and including the Adoption Agreement, the Basic Plan Document and the Trust, if any. The Employer
will set forth the name of the Plan in its Adoption Agreement. For purposes of applying Code §409A
requirements: (i) this Plan is an account balance plan under Prop. Treas. Reg.
§1.409A-1(c)(2)(i)(A) or is a separation pay arrangement under Prop. Treas. Reg.
§1.409A-1(c)(2)(i)(C); and (ii) this plan constitutes a separate plan for each Participant. This
Plan does not constitute: (i) a Code §401(a) plan with and exempt trust under Code §501(a); (ii) a
Code §403(a) annuity plan; (iii) a Code §403(b) annuity; (iv) a Code §408(k) SEP; (v) a Code
§408(p) Simple IRA; (vi) a Code §501(c)(18) trust to which an active participant makes deductible
contributions; (vii) a Code §457(b) plan; or (viii) a Code §415(m) plan.

     1.38 “Retirement Age” means the date the Employer elects in the Adoption Agreement. A
Participant is not entitled to distribution of his/her Vested Accrued Benefit based solely on
attainment of Retirement Age, unless the Employer elects in the Adoption Agreement to permit such
distributions.

     1.39 “Separation from Service” means in the case of an Employee, the Employee’s
termination of employment with the Employer whether on account of death, retirement or otherwise.

     (A) Effect of Leave. An Employee does not incur a Separation from Service if the
Employee is on military leave, sick leave, or other bona fide leave of absence (such as temporary
employment by the government), if such leave does not exceed a period of six months, or if longer,
the period for which a statute or contract provides the Employee with the right to reemployment
with the Employer. If a Participant’s leave exceeds six months but the Participant is not entitled
to reemployment under a statute or contract, the Participant incurs a Separation from Service on
the next day following the expiration of six months.

     (B) Insignificant Service. If an Employee continues to perform services for the
Employer, but the services are not more than insignificant, the Employee incurs a Separation from
Service. For this purpose, an Employee will be deemed to provide more than insignificant service
(and no Separation from Service occurs) if the Employee provides service at an annual rate and
receives annual remuneration from the Employer which are equal to at least 20% of the average
annual service performed and to at least 20% of the average annual remuneration earned during the
immediately preceding 3 full calendar years of employment, or if less, the period the Employer
employed the Employee.

     (C) Significant Non-Employee Service. In addition, a former Employee who continues to
render significant services to the Employer in a non-Employee capacity is not deemed to have
incurred a Separation from Service. For this purpose a former Employee is deemed to render
significant service if the former Employee provides service at an annual rate and receives annual
remuneration from the Employer which are equal to at least 50% of the average annual service
performed and to at least 50% of the average annual remuneration earned during the immediately
preceding 3 full calendar years of employment, or if less, the period the Employer employed the
Employee.

     (D) Contractor. Separation from Service, in the case of a Contractor, means
the expiration of the contract or contracts under which the Contractor performs services for the
Employer provided that the expiration constitutes a good-faith and complete termination of the
contractual relationship between the Contractor and the Employer. A good-faith and complete
termination does not occur if: (i) the Employer anticipates a renewal of the service contract for
the services provided under the expired contract or the Employer anticipates the Contractor
becoming an Employee; and (ii) neither the Employer nor the Contractor has eliminated the
Contractor as a possible provider of such additional services. The Employer is deemed to
intend renewal of the Contractor’s expired contract if renewal is conditioned only upon the
need for services,

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Nonqualified Deferred Compensation Prototype Plan

the Employer’s ability to pay for the services, or both. See Section 4.01(B) as
to Contractor “deemed” Separation from Service provisions.

     (E) Employer Determination. The Employer will determine whether an Employee has
incurred a Separation from Service: (i) based on the facts and circumstances; (ii) subject to the
provisions of this Section 1.39; and (iii) without application of the “same desk rule” under Rev.
Rul. 79-336 and Rev. Rul. 80-229. The Employer will determine whether an Employee or Contractor has
incurred a Separation from Service in accordance with Prop. Treas. Reg. §1.409A-1(h) and Applicable
Guidance.

     1.40 “Separation Pay” means any Compensation where one of the conditions to a right to the
Compensation is Separation from Service, whether voluntary or involuntary. Separation Pay includes:
(i) payments in the form of reimbursements for expenses incurred and the provision of other taxable
benefits; (ii) payments due on account of Separation from Service, regardless of whether such
payments are conditioned on the Participant’s execution of a release of claims, noncompetition or
nondisclosure provisions or other similar requirements; and (iii) such other amounts as are
described in Prop. Treas. Reg. §1.409A-1(m) or in Applicable Guidance.

     1.41 “Separation Pay Arrangement” means any arrangement that provides for Separation Pay,
including the portion of any arrangement that provides for Separation Pay.

     1.42 “Service Year” means a Participant’s Taxable Year in which the Participant performs
services which give rise to Compensation.

     1.43 “Specified Employee” means a Participant who is a key employee as described in Code
§416(i), disregarding paragraph (5) thereof. However, a Participant is not a Specified Employee
unless any stock of the Employer is publicly traded on an established securities market or
otherwise. If a Participant is a key employee at any time during the 12 months ending on the
identification date, the Participant is a Specified Employee for the 12 month period commencing on
the first day of the fourth month following the identification date. The Employer in its Adoption
Agreement will elect the identification date which may be any date in the calendar year and the
same identification date must apply as to all deferred compensation arrangements of the Employer.
The Employer may amend its Adoption Agreement to change the identification date but any such
amendment is not effective for 12 months after the adoption of the amendment. If the Employer fails
to elect an identification date in its Adoption Agreement, the identification date is December 31.
The Employer’s election of an identification date on or before December 31, 2006, applies to any
Separation from Service occurring on or after January 1, 2005. The Employer, in determining whether
this Section 1.43 and all related Plan provisions apply, will determine whether the Employer has
any publicly traded stock as of the date of a Participant’s Separation from Service. In the case of
a spin-off or merger, or in the case of nonresident alien Employees, the Employer will apply the
Specified Employee provisions of the Plan in accordance with Prop. Treas. Reg. §1.409A-1(i) and
other Applicable Guidance.

     1.44 “Specified Time or Fixed Schedule” means, in reference to a payment of Deferred
Compensation, the Employer at the time of the deferral of the Compensation can objectively
determine: (i) the amount payable; and (ii) the payment date or dates. An amount is objectively
determinable if the deferral election specifically identifies the amount or if the Employer can
determine the amount pursuant to a nondiscretionary formula. For this purpose, the Participant’s or
the Employer’s designation of a calendar year or years for payment without more is deemed to mean
payment on January 1 in such years. A Specified Time or Fixed Schedule also means as described in
Prop. Treas. Reg. §1.409A-3(g)(1) and other Applicable Guidance.

     1.45 “State” means: (i) one of the fifty states of the United States or the District of
Columbia, or (ii) a political subdivision of a State, or any agency or instrumentality of a State
or its political subdivision. A State does not include the federal government or an agency or
instrumentality thereof.

     1.46 “Substantial Risk of Forfeiture” means as to 409A Amounts, and other than for
purposes of application of Code §457(f), Compensation which is payable conditioned: (i) on the
performance of substantial future services by any person including the Participant; or (ii) on the
occurrence of a condition related to a purpose of the Compensation, and where under clause (i) or
(ii) the possibility of forfeiture is substantial. A
condition related to the purpose of the Compensation relates to the Participant’s performance

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Nonqualified Deferred Compensation Prototype Plan

for the Employer or to the Employer’s business activities or organizational goals. A Substantial
Risk of Forfeiture does not include any addition of a condition after a Legally Binding Right to
the Compensation arises or any extension of a period during which the Compensation is subject to a
Substantial Risk of Forfeiture. Compensation is not subject to a Substantial Risk of Forfeiture
merely because payment is conditioned on the Participant’s refraining from performing services.
Compensation is not subject to a Substantial Risk of forfeiture beyond the date or time that the
Participant otherwise could have elected to receive the Compensation unless the amount of
Compensation (disregarding Earnings) is materially greater than the amount of Compensation that the
Participant otherwise could have elected to receive. As such, a Participant’s Elective Deferrals
generally may not be made subject to a Substantial Risk of Forfeiture. In determining whether the
possibility of forfeiture is substantial in the case of rights to Compensation granted to a
Participant who owns significant voting power or value in the Employer, the Employer will apply
Prop. Treas. Reg. §1.409A-1(d)(3) and Applicable Guidance. A Substantial Risk of Forfeiture for
Grandfathered Amounts means as defined in Treas. Reg. §1.83-3(c) and in Notice 2005-1,
Q/A-16(b) or in Applicable Guidance. A Substantial Risk of Forfeiture for purposes of application
of Code §457(f) under an Ineligible 457 Plan means as described in Code §457(f)(3)(B), Treas. Reg.
§1.83-3(c) and Applicable Guidance.

     1.47 “Tax-Exempt Organization” means any tax-exempt organization other than a governmental
unit or a church or a qualified church-controlled organization within the meaning of Code
§§3121(w)(3)(A) and 3121(w)(3)(B).

     1.48 “Taxable Year” means the 12 consecutive month period ending each December 31.

     1.49 “Trust” means the trust described in Section 5.01 of the Basic Plan Document and created
under Section 5.01 of the Adoption Agreement.

     1.50 “Unforeseeable Emergency” means: (i) a severe financial hardship of the Participant or
Beneficiary resulting from an illness or accident of the Participant or Beneficiary, of the
Participant’s spouse or of the Beneficiary’s spouse, or the Participant’s or Beneficiary’s
dependent (as defined in Code §152(a)); (ii) loss of the Participant’s or Beneficiary’s property
due to casualty; or (iii) other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the Participant’s or Beneficiary’s control. The Employer will determine
whether a Participant or Beneficiary incurs an Unforeseeable Emergency based on the relevant facts
and circumstances and in accordance with Prop. Treas. Reg. §1.409A-3(g)(3) or Applicable Guidance,
but in any case, the Plan may not make payment to the extent that the Unforeseeable Emergency may
be relieved: (i) through reimbursement or compensation by insurance or otherwise; (ii) by
liquidation of the Participant’s assets to the extent that such liquidation of assets would not
itself cause severe financial hardship; or (iii) by the Participant’s cessation of Elective
Deferrals under the Plan. The Plan must limit the amount of any payment based on Unforeseeable
Emergency to the amount that is reasonably necessary to satisfy the emergency need, which may
include amounts necessary to pay any Federal, state or local income taxes or penalties reasonably
anticipated to result from the payment. The Employer in making the determination as to the amount
of payment must take into account any additional Compensation available to the Participant if
he/she cancels an Elective Deferral election under Section 4.03(D)(vii). If the Employer in its
Adoption Agreement elects to permit payment based on Unforeseeable Emergency, the Employer further
will elect whether to permit payment based on all events that will constitute an Unforeseeable
Emergency or to limit such events to a subset of specific events which will so qualify. 

     1.51 “Valuation Date” means the last day of each Taxable Year and such other dates as the
Employer may determine.

     1.52 “Vested” means Deferred Compensation which is not subject to a Substantial Risk of
Forfeiture. or to a requirement to perform further services for the Employer. For purposes of
determining whether an amount satisfies the vesting requirement for Grandfathered Amounts under
Article VII, Substantial Risk of Forfeiture means as described in Treas. Reg. §1.83-3(c) and does
not mean as defined in Section 1.46 for purposes of application of Code §409A.

     1.53 “Window Program” means a program the Employer establishes to provide, for a limited
period of time not exceeding one year, Separation Pay in connection with Separation from Service,
or in connection
with Separation from Service under prescribed circumstances, and otherwise as described in
Prop. Treas. Reg. §1.409A-1(b)(9)(v) or in Applicable Guidance.

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Nonqualified Deferred Compensation Prototype Plan

     1.54 “Wraparound Election” means as to a Participant who also is a participant in a 401(k)
plan of the Employer, an election (or elections, if made separately) to defer compensation under
both plans with the result that the Participant will achieve under the 401(k) plan, the maximum
amount of elective deferrals and matching contributions, if any, as is permissible under Code
§§402(g), 401(k)(3), 401(m), 415 and 414(v). For a Taxable Year as to any Participant, the maximum
amount of Elective Deferrals the Plan will transfer may not exceed the Code §402(g) limit and the
maximum amount of Matching Contributions the Plan will transfer may not exceed the Code §402(g)
limit, applying such limit separately as to each contribution type. Under a Wraparound Election,
the Plan promptly following completion of 401(k) plan testing and within any time required under
Applicable Guidance, will transfer from the Participant’s Account such Elective Deferrals and
related Matching Contributions for the Taxable Year (but without Earnings thereon) as are
consistent with the Wraparound Election, to the Participant’s account under the 401(k) plan to be
held and administered in accordance with the 401(k) plan. Any remaining amounts not transferred to
the 401(k) plan will remain in and be administered in accordance with this Plan. The Employer in
its Adoption Agreement will specify whether a participant may make a Wraparound Election. A
Participant will make a Wraparound Election subject to any timing requirements of Applicable
Guidance and on a form the Employer provides for this purpose.

     1.55 “Year of Service” means the computation period of twelve (12) consecutive months, herein
set forth, during which the Employee has at least 1,000 hours of service. For vesting purposes,
the computation periods shall be the Plan Year, including periods prior to the Effective Date. The
computation period shall be the Plan Year.

     Nothwithstanding the foregoing, for any short Plan Year, the determination of whether an
Employee has completed a Year of Service shall be made in accordance with Department of Labor
regulation 2530.203-2©. However, in determining whether an Employee has completed a Year of
Service for benefit accrual purposes in the short Plan Year, the number of hours of service shall
be proportionately reduced based on the number of full months in the short Plan Year.

     Years of Service with any affiliated employer shall be recognized.

II. PARTICIPATION

     2.01 Participant Designated. The Employer will designate from time to time in its
Adoption Agreement those Employees or Contractors (by name, job title or other classification) who
are Participants in the Plan.

     2.02 Elective Deferrals. The Employer will specify in its Adoption Agreement whether
Participants may elect to make Elective Deferrals to their Accounts.

     (A) Limitations. The Employer will specify in its Adoption Agreement any amount
limitations or conditions applicable to Elective Deferrals.

     (B) Election Form and Timing. A Participant must make his/her Elective Deferral
election on an election form the Employer provides for that purpose. The Participant must make the
election no later than the latest of the applicable times specified below. The Employer in its
Adoption Agreement will elect that a Participant must make and deliver his/her election to the
Employer no later than: (i) such applicable time; or (ii) the number of days prior to such
applicable time as the Employer sets forth in its Adoption Agreement. The Employer will disregard
any election which is not timely under this Section 2.02(B).

          (1) General Timing Rule. Except as otherwise provided in this Section 2.02(B), a
Participant must deliver his/her election to the Employer no later than the end of the Taxable Year
prior to the Service Year.

          (2) New Participant/New Plan. If the Plan becomes effective, or an Employee or
Contractor first becomes a Participant, on a date which is not the first day of a Taxable Year, the
Participant must make and
deliver his/her Elective Deferral election for that Taxable Year not later than 30 days after
the Plan goes into effect or the Participant becomes a Participant. The election may apply only to
Compensation for services

8

 

Nonqualified Deferred Compensation Prototype Plan

the Participant performs subsequent to the date the Participant delivers
the election to the Employer. For Compensation that is earned for a specified performance period,
including an annual bonus, and where the new Participant makes an Elective Deferral election after
the service period commences, the Employer will pro rate the election by multiplying the
Compensation by the ratio of the number of days left in the performance period at the time of the
election, over the total number of days in the entire performance period.

          (3) Certain Forfeitable Rights. If payment of Deferred Compensation is subject to a
forfeiture condition requiring the Participant to perform services for the Employer for at least 12
months after the Participant obtains the Legally Binding Right to the Compensation, the Participant
may make an Elective Deferral election no later than 30 days after the Participant obtains the
Legally Binding Right to the Compensation, provided the Participant makes the election at least 12
months prior to the earliest date on which the service forfeiture condition could lapse.

          (4) Performance-Based Compensation. As to any Performance-Based Compensation based on
services performed over a period of at least 12 months, a Participant may elect no later than 6
months before the end of the service period to defer such Compensation, provided that the
Participant: (i) continuously must perform services from a date no later than the date the Employer
establishes the performance criteria and at least through the date of the Participant’s election;
and (ii) may not make an election after the Compensation has become substantially certain to be
paid and is readily ascertainable.

          (5) Commissions. For purposes of election timing under this Section 2.02(B), if
Compensation consists of Commissions, the Participant is treated as providing the services giving
rise to the Commissions in the Taxable Year in which the customer remits payment to the Employer.

          (6) Final Payroll Period. As the Employer elects in its Adoption Agreement, if
Compensation is payable after the last day of the Participant’s Taxable Year, but is Compensation
for the Participant’s services during the final payroll period within the meaning of Code §3401(b)
which contains the last day of the Taxable Year, the Compensation is treated for purposes of an
election under this Section 2.02(B), as Compensation for the current Taxable Year in which the
final payroll period commenced or for the subsequent Taxable Year in which the Employer pays the
Compensation. This Section 2.02(B)(6) does not apply to Compensation for services performed over
any period other than the final payroll period as described herein and the Employer will apply this
Section 2.02(B)(6) in accordance with Prop. Treas. Reg. §1.409A-2(a)(11) and Applicable Guidance.
If the Employer amends its plan after December 31, 2006, to alter the timing rule of this Section
2.02(B)(6), any such amendment may not take effect until 12 months after the later of the date the
amendment if adopted and is effective.

          (7) Separation Pay/Window Program. If the Participant’s election relates to Separation
Pay and the Separation Pay: (i) is due to an actual involuntary Separation from Service; and (ii)
is the result of bona-fide, arm’s length negotiations, then the Participant may make an election
under this Section 2.02(B) at any time up to the time that the Participant has a Legally Binding
Right to the Separation Pay. If the Separation Pay results from a Window Program, the Participant
may make the election at any time up to the time that the Participant’s election to participate in
the Window Program becomes irrevocable.

          (8) Wraparound Elections. A Participant’s Wraparound Election under Section 1.54 is
not an election under this Section 2.02(B) even if as a result of the election the amount of the
Participant’s Elective Deferrals under this Plan increases, provided that the Wraparound Election
does not affect the timing and form of payment of Deferred Compensation under this Plan.

          (9) Fiscal Year Employer. In the event that the Employer’s taxable year is a
non-calendar year, a Participant may elect to defer Compensation which is co-extensive with the
Employer’s fiscal year by making an election no later than the end of the Employer’s fiscal year
which precedes the Employer’s fiscal year in which the Participant performs the service for which
the Compensation is payable and in accordance with Prop. Treas. Reg. §1.409A-2(a)(5) and Applicable
Guidance.

     (C) Early Elections/Changes. The Employer in its Adoption Agreement will elect whether
a Participant’s election made prior to the Section 2.02(B) deadline becomes irrevocable as to a
Taxable Year: (i)
following the last day on which a Participant may make an election under Section 2.02(B) for
such Taxable Year; or (ii) if earlier, when the Participant makes the election for a Taxable Year.
If the Employer elects to

9

 

Nonqualified Deferred Compensation Prototype Plan

permit changes to an election up to the Section 2.02(B) election
deadline, a Participant may make any number of changes to his/her Elective Deferral election during
the period prior to the election becoming irrevocable. If the Employer elects in its Adoption
Agreement and under Section 2.02(D) that a Participant’s election is continuing, the Participant is
deemed to have made an election as to each Taxable Year on the last day that the Participant could
have made an election under Section 2.02(B). As such, the Participant may revoke or modify a
continuing election for a Taxable Year up to the date that such election is deemed made for that
Taxable Year. A change payment election under Section 4.03(B) does not render an Elective Deferral
election and an accompanying initial payment election under Section 4.03(A), revocable within the
meaning of this Section 2.02(C).

     (D) Election Duration. As the Employer elects in its Adoption Agreement, a
Participant’s Elective Deferral election remains in effect: (i) only for the duration of the
Taxable Year for which the Participant makes the election; or (ii) for the duration of the Taxable
Year for which the Participant makes the election and for all subsequent Taxable Years unless the
Participant executes a subsequent timely election, modification or revocation. A Participant,
subject to Plan requirements regarding election timing, including those in Article VII, may make a
new election, or may revoke or modify an existing election effective no earlier than for the next
Taxable Year, provided that a Participant may cancel an existing and otherwise irrevocable election
for a Taxable Year at any time following the Participant’s receipt of an Unforeseeable Emergency
distribution or of a distribution from the Employer’s 401(k) plan based upon hardship within the
meaning of Treas. Reg. §1.401(k)-1(d)(3).

     2.03 Nonelective Contributions. The Employer will specify in its Adoption Agreement
whether the Employer will or may make Nonelective Contributions to the Plan, and the terms and
conditions applicable to any Nonelective Contributions.

     2.04 Matching Contributions. The Employer will specify in its Adoption Agreement
whether the Employer will or may make Matching Contributions to the Plan, and the terms and
conditions applicable to any Matching Contributions.

     2.05 Actual or Notional Contribution. The Employer will specify in its Adoption
Agreement whether it will make any Employer Contribution as a notional contribution or as an actual
contribution to an Account. If the Employer establishes the Trust, any Employer Contributions to
the Trust will be actual contributions.

     2.06 Allocation Conditions. The Employer will specify in its Adoption Agreement any
employment or other condition applicable to the allocation of Employer Contributions for a Taxable
Year.

     2.07 Timing. The Employer may elect to make any Employer Contribution for a Taxable
Year at such times as Code §409A or Applicable Guidance may permit. The Employer is not required to
contribute any actual contribution (or to post any notional contribution) to an Account at the time
that the Employer makes its contribution election.

     2.08 Administration. The Employer will administer all Employer Contributions in the
same manner as Elective Deferrals, except as the Plan otherwise provides. If the Employer
establishes the Trust, the Employer will remit any Elective Deferrals to the Trust and will make
any Employer Contributions to the Trust. Any Employer Contribution is not subject to an immediate
Participant right to elect a cash payment in lieu of the Employer Contribution and such amounts are
payable only in accordance with the Plan terms.

III. VESTING AND SUBSTANTIAL RISK OF FORFEITURE

     3.01 Vesting Schedule or other Substantial Risk of Forfeiture. The Employer will
specify in its Adoption Agreement any vesting schedule or other Substantial Risk of Forfeiture
applicable to Participant Accounts. If the Plan is an Ineligible 457 Plan, the Employer must
specify a Substantial Risk of Forfeiture.

     3.02 Immediate Vesting on Specified Events. The Employer will specify in its Adoption
Agreement whether a Participant’s Account is Vested without regard to Years of Service if the
Participant Separates from Service on or following Retirement Age, or as a result of death,
Disability, or other events.

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Nonqualified Deferred Compensation Prototype Plan

     3.03 Application of Forfeitures. A Participant will forfeit any non-Vested Accrued
Benefit upon Separation from Service. The Employer will specify in its Adoption Agreement how it
will apply Participant forfeitures under the Plan.

IV. BENEFIT PAYMENTS

     4.01 Separation from Service or Death. The Plan will pay to the Participant the Vested
Accrued Benefit held in the Participant’s Account following the earlier of the Participant’s
Separation from Service or death. Payment will commence at the time and payment will be made in the
form and method specified under Section 4.03. In the event of the Participant’s death, the Plan
will pay to the Participant’s Beneficiary the Participant’s Vested Accrued Benefit or any remaining
amount thereof if benefits to the Participant already have commenced, in accordance with the
Participant’s election or otherwise as the Plan permits.

     (A) Payment to Specified Employees. Notwithstanding anything to the contrary in the
Plan or in a Participant or Employer payment election, the Plan may not make payment to a Specified
Employee, based on Separation from Service, earlier than 6 months following Separation from Service
(or if earlier, upon the Specified Employee’s death), except as permitted under this Section
4.01(A). The Employer in its Adoption Agreement will elect whether any payments that otherwise
would be payable to the Specified Employee during the foregoing 6 month period: (i) will be
accumulated and payment delayed until a date specified in the Adoption Agreement that is after the
6 month period; or (ii) will be delayed by 6 months as to each installment otherwise payable during
the 6 month period. The Employer may amend its Adoption Agreement to change the method of treating
payments otherwise payable within the 6 month period, provided that any change in method may not be
effective for 12 months after the adoption of the amendment unless the Employer makes such an
amendment prior to the Employer’s stock first becoming readily tradable on an established
securities market. This Section 4.01(A) does not apply to payments made on account of a domestic
relations order under Section 4.03(D)(i), payments made because of a conflict of interest under
Section 4.03(D)(ii), or payment of employment taxes under Section 4.03(D)(v).

     (B) Deemed Separation of Contractor. The Employer in its Adoption Agreement may elect
to apply the special payment timing rules in this Section 4.01(B) as to Contractors. Compliance
with this Section 4.01(B) results in the Contractor being deemed to have incurred a Separation from
Service under Section 1.39. Under this Section 4.01(B): (i) the Plan will not pay a Contractor’s
Account, or any portion thereof, before a date that is at least 12 months after the expiration of
the contract or contracts under which the Contractor performs services for the Employer; and (ii)
no amount payable under clause (i) will be paid to the Contractor if the Contractor (whether as a
Contractor or an Employee) performs significant services for the Employer after the contract(s)’
expiration and before the payment date.

     4.02 Other Payment Events. The Employer will specify in the Adoption Agreement
whether, in addition to the payment events under Section 4.01, the Plan may pay to a Participant
all or any part of the Participant’s Account: (i) upon the Participant’s Disability; (ii) at a
Specified Time or pursuant to a Fixed Schedule; (iii) upon a Change in Control; or (iv) based upon
an Unforeseeable Emergency. Payment will commence at the time and payment will be made in the form
and method specified under Section 4.03.

     4.03 Form, Timing and Method/ Payment Election. The Employer will specify in its
Adoption Agreement: (i) the permissible forms of payment (cash or property), the timing of payment
and methods of payment applicable to Plan Accounts (collectively, “payment elections”); and (ii)
whether a Participant or the Employer may make an initial payment election under Section 4.03(A) or
change payment election under Section 4.03(B). Until the Plan pays a Participant’s entire Vested
Accrued Benefit, the Plan will continue to credit the Participant’s Account with Earnings, in
accordance with Section 5.02. As to the permissible forms of payment (cash or property), the
Participant or the Employer may, but is not required to, elect the form of payment as part of and
at the same time as the initial payment election or change payment election.

     (A) Initial Payment Election. The Employer will specify in its Adoption Agreement: (i)
whether a Participant or the Employer may make an initial payment election or whether there are no
initial payment
elections and the form, timing and method of payment are controlled by the Employer’s Adoption
Agreement elections; and (ii) whether any Participant payment election applies to all Account types
or only applies to a Participant’s Elective Deferral Account. In the event the Employer elects in
its Adoption Agreement not to

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Nonqualified Deferred Compensation Prototype Plan

provide any Participant or Employer initial payment elections, the
Plan provisions constitute an initial payment election under the Plan. A Participant must make an
initial payment election at the time of the Participant’s Elective Deferral election under Section
2.02(B). The Employer must make an initial payment election as to a Participant at the time that
the Employer grants a Legally Binding Right to Deferred Compensation to the Participant. A payment
election may apply only to the Deferred Compensation that is the subject of the Elective Deferral
election or the Employer Contribution or may apply to such Deferred Compensation and to all future
Deferred Compensation, as the payment election indicates. A Participant must make any permissible
initial payment election on a form the Employer provides for that purpose. If the Participant or
the Employer as applicable have the right to make an initial payment election but fail to do so,
the Plan will pay the affected Participant’s Vested Accrued Benefit attributable to the
non-election under this default provision, in a lump-sum cash payment 13 months following the
earliest event permitting payment of the Participant’s Account under Sections 4.01 or 4.02. If this
default provision applies, the default payment is deemed to be an initial payment election under
the Plan.

     (B) Change Payment Election. The Employer will specify in its Adoption Agreement
whether a Participant’s or the Employer’s initial payment election under Section 4.03(A) or first
change payment election under this Section 4.03(B) is irrevocable or whether a Participant or the
Employer may change the elections. If the Plan permits Participants or the Employer to change
existing payment elections (initial or change elections) as to any or all Deferred Compensation,
including any Plan default payment applicable in the absence of an actual initial payment election,
any such change payment election must comply with this Section 4.03(B). The Employer in its
Adoption Agreement will elect whether a Beneficiary following a Participant’s death may make a
change payment election under this Section 4.03(B). A Participant or Beneficiary must make any
change payment election on a form the Employer provides for such purpose.

          (1) Conditions on Change Payment Elections. Any Participant or Employer change payment
election: (i) may not take effect until at least 12 months following the date of the change payment
election; (ii) if the change payment election relates to a payment based on Separation from Service
or on Change in Control, or if the payment is at a Specified Time or pursuant to a Fixed Schedule,
the change payment election must result in payment being made not earlier than 5 years following
the date upon which the payment otherwise would have been made (or, in the case of a life annuity
or installment payments treated as a single payment, 5 years from the date the first amount was
scheduled to be paid); and (iii) if the change payment election relates to payment at a Specified
Time or pursuant to a Fixed Schedule, the Participant or Employer must make the change payment
election not less than 12 months prior to the date the payment is scheduled to be made (or, in the
case of a life annuity or installment payments treated as a single payment, 12 months prior to the
date the first amount was scheduled to be paid).

          (2) Definition of “Payment.” Except as otherwise provided in Section 4.03(B)(3), a
“payment” for purposes of applying Section 4.03(B)(1) is each separately identified amount the Plan
is obligated to pay to a Participant on a determinable date and includes amounts paid for the
benefit of the Participant. An amount is “separately identified” only if the Employer can
objectively determine the amount. A payment includes the provision of any taxable benefit,
including payment in cash or in-kind. A payment includes, but is not limited to, the transfer,
cancellation or reduction of an amount of Deferred Compensation in exchange for benefits under a
welfare benefit plan, fringe benefits excludible under Code §§119 or 132, or any other benefit that
is excluded from gross income.

          (3) Installment Payments and Life Annuities. A life annuity is treated as a single
payment. For purposes of this Section 4.03(B)(3), a “life annuity” is a series of substantially
equal periodic payments, payable not less frequently than annually, for the life (or life
expectancy) of the Participant, or the joint lives (or life expectancies) of the Participant and of
his/her Beneficiary. A change in the form of payment from one type of life annuity to another
before any annuity payment has been made is not subject to the change payment election requirements
provided that the annuities are actuarially equivalent applying reasonable actuarial assumptions.
The Employer in its Adoption Agreement will elect whether to treat a series of installment payments
which are not a life annuity as a single payment or as a series of separate payments. If the
Employer fails to so elect, the Employer must treat the installments as a single payment. For
purposes of this Section 4.03(B)(3), a “series of installment payments” means payment of a series
of substantially equal periodic
amounts to be paid over a predetermined number of years, except to the extent that any
increase in the payment amounts reflects reasonable Earnings through the date of payment.

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Nonqualified Deferred Compensation Prototype Plan

          (4) Coordination with Anti-Acceleration Rule. In applying Section 4.03(C), “payment”
means as described in Sections 4.03(B)(2) and (3). A Participant under a change payment election
may change the form of payment to a more rapid schedule (including a change from installments to a
lump-sum payment) without violating Section 4.03(C), provided any such change remains subject to
the change payment election provisions under this Section 4.03(B). Accordingly, if the
Participant’s payment change election modifies the payment method from installments to a lump-sum
payment, and if the Plan treats an installment payment as a single payment, a change payment
election must satisfy Section 4.03(B)(1) measured from the first installment payment. Conversely,
if the plan treats an installment payment as a series of payments, a change payment election must
satisfy Section 4.03(B)(1) measured from the last installment payment. If a change payment election
only modifies the timing of an installment payment, and the Plan treats the installments as a
single payment, the change payment election must apply to each installment and must satisfy Section
4.03(B) measured from each installment payment. If in the latter case, the Plan treats installments
as a series of payments, the change payment election may apply to any or all installments and must
satisfy Section 4.03(B) separately as to each payment the change payment election affects.

          (5) Multiple Payment Events. If the Plan permits multiple payment events, the change
payment election provisions of Section 4.03(B)(1) apply separately as to each payment due upon each
payment event. The addition of a permissible payment event to Deferred Compensation previously
deferred is subject to the change election provisions of Section 4.03(B)(1) where the additional
event may cause a change in the time or form of payment. The addition of a payment event is not an
impermissible acceleration under Section 4.03(C) provided that the change complies with this
Section 4.03(B)(5).

          (6) Certain Payment Delays not Subject to Change Payment Election Rules. The Employer
in its Adoption Agreement will elect whether to apply the some or all of the following payment
delay provisions. If applicable, these provisions do not result in the Plan failing to provide for
payment upon a permissible event as Code §409A requires nor are the delays treated as a change
payment election under this Section 4.03(B).

               (a) Non-deductible Payment. The Plan may delay payment to a Participant if the
Employer reasonably anticipates that the Employer’s deduction for payment of the Participant’s
Deferred Compensation will be limited or eliminated under Code §162(m). As the Employer elects in
its Adoption Agreement, the Plan will pay such Deferred Compensation at the earliest date at which
the Employer reasonably anticipates that Code §162(m) will not apply or in the calendar year in
which the affected Participant Separates from Service.

               (b) Loan Covenants/Contract Terms. The Plan may delay payment to a Participant if the
Employer reasonably anticipates that the payment will violate the terms of a loan agreement or
other similar contract to which the Employer is a party, provided that the Employer entered into
the agreement or contract for legitimate business reasons and that such violation will cause
material harm to the Employer. The Plan will pay such Deferred Compensation at the earliest date at
which the Employer reasonably anticipates that the payment will not cause a violation of the
agreement or contract or that such a violation will not result in material harm to the Employer.

               (c) Securities or Other Laws. The Plan may delay payment to a Participant if the
Employer reasonably anticipates that the payment will violate Federal securities law or other
applicable law. The Plan will pay such Deferred Compensation at the earliest date at which the
Employer reasonably anticipates that the payment will not cause a violation of such laws. For
purposes of this Section 4.03(B)(6)(c), a violation of “other applicable law” does not include a
payment which would cause inclusion of the Deferred Compensation in the Participant’s gross income
or which would subject the Participant to any Code penalty or other Code provision.

               (d) Other. The Plan may delay payment to a Participant upon such other events as
Applicable Guidance may permit.

               (e) Amendment. If the Employer amends its Adoption Agreement to add any or all of
payment delays described in this Section 4.03(B)(6), any such amendment may not be effective for at
least 12
months following the Employer’s adoption of the amendment. As required under Section 4.03(C),
the

13

 

Nonqualified Deferred Compensation Prototype Plan

Employer may not amend its Adoption Agreement to remove any or all payment delays described in
this Section 4.03(B)(6) as to any previous Deferred Compensation.

     (C) No Acceleration-General Rule. Neither the Employer nor a Participant may
accelerate the time or schedule of any Plan payment or amount scheduled to be paid under the Plan.
For this purpose, the following are not an acceleration: (i) payment made in accordance with Plan
provisions or pursuant to an initial payment election under Section 4.03(A) or a change payment
election under Section 4.03(B) under which payment on an accelerated schedule is required on
account of an intervening event which includes Separation from Service, Disability, death, Change
in Control or Unforeseeable Emergency; (ii) The Employer’s waiver or acceleration of the
satisfaction of any condition constituting a Substantial Risk of Forfeiture provided that payment
is made only upon a permissible payment event and the Employer’s action otherwise does not violate
Code §409A; and (iii) a choice between a distribution of cash or property if the timing and the
amount of income inclusion to the Participant are the same.

     (D) Permissible Accelerations. Notwithstanding Section 4.03(C), the Employer in its
Adoption Agreement may elect to permit any or all of the following accelerations of the time or
schedule of payment: (i) a payment to an individual other than the Participant required under a
domestic relations order under Code §414(p)(1)(B); (ii) a payment required under a certificate of
divestiture under Code §1043(b)(2) relating to conflicts of interest; (iii) a payment from a 457(f)
plan to a Participant for the purpose of payment of the Participant’s Federal, state local or
foreign income tax due upon a vesting event under the 457(f) plan, provided that the payment does
not exceed the income tax withholding the Employer would have remitted if it had paid wages equal
to the amount of 457(f) income includible at the time of vesting; (iv) a Plan amendment to permit
certain cash-out payments described in Sections 4.03(E) and (F); (v) as it relates to the Deferred
Compensation, a payment to pay the FICA tax under Code §§3101, 3121(a) and 3121(v)(2) and to pay
income taxes at source on wages under Code §3401 or under corresponding provisions of state, local
or foreign tax laws related to payment of the FICA and to pay additional income tax at source on
wages attributable to pyramiding Section §3401 wages and taxes, but the total of all such payments
may not exceed the aggregate of the FICA amount and the income tax withholding related to the FICA
amount; (vi) a payment to any affected Participant at any time that the Plan fails to meet the
requirements of Code §409A and the regulations thereunder, provided that such payment may not
exceed the amount required to be included in income as a result of such failure; (vii) cancellation
of a Participant’s Elective Deferral election on account of a payment based on Unforeseeable
Emergency or a hardship distribution under Treas. Reg. §1.401(k)-1(d)(3) provided that the election
is fully cancelled and that any subsequent election is subject to Sections 2.02 and 4.03(A); (viii)
payment upon Plan termination in accordance with Section 6.03(B); (ix) payment to prevent the
occurrence of a “nonallocation year” under Code §409(p) in accordance with Prop. Treas. Reg.
§1.409A-3(h)(2)(ix) or other Applicable Guidance; and (x) a decrease in the amounts deferred under
the Plan as a result of a formula which links Deferred Compensation under this Plan to benefits
paid by or contributions made to a qualified plan of the Employer, including Wraparound Elections,
in accordance with Prop. Treas. Reg. §1.409A-3(h)(3) or other Applicable Guidance.

     (E) Cash-Out Upon Separation. The Employer in its Adoption Agreement will elect
whether (notwithstanding a Participant’s or the Employer’s payment election or any contrary Plan
terms) the Plan will pay in a single cash payment the entire Vested Accrued Benefit of a
Participant who has Separated from Service (including Grandfathered and 409A Amounts) where the
Participant’s Vested Accrued Benefit does not exceed $10,000. A payment under this Section 4.03(E)
must terminate the Participant’s entire interest in the Plan and in all similar deferred
compensation arrangements within the meaning of Prop. Treas. Reg. §1.409A-1(c) or other Applicable
Guidance. The Employer will make any payment under this Section 4.03(E) on or before the later of:
(i) December 31 of the Taxable Year in which the Participant Separates from Service; or (ii) the
15th day of the third month following the Participant’s Separation from Service.

     (F) Cash-out of 409A Amount. The Employer in its Adoption Agreement will elect whether
the Plan will pay in the form of a single cash payment the entire Vested Accrued Benefit of any
Participant attributable to 409A Amounts upon the occurrence of any Plan payment event affecting
the Participant, provided: (i) the Vested Accrued Benefit attributable to 409A Amounts does not
exceed an amount the Employer designates in the Adoption Agreement; and (ii) “409A Amounts” for
purposes of this cash-out provision only includes Compensation Deferred on and following the date
the Employer elects this cash-out provision in the Adoption
Agreement. If the Employer elects to apply this Section 4.03(F), any subsequent

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Nonqualified Deferred Compensation Prototype Plan

amendment to
change or eliminate this feature is subject to the rules regarding payment change elections under
Section 4.03(B).

     4.04 Withholding. The Employer will withhold from any payment made under the Plan and
from any amount taxable under Code §409A, all applicable taxes, and any and all other amounts
required to be withheld under Federal, state or local law, including Notice 2005-1 and other
Applicable Guidance.

     4.05 Beneficiary Designation. A Participant may designate a Beneficiary (including one
or more primary and contingent Beneficiaries) to receive payment of any Vested Accrued Benefit
remaining in the Participant’s Account at death. The Employer will provide each Participant with a
form for this purpose and no designation will be effective unless made on that form and delivered
to the Employer. A Participant may modify or revoke an existing designation of Beneficiary by
executing and delivering a new designation to the Employer. In the absence of a properly designated
Beneficiary, the Employer will pay a deceased Participant’s Vested Accrued Benefit to the
Participant’s surviving spouse and if none, to the Participant’s estate. If a Beneficiary is a
minor or otherwise is a person whom the Employer reasonably determines to be legally incompetent,
the Employer may cause the Plan or Trust to pay the Participant’s Vested Accrued Benefit to a
guardian, trustee or other proper legal representative of the Beneficiary. The Plan’s or Trust’s
payment of the deceased Participant’s Vested Accrued Benefit to the Beneficiary or proper legal
representative of the Beneficiary completely discharges the Employer, the Plan and Trust of all
further obligations under the Plan.

     4.06 Administration of Payment Date(s).

     (A) Objective Payment Date(s). The Employer in its Adoption Agreement, or the
Participant or the Employer in an initial payment election or change payment election made pursuant
to the Adoption Agreement must provide for a payment date that the Employer, at the time of the
payment event, objectively can determine. Such payment date may, but need not, coincide with a
payment event, but any payment must be on or following and must relate to a Plan payment event. If
the Adoption Agreement or any such election provides for payment only in a designated calendar
year, the payment date is deemed to be January 1 of that year.

     (B) Multiple Payment Events/Fixed Schedule Linked to Payment Events. The Employer in
its Adoption Agreement, or a Participant or the Employer in a payment election under Sections
4.03(A) or (B): (i) may provide for payment upon the earliest or latest of more than one
permissible payment event under Sections 4.01 and 4.02; (ii) may provide that a payment based on
Separation from Service, death, Disability, Change in Control or Unforeseeable Emergency is to be
made in accordance with a Fixed Schedule that the Employer objectively can determine at the time of
the applicable payment event; or (iii) may provide for an alternative payment schedule if the
payment event to which the payment schedule is linked occurs prior to a single specified date.

     (C) Treatment of Payment as Made on Designated Payment Date. The Plan’s payment of
Deferred Compensation is deemed made on the Plan required payment date or payment election required
payment date even if the Plan makes payment after such date, provided the payment is made by the
latest of: (i) the end of the calendar year in which the payment is due; (ii) the 15th
day of the third calendar month following the payment due date; (iii) in case the Employer cannot
calculate the payment amount on account of administrative impracticality which is beyond the
Participant’s control (or the control of the Participant’s estate), in the first calendar year in
which payment is practicable; (iv) in case the Employer does not have sufficient funds to make the
payment without jeopardizing the Employer’s solvency, in the first calendar year in which the
Employer’s funds are sufficient to make the payment. The Employer may cause the Plan or Trust to
pay a Participant’s Vested Accrued Benefit on any date which satisfies this Section 4.06(C) and
that is administratively practicable following any Plan specified payment date or the date
specified in any valid payment election.

     (D) Disputed Payments. In the event of a dispute between the Employer and a
Participant as to whether Deferred Compensation is payable to the Participant or as to the amount
thereof, the Plan is deemed to make timely payment on any Plan required payment date or payment
election required payment date if: (i) the Participant accepts any portion of the payment that the
Employer is willing to make (unless such acceptance results in a forfeiture of the Participant’s
claim to the remaining amount); (ii) the Participant

15

 

Nonqualified Deferred Compensation Prototype Plan

makes prompt, reasonable and good-faith
efforts to collect the payment; and (iii) the Plan makes payment in the first calendar year in
which the Employer and the Participant enter into a legally binding settlement of the dispute, the
Employer concedes that the amount is payable or the Employer is required to cause the Plan to make
payment
under a final and nonappealable judgment or other binding decision. This Section 4.06(D) does
not apply if the Plan’s failure to make payment on a required date is on account of: (i) the
Participant’s failure to request payment, to provide information or to take any other action
necessary for the Plan to make payment; or (ii) the Participant
or a member of the Participant’s
family (as defined in Code §267(c)(4) applied to include the spouse of any family member), any
person or group of persons over whom the Participant or the Participant’s family has effective
control or any person whose compensation (or any portion thereof) is controlled by the Participant
or the Participant’s family members, makes the decision to not pay.

     4.07 Employer Approval of Participant Elections. A Participant’s or the Employer’s
initial payment elections or change payment elections must be consistent with the Plan and with the
Adoption Agreement. The Employer at the time of the election must approve any Participant payment
election as to form, timing and method, where the Adoption Agreement does not expressly authorize
the elected form, timing or method. The Employer, in its absolute discretion, may withhold approval
for any reason, including, but not limited to non-compliance with Plan terms. If the Employer does
not approve a Participant’s initial payment election or change payment election, the Employer will
pay the Participant’s Vested Accrued Benefit under Section 4.03 as though the Participant did not
make such payment election.

V. TRUST ELECTION AND PLAN EARNINGS

     5.01 Unfunded Plan/Trust Election. The Employer as it elects in its Adoption Agreement
intends this Plan to be an unfunded plan that is wholly or partially exempt under ERISA. No
Participant, Beneficiary or successor thereto has any legal or equitable right, interest or claim
to any property or assets of the Employer, including assets held in any Account under the Plan
except as the Plan otherwise permits. The Employer’s obligation to pay Plan benefits is an
unsecured promise to pay. Except as provided in the Adoption Agreement, this Plan does not create a
trust for the benefit of any Participant. If the Employer elects to create the Trust, the
applicable provisions of the Basic Plan Document continue to apply, including those of this Section
5.01. The Trustee will pay Plan benefits in accordance with the Plan terms or upon the Employer’s
direction consistent with Plan terms. Unless the Employer establishes the Trust: (i) the Employer
may elect to make notional contributions in lieu of actual contributions to the Plan; and (ii) the
Employer may elect not to invest any actual Plan contributions. If the Employer elects to invest
any actual Plan contributions, such investments may be held for the Employer’s benefit in providing
for the Employer’s obligations under the Plan or for such other purposes as the Employer may
determine. Any assets held in Plan Accounts remain subject to claims of the Employer’s general
creditors and no Participant’s or Beneficiary’s claim to Plan assets has any priority over any
general unsecured creditor of the Employer.

     (A) Restriction on Trust Assets. If an Employer establishes, directly or indirectly,
the Trust (or any other arrangement Applicable Guidance may describe), the Trust and the Trust
assets must be and must remain located within the United States, except with respect to a
Participant who performs outside the United States substantially all services giving rise to the
Deferred Compensation. The Trust may not contain any provision limiting the Trust assets to the
payment of Plan benefits upon a Change in the Employer’s Financial Health, even if the assets
remain subject to claims of the Employer’s general creditors. For this purpose, the Employer, upon
a Change in the Employer’s Financial Health, may not transfer Deferred Compensation to the Trust.
Any Trust the Employer establishes under this Plan shall be further subject to Applicable Guidance,
compliance with which is necessary to avoid the transfer of assets to the Trust being treated as a
transfer of property under Code § 83.

     (B) Transitional Relief for Grace Period Assets. As to any Grace Period Assets that
otherwise would violate Section 5.01(A) and Code §409(A)(b), not later than December 31, 2007, or
such other date as Applicable Guidance may specify, the Plan or the Employer will eliminate Grace
Period Assets or otherwise cause such assets to not violate Code §409A(b) by: (i) making payment of
Deferred Compensation in accordance with the Plan terms; (ii) making payment of Deferred
Compensation upon the Employer’s termination of the Plan under Section 6.03(b); (iii) dissolving
the Trust in accordance with the Trust terms; (iv) desegregating the Grace Period Assets such that
they no longer are associated with the payment of Deferred Compensation; or (v) taking such other
action to come into conformity with Code §409A(b) and Applicable Guidance issued before December
31, 2007, as Applicable guidance may specify. Under clause

16

 

Nonqualified Deferred Compensation Prototype Plan

(iv), even if the Employer takes no
other prior action, the Grace Period Assets as of December 31, 2007, are by this provision
desegregated and no longer are associated with the payment of Deferred Compensation. Under clauses
(i) and
(ii), if payment consists of both Grace Period Assets and other assets, the payment is treated
for purposes of this Section 5.01(B) as consisting first of Grace Period Assets.

          (1) Grace Period Assets. For purposes of this Section 5.01(B), Grace Period Assets
means assets which on or before March 21, 2006, were set aside, transferred or restricted under
Code §§409(A)(b)(1) or 409A(b)(2) so as to become subject to income inclusion under such Code
sections. Grace Period Assets includes actual Earnings on the Grace Period Assets (whether held in
the Trust or otherwise), including such Earnings credited after March 21, 2006. The Employer will
determine Grace Period Assets in accordance with Notice 2006-33 and other Applicable Guidance.

     5.02 Actual or Notional Earnings. If the Employer establishes the Trust under Section
5.01, the Trust earnings provisions apply to all Plan contributions and constitute Earnings for
purposes of the Plan. If the Employer does not establish the Trust, the Employer will elect in its
Adoption Agreement whether the Plan periodically will credit actual or notional Plan contributions
with a determinable amount of notional Earnings (at a specified fixed or floating interest rate or
other specified index) or will credit or charge each Participant’s Account with net investment
earnings, gain and loss actually incurred by the Account. If the Account is credited and charged
with actual Earnings, the Employer will specify in the Adoption Agreement whether the Employer, the
Trustee (subject to the Trust terms) or the Participant has the right to direct the investment of
the Participant’s Account and also may specify any limitations on the Participant’s right of
investment direction. If the Adoption Agreement provides for Employer investment direction, the
Employer may make any investment of Plan assets it deems reasonable or appropriate. If the Adoption
Agreement provides for Participant investment direction, this right is limited strictly to
investment direction and the Participant will not be entitled to the distribution of any Account
asset except as the Plan otherwise permits. Except as otherwise provided in the Plan or Trust, all
Plan assets, including all incidents of ownership thereto, at all times will be the sole property
of the Employer.

VI. MISCELLANEOUS

     6.01 No Assignment. No Participant or Beneficiary has the right to anticipate,
alienate, assign, pledge, encumber, sell, transfer, mortgage or otherwise in any manner convey in
advance of actual receipt, the Participant’s Account. Prior to actual payment, a Participant’s
Account is not subject to the debts, judgments or other obligations of the Participant or
Beneficiary and is not subject to attachment, seizure, garnishment or other process applicable to
the Participant or Beneficiary.

     6.02 Not Employment Contract. This Plan is not a contract for employment between the
Employer and any Employee who is a Participant. This Plan does not entitle any Participant to
continued employment with the Employer, and benefits under the Plan are limited to payment of a
Participant’s Vested Accrued Benefit in accordance with the terms of the Plan.

     6.03 Amendment and Termination.

     (A) Amendment. The Employer reserves the right to amend the Plan at any time to comply
with Code §409A, Notice 2005-1, Prop. Treas. Reg. §1.409A and other Applicable Guidance or for any
other purpose, provided that such amendment will not result in taxation to any Participant under
Code §409A. Except as the Plan and Applicable Guidance otherwise may require, the Employer may make
any such amendments effective immediately.

     (B) Termination. The Employer may terminate, but is not required to terminate, the
Plan and distribute Plan Accounts under the following circumstances:

          (1) Dissolution/Bankruptcy. The Employer may terminate the Plan within 12 months
following a dissolution of a corporate Employer taxable under Code §331 or with approval of a
Bankruptcy court under 11 U.S.C. §503(b)(1)(A), provided that the Deferred Compensation is paid to
the Participants and is included in the Participants’ gross income in the latest calendar year: (i)
in which the plan termination occurs; (ii) in which the amounts no longer are subject to a
Substantial Risk of Forfeiture; or (iii) in which the payment is administratively practicable.

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Nonqualified Deferred Compensation Prototype Plan

          (2) Change in Control. The Employer may terminate the Plan within the 30 days
preceding or the 12 months following a Change in Control provided the Employer distributes all Plan
Accounts (and must distribute the accounts under any substantially similar Employer plan which plan
the Employer also must terminate) within 12 months following the Plan termination.

          (3) Other. The Employer may terminate the Plan for any other reason in the Employer’s
discretion provided that: (i) the Employer also terminates all Aggregated Plans in which any
Participant also is a participant; (ii) the Plan makes no payments in the 12 months following the
Plan termination date other than payments the Plan would have made irrespective of Plan
termination; (iii) the Plan makes all payments within 24 months following the Plan termination
date; and (iv) the Employer within 5 years following the Plan termination date does not adopt a new
plan covering any Participant that would be an Aggregated Plan.

          (4) Applicable Guidance. The Employer may terminate the Plan under such other
circumstances as Applicable Guidance may permit.

     (C) Effect on Vesting. Any Plan amendment or termination will not reduce the Vested
Accrued Benefit held in any Participant Account at the date of the amendment or termination and
also may not accelerate vesting except as may be permitted without subjecting any Participant to
taxation under Code §409A.

     (D) Cessation of Future Contributions. The Employer in its Adoption Agreement may
elect at any time to amend the Plan to cease future Elective Deferrals, Nonelective Contributions
or Matching Contributions as of a specified date. In such event, the Plan remains in effect (except
those provisions permitting the frozen contribution type) until all Accounts are paid in accordance
with the Plan terms, or, if earlier, upon the Employer’s termination of the Plan.

     6.04 Severability. If the Employer or any proper authority determines any provision of
the Plan will cause taxation under Code §409A or is otherwise invalid, the remaining portions of
the Plan will continue in effect and will be interpreted consistent with the elimination of the
invalid provision.

     6.05 Notice and Elections. Any notice given or election made under the Plan must be in
writing and must be delivered or mailed by certified mail, to the Employer or to the Participant or
Beneficiary as appropriate. The Employer will prescribe the form of any Plan notice or election to
be given to or made by Participants. Any notice or election will be deemed given or made as of the
date of delivery, or if given or made by certified mail, as of 3 business days after mailing.

     6.06 Administration. The Employer will administer and interpret the Plan, including
making a determination of the Vested Accrued Benefit due any Participant or Beneficiary under the
Plan. As a condition of receiving any Plan benefit to which a Participant or Beneficiary otherwise
may be entitled, a Participant or Beneficiary will provide such information and will perform such
other acts as the Employer reasonably may request. The Employer may cause the Plan to forfeit any
or all of a Participant’s Vested Accrued Benefit, if the Participant fails to cooperate reasonably
with the Employer in the administration of the Participant’s Plan Account, provided that this
provision does not apply to a bona fide dispute under Section 4.06(D). The Employer may retain
agents to assist in the administration of the Plan and may delegate to agents such duties as it
sees fit. The decision of the Employer or its designee concerning the administration of the Plan is
final and is binding upon all persons having any interest in the Plan. The Employer will indemnify,
defend and hold harmless any Employee designated by the Employer to assist in the administration of
the Plan from any and all loss, damage, claims, expense or liability with respect to this Plan
(collectively, “claims”) except claims arising from the intentional acts or gross negligence of the
Employee.

     6.07 Account Statements. The Employer from time to time will provide each Participant
with a statement of the Participant’s Vested Accrued Benefit as of the most recent Valuation Date.
The Employer also will provide Account statements to any Beneficiary of a deceased Participant with
a Vested Accrued Benefit remaining in the Plan.

     6.08 Accounting. The Employer will maintain for each Participant as is necessary for
proper administration of the Plan, an Elective Deferral Account, a Matching Contribution Account, a
Nonelective

18

 

Nonqualified Deferred Compensation Prototype Plan

Contribution Account, and separate sub-accounts reflecting 409A Amounts and Grandfathered
Amounts in accordance with Section 7.03.

     6.09 Costs and Expenses. Except for investment charges, which will be borne by the
Account to which they pertain, the Employer will pay the costs, expenses and fees associated with
the operation of the Plan, excluding those incurred by Participants or Beneficiaries. The Employer
will pay costs, expenses or fees charged by or incurred by the Trustee only as provided in the
Trust or other agreement between the Employer and the Trustee.

     6.10 Reporting. The Employer will report Deferred Compensation for Employee
Participants on Form W-2 for and on Form 1099-MISC for Contractor Participants in accordance with
Notice 2005-1 and Applicable Guidance.

     6.11 ERISA Claims Procedure. If this Plan is established as a “top-hat plan” within
the meaning of DOL Reg. §2520.104-23, the following claims procedure under DOL Reg. §2560.503-1
applies. For purposes of the Plan’s claims procedure under this Section 6.11, the “Plan
Administrator” means the Employer. A Participant or Beneficiary may file with the Plan
Administrator a written claim for benefits, if the Participant or Beneficiary disputes the Plan
Administrator’s determination regarding the Participant’s or Beneficiary’s Plan benefit. However,
the Plan Administrator will cause the Plan to pay only such benefits as the Plan Administrator in
its discretion determines a Participant or Beneficiary is entitled to receive. The Plan
Administrator under this Section 6.11 will provide a separate written document to affected
Participants and Beneficiaries which explains the Plan’s claims procedure and which by this
reference is incorporated into the Plan. If the Plan Administrator makes a final written
determination denying a Participant’s or Beneficiary’s claim, the Participant or Beneficiary must
file an action with respect to the denied claim within 180 days following the date of the Plan
Administrator’s final determination.

VII. 2005 AND 2006 TRANSITION RULES AND PROVISIONS APPLICABLE

IF PLAN WAS EFFECTIVE BEFORE 2005

     7.01 409A Amounts. The terms of this Plan control as to any 409A Amount.

     7.02 Grandfathered Amounts. A Grandfathered Amount remains subject to the terms of the
Plan as in effect before January 1, 2005, unless the Employer makes a material modification to the
Plan under Section 7.04. Notwithstanding the preceding sentence, the restrictions of Section
5.01(A) and the transition relief of Section 5.01(B) as to Grace Period Assets apply to
Grandfathered Amounts.

     7.03 Separate Accounting/Earnings. The Employer will account separately for 409A
Amounts and for Grandfathered Amounts within each Participant’s Account. The Employer also will
account separately for Earnings on the 409A Amounts and Earnings on the Grandfathered Amounts.
Post-2004 Earnings on Grandfathered Amounts are included in the Grandfathered Amount.

     7.04 Material Modification. The Employer makes a material modification to the Plan if
at any time the Employer amends the Plan or exercises discretion under the Plan to enhance
materially a benefit or right existing as of October 3, 2004, or to add a new material benefit or
right not existing as of October 3, 2004, and such actions affect amounts which otherwise would be
Grandfathered Amounts. The Employer’s adoption of this Plan as a new plan or grant of an additional
benefit under an existing Plan after October 3, 2004, and before January 1, 2005, is a material
modification unless: (i) the adoption or grant is consistent with the Employer’s historical
compensation practices; and (ii) the Plan treats such additional Deferred Compensation as a 409A
Amount. The Employer’s amendment of the Plan to permit Participants with the option to terminate
participation in the Plan is a material modification.

     (A) Not a Material Modification. A material modification does not include: (i) the
Employer’s amendment of the Plan to comply with Code §409A (except to add one or more provisions
permitted by Code §409A that the Plan did not include as of October 3, 2004, and which would
enhance materially an existing benefit or add a new material benefit); (ii) the Employer’s
amendment of the Plan to reduce or eliminate any benefit existing as of October 3, 2004; (iii) the
Employer’s exercise of Plan discretion existing as of October 3, 2004, over the time and manner of
payment (except for the right to accelerate vesting to a date on or before

19

 

Nonqualified Deferred Compensation Prototype Plan

December 31, 2004, or otherwise to enhance materially an existing benefit or right or to add a
new material benefit or right); (iv) the Employer’s amendment of the Plan to change the application
of Earnings to a Participant’s Account as permitted under Prop. Treas. Reg. §1.409A-6(a)(4)(iv);
(v) the Employer’s establishment of a trust or the making of Plan contributions to a trust or other
arrangement from which the Plan will pay benefits provided that the contribution to the trust or
other arrangement does not cause an amount to be included in the Participant’s gross income; (v)
the Participant’s exercise of any right existing as of October 3, 2004 (except to enhance an
existing benefit or to add a new benefit); (vi) the Employer’s amendment of the Plan to cease
future Elective Deferrals and Employer Contributions; or (vii) the Employer’s termination of the
Plan in accordance with Section 6.03. An amendment to the Plan which otherwise would constitute a
material modification is not treated as a material modification provided the Employer rescinds the
amendment before any Participant exercises any right granted under the amendment and in any event
not later than the end of the calendar year in which the Employer made the amendment.

     (B) Aggregation. In applying this Section 7.04, “Plan” means under Section 1.37 and
the Aggregated Plans provisions under Section 1.04 do not apply.

     7.05 2005 and 2006 Operational Rules. The following provisions apply to the Plan
during the 2005 and 2006 Taxable Years.

     (A) Good Faith. As to 409A Amounts, the Employer will operate the Plan during the 2005
and 2006 Taxable Years in good faith compliance in accordance with: (i) Notice 2005-1; (ii) Code
§409A; and (iii) any Applicable Guidance as of the effective date thereof. The Employer also may
operate the Plan consistent with the Prop. Treas. Reg. §1.409A before such regulations become
effective and may apply such regulations to the extent that they are inconsistent with Notice
2005-1. Although the Employer intends this Plan document to comply with the provisions of Notice
2005-1 and of Prop. Treas. Reg. §1.409A, the Employer will not apply any Plan provision which is
inconsistent therewith and, by December 31, 2006, will amend any such provision to comply with
Applicable Guidance. The Employer and the Participants may not exercise discretion under the Plan
in a manner that would violate Code §409A.

     (B) New Payment Elections. A Participant, on or before December 31, 2006, may make a
new payment election as to any previously deferred 409A Amount. Any such election must be a
permissible election under Section 4.03(A), but an election under this Section 7.05(B) is not
treated as a change in the timing or form of distribution and need not comply with Section 4.03(B)
as it applies to such changes. In addition, during 2006, a Participant may not make a new payment
election under this Section 7.05(B) which: (i) would result in the Participant not receiving any
payment which the Plan otherwise would make in 2006; or (ii) would accelerate to 2006 any payment
the Plan would otherwise make after 2006.

     (C) Payments Linked to Qualified Plans. Notwithstanding Article IV, the Plan will
honor any Participant election as to the timing or form of payment of Deferred Compensation that is
a 409A Amount provided: (i) such election is controlled by the Participant’s distribution election
under any Code §401(a) qualified plan; (ii) the election is permitted under the Plan terms as in
effect on October 3, 2004; and (iii) the distribution is made or is commenced on or after January
1, 2005, and no later than December 31, 2006.

     (D) 2005 Deferral Election by March 15, 2005. Notwithstanding Section 2.03, if the
Plan was in existence on or before December 31, 2004 (as described in Notice 2005-1, Q/A 21), a
Participant may make an Elective Deferral election as to 409A amounts earned for service to the
Employer through December 31, 2005. A Participant must make an election under this Section 7.05(D)
no later than March 15, 2005, and in accordance with the Plan terms as in effect on or before
December 31, 2005. The election applies only as to amounts not paid or payable to the Participant
at the time of the election. Any amounts subject to this election otherwise are 409A Amounts. This
Section applies only to the 2005 Taxable Year.

     (E) Certain Severance Plans. If the Plan provides severance pay benefits and either:
(i) is collectively bargained; or (ii) does not cover any key employees within the meaning of Code
§416(i), the Plan provisions governing 409A Amounts are effective as to the severance benefits for
Taxable Years commencing in 2006. For 2005, the severance benefit provisions of the Plan remain
subject to prior Plan terms. For purposes of this Section 7.05(E), a severance pay benefit means as
described in Notice 2005-1, Q/A 19(d).

20

 

Nonqualified Deferred Compensation Prototype Plan

     (F) Cancellation of Election/Participation. A Participant as to 409A Amounts, on or
before December 31, 2005, may elect to terminate participation in the Plan or to cancel (or reduce
the amount of) any or all existing Elective Deferral elections and Employer Contributions. The
Employer as to 409A Amounts, on or before December 31, 2005, also may terminate any Participant’s
participation in the Plan or may cancel any Participant’s Elective Deferral election or Employer
Contribution. The Plan will distribute to an affected Participant all 409A Amounts subject to an
election under this Section 7.05(F) and the Participant will include such amounts in income, in the
2005 Taxable Year, or if later, in the Taxable Year in which such amounts are Vested.

     7.06 Incorporation of Applicable Guidance. In the event of Applicable Guidance that is
contrary to any Plan provision, the Employer, as of the effective date of the Applicable Guidance,
will operate the Plan in conformance therewith and will disregard any inconsistent Plan provision.
Any such Applicable Guidance is deemed to be incorporated by reference into the Plan and to
supersede any contrary Plan provision during any period in which the Employer is permitted to
comply operationally with the Applicable Guidance and before a formal Plan amendment is required.

*   *   *    *    *   *    *    *   *   *   *   *    *    *    *

21

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