Document:

EX-10.4

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “Agreement”) is dated as of December 22, 2005 by and between
PORTFOLIO RECOVERY ASSOCIATES, INC., a Delaware corporation (the “Company”), and Judith S. Scott
(“Employee”).

W I T N E S S E T H

:

WHEREAS, the Company desires that Employee serve as the Executive Vice President, General
Counsel and Secretary of the Company;

WHEREAS, the Employee desires to enter into such an employment relationship upon the terms set
forth in this Agreement;

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged,
the parties agree as follows:

1. Employment.

a) The Company hereby employs (the “Employment”) Employee as the Executive Vice President,
General Counsel and Secretary. Employee shall perform such duties and exercise such powers as
directed by the President and Chief Executive Officer, subject to the general supervision, control
and guidance of the Board of Directors of the Company (the “Board”). Employee hereby accepts the
Employment and agrees to (i) render such executive services, (ii) perform such executive duties and
(iii) exercise such executive supervision and powers to, for and with respect to the Company, as
may be established, for the period and upon the terms set forth in this Agreement.

b) Employee shall devote substantially all of Employee’s business time and attention to the
business and affairs of the Company consistent with Employee’s executive position with the
Company, except as permitted for Paid Time Off, pursuant to Section 4(d) and for Disability (as
defined in Section 8(b)). This Agreement shall not be construed as preventing Employee from
serving on the Boards of Directors of other companies, engaging in charitable and community
affairs, or giving attention to her passive investments, provided that such activities do not
interfere with the regular performance of her duties and responsibilities under this Agreement or
violate any other provision of this Agreement.

2. Place of Performance. The principal place of employment of Employee shall be at
the Company’s principal executive offices in Norfolk, Virginia or, if such offices are relocated,
within a 50 mile radius of Norfolk, Virginia (the “Metropolitan Area”). Notwithstanding the
foregoing, Employee may be required to travel beyond the Metropolitan Area as reasonably required
to perform his duties hereunder.

3. Term. Except as otherwise specifically provided in Section 8 below, this Agreement
shall commence on January 1, 2006 (the “Commencement Date”), and shall continue until December 31,
2008, subject to the terms and conditions of this Agreement. The Term may be terminated at an
earlier date in accordance with Section 8 hereof.

4. Compensation.

a) Base Salary. Employee shall be paid a base salary (the “Base Salary”) at an annual
rate of $155,000, payable at such intervals as the other executive officers of the Company are
paid, but in any event at least on a monthly basis. On each January 1 following the Commencement
Date, commencing January 1, 2007, Base Salary shall be increased annually by no less than 4% over
the immediately preceding year’s Base Salary.

b) Bonus Compensation. Employee shall receive bonus compensation (“Bonus
Compensation”) in accordance with paragraph (i) of this Section 4(b); provided,
however, that if at any time the Management Bonus (as hereinafter defined) is not in
effect, Employee shall receive bonus compensation in accordance with paragraph (ii) of this Section
4(b). Employee shall not be entitled to participate in any incentive bonus program for
non-management level employees during the time the Management Bonus is in effect.

(i) Management Bonus. The performance of the business shall be reviewed at the end of
each operating year and compared to such goals as are set forth in the business plan for that year
as approved by the Board (the “Business Plan”). If the results of operations for the year achieve
the net profitability goals for the year specified in the approved Business Plan, Plan and (ii) the
Employee’s performance is determined in conformance with Company policy to have met expectations,
a bonus equal to no less than 50% of the Employee’s Base Salary shall be paid to him (the
“Management Bonus”). If (i) the results of operations for the year exceed the net profitability
goals of the approved Business Plan and (ii) the Employee’s performance is determined in
conformance with Company policy to have exceeded expectations, the amount of the Employee’s
Management Bonus may be increased in recognition of the degree to which results exceeded such
goals, and the degree to which the Employee contributed to the Company’s superior performance
results as determined in the sole discretion of the Compensation Committee of the Board (the
“Committee”). If (i) the results of operations for the year fail to achieve such net profitability
goals specified in the approved Business Plan or (ii), the Employee’s performance is determined in
conformance with Company policy not to have met expectations, then the amount, if any of the
Employee’s Management Bonus shall be within the absolute discretion of the Committee, provided that
the Committee shall give reasonable consideration to any intervening or extraordinary events or
circumstances that might have given rise to such shortfall. Further, if pursuant to the Company’s
senior executive target equity ownership policies, the Employee’s targeted equity ownership levels
have not been met, the Employee’s Management Bonus may be paid, in whole or in part, in shares of
the Company’s common stock.

(ii) Bonus. In the event that the Management Bonus is not in effect, in addition to
the Base Salary, Employee shall be entitled to such bonus compensation as may be determined from
time to time by the Committee, in its sole discretion. The Committee shall base its decision on a
review of the performance of the Company and the Employee’s performance at the end of each year.

c) Employee Benefits. In addition to the Base Salary and the Bonus Compensation, and
subject to the limitations imposed herein, Employee shall be entitled to (i) receive any fringe
benefits provided by the Company to its executive officers, including, but not limited to, life,
hospitalization, surgical, major medical and disability insurance and sick leave, (ii) such
employee benefit programs as may be offered by the Company to other employees and (iii) be a full
participant in all of the Company’s other benefit plans, pension plans, retirement plans and
profit-sharing plans which may be in effect from time to time or may hereafter be adopted by the
Company.

d) Paid Time Off. During the Term, Employee shall be entitled to such paid time off
(“PTO”) during each calendar year of his Employment hereunder consistent with the Company’s PTO
policies then in effect and his position as an executive officer of the Company, but in no event
less than twenty-five PTO days in any such calendar year (pro-rated as necessary for partial
calendar years during the Term). Such PTO may be taken, in Employee’s discretion, at such time or
times as are not inconsistent with the reasonable business needs of the Company. At the end of the
calendar year, Employee shall be entitled to carry over up to five days of unused PTO into the next
calendar year, but shall not be entitled to any additional compensation in the event that Employee,
for whatever reason, fails to take such vacation during any year of his Employment hereunder.
Employee shall also be entitled to all paid holidays given by the Company to its executive
officers.

5. Indemnification. Employee shall be entitled at all times to the benefit of the
maximum indemnification and advancement of expenses available from time to time under the laws of
the State of Delaware, and such benefit shall not be less than any other officer or director
entitled to indemnification by the Company. Without limiting the foregoing, Employee shall also be
entitled to the benefit of the following provisions:

a) D&O Insurance. Employee shall be covered under any directors’ and officers’
liability insurance policy then in effect for the Company or any of its affiliates as to which
Employee is serving as a director or officer. The failure to have an insurance policy in effect at
all times shall not allow Employee to assert a Constructive Termination of this Agreement, other
than to the extent such failure constitutes a breach of the immediately preceding sentence.

b) Scope of Indemnification. In addition to the insurance coverage provided for in
Section 5(a), the Company and any of the Company’s affiliates as to which Employee has at any time
served as a director, officer, employee, agent or fiduciary (collectively, the “Indemnitors”) shall
jointly and severally hold harmless and indemnify Employee (and his heirs, executors and
administrators) to the fullest extent permitted under applicable law against all expenses and
liabilities reasonably incurred by him in connection with or arising out of any action, suit or
proceeding (each, a “Claim”) in which he may be involved by reason of his having been a director,
officer, employee, agent or fiduciary of any Indemnitor (whether or not he continues to be a
director, officer, employee, agent or fiduciary thereof at the time of incurring such expenses or
liabilities), or by reason of any action or inaction on Employee’s part while serving in any such
capacity, such expenses and liabilities to include, but not be limited to, losses, damages,
judgments, investigation costs, court costs and attorneys’ fees and the cost of reasonable
settlements.

c) Selection of Counsel. In the event the Indemnitors shall be obligated hereunder to
pay any Expenses with respect to a Claim, the Indemnitors shall be entitled to assume the defense
of such Claim upon the delivery to Employee of written notice of its election to do so. After
delivery of such notice and the retention of such counsel by the Indemnitors, the Indemnitors will
not be liable to Employee under this Agreement for any fees of counsel subsequently incurred by
Employee with respect to the same Claim; provided that, (i) Employee shall have the right to employ
counsel in any such Claim at his expense; and (ii) if (A) the employment of counsel by Employee has
been previously authorized by the Indemnitors, (B) counsel for Employee shall have provided the
Indemnitors with written advice that there is a conflict of interest between the Indemnitors and
Employee in the conduct of any such defense, or (C) the Indemnitors shall not continue to retain
such counsel to defend such Claim, then the fees and expenses of Employee’s counsel shall be at the
expense of the Indemnitors.

d) Nonexclusivity. The indemnification rights set for in this Section 5 shall be in
addition to any rights to which Employee may be entitled under any of the Indemnitors’ charter
documents, bylaws or agreements, any vote of stockholders or disinterested directors, the laws of
the various Indemnitors’ jurisdictions of formation or incorporation. The indemnification rights
set forth in this Section 5 shall continue as to Employee for any action Employee took or did not
take while serving in an indemnified capacity even though Employee may have ceased to serve in such
capacity.

e) Survival. The indemnification and contribution provided for in this Section 5 will
remain in full force and effect after any termination of Employee’s employment and without regard
to any investigation made by or on behalf of Employee or any agent or representative of Employee.

6. Expenses. During the Term, the Company shall reimburse Employee upon presentation
of appropriate vouchers or receipts in accordance with the Company’s expense reimbursement policies
for executive officers, for all out-of-pocket business travel and entertainment expenses incurred
or expended by Employee in connection with the performance of his duties under this Agreement in
accordance with the Company’s expense reimbursement policies for executive officers.

7. Termination Procedure.

a) Notice of Termination. Any termination of Employee’s Employment by the Company or
by Employee during the Term (other than termination pursuant to Section 8(a) of this Agreement)
shall be communicated by written notice (“Notice of Termination”) to the other party hereto in
accordance with Section 13 herein. For purposes of this Agreement, a Notice of Termination shall
mean a notice which shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee’s Employment under the provision so indicated.

b) Date of Termination. “Date of Termination” shall mean (a) if Employee’s Employment
is terminated by his death, the date of death, (b) if Employee’s Employment is terminated pursuant
to Section 8(b) herein, 30 days after Notice of Termination (provided that Employee shall not have
returned to the substantial performance of his duties on a full-time basis during such 30 day
period), (c) if Employee’s Employment terminates upon the expiration of the Term and Employee’s
Employment is not renewed, the date of expiration of the Term, and (d) if Employee’s Employment is
terminated for any other reason, the date on which Notice of Termination is given or any later date
(within 30 days after the giving of such notice) set forth in such Notice of Termination.

8. Termination of Employment.

a) Death. In the event of the death of Employee during the Term, Employee’s
Employment hereunder shall be terminated as of the date of his death and Employee’s designated
beneficiary, or, in the absence of such designation, the estate or other legal representative of
Employee (collectively, the “Estate”), shall be paid Employee’s unpaid Base Salary through the
month in which the death occurs and any unpaid Bonus Compensation for any fiscal year which has
ended as of the date of such termination or which was at least fifty percent (50%) completed as of
the date of death. In the case of such incomplete fiscal year, the Bonus Compensation shall be
determined based upon the assumption that Employee would have earned the target Bonus Compensation
in accordance with Section 4(b) and pro-rated, and all such Bonus Compensation, if any, payable as
a result of this Section 8(a) shall be payable at the same time as bonuses would be payable to
other executive officers (regardless of whether such other officers earned any such bonus). The
Estate shall be entitled to all other death benefits in accordance with the terms of the Company’s
benefit programs and plans.

b) Disability. In the event Employee shall be unable to render the services or
perform his duties hereunder by reason of illness, injury or incapacity (whether physical, mental,
emotional or psychological) (any of the foregoing shall be referred to herein as a “Disability”)
for a period of either (i) 180 consecutive days or (ii) 270 days in any consecutive 365-day period,
the Company shall have the right to terminate this Agreement by giving Employee 30 days’ prior
written notice. Any determination of Disability shall be made by the Board in its reasonable good
faith discretion. If Employee’s Employment hereunder is so terminated, Employee shall be paid,
offset by payments under any disability insurance policy in effect, Employee’s unpaid Base Salary
through the month in which the termination occurs, plus Bonus Compensation on the same basis as is
set forth in Section 8(a) above. The Employee shall be entitled to receive all benefits in
accordance with the terms of this Agreement and of the Company’s benefit programs and plans.

c) Termination of Employment by the Company for Cause.

(i) Nothing herein shall prevent the Company from terminating Employee’s Employment for Cause
(as hereinafter defined). From and after the Date of Termination, Employee shall no longer be
entitled to receive Base Salary and Bonus Compensation and the Company shall no longer be required
to pay premiums on any life insurance or disability policy for Employee. Any rights and benefits
which Employee may have in respect of any other compensation or any employee benefit plans or
programs of the Company, whether pursuant to Section 4(c) or otherwise, shall be determined in
accordance with the terms of such other compensation arrangements or plans or programs. The term
“Cause,” as used herein, shall mean: (A) Employee’s conviction, or plea of guilty or nolo
contendere to, a felony; (B) Employee’s engaging in willful misconduct that is economically
injurious to the Company or its subsidiaries, including, but not limited to, a willful
violation of Sections 10 or 11 of this Agreement, or the embezzlement of funds or misappropriation
of other property of the Company or any subsidiary); or (C) Employee’s material violation of the
Company’s written policies and procedures (including gross and continued failure to satisfy written
directives or performance material provided to Employee), insubordination or breach this Agreement
in a material manner; or (D) Employee’s fraudulent conduct as regards the Company, which results
either in personal enrichment to Employee or material injury to the Company or its subsidiaries.

(ii) The Company shall provide Employee with Notice of Termination stating that it intends to
terminate Employee’s Employment for Cause under this Section 8(c) and specifying the particular act
or acts on the basis of which the Board intends to terminate Employee’s Employment. Employee shall
then be given the opportunity, within 15 days of his receipt of such notice, to have a meeting with
the Board to discuss such act or acts (other than with respect to an action described in Sections
8(c)(i)(A), (B) or (D) above as to which the Board may immediately terminate Employee’s Employment
for Cause). Other than with respect to an action described in Sections 8(c)(i)(A) (B) or D above,
Employee shall be given seven days after his meeting with the Board to take reasonable steps to
cease or correct the performance (or nonperformance) giving rise to such Notice of Termination. In
the event the Board determines that Employee has failed within such seven-day period to take
reasonable steps to cease or correct such performance (or nonperformance), Employee shall be given
the opportunity, within 10 days of his receipt of written notice to such effect, to have a meeting
with the Board to discuss such determination. Following that meeting, if the Board believes that
Employee has failed to take reasonable steps to cease or correct his performance (or
nonperformance) as above described, the Board may thereupon terminate the Employment of Employee
for Cause.

d) Termination Other than for Cause, Death or Disability.

(i) Termination. This Agreement may be terminated by the Company (in addition to
termination pursuant to Sections 8(a), (b) or (c) above) or Employee at any time and for any reason
or upon the expiration of the Term.

(ii) Severance and Non-Competition Payments. If the Employee’s employment is
terminated under this Section 8(d), including a Constructive Termination (as hereinafter defined),
or other than as a termination by Employee, or as a result of death or Disability of Employee or
for Cause, the following shall apply:

A) the Company shall pay to Employee (w) Base Salary and accrued PTO through the Date of
Termination, plus a pro rata portion of the Target Bonus Compensation for the year in which the
Termination occurs (whether or not such target is actually met) determined based upon the days
elapsed in the year divided by 365, as soon as practicable following the Date of Termination, (x)
the greater of a lump-sum payment equal to one times Employee’s then current Base Salary or the
minimum Base Salary due under the remaining Term and (y) a lump-sum payment equal to the greater of
one times the amount of the Bonus Compensation, if any, paid to Employee in the year immediately
prior to the year in which the Date of Termination occurs or the target Bonus Compensation due
under the remaining Term (whether or not such target is actually met). Such payment under clauses
(x) and (y) hereof shall be made as soon as administratively feasible following the Date of
Termination and the execution of a valid Release (as hereinafter defined), but in no event more
than 45 days following the execution of such Release;

B) the Company shall continue to provide Employee with the same level of medical benefits upon
substantially the same terms and conditions (including contributions required by Employee for such
benefits) as existed immediately prior to Employee’s termination for the longer of the maximum
period of time provided under federal law or the remainder of the Term; provided that the Company
shall bear the costs of such benefits for the longer of 12 months or the remainder of the Term
and, provided further, if Employee cannot continue to participate in the Company’s plans providing
such benefits, the Company shall reimburse Employee the cost of obtaining such benefits as if
continued participation had been permitted. Notwithstanding the foregoing, in the event Employee
obtains employment with another employer and becomes eligible to receive comparable benefits from
such employer, the benefits described in this clause (B) shall cease; and

C) Employee shall be entitled to any other rights, compensation and/or benefits as may be due
to Employee in accordance with the terms and provisions of any agreements, plans or programs of the
Company.

(iii) Constructive Termination. For purposes of this Agreement, “Constructive
Termination” shall be deemed to have occurred upon (i) the removal of Employee from, or a failure
of Employee to continue as Executive Vice President, General Counsel and Secretary of the Company,
(ii) any material diminution in the nature or scope of the authorities, powers, functions, duties
or responsibilities attached to such position, (iii) the relocation of the Company’s principal
executive offices to a location more than 50 miles from Norfolk, Virginia, or (iv) the material
breach by the Company of this Agreement and, in the case of clauses (i)-(iii) above, Employee does
not agree to such change (which decision is personal in nature and not subject to any fiduciary
responsibilities Employee may have as an officer of the Company) and elects to terminate her
Employment.

(iv) Severance and Non-Competition Payments Following Non-Renewal of this Agreement.
If this Agreement is not renewed beyond the Term by the parties hereto, the Company shall pay
Employee a severance and non-competition payment equal to: (w) his Base Salary and accrued PTO
through the Date of Termination, as soon as practicable following the Date of Termination, plus a
pro rata portion of the target Bonus Compensation for the year in which the Termination occurs
(whether or not such target is actually met) determined based upon the days elapsed in the year
divided by 365, (x) a lump-sum payment equal to one times Employee’s then current Base Salary and
(y) the benefits set forth in Sections 8(d)(ii)(B) and (C). Such payment under clause (x) hereof
shall be made as soon as administratively feasible following the Date of Termination and the
execution of a valid Release, but in no event more than 45 days following the execution of such
Release.

(v) No Mitigation. Employee shall not be required to mitigate the amount of any
severance and non-competition payment provided for under this Agreement by seeking other employment
or otherwise.

(vi) Excise Tax. In the event that Employee becomes entitled to any payments or
benefits under this Agreement and any portion of such payments or benefits, when combined with any
other payments or benefits provided to Employee (including, without limiting the generality of the
foregoing, by reason of the exercise of any stock options or the receipt of any shares of stock of
the Company), which in the absence of this Section 8(d) would be subject to the tax (the “Excise
Tax”) imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), then
the amount payable to Employee under this Agreement shall be reduced to the largest amount or
greatest right (for example, by deferring the vesting date of Employee’s options) such that none of
the amounts payable to Employee under this Agreement and any other payments or benefits received or
to be received by Employee as a result of, or in connection with, an event constituting a change in
the ownership or effective control of the Company or in the ownership of a substantial portion of
the assets of the Company (within the meaning of Section 280G(b)(2)(A) of the Code) or the
termination of Employment (including a Constructive Termination, shall be treated as “parachute
payments” within the meaning of Section 280G(b)(2) of the Code. The Company shall cooperate in good
faith with Employee in making such determination. In the event that the vesting date of any option
is deferred hereunder, the term during which such option may be exercised shall be extended until
the ninetieth (90th) day following the full vesting thereof.

9. Release. Employee acknowledges and agrees that the payments set forth in Section 8
of this Agreement constitute liquidated damages for any claim of breach of contract under this
Agreement as it relates to termination of Employee’s employment. In order to receive any of the
payments set forth above, prior to the payment of such amounts, Employee shall execute and agree to
be bound by an agreement relating to the waiver and general release of any and all claims (other
than claims for the compensation and benefits payable under Section 8 hereof) arising out of or
relating to Employee’s employment and termination of employment (the “Release”), which Release
shall be in substantially the form annexed hereto as Exhibit B (with such changes as counsel to the
Company may reasonably require as a result of changes in law after the date hereof).

10. Confidential Information.

a) Employee covenants and agrees that he will not at any time, either during the Term or
thereafter, use, disclose or make accessible to any other person, firm, partnership, corporation or
any other entity any Confidential Information (as defined below) pertaining to the business of the
Company or any of its subsidiaries except (i) while employed by the Company, in the business of and
for the benefit of the Company or (ii) when required to do so by a court of competent jurisdiction,
by any governmental agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with jurisdiction to order
the Company to divulge, disclose or make accessible such information. For purposes of this
Agreement, “Confidential Information” shall mean non-public information concerning the Company’s or
any of its subsidiaries’ financial data, statistical data, strategic business plans, product
development (or other proprietary product data), customer and supplier lists, customer and supplier
information, information relating to practices, processes, methods, trade secrets, marketing plans
and other non-public, proprietary and confidential information of the Company or any of its
subsidiaries; provided, however, that Confidential Information shall not include any information
which (x) is known generally to the public other than as a result of unauthorized disclosure by
Employee, (y) becomes available to the Employee on a non-confidential basis from a source other
than the Company or any of its subsidiaries or (z) was available to Employee on a non-confidential
basis prior to its disclosure to Employee by the Company or any of its subsidiaries. It is
specifically understood and agreed by Employee that any Confidential Information received by
Employee during his Employment by the Company is deemed Confidential Information for purposes of
this Agreement. In the event Employee’s Employment is terminated hereunder for any reason, he
immediately shall return to the Company all tangible Confidential Information in his possession.

b) Employee and the Company agree that this covenant regarding Confidential Information is a
reasonable covenant under the circumstances, and further agree that if, in the opinion of any court
of competent jurisdiction, such covenant is not reasonable in any respect, such court shall have
the right, power and authority to excise or modify such provision or provisions of this covenant as
to the court shall appear not reasonable and to enforce the remainder of the covenant as so
amended. Employee agrees that any breach of the covenant contained in this Section 10 would
irreparably injure the Company. Accordingly, Employee agrees that the Company, in addition to
pursuing any other remedies it may have in law or in equity, may obtain an injunction against
Employee from any court having jurisdiction over the matter, restraining any further violation of
this Section 10.

11. Non-Competition; Non-Solicitation.

a) Employee agrees that during the Non-Competition Period (as defined in Section 11(d) below),
without the prior written consent of the Company: (i) he shall not be a principal, manager, agent,
consultant, officer, director or employee of, or, directly or indirectly, own more than 1% percent
of any class or series of equity securities in, any partnership, corporation or other entity,
which, now or at such time, has material operations which are engaged in any business activity
competitive (directly or indirectly) with the Business of the Company (a “Competing Entity”); and
(ii) he shall not, on behalf of any Competing Entity, directly or indirectly, have any dealings or
contact with any suppliers or customers of the Company or any or its subsidiaries. As used in this
Agreement, the term “Business” means the means government revenue administration; the
administration, auditing and collection of taxes; skip tracing and asset location; and the
purchase, collection and management of portfolios of defaulted and bankrupt consumer receivables,
but shall not include such collection and management activities to the extent they are incidental
to a business primarily engaged in loan origination or servicing. Notwithstanding the foregoing,
an entity will not be deemed to be a Competing Entity, and Employee will not be deemed to be
engaged in the Business, if (i) Employee is employed by an entity that is engaged in any meaningful
way in one or more businesses other than the Business (the “Non-Competing Businesses”), (ii) such
entity’s relationship with Employee relates solely to the Non-Competing Businesses, and (iii) if
requested by the Company, such entity and Employee shall provide the Company with reasonable
assurances that Employee will have no direct or indirect involvement in the Business on behalf of
such entity.

b) During the Non-Competition Period, Employee agrees that, without the prior written consent
of the Company (and other than on behalf of the Company), Employee shall not, on his own behalf or
on behalf of any person or entity, directly or indirectly, (i) solicit the customers or suppliers
of the Company or any of its subsidiaries to terminate their relationship with the Company or any
of its subsidiaries (or to modify such relationship in a manner that is adverse to the interests of
the Company) or (ii) hire or solicit the employment of any employee who has been employed by the
Company or any of its subsidiaries at the time of Employee’s termination or at any time during the
six months immediately preceding such date of hiring or solicitation. This provision does not
prohibit the solicitation of employees by means of a general advertisement.

c) Employee and the Company agree that the covenants of non-competition and non-solicitation
are reasonable covenants under the circumstances, in order to protect the Company’s goodwill and
other legitimate business interests, such as business opportunities, customer and client contacts,
prospects, contracts, lists and leads, and to ensure that former employees do not disclose the
Company’s trade secrets and its proprietary and confidential information to its competitors.
Employee and the Company further agree that if, in the opinion of any court of competent
jurisdiction such covenants are not reasonable in any respect, such court shall have the right,
power and authority to excise or modify such provision or provisions of these covenants as to the
court shall appear not reasonable and to enforce the remainder of these covenants as so amended.
Employee agrees that any breach of the covenants contained in this Section 11 would irreparably
injure the Company. Accordingly, Employee agrees that the Company, in addition to pursuing any
other remedies it may have in law or in equity, may obtain an injunction against Employee from any
court having jurisdiction over the matter, restraining any further violation of this Section 11.

d) The provisions of this Section 11 shall extend for the Term and survive the termination of
this Agreement for one year from the date of such termination (herein referred to as the
“Non-Competition Period”).

e) The provisions of this Section 11 shall terminate if this Agreement is terminated by the
Company other than for Cause, or in the event of a Constructive Termination of this Agreement or if
the Company defaults on any of its payment obligations set forth in this Agreement, which payment
default is not cured within fifteen (15) days after notice.

12. Limitation of Liability and Indemnity. The limitation of liability and indemnity
provisions of Section 8.1 of the Amended and Restated By-Laws of the Company and Article 9 of the
Amended and Restated Certificate of Incorporation of the Company are a contractual benefit to
Employee and are a material consideration for Employee’s employment.

13. Notices. All notices and other communications hereunder shall be in writing and
shall be deemed to have been given if delivered personally or sent by facsimile transmission,
overnight courier, or certified, registered or express mail, postage prepaid. Any such notice
shall be deemed given when so delivered personally or sent by facsimile transmission (provided that
a confirmation copy is sent by overnight courier), one day after deposit with an overnight courier,
or if mailed, five days after the date of deposit in the United States mails, as follows (or to
another address specified in writing by the recipient prior to the sending of such notice or
communication):

	 	 	 	 	 
	If to the Company, to:
	 	Portfolio Recovery Associates, Inc.

	 
	 	120 Corporate Boulevard
	 
	 	Norfolk, Virginia  23502

	 
	 	Attn: President and Chief Executive Officer

	 
	 	Fax: 757-554-0586

	If to Employee, to:
	 	Judith Scott

Fax: 757-321-2518

14. Entire Agreement. This Agreement contains the entire agreement between the
parties hereto with respect to the matters contemplated herein and supersede all prior agreements
or understandings among the parties related to such matters.

15. Successors; Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon, and inure to the benefit of, the Company and its successors and assigns and
upon Employee. “Successors and assigns” shall mean, in the case of the Company, any successor
pursuant to a merger, consolidation, or sale, or other transfer of all or substantially all of the
assets or Common Stock of the Company, provided that, should the Company assign or transfer this
Agreement, the Company will require any successor to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to perform it if no such
assignment or transfer had taken place.

16. No Assignment. Except as contemplated by Section 15 above, this Agreement shall
not be assignable or otherwise transferable by either party.

17. Withholding. All payments hereunder shall be subject to any required withholding
of federal, state and local taxes pursuant to any applicable law or regulation.

18. Amendment or Modification; Waiver. No provision of this Agreement may be amended
or waived unless such amendment or waiver is authorized by the Board and is agreed to in writing,
signed by Employee and by a duly authorized officer of the Company (other than Employee). Except
as otherwise specifically provided in this Agreement, no waiver by either party hereto of any
breach by the other party hereto of any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of a similar or dissimilar provision or condition at the
same or at any prior or subsequent time.

19. Fees and Expenses. If either party institutes any action or proceedings to
enforce any rights the party has under this Agreement, or for damages by reason of any alleged
breach of any provision of this Agreement, or for a declaration of each party’s rights or
obligations hereunder or to set aside any provision hereof, or for any other judicial remedy, the
prevailing party shall be entitled to reimbursement from the other party for its costs and expenses
incurred thereby, including but not limited to, reasonable attorneys’ fees and disbursements.

20. Governing Law. The validity, interpretation, construction, performance and
enforcement of this Agreement shall be governed by the internal laws of the State of Delaware,
without regard to its conflicts of law rules.

21. Titles. Titles to the Sections in this Agreement are intended solely for
convenience and no provision of this Agreement is to be construed by reference to the title of any
Section.

22. Counterparts. This Agreement may be executed in one or more counterparts, which
together shall constitute one agreement. It shall not be necessary for each party to sign each
counterpart so long as each party has signed at least one counterpart.

23. Severability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of any of the terms
and provisions of this Agreement in any other jurisdiction.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first set forth above.

PORTFOLIO RECOVERY ASSOCIATES, INC.

By:      /s/ Judith S. Scott     

Name: Judith S. Scott

Position: General Counsel and Secretary

By:     /s/ Steven D. Fredrickson     

	 	 	 	Steven D. FredricksonA.G. EDWARDS, INC.
 

 

	
             
 	
            EXCESS PROFIT SHARING
 	
             

	
             
  	
            DEFERRED COMPENSATION PLAN
  
				

 

	
             
 	
            2002 RESTATEMENT
 

 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

 

	
             
  	
            TABLE OF CONTENTS
  	
             

	
            1.
 	
            Purpose
 	
            1
 
	
            2.
 	
            Eligibility
 	
            1
 
	
            3.
 	
            Basic Benefit
 	
            2
 
	
            4.
 	
            Plan Year Accounts
 	
            3
 
	
            5.
 	
            Pre-1987 Creditation of Interest
 	
            3
 
	
            6.
 	
            Plan Year Account Return Options – Post 1986
 	
            4
 
	
            7.
 	
            Fees Charged to Plan Year Accounts
 	
            5
 
	
            8.
 	
            Vesting Provisions for A Accounts
 	
            5
 
	
            9.
 	
            Vesting Provisions for B Accounts
 	
            7
 
	
            10.
 	
            Vesting Provisions For All Plan Year Accounts
 	
            8
 
	
            11.
 	
            Payment of A Accounts
 	
            9
 
	
            12.
 	
            Payment of B Accounts
 	
            12
 
	
            13.
 	
            Payment Upon Change in Control
 	
            13
 
	
            14.
 	
            Payment Upon Death
 	
            13
 
	
            15.
 	
            Severance Plan Override
 	
            14
 
	
            16.
 	
            Amendment or Discontinuance
 	
            14
 
	
            17.
 	
            Plan Administrator
 	
            14
 
	
            18.
 	
            Unfunded
 	
            14
 
	
            19.
 	
            Definitions and Rules of Construction
 	
            14
 
	
            20.
 	
            Official Actions
 	
            15
 
	
            21.
 	
            Tax Withholding
 	
            15
 
						

 

 

	
             
 	
            - i -
 

 

 

 

 

	
             
 	
            A.G. EDWARDS, INC.
 	
             

	
             
 	
            EXCESS PROFIT SHARING
 	
             

	
             
  	
            DEFERRED COMPENSATION PLAN
  
						

 

	
             
 	
            As Amended and Restated effective January 1, 2002
 

 

 

The A.G. Edwards, Inc. Excess Profit Sharing Deferred Compensation Plan (the “Plan”) was originally effective beginning with the 1983 calendar year.  The Plan was amended and restated as of January 1, 1987, January 1, 1994, January 1, 1995, August 20, 1999, and February 22, 2001.  As of February 28, 2001, all existing post 1986 Plan Year Accounts were designated Plan Year A Accounts.  Beginning with the 2001 Plan Year, awards are allocated evenly between an A Account and a B Account.  Amounts allocated to B Accounts are subject to different vesting and payment provisions, as set forth in this restated instrument.

 

A.G. Edwards, Inc. now wishes to amend the Plan to accelerate vesting and payment of benefits for certain retirees and to add certain severance payment provisions.

 

NOW, THEREFORE, the Plan is hereby amended and restated by the following instrument, which shall be entitled the 2002 Restatement.

 

The amendments made by this 2002 Restatement generally are effective as of January 1, 2002, except as otherwise explicitly provided in the Plan.  

 

The rights and benefits of a participant shall be governed by this Plan as amended from time to time and as in effect at the relevant time.  Except as otherwise explicitly provided in the Plan, the rights and benefits of each participant shall be determined pursuant to the provisions of the Plan as in effect on the date of the applicable event.

 

1.           Purpose.  The purpose of the Plan is to provide unfunded deferred compensation to certain highly compensated employees whose benefit under the A.G. Edwards, Inc. Retirement and Profit Sharing Plan (the “Profit Sharing Plan”) is limited by the Allocation Limitations contained in the Profit Sharing Plan.  For purposes of this Plan, “Allocation Limitations” means the limitations on benefits in the Profit Sharing Plan imposed by Section 402(g) of the Code, which limits the amount an employee may elect to contribute to the Profit Sharing Plan, as described in Article VI of the Profit Sharing Plan, the limitation on the amount of Compensation which may be considered
under the Profit Sharing Plan, as described in Article III of the Profit Sharing Plan, and the limitation imposed by Section 415 of the Code, which limits the amount that may be allocated to the account of an employee, as described in Section 7.6 of the Profit Sharing Plan.

 

2.           Eligibility.  Any employee of A.G. Edwards, Inc. and its Affiliates (the “Company”) who is eligible to make a Deductible Employee Contribution pursuant to Section 6.1 of the Profit Sharing Plan for a Plan Year beginning after 1994 shall be eligible to participate in this Plan for that Plan Year whether or not a contribution is made.

	
             
 	
            - 1 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

3.           Basic Benefit.  The “Basic Benefit” of a participant in this Plan for a Plan Year beginning after 1994 shall, subject to the limitations in this Paragraph 3, equal the sum of (A) and (B) as follows:

 

	
            (A)
 	
            The product of the “Applicable Percentage” of the participant for the Plan Year multiplied by the “Excess Profit Sharing Compensation” of the participant for the Plan Year where:
 

 

	
             
 	
            (i)
 	
            The Applicable Percentage is the sum of (a) the rate of the Required Employer Non-matching Contribution with respect to Excess Compensation for that Plan Year made in accordance with Section 6.3 of the Profit Sharing Plan and (b) the rate of the FICA Discretionary Employer Non-matching Contribution for that Plan Year made in accordance with Section 6.4 of the Profit Sharing Plan; and 
 

 

	
             
 	
            (ii)
 	
            The Excess Profit Sharing Compensation for a Plan Year is Compensation as defined in the first Paragraph of Section 3.6 of the Profit Sharing Plan to the extent such compensation exceeds the limitation on Compensation in Sections 6.3 and 6.4 of the Profit Sharing Plan; and   
 

 

	
            (B)
 	
            The amount, if any, that would have been prevented from being allocated to the account of the participant in the Profit Sharing Plan for the Plan Year with respect to Compensation below the limitation on Compensation in Sections 6.3 and 6.4 of the Profit Sharing Plan solely as a result of the dollar limitation of Section 415(c)(1)(A) of the Code as set forth in Section 7.6(A) of the Profit Sharing Plan if the participant had made the maximum Deductible Employee Contribution permitted for the participant by the Profit Sharing Plan.
 

 

Notwithstanding anything to the contrary in this Paragraph 3, in no event shall the amount of the Basic Benefit for a Plan Year under this Plan, when added to the combined maximum amount of the Employer Contributions under the Profit Sharing Plan, exceed the maximum amount, if any, established for such Plan Year by the Plan Administrator.

 

Notwithstanding anything to the contrary in this Paragraph 3, if the Basic Benefit of a participant for a Plan Year, computed pursuant to the formula as described above that is applicable to that Plan Year, shall be less than $500, such participant shall not be entitled to any benefit under this Plan for that Plan Year.

 

 

	
             
 	
            - 2 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

4.           Plan Year Accounts.  A separate Plan Year Account shall be established and maintained for each participant with respect to each Plan Year for which the participant is entitled to creditation of a Basic Benefit.  The Plan Administrator shall record the dollar amount of the Basic Benefit of a participant for each Plan Year to a separate Plan Year Account for that participant for that year.

 

As of February 28, 2001, all existing post-1986 Plan Year Accounts shall be designated Plan Year A Accounts.  Beginning with the 2001 Plan Year, awards shall be allocated evenly between an A Account and a B Account for each participant.  

 

5.           Pre-1987 Creditation of Interest.  As of the last day of each Plan Year, the Plan Administrator shall adjust the pre-1987 Plan Year Accounts of each participant by crediting simple interest on the balance credited to each such account as of the beginning of the Plan Year (after reduction of the account balances to reflect the amount paid to participants during such Plan Year) at the applicable rate, as follows:  

 

	
            (A)
 	
            Except as provided below in subparagraphs (B) and (C) of this Paragraph 5, the applicable rate shall be the average of the broker call rates of A.G. Edwards & Sons, Inc. as of the end of each month during the twelve-month period of the Plan Year.
 

 

	
            (B)
 	
            In the event a participant elects a lump-sum payment of the balance of a Plan Year Account after June 30 of a Plan Year, the Plan Administrator shall adjust the Plan Year Account by crediting simple interest on the balance credited to such account for the partial year ending on the last day of the month as of which such Account becomes payable at the average broker call rate of A.G. Edwards & Sons, Inc. as of the end of each month during the period from the last year-end date interest was credited until the end of the month preceding the payment date.
 

 

	
            (C)
 	
            The applicable rate for a participant who incurs a Termination of Employment before the participant attains sixty (60) years of age, for the period beginning on the January 1 of the calendar year in which such a Termination of Employment occurred, shall be the lesser of:
 

 

	
             
 	
            (i)
 	
            The average of one-half of the broker call rates of A.G. Edwards & Sons, Inc. as of the end of each month during the twelve-month period of the Plan Year, and 
 

 

	
             
 	
            (ii)
 	
            The average of the Federal Reserve discount rates as of the end of each of such twelve (12) months. 
 

 

 

	
             
 	
            - 3 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

In the event such a terminated participant is rehired before the first anniversary of his or her Termination of Employment, the applicable interest rate shall be the average broker call rate determined as if the participant had not incurred a Termination of Employment.

 

In the event such a terminated participant is rehired on or after the first anniversary of his or her Termination of Employment, the lower interest rate applicable to former employees as described above shall apply until the January 1 next following the date of reemployment of the participant, at which time the average broker call rate applicable to active employees shall again become applicable. 

 

6.           Plan Year Account Return Options – Post 1986.  On and after June 1, 2000, participants may base the return of a post-1986 Plan Year Account on the performance of one or a combination of securities (the “Funds”) designated from time to time by the Plan Administrator.  Participants will have no ownership interest in the Funds, but their Plan Year Account balance shall increase or decrease based on the performance of the designated Fund(s).  The Funds’ performance will be determined by industry acceptable performance measurement standards as determined by the Plan Administrator.  Effective December 26, 2001, the broker call rate is eliminated as a basis for determining the return for any
unvested Plan Year Account.  The Plan Administrator in its sole discretion may from time to time add or delete Funds or other return options from the list of Funds or other return options which participants may base the return for a Plan Year Account

 

From time to time, at such times and upon such effective dates as the Plan Administrator may determine, participants may change the Fund(s) they have designated by notifying the Plan Administrator or its designee in such manner as determined by the Plan Administrator.  

 

For Plan Year Accounts vested prior to December 26, 2001, for participants who choose not to base the return of a Plan Year Account on the performance of a Fund(s), the Plan Year Account will be credited interest monthly at the average of the A.G. Edwards & Sons, Inc. broker call rates determined as of the 30-day period ending in the previous month for which data is available.  For participants choosing to base the return of a Plan Year Account previously based on broker call rates on the performance of a Fund(s), the Plan Year Account will be credited interest at the previous month’s average of the A.G. Edwards & Sons, Inc. broker call rates through the effective date of the transfer from the broker call rate method.  No Plan Year Account Balance may be transferred from a Fund(s) to the broker call rate method.  No Plan Year Account can have its return based on both the
broker call rate and a Fund(s).  

 

Effective with Plan Year 2001 awards, the return on all new Plan Year Accounts must be based on the performance of a Fund(s).  The broker call rate method will no longer be a return measurement option.  The return on new Plan Year Accounts initially will be based on the performance of the Fund(s) designated for the Plan Year Accounts of the participant for the immediately preceding Plan Year, if applicable.  After the new Plan Year Account is initially directed to a Fund(s), the participant may change the Fund(s) on which the performance of the Plan Year Account is based, independent of other Plan Year Accounts.
 

	
             
 	
            - 4 -
 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

Participants who do not designate a return option for Plan Year Accounts will have the return on their Plan Year Accounts determined by a default Fund as determined by the Plan Administrator.  

 

7.           Fees Charged to Plan Year Accounts.  On and after January 1, 2001, all Plan Year Accounts based on the return of a Fund(s) will be charged an annual administration fee in the manner determined by the Plan Administrator, but in no event will the administration fee exceed 25 basis points of the Plan Year Account’s ending quarterly balance.  The administration fee shall be based on the value of the Plan Year Account(s) at the end of the quarter and charged after the end of the quarter (retroactively), not in advance.  The administration fee will apply if the return on the Plan Year Account(s) at any time during the quarter was based on a Fund(s).  The Plan Administrator in its sole discretion shall determine which
Fund(s) the administration fee will apply to.  

 

8.           Vesting Provisions for A Accounts.  The amount from time to time credited to each respective Plan Year A Account of a participant maintained for a Plan Year after 1986 shall vest at the rate for each year of service following the Plan Year for which the Basic Benefit was credited to that account of the participant, determined by the following schedule:

 

	
             
  	
            Years of Service
 	
            Vested Percentage
 

 

	
             
 	
            Less than 6
 	
            0%
 
	
             
 	
            6
 	
            100%
 
				

 

The vested percentage of each separate Plan Year Account shall be determined independently of the vested percentage of any other Plan Year Account of that participant.

 

Years of Service.  A year of service for purposes of this Paragraph means any calendar year during which the participant is employed continuously by the Company.  An approved leave of absence for medical reasons shall be treated as a period of continuous employment for vesting. Any other leave of absence shall not count as a period of continuous employment for vesting, but commencing such a leave shall not cause a Termination of Employment.  A participant shall receive no vesting credit for a calendar year unless the participant is employed continuously by the Company throughout such year.

 

 

	
             
 	
            - 5 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

Years of service completed prior to the Termination of Employment of a re-employed former participant shall be disregarded completely after the participant is rehired unless the participant is re-employed by the Company no later than the first anniversary of the Termination of Employment of the participant.  In the event such a participant is re-employed on or before the first anniversary of his or her Termination of Employment, years of service completed before and after the Termination of Employment shall be aggregated for purposes of determining the vested percentage credited to the respective Plan Year A Accounts of the participant, regardless of whether the participant engages in competition with the Company during such a period of severance.  

 

Forfeiture for Early Termination of Employment.  Effective on and after March 1, 2001, in the event of Termination of Employment of a participant, for reasons other than death or disability, before the participant attains fifty-five (55) years of age, and before the combination of full years of age plus full years of service of the participant exceeds 70, the unvested portion of the respective Plan Year A Account balances of such a participant shall be forfeited at the time of such a Termination of Employment of the participant.  In the event the participant is rehired by the Company on or
before the first anniversary of such a Termination of Employment, no portion of the Plan Year A Account balances shall be forfeited or become payable to the participant on account of such a Termination of Employment and the previously forfeited Plan Year A Account balances of the participant shall be restored and distributed to the participant as determined under the remaining provisions of this Plan (including the provision mentioned previously in this Paragraph that only complete continuous years of employment are credited for increased vesting).

 

Extended Vesting - Early Retirement.  Effective on and after March 1, 2001, upon Termination of Employment of a participant after the participant attains age fifty-five (55); or after the combination of full years of age plus full years of service of the participant exceeds 70, but before the participant attains sixty-five (65) years of age (“early retirement”), the respective Plan Year A Account balances of a participant that are not fully vested at the time the participant takes early retirement shall continue to vest as provided above, except that the time after early retirement during which the participant does not engage in competition, as defined in Article X of the Profit Sharing
Plan, shall be treated as continued employment of the participant with the Company solely for purposes of vesting.

 

In the event a participant who takes early retirement shall subsequently engage in competition, as defined in Article X of the Profit Sharing Plan, each Plan Year A Account balance of the participant that is not fully vested at the time the participant first so engages in competition shall be forfeited, unless the participant is rehired by the Company on or before the first anniversary of his or her early retirement date.

 

 

	
             
 	
            - 6 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

Accelerated Vesting at Normal Retirement.    For each respective Plan Year A Account of a participant maintained for a Plan Year before 1995, upon Termination of Employment of the participant on or after the participant attains sixty-five (65) years of age, the full amount credited to the Plan Year A Account of the participant as of the last day of the calendar year during which such Termination of Employment occurred shall become fully vested regardless of the number of years of service of the participant at such time, and shall be paid at such time or times as provided below.

 

For each respective Plan Year A Account of a participant maintained for a Plan Year after 1994, upon the Termination of Employment of the participant on or after the participant attains sixty-five (65) years of age, the respective Plan Year A Account balances of the participant that are not fully vested at the time the participant so retires shall become fully vested at the earlier of the time such accounts vest in accordance with the above six-year schedule, or the first anniversary of the date of such a Termination of Employment.  In the event a participant who so retires shall subsequently engage in competition, as defined in Article X of the Profit Sharing Plan, each Plan Year A Account balance of the participant that is not fully vested at the time the participant first so engages in competition shall be forfeited, unless the participant
is rehired by the Company on or before the first anniversary of his or her retirement date.  The balance credited to each respective Plan Year A Account of a participant that becomes fully vested after the participant so retires shall (so long as the participant is not rehired) be paid at such time or times as provided below as if the participant had incurred a Termination of Employment on the day which each such account becomes fully vested. 

 

	
             
 	
            9.
 	
            Vesting Provisions for B Accounts.
 

 

Forfeiture for Early Termination of Employment.  In the event of Termination of Employment of a participant, for reasons other than death or disability, before the participant attains fifty-five (55) years of age, and before the combination of full years of age plus full years of service of the participant exceeds 70, the unvested portion of the respective B Account balance of such a participant shall be forfeited at the time of such a Termination of Employment of the participant.  In the event the participant is rehired by the Company on or before the first anniversary of such a Termination of Employment, no portion of the B Account balance shall be forfeited on account of such a Termination of Employment and the previously
forfeited B Account balance of the participant shall be restored and paid to the participant as determined under the remaining provisions of this Plan.

 

Vesting after Retirement.  Upon Termination of Employment of a participant after the participant attains age fifty-five (55); or after the combination of full years of age plus full years of service of the participant exceeds 70, the balance remaining in the B Account at the end of each anniversary of the participant’s Termination of Employment shall vest over a six year period, as follows:  

 

	
             
 	
            1st anniversary – 17%
 	
            4th anniversary – 67%
 	
             

	
             
 	
            2nd anniversary –33%
 	
            5th anniversary – 83%
 	
             

	
             
 	
            3rd anniversary – 50%
 	
            6th anniversary – 100%
 

 

	
             
 	
            - 7 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

Vesting of the B Account shall be suspended in the event such a retired participant is rehired by the Company.  All amounts allocated to the B Account of the participant shall vest as described above upon the subsequent Termination of Employment of the participant, as if the participant had retired for the first time.

 

In the event a participant who so retires subsequently engages in competition, as defined in Article X of the Profit Sharing Plan, the B Account balance of the participant that is not fully vested at the time the participant first so engages in competition shall be forfeited, unless the participant is rehired by the Company on or before the first anniversary of his or her early retirement date.

 

The following provision is effective December 26, 2001

 

Accelerated Vesting at Normal Retirement.  Upon Termination of Employment of the participant on or after the participant attains sixty-five (65) years of age, the full amount credited to the B Account of the participant shall become fully vested upon the first anniversary of such Termination of Employment regardless of the number of years of service of the participant at such time.  In the event a participant who so retires shall subsequently engage in competition, as defined in Article X of the Profit Sharing Plan, the B Account balance of the participant that is not fully vested at the time the participant first so engages in competition shall be forfeited, unless the participant is rehired by the Company on or before the first anniversary of his or her retirement date.  The balance credited to the B Account of a participant that becomes fully vested after the
participant so retires shall (so long as the participant is not rehired) be paid as such time or times provided below as if the participant had incurred a Termination of Employment on the day the B Account becomes fully vested.

 

	
             
 	
            10.
 	
            Vesting Provisions For All Plan Year Accounts.
 

 

Forfeiture for Cause.  Notwithstanding anything to the contrary in the Plan, the entire balance credited to all respective Plan Year Accounts of a participant that are not fully vested shall be forfeited at the time of Termination of Employment in the event the participant is Terminated for Aggravated Cause, as defined in Article III of the Profit Sharing Plan.  

 

 

	
             
 	
            - 8 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

Full Vesting for Disability.  Upon the Termination of Employment of a participant on account of Total Disability (as defined in Article III of the Profit Sharing Plan), the full amount credited to all of the Accounts of the participant as of the last day of the calendar year during which such a Termination of Employment occurred shall become fully vested regardless of the number of years of service of the participant at such time, and shall be paid at such time or times as provided below.

 

Full Vesting at Death.  In the event of the death of a participant, the entire balance credited to all of the Accounts of the participant that are not forfeited on account of an event, such as Termination of Employment or engaging in competition, that occurred prior to death, whether or not vested in accordance with Paragraphs 8 and 9, shall be fully vested.

 

Full Vesting at Change in Control.  Notwithstanding the provisions prescribed in the preceding Paragraphs governing the time of vesting, the balance credited to all Plan Year Accounts of each participant shall become fully vested and nonforfeitable immediately upon a Change in Control and shall be paid to the participant in a single lump sum as soon as administratively feasible after the Change in Control occurs.

 

For purposes of this Paragraph, “Change in Control” means the occurrence of any of the following events without the prior approval of the Board of Directors:  (a) a merger, consolidation or reorganization of the Company in which the Company does not survive as an independent entity; (b) a sale of all or substantially all of the assets of the Company; (c) the first purchase of shares of Common Stock of  the Company pursuant to a tender or exchange offer for more than 20% of the Company’s outstanding shares of Common Stock; or (d) any change in control of a nature that, in the opinion of the Board of Directors, would be required to be reported under the federal securities laws; provided that such a change in control shall be deemed to have occurred if (i) any person is or becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 40% or more of the combined voting power of the Company’s then outstanding securities; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute a majority thereof unless the election of any director, who was not a director at the beginning of the period, was approved by a vote of at least 70% of the directors then still in office who were directors at the beginning of the period.

 

	
             
 	
            11.
 	
            Payment of A Accounts.
 

 

Normal Time of Payment.  Benefits payable under this Plan attributable to a Plan Year A Account that is vested at the time the participant incurs a Termination of Employment generally shall become payable after the end of the Plan Year in which the participant incurs a Termination of Employment; provided that benefits for a Plan Year after 1994 of a participant who incurs a Termination of Employment after attaining sixty-five (65) years of age shall become payable one (1) year after the Termination of Employment.  Subject to the deferral election provisions below, such benefits shall be paid to the participant in one lump-sum payment as soon as practical after such time. 

 

	
             
 	
            - 9 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

Effective on and after March 1, 2001, upon Termination of Employment of a participant after the participant attains age fifty-five (55); or after the combination of full years of age plus full years of service of the participant exceeds 70, but before the participant attains sixty-five (65) years of age (“early retirement”), the balance credited to a Plan Year A Account of the participant that becomes fully vested after the participant takes early retirement shall (so long as the participant is not rehired) be paid at such time or times as if the participant had incurred a Termination of Employment on the day on which each such account becomes fully vested. 

 

Notwithstanding the above, benefits payable under this Plan attributable to a Plan Year A Account of a participant maintained for a Plan Year after 1986 that was fully vested on August 20, 1999, shall be payable at such time or times as determined in accordance with the terms of this Plan (including elective deferred payment date rules) as in effect before the adoption of the 1999 Restatement. 

 

Accelerated Lump Sum Payment.  A participant may elect to receive a lump sum distribution of the benefits payable under this Plan attributable to a Plan Year A Account that is vested.  If such an election is made in the first six (6) months of the Plan Year, the Plan Year Account shall become payable after the end of the Plan Year in which the participant made the election.  If such an election is made in the last six (6) months of the Plan Year, the Plan Year Account shall become payable after the end of the sixth full calendar month beginning after the participant made the election.  An election to receive an accelerated lump sum payment of a Plan Year A Account balance shall be irrevocable.

 

Installment Payments.  A participant may elect installment payments of the balances credited to his or her respective Plan Year A Accounts in lieu of a normal lump-sum distribution, subject to the following:

 

	
            (A)
 	
            A participant may elect to receive five (5) annual installment payments of the balance of a Plan Year A Account, with the first payment payable at the time a normal lump-sum distribution of such balance would have been paid but for such election, and each of the next four (4) annual installment payments payable as of the next four (4) anniversaries of such date; except that in the case of a participant who has attained sixty-five (65) years of age whose benefit is payable one (1) year after Termination of Employment, the first payment shall be payable after the end of the second Plan Year after Termination of Employment, and each of the next four (4) annual installment payments payable after the end of the next four Plan Years; and
 

 

	
             
 	
            - 10 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

	
            (B)
 	
            The first installment payment shall equal one-fifth (1/5) of the balance of such Plan Year A Account payable to the participant as of the normal payment date, the second installment payment shall equal one-fourth (1/4) of the remaining balance of such account as of the last day of the Plan Year immediately preceding the payment, the third installment payment shall equal one-third (1/3) of the remaining balance of such account as of the last day of the Plan Year immediately preceding the payment, the fourth installment payment shall equal one-half (1/2) of the remaining balance of such account as of the last day of the Plan Year immediately preceding the payment, and the fifth installment payment shall equal the entire remaining balance of such account as of the last day of the Plan Year immediately preceding the payment.
 

 

General Deferral Election.  Effective March 1, 2001, a participant may elect to defer payment of a Plan Year A Account balance in a lump sum payment to the end of the first, second, third, fourth, or fifth year following the year in which the participant incurs a Termination of Employment.  Such an election shall be made within (60) days after Termination of Employment but no later than December 31 of the year in which the participant incurs a Termination of Employment.

 

Age 65 Deferral Election.  A participant who has attained sixty-five (65) years of age may elect to defer payment of a Plan Year A Account in one lump sum until after the end of the first, second, third, fourth or fifth year following the year in which the participant Retires, regardless of any previous election with respect to such Plan Year Account.  Effective March 1, 2001, such an election shall be made no later than six (6) months before the day the Plan Year Account first becomes payable without regard to any election.  For purposes of this Paragraph, “Retire” means the Termination of Employment of a participant after the participant attains sixty-five (65) years of age.

 

Election Procedures.  Effective March 1, 2001, except as otherwise explicitly provided in this Paragraph, an election made pursuant to this Paragraph shall be made within sixty (60) days after termination or retirement but no later than December 31 in the year of termination or retirement; except that in the case of a participant who has attained age sixty-five (65) years of age electing installment payments, such an election shall be made no later than six (6) months before the day the Plan Year Account first becomes payable without regard to any election.  An election to receive installment payments or to defer a benefit pursuant to this Paragraph must be delivered to the Plan Administrator at such time and in such form and manner as is acceptable to the Plan Administrator. An election shall be irrevocable after the deadline for making such election.  A participant may elect a payment with respect to each Plan Year A Account independently of any other Plan Year A Account. 

	
             
 	
            - 11 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

Payments scheduled to be made after the end of a Plan Year shall be made as soon as administratively practicable after the end of the year. 

 

	
             
 	
            12.
 	
            Payment of B Accounts.
 

 

Normal Time of Payment.  The vested portion of the  B Account shall become payable on the date such portion becomes vested in accordance with Paragraph 9 or 10, whichever is applicable, and shall be paid in a lump sum payment as soon as administratively feasible after such time.

 

Deferral Election.  A participant may elect to defer payment of the vested amount, which otherwise would be paid each year at the time of vesting, to the following annual payment date.  On the following annual payment date, the cumulative deferral (the current year vested portion and any previous year deferred payments) may be deferred to the following annual payment date.  However, the Plan Year B Account will become payable when such account becomes fully vested, with no further elective deferrals after that time. 

 

Except as otherwise explicitly provided in this Paragraph, an election made pursuant to this Paragraph shall be made no later than sixty (60) days before the amount would otherwise become payable; except in the case of a participant who has attained age sixty-five (65) years of age, such an election shall be made no later than six (6) months before the day the B Account first becomes payable (as explained below). 

 

Effective December 26, 2001

 

Lump Sum Payment.  A participant who has attained sixty-five (65) years of age may elect to defer payment of  the B Account in one lump sum until after the end of the first second, third, fourth or fifth year following the year in which the participant Retires.  Such election shall be made no later than six (6) months before the day the B Account first becomes payable.  For purposes of this Paragraph, "Retire" means the Termination of Employment of a participant after the participant attains sixty-five (65) years of age.

 

Installment Payments.  A participant who has attained sixty-five (65) years of age may elect installment payments credited to his or her respective B Account in lieu of a normal lump-sum distribution, subject to the following:

 

 

	
             
 	
            - 12 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

	
            (A)
 	
            The first payment shall be payable after the end of the second Plan Year after Termination of Employment, and each of the next four (4) annual installment payments payable after the end of the next four Plan Years.
 

 

	
            (B)
 	
            The first installment payment shall equal one-fifth (1/5) of the balance of such B Account payable to the participant as of the normal payment date, the second installment shall equal one-fourth (1/4) of the remaining balance of such account as of the last day of the Plan Year immediately preceding the payment, the third installment payment shall equal one-third (1/3) of the remaining balance of such account as of the last day of the Plan Year immediately preceding the payment, the fourth installment payment shall equal one-half (1/2) of the remaining balance of such account as of the last day of the Plan Year immediately preceding the payment, and the fifth installment payment shall equal the entire remaining balance of such account as of the last day of the Plan Year immediately preceding the payment.
 

 

Such election shall be made no later than six (6) months before the day the B Account first becomes payable.

 

An election to receive installment payments or to defer a payment pursuant to this Paragraph must be delivered to the Plan Administrator at such time and in such form and manner as is acceptable to the Plan Administrator. An election shall be irrevocable after the deadline for making such election.  

 

13.        Payment Upon Change in Control.  Notwithstanding the provisions prescribed in the preceding Paragraphs governing the time of payment, the balance credited to all Plan Year Accounts of each participant be paid to the participant in a single lump sum as soon as administratively feasible after the Change in Control, as defined in Paragraph 10, occurs.

 

14.        Payment Upon Death.  In the event of the death of a participant, the entire balance credited to all Accounts of the participant at the time of the death of the participant shall be paid to the beneficiary in a single lump sum as soon as administratively practical after the death of the participant, or in five (5) annual installment payments (each in the amount described in subparagraph (B) of Paragraph 11), as determined by the Plan Administrator in its sole discretion.

 

Each participant may designate any person or persons, including a trust (concurrently, contingently, or successively) to whom his benefits under this Plan are to be paid if the participant dies before receipt of all such benefits.  A beneficiary designation shall be effective only if made in writing in a form suitable to the Plan Administrator and filed with the Plan Administrator by the participant.  Each participant may change a beneficiary designation from time to time.  If a participant shall fail to designate a beneficiary pursuant to this Plan, the beneficiary under this Plan shall be the beneficiary of such participant determined pursuant to the Profit Sharing Plan.

 

	
             
 	
            - 13 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

15.        Severance Plan Override.  Notwithstanding the provisions prescribed in the preceding Paragraphs, the provisions governing amounts credited to Accounts of Participants may be modified, as determined by the Plan Administrator, to conform to the terms, conditions and provisions of the A.G. Edwards, Inc. Severance Benefit Plan, including any Appendix thereto.

 

16.        Amendment or Discontinuance.  A.G. Edwards, Inc. reserves the right to amend, alter or discontinue this Plan at any time, provided that no such amendment, alteration or discontinuance may cause any forfeiture or diminution of the rights and benefits under this Plan in which a participant shall have become vested on or before the date of such amendment, alteration or discontinuance.  Such action may be taken by an instrument in writing signed by the President of A.G. Edwards, Inc. or by any other officer or committee who has been duly authorized by the Board of Directors of A.G. Edwards, Inc.

 

17.        Plan Administrator.  The Plan Administrator of this Plan shall be the Plan Administrator appointed under the Profit Sharing Plan, and shall have all of the authority, rights and duties to administer this Plan as is assigned to the Plan Administrator to administer the Profit Sharing Plan.

 

18.        Unfunded.  Benefits payable under this Plan shall be paid by the respective employer of each participant out of its general assets.  A participant shall have no rights with respect to benefits under this Plan other than the unsecured right to receive payments from the Company as provided herein.  The Company shall not be obligated to set aside, earmark or escrow any funds or other assets to satisfy its obligations hereunder.  Any benefit payable hereunder shall not be represented by a note or any evidence of indebtedness other than the promises contained in this Plan.  No benefit or any part thereof which shall be payable hereunder shall be subject in any manner to anticipation, alienation, transfer, sale, assignment, pledge, encumbrance, garnishment, attachment,
execution, or the claims of creditors of any person having an interest hereunder, nor be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of such person.

 

19.        Definitions and Rules of Construction.  The terms and provisions of this Plan shall be construed as defined in, and in accordance with the meaning under, the Profit Sharing Plan.  Reference to a particular section or article of the Profit Sharing Plan shall refer to the section or article of such Plan as in effect on the date of adoption of this Plan or any comparable section or sections, or article or articles of any future plan document that amends, supplements or supersedes said section.

 

	
             
 	
            - 14 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

20.        Official Actions.  Any action required to be taken by the Board of Directors of A.G. Edwards, Inc. pursuant to this Plan may be performed by any person or persons, including a committee, to which the Board of Directors of A.G. Edwards, Inc. delegates the authority to take actions of that kind.  Whenever under the terms of this Plan a corporation is permitted or required to take some action, such action may be taken by an officer of the corporation who has been duly authorized by the Board of Directors of such corporation to take actions of that kind, and if no such authorization is given by the Board, by the President of such corporation.

 

21.        Tax Withholding.  The Company will withhold any amount otherwise payable under this Plan as necessary to enable it to remit to the appropriate government entity or entities on behalf of the Employee the amount required to be withheld from wages with respect to benefits under this Plan.

 

 

IN WITNESS WHEREOF, A.G. Edwards, Inc. has adopted the foregoing amendment this 27th day of August,           2002.

 

 

	
             
 	
            A.G. EDWARDS, INC.
 

 

 

 

	
             
 	
            By:
 	
            /s/ Robert L. Bagby      
 

 

	
             
 	
            Title:
 	
            Chairman                      
 

ATTEST:

	
             
 	
            /s/ Douglas L. Kelly
 

 

 

	
             
 	
            - 15 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

 FIRST AMENDMENT

A.G. EDWARDS, INC.

EXCESS PROFIT SHARING

DEFERRED COMPENSATION PLAN

2002 RESTATEMENT

 

 

The A.G. Edwards, Inc. Excess Profit Sharing Deferred Compensation Plan (the “Plan”) originally effective beginning with the 1983 calendar year.  The Plan was amended and restated as of January 1, 1987, January 1, 1994, January 1, 1995, August 20, 1999, and February 22, 2001.  As of February 28, 2001, all existing post 1986 Plan Year Accounts were designated Plan Year A Accounts.  Beginning with the 2001 Plan Year, awards are allocated evenly between an A Account and a B Account.  Amounts allocated to B Accounts are subject to different vesting and payment provisions, as set forth in this restated instrument.  

 

A.G. Edwards, Inc., now wishes to amend the Plan allow the Plan Administrator to impose transfer restrictions on return options and to provide accelerate vesting and of benefits for certain Participants in conjunction with the sale of CPI Qualified Plan Consultants, Inc. by A.G. Edwards, Inc.  

 

NOW THEREFORE, the Plan is hereby amended as follows:

 

	
             
 	
            1.
 	
            Effective February 20, 2004, the following paragraph is added as the last paragraph of existing paragraph 7:
 

 

The Plan Administrator may from time to time impose transfer restrictions as to how often a participant may change his or her designation of a return option.  The Plan Administrator may from time to time impose a redemption fee to be charged to a participant’s Account or Accounts for violation of such transfer restrictions or may take other actions including blocking or reversing transactions to enforce such restrictions.

 

	
             
 	
            2.
 	
            Effective March 15, 2004, an additional paragraph is added to paragraph 10 as follows:
 

 

Accelerated Vesting Upon Sale of CPI.  Upon the Termination of Employment of a Participant on the account of the sale of CPI Qualified Plan Consultants, Inc. by A.G. Edwards, Inc., the full amount credited to all the Accounts of the participant at the time of Termination of Employment shall become fully vested regardless of the number of years of service of the participant at such time, and shall be paid at such time or times as provided below.

 

	
             
 	
            - 16 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

IN WITNESS WHEREOF, the undersigned as Secretary of A.G. Edwards, Inc. hereby certifies that this First Amendment was duly adopted by A.G. Edwards, Inc.

 

 

	
             
 	
            By:
 	
            /s/ Douglas L. Kelly                
 

 

 

	
             
 	
            Title:
 	
            Corporate Secretary                  
 

 

 

	
             
 	
            - 17 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

SECOND AMENDMENT

A.G. EDWARDS, INC.

EXCESS PROFIT SHARING

DEFERRED COMPENSATION PLAN

2002 RESTATEMENT

 

 

The A.G. Edwards, Inc. Excess Profit Sharing Deferred Compensation Plan (the “Plan”) was originally effective beginning with the 1983 calendar year.  The Plan has been amended from time to time, most recently in the form of a restated plan document dated August 22, 2002 (the “2002 Restatement”) and a First Amendment to such Restatement.

 

A.G. Edwards, Inc. now wishes to amend the Plan.

 

NOW THEREFORE, the Plan is hereby amended as follows:

 

	
             
 	
            1.
 	
            The first paragraph of existing Paragraph 6 is restated as follows:
 

 

Plan Year Account Return Options – Post 1986.  On and after June 1, 2000, participants may base the return of a post-1986 Plan Year Account on the performance of one or a combination of securities (the “Funds”) designated from time to time by the Investment Committee.  Participants will have no ownership interest in the Funds, but their Plan Year Account balance shall increase or decrease based on the performance of the designated Fund(s).  The Funds’ performance will be determined by industry acceptable performance measurement standards as determined by the Investment Committee.  Effective December 26, 2001, the broker call rate is eliminated as a basis for determining the return for any unvested Plan Year Account.  

 

The Investment Committee in its sole discretion may from time to time add or delete Funds or other return options from the list of Funds or other return options which participants may base the return for a Plan Year Account.

 

2.           The following paragraph is added as the second to last paragraph of existing Paragraph 9:

 

Vesting After Age 65.  The full amount credited to the B Account of the participant shall become fully vested on December 31 of the year in which the participant attains sixty-five (65) years of age and all subsequent amounts credited to the B Account of the participant shall vest on December 31 of the year awarded in which the amount is credited to the B Account.

 

	
             
 	
            - 18 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

	
             
 	
            3.
 	
            The last paragraph of Paragraph 9 is restated as follows:
 

 

Accelerated Vesting at Normal Retirement.  Upon the Termination of Employment of the participant on or after the participant attains age sixty-five (65) years of age, the unvested balance of the B Account of the participant shall become fully vested upon the first anniversary of such Termination of Employment regardless of the number of years of service of the participant at such time.  In the event a participant who so retires subsequently engages in competition, as defined in Paragraph 23 of this Plan, the B Account balance of the participant that is not fully vested at the time the participant first so engages in competition shall be forfeited, unless the participant is rehired by the Company on or before the first anniversary of his or her retirement date.  The balance credited to the B Account of a participant that becomes fully vested
after the participant so retires shall (so long as the participant is not rehired) be paid as such time or times provided below as if the participant had incurred a Termination of Employment on the day the B Account becomes fully vested.

 

4.           Change the heading of existing Paragraph 11 to read: Payment of A Accounts -- Pre-1999 Plan Years.

 

	
             
 	
            5.
 	
            Add Paragraph 12 as follows and renumber remaining Paragraphs as applicable:
 

 

	
             
 	
            Payment of A Accounts – Post 1998 Plan Years.
 

 

Normal Time of Payment.  Benefits payable under this Plan attributable to a Plan Year A Account shall become payable upon vesting and paid as soon as administratively practical after such time; provided that Benefits for a Plan year of a participant who incurs a Termination of Employment after attaining sixty-five (65) years of age shall become payable one (1) year after the Termination of Employment.  Subject to the deferral election provisions below, such benefits shall be paid to the participant in one-lump sum payment as soon as practical after such time.

 

Upon Termination of Employment of a participant after the participant attains age fifty-five (55); or after the combination of full years of age plus full years of service of the participant exceeds 70, but before the participant attains sixty-five (65) years of age (“early retirement”), the balance credited to a Plan Year A Account of the participant that becomes fully vested after the participant takes early retirement shall (so long as the participant is not rehired) become payable upon vesting and paid as soon as administratively practical after such time. 

 

	
             
 	
            - 19 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

General Deferral Election.  A participant may elect to defer payment of a Plan Year A Account balance in a lump sum payment for a period of at least five (5) years from the normal time of payment.  Such an election shall be made no later than twelve (12) months before the normal time of payment.  A participant may again elect a further deferred payment date that is at least five years later than the previously scheduled payment date.  Such a subsequent election also shall be made no later than twelve (12) months before the previously scheduled payment date.

 

Election Procedures.  An election to defer a benefit pursuant to this Paragraph must be delivered to the Plan Administrator at such time and in such form and manner as is acceptable to the Plan Administrator.  An election shall be irrevocable after the deadline for making such election.  A participant may elect a payment with respect to each Plan Year A Account independently of any other Plan Year A Account.

 

A payment scheduled to be made after the end of a Plan Year shall be made as soon as administratively practicable after the end of the year.

 

Notwithstanding any of the payment provisions noted in this Paragraph, a participant will receive payment of all vested monies the earlier of 1) 5 years following termination of employment; or 2) his or her scheduled fixed payment date.

 

	
             
 	
            6.
 	
            Existing Paragraph 12 is restated as follows:
 

 

	
             
 	
            13.
 	
            Payment of B Accounts.
 

 

Normal Time of Payment.  The vested portion of the B Account shall become payable on the date such portion becomes vested in accordance with Paragraph 9 or 10, whichever is applicable, and shall be paid in a lump sum payment as soon as administratively practicable after such time. 

 

 

	
             
 	
            - 20 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

 

Age 65 Deferral Election.  Provided the participant is employed by the Company, the participant may elect to defer payment of his or her B Account balance in a lump sum payment for a period of at least five (5) years from the normal time of payment.  Such an election shall be made no later than twelve (12) months prior to the normal time of payment.

 

Election Procedures.  An election to defer pursuant to this Paragraph must be delivered to the Plan Administrator at such time and in such form and manner as is acceptable to the Plan Administrator.  An election shall be irrevocable after the deadline for making such election.

 

Notwithstanding any of the payment provisions noted in this Paragraph, a participant will receive payment of all vested monies the earlier of 1) 5 years following termination of employment; or 2) his or her scheduled fixed payment date.

 

	
             
 	
            7.
 	
            The first paragraph of existing Paragraph 14 is restated as follows:
 

 

Payment Upon Death.  In the event of the death of a participant, the entire balance credited to all Accounts of the participant at the time of the death of the participant shall be paid to the beneficiary in a single lump sum as soon as administratively practical after the death of the participant as determined by the Plan Administrator in its sole discretion.

 

	
             
 	
            8.
 	
            The following is added as the second paragraph to existing Paragraph 16:
 

 

The Plan Administrator may adopt policies and procedures necessary or advisable to implement the Treasury Department’s temporary regulations relating to the American Jobs Creation Act of 2004 (the “2004 Act”).  The Executive Committee of A.G. Edwards, Inc. may approve any Plan amendments necessary or advisable to implement such temporary regulations of the 2004 Act.

 

	
             
 	
            9.
 	
            Add Paragraph 19 as follows:
 

 

Investment Committee.  The Plan Administrator shall appoint an Investment Committee to serve at its pleasure.  The members of the Investment Committee may be a corporation (including the Sponsor), one or more individuals or any combination of the above.  The Plan Administrator may change such appointments from time to time provided that such changes are published to the 

 

	
             
 	
            - 21 -
 

 

	
            A.G. Edwards, Inc.

Excess Profit Sharing

Deferred Compensation Plan

2002 Restatement

 
 

 

 

extent of enabling interested parties to ascertain the person or persons responsible for operating the Plan.

 

In the absence of such an appointment, the Compensation Committee of A.G. Edwards & Sons, Inc. shall serve as the Investment Committee.

 

Any member serving on the Investment Committee may, but need not, be an employee, and may, but need not, be a participant.  Any member shall serve, in the case of natural persons until his death, resignation or removal and in the case of a corporation until its liquidation, resignation or removal.  The Compensation Committee of A.G. Edwards & Sons, Inc. in its sole discretion, may remove any member of the Investment Committee at any time.  A member serving on the Investment Committee may resign by delivering a written resignation to the Compensation Committee of A.G. Edwards & Sons, Inc.

 

All resolutions and other actions of the Investment Committee may be adopted and effected by a majority of a quorum of the Investment Committee at the time of such action.  A quorum of the Investment Committee shall be comprised of no fewer than fifty percent (50%) of the members then serving.  An action of the Investment Committee also shall be valid if concurred in by unanimous written consent in lieu of a meeting.  A member may participate in a meeting by means of a conference telephone or similar communications equipment.

 

The Investment Committee may appoint one or more of its members to carry out any particular duty or duties or to execute any and all documents.  Any documents so executed shall have the same effect as if executed by all such persons.  Such appointment shall be made by an instrument in writing that specifies which duties and powers are so allocated and to whom each such duty or power is so allocated.

 

IN WITNESS WHEREOF, the undersigned as Secretary of A.G. Edwards, Inc. hereby certifies that this Second Amendment was duly adopted by A.G. Edwards, Inc.

 

	
             
 	
            By:
 	
            /s/ Douglas L. Kelly                
 

 

 

	
             
 	
            Title:
 	
            Corporate Secretary                  
 

 

 

 

	
             
 	
            - 22 -

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