Document:

Exhibit
10.16

 

COHERENT, INC.

 

2005 DEFERRED COMPENSATION PLAN

 

 

PREAMBLE

 

This Coherent, Inc.
2005 Deferred Compensation Plan is adopted by Coherent, Inc. for the
benefit of certain of its Employees and members of its Board of Directors,
effective as of January 1, 2005 (the “Effective Date”).  The purpose of the Plan is to provide
supplemental retirement income and to permit eligible Participants the option
to defer receipt of Compensation, pursuant to the terms of the Plan.  The Plan is intended to be an unfunded
deferred compensation plan maintained for the benefit of a select group of
management or highly compensated employees under sections 201(2), 301(a)(3) and
401(a)(1) of ERISA and is intended to comply with Section 409A of the
Internal Revenue Code.  Participants
shall have the status of unsecured creditors of Coherent, Inc. with
respect to the payment of Plan benefits.

 

From and after the
Effective Date, this Plan replaces the Coherent, Inc. 1995 Deferred
Compensation Plan, the Coherent, Inc. Supplementary Retirement Plan and
the Director Deferred Compensation Plan, which have been frozen to new
deferrals as of December 31, 2004 so as to qualify these prior plans for “grandfather”
treatment under Internal Revenue Code Section 409A.

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I Definitions

  	
  1

  
	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
   

  
	
  ARTICLE II Participation

  	
  4

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Date of Participation

  	
  4

  
	
  2.2

  	
  Resumption of Participation Following Return to Service

  	
  4

  
	
  2.3

  	
  Change in Employment Status

  	
  5

  
	
   

  	
   

  
	
  ARTICLE III

  	
  5

  
	
   

  	
   

  
	
  Contributions

  	
  5

  
	
   

  	
   

  
	
  3.1

  	
  Deferral Contributions

  	
  5

  
	
  3.2

  	
  Accounts

  	
  6

  
	
  3.3

  	
  Company Contributions

  	
  7

  
	
  3.4

  	
  Cancellation of Elections Due to 401(k) Hardship Withdrawal or
  Unforeseeable Emergency Distribution

  	
  7

  
	
   

  	
   

  
	
  ARTICLE IV Participants’ Accounts

  	
  8

  
	
   

  	
   

  
	
  4.1

  	
  Individual Accounts

  	
  8

  
	
  4.2

  	
  Accounting for Distributions

  	
  8

  
	
  4.3

  	
  Separate Accounts

  	
  8

  
	
   

  	
   

  
	
  ARTICLE V Investment of Contributions

  	
  8

  
	
   

  	
   

  
	
  5.1

  	
  Manner of Investment

  	
  8

  
	
  5.2

  	
  Investment Decisions

  	
  9

  
	
   

  	
   

  
	
  ARTICLE VI Distributions

  	
  9

  
	
   

  	
   

  
	
  6.1

  	
  Certain Distributions to Participants and Beneficiaries

  	
  9

  
	
  6.2

  	
  Subsequent Election to Delay or Change Form of Payment

  	
  10

  
	
  6.3

  	
  Lump-Sum Distribution Timing

  	
  11

  
	
  6.4

  	
  Installment Amounts

  	
  11

  
	
  6.5

  	
  Unforeseeable Emergency Distributions

  	
  11

  
	
  6.6

  	
  Scheduled In-Service Distribution

  	
  12

  
	
  6.7

  	
  Death

  	
  12

  
	
  6.8

  	
  Notice to Trustee

  	
  13

  
	
  6.9

  	
  Time of Distribution

  	
  13

  
	
  6.10

  	
  Limitation on Distributions to Covered Employees Prior to a Change of
  Control

  	
  13

  
	
  6.11

  	
  Domestic Relations Order Distributions

  	
  13

  
	
  6.12

  	
  Conflicts of Interest and Ethics Rules Distributions

  	
  13

  

 

i

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  6.13

  	
  FICA and Related Income Tax Distribution

  	
  14

  
	
  6.14

  	
  State, Local and Foreign Tax Distribution

  	
  14

  
	
  6.15

  	
  Code Section 409A Distribution

  	
  14

  
	
  6.16

  	
  Tax Withholding

  	
  14

  
	
  6.17

  	
  Special 2008 Election

  	
  14

  
	
   

  	
   

  
	
  ARTICLE VII Change of Control

  	
  14

  
	
   

  	
   

  
	
  7.1

  	
  No New Participants Following Change of Control

  	
  14

  
	
  7.2

  	
  Discretionary Termination and Accelerated Plan Distributions 30 Days
  Prior to or Within 12 Months Following a Change in Control

  	
  14

  
	
   

  	
   

  
	
  ARTICLE VIII Termination Due to Corporate
  Dissolution or Pursuant to Bankruptcy Court Approval

  	
  15

  
	
   

  	
   

  
	
  8.1

  	
  Corporate Dissolution

  	
  15

  
	
  8.2

  	
  Bankruptcy Court Approval

  	
  15

  
	
   

  	
   

  
	
  ARTICLE IX Amendment and Termination

  	
  15

  
	
   

  	
   

  
	
  9.1

  	
  Amendment by Employer

  	
  15

  
	
  9.2

  	
  Retroactive Amendments

  	
  15

  
	
  9.3

  	
  Plan Deferral Termination

  	
  15

  
	
  9.4

  	
  Distribution upon Certain Plan Terminations

  	
  15

  
	
   

  	
   

  
	
  ARTICLE X The Trust

  	
  16

  
	
   

  	
   

  
	
  10.1

  	
  Establishment of Trust

  	
  16

  
	
   

  	
   

  
	
  ARTICLE XI Miscellaneous

  	
  16

  
	
   

  	
   

  
	
  11.1

  	
  Limitation of Rights

  	
  16

  
	
  11.2

  	
  Nontransferability; Domestic Relations Orders

  	
  16

  
	
  11.3

  	
  Facility of Payment

  	
  16

  
	
  11.4

  	
  Information between Employer and Trustee

  	
  16

  
	
  11.5

  	
  Notices

  	
  16

  
	
  11.6

  	
  Governing Law

  	
  17

  
	
  11.7

  	
  No Guarantees Regarding Tax Treatment; Disclaimer

  	
  17

  
	
   

  	
   

  
	
  ARTICLE XII Plan Administration

  	
  17

  
	
   

  	
   

  
	
  12.1

  	
  Powers and responsibilities of the Administrator

  	
  17

  
	
  12.2

  	
  Nondiscriminatory Exercise of Authority

  	
  18

  
	
  12.3

  	
  Claims and Review Procedures

  	
  18

  
	
  12.4

  	
  Exhaustion of Claims Procedure and Right to Bring Legal Claim

  	
  21

  
	
  12.5

  	
  Plan’s Administrative Costs

  	
  21

  

 

ii

 

ARTICLE I

Definitions

 

1.1                                 Definitions. 
Wherever used herein, the following terms have the meanings set forth below,
unless a different meaning is clearly required by the context:

 

(a)                                  “Account”
means an account established on the books of the Employer for the purpose of
recording amounts credited on behalf of a Participant and any expenses, gains
or losses included thereon.

 

(b)                                 “Administrator”
means the Employer, or the Committee, if one has been designated by such
Employer.

 

(c)                                  “Bankruptcy
Court Approval” means the approval of a bankruptcy court pursuant to 11
U.S.C. § 503(b)(1)(A).

 

(d)                                 “Beneficiary”
means the person or persons entitled under Section 6.7 to receive benefits
under the Plan upon the death of a Participant.

 

(e)                                  “Change
of Control Event” means a change in ownership or effective control of the
Company or in the ownership of a substantial portion of the Company’s assets,
as defined under Code Section 409A.

 

(f)                                    “Code”
means the Internal Revenue Code of 1986, as amended from time to time.

 

(g)                                 “Code
Section 409A” means Code Section 409A and the proposed or final
(as applicable) Treasury regulations and other official guidance promulgated
thereunder.

 

(h)                                 “Code
Section 409A Distribution” means a distribution pursuant to Section 6.15
hereof.

 

(i)                                     “Committee”
means the Deferred Compensation Committee composed of three or more individuals
appointed by the Compensation Committee of the Board of Directors of the
Employer, or following a Change of Control, appointed by the Committee, to
function as the Administrator.  Once
appointed, the Deferred Compensation Committee shall interpret and administer
this Plan and take such other actions as may be specified herein.

 

(j)                                     “Company”
means the Employer and any of its Subsidiaries.

 

(k)                                  “Compensation”
means (i) with respect to Eligible Employees, base salary, commissions,
variable compensation plan bonuses, and, to the extent that they qualify as
Sales Commissions under Code Section 409A, sales commission plan bonuses
and sales incentive bonuses, including amounts that are otherwise excludable
from the gross income of the Participant

 

1

 

under a salary reduction
agreement by reason of the application of Sections 125 or 402(a)(8) of the
Code, and (ii) with respect to Outside Directors, all cash retainers and
cash meeting fees, excluding expense reimbursements.  Compensation does not include any severance
payments or benefits.

 

(l)                                     “Corporate
Dissolution” means a dissolution of the Company that is taxed under Code Section 331.

 

(m)                               “Deferral
Contributions” means, for each Participant, the amount deferred pursuant to
Section 3.1 hereof.

 

(n)                                 “Disability”
means the Participant (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, or (ii) is, by
reason of any medically determinable physical or mental impairment which can be
expected to last for a continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than three (3) months
under an accident and health plan covering Company employees.

 

(o)                                 “Domestic
Relations Order” means a court order that qualifies as a domestic relations
order under Code Section 414(p)(1)(B).

 

(p)                                 “Eligible
Participant” means (i) any employee with an annual base salary in
excess of the amount specified by the Committee, (ii) any Outside
Director, and (iii) any other employees designated as eligible by the
Committee.

 

(q)                                 “Employee”
means any employee of the Employer.

 

(r)                                    “Employer”
means Coherent, Inc. and any successors and assigns unless otherwise
provided herein.

 

(s)                                  “Entry
Date” means (i) January 1 (which is also the Entry Date for
employees who are promoted or given a base salary increase so as to become an
Eligible Participant for the first time and for re-hires who were previously
Eligible Participants), (ii) for new employees who are Eligible
Participants (including re-hires who were not previously Eligible
Participants), the first day of the next payroll period commencing after the
next paydate following receipt of their deferral election by the Company; provided,
however, that such new employee’s deferral election must be submitted no later
than 30 days following their becoming newly eligible, or (iii) for
Non-Employee Directors who are Eligible Participants for the first time, the
first day of the next Company fiscal quarter following their becoming a
Non-Employee Director; provided, however, that such new Non-Employee Director’s
deferral election must be submitted no later than 30 days following their
becoming a newly eligible Non-Employee Director.

 

(t)                                    “ERISA”
means the Employee Retirement Income Security Act of 1974, as from time to time
amended.

 

2

 

(u)                                 “FICA
Amount” means the aggregate Federal Insurance Contributions Act (FICA) tax
imposed on any Account under Code Sections 3101, 3121(a) and 3121(v)(2),
as applicable and any corresponding tax withholding provisions of applicable
state, local or foreign tax laws as a result of the payment of the FICA amount.

 

(v)                                 “401(k) Plan” means the Coherent, Inc.
Employee Retirement and Investment Plan.

 

(w)                               “Outside
Director” means a member of the Board whom is not an Employee.

 

(x)                                   “Participant”
means any Employee or Outside Director who participates in the Plan in
accordance with Article 2 hereof.

 

(y)                                 “Plan”
means this Coherent, Inc. 2005 Deferred Compensation Plan.

 

(z)                                   “Plan
Year” means the 12-consecutive month period beginning January 1 and
ending December 31.

 

(aa)                            “Prior
Plans” means the Coherent, Inc. 1995 Deferred Compensation Plan, the
Coherent, Inc. Supplementary Retirement Plan and the Director Deferred
Compensation Plan.

 

(bb)                          “Retirement”
means a Participant’s Separation from Service after attaining 50 years of age.

 

(cc)                            “Sales
Commission”   means “sales commission compensation” as such
term is defined in Treasury Regulation §1.409A-2(a)(12)(i).

 

(dd)                          “Separation
From Service” means a separation from service as defined under Code Section 409A.  For this purpose, the employment relationship
will be treated as continuing intact while the Participant is on military
leave, sick leave or other bona fide leave of absence, except that if the
period of such leave exceeds six (6) months and the Participant does not
retain a right to re-employment under an applicable statute or by contract,
then the employment relationship will be deemed to have terminated on the first
day immediately following such six-month period.  A leave of absence constitutes a bona fide
leave of absence only if there is a reasonable expectation that the Participant
will return to perform services for the Company.

 

(ee)                            “Specified
Employee” means a Participant who, as of the date of his or her Separation
from Service, is a key employee of the Company. 
For this purpose, a Participant is a key employee if he or she meets the
requirements of Code section 416(i)(1)(A)(i), (ii) or (iii) (disregarding Code section
416(i)(5)).  As of 2008, this generally
includes (i) the top fifty (50) Company officers with compensation greater
than $150,000 per year, (ii) a 5% owner of the Company, or (iii) a 1%
owner of the Company with compensation greater than $150,000 per year.  For purposes of the preceding sentence, “compensation”
means compensation as such term is defined in the 401(k) Plan for Code
section 415 purposes.  The determination
of who is a Specified Employee shall be made on December 31 of each year
and shall include any employee who qualified

 

3

 

as a Specified Employee
at any time during the preceding twelve-month period.  Once so determined, the list of Specified
Employees shall be initially effective on the following April 1 and shall
remain effective for twelve months (i.e., through March 31 of the
following year).

 

(ff)                                “Subsidiary”
means a subsidiary of the Employer, as such term is defined in Code section
424(f).

 

(gg)                          “Trading
Day” means a day upon which the major U.S. national stock exchanges are
open for trading.

 

(hh)                          “Trust”
means the trust fund established pursuant to the terms of the Plan.

 

(ii)                                  “Trustee”
means the corporation or individuals named in the agreement establishing the
Trust and such successor and/or additional trustees as may be named in
accordance with the Trust Agreement.

 

(jj)                                  “Unforeseeable
Emergency” means (a) a severe financial hardship to a Participant
resulting from an illness or accident of the Participant or his or her spouse,
beneficiary or dependent (as defined in section 152 of the Code, but without
regard to subsections (b)(1), (b)(2) and (d)(1)(B) thereof), (b) loss
of the Participant’s property due to casualty (including the need to rebuild a
home following damage to a home not otherwise covered by insurance, for
example, not as a result of a natural disaster), or (c) other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant.

 

(kk)                            “Year
of Service” means a period of 12 consecutive months during which the
Participant is employed by the Employer or serves as a Board member.  Service commences on the date the Participant
first commences service for the Employer and ends on the date that the
Participant quits, retires, is discharged, is determined to be Totally Disabled
or dies.

 

(ll)                                  “Valuation
Date” means (i) for re-allocations of amounts previously deferred, the
date of re-allocation, or, if that date is not a Trading Day, then the next
Trading Day, (ii) for
distributions hereunder, the last day of the preceding month, or, if that day
is not a Trading Day, then the most recently concluded Trading Day,  and (iii) for allocations of
deferrals, the next Trading Day following the payday to which the deferral
relates.

 

ARTICLE II

Participation

 

2.1                                 Date
of Participation.  Each Eligible Participant shall be become a
Participant as of the Entry Date next following their timely filing of an
election to defer Compensation in accordance with Section 3.1.

 

2.2                                 Resumption
of Participation Following Return to Service.  If a Participant ceases
to be an Employee or Outside Director and thereafter returns to the service of
the Employer he or she

 

4

 

will again become a
Participant as of the Entry Date following the date on which he or she
re-commences service with the Employer, provided he or she is an Eligible
Participant and has timely filed an election to defer Compensation pursuant to Section 3.1.  Any scheduled Plan payments the Participant
has been receiving shall continue to be paid as previously scheduled.

 

2.3                                 Change
in Employment Status.  If any Employee Participant continues in the
employ of the Employer but ceases to be an Eligible Participant, the individual
shall continue to be a Participant until the entire amount of his benefit is
distributed; provided, however, the individual shall not be entitled to make
Deferral Contributions during subsequent Plan Years in which he or she is not
an Eligible Participant.  In the event an
Employee Participant ceases to be an Eligible Participant, if such individual
has not undergone a Separation From Service, he or she shall continue to make
Deferral Contributions under the Plan through the end of the Plan Year in which
he or she ceases to be an Eligible Participant. 
Thereafter, such individual shall not make any further Compensation
deferral contributions to the Plan unless or until he or she again becomes an
Eligible Participant.  In the event that
the individual subsequently again becomes an Eligible Participant, the
individual may resume full participation on the next Entry Date in accordance
with Section 3.1.

 

ARTICLE III

Contributions

 

3.1                                 Deferral
Contributions.

 

(a)                                  Annual
Open Enrollment.  Prior to the
beginning of each Plan Year, each Eligible Participant (including newly
eligible Eligible Participants who were formerly Eligible Participants) may
elect to execute a compensation reduction agreement with the Employer to reduce
his Compensation by a specified percentage not exceeding, (i) for Eligible
Employees, 75% of their base salary and 100% of their other Compensation, and (ii) for
Outside Directors, 100% of their Compensation, equal in either case to whole
number multiples of one (1) percent, and in a scheduled amount of not less
than $10,000.  Such agreement shall
become irrevocable as of the last day of the calendar year in which it is made
and shall be effective, with respect to Eligible Employees, with the first
payday in the following Plan Year and with respect to Outside Directors, with
the first day of service in the following Plan Year.  Except with respect to payroll periods that
cross-over from one calendar year to the next, the election shall not be effective
with respect to Compensation relating to services already performed.  With respect to Compensation that qualifies
as a Sales Commission, the services relating to such Compensation shall be
deemed performed in the year in which the customer pays the Company.  An election once made will remain in effect
for paydays falling in the duration of the Plan Year.  After the beginning of a Plan Year, a
Participant will not be permitted to change, terminate or revoke his or her
Compensation Deferral election for such Plan Year, except to the limited extent
provided in Section 3.4. Amounts credited to a Participant’s Account prior
to the effective date of any new election will not be affected and will be paid
in accordance with that prior election.

 

5

 

(b)                                 Newly
Eligible Participants.  The same rules as
in Section 3.1(a) above shall also apply to individuals who become
Eligible Participants for the first time, except (i) such new Eligible
Participants shall have no more than thirty (30) days following their becoming
eligible for the first time under the Plan or any other non-qualified deferred
compensation plans of the Employer required to be aggregated with the Plan in
which to elect to have their Compensation reduced, and (ii) the agreement
shall become effective, with respect to Eligible Employees, with the first full
payroll period commencing following the receipt of their election by the
Company and with respect to Outside Directors, with the first day of service
following the receipt of their election by the Company.  Newly eligible Outside Directors may not,
however, defer quarterly fees payable on account of the Company’s fiscal
quarter in which the election is made.

 

(c)                                  Variable
Compensation Plan, Sales Commission Plan and Sales Incentive Bonuses Payable in
a Subsequent Year.  If a Variable
Compensation Plan, Sales Commission Plan or Sales Incentive Bonus (so long as
such Sales Commission Plan and Sales Incentive Bonus qualifies as Sales
Commissions under Section 409A) is earned in one calendar year and would
normally be paid in the first quarter of the ensuing calendar year, it shall be
deferred and distributed based upon the election made by the Eligible
Participant in the open enrollment period in the year prior to the year in
which it was earned.  For newly Eligible
Participants, any such Variable Compensation Plan, Sales Commission Plan or
Sales Incentive Bonus shall be deferred and distributed based upon their
initial election made with respect to the year in which it was earned (or the
year in which it was paid to the Company, with respect to Sales Commissions);
provided, however, that such election may apply to no more than the total
amount of such compensation multiplied by the ratio of the number of days
remaining in the applicable performance period after such election becomes
irrevocable over the total number of days in the applicable performance period.

 

EXAMPLE:
 In the December, 2005 open
enrollment period, an Eligible Participant elects to defer 75% of her Sales
Incentive Bonus for 2006.  The 2006 Sales
Incentive Bonus is normally paid in March, 2007.  The deferral and distribution of her 2006
Sales Incentive Bonus otherwise payable in March 2007 are controlled by
her election made in the 2005 open enrollment period.

 

(d)                                 Year-End
Cross-Over Payroll Periods.  Paydays
relating to periods of service that cross-over the calendar year end shall be
covered by the Participant’s deferral election in effect for the later year,
consistently with the default rules under Treasury Regulation §1.409A-2(a)(13).

 

(e)                                  Limitation
on Deferral Changes.  The dollar
amount of any Plan deferrals shall not be reduced or increased during any Plan
Year by virtue of any Participant election to increase, decrease or terminate
his or her rate of deferral in any other employee benefit plan, including the
Company’s employee stock purchase plan; except as permitted by Code Section 409A
with respect to changes in deferral elections under the Company’s 401(k) Employee
Savings Plan and Code section 125 flexible benefits plan (or as otherwise
permitted under Code Section 409A).

 

3.2                                 Accounts. 
The Employer shall credit an amount to the Account maintained on behalf of the
Participant corresponding to the amount of said reduction.  Under no circumstances may an election to defer
Compensation be adopted retroactively.

 

6

 

3.3                                 Company
Contributions.

 

(a)                                  Discretionary
Contributions.  The Company may, in
its sole discretion, make a contribution to a Participant’s Account, subject to
such vesting and distribution conditions and limitations as the Company, in its
sole discretion, shall impose.  To the
extent such Company contributions do not vest, corresponding debits will be
made to a Participant’s Account, including any earnings on such forfeited
amounts.

 

(b)                                 Annual
Contribution.  Until such time as the
Company determines otherwise, the Company shall make an annual contribution on
behalf of any Employee with a Plan Account who also makes a deferral for a
given year into the Employer’s 401(k) Plan.  The amount of the annual contribution shall
be equal to 6% of the Participant’s compensation, as such term is defined in Section 2.12
of the Employer’s 401(k) Plan, without regard to Section 2.12(b) thereof
(“401(k) Compensation”) for an applicable year, minus the maximum amount
permitted to be contributed to a participant’s account in the Employer’s 401(k) Plan
as an employer matching contribution, as limited by virtue of Code section
401(a)(17), for such year.  The annual
contribution shall be credited to the Participant’s Account in the calendar
year following the year in which the 401(k) Plan deferrals were made.

 

EXAMPLE:  In 2006, Employee Favre (who also
participates in the Plan) defers part of his compensation into the Employer’s
401(k) Plan.  Employee Favre’s 2006
401(k) Compensation is $300,000. 
Because of the Code section 401(a)(17) limit, the Employer can only make
a maximum matching contribution of $13,200 into Employee Favre’s 401(k) Plan
account in 2006 (the 2006 Code section 401(a)(17) limit of $220,000 x 6%).  Accordingly, Employee Favre receives a
non-discretionary credit in the Plan equal to $4,800 [(6% x $300,000) -
$13,200] in 2007.  Employee Favre will
receive this credit even if the amount of the employer match into his 401(k) Plan
account for 2006 is less than $13,200 by virtue of his deferring less than
$13,200 into the 401(k) Plan in 2006.

 

3.4                                 Cancellation
of Elections Due to 401(k) Hardship Withdrawal or Unforeseeable Emergency
Distribution.

 

(a)                                  401(k) Hardship
Withdrawal.  A Participant’s deferral
election shall be automatically cancelled in the event the Participant obtains
a hardship distribution from the Employer’s 401(k) Plan pursuant to
Treasury Regulation §1.401(k)-1(d)(3). 
The Participant, if still an Eligible Participant, may re-enroll in the
Plan in the next open enrollment period.

 

(b)                                 Unforeseeable
Emergency Distribution.  A
Participant’s deferral election shall be automatically cancelled in the event
the Participant obtains an unforeseeable emergency distribution from the Plan
pursuant to Section 6.5 hereof.  The
Participant, if still an Eligible Participant, may re-enroll in the Plan in the
next open enrollment period.

 

7

 

(c)                                  Special
2005 Elections.

 

(i)             In accordance with
Internal Revenue Service Notice 2005-1, Q&A-21, Eligible Participants may
make a deferral election with respect to 2005 Compensation that has not been
paid or become payable at the time of election, and superseding their prior
election, if any, with respect to such Compensation, on or before March 15,
2005, or such earlier time as is determined by the Administrator (or its
designee) in its sole discretion.

 

(ii)          In accordance with
Internal Revenue Service Notice 2005-1 and the proposed Treasury regulations
promulgated under Code Section 409A, and notwithstanding any contrary
provision of the Plan, a Participant may elect to rescind or reduce his or her
2005 Compensation deferral election made under Section 3.1 by filing a
form specified by the Administrator (or its designee) with the Administrator
(or its designee) no later than December 31, 2005, or such earlier time as
is determined by the Administrator (or its designee), in its sole
discretion.  The amount subject to such
election shall be distributed to the Participant in a single lump sum payment
of cash (or its equivalent) in calendar year 2005 or, if later, the Participant’s
taxable year in which the amount becomes earned and vested.

 

ARTICLE IV

Participants’ Accounts

 

4.1                                 Individual
Accounts.  The Administrator will establish and maintain an Account
for each Participant which will reflect Deferral Contributions credited to the
Account on behalf of the Participant with earnings, expenses, gains and losses
credited thereto, attributable to the investments made with the amounts in the
Participant’s Account.  Participants will
be furnished statements of their Account values at least once each Plan Year.

 

4.2                                 Accounting
for Distributions.  As of any date of a distribution to a Participant
or a Beneficiary hereunder, the distribution to the Participant or to the
Participant’s Beneficiary(ies) shall be charged to the Participant’s Account.

 

4.3                                 Separate
Accounts.  A separate account under the Plan shall established and
maintained to reflect the Account for each Participant with subaccounts to show
separately the earnings, expenses, gains and losses credited or debited to that
Account.

 

ARTICLE V

Investment of Contributions

 

5.1                                 Manner
of Investment.  All amounts credited to the Accounts of Participants
shall be treated as though invested only in eligible investments selected by
the Employer.

 

8

 

5.2                                 Investment
Decisions.

 

(a)                                  Accounts
shall be treated as invested as directed by the Participant among the eligible
investment alternatives selected by the Employer.  Participants may change their investment
allocations as specified by the Committee.

 

(b)                                 All
dividends, interest, gains and distributions of any nature earned in respect of
an investment alternative in which the Account is treated as investing shall be
credited to the Account in an amount equal to the net increase or decrease in
the net asset value of each investment option since the preceding Valuation
Date.

 

ARTICLE VI

Distributions

 

6.1                                 Certain
Distributions to Participants and Beneficiaries.

 

(a)                                  Earliest
Distributions

 

(i)             Regular
Participants.  Except as permitted by
the Plan and Code Section 409A in connection with a Change of Control
Event, a Corporate Dissolution, pursuant to a Bankruptcy Court Approval, a
conflicts of interest or ethics rule distribution under Section 6.12,
a FICA and related income tax distribution under Section 6.13, a state,
local or foreign tax distribution under Section 6.4, or a Code Section 409A
Distribution, in no event may the account of a Participant who is not a
Specified Employee be distributed earlier than (i) the Participant’s
Separation From Service, (ii) the Participant’s Disability, (iii) the
Participant’s death, (iv) a specified time under Section 6.6
hereunder, (v) a Change in Control, (vi) the occurrence of an
Unforeseeable Emergency, or (vii) as required to satisfy a Domestic
Relations Order.

 

(ii)          Specified Employee
Participants.  Except as permitted by
the Plan and Code Section 409A in connection with a Change of Control
Event, a Corporate Dissolution, pursuant to a Bankruptcy Court Approval, a
conflicts of interest or ethics rules distribution under Section 6.12,
a FICA and related income tax distribution under Section 6.13, a state,
local or foreign tax distribution under Section 6.4, or a Code Section 409A
Distribution, in no event may a Specified Employee’s account be distributed
earlier than (i) six (6) months following the Specified Employee’s
Separation From Service (or if earlier, the Specified Employee’s death), (ii) the
Specified Employee’s Disability, (iii) the Specified Employee’s death, (iv) a
specified time under Section 6.6 hereunder, (v) a Change in Control, (vi) the
occurrence of an Unforeseeable Emergency, or (vii) as required to satisfy
a Domestic Relations Order.  In the event
a Specified Employee’s Plan distributions are delayed due to the six-month
delay requirement, the amounts otherwise payable to the Specified Employee
during such period of delay shall be paid on a date that is at least six months
and one day following Separation From Service, but no later than the end of the
calendar year in which such six month and one day period ends (or, if earlier,
within 60 days following the death of the Specified Employee).  The Participant’s other scheduled
distributions, if any, shall not be affected by the period of delay.

 

9

 

(b)                                 Lump-Sum
or Installment Payment Initial Elections Upon Retirement or Disability.  At the same time their initial elections for
any Plan Year are made, Participants shall elect to have their Compensation
deferrals for that Plan Year paid out, either following their Retirement or
their Disability, in one of the following forms of payment:

 

(i)                     Lump
sum cash payment; or

 

(ii)                  Two
to fifteen substantially equal annual installments.

 

In no event shall any Plan payments be made more than
sixteen (16) years following a Participant’s Separation From Service.  Any payment scheduled to be made more than
sixteen (16) years following a Participant’s Separation From Service shall be
paid with the last scheduled payment with the sixteen (16) year period.

 

(c)                                  Other
Plan Payments.  All Plan payments not
specified in Section 6.1(b), except for certain scheduled in-service withdrawals
as specified in Section 6.6, shall be made in the form of a lump-sum
payment.

 

(d)                                 Installment
Payments Treated as Single Payments. 
All installment payments under the Plan are considered a single payment
for purposes of complying with Code Section 409A.

 

6.2                                 Subsequent
Election to Delay or Change Form of Payment.

 

(i)             A Participant’s
initial election to receive a Retirement, Disability or in-service distribution
may be delayed or the form of payment changed by filing an election, in the
form required by the Administrator, at least one year in advance of the date
upon which any distribution would otherwise have been made pursuant to the
prior election.  Such election shall not
be effective for a period of one (1) year, and must delay the initial payment
by a period of at least five (5) years, but may not result in the initial
payment occurring more than then ten (10) years following Retirement or
Disability.  In the absence of such
timely filed election, the value of such Participant’s Account shall be
distributed in accordance with their previously timely filed Account election.

 

10

 

(ii)          Because Plan installment
payments are considered a single payment for purposes of Code Section 409A,
a subsequent election may accelerate the method of distribution.  For example, if a Participant initially
elected to receive Retirement or Disability payments in five annual
installments following her Separation From Service, she could make a timely
election to instead take a lump-sum distribution five years following her
Separation From Service.  Moreover, a
subsequent election may change a lump-sum distribution to an installment
election, so long as, in either case, the initial payment is delayed for a
period of at least five (5) years, the election is not effective for one (1) year
and is made at least one (1) year in advance of the date upon which the
first distribution would have otherwise been made.

 

(iii)       Because installment
payments are treated as a single payment, any subsequent election must apply to
all of the installment payments.  For
example, if a Participant initially elected to receive Retirement or Disability
payments in five annual installments following her Separation From Service, the
Participant may not elect to defer the 1st, 2d, 3rd and 5th
installments only, but must also defer the 4th installment.

 

6.3                                 Lump-Sum
Distribution Timing.  Except as
elected otherwise for Plan Years prior to the 2009 Plan Year, for Participants
receiving a lump-sum distribution (other than a small account lump-sum
distribution under Section 6.2 hereof, which shall be paid in accordance
with that subsection), the value of their Account (or portion thereof specified
in the Participant’s election) shall be paid in a lump-sum cash payment in the
first February following their Separation From Service, or, for Specified
Employees (or their estates or beneficiaries), if later, at least six months
and one day after the date upon which they incur a Separation From Service, but
no later than the end of the calendar year in which such six month and one day
period ends or, if earlier, upon their death.

 

6.4                                 Installment
Amounts.  For purposes of this Section 6,
installment payments shall be determined by dividing the value of the
Participant’s Account at the time of such installment by the number of payments
remaining.  Except as elected otherwise
for Plan Years prior to the 2009 Plan Year, installment payments other than
in-service distributions shall commence in the next February following the
triggering distribution event, or, for Specified Employees undergoing a
Separation From Service triggering event, as soon as is practicable at least
six months and one day after the date upon which they incur a Separation From
Service, but no later than the end of the calendar year in which such six month
and one day period ends.  However, in no
event may installment payments be made over a period exceeding fourteen years
following the first installment, even if the payments are postponed pursuant to
an election made under Section 6.2 hereof. 
In-service distributions will commence in the February of the
specified year.

 

6.5                                 Unforeseeable
Emergency Distributions.  With the consent of the Administrator, a
Participant may withdraw up to one hundred percent (100%) of his or her Account
as may be required to meet a sudden Unforeseeable Emergency of the
Participant.  Such distribution may only
be made if the amounts distributed with respect to an Unforeseeable Emergency
may not exceed the amounts necessary to satisfy such emergency plus amounts
necessary to pay taxes reasonably anticipated as a result of the distribution,
after taking into account the extent to which such hardship

 

11

 

is or may be relieved
through reimbursement or compensation by insurance or otherwise or by
liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship).

 

6.6                                 Scheduled
In-Service Distribution.  A Participant may elect, as provided in his
or her Participant deferral election, to receive one or more scheduled
in-service (i.e., commencing while employed by the Company, or, for outside
director Participants, while serving as a Board member) distributions relating
to the Plan Year to which the deferral election relates.  Such in-service distributions may only be
scheduled for years at least two full calendar years following the end of the
calendar year to which the deferrals relate. Participants may elect to receive
in-service distributions of deferrals in annual installments of up to five
years.

 

EXAMPLE:
 In the December, 2005 open
enrollment period, an Eligible Participant elects to receive an in-service
distribution of 50% of her 2006 plan deferrals, plus earnings and losses
thereon, in 2009.  This includes a
variable compensation plan bonus paid in 2007 but earned in 2006.  Because the scheduled in-service distribution
is at least two full calendar years following the end of 2006 (the end of the
year to which the deferrals relate), the election is permissible.

 

Each scheduled
in-service distribution may only be postponed in accordance with Section 6.2
hereof.  In the event a Participant
incurs a Separation From Service prior to receiving the first scheduled payment,
then the scheduled in-service distribution election shall be without further
force and effect and the applicable Separation From Service distribution
provisions of the Plan and the Participant’s deferral election shall
control.  Similarly, in the event a
Participant incurs a Separation From Service after receiving the first
scheduled in-service distribution payment, and if the Separation From Service
is not pursuant to Retirement, Disability or death, then any scheduled future
installments of the in-service distribution election shall be without further
force and effect and the applicable Separation From Service distribution
provisions of the Plan and the Participant’s deferral election shall
control.  If, however, a Participant
incurs a Separation From Service due to his or her Retirement, Disability or
death after receiving their first scheduled in-service distribution payment,
then the scheduled in-service distributions will be made according to their
schedule and will take precedence over the Participant’s other deferral
elections; provided, however, that the first scheduled payment following the
Separation From Service for a Specified Employee shall be paid on a date that
is at least six months and one day following Separation From Service, but no
later than the end of the calendar year in which such six month and one day
period ends (or, if earlier, upon the death of the Specified Employee).

 

6.7                                 Death. 
Except with respect to certain in-service distributions as provided below, if a
Participant dies, his or her designated Beneficiary or Beneficiaries will
receive the balance of his or her Account in a lump-sum.  Moreover, if such death occurs prior to a Separation From Service, the Account shall vest
100% as to any previously unvested Account balance.  Distribution to the Beneficiary or
Beneficiaries will be made on the date that is 3 months and one day following
the Participant’s death.

 

12

 

A Participant may
designate a Beneficiary or Beneficiaries, or change any prior designation of
Beneficiary or Beneficiaries by giving notice to the Administrator on a form
designated by the Administrator (spousal consent to such change may be required
on the form designated by the Administrator). 
If more than one person is designated as the Beneficiary, their
respective interests shall be as indicated on the designation form.

 

If upon the death
of the Participant there is, in the opinion of the Administrator, no designated
Beneficiary for part or all of the Participant’s Account, the amount as to
which there is no designated Beneficiary will be paid to his or her surviving
spouse or, if none, to his or her estate (such spouse or estate shall be deemed
to be the Beneficiary for purposes of the Plan).

 

6.8                                 Notice
to Trustee.  The Administrator will notify the Trustee in writing
whenever any Participant or Beneficiary is entitled to receive benefits under
the Plan.  The Administrator’s notice
shall indicate the form, amount and frequency of benefits that such Participant
or Beneficiary shall receive.

 

6.9                                 Time
of Distribution.  In no event will distribution to a Participant be
made later than the date specified by the Participant in his or her election to
defer Compensation; provided, however, that if a Participant is a Specified
Employee, his or her election shall be subject to the six (6) month
distribution delay requirements of the Plan and Code Section 409A.

 

6.10                           Limitation
on Distributions to Covered Employees Prior to a Change of Control. 
Notwithstanding any other provision of this Article VI, in the event that,
prior to a Change of Control, the Participant is a “covered employee” as that
term is defined in Section 162(m)(3) of the Code, or would be a
covered employee if his or her Account were distributed in accordance with his
or her election, and the Administrator reasonably anticipates that Participant’s
scheduled Plan distributions would cause the Employer to forego an income tax
deduction with respect to such distribution by virtue of Code Section 162(m),
then such Participant’s distributions shall be delayed until the earlier of (i) the
earliest date at which the Administrator reasonably anticipates that the
Employer’s deduction related to the distribution will not be limited by virtue
of Code Section 162(m), or (ii) the calendar year in which the
Participant undergoes a Separation From Service, subject to complying with any
six (6) month distribution delay requirements of this Plan and Code Section 409A.

 

6.11                           Domestic
Relations Order Distributions.  The Committee, in its sole discretion,
may accelerate a payment (or payments) make such payments to an individual
other than the Participant as necessary to comply with the terms of a Domestic
Relations Order.

 

6.12                           Conflicts
of Interest and Ethics Rules Distributions.  The Committee, in
its sole discretion, may accelerate a payment (or payments) as necessary (i) for
any U.S. federal officer or employee in the executive branch of the U.S.
federal government to comply with an ethics agreement with the U.S. federal
government, or (ii) to avoid violating a U.S. federal, state, local or
foreign ethics law or conflicts of interest law, as specified under Code Section 409A.

 

13

 

6.13                           FICA
and Related Income Tax Distribution.  The Committee, in its sole
discretion, may permit a distribution from a Participant’s Account sufficient
to pay any FICA Amounts due upon the vesting of any Company contribution as
well as to satisfy the income tax withholding requirements with respect to the
FICA Amount and income tax payments under this Section 6.13.  In no event may the total payment under this Section 6.13
exceed the aggregate of the FICA Amount and the related income tax withholding.

 

6.14                           State,
Local and Foreign Tax Distribution.  The Committee, in its sole
discretion, may permit a distribution from a Participant’s Account sufficient
to pay any state, local or foreign tax obligations arising from participation
in the Plan that apply to an amount deferred under the Plan prior to the scheduled
distribution of such amount.  In the
event the Committee exercises such discretion, the Committee may also permit a
distribution sufficient to pay related income tax withholding in accordance
with Code Section 409A.  In no event
may the total payment under this Section 6.14 exceed the aggregate amount
of such taxes due.

 

6.15                           Code
Section 409A Distribution.  In the event that the Plan fails to
satisfy the requirements of Code Section 409A, then the Committee, in its
sole discretion, may permit a distribution from a Participant’s Account up to
the maximum amount required to be included in income as a result of the failure
to comply with Code Section 409A.

 

6.16                           Tax
Withholding.  Payments under this Article VI shall be subject to
all applicable withholding requirements for state and federal income taxes and
to any other federal, state or local taxes that may be applicable to such
payments.

 

6.17                           Special
2008 Election.  Notwithstanding other
Plan provisions, pursuant to and in accordance with IRS Notice 2007-86, in the
2008 Plan Year, the Committee had the discretion to permit Participants to
change the time and form or payment of Accounts with respect to amounts
credited on and after January 1, 2005 so long as the change did not (i) accelerate
payment of amounts that would otherwise be payable in a future year into the
year of the new election, and (ii) apply to amounts that would otherwise
be paid in the year of the election.

 

ARTICLE VII

Change of Control

 

7.1                                 No
New Participants Following Change of Control.  No individual may
commence participation in the Plan following a Change of Control Event.

 

7.2                                 Discretionary
Termination and Accelerated Plan Distributions 30 Days Prior to or Within 12
Months Following a Change in Control.  The Administrator, in its sole
discretion, may terminate the Plan and accelerate all scheduled Plan
distributions within 30 days prior to or 12 months following a Change in
Control Event by means of an irrevocable election; provided that such
termination and distribution acceleration complies with the requirements of
Code Section 409A.

 

14

 

ARTICLE VIII

Termination Due to Corporate Dissolution or Pursuant to Bankruptcy Court
Approval

 

8.1                                 Corporate
Dissolution.  The Administrator, in its sole discretion, may terminate
the Plan and accelerate all scheduled Plan distributions within 12 months
following a Corporate Dissolution; provided that such termination and
distribution acceleration complies with the requirements of Code Section 409A.

 

8.2                                 Bankruptcy
Court Approval.  The Administrator, in its sole discretion, may
terminate the Plan and accelerate all scheduled Plan distributions pursuant to
Bankruptcy Court Approval; provided that such termination and distribution
acceleration complies with the requirements of Code Section 409A.

 

ARTICLE IX

Amendment and Termination

 

9.1                                 Amendment
by Employer.  The Employer reserves the authority to amend the
Plan.  Any such change notwithstanding,
no Participant’s Account shall be reduced by such change below the amount to
which the Participant would have been entitled if he had voluntarily left the
employ of the Employer immediately prior to the date of the change.  The Employer may from time to time make any amendment
to the Plan that may be necessary to satisfy Code Section 409A or ERISA.

 

9.2                                 Retroactive
Amendments.  An amendment made by the Employer in accordance with Section 9.1
may be made effective on a date prior to the first day of the Plan Year in
which it is adopted if such amendment is necessary or appropriate to enable the
Plan and Trust to satisfy the applicable requirements of Code Section 409A
or ERISA or to conform the Plan to any change in federal law or to any
regulations or rulings thereunder, so long as such retroactive amendment is
permitted by applicable law.

 

9.3                                 Plan
Deferral Termination.  The Employer has adopted the Plan with the
intention and expectation that deferrals will be permitted indefinitely.  However, the Employer has no obligation to
maintain the Plan for any length of time and may discontinue future
Compensation deferrals under the Plan in advance of any Plan Year by written
notice delivered to Eligible Participants without any liability for any such
discontinuance.

 

9.4                                 Distribution
upon Certain Plan Terminations.  Upon termination of the Plan other
than pursuant to a Change of Control Event, Corporate Dissolution or pursuant
to a Bankruptcy Court Approval, no further Deferral Contributions or Employer
Contributions shall be made under the Plan, but Accounts of Participants
maintained under the Plan at the time of termination shall continue to be
governed by the terms of the Plan until paid out in accordance with the terms
of the Plan, Participants’ deferral elections and the requirements of Code Section 409A,
which latter shall take precedence over the terms of the Plan and Participants’
deferral elections in the event of any conflict.

 

15

 

ARTICLE X

The Trust

 

10.1                           Establishment
of Trust.  The Employer shall establish the Trust between the Employer
and the Trustee, in accordance with the terms and conditions as set forth in a
separate agreement, under which assets are held, administered and managed,
subject to the claims of the Employer’s creditors in the event of the Employer’s
insolvency, until paid to Participants and their Beneficiaries as specified in
the Plan.  The Trust is intended to be
treated as a grantor trust under the Code, and the establishment of the Trust
is not intended to cause Participants to realize current income on amounts
contributed thereto.

 

ARTICLE XI

 Miscellaneous

 

11.1                           Limitation
of Rights.  Neither the establishment of the Plan and the Trust, nor
any amendment thereof, nor the creation of any fund or account, nor the payment
of any benefits, will be construed as giving to any Participant or other person
any legal or equitable right against the Employer, Administrator or Trustee,
except as provided herein; and in no event will the terms of employment or
service of any Participant be modified or in any way affected hereby

 

11.2                           Nontransferability;
Domestic Relations Orders.  The right of any Participant, any
Beneficiary, or any other person to the payment of any benefits under this Plan
shall not be assigned, transferred, pledged or encumbered; provided, however,
that a Deferral Account hereunder may be transferred to a Participant’s former
spouse pursuant to a Domestic Relations Order.

 

11.3                           Facility
of Payment.  In the event the Administrator determines, on the basis
of medical reports or other evidence satisfactory to the Administrator, that
the recipient of any benefit payments under the Plan is incapable of handling
his affairs by reason of minority, illness, infirmity or other incapacity, the
Administrator may direct the Trustee to disburse such payments to a person or
institution designated by a court which has jurisdiction over such recipient or
a person or institution otherwise having the legal authority under State law
for the care and control of such recipient. 
The receipt by such person or institution of any such payments
therefore, and any such payment to the extent thereof, shall discharge the
liability of the Trust for the payment of benefits hereunder to such recipient.

 

11.4                           Information
between Employer and Trustee.  The Employer agrees to furnish the
Trustee, and the Trustee agrees to furnish the Employer with such information
relating to the Plan and Trust as may be required by the other in order to carry
out their respective duties hereunder, including without limitation information
required under the Code or ERISA and any regulations issued or forms adopted
thereunder.

 

11.5                           Notices. 
Any notice or other communication in connection with this Plan shall be deemed
delivered in writing if addressed as provided below and if either actually
delivered at said

 

16

 

address or, in the case of a letter, three business
days shall have elapsed after the same shall have been deposited in the United
States mails, first-class postage prepaid and registered or certified:

 

(a)                                  If
it is sent to the Employer or Administrator, it will be at the address
specified by the Employer;

 

(b)                                 If
it is sent to the Trustee, it will be sent to the address set forth in the
Trust Agreement; or, in each case at such other address as the addressee shall
have specified by written notice delivered in accordance with the foregoing to
the addressor’s then effective notice address.

 

11.6                           Governing
Law.  The Plan will be construed, administered and enforced according
to ERISA, and to the extent not preempted thereby, the laws of the state of
California.

 

11.7                           No
Guarantees Regarding Tax Treatment; Disclaimer.  Participants (or their Beneficiaries) will be
completely responsible for all taxes with respect to any benefits under the
Plan.  The Administrator, the Board of
Directors and the Employer make no guarantees regarding the tax treatment to
any person of any deferrals or payments made under the Plan.  The Plan is intended to comply with the
provisions of Code Section 409A.  Neither the Employer nor any of their employees shall have any
liability to any Participant should the Plan or its administration fail to
comply with Code Section 409A.

 

ARTICLE XII

 Plan Administration

 

12.1                           Powers
and responsibilities of the Administrator.  The Administrator has the
full power and the full responsibility to administer the Plan in all of its
details, subject, however, to the applicable requirements of ERISA.  The Administrator’s powers and
responsibilities include, but are not limited to, the following:

 

(a)                                  To
make and enforce such rules and regulations as it deems necessary or
proper for the efficient administration of the Plan;

 

(b)                                 The
discretionary authority to construe and interpret the Plan, its interpretation
thereof in good faith to be final and conclusive on all persons claiming
benefits under the Plan;

 

(c)                                  To
decide all questions concerning the Plan and the eligibility of any person to
participate in the Plan;

 

(d)                                 To
administer the claims and review procedures specified in Section 12.3;

 

(e)                                  To
compute the amount of benefits which will be payable to any Participant, former
Participant or Beneficiary in accordance with the provisions of the Plan;

 

17

 

(f)                                    To
determine the person or persons to whom such benefits will be paid;

 

(g)                                 To
authorize the payment of benefits;

 

(h)                                 To
appoint such agents, counsel, accountants, and consultants as may be required
to assist in administering the Plan;

 

(i)                                     By
written instrument, to allocate and delegate its responsibilities.

 

12.2                           Nondiscriminatory
Exercise of Authority.  Whenever, in the administration of the Plan,
any discretionary action by the Administrator is required, the Administrator
shall exercise its authority in a nondiscriminatory manner so that all persons
similarly situated will receive substantially the same treatment.

 

12.3                           Claims
and Review Procedures.

 

(a)                                  Purpose.  Every Participant or Beneficiary (or his or
her representative who is authorized in writing by the Claimant to act on his
or her behalf) (hereinafter collectively, “Claimant”) shall be entitled to file
with the Administrator (and subsequently with the individual(s) designated
to review claims appealed after being initially denied by the Administrator
(the “Review Panel”)) a written claim for benefits under the Plan.  The Administrator and Review Panel shall each
be able to establish such rules, policies and procedures, consistent with ERISA
and the Plan, as it may deem necessary or appropriate in carrying out its
duties and responsibilities under this Section 12.3.  In the case of a denial of the claim, the
Administrator or Review Panel, as applicable, shall provide the Claimant with a
written or electronic notification that complies with Department of Labor
Regulation Section 2520.104b-1(c)(1).

 

(b)                                 Denial
of Claim.  If a claim is denied by
the Administrator (or its authorized representative), in whole or in part, then
the Claimant shall be furnished with a denial notice that shall contain the
following:

 

(i)             specific reason(s) for
the denial;

 

(ii)          reference to the
specific Plan provision(s) on which the denial is based;

 

(iii)       a description of any
additional material or information necessary for the Claimant to perfect the
claim, and an explanation of why the material or information is necessary; and

 

(iv)      an explanation of the Plan’s
claims review procedure and the time limits applicable to such procedures,
including a statement of the Claimant’s right to bring a civil action under
ERISA Section 502(a) following a denial on review (as set forth in Section 12.4
below).

 

The denial notice shall be furnished to the Claimant
no later than ninety (90)-days after receipt of the claim by the Administrator,
unless the Administrator determines that special circumstances require

 

18

 

an extension of time for processing the claim.  If the Administrator determines that an
extension of time for processing is required, then notice of the extension
shall be furnished to the Claimant prior to the termination of the initial
ninety (90)-day period.  In no event
shall such extension exceed a period of ninety (90)-days from the end of such
initial period.  The extension notice
shall indicate the special circumstances requiring an extension of time and the
date by which the Plan expects to render the benefits determination.

 

(c)                                  Claim
Review Procedure.  The Claimant may
request review of the denial at any time within sixty (60) days following the
date the Claimant received notice of the denial of his or her claim.  The Administrator shall afford the Claimant a
full and fair review of the decision denying the claim and, if so requested,
shall:

 

(i)             provide the Claimant
with the opportunity to submit written comments, documents, records and other
information relating to the claim for benefits;

 

(ii)          provide that the
Claimant shall be provided, upon request and free of charge, reasonable access
to, and copies of, all documents, records and other information (other than
documents, records and other information that is legally-privileged) relevant
to the Claimant’s claim for benefits; and

 

(iii)       provide for a review that
takes into account all comments, documents, records and other information
submitted by the Claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.

 

(d)                                 If
the claim is subsequently also denied by the Review Panel, in whole or in part,
then the Claimant shall be furnished with a denial notice that shall contain
the following:

 

(i)             specific reason(s) for
the denial;

 

(ii)          reference to the
specific Plan provision(s) on which the denial is based; and

 

(iii)       an explanation of the Plan’s
claims review procedure and the time limits applicable to such procedures,
including a statement of the Claimant’s right to bring a civil action under
ERISA Section 502(a) following the denial on review.

 

(e)                                  The
decision on review shall be issued within sixty (60) days following receipt of
the request for review.  The period for
decision may, however, be extended up to one hundred twenty (120) days after
such receipt if the Review Panel determines that special circumstances require
extension.  In the case of an extension,
notice of the extension shall be furnished to the Claimant prior to the
expiration of the initial sixty (60)-day period.  In no event shall such extension exceed a
period of sixty (60) days from the end of such initial period.  The extension notice shall indicate the
special circumstances requiring an extension of time and the date by which the
Plan expects to render the benefits determination.

 

19

 

(f)                                    Special
Procedure for Claims Due to Disability. 
To the extent an application for distribution  as a result of a Disability
requires the Administrator or the Review Panel, as applicable, to make a
determination of Disability under the terms of the Plan, then such
determination shall be subject to all of the general rules described in
this Article, except as they are expressly modified by this Section.

 

(i)             The initial decision
on the claim for a Disability distribution will be made within forty-five (45)
days after the Plan receives the Claimant’s claim, unless special circumstances
require additional time, in which case the Administrator will notify the
Claimant before the end of the initial forty-five (45)-day period of an
extension of up to thirty (30) days.  If
necessary, the Administrator may notify the Claimant, prior to the end of the
initial thirty (30)-day extension period, of a second extension of up to thirty
(30) days.  If an extension is due to the
Claimant’s failure to supply the necessary information, then the notice of
extension will describe the additional information and the Claimant will have
forty-five (45) days to provide the additional information.  Moreover, the period for making the
determination will be delayed from the date the notification of extension was
sent out until the Claimant responds to the request for additional
information.  No additional extensions
may be made, except with the Claimant’s voluntary consent.  The contents of the notice shall be the same
as described in Section 13.3(b) above.  If a disability distribution claim is denied
in whole or in part, then the Claimant will receive notification, as described
in Section 13.3(b).

 

(g)                                 If
an internal rule, guideline, protocol or similar criterion is relied upon in
making the adverse determination, then the denial notice to the Claimant will
either set forth the internal rule, guideline, protocol or similar criterion,
or will state that such was relied upon and will be provided free of charge to
the Claimant upon request (to the extent not legally-privileged) and if the
Claimant’s claim was denied based on a medical necessity or experimental
treatment or similar exclusion or limit, then the Claimant will be provided a
statement either explaining the decision or indicating that an explanation will
be provided to the Claimant free of charge upon request.

 

(h)                                 Any
Claimant whose application for a Disability distribution is denied in whole or
in part, may appeal the denial by submitting to the Review Panel a request for
a review of the application within one hundred and eighty (180) days after
receiving notice of the denial.  The
request for review shall be in the form and manner prescribed by the Review
Panel.  In the event of such an appeal
for review, the provisions of Section 13.3(c) regarding the Claimant’s
rights and responsibilities shall apply. 
Upon request, the Review Panel will identify any medical or vocational
expert whose advice was obtained on behalf of the Review Panel in connection
with the denial, without regard to whether the advice was relied upon in making
the determination.  The entity or
individual appointed by the Review Panel to review the claim will consider the
appeal de novo, without any deference to the initial denial.  The review will not include any person who
participated in the initial denial or who is the subordinate of a person who
participated in the initial denial.

 

(i)                                     If
the initial Disability distribution denial was based in whole or in part on a
medical judgment, then the Review Panel will consult with a health care
professional who has appropriate training and experience in the field of
medicine involved in the medical judgment, and

 

20

 

who was neither consulted in connection with the
initial determination nor is the subordinate of any person who was consulted in
connection with that determination; and upon notifying the Claimant of an
adverse determination on review, include in the notice either an explanation of
the clinical basis for the determination, applying the terms of the Plan to the
Claimant’s medical circumstances, or a statement that such explanation will be
provided free of charge upon request.

 

(j)                                     A
decision on review shall be made promptly, but not later than forty-five (45)
days after receipt of a request for review, unless special circumstances
require an extension of time for processing. 
If an extension is required, the Claimant will be notified before the
end of the initial forty-five (45)-day period that an extension of time is
required and the anticipated date that the review will be completed.  A decision will be given as soon as possible,
but not later than ninety (90) days after receipt of a request for review.  The Review Panel shall give notice of its
decision to the Claimant; such notice shall comply with the requirements set
forth in paragraph (h) above.  In
addition, if the Claimant’s claim was denied based on a medical necessity or
experimental treatment or similar exclusion, then the Claimant will be provided
a statement explaining the decision, or a statement providing that such
explanation will be furnished to the Claimant free of charge upon request.  The notice shall also contain the following
statement:  “You and your Plan may have
other voluntary alternative dispute resolution options, such as mediation.  One way to find out what may be available is
to contact your local U.S. Department of Labor Office and your State insurance
regulatory agency.”

 

12.4                           Exhaustion
of Claims Procedure and Right to Bring Legal Claim.  No action in law
or equity shall be brought more than one (1) year after the Review Panel’s
affirmation of a denial of the claim, or, if earlier, more than four (4) years
after the facts or events giving rise to the Claimant’s allegation(s) or
claim(s) first occurred.

 

12.5                           Plan’s
Administrative Costs.  The Employer shall pay all reasonable costs and
expenses (including legal, accounting, and employee communication fees)
incurred by the Administrator and the Trustee in administering the Plan and
Trust.

 

21

 

IN WITNESS WHEREOF, the
Employer by its duly authorized officer(s), has caused this Plan to be adopted
initially effective January 1, 2005, and amended and restated as of November 14,
2006 and November 20, 2008.

 

	
   

  	
  COHERENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald Victor

  

 

22Exhibit 10-h-3

 

ROCKWELL COLLINS 

NON-QUALIFIED PENSION PLAN

 

This Plan is a continuation of
the Rockwell International Corporation Non-Qualified Pension Plan.  Effective as of June 29, 2001, Rockwell
Collins, Inc. assumed such plan and all liabilities thereunder with
respect to the Rockwell Collins Participants (as defined in the Employee
Matters Agreement).  Such plan has been
renamed as the Rockwell Collins Non-Qualified Pension Plan.

 

On November 4,
2003, the Board of Directors of Rockwell Collins approved a freezing of the
Plan. The said freezing of the Plan, which is effective as of the close of
business on September 30, 2006 (the “Freeze Date”), has the effect of
terminating further accrual of benefits under the Plan as of that Date and
closing Plan participation off for new employees after that Freeze Date.

 

Effective as of December 31,
2004, the Unfunded Supplemental Pension Plan for Employees Who Are
Participating in a Base Compensation Deferral Agreement, which provides
benefits to highly paid employees who deferred compensation under the Rockwell
Collins Deferred Compensation Plan, was merged into and with this Plan.

 

For purposes of
retaining “grandfathered” status under Section 409A of the Internal
Revenue Code of 1986, as amended, the Plan was amended effective as of January 1,
2005 to limit the Plan to accrued benefits that were earned and vested as of December 31,
2004.

 

ARTICLE I

DEFINITIONS

 

1.005      Affiliate
means:

 

(a)                                  any
company incorporated under the laws of one of the United States of America of
which the Company owns, directly or indirectly, eighty percent (80%)
or more of the combined voting power of all classes of stock or eighty
percent (80%) or more of the total value of the shares of all classes
of stock (all within the meaning of Code §1563);

 

(b)                                 any
partnership or other business entity organized under such laws, of which the
Company owns, directly or indirectly, eighty percent (80%) or more of the
voting power or eighty percent (80%) or more of the total value (all
within the meaning of Code §414(c)); and

 

(c)                                  any
other company deemed to be an Affiliate by the Board of Directors.

 

 

1.010      Benefit Limitation
means the limitations on benefits payable from Defined Benefit Plans which are
imposed by §415 of the Code.

 

1.020      Board of Directors
means the Company’s Board of Directors.

 

1.030      Change of Control
means any of the following occurring at any time after June 29,
2001:

 

(a)           The acquisition by any individual,
entity or group (within the meaning of §13(d)(3) or §14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (1) the then outstanding
shares of common stock of the Company (the “Outstanding Company Common Stock”)
or (2) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Change of
Control:  (w) any acquisition
directly from the Company, (x) any acquisition by the Company, (y) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company, Rockwell or any corporation controlled by the
Company or Rockwell or (z) any acquisition pursuant to a transaction which
complies with clauses (1), (2) and (3) of subsection (c) of this
Section 1.030; or

 

(b)           Individuals who, as of June 29,
2001, constitute the Board of Directors of the Company (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual becoming a director subsequent
to that date whose election, or nomination for election by the Company’s
shareowners, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board of Directors; or

 

(c)           Consummation of a reorganization,
merger or consolidation or sale or other disposition of all or substantially
all of the assets of the Company or the acquisition of assets of another entity
(a “Company Transaction”), in each case, unless, following such Company
Transaction, (1) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Company Transaction beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Company Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or
more subsidiaries)  in substantially the
same proportions as their ownership, immediately prior to such Company
Transaction of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (2) no Person (excluding any
employee benefit plan (or related trust) of the Company, of Rockwell or of such
corporation resulting from such Company Transaction) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Company 

 

2

 

Transaction or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Company Transaction and (3) at least a majority of the members of the
board of directors of the corporation resulting from such Company Transaction were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board of Directors, providing for such
Company Transaction; or

 

(d)           Approval by the Company’s shareowners
of a complete liquidation or dissolution of the Company.

 

1.040      Code
means the Internal Revenue Code of 1986, as amended.

 

1.050      Committee
means the Compensation and Management Development Committee of the Board of
Directors.

 

1.060      Company
means Rockwell Collins, Inc., a Delaware corporation and its predecessor,
Rockwell International Corporation.

 

1.065      Company Officer
means an employee who has been elected by the
Board of Directors as an officer of the Company pursuant to the Company’s
by-laws.

 

1.070      Company Pension Plan
means the Rockwell Collins Pension Plan.

 

1.080      Compensation Limit
means the limitation imposed by §401(a)(17) of the Code on the amount of
compensation which can be considered in determining the amount of a participant’s
benefit under the Company Pension Plan.

 

1.090      Defined Benefit Plan  has the same meaning given that term in §3(35) of ERISA.

 

1.100      Employee
means any person who is employed by the Company or by an Affiliate, including,
to the extent permitted by §406 of the Code, any United States citizen
regularly employed by a foreign Affiliate of the Company.

 

1.110      Employee Matters Agreement
means the Employee Matters Agreement dated as of June 29, 2001 by and
among Rockwell International Corporation, New Rockwell Collins, Inc. and
Rockwell Scientific Company LLC.

 

1.120      ERISA
means the Employee Retirement Income Security Act of 1974, as amended.

 

1.130      Highly Compensated
Employee means a participant in or
retiree under the Company Pension Plan whose compensation would otherwise be
considered under such Plan in determining his benefits thereunder in excess of
the Compensation Limit.

 

1.140      Participant
means any participant in the Company Pension Plan who is a Rockwell Collins
Participant as defined in the Employee Matters Agreement whose benefits payable
therefrom are restricted by the Benefit Limitation or the Compensation
Limit.  Employees who (1) are
Company Officers hired on or after January 1, 1993 but eligible for the
pre-1993 formula 

 

3

 

under the Company Pension Plan,
or (2) are participants in the Company Pension Plan who deferred
compensation under the Rockwell Collins Deferred Compensation Plan are also
eligible to participate in this Plan. Notwithstanding any other provision of
this Plan or the Company Pension Plan to the contrary, no Employee or any other
person, individual or entity shall become a Participant in this Plan on or
after the day on which a Change of Control occurs.

 

1.150      Plan
means this Rockwell Collins Non-Qualified Pension Plan and its predecessor, the
Rockwell International Corporation Non-Qualified Pension Plan.

 

1.160      Plan Administrator
means the person from time to time so designated by name or corporate office by
the Board of Directors.

 

1.165      Section 409A
means Section 409A of the Code and any regulations and other guidance
issued thereunder.

 

1.170      Securities Exchange Act  means the Securities Exchange Act of 1934, as amended.

 

1.180      Third Party Administrator
means an independent third party selected by the
Trustee and approved by the individual who, immediately prior to a Change of
Control, was the Company’s Chief Executive Officer or, if not so identified,
the Company’s highest ranking officer (the “Ex-CEO”).

 

1.190      Trust
means the master trust established by agreement between the Company and the
Trustee, which will be a grantor trust.

 

1.200      Trustee
means Wells Fargo Bank, N.A., or any successor trustee of the Trust described
in Section 1.190 of this Plan.

 

1.210      2005 NQ Pension Plan means the Rockwell Collins 2005 Non-Qualified Pension
Plan.

 

Terms not otherwise defined in
this Article I shall have meanings set forth in the Company Pension Plan
document.

 

ARTICLE II

DETERMINATION OF BENEFITS

 

2.005      Effective
as of the close of business on September 30, 2006 (the “Freeze Date”), and
notwithstanding any other provision in this Plan (or in the Company Pension
Plan) to the contrary, accrual of additional benefits under this Plan (as well
as under the Company Pension Plan) will no longer be possible for current Plan
Participants and individuals who first become Employees on or after the said
Freeze Date will not be eligible to become Participants in this Plan after the
said Freeze Date.

 

2.010      This Plan has been established by the
Company as a non-qualified pension plan for those employees of the Company and
its Affiliates whose retirement benefits under the Company Pension Plan are, in
the determination of those benefits, reduced by reason of application
of the 

 

4

 

Compensation Limit and/or the
Benefit Limitation.  This Plan also
provides enhanced benefits to (a) Company Officers hired on or after January 1,
1993 but eligible for the pre-1993 formula under the Company Pension Plan, and (b) participants
in the Company Pension Plan who deferred compensation under the Rockwell
Collins Deferred Compensation Plan.  The
Company shall pay from its general assets or from the Trust, as the case may
be, to each Participant, or to the beneficiary, surviving spouse or joint
annuitant of the Participant, a benefit which is equal to the amount of such
reduction or enhancement.

 

2.020      If the monthly benefit for which a
Participant would have been otherwise eligible at retirement under the Company
Pension Plan is reduced because of application of the Compensation Limit, for
purposes of determining the benefit payable under this Plan, a Participant’s
Average Annual Earnings, as otherwise defined in Section 1.140 of the
Company Pension Plan shall mean the highest amount that can be determined by
averaging the Participant’s Earnings (as defined in the Company Pension Plan)
for any five (5) calendar years within the ten (10) calendar years
(or lesser period, if applicable) of active employment which immediately
precede the earliest of the dates on which the Participant retires, dies,
terminates or commences an approved absence for disability or the date of the
Company Pension Plan freeze (September 30, 2006) in accordance with the
Company Pension Plan.  In determining
Average Annual Earnings (as defined in the Company Pension Plan), any calendar
year in which the Participant has less than a full year of Credited Service (as
defined in the Company Pension Plan) may be disregarded.  In addition, in determining the benefit
payable to the Participant under this Plan, amounts awarded to the Participant
under the Company’s incentive compensation plan (including both the amount of
cash and the value of Employer stock awarded thereunder) will be included as
compensation to be considered hereunder.

 

2.025      In the case of a
Participant who first becomes an Employee on or after January 1, 1993 and,
prior to his retirement from the Company, either:

 

(a)                                  becomes
a Company Officer, or

 

(b)                                 is
an employee who attains Salary Grade 21 or higher and is approved in writing by
the Company’s Chief Executive Officer (authority for which approval can be
delegated by him to the Company’s Senior Vice President, Human Resources) for
the enhanced benefit treatment set forth in this Section,

 

the monthly benefit payable to
such Participant from this Plan shall be calculated pursuant to the same
formula as is set forth in Section 5.010(a) of the Company Pension
Plan for participants in that Plan who were first employed by the Company prior
to January 1, 1993.

 

2.030      Subject to the provisions of Section 2.040,
any benefit payable under this Plan shall be paid to or in respect of the
Participant in the same manner and at the same times that benefits become
payable under the Company Pension Plan.

 

2.040      A Participant (including, for purposes of
this Section 2.040, a retiree who is currently receiving benefits under
this Plan) or his surviving spouse or joint annuitant may elect to have the
present value of the benefits due hereunder (such present value to be based
upon the interest 

 

5

 

and mortality assumptions in
effect for the Company Retirement Plan at the time of the Participant’s
retirement or death, as applicable) paid in a lump sum in the event of the
occurrence of a Change of Control, subject to the following:

 

(a)                                  To
be effective, the election of a Participant or his surviving spouse or
joint annuitant pursuant to this Section must be made in writing and filed
with the Committee prior to the occurrence of a Change of Control.

 

(b)                                 An
election made hereunder shall be revocable by the Participant or his surviving
spouse or joint annuitant until such time as a Change of Control shall have
occurred at which point the said election shall be irrevocable.

 

(c)                                  Lump
sum payments to be made under this Section 2.040 to Participants or, in
the case of the Participant’s death, to the Participant’s surviving spouse or
joint annuitant shall be made within forty-five (45) days following the
Participant’s retirement, termination of employment or death; provided,
however, that lump sum payments which are to be made under this Section to
Participants, surviving spouses or joint annuitants who are currently receiving
benefits at the time of a Change of Control shall be made within
forty-five (45) days following the Change of Control.

 

Notwithstanding any provision of
this Plan to the contrary, such election may only be made by a Participant or
beneficiary of a Participant who first became eligible to participate in the
Rockwell International Corporation Non-Qualified Pension Plan prior to June 29,
2001.

 

ARTICLE III

CLAIMS PROCEDURE

 

3.010      Any person claiming a right to participate
in this Plan, claiming a benefit under this Plan or requesting information
under this Plan shall present the claim or request in writing to the Committee,
who shall respond in writing within ninety (90) days following his receipt of
the request.

 

3.020      If the claim or request is denied, the
written notice of denial shall state:

 

(a)                                  the
reasons for denial;

 

(b)                                 a
description of any additional material or information required and an
explanation of why it is necessary; and

 

(c)                                  an
explanation of this Plan’s claim review procedure.

 

3.030      Any person whose claim or request is
denied may make a request for review by notice given in writing to the
Committee.

 

6

 

3.040      A decision on a request for review shall
normally be made within ninety (90) days after the date of such
request.  If an extension of time is
required for a hearing or other special circumstances, the claimant shall be
notified and the time limit shall be extended by an additional sixty (60) days
from the date of such request.  The
decision shall be in writing and shall be final and binding on all parties
concerned.

 

ARTICLE IV

AMENDMENT AND TERMINATION; MISCELLANEOUS PROVISIONS

 

4.010      The Board of Directors shall have the
power to amend, suspend or terminate this Plan at any time, except that no such
action shall adversely affect rights with respect to any benefit without the
consent of the person affected.

 

4.020      This Plan shall be interpreted and
administered by the Committee; provided, that interpretations by the Plan
Administrator of those provisions of the Company Pension Plan which are also
applicable to this Plan shall be binding on the Committee.

 

Notwithstanding any other
provision of this Plan to the contrary, upon and after the occurrence of a
Change of Control, the Plan will be administered by the Third-Party
Administrator.  The Third-Party
Administrator will have the discretionary power to determine all questions
arising in connection with the administration of the Plan and the
interpretation of the Plan and Trust including, but not limited, to benefit
entitlement determinations; provided, however, upon and after the occurrence of
a Change of Control, such administrator will have no power to direct the
investment of Plan or Trust assets or select any investment manager or
custodial firm for the Plan or Trust.

 

Upon and after the occurrence of
a Change of Control, the Company will be required to:

 

(a)                                  pay
all reasonable administrative expenses and fees of the Third-Party
Administrator;

 

(b)                                 indemnify
the Third-Party Administrator against any costs, expenses and liabilities
including, without limitation, attorney’s fees and expenses arising in connection
with the performance of such administrator hereunder, except with respect to
matters resulting from the gross negligence or willful misconduct of the said
administrator or its employees or agents; and

 

(c)                                  supply
full and timely information to the Third-Party Administrator on all matters
relating to the Plan, the Trust, the Participants and any surviving spouses and
contingent annuitants, the benefits of the Participants, the date of
circumstances of the retirement, disability, death or termination of employment
of the Participants, and such other pertinent information as the Third-Party
Administrator may reasonably require.

 

(d)                                 upon
and after a Change of Control, the Third-Party Administrator may not be
terminated by the Company and may only be terminated (and a replacement
appointed) by the Trustee, but only with the approval of the Ex-CEO (as defined
in Section 1.180).

 

7

 

4.030      This Plan is an unfunded employee benefit
plan primarily for providing deferred compensation to an identified group of
management or highly compensated employees of the Company and is also an excess
benefit plan (as defined by §3(36) of ERISA).  This Plan is intended to be unfunded for tax
purposes and for purposes of Title I of ERISA. 
Participants and their beneficiaries, estates, heirs, successors and
assigns shall have no legal or equitable rights, interest or claims in any
property or assets of the Company or its Affiliates.  Any and all of the assets of the Company and
its Affiliates shall be, and remain, the general, unpledged, unrestricted
assets of the Company and its Affiliates. 
The Company’s and any Affiliate’s sole obligation under this Plan shall
be merely that of an unfunded and unsecured promise of the Company or such
Affiliate to pay money in the future.

 

4.040      Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate or convey, in advance of
actual receipt, any interest he may have hereunder.  A Participant’s rights to benefits described
herein are and shall be nonassignable and nontransferable prior to actual
distribution as provided by this Plan. 
Any such attempted assignment or transfer shall be ineffective with
respect to the Company and with respect to any Affiliate, and the Company’s and
any Affiliate’s sole obligation shall be to distribute benefits to
Participants, their beneficiaries or estates as appropriate.  No part of any Participant’s benefits
hereunder shall, prior to actual payment as provided by this Plan, be
subject to seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, nor shall any such benefits be transferable by operation of law in the
event of a Participant’s or any other persons bankruptcy or insolvency,
except as otherwise required by law.

 

4.050      This Plan shall not be deemed to
constitute a contract of employment between the Company or any of its
Affiliates and any Participant, and no Participant, beneficiary or estate shall
have any right or claim against the Company or any of its Affiliate under this
Plan except as may otherwise be specifically provided in this Plan.  Nothing in this Plan shall be deemed to give
a Participant the right to be retained in the service of the Company or any
Affiliate or to interfere with the right of the Company or any Affiliate to
discipline, discharge or change the status of a Participant at any time.

 

4.060      A Participant will cooperate with the
Committee by furnishing any and all information requested by the Committee or
its delegates in order to facilitate proper administration (including
distributions to and in respect of Participants) of this Plan and by taking
such other action as may be reasonably requested by the Committee or its
delegate.

 

4.070      Subject to ERISA, the provisions of this
Plan shall be construed and interpreted according to the laws of the State of Iowa.  In the event that any provision of this Plan
shall be held illegal or invalid for any reason, said illegality or invalidity
shall not affect the remaining provisions of this Plan, which shall be
construed and enforced as if such illegal or invalid provision were not
included in this Plan.  The provisions of
this Plan shall bind and obligate the Company and its Affiliates and their
successors, including, but not limited to, any corporate or other business
entity which shall, whether by merger, consolidation, purchase or otherwise,
acquire all or substantially all of the business and assets of the Company or
its Affiliates and their successors of any such company or other business
entity.

 

8

 

4.080      All words used in this Plan in the
masculine gender shall be construed as if used in the feminine gender where
appropriate.  All words used in this Plan
in the singular or plural shall be construed as if used in the plural or
singular where appropriate.

 

ARTICLE V

TRUST

 

5.010      Establishment of the Trust.
The Company shall establish the Trust (which may be referred to herein as a “Rabbi
Trust”).  The Trust shall become
irrevocable upon a Change of Control (to the extent not then irrevocable).  After the Trust has become irrevocable with
respect to the Plan, except as otherwise provided in Section 12 of the
Trust, the Trust shall remain irrevocable with respect to the Plan until all
benefits due under this Plan and benefits and account balances due to any
participants and beneficiaries under any other plan covered by the Trust have
been paid in full.  Upon establishment of
the Trust, the Company shall provide for funding of the Trust in accordance
with the terms of the Trust.

 

5.020      Interrelationship of the
Plan and the Trust.  The
provisions of the Plan and any Participant’s Participation Agreement Form will
govern the rights of a Participant to receive distributions pursuant to the
Plan.  The provisions of the Trust will
govern the rights of the Company and its Affiliates, Participants and the
creditors of the Company and its Affiliates to the assets transferred to the
Trust.  The Company and each of its
Affiliates employing any Participant will at all times remain liable to carry
out their obligations under the Plan.

 

5.030      Distributions From the
Trust. The Company’s and each of its Affiliate’s obligations
under the Plan may be satisfied with Trust assets distributed pursuant to the
terms of the Trust, and any such distribution will reduce their obligations
under this Plan.

 

5.040      Rabbi Trust.   The Rabbi Trust shall:

 

(a)                                  be
a non-qualified grantor trust which satisfies in all material respects the
requirement of Revenue Procedure 92-64, 1992-2 CB 122 (or any successor Revenue
Procedure or other applicable authority);

 

(b)                                 be
irrevocable upon a Change of Control (to the extent not then irrevocable); and

 

(c)                                  provide
that any successor trustee shall be a bank trust department or other party that
may be granted corporate trustee powers under state law.

 

ARTICLE VI

SECTION 409A

 

6.010       Effective as of January 1, 2005, for purposes of
retaining “grandfathered” status under Section 409A, this Plan is limited
to accrued benefits that were earned and vested as of

 

9

 

December 31, 2004. Effective as of January 1, 2005, any
accrued benefits under the Plan that were earned and vested after December 31,
2004 will be credited under, and all liabilities related thereto will be
transferred to, the 2005 NQ Pension Plan.

 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}]]