Contract

EXHIBIT 10.4 SMITH INTERNATIONAL, INC. POST-2004 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (EFFECTIVE AS OF DECEMBER 31, 2004) TABLE OF CONTENTS

PAGE —- ARTICLE ONE ESTABLISHMENT, PURPOSE AND STATUS OF THE PLAN……………….. 1 1.1 Establishment of Plan…………………………………………………… 1 1.2 Purpose of Plan………………………………………………………… 1 1.3 Status of Plan…………………………………………………………. 1ARTICLE TWO DEFINITIONS……………………………………………… 1 2.1 Account……………………………………………………………….. 1 2.2 Active Participant……………………………………………………… 1 2.3 Administrative Committee………………………………………………… 1 2.4 Advance Distribution Election……………………………………………. 1 2.5 Affiliated Entity………………………………………………………. 1 2.6 Beneficiary……………………………………………………………. 2 2.7 Board ………………………………………………………………… 2 2.8 Bonus ………………………………………………………………… 2 2.9 Change of Control………………………………………………………. 2 2.10 Code ………………………………………………………………… 2 2.11 Company……………………………………………………………….. 2 2.12 Compensation…………………………………………………………… 2 2.13 Compensation Committee………………………………………………….. 2 2.14 Deferral Agreement……………………………………………………… 2 2.15 Deferred Compensation Ledger…………………………………………….. 2 2.16 Determination Date……………………………………………………… 3 2.17 Elective Deferral Contribution…………………………………………… 3 2.18 Employee………………………………………………………………. 3 2.19 Employment…………………………………………………………….. 3 2.20 Employer………………………………………………………………. 3 2.21 ERISA ………………………………………………………………… 3 2.22 Executive Staff Participant……………………………………………… 3 2.23 Financial Emergency…………………………………………………….. 3 2.24 Funds ………………………………………………………………… 3 2.25 401(k) Plan……………………………………………………………. 4 2.26 Insolvent……………………………………………………………… 4 2.27 Interest Equivalents……………………………………………………. 4 2.28 Investment Experience…………………………………………………… 4 2.29 Key Employee…………………………………………………………… 4 2.30 Participant……………………………………………………………. 4 2.31 Plan ………………………………………………………………… 4 2.32 Plan Year……………………………………………………………… 4 2.33 Separation from Service…………………………………………………. 5 2.34 Subsidiary…………………………………………………………….. 5 2.35 Total and Permanent Disability…………………………………………… 5 2.36 Trust ………………………………………………………………… 5 2.37 Trust Agreement………………………………………………………… 5
2.38 Trustee……………………………………………………………….. 5 2.39 Valuation Date…………………………………………………………. 5ARTICLE THREE ADMINISTRATION…………………………………………… 5 3.1 Composition of Administrative Committee…………………………………… 5 3.2 Administration of Plan………………………………………………….. 5 3.3 Action by Committee…………………………………………………….. 6 3.4 Delegation…………………………………………………………….. 6 3.5 Reliance Upon Information……………………………………………….. 6 3.6 Responsibility and Indemnity…………………………………………….. 6ARTICLE FOUR PARTICIPATION……………………………………………. 7 4.1 Eligibility of Employees………………………………………………… 7 4.2 Notification of Eligible Employees……………………………………….. 7 4.3 Compensation and Bonus Deferral Agreement…………………………………. 7 4.4 Leave of Absence……………………………………………………….. 8 4.5 Employer Contributions………………………………………………….. 8 4.6 Vesting……………………………………………………………….. 11 4.7 Election of Manner of Payment……………………………………………. 11ARTICLE FIVE DEFERRAL OF COMPENSATION AND ALLOCATION OF INTEREST EQUIVALENTS.. 12 5.1 Deferral of Compensation and/or Bonus…………………………………….. 12 5.2 Allocation of Investment Experience to Accounts……………………………. 12 5.3 Investment of Accounts………………………………………………….. 12 5.4 Interest Equivalents……………………………………………………. 12 5.5 Participants’ Rights Under the Trust……………………………………… 13 5.6 Determination of Account………………………………………………… 13ARTICLE SIX DISTRIBUTIONS……………………………………………. 13 6.1 Amount of Deferred Compensation Subject to Distribution…………………….. 13 6.2 Forms of Distribution Following Determination Date Except for Death………….. 13 6.3 Form of Death Distribution………………………………………………. 14 6.4 Timing of Distributions…………………………………………………. 14 6.5 Advance Distribution Election Required……………………………………. 15 6.6 Withdrawal due to Financial Emergency…………………………………….. 15 6.7 Trust and Payor of Deferred Compensation………………………………….. 15 6.8 Reimbursement of Participant…………………………………………….. 16 6.9 Facility of Payments……………………………………………………. 16 6.10 Beneficiary Designations………………………………………………… 17 6.11 Withholding of Taxes……………………………………………………. 17ARTICLE SEVEN RIGHTS OF PARTICIPANTS……………………………………. 17 7.1 Annual Statement to Participants…………………………………………. 17 7.2 Limitation of Rights……………………………………………………. 18 7.3 Nonalienation of Benefits……………………………………………….. 18 7.4 Claims Procedures………………………………………………………. 18
ARTICLE EIGHT MISCELLANEOUS……………………………………………. 19 8.1 Amendment or Termination of the Plan……………………………………… 19 8.2 Powers of the Company…………………………………………………… 20 8.3 Adoption of Plan by Affiliated Entity…………………………………….. 20 8.4 Waiver………………………………………………………………… 20 8.5 Notice………………………………………………………………… 20 8.6 Severability…………………………………………………………… 20 8.7 Gender, Tense and Headings………………………………………………. 20 8.8 Governing Law………………………………………………………….. 20 8.9 Effective Date…………………………………………………………. 20

SMITH INTERNATIONAL, INC. POST-2004 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (EFFECTIVE AS OF DECEMBER 31, 2004) ARTICLE ONE ESTABLISHMENT, PURPOSE AND STATUS OF THE PLAN 1.1 ESTABLISHMENT OF PLAN. Smith International, Inc. (the “COMPANY”)hereby establishes an unfunded nonqualified deferred compensation plan to beknown as the “Smith International, Inc. Post-2004 Supplemental ExecutiveRetirement Plan” (the “PLAN”). 1.2 PURPOSE OF PLAN. The Plan is maintained for the purpose of advancingthe interests of the Company and its stockholders by enhancing the Company’sability to attract and retain highly qualified executives. The Companyanticipates that accomplishment of those objectives will be facilitated byproviding Participants with a mechanism through which they may provide for theirretirement (or other deferred compensation needs) by electing to defer all or aportion of their Compensation and/or Bonuses. 1.3 STATUS OF PLAN. The Plan is intended as an unfunded plan to bemaintained primarily for the purpose of providing deferred compensation for aselect group of management or highly compensated employees within the meaning ofSections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement IncomeSecurity Act of 1974, as amended (“ERISA”), and as such it is intended that thePlan be exempt from the participation and vesting, funding, and fiduciaryresponsibility requirements of Title I of ERISA. The Plan is also intended toqualify for simplified reporting under U.S. Department of Labor RegulationSection 2530.104-23, which provides for an alternative method of compliance forplans described in such regulation. The Plan is not intended to satisfy thequalification requirements of Section 401 of the Internal Revenue Code of 1986,as amended (the “CODE”). The Plan is intended to comply in good faith with therequirements of Code Section 409A for deferred compensation plans and is to beconstrued in accordance with Code Section 409A and the authority issuedthereunder. ARTICLE TWO DEFINITIONS In addition to the terms defined in the text hereof, each term below shallhave the meaning assigned thereto for all purposes of the Plan unless thecontext reasonably requires a broader, narrower or different meaning. 2.1 ACCOUNT. “Account” means, with respect to each Participant, theAccount reflecting his interest under the Plan under the Deferred CompensationLedger, as established and maintained pursuant to Article Five hereof. TheAdministrative Committee may establish subaccounts for Participants under theirAccounts as it may deem appropriate from time to time. 2.2 ACTIVE PARTICIPANT. “Active Participant” means a Participant who iscurrently eligible to authorize a Deferral Agreement and to receive anallocation of Employer contributions to his Account. 2.3 ADMINISTRATIVE COMMITTEE. “Administrative Committee” means thecommittee described in Article Three of the Plan. 2.4 ADVANCE DISTRIBUTION ELECTION. “Advance Distribution Election” meansa separate written agreement entered into by and between the Employer and aParticipant which specifies the Participant’s election as to the method that thedeferred amount is to be paid, such as lump sum or installment payments. 2.5 AFFILIATED ENTITY. “Affiliated Entity” means an entity which isaffiliated by common ownership or control with the Company as determined anddesignated by the Compensation Committee, CEO or the Administrative Committee inits discretion. 1 2.6 BENEFICIARY. “Beneficiary” means the beneficiary or beneficiariesdesignated by the Participant to receive any amounts distributable under thePlan upon his death. 2.7 BOARD. “Board” means the Board of Directors of the Company. 2.8 BONUS. “Bonus” means any amount payable to the Participant during aPlan Year as an award granted under the Smith International, Inc. AnnualIncentive Plan (or any successor thereto) or under any other bonus programmaintained by the Company or an Adopting Employer. 2.9 CHANGE OF CONTROL. “Change of Control” means the occurrence of anyof the following: (a) any person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) being or becoming the “beneficial owner” as defined in Rule 13d-3 of the Exchange Act) directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the then outstanding securities of such Employer; (b) the first purchase of the Company’s common stock pursuant to a tender or exchange offer (other than a tender or exchange offer made by the Company); (c) the approval by the Company’s stockholders of a merger or consolidation, a sale or disposition of all or substantially all of the Company’s assets or a plan of liquidation or dissolution of the Company; or (d) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company ceasing for any reason to constitute at least a majority thereof, unless the election or nomination for the election by the Company’s stockholders of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. Notwithstanding the above provisions of this Section 2.9, Change ofControl shall have the meaning set forth in Code Section 409A(a)(2)(A)(v) andany regulations issued thereunder, which are incorporated herein by thisreference, but only to the extent inconsistent with the above provisions asdetermined by the Compensation Committee. 2.10 CODE. “Code” means the Internal Revenue Code of 1986, as amended,and the regulations and other authority issued thereunder by the appropriategovernmental authority. References herein to any Section of the Code shallinclude references to any successor Section or provision of the Code. 2.11 COMPANY. “Company” means Smith International, Inc. or any successorin interest thereto. 2.12 COMPENSATION. “Compensation” means the salary and other cashremuneration that is payable by the Employer to the Employee during a Plan Yearfor compensatory services rendered, excluding any Bonuses and reimbursements ofbusiness and other expenses. 2.13 COMPENSATION COMMITTEE. “Compensation Committee” means theCompensation and Benefits Committee of the Board. 2.14 DEFERRAL AGREEMENT. “Deferral Agreement” means a separate writtenagreement entered into by and between the Employer and an Active Participantprior to the commencement of a Plan Year, which agreement describes the termsand conditions of such Active Participant’s deferred compensation arrangementhereunder for the Plan Year. The Deferral Agreement shall be executed and datedby the Active Participant and shall specify the amount of Compensation and/orBonus related to services to be performed during the Plan Year, by percentage ordollar amount, to be deferred. 2.15 DEFERRED COMPENSATION LEDGER. “Deferred Compensation Ledger” meansthe appropriate accounting records maintained by the Administrative Committeewhich set forth the name of each Participant and his Account transactionsreflecting (a) the amount of Compensation and Bonus deferred pursuant to ArticleFour, (b) the amount of Employer contributions made on behalf of the Participantpursuant to Article Four, (c) the amount of Investment Experience credited orcharged to the Participant’s Account pursuant to Article Five, and (d) theamount of any distributions or 2withdrawals pursuant to Article Six. The Deferred Compensation Ledger shall beutilized solely as a device for the measurement and determination of thecontingent amounts to be paid to Participants under the Plan. The DeferredCompensation Ledger shall not constitute or be treated as an escrow, trust fund,or any other type of funded account of whatever kind for Code or ERISA purposesand, moreover, contingent amounts credited thereto shall not be considered “planassets” for ERISA purposes. In addition, no economic benefit or constructivereceipt of income shall be provided to any Participant for purposes of the Codeunless and until cash payments under the Plan are actually made to theParticipant. The Deferred Compensation Ledger merely provides a record of thebookkeeping entries relating to the contingent benefits that the Employerintends to provide to Participants and thus reflects a mere unsecured promise topay such amounts in the future. 2.16 DETERMINATION DATE. “Determination Date” means, with respect to aParticipant, the date of his termination of Employment due to his death,Disability or other Separation from Service. 2.17 ELECTIVE DEFERRAL CONTRIBUTION. “Elective Deferral Contribution”means any amount of a Participant’s Compensation and/or Bonus which he elects todefer hereunder and to have such deferred amount credited to his Account. 2.18 EMPLOYEE. “Employee” means a member of a select group of managementor highly compensated employees of the Employer, as determined by theCompensation Committee for each Plan Year. 2.19 EMPLOYMENT. “Employment” means employment as an Employee. In thisregard, neither the transfer of a Participant from employment by the Company toemployment by an Affiliated Entity nor the transfer of a Participant fromemployment by an Affiliated Entity to employment by the Company shall be deemedto be a Separation from Service by the Participant. Moreover, a Participantshall not be deemed to have incurred a Separation from Service because of hisapproved temporary absence from active employment on account of illness orauthorized vacation, or during another approved and temporary leave of absencegranted by the Employer. 2.20 EMPLOYER. “Employer” means the Company and each Affiliated Entitywhich has adopted the Plan with the consent of the Compensation Committee or theAdministrative Committee. 2.21 ERISA. “ERISA” means the Employee Retirement Income Security Act of1974, as amended, and the regulations and other authority issued thereunder bythe appropriate governmental authority. References herein to any section ofERISA shall include references to any successor section or provision of ERISA. 2.22 EXECUTIVE STAFF PARTICIPANT. “Executive Staff Participant” means aParticipant who is designated by the Compensation Committee, in its discretion,as an Executive Staff Participant. An Executive Staff Participant will generallybe a senior officer of the Employer who is a member of the Employer’s ExecutiveStaff; provided, however, only Participants so designated by the CompensationCommittee shall be deemed Executive Staff Participants for purposes of thisPlan. Executive Staff Participants shall be designated by name in resolutionsadopted by the Compensation Committee from time to time, and any Participant maybe added or deleted from the list of Executive Staff Participants by theCompensation Committee in its absolute discretion at any time. Executive StaffParticipants are eligible to receive additional Employer contributions inaccordance with Section 4.6. 2.23 FINANCIAL EMERGENCY. “Financial Emergency” means an unforeseeableemergency and severe financial hardship to the Participant resulting from anillness or accident of the Participant, the Participant’s spouse, or of adependent (as defined in Code Section 152(a)) of the Participant, loss of theParticipant’s property due to casualty, or other similar extraordinary andunforeseeable circumstances arising as a result of events beyond the control ofthe Participant. Withdrawals of amounts from the Participant’s Account due to a FinancialEmergency, pursuant to Section 6.6, shall only be permitted to the extentreasonably necessary to satisfy the emergency need plus amounts necessary to paytaxes reasonably anticipated as a result of the distribution, after taking intoaccount the extent to which such hardship is or may be relieved throughreimbursement or compensation by insurance or otherwise or by liquidation of theParticipant’s assets (to the extent the liquidation of such assets would notitself cause severe financial hardship). The Administrative Committee, in itsdiscretion, shall determine whether a Financial Emergency has occurred and theamount needed to satisfy the emergency need, and each such determination shallbe made in accordance with the requirements of Code Section 409A. TheParticipant must provide the Administrative Committee with the information thatit requests to make these determinations. 2.24 FUNDS. “Funds” means the investment funds designated from time totime for the deemed investment of Accounts pursuant to Article Five. 3 2.25 401(k) PLAN. “401(k) Plan” means the Smith International, Inc.401(k) Retirement Plan, as it may be amended from time to time, or any successordefined contribution plan maintained by the Company which is intended to qualifyunder Sections 401(a) and 401(k) of the Code. 2.26 INSOLVENT. “Insolvent” means either (a) the Employer is unable topay its debts as they become due, or (b) the Employer is subject to a pendingproceeding as a debtor under the United States Bankruptcy Code. 2.27 INTEREST EQUIVALENTS. “Interest Equivalents” means the hypotheticalamounts credited as interest to the Participant’s Account, as a component ofInvestment Experience, pursuant to Section 5.4. 2.28 INVESTMENT EXPERIENCE. “Investment Experience” means thehypothetical amounts credited (as income, gains or appreciation on anyhypothetical investments in Funds or other investments permitted by the Trustee)or charged (as losses or depreciation on any such hypothetical investments) tothe balances in the Participant’s Account pursuant to Article Five, including,without limitation, Interest Equivalents. 2.29 KEY EMPLOYEE. “Key Employee” means any person employed or formerlyemployed by the Company or any corporation that is an Affiliated Entity, thestock of which is publicly traded on an established securities market (or asotherwise prescribed by Code Section 409A), who is, at any time during the PlanYear, any one or more of the following: (a) an officer of the Company or Affiliated Entity having compensation (as defined in Code Section 415(c)(3)) for the applicable Plan Year greater than One Hundred Thirty Thousand Dollars ($130,000), as adjusted under Section 416(i)(1) of the Code; (b) any person owning (or considered as owning within the meaning of Code Section 318) more than five percent (5%) of the outstanding stock of the Company or Affiliated Entity or stock possessing more than five percent (5%) of the total combined voting power of such stock, or if the Company or Affiliated Employer is not a corporation, any person owning more than five percent (5%) of the capital or profits interest of the Company or Affiliated Entity; or (c) a person who would be described in clause (b) above if “one percent (1%)” were substituted for “five percent (5%)” each place it appears in such clause (b), and whose aggregate annual compensation (as defined in Code Section 415(c)(3)) from the Company and any Affiliated Entity is more than One Hundred Fifty Thousand Dollars ($150,000). For purposes of determining ownership under this Section 2.29, theaggregation rules of Code Sections 414(b), (c) and (m) shall not apply. Forpurposes of clause (a) above, no more than fifty (50) Employees (or, if lesser,the greater of three (3) or ten percent (10%) of the Employees) shall be treatedas officers. Notwithstanding the provisions of this Section 2.29, the term Key Employeeshall have the meaning set forth in Code Section 409A(a)(2)(B)(i) and anyregulations issued thereunder, which are incorporated herein by this reference,but only to the extent inconsistent with the above provisions as determined bythe Compensation Committee. 2.30 PARTICIPANT. “Participant” means an Employee who has been selectedby the Compensation Committee to participate in the Plan. An Employee or formerEmployee (or a Beneficiary thereof in the event of death) who still has anAccount balance shall be deemed a Participant hereunder regardless of whether heis an Active Participant. 2.31 PLAN. “Plan” means the Smith International, Inc. Post-2004Supplemental Executive Retirement Plan as set forth herein, and as it may beamended from time to time. This Plan is a separate and distinct plan from theSmith International, Inc. Supplemental Executive Retirement Plan which was”frozen” by the Compensation Committee effective as of December 31, 2004. 2.32 PLAN YEAR. “Plan Year” means the calendar year commencing on January1 and ending on December 31, with the first Plan Year ending December 31, 2005. 4 2.33 SEPARATION FROM SERVICE. “Separation from Service” means theParticipant’s termination from Employment with the Employer, and shall have thesame meaning as set forth in Code Section 409A(a)(2)(A)(i). 2.34 SUBSIDIARY. “Subsidiary” means any subsidiary of the Company asdefined under Code Section 424(f). 2.35 TOTAL AND PERMANENT DISABILITY. “Total and Permanent Disability”means the Participant is (a) unable to engage in any substantial gainfulactivity by reason of any medically determinable physical or mental impairmentwhich can be expected to result in death or can be expected to last for acontinuous period of not less than 12 months, or (b) is, by reason of anymedically determinable physical or mental impairment which can be expected toresult in death or can be expected to last for a continuous period of not lessthan 12 months, receiving income replacement benefits for a period of not lessthan three months under an accident and health plan covering Employees of theEmployer. Any determination of Total and Permanent Disability shall be made inaccordance with the requirements of Code Section 409A. 2.36 TRUST. “Trust” means a grantor trust, as described in Code Sections671-677, of the type commonly referred to as a “rabbi trust” which has beencreated under the Trust Agreement and pursuant to which the Employer may placeassets to “informally fund” contingent benefits payable under the Plan. 2.37 TRUST AGREEMENT. “Trust Agreement” means the Smith International,Inc. Post-2004 Supplemental Executive Retirement Plan Trust Agreement, as it maybe amended from time to time, which embodies the terms and conditions of theTrust. 2.38 TRUSTEE. “Trustee” means the duly appointed and acting trustee ofthe Trust, and any successor thereto. 2.39 VALUATION DATE. “Valuation Date” means the last day of each calendarquarter and any other interim date, as determined by the AdministrativeCommittee, for the valuation of Participants’ Accounts. ARTICLE THREE ADMINISTRATION 3.1 COMPOSITION OF ADMINISTRATIVE COMMITTEE. The AdministrativeCommittee shall be comprised of such officers of the Employer as chosen by theCompensation Committee to constitute the Administrative Committee. Each memberof the Administrative Committee shall serve at the pleasure of the CompensationCommittee and the Compensation Committee may remove or replace a member of theAdministrative Committee pursuant to procedures established by the CompensationCommittee. A member of the Administrative Committee may also be a Participant. Amember of the Administrative Committee who is also a Participant shall not voteor otherwise act on any matter relating solely to himself. The members of the Administrative Committee shall not receive any specialcompensation for serving in their capacities as members of the AdministrativeCommittee but shall be reimbursed by the Company for any reasonable expensesincurred in connection therewith. No bond or other security need be required ofthe Administrative Committee or any member thereof. 3.2 ADMINISTRATION OF PLAN. The Administrative Committee shall operate,administer, interpret, construe and construct the Plan, including correcting anydefect, supplying any omission or reconciling any inconsistency. TheAdministrative Committee shall have all powers necessary or appropriate toimplement and administer the terms and provisions of the Plan, including thepower to make findings of fact. The determination of the AdministrativeCommittee as to the proper interpretation, construction, or application of anyterm or provision of the Plan shall be final, binding, and conclusive withrespect to all interested persons. In addition, the Trustee may take investment directions from theAdministrative Committee, in which case the Administrative Committee shallimplement the provisions of Section 5.3 regarding investment of Accountbalances. The Administrative Committee shall have the authority to select anyFund or other prudent investment vehicles that are available for hypotheticalinvestment by Participants of their Account balances in assets held by theTrust. Furthermore, the 5Administrative Committee shall direct the Trustee in matters relating to thedistribution to Participants of amounts credited to their Accounts in accordancewith the terms of the Plan. 3.3 ACTION BY COMMITTEE. A majority of the members of the AdministrativeCommittee shall constitute a quorum for the transaction of business, and thevote of a majority of those members present at any meeting at which a quorum ispresent shall decide any question brought before the meeting and shall be theact of the Administrative Committee. In addition, the Administrative Committeemay take any other action otherwise proper under the Plan by an affirmativevote, taken without a meeting, of a majority of its members. 3.4 DELEGATION. The Administrative Committee may, in its discretion,delegate one or more of its duties to its designated agents or to employees ofan Employer, but may not delegate its authority to make the determinationsspecified in the first paragraph of Section 3.2. 3.5 RELIANCE UPON INFORMATION. No member of the Administrative Committeeshall be liable for any decision, action, omission, or mistake in judgment,provided that he acted in good faith in connection with the administration ofthe Plan. Without limiting the generality of the foregoing, any decision oraction taken by the Administrative Committee in reasonable reliance upon anyinformation supplied to it by the Board, the Compensation Committee, anyemployee of an Employer, the Employer’s legal counsel, or the Employer’sindependent accountants shall be deemed to have been taken in good faith. The Administrative Committee may consult with legal counsel, who may becounsel for the Employer or other counsel, with respect to its obligations orduties hereunder, or with respect to any action, proceeding or question at law,and shall not be liable with respect to any action taken, or omitted, in goodfaith pursuant to the advice of such counsel. 3.6 RESPONSIBILITY AND INDEMNITY. To the full extent permitted by law,Smith International, Inc. and each other adopting Employer (collectively, the”EMPLOYER”) jointly and severally shall defend, indemnify and hold harmless eachpast, present and future member of the Administrative Committee and each otheremployee who acts in the capacity of an agent, delegate or representative of theAdministrative Committee under the Plan (hereafter, all such indemnified personsshall be jointly and severally referred to as “PLAN ADMINISTRATION EMPLOYEE”)against, and each Plan Administration Employee shall be entitled without furtheract on his part to indemnity from the Employer for, any and all losses, claims,damages, judgments, settlements, liabilities, expenses and costs (and allactions in respect thereof and any legal or other costs and expenses in givingtestimony or furnishing documents in response to a subpoena or otherwise),including the cost of investigating, preparing or defending any pending,threatened or anticipated action, claim, suit or other proceeding, whether ornot in connection with litigation in which the Plan Administration Employee is aparty (collectively, the “Losses”), as and when incurred, directly orindirectly, relating to, based upon, arising out of, or resulting from his beingor having been a Plan Administration Employee; provided, however, that suchindemnity shall not include any Losses incurred by such Plan AdministrationEmployee (i) with respect to any matters as to which he is finally adjudged inany such action, suit or proceeding to have been guilty of gross negligence, badfaith or intentional misconduct in the performance of his duties as a PlanAdministration Employee, or (ii) with respect to any matter to the extent that asettlement thereof is effected in an amount in excess of the amount approved bythe Company (which approval shall not be unreasonably withheld). The foregoingright of indemnification shall be in addition to any liability that the Employermay otherwise have to the Plan Administration Employee. The Employer’s obligation hereunder to indemnify the Plan AdministrationEmployee shall exist without regard to the cause or causes of the matters forwhich indemnity is owed and expressly includes (but is not limited to) theLosses, directly or indirectly, relating to, based upon, arising out of, orresulting from any one or more of the following: (a) the sole negligence or fault of any Plan Administration Employee or combination of Plan Administration Employees; (b) the sole negligence or fault of the Employer; (c) the sole negligence or fault of third parties; (d) the concurrent negligence of fault or any combination of the Plan Administration Employee and/or the Employer and/or any third party; and 6 (e) Any other conceivable or possible combination of fault or negligence, it being the specific intent of the Employer to provide the maximum possible indemnification protection hereunder, but excluding any such Losses that are found by a court of competent jurisdiction to have resulted from the gross negligence, bad faith or intentional misconduct of the Plan Administration Employee. The Plan Administration Employee shall have the right to retain counsel ofits own choice to represent it provided that such counsel is acceptable to theEmployer, which acceptance shall not be unreasonably withheld. The Employershall pay the fees and expenses of such counsel, and such counsel shall to thefull extent consistent with its professional responsibilities cooperate with theEmployer and any counsel designated by it. The Employer shall be liable for anysettlement of any claim against the Plan Administration Employee made with thewritten consent of the Employer which consent shall not be unreasonablywithheld. The foregoing right of indemnification shall inure to the benefit of thesuccessors and assigns, and the heirs, executors, administrators and personalrepresentatives of each Plan Administration Employee, and shall be in additionto all other rights to which the Plan Administration Employee may be entitled asa matter of law, contract, or otherwise. ARTICLE FOUR PARTICIPATION 4.1 ELIGIBILITY OF EMPLOYEES. The Compensation Committee shall have thesole and exclusive authority and discretion to designate Employees who areeligible to participate in the Plan as Active Participants. Only Employees whoare members of a select group of management or highly compensated Employees forpurposes of ERISA shall be eligible for selection by the Compensation Committee. The Compensation Committee shall also have the authority and discretion todeem any Employee as no longer an Active Participant effective as of anydesignated date; provided, however, such action shall not be effective beforethe date that the Participant receives written notice of same. Any Participantwhose Employment is terminated, for whatever reason, shall not be an ActiveParticipant effective as of his Separation from Service date. A person who is nolonger an Active Participant shall still be considered a Participant for otherpurposes hereunder until he has received a total distribution of his Accountbalance. 4.2 NOTIFICATION OF ELIGIBLE EMPLOYEES. Within thirty (30) days prior tothe beginning of each Plan Year, the Administrative Committee, as directed bythe Compensation Committee, shall notify in writing each of the Employees whoare eligible to elect to defer Compensation under the Plan. The CompensationCommittee shall also have the right to designate Employees as ActiveParticipants at any time during a Plan Year. Each Employee who has beendesignated as an Active Participant by the Compensation Committee in any PlanYear shall remain eligible to defer Compensation and/or Bonuses hereunder unlessand until the Compensation Committee determines that he is no longer eligible toauthorize such deferrals and notifies Employee of same. An Employee (or in theevent of his death, his Beneficiary) shall be a Participant hereunder as long ashe has any balance credited to his Account, regardless of whether he is eligibleto authorize Compensation and/or Bonus deferrals hereunder as an ActiveParticipant. Only Employees who are designated as Active Participants for a PlanYear may authorize deferrals or have Employer contributions made on theirbehalf. 4.3 COMPENSATION AND BONUS DEFERRAL AGREEMENT. After an Employee has beennotified by the Administrative Committee that he is eligible to participate inthe Plan for the relevant Plan Year as an Active Participant, he must, in orderto defer Compensation and/or Bonus with respect to services to be performedduring such Plan Year, notify the Administrative Committee of his deferralelection by completing and executing a Deferral Agreement prior to the end ofthe Plan Year which precedes the Plan Year to which such Deferral Agreementrelates. The Employee may elect to defer up to one hundred percent (100%) of hisCompensation and/or Bonus for a Plan Year or the portion thereof that he is anActive Participant. Any Deferral Agreement that is not completed and signed bythe Employee, and received and accepted by the Administrative Committee (or itsdelegate), on or prior to the last day of the Plan Year immediately precedingthe Plan Year for which the Employee is notified that he may make a deferralelection, shall be treated as the Employee’s election not to defer Compensationor Bonus for that Plan Year. If, after the commencement of a Plan Year, an Employee is designated bythe Compensation Committee as an Active Participant for the first time, thenewly eligible Active Participant, in order to defer Compensation hereunder,must 7complete and execute a Deferral Agreement and return it to the AdministrativeCommittee (or its delegate) within thirty (30) days of the effective date onwhich the Employee first became an Active Participant. Such Deferral Agreementshall only apply to defer Compensation and/or Bonus for services to be performedfor the remainder of the Plan Year by the Active Participant, provided that suchservices are to be performed subsequent to receipt and approval of his DeferralAgreement by the Administrative Committee. The amount of Compensation elected to be deferred pursuant to a DeferralAgreement shall be withheld on a pro rata basis from the Active Participant’sregular payments of Compensation for each pay period during the Plan Year orportion thereof during which such Deferral Agreement is in effect, unlessotherwise designated by the Active Participant in his Deferral Agreement. In theevent that a Trust is maintained, Compensation deferrals shall promptly bedelivered to the Trustee by the Employer. Regardless of any services performed during a year on behalf of theCompany, no Participant will accrue any right to receive any Bonus until it isactually awarded to him. An Active Participant’s election to defer all or anyportion of his Bonus that may be awarded with respect to any Plan Year must bemade prior to the first day of the Plan Year in which services will be performedfor which such Bonus amount is to be paid. The dollar amount or percentage of a Bonus elected to be deferred underthis Section 4.3 shall be deferred in one lump sum and shall be deemed to havebeen deferred on the date the deferred portion of the Bonus would otherwise havebeen paid to the Active Participant in the absence of his deferral election. AnyBonus deferral election made hereunder shall be void and ineffective to theextent that no Bonus is awarded to the Active Participant with respect toservices performed during the Plan Year. To the extent required under payroll tax law or regulation, the deferredamount of any Compensation or Bonus elected hereunder may be reduced by theAdministrative Committee in order to provide taxable, non-deferred wagessufficient to cover required withholding taxes. 4.4 LEAVE OF ABSENCE. If an Active Participant is authorized by hisEmployer for any reason to take a paid leave of absence from Employment, theParticipant shall continue to be considered in Employment and his ElectiveDeferral Contributions shall continue to be withheld during such paid leave ofabsence. If an Active Participant is authorized by his Employer for any reasonto take an unpaid leave of absence from Employment, the Participant shallcontinue to be considered in Employment and the Participant shall be excusedfrom making Elective Deferral Contributions from his Compensation until theParticipant returns to a paid Employment status. Upon his return from the unpaidleave, Elective Deferral Contributions shall resume for the remaining portion ofthe Plan Year in which the expiration or return occurs, based on theParticipant’s Deferral Agreement, if any, as in effect for that Plan Year, i.e.,the same percentage or dollar amount that was being withheld prior to the unpaidleave of absence shall resume after return to active service, but no make-upcontributions shall be made for the unpaid leave period. A leave of absenceshall not affect any previously elected Bonus deferral. 4.5 EMPLOYER CONTRIBUTIONS. (1) Age-Weighted Contributions. Subject to the following provisions of this subsection that apply to Executive Staff Participants, effective as of the last day of each 3-month quarter during a Plan Year, an Age-Weighted Contribution shall be allocated and credited by the Administrative Committee to the Account of each Active Participant who has entered into a Deferral Agreement covering that quarter. The Age-Weighted Contribution shall be based on the Active Participant’s Age-Weighted Contribution Percentage (“AWCP”) as determined based on the schedule set forth below:

AGE AS OF ANNIVERSARY OFPARTICIPANT’S DATE OF BIRTH AWCP- ————————— —- Under Age 40 2.00% 40-44 2.50% 45-49 3.00% 50-54 4.00% 55-59 5.00% 60 or older 6.00%

8 An Active Participant’s AWCP shall change as of the first payroll periodbeginning in the month following the month in which the anniversary of theActive Participant’s date of birth occurs. To compute an Active Participant’sAge-Weighted Contribution for a Plan Year, his AWCP shall be multiplied by thedifference between, for the Plan Year, the Active Participant’s (i) “Total401(k) Compensation” (defined below) and his (ii) “Net 401(k) Compensation”(defined below). “Total 401(k) Compensation” means the total of all cash amounts payable bythe Employer to or for the benefit of an Active Participant for servicesrendered or labor performed while an Active Participant during the Plan Year(including overtime pay, Bonuses, “perq pay,” and incentive or othersupplemental pay and amounts that he could have received in cash (i) in lieu ofan Elective Deferral Contribution to this Plan or a 401(k) salary deferralcontribution made under the 401(k) Plan and (ii) had he not entered into asalary reduction agreement pursuant to a cafeteria plan under Section 125 of theCode), excluding, however, severance pay and the proceeds from the ActiveParticipant’s exercise of any stock options. The Total 401(k) Compensation ofany Active Participant taken into account for purposes of the Plan shall beprorated for (i) a Plan Year of less than twelve months (other than the firstPlan Year) or (ii) in the case of an Active Participant who is either an ActiveParticipant for less than the entire Plan Year or receives Compensation for lessthan the entire Plan Year. Total 401(k) Compensation shall not be reduced orotherwise affected by any limits that apply under the 401(k) Plan. “Net 401(k) Compensation” means the total of all cash amounts payable bythe Employer to or for the benefit of an Active Participant for servicesrendered or labor performed while an Active Participant during a Plan Year(including overtime pay, Bonuses, “perq pay,” and incentive or othersupplemental pay and amounts which he could have received in cash (i) in lieu ofa 401(k) salary deferral contribution made under the 401(k) Plan and (ii) had henot entered into a salary reduction agreement pursuant to a cafeteria plan underSection 125 of the Code), excluding, however, (i) severance pay, (ii) theproceeds from the Active Participant’s exercise of any stock options, and (iii)the Active Participant’s Elective Deferral Contributions to this Plan or toanother deferred compensation program other than 401(k) salary deferralcontributions made under the 401(k) Plan. The “Net 401(k) Compensation” of anyActive Participant taken into account for purposes of the Plan shall be limitedto $210,000 for the Plan Year with such amount to be (i) adjusted automaticallyto reflect any cost-of-living increases authorized by Section 401(a)(17) of theCode and (ii) prorated for (a) a Plan Year of less than twelve months or (b) inthe case of an Active Participant who is either an Active Participant for lessthan the entire Plan Year or receives Compensation for less than the entire PlanYear. Notwithstanding the preceding provisions of this subsection, theEmployer’s Age-Weighted Contribution (“AWC”) with respect to each ExecutiveStaff Participant shall be determined by the Administrative Committee or itsdelegate for each 3-month quarter during each Plan Year in accordance with theprovisions of this paragraph. The Age-Weighted Contribution Percentage (“AWCP”)shall be six percent (6%) for each Executive Staff Participant. The AWC of eachExecutive Staff Participant shall be computed in accordance with the followingformula: (6% x A) – B = AWC. For purposes of this formula, A equals theExecutive Staff Participant’s Total 401(k) Compensation, and B equals the dollaramount of the age-weighted, profit sharing contribution, if any, for theapplicable 3-month quarter that has been or will be contributed by the Employeron behalf of the Executive Staff Participant under the terms of the 401(k) Plan.Effective as of the last day of each 3-month quarter during a Plan Year, the AWCfor each Executive Staff Participant shall be allocated and credited by theAdministrative Committee to his account under the Deferred Compensation Ledger. (2) Make-up Matching Contributions. The provisions of this subsection4.5(2) shall apply only to those Active Participants who (i) have authorizedelective deferral contributions under the 401(k) Plan during the Plan Year and(ii) have entered into a Deferral Agreement hereunder for the Plan Year. To theextent that an Active Participant authorized elective deferral contributionsunder the 401(k) Plan during a Plan Year but his account thereunder is precludedfrom receiving an allocation of any matching contributions under the 401(k) Planthat it otherwise would have been eligible to receive, as the result ofnon-discrimination limits imposed by the average deferral percentage (“ADP”)test or the actual contribution percentage (“ACP”) test under the Code, thensuch Active Participant shall be eligible to receive a “Make-up MatchingContribution” under this Plan for that Plan Year. The Make-up MatchingContribution shall be equal to the difference between (i) the total matchingcontributions that the Active Participant’s account under the 401(k) Plan wouldhave been allocated for the Plan Year without regard to the ADP and ACP tests,and (ii) the amount of matching contributions actually allocated to his accountunder the 401(k) Plan for the Plan Year. The Make-up Matching Contributionsshall be allocated and credited by the Administrative Committee to the affectedActive Participant’s Account, effective as of the last day of the Plan 9Year. Notwithstanding the preceding provisions of this subsection, no Make-upMatching Contribution shall be credited by the Administrative Committee onbehalf of any Active Participant who is not in Employment on the last day ofsuch Plan Year for any reason. (3) Matching Contributions. (a) Non-Executive Staff Participants. The provisions of this subsection 4.5 (3)(a) shall apply only (i) to those Active Participants who (a) have entered into a Deferral Agreement for the Plan Year and (b) are not Executive Staff Participants and (ii) to Plan Years in which a matching contribution is made to eligible participants under the 401(k) Plan. The Matching Contribution (“MC”) of such an eligible Participant for a Plan Year shall be computed as follows: MC = The lesser of: [.015A + (.985A x B)] or [(6% x C) – (D + E)] For purposes of this formula: A equals the aggregate dollar amount of elective deferral contributions that the Active Participant made to this Plan for the Plan Year, pursuant to his Deferral Agreement, that were credited to his account under the Deferred Compensation Ledger; B equals the matching contribution percentage designated under section 3.03(b) (or its successor) of the 401(k) Plan for the Plan Year; C equals the Active Participant’s Total 401(k) Compensation (as defined in Section 4.5(1)) but excluding therefrom any (i) Bonus paid during the Plan Year and (ii) retention or similar payments paid during the Plan Year; D equals the matching contributions, if any, that were credited to the Active Participant’s account under the 401(k) Plan for the Plan Year; and E equals the Make-up Matching Contributions, if any, that were credited to the Active Participant’s Account for the Plan Year pursuant to subsection 4.5(2) above. For example, assume that for a Plan Year (i) the Active Participant’s Account was credited with elective deferral contributions of $8,000 under this Plan, (ii) the matching contribution percentage under Section 3.03(b) (or its successor) of the 401(k) Plan for such Plan Year was 50%, (iii) the Active Participant’s Total 401(k) Compensation (excluding his Annual Incentive Plan Bonus, if any) was $125,000, (iv) his account was credited with a $2,000 matching contribution under the 401(k) Plan, and (v) his Account under this Plan was credited with a $1,000 Make-up Matching Contribution. MC = The lesser of: [$120 + ($7880 x 50%)] or [(6% x 125,000) – ($2,000 + $1,000)] MC = The lesser of: $4,060 or $4,500 (i.e., $7,500 – $3,000) MC = $4,060 The MC shall be computed, allocated and credited by the Administrative Committee to the Active Participant’s Account effective as of the last day of the Plan Year. Notwithstanding the preceding provisions of this subsection, no Matching Contribution shall be credited for a Plan Year on behalf of any Active Participant who is not in Employment on the last day of such Plan Year for any reason. (b) Executive Staff Participants. The Company’s Matching Contribution (“MC”) with respect to each Executive Staff Participant shall be determined in accordance with the provisions of this subsection 4.6(3)(b) which shall apply regardless of whether or not (i) the Executive Staff Participant is also a member of the 401(k) Plan or has entered into a Deferral Agreement under this Plan, or (ii) any matching contributions were credited to his 401(k) Plan account during the Plan Year. The MC of an Executive Staff Participant for a Plan Year shall be computed as follows: X = The lesser of: (A + B) or (6% x C). MC = X – (D + E). For purposes of this formula: A equals the aggregate dollar amount of elective deferral contributions that the Executive Staff Participant made to this Plan for the Plan Year, pursuant to his Deferral Agreement, that were credited to his account under the Deferred Compensation Ledger; B equals the aggregate dollar amount of elective deferral contributions that were credited to the Executive Staff Participant’s Account under the 401(k) Plan for the Plan Year; C equals the Executive Staff Participant’s Total 401(k) 10 Compensation (as defined in Section 4.5(1)) for the Plan Year; D equals the matching contributions, if any, that were credited to the Executive Staff Participant’s Account under the 401(k) Plan for the Plan Year; and E equals the Make-up Matching Contributions, if any, that were credited to the Executive Staff Participant’s Account for the Plan Year pursuant to subsection 4.5(2) above. For example, assume that for a Plan Year an Executive Staff Participant (i) earned Total 401(k) Compensation of $300,000, (ii) authorized and was credited with elective deferral contributions of $9,000 under the 401(k) Plan and $11,000 under this Plan, (iii) his account was credited with a $4,500 matching contribution under the 401(k) Plan, and (iv) his Account under this Plan was not credited with any Make-up Matching Contributions for the Plan Year. X = the lesser of: ($9,000 + $11,000) or (6% x $300,000) X = $18,000 MC = $18,000 – ($4,500 + 0) MC = $13,500. The MC shall be computed, allocated and credited by the Administrative Committee to the Executive Staff Participant’s Account effective as of the last day of the Plan Year. Notwithstanding the previous provisions of this subsection, no MC shall be credited by the Administrative Committee for a Plan Year on behalf of any Executive Staff Participant who is not in Employment on the last day of such Plan Year for any reason. The Compensation Committee may, in its discretion, determine that the matching contribution percentage for purposes of the preceding provisions of this subsection 4.5(3)(b) shall not be 100% as described above (i.e., a dollar-for-dollar match but not in excess of 6% of the Executive Staff Participant’s Total 401(k) Compensation); for example, the Compensation Committee may determine that the matching contribution percentage under the 401(k) Plan for the Plan Year shall also apply under this subsection 4.5(3)(b) for Executive Staff Participants. In such event, the formula at subsection 4.5(3)(a) which incorporates a 100% match of the first 1.50% of elective deferral contributions shall apply for the Plan Year for Executive Staff Participants. Any such determination made by the Compensation Committee shall be recorded in a duly adopted resolution and communicated in writing to the Executive Staff Participants prior to the beginning of each applicable Plan Year. (4) Discretionary Profit Sharing Contributions. The Compensation Committee may, in its discretion, determine the amount, if any, of the Employer’s profit sharing contribution for a Plan Year and how such amount is to be allocated and credited between and among the Participants’ Accounts. A Participant shall not be entitled to share in the allocation of any such Employer profit sharing contribution for a Plan Year if he is not in Employment on the last day of the Plan Year for any reason. The Compensation Committee shall have no obligation to authorize any such profit sharing contributions hereunder for any Plan Year. 4.6 VESTING. All contributions made by Participants and the Employerhereunder shall be fully vested and nonforfeitable at all times. All InvestmentExperience credited on all contributions shall also be fully vested andnonforfeitable at all times. 4.7 ELECTION OF MANNER OF PAYMENT. At the time that a Participant makes adeferral election under Section 4.3, the Participant shall also elect (on anAdvance Distribution Election form) the manner in which his distribution shallbe paid following his Determination Date after Separation from Service fromamong the following options: (a) Lump sum payment; or (b) If the distributable portion of the Account balance is at least $25,000 on the Determination Date, annual installments to be paid during a period specified by the Participant of not less than two (2) nor more than twenty (20) years. If the distributable amount is less than $25,000, it shall automatically be paid in a lump sum distribution without regard to any installment option that may have been elected by the Participant. 11 ARTICLE FIVE DEFERRAL OF COMPENSATION AND ALLOCATION OF INTEREST EQUIVALENTS 5.1 DEFERRAL OF COMPENSATION AND/OR BONUS. If an Active Participant haselected to defer Compensation and/or a Bonus hereunder for a Plan Year, thedeferred amounts shall not be paid when they otherwise would have been paid inthe absence of such election. A bookkeeping entry to reflect the deferredamounts shall be credited by the Administrative Committee to the ActiveParticipant’s Account under the Deferred Compensation Ledger. With respect toCompensation and Bonuses deferred hereunder for a Plan Year, each such deferredamount shall be credited to the Active Participant’s Account under the DeferredCompensation Ledger as of the date it otherwise would have been paid to theActive Participant and shall reflect a mere unsecured promise by the Employer topay such amount in the future. 5.2 ALLOCATION OF INVESTMENT EXPERIENCE TO ACCOUNTS. As of each ValuationDate, the Administrative Committee or its delegate shall determine theInvestment Experience for the applicable accounting period and, as soon aspracticable after such period, shall post and credit the amount of InvestmentExperience to each Participant’s Account effective as of the end of such period.Each Account for which there was a positive balance at any time during theapplicable valuation period shall be entitled to an allocation and crediting ofInvestment Experience for that valuation period regardless of whether theParticipant is still an Active Participant. 5.3 INVESTMENT OF ACCOUNTS. The Administrative Committee shall permit eachParticipant to request that the amounts credited to his Account under theDeferred Compensation Ledger be invested in any one or a combination of Funds(or other investment vehicles) which have been designated by the AdministrativeCommittee as available for hypothetical investment under the Plan. However,except as provided in the next sentence, the Trustee shall make the finalinvestment decision, which may or may not correspond to the Participant’srequest. In the event that a Participant is serving as Trustee, theAdministrative Committee, and not the Trustee, shall make the final decisionwith respect to the hypothetical investment of such Participant’s Account.Subject to Section 5.4 for Interest Equivalents, the Investment Experienceposted and credited to each Participant’s Account shall be based upon theInvestment Experience of the actual investments made by the Trustee in which theParticipant’s Account balance is hypothetically invested. Notwithstanding anycontrary provision of the Plan or Trust Agreement, no direct investment insecurities issued by the Company or its Affiliated Entities shall be permittedunder the Plan or Trust. Except as otherwise provided below, each Participant shall advise theAdministrative Committee, or any agent appointed by such Committee, of hisrequest with respect to the hypothetical investment of the amounts credited tohis Account. Each Participant’s investment request shall be in a form andmanner, and in the minimum increments, as prescribed by the AdministrativeCommittee. Each Participant may, on any business day on which the applicablefinancial markets are open, communicate directly with any appointed mutual fundcompany, financial consultant, or other appropriate agent or delegate of theAdministrative Committee to request a change in the combination of Funds (orother investment vehicle) in which his Account is hypothetically invested. TheAdministrative Committee may direct the Trustee concerning the Funds in whichthe Participant’s Account shall be hypothetically invested in the absence of aninvestment request from such Participant, or in the event that any such requestis not followed by the Administrative Committee or Trustee for whatever reason. In addition, notwithstanding any contrary provision of the Plan or TrustAgreement, neither the Administrative Committee nor Trustee shall be bound tofollow the investment request of any Participant. Subject to Section 5.4, theInvestment Experience posted to each Participant’s Account shall be based solelyon the Investment Experience of the actual Funds or other investments authorizedby the Administrative Committee or Trustee, as applicable, in which theParticipant’s Account balance was hypothetically invested. Investment Experienceshall be allocated to the Participant’s Account as directed by theAdministrative Committee. 5.4 INTEREST EQUIVALENTS. To the extent that all or any portion of aParticipant’s Account is deemed to have been hypothetically invested in a Fundthat is a money market mutual fund, the Participant’s Account will be creditedwith the Interest Equivalent described below in this Section 5.4 instead of theactual investment return generated by the deemed investment in the money marketmutual fund. In addition, if a Trust is maintained, all deferrals ofCompensation and Bonus authorized by Participants shall be credited withInterest Equivalents by the Employer from the date otherwise payable by theEmployer to the Participants until the date that such amounts are paid to theTrustee for investment in Funds or other investment vehicles. Compensation andBonuses being deferred during a calendar quarter shall be considered to beinvested 12on the mid-point day of the calendar quarter during which such amounts wouldotherwise have been payable to the Participant and shall be credited withInterest Equivalents accordingly for that calendar quarter. Interest Equivalentsshall be computed by the Administrative Committee pursuant to non-discriminatoryprocedures maintained by the Administrative Committee from time to time, andsuch amounts shall be posted and credited to each affected Participant’s Accountby the Administrative Committee. Crediting of Interest Equivalents hereunder shall be made only to theAccounts of those affected Participants who are current Employees. Therefore,for example, if a Participant has terminated Employment but has not yet receiveda distribution of the entire amount credited to his Account by the end of themonth in which he is terminated, the Investment Experience that is deemed to becredited to such Participant’s Account (to the extent of the portion of theAccount that is hypothetically invested in the money market mutual fund) afterthe last day of such month shall only be the actual investment return realizedby the deemed investment in the money market mutual fund, and not the greaterInterest Equivalent. All amounts credited to a Participant’s Account, to the extent suchamounts are either (i) deemed to have been invested in a Fund that is a moneymarket mutual fund or (ii) withheld by the Employer from a Participant’sCompensation or Bonus but not yet paid to the Trustee for investment in any Fund(or other investment vehicle), shall be credited quarterly with InterestEquivalents. The rate of Interest Equivalents shall be equal to 120% of thelong-term, applicable federal rate (AFR) for quarterly compounding for the lastmonth of the calendar quarter immediately preceding the calendar quarter inwhich the Interest Equivalents are to be credited. For example, for purposes ofcrediting Interest Equivalents for the 3-month quarter ending December 31 of agiven Plan Year, 120% of the AFR rate for September of that Plan Year will beused. Allocations of Interest Equivalents shall be computed and credited by theAdministrative Committee based on the balances credited to the Participant’sAccount as of the last day of each calendar quarter during a Plan Year, i.e.,March 31, June 30, September 30 and December 31. In the event of a distributionfollowing a Determination Date, the applicable portion of the Participant’sAccount balance deemed to be invested in a Fund that is a money market fundshall be credited with Interest Equivalents based on such applicable portion asof the last day of the month which includes the Determination Date. Interest Equivalents credited to the Participant’s Account shall becompounded quarterly and shall increase the contingent benefits receivable bythe Participant in the future. 5.5 PARTICIPANTS’ RIGHTS UNDER THE TRUST. The assets of the Trust shall beheld for the benefit of the Participants in accordance with the terms of thePlan and the Trust Agreement. In accordance with applicable provisions of theTrust Agreement, the assets of the Trust shall remain subject to the claims ofthe general creditors of the Employer, and the rights of the Participants to theamounts in the Trust shall be limited as provided in the Plan and TrustAgreement in the event that the Employer becomes Insolvent. 5.6 DETERMINATION OF ACCOUNT. The aggregate amount credited to aParticipant’s Account under the Deferred Compensation Ledger shall consist of(i) the aggregate amount of deferred Compensation and/or Bonuses and EmployerContributions made pursuant to Article Four, plus (or minus) (ii) the aggregateamount of Investment Experience credited or charged to such Account pursuant toArticle Five, minus (iii) the aggregate amount of any distributions orwithdrawals made from such Account pursuant to Article Six. ARTICLE SIX DISTRIBUTIONS 6.1 AMOUNT OF DEFERRED COMPENSATION SUBJECT TO DISTRIBUTION. As of theParticipant’s Determination Date, the aggregate amount credited to his Accountmaintained under the Deferred Compensation Ledger shall become distributable inaccordance with the provisions of Section 6.2. 6.2 FORMS OF DISTRIBUTION FOLLOWING DETERMINATION DATE EXCEPT FOR DEATH.Upon the occurrence of a Determination Date (except due to the Participant’sdeath) and prior to a Change of Control, the Participant’s Account balance shallbecome distributable in the form of payment prescribed in Section 4.7. Alldistributions shall be paid in cash. 13 If there is no form of distribution election for the Participant pursuantto Section 4.7, the form of distribution following a Determination Date shallautomatically be a lump sum payment. A Participant cannot elect to retain hisdistributable Account balance in the Plan following his Determination Dateexcept for any remaining unpaid installments during the installment period. Notwithstanding any provision hereof to the contrary, with respect to anyDetermination Date resulting from a Separation from Service within the 12-monthperiod following a Change of Control, all distributions under the Plan shallautomatically be paid in lump sum payments, and no installment payments may beelected and no prior installment election shall be honored. Following a Changeof Control, a lump sum payment shall be made to each Participant who incurs aSeparation from Service within 12 months from the Change of Control date. Insuch event, the lump sum distribution shall be paid within thirty (30) days fromthe Participant’s Separation from Service date. Notwithstanding any previous installment payment election that may havebeen made by the Participant, the aggregate of any remaining installmentpayments due to a Participant who had incurred a Separation from Service at anytime prior to the Change of Control shall be paid to such Participant in a lumpsum within thirty (30) days from the Change of Control date. 6.3 FORM OF DEATH DISTRIBUTION. If the Determination Date results from thedeath of the Participant, or if he dies before receiving all elected installmentpayments, his designated Beneficiary (pursuant to Section 6.10) shallautomatically be entitled to receive a lump sum cash distribution of theParticipant’s remaining Account balance within sixty (60) days following thedate that the Administrative Committee is notified of Participant’s death and,therefore, installment payments, or continued installment payments, shall not beavailable as a distribution option following the Participant’s death, even ifpreviously elected by the Participant or Beneficiary. Notwithstanding the preceding paragraph of this Section 6.3, if (a) theParticipant’s Account balance at the time of his death is at least one milliondollars ($1,000,000) and (b) the Participant had an installment distributionelection in effect at the time of his death, then the Participant’s installmentelection shall be honored and his designated Beneficiary shall receiveinstallment payments over the installment period, or remaining installmentperiod, that had been elected by the Participant prior to his death; provided,however, if the elected installment period or remaining installment period, asapplicable, is longer than five (5) years from the date of Participant’s death,the installment payments shall be made over an installment period that ends onthe last day of the year that is five years from the end of the year in whichthe Participant’s death occurred. In this event, the installment payment periodshall be automatically shortened pursuant to this provision and the maximuminstallment period shall thus not exceed the 5-year period specified in theimmediately preceding sentence. All installment payments shall be made insubstantially equal annual payments over the installment period. 6.4 TIMING OF DISTRIBUTIONS. (a) Lump Sum Distribution. Lump sum distributions shall be made as soon as administratively feasible following the end of the calendar quarter in which the Participant’s Determination Date occurs. Notwithstanding the above, any distribution payable to a Key Employee due to the Key Employee’s Separation from Service (for any reason except due to his death) shall not be made before the earlier of the date which is six (6) months after the date of his Separation from Service. (b) Installment Payments. Annual installment payments shall commence as soon as administratively feasible following the end of the calendar quarter in which the Participant’s Determination Date occurs. Thereafter, the remaining installment payments shall be made as of the annual anniversary of the first installment date. Notwithstanding the above, any distribution payable to a Key Employee due to the Key Employee’s Separation from Service (for any reason except due to his death) shall not commence earlier than the date which is six (6) months after the date of his Separation from Service. (c) Changes in Time and Form of Distribution. If a Participant has not commenced receiving payments under this Section 6.4, the Participant may petition the Administrative Committee in writing to request that the form of distribution be changed from a lump sum distribution to an 14 installment payment option; provided, however, any such election to delay his distribution or change the form of payment: (1) will not be effective until at least 12 months after the date on which the election is made; and (2) in the case of an election related to a payment other than a payment made due to the Participant’s death, Total and Permanent Disability, or Financial Emergency, the first payment with respect to which such election is made is deferred for a period of not less than five (5) years from the date such payment would otherwise have been made. 6.5 ADVANCE DISTRIBUTION ELECTION REQUIRED. The Participant’s election asto the form of his distribution hereunder with respect to any Plan Year must bemade prior to the first day of the Plan Year in which the services will beperformed for which the Compensation or Bonus relates. If the Participant orBeneficiary, as applicable, validly elects annual installment payments, thenInvestment Experience shall continue to be credited by the AdministrativeCommittee to undistributed amounts allocated to the Participant’s Account.Pending receipt of any distribution from the Plan, the Participant orBeneficiary shall remain subject to Section 7.2 and other applicable provisionsof the Plan. 6.6 WITHDRAWAL DUE TO FINANCIAL EMERGENCY. A Participant who believes hehas suffered a Financial Emergency may in writing request a distribution of theportion of his Account balance needed to satisfy the emergency need. TheAdministrative Committee will review the Participant’s request to determinewhether, in its discretion, a Financial Emergency has occurred and, if so, theamount reasonably needed to satisfy the emergency need. If the Administrative Committee, in its discretion, determines that aParticipant has suffered a Financial Emergency, the Administrative Committee maydirect payment to the Participant of only that portion, if any, of his Accountbalance which is attributable to his Compensation and Bonus deferralcontributions and is necessary to satisfy the emergency need. A Participant requesting a withdrawal for Financial Emergency mustpetition the Administrative Committee in writing and provide such information asthe Administrative Committee may request to support the withdrawal request. TheAdministrative Committee, in its discretion, shall determine whether a FinancialEmergency under the Plan has occurred and the minimum amount needed to satisfythe emergency need, plus amounts necessary to pay taxes reasonably anticipatedas a result of the distribution, after taking into account the extent to whichsuch hardship is or may be relieved through reimbursement or compensation byinsurance or otherwise or by liquidation of the Participant’s assets (to theextent the liquidation of such assets would not itself cause severe financialhardship). Only one withdrawal for a Financial Emergency may be made by Participantin any 24-month period. If, subject to the sole discretion of the AdministrativeCommittee, the petition for payout is approved, the payout shall be made within60 days of the date of approval. A request for a withdrawal under this Section6.6 must be accompanied by (a) a letter signed by the Participant describing allthe circumstances and the resources he has available to meet the need and acertification that the resources listed in the definition of Financial Emergencyand all others are unavailable/insufficient/non-existent to meet the need, (b)copies of the appropriate official documentation (e.g., bills, eviction orforeclosure notices or documents showing that such are impending), and (c)statement of monthly household income and expenses (with explanations forunusual items). If the withdrawal is approved in its discretion, the AdministrativeCommittee shall authorize a distribution to the Participant in the amountreasonably necessary to satisfy the Financial Emergency. No Interest Equivalentsshall be credited to the Participant’s Account during a calendar quarter withrespect to the amount distributed to satisfy the Financial Emergency. 6.7 TRUST AND PAYOR OF DEFERRED COMPENSATION. Benefits payable under thePlan with respect to a Participant’s Account shall be the obligation of, andpayable by, the Company; provided, however, the Company may, in its completediscretion, obtain reimbursement from any adopting Employer which employed theParticipant. Adoption and maintenance of the Plan by the Employer shall not, forthat reason, create a joint venture or partnership relationship between or amongsuch entities for purposes of payment of benefits under the Plan or for anyother purpose. In order to meet its contingent obligations under the Plan, the Employershall not set aside any assets or otherwise create any type of fund in which anyParticipant, or any person claiming under such Participant, has an interestother than that 15of an unsecured general creditor of the Employer or which would provide anyParticipant, or any person claiming under such Participant, with a legallyenforceable right to priority over any general creditor of the Employer in theevent that the Employer becomes Insolvent. The Employer intends for the Plan to recognize the value to the Employerof the past and present services of Participants and to encourage and assuretheir continued service with the Employer by making more adequate provision fortheir future retirement security. The maintenance of the Plan is, in part, madenecessary by certain benefit limitations which are imposed on the 401(k) Plan bythe Code. The Plan is intended to constitute an unfunded, unsecured plan ofdeferred compensation for a select group of management or highly compensatedemployees of the Employer. Plan benefits herein provided are to be paid out ofthe Employer’s general assets. Nevertheless, subject to the terms hereof and ofthe Trust Agreement, the Employer may transfer money or other property to theTrustee and the Trustee shall pay Plan benefits to Participants and theirbeneficiaries out of the Trust fund. To the extent the Employer transfers assetsto the Trustee, the Administrative Committee may, but need not, establishprocedures for the Trustee to invest the Trust assets in Funds or otherwise inaccordance with each Participant’s designated deemed investments pursuant toArticle Five, but only with respect to the portion of the Trust assets equal tosuch Participant’s Account balance. The Compensation Committee or Board may establish the Trust and direct theCompany to enter into the Trust Agreement. In such event, the Company shallremain the owner of all assets in the Trust Fund and the assets shall be subjectto the claims of the Employer’s creditors if the Employer ever becomesInsolvent. The Chief Executive Officer of the Company and the Board shall eachhave the duty to inform the Trustee in writing if the Employer becomesInsolvent. Such notice given under the preceding sentence by any party shallsatisfy all of the parties’ duty to give notice. When so informed, the Trusteeshall suspend payments to the Participants and hold the assets for the benefitof the Employer’s general creditors. If the Trustee receives a writtenallegation that the Employer is Insolvent, the Trustee shall suspend payments tothe Participants and hold the Trust fund for the benefit of the Employer’sgeneral creditors, and shall determine within the period specified in the TrustAgreement whether the Employer is Insolvent. If the Trustee determines that theEmployer is not Insolvent, the Trustee shall resume payments to theParticipants. No Participant or Beneficiary shall have any preferred claim to,or any beneficial ownership interest in, any assets of the Trust Fund. During any period in which a Trust is in existence, benefits payable underthe Plan shall be payable by the Trustee in accordance with the terms,provisions, conditions and limitations of the Plan and Trust Agreement. To theextent that any distribution described in the immediately preceding sentencedoes not fully satisfy the obligation for any benefit due under the Plan, theEmployer shall remain fully liable and obligated for full payment of any unpaidbenefit due and payable under the Plan. 6.8 REIMBURSEMENT OF PARTICIPANT. The Company agrees to pay as incurred,to the full extent permitted by law, all legal fees and other expenses which theParticipant (or any Beneficiary thereof) may reasonably incur as a result of anycontest (regardless of the outcome thereof) by the Employer, the Participant orothers concerning the validity or enforceability of, or liability under, anyprovision of this Plan or any guarantee of performance thereof (including,without limitation, as a result of any contest by the Participant about theamount of any benefits due pursuant to the Plan), plus in each case interest onany delayed payment at the applicable interest rate specified in Section 5.4 forInterest Equivalents. To the extent that the Employer is found under a finaldecree of a court of competent jurisdiction to have engaged in an intentionalbreach of contract without good cause, bad faith or fraudulent conduct hereunderin delaying or failing to make any payment due under this Plan, then the amountfound due to any Participant shall be doubled and fully paid to the Participantwithin thirty (30) days of such determination. The Company authorizesParticipant to engage counsel of his choice to represent him in any suchdispute. This Section 6.8 shall not be construed to limit or foreclose any courtor arbitrator from imposing any other awards or remedies. 6.9 FACILITY OF PAYMENTS. If the Administrative Committee determines thatany person entitled to payments under the Plan is physically or mentallyincompetent to receive or properly receipt for such payments, the Company shallmake such payments or, if applicable, the Administrative Committee shall directthe Trustee to make the payments, to the legal guardian or other personalrepresentative of such person for the use and benefit of such person. If theAdministrative Committee for any reason is unable to determine with reasonablecertainty the proper person to pay pursuant to the immediately precedingsentence, the Company shall pay or, if applicable, the Administrative Committeeshall direct the Trustee to pay, any amounts due hereunder into a court ofcompetent jurisdiction in an interpleader proceeding for purposes of beingdirected by such court as to the proper disposition of such amounts. Any suchpayments so made by the Company or the Trustee, to the extent of the amountsthereof, shall be a full and complete discharge of any liability or obligationof the Plan, Trust, Employer, Administrative Committee, Compensation Committee,Board and other interested parties, therefor. 16 6.10 BENEFICIARY DESIGNATIONS. Each Employee, upon becoming a Participant,shall file with the Administrative Committee (or its delegate) a designation ofone or more Beneficiaries to whom benefits otherwise payable to the Participantshall be made in the event of his death prior to the complete distribution ofhis Account balance. A Beneficiary designation shall be on the form prescribedby the Administrative Committee and shall be effective when received andaccepted by the Administrative Committee. A Participant may, from time to time,revoke or change his Beneficiary designation by filing a new designation formwith the Administrative Committee. The last valid designation received by theAdministrative Committee shall be controlling; provided, however, that noBeneficiary designation, or change or revocation thereof, shall be effectiveunless received prior to the Participant’s death, and shall not be effective asof a date prior to its receipt by the Administrative Committee If no valid and effective Beneficiary designation exists at the time ofthe Participant’s death, or if no designated Beneficiary survives theParticipant, or if such designation conflicts with applicable law, the paymentof the Participant’s Account balance shall be made to the Participant’ssurviving lawful spouse, if any. If there is no surviving spouse, then paymentof the Account balance shall be made to the executor or administrator of theParticipant’s estate, or if there is no administration on Participant’s estate,in accordance with the laws of descent and distribution as determined by theCompany. If the Administrative Committee is in doubt as to the right of anyperson to receive such amount, it may direct that the amount be paid into anycourt of competent jurisdiction in an interpleader action, and such paymentshall be a full and complete discharge of any liability or obligation under thePlan or Trust Agreement to the full extent of such payment. 6.11 WITHHOLDING OF TAXES. The Administrative Committee shall direct theEmployer or, if appropriate, the Trustee, to withhold from the amount ofbenefits payable under the Plan all federal, state and local taxes required tobe withheld under any applicable law or governmental regulation or ruling. For each payroll period in which an Elective Deferral Contribution isbeing withheld, the Employer shall ratably withhold from that portion of theActive Participant’s Compensation or Bonus that is not being deferred, theActive Participant’s share of FICA, FUTA other applicable employment taxes thatare required to be withheld with respect to such Elective DeferralContributions. With respect to Employer contributions pursuant to Section 4.5, theEmployer shall withhold the Active Participant’s required share of FICA, FUTA orand other applicable employment taxes from the Active Participant’s Compensationor Bonus that is not being deferred. Such taxes shall be withheld at the sametime that the Employer contributions are credited to the Deferred CompensationLedger. ARTICLE SEVEN RIGHTS OF PARTICIPANTS 7.1 ANNUAL STATEMENT TO PARTICIPANTS. As soon as practicable after the endof each Plan Year, or at such other time as the Administrative Committeedetermines to be appropriate, the Administrative Committee shall cause to beprepared and delivered to each Participant a written statement showing thefollowing information and such other information that the AdministrativeCommittee decides is appropriate: (a) The beginning balances in the Participant’s Account under the Deferred Compensation Ledger as of the first day of the Plan Year; (b) The amount of Compensation and Bonuses deferred for the Plan Year and credited to the Participant’s Account for the Plan Year; (c) The amount of Employer contributions for the Plan Year that were credited to the Participant’s Account for the Plan Year; (d) The adjustments to the Participant’s Account to reflect the crediting of Investment Experience and any distributions or withdrawals made during the Plan Year; and (e) the ending balances in the Participant’s Account as of the last day of the Plan Year. 17 7.2 LIMITATION OF RIGHTS. Nothing in this Plan shall be construed to: (a) Give any individual who is employed by an Employer any right to be a Participant unless and until such person is selected by the Compensation Committee. (b) Give any Participant any rights, other than as an unsecured general creditor of the Employer, with respect to the Compensation, Bonuses, Employer contributions and Investment Experience credited to his Account under the Deferred Compensation Ledger until such amounts are actually distributed to him; (c) Limit in any way the right of the Employer to terminate a Participant’s Employment with the Employer; (d) Give a Participant or any other person any interest in any fund or in any specific asset of the Employer; (e) Give a Participant or any other person any interests or rights other than those of an unsecured general creditor of the Employer; (f) Be evidence of any agreement or understanding, express or implied, that the Employer will employ a Participant in any particular position, at any particular rate of remuneration, or for any particular time period; or (g) Create a fiduciary relationship between the Participant and the Employer, Compensation Committee, and/or Administrative Committee. 7.3 NONALIENATION OF BENEFITS. No right or benefit under this Plan shallbe subject to anticipation, alienation, sale, assignment, pledge, encumbrance,or charge, and any attempt to anticipate, alienate, sell, assign, pledge,encumber, or charge the same will be void and without effect. No right orbenefit hereunder shall in any manner be liable for or subject to any debts,contracts, liabilities or torts of the person entitled to such benefits. If anyParticipant or Beneficiary hereunder shall become bankrupt or attempt toanticipate, alienate, assign, sell, pledge, encumber, or charge any right orbenefit hereunder, or if any creditor shall attempt to subject the same to awrit of garnishment, attachment, execution, sequestration, or any other form ofprocess or involuntary lien or seizure, then such right or benefit shall be heldby the Company for the sole benefit of the Participant or Beneficiary, hisspouse, children, or other dependents, or any of them, in such manner as theAdministrative Committee shall deem proper, free and clear of the claims of anyparty. The withholding of taxes from benefit payments hereunder; the recoveryunder the Plan of overpayments of benefits previously made to a Participant; thetransfer of benefit rights from the Plan to another plan; the direct deposit ofbenefit payments to an account in a banking institution (if not actually part ofan arrangement constituting an assignment or alienation); or an in-servicedistribution under Section 6.6, shall not be construed as an assignment oralienation for purposes of the first paragraph of this Section. The first paragraph of this Section shall not preclude (a) the Participantfrom designating a Beneficiary to receive any benefit payable hereunder upon hisdeath, or (b) the executors, administrators, or other legal representatives ofthe Participant or his estate from assigning any rights hereunder to the personor persons entitled thereto. In the event that any Participant’s or Beneficiary’s benefits hereunderare garnished or attached by order of any court, the Company or Trustee maybring an action or a declaratory judgment in a court of competent jurisdictionto determine the proper recipient of the benefits to be paid under the Plan.During the pendency of said action, any benefits that become payable shall beheld as credits to the Participant’s Account or, if the Company prefers, paidinto the court as they become payable, to be distributed by the court to therecipient as the court deems proper at the close of said action. 7.4 CLAIMS PROCEDURES. When a benefit is due and payable under the Plan, aclaim should be submitted to the Administrative Committee or Trustee, asapplicable, by the Participant or by his Beneficiary in the event ofParticipant’s death (referred to as the “Claimant” for purposes of this Section7.4). A decision on a Claimant’s claim for benefits shall be made by theCompensation Committee within twenty (20) days after receipt of the claim. Inthe event there is a disagreement concerning the amount payable to the Claimant,the Claimant shall receive written notification of the amount in dispute and 18shall be entitled to a full and fair review of his claim. A Claimant desiring areview must submit a written request to the Compensation Committee requestingsuch a review, which request should include whatever comments or arguments thatthe Claimant wishes to make. Incident to the review, the Claimant may representhimself or appoint a representative to do so, and he shall have the right toinspect all documents pertaining to the issue. The Compensation Committee, inits discretion, may schedule any meeting with the Claimant and/or the Claimant’srepresentative that it deems to be necessary or appropriate to facilitate orexpedite its review of the amount in dispute. A request for a review must be filed with the Compensation Committeewithin sixty (60) days after notice of the disputed amount is received by theClaimant. If no request is received within the 60-day time limit, thedetermination of the amount due by the Administrative Committee or Trustee, asapplicable, will be final. However, if a request for review of a disputed amountis timely filed, the Compensation Committee must render its decision undernormal circumstances within thirty (30) days of its receipt of the request forreview. In special circumstances the decision may be delayed if, prior toexpiration of the initial 30-day period, the Claimant is notified of theextension, but must in any event be rendered no later than sixty (60) days afterreceipt of the Claimant’s request. All decisions of the Compensation Committeeshall be in writing and shall include specific reasons for whatever action hasbeen taken, as well as the pertinent Plan provisions on which its decision isbased. ARTICLE EIGHT MISCELLANEOUS 8.1 AMENDMENT OR TERMINATION OF THE PLAN. The Compensation Committee orthe Administrative Committee may amend or terminate the Plan at any timeeffective as of the date specified by said Committee, including amendments witha retroactive effective date; provided, however, the provisions of Section 8.2may not be amended without the consent of at least two-thirds (2/3) of allaffected Participants and no amendment may be made which affects the rights orduties of the Compensation Committee hereunder without its consent. In addition,unless the particular Participant (or his Beneficiary in the event of death)consents in writing, no such amendment or termination shall adversely affect anyrights of such Participant or Beneficiary to any amounts which are required tobe allocated and credited hereunder to his Account at such time. Notwithstanding the immediately preceding paragraph, the Plan may beamended by the Compensation Committee or the Administrative Committee at anytime prior to a Change of Control if required to ensure that the Plan ischaracterized as a “top-hat plan” of deferred compensation maintained for aselect group of management or highly compensated employees as described underERISA Sections 201(2), 301(a)(3), and 401(a)(1), or to conform the Plan to therequirements of ERISA, for “top-hat plans” or “supplemental executive retirementplans” or the requirements of the Code for deferred compensation plans includingCode Section 409A. No such amendment for this exclusive purpose shall beconsidered prejudicial to the interest of a Participant or a Beneficiaryhereunder. Following a Change of Control, any amendment or termination of the Plan(which is proposed by the Compensation Committee or Administrative Committeepursuant to the immediately preceding paragraph) shall require the writtenconsent of a majority of the then Participants. For purposes of this Plan, whenthe consent of a majority of the Participants is required, the determination ofmajority consent shall be based upon receiving the consent of any combination ofParticipants whose sum of Account balances under the Plan as of the time ofdetermination is greater than fifty percent (50%) of the sum of all Accountbalances for all Participants at such time, rather than upon receiving theconsent of a majority of the number of Participants. For purposes of thisdetermination, Beneficiaries of deceased Participants shall be consideredParticipants. If the consent of a majority of the Participants is required for theamendment or termination of the Plan, then the Administrative Committee shall beresponsible for securing such Participant consents in a timely and confidentialfashion and, unless ordered by a court of competent jurisdiction, shall notreveal to the Company, the Board, Compensation Committee or any other interestedparty any information concerning such consents, except whether the requiredmajority has been achieved. The decision whether or not to consent is theresponsibility of the Participant in the exercise of his judgment, and notice ofsuch consent or failure to consent shall be administered in a confidentialmanner to protect the identity of the Participant. Any consent of a Participantrequired under this Section 8.1 shall be deemed given if no written objectionfrom such Participant is received by the person soliciting such consents onbehalf of the Participants within fifteen (15) days after a written noticerequesting such consent and indicating such 15-day response period has been sentpostpaid by United States registered or certified mail with return receiptrequested, and such return receipt has been returned indicating receipt of suchnotice by the Participant. 19 In the event of termination of the Plan, there shall be no ActiveParticipants, and the Account balance of each Participant shall not bedistributable except in accordance with Article Six. In accordance with CodeSection 409A, termination of the Plan shall not, by itself, create adistribution event for Participants. 8.2 POWERS OF THE COMPANY. The existence of outstanding and unpaidbenefits under the Plan shall not affect in any way the right or power of theEmployer to make or authorize any adjustments, recapitalization, reorganizationor other changes in the Employer’s capital structure or in its business, or anymerger or consolidation of the Employer, or any issue of bonds, debentures,common or preferred stock, or the dissolution or liquidation of the Employer, orany sale or transfer of all or any part of their assets or business, or anyother act or corporate proceeding, whether of a similar character or otherwise. Should the Employer (or any successor thereto) elect to dissolve, enterinto a sale of its assets, or enter into any reorganization incident to which itis not the surviving entity, unless the surviving or successor entity shallformally agree to assume and continue the Plan, and Trust if applicable, thePlan shall terminate with respect to the Employer (or any successor thereto) onthe earlier of the date of closing or the effective date of such transaction. Insuch event, there shall be no Active Participants of that Employer, and theAccount balance of each affected Participant shall not be distributable exceptin accordance with Article Six. Should any successor to the Company assume and continue the Plan, andTrust if applicable, incident to a transaction described in the immediatelypreceding paragraph, the affected Participants’ Account balances shall not bedistributable except in accordance with Article Six. 8.3 ADOPTION OF PLAN BY AFFILIATED ENTITY. Any Affiliated Entity may adoptthe Plan with the consent of the Compensation Committee or the AdministrativeCommittee, effective as of the date specified by the respective Committee. AnyAffiliated Entity which has adopted the Plan shall not be responsible for theadministration of the Plan, and its Employees who are eligible to participateherein shall be selected as provided herein. 8.4 WAIVER. No term or condition of this Plan shall be deemed to have beenwaived, nor shall there be an estoppel against the enforcement of any provisionof this Plan, except by written instrument of the party charged with such waiveror estoppel. No such written waiver shall be deemed a continuing waiver unlessspecifically stated therein, and each such waiver shall operate only as to thespecific term or condition waived and shall not constitute a waiver of such termor condition for the future or as to any act other than that specificallywaived. Any waiver by either party hereto of a breach of any provision of thePlan by the other party shall not operate or be construed as a waiver by suchparty of any subsequent breach thereof. 8.5 NOTICE. Except as provided in Section 8.1, any notice required orpermitted to be given under this Plan shall be sufficient if in writing anddelivered via telecopier, messenger, or overnight courier with appropriate proofof receipt, or sent by U.S. registered or certified or registered mail, returnreceipt requested, to the appropriate person or entity at the address lastfurnished by such person or entity. Such notice shall be deemed given as of thedate of delivery to the recipient or, if delivery is made by mail, as of thedate shown on the receipt for registration or certification. 8.6 SEVERABILITY. In the event that any provision of the Plan is declaredinvalid and not binding on the parties hereto in a final decree or order issuedby a court of competent jurisdiction, such declaration shall not affect thevalidity of the other provisions of the Plan to which such declaration ofinvalidity does not relate and such other provisions shall remain in full forceand effect. 8.7 GENDER, TENSE AND HEADINGS. Whenever the context requires, words ofthe masculine gender used herein shall include the feminine and neuter, andwords used in the singular shall include the plural. The words “hereof,””hereunder,” “herein,” and similar compounds of the word “here” shall refer tothe entire Plan and not to any particular term or provision of the Plan.Headings of Articles and Sections, as used herein, are inserted solely forconvenience and reference and shall not affect the meaning, interpretation orscope of the Plan. 8.8 GOVERNING LAW. The Plan shall be subject to and governed by the lawsof the State of Texas (other than such laws relating to choice of laws), exceptto the extent preempted by ERISA, the Code or other controlling federal law. 8.9 EFFECTIVE DATE. The effective date of the Plan is December 31, 2004,and therefore the Plan is in existence, and shall be construed as being inexistence, on or before December 31, 2004 for all purposes including, withoutlimitation, Code Section 409A. The Plan shall be applicable only with respectto: 20 (a) Compensation and Bonuses deferred by Participants to the extentrelated to (i) services performed on or after January 1, 2005, or (ii) servicesperformed prior to January 1, 2005, for which the Compensation or Bonusattributable thereto was not earned and vested until after 2004; and (b) Employer contributions to the extent related (i) services performed onor after January 1, 2005, or (ii) services performed prior to January 1, 2005,for which Employer contributions attributable thereto were not earned and vesteduntil after 2004. [Signature page follows.] 21 IN WITNESS WHEREOF, this Plan is approved and executed by a dulyauthorized officer of the Company, on this 30th day of December, 2004, to beeffective as of December 31, 2004.ATTEST: SMITH INTERNATIONAL, INC.By: /s/ VIVIAN M. CLINE By: /s/ NEAL S. SUTTON ——————- ———————————Name: Vivian M. Cline Name: Neal S. SuttonTitle: Assistant Secretary Title: Senior Vice President- Administration General Counsel and SecretaryDate: December 30, 2004 Date: December 30, 2004 22