NATIONAL WESTERN LIFE INSURANCE COMPANY NON-QUALIFIED DEFERRED COMPENSATION PLAN

1.1            Purpose of the Plan

This Plan was established by the Employer effective as of the Original Effective Date to permit certain select management employees, who are defined below, to defer the payment of a percentage of their Compensation, and in addition thereto, to provide for certain Employer contributions to augment such employees' retirement income.  This Plan is not intended to, and does not, qualify under sections 401(a) and 501(a) of the Internal Revenue Code, and is designed and intended to be a plan described in section 201(2) of ERISA (as defined below).

This Plan is subject to section 409A of the Code and is intended to provide for post-2004 benefit accruals in lieu of continued benefit accruals under the Grandfathered Plan.  However, this Plan is a separate plan from the Grandfathered Plan, and nothing herein shall be construed to constitute a material modification of the Grandfathered Plan or to otherwise cause the Grandfathered Plan to be subject to section 409A of the Code.  Benefit accruals and service crediting under the Grandfathered Plan were frozen effective as of the Freeze Date.

This Plan is intended to comply with the requirements of Code section 409A and, notwithstanding anything herein to the contrary, shall be administered, operated, and interpreted in compliance with such requirements.  The Plan is amended and restated as set forth herein effective as of the Effective Date to make certain clarifying changes to comply with the final regulations under Code section 409A.  For periods on and after the Original Effective Date and prior to the Effective Date, each Participant’s benefit shall be determined in accordance with the Plan as in effect at such time subject to any modifications necessary to satisfy a good faith interpretation of the requirements of Code section 409A.

1.2            Definitions

The following terms, when found in the Plan, shall have the meanings set forth below:

(a)            Account :  The account established for a Participant pursuant to Section 5.1 .

(b)            Beneficiary :  The person or persons designated (or deemed designated) by a Participant under Section 7.3 to receive any benefits payable hereunder after the death of the Participant.

(c)            Code :  The Internal Revenue Code of 1986, as it may be amended from time to time, including any successor and including applicable Treasury regulations.

(d)            Committee :  The individuals appointed by the Board of Directors of the Employer, and known as the Pension Committee, to manage and direct the operation and administration of the Plan.

(e)            Compensation :  Compensation shall be the total cash remuneration paid by the Employer during each Plan Year, as reported on Form W-2 or its subsequent equivalent.  Notwithstanding the foregoing, “Compensation” shall include director’s fees; amounts deferred under Code sections 125, 132(f)(4), or 401(k); and nonqualified elective deferrals, and “Compensation” shall exclude reimbursements or other expense allowances, moving expenses, welfare benefits, imputed value of insurance, stock option income, commissions, bonuses, and any other extraordinary remuneration.  Compensation hereunder shall not be subject to any limitations applicable to tax-qualified plans, such as pursuant to Code sections 401(a)(17) or 415.

(f)            Deferral Election :  An election described in Section 3.1 .

(g)            Disability or Disabled :  The inability of a Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; provided that a Participant will be considered Disabled for purposes of the Plan if and only if he is determined to be totally disabled by the Social Security Administration.  A Participant’s Disability shall be considered to have ended at such time as a determination is made by the Social Security Administration that no further disability benefits shall be payable to the Participant under the Social Security Act.

(h)            Effective Date :  January 1, 2009.

(i)            Eligible Employee :  A person (other than the Chairman of the Employer) employed by the Employer in the position of Senior Vice President or above, or an employee of the Employer who has been designated by the President of the Employer, by name, position, or in any other manner, as being in the class of persons who are eligible to participate in the Plan.  Such latter designation shall be made in writing by the President of the Employer.  However, no person who is an employee of the Employer shall be selected as an Eligible Employee except an individual whose taxable year is the Plan Year and who is a member of the select group of management or highly compensated employees of the Employer, as defined under section 201 of ERISA.

(j)            Employer :  National Western Life Insurance Company, a corporation organized and existing under the laws of the State of Texas, and any successor or successors.  For purposes of Section 1.2(y) , the term “Employer” includes all persons with whom such Employer would be considered a single employer under Code sections 414(b) and/or 414(c), determined by using the 80% ownership threshold specified in Code sections 1563(a)(1), (2), and (3) and in Treasury regulation section 1.414(c)-2, rather than the default 50% ownership threshold specified in Treasury regulation 1.409A-1(h)(3).

(k)            ERISA :  The Employee Retirement Income Security Act of 1974, as it may be amended from time to time, including any successor.

(l)            Excess Compensation :  The portion of a Participant’s Compensation that exceeds, on a year-to-date basis, the applicable limitation under Code section 401(a)(17)(A), as adjusted in accordance with Code section 401(a)(17)(B).

(m)           Freeze Date :  December 31, 2004.

(n)            Grandfathered Plan :  The National Western Life Insurance Company Grandfathered Non-Qualified Deferred Compensation Plan, originally adopted effective as of April 1, 1995 and as it may be amended from time to time.

(o)            Hour of Service :  An Hour of Service is each hour for which an Eligible Employee is paid by virtue of his employment with the Employer, including hours paid but not worked, and including hours completed prior to the date he actually becomes a Participant hereunder.

(p)            Initial Participation Period :  The time period beginning when the Eligible Employee first completes an Hour of Service until the first day of the Plan Quarter which is coincident with or next follows the date he completes one Year of Service.

(q)            Normal Retirement Age :  The date on which a Participant attains age sixty-five (65).

(r)            Original Effective Date :  January 1, 2005.

(s)            Other Plans :  All other plans required to be aggregated with this Plan for purposes of determining compliance with applicable requirements of Code section 409A.

(t)            Participant :  An Eligible Employee who has met the requirements of Section 2.1 hereof, and whose participation has not been terminated in accordance with Section 2.3 .

(u)           Plan :  The National Western Life Insurance Company Non-Qualified Deferred Compensation Plan, as set forth herein, and as it may be amended from time to time.

(v)            Plan Quarter :  The three-month period beginning on each January 1, April 1, July 1 or October 1 and ending, respectively, on the immediately following March 31, June 30, September 30 or December 31.

(w)            Plan Year :  The twelve-month period beginning each January 1 and ending the immediately following December 31.

(x)            Qualified Plan :  The National Western Life Insurance Company 401(k) Plan, as amended from time to time, and any successor or replacement plan.

(y)            Separates from Service or Separation from Service :  A Participant’s “separation from service” with the Employer within the meaning of Code section 409A(a)(2)(A)(i).  For this purpose, a Participant shall be considered to have separated from service with the Employer if the facts and circumstances indicate that the Employer and the Participant reasonably anticipated that no further services would be performed after the date of separation or that the level of bona fide services the Participant would perform after such date would permanently decrease to an amount that is less than fifty percent (50%) of the average level of bona fide services performed over the immediately preceding thirty-six (36)-month period.  To the extent permitted by Treasury regulation section 1.409A-1(h)(5), a Participant may be considered to have such a separation from service even if he continues to provide services as an independent contractor or non-employee director of the Employer.  

(z)            Valuation Date :  Each date as of which the Plan is valued and gains or losses allocated, which shall be the last day of each Plan Quarter or such other dates as the Committee may determine in its discretion; provided, however, that if a date that would otherwise be a Valuation Date falls on a date on which NASDAQ (or any successor exchange) is not open for business, the Valuation Date shall be the immediately following date on which NASDAQ (or any successor exchange) is open for business.

(aa)          Years of Service :  The period of an Eligible Employee's employment considered in the calculation of the vested amount of his benefits and the determination of the Initial Participation Period.  An Eligible Employee's service shall be determined in twelve (12) month periods, based on Plan Years, including the Plan Year within which falls his date of hire.  During such twelve (12) month periods, a Year of Service will be granted if the Eligible Employee completes at least one thousand (1,000) Hours of Service.

1.3            Construction

The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender, and the singular may indicate the plural, unless the context clearly indicates the contrary.  The words "hereof', "herein", "hereunder" and other similar compounds of the word "here" shall, unless otherwise specifically stated, mean and refer to the entire Plan, not to any particular provision or Section.  Article and Section headings are included for convenience of reference and are not intended to add to, or subtract from, the terms of the Plan.

2.1            Initial Eligibility Requirements

(a)           Each Eligible Employee who was a Participant in the Plan immediately prior to the Effective Date shall continue as a Participant until the date participation terminates in accordance with Section 2.2 ,

(b)           Each individual who becomes an Eligible Employee on or after the Effective Date shall become a Participant hereunder on the date he first completes an Hour of Service as an Eligible Employee.

2.2            Loss of Eligible Employee Status

In the event of the demotion of a participating Eligible Employee, such that the employee is no longer an Eligible Employee within the meaning of Section 1.2(i) herein, the employee shall cease to be eligible to receive additional contributions under Sections 4.2 , 4.3 , 4.4 , and 4.5 , but except as specifically provided in Section 3.4 , such loss of Eligible Employee status shall not result in the cancellation of a Deferral Election under Section 4.1 prior to the end of the Plan Year in which such demotion occurs.  No distribution shall be permitted as a result of a loss of Eligible Employee status except to the extent specified in Section 6.3 in connection with a Separation from Service.

2.3            Termination of Participation

An individual who was a Participant shall cease to be a Participant when the individual is no longer an Eligible Employee and has ceased to have an Account balance under the Plan due to distribution and/or forfeiture.

3.1            Deferral Elections

(a)           A Deferral Election is an election to defer Compensation under Section 4.1 and/or to elect a form of payment under Section 6.4 that is made or deemed made by a Participant on a form and in a manner approved by the Committee.  A Deferral Election must be in writing, which may include an electronic format approved by the Committee.

A Deferral Election is considered made on the date the completed and valid election is received by the Committee.  A Deferral Election shall not be effective unless made by the close of business on the latest date specified for such election.  An initial Deferral Election under Section 3.2 shall become irrevocable for the remainder of the Plan Year to which it applies as of the date such election is made and may not be changed or cancelled during such Plan Year except as specified in Section 3.4 .  A subsequent Deferral Election under Section 3.3 shall become irrevocable for the Plan Year to which it applies as of the latest date for such election and may not be changed or cancelled during such Plan Year except as specified in Section 3.4 .  Such a subsequent Deferral Election that is made prior to such latest date may be revoked or changed prior to becoming irrevocable by making a new Deferral Election on or before such latest date.

A Deferral Election cannot be conditioned upon a Participant making or not making elective deferral contributions under the Qualified Plan.  Deferral Elections shall be independent of any elections made under the Qualified Plan.

(b)           A Deferral Election under Section 4.1 shall apply only to Compensation paid after the effective date of the election for services performed after the date the election is made.  For this purpose, (i) Compensation with respect to the payroll period containing the last day of the immediately preceding Plan Year (including directors fees payable with respect to the same time period) that is paid during the immediately following Plan Year in accordance with the Employer’s normal payroll and compensation practices is considered Compensation for services performed in such following Plan Year and (ii) an initial Deferral Election under Section 3.2(a) shall apply to a portion of the Compensation that is earned based upon a specified performance period beginning prior to the date the initial election is made.  Such portion shall equal the total amount of such Compensation for the performance period multiplied by the ratio of the number of days remaining in the performance period after the election to the total number of days in the performance period.

A Participant’s Deferral Election under Section 6.4 shall apply only to contributions (and related earnings and losses) made after the date the election is made, and shall not affect or change the form of payment for contributions (and related earnings and losses) made prior to such election.  A Deferral Election under Section 6.4 shall not apply to benefits payable to a Beneficiary after the death of a Participant.  Such benefits are payable solely in the form of a single lump sum cash payment in accordance with Section 6.4(a) .

(c)           The balance of a Participant’s Account attributable to Employer contributions under Sections 4.4 and 4.5 that are allocated to the Participant and that are not subject to an effective Deferral Election under Section 6.4 shall be payable in the default form of annual installments over a five-year period in accordance with Section 6.4 .  

3.2            Deferral Election for First Year of Eligibility

(a)           For the first Plan Year in which an Eligible Employee becomes a Participant in the Plan, the Participant may make a Deferral Election within 30 days after becoming a Participant.  A Deferral Election made after the end of such 30-day period shall not be effective during such first Plan Year of participation.

If an individual previously was a Participant in the Plan but ceased to be a Participant following a distribution of the Participant’s entire Account, the individual shall be treated as initially eligible to participate in the Plan as of the first date the individual becomes a Participant after receiving such distribution.  If an individual becomes an Eligible Employee and was not an Eligible Employee at any time during the preceding 24 months, such individual shall be treated as initially eligible to participate in the Plan after completing an Hour of Service as a newly Eligible Employee notwithstanding that such individual may already be a Participant due to an undistributed Account balance from an earlier period of participation in the Plan.

For purposes determining whether a Participant is initially eligible to participate in the Plan, the Plan and all Other Plans providing for elective deferrals shall be treated as a single plan.

(b)           If a Participant does not make an initial Deferral Election under Section 4.1 within the specified period, the Participant shall be deemed to have elected not to make any Participant contributions for such initial Plan Year of participation.  If a Participant does not make an initial Deferral Election under Section 6.4 within the specified period, the Participant shall be deemed to have elected to receive any contributions under ARTICLE IV for such initial Plan Year and for all future Plan Years in the default form specified in Section 3.1(c) .

3.3            Deferral Elections for Subsequent Plan Years

(a)           A Deferral Election other than an initial Deferral Election described in Section 3.2 shall be effective as of the first day of the Plan Year that is at least 15 days after the date the election is made.  A Deferral Election made less than 15 days before the beginning of a Plan Year shall not apply to such immediately following Plan Year.  A new Deferral Election shall apply prospectively and shall not change the form of payment elected or deemed elected under Section 6.4 .

(b)           If a Participant who is an Eligible Employee does not make an affirmative Deferral Election under Section 4.1 for a Plan Year following the initial Plan Year of participation, the Participant shall be deemed to have made the same Deferral Election or deemed Deferral Election for such Plan Year as was in effect for the Participant as of the last day of the immediately preceding Plan Year.

3.4            Cancellation of Deferral Elections

(a)           After a Deferral Election becomes irrevocable in accordance with Section 3.1 , the election shall remain in effect until the end of the Plan Year to which the election applies.  If the Participant is no longer an Eligible Employee as of the last day of such Plan Year, the Deferral Election shall be cancelled and shall not apply to a subsequent Plan Year notwithstanding Section 3.3(b) .

(b)           Notwithstanding the foregoing, a Deferral Election shall be cancelled during a Plan Year as follows.

(i)           A Participant’s Deferral Election under Section 4.1 shall be cancelled effective as of the date on which the Participant takes a hardship withdrawal from the Qualified Plan.

(ii)          A Participant’s Deferral Election under Section 4.1 shall be cancelled effective as of the date that is 30 days following the date the Participant incurs a disability.  Solely for purposes of this subsection, the term “disability” means any medically determinable physical or mental impairment resulting in the Participant’s inability to perform the duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months.  Determinations of disability shall be made by the Committee in its sole discretion.

A Deferral Election that is cancelled in accordance with the foregoing shall not be reinstated during the same Plan Year.  A cancelled election may only be replaced by a new election under Section 3.3 that is effective as of a subsequent Plan Year, and, in the case of a cancellation under subsection (b) (i) above, such new election cannot apply to a Plan Year that commences earlier than six months after the date of such hardship withdrawal.

4.1            Participant Contributions

A Participant may make a Deferral Election to red