NATIONAL WESTERN LIFE INSURANCE COMPANY NON-QUALIFIED DEFINED BENEFIT PLAN

1.1            Purpose of the Plan

This Plan was established by the Employer effective as of the Original Effective Date to provide an additional benefit for certain select management employees, who are defined below, to augment the retirement benefit which is otherwise provided to such employees under the Qualified Plan (as defined below).  This Plan is not intended to, and does not, qualify under sections 401(a) and 501(a) of the Code (as defined below), 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 Nonqualified Plan.  However, this Plan is a separate plan from the Grandfathered Nonqualified Plan, and nothing herein shall be construed to constitute a material modification of the Grandfathered Nonqualified Plan or to otherwise cause the Grandfathered Nonqualified Plan to be subject to section 409A of the Code.  Benefit accruals and service crediting under the Grandfathered Nonqualified Plan were frozen effective as of December 31, 2004.  Benefit accruals under the Qualified Plan were frozen effective as of December 31, 2007.

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 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)            Accrued Benefit :  The benefit determined under Article IV hereof which has accrued at any time under the provisions of the Plan.

(b)            Actuarial Equivalent :  The equivalent in value of amounts expected to be received under the Plan under different forms of payment, determined based upon an interest assumption of eight and one-half percent (8.5%) and a mortality assumption based on the 1984 Unisex Pension (UP84) Mortality Table.

(c)            Annual Compensation :  For a Plan Year means the sum of the Participant’s “monthly compensation” (as defined in Section 1.2(f) ) for each month of the Plan Year.

(d)            Beneficiary :  The natural person or natural persons designated (or deemed designated) by a Participant under Section 5.3 to receive any benefits payable hereunder after the death of the Participant.

(e)            Code :  The Internal Revenue Code of 1986, as it may be amended from time to time, including any successor.

(f)            Compensation :  Twelve (12) times the average of the Participant’s monthly compensation over the sixty (60)-consecutive calendar months (or the period of employment, if less) immediately prior to his Separation from Service.  “Monthly compensation” shall be the total cash remuneration paid by the Employer during each month of the Plan Year, as reported on Form W-2 or its subsequent equivalent.  Notwithstanding the foregoing, “monthly compensation” (i) shall include director’s fees; amounts deferred under Code sections 125, 132(f)(4), or 401(k); and nonqualified elective deferrals; (ii) for periods on and after December 5, 2003, 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; and (iii) for periods prior to January 1, 2000, shall exclude “NWAMI compensation”.  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.

(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)            Early Retirement Age :  The date on which the Participant attains age fifty-five (55)

(i)            Early Retirement Date :  The first day of the month which is prior to a Participant’s Normal Retirement Date, but follows his attainment of Early Retirement Age, completion of fifteen (15) years of Service, and Separation from Service.

(j)            Effective Date :  January 1, 2009

(k)            Eligible Employee :  An employee of the Employer who is listed on Schedule 1.2(k) , as such Schedule may be amended from time to time by written action of the President of the Employer.  However, no person shall be selected as or remain an Eligible Employee except a member of the select group of management or highly compensated employees of the Employer, as such term is defined under section 201 of ERISA.

(l)            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(v) , 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).

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

(n)            Grandfathered Nonqualified Plan :  the Grandfathered National Western Life Insurance Company Non-Qualified Defined Benefit Plan, originally adopted effective as of January 1, 1991 and as amended from time to time.

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

(p)            Normal Retirement Date :  The first day of the month coincident with or next following a Participant’s Normal Retirement Age.

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

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

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

(t)            Plan Year :  The twelve month period beginning on January 1 and ending on December 31 each year.

(u)            Qualified Plan :  The National Western Life Insurance Company Pension Plan, as it may be amended from time-to-time.

(v)            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.

(w)            Service :  The period of a Participant’s employment considered in the determination of his eligibility hereunder and in the calculation of the vested amount of his benefits.  A Participant’s Service shall be determined in twelve (12)-month periods, commencing with the twelve (12)-month period that begins on his date of hire with the Employer, and thereafter 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 Participant completes at least one thousand (1,000) hours of Service.  An hour of Service is each hour for which the Participant 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.

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

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            Eligibility Requirements

Each individual who is an Eligible Employee as of the Original Effective Date shall become a Participant hereunder as of such date.  No individual who was not an Eligible Employee as of the Original Effective Date shall become a Participant hereunder.

2.2            Loss of Eligible Employee Status

In the event of the demotion or Separation from Service of a participating Eligible Employee, such that the employee is no longer an Eligible Employee within the meaning of Section 1.2(k) herein, the employee shall lose his status as a Participant, and no further benefit accruals for the employee shall be allowed under the Plan.  If such an employee again becomes an Eligible Employee, the employee shall not again become a Participant and shall not accrue any additional benefits under the Plan.

3.1            Funding

The Employer is under no obligation to earmark or set aside any funds toward the funding of this Plan.  However, the benefits to be provided to each Participant hereunder may be paid from the assets, if any, of the National Western Life Insurance Company Non-Qualified Plans Trust, if any, designed to be an irrevocable grantor trust under Code section 671.  However, if the assets of such trust are not available or are insufficient to pay such benefits or if no such trust is established or funded, then benefits hereunder shall be paid from the general assets of the Employer.  The rights of each Participant and any Beneficiary hereunder shall be solely those of an unsecured general creditor of the Employer.

4.1            Normal Retirement Benefit

The benefit to be paid pursuant to this Plan to a Participant who Separates from Service at his Normal Retirement Date shall be equal to (a) less (b) less (c) less (d), but in no event greater than (e), where:

(a)           equals the annual single life annuity benefit which would have been payable at the Participant’s Normal Retirement Date under the terms of the Qualified Plan as of December 31, 1990, as if that plan had continued without change, and without regard to limitations applicable under Code sections 401(a)(17) and 415, and

(b)           equals the annual single life annuity benefit which is payable (or which would be payable if elected by the Participant) under the terms of the Qualified Plan at the Participant’s Normal Retirement Date, and

(c)           equals the Actuarially Equivalent annual single life annuity which may be provided by an accumulation of two percent (2%) of the Participant’s Annual Compensation for each year of Service on and after January 1, 1991, accumulated at an assumed interest rate of eight and one-half percent (8.5%) to his Normal Retirement Date, and

(d)           equals the frozen annual single life annuity benefit which is payable (or which would be payable if elected by the Participant) at the Participant’s Normal Retirement Date under the terms of the Grandfathered Nonqualified Plan, but excluding any benefit accrued under Section 4.8 of such plan, and

(e)           equals (i) the product of the following amounts determined as of the Participant’s Normal Retirement Date (A) the Participant’s years of Service (up to a maximum of thirty (30)) multiplied by (B) 1.66667% multiplied by (C) the excess of the Participant’s Compensation over the Participant’s annualized “Primary Social Security Benefit” as defined by the terms of the Qualified Plan as of December 31, 1990, as if such plan had continued without change and without regard to limitations applicable under Code sections 401(a)(17) and 415, less (ii) the sum of the benefits described in subsections (b) and (d) above.

The foregoing benefit shall be payable effective as of the Participant’s Separation from Service at his Normal Retirement Date, in accordance with Article V hereof as to the time, form, and duration of payment.  Monthly installments under Article V shall be calculated by dividing the Participant’s annual benefit by twelve (12).

4.2            Late Retirement Benefit

The benefit to be paid pursuant to this Plan to a Participant who Separates from Service after his Normal Retirement Date shall be equal to (a) less (b) less (c) less (d), but in no event greater than (e), with such benefit amount adjusted for Actuarial Equivalence to reflect commencement after the Participant’s Normal Retirement Date, where:

(a)           equals the annual single life annuity benefit which would have been payable at the Participant’s Normal Retirement Date under the terms of the Qualified Plan as of December 31, 1990, as if that plan had continued without change, and without regard to limitations applicable under Code sections 401(a)(17) and 415, and

(b)           equals the annual single life annuity benefit which is payable (or which would be payable if elected by the Participant) under the terms of the Qualified Plan at the Participant’s Normal Retirement Date, and  

(c)           equals the Actuarially Equivalent annual single life annuity which may be provided by an accumulation of two percent (2%) of the Participant’s Annual Compensation for each year of Service on and after January 1, 1991, accumulated at an assumed interest rate of eight and one-half percent (8.5%) to his Normal Retirement Date, and

(d)           equals the frozen annual single life annuity benefit which is payable (or which would be payable if elected by the Participant) at the Participant’s Normal Retirement Date under the terms of the Grandfathered Nonqualified Plan, but excluding any benefit accrued under Section 4.8 of such plan, and

(e)           equals (i) the product of the following amounts determined as of the Participant’s Normal Retirement Date (A) the Participant’s years of Service (up to a maximum of thirty (30)) multiplied by (B) 1.66667% multiplied by (C) the excess of the Participant’s Compensation over the Participant’s annualized “Primary Social Security Benefit” as defined by the terms of the Qualified Plan as of December 31, 1990, as if such plan had continued without change and without regard to limitations applicable under Code sections 401(a)(17) and 415, less (ii) the sum of the benefits described in subsections (b) and (d) above.

The foregoing benefit shall be payable effective as of the Participant’s Separation from Service, in accordance with Article V hereof as to the time, form, and duration of payment.  Monthly installments under Article V shall be calculated by dividing the Participant’s annual benefit by twelve (12).

4.3            Early Retirement Benefit

The benefit to be paid pursuant to this Plan to a Participant who Separates from Service on or after his Early Retirement Date and before his Normal Retirement Date shall be equal to (a) less (b) less (c) less (d), but in no event greater than (e) and shall be adjusted as provided in (f), where:

(a)           equals the annual single life annuity benefit which would have been payable at the Participant’s Normal Retirement Date under the terms of the Qualified Plan as of December 31, 1990, as if that plan had continued without change, and without regard to limitations applicable under Code sections 401(a)(17) and 415, multiplied by a fraction, the numerator of which is his years of Service as of his Early Retirement Date, and the denominator of which is his years of Service he would have earned had he not Separated from Service prior to his Normal Retirement Date, and

(b)           equals the annual single life annuity benefit which is payable (or which would be payable if elected by the Participant) under the terms of the Qualified Plan at the Participant’s Normal Retirement Date, and

(c)           equals the Actuarially Equivalent annual single life annuity commencing at the Participant’s Normal Retirement Date which may be