NATIONAL WESTERN LIFE INSURANCE COMPANY GRANDFATHERED NON-QUALIFIED DEFINED BENEFIT PLAN

1.1            Purpose of the Plan

This Plan is established by the Employer 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 tax qualified defined benefit plan maintained by the Employer.  This Plan is not intended to, and does not, qualifies under sections 401(a) and 501(a) of the Internal Revenue Code, and is designed to be exempt from the requirements of the Employee Retirement Income Security Act.

The Plan is amended and restated as set forth herein effective as of the Freeze Date solely for the purpose of incorporating prior amendments (all of which were effective prior to January 1, 2005) and documenting the freezing of all benefits effective as of the Freeze Date.  Nothing in this amended and restated Plan is intended to constitute or shall be construed as constituting a material modification of the Plan.  Because the Plan has not been materially modified after October 3, 2004 and does not provide for any benefits not earned and vested as of December 31, 2004, the Plan is intended to be exempt from 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, payable at the Participant’s Normal Retirement Date, which has accrued at any time under the provisions of the Plan, determined as if the Participant had then terminated his employment with the Employer.

(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)            Beneficiary :  The person(s) and/or the trust(s) created for the benefit of a person or persons who are the natural object of the Participant’s bounty, or the Participant’s estate, whichever is designated by the Participant to receive the benefits payable hereunder upon his death.

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

(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.  Prior to January 1, 2000, “NWAMI compensation” was excluded from the definition of “Compensation.”

(f)            Disability :  A physical or mental condition of a Participant resulting from bodily injury, disease or mental disorder which renders him incapable of continuing any gainful occupation.  The determination of Disability shall be made either as a result of the Participant qualifying for a pension under the federal Social Security Act, or based upon such evidence as is determined to be applicable by the Employer in its sole discretion.

(g)            Early Retirement Date :  The first day of the month which is prior to a Participant’s Normal Retirement Date, but follows his attainment of age fifty-five (55), completion of fifteen (15) Years of Service, and his termination of employment from the Employer.

(h)            Effective Date :  January 1, 1991.

(i)            Eligible Employee :  A person employed by the Employer as of December 31, 1990, in the position of Senior Vice President or above, or a person 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 a member of the select group of management or highly compensated employees of the Employer, as such term is defined under section 201 of the Employee Retirement Income Security Act of 1974, and regulations and rulings promulgated thereunder by the Department of Labor.

(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.

(k)            Freeze Date :  December 31, 2004.

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

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

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

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

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

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

(r)            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.

(s)            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.

1.4            Cessation of Benefit Accruals and Vesting and Early Retirement Eligibility Service

Notwithstanding any other provision of the Plan to the contrary, no individual (including individuals who ceased to be Employees prior to the Freeze Date) shall become a Participant, be credited with additional Years of Service for vesting or Early Retirement Date eligibility purposes, or accrue any benefits under the Plan after the Freeze Date.  For purposes of the immediately preceding sentence, an individual would be considered to accrue benefits under the Plan after the Freeze Date if he would experience an increase in any retirement, ancillary, or other benefit already earned or accrued under the Plan as of the Freeze Date.  Without limiting the generality of the foregoing, an individual would experience an increase in benefits if he, for example, is credited with new Service, Compensation, or other remuneration taken into account under the Plan.  Therefore, no individual shall be credited with additional Service after the Freeze Date, and remuneration paid after the Freeze Date shall not be taken into account under the Plan for benefit accrual purposes.  The provisions of this Section are intended to comply with an exemption from the requirements of Code section 409A and shall be construed in accordance therewith.  The provisions of this paragraph shall not be considered a “material modification” of the Plan, but shall instead be considered a cessation of future deferrals in accordance with Treasury regulation section 1.409A-6(a)(4)(iii).

2.1            Eligibility Requirements

An Eligible Employee shall become a Participant hereunder as of the first January 1 or July 1 which is coincident with or next follows his completion of one (1) Year of Service.

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 with the meaning of Section 1.2(i) herein, the employee shall lose his status as a Participant, and no further contributions by the employee shall be allowed 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 retires at his Normal Retirement Date shall be equal to a. less b. less c., but in no event greater than d., where:

(a)           equals the 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 benefit which actually becomes payable under the terms of the Qualified Plan at the Participant’s Normal Retirement Date, and

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

(d)           equals the 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, except that the proration over fifteen (15) years shall instead be calculated over thirty (30) years (i.e. the benefit shall equal fifty percent (50%) of Final Average Compensation less fifty percent (50%) of Primary Insurance Amount as defined under the Qualified Plan, for thirty (30) or more years of service at Normal Retirement Date or, alternatively, each portion of the formula shall be determined as One and two-thirds percent (1.667%) for each year of service to the maximum thirty (30) years of service), and except that NWAMI Compensation normally excluded by reason of Section 1.2(e) hereof shall be included, less the benefit provided under the Qualified Plan.

The foregoing benefit shall be payable as of the Participant’s Normal Retirement Date, in accordance with Article V hereof as to form and duration of payment.

4.2            Late Retirement Benefit

The benefit to be paid pursuant to this Plan to a Participant who retires after his Normal Retirement Date shall be equal to a. less b. less c., but in no event greater than d., where:

(a)           equals the Actuarial Equivalent of the 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 benefit which actually becomes payable under the terms of the Qualified Plan at the Participant’s Late Retirement Date, and

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

(d)           equals the benefit which would have been payable at the Participant’s Late 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, except that the proration over fifteen (15) years shall instead be calculated over thirty (30) years (i.e. the benefit shall equal fifty percent 50%) of Final Average Compensation less fifty percent (50%) of Primary Insurance Amount as defined under the Qualified Plan, for thirty (30