Section 409A Nonqualified Deferred Compensation Plan

Employee Benefits Plan Agreement

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Title: Section 409A Nonqualified Deferred Compensation Plan
Governing Law: California Date: 1/29/2009
Industry: Construction Services Sector: Capital Goods

Exhibit 10.26

KB HOME

Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document

Section 409A Nonqualified Deferred Compensation Plan

Effective January 1, 2009

For Amounts Deferred or Vested On and After January 1, 2005

KB HOME

Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document

TABLE OF CONTENTS


	Page
ARTICLE 1 Definitions		1

ARTICLE 2 Selection, Enrollment, Eligibility		8

2.1 Selection by Committee		8

2.2 Enrollment and Eligibility Requirements; Commencement of Participation		8

ARTICLE 3 Deferral Commitments/Company Contribution Amounts/Company Matching Amounts /Vesting/Crediting/Taxes		8

3.1 Maximum Deferrals		9

3.2 Timing of Deferral Elections; Effect of Election Form		9

3.3 Withholding and Crediting of Annual Deferral Amounts		11

3.4 Company Contribution Amount		11

3.5 Company Matching Amount		12

3.6 Vesting		12

3.7 Crediting/Debiting of Account Balances		13

3.8 FICA and Other Taxes		15

ARTICLE 4 Short-Term Payout; Unforeseeable Emergencies		15

4.1 Short-Term Payouts		15

4.2 Postponing Short-Term Payouts		16

4.3 Other Benefits Take Precedence Over Short-Term Payouts		16

4.4 Unforeseeable Emergencies		16

ARTICLE 5 Retirement Benefit		17

5.1 Retirement Benefit		17

5.2 Payment of Retirement Benefit		17

ARTICLE 6 Pre-Retirement Survivor Benefit		18

6.1 Pre-Retirement Survivor Benefit		18

6.2 Payment of Pre-Retirement Survivor Benefit		18

ARTICLE 7 Termination Benefit		19

7.1 Termination Benefit		19

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KB HOME

Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document


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7.2 Payment of Termination Benefit		19

ARTICLE 8 Disability Benefit		19

8.1 Disability Benefit		19

8.2 Payment of Disability Benefit		20

ARTICLE 9 Post-Retirement Survivor Benefit		20

9.1 Death Prior to Completion of Retirement Benefit		20

9.2 Payment of Post-Retirement Survivor Benefit		20

ARTICLE 10 Beneficiary Designation		20

10.1 Beneficiary		20

10.2 Beneficiary Designation; Change; Spousal Consent		20

10.3 Acknowledgement		21

10.4 No Beneficiary Designation		21

10.5 Doubt as to Beneficiary		21

10.6 Discharge of Obligations		21

ARTICLE 11 Leave of Absence		21

11.1 Paid Leave of Absence		21

11.2 Unpaid Leave of Absence		21

ARTICLE 12 Termination of Plan, Amendment or Modification		21

12.1 Termination of Plan		22

12.2 Amendment		22

12.3 Plan Agreement		22

12.4 Effect of Payment		22

ARTICLE 13 Administration		22

13.1 Committee Duties		23

13.2 Administration Upon Change In Control		23

13.3 Agents		23

13.4 Binding Effect of Decisions		23

13.5 Indemnity of Committee		23

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Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document


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13.6 Employer Information		23

ARTICLE 14 Other Benefits and Agreements		24

14.1 Coordination with Other Benefits		24

ARTICLE 15 Claims Procedures		24

15.1 Presentation of Claim		24

15.2 Notification of Decision		24

15.3 Review of a Denied Claim		25

15.4 Decision on Review		25

15.5 Legal Action		26

ARTICLE 16 Trust		26

16.1 Establishment of the Trust		26

16.2 Interrelationship of the Plan and the Trust		26

16.3 Distributions From the Trust		26

ARTICLE 17 Miscellaneous		26

17.1 Status of Plan		26

17.2 Unsecured General Creditor		26

17.3 Employer’s Liability		27

17.4 Nonassignability		27

17.5 Not a Contract of Employment		27

17.6 Furnishing Information		27

17.7 Terms		27

17.8 Captions		27

17.9 Governing Law		27

17.10 Notice		27

17.11 Successors		28

17.12 Spouse’s Interest		28

17.13 Validity		28

17.14 Incompetent		28

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KB HOME

Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document


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17.15 Domestic Relations Orders		28

17.16 Distribution in the Event of Income Inclusion Under Code Section 409A		28

17.17 Deduction Limitation on Benefit Payments		29

APPENDIX A		30

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KB HOME

Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document

KB HOME

SECTION 409A NONQUALIFIED DEFERRED COMPENSATION PLAN

Effective January 1, 2009

Purpose

This Plan applies with respect to compensation deferred or vested on and after January 1, 2005. There is a separate KB Home Nonqualified Deferred Compensation Plan, effective as of March 1, 2001, that applies with respect to amounts deferred and vested prior to January 1, 2005. The purpose of this Plan is to provide specified benefits to a select group of management or highly compensated Employees who contribute materially to the continued growth, development and future business success of KB Home, a Delaware corporation, and its subsidiaries, if any, that sponsor this Plan. This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.

This Plan is intended to comply with all applicable law, including Code Section 409A and related Treasury guidance and Regulations, and shall be operated and interpreted in accordance with this intention. In order to transition to the requirements of Code Section 409A and related Treasury Regulations, the Committee may make available to Participants certain transition relief provided under Notice 2006-79 and Notice 2007-86, as described more fully in Appendix A of this Plan.

ARTICLE 1
Definitions

For the purposes of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:

1.1		“Account Balance” shall mean, with respect to a Participant, an entry on the records of the Employer equal to the sum of the Participant’s Annual Accounts. The Account Balance shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.

1.2		“Annual Account” shall mean, with respect to a Participant, an entry on the records of the Employer equal to (a) the sum of the Participant’s Annual Deferral Amount, Company Contribution Amount and Company Matching Amount for any one Plan Year, plus (b) amounts credited or debited to such amounts pursuant to this Plan, less (c) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Annual Account for such Plan Year. The Annual Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.

KB HOME

Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document

1.3		“Annual Deferral Amount” shall mean that portion of a Participant’s Base Salary and Bonus that a Participant defers in accordance with Article 3 for any one Plan Year, without regard to whether such amounts are withheld and credited during such Plan Year.

1.4		“Annual Installment Method” shall mean the method used to determine the amount of each payment due to a Participant who has elected to receive a benefit over a period of years in accordance with the applicable provisions of the Plan. The amount of each annual payment due to the Participant shall be calculated by multiplying the balance of the Participant’s benefit by a fraction, the numerator of which is one and the denominator of which is the remaining number of annual payments due to the Participant. The amount of the first annual payment shall be calculated as of the close of business on or around the Participant’s Benefit Distribution Date, and the amount of each subsequent annual payment shall be calculated on or around each anniversary of such Benefit Distribution Date. For purposes of this Plan, the right to receive a benefit payment in annual installments shall be treated as the entitlement to a single payment.

1.5		“Base Salary” shall mean the annual cash compensation relating to services performed during any calendar year, excluding distributions from nonqualified deferred compensation plans, bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, director fees and other fees, and automobile and other allowances paid to a Participant for employment services rendered (whether or not such allowances are included in the Employee’s gross income). Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or nonqualified plans of any Employer and shall be calculated to include amounts not otherwise included in the Participant’s gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by any Employer; provided, however, that all such amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payable in cash to the Employee.

1.6		“Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 10, that are entitled to receive benefits under this Plan upon the death of a Participant.

1.7		“Beneficiary Designation Form” shall mean the form established from time to time by the Committee that a Participant completes, signs and returns to the Committee to designate one or more Beneficiaries.

1.8		“Benefit Distribution Date” shall mean the date upon which all or an objectively determinable portion of a Participant’s vested benefits will become eligible for distribution. Except as otherwise provided in the Plan, a Participant’s Benefit Distribution Date shall be determined based on the earliest to occur of an event or scheduled date set forth in Articles 4 through 9, as applicable.

1.9		“Board” shall mean the board of directors of the Company.

KB HOME

Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document

1.10		“Bonus” shall mean compensation earned by a Participant under any Employer’s annual bonus plan (and shall not include any other incentive compensation).

1.11		“Change in Control” shall mean the first to occur of either of the following events:

	(a)		individuals who, as of March 1, 2001, constitute the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the directors constituting the Board of Directors, provided that any person becoming a director subsequent to March 1, 2001, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least three-quarters (3/4) of the then directors who are members of the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is (i) in connection with the acquisition by a third person, including a “group” as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Act”), of beneficial ownership, directly or indirectly, of 20% or more of the combined voting securities ordinarily having the right to vote for the election of directors of the Company (unless such acquisition of beneficial ownership was approved by a majority of the Board of Directors who are members of the Incumbent Board), or (ii) in connection with an actual or threatened election contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Act) shall be, for purposes of this Plan, considered as though such person were a member of the Incumbent Board; or

	(b)		the Board of Directors (a majority of which shall consist of directors who are members of the Incumbent Board) has determined that a Change in Control shall have occurred.

1.12		“Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.

1.13		“Committee” shall mean the committee described in Article 13.

1.14		“Company” shall mean KB HOME, a Delaware corporation, and any successor to all or substantially all of the Company’s assets or business.

1.15		“Company Contribution Amount” shall mean, for any one Plan Year, the amount determined in accordance with Section 3.4.

1.16		“Company Matching Amount” shall mean, for any one Plan Year, the amount determined in accordance with Section 3.5.

1.17		“Director” shall mean any member of the board of directors of any Employer.

1.18		“Disability” or “Disabled” shall mean that a Participant is either (a) unable 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 12 months, or (b) by reason of any medically determinable physical or

KB HOME

Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document

mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Participant’s Employer. For purposes of this Plan, a Participant shall be deemed Disabled if determined to be totally disabled by the Social Security Administration. A Participant shall also be deemed Disabled if determined to be disabled in accordance with the applicable disability insurance program of such Participant’s Employer, provided that the definition of “disability” applied under such disability insurance program complies with the requirements of this Section. Notwithstanding the foregoing, and solely for purposes of vesting under Section 3.6(d), “Disability” shall mean a period of disability during which a Participant qualifies for permanent disability benefits under the KB Home Long-term Disability Plan, or, if a Participant does not participate in such plan, a period of disability during which the Participant would have qualified for permanent disability benefits under such plan had the Participant been a participant in such plan, as determined in the sole discretion of the Committee, and if the Participant’s Employer does not sponsor such plan, or discontinues to sponsor such plan, Disability shall be determined by the Committee in its sole discretion.

1.19		“Election Form” shall mean the form, which may be in electronic format, established from time to time by the Committee that a Participant completes, signs and returns to the Committee to make an election under the Plan.

1.20		“Employee” shall mean a person who is an employee of an Employer.

1.21		“Employer(s)” shall be defined as follows:

	(a)		Except as otherwise provided in part (b) of this Section, the term “Employer” shall mean the Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Board to participate in the Plan and have adopted the Plan as a sponsor.

	(b)		For the purpose of determining whether a Participant has experienced a Separation from Service, the term “Employer” shall mean:

	(i)		The entity for which the Participant performs services and with respect to which the legally binding right to compensation deferred or contributed under this Plan arises; and

	(ii)		All other entities with which the entity described above would be aggregated and treated as a single employer under Code Section 414(b) (controlled group of corporations) and Code Section 414(c) (a group of trades or businesses, whether or not incorporated, under common control), as applicable. In order to identify the group of entities described in the preceding sentence, the Committee shall use an ownership threshold of at least 50% as a substitute for the 80% minimum ownership threshold that appears in, and otherwise must be used when applying, the applicable provisions of (A) Code Section 1563 for determining a controlled

KB HOME

Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document

group of corporations under Code Section 414(b), and (B) Treas. Reg. §1.414(c)-2 for determining the trades or businesses that are under common control under Code Section 414(c).

1.22		“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

1.23		“401(k) Plan” shall mean, that certain KB HOME 401(k) Savings Plan adopted by the Employer, as it may be amended from time to time.

1.24		“Participant” shall mean any Employee (i) who is selected by the Board (or a committee to which the Board has delegated such authority) from among the highly compensated and management employees of the Employer to participate in the Plan, (ii) who elects to participate in the Plan, (iii) who signs a Plan Agreement, an Election Form and a Beneficiary Designation Form, (iv) whose signed Plan Agreement, Election Form and Beneficiary Designation Form are accepted by the Committee, (v) who commences participation in the Plan, and (vi) whose Plan Agreement has not terminated. A spouse or former spouse of a Participant shall not be treated as a Participant in the Plan or have an account balance under the Plan, even if he or she has an interest in the Participant’s benefits under the Plan as a result of applicable law or property settlements resulting from legal separation or divorce.

1.25		“Performance-Based Compensation” shall mean compensation the entitlement to or amount of which is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(e).

1.26		“Plan” shall mean the KB HOME Section 409A Nonqualified Deferred Compensation Plan, which shall be evidenced by this instrument, as it may be amended from time to time, and by any other documents that together with this instrument define a Participant’s rights to amounts credited to his or her Account Balance.

1.27		“Plan Agreement” shall mean a written agreement in the form prescribed by or acceptable to the Committee that evidences a Participant’s agreement to the terms of the Plan and which may establish additional terms or conditions of Plan participation for a Participant. Unless otherwise determined by the Committee, the most recent Plan Agreement accepted with respect to a Participant shall supersede any prior Plan Agreements for such Participant. Plan Agreements may vary among Participants and may provide additional benefits not set forth in the Plan or limit the benefits otherwise provided under the Plan.

1.28		“Plan Year” shall mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.

1.29		“Retirement,” “Retire(s)” or “Retired” shall mean with respect to a Participant who is an Employee, a Separation from Service for any reason other than a leave of absence, death or

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Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document

Disability at such time as the sum of the Employee’s age and Years of Service equals at least sixty-five (65) or more, provided that the Employee is then at least fifty-five (55) years of age.

1.30

“Separation from Service” shall mean a termination of services provided by a Participant to his or her Employer, whether voluntarily or involuntarily, other than by reason of death or Disability, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(h). In determining whether a Participant has experienced a Separation from Service, the following provisions shall apply:

(a)

For a Participant who provides services to an Employer as an Employee, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur when such Participant has experienced a termination of employment with such Employer. A Participant shall be considered to have experienced a termination of employment when the facts and circumstances indicate that the Participant and his or her Employer reasonably anticipate that either (i) no further services will be performed for the Employer after a certain date, or (ii) that the level of bona fide services the Participant will perform for the Employer after such date (whether as an Employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by such Participant (whether as an Employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Employer if the Participant has been providing services to the Employer less than 36 months).

If a Participant is on military leave, sick leave, or other bona fide leave of absence, the employment relationship between the Participant and the Employer shall be treated as continuing intact, provided that the period of such leave does not exceed 6 months, or if longer, so long as the Participant retains a right to reemployment with the Employer under an applicable statute or by contract. If the period of a military leave, sick leave, or other bona fide leave of absence exceeds 6 months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship shall be considered to be terminated for purposes of this Plan as of the first day immediately following the end of such 6-month period. In applying the provisions of this paragraph, a leave of absence shall be considered a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer. For purposes of this paragraph, where a leave of absence is due to any 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 six months, where such impairment causes the Participant to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a 29-month period of absence shall be substituted for such 6-month period.

(b)

For a Participant who provides services to an Employer as an independent contractor, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur upon the expiration of the contract (or in the case of more than one contract, all

KB HOME

Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document

contracts) under which services are performed for such Employer, provided that the expiration of such contract(s) is determined by the Committee to constitute a good-faith and complete termination of the contractual relationship between the Participant and such Employer.

(c)

For a Participant who provides services to an Employer as both an Employee and an independent contractor , a Separation from Service generally shall not occur until the Participant has ceased providing services for such Employer as both as an Employee and as an independent contractor, as determined in accordance with the provisions set forth in parts (a) and (b) of this Section, respectively. Similarly, if a Participant either (i) ceases providing services for an Employer as an independent contractor and begins providing services for such Employer as an Employee, or (ii) ceases providing services for an Employer as an Employee and begins providing services for such Employer as an independent contractor, the Participant will not be considered to have experienced a Separation from Service until the Participant has ceased providing services for such Employer in both capacities, as determined in accordance with the applicable provisions set forth in parts (a) and (b) of this Section.

Notwithstanding the foregoing provisions in this part (c), if a Participant provides services for an Employer as both an Employee and as a Director, to the extent permitted by Treas. Reg. §1.409A-1(h)(5) the services provided by such Participant as a Director shall not be taken into account in determining whether the Participant has experienced a Separation from Service as an Employee.

(d)

For purposes of this Subsection, services performed for the Employer shall include service performed both for the Employer and for any other corporation that is a member of the same “controlled group” of corporations as the Employer under Section 414(b) of the Code or any other trade or business (such as a partnership)_that is under common control with the Employer as determined under Section 414(c) of the Code, in each case as modified by Treasury Regulation Section 1.409A-1(h)(3) and substituting “at least 50 percent” for “at least 80 percent” each place it appears in Section 1563(a) of the Code or Treasury Regulation Section 1.414(c)-2.

1.31		“Specified Employee” shall mean any Participant who is determined to be a “key employee” (as defined under Code Section 416(i) without regard to paragraph (5) thereof) for the applicable period, as determined annually by the Committee in accordance with the methodology specified by resolution of the Board or the Management Development and Compensation Committee of the Board and in accordance with Treas. Reg. §1.409A-1(i).

1.32		“Trust” shall mean one or more trusts established by the Company in accordance with Article 16.

1.33		“Unforeseeable Emergency” shall mean a severe financial hardship of the Participant resulting from (a) an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary or the Participant’s dependent (as defined in Code Section 152 without regard to

KB HOME

Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document

paragraphs (b)(1), (b)(2) and (d)(1)(b) thereof), (b) a loss of the Participant’s property due to casualty, or (c) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined by the Committee based on the relevant facts and circumstances.

1.34

“Years of Service” shall mean the total number of full years in which a Participant has been employed by one or more Employers. For purposes of this definition, a year of employment shall be a 365 day period (or 366 day period in the case of a leap year) that, for the first year of employment, commences on the Employee’s date of hiring and that, for any subsequent year, commences on an anniversary of that hiring date. A partial year of employment shall not be treated as a Year of Service.

ARTICLE 2
Selection, Enrollment, Eligibility

2.1		Selection by Committee . Participation in the Plan shall be limited to,a select group of management or highly compensated Employees (as determined by the Committee in its sole discretion). From that group, the Committee shall select, in its sole discretion, those individuals who may actually participate in this Plan.

2.2		Enrollment and Eligibility Requirements; Commencement of Participation .

	(a)		As a condition to participation, each selected Employee shall complete, execute and return to the Committee a Plan Agreement, an Election Form and a Beneficiary Designation Form by the deadline(s) established by the Committee in accordance with the applicable provisions of this Plan. In addition, the Committee shall establish from time to time such other enrollment requirements as it determines, in its sole discretion, are necessary.

	(b)		Each selected Employee who is eligible to participate in the Plan shall commence participation in the Plan on the date that the Committee determines that the Employee has met all enrollment requirements set forth in this Plan and required by the Committee, including returning all required documents to the Committee within the specified time period.

	(c)		If an Employee fails to meet all requirements established by the Committee within the period required, that Employee shall not be eligible to participate in the Plan during such Plan Year.

KB HOME

Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

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ARTICLE 3
Deferral Commitments/Company Contribution Amounts/
Company Matching Amounts/ Vesting/Crediting/Taxes

3.1

Maximum Deferrals .

(a)

Maximum Deferrals for Annual Deferral Amount . For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Salary and Bonus, up to the following maximum percentages for each deferral elected:


Deferral	Maximum Percentage
Base Salary		75%
Bonus		75%

(b)

Maximum Deferrals for Short Plan Year . Notwithstanding the foregoing, if a Participant first becomes a Participant after the first day of a Plan Year, then to the extent required by Section 3.2 and Code Section 409A and related Treasury Regulations, the maximum amount of the Participant’s Base Salary and Bonus that may be deferred by the Participant for the Plan Year shall be determined by applying the percentages set forth in Section 3.1(c) to the portion of such compensation attributable to services performed after the date that the Participant’s deferral election is made.

3.2

Timing of Deferral Elections; Effect of Election Form .

(a)

General Timing Rule for Deferral Elections . Except as otherwise provided in this Section 3.2, in order for a Participant to make a valid election to defer Base Salary and Bonus, the Participant must submit an Election Form on or before the deadline established by the Committee, which in no event shall be later than the December 31 ^st preceding the Plan Year in which such compensation will be earned.

Any deferral election made in accordance with this Section 3.2(a) shall be irrevocable; provided, however, that if the Committee permits or requires Participants to make a deferral election by the deadline described above for an amount that qualifies as Performance-Based Compensation, the Committee may permit a Participant to subsequently change his or her deferral election for such compensation by submitting a new Election Form in accordance with Section 3.2(d) below.

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Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

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(b)

Timing of Deferral Elections for Newly Eligible Plan Participants . A selected Employee who first becomes eligible to participate in the Plan on or after the beginning of a Plan Year, as determined in accordance with Treas. Reg. §1.409A-2(a)(7)(ii) and the “plan aggregation” rules provided in Treas. Reg. §1.409A-1(c)(2), may be permitted to make an election to defer the portion of Base Salary or Bonus, attributable to services to be performed after such election, provided that the Participant submits an Election Form on or before the deadline established by the Committee, which in no event shall be later than 30 days after the Participant first becomes eligible to participate in the Plan.

If a deferral election made in accordance with this Section 3.2(b) relates to compensation earned based upon a specified performance period, the amount eligible for deferral shall be equal to (i) the total amount of compensation for the performance period, multiplied by (ii) a fraction, the numerator of which is the number of days remaining in the service period after the Participant’s deferral election is made, and the denominator of which is the total number of days in the performance period.

Any deferral election made in accordance with this Section 3.2(b) shall become irrevocable no later than the 30 ^th day after the date the selected Employee becomes eligible to participate in the Plan.

(c)

Timing of Deferral Elections for Fiscal Year Compensation . In the event that the fiscal year of an Employer is different than the taxable year of a Participant, the Committee may determine that a deferral election may be made for “fiscal year compensation” (as defined below), by submitting an Election Form on or before the deadline established by the Committee, which in no event shall be later than the last day of the Employer’s fiscal year immediately preceding the fiscal year in which the services related to such compensation will begin to be performed. For purposes of this Section, the term “fiscal year compensation” shall only include Bonus amounts relating to a service period coextensive with one or more consecutive fiscal years of the Employer, of which no amount is paid or payable during the Employer’s fiscal year(s) that constitute the service period.

A deferral election made in accordance with this Section 3.2(c) shall be irrevocable; provided, however, that if the Committee permits or requires Participants to make a deferral election by the deadline described in this Section 3.2(c) for an amount that qualifies as Performance-Based Compensation, the Committee may permit a Participant to subsequently change his or her deferral election for such compensation by submitting a new Election Form in accordance with 3.2(d) below.

(d)

Timing of Deferral Elections for Performance-Based Compensation . Subject to the limitations described below, the Committee may determine that an irrevocable deferral election for an amount that qualifies as Performance-Based Compensation may be made by submitting an Election Form on or before the deadline established by the Committee, which in no event shall be later than 6 months before the end of the performance period.

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Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

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In order for a Participant to be eligible to make a deferral election for Performance-Based Compensation in accordance with the deadline established pursuant to this Section 3.2(d), the Participant must have performed services continuously from the later of (i) the beginning of the performance period for such compensation, or (ii) the date upon which the performance criteria for such compensation are established, through the date upon which the Participant makes the deferral election for such compensation. In no event shall a deferral election submitted under this Section 3.2(d) be permitted to apply to any amount of Performance-Based Compensation that has become readily ascertainable.

(e)

Timing Rule for Deferral of Compensation Subject to Risk of Forfeiture . With respect to compensation (i) to which a Participant has a legally binding right to payment in a subsequent year, and (ii) that is subject to a forfeiture condition requiring the Participant’s continued services for a period of at least 12 months from the date the Participant obtains the legally binding right, the Committee may determine that an irrevocable deferral election for such compensation may be made by timely delivering an Election Form to the Committee in accordance with its rules and procedures, no later than the 30 ^th day after the Participant obtains the legally binding right to the compensation, provided that the election is made at least 12 months in advance of the earliest date at which the forfeiture condition could lapse, as determined in accordance with Treas. Reg. §1.409A-2(a)(5).

Any deferral election(s) made in accordance with this Section 3.2(e) shall become irrevocable no later than the 30 ^th day after the Participant obtains the legally binding right to the compensation subject to such deferral election(s).

3.3		Withholding and Crediting of Annual Deferral Amounts . For each Plan Year, the Base Salary portion of the Annual Deferral Amount shall be withheld from each regularly scheduled Base Salary payroll in equal amounts, as adjusted from time to time for increases and decreases in Base Salary. The Bonus portion of the Annual Deferral Amount shall be withheld at the time the Bonus are or otherwise would be paid to the Participant, whether or not this occurs during the Plan Year itself. Annual Deferral Amounts shall be credited to the Participant’s Annual Account for such Plan Year at the time such amounts would otherwise have been paid to the Participant.

3.4		Company Contribution Amount .

	(a)		For each Plan Year, an Employer may be required to credit amounts to a Participant’s Annual Account in accordance with employment or other agreements entered into between the Participant and the Employer, which amounts shall be part of the Participant’s Company Contribution Amount for that Plan Year. Such amounts shall be credited to the Participant’s Annual Account for the applicable Plan Year on the date or dates prescribed by such agreements.

	(b)		For each Plan Year, an Employer, in its sole discretion, may, but is not required to, credit any amount it desires to any Participant’s Annual Account under this Plan, which amount shall be part of the Participant’s Company Contribution Amount for that Plan Year. The

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Section 409A Nonqualified Deferred Compensation Plan — Effective January 1, 2009

Master Plan Document

			amount so credited to a Participant may be smaller or larger than the amount credited to any other Participant, and the amount credited to any Participant for a Plan Year may be zero, even though one or more other Participants receive a Company Contribution Amount for that Plan Year. The Company Contribution Amount described in this Section 3.4(b), if any, shall be credited to the Participant’s Annual Account for the applicable Plan Year on a date or dates to be determined by the Committee.

	(c)		If not otherwise specified in the Participant’s employment or other agreement entered into between the Participant and the Employer, the amount (or the method or formula for determining the amount) of a Participant’s Company Contribution Amount shall be set forth in writing in one or more documents, which shall be deemed to be incorporated into this Plan in accordance with Section 1.26, no later than the date on which such Company Contribution Amount is credited to the applicable Annual Account of the Participant.

3.5

Company Matching Amount . A Participant&rsq

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