SEPTEMBER 17, 1998
AMENDMENTS TO THE
LOWE'S COMPANIES, INC. 1994 INCENTIVE PLAN
On September 17, 1998, the Plan was amended as follows:
a. A new section 1.12, entitled "Deferred Stock Benefit," was added to
the Plan and reads as follows:
1.12. Deferred Stock Benefit means "Deferred Stock Benefit" as
defined in section 2(h) of the Program.
b. A new section 1.20, entitled "Program," was added to the Plan and
reads as follows:
1.20. Program means the Lowe's Companies, Inc.Deferred
Compensation Program, set forth as Exhibit I hereto.
c. The remaining sections of Article I were renumbered accordingly.
d. The second sentence of Article II was amended to read as follows:
The Plan is intended to permit the grant of Stock Awards, STARs,
the grant of both Options qualifying under Section 422 of the Code
("incentive stock options") and Options not so qualifying, the
grant of Incentive Awards, and the deferral of income in accordance
with the Program.
e. The fifth sentence of Article III was amended to read as follows:
In addition, the Administrator shall have complete authority to
interpret all provisions of this Plan; to prescribe the form of
Agreements and documents used in connection with the Program; to
adopt, amend, and rescind rules and regulations pertaining to the
administration of the Plan; and to make all other determinations
necessary or advisable for the administration of this Plan.
f. The following sentence was added at the end of Section 5.01:
On the distribution of Deferred Stock Benefits, the Company may
issue shares of Common Stock from its authorized but unissued
Common Stock
g. Section 5.02 was amended to read as follows:
The maximum aggregate number of shares of Common Stock that may be
issued under this Plan (including shares of Common Stock issued
under the Plan as in effect before January 31, 1994 and after giving
effect to the March 16, 1994 two-for-one stock split) is 5,000,000
shares, subject to adjustment as provided in Article X such that
2,423,640 shares of Common Stock will be available for issuance
under Options and Stock Awards granted on and after January 31,
1994, or as the portion of a Deferred Stock Benefit that represents
forfeited or deferred shares of Common Stock subject to such Options
and Stock Awards, or as earnings on any shares of Common Stock
deferred or forfeited under the Program. Subject to the limitation
set forth in the preceding sentence, the maximum aggregate number
of shares that may be issued under this Plan as Stock Awards (or as
the portion of a Deferred Stock Benefit that represents forfeited
shares of Common Stock subject to such awards) is 1,000,000 shares,
subject to adjustment as provided in Article X. Shares of Common
Stock issued in settlement of a Deferred Stock Benefit, and the
shares of Common Stock subject to the Option or Stock Award (or
portion thereof) with respect to which such Deferred Stock Benefit
was earned or elected, shall be counted toward the foregoing limits
only once (even in the case of shares subject to a Stock Award that
are canceled in connection with a Deferred Stock Benefit); provided,
however, that shares of Common Stock issued in settlement of a
Deferred Stock Benefit that constitute earnings on deferred or
forfeited shares of Common Stock shall be counted separately toward
the foregoing limits.
h. Section 5.03 was amended to read as follows:
If an Option is terminated, in whole or in part, for any reason
other than its exercise (including an exercise that results in a
Deferred Stock Benefit), the number of shares of Common Stock
allocated to the Option or portion thereof may be reallocated to
other Options and Stock Awards to be granted under this Plan and to
the settlement of Deferred Stock Benefits. If a Stock Award is
forfeited, in whole or in part, for any reason (other than a
cancellation that results in a Deferred Stock Benefit), the number
of shares of Common Stock allocated to the Stock Award or portion
thereof may be reallocated to other Options and Stock Awards to be
granted under this Plan, and to the settlement of Deferred Stock
Benefits. If a Deferred Stock Benefit is forfeited, in whole or in
part, the number of shares of Common Stock allocated to the Deferred
Stock Benefit or portion thereof may be reallocated to other Options
and Stock Awards to be granted under this Plan, and to the
settlement of other Deferred Stock Benefits.
i. Article X was amended to read as follows:
The maximum number of shares as to which Options and Stock Awards
may be granted under this Plan and the maximum number of shares that
may be distributed as Deferred Stock Benefits shall be
proportionately adjusted, and the terms of outstanding Stock Awards,
Options, STARs (including any limitation on the maximum amount
payable under a STAR award) and undistributed Deferred Stock
Benefits, and the per individual limitations on the number of shares
or Units for which Options, STARs, and Stock Awards may be granted
shall be adjusted as the Committee shall determine to be equitably
required, in the event that (a) the Company (i) effects one or more
stock dividends, stock split-ups, subdivisions or consolidations of
shares or (ii) engages in a transaction to which Section 424 of the
Code applies or (b) there occurs any other event which, in the
judgment of the Committee, necessitates such action. Any
determination made under this Article X by the Committee shall be
final and conclusive.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash
or property, or for labor or services, either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor, or
upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
maximum number of shares as to which Options and Stock Awards may
be granted or the maximum number of shares that may be distributed
as Deferred Stock Benefits; the per individual limitations on the
number of shares or Units for which Options, STARs and Stock Awards
may be granted; or the terms of outstanding Stock Awards, Options or
SARs or undistributed Deferred Stock Benefits.
The Committee may make Stock Awards and may grant Options and STARs
in substitution for performance shares, phantom shares, stock
awards, stock options, stock appreciation rights, or similar awards
held by an individual who becomes an employee of the Company or an
Affiliate in connection with a transaction described in the first
paragraph of this Article X. Notwithstanding any provision of the
Plan (other than the limitation of Article V), the terms of such
substituted Stock Awards or Option or STAR grants shall be as the
Committee, in its discretion, determines is appropriate.
j. The following sentence was added at the end of Article XIII:
No amendment shall, without the consent of a Program Participant
(as defined in the Program) adversely affect any rights of such
Program Participant under the Program as in effect at the time such
amendment is made, unless such amendment is made in accordance with
section 12 of the Program.
k. The following sentence was added at the end of Article XIV:
The Program shall remain in effect until all Deferred Stock Accounts
(as defined in the Program) have been distributed in full, unless
sooner terminated by the Board in accordance with section 12 of the
Program.
l. The Lowe's Companies, Inc. Deferred Compensation Program attached
hereto as Exhibit I was added to the Plan as Exhibit I.
Exhibit I
LOWE'S COMPANIES, INC.
1994 INCENTIVE PLAN
LOWE'S COMPANIES, INC.
DEFERRED COMPENSATION PROGRAM
TABLE OF CONTENTS
SECTION PAGE
1. PURPOSE 5
2. DEFINITIONS 5
3. PARTICIPATION 7
4. DEFERRAL ELECTION 7
5. EFFECT OF NO ELECTION 8
6. DEFERRED STOCK BENEFITS 8
7. DISTRIBUTIONS 9
8. HARDSHIP DISTRIBUTIONS 11
9. COMPANY'S OBLIGATION 12
10. CONTROL BY PROGRAM PARTICIPANT 12
11. CLAIMS AGAINST PROGRAM PARTICIPANT'S DEFERRED BENEFITS 12
12. AMENDMENT OR TERMINATION 12
13. NOTICES 12
14. WAIVER 13
15. CONSTRUCTION 13
1. PURPOSE.
The Program is intended to constitute a deferred compensation plan for a
select group of management and highly compensated employees of the
Company and its Affiliates.
2. DEFINITIONS.
The following definitions apply to this Program and to the Deferral
Election Forms. All capitalized terms not defined in this section 2
shall have the same meaning as given them in the Company's 1994 Incentive
Plan, of which this Program is a part.
(a) Beneficiary or Beneficiaries means a person or persons or other
entity designated on a Beneficiary Designation Form by a Program
Participant as allowed in section 7(d) to receive a Deferred
Benefit. If there is no valid designation by the Program
Participant, or if the designated Beneficiary or Beneficiaries fail
to survive the Program Participant or otherwise fail to take the
benefit, the Program Participant's Beneficiary is the first of the
following who survives the Program Participant: a Program
Participant's spouse (the person legally married to the Program
Participant when the Program Participant dies); the Program
Participant's children in equal shares; and the Program
Participant's estate.
(b) Beneficiary Designation Form means a form acceptable to the
Administrator or its designee used by a Program Participant
according to this Program to name his Beneficiary or Beneficiaries
who will receive his Deferred Benefits under this Program if he
dies.
(c) Compensation means either of the following types of compensation:
an Eligible Employee's Stock Award and Nonqualified Option Gain.
(d) Deferral Election Form means a document governed by the provisions
of section 4 of this Program, including the portion that is the
Distribution Election Form and the related Beneficiary Designation
Form that applies to all of that Program Participant's Deferred
Benefits under the Program.
(e) Deferral Year means a calendar year for which an Eligible Employee
has an operative Deferral Election Form or in which a Mandatory
Deferred Benefit is earned.
-2-
(f) Deferred Benefit means either a Mandatory Deferred Benefit, or the
benefit elected by a Program Participant under section 4 of this
Program, that results in payments governed by sections 6 and 7.
(g) Deferred Stock Account means that bookkeeping record established
for each Program Participant who elects or earns a Deferred Stock
Benefit attributable to deferred Stock Awards or Nonqualified
Option Gain under this Program. A Deferred Stock Account is
established only for purposes of measuring a Deferred Stock Benefit
and not to segregate assets or to identify assets that may or must
be used to satisfy a Deferred Stock Benefit. A Deferred Stock
Account will be credited with the Program Participant's
Compensation deferred according to a Deferral Election Form and
with Mandatory Deferred Benefits attributable to forfeited Stock
Awards, according to section 6(a) or (b) of this Program. A
Deferred Stock Account will be credited periodically with amounts
determined under section 6(c) of this Program.
(h) Deferred Stock Benefit means the Deferred Benefit elected by a
Program Participant under section 4 or earned under section 6(b)
that results in payments governed by sections 6 and 7.
(i) Distribution Election Form means that part of a Deferral Election
Form used by a Program Participant according to this Program to
establish the duration of deferral and the frequency of payments of
a Deferred Stock Benefit. If a Program Participant has no
Distribution Election Form that is operative according to section 4
of this Program, distribution of his Deferred Stock Benefit is
governed by section 7 of this Program.
(j) Election Date means the date established by this Program as the date
before which an Eligible Employee must submit a valid Deferral
Election Form to the Administrator. For each Deferral Year, the
Election Date is December 31 of the preceding calendar year.
However, for an individual who becomes an Eligible Employee during
a Deferral Year, the Election Date is the thirtieth day following
the date that he becomes an Eligible Employee. For Compensation
that is payable or that could become vested or earned in 1998, the
Election Date is the thirtieth day after the Board adopts this
Program as a Plan amendment. Despite the preceding sentences, the
Administrator may set an earlier date as the Election Date for any
Deferral Year.
(k) Eligible Employee means an employee of the Company or an Affiliate
who is a member of a select group of management or a highly
compensated employee (as such terms are used in Section 201(2) of
-3-
the Employee Retirement Income Security Act of 1974), and who is
designated by the Administrator as an individual who is eligible to
elect a Deferred Benefit under section 4 or who earns a Mandatory
Deferred Benefit under section 6(b). Once an individual is
designated by the Administrator as an individual who is eligible to
elect a Deferred Benefit under section 4, such employee shall
continue to be an Eligible Employee until the date he is no longer
a member of a select group of management or a highly compensated
employee or the date the Administrator declares he that is no longer
entitled to elect a Deferred Benefit.
(l) Mandatory Deferred Benefit means a Deferred Benefit earned by a
Program Participant in accordance with section 6(b) that results in
payments governed by sections 6 and 7 of this Program.
(m) Nonqualified Option Gain means gain attributable to the exercise of
Options not intended to qualify under Code section 422, stated as a
number of whole shares of Common Stock, where the Option price is
paid by the surrender of shares of Common Stock that have been held
by the Program Participant for at least six months.
(n) Program Participant means, with respect to any Deferral Year, an
Eligible Employee whose Deferral Election Form is operative, or who
has earned a Mandatory Deferred Benefit, for that Deferral Year.
(o) Terminate, Terminating, or Termination, with respect to a Program
Participant, means cessation of his relationship with the Company
and its Affiliates as an employee whether by death, disability or
severance for any other reason.
3. PARTICIPATION.
An Eligible Employee becomes a Program Participant for any Deferral Year
by filing a valid Deferral Election Form according to section 4 on or
before the Election Date for that Deferral Year, but only if his Deferral
Election Form is operative according to section 4. An Eligible Employee
also becomes a Program Participant for any Deferral Year if a Mandatory
Deferred Benefit is earned for that year in accordance with section 6(b).
4. DEFERRAL ELECTION.
A deferral election is valid when a Deferral Election Form is completed,
signed by the electing Eligible Employee, and received by the
Administrator. Deferral elections are governed by the provisions of this
section.
-4-
(a) A Program Participant may elect a Deferred Benefit for any Deferral
Year if he is an Eligible Employee at the beginning of that Deferral
Year or becomes an Eligible Employee during that Deferral Year.
(b) Before each Election Date for a Deferral Year, each Eligible
Employee will be provided with a Deferral Election Form and a
Beneficiary Designation Form. Under the Deferral Election Form or
Forms for a single Deferral Year, an Eligible Employee may elect on
or before the Election Date to defer the receipt of all or part of
his (i) Stock Awards that may vest during or after the Deferral Year
(specifying 100 or more whole shares subject to the election); or
(ii) Nonqualified Option Gain (specifying the Option, and 100 or
more whole shares of Common Stock, or a percentage of Nonqualified
Option Gain, subject to the election). The Compensation described
in the preceding sentence must be earned and payable after the
Election Date.
(c) A Distribution Election Form is part of the Deferral Election Form
on which it appears or to which it states that it is related.
A Program Participant may file one Distribution Election Form for
all of his Deferred Benefits at the time he files his initial
Deferral Election Form. In its sole discretion, the Administrator
may allow a Program Participant to change his Distribution Election
Form or file a Distribution Election Form after the time he files
his initial Deferral Election Form, in accordance with section 7(b)
and any other procedures established by the Administrator. The
provisions of section 7 of this Program apply to a Program
Participant's Deferred Benefits under this Program if there is no
operative Distribution Election Form for that Program Participant.
(d) If it does so before the last business day of the Deferral Year, the
Administrator may reject any Deferral Election Form or any
Distribution Election Form or both, and the Administrator is not
required to state a reason for any rejection. The Administrator may
modify any Distribution Election Form at any time to the extent
necessary to comply with any federal securities laws or regulations.
The Administrator's rejections must be made on a uniform basis with
respect to similarly situated Eligible Employees. If the
Administrator rejects a Deferral Election Form, the Eligible
Employee must be paid the amounts he would have been entitled to
receive if he had not submitted the rejected Deferral Election Form.
(e) An Eligible Employee may not revoke a Deferral Election Form or a
Distribution Election Form after the applicable Election Date. Any
revocation before the applicable Election Date is the same as a
failure to submit a Deferral Election Form or a Distribution
Election Form. Any writing signed by an Eligible Employee
expressing an intention to revoke his Deferral Election Form or
-5-
Distribution Election Form and delivered to the Administrator before
the close of business on the relevant Election Date is a revocation.
5. EFFECT OF NO ELECTION.
An Eligible Employee who has not submitted a valid Deferral Election
Form to the Administrator on or before the relevant Election Date may not
defer such Compensation for the Deferral Year under this Program. The
Deferred Benefit of an Eligible Employee who submits a valid Deferral
Election Form but fails to submit a valid Distribution Election Form with
his initial Deferral Election Form or who otherwise has no valid
Distribution Election Form is governed by section 7 of this Program.
6. DEFERRED STOCK BENEFITS.
(a) All Deferred Benefits, i.e., those attributable to deferred Stock
Awards (including Mandatory Deferred Benefits earned with respect to
forfeited Stock Awards under section 6(b)) and to Nonqualified
Option Gain, shall be Deferred Stock Benefits. Deferred Stock
Benefits will be set up in a Deferred Stock Account and credited
with earnings as described in section 6(c). Deferred Stock Benefits
will be credited as follows: (i) Stock Award deferrals (other than
Mandatory Deferred Benefits) will be credited on the day following
the Election Date; (ii) Mandatory Deferred Benefits attributable to
forfeited Stock Awards will be credited as soon as practicable after
the applicable award or portion thereof has been forfeited; and
(iii) Nonqualified Option Gain deferrals will be credited on the day
following the date of exercise of the related Option.
(b) A Mandatory Deferred Benefit will be earned by any Program
Participant whose applicable employee remuneration, as defined in
Code section 162(m)(4), would exceed the limit in Code
section 162(m)(1) (taking into account any reduction in applicable
employee remuneration required by procedures of the Administrator).
Such Mandatory Deferred Benefit shall consist of a credit equal to
the portion of a Stock Award that, pursuant to procedures
established by the Administrator, was forfeited because its vesting
or transferability would have caused the limit in Code section 162(m)
(1) to be exceeded.
(c) A Deferred Stock Account also shall be credited with any dividends
that would have been paid on the whole shares of Common Stock
credited to the Deferred Stock Account. A Deferred Stock Account
shall be credited with the number of whole and fractional shares of
Common stock that a Program Participant could have purchased with
such dividends based on the Fair Market Value on the day before such
-6-
dividends are credited to the account. The Deferred Stock Account
shall be credited on the days that dividends are paid on the Common
Stock.
(d) The portion of a Program Participant's Deferred Stock Benefit
attributable to Nonqualified Option Gain, and all Mandatory Deferred
Benefits, are immediately and fully vested. The portion of a
Program Participant's Deferred Stock Benefit attributable to
deferred Stock Awards (or a portion thereof), other than a Mandatory
Deferred Benefit, shall become vested as of the date the related
Stock Award (or portion thereof) would otherwise have become
nonforfeitable and transferable, provided any conditions for vesting
set forth in the Agreement relating to the Stock Award are
satisfied. To the extent a Program Participant Terminates under
circumstances that would allow for continued vesting of a Stock
Award, vesting of the related portion of the Program Participant's
Deferred Stock Account shall occur on the same basis and shall not
be affected by such Termination. Notwithstanding any other
provision of this section 6(d), a Program Participant's entire
Deferred Stock Benefit shall become fully vested upon a Control
Change Date.
7. DISTRIBUTIONS.
(a) According to a Program Participant's Distribution Election Form, but
subject to Plan Article V, a Deferred Stock Benefit must be
distributed in shares of Common Stock equal to the number of whole
shares of Common Stock credited to the Program Participant's
Deferred Stock Account on the last day of the month preceding the
month of distribution. Cash will be paid in lieu of a fractional
share of Common Stock credited to the Program Participant's Deferred
Stock Account on the last day of the month preceding the month of
distribution.
(b) Except for distributions of Mandatory Deferred Benefits and
distributions triggered by a Program Participant's disability,
Deferred Benefits will be paid in a lump sum unless the Program
Participant's Distribution Election Form specifies annual
installment payments over a period of up to 5 years. A Deferred
Benefit payable in installments will continue to accrue additional
credits under Program section 6(c) on the unpaid balance of a
Deferred Stock Account through the end of the month preceding the
month of distribution.
If a Program Participant Terminates as a result of his disability,
Deferred Benefits will be paid to such Program Participant in annual
installments over a period of 5 years commencing on the date his
disability is certified by the Administrator unless the
Administrator, in his sole discretion, approves a longer or shorter
payment period. If, after his Termination as a result of
disability, such Program Participant recovers before the balance of
his Deferred Stock Account under the Program is exhausted, his
distributions will be discontinued and any remaining Deferred
Benefits
-7-
under the Program will be governed by the provisions of this section
and his Distribution Election Form.
Unless otherwise specified in a Program Participant's Distribution
Election Form, any lump sum payment will be paid or installment
payments will begin to be paid on the March 15 after the Program
Participant's sixty-fifth birthday or on the March 15 after the
Program Participant's Termination, if earlier. For distributions
that would automatically be caused under the preceding sentence by
a Program Participant's Termination (other than by death or
disability) or for distributions that would otherwise automatically
begin because a Program Participant reaches age sixty-five, the
Program Participant may elect on his Distribution Election Form that
payments are to begin
(i) on the March 15 following his Termination, without regard to
his age; or
(ii) on the March 15 following his Termination and his attainment
of a specified age; or
(iii) even if the Program Participant does not Terminate, on the
March 15 following his attainment of a specified age.
For purposes of these distribution election alternatives, the
specified age must be not less than the Program Participant's age
two years from the Election Date pertaining to the applicable
Deferral Year. With the consent of the Administrator, as described
in section 4(c) above, a Program Participant may amend his
Distribution Election Form to postpone the commencement of benefit
payments if (i) the amendment is approved by the Administrator
before the calendar year in which benefit payments are scheduled to
begin and (ii) the amended payment date conforms to the requirements
of the Program.
(c) Notwithstanding section 7(b), above, to the extent a Program
Participant's Deferred Stock Benefit is not yet vested according
to section 6(d) at the time distribution is scheduled to occur,
because the deferred Stock Award to which such Deferred Stock
Benefit or portion thereof is attributable would not yet have
vested under the Agreement evidencing the award, distribution shall
be delayed until the date specified in the following sentence. Any
portion of a Deferred Stock Account that is subject to delayed
distribution under the preceding sentence will be distributed on the
March 15 next following such vesting date. No distribution will be
made, and all or a portion of a Program Participant's Deferred Stock
Account will be forfeited to the extent the conditions for vesting
specified in the Agreement relating to the deferred Stock Award are
-8-
not met, including the Program Participant's Termination under
circumstances which would have caused all or a portion of the award
to have been forfeited.
(d) Deferred Benefits may not be assigned by a Program Participant or
Beneficiary. A Program Participant may use only one Beneficiary
Designation Form to designate one or more Beneficiaries for all of
his Deferred Benefits under the Program; such designations are
revocable. Each Beneficiary will receive his portion of the Program
Participant's Deferred Account on the March 15 following the Program
Participant's death unless the Beneficiary's request for accelerated
payment is approved at the Administrator's discretion under
section 8 or unless the Beneficiary's request for a different
distribution schedule is received before distributions begin and is
approved at the Administrator's discretion. The Administrator may
insist that multiple Beneficiaries agree upon a single distribution
method.
(e) Notwithstanding any other provision of this section 7, a Program
Participant's entire Deferred Stock Account shall be distributed to
the Program Participant, or his Beneficiary following his death, as
of a Control Change Date.
(f) Mandatory Deferred Benefits will be paid in a single sum no later
than the last day of the Company's fiscal year in which the
distribution would not result in the Program Participant's
applicable employee remuneration, as defined in Code
section 162(m)(4), to exceed the limit in Code section 162(m)(1).
8. HARDSHIP DISTRIBUTIONS.
(a) At its sole discretion and at the request of a Program Participant
before or after the Program Participant's Termination, or at the
request of any of the Program Participant's Beneficiaries after the
Program Participant's death, the Administrator may accelerate and
pay all or part of any amount attributable to a Program
Participant's vested Deferred Benefits under this Program.
Accelerated distributions may be allowed only in the event of a
financial emergency beyond the Program Participant's or
Beneficiary's control and only if disallowance of a distribution
would create a severe hardship for the Program Participant or
Beneficiary. An accelerated distribution must be limited to the
amount determined by the Administrator to be necessary to satisfy
the financial emergency.
(b) For purposes of an accelerated distribution under this section, the
Deferred Benefit's value is determined by the value of the Deferred
Account at the time of the distribution.
-9-
(c) A distribution under this section is in lieu of that portion of the
Deferred Benefit that would have been paid otherwise. A Deferred
Benefit is adjusted for a distribution under this section by
reducing the Program Participant's Deferred Account by the amount of
the distribution.
9. COMPANY'S OBLIGATION.
The Program is unfunded. A Deferred Benefit is at all times a mere
contractual obligation of the Company. A Program Participant and his
Beneficiaries have no right, title, or interest in the Deferred Benefits
or any claim against them. The Company will not segregate any funds or
assets for Deferred Benefits nor issue any notes or security for the
payment of any Deferred Benefit.
10. CONTROL BY PROGRAM PARTICIPANT.
A Program Participant has no control over Deferred Benefits except
according to his Deferral Election Forms, his Distribution Election Forms,
and his Beneficiary Designation Forms.
11. CLAIMS AGAINST PROGRAM PARTICIPANT'S DEFERRED BENEFITS.
A Deferred Stock Account relating to a Program Participant under this
Program is not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt to
do so is void. Deferred Benefits are not subject to attachment or legal
process for a Program Participant's debts or other obligations. Nothing
contained in this Program gives any Program Participant any interest,
lien, or claim against any specific asset of the Company. A Program
Participant or his Beneficiary has no rights to receive Deferred Benefits
other than as a general creditor.
12. AMENDMENT OR TERMINATION.
Except as otherwise provided in this section, this Program may be altered,
amended, suspended, or terminated at any time by the Board. Except for a
termination of the Program caused by the determination of the Board that
the laws upon which the Program is based have changed in a manner that
negates the Program's objectives, the Board may not alter, amend, suspend,
or terminate this Program without the majority consent of all Eligible
Employees if that action would result either in a distribution of all
Deferred Benefits in any manner other than as provided in this Program or
that would result in immediate taxation of Deferred Benefits to Program
Participants. Notwithstanding the preceding sentence, if any amendment to
the Program, subsequent to the date the Program becomes effective,
adversely affects Deferred Benefits elected hereunder, after the effective
date of any such amendment, and the Internal Revenue Service declines to
rule
-10-
favorably on any such amendment or to rule favorably only if the Board
makes amendments to the Program not acceptable to the Board, the Board, in
its sole discretion, may accelerate the distribution of part or all
amounts attributable to affected Deferred Benefits due Program
Participants and Beneficiaries hereunder.
13. NOTICES.
Notices and elections under this Program must be in writing. A notice or
election to a Program Participant or Beneficiary is deemed delivered if it
is delivered personally or if it is mailed by registered or certified mail
to the person at his last known home address. A notice or election to the
Company or the Administrator is deemed delivered if it is delivered
personally or if it is mailed by registered or certified mail to the
Company's executive office.
14. WAIVER.
The waiver of a breach of any provision in this Program does not operate
as and may not be construed as a waiver of any later breach.
15. CONSTRUCTION.
This Program is created, adopted, and maintained according to the laws of
the State of North Carolina (except its choice-of-law rules). It is
governed by those laws in all respects. Headings and captions are only
for convenience; they do not have substantive meaning. If a provision of
this Program is not valid or not enforceable, that fact in no way affects
the validity or enforceability of any other provision. Use of the one
gender includes all, and the singular and plural include each other.
AMENDMENTS TO THE
LOWE'S COMPANIES, INC. 1994 INCENTIVE PLAN
On September 17, 1998, the Plan was amended as follows:
a. A new section 1.12, entitled "Deferred Stock Benefit," was added to
the Plan and reads as follows:
1.12. Deferred Stock Benefit means "Deferred Stock Benefit" as
defined in section 2(h) of the Program.
b. A new section 1.20, entitled "Program," was added to the Plan and
reads as follows:
1.20. Program means the Lowe's Companies, Inc.Deferred
Compensation Program, set forth as Exhibit I hereto.
c. The remaining sections of Article I were renumbered accordingly.
d. The second sentence of Article II was amended to read as follows:
The Plan is intended to permit the grant of Stock Awards, STARs,
the grant of both Options qualifying under Section 422 of the Code
("incentive stock options") and Options not so qualifying, the
grant of Incentive Awards, and the deferral of income in accordance
with the Program.
e. The fifth sentence of Article III was amended to read as follows:
In addition, the Administrator shall have complete authority to
interpret all provisions of this Plan; to prescribe the form of
Agreements and documents used in connection with the Program; to
adopt, amend, and rescind rules and regulations pertaining to the
administration of the Plan; and to make all other determinations
necessary or advisable for the administration of this Plan.
f. The following sentence was added at the end of Section 5.01:
On the distribution of Deferred Stock Benefits, the Company may
issue shares of Common Stock from its authorized but unissued
Common Stock
g. Section 5.02 was amended to read as follows:
The maximum aggregate number of shares of Common Stock that may be
issued under this Plan (including shares of Common Stock issued
under the Plan as in effect before January 31, 1994 and after giving
effect to the March 16, 1994 two-for-one stock split) is 5,000,000
shares, subject to adjustment as provided in Article X such that
2,423,640 shares of Common Stock will be available for issuance
under Options and Stock Awards granted on and after January 31,
1994, or as the portion of a Deferred Stock Benefit that represents
forfeited or deferred shares of Common Stock subject to such Options
and Stock Awards, or as earnings on any shares of Common Stock
deferred or forfeited under the Program. Subject to the limitation
set forth in the preceding sentence, the maximum aggregate number
of shares that may be issued under this Plan as Stock Awards (or as
the portion of a Deferred Stock Benefit that represents forfeited
shares of Common Stock subject to such awards) is 1,000,000 shares,
subject to adjustment as provided in Article X. Shares of Common
Stock issued in settlement of a Deferred Stock Benefit, and the
shares of Common Stock subject to the Option or Stock Award (or
portion thereof) with respect to which such Deferred Stock Benefit
was earned or elected, shall be counted toward the foregoing limits
only once (even in the case of shares subject to a Stock Award that
are canceled in connection with a Deferred Stock Benefit); provided,
however, that shares of Common Stock issued in settlement of a
Deferred Stock Benefit that constitute earnings on deferred or
forfeited shares of Common Stock shall be counted separately toward
the foregoing limits.
h. Section 5.03 was amended to read as follows:
If an Option is terminated, in whole or in part, for any reason
other than its exercise (including an exercise that results in a
Deferred Stock Benefit), the number of shares of Common Stock
allocated to the Option or portion thereof may be reallocated to
other Options and Stock Awards to be granted under this Plan and to
the settlement of Deferred Stock Benefits. If a Stock Award is
forfeited, in whole or in part, for any reason (other than a
cancellation that results in a Deferred Stock Benefit), the number
of shares of Common Stock allocated to the Stock Award or portion
thereof may be reallocated to other Options and Stock Awards to be
granted under this Plan, and to the settlement of Deferred Stock
Benefits. If a Deferred Stock Benefit is forfeited, in whole or in
part, the number of shares of Common Stock allocated to the Deferred
Stock Benefit or portion thereof may be reallocated to other Options
and Stock Awards to be granted under this Plan, and to the
settlement of other Deferred Stock Benefits.
i. Article X was amended to read as follows:
The maximum number of shares as to which Options and Stock Awards
may be granted under this Plan and the maximum number of shares that
may be distributed as Deferred Stock Benefits shall be
proportionately adjusted, and the terms of outstanding Stock Awards,
Options, STARs (including any limitation on the maximum amount
payable under a STAR award) and undistributed Deferred Stock
Benefits, and the per individual limitations on the number of shares
or Units for which Options, STARs, and Stock Awards may be granted
shall be adjusted as the Committee shall determine to be equitably
required, in the event that (a) the Company (i) effects one or more
stock dividends, stock split-ups, subdivisions or consolidations of
shares or (ii) engages in a transaction to which Section 424 of the
Code applies or (b) there occurs any other event which, in the
judgment of the Committee, necessitates such action. Any
determination made under this Article X by the Committee shall be
final and conclusive.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash
or property, or for labor or services, either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor, or
upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
maximum number of shares as to which Options and Stock Awards may
be granted or the maximum number of shares that may be distributed
as Deferred Stock Benefits; the per individual limitations on the
number of shares or Units for which Options, STARs and Stock Awards
may be granted; or the terms of outstanding Stock Awards, Options or
SARs or undistributed Deferred Stock Benefits.
The Committee may make Stock Awards and may grant Options and STARs
in substitution for performance shares, phantom shares, stock
awards, stock options, stock appreciation rights, or similar awards
held by an individual who becomes an employee of the Company or an
Affiliate in connection with a transaction described in the first
paragraph of this Article X. Notwithstanding any provision of the
Plan (other than the limitation of Article V), the terms of such
substituted Stock Awards or Option or STAR grants shall be as the
Committee, in its discretion, determines is appropriate.
j. The following sentence was added at the end of Article XIII:
No amendment shall, without the consent of a Program Participant
(as defined in the Program) adversely affect any rights of such
Program Participant under the Program as in effect at the time such
amendment is made, unless such amendment is made in accordance with
section 12 of the Program.
k. The following sentence was added at the end of Article XIV:
The Program shall remain in effect until all Deferred Stock Accounts
(as defined in the Program) have been distributed in full, unless
sooner terminated by the Board in accordance with section 12 of the
Program.
l. The Lowe's Companies, Inc. Deferred Compensation Program attached
hereto as Exhibit I was added to the Plan as Exhibit I.
Exhibit I
LOWE'S COMPANIES, INC.
1994 INCENTIVE PLAN
LOWE'S COMPANIES, INC.
DEFERRED COMPENSATION PROGRAM
TABLE OF CONTENTS
SECTION PAGE
1. PURPOSE 5
2. DEFINITIONS 5
3. PARTICIPATION 7
4. DEFERRAL ELECTION 7
5. EFFECT OF NO ELECTION 8
6. DEFERRED STOCK BENEFITS 8
7. DISTRIBUTIONS 9
8. HARDSHIP DISTRIBUTIONS 11
9. COMPANY'S OBLIGATION 12
10. CONTROL BY PROGRAM PARTICIPANT 12
11. CLAIMS AGAINST PROGRAM PARTICIPANT'S DEFERRED BENEFITS 12
12. AMENDMENT OR TERMINATION 12
13. NOTICES 12
14. WAIVER 13
15. CONSTRUCTION 13
1. PURPOSE.
The Program is intended to constitute a deferred compensation plan for a
select group of management and highly compensated employees of the
Company and its Affiliates.
2. DEFINITIONS.
The following definitions apply to this Program and to the Deferral
Election Forms. All capitalized terms not defined in this section 2
shall have the same meaning as given them in the Company's 1994 Incentive
Plan, of which this Program is a part.
(a) Beneficiary or Beneficiaries means a person or persons or other
entity designated on a Beneficiary Designation Form by a Program
Participant as allowed in section 7(d) to receive a Deferred
Benefit. If there is no valid designation by the Program
Participant, or if the designated Beneficiary or Beneficiaries fail
to survive the Program Participant or otherwise fail to take the
benefit, the Program Participant's Beneficiary is the first of the
following who survives the Program Participant: a Program
Participant's spouse (the person legally married to the Program
Participant when the Program Participant dies); the Program
Participant's children in equal shares; and the Program
Participant's estate.
(b) Beneficiary Designation Form means a form acceptable to the
Administrator or its designee used by a Program Participant
according to this Program to name his Beneficiary or Beneficiaries
who will receive his Deferred Benefits under this Program if he
dies.
(c) Compensation means either of the following types of compensation:
an Eligible Employee's Stock Award and Nonqualified Option Gain.
(d) Deferral Election Form means a document governed by the provisions
of section 4 of this Program, including the portion that is the
Distribution Election Form and the related Beneficiary Designation
Form that applies to all of that Program Participant's Deferred
Benefits under the Program.
(e) Deferral Year means a calendar year for which an Eligible Employee
has an operative Deferral Election Form or in which a Mandatory
Deferred Benefit is earned.
(f) Deferred Benefit means either a Mandatory Deferred Benefit, or the
benefit elected by a Program Participant under section 4 of this
Program, that results in payments governed by sections 6 and 7.
(g) Deferred Stock Account means that bookkeeping record established
for each Program Participant who elects or earns a Deferred Stock
Benefit attributable to deferred Stock Awards or Nonqualified
Option Gain under this Program. A Deferred Stock Account is
established only for purposes of measuring a Deferred Stock Benefit
and not to segregate assets or to identify assets that may or must
be used to satisfy a Deferred Stock Benefit. A Deferred Stock
Account will be credited with the Program Participant's
Compensation deferred according to a Deferral Election Form and
with Mandatory Deferred Benefits attributable to forfeited Stock
Awards, according to section 6(a) or (b) of this Program. A
Deferred Stock Account will be credited periodically with amounts
determined under section 6(c) of this Program.
(h) Deferred Stock Benefit means the Deferred Benefit elected by a
Program Participant under section 4 or earned under section 6(b)
that results in payments governed by sections 6 and 7.
(i) Distribution Election Form means that part of a Deferral Election
Form used by a Program Participant according to this Program to
establish the duration of deferral and the frequency of payments of
a Deferred Stock Benefit. If a Program Participant has no
Distribution Election Form that is operative according to section 4
of this Program, distribution of his Deferred Stock Benefit is
governed by section 7 of this Program.
(j) Election Date means the date established by this Program as the date
before which an Eligible Employee must submit a valid Deferral
Election Form to the Administrator. For each Deferral Year, the
Election Date is December 31 of the preceding calendar year.
However, for an individual who becomes an Eligible Employee during
a Deferral Year, the Election Date is the thirtieth day following
the date that he becomes an Eligible Employee. For Compensation
that is payable or that could become vested or earned in 1998, the
Election Date is the thirtieth day after the Board adopts this
Program as a Plan amendment. Despite the preceding sentences, the
Administrator may set an earlier date as the Election Date for any
Deferral Year.
(k) Eligible Employee means an employee of the Company or an Affiliate
who is a member of a select group of management or a highly
compensated employee (as such terms are used in Section 201(2) of
the Employee Retirement Income Security Act of 1974), and who is
designated by the Administrator as an individual who is eligible to
elect a Deferred Benefit under section 4 or who earns a Mandatory
Deferred Benefit under section 6(b). Once an individual is
designated by the Administrator as an individual who is eligible to
elect a Deferred Benefit under section 4, such employee shall
continue to be an Eligible Employee until the date he is no longer
a member of a select group of management or a highly compensated
employee or the date the Administrator declares he that is no longer
entitled to elect a Deferred Benefit.
(l) Mandatory Deferred Benefit means a Deferred Benefit earned by a
Program Participant in accordance with section 6(b) that results in
payments governed by sections 6 and 7 of this Program.
(m) Nonqualified Option Gain means gain attributable to the exercise of
Options not intended to qualify under Code section 422, stated as a
number of whole shares of Common Stock, where the Option price is
paid by the surrender of shares of Common Stock that have been held
by the Program Participant for at least six months.
(n) Program Participant means, with respect to any Deferral Year, an
Eligible Employee whose Deferral Election Form is operative, or who
has earned a Mandatory Deferred Benefit, for that Deferral Year.
(o) Terminate, Terminating, or Termination, with respect to a Program
Participant, means cessation of his relationship with the Company
and its Affiliates as an employee whether by death, disability or
severance for any other reason.
3. PARTICIPATION.
An Eligible Employee becomes a Program Participant for any Deferral Year
by filing a valid Deferral Election Form according to section 4 on or
before the Election Date for that Deferral Year, but only if his Deferral
Election Form is operative according to section 4. An Eligible Employee
also becomes a Program Participant for any Deferral Year if a Mandatory
Deferred Benefit is earned for that year in accordance with section 6(b).
4. DEFERRAL ELECTION.
A deferral election is valid when a Deferral Election Form is completed,
signed by the electing Eligible Employee, and received by the
Administrator. Deferral elections are governed by the provisions of this
section.
(a) A Program Participant may elect a Deferred Benefit for any Deferral
Year if he is an Eligible Employee at the beginning of that Deferral
Year or becomes an Eligible Employee during that Deferral Year.
(b) Before each Election Date for a Deferral Year, each Eligible
Employee will be provided with a Deferral Election Form and a
Beneficiary Designation Form. Under the Deferral Election Form or
Forms for a single Deferral Year, an Eligible Employee may elect on
or before the Election Date to defer the receipt of all or part of
his (i) Stock Awards that may vest during or after the Deferral Year
(specifying 100 or more whole shares subject to the election); or
(ii) Nonqualified Option Gain (specifying the Option, and 100 or
more whole shares of Common Stock, or a percentage of Nonqualified
Option Gain, subject to the election). The Compensation described
in the preceding sentence must be earned and payable after the
Election Date.
(c) A Distribution Election Form is part of the Deferral Election Form
on which it appears or to which it states that it is related.
A Program Participant may file one Distribution Election Form for
all of his Deferred Benefits at the time he files his initial
Deferral Election Form. In its sole discretion, the Administrator
may allow a Program Participant to change his Distribution Election
Form or file a Distribution Election Form after the time he files
his initial Deferral Election Form, in accordance with section 7(b)
and any other procedures established by the Administrator. The
provisions of section 7 of this Program apply to a Program
Participant's Deferred Benefits under this Program if there is no
operative Distribution Election Form for that Program Participant.
(d) If it does so before the last business day of the Deferral Year, the
Administrator may reject any Deferral Election Form or any
Distribution Election Form or both, and the Administrator is not
required to state a reason for any rejection. The Administrator may
modify any Distribution Election Form at any time to the extent
necessary to comply with any federal securities laws or regulations.
The Administrator's rejections must be made on a uniform basis with
respect to similarly situated Eligible Employees. If the
Administrator rejects a Deferral Election Form, the Eligible
Employee must be paid the amounts he would have been entitled to
receive if he had not submitted the rejected Deferral Election Form.
(e) An Eligible Employee may not revoke a Deferral Election Form or a
Distribution Election Form after the applicable Election Date. Any
revocation before the applicable Election Date is the same as a
failure to submit a Deferral Election Form or a Distribution
Election Form. Any writing signed by an Eligible Employee
expressing an intention to revoke his Deferral Election Form or
Distribution Election Form and delivered to the Administrator before
the close of business on the relevant Election Date is a revocation.
5. EFFECT OF NO ELECTION.
An Eligible Employee who has not submitted a valid Deferral Election
Form to the Administrator on or before the relevant Election Date may not
defer such Compensation for the Deferral Year under this Program. The
Deferred Benefit of an Eligible Employee who submits a valid Deferral
Election Form but fails to submit a valid Distribution Election Form with
his initial Deferral Election Form or who otherwise has no valid
Distribution Election Form is governed by section 7 of this Program.
6. DEFERRED STOCK BENEFITS.
(a) All Deferred Benefits, i.e., those attributable to deferred Stock
Awards (including Mandatory Deferred Benefits earned with respect to
forfeited Stock Awards under section 6(b)) and to Nonqualified
Option Gain, shall be Deferred Stock Benefits. Deferred Stock
Benefits will be set up in a Deferred Stock Account and credited
with earnings as described in section 6(c). Deferred Stock Benefits
will be credited as follows: (i) Stock Award deferrals (other than
Mandatory Deferred Benefits) will be credited on the day following
the Election Date; (ii) Mandatory Deferred Benefits attributable to
forfeited Stock Awards will be credited as soon as practicable after
the applicable award or portion thereof has been forfeited; and
(iii) Nonqualified Option Gain deferrals will be credited on the day
following the date of exercise of the related Option.
(b) A Mandatory Deferred Benefit will be earned by any Program
Participant whose applicable employee remuneration, as defined in
Code section 162(m)(4), would exceed the limit in Code
section 162(m)(1) (taking into account any reduction in applicable
employee remuneration required by procedures of the Administrator).
Such Mandatory Deferred Benefit shall consist of a credit equal to
the portion of a Stock Award that, pursuant to procedures
established by the Administrator, was forfeited because its vesting
or transferability would have caused the limit in Code section 162(m)
(1) to be exceeded.
(c) A Deferred Stock Account also shall be credited with any dividends
that would have been paid on the whole shares of Common Stock
credited to the Deferred Stock Account. A Deferred Stock Account
shall be credited with the number of whole and fractional shares of
Common stock that a Program Participant could have purchased with
such dividends based on the Fair Market Value on the day before such
dividends are credited to the account. The Deferred Stock Account
shall be credited on the days that dividends are paid on the Common
Stock.
(d) The portion of a Program Participant's Deferred Stock Benefit
attributable to Nonqualified Option Gain, and all Mandatory Deferred
Benefits, are immediately and fully vested. The portion of a
Program Participant's Deferred Stock Benefit attributable to
deferred Stock Awards (or a portion thereof), other than a Mandatory
Deferred Benefit, shall become vested as of the date the related
Stock Award (or portion thereof) would otherwise have become
nonforfeitable and transferable, provided any conditions for vesting
set forth in the Agreement relating to the Stock Award are
satisfied. To the extent a Program Participant Terminates under
circumstances that would allow for continued vesting of a Stock
Award, vesting of the related portion of the Program Participant's
Deferred Stock Account shall occur on the same basis and shall not
be affected by such Termination. Notwithstanding any other
provision of this section 6(d), a Program Participant's entire
Deferred Stock Benefit shall become fully vested upon a Control
Change Date.
7. DISTRIBUTIONS.
(a) According to a Program Participant's Distribution Election Form, but
subject to Plan Article V, a Deferred Stock Benefit must be
distributed in shares of Common Stock equal to the number of whole
shares of Common Stock credited to the Program Participant's
Deferred Stock Account on the last day of the month preceding the
month of distribution. Cash will be paid in lieu of a fractional
share of Common Stock credited to the Program Participant's Deferred
Stock Account on the last day of the month preceding the month of
distribution.
(b) Except for distributions of Mandatory Deferred Benefits and
distributions triggered by a Program Participant's disability,
Deferred Benefits will be paid in a lump sum unless the Program
Participant's Distribution Election Form specifies annual
installment payments over a period of up to 5 years. A Deferred
Benefit payable in installments will continue to accrue additional
credits under Program section 6(c) on the unpaid balance of a
Deferred Stock Account through the end of the month preceding the
month of distribution.
If a Program Participant Terminates as a result of his disability,
Deferred Benefits will be paid to such Program Participant in annual
installments over a period of 5 years commencing on the date his
disability is certified by the Administrator unless the
Administrator, in his sole discretion, approves a longer or shorter
payment period. If, after his Termination as a result of
disability, such Program Participant recovers before the balance of
his Deferred Stock Account under the Program is exhausted, his
distributions will be discontinued and any remaining Deferred
Benefits
under the Program will be governed by the provisions of this section
and his Distribution Election Form.
Unless otherwise specified in a Program Participant's Distribution
Election Form, any lump sum payment will be paid or installment
payments will begin to be paid on the March 15 after the Program
Participant's sixty-fifth birthday or on the March 15 after the
Program Participant's Termination, if earlier. For distributions
that would automatically be caused under the preceding sentence by
a Program Participant's Termination (other than by death or
disability) or for distributions that would otherwise automatically
begin because a Program Participant reaches age sixty-five, the
Program Participant may elect on his Distribution Election Form that
payments are to begin
(i) on the March 15 following his Termination, without regard to
his age; or
(ii) on the March 15 following his Termination and his attainment
of a specified age; or
(iii) even if the Program Participant does not Terminate, on the
March 15 following his attainment of a specified age.
For purposes of these distribution election alternatives, the
specified age must be not less than the Program Participant's age
two years from the Election Date pertaining to the applicable
Deferral Year. With the consent of the Administrator, as described
in section 4(c) above, a Program Participant may amend his
Distribution Election Form to postpone the commencement of benefit
payments if (i) the amendment is approved by the Administrator
before the calendar year in which benefit payments are scheduled to
begin and (ii) the amended payment date conforms to the requirements
of the Program.
(c) Notwithstanding section 7(b), above, to the extent a Program
Participant's Deferred Stock Benefit is not yet vested according
to section 6(d) at the time distribution is scheduled to occur,
because the deferred Stock Award to which such Deferred Stock
Benefit or portion thereof is attributable would not yet have
vested under the Agreement evidencing the award, distribution shall
be delayed until the date specified in the following sentence. Any
portion of a Deferred Stock Account that is subject to delayed
distribution under the preceding sentence will be distributed on the
March 15 next following such vesting date. No distribution will be
made, and all or a portion of a Program Participant's Deferred Stock
Account will be forfeited to the extent the conditions for vesting
specified in the Agreement relating to the deferred Stock Award are
not met, including the Program Participant's Termination under
circumstances which would have caused all or a portion of the award
to have been forfeited.
(d) Deferred Benefits may not be assigned by a Program Participant or
Beneficiary. A Program Participant may use only one Beneficiary
Designation Form to designate one or more Beneficiaries for all of
his Deferred Benefits under the Program; such designations are
revocable. Each Beneficiary will receive his portion of the Program
Participant's Deferred Account on the March 15 following the Program
Participant's death unless the Beneficiary's request for accelerated
payment is approved at the Administrator's discretion under
section 8 or unless the Beneficiary's request for a different
distribution schedule is received before distributions begin and is
approved at the Administrator's discretion. The Administrator may
insist that multiple Beneficiaries agree upon a single distribution
method.
(e) Notwithstanding any other provision of this section 7, a Program
Participant's entire Deferred Stock Account shall be distributed to
the Program Participant, or his Beneficiary following his death, as
of a Control Change Date.
(f) Mandatory Deferred Benefits will be paid in a single sum no later
than the last day of the Company's fiscal year in which the
distribution would not result in the Program Participant's
applicable employee remuneration, as defined in Code
section 162(m)(4), to exceed the limit in Code section 162(m)(1).
8. HARDSHIP DISTRIBUTIONS.
(a) At its sole discretion and at the request of a Program Participant
before or after the Program Participant's Termination, or at the
request of any of the Program Participant's Beneficiaries after the
Program Participant's death, the Administrator may accelerate and
pay all or part of any amount attributable to a Program
Participant's vested Deferred Benefits under this Program.
Accelerated distributions may be allowed only in the event of a
financial emergency beyond the Program Participant's or
Beneficiary's control and only if disallowance of a distribution
would create a severe hardship for the Program Participant or
Beneficiary. An accelerated distribution must be limited to the
amount determined by the Administrator to be necessary to satisfy
the financial emergency.
(b) For purposes of an accelerated distribution under this section, the
Deferred Benefit's value is determined by the value of the Deferred
Account at the time of the distribution.
(c) A distribution under this section is in lieu of that portion of the
Deferred Benefit that would have been paid otherwise. A Deferred
Benefit is adjusted for a distribution under this section by
reducing the Program Participant's Deferred Account by the amount of
the distribution.
9. COMPANY'S OBLIGATION.
The Program is unfunded. A Deferred Benefit is at all times a mere
contractual obligation of the Company. A Program Participant and his
Beneficiaries have no right, title, or interest in the Deferred Benefits
or any claim against them. The Company will not segregate any funds or
assets for Deferred Benefits nor issue any notes or security for the
payment of any Deferred Benefit.
10. CONTROL BY PROGRAM PARTICIPANT.
A Program Participant has no control over Deferred Benefits except
according to his Deferral Election Forms, his Distribution Election Forms,
and his Beneficiary Designation Forms.
11. CLAIMS AGAINST PROGRAM PARTICIPANT'S DEFERRED BENEFITS.
A Deferred Stock Account relating to a Program Participant under this
Program is not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt to
do so is void. Deferred Benefits are not subject to attachment or legal
process for a Program Participant's debts or other obligations. Nothing
contained in this Program gives any Program Participant any interest,
lien, or claim against any specific asset of the Company. A Program
Participant or his Beneficiary has no rights to receive Deferred Benefits
other than as a general creditor.
12. AMENDMENT OR TERMINATION.
Except as otherwise provided in this section, this Program may be altered,
amended, suspended, or terminated at any time by the Board. Except for a
termination of the Program caused by the determination of the Board that
the laws upon which the Program is based have changed in a manner that
negates the Program's objectives, the Board may not alter, amend, suspend,
or terminate this Program without the majority consent of all Eligible
Employees if that action would result either in a distribution of all
Deferred Benefits in any manner other than as provided in this Program or
that would result in immediate taxation of Deferred Benefits to Program
Participants. Notwithstanding the preceding sentence, if any amendment to
the Program, subsequent to the date the Program becomes effective,
adversely affects Deferred Benefits elected hereunder, after the effective
date of any such amendment, and the Internal Revenue Service declines to
rule
favorably on any such amendment or to rule favorably only if the Board
makes amendments to the Program not acceptable to the Board, the Board, in
its sole discretion, may accelerate the distribution of part or all
amounts attributable to affected Deferred Benefits due Program
Participants and Beneficiaries hereunder.
13. NOTICES.
Notices and elections under this Program must be in writing. A notice or
election to a Program Participant or Beneficiary is deemed delivered if it
is delivered personally or if it is mailed by registered or certified mail
to the person at his last known home address. A notice or election to the
Company or the Administrator is deemed delivered if it is delivered
personally or if it is mailed by registered or certified mail to the
Company's executive office.
14. WAIVER.
The waiver of a breach of any provision in this Program does not operate
as and may not be construed as a waiver of any later breach.
15. CONSTRUCTION.
This Program is created, adopted, and maintained according to the laws of
the State of North Carolina (except its choice-of-law rules). It is
governed by those laws in all respects. Headings and captions are only
for convenience; they do not have substantive meaning. If a provision of
this Program is not valid or not enforceable, that fact in no way affects
the validity or enforceability of any other provision. Use of the one
gender includes all, and the singular and plural include each other.