LOWE'S COMPANIES

CASH DEFERRAL PLAN

 

Section 1. Nature of the Plan.

The purpose of this Plan is to permit eligible employees to voluntarily defer a
portion of their base salary, management bonus, and certain other bonuses on a
tax-deferred basis, and to have such deferred amounts credited with earnings,
generally using the same investment choices as are available from time to time
under the Lowe's Companies Benefit Restoration Plan. The Plan is intended to be
unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management and highly compensated employees,
within the meaning of Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). The plan is adopted effective for base salary and
management bonuses payable in the Company's fiscal year that begins January 31,
2004.

Section 2. Definitions.

In this Plan, whenever the context so indicates, the singular or plural number
and the masculine, feminine or neuter gender shall be deemed to include the
other and the terms "he," "his" and "him" shall refer to a Participant. Unless
otherwise indicated, section references shall be to this Plan. Where the
following terms appear hereafter in this Plan, they shall have the meanings
indicated below:

401(k) Plan - The Lowe's Companies 401(k) Plan, a stock bonus and profit sharing
plan which constitutes a cash or deferred arrangement under Section 401(k) of
the Code.

Account - The account established and maintained for bookkeeping purposes to
reflect the interest of a Participant in the Plan. Each Account shall reflect
Employee Deferrals by the Participants, as well as additions, withdrawals, and
adjustments to the Account (including adjustments for appreciation and
depreciation in the deemed investments). The 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 Beneficiary under
the Plan.

Base Pay - The base pay paid to a Participant by the Company in the Plan Year,
plus the amount (if any) of (i) Salary Deferral Contributions made on his behalf
under the 401(k) Plan, (ii) salary reductions for the Medical Coverage Benefit
under the Lowe's Companies Flexible Benefit Plan, (iii) any base pay that is
required to be deferred because it exceeds the amount deductible by the Company
under Section 162(m) of the Code; and (iv) any base pay that is deferred under
this or any other plan of non-qualified deferred compensation that is adopted
and maintained by the Company.

Beneficiary - The person (or persons) designated by the Participant to receive
benefits under the Plan in the event of a Participant's death. If a Participant
fails to make such designation, the Participant's Beneficiary shall be deemed to
be his surviving spouse, or if none, his estate.

Benefit Restoration Plan  - The Lowe's Companies Benefit Restoration Plan (or
BRP), a non-qualified deferred compensation plan that restores benefits to
eligible employees that cannot be received under the 401(k) Plan because of
limitations under the Code.

Code - The Internal Revenue Code of 1986, as amended.

Committee - The Administrative Committee of the 401(k) Plan appointed by the
Board of Directors of the Company, which has been given authority by the Board
of Directors to designate Participants and to administer the Plan.

Company - Lowe's Companies, Inc, a North Carolina corporation, and its direct or
indirect wholly-owned subsidiaries (including wholly-owned limited liability
companies).

Deferral Election - The Participant's irrevocable election under the Plan to
defer Base Pay, Management Bonus, or a Signing/Retention Bonus for a given Plan
Year.

Employee Deferral - The employee pre-tax deferrals made under this Plan.

ERISA - Public Law 93 406, popularly known as the "Employee Retirement Income
Security Act of 1974", as amended.
 

Management Bonus - The annual bonus, if any, that is earned by a Participant for
a fiscal year and is typically paid in March following the close of the fiscal
year.

Participant - Any employee or former employee who has met the applicable
eligibility requirements of Section 3 and who has not yet received a complete
distribution of his Account.

Plan - The Lowe's Companies Cash Deferral Plan, as set forth herein, and as it
may be amended from time to time.

Plan Year - The 52/53-week period ending on Friday closest to January 31st of
each year (and coinciding with the fiscal year of the Company).

Signing/Retention Bonus - A signing or retention bonus negotiated by the Company
and a person who once hired will be eligible to participate in the Plan.

Trust - The Lowe's Companies, Inc. Benefit Security Trust, as amended from time
to time. The Trust is a so-called "rabbi trust" that serves as the funding
vehicle for the Plan and the Benefit Restoration Plan.

Section 3. Eligibility and Participation.

An employee shall be eligible to participate in the Plan as of the date he is
designated by the Committee for eligibility, either individually or as a member
of a class of employees. Until determined otherwise by the Committee, the
employees who are eligible to become Participants for a given Plan Year are
those employees of the Company who are director level or above. Notwithstanding
the foregoing, a person who would otherwise become eligible to participate in
this Plan as a result of promotion within the Company shall not be eligible to
participate in the Plan until the first day of the Plan Year following the date
such promotion becomes effective.

Only employees who are members of a select group of management and highly
compensated employees (within the meaning of Title I of ERISA) are eligible to
participate in the Plan. Notwithstanding anything to the contrary in the Plan,
the Committee shall be authorized to modify the eligibility requirements and
rescind the eligibility of any Participant if necessary to ensure that the Plan
is maintained primarily for the purpose of providing additional benefits to a
select group of management or highly compensated employees under ERISA.

Section 4. Funding.

The benefits under this Plan may be funded under the Trust. Regardless of the
extent to which the Company chooses to fund its obligations under the Plan by
transferring cash or property to the Trust, the Plan shall at all times be
"unfunded" within the meaning of ERISA and the Code. When a Participant (or
Beneficiary) is entitled to a distribution under Section 9, such distribution
will be paid either by the Company or from assets held in the Trust, as further
described in the Trust document.

Section 5. Employee Deferrals.

(a) Compensation Which May Be Deferred. A Participant who chooses to participate
in the Plan for a Plan Year must elect to participate to do so for the entire
Plan Year by executing a Deferral Election Form on a timely basis, as provided
herein. If a Participant elects to participate in the Plan for a Plan Year, then
the following shall occur:

> (1) Base Pay Deferral. Each payroll period during such Plan Year, a
> Participant may elect to have up to eighty percent (80%) of the Participant's
> Base Pay deducted from his Base Pay and credited to his Account under the
> Plan. Such election may be expressed as a percentage of Base Pay, a set dollar
> amount, or in any other manner permitted by the Committee from time to time.
> 
> 
> (2) Management Bonus Deferral. A Participant may elect to have up to eighty
> percent (80%) of the Participant's Management Bonus, if any, deducted from his
> Management Bonus and credited to his Account under the Plan. Such election may
> be expressed as a percentage of the Management Bonus, a set dollar amount, an
> amount in excess of a set dollar amount, or in any other manner permitted by
> the Committee from time to time.
> 
> 
> (3) Signing/Retention Bonus Deferral. A person who once hired will be eligible
> to participate in the Plan, and who has negotiated a signing or retention
> bonus with the Company, may elect to have up to eighty percent (80%) of such
> bonus deducted and credited to his Account under the Plan. Such election may
> be expressed as a percentage of the Signing/Retention Bonus, a set dollar
> amount, or in any other manner permitted by the Committee from time to time.
> 
> 
> (4) Allocation Dates. The Base Pay Deferral, Management Bonus Deferral, and
> Signing/Retention Bonus Deferral, respectively, shall be allocated to the
> Participant's Account on the date that the Base Pay, Management Bonus, or
> Signing/Retention Bonus, respectively, would have been paid to the
> Participant, but for his participation in the Plan.

(b) The Form of the Deferral Election. A Deferral Election shall be made in a
manner prescribed by the Committee.
 

(c) Timing of Deferral Election.

> (1) Initial Election. The initial Deferral Election under this election must
> be made no later than December 31, 2003. Such election shall apply to Base Pay
> to be received in the Company's fiscal year that begins January 31, 2004, and
> to the Management Bonus to be paid in March 2004.
>  
> 
> (2) Elections for Subsequent Plan Years. Deferral Elections for subsequent
> Plan Years must be made no later than thirty (30) days before the beginning of
> the fiscal year in which the Base Pay or the Management Bonus would be earned
> (e.g., for any Management Bonus to be paid in March 2005, the Deferral
> Election must be made no later than December 31, 2003, which is thirty days
> before the beginning of the Company's fiscal year that begins January 31,
> 2004). The Deferral Election for a Signing/Retention Bonus must be made at the
> time the Signing/Retention Bonus is negotiated with the Company.
>  
> 
> (3) Special Thirty Day Rule for New Participants. The initial Deferral
> Election for a new Participant shall be made in a form acceptable to the
> Committee, not later than thirty (30) days after the date the Participant is
> notified of his eligibility to participate in the Plan.
> 
> (4) Other Rules. Any revocation of the most recent Deferral Election shall be
> made in a form prescribed by the Committee not later than the deadline that
> would have applied to the Deferral Election (e.g., the revocation of a
> Deferral Election for Base Pay must be made no later than thirty (30) days
> before the beginning of the fiscal year in which the Base Pay would be
> earned). A Deferral Election shall not carry forward to future Plan Years; a
> new Deferral Election form must be completed for each Plan Year.

Section 6. Deemed Investment of Account.

(a) Deemed Investment of Accounts. Each Participant's Account shall be deemed to
be invested in one or more of the investment options permitted from time to time
under the Benefit Restoration Plan. The investment elections under this Plan
shall be made using the same investment election rules and procedures as
provided from time to time under the Benefit Restoration Plan. Notwithstanding
the foregoing, the Company intends that the Plan shall be "unfunded" within the
meaning of ERISA and the Code, and the provisions in this Section providing for
employee deemed investment directions shall not require the Company or any other
party to make any specific actual investments to reflect such directions.
 

(b) Annual Statement. At least once each Plan Year, each Participant shall be
furnished with a statement reflecting the following information:

> (1) The balance (if any) in his Account as of the beginning of the Plan Year.
> 
> (2) The amount allocated to his Account for that Plan Year.
> 
> (3) The new balance in his Account.
>  

Section 7. Vesting.

Except as otherwise provided in this Plan, a Participant's interest in his
Account shall be 100% vested at all times.

Section 8. Payment of Account After Set Number of Years.

A Participant may elect that deferrals for a given Plan Year shall be segregated
into a separate sub-account and paid at a set date, rather than being paid at
termination of employment. If a Participant makes such an election, then all
deferrals for such Plan Year shall be credited to such sub-account. The amounts
in such sub-account, together with deemed investment earnings thereon, shall be
paid to the Participant at a set date elected by the Participant, provided that
such date shall be not less than five (5) years from the date of the Deferral
Election. The investment of the amounts in a given sub-account shall be governed
by the Participant's investment election for the remainder of his Account, and a
Participant shall not be permitted to make a separate investment election for
any sub-account.

A Participant may elect that a given sub-account be paid in any of the payment
forms permitted under Section 9, provided, however that the $25,000 rule set
forth in Section 9 shall not apply to amounts held in a sub- account under this
Section 8. The payment date for a given sub-account, once elected, may not be
changed thereafter, provided, however, that a Participant, at the time the
Deferral Election is first made, may elect that if he or she terminates
employment before the set payment date for the sub-account, all amounts in the
sub-account shall be accelerated to a lump sum payment at the time of
termination of employment.

Section 9. Payment of Account After Termination of Employment .

(a) Time and Form of Payment. Within 120 days after the end of the Plan Year
coinciding with or next following a Participant's termination of employment, the
Participant shall be entitled to commence receiving payment of the balance of
his Account (including any deemed appreciation and depreciation through the date
of distribution). The Participant may elect to have his Account paid in one of
the following three methods:

> (1) Single lump sum payment,
> 
> (2) Installments payable annually over a period of five (5) years, or
> 
> (3) Installments payable annually over a period of ten (10) years,

as specified by the Participant on forms made available by the Committee. A lump
sum distribution will be paid in lieu of installments if as of the date of
termination of employment, the Account balance is $25,000 or less. If the
Participant fails to specify a form of payment, his Account shall be distributed
in a lump sum.

 

In the event payment is made in installments, the Participant's Account shall
continue to be adjusted for additions, withdrawals, deemed appreciation and
depreciation as provided herein, and the amount of the payment to be made in a
given year shall be equal to (i) times (ii), where (i) equals the value of the
Participant's Account as of the most recent valuation date (which for purposes
of paying installments, shall be anniversary of the date payments commence under
this Plan), and (ii) equals a fraction, the numerator of which is one, and the
denominator of which is the number of installments to be paid under the
Participant's election (including the current installment).

All payments shall be made in cash.

(b) Changing the Form of Distribution. A Participant may amend his election as
to the form of payment, provided that such change is made at least one (1) year
prior to the Participant's termination of employment. Any such amended election
shall apply to all deferrals and credits from all prior years which are payable
at the Participant's termination of employment.

(c) Payment to Beneficiary. In the event a Participant dies before his Account
has been fully paid to him, his remaining Account will be paid to his
Beneficiary in a single lump sum as soon as practicable.

(d) Withholding. The Company shall withhold from any payment the amount of all
applicable federal and state income and other taxes. In addition, the Company
may reduce the amount otherwise payable under this Section 9 by any amounts owed
by the Participant to the Company.

Section 10. Administration.

(a) In General. The Plan shall be administered by the Committee. The members of
the Committee shall be appointed by and may be removed by the Board, in each
case by written notice delivered to the Committee member. A majority of the
members of the Committee shall constitute a quorum for the transaction of
business at any meeting. Any determination or action of the Committee may be
made or taken by a majority of the members present at any meeting thereof, or
without a meeting by resolution or written memorandum concurred in by a majority
of members. Meetings may be held electronically.

(b) Powers of the Committee. The Committee shall administer the Plan in
accordance with its terms and shall have all powers necessary to carry out the
provisions of the Plan. It shall interpret the Plan and shall determine all
questions arising in the administration, interpretation and application of the
Plan. It shall determine the eligibility for benefits, the amount of any benefit
due and the manner in which any benefit is to be paid by the Plan. It will
construe the Plan, supplying any omissions, reconciling any differences and
determining factual issues relating to the Plan. The Committee may adopt such
rules as it deems desirable for the conduct of its affairs. It may appoint such
accountants, counsel, actuaries, specialists and other persons as it deems
necessary or desirable in connection with the administration of this Plan, and
shall be the agent for the service of process. All powers of the Committee shall
be exercised in its discretion, and the Committee shall be given the greatest
possible deference permitted by law in the exercise of such authority.

(c) Electronic Administration. Notwithstanding anything to the contrary in the
Plan, the Committee may announce from time to time that Participant enrollments,
Participant elections, and the any other aspect of plan administration may be
made by telephonic or other electronic means rather than in paper form.

Section 11. Claims Procedure.

A Participant (or Beneficiary) who does not receive a distribution of benefits
to which he believes he is entitled may present a claim to the Company's Manager
of Compensation, or his delegate (such manager and his delegate(s) are referred
to hereafter as the "Manager"). The claim for benefits must be in writing and
addressed to the Manager or to the Company. If the claim for benefits is denied,
the Manager shall notify the Participant (or Beneficiary) in writing within 90
days after the Manager initially received the benefit claim. Any notice of a
denial of benefits shall advise the Participant (or Beneficiary) of the basis
for the denial, any additional material or information necessary for the
Participant (or Beneficiary) to perfect his claim and the steps which the
Participant (or Beneficiary) must take to have his claim for benefits reviewed.

Each Participant (or Beneficiary) whose claim for benefits has been denied may
file a written request for a review of his claim by the Committee. The request
for review must be filed by the Participant (or Beneficiary) within 60 days
after he receives the written notice denying his claim. The decision of the
Committee will be made within 60 days after receipt of a request for review and
shall be communicated in writing to the claimant. Such written notice shall set
forth the basis for the Committee's decision. If there are special circumstances
(such as the need to hold a hearing) which require an extension of time for
completing the review, the Committee's decision shall be rendered not later than
120 days after receipt of a request for review. All decisions and
interpretations of the Committee under this Section 11 shall be conclusive and
binding upon all persons with an interest in the Plan and shall be given the
greatest deference permitted by law.

Section 12. Limitation on Participants' Rights.

(a) Non-Guarantee of Employment. The adoption and maintenance of the Plan shall
not be deemed to constitute a contract of employment or otherwise between the
Company and any employee, or to be a consideration for, or an inducement or
condition of, any employment. Nothing contained in this Plan shall be deemed to
give an employee the right to be retained in the service of the Company or to
interfere with the right of the Company to discharge, with or without cause, any
employee at any time.

(b) No Assignment of Benefits. A Participant's interest in his Account may not
be anticipated, assigned (either at law or in equity), alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable process;
provided, however, that a Participant may designate one or more Beneficiaries.

(c) Distributions Not Compensation for Purposes of Any Other Plan. Distributions
from a Participant's Account shall not be considered wages, salaries or
compensation under any other employee benefit plan.
Section 13. Rights of Participants and Beneficiaries.

The rights of a Participant or any Beneficiary of the Participant shall be
solely those of an unsecured general creditor of the Company. A Participant or
Beneficiary of the Participant shall have the right to receive those payments
specified under this Plan only from the Company or the Trust. The parties have
no right to look to any specific or special property separate from the Company
or the Trust to satisfy a claim for benefit payments.

A Participant agrees that he or his Beneficiary shall have no right, claim,
security interest, or any beneficial ownership interest whatsoever in any
general asset that the Company may acquire or use to help support its financial
obligations under this Plan. Any general asset used or acquired by the Company
in connection with the liabilities it has assumed under this Plan shall not be
deemed to be held under any trust for the benefit of the Participant or his
Beneficiary (other than the Trust), and no general asset shall be considered
security for the performance of the obligations of the Company.

A Participant also understands and agrees that his participation in the
acquisition of any general asset for the Company shall not constitute a
representation to the Participant or his Beneficiary that any of them has a
special or beneficial interest in any general asset.

The Company's obligation under this Plan shall be an unfunded and unsecured
promise to pay. Except as provided in the rabbi trust described in Section 4,
the Company shall not be obligated under any circumstances to fund its financial
obligations under this Plan. All assets which the Company may acquire to help
cover its financial liabilities are and remain general assets of the Company
subject to the claims of its creditors. The Company does not give, and the Plan
does not give, any beneficial ownership interest in any asset of the Company to
a Participant or his Beneficiary. All rights of ownership in any assets are and
remain in the Company or the rabbi trust described in Section 4. The Company's
liability for payment of benefits shall be determined only under the provisions
of this Plan as it may be amended from time to time.

Section 14. Plan Binding.

The Plan shall be binding upon the Company and any successor company through
merger, acquisition or consolidation, and upon a Participant, his Beneficiary,
heirs, executors and administrators.

Section 15. Future of the Plan.

The Company reserves the right to amend or terminate the Plan (in whole or in
part) at any time, by action of the Company's Board of Directors.
Notwithstanding the foregoing, the Committee may amend the Plan without approval
of the Board provided that the Committee determines in good faith that such
amendment (i) will not result in a significant cost increase to the Company;
(ii) will not result in the issuance of Lowe's common stock; and (iii) is not
limited in impact to only officers of the Company. Any termination of the Plan
includes the right to pay to Participants upon Plan termination the full value
of their Accounts in a lump sum, regardless of the prior elections made by the
Participants. However, no such amendment, modification, or termination shall
reduce the value of benefits credited under the Plan prior to such amendment,
modification or termination. If the Plan is terminated, distribution of Accounts
shall occur at such time as may be determined by the Committee.

Section 16. Governing Law.

The provisions of this Plan shall be construed and interpreted in accordance
with the laws of the State of North Carolina, except to the extent such laws are
superseded by ERISA.

Section 17. Execution.

To record the amendment and restatement of this Plan, the Company has caused
this document to be executed on this 5th day of December, 2003.

LOWE'S COMPANIES, INC.

By   /s/ Perry G. Jennings