Document:

EX-10.1

                              ENDORSEMENT NO. 1 TO
                       FINANCIAL GUARANTY INSURANCE POLICY

FINANCIAL SECURITY                                               350 Park Avenue
ASSURANCE INC.                                          New York, New York 10022

TRUST:              The Trust  created by the Pooling and  Servicing  Agreement,
                    dated as of July 1, 2002 among Morgan  Stanley ABS Capital I
                    Inc.,   as   Depositor,   CDC  Mortgage   Capital  Inc.,  as
                    Unaffiliated Seller, Ocwen Federal Bank FSB, as Servicer and
                    Deutsche Bank National Trust Company, as Trustee

CERTIFICATES:       $328,101,000 CDC Mortgage  Capital Trust 2002-HE2,  Mortgage
                    Pass-Through   Certificates,   Series   2002-HE2,   Class  A
                    Certificates

Policy No.:         51309-N

Date of Issuance:   July 31, 2002

         1.  DEFINITIONS.  For all purposes of this Policy,  the terms specified
below shall have the meanings or constructions provided below. Capitalized terms
used herein and not otherwise defined herein shall have the meanings provided in
the Pooling and Servicing Agreement unless the context shall otherwise require.

         "BUSINESS DAY" means any day other than (i) Saturday or Sunday, or (ii)
a day on which  banking and savings and loan  institutions,  in (a) the State of
New  York,  New  Jersey  and  Florida,  (b) the  state in which  the  Servicer's
servicing  operations  are  located,  or (c) the  State in which  the  Trustee's
operations are located,  are authorized or obligated by law,  executive order or
government decree to be closed.

         "GUARANTEED  DISTRIBUTIONS"  means,  with respect to each  Distribution
Date, the distribution to be made to Holders of the Certificates in an aggregate
amount equal to (i) the Accrued  Certificate  Interest  Distribution Amount with
respect  to the  Certificates  for each  Distribution  Date,  (ii)  any  Class A
Principal  Parity  Amount  and  (iii)  the  Class  Certificate  Balance  of  the
Certificates  to the extent unpaid on the Final Scheduled  Distribution  Date or
earlier  termination  of the  Trust  pursuant  to the terms of the  Pooling  and
Servicing  Agreement,  after  giving  effect  to all  other  amounts  due to the
Certificates,  in  each  case in  accordance  with  the  original  terms  of the
Certificates  when issued and without regard to any amendment or modification of
the  Certificates or the Pooling and Servicing  Agreement  except  amendments or
modifications  to which Financial  Security has given its prior written consent.
Guaranteed Distributions shall not include, nor shall coverage be provided under
this Policy in respect of, any taxes, withholding or other charge imposed by any
governmental  authority  due in  connection  with the payment of any  Guaranteed
Distribution to a Holder.

         "POLICY" means this Financial  Guaranty  Insurance  Policy and includes
each endorsement thereto.

<PAGE>

Policy No.: 51309-N                              Date of Issuance: July 31, 2002

         "POOLING  AND  SERVICING  AGREEMENT"  means the Pooling  and  Servicing
Agreement  dated as of July 1, 2002 among Morgan  Stanley ABS Capital I Inc., as
Depositor,  Ocwen Federal Bank FSB, as Servicer,  CDC Mortgage  Capital Inc., as
Unaffiliated  Seller, and Deutsche Bank National Trust Company,  as Trustee,  as
amended from time to time with the consent of Financial Security.

         "RECEIPT" and "RECEIVED" mean actual delivery to Financial Security and
to the Fiscal Agent (as defined  below),  if any,  prior to 12:00 noon, New York
City time,  on a Business Day;  delivery  either on a day that is not a Business
Day, or after 12:00 noon,  New York City time,  shall be deemed to be receipt on
the next succeeding  Business Day. If any notice or certificate  given hereunder
by the Trustee is not in proper form or is not properly  completed,  executed or
delivered,  it shall be deemed not to have been Received, and Financial Security
or its Fiscal  Agent  shall  promptly  so advise the Trustee and the Trustee may
submit an amended notice.

          "TERM OF THIS POLICY"  means the period from and including the Date of
Issuance to and including the date on which (i) the unpaid principal balances of
all of the Certificates is zero, (ii) any period during which any payment on the
Certificates could have been avoided in whole or in part as a preference payment
under  applicable  bankruptcy,  insolvency,  receivership  or  similar  law  has
expired,  and (iii) if any  proceedings  requisite  to avoidance as a preference
payment have been commenced prior to the occurrence of (i) and (ii), a final and
nonappealable order in resolution of each such proceeding has been entered.

         "TRUSTEE"  means Deutsche Bank National Trust Company,  in its capacity
as Trustee under the Pooling and  Servicing  Agreement and any successor in such
capacity.

         2.  NOTICES  AND   CONDITIONS  TO  PAYMENT  IN  RESPECT  OF  GUARANTEED
DISTRIBUTIONS.   Following  Receipt  by  Financial  Security  of  a  notice  and
certificate  from  the  Trustee  in the  form  attached  as  Exhibit  A to  this
Endorsement, Financial Security will pay any amount payable hereunder in respect
of Guaranteed  Distributions out of the funds of Financial Security on the later
to occur of (a) 12:00  noon,  New York City  time,  on the second  Business  Day
following  such  Receipt;  and (b)  12:00  noon,  New  York  City  time,  on the
Distribution Date to which such claim relates. Payments due hereunder in respect
of Guaranteed  Distributions  will be disbursed by wire transfer of  immediately
available funds to the Class A Insurance Payment Account established pursuant to
the Pooling and  Servicing  Agreement  or, if no such Class A Insurance  Payment
Account has been established, to the Trustee.

         Financial  Security  shall be entitled to pay any amount  hereunder  in
respect of Guaranteed Distributions, including any acceleration payment, whether
or not any notice and certificate shall have been Received by Financial Security
as provided  above,  provided,  however,  that by  acceptance of this Policy the
Trustee  agrees to provide to  Financial  Security,  upon  Financial  Security's
request to the Trustee, a notice and certificate in respect of any such payments
made  by  Financial  Security.  Financial  Security  shall  be  entitled  to pay
principal hereunder on an accelerated basis if Financial Security shall so elect
in its sole  discretion,  at any time or from time to time, in whole or in part,
at an earlier  Distribution  Date than provided in the definition of "Guaranteed
Distributions,"  if such principal would have been payable under the Pooling and
Servicing  Agreement were funds sufficient to make such payment available to the
Trustee for such purpose.  Guaranteed  Distributions insured hereunder shall not
include  interest,  in respect of

                                      -2-

<PAGE>

Policy No.: 51309-N                              Date of Issuance: July 31, 2002

principal paid hereunder on an accelerated  basis,  accruing from after the date
of such payment of  principal.  Financial  Security's  obligations  hereunder in
respect of Guaranteed  Distributions shall be discharged to the extent funds are
disbursed by Financial Security as provided herein whether or not such funds are
properly applied by the Trustee.

         3.  NOTICES  AND   CONDITIONS  TO  PAYMENT  IN  RESPECT  OF  GUARANTEED
DISTRIBUTIONS AVOIDED AS PREFERENCE PAYMENTS. If any Guaranteed  Distribution is
avoided  as  a  preference  payment  under  applicable  bankruptcy,  insolvency,
receivership or similar law,  Financial Security will pay such amount out of the
funds of  Financial  Security  on the  later of (a) the date when due to be paid
pursuant  to the  Order  referred  to below or (b) the first to occur of (i) the
fourth Business Day following Receipt by Financial  Security from the Trustee of
(A) a certified copy of the order of the court or other  governmental body which
exercised  jurisdiction  to the  effect  that the Holder is  required  to return
principal or interest  distributed with respect to the  Certificates  during the
Term of this Policy  because such  distributions  were  avoidable as  preference
payments under applicable bankruptcy law (the "Order"), (B) a certificate of the
Holder that the Order has been entered and is not subject to any stay and (C) an
assignment  duly  executed  and  delivered  by the  Holder,  in such  form as is
reasonably  required  by  Financial  Security  and  provided  to the  Holder  by
Financial Security,  irrevocably  assigning to Financial Security all rights and
claims of the Holder relating to or arising under the  Certificates  against the
debtor  which made such  preference  payment or  otherwise  with respect to such
preference  payment or (ii) the date of Receipt by Financial  Security  from the
Trustee of the items  referred to in clauses (A), (B) and (C) above if, at least
four Business Days prior to such date of Receipt,  Financial Security shall have
Received written notice from the Trustee that such items were to be delivered on
such date and such date was  specified  in such notice.  Such  payment  shall be
disbursed  to the  receiver,  conservator,  debtor-in-possession  or  trustee in
bankruptcy  named in the Order and not to the  Trustee  or any  Holder  directly
(unless a Holder has previously  paid such amount to the receiver,  conservator,
debtor-in-possession  or trustee in bankruptcy named in the Order, in which case
such payment shall be disbursed to the Trustee for  distribution  to such Holder
upon proof of such payment reasonably  satisfactory to Financial  Security).  In
connection with the foregoing, Financial Security shall have the rights provided
pursuant to Sections 4.05 and 4.06 of the Pooling and Servicing Agreement.

         4.  GOVERNING  LAW.  This Policy shall be governed by and  construed in
accordance with the laws of the State of New York,  without giving effect to the
conflict of laws principles thereof.

         5. FISCAL AGENT. At any time during the Term of this Policy,  Financial
Security may appoint a fiscal  agent (the  "Fiscal  Agent") for purposes of this
Policy by written notice to the Trustee at the notice  address  specified in the
Pooling and Servicing  Agreement  specifying  the name and notice address of the
Fiscal Agent.  From and after the date of receipt of such notice by the Trustee,
(i) copies of all notices and  documents  required to be  delivered to Financial
Security pursuant to this Policy shall be simultaneously delivered to the Fiscal
Agent and to Financial  Security and shall not be deemed Received until Received
by both and (ii) all payments  required to be made by Financial  Security  under
this Policy may be made directly by Financial Security or by the Fiscal Agent on
behalf  of  Financial  Security.  The  Fiscal  Agent is the  agent of  Financial
Security only and the Fiscal Agent shall in no event be liable to any Holder for
any acts of the

                                      -3-
<PAGE>

Policy No.: 51309-N                              Date of Issuance: July 31, 2002

Fiscal  Agent or any failure of  Financial  Security to deposit,  or cause to be
deposited, sufficient funds to make payments due under this Policy.

         6. WAIVER OF DEFENSES.  To the fullest  extent  permitted by applicable
law, Financial Security agrees not to assert, and hereby waives, for the benefit
of each Holder,  all rights (whether by  counterclaim,  setoff or otherwise) and
defenses (including, without limitation, the defense of fraud), whether acquired
by  subrogation,  assignment  or  otherwise,  to the extent that such rights and
defenses  may be  available  to  Financial  Security  to  avoid  payment  of its
obligations under this Policy in accordance with the express  provisions of this
Policy.

         7.  NOTICES.  All  notices  to be given  hereunder  shall be in writing
(except  as  otherwise  specifically  provided  herein)  and  shall be mailed by
registered mail or personally  delivered or telecopied to Financial  Security as
follows:

                   Financial Security Assurance Inc.
                   350 Park Avenue
                   New York, NY 10022
                   Attention: Managing Director - Transaction Oversight
                   Re:  CDC Mortgage Capital Trust 2002-HE2
                   Policy No.: 51309-N
                   Telecopy No.: (212) 339-3518
                   Confirmation: (212) 826-0100

Financial  Security  may specify a  different  address or  addresses  by writing
mailed or delivered to the Trustee.

         8.  PRIORITIES.  In the event any term or provision of the face of this
Policy is inconsistent with the provisions of this  Endorsement,  the provisions
of this Endorsement shall take precedence and shall be binding.

         9. EXCLUSIONS FROM INSURANCE GUARANTY FUNDS. This Policy is not covered
by the Property/Casualty  Insurance Security Fund specified in Article 76 of the
New York  Insurance  Law.  This Policy is not  covered by the Florida  Insurance
Guaranty  Association  created  under  Part  II of  Chapter  631 of the  Florida
Insurance Code. In the event Financial  Security were to become  insolvent,  any
claims  arising under this Policy are excluded  from coverage by the  California
Insurance Guaranty Association,  established pursuant to Article 14.2 of Chapter
1 of Part 2 of Division 1 of the California Insurance Code.

         10.  SURRENDER OF POLICY.  The Trustee shall  surrender  this Policy to
Financial Security for cancellation upon expiration of the Term of this Policy

                                      -4-
<PAGE>

Policy No.: 51309-N                              Date of Issuance: July 31, 2002

         IN WITNESS WHEREOF,  FINANCIAL  SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.

                                             FINANCIAL SECURITY ASSURANCE INC.

                                             By
                                                --------------------------------
                                                       Authorized Officer

                                      -5-
<PAGE>

Policy No.: 51309-N                             Date of Issuance: April 30, 2002

                                                                       EXHIBIT A
                                                                TO ENDORSEMENT 1

                         NOTICE OF CLAIM AND CERTIFICATE

                             (Letterhead of Trustee)

Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022

         Re:  CDC  Mortgage   Capital  Trust  2002-HE2   Mortgage   Pass-Through
Certificates, Series 2002-HE2

         The  undersigned,  a duly authorized  officer of Deutsche Bank National
Trust Company (the "Trustee"),  hereby certifies to Financial Security Assurance
Inc.  ("Financial  Security"),  with reference to Financial  Guaranty  Insurance
Policy  No.  51309-N  dated July 31,  2002 (the  "Policy")  issued by  Financial
Security  in  respect  of the  CDC  Mortgage  Capital  Trust  2002-HE2  Mortgage
Pass-Through Certificates, Series 2002-HE2 (the "Certificates"), that:

                  (i) The  Trustee  is the  Trustee  for the  Holders  under the
         Pooling and Servicing Agreement.

                  (ii) The sum of all amounts on deposit (or  scheduled to be on
         deposit) in the Collection  Account and available for  distribution  to
         the Holders  pursuant to the Pooling and  Servicing  Agreement  will be
         $___________ (the  "Shortfall") less than the Guaranteed  Distributions
         with respect to the Distribution Date.

                  (iii) The  Trustee is making a claim  under the Policy for the
         Shortfall  to be applied to  distributions  of principal or interest or
         both with respect to the Certificates.

                  (iv) The Trustee agrees that,  following receipt of funds from
         Financial  Security,  it shall (a) hold such amounts in trust and apply
         the same  directly to the payment of  Guaranteed  Distributions  on the
         Certificates  when due; (b) not apply such funds for any other purpose;
         (c) not  commingle  such funds with other funds held by the Trustee and
         (d) maintain an accurate  record of such  payments with respect to each
         Certificate  and the  corresponding  claim on the Policy  and  proceeds
         thereof  and,  if the  Certificate  is required  to be  surrendered  or
         presented for such payment,  shall stamp on each such  Certificate  the
         legend "$ [insert applicable amount] paid by Financial Security and the
         balance  hereof has been cancelled and reissued" and then shall deliver
         such Certificate to Financial Security.

                  (v) The Trustee,  on behalf of the Holders,  hereby assigns to
         Financial  Security  the  rights of the  Holders  with  respect  to the
         Certificates to the extent of any payments under the Policy, including,
         without  limitation,  any  amounts  due to the  Holders  in  respect of
         securities  law  violations  arising  from  the  offer  and sale of the
         Certificates.  The  foregoing  assignment is in addition to, and not in
         limitation of, rights of subrogation  otherwise  available to Financial
         Security  in  respect of such  payments.  The  Trustee  shall

<PAGE>

Policy No.: 51309-N                              Date of Issuance: July 31, 2002

         take such  action and deliver  such  instruments  as may be  reasonably
         requested or required by Financial  Security to effectuate  the purpose
         or provisions of this clause (v).

                  (vi) The Trustee,  on its behalf and on behalf of the Holders,
         hereby appoints  Financial Security as agent and  attorney-in-fact  for
         the Trustee and each such Holder in any legal  proceeding  with respect
         to the Certificates.  The Trustee hereby agrees that Financial Security
         may at any time during the continuation of any proceeding by or against
         the  Issuer  under  the  United  States  Bankruptcy  Code or any  other
         applicable  bankruptcy,  insolvency,  receivership,  rehabilitation  or
         similar law (an "Insolvency Proceeding") direct all matters relating to
         such  Insolvency  Proceeding,  including  without  limitation,  (A) all
         matters  relating  to  any  claim  in  connection  with  an  Insolvency
         Proceeding  seeking the  avoidance  as a  preferential  transfer of any
         distribution  made with  respect  to the  Certificates  (a  "Preference
         Claim"),  (B) the direction of any appeal of any order  relating to any
         Preference  Claim, at the expense of Financial  Security but subject to
         reimbursement  as  provided  in the  Insurance  Agreement  and  (C) the
         posting of any surety, supersedeas or performance bond pending any such
         appeal. In addition,  the Trustee hereby agrees that Financial Security
         shall be subrogated  to, and the Trustee on its behalf and on behalf of
         each  Holder,  hereby  delegates  and  assigns,  to the fullest  extent
         permitted  by law,  the rights of the  Trustee  and each  Holder in the
         conduct of any Insolvency  Proceeding,  including,  without limitation,
         all  rights  of any party to an  adversary  proceeding  or action  with
         respect  to  any  court  order  issued  in  connection  with  any  such
         Insolvency Proceeding.

                  (vii) Payment should be made by wire transfer  directed to the
         Class A Insurance Payment Account.

         Unless the context otherwise  requires,  capitalized terms used in this
Notice of Claim and  Certificate  and not defined herein shall have the meanings
provided in the Policy.

                  IN WITNESS  WHEREOF,  the Trustee has executed  and  delivered
         this  Notice of Claim and  Certificate  as of the  ____________  day of
         ___________, _____.

                               DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee

                               By
                                  -----------------------------------------
                               Title
                                     --------------------------------------

--------------------------------------------------------------------------------

For Financial Security or Fiscal Agent Use Only

Wire transfer sent on ____________________ by _______________________

Confirmation Number _____________________<PAGE>

                                                                     Exhibit 4.4

                    Lowe's Companies Benefit Restoration Plan
                as amended and restated effective August 3, 2002

<PAGE>

                                LOWE'S COMPANIES

                            BENEFIT RESTORATION PLAN

Section 1.  Nature of the Plan.

         The purpose of this Plan is to provide benefits in addition to those
provided under the Lowe's 401(k) Plan (the "401(k) Plan") to those 401(k) Plan
participants whose benefits under such plan are restricted as a result of the
annual dollar limitation on pre-tax deferrals imposed by Section 402(g) of the
Internal Revenue Code of 1986, as amended (the "Code"), and/or the limitation on
annual compensation that may be taken into account under Section 401(a)(17) of
the Code, and/or the deferral percentage requirements set forth in Section
401(k)(2) of the Code, and/or the contribution percentage requirements set forth
in Section 401(m)(2) of the Code, and/or the limitation on defined contribution
plan allocations set forth in Code Section 415(c)(1)(A) (collectively referred
to as the "Code Limitations"). 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, originally adopted February 1, 1990, is hereby amended and
restated, effective as of August 3, 2002.

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 and
                                            Company credits, as well as
                                            additions, withdrawals, and
                                            adjustments to the Account
                                            (including adjustments for
                                            appreciation and depreciation in the
                                            deemed investments). Each Account
                                            shall include one sub-account for
                                            Employee Deferrals and one

<PAGE>

                                            sub-Account for Company Credits. 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.

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

Code Limitations.......................     The annual dollar limitation on
                                            pre-tax deferrals imposed by Section
                                            402(g) of the Internal Revenue Code
                                            of 1986, as amended (the "Code"),
                                            the limitation on annual
                                            compensation that may be taken into
                                            account under Section 401(a)(17) of
                                            the Code, the deferral percentage
                                            requirements set forth in Section
                                            401(k)(2) of the Code (including for
                                            this purpose the Maximum HCE
                                            Contribution Percentage under the
                                            401(k) Plan for a given Plan Year),
                                            the contribution percentage
                                            requirements set forth in Section
                                            401(m)(2) of the Code, and the
                                            limitation on defined contribution
                                            plan allocations set forth in Code
                                            Section 415(c)(1)(A).

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.

                                      -2-

<PAGE>

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

Company Baseline Matching
Credit.................................     The Company matching credit that
                                            corresponds to the Company baseline
                                            matching contribution under the
                                            401(k) Plan.

Company Performance Matching
Credit.................................     The Company matching credit that
                                            corresponds to the Company
                                            performance matching contribution
                                            under the 401(k) Plan.

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.

Highly Compensated Employee............     Each employee of the Company who for
                                            a given plan year of the 401(k) Plan
                                            is considered to be a "highly
                                            compensated employee" for such plan
                                            year, as determined under Code
                                            Section 414(q).

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.

Maximum HCE Contribution
Percentage.............................     The maximum pre-tax deferrals,
                                            expressed as a percentage of
                                            compensation, that may be
                                            contributed to the 401(k) Plan for a
                                            given plan year (or a portion
                                            thereof) by 401(k) Plan participants
                                            who are Highly Compensated Employees
                                            for such Plan Year. The Maximum HCE
                                            Contribution Percentage is
                                            determined by the Company from time
                                            to time in order to assist the
                                            401(k) Plan in passing the deferral
                                            percentage requirements of Code
                                            Section 401(k)(2) and the
                                            contribution percentage requirements
                                            of Code Section 401(m)(2) of the
                                            Code.

                                      -3-

<PAGE>

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.

Participation Election.................     The Participant's irrevocable
                                            election under the Plan to
                                            participate in the Plan for a given
                                            Plan Year.

Plan...................................     The Lowe's Companies Benefit
                                            Restoration 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).

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 (i) are participating in the 401(k) Plan as
of the first day of such Plan Year (or, for the Plan Year ending on January 31,
2003, are participating in the 401(k) Plan as of August 3, 2002); and (ii) are
considered to be Highly Compensated Employees of the Company for such Plan Year.

         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 Plans 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 Company intends to establish in connection with the Plan a "rabbi
trust" substantially in accordance with the model rabbi trust described by the
Internal Revenue Service in Revenue Procedure 92-64. Regardless of the extent to
which the Company chooses to fund its obligations under the Plan by transferring
cash or property to such rabbi 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 rabbi trust, as further
described in the rabbi trust document.

                                      -4-

<PAGE>

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 Participation 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,
there shall be deducted from the Participant's Base Pay a percentage equal to
the difference between (i) and (ii), where

             (i)  is 6%; and

             (ii) is the lower of

                      (A) the Maximum HCE Contribution Percentage announced by
             the Company for such Plan Year;

                      (B) zero, once, for the Plan Year the Participant has
             received compensation that exceeds the maximum amount of
             compensation that may be taken into account by the 401(k) Plan
             for such Plan Year, as determined under Code Section 401(a)(17);or

                      (C) zero, once, for the calendar year that ENDS
             during such Plan Year, the Participant has contributed to the
             401(k) Plan the maximum Salary Deferral Contribution that is
             permitted under Section 402(g) of the Code for such calendar year;

         (2) Management Bonus Deferral.  There shall be deducted from the
Participant's Management Bonus, if any, earned with respect to such Plan Year a
percentage equal to the difference between (i) and (ii), where

             (i)  is 6%; and

             (ii) is the lower of

                      (A) the Maximum HCE Contribution Percentage announced by
             the Company for such Plan Year;

                      (B) zero, once, for the Plan Year the Participant has
             received compensation that exceeds the maximum amount of
             compensation that may be taken into account by the 401(k) Plan for
             such Plan Year, as determined under Code Section 401(a)(17); or

                      (C) zero, once, for the calendar year that BEGINS during
             such Plan Year, the Participant has contributed to the 401(k) Plan
             the maximum

                                      -5-

<PAGE>

             Salary Deferral Contribution that is permitted under Section 402(g)
             of the Code for such calendar year.

         (3) Allocation Dates. The Base Pay Deferral and Management Bonus
Deferrals, respectively, shall be allocated to the Participant's Account on the
date that the Base Pay or Management Bonus, respectively, would have been paid
to the Participant, but for his participation in the Plan.

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

         (c) Timing of Participation Election. The initial Participation
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. Any revocation of the
most recent Participation Election shall be made in a form prescribed by the
Committee not later than the day preceding the first day of the next succeeding
Plan Year and shall be effective with respect to Base Pay on the first day of
such succeeding Plan Year. A Participation Election shall continue for each
future Plan Year, unless and until the Participant makes a new election form on
a timely basis as provided herein.

         (d) 2002 Plan Year. Notwithstanding the foregoing, for the Plan Year
that ends on January 31, 2003, the Participation Election shall be made no later
than August 11, 2002, and Employee Deferrals from Base Pay shall commence
effective for the pay period that begins August 3, 2002.

Section 6.   Company Matching Credits.

         (a) Company Baseline Matching Credit. If a Participant elects to
participate in the Plan for a Plan Year, then, each payroll period during such
Plan Year, the Company shall credit to such Participant's Account under this
Plan a Company Baseline Matching Credit equal to (i) minus (ii), where:

             (i)   is the maximum Baseline Matching Contribution that would
         have been made to the Participant's Account under the 401(k) Plan for
         such Plan Year if the Participant had been able to contribute 6% of
         Base Pay and Management Bonus to the 401(k) Plan for such Plan Year,
         and disregarding all Code Restrictions; and

             (ii)  is the Baseline Matching Contribution that was actually
         allocated to the Participant under the 401(k) Plan for such year.

         (b) Company Performance Matching Credit. If a Participant elects to
participate in the Plan for a Plan Year, then, as soon as practicable following
the announcement by the Company of the Performance Matching Contribution under
the 401(k) Plan for such Plan Year, the Company shall credit to such
Participant's Account under this Plan a Company Performance Matching credit
equal to (i) minus (ii), where:

                                      -6-

<PAGE>

                  (i)  is the maximum Performance Matching Contribution that
         would have been made to the Participant's Account under the 401(k) Plan
         with respect to such Plan Year if the Participant had been able to
         contribute 6% of Base Pay and Management Bonus to the 401(k) Plan for
         such Plan Year, and disregarding all Code Restrictions; and

                  (ii) is the Performance Matching Contribution that was
         actually allocated to the Participant under the 401(k) Plan for such
         year.

Notwithstanding the foregoing, the Company Performance Matching Credit shall be
made only if the Participant actually qualifies to receive a Performance
Matching Credit under the 401(k) Plan for such Plan Year.

         (c)      Allocation Dates. The Baseline Matching Credit shall be
credited to the Participant's Account on the date that the corresponding
Baseline Matching Contribution under 401(k) Plan is (or would have been)
allocated to the Participant. The Performance Matching Credit shall be credited
to the Participant's Account on the same date that the Performance Matching
Contribution is contributed by the Company to the 401(k) Plan; such day
typically will be the second Monday in April.

Section 7.        Further Condition for Receiving Company Credits.

         As of the relevant allocation date, a Participant's Company Credits
under this Plan are conditioned on the Participant's contributing the maximum
amount of pre-tax deferrals permitted under the 401(k) Plan for such Plan Year.
Such maximum amount is the lesser of

                  (i)  the Maximum HCE Contribution Percentage for such Plan
         Year, times the maximum amount of the Participant's compensation that
         may be taken into account by the 401(k) Plan for such Plan Year, as
         determined under Code Section 401(a)(17); and

                  (ii) the maximum pre-tax contribution permitted under Code
         Section 402(g) for the calendar year in which the allocation of Company
         Credits occurs.

If the Committee determines that a Participant has not made the maximum pre-tax
deferrals permitted under the 401(k) Plan for a Plan Year, then the Committee
shall take such action as may be necessary in its discretion to comply with
ERISA, the Code, and regulations thereunder, including but not limited to
forfeiture of any Company Credits previously allocated for such Plan Year
(including any deemed appreciation or depreciation thereon).

Section 8.        Deemed Investment of Account.

         (a)      Deemed Investment of Accounts.  Each Participant's Account
shall be deemed to be invested in the same manner as the Participant's account
under the 401(k)

                                      -7-

<PAGE>

Plan. In this respect, the Participant's Employee Deferral sub-account shall be
deemed to be invested in the same manner as the Participant's pre-tax deferral
account under the 401(k) Plan, the Company Credit sub-account shall be deemed to
be invested in the same manner as the Participant's Company matching account
under the 401(k) Plan, and new Employee Deferrals and Company Credits under this
Plan shall be deemed to be invested in the same manner as the investment of new
contributions under the 401(k) Plan. The Committee shall develop such rules and
procedures as may be necessary or appropriate to provide for the proper
crediting of deemed investment returns under this Section. 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 (including sub-accounts)
                    as of the beginning of the Plan Year.

             (2)    The amount allocated to his Account (including sub-accounts)
                    for that Plan Year.

             (3)    The new balance in his Account (including sub-accounts)

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 9.  Payment of Account.

         (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 and additional Company Credits (if any) earned
during the Plan Year in which termination of employment occurred), except as
otherwise provided in Section 15. 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,

                                       -8-

<PAGE>

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 the date that the Performance Matching Credit
is allocated to Participants' Accounts, as provided in Section 6(c)), 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; provided,
however, that if a Participant terminates employment prior to September 1, 2003,
the one (1) year advance notice requirement shall be waived if the Participant
executes a distribution election form no later than August 31, 2002. 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.

                                      -9-

<PAGE>

         (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 Benefits, 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.

                                      -10-

<PAGE>

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 - Except as provided in Section 9(c), 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 rabbi trust described in
Section 4. The parties have no right to look to any specific or special property
separate from the Company or such rabbi 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 rabbi trust described in Section 4), 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

                                      -11-

<PAGE>

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. Such
termination 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 7th day of August, 2002.

                                                 LOWE'S COMPANIES, INC.

                                                 By /s/ Perry G. Jennings
                                                   ________________________

                                      -12-

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