Document:

ex10-24.htm

    Exhibit 10.24

      
 

      ADVANCE
AUTO PARTS, INC.

      

      DEFERRED
COMPENSATION PLAN

      

      (As
Amended and Restated Effective as of January 1, 2008)

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      
        TABLE
OF CONTENTS

        Page

         

        
          	ARTICLE
      I 	 	GENERAL 	
                  1

                
	Section
      1.1 	 	 	Purpose	
                  1

                
	Section
      1.2 	 	 	Status
      of Plan	
                  1

                
	Section
      1.3 	 	 	Effective
      Date	
                  1

                
	Section
      1.4 	 	 	Pre-2005
      Deferrals	
                  1

                
	 	 	 	 	
                   

                
	ARTICLE
      II 	 	DEFINITIONS 	
                  2

                
	Section
      2.1 	 	 	Affiliated
      Company	
                  2

                
	Section
      2.2 	 	 	Aggregated
      Plans 	
                  2

                
	Section
      2.3 	 	 	Base
      Salary 	
                  2

                
	Section
      2.4 	 	 	Beneficiary 	
                  2

                
	Section
      2.5 	 	 	Board 	
                  2

                
	Section
      2.6	 	 	Code 	
                  3

                
	Section
      2.7 	 	 	Company 	
                  3

                
	Section
      2.8 	 	 	Compensation
      Committee 	
                  3

                
	Section
      2.9 	 	 	Deferral
      Account 	
                  3

                
	Section
      2.10	 	 	Deferral
      Election Agreement 	
                  3

                
	Section
      2.11	 	 	Deferral
      Period 	
                  3

                
	Section
      2.12 	 	 	Deferred
      Amount 	
                  3

                
	Section
      2.13	 	 	Disabled 	
                  3

                
	Section
      2.14	 	 	Eligible
      Compensation 	
                  4

                
	Section
      2.15	 	 	Employer 	
                  4

                
	Section
      2.16	 	 	ERISA 	
                  4

                
	Section
      2.17 	 	 	Hypothetical
      Investment Benchmark 	
                  4

                
	Section
      2.18 	 	 	Matching
      Contribution 	
                  4

                
	Section
      2.19 	 	 	Matching
      Contribution Account 	
                  4

                
	Section
      2.20	 	 	Participant 	
                  4

                
	Section
      2.21 	 	 	Plan 	
                  4

                
	Section
      2.22 	 	 	Plan
      Administration Committee 	
                  4

                
	Section
      2.23 	 	 	Plan
      Year 	
                  4

                
	Section
      2.24 	 	 	Qualified
      Change in Control Event 	
                  4

                
	Section
      2.25 	 	 	Quarterly
      Bonus 	
                  4

                
	Section
      2.26	 	 	Retirement 	
                  4

                
	Section
      2.27	 	 	Roll-up
      Performance Bonus 	
                  4

                
	Section
      2.28 	 	 	Separation
      from Service 	
                  5

                
	Section
      2.29	 	 	Specified
      Employee 	
                  5

                
	Section
      2.30	 	 	Specified
      Time 	
                  6

                
	Section
      2.31 	 	 	Team
      Member 	
                  6

                
	 	 	 	 	
                   

                
	ARTICLE
      III 	 	PARTICIPATION
      AND DEFERRAL ELECTIONS 	
                  7

                
	Section
      3.1 	 	 	Participation	
                  7

                
	Section
      3.2 	 	 	Duration
      of Participation 	
                  8

                
	
                  Section
      3.3 

                	 	 	Deferral
      Election Agreement 	
                  8

                
	Section
      3.4 	 	 	Deferred
      Amount 	
                  8

                
	Section
      3.5 	 	 	Designated
      Payment Event 	
                  9

                
	Section
      3.6 	 	 	Form
      of Payment 	
                  9

                
	Section
      3.7 	 	 	Deferral
      Election Deadline 	
                  10

                
	Section
      3.8 	 	 	Election
      for First Year of Eligibility 	
                  10

                
	Section
      3.9 	 	 	Irrevocability
      of Election 	
                  12

                
	Section
      3.10  	 	 	Evergreen
      Elections 	
                  13

                
	Section
      3.11  	 	 	Non-Elective
      LTIP Shares Grant Deferrals 	
                  13

                
	 	 	 	 	 
	ARTICLE
      IV 	 	MAINTENANCE
      AND INVESTMENT OF ACCOUNTS	
                  15

                
	Section
      4.1  	 	 	Maintenance
      of Deferral Accounts 	
                  15

                
	Section
      4.2 	 	 	Crediting
      of Deferred Compensation	
                  15

                

        

         

         

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

        

         

         

        
          
            	Section
      4.3	 	 	Vesting	
                    15

                  
	Section
      4.4 	 	 	Hypothetical
      Investment Benchmarks	
                    16

                  
	Section
      4.5 	 	 	Statement
      of Accounts	
                    16

                  
	 	 	 	 	
                     

                  
	ARTICLE
      V 	 	DISTRIBUTIONS 	
                    17

                  
	Section
      5.1 	 	 	Eligibility
      for Distributions	
                    17

                  
	Section
      5.2	 	 	Retirement
      Distributions	
                    17

                  
	Section
      5.3	 	 	Specified
      Time Distributions	
                    17

                  
	Section
      5.4 	 	 	Other
      Payment Events	
                    17

                  
	Section
      5.5 	 	 	Designated
      Payment Date	
                    17

                  
	Section
      5.6 	 	 	Restriction
      on Distributions to Specified Employees	
                    18

                  
	Section
      5.7	 	 	No
      Acceleration of Scheduled Distributions	
                    19

                  
	Section
      5.8 	 	 	Extension
      of Specified Time Deferral Period	
                    19

                  
	Section
      5.9 	 	 	Delay
      of Payments Under Certain Circumstances	
                    20

                  
	Section
      5.10 	 	 	Cash
      Payments	
                    20

                  
	Section
      5.11 	 	 	Unforeseeable
      Emergency Withdrawals	
                    21

                  
	Section
      5.12 	 	 	Withholding
      of Taxes	
                    22

                  
	Section
      5.13 	 	 	USERRA
      Rights	
                    22

                  
	 	 	 	 	
                     

                  
	ARTICLE
      VI 	 	PAYMENTS
      UPON QUALIFIED CHANGE IN CONTROL EVENT	
                    23

                  
	Section
      6.1 	 	 	Termination
      of Plan Upon Change in Control 	
                    23

                  
	Section
      6.2 	 	 	Qualified
      Change in Control Event	
                    23

                  
	Section
      6.3 	 	 	Change
      in the Ownership of a Corporation	
                    23

                  
	Section
      6.4 	 	 	Change
      in the Effective Control of a Corporation	
                    24

                  
	Section
      6.5 	 	 	Change
      in the Ownership of Substantial Portion of Assets	
                    24

                  
	Section
      6.6 	 	 	Definitions
      and Operating Rules	
                    25

                  
	 	 	 	 	
                     

                  
	ARTICLE
      VII 	 	BENEFICIARY
      DESIGNATION 	
                    27

                  
	Section
      7.1 	 	 	Beneficiary
      Designation	
                    27

                  
	Section
      7.2 	 	 	No
      Beneficiary Designation	
                    27

                  
	 	 	 	 	
                     

                  
	ARTICLE
      VIII 	 	ADMINISTRATION
      OF PLAN 	
                    28

                  
	Section
      8.1 	 	 	Named
      Fiduciaries	
                    28

                  
	Section
      8.2 	 	 	Claim
      Procedure 	
                    
                      30

                    

                  
	 	 	 	 	
                     

                  
	ARTICLE
      IX 	 	AMENDMENT
      AND TERMINATION OF PLAN 	
                    32

                  
	
                    Section 9.1

                  	 	 	Amendment	
                    32

                  
	Section
      9.2 	 	 	Company’s
      Right to Terminate	
                    32

                  
	 	 	 	 	
                     

                  
	ARTICLE
      X 	 	MISCELLANEOUS 	
                    34

                  
	Section
      10.1 	 	 	Unfunded
      Plan	
                    34

                  
	Section
      10.2	 	 	Nonassignability	
                    34

                  
	Section
      10.3 	 	 	Validity
      and Severability	
                    34

                  
	Section
      10.4 	 	 	Governing
      Law 	
                    34

                  
	Section
      10.5 	 	 	Employment
      Status 	
                    34

                  
	Section
      10.6 	 	 	Underlying
      Incentive Plans and Programs 	
                    35

                  
	Section
      10.7 	 	 	Funding
      and Financial Health Restrictions 	
                    35

                  
	 	 	 	 	 
	APPENDIX
      A 	 	 	 	
                    36 

                  
	 	 	 	 	 
	ADDENDUM 	 	 	 	
                    37

                  

          

           

        

        
        

        
          
             

          

          
            ii

            
              

            

          

          
             

          

        

      ARTICLE
I

      

      GENERAL

      

      Section
1.1  Purpose.  It
is the intention of Advance Auto Parts, Inc. (the “Company”) to continue to
maintain and provide for the administration of the Advance Auto Parts, Inc.
Deferred Compensation Plan (the “Plan”) in accordance with the provisions
of Section 409A of the Code, and in accordance with other provisions of law
relating to non-qualified deferred compensation plans.  The purpose of
the Plan is to allow eligible Team Members to elect to defer the receipt of a
portion of the compensation that would otherwise be currently payable to the
Team Member.

       

      Section
1.2  Status of
Plan.  The Plan is maintained by the Company primarily for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, as amended (ERISA).  It is the
intention of the Company that the Plan be unfunded for tax purposes and for
purposes of Title I of ERISA.  The Plan constitutes a mere
promise by the Company to make deferred compensation payments in the
future.  As to such deferred compensation benefits, Participants under
the Plan have the status of a general, unsecured creditors of the
Company.

       

      Section
1.3  Effective
Date.  The Plan is a continuation of the Plan that was
originally adopted effective as of June 1, 2003.  Except as may
be expressly provided otherwise, the Plan is hereby amended and restated
effective as of January 1, 2008 for the purpose of becoming compliant with
final Code Section 409A regulations issued by the Internal Revenue
Service.

       

      Section
1.4  Pre-2005
Deferrals.  Deferrals made under the Plan on or before
December 31, 2004, which were earned and not subject to a substantial risk
of forfeiture as of such date, shall be segregated and administered solely in
accordance with the Addendum to this Plan.

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      ARTICLE
II

      

      DEFINITIONS

      

      For the
purposes of this Plan, the following words and phrases shall have the meanings
indicated, unless the context clearly indicates otherwise:

       

      Section
2.1  Affiliated
Company.  “Affiliated Company” means the Company and each other
corporation or enterprise, which as of a given date, is then a member of the
same controlled group of corporations or the same group of trades or businesses
under common control, determined in accordance with Sections 414(b) and (c)
of the Code, as is the Company.

       

      Section
2.2  Aggregated
Plans.  “Aggregated Plans” means the Advance Auto Parts, Inc.
Deferred Stock Unit Plan for Non-Employee Directors and Selected Executives, and
any other account balance form of deferred compensation plan allowing elective
deferrals that is sponsored by an Affiliated Company, and which  is
required to be aggregated with this Plan pursuant to IRS Regulation
§1.409A-1(c)(2).

       

      Section
2.3  Base
Salary.

       

      
        	
                (a)  

              	
                The
      “Base Salary” of a Team Member for a Plan Year means the base rate of cash
      compensation otherwise payable by an Employer to or for the benefit of the
      Team Member for services rendered or labor performed while that Team
      Member is a Participant in this Plan for such Plan Year, including the
      base pay that the Team Member could have received in cash in lieu
      of:

              

      

       

      
        	
                (i)  

              	
                Compensation
      deferrals elected to be made under this Plan, or under any other
      non-qualified deferred compensation plan maintained by the Company or
      other Affiliated Company; and

              

      

       

       

      
        	
                (ii)  

              	
                Contributions
      made by or on the Team Member’s behalf to any qualified retirement plan,
      or to any Code Section 125 cafeteria plan or other employee benefit
      plan maintained by the Company or other Affiliated
  Company.

              

      

       

      
        	
                (b)  

              	
                Any
      compensation paid to a Team Member after the last day of a Plan Year
      solely for services performed during the final payroll period (as
      described in Code Section 3401(b)) containing the last day of the
      Plan Year shall be treated as compensation for services performed in the
      subsequent Plan Year.  For example, if a payroll period begins
      on December 23 of Year 1 and ends on January 5 of Year 2, then
      the compensation for that payroll period shall be treated as Year 2
      compensation.

              

      

       

      Section
2.4  Beneficiary.  “Beneficiary”
means the person, persons or entity designated by the Participant or by the
terms of the Plan to receive any benefits payable under the Plan pursuant to
Article VII.

       

      Section
2.5  Board.  Except
as provided in Section 6.1, “Board” means the Board of Directors of the
Company as constituted from time to time.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      Section
2.6  Code.  “Code”
shall mean the Internal Revenue Code of 1986, as amended.  References
to any provision of the Code or regulation (including a proposed regulation)
thereunder shall include any successor provisions or regulations.

       

      Section
2.7  Company.  “Company”
means Advance Auto Parts, Inc., its successors, and any organization into which
or with which Advance Auto Parts, Inc. may merge or consolidate or to which all
or substantially all of its assets may be transferred.

       

      Section
2.8  Compensation
Committee.  “Compensation Committee” means the Compensation
Committee of the Board, or any successor to such committee.

       

      Section
2.9  Deferral
Account.  “Deferral Account” means each account established and
maintained on behalf of each Participant pursuant to
Section 4.1.  Where the context so implies, reference to a
Participant’s Deferral Account shall include the Participant’s Matching
Contribution Account (if any).

       

      Section
2.10  Deferral
Election Agreement.  “Deferral Election Agreement” (sometimes
referred to simply as a “Deferral Election”) means a Team Member’s agreement to
defer the receipt of Eligible Compensation as submitted by the Team Member under
the Plan in accordance with Section 3.3.

       

      Section
2.11  Deferral
Period.  “Deferral Period” means the period defined in
Section 3.5.

       

      Section
2.12  Deferred
Amount.  “Deferred Amount” means the amount defined in
Section 3.4.

       

      Section
2.13  Disabled.  A
Participant shall be considered to be or have become “Disabled” for purposes of
the Plan if, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than twelve months, the
Participant:

       

      
        	
                 
      

              	
                (a)

              	
                Is
      unable to engage in any substantial gainful activity;
  or

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Is
      receiving, and has received for a period of not less than three months,
      income replacement benefits under another accident and health plan
      covering employees of the Participant’s
  Employer.

              

      

       

      A
Participant will be deemed to be Disabled if the Participant has been determined
to be disabled (i) by the Social Security Administration, or
(ii) under a disability insurance program having a definition of disability
that satisfies the standard prescribed in subsection (a)
above.

       

      Section
2.14  Eligible
Compensation.  “Eligible Compensation” for any Team Member for
any period means the Base Salary, Quarterly Bonus or Roll-up Performance Bonus,
if any, otherwise payable to the Team Member for services performed during such
period.

       

      Section
2.15  Employer.  “Employer”
means each Affiliated Company having any Team Members who are Participants under
the Plan. An Affiliated Company qualifying as an Employer as of January 1,
2005 shall continue as such, subject to the provisions of the
Plan.  For periods on and after January 1, 2005, if an Affiliated
Company acquires a corporation or other trade or business, and if the acquired
entity is thereupon maintained as a separate Employer or operating unit with
respect an Affiliated Company in general, then such entity shall not be deemed
to be an Employer with respect to the Plan, and the 

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      Employees
employed by that entity shall not be eligible to participate in the Plan, unless
and until the Company directly, or acting through the Plan Administration
Committee, affirmatively designates the acquired entity as an
Employer.

       

      Section
2.16  ERISA.  “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.

       

      Section
2.17  Hypothetical Investment
Benchmark.  “Hypothetical Investment Benchmark” means the
phantom investment benchmarks that are used to measure the earnings credited to
a Participant’s Deferral Account.

       

      Section
2.18  Matching
Contribution.  “Matching Contribution” means the amount of
matching or other non-elective employer contribution that an Employer may make
to the Plan on behalf of eligible Team Members for any Plan Year, as prescribed
in Section 3.9.

       

      Section
2.19  Matching
Contribution Account.  “Matching Contribution Account” means a
notational account established to reflect the crediting of any Matching
Contributions or other non-elective Employer contributions made on account of a
Participant, including the deemed earnings thereon.

       

      Section
2.20  Participant.  “Participant”
means any eligible Team Member who has elected to participant in the Plan by
filing a Deferral Election Agreement as provided in
Article III.

       

      Section
2.21  Plan.  “Plan”
means this Advance Auto Parts, Inc. Deferred Compensation Plan, as may be
amended from time to time.

       

      Section
2.22  Plan
Administration Committee.  “Plan Administration Committee”
means the committee that is responsible for the operation and administration of
the Plan, as identified in Section 8.1(c).

       

      Section
2.23  Plan
Year.  “Plan Year” means a 12-month period beginning
January 1 and ending the following December 31.

       

      Section
2.24  Qualified
Change in Control Event.  “Qualified Change in Control Event”
is a change in control of an Employer, as more fully prescribed in
Article VI.

       

      Section
2.25  Quarterly
Bonus.  “Quarterly Bonus” means the amount awarded to a Team
Member for each quarterly performance period within a Plan Year pursuant to any
approved incentive plan maintained by an Employer.

       

      Section
2.26  Retirement.  “Retirement”
or “Retired” means a Participant’s Separation from Service after both attaining
age 55 and completing at least 10 continuous years of service with the
Affiliated Companies.

       

      Section
2.27  Roll-up
Performance Bonus.  “Roll-up Performance Bonus” means the bonus
of the same name that is awarded to a Team Member under an incentive plan
maintained by an Employer.  Under the terms of the incentive plan,
such Roll-up Performance Bonus is payable by reason of the Team Member’s
satisfaction of organizational or individual performance criteria, and is
measured on the basis of a performance period of 12 months (being the Plan
Year).  A performance bonus payable to a Team Member that does not
satisfy both of the above conditions will be treated under the Plan as a
Quarterly Bonus.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      Section
2.28  Separation
from Service.

       

      
        	
                (a)  

              	
                Subject
      to the further provisions of this Section 2.28, a Participant will
      incur a Separation from Service for purposes of the Plan if the
      Participant dies, Retires, or otherwise has a termination of employment as
      to all the Affiliated Companies.

              

      

       

      
        	
                (b)  

              	
                An
      Participant’s employment relationship with an Affiliated Company will be
      treated as continuing intact, and thus the Participant will not be deemed
      to have incurred a Separation from Service, while the Participant is on
      military leave, sick leave or other bona fide leave of absence if the
      period of such leave does not exceed six months, or if longer, so
      long as the Participant retains a right to reemployment with the
      Affiliated Company under an applicable statute or by
      contract.  A leave of absence constitutes a bona fide leave of
      absence only if there is a reasonable expectation that the Participant
      will return to perform services for the Affiliated Company.  If
      the period of leave exceeds six months and the Participant does not
      retain a right to reemployment under an applicable statute or by contract,
      the employment relationship is deemed to terminate on the first day
      immediately following such six-month
period.

              

      

       

      
        	
                (c)  

              	
                Whether
      a termination of employment has occurred is determined based on whether
      the facts and circumstances indicate that the Affiliated Company and the
      Participant reasonably anticipated that no further services would be
      performed after a certain date, or that the level of bona fide services
      the Participant would perform after such date (whether as an Employee or
      as an independent contractor) would permanently decrease to no more than
      20 percent of the average level of bona fide services
      performed  (whether as an Employee or an independent contractor)
      over the immediately preceding 36-month period (or the full period of
      services to the Affiliated Companies if the Participant has been providing
      services to the Affiliated Companies less than 36 months).  A
      Participant is presumed to have incurred a Separation from Service where
      the level of bona fide services performed decreases to a level equal to 20
      percent or less of the average level of services performed by the
      Participant during the immediately preceding 36-month period.  A
      Participant will be presumed not to have incurred a Separation from
      Service where the level of bona fide services performed continues at a
      level that is 50 percent or more of the average level of service performed
      by the Participant during the immediately preceding 36-month
      period.  No presumption applies to a decrease in the level of
      bona fide services performed to a level that is more than 20 percent, and
      less than 50 percent, of the average level of bona fide services performed
      during the immediately preceding 36-month
  period).

              

      

       

      Section
2.29  Specified
Employee.

       

      
        	
                (a)  

              	
                For
      purposes of this Plan, a “Specified Employee” means a Participant who
      is:

              

      

       

      
        	
                (i)  

              	
                A
      five-percent owner of an Affiliated Company;
or

              

      

       

      
        	
                (ii)  

              	
                A
      one-percent owner of an Affiliated Company having annual compensation of
      more than $150,000; or

              

      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                (iii)  

              	
                An
      officer of an Affiliated Company, regardless of the level of the officer’s
      annual compensation for the Plan Year at issue.  In this regard,
      an “officer” means a Team Member whose position is that of a
      Vice-President or higher.

              

      

       

      
        	
                (b)  

              	
                A
      Participant’s status as a Specified Employee will be determined as of
      December 31 of each Plan Year (the “Identification Date”).  If
      applicable, such a determination will be based on the compensation earned
      by the Participant from the Affiliated Companies for the 12-month period
      ending on the Identification Date.

              

      

       

      
        	
                (c)  

              	
                A
      Participant who is determined to be a Specified Employee as of an
      Identification Date shall be treated as a Specified Employee for purposes
      of the distribution restrictions prescribed under Section 5.6 of the Plan
      for the 12-month period beginning on the first day of the month following
      the Identification Date (i.e., for the calendar year immediately following
      the Identification Date).

              

      

       

      
        	
                (d)  

              	
                If
      a publicly-traded corporation is acquired by, or merges into, the Company
      or other Affiliated Company, then any Team Member of the acquired or
      merged corporation who as of December 31 (the Identification Date)
      immediately following the corporation transaction, has become an officer
      of an Affiliated Company (as defined in paragraph (a)(iii) above), or who
      is an owner described in paragraph (a)(i) or (ii) above, will be treated
      as a Specified Employee for purposes of this Plan through the last day of
      calendar year that is coincident with or next follows the date of the
      corporation transaction.  Thereafter, the Team Member’s status
      as a Specified Employee will be determined as prescribed
      above.  Notwithstanding the foregoing, the Company may elect to
      use any reasonable method to determine the Specified Employees for
      purposes of the Plan for periods immediately after the corporate
      transaction, provided that such method is adopted no later than 90 days
      after the corporate transaction and applied prospectively from the date
      the method is adopted.

              

      

       

      
        	
                (e)  

              	
                If
      a company that is not publicly-traded is acquired by or merges into the
      Company or other Affiliated Company, then the Team Members of the acquired
      or merged company will not be treated as Specified Employees for purposes
      of this Plan until the first day of the calendar year next following the
      acquisition.  Thereafter, the Team Member’s status as a
      Specified Employee shall be determined as prescribed
  above.

              

      

       

      
        	
                (f)  

              	
                A
      Participant who is not a current or former Team Member of the Company or
      any other Affiliated Company (i.e., an “outside” Director) is not a key
      employee, and therefore not a Specified Employee for purposes of the
      Plan.

              

      

       

      Section
2.30  Specified
Time.  “Specified Time” means a designated Deferral Period with
respect to a Deferral Account that based on a stated number of years, as
prescribed in Section 3.5(b).

       

      Section
2.31  Team
Member.  “Team Member” means an employee of the Company or
other Affiliated Company.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      ARTICLE
III

      

      PARTICIPATION
AND DEFERRAL ELECTIONS

      
 

      Section
3.1  Participation.

       

      
        	
                (a)  

              	
                Each
      Team Member who was a Participant in the Plan as of December 31, 2007
      shall continue as such, subject to the provisions of the
    Plan.

              

      

       

      
        	
                (b)  

              	
                Effective
      on and after January 1, 2008, a Team Member shall be eligible to
      participate in the Plan with respect to any Plan Year
  if:

              

      

       

      
        	
                (i)  

              	
                The
      Plan Administration Committee concludes that for such Plan Year, the Team
      Member is:

              

      

       

      
        	
                (A)  

              	
                Expected
      to be compensated in an amount such that the sum of the Team Member’s Base
      Salary plus 75% of the Team Member’s anticipated incentive bonuses for the
      Plan Year will equal or exceed
$100,000;

              

      

       

      
        	
                (B)  

              	
                A
      “highly-compensated employee” for the Plan Year at issue under a
      Section 401(k) plan maintained by an Employer by reason of the Team
      Member’s compensation for the prior Plan Year;
  or

              

      

       

      
        	
                (C)  

              	
                A
      newly-hired Team Member, and is expected to receive compensation from the
      Employer at a level which, if annualized, will equal or exceed the dollar
      amount that will be used to establish a person’s status as a “highly
      compensated employee” under Code Section 414(q) for the following
      year.

              

      

       

      
        	
                (ii)  

              	
                As
      of the first day of the Plan Year, the Team Member is at least
      21 years of age and has completed at least one year of
      continuous service (1,000 hours) with the Affiliated Companies;
      and

              

      

       

      
        	
                (iii)  

              	
                The
      Team Member commits to make elective deferrals to a qualified
      Section 401(k) plan maintained by an Employer at the maximum rate
      allowed with respect to such Team Member under the Section 401(k)
      plan.  This condition applies only if the Team Member is
      eligible to participate in such a Section 401(k)
  plan.

              

      

       

      
        	
                (c)  

              	
                A
      Participant who is transferred from an Employer to employment with an
      Affiliated Company that is not an Employer with respect to the Plan, or
      who while continuing in the employ of an Employer ceases to be an eligible
      Team Member (a “Transferred Participant”), shall not be considered to have
      incurred a Separation from Service.  The Transferred Participant
      shall continue to be eligible to make deferrals under the Plan through the
      end of the Plan Year in which such transfer occurs, or for such additional
      period as may be permitted by the Compensation
  Committee.

              

      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      Section
3.2  Duration of
Participation.  Each Participant shall remain a Participant
under the Plan until the balance of all of the Participant’s Deferral Accounts
has been distributed to the Participant or the Participant’s
Beneficiary.

       

      Section
3.3  Deferral
Election Agreement.

       

      
        	
                (a)  

              	
                For
      each Plan Year, each eligible Team Member shall be permitted to submit a
      separate Deferral Election Agreement with respect to each of the forms of
      Eligible Compensation otherwise payable to the Team Member for services
      performed during the Plan Year.  The forms of Eligible
      Compensation for a Plan Year consist of Base Salary, Quarterly Bonuses and
      Roll-up Performance Bonus.  For administrative convenience, the
      Plan Administration Committee can combine the elections for two or more
      forms of the Eligible Compensation on a single form.  The
      submission of the Deferral Election Agreement must be made in accordance
      with such policies and procedures established by the Plan Administration
      Committee and communicated to eligible Team Members, which procedures may
      permit or require elections to be made by electronic
  media.

              

      

       

      
        	
                (b)  

              	
                The
      Deferral Election Agreement with respect to each form of Eligible
      Compensation shall include the elections and descriptions prescribed
      below.

              

      

       

      
        	
                (i)  

              	
                The
      amount of the Team Member’s Eligible Compensation to be deferred for the
      Plan Year (the “Deferred Amount”), as described more fully in
      Section 3.4;

              

      

       

      
        	
                (ii)  

              	
                The
      designated payment event for such Deferred Amount, as described more fully
      in Section 3.5;

              

      

       

      
        	
                (iii)  

              	
                The
      form in which the Deferred Amount is elected to be paid, as described more
      fully in Section 3.6; and

              

      

       

      
        	
                (iv)  

              	
                The
      manner in which the Deferred Amount shall be deemed to be invested, as
      described in Section 4.4.

              

      

       

      Section
3.4  Deferred
Amount.

       

      
        	
                 
      

              	
                (a)

              	
                The
      Deferral Election Agreement of an eligible Team Member for a Plan Year
      shall designate the amount of each form of the Eligible Compensation for
      the Plan Year that the Team Member elects to have deferred under the Plan
      (the “Deferred Amount”).  An eligible Team Member shall
      make a separate deferral election for each form of the Team Member’s
      Eligible Compensation (i.e., Base Salary, Quarterly Bonus and Roll-up
      Performance Bonus) for the Plan Year.  The maximum or minimum
      amount of deferral that may be elected by a Team Member for a Plan Year
      with respect to each form of Eligible Compensation shall be established by
      the Plan Administration Committee.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                The
      aspect of a Deferral Election Agreement regarding the elected Deferred
      Amount shall not apply to any pay period for which the amount of the
      Eligible Compensation remaining to be paid to the Team Member (but for the
      deferral election), after making any other deductions or withholdings of
      income, would be less than the Deferred Amount prescribed in the Deferral
      Election Agreement

              

      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        	
                (c)  

              	
                Notwithstanding
      an eligible Team Member’s election to the contrary, if the Team Member is
      eligible to make elective deferrals under a Code Section 401(k) plan
      maintained by an Employer for any period for which the Team Member is
      eligible to participate in the Plan, the Team Member’s deferral election
      with respect to the Plan for a Plan Year, or for any period during a Plan
      Year, shall not apply unless and until the Team Member has made the
      maximum elective deferrals to the Section 401(k) plan permitted by
      Code Section 402(g), or has made the maximum elective deferrals for a
      period permitted under the terms of the Section 401(k)
      plan.

              

      

       

      Section
3.5  Designated
Payment Event.  A Team Member’s Deferral Election Agreement
must designate the event that will give rise to the payment of the Deferred
Amount.  The period of the deferral through the date of the event
giving rise to the payment of the Deferred Amount is sometimes referred to
herein as the “Deferral Period.”  Subject to the terms of the Plan,
including Section 5.6 (regarding the restriction on distributions to
Specified Employees), a Team Member may elect to have the Deferred Amount
pertaining to services performed in any Plan Year become payable upon
(i.e., to be deferred until) either of the following alternative
events:

       

      
        	
                (a)  

              	
                The
      Team Member’s Retirement or other Separation from Service;
    or

              

      

       

      
        	
                (b)  

              	
                The
      expiration of a stated number of full calendar years, not less than two,
      following the Plan Year to which the deferred compensation pertains
      (i.e., as of a “Specified Time”).  For example, a Team
      Member may elect to have a Deferral Account pertaining to Year 1
      compensation be deferred for the period ending on December 31 of Year
      3, or until the last day of any subsequent calendar
  year.

              

      

       

      Notwithstanding
the terms of a Deferral Election Agreement, a Participant’s Retirement shall be
a designated payment event with respect to each of the Participant’s Deferral
Accounts.  Accordingly, if such Retirement occurs prior to the
occurrence of the Specified Time designated in any Deferral Election Agreement
for any Deferral Account, then the Retirement shall supplant the Specified Time
election with respect to that  Deferral Account.

       

      Section
3.6  Form of
Payment.

       

      
        	
                (a)  

              	
                A
      Participant’s Deferral Election Agreement shall designate the form in
      which the Deferred Amount will be paid if such payments arise by reason of
      a designated payment event prescribed in Section 3.5
      above.  The permissive forms of payment
  are:

              

      

       

      
        	
                (i)  

              	
                A
      lump sum; or

              

      

       

      
        	
                (ii)  

              	
                Substantially
      equal annual installments over a period (as the Participant shall
      designate) of not less than two years and not more than
      10 years.

              

      

       

      
        	
                (b)  

              	
                If
      the distribution of a Participant’s Deferral Account is to be made in
      annual installments, then the annual cash payments to be made from the
      Participant’s Deferral Account shall be determined by reference to
      a  fraction, the numerator of which is one and the denominator
      of which is the number of remaining installments (including the
      installment being paid).  Each installment shall be deemed to be
      made on a pro rata basis from each 

              

      

      
         

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

         

        
          	
                   

                	
                  of
      the different deemed investments of the Deferral Account (if there is more
      than one such deemed investment).

                

        

         

      

      
         

        Section
3.7  Deferral
Election Deadline.

      

       

      
        	
                (a)  

              	
                A
      Deferral Election pertaining to any Base Salary or Quarterly Bonuses that
      may otherwise become payable to a Participant for services performed
      during a Plan Year, including in regard to the fourth quarter Quarterly
      Bonus for a Plan Year that will be paid after the end of that Plan Year,
      must be submitted on or before December 31 of the Plan Year
      immediately preceding the Plan Year for which it is effective
      (a “Statutory Deadline”), or as of such earlier submission date
      established by the Plan Administration
  Committee.

              

      

       

      
        	
                (b)  

              	
                A
      Deferral Election pertaining to any Roll-up Performance Bonus that may
      otherwise become payable to a Participant for services performed during a
      Plan Year must be submitted on or before December 31 of the Plan Year
      immediately preceding the Plan Year performance period for which it is
      effective (a “Statutory Deadline”), or as of such earlier submission
      date established by the Plan Administration
      Committee.  Notwithstanding the foregoing, the Compensation
      Committee in its discretion may permit Participants to submit the Deferral
      Election for the Roll-up Performance Bonus pertaining to any Plan Year on
      or before June 30 falling within the applicable Plan Year
      (a “Statutory Deadline”), or as of such earlier submission date
      established by the Plan Administration Committee, subject to the following
      conditions:

              

      

       

      
        	
                (i)  

              	
                The
      Participant must have performed services for the Employer continuously
      during the period beginning on the later of the beginning of the
      performance period or the date the applicable performance criteria are
      established, and ending on the date the election is made;
    and

              

      

       

      
        	
                (ii)  

              	
                The
      election is made before the amount of the Roll-up Performance Bonus
      becomes readily ascertainable.

              

      

       

      Section
3.8  Election for
First Year of Eligibility.  Notwithstanding Section 3.7 above,
the provisions of this Section 3.8 shall apply with respect to a Team Member who
becomes eligible to participate in the Plan after the first day of a Plan
Year.

       

      
        	
                (a)  

              	
                The
      timing of the eligible Team Member’s initial Deferral Election shall be
      governed by the rules prescribed
below.

              

      

       

      
        	
                (i)  

              	
                The
      initial Deferral Election must be made within 30 days after the date
      the individual becomes such an eligible Team Member.  Except as
      provided in paragraph (ii) below, the eligible Team Member’s initial
      Deferral Election, or the decision to not make an initial Deferral
      Election, shall become irrevocable as of the expiration of such 30-day
      election period.

              

      

       

      
        	
                (ii)  

              	
                Notwithstanding
      paragraph (i) above, an initial Deferral Election by an eligible Team
      Member with respect to a Quarterly Bonus or a Roll-up Performance Bonus
      that is affirmatively made and submitted under the Plan by the last day of
      the quarter or Plan Year preceding the quarter or Plan Year for which the
      Deferral 

              

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
         

        
          	
                    

                	
                  Election
      will first apply, and before the expiration of the otherwise applicable
      30-day election period, shall become irrevocable as of the last day of
      such preceding quarter or Plan
Year.

                

        

         

      

      
        	
                (iii)  

              	
                In
      no event may the deadline for making an initial Deferral Election under
      this Plan with respect to any eligible Team Member for any Plan Year be
      subsequent to the deadline imposed on that Eligible Individual for making
      a Deferral Election for such Plan Year under any other Aggregated
      Plan.

              

      

       

      
        	
                (b)  

              	
                A
      former Participant who has again become an eligible Team Member shall be
      treated as first becoming eligible to participate in the Plan, and thus
      shall be subject to the special election rules of this Section 3.8,
      under either of the following
circumstances:

              

      

       

      
        	
                (i)  

              	
                The
      former Participant has been paid all amounts deferred under the Plan and
      all other Aggregated Plans, and the Participant ceased to be eligible to
      elect to continue to participate in the Plan or an Aggregated Plan on or
      before the date of the last such payment;
or

              

      

       

      
        	
                (ii)  

              	
                The
      former Participant was not eligible to participate in the Plan or an
      Aggregated Plan during the 24-month period ending on the date of again
      becoming eligible to participate in the Plan or an Aggregated
      Plan.

              

      

       

      
        	
                (c)  

              	
                The
      compensation to which such initial Deferral Election will apply shall be
      determined in accordance with the rules set forth
  below.

              

      

       

      
        	
                (i)  

              	
                The
      eligible Team Member’s initial Deferral Election shall apply only to the
      Eligible Compensation otherwise payable for services performed by the
      eligible Team Member subsequent to the date the Deferral Election has
      become irrevocable pursuant to subsection (a)
  above.

              

      

       

      
        	
                (ii)  

              	
                For
      purposes of paragraph (i) above, as with respect to a Deferral
      Election by an eligible Team Member pertaining to a Quarterly or Roll-up
      Performance Bonus, if the initial Deferral Election is made after the
      beginning of the applicable bonus performance period, the Deferral
      Election shall apply to the total amount of Eligible Compensation for the
      applicable performance period multiplied by a fraction, the numerator of
      which is the number of days remaining in the performance period after the
      election has become irrevocable, and the denominator of which is the total
      number of days in the performance
period.

              

      

       

      
        	
                (iii)  

              	
                The
      formula prescribed in paragraph (ii) above shall also apply in regard
      to a Deferral Election pertaining to the deferral of the eligible Team
      Member’s Base Salary, unless the amount of the individual’s Eligible
      Compensation for the portion of a period prior to the date of the
      irrevocability of the Deferral Election (i.e., the amount of the
      Eligible Compensation that is not eligible to be deferred under the Plan)
      can be readily ascertained.

              

      

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      Section
3.9  Irrevocability of
Election. 

       

      
        	
                (a)  

              	
                Once
      the applicable Statutory Deadline to make a Deferral Election for any form
      of Eligible Compensation with respect to any Plan Year has passed, as
      prescribed in Section 3.7, or once the deadline for making an initial
      Deferral Election pursuant to Section 3.8 above has expired, the Deferral
      Election shall generally become irrevocable.  The consequences
      of such include the following:

              

      

       

      
        	
                (i)  

              	
                The
      amount of the Eligible Compensation that the Participant elected to defer
      for the Plan Year, or the election not to defer any amount, cannot be
      canceled or modified;

              

      

       

      
        	
                (ii)  

              	
                The
      form of payment for the Deferral Account to which the Deferred Election
      applies cannot be modified; and

              

      

       

      
        	
                (iii)  

              	
                The
      designated date of payment for the Deferral Account to which the Deferred
      Election applies cannot be modified, except as provided in
      Section 5.8.

              

      

       

      
        	
                (b)  

              	
                Notwithstanding
      subsection (a) above, an eligible Team Member who receives a hardship
      withdrawal from a Section 401(k) plan maintained by the Company or
      another Affiliated Company, and who is thereupon suspended from making
      elective deferrals under all qualified and non-qualified plans of the
      Affiliated Companies pursuant to IRS Regulation § 1.401(k)-1(d)(3)
      and the terms of the 401(k) plan, shall have his or her Deferral Election
      under this Plan thereupon canceled on a prospective basis.  Such
      Deferral Election cancellation rule shall be subject to the
      following:

              

      

       

      
        	
                (i)  

              	
                An
      eligible Team Member’s Deferral Election shall not be canceled upon the
      hardship withdrawal if the 401(k) plan does not require the suspension of
      elective deferrals; and

              

      

       

      
        	
                (ii)  

              	
                An
      eligible Team Member whose Deferral Election is canceled pursuant to the
      above, and who thereafter becomes eligible to resume making deferrals
      under this Plan, shall nevertheless remain subject to the general election
      deadline rules prescribed under this
      Section 3.9.  Accordingly, the eligible Team Member shall
      not be permitted to resume making elective deferrals under this Plan for
      any period prior to the first day of the Plan Year following the
      expiration of the elective deferral suspension period under the applicable
      401(k) plan.

              

      

       

      
        	
                (c)  

              	
                Further
      notwithstanding subsection (a) above, the Deferral Election of a
      Participant who receives an Unforeseeable Emergency withdrawal from the
      Plan pursuant to Section 5.11 shall be cancelled on a prospective
      basis.  Such cancellation shall continue in effect for the
      remainder of the Plan Year in which the withdrawal is made.  The
      Participant, if otherwise so eligible, shall be permitted to elect to make
      elective deferrals under the Plan for the subsequent Plan
      Year.

              

      

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      Section
3.10  Evergreen
Elections.

       

      
        	
                (a)  

              	
                Prior
      to each Deferral Election Agreement submission deadline, each eligible
      Team Member shall be provided information regarding the eligible Team
      Member’s deferral rights under the Plan for the following Plan Year or
      other applicable period.  The eligible Team Member shall then be
      permitted to affirmatively elect or decline to enter into a Deferral
      Election Agreement for the applicable period.  In the event that
      an eligible Team Member fails to timely submit a Deferral Election
      Agreement, or fails to affirmatively decline to enter into a Deferral
      Election Agreement, for any period, then the Eligible Individual shall be
      deemed to have made the same Deferral Election (or election declination)
      as had most recently been made for the form of Eligible Compensation at
      issue.

              

      

       

      
        	
                (b)  

              	
                Subject
      to Section 3.9(b) above (regarding the cancellation of a Deferred
      Election upon a 401(k) plan hardship withdrawal), a deemed election shall
      become irrevocable as of the applicable Statutory Deadline (as prescribed
      in Section 3.7).  For example, an eligible Team Member who
      fails to make or affirmatively decline a Deferral Election Agreement in
      regard to Base Salary payable for Year 2 will be deemed to have made
      the same Base Salary Deferral Election, or election declination, as in
      effect for Year 1.  An eligible Team Member who is first
      eligible to make a Deferral Election for any form of Eligible
      Compensation, but fails to timely make such election, shall be deemed to
      have declined such Deferral Election.  Subject to
      subsection (c) below, this deemed evergreen election shall apply to
      all aspects of an eligible Team Member’s Deferral Election, including in
      regard to the designated Deferral
Period.

              

      

       

      
        	
                (c)  

              	
                The
      Deferral Period applicable to a evergreen election deemed to be made under
      this Section 3.10 with respect to any form of Eligible Compensation
      shall be determined as prescribed
below.

              

      

       

      
        	
                (i)  

              	
                If
      the most recent Deferral Election for the form of Eligible Compensation at
      issue designated a Deferral Period extending to the eligible Team Member’s
      Retirement or other Separation from Service, then that same designation
      shall apply to the deemed evergreen
election.

              

      

       

      
        	
                (ii)  

              	
                If
      the most recent Deferral Election for the form of Eligible Compensation
      designated a deferral of payment for a Specified Time, then that Specified
      Time shall be deemed to have also been elected; provided, however, if that
      Specified Time is not the end of at least two full calendar years
      following the beginning of the Plan Year to which the deemed evergreen
      election applies, then the Deferral Period for a Deferred Amount that is
      the subject of the deemed election shall be the end of such second future
      calendar year.

              

      

       

      Section
3.11  Non-Elective Employer
Deferrals.

       

      
        	
                (a)  

              	
                An
      Employer may, at any time and in its complete discretion, make Matching
      Contributions or other non-elective employer deferrals on behalf of any
      eligible Team Member for any Plan
Year.

              

      

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      
        	
                (b)  

              	
                Any
      non-elective employer deferrals made by an Employer with respect to an
      eligible Team Member shall be maintained in a separate Deferral Account
      established on the Team Member’s
behalf.

              

      

       

      
        	
                (c)  

              	
                Except
      as otherwise prescribed under the Plan, a Team Member’s Deferral Account
      pertaining to non-elective employer deferrals for any Plan Year shall
      become payable at such time, and in such form, as prescribed in the
      Deferral Election Agreement made (or deemed to have been made) by the Team
      Member with respect to the Team Member’s Base Salary for the Plan Year at
      issue; provided, however, that the specified payment date for such
      Deferral Account shall not precede the last day of the Plan Year as of
      which such Deferral Account has become vested pursuant to
      Section 4.3(b) below.

              

      

       

      
        	
                (d)  

              	
                Non-elective
      employer deferrals pertaining to any Plan Year shall be invested pursuant
      to the same Hypothetical Investment Benchmarks and in the same proportion
      as prescribed in the deferrals of the Team Member’s Base Salary for such
      Plan Year.

              

      

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      ARTICLE
IV

      

      MAINTENANCE
AND INVESTMENT OF ACCOUNTS

      

       

      Section
4.1  Maintenance
of Deferral Accounts.  Separate Deferral Accounts shall be
maintained for each Participant. More than one Deferral Account may be
maintained for a Participant as necessary to reflect various Hypothetical
Investment Benchmarks, or separate Deferral Election Agreements specifying
different Deferral Periods and/or forms of payment.  A Participant’s
Deferral Accounts shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to the Participant pursuant to this
Plan, and shall not constitute or be treated as a trust fund of any kind. The
Plan Administration Committee shall determine the balance of each Deferral
Account, as of each Valuation Date, by adjusting the balance of such Deferral
Account as of the immediately preceding Valuation Date to reflect changes in the
value of the deemed investments thereof, credits and debits pursuant to
Section 4.2 and Section 4.4 and distributions pursuant to
Article V with respect to such Deferral Account since the preceding
Valuation Date.

       

      Section
4.2  Crediting of
Deferred Compensation.  The Deferred Amount of a Participant
with respect to each Plan Year of participation in the Plan shall be credited to
the Participant’s Deferral Account as and when such Deferred Amount would
otherwise have been paid to the Participant.  To the extent that an
Employer is required to withhold any taxes or other amounts from the Deferred
Amount pursuant to any state, Federal or local law, such amounts shall be taken
out of other compensation eligible to be paid to the Participant that is not
deferred under this Plan.

       

      Section
4.3  Vesting.

       

      
        	
                (a)  

              	
                Except
      as provided in subsection (b) below, a Participant shall be 100%
      vested in the balance of each of his or her Deferral Accounts at all
      times.

              

      

       

      
        	
                (b)  

              	
                A
      Participant shall become vested in a Deferral Account pertaining to
      Matching Contributions or other non-elective employer contributions made
      for any Plan Year (a “Matching Contribution Deferral Account”) as of the
      earliest to occur of the following:

              

      

       

      
        	
                (i)  

              	
                The
      passage of two Plan Years following the Plan Year to which such
      non-elective employer contributions pertain during each of which the
      Participant completes at least 1,000 hours of
  service;

              

      

       

      
        	
                (ii)  

              	
                The
      date as of which the Participant, while employed by an Employer or other
      Affiliated Company, dies or becomes Disabled;
  and

              

      

       

      
        	
                (iii)  

              	
                The
      date as of which the Participant
Retires.

              

      

       

      Notwithstanding
the foregoing, the Company, in its sole discretion, may waive or reduce the
foregoing vesting standard for the Matching Contribution Deferral Account of any
Participant.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (c)

              	
                Amounts
      held in a Matching Contribution Deferral Account of a Participant who
      terminates employment prior to becoming vested such account as prescribed
      in subsection (b) above shall be forfeited and used to pay the
      administrative expenses of the
Plan.

              

      

       

      Section
4.4  Hypothetical
Investment Benchmarks.  Each Participant shall be entitled to
direct the manner in which his/her Deferral Accounts will be deemed to be
invested, selecting among the Hypothetical Investment Benchmarks specified in
Appendix A hereto, as amended from time to time, and in accordance with such
rules, regulations and procedures as the Plan Administration Committee may
establish from time to time. Notwithstanding anything to the contrary herein,
earnings and losses based on a Participant’s investment elections shall begin to
accrue as of the date the  Participant’s Deferred  Amounts
are credited to his or her Deferral Accounts.

       

      Section
4.5  Statement of
Accounts.  Each Participant shall be provided quarterly
statements of his or her Deferral Accounts, in such form as the Plan
Administration Committee deems desirable, setting forth the balance to the
credit of such Participant in his or her Deferral Accounts as of the end of the
most recently completed quarter.

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      ARTICLE
V

      

      DISTRIBUTIONS

      

       

      Section
5.1  Eligibility
for Distributions.  Except as otherwise provided herein, a
distribution from a Participant’s Deferral Account may be made only on account
of one of the following events incurred by or with respect to the
Participant:

       

      
        	
                (a)  

              	
                The
      Participant’s Separation from Service.  In this regard, a
      distribution by reason of a Participant’s Retirement shall be permitted
      only if the Retirement constitutes a Separation from
    Service;

              

      

       

      
        	
                (b)  

              	
                The
      Participant becoming Disabled;

              

      

       

      
        	
                (c)  

              	
                The
      Participant’s death;

              

      

       

      
        	
                (d)  

              	
                A
      Specified Time, as prescribed under the Participant’s Deferral Election
      Agreement;

              

      

       

      
        	
                (e)  

              	
                The
      occurrence of an Unforeseeable Emergency, as prescribed in
      Section 5.10; or

              

      

       

      
        	
                (f)  

              	
                The
      termination of the Plan, or portion of the Plan, prescribed in
      Section 9.2.

              

      

       

      Section
5.2  Retirement
Distributions.  Subject to Section 5.6 below, in either of
the circumstances described below, upon a Participant’s Retirement, the value of
the Participant’s Deferral Accounts shall be then distributed to the Participant
in installments or in a lump sum as designated in the applicable Deferral
Election Agreement.

       

      
        	
                (a)  

              	
                The  Participant
      had elected to receive payment of a Deferral Account upon Retirement;
      or

              

      

       

      
        	
                (b)  

              	
                The
      Deferral Period elected by the Participant for that Deferral Account was a
      Specified Time, but the Participant Retires before the end of that
      Specified Time.

              

      

       

      Section
5.3  Specified
Time Distributions.  Subject to Sections 5.6 and 5.8
below, if the Deferral Period elected by a Participant with respect to a
Deferral Account is a Specified Time, and the Participant did not Retire before
the end of that Specified Time, then upon the end of that Specified Time, the
value of the Deferral Account at issue shall be distributed to the Participant
in installments or in a lump sum as designated in the applicable Deferral
Election Agreement.

       

      Section
5.4  Other
Payment Events.  Notwithstanding the provisions of any Deferral
Election Agreement, if prior to Retirement a Participant dies, becomes Disabled
but remains employed, or incurs a Separation from Service, the entire balance of
all of the Participant’s Deferral Accounts shall be distributed to the
Participant or the Participant’s Beneficiary or Beneficiaries (as the case may
be) in a lump sum payment.

       

      Section
5.5  Designated
Payment Date.

       

      
        	
                (a)  

              	
                The
      designated date as of which the value of a Participant’s Deferral Account
      is to be distributed, or shall commence being distributed, shall be as
      prescribed below.

              

      

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      
        	
                (i)  

              	
                The
      designated payment date with respect to a Deferral Account to be
      distributed in a lump sum payment, including with respect to a lump sum
      payment made to a Participant’s Beneficiary upon the Participant’s death,
      shall be the first day following the date of the event giving rise to the
      lump sum payment (or, if later, the date as of which the final deferral
      with respect to the Deferral Election Agreement pertaining to the Deferral
      Account is withheld from the Participant’s
  paycheck).

              

      

       

      
        	
                (ii)  

              	
                In
      the case of distributions to be made to a Participant in the form of
      installment payments, the designated payment dates shall be the first day
      of the month following the event that gives rise to the payment, and each
      annual anniversary of that initial designated payment
  date.

              

      

       

      
        	
                (iii)  

              	
                The
      designated payment date with respect to a withdrawal due to an
      Unforeseeable Emergency pursuant to Section 5.9 below shall be the
      date as of which the withdrawal request is approved by the Plan
      Administration Committee.

              

      

       

      
        	
                (b)  

              	
                For
      purposes of the administrative provisions of this Plan, a payment shall be
      treated as having been made upon the date specified under
      subsection (a) above if the payment is
  made:

              

      

       

      
        	
                (i)  

              	
                On
      such date or a later date within the same calendar year;
  or

              

      

       

      
        	
                (ii)  

              	
                If
      later, by the 15th
      day of the third calendar month following the date so
      specified.

              

      

       

      Notwithstanding
the foregoing, if calculation of the amount of the payment is not
administratively practicable due to events beyond the control of the Participant
(or the Participant’s estate), the payment will be treated as made upon the
specified date if the payment is made during the first calendar year in which
the payment is administratively practicable.

       

      For
purposes of administrative convenience, payment may be made to a Participant no
earlier than 30 days before the designated payment date prescribed in subsection
(a) above.

       

      In no
event shall a Participant be permitted, directly or indirectly, to designate the
taxable year of the distribution.

       

      
        	
                (c)  

              	
                The
      amount to be distributed to a Participant shall be determined on the basis
      of the value of the applicable Deferral Account as of the designated
      payment date with respect to the distribution at
  issue.

              

      

       

      Section
5.6  Restriction
on Distributions to Specified Employees.

       

      
        	
                (a)  

              	
                Notwithstanding
      the provisions of Section 5.5 above, if a Participant is a Specified
      Employee as of the date of the Participant’s Retirement or other
      Separation from Service, then, by reason of such event, the amounts held
      in the Participant’s Deferral Accounts shall become payable as of the
      first day of the seventh month following the date of
      the

              

      

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      
         

        
          	
                   

                	
                  Participant’s
      Retirement or other Separation from Service (or, if earlier, as of the
      date of the Participant’s death).

                

        

         

      

      
        	
                (b)  

              	
                If
      the distributions to the Specified Employee are to be made in annual
      installments, the delay in payment prescribed in subsection (a)(ii)
      above shall apply solely to the first installment payment.  Each
      subsequent installment payment shall be made as of the date such payment
      otherwise would have been made pursuant to
    Section 5.5.

              

      

       

      
        	
                (c)  

              	
                The
      distribution restrictions prescribed in subsection (a)(ii) above
      shall not apply to a payment to be made pursuant to Section 5.7(b)(i)
      or (ii) (regarding the payment of employment taxes and compensation
      deferred under the Plan or a certificate of divesture compliance
      distributions), or Section 10.2(b) (regarding domestic relations
      orders).

              

      

       

      Section
5.7  No
Acceleration of Scheduled Distributions.

       

      
        	
                (a)  

              	
                Except
      as otherwise provided in the Plan, the time or schedule of any
      distribution of any portion of a Participant’s Deferral Accounts shall not
      be permitted to be accelerated, either at the election of the Participant
      or at the discretion of the Compensation
  Committee.

              

      

       

      
        	
                (b)  

              	
                Notwithstanding
      the foregoing, distributions may be made to or on behalf of a Participant
      prior to the otherwise applicable designated payment date in the following
      situations:

              

      

       

      
        	
                (i)  

              	
                As
      may be necessary to comply with a certificate of divestiture (as defined
      in Code Section 1043(b)(2));

              

      

       

      
        	
                (ii)  

              	
                To
      pay FICA taxes on amounts deferred under the Plan, or income taxes on
      additional charges arising from the Employer’s payment of FICA taxes or
      for amounts attributable to the pyramiding of wages and taxes;
      or

              

      

       

      
        	
                (iii)  

              	
                If
      the Plan at any time fails to meet the requirements of Code
      Section 409A and the underlying regulations.  In that
      event, however, the accelerated payment may not exceed the amount required
      to be included in the Participant’s income as a result of the Plan’s
      failure to comply with the Code Section 409A
      requirements.

              

      

       

      Section
5.8  Extension of
Specified Time Deferral Period.  Section 3.5(b) of the
Plan permits a Participant to select a Deferral Period of a stated period of
calendar years (i.e., a “Specified Time Deferral Period”).  In
this connection, a Participant shall be permitted to extend a Specified Time
Deferral Period with respect to a Deferral Account, subject to the conditions
set forth below.

       

      
        	
                (a)  

              	
                An
      election to extend the Specified Time Deferral Period with respect to any
      Deferral Account must be submitted to the Plan Administration Committee in
      accordance with its established
procedures.

              

      

       

      
        	
                (b)  

              	
                Any
      such election shall not take effect under the Plan until 12 months
      after the date on which the election is submitted to the Plan
      Administration Committee.

              

      

       

      
        	
                (c)  

              	
                An
      election to extend a Specified Time Deferral Period must provide for the
      lengthening of the Specified Time Deferral Period for a period of not less
      than an additional five years.

              

      

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      
        	
                (d)  

              	
                Any
      election to extend a Specified Time Deferral Period must be made at least
      12 months prior to the designated payment date (as prescribed in
      Section 5.5(a)) for the first scheduled payment from the
      applicable  Deferral
Account.

              

      

       

      
        	
                (e)  

              	
                For
      purposes of this Section 5.8:

              

      

       

      
        	
                (i)  

              	
                The
      entitlement to installment payments shall be treated as the entitlement to
      a single payment; and

              

      

       

      
        	
                (ii)  

              	
                The
      applicable designated payment date otherwise applicable to a Specified
      Time Deferral Period shall be determined without regard to the
      restrictions on distributions to Specified Employees prescribed in
      Section 5.6.

              

      

       

      Section
5.9  Delay of
Payments Under Certain Circumstances.  Notwithstanding any
provision of the Plan to the contrary, payment to a Participant will be delayed
to a date after the designated payment date otherwise prescribed under
Section 5.5 under any of the circumstances prescribed below.

       

      
        	
                (a)  

              	
                A
      payment to a Participant will be delayed where the Compensation Committee
      reasonably anticipates that the Company’s or other Affiliated Company’s
      income tax deduction with respect to such payment otherwise would be
      limited or eliminated by application of Code Section 162(m);
      provided, however, that in such event, the payment shall be made either at
      the earliest date at which the Compensation Committee reasonably
      anticipates that the deduction of the payment of the amount will not be
      limited or eliminated by application of Code Section 162(m), or the
      calendar year in which the Participant Separates from
    Service.

              

      

       

      
        	
                (b)  

              	
                A
      payment to a Participant will be delayed where the Compensation Committee
      reasonably anticipates that the making of the payment will violate a term
      of a loan agreement , or other similar contract, to which the Company or
      any other Affiliated Company is a party, and such violation will cause
      material harm to the Company or other Affiliated Company; provided,
      however, that in such event, the payment shall be made at the earliest
      date at which the Compensation Committee reasonably anticipates that the
      making of the payment will not cause such violation, or such violation
      will not cause material harm to the Company or other Affiliated
      Company.

              

      

       

      
        	
                (c)  

              	
                A
      payment to a Participant will be delayed where the Compensation Committee
      reasonably anticipates that the making of the payment will violate federal
      securities laws or other applicable law; provided, however, that in such
      event, the payment to be made at the earliest date at which the Company or
      other Affiliated Company reasonably anticipates that the making of the
      payment will not cause such violation.  For purposes of this
      subsection (c), the making of a payment that would cause inclusion in
      gross income or other application of any penalty provision or other
      provision of the Code is not treated as a violation of applicable
      law.

              

      

       

      
        	
                (d)  

              	
                A
      payment to a Participant will be delayed upon such other events and
      conditions as may be prescribed in generally applicable guidance issued by
      the Internal Revenue Service.

              

      

       

      Section
5.10  Cash  Payments.  All
distributions under the Plan shall be paid in cash.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      Section
5.11  Unforeseeable Emergency
Withdrawals.  A Participant who incurs an Unforeseeable
Emergency (as defined below) may submit a request to the Plan Administration
Committee for a withdrawal equal to that portion (or all) of the Participant’s
Deferral Accounts as is then needed to alleviate the financial hardship
resulting therefrom.  Such withdrawals shall be subject to the
following provisions of this Section 5.11.

       

      
        	
                (a)  

              	
                For
      purposes of this Section 5.11:

              

      

       

      
        	
                (i)  

              	
                An
      “Unforeseeable Emergency” means a severe financial hardship to a
      Participant resulting from an illness or accident of the Participant, or
      of the spouse, a dependent (as defined in Code Section 152(a)) or a
      primary beneficiary (as defined below) of the Participant; the loss of the
      Participant’s property due to casualty; or other similar extraordinary and
      unforeseeable circumstances arising as a result of events beyond the
      control of the Participant; and

              

      

       

      
        	
                (ii)  

              	
                A
      ”primary beneficiary” of a Participant is an individual who is named as a
      Beneficiary of the Participant under the Plan, and who has an
      unconditional right to all, or a portion of, the balance of the
      Participant’s Deferral Account upon the death of the
      Participant.

              

      

       

      
        	
                (b)  

              	
                The
      circumstances that will constitute an Unforeseeable Emergency will depend
      upon the facts of each case.  Examples of circumstances that may
      qualify as an Unforeseeable Emergency (provided that the other conditions
      of this Section 5.11 are satisfied)
are:

              

      

       

      
        	
                (i)  

              	
                The
      imminent foreclosure of, or eviction from, the Participant’s primary
      residence;

              

      

       

      
        	
                (ii)  

              	
                The
      need to pay for medical expenses, including non-refundable deductibles or
      the cost of prescription drugs; and

              

      

       

      
        	
                (iii)  

              	
                The
      need to pay for the funeral expenses of the spouse, or dependent or
      primary beneficiary of the
Participant.

              

      

       

      The
purchase of a home and the payment of college tuition are not Unforeseeable
Emergencies for purposes of this Plan.

       

      
        	
                (c)  

              	
                A
      withdrawal shall not be permitted under this Section 5.11 to the extent
      that the hardship resulting from the Unforeseeable Emergency is, or may
      be, relieved:

              

      

       

      
        	
                (i)  

              	
                Through
      the reimbursement or compensation by insurance or
    otherwise;

              

      

       

      
        	
                (ii)  

              	
                By
      the liquidation of the Participant’s assets, to the extent the liquidation
      of such assets would not itself cause severe financial hardship;
      or

              

      

       

      
        	
                (iii)  

              	
                By
      the cessation of deferrals under the
Plan.

              

      

       

      
        	
                (d)  

              	
                The
      amount of any Unforeseeable Emergency withdrawal shall be limited to that
      which the Plan Administration Committee determines is reasonably necessary
      to alleviate the hardship resulting from the occurrence of the
      Unforeseeable Emergency (which may 

              

      

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      
         

        
          	
                    

                	
                  include
      any amount necessary to pay any federal or state income taxes or penalties
      reasonably anticipated to result from the distribution).  The
      determination of the amount reasonably necessary to satisfy the emergency
      need must take into account any additional compensation that is available
      to the Participant upon cancellation of the Participant’s deferral
      election due to the Unforeseeable Emergency withdrawal that is effected
      pursuant to Section 3.9(c).  However, such determination is not
      required to take into account any additional Unforeseeable Emergency
      withdrawal that is available under another nonqualified deferred
      compensation plan, but which has not actually been paid from that other
      plan.

                

        

         

      

      
        	
                (e)  

              	
                After
      reviewing each Unforeseeable Emergency withdrawal request, the Plan
      Administration Committee shall make a determination as to whether the
      circumstances satisfy the Unforeseeable Emergency standards prescribed
      above, and will thereupon notify the requesting Participant of the
      determination.  If the request is approved, the Plan
      Administration Committee shall process payment of the
      withdrawal

              

      

       

      
        	
                (f)  

              	
                The
      Plan Administration Committee may establish a policy and procedures
      regarding the order in which Unforeseeable Emergency withdrawals are to be
      charged against the particular Deferral Accounts of a
      Participant.

              

      

       

      Section
5.12  Withholding
of Taxes. Notwithstanding any other provision of this Plan, the Employer
shall withhold from payments made hereunder any amounts required to be so
withheld by any applicable law or regulation.

       

      Section
5.13  USERRA
Rights.  Notwithstanding any provision of this Article V to the
contrary, the Plan shall permit a Participant to elect a change in the time or
the form of payment as may be required to comply with the Uniformed Services
Employment and Reemployment Rights Act (USERRA).

       

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

      ARTICLE
VI

      

      PAYMENTS
UPON QUALIFIED CHANGE IN CONTROL EVENT

      

       

      Section
6.1  Termination
of Plan upon Change in Control.  Notwithstanding any provision
of the Plan to the contrary, upon the occurrence of a Qualified Change in
Control Event involving the Company or other Relevant Employer (as defined in
Section 6.6(a) below), the Board as constituted immediately prior to the
event may in its discretion terminate the Plan, or the portion of the Plan
pertaining to the Relevant Employer, and cause to be distributed to each
affected Participant the entire balance of all of the Participant’s Deferral
Accounts (including the balance of any non-vested Matching Contribution
Accounts).  The termination by such Board must occur within the
30 days preceding, or within the 12-month period following, the Qualified
Change in Control Event.  Such Plan termination distributions shall be
permitted only if:

       

      
        	
                (a)  

              	
                All
      substantially similar non-qualified deferred compensation programs
      maintained by the Company and all other Affiliated Companies are
      terminated upon such Qualified Change in Control Event;
  and

              

      

       

      
        	
                (b)  

              	
                All
      compensation deferred and held under each such deferred compensation
      program is distributed to Participants within 12 months of the date
      of termination of the applicable
program.

              

      

       

      Section
6.2  Qualified
Change in Control Event.  For purposes of this Article VI,
a “Qualified Change in Control Event” with respect to any Participant means any
of the following events:

       

      
        	
                (a)  

              	
                A
      Qualified change in the ownership of a corporation that is a Relevant
      Employer (as prescribed in
Section 6.3);

              

      

       

      
        	
                (b)  

              	
                A
      Qualified change in effective control of a corporation that is a Relevant
      Employer (as prescribed in Section 6.4);
  and

              

      

       

      
        	
                (c)  

              	
                A
      Qualified Change in the ownership of a substantial portion of the assets
      of a corporation that is a Relevant Employer (as prescribed in
      Section 6.5).

              

      

       

      Section
6.3  Change in
the Ownership of a Corporation.

       

      
        	
                (a)  

              	
                For
      purposes of this Article VI, a change in the ownership of a
      corporation occurs on the date that any one person, or more than one
      person acting as a group, acquires ownership of stock of the corporation
      that, together with stock held by such person or group, constitutes more
      than 50 percent of the total fair market value or total voting power
      of the stock of such corporation.  If any one person, or more
      than one person acting as a group, is considered to own more than
      50 percent of the total fair market value or total voting power of
      the stock of a corporation, the acquisition of additional stock by the
      same person or persons is not considered to cause a change in the
      ownership of the corporation (or to cause a change in the effective
      control of the corporation within the meaning of Section 6.4
      below).

              

      

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      
        	
                (b)  

              	
                For
      purposes of this Section 6.3, an increase in the percentage of stock
      owned by any one person, or by persons acting as a group, as a result of a
      transaction in which the corporation acquires its stock in exchange for
      property will be treated as an acquisition of
  stock.

              

      

       

      
        	
                (c)  

              	
                In
      all regards, for purposes of this Section 6.3, a change in the
      ownership of a corporation will be deemed to have occurred only when there
      is a transfer of stock of a corporation (or issuance of stock of a
      corporation), and stock in such corporation remains outstanding after the
      transaction.

              

      

       

      Section
6.4  Change in
the Effective Control of a Corporation.

       

      
        	
                (a)  

              	
                For
      purposes of this Article VI, a change in the effective control of a
      corporation occurs on the date that
either:

              

      

       

      
        	
                (i)  

              	
                A
      majority of members of the Company’s Board is replaced during any 12-month
      period by directors whose appointment or election is not endorsed by a
      majority of the members of the Company’s Board prior to the date of the
      appointment or election; or

              

      

       

      
        	
                (ii)  

              	
                Any
      one person, or more than one person acting as a group acquires (or has
      acquired during the 12-month period ending on the date of the most recent
      acquisition by such person or persons) ownership of stock of the
      applicable corporation possessing 30 percent or more of the total
      voting power of the stock of such
corporation.

              

      

       

      
        	
                (b)  

              	
                A
      change in effective control of a corporation may also occur in any
      transaction in which either of the two corporations involved in the
      transaction incurs a change in control event described under
      Section 6.3 or 6.5.

              

      

       

      
        Section
6.4  Change in the Ownership of
Substantial Portion of Assets.

      

      
      

       

      
        	
                (a)  

              	
                For
      purposes of this Article VI, a change in the ownership of a
      substantial portion of a corporation's assets occurs on the date that any
      one person, or more than one person acting as a group acquires (or has
      acquired during the 12-month period ending on the date of the most recent
      acquisition by such person or persons) assets from the corporation that
      have a total gross fair market value equal to or more than 40 percent
      of the total gross fair market value of all of the assets of the
      corporation immediately prior to such acquisition or acquisitions. For
      this purpose, gross fair market value means the value of the assets of the
      corporation, or the value of the assets being disposed of, determined
      without regard to any liabilities associated with such
    assets.

              

      

       

      
        	
                (b)  

              	
                A
      transfer of assets by a corporation shall not be treated as a change in
      the ownership of such assets, and such transfer shall thus not constitute
      a Qualified Change in Control Event, if the assets are transferred
      to:

              

      

       

      
        	
                (i)  

              	
                A
      shareholder of the corporation (immediately before the asset transfer) in
      exchange for or with respect to its
stock;

              

      

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      
        	
                (ii)  

              	
                An
      entity, 50 percent or more of the total value or voting power of
      which is owned, directly or indirectly, by the
  corporation;

              

      

       

      
        	
                (iii)  

              	
                A
      person, or more than one person acting as a group, that owns, directly or
      indirectly, 50 percent or more of the total value or voting power of
      all the outstanding stock of the corporation;
or

              

      

       

      
        	
                (iv)  

              	
                An
      entity, at least 50 percent of the total value or voting power of
      which is owned, directly or indirectly, by a person described in
      paragraph (iii).

              

      

       

      
        	
                (c)  

              	
                For
      purposes of subsection (b) above, a person's status is determined
      immediately after the transfer of the assets.  Thus, for
      example, a transfer to a corporation in which the transferor corporation
      has no ownership interest before the transaction, but which is a
      majority-owned subsidiary of the transferor corporation after the
      transaction is not treated as a change in the ownership of the assets of
      the transferor corporation.

              

      

       

      Section
6.6  Definitions
and Operating Rules.  The following definitions and operating
rules shall apply for purposes of this Article VI.

       

      
        	
                (a)  

              	
                Relevant
      Employer.  To constitute a Qualified Change in Control
      Event as to the particular Participant, the event must relate to one of
      the following corporate employers:

              

      

       

      
        	
                (i)  

              	
                The
      Company;

              

      

       

      
        	
                (ii)  

              	
                A
      subsidiary corporate Employer for whom the Participant is performing
      services at the time of the Qualified Change in Control Event;
      or

              

      

       

      
        	
                (iii)  

              	
                A
      subsidiary corporate Employer that is a majority shareholder of an
      Employer identified in paragraph (ii) above, or any corporate
      Employer in a chain of corporations in which each corporation is a
      majority shareholder of another corporation in the chain, ending in a
      corporation identified in paragraph (ii) above.  For
      purposes of this paragraph (iii), a majority shareholder of a
      corporate Employer is a shareholder owning more than 50% of the total fair
      market value and total voting power of such
  Employer.

              

      

       

      
        	
                (b)  

              	
                Persons Acting as a
      Group.  Persons will not be considered to be acting as a
      group solely because they purchase or own stock of the same corporation at
      the same time, or as a result of the same public offering. However,
      persons will be considered to be acting as a group if they are owners of a
      corporation that enters into a merger, consolidation, purchase or
      acquisition of stock, or similar business transaction with the
      corporation. If a person, including an entity, owns stock in both
      corporations that enter into a merger, consolidation, purchase or
      acquisition of stock, or similar transaction, such shareholder is
      considered to be acting as a group with other shareholders in a
      corporation prior to the transaction giving rise to the change and not
      with respect to the ownership interest in the other
      corporation.

              

      

       

      
        	
                (c)  

              	
                Ownership
      Attribution.  The ownership attribution rules of Code
      Section 318(a) shall apply to determine stock
      ownership.  Stock underlying a vested option is considered owned
      by the individual who holds the vested option (and the stock underlying an
      unvested option is 

              

      

      
         

        
          
            
            

          

          
            25

            
              

            

          

          
            
            

          

        

         

        
          	
                   

                	
                  not
      considered owned by the individual who holds the unvested
      option).  For purposes of the preceding sentence, however, if a
      vested option is exercisable for stock that is not substantially vested
      (as defined in IRS Regulation § 1.83-3(b) and (j)), the stock
      underlying the option is not treated as owned by the individual who holds
      the option.

                

        

         

      

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

      ARTICLE VII

      

      BENEFICIARY
DESIGNATION

      

       

      Section
7.1  Beneficiary
Designation. Each Participant shall have the right, at any time, to
designate any person, persons or entity as his Beneficiary or Beneficiaries. A
Beneficiary designation shall be made, and may be amended, by the Participant by
filing a written designation with the Plan Administration Committee, on such
form and in accordance with such procedures as the Plan Administration Committee
shall establish from time to time.

       

      Section
7.2  No
Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided above, or if all designated Beneficiaries predecease the
Participant, then the Participant’s Beneficiary shall be deemed to be the
Participant’s estate.

       

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

      ARTICLE
VIII

      

      ADMINISTRATION
OF PLAN

      

       

      Section
8.1 Named
Fiduciaries.  The persons identified in this Section 8.1
are named as fiduciaries under this Plan and shall be the only named fiduciaries
with respect to the Plan.

       

      
        	
                (a)  

              	
                The
      Company, as Plan sponsor, shall be responsible for all fiduciary functions
      under the Plan except insofar as any such authority or responsibility is
      assigned by or pursuant to the Plan to another named fiduciary, or is
      delegated to another fiduciary pursuant to subsection (b)
      below.  In that regard, the Company shall be the “Administrator”
      of the Plan within the meaning of ERISA.  The authority and
      responsibility reserved or assigned to the Company shall be exercised by
      its Compensation Committee or other authorized officers, and shall include
      the authority and responsibility in regard to the
    following:

              

      

       

      
        	
                (i)  

              	
                The
      design of the Plan, including the right to amend and to terminate the
      Plan; and

              

      

       

      
        	
                (ii)  

              	
                Considering
      and reviewing all appeals of claims which have been
  denied.

              

      

       

      
        	
                (b)  

              	
                The
      Compensation Committee may delegate to a committee or to any officer of
      the Company or any Affiliated Company any authority or responsibility
      reserved or assigned to the Company pursuant to the Plan.  In
      the event of any such delegation, then any references to the authority,
      right or power of the Company to act which are contained in any notice,
      disclosure or communication made with a view toward effectuating the
      purposes of the Plan shall be construed to include authority for such
      actions by the committee or officer to whom the Compensation Committee has
      delegated its authority.  Notwithstanding any other provision of
      the Plan, in the event that an action or direction of any person to whom
      authority reposed with the Company under the Plan has been delegated by
      the Compensation Committee conflicts with an action or direction of the
      Board of Directors, then the authority of the Compensation Committee shall
      supersede that of the delegate with respect to such action or
      direction.

              

      

       

      
        	
                (c)  

              	
                A
      Plan Administration Committee shall have the responsibility and authority
      to control the operation and administration of the Plan in accordance with
      the terms of the Plan.

              

      

       

      
        	
                (i)  

              	
                The
      members of the Plan Administration Committee shall be the individuals
      serving in the roles of, respectively, the Senior Vice President of Human
      Resources and the Vice President, Compensation and Benefits for the
      Employers, and such other individuals who are appointed to the Plan
      Administration Committee by such Senior Vice President of Human Resources
      (or, in the event of a vacancy in such position, by the Vice President,
      Compensation and Benefits).

              

      

       

      
        	
                (ii)  

              	
                The
      Plan Administration Committee may designate one of its members as a
      chairperson, and may retain and supervise outside providers, third party
      administrators, record keepers and professionals (including in-house
      professionals) to perform any or all of the duties delegated to it
      hereunder.

              

      

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      
        	
                (d)  

              	
                The
      Plan Administration Committee shall be responsible for the administration
      of this Plan and shall have all powers necessary to administer this Plan,
      including discretionary authority to determine eligibility for benefits
      and to decide claims under the terms of this Plan, except to the extent
      that any such powers are vested in any other person administering this
      Plan by the Compensation Committee. The Plan Administration Committee may
      from time to time establish rules for the administration of this Plan, and
      it shall have the exclusive right to interpret this Plan and to decide any
      matters arising in connection with the administration and operation of
      this Plan. All rules, interpretations and decisions of the Plan
      Administration Committee shall be conclusive and binding on the Company,
      the Employers, Participants and
Beneficiaries.

              

      

       

      
        	
                (e)  

              	
                The
      Plan Administration Committee is expressly reposed with the discretionary
      authority and powers in regard to all facets of any claims for benefits
      made under the Plan.  In turn, the Compensation Committee is
      expressly reposed with the discretionary authority and powers in regard to
      all facets of the review of a denied claim for benefits.  Such
      authority and powers include, but are not limited to, the
      following:

              

      

       

      
        	
                (i)  

              	
                Construing
      and interpreting the terms of the Plan and of any documents pertaining to
      the Plan;

              

      

       

      
        	
                (ii)  

              	
                Construing
      and interpreting all laws and regulations as applicable to any claims for
      benefits made under the Plan;

              

      

       

      
        	
                (iii)  

              	
                Making
      any factual determinations, and applying such determinations to the terms
      of the Plan and issues arising under the Plan;
  and

              

      

       

      
        	
                (iv)  

              	
                Otherwise
      deciding all questions regarding an individual’s benefit entitlements
      under the Plan, and the manner and timing of any payments to be made to or
      with respect to any individual under the
Plan.

              

      

       

      
        	
                (f)  

              	
                No
      member of the Board, Compensation Committee or Plan Administration
      Committee shall be liable for any act or action hereunder, whether of
      omission or commission, by any other member or Employee or by any agent to
      whom duties in connection with the administration of this Plan have been
      delegated or for anything done or omitted to be done in connection with
      this Plan.

              

      

       

      
        	
                (g)  

              	
                The
      Company shall, to the fullest extent permitted by law, indemnify each
      director, officer or Employee of the Company or any Affiliated Company
      (including the heirs, executors, administrators and other personal
      representatives of such person), each member of the Compensation Committee
      and Plan Administration Committee against expenses (including attorneys’
      fees), judgments, fines, amounts paid in settlement, actually and
      reasonably incurred by such person in connection with any threatened,
      pending or actual suit, action or proceeding (whether civil, criminal,
      administrative or investigative in nature or otherwise) in which such
      person may be involved by reason of the fact that he or she is or was
      serving this Plan in any capacity at the request of the Company or any
      other Affiliated Company,  the Compensation Committee or the
      Plan Administration Committee.

              

      

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

      
        	
                (h)  

              	
                Any
      expense incurred by the Company, an Employer, the Compensation Committee
      or the Plan Administration Committee relative to the administration of
      this Plan shall be paid by the Company or other Affiliated Company and/or
      may be deducted from the Deferral Accounts of the Participants as
      determined by the Compensation
Committee.

              

      

       

      
        	
                (i)  

              	
                Any
      member of the Compensation Committee or the Plan Administration Committee
      may also be a Participant, but no committee member shall have power to
      take part in any discretionary decision or action affecting his own
      interest as a Participant under this Plan unless such decision or action
      is upon a matter which affects all other Participants similarly situated
      and confers no special right, benefit or privilege not simultaneously
      conferred upon all other such
Participants.

              

      

       

      Section
8.2  Claim
Procedure.

       

      
        	
                (a)  

              	
                If
      a Participant or Beneficiary makes a written request alleging a right to
      receive payments under this Plan or alleging a right to receive an
      adjustment in benefits being paid under this Plan, such actions shall be
      treated as a claim for benefits. All claims for benefits under this Plan
      shall be sent to the Plan Administration
  Committee.

              

      

       

      
        	
                (b)  

              	
                If
      the Plan Administration Committee determines that any individual who has
      claimed a right to receive benefits, or different benefits, under this
      Plan is not entitled to receive all or any part of the benefits claimed,
      the Plan Administration Committee shall inform the claimant in writing of
      such determination and the reasons thereof in terms calculated to be
      understood by the claimant. The notice shall be sent within 90 days
      of the claim unless the Plan Administration Committee determines that
      additional time, not exceeding 90 days, is needed and so notifies the
      Participant. The notice shall make specific reference to the pertinent
      Plan provisions on which the denial is based, and shall describe any
      additional material or information that is necessary. Such notice shall,
      in addition, inform the claimant of the procedure that the claimant should
      follow to take advantage of the review procedures set forth below in the
      event the claimant desires to contest the denial of the claim, and the
      right of the claimant to bring a civil action under ERISA if the claim is
      denied upon further review.  Upon request, and free of charge,
      the claimant will be provided with reasonable access to, and copies of,
      all documents, records and other information relevant to the claim for
      benefits.

              

      

       

      
        	
                (c)  

              	
                The
      claimant may within 90 days thereafter submit in writing to the Plan
      Administration Committee a notice that the claimant contests the denial of
      his or her claim and desires a further review of the denied
      claim.  The request for review will be directed to the
      Compensation Committee, which will review the claim and authorize the
      claimant to review pertinent documents and submit issues and comments
      relating to the claim. The Compensation Committee will render a final
      decision with specific reasons thereof in writing and will transmit it to
      the claimant within 60 days of the written request for review, unless
      the Compensation Committee determines that additional time, not exceeding
      60 days, is needed, and so notifies the Participant.  If
      the claim is to be denied in whole or in part upon review, the written
      notice to the claimant will include the
  following:

              

      

       

      
        	
                (i)  

              	
                The
      specific reason or reasons for the
denial;

              

      

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      
        	
                (ii)  

              	
                Reference
      to the specific Plan provisions upon which the denial is
      based;

              

      

       

      
        	
                (iii)  

              	
                A
      statement that the claimant is entitled to receive, upon request, and free
      of charge, reasonable access to, and copies of, all documents, records and
      other information relevant to the claim appeal;
  and

              

      

       

      
        	
                (iv)  

              	
                A
      statement of the claimant’s right to file a civil lawsuit under
      ERISA.

              

      

       

      
        	
                (d)  

              	
                Notwithstanding
      subsection (c) above, if the Compensation Committee holds regularly
      scheduled meetings at least quarterly, the Compensation Committee shall
      make a claim review determination no later than the date of the meeting of
      the committee that immediately follows the Plan’s receipt of a request for
      review, unless the request for review is filed within 30 days
      preceding the date of such meeting.  In such case, a claim
      review determination may be made by no later than the date of the second
      meeting following the Plan’s receipt of the request for
      review.  If special circumstances (such as the need to hold
      hearing) require a further extension of time for processing, a
      determination shall be rendered not later than the third meeting of the
      committee following the Plan’s receipt of the request for
      review.  If such an extension of time for review is required
      because of special circumstances, the claimant shall be provided with
      written notice of the extension, describing the special circumstances and
      the date as of which the claim review determination will be made, prior to
      the commencement of the extension.  The claimant shall be
      notified of the claim review determination as soon as possible, but not
      later than five days after the determination is
  made.

              

      

       

      
        
           

        

        
          31

          
            

          

        

        
           

        

      

       

      ARTICLE
IX

       

      

      AMENDMENT
AND TERMINATION OF PLAN

      

       

      Section
9.1  Amendment. The Board
or the Compensation Committee may at any time amend this Plan in whole or in
part, provided, however, that no amendment shall be effective to decrease the
balance in, or otherwise alter the election made with respect to, any Deferral
Account as accrued at the time of such amendment, nor shall any amendment
otherwise have a retroactive effect.  In addition, any amendment that
has the effect of changing the time or form of payment under the Plan with
respect to any Participant shall be subject to the provisions of Sections 5.7
and 5.8 (regarding the prohibition against the acceleration of payments and the
restrictions on changes in the time or form of payments).

       

      Section
9.2  Company’s
Right to Terminate.  The Board or the Compensation Committee
may at any time terminate the Plan with respect to future Deferral Election
Agreements.  However, the Plan cannot otherwise be terminated, and
Deferral Accounts thereupon distributed, except as provided below.

       

      
        	
                (a)  

              	
                The
      Plan may be terminated and distributions thereupon made upon a Qualified
      Change in Control Event, as prescribed in
  Section 6.1.

              

      

       

      
        	
                (b)  

              	
                The
      Plan may be terminated and distributions thereupon made within
      12 months of the Company’s corporate dissolution taxed under Code
      Section 331, or with the approval of a bankruptcy court pursuant to
      11 USC § 503(b)(1)(A), provided that the amounts deferred
      under the Plan are distributed for inclusion in the gross income of the
      Participant in the latest of:

              

      

       

      
        	
                (v)  

              	
                The
      calendar year in which the Plan termination
  occurs;

              

      

       

      
        	
                (vi)  

              	
                The
      calendar year in which the deferred amount is no longer subject to a
      substantial risk of forfeiture; or

              

      

       

      
        	
                (vii)  

              	
                The
      first calendar year in which the termination distribution is
      administratively practicable.

              

      

       

      
        	
                (c)  

              	
                The
      Plan may be terminated and distributions thereupon made if the conditions
      prescribed below are satisfied.

              

      

       

      
        	
                (i)  

              	
                Each
      other “account balance” deferred compensation plan maintained by the
      Company and any other Affiliated Company that also covers any Participant
      in this Plan is concurrently
terminated;

              

      

       

      
        	
                (ii)  

              	
                No
      payments (other than payments that would be payable under the terms of the
      terminated programs if the terminations had not occurred) are made within
      12 months of the termination of the
  programs;

              

      

       

      
        	
                (iii)  

              	
                All
      payments are made within 24 months of the termination of the
      applicable programs; and

              

      

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

      
        	
                (iv)  

              	
                During
      the three-year period following the termination of the Plan, neither the
      Company, nor any other Affiliated Company, adopts an account balance
      deferred compensation program covering any individual who was a
      Participant in the Plan upon its
termination.

              

      

       

      
        
           

        

        
          33

          
            

          

        

        
           

        

      

      ARTICLE
X

      

      MISCELLANEOUS

      

       

      Section
10.1  Unfunded
Plan. This Plan is intended to be an unfunded plan maintained primarily
for the purpose of providing deferred compensation for a select group of highly
compensated Team Members, within the meaning of Sections 201, 301 and 401
of ERISA.  All payments pursuant to the Plan shall be made from the
general funds of the Employers and no special or separate fund shall be
established or other segregation of assets made to assure payment. No
Participant or other person shall have under any circumstances any interest in
any particular property or assets of the Employers as a result of participating
in the Plan. Notwithstanding the foregoing, the Employers may (but shall not be
obligated to) create one or more grantor trusts, the assets of which are subject
to the claims of the Employers’ creditors, to assist it in accumulating funds to
pay its obligations under the Plan.

       

      Section
10.2  Nonassignability.

       

      
        	
                (a)  

              	
                Except
      as specifically set forth in the Plan with respect to the designation of
      Beneficiaries, neither a Participant nor any other person shall have any
      right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
      otherwise encumber, transfer, hypothecate or convey in advance of actual
      receipt the amounts, if any, payable hereunder, or any part thereof, which
      are, and all rights to which are, expressly declared to be unassignable
      and non-transferable. No part of the amounts payable shall, prior to
      actual payment, be subject to seizure or sequestration for the payment of
      any debts, judgments, alimony or separate maintenance owed by a
      Participant or any other person, nor be transferable by operation of law
      in the event of a Participant’s or any other person’s bankruptcy or
      insolvency.

              

      

       

      
        	
                (b)  

              	
                Notwithstanding
      the foregoing, the balance of a Participant’s Deferral Accounts, or any
      portion thereof, shall be distributed in accordance with the terms of any
      domestic relations order which the Plan Administration Committee
      determines to be a qualified domestic relations order (QDRO) described in
      Section 414(p) of the Code.

              

      

       

      Section
10. 3  Validity
and Severability.  The invalidity or unenforceability of any
provision of this Plan shall not affect the validity or enforceability of any
other provision of this Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

       

      Section
10.4  Governing
Law. The validity, interpretation, construction and performance of this
Plan shall in all respects be governed by the laws of the State of Virginia,
without reference to principles of conflict of law, except to the extent
preempted by federal law.

       

      Section
10.5  Employment
Status. This Plan does not constitute a contract of employment or impose
on the Participant or any Employer any obligation for the Participant to remain
employed by the Employer or change the status of the Participant’s employment or
the policies of the Employer and its affiliates regarding termination of
employment.

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      Section
10.6  Underlying
Incentive Plans and Programs. Nothing in this Plan shall prevent the
Company or other Employer from modifying, amending or terminating the
compensation or the incentive plans and programs pursuant to which cash awards
are earned and which are deferred under this Plan.

       

      Section
10.7  Funding and
Financial Health Restrictions.  In no event shall any amounts
attributable to any Deferral Account be held in an offshore trust within the
meaning of Code Section 409A(b)(1).  In addition, the assets of any
Affiliated Company shall not be restricted to the payment of benefits under the
Plan upon a change in the Affiliated Company’s financial health within the
meaning of Code Section 409A(b)(2).

       

      

      *           *           *

      

      

      Pursuant
to the authority granted by the Compensation Committee of the Board of Directors
of Advance Auto Parts, Inc. under its resolutions adopted on November ________,
2007, the undersigned hereby executes this Advance Auto Parts, Inc.
Deferred Compensation Plan on behalf of Advance Auto Parts, Inc.

      

      

      ADVANCE
AUTO PARTS, INC.

      

      

      By:                                                                         

      

      Its:                                                                         

      

      Dated:
November , 2007

      

      

      
        
           

        

        
          35

          
            

          

        

        
           

        

      

      Appendix
A

    

     

    
      
        Advance
Auto Parts, Inc. MONY Deferred Compensation Plan Investment
Funds

      
        	
                Enterprise
      Total Return

              
	
                MFS
      Total Return

              
	
                Dreyfus
      Stock Index

              
	
                MFS
      New Discovery

              
	
                Dreyfus
      Appreciation

              
	
                Janus
      Aspen Capital Appreciation

              
	
                MONY
      Money Market Fund

              
	
                T.
      Rowe Price Int'l Stock

              

      

      

      
        
           

        

        
          36

          
            

          

        

        
           

        

      

      ADDENDUM
TO

      ADVANCE
AUTO PARTS, INC. DEFERRED COMPENSATION PLAN

      (As
Amended and Restated Effective as of January 1, 2008)

      

       

      PREAMBLE

       

      The
purpose and effect of this Addendum (the “Addendum”) to the Advance Auto
Parts, Inc. Deferred Compensation Plan (the “Plan”) is to preserve the
terms of the Plan that were in effect as of December 31, 2004
(the “2004 Plan Terms”), and to continue to apply such 2004 Plan Terms to
compensation deferred under the Plan on or before December 31, 2004,
without regard to the standards of Code Section 409A as enacted under the
American Jobs Creation Act of 2004 (“AJCA”).

       

       

      SCOPE OF
ADDENDUM

       

      This
Addendum shall apply solely to a Participant’s Deferral Accounts under the Plan
attributable to the deferral of any compensation for services performed by the
Participant for the Company or an Affiliated Company (or for Discount Auto
Parts, Inc., which was acquired by the Company in 2003) on or before
December 31, 2004, provided that the compensation was earned and not
subject to a substantial risk of forfeiture as of that date.  Such
accounts are hereinafter referred to as “Pre-2005 Deferrals.”  The
accounts maintained for such deferrals are referred to as “Pre-2005 Deferral
Accounts.”

       

      For
purposes of greater preciseness, the Pre-2005 Deferral Accounts are those
pertaining to:

       

      
        	
                1.  

              	
                A
      Participant’s “Base Salary” Deferrals for 2003 and
  2004;

              

      

       

      
        	
                2.  

              	
                A
      Participant’s “Quarterly Bonus” Deferrals for 2003 and for the first three
      quarters of 2004;

              

      

       

      
        	
                3.  

              	
                A
      Participant’s Roll-up Performance Bonus for 2003;
  and

              

      

       

      
        	
                4.  

              	
                A
      Participant’s DAP SEP Account, as described in Section 4.02 of this
      Addendum.

              

      

       

      Entitlement
to both the Quarterly Bonus for the fourth quarter of 2004, and for the 2004
Roll-up Performance Bonus, generally required that a Participant have been
employed by the Company as of a post- December 31, 2004 payment
date.  These bonuses, and the underlying deferrals of such bonuses,
were therefore generally subject to a substantial risk of forfeiture as of such
date.  Consequently, such bonus deferrals are subject to the Code
Section 409A standards that become effective as of January 1, 2005,
and thus shall be governed by the Basic Plan Document, unless the bonuses were
in fact paid to the applicable Participant on or before December 31,
2004.

       

      EFFECT OF AMENDMENTS AND
DISCRETIONARY ACTIONS

       

      It is
intended that the 2004 Plan terms be strictly preserved for purposes of this
Addendum.  In that regard, no amendment to the Basic Plan Document,
and no exercise of any discretion by the Plan
Administration  Committee under the terms of the Basic Plan Document,
shall apply to the Pre-2005 Deferral Accounts to which this Addendum pertains
unless such amendment or exercise of discretion expressly provides that it is to
be applied to such Pre-2005 Deferral Accounts.

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

       

      Notwithstanding
the foregoing, the Plan Administration Committee may change or add a
Hypothetical Investment Benchmarks made available with respect to Pre-2005
Deferral Accounts.

       

      2004 PLAN
TERMS

       

      ARTICLE
I

       

      APPLICATION

       

      Notwithstanding
any provision of the Plan to the contrary, the following provisions of this
Addendum shall apply to a Participant’s Pre-2005 Deferral Accounts as previously
defined.

       

      ARTICLE
II

       

       

      DEFINITIONS

       

      For the
purposes of this Addendum, the words and phrases set forth below shall have the
meanings indicated, unless the context clearly indicates
otherwise.  Other words and phrases within this Addendum shall have
the same meaning as defined under the Basic Plan Document.

       

      Basic Plan
Document.  “Basic Plan Document” means the document governing
the terms of the Plan as in effect on and after January 1, 2005, as may be
amended from time to time.

       

      Pre-2005
Deferrals.  “Pre-2005 Deferrals” means the elective deferrals
described in the “Scope of Addendum” Section of this Addendum.

       

      Pre-2005 Deferral
Account. “Pre-2005 Deferral Account” means the account maintained under
the Plan for each Participant who has made Pre-2005 Deferrals to the
Plan.

       

      Deferral Period.
“Deferral Period” as applied under this Addendum is defined in Section 3.03
below.

       

      Deferred Amount.
“Deferred Amount” as applied under this Addendum is defined in Section 3.03
below.

       

      Disability.
“Disability” means eligibility for disability benefits under the terms of the
Long-Term Disability Plan maintained by the Company.

       

      Form of
Payment.  “Form of Payment” means payment in one lump sum or in
substantially equal annual installments over a period of up to 10
years.

       

      Participation
Agreement. “Participation Agreement” means an agreement filed by a
Participant as described in Section 3.01 of this Addendum.

       

      Retirement.
“Retirement” means retirement of a Participant from the Company and all
Affiliated Companies after attaining both age 55 and completing at least ten
continuous years of service.

       

      Termination of
Employment.  “Termination of Employment” means the cessation of
a Participant’s services as a full-time team member of the Company and all
Affiliated Companies for any reason other than Retirement.

       

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

       

      Unforeseeable
Emergency. “Unforeseeable Emergency” means severe financial hardship to
the Participant resulting from a sudden and unexpected illness or accident of
the Participant or a dependent of the Participant, loss of the Participant’s
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant.

       

       

      ARTICLE
III

       

      PLAN
TERMS

       

      Section
3.01

       

      Maintenance of
Accounts.  Separate Pre-2005 Deferral Accounts shall be
maintained for each Participant. More than one Pre-2005 Deferral Account may be
maintained for a Participant as necessary to reflect (a) various
Hypothetical Investment Benchmarks; and/or (b) separate Participation
Agreements specifying different Deferral Periods and/or forms of payment
pertaining to such Pre-2005 Deferral Accounts.

       

      Section
3.02

       

      Vesting of Deferral
Account. Except as provided in Section 3.10 below (regarding a
forfeiture upon a voluntary early withdrawal), a Participant shall be 100%
vested in his or her Pre-2005 Deferral Accounts at all times.

       

      Section
3.03

       

      Participation
Agreement.  Each Participant for whom a Pre-2005 Deferral
Account is maintained shall have previously entered into a Participation
Agreement that set forth the following:

       

      
        	
                (a)  

              	
                The
      amount of Eligible Compensation for the Plan Year or performance period to
      which the Participation Agreement relates that was to be deferred under
      the Plan (the “Deferred Amount”);

              

      

       

      
        	
                (b)  

              	
                The
      period after which payment of the Deferred Amount is to be made or begin
      to be made (the “Deferral Period”), which shall be the earlier of
      (i) a number of full years, not less than two (i.e., for a
      “Specified Time”), and (ii) the period ending upon the Retirement or
      prior termination of employment of the Participant;
  and

              

      

       

      
        	
                (c)  

              	
                The
      form in which payments are to be made, which may be a lump sum or in
      substantially equal annual installments over a period of up to
      10 years.

              

      

       

      Section
3.04

       

      Modification of Deferral
Period Election by Participant.  A Participant who elected a
Deferral Period for any Pre-2005 Deferrals based on a Specified Time may elect
to extend that Specified Time period (in increments of full calendar years) by
submitting an amended Participation Agreement to the Plan Administration
Committee at least one full calendar year before the end of Deferral Period (as
in effect before such amendment); provided, that only one such amendment may be
filed with respect to each Participation Agreement.  Under no
circumstances may a Participant’s elected Deferral Period be shortened or
reduced.

       

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

       

      Section
3.05

       

      Time and Form of
Payment.

       

      
        	
                (a)  

              	
                At
      the end of the Deferral Period for each Pre-2005 Deferral Account, the
      value of such Pre-2005 Deferral Account shall be paid to the Participant
      at the time or times elected by the Participant in the applicable
      Participation Agreement.

              

      

       

      
        	
                (b)  

              	
                If
      the Participant has elected to receive payments from a Pre-2005 Deferral
      Account in a lump sum, the Company shall pay the value of such Pre-2005
      Deferral Account (determined as of the most recent Valuation Date
      preceding the end of the Deferral Period) in a lump sum in cash as soon as
      practicable after the end of the Deferral
  Period.

              

      

       

      
        	
                (c)  

              	
                If
      the Participant has elected to receive payments from a Pre-2005 Deferral
      Account in installments, the Company shall make annual cash payments from
      such Pre-2005 Deferral Account, each of which shall consist of an amount
      equal to (i) the balance of such Pre-2005 Deferral Account as of the
      most recent Valuation Date preceding the payment date times (ii) a
      fraction, the numerator of which is one and the denominator of which is
      the number of remaining installments (including the installment being
      paid). The first such installment shall be paid as soon as practicable
      after the end of the Deferral Period and each subsequent installment shall
      be paid on or about the anniversary of such first payment. Each such
      installment shall be deemed to be made on a pro rata basis from each of
      the different deemed investments of the Pre-2005 Deferral Account (if
      there is more than one such deemed
investment).

              

      

       

      Section
3.06

       

      Retirement.  If
a Participant had elected to have a Pre-2005 Deferral Account distributed upon
Retirement, then the value of such Pre-2005 Deferral Account (determined as of
the most recent Valuation Date preceding such Retirement) shall be distributed
to the Participant upon Retirement in installments or a lump sum as elected in
the Participation Agreement, and as generally described in Section 3.05
above.

       

      Section
3.07

       

      Specified
Time  Distributions.  If a Participant elected a
Deferral Period with respect to a Pre-2005 Deferral Account that is a stated
number of years (i.e., for a Specified Time), then upon the expiration of
such Specified Time, the value of such Pre-2005 Deferral Account (determined as
of the most recent Valuation Date preceding such Deferral Period) shall be
distributed in installments or a lump sum as elected in the Participation
Agreement, and as generally described in Section 3.05 above.

       

      Section
3.08

       

      Other Than
Retirement.  Notwithstanding the provisions of any
Participation Agreement, if a Participant dies, has a Termination of Employment
or Disability prior to Retirement and prior to receiving full payment of a
Pre-2005 Deferral Account, the Company shall pay the remaining balance
(determined as of the most recent Valuation Date preceding such event) to the
Participant or the Participant’s Beneficiary or Beneficiaries (as the case may
be) in a lump sum as soon as practicable following the occurrence of such event,
unless the Plan Administration Committee in its sole discretion determines
otherwise.

       

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

       

      Section
3.09

       

      Hardship
Withdrawals.

       

      
        	
                (a)  

              	
                Notwithstanding
      the foregoing provisions of this Article III and any Participation
      Agreement, a Participant shall be entitled to elect to withdraw all or
      part of the balance of a Pre-2005 Deferral Account in the event of an
      Unforeseeable Emergency, in accordance with this
      Section 3.09.

              

      

       

      
        	
                (b)  

              	
                A
      hardship withdrawal pursuant to this Section 3.09 may only be made to
      the extent reasonably needed to satisfy the Unforeseeable Emergency need,
      and may not be made if such need is or may be relieved (i) through
      reimbursement or compensation by insurance or otherwise; (ii) by
      liquidation of the Participant’s assets to the extent such liquidation
      would not itself cause severe financial hardship; or (iii) by
      cessation of participation in the
Plan.

              

      

       

      
        	
                (c)  

              	
                An
      application for a hardship withdrawal under this Section 3.09 shall
      be made to the Plan Administration Committee in such form and in
      accordance with such procedures as the Plan Administration Committee shall
      determine from time to time. The determination of whether, and in what
      amount and form, a hardship withdrawal will be permitted pursuant to this
      Section 3.09 shall be made by the Plan Administration
      Committee.

              

      

       

      Section
3.10

       

      Voluntary Early
Withdrawal.  Notwithstanding the foregoing provisions of this
Article III and any Participation Agreement, a Participant shall be
entitled to elect to withdraw the entire balance of his or her Pre-2005 Deferral
Accounts in accordance with this Section 3.10 by filing with the Plan
Administration Committee such forms, in accordance with such procedures, as the
Plan Administration Committee shall determine from time to time. As soon as
practicable after receipt of such form by the Plan Administration Committee, the
Company shall pay an amount equal to ninety percent of the balance in such
Pre-2005 Deferral Accounts (determined as of the most recent Valuation Date
preceding the date such election is filed) to the electing Participant in a lump
sum in cash, and the Participant shall forfeit the remainder of such Pre-2005
Deferral Accounts.  A Participant who elects to make a voluntary early
withdrawal under this Section 3.10 shall not be entitled to file any
Deferral Agreements under the Plan for post-2004 deferrals pertaining to
compensation to be earned in the first Plan Year that begins after such
voluntary early withdrawal election is made.

       

      Section
3.11

       

      Change of
Control.  In the event of a Change of Control that is
recommended for approval to the shareholders by the Board, no immediate special
payment shall be made to any Participant and the terms and conditions of the
Plan shall remain in full force and effect. Notwithstanding anything contained
in this Plan to the contrary, upon a hostile Change of Control, the Company
shall immediately pay to each Participant in a lump sum in cash the balance in
the Participant’s Pre-2005 Deferral Accounts (determined as of the most recent
Valuation Date preceding the Change of Control) including any Company Matching
Contributions. A “Hostile Change of Control” is a Change of Control of the
Company (as defined under the terms of the Plan in effect on December 31,
2004), which is not recommended for approval to the shareholders by the
Board.

       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

       

      Section 3.12

       

      Company’s Right to
Terminate.  The Board or the Compensation Committee may at any
time terminate the portion of the Plan pertaining to Pre-2005 Deferral Accounts
at any time for any reason, including without limitation if, in its judgment,
the continuance of such portion of the Plan, the tax, accounting, or other
effects thereof, or potential payments thereunder would not be in the best
interests of the Company, and upon any such termination, the Company shall
immediately pay to each Participant in a lump sum the accrued balance in the
Participant’s Pre-2005  Deferral Account (determined as of the most
recent Valuation Date preceding the termination date).

       

       

      ARTICLE
IV

       

      MERGED
DISCOUNT AUTO PARTS PLAN

       

      Section
4.01

       

      Overview.  Discount
Auto Parts, Inc. (“Discount Auto Parts”) was acquired by, and is now a
subsidiary of, the Company.  Discount Auto Parts had maintained the
Discount Auto Parts Plan, Inc. Supplemental Executive Profit Sharing Plan (the
“DAP SEP”), a deferred compensation plan, for the benefit of its eligible
employees.  The DAP SEP was merged with and into the Plan, effective
on or about November 1, 2003 (which effective date is hereby referred to as the
“Merger Date”).  For purposes of this Appendix A, a “DAP SEP
Participant” means any current or former employee of Discount Auto Parts for
whom an account was maintained under the DAP SEP as of the Merger
Date.  A DAP SEP Participant is a Participant in the Plan, but only
with respect to the rights associated with the Participant’s DAP SEP Account
established pursuant to Section 4.02 below, unless and to the extent the
individual has become a general Participant in the Plan pursuant to its
terms.

       

      Section
4.02

       

      Separate DAP SEP
Account.  The value of each DAP SEP Participant’s accrued
benefit under the DAP SEP was transferred to and became a liability of the Plan
as of the Merger Date.  Such amount is maintained in a separate DAP
SEP Account established for the benefit of the DAP SEP Participant.  A
DAP SEP Participant shall at all times be fully vested and have a nonforfeitable
interest in the value of his or her DAP SEP Account.

       

      Section
4.03

       

      Investment of
Accounts.  A DAP SEP Participant shall be entitled to direct
the manner in which his or her DAP SEP Account will be deemed to be invested by
selecting among the Hypothetical Investment Benchmarks specified from time to
time in Appendix A of the Basic Plan Document.

       

      Section
4.04

       

      Payment of
Benefits.

       

      
        	
                (a)  

              	
                Upon
      a DAP SEP Participant’s termination of employment with the Company and all
      Affiliated Companies, or, if earlier, upon such Participant’s attainment
      of age 65 (the “Normal Retirement Age” under the DAP SEP), the DAP SEP
      Participant shall become 

              

      

       

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

      
         

        
          	
                    

                	
                  entitled
      to receive payment of the value of the balance of his or her DAP SEP
      Account determined as of the date of such event.  Payment of
      such benefit shall be made in a lump sum within 120 days after the
      occurrence of the event giving rise to the DAP SEP Participant’s right to
      receive payment.

                

        

         

      

      
        	
                (b)  

              	
                A
      DAP SEP Participant shall not be entitled to elect to receive any portion
      of his or her DAP SEP Account prior to terminating employment or attaining
      age 65.  Consequently, the Specified Time distribution,
      hardship withdrawal and voluntary early withdrawal provisions of
      Article III of this Addendum shall not apply to a Participant’s DAP
      SEP Account.

              

      

       

      
        	
                (c)  

              	
                The
      timing of the payment of a Participant’s DAP SEP Account shall not be
      affected by the timing of any other benefits that the DAP SEP Participant
      may be entitled to receive as a general Participant in the
      Plan.

              

      

       

      Section
4.05

       

      Death
Benefits.  Any beneficiary designation filed under the DAP SEP
by a DAP SEP Participant whose death had occurred prior to the Merger Date
became null and void as of the Merger date.  Accordingly, a DAP SEP
Participant who is not a general Participant in the Plan as of the Merger Date
may designate a Beneficiary or Beneficiaries as generally prescribed under the
Plan.  In the event of the DAP SEP Participant’s death prior to
payment of his or her DAP SEP Account, the Participant’s interest in that
Account shall be paid to the Participant’s Beneficiary as designated or
prescribed under the Plan.

       

      
        
           

        

        
          43Capital Plan - Draft 1B

 

 

 

CAPITAL PLAN 

of the

Federal Home Loan Bank of Seattle

 

Adopted March 5, 2002, as amended on November 22, 2002, 

December 8, 2004, March 9, 2005, June 8, 2005, October 11, 2006 and 

February 20, 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS 

 

Section I.  Definitions*

Section II.  Stock Investment*

A.General.*

B.Required Amount.*

C.Periodic Review.*

D.Amendments to the Capital Plan.*

E.Member Compliance.*

Section III.  Transition*

Manner of Conversion/Exchange.*

Section IV.  Classes of Stock*

A.General.*

B.Rights, Terms and Preferences.*

C.Exchange of Ownership.*

Section I.  Definitions

As used herein, the following terms shall have the following meanings (terms defined in the singular to have the same meaning when used in the plural and vice versa):

 

	"Activity-Based Member Stock Purchase Requirement" means Stock that a Member must acquire, hold or utilize as a condition of transacting business with the Bank, the aggregate amount of which is a function of the volume of the particular products or services provided to that Member by the Bank.

	"Advance" has the same meaning as set forth in 12 C.F.R. 900.2.

	"Bank" means the Federal Home Loan Bank of Seattle.

	"Bank Act" means the Federal Home Loan Bank Act (12 U.S.C 1421, et seq.), as amended from time to time.

	"Board of Directors" means the Board of Directors of the Bank.

	"Business Day" means any day on which the Bank is open to conduct business.

	"Capital Plan" means this capital plan, as amended, supplemented, or modified from time to time.

	"Class A Stock" means Stock issued by the Bank that has a par value of one hundred dollars ($100) per share and is redeemable at par for cash on six (6) months written notice to the Bank, consistent with Finance Board regulations.

	"Class B Stock" means Stock issued by the Bank that has a par value of one hundred dollars ($100) per share and is redeemable at par for cash on five (5) years written notice to the Bank, consistent with Finance Board regulations. 

	"Conversion Date" means the date upon which Current Stock is converted into the new Class B Stock.

11."Current Stock" means all stock outstanding on the close of business on the last Business Day prior to the Conversion Date.

12."Excess Stock" means the Stock held by a Holder that is in excess of that Holder's current Total Stock Purchase Requirement. 

 

12"Excess Stock" means the Stock held by a Member or successor to a former Member that is in excess of  the current Total Stock Purchase Requirement of the Member or successor to the former Member.

13."Excess Stock Pool" means the aggregate amount of Excess Stock held by all Holders.  

	 "Finance Board" means the Federal Housing Finance Board.

	"GAAP" means Generally Accepted Accounting Principles in the United States.

	"Holder" means a Member or a successor to a former Member that owns Stock. 

	"Home Mortgage Loan" means:

	A loan, whether or not fully amortizing, or an interest in such a loan, which is secured by a mortgage, a deed of trust, or other security agreement that creates a lien on one of the following interests in property:

	One-to-four family property or multi-family property, in fee simple;

	A leasehold on one-to-four family property or multi-family property under a lease of not less than 99 years that is renewable, or under a lease having a period of not less than 50 years to run from the date the mortgage was executed; or

	A mortgage pass-through security that represents an undivided ownership interest in:

	Long-term loans, provided that at the time of issuance of the security, all of the loans satisfy the requirements set forth in Section I(17)(a) hereof; or

	A security that represents an undivided ownership interest in long-term loans, provided that, at the time of issuance of the security, all of the loans satisfy the requirements set forth in Section I(17)(a) hereof.

18. "Member" means an institution that has been approved for Membership, that has purchased Stock in the Bank and continues to be entitled to Membership. 

19. "Member Advance Stock Purchase Requirement" means a specific Activity-Based Member Stock Purchase Requirement where the activity is the outstanding principal balance of one or more Advances made by the Bank to the Member.

20. "Member MPP Stock Purchase Requirement" means a specific Activity-Based Member Stock Purchase Requirement where the activity is the outstanding principal balance of one or more loans sold to the Bank by the Member pursuant to the Bank's Mortgage Purchase Program.

21. "Membership" means all of the rights, privileges and obligations associated with being a Member of the Bank.

	"Membership Stock Purchase Requirement" means Stock that must be purchased and held  as a condition of Membership in the Bank, as set forth in Section II (B)(1)(b) hereof.

	"Mortgage Purchase Program" or "MPP" means the program established by the Bank pursuant to 12 C.F.R. 955 for the purchase of loans from its Members.
	"Redemption Cancellation Fee" means the fee imposed by the Bank upon a Holder that has given the Bank notice of its intent to redeem Stock and that subsequently revokes or cancels such redemption request.
	"Regulations" means the regulations of the Finance Board found at 12 C.F.R. Chapter IX - Federal Housing Finance Board, as amended from time to time.
	"Stock" means Class A Stock and/or Class B Stock as defined in the Bank Act, and as further defined by the Regulations.

 

	"Total Stock Purchase Requirement" means the amount of Stock that a Holder is required to hold or utilize pursuant to Section II (B)(1)(a) hereof.

 

 

Section II.  Stock Investment

	General.  

Adequate capitalization is required in order to: (a) provide for the safe and sound operation of the Bank; (b) permit prudent leveraging into products and services of benefit to Members; (c) provide appropriate risk-adjusted Member dividend returns; (d) protect the Bank's creditors against potential loss; (e) generate earnings sufficient to meet the Bank's various community support and public purpose obligations; and (f) comply with statutory and regulatory capital requirements as established by federal law and the Finance Board. The need for capital is a function of the volumes of and risks inherent in the products and services provided by the Bank to its Members.  Therefore, the capital stock of the Bank should be contributed by its Members in general proportion to the distribution of such products and services to its Members.  Accordingly, this Capital Plan requires Members to establish and maintain certain capital stock investments in the Bank.

	Required Amount.

	Stock Purchase Requirements.

	Total Stock Purchase Requirement.  The amount of Stock that each Member or successor to a former Member is required to hold or utilize shall at all times equal the greater of:

	The Membership Stock Purchase Requirement; or

	The sum of the Member MPP Stock Purchase Requirement and the Member Advance Stock Purchase Requirement.

	Membership Stock Purchase Requirement.  A Member's Membership Stock Purchase Requirement shall be equal to the greater of five hundred dollars ($500), or one-half of one percent (0.5%) of the Member's Home Mortgage Loans, as of the most recent calendar year-end.  Only Class B Stock may be utilized to meet the Membership Stock Purchase Requirement.  The Bank will calculate the Membership Stock Purchase Requirement annually by April 30 of each year based on Member's Home Mortgage Loans as of the most recent calendar year-end.  The Bank may, for a bona fide business purpose, recalculate a Member's Membership Stock Purchase Requirement between annual calculations, based on the Member's most current Home Mortgage Loans.  The Board of Directors may change the above percentage within a range of not less than one-half of one percent (0.5%) or not greater than one percent (1.0%). Any such increase or decrease in the Membership Stock Purchase Requirement will be applied at the implementation date of the change to all Home Mortgage Loan balances of each Member. The Membership Stock Purchase Requirement of a successor to a former Member shall be equal to that of the former Member on the day before the liquidation, merger, or consolidation of the Member until the next annual calculation of the Membership Stock Purchase Requirement. On that date, the Membership Stock Purchase Requirement of the successor to the former Member shall be reduced to $0. In the event that a Member provides the Bank with written notice of its intent to withdraw from Membership, the Membership Stock Purchase Requirement for said Member shall not be increased during the pendency of said notice. 

	Member MPP Stock Purchase Requirement.  The Member MPP Stock Purchase Requirement shall be equal to five percent (5.0%) of the outstanding principal balance of loans sold by the Member to the Bank pursuant to the Bank's Mortgage Purchase Program.  The Board of Directors may change the above percentage within a range of not less than zero percent (0.0%) or not greater than six percent (6.0%).  Only Class B Stock may be utilized to meet the Member MPP Stock Purchase Requirement.  Any such change in the Member MPP Stock Purchase Requirement will be applied from the implementation date of the change to all new loans purchased by the Bank under its Mortgage Purchase Program. The requirements of this Section II(B)(1)(c) shall apply to a successor to a former Member that acquires the duties and obligations of the former Member with respect to any Mortgage Purchase Program loans sold by the former Member to the Bank.

	Member Advance Stock Purchase Requirement. 

	The Member Advance Stock Purchase Requirement shall be equal to four percent (4.0%) of the outstanding principal balance of Advances extended from the Bank to a Member.  The Board of Directors may change the above percentage within a range of not less than two and one-half percent (2.5%) or not greater than six percent (6.0 %). Any such change in the Member Advance Stock Purchase Requirement will be applied from the implementation date of the change in the requirement to all new and renewed Advances.  At its option, the Bank may issue either Class A Stock or Class B Stock in satisfaction of this requirement, as determined by the Board of Directors. Said determination shall be made periodically and applied consistently to all Members.  The Bank may issue Class A Stock only to satisfy the Member Advance Stock Purchase Requirement for a new Advance, or for the renewal of an existing Advance initially capitalized by the Excess Stock Pool, and only  to a Member that has  no excess Class B Stock available to capitalize the new or renewing Advance. The requirements of this Section II(B)(1)(d) shall apply to a successor to a former Member that is allowed by the Bank to retain Advances acquired from a former Member.

	Notwithstanding any other provision in this Capital Plan, a Member  may utilize Stock from the Excess Stock Pool to satisfy its Member Advance Stock Purchase Requirement if all of the following conditions are met:

	The Member owns no other Stock that can be used to capitalize a new Advance or the renewal of an existing Advance to satisfy the Member Advance Stock Purchase Requirement.

	The Member is requesting a new Advance or the renewal of an existing Advance, and the maturity does not exceed one year. 

	The Member would utilize no more than twenty five percent (25%) of the total amount of the Excess Stock Pool, measured on the date the Advance is received by the Member.

	The Member's aggregate outstanding Advances (whether or not capitalized with Stock from the Excess Stock Pool) would not be greater than $11 billion, measured on the date the Advance is received by the Member.

	The aggregate amount of all Stock from the Excess Stock Pool being utilized to capitalize Advances would not exceed fifty percent (50%) of the Excess Stock Pool, measured on the date the Advance is received by the Member.  

iii.Authority to use Stock from the Excess Stock Pool shall expire on October 1, 2008, unless the Board of Directors, subject to Finance Board approval, approves an extension of the expiration date.  However, Advances utilizing Stock from the Excess Stock Pool received by the Member prior to the expiration of the Excess Stock Pool may continue to be capitalized utilizing Stock from the Excess Stock Pool until the maturity date of said Advances. An Advance acquired by a successor to a former Member which was capitalized with Stock from the Excess Stock Pool can continue to be capitalized by Stock in the Excess Stock Pool until the maturity of the Advance.

iv.The Bank reserves the right to suspend, at any time, the use of the Excess Stock Pool. 

	Recalculation of Stock Purchase Requirements. The Member Advance Stock Purchase Requirement and the Member MPP Stock Purchase Requirement will be recalculated whenever any activity occurs that results in a change in the outstanding principal balances of either Advances or MPP loans.                      

 

	Notice of Change in Stock Purchase Requirements. In the event the Board of Directors changes the Member Advance Stock Purchase Requirement, the Member MPP Stock Purchase Requirement, or the Membership Stock Purchase Requirement, in accordance with the provisions set forth above, the Bank shall provide its Members with prior written notice of any such change.

	Excess Stock.  Subject to the right of the Bank to repurchase Stock pursuant to Sections IV(B)(6) and IV(B)(7) hereof, a Member or a successor to a former Member may hold Stock in excess of its Total Stock Purchase Requirement.

C.Periodic Review.  

To maintain prudent capitalization and ongoing compliance with Finance Board regulations, the Board of Directors shall review the Bank's Capital Plan at least annually to determine whether adjustments are required with respect to one or more of the following:

	The specific Stock purchase requirement percentages, and/or the types of loans and activities, to which such requirements shall apply.

	The exercise by the Bank of its discretion to repurchase Excess Stock.
	Any increases or decreases to the Redemption Cancellation Fees.
	The introduction of any new class or subclass of capital stock.

D.Amendments to the Capital Plan. 

Any modifications to this Capital Plan shall require an amendment to the Capital Plan by the Board of Directors and approval from the Finance Board.

E.Member Compliance.  

Each Member is required to comply with any changes in, or adjustments or amendments to this Capital Plan, including without limitation any change, adjustment or amendment that may increase a Member's Total Stock Purchase Requirement, within 10 Business Days after notice of such adjustment, change or amendment has been mailed by the Bank to such Member.  In order to effectuate the purchase of additional Stock by a Member that may be required due to any such change, adjustment or amendment, the Bank may at any time following 10 Business Days after the mailing of the notice of the purchase requirement by the Bank to such Member, issue Stock in the name of such Member and withdraw appropriate payment from the Member's demand deposit account held with the Bank.  In addition, in the event any Member fails to comply with any requirement of this Capital Plan, the Member's access to products and services of the Bank shall be suspended until such requirement is met, and such failure to comply may lead to involuntary termination of the Member's Membership.

Section III.  Transition

Manner of Conversion/Exchange.  

The following steps which constitute the Bank's Plan of Recapitalization for purposes of Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended, shall be taken in order to implement the amendment of this Capital Plan effective on the Conversion Date:

	Establish Dates.  Following Finance Board approval of the amendment to this Capital Plan, the Bank will establish the Conversion Date, and notify all Holders of the Conversion Date. Holders shall be notified by the Bank of the Conversion Date no later than 5 days prior to the Conversion Date.

	Conversion of Current Stock to Class B Stock.  On the Conversion Date, all of the outstanding Current Stock of the Bank shall be converted automatically to Class B Stock of equal par value without any action on the part of the Holders.  The Bank will reflect the conversion by appropriate book entries. 

	Members in the Process of Withdrawing from Membership.  Any Member that has filed its written notice to withdraw from Membership with the Bank prior to the Conversion Date shall have its Current Stock converted to Class B Stock in accordance with this Capital Plan, and the effective date of withdrawal established pursuant to 12 C.F.R. 925.26 shall remain unchanged.

 

 
Section IV.  Classes of Stock

A.General.  
Except when issued as dividends to Holders in accordance with Section IV(B)(4), Stock shall be issued only to Members and may be held only by Members and their transferees in accordance with Section IV(B)(9), and is tradable only between the Bank and its Members.  Stock shall be issued by the Bank in accordance with 12 C.F.R. 931.2 of the Regulations. 

	Rights, Terms and Preferences.  

Terms and Preferences.  The terms and preferential rights of stockholders are as follows:

	Ownership.  The retained earnings, surplus, undivided profits, and equity reserves, if any, of the Bank are owned by the Holders of Class B Stock proportionate to the total par value of any outstanding shares of Class B Stock; provided, however, that Holders have no right to receive any portion of these items except through the declaration of a dividend by the Board of Directors or through liquidation of the Bank.

2.Dividends.  At the discretion of the Board of Directors and subject to the terms and conditions set forth herein and in the Bank Act or the Regulations, dividends may from time to time (quarterly or otherwise) be declared and paid on Class A Stock and Class B Stock. Stock dividends are non-cumulative with respect to payment obligation.  Any dividend on Class A Stock shall be paid equally on all Class A Stock and any dividend on Class B Stock shall be paid equally on all Class B Stock.  Dividends shall be paid to a Holder based on the average number of shares of Stock actually owned by the Holder during the period for which the dividend has been declared. In no event will the Board of Directors declare or pay any dividend on its Class A Stock or Class B Stock if after doing so it would fail to meet any of its minimum capital requirements or if the Board of Directors determines in its discretion that to do so would create a safety and soundness issue for the Bank. No dividend shall be declared or paid except out of previously retained earnings or current net earnings, as determined in accordance with GAAP, and in accordance with the requirements set forth in the Bank Act or the Regulations. For purposes of this Section IV(B)(2), net earnings shall equal net income under GAAP, plus or minus any adjustments as authorized or required by the Finance Board.

3.Dividend Rate.  The dividend rate shall be determined by the Board of Directors in its discretion at such time as a dividend is declared. The dividend rate that is declared on Class A Stock may differ from the dividend rate declared on Class B Stock. 

4.Form of Payment.  Holders of Class A Stock shall receive dividend payments with respect to such Class A Stock in the form of cash or Class A Stock. Holders of Class B Stock shall receive dividend payments with respect to such Class B Stock in the form of cash or Class B Stock. The Board of Directors shall determine the form of payment of dividends on Stock.  All dividend payments, with respect to such class of Stock, shall be pro rata as to both amount and character.

5.Rights of Holders in the Event of Liquidation, Merger or Consolidation of the Bank.  Subject to applicable law and Regulations, which could modify, restrict or eliminate any rights set forth in this Section, in the event of liquidation, merger or other consolidation of the Bank, the Holders of Class A Stock and Class B Stock shall be entitled to receive the par value of their Class A Stock and Class B Stock plus any declared but unpaid dividends on a pari passu basis, provided that payment obligations to the Bank's creditors have been fully satisfied. The Holders of Class B Stock shall thereafter be entitled to receive the retained earnings, surplus, undivided profits and equity reserves, if any, provided that payment obligations to the Bank's creditors have been fully satisfied. 

	Repurchase at Discretion of Bank.

	Subject to the provisions of 12 C.F.R. 931.8(a), the Bank may elect to repurchase at any time and at par, Excess Stock; provided, however, that the Bank must give five (5) Business Days prior written notice of any such repurchase by the Bank.  Said notice shall specify the class of Stock and the number of shares to be repurchased.  In no event will the Bank make any such repurchase if such repurchase would cause the Bank to fail any minimum capital requirement set forth in applicable law or Regulations or cause the seller to fail to satisfy its Total Stock Purchase Requirement.  The Bank will not repurchase any Excess Stock which is Class B Stock unless the Holder has no Class A Stock outstanding that could be repurchased as Excess Stock.

	A Holder who receives written notice from the Bank of the Bank's intention to repurchase the Holder's shares of Excess Stock shall be permitted to specify by written notice to the Bank, delivered at least one (1) Business Day prior to the date on which the repurchase is to be finalized, the particular shares that are the subject of the repurchase.  Such notice shall identify the particular shares that are subject to repurchase by reference to the number and class of Stock, and specifying the date and manner in which such shares were acquired (i.e. whether by purchase at par value or as a stock distribution or dividend from the Bank).  If a Holder fails to timely deliver written notice to the Bank identifying the shares to be repurchased, the shares of the Holder's Stock subject to repurchase within a particular class shall be determined using a first-acquired, first-repurchased method of identification. 

7.Redemption at Member Request.

	Subject to the restrictions set forth below and in 12 CFR 931.8(a), Class A Stock shares are redeemable for cash at par value at the request of the Holder following six (6) months prior written notice to the Bank of such redemption request and Class B Stock shares are redeemable for cash at par value at the request of the Holder following five (5) years prior written notice to the Bank of such redemption request; provided, however, that a Holder shall not have more than one notice of redemption outstanding at one time with respect to the same shares of Stock.  The applicable notice period shall begin on the date that written notice of the redemption request is received by the Bank.  In accordance with Section IV(B)(6) and prior to the expiration of the applicable redemption period, the Bank has the right in its sole discretion, but not the obligation, upon five (5) Business Days prior written notice to the Holder, to repurchase at par, any or all of the shares of Excess Stock for which a Holder has provided a redemption notification unless a shorter notice period is agreed to in writing by the affected Holder.  The Bank may suspend redemption of Stock by a Holder if the Bank reasonably believes that the continued redemption of Stock would cause the Bank to fail to meet its minimum capital requirements as set forth in applicable law or Regulations, would prevent the Bank from maintaining adequate capital against a potential risk that may not be adequately reflected in its minimum capital requirements, or would otherwise prevent the Bank from operating in a safe and sound manner. In the event the Bank suspends a redemption of Stock, the following provisions shall apply:

	The Bank will notify the Finance Board in writing within two (2) Business Days of the date of the decision to suspend the redemption of Stock, informing the Finance Board of the reasons for the suspension and of the strategies and time frames for addressing the conditions that led to the suspension.

	The Finance Board may require the Bank to re-institute the redemption of a Holder's Stock.

	The Bank will not repurchase any Stock without the written permission of the Finance Board during any period in which the Bank has suspended redemption of Stock under this Section.

	The Bank will not charge a Redemption Cancellation Fee if Stock is not redeemed due to the suspension of Stock redemptions under this Section.

	A Holder who provides written notice to the Bank of its intention to redeem Stock pursuant to this Section shall identify in that written notice the particular shares that are the subject of that redemption request by reference to the class of Stock, the number of shares in that class, the date acquired, and the manner in which the shares subject to notice were acquired (i.e. whether by purchase at par value or as a stock distribution or dividend by the Bank).  Failure to identify the class of Stock and number of shares in that class to be redeemed shall render the notice invalid.  If a Holder fails to identify the specific shares to be redeemed by reference to the date and manner in which the shares were acquired, the shares of the Holder's Stock subject to redemption within a particular class shall be determined using a first-acquired, first-redeemed method of identification.  

	The Stock of a Holder will not be redeemed if such redemption would cause the Holder to fail to satisfy its Total Stock Purchase Requirement.  In the event that a redemption would cause a Holder to fail to satisfy its Total Stock Purchase Requirement on the redemption date, such portion of the request that causes the Holder to fail its Total Stock Purchase Requirement will be cancelled by the Bank five (5) Business Days following the expiration of such redemption period, and the Redemption Cancellation Fee will apply to the cancelled portion of the request.

	A Holder that previously had notified the Bank in writing of its intent to redeem some or all of its Stock, and that subsequently decides to cancel its redemption request before the completion of the applicable notification period, shall do so by providing written notice to the Bank of its intent to cancel its redemption.  Said notice shall include a copy of the redemption request and shall specify the particular shares that are subject to the notice to cancel the redemption request by reference to the class of Stock, the number of shares in that class, and if applicable, the date acquired, and the manner in which the shares subject to the notice were acquired.  Failure to identify accurately the shares of Stock that are subject to the notice to cancel the redemption request shall render such notice invalid.  If a Holder cancels a redemption request, the Bank shall impose a Redemption Cancellation Fee equal to the applicable amount shown in the following table; provided, however, that the Board of Directors may waive the imposition of such fee if it has a bona fide business purpose for doing so and the waiver is consistent with Section 7(j) of the Bank Act. If a Redemption Cancellation Fee is imposed by the Bank, the Bank shall notify the Holder of the amount of the fee that is imposed.

	
Cancellation of Redemption Request

Occurs During:

	
Maximum Cancellation Fee

 

	
 

Year 1

	
20% of dividends received during the

time the request was outstanding

	
Year 2
	
Year 1 fee plus 40% of the dividends

received during the second year the 

request was outstanding

	
Year 3
	
Year 2 fee plus 60% of the dividends

received during the third year the 

request was outstanding

	
Year 4
	
Year 3 fee plus 80% of the dividends

received during the fourth year the 

request was outstanding

	
Year 5

	
Year 4 fee plus 100% of the dividends

received during the fifth year the 

request was outstanding

 

	In the event the Bank does impose such a Redemption Cancellation Fee, the Holder, within ten (10) business days from the date of mailing by the Bank to the Holder of written notice that sets forth the amount of the fee, may provide written notice of its intent to revoke the cancellation and to proceed with the redemption of the Stock subject to the redemption request in accordance with the original redemption timetable, in which event no Redemption Cancellation Fee shall be imposed.

	The Bank may retain the proceeds of redemption by a Holder of Stock as additional collateral if the Bank reasonably determines that there is an existing or anticipated collateral deficiency related to any obligations owed by the Holder to the Bank and the Holder has failed to deliver additional collateral to resolve the existing or anticipated collateral deficiency to the Bank's satisfaction, until all such obligations have been satisfied or the anticipated deficiency is resolved to the Bank's satisfaction.

	Voting Rights.  Holders will have the right to vote their Stock in elections of the Bank's Board of Directors pursuant to applicable law and Regulations.

9.Transferability.  

a.Except as set forth herein, a Holder may not transfer Stock to any other person or entity.

b.A Holder may transfer at par value the Excess Stock held by that Holder to a Member. 

c.In the event of a merger or consolidation of two or more Members, the Stock of the disappearing Member or Members may be transferred at par value to the surviving or consolidated Member.

d.Notwithstanding any other provision of this Capital Plan, (i) in the event of a proposed merger of a Member into a non-Member in which the non-Member will be the successor institution, a Member, prior to such proposed merger and with the prior approval of the Bank, may transfer its Activity-Based Member Stock Purchase Requirement, together with the rights and obligations associated with the related Advances and/or Mortgage Purchase Program activities, to a Member that is Affiliated with either the merging Member or the merging non-Member, and (ii) in the event of a merger of a Member into a non-Member in which the non-Member will be the successor institution, the successor non-Member, following such proposed merger and with the prior approval of the Bank, may transfer the Activity-Based Member Stock Purchase Requirement that it has assumed by virtue of the merger with the Member, together with the rights and obligations associated with the related Advances and/or Mortgage Purchase Program activities, to a Member that is Affiliated with the successor non-Member. In addition, any such successor non-Member that holds Stock shall, if requested to do so by the Bank in its discretion, transfer the Activity-Based Member Stock Purchase Requirement that it has assumed by virtue of the merger with the Member, together with the rights and obligations associated with the related Advances and/or Mortgage Purchase Program activities, to a Member that is Affiliated with the successor non-Member, and said transfer must take place no later than 60 days following the request from the Bank. Upon the transfer of Stock pursuant to the preceding d(ii) hereof, the stock redemption period that became applicable to any such Stock by virtue of the merger of the Member into the successor non-Member shall be deemed to be cancelled and inapplicable, as of the date of the transfer of Stock to the successor non-Member pursuant to d(ii) hereof, and the Bank, in its discretion, may impose a cancellation fee in accordance with the amounts set forth in Section IV(B)(7)(d). The Activity-Based Member Stock Purchase Requirement of any Member or non-Member that has been transferred pursuant to this Section shall terminate with respect to the transferor as of the effective date of the transfer. 

	For purposes of this Section IV(B)(9), the term "Affiliated" means to control, to be controlled by, or to be under common control with.

f.Each transferor shall give the Bank at least 30 days prior notice of any transfer it intends to make pursuant to this Section, unless this prior notice requirement is waived by the Bank.

g.All transfers permitted by this Section shall: (1) be subject to applicable law and Regulations, and the prior approval of the Bank, (2) be subject to the terms, limits and conditions set forth in this Capital Plan, including without limitation the applicable provisions of Section IV(C), and (3) be transferred at par value.

C.Exchange of Ownership.
1.Consolidation of Members.  Upon a merger or consolidation of two or more Members, the Total Stock Purchase Requirement will be calculated for the surviving or consolidated institution using data as of the effective date of the merger or consolidation.  Excess Stock, if any, of the surviving or consolidated institution will be subject to the other terms and conditions set forth in this Capital Plan.   

	Withdrawals and Terminations of Membership.

	Law and Regulations.  All withdrawals and terminations of Membership shall be subject to applicable law and Regulations.

	Disposition of capital of a terminated Member.  In the event  that a Member withdraws from Membership or has had its Membership terminated and on the effective date of such withdrawal or termination remains indebted to the Bank or has outstanding business transactions with the Bank, the Bank shall not redeem or repurchase any Stock that is required by any Activity Based Member Stock Purchase Requirement of such Member, in accordance with the provisions hereof, until such indebtedness and business transactions have been extinguished or settled, including any fees relating to the prepayment of Advances.

	Stock redemption notices of a terminated Member.

	Voluntary withdrawal of Membership.  The receipt by the Bank of a Member's notice of withdrawal of Membership shall commence the redemption period of all Stock held by that Member that is not already subject to a pending request for redemption.  In the case of an institution the Membership of which has been terminated as a result of a merger or consolidation into a nonmember or into a member of another Federal Home Loan Bank, the applicable stock redemption period for any Stock that is not subject to a pending notice of redemption shall be deemed to commence on the date on which the charter of the Member is cancelled.

	Involuntary termination of Membership.  In the event of an involuntary termination of a Member's Membership, the redemption period for all Stock owned by the Member and not already subject to a pending request for redemption, shall commence on the date that the Bank terminates the institution's Membership.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}]]