ADVANCE AUTO PARTS, INC. DEFERRED STOCK UNIT PLAN FOR NON-EMPLOYEE DIRECTORS AND SELECTED EXECUTIVES (As Amended and Restated Effective as of January 1, 2008) TABLE OF CONTENTS

 

Section 3.3

(a)  

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

 

(i)

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

(b)  

Any compensation paid to an Eligible Executive 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.

 

(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)

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

 

(b)

The “Eligible Compensation” of a Director for any period means the Retainer, or portion thereof, payable to the Director for services performed during such period.

(a)  

Holds a position with the Company, or an Affiliated Company, of a Senior Vice President, or a position senior to, or recognized as being equivalent to, a Senior Vice President; and

(b)  

Satisfies any such other eligibility requirements as the Compensation Committee may establish from time to time.

(a)  

In the case of a Participant who is an Eligible Executive, the Participant’s Separation from Service after both attaining age 55 and completing at least 10 continuous years of service with the Affiliated Companies; and

(a)  

In the case of a Participant who is a Director, a Separation from Service will occur when the Director ceases to be a member of the Board; provided that (i) the cessation constitutes a good-faith and complete termination of the Director’s service relationship with the Company, and (ii) it is not anticipated that the services of the Director will be renewed, either as a Director, or as an independent contractor or an Employee of the Company or another Affiliated Company.

(b)  

Subject to the further provisions of this Section 2.33, a Participant who is an Eligible Executive will incur a Separation from Service for purposes of the Plan if the Eligible Executive dies, retires, or otherwise has a termination of employment as to all the  Affiliated Companies.

(c)  

An Eligible Executive’s employment relationship with an Affiliated Company will be treated as continuing intact, and thus the Eligible Executive will not be deemed to have incurred a Separation from Service, while the Eligible Executive 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 Eligible Executive 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 Eligible Executive will return to perform services for the Affiliated Company.  If the period of leave exceeds six months and the Eligible Executive does not retain a right to reemp loyment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following such six-month period.

(d)  

Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the Affiliated Company and the Eligible Executive reasonably anticipated that no further services would be performed after a certain date, or that the level of bona fide services the Eligible Executive 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 Eligible Executive has been providing services to the Affiliated Companies less than 36 months).  An Eligible Executive is presumed to h ave 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 Eligible Executive during the immediately preceding 36-month period.  An Eligible Executive 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 Eligible Executive 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.

(a)  

Each Participant who is an Eligible Executive, or an Employee serving as a Director, shall be deemed to be a Specified Employee for purposes of the Plan, and therefore shall be subject to distribution restrictions prescribed under Section 5.6 of the Plan.

(b)  

A Participant who is not an Eligible Executive, or an Employee serving as a Director, (i.e., an “outside” Director) is not a Specified Employee, and therefore is not a Specified Employee for purposes of the Plan.

(a)  

Each Director and Eligible Executive who was a Participant in the Plan as of December 31, 2007 shall continue as such, subject to the provisions of the Plan.

(b)  

On or after January 1, 2008, each individual who becomes a Director or an Eligible Executive shall be immediately eligible to become a Participant in the Plan.

(c)  

An Eligible Executive 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 Executive (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.

(a)  

For each Board Service Period, each Director shall be permitted to submit a Deferral Election Agreement with respect to the Retainer otherwise payable to the Director for services performed during the Board Service Period.

(b)  

For each Plan Year, each Eligible Executive for that Plan Year shall be permitted to submit a separate Deferral Election Agreement with respect to each of the forms of Eligible Compensation otherwise payable to the Eligible Executive 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 direct that the elections for two or more forms of the Eligible Compensation be combined 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 Individuals, which procedures may permit or require elections to be made by electronic media.

(c)  

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 Participant’s Eligible Compensation to be deferred for the Board Service Period or Plan Year, as applicable (i.e., 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; and

(iii)  

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

 

(a)

The Deferral Election Agreement of a Participant for a Board Service Period or Plan Year, as applicable, shall designate the amount of each form of the Eligible Compensation for the period that the Participant elects to have deferred under the Plan (the “Deferred Amount”).

 

(i)

A Director may elect to defer up to 100% of his or her Retainer for a Board Service Period.

 

(ii)

An Eligible Executive shall make a separate deferral election for each form of the Eligible Executive’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 an Eligible Executive 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 Participant (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.

 

(a)

A lump sum; or

 

(b)

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

(a)  

A Deferral Election pertaining to a Director’s Retainer that may otherwise become payable to the Director for services performed to the Board during a Board Service Period must be filed on or before December 31 of the Plan Year immediately preceding the beginning of the Board Service Period 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 Base Salary or Quarterly Bonuses that may otherwise become payable to an Eligible Executive 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.

(c)  

A Deferral Election pertaining to any Roll-up Performance Bonus that may otherwise become payable to an Eligible Executive 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 Eligible Executives 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 Com mittee, subject to the following conditions:

(i)  

The Eligible Executive 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.

(a)  

The timing of the Eligible Individual’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 Individual.  Except as provided in paragraph (ii) below, the Eligible Individual’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 Executive 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 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 Individual 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 Individual 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 Individual’s initial Deferral Election shall apply only to the Eligible Compensation otherwise payable for services performed by the Eligible Individual

(ii)  

For purposes of paragraph (i) above, as with respect to a Deferral Election by an Eligible Executive 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 Executive’s Base Salary or to a Director’s Retainer, 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.

(a)  

Once the applicable Statutory Deadline to make a Deferral Election for any form of Eligible Compensation with respect to any Board Service Period or Plan Year, as applicable, 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 Board Service Period or Plan Year, as applicable, or the election not to defer any amount, cannot be canceled or modified;

(ii)  

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

(iii)  

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

(b)  

Notwithstanding subsection (a) above, an Eligible Executive 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 Executive’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 Executive 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 Executive 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.

(a)  

Prior to each Deferral Election Agreement submission deadline, each Eligible Individual shall be provided information regarding the Eligible Individual’s deferral rights under the Plan for the following Plan Year or other applicable period.  The Eligible Individual 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 Individual 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 Executive 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 Individual 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 sha ll apply to all aspects of an Eligible Individual’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 Individual’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 Board Service Period or Plan Year, as applicable, 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.

(a)  

Each Shares Grant awarded to a Director under the 2004 LTIP shall be automatically deferred under the Plan on a non-elective basis, and shall be credited to the Director’s DSU Account.

(a)  

Separate DSU Accounts shall be maintained for each Participant.  An amount equal to that the Eligible Compensation deferred by or on behalf of the Participant under the Plan shall be credited to the applicable DSU Accounts.  More than one DSU Account may be maintained for a Participant as necessary to reflect separate Deferral Election Agreements specifying different Deferral Periods or forms of payment.

(b)  

A Participant’s DSU 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.

(c)  

A DSU Account will be credited with the number of DSUs calculated to the nearest thousandth of a DSU, determined by dividing the Deferred Amount on the date of deferral by the closing market price of the Company’s common stock as reported on the Consolidated Tape of the New York Stock Exchange listed shares on such date of deferral.

(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)  

An Unforeseeable Emergency, as prescribed in Section 5.11 below; or

(f)  

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

(a)  

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

(b)  

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

(a)  

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

(i)  

The designated payment date with respect to a DSU 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 DSU 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 date of 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 amounts in a Director’s DSU Account that are attributable to deferrals of Shares Grants shall be paid to the Director in a lump sum within 90 days after the date of the Director’s Separation from Service of the Board.

(iv)  

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.

(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 DSU Accounts shall become payable as of the first day of the seventh month following the date of the

(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).

(a)  

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

(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.

(a)  

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

(b)  

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

(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.

(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 DSU 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.

(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 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.

(c)  

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.

(a)  

All payments to a Participant (or to a Participant’s Beneficiary) with respect to the Participant’s DSU Account shall be paid in Shares, unless the Compensation Committee in its discretion directs that such amounts be paid in cash.  If Shares are not traded on The New York Stock Exchange on any day on which a payment of Shares is to be made under the Plan, then that payment shall be made on the next day on which Shares are traded on

(b)  

The value of any fractional Shares otherwise payable with respect to a Participant shall be paid in cash.  Such value shall be determined as of the last business day of the month immediately preceding the date of the payment or final payment, as the case may be.

(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 DSU 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.

(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 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 w ithdrawal 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 DSU Accounts of a Participant.

(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.

(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).

(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 belo w).

(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.

(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.

(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;

(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.

(i)  

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.

(ii)  

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.

(iii)  

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

(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;

(ii)  

Establishing the criteria for Employees who are to be designated as Eligible Executives for any Plan Year; and

(iii)  

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 ac tion 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.

(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 Beneficiarie s.

(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)

(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 DSU 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.

(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

(i)  

The specific reason or reasons for the denial;

(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 th e 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.

(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:

(i)  

The calendar year in which the Plan termination occurs;

(ii)  

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

(iii)  

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

(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.