ADVANCE AUTO PARTS, INC. DEFERRED COMPENSATION PLAN

 

Exhibit 10.35

 

 

 

 

 

 

 

 

 

June 1, 2003

 

 

 

ADVANCE AUTO PARTS, INC.

 

DEFERRED COMPENSATION PLAN

 

PLAN DOCUMENT

 

 

 

 

ARTICLE I

PURPOSE AND EFFECTIVE DATE

 

The purpose of the Advance Auto Parts, Inc. Deferred Compensation Plan (“Plan”) is to aid Advance Auto Parts, Inc. and its subsidiaries in retaining and attracting executive Team Members by providing them with tax deferred savings opportunities. The Plan provides a select group of management and highly compensated Team Members, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), of Advance Auto Parts, Inc. with the opportunity to elect to defer receipt of specified portions of compensation, and to have these deferred amounts treated as if invested in specified Hypothetical Investment Benchmarks. The Plan shall be effective for deferral elections made hereunder on or after June 1, 2003.

 

 

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 2.01

 

Administrative Committee. “Administrative Committee” means the committee appointed by the Retirement Plan Committee of the Board.

 

Section 2.02

 

Base Salary. “Base Salary” means the base rate of cash compensation paid by the Company to or for the benefit of a Participant for services rendered or labor performed while a Participant, including base pay a Participant could have received in cash in lieu of (A) deferrals pursuant to Section 4.02 and (B) contributions made on his behalf to any qualified plan maintained by the Company or to any cafeteria plan under Section 125 of the Internal Revenue Code maintained by the Company.

 

Section 2.03

 

Base Salary Deferral. “Base Salary Deferral” means the amount of a Participant’s Base Salary which the Participant elects to have withheld on a pre-tax basis from his Base Salary and credited to his Deferral Account pursuant to Section 4.02.

 

Section 2.04

 

Beneficiary. “Beneficiary” means the person, persons or entity designated by the Participant to receive any benefits payable under the Plan pursuant to Article VIII.

 

 

 

 

Section 2.05

 

Board. “Board” means the Board of Directors of Advance Auto Parts, Inc.

 

Section 2.06

 

Bonus. “Bonus” means the amount awarded to a Participant for a Plan Year under any approved incentive plan maintained by the Company.

 

Section 2.07

 

Bonus Deferral. “Bonus Deferral” means the amount of a Participant’s Bonus, which the Participant elects to have withheld on a pre-tax basis from his Bonus and credited to his account pursuant to Section 4.02.

 

Section 2.08

 

Change of Control . For purposes of this Plan, a “Change of Control” shall be deemed to have occurred if: (i) there is an acquisition, in any one transaction or a series of transactions, other than from Advance Auto Parts, Inc., by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), of beneficial ownership (within the meaning of Rule 13(d)(3) promulgated under the Exchange Act) of 20% or more of either the then outstanding shares of Common Stock or the combined voting power of the then outstanding voting securities of Advance Auto Parts, Inc. entitled to vote generally in the election of directors, but excluding, for this purpose, any such acquisition by Advance Auto Parts, Inc. or any of its subsidiaries, or any team member benefit plan (or related trust) of Advance Auto Parts, Inc. or its subsidiaries, or any corporation with respect to which, following such acquisition, more than 50% of the then outstanding shares of Common Stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively, of the Common Stock and voting securities of Advance Auto Parts, Inc. immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of Common Stock or the combined voting power of the then outstanding voting securities of Advance Auto Parts, Inc. entitled to vote generally in the election of directors, as the case may be; or (ii) individuals who, as of January 1, 2003, constitute the Board (as of such date, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to January 1, 2003, whose election, or nomination for election by Advance Auto Parts, Inc.’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the

 

 

election of the directors of Advance Auto Parts, Inc. (as such terms are used in Rule 14(a)(11) or Regulation 14A promulgated under the Exchange Act); or (iii) there occurs either (A) the consummation of a reorganization, merger or consolidation, in each case, with respect to which the individuals and entities who were the respective beneficial owners of the Common Stock and voting securities of Advance Auto Parts, Inc. immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of Common Stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation, or (B) an approval by the shareholders of Advance Auto Parts, Inc. of a complete liquidation of dissolution of Advance Auto Parts, Inc. or of the sale or other disposition of all of the assets of Advance Auto Parts, Inc. or

(iv) there occurs a Change of Control determined to be “hostile” which is defined as a Change of Control of the Company, which is not recommended for approval to the shareholders by the Board. In this event, the Company shall immediately pay to each Participant in a lump sum in cash the balance in his/her Deferral Account(s) (determined as of the most recent Valuation Date preceding the Change of Control).

 

Section 2.09

 

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 2.10

 

Company. “Company” means Advance Auto Parts, Inc., its successors, any subsidiary or affiliated organizations authorized by the Board or the Retirement Plan Committee to participate in the Plan 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 2.11

 

Deferral Account. “Deferral Account” means the account maintained on the books of the Administrative Committee for each Participant pursuant to Article VI.

 

Section 2.12

 

Deferral Period. “Deferral Period” is defined in Section 4.02.

 

 

 

Section 2.13

 

Deferred Amount. “Deferred Amount” is defined in Section 4.02.

 

Section 2.14

 

Designee. “Designee” shall mean the Company’s senior human resources officers or other individuals to whom the Committee has delegated the authority to take action under the Plan. Wherever Committee is referenced in the plan, it shall be deemed to also refer to Designee.

 

Section 2.15

 

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

 

Section 2.16

 

Eligible Compensation. “Eligible Compensation” means any Base Salary and Bonus otherwise payable with respect to a Plan Year.

 

Section 2.17

 

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

 

Section 2.18

 

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.

 

Section 2.19

 

Hardship Withdrawal. “Hardship Withdrawal” means the early payment of all or part of the balance in a Deferral Account(s) in the event of an Unforeseeable Emergency.

 

Section 2.20

 

Hypothetical Investment Benchmark. “Hypothetical Investment Benchmark” shall mean the phantom investment benchmarks, which are used to measure the return, credited to a Participant’s Deferral Account.

 

Section 2.21

 

Matching Contribution. “Matching Contribution” means the amount of annual matching contribution that the Company may make to the Plan.

 

 

 

Section 2.22

 

Participant. “Participant” means any individual who is eligible or makes an election to participate in this Plan and who elects to participate by filing a Participation Agreement as provided in Article IV.

 

Section 2.23

 

Participation Agreement . “Participation Agreement” means an agreement filed by a Participant in accordance with Article IV.

 

Section 2.24

 

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

 

Section 2.25

 

Retirement. “Retirement” means retirement of a Participant from the Company after attaining age 55 with at least ten continuous years of service.

 

Section 2.26

 

Retirement Plan Committee . “Retirement Plan Committee” means the compensation committee of the Board.

 

Section 2.27

 

Team Member. “Team member” means an employee of the Company.

 

Section 2.28

 

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

 

Section 2.29

 

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.

 

 

Section 2.30

 

Valuation Date. “Valuation Date” means the last day of each calendar month or such other date as the Administrative Committee in its sole discretion may determine.

 

 

ARTICLE III

ADMINISTRATION

 

Section 3.01

 

Retirement Plan Committee and Administrative Committee Duties. This Plan shall be administered by the Retirement Plan Committee. A majority of the members of the Retirement Plan Committee shall   constitute a quorum for the transaction of business. All resolutions or other action taken by the Retirement Plan Committee shall be by a vote of a majority of its members present at any meeting or, without a meeting, by an instrument in writing signed by all its members. Members of the Retirement Plan Committee may participate in a meeting of such committee by means of a conference telephone or similar communications equipment that enables all persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in person at the meeting and waiver of notice of such meeting.

 

The Retirement Plan 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 Retirement Plan Committee. The Retirement Plan 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 Retirement Plan Committee shall be conclusive and binding on the Company, Participants and Beneficiaries.

 

The Retirement Plan Committee has delegated to the Administrative Committee responsibility for performing certain administrative and ministerial functions under this Plan. The Administrative Committee shall be responsible for determining in the first instance issues related to eligibility, Hypothetical Investment Benchmarks, distribution of Deferred Amounts, determination of account balances, crediting of hypothetical earnings and debiting of hypothetical losses and of distributions, in-service withdrawals, deferral elections and any other duties concerning the day-to-day operation of this Plan. The Retirement Plan Committee shall have discretion to delegate to the Administrative Committee such additional duties as it may determine. The Administrative 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.

 

 

 

Neither the Retirement Plan Committee nor a member of the Board nor any member of the Administrative Committee shall be liable for any act or action hereunder, whether of omission or commission, by any other member or team member 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. The Retirement Plan Committee and the Administrative Committee shall keep records of all of their respective proceedings and the Administrative Committee shall keep records of all payments made to Participants or Beneficiaries and payments made for expenses or otherwise.

 

The Company shall, to the fullest extent permitted by law, indemnify each director, officer or team member of the Company (including the heirs, executors, administrators and other personal representatives of such person), each member of the Retirement Plan Committee and Administrative 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, the Retirement Plan Committee or Administrative Committee.

 

Any expense incurred by the Company, the Retirement Plan Committee or the Administrative Committee relative to the administration of this Plan shall be paid by the Company and/or may be deducted from the Deferral Accounts of the Part