SAKS INCORPORATED DEFERRED COMPENSATION PLAN

Employee Benefits Plan Agreement

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Proffitt's, Inc | SAKS INCORPORATED

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Title: SAKS INCORPORATED DEFERRED COMPENSATION PLAN
Governing Law: Tennessee Date: 3/23/2009
Industry: Retail (Department and Discount) Sector: Services

Exhibit 10.16

SAKS INCORPORATED

DEFERRED COMPENSATION PLAN

(as amended and restated effective January 1, 2009)


12/14/2008

TABLE OF CONTENTS


INTRODUCTION		1-1
1.01	Establishment and Name of Plan	1-1
1.02	Intent and Status of Plan	1-1

DEFINITIONS		2-1
2.01	Account	2-1
2.02	Basic Compensation	2-1
2.03	Beneficiary	2-1
2.04	Board	2-1
2.05	Bonus Compensation	2-1
2.06	Change in Control	2-1
2.07	Class Share	2-2
2.08	Committee	2-2
2.09	Code	2-2
2.10	Compensation	2-2
2.11	Corporation	2-3
2.12	Deferral Election	2-3
2.13	Deferred Compensation Account	2-3
2.14	Director	2-3
2.15	Disability	2-3
2.16	Effective Date	2-3
2.17	Elective Deferral Amounts	2-3
2.18	Employee	2-4
2.19	ERISA	2-4
2.20	Frozen Account	2-4
2.21	Initial Eligibility Period	2-4
2.22	In-Service Class Share	2-4
2.23	Investment Credits	2-4
2.24	Lost Match Amounts	2-4
2.25	Open Enrollment Period	2-4
2.26	Other Employer Amounts	2-4
2.27	Participant	2-4
2.28	Participating Company	2-4
2.29	Plan	2-4
2.30	Plan Year	2-4
2.31	Retirement	2-4
2.32	Retirement Class Share	2-5
2.33	Separation from Service	2-5
2.34	Specified Employee	2-5
2.35	Stock Grant	2-5
2.36	Stock Grant Account	2-5
2.37	Stock Grant Deferral Amounts	2-5
2.38	Unforeseeable Emergency	2-6
2.39	Valuation Date	2-6

ELIGIBILITY AND PARTICIPATION		3-1
3.01	Eligibility	3-1
3.02	Participation	3-1
3.03	Termination of Participation for Purposes of Making Deferrals	3-1
3.04	Special Participation for Purposes of Deferring Stock Grants	3-1


12/14/2008


ACCOUNTS		4-1
4.01	Accounts	4-1
4.02	Deferral Elections by Participants	4-2
4.03	Lost Match Amounts	4-3
4.04	Other Employer Amounts	4-4
4.05	Transitional Elections	4-4
4.06	Investment Credits	4-4
4.07	Default Provisions	4-5

DISTRIBUTION OF DEFERRED COMPENSATION BENEFITS		5-1
5.01	In General	5-1
5.02	Scheduled Retirement and In-Service Distributions	5-1
5.03	Separation from Service Prior to Retirement	5-2
5.04	Payments After Participant’s Disability	5-2
5.05	Payments After Participant’s Death	5-2
5.06	Designation of Beneficiaries	5-3
5.07	Six-Month Delay for Specified Employees	5-3
5.08	Short-Term Delays	5-3
5.09	Hardship Withdrawals	5-3
5.10	Distributions from Stock Grant Account	5-3
5.11	Distributions in Event of Change in Control	5-3
5.12	Delay in Distributions	5-4
5.13	Tax Withholding	5-4
5.14	Committee Rules and Procedures	5-4

FINANCING AND UNFUNDED STATUS		6-1
6.01	Costs Borne by the Participating Companies	6-1
6.02	Source of Benefit Payments and Medium of Financing the Plan	6-1
6.03	Unfunded Status	6-1

ADMINISTRATION		7-1
7.01	General Administration	7-1
7.02	Committee Procedures	7-1
7.03	Claims Procedures	7-1
7.04	Facility of Payment	7-1
7.05	Indemnification of Committee Members	7-2

AMENDMENT AND TERMINATION OF PLAN		8-1
8.01	Amendment	8-1
8.02	Plan Termination	8-1
8.03	No Liability for Plan Amendment or Termination	8-2

GENERAL PROVISIONS		9-1
9.01	Limitation of Rights	9-1
9.02	No Assignment or Alienation of Benefits	9-1
9.03	Successors	9-1
9.04	Governing Law	9-1


12/14/2008

ARTICLE 1

INTRODUCTION

1.01

Establishment and Name of Plan.

Proffitt’s, Inc. established, as of April 1, 1997, an unfunded, deferred compensation plan primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees of the Participating Companies, entitled the “Proffitt’s, Inc. Supplemental Savings Plan.”

The Plan has been amended from time to time, including a complete amendment and restatement of the Plan effective as of April 12, 1999, pursuant to which Saks Incorporated became the sponsor of the Plan and the name of the Plan was changed to the “Saks Incorporated Supplemental Savings Plan.”

The Plan was again amended and restated effective as of May 1, 2002, pursuant to which the name of the Plan was changed to “Saks Incorporated Deferred Compensation Plan.” The Plan has further been amended from time to time.

This document is an amendment and restatement of the Plan and shall be effective as of January 1, 2009, except as specifically otherwise provided.

1.02

Intent and Status of Plan.

The Plan is intended to be an unfunded plan maintained by the Corporation with the Participating Companies primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees (and intended to be within the exemptions therefore in, without limitation, sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA and section 2520.104-23 of the Labor Regulations). The Plan is intended to be “unfunded” for purposes of both ERISA and the Code. The Plan is not intended to be qualified as a qualified plan under section 401(a) of the Code; rather, the Plan is intended to be a “nonqualified” plan.

With the exception of Frozen Accounts as defined as Section 2.20 hereof, it is intended that this Plan comply with Code section 409A and all relevant regulations and other guidance in effect relating to this Code section. During the period beginning January 1, 2005 and ending on the Effective Date of this amendment and restatement, this Plan is intended to operate in accordance with the reasonable and good faith compliance standards established by said regulations and other guidance. During said transition period, the Plan is specifically authorized to take advantage of any available transition relief, including but not limited to relief related to changes in payout elections.


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ARTICLE 2

DEFINITIONS

Each following word, term and phrase shall have the following respective meanings whenever such word, term or phrase is capitalized and used in any Article of this Plan unless the context clearly indicates otherwise:

2.01

“Account” means the combination of the Participant’s Deferred Compensation Account, Stock Grant Account, Frozen Account and such other accounts as may be established under the Plan on behalf of the Participant. All amounts which are credited to such Account are credited solely for computation purposes.

2.02

“Basic Compensation” means the portion of a Participant’s Compensation that is paid in the form of base salary. For Directors, the term Basic Compensation means retainers and attendance fees paid by the Corporation to the Director for service as a Director.

2.03

“Beneficiary” means the person, persons or entities designated by the Participant to receive benefits hereunder upon the death of the Participant.

2.04

“Board” means the Board of Directors of the Corporation.

2.05

“Bonus Compensation” means the portion of a Participant’s Compensation that is paid in the form of a bonus as part of the Participating Company’s annual bonus program. Bonuses paid outside the annual bonus program are not considered to be Bonus Compensation.

2.06

“Change in Control” means a change in the ownership of the Corporation where 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 fifty percent (50%) of the total fair market value or total voting power of the stock of the Corporation.

For purposes of this Plan and applying the definition of Change of Control:

Permitted transfers shall be disregarded when determining whether a Change of Control has occurred.

If any one person, or more than one person acting as a group, is considered to own more than fifty percent (50%) of the stock of the Corporation, the acquisition of additional stock in the Corporation by the same person or persons is not considered to cause a Change of Control of the Corporation.

An increase in the percentage of stock owned by any one person, or 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 in the Corporation.

Persons will not be considered to be acting as a group solely because they purchase or own stock of the 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 another entity and the Corporation enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with that other entity.


12/14/2008		2 - 1

If a person, including an entity, owns stock in the Corporation, and an interest in another entity (or entities) that enters into a merger, consolidation, purchase or acquisition of stock, or similar transaction with the Corporation, such shareholder is considered to be acting as a group with the other shareholders of the Corporation, as appropriate, only with respect to the ownership in the Corporation prior to the transaction giving rise to the change and not with respect to the ownership in the other entity (or entities).

Code section 318(a) applies to determine ownership of the stock of the Corporation. Stock underlying a vested option is considered owned by the individual or other person who holds the vested option (and the stock interest underlying an unvested option is 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 by Treasury Regulations section 1.83-3(b) and (j)), the stock underlying the option is not treated as owned by the individual or other person who holds the option.

A Change of Control does not occur when there is a transfer to an entity that is controlled by the shareholders of the Corporation immediately after the transfer.

2.07

“Class Share” means a distribution subaccount within an Account type established on behalf of the Participant, in accordance with the rules and procedures described in Articles 4 and 5 hereof. For each Class Share, the Participant shall establish:

(a)

the percentage of each contribution or deferral to be credited to that Class Share,

(b)

the investment fund or funds to be used to determine Investment Credits for the Class Share,

(c)

the payout parameters applicable to the Class Share.

Once an amount has been credited to a Class Share, it cannot later be transferred to a different Class Share.

2.08

“Committee” means the Retirement Committee appointed by the Board to administer the Plan pursuant to Article 8 hereof. If no such Retirement Committee has been appointed, then the term Committee shall mean the Human Resources and Compensation Committee of the Board, or any of its delegates.

2.09

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

2.10

“Compensation” means the cash compensation which is earned and otherwise payable to a Participant, including any amounts that would be payable as cash compensation except for the Participant’s election to defer such amount under this Plan or a plan under Code section 401(k) or Code section 125. For members of the Board, the term Compensation means retainers and attendance fees paid by the Corporation to the Director for service as a Director.


12/14/2008		2 - 2

2.11

“Corporation” means Saks Incorporated, a Tennessee corporation, and any business organization or corporation into which Saks Incorporated may be merged or consolidated or by which it may be succeeded.

2.12

“Deferral Election” means an election made by a Participant to defer Compensation and/or Stock Grants into the Plan, and shall involve selections regarding:

(a)

the percentages of Basic Compensation, Bonus Compensation, and/or Stock Grant (separate percentages for each) to be deferred into the Plan;

(b)

the Class Share(s) into which such deferral amounts are to be credited, along with the portion of each such deferral amount to be credited to the respective selected Class Share(s); and/or

(c)

if not already established, the payout parameters (pursuant to Section 5.02 hereof) associated with each applicable Class Share.

2.13

“Deferred Compensation Account” means the account established by the Participating Companies pursuant to Article 4 of this Plan for each Participant to which shall be credited (added) the Participant’s Elective Deferral Amounts, Lost Match Amounts, Other Employer Amounts, and Investment Credits thereon and from which any distributions and in-service withdrawals shall be subtracted.

2.14

“Director” means a member of the Board.

2.15

“Disability” means a physical or mental condition of a Participant resulting in:

(a)

evidence that the Participant is deemed to be totally disabled by the Social Security Administration, or

(b)

evidence that the Participant is unable to engage in any substantial gainful activity by reason of such condition physical or mental condition that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

(c)

evidence that the Participant, by reason of such physical or mental condition that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, is receiving disability benefits for a period of not less than three months under a disability insurance program sponsored by a Participating Company.

Whether or not a Participant meets any or all of the above conditions will be determined solely and exclusively by the Committee.

2.16

“Effective Date” means April 1, 1997, the date the Plan was established.

The effective date of this amendment and restatement is January 1, 2009, except as otherwise indicated within a specific provision.

2.17

“Elective Deferral Amounts” means amounts credited by a Participating Company to a Participant’s Deferred Compensation Account due to the Participant’s Deferral Election made with regard to Basic Compensation and Bonus Compensation.


12/14/2008		2 - 3

2.18

“Employee” means a person, other than an independent contractor, who is receiving remuneration from the Employer for services rendered to, or labor performed for, the Employer (or who would be receiving such remuneration except for an authorized leave of absence). The term Employee shall also include Directors.

2.19

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

2.20

“Frozen Account” means the Participant’s account balance in this Plan as of December 31, 2004, plus subsequent Investment Credits thereon and minus any distributions therefrom.

2.21

“Initial Eligibility Period” means the thirty (30) day period beginning on the date an Employee first becomes eligible to participate in the Plan.

2.22

“In-Service Class Share” means a Class Share used to account for amounts to be distributed at a specified time selected by the Participant without regard to the Participant’s Retirement.

2.23

“Investment Credits” means amounts credited by a Participating Company to a Participant’s Account pursuant to Section 4.06.

2.24

“Lost Match Amounts” means amounts credited by a Participating Company to a Participant’s Deferred Compensation Account pursuant to Section 4.03.

2.25

“Open Enrollment Period” means a period established by the Committee or its representative during which eligible Employees are allowed to enroll in the Plan and/or make Deferral Elections.

2.26

“Other Employer Amounts” means amounts credited by a Participating Company to a Participant’s Deferred Compensation Account pursuant to Section 4.04.

2.27

“Participant” means an eligible Employee participating in the Plan pursuant to the provisions of Article 3 hereof.

2.28

“Participating Company” means the Corporation and any organization which is in the Corporation’s controlled group within the meaning of Code section 1563(a).

2.29

“Plan” means this Saks Incorporated Deferred Compensation Plan as established and set forth herein (together with any and all supplements hereto), and as amended from time to time.

2.30

“Plan Year” means the twelve (12) consecutive month period beginning on each January 1 and ending on each following December 31 thereafter (the calendar year).

2.31

“Retirement” means the Participant’s Separation from Service after having met either of the following conditions:

(a)

attainment of age 65 while actively employed by one or more of the Participating Companies;


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(b)

attainment of age 55 while actively employed by one or more of the Participating Companies and completion of at least 5 years of service with the Participating Companies.

2.32

“Retirement Class Share” means a Class Share used to account for amounts to be distributed pursuant to the Participant’s Retirement.

2.33

“Separation from Service” means the Participant’s ceasing to be employed by the Participating Companies on account of a termination of employment or Retirement. A Separation from Service will not be deemed to have occurred if the Participant continues to perform services as a consultant or an Employee in excess of any amount of time permitted herein.

(a)

Leave of absence. The employment relationship is treated as continuing in effect while the Participant is on military leave, sick leave, or other bona fide leave of absence, as long as the period of leave does not exceed six months, or, if longer, as long as the Participant’s right to reemployment with the Participating Companies is provided either by statute or contract. Otherwise, after a six-month leave of absence, the employment relationship is deemed terminated.

(b)

Part-time status. Whether or not a termination of employment occurs is determined based on all the facts and circumstances. Notwithstanding the foregoing, if the Participant is providing services to the Participating Companies at a rate that is equal to 20% or less of the services rendered during the immediately preceding three calendar years of employment (or a lesser period, if relevant), Separation from Service will be presumed to have occurred. Where the Participant continues to provide services, a Separation from Service will not be presumed to have occurred if the Participant is providing services at an annual level that is more than 50% of the services rendered during the immediately preceding three calendar years.

(c)

Same Desk Rule. If, as part of an asset sale, one or more Employees of the seller retains the same job at the buyer, the seller and buyer can specify in the asset sale agreement (or other agreement prior to closing) whether or not such Employees who continue “at the same desk” with the buyer will be treated as Separated from Service with the seller for purposes of the Plan, provided that all Employees who continue at the buyer are treated consistently and the asset sale results from bona fide arm’s-length negotiations.

2.34

“Specified Employee” means a “key employee” as defined in Code section 416(i) (without regard to subparagraph (5) thereof).

2.35

“Stock Grant” means a grant of common stock of the Corporation made by the Participating Companies to a Participant, or that would be made to such Participant but for the fact that the Participant deferred the grant into the Plan.

2.36

“Stock Grant Account” means the account established by the Participating Companies pursuant to Article 4 of this Plan for each Participant to which shall be credited (added) the Participant’s Stock Grant Deferral Amounts and Investment Credits thereon and from which any distributions and any in-service withdrawals shall be subtracted.

2.37

“Stock Grant Deferral Amounts” means amounts credited by a Participating Company to a Participant’s Stock Grant Account pursuant to Section 4.01(b).


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2.38

“Unforeseeable Emergency” means:

(a)

a severe financial hardship of the Participant resulting from an illness or accident of the Participant or the Participant’s Beneficiary, spouse, or dependent as defined in section 152 of the Code, without regard to section 152(b)(1), (b)(2), and (d)(1)(B);

(b)

loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to the home not otherwise covered by insurance);

(c)

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

(d)

the need to pay for medical expenses (including non-refundable deductibles and prescription drugs);

(e)

the need to pay funeral expenses of a spouse, Beneficiary, or dependent; and

(f)

other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

The Committee, in its sole discretion, shall determine whether or not the Participant has suffered an Unforeseeable Emergency.

2.39

“Valuation Date” means each business day that the applicable trading markets and the Plan’s record keeper are open for business, or such other dates as the Committee, in its discretion, may designate.


12/14/2008		2 - 6

ARTICLE 3

ELIGIBILITY AND PARTICIPATION

3.01

Eligibility.

Eligibility to participate in the Plan shall be limited to Directors and full-time salaried Employees of the Participating Companies who are in a select group of management or highly compensated Employees and who are designated, from time to time, by the Committee as eligible to participate in the Plan. The Employees eligible to participate shall be those eligible Employees as described above who meet either of the following conditions:

(a)

Annual base salary of at least one-hundred fifty thousand dollars ($150,000),

(b)

Employees who were actually enrolled in the Plan and making deferral contributions to the Plan in the first pay period of 2009.

An Employee shall be considered eligible to participate in the Plan on the date he is notified that he is eligible to participate.

Notwithstanding the above, Employees who are paid on an hourly basis shall be considered as an excluded class for purposes of the Plan and shall not be eligible to participate in the Plan.

3.02

Participation.

An Employee eligible to participate in the Plan as provided in Section 3.01 hereof who is not a Participant may elect to become a Participant in the Plan by electing to defer Compensation or by being credited with employer contributions as described in Article 4 hereof.

3.03

Termination of Participation for Purposes of Making Deferrals.

Participation in the Plan for purposes of being able to make Elective Deferral Amounts under this Plan shall terminate when a Participant’s employment with the Participating Companies as an Employee terminates, on the last day of the Plan Year during which the Participant transfers to an excluded class of Employees, or on the last day of the Plan Year such Participant is no longer designated by the Committee as an Employee eligible to participate in the Plan.

3.04

Special Participation for Purposes of Deferring Stock Grants

Notwithstanding any other provision of the Plan to the contrary, the Committee, in its sole discretion, may allow an Employee eligible to participate in the Plan to elect to defer special compensation that such Employee may become eligible to receive in the form of a Stock Grant.


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