Target Corporation SMG Executive Officer Deferred Compensation Plan

 

 

TARGET CORPORATION

2009 OFFICER EDCP

(2009 Plan Statement)

 

TABLE OF CONTENTS

 

SECTION 1  INTRODUCTION; DEFINITIONS	1
1.1   Name of Plan; History	1
1.2  Definitions	1
1.2.1  Account	1
1.2.2  Affiliate	1
1.2.3  Base Salary	1
1.2.4  Beneficiary	2
1.2.5   Board	2
1.2.6  Bonus	2
1.2.7  Certified Earnings	2
1.2.8  Change-in-Control	2
1.2.9  Code	3
1.2.10  Committee	3
1.2.11  Company	3
1.2.12  Company’s Fiscal Year	3
1.2.13 Crediting Rate Alternative	3
1.2.14  Deferral Credit	4
1.2.15  Disabled	4
1.2.16  Discretionary Credit	4
1.2.17  Earnings Credit	4
1.2.18  EDCP	4
1.2.19  Effective Date	4
1.2.20  Eligible Compensation	4
1.2.21  Employee	4
1.2.22  Enhancement	4
1.2.23  ERISA	4
1.2.24  ESBP	4
1.2.25  ESBP Benefit	4
1.2.26  ESBP Benefit Transfer Credits	4
1.2.27  Newly Eligible Employee	5
1.2.28  Officer	5
1.2.29  Participant	5
1.2.30  Participating Employer	5
1.2.31  Performance Share Award	5
1.2.32  Plan	5
1.2.33  Plan Administrator	5
1.2.34  Plan Rules	5
1.2.35  Plan Statement	5
1.2.36  Plan Year	5
1.2.37  Restoration Match Credit	5
1.2.38  Signing Bonus	6

 

 

1.2.39  SPP Benefit	6
1.2.40  SPP Benefit Transfer Credit	6
1.2.41  Specified Employee	6
1.2.42  Target 401(k) Plan	6
1.2.43  Target Pension Plan	6
1.2.44  Termination of Employment	6
1.2.45  Trust	7
1.2.46  Unforeseeable Emergency	7
1.2.47  Valuation Date	7
1.2.48  Year Of Service	7
SECTION 2  PARTICIPATION AND DEFERRAL ELECTIONS	8
2.1  Eligibility	8
2.2  Special Rules for Participating Employees	8
2.3  Termination of Participation	8
2.4  Rehires and Transfers	8
2.5  Effect on Employment	9
2.6  Condition of Participation	9
2.7  Deferral Elections	10
2.8  Base Salary Deferrals	10
2.9  Bonus Deferrals	10
2.10  Performance Share Award Deferrals	11
2.11  Special Code section 162(m) Deferral Elections	11
2.12  Cancellation of Deferral Elections	12
SECTION 3  CREDITS TO ACCOUNTS	13
3.1  Elective Deferral Credit	13
3.2  Restoration Match Credit	13
3.3  SPP Benefit Transfer Credits	13
3.4  ESBP Benefit Transfer Credits	15
3.5  Discretionary Credits	16
SECTION 4  ADJUSTMENTS OF ACCOUNTS	17
4.1  Establishment of Accounts	17
4.2  Adjustments of Accounts	17
4.3  Investment Adjustment	17
4.4  Enhancement	17
4.5  Account Adjustments Upon a Change-in-Control or Plan Termination	18
SECTION 5  VESTING	19
5.1  Deferral Credits and Restoration Match Credits	19
5.2  Discretionary Credits	19
5.3  Enhancement	19
5.4  SPP Benefit Transfer Credit	19
5.5  ESBP Benefit Transfer Credit	19
5.6  Failure to Cooperate; Misinformation or Failure to Disclose	19
SECTION 6 DISTRIBUTION	20
6.1  Distribution Elections	20
6.2  General Requirements	20
6.3  Six-Month Suspension for Specified Employees	22
6.4  Distribution on Account of Death	23

 

 

6.5  Distribution on Account of Unforeseeable Emergency.	23
6.6  Designation of Beneficiaries	23
6.7  Facility of Payment	25
6.8  Tax Withholding	25
6.9  Payments Upon Rehire	25
6.10  Application for Distribution	25
6.11  Acceleration of Distributions	25
6.12  Delay of Distributions	25
SECTION 7  SOURCE OF PAYMENTS; NATURE OF INTEREST	27
7.1  Source of Payments	27
7.2  Unfunded Obligation	27
7.3  Establishment of Trust	27
7.4  Spendthrift Provision	27
SECTION 8  ADOPTION, AMENDMENT AND TERMINATION	28
8.1  Adoption	28
8.2  Amendment	28
8.3  Termination	28
SECTION 9  CLAIM PROCEDURES	30
9.1  Claim Procedures	30
9.2  Rules and Regulations	31
9.3  Limitations and Exhaustion	32
SECTION 10  PLAN ADMINISTRATION	34
10.1  Plan Administration	34
10.2  Conflict of Interest	34
10.3  Committee Membership and Authority	35
10.4  Service of Process	35
10.5  Choice of Law	35
10.6  Responsibility for Delegate	35
10.7  Expenses	35
10.8  Errors in Computations	35
10.9  Indemnification	35
10.10  Notice	36
SECTION 11  CONSTRUCTION	37
11.1  ERISA Status	37
11.2  IRC Status	37
11.3  Rules of Document Construction	37
11.4  References to Laws	37
11.5  Appendices	37
APPENDIX A	38

 

 

SECTION 1

INTRODUCTION; DEFINITIONS

 

1.1           Name of Plan; History.  This Plan (formerly known as the “Target Corporation SMG Executive Officer Deferred Compensation Plan) is a non-qualified, unfunded plan established for the purpose of allowing a select group of management or highly compensated employees to defer the receipt of income.  This Plan was originally adopted effective as of January 1, 1997 and was amended at various times thereafter.  Effective April 30, 2002, Participants in this Plan who were members of the Company’s Corporate Operating Committee received credits under this Plan equal to the present value of their benefit under the supplemental pension plans maintained by the Company.  Each subsequent April, the Participant receives annual SPP Benefit Transfer Credits equal to the change in value of his or her benefit under the supplemental pension plans.  Effective July 31, 2002, this program was extended to include all officers of the Company.  Effective April 30, 2002, Participants in this Plan who were members of the Company’s Corporate Operating Committee received credits under this Plan equal to the present value of their benefit under the Company’s ESBP.  Each subsequent April, Participants received annual credits equal to the change in value of his or her benefit under the ESBP.  Effective October 28, 2005, all officers who had not previously received ESBP Benefit Transfer Credits, received a one-time transfer of the present value of their benefit under the ESBP.  As of January 28, 2006, a one-time ESBP credit was made to certain executive committee members and no subsequent ESBP Benefit Transfer Credits were made to those receiving the one-time ESBP credit.  From time to time, certain participants in the Target Corporation Deferred Compensation Plan — Senior Management Group (“ODCP”) and the Company negotiated to transfer the economic value of their benefit under ODCP to this Plan.  Officers eligible to receive performance share awards granted in the fiscal years ending February 1, 2003 and January 31, 2004 had an opportunity to defer receipt of the value of the earned performance shares into this Plan at the end of the performance period.  The performance period for the shares granted in 2003 ended February 3, 2007.  The performance period for the shares granted in 2004 ended February 2, 2008.  Effective January 1, 2005 (and other effective dates as specifically provided), this Plan was operated in compliance with Code section 409A.  Effective January 29, 2006, members of the Company’s executive committee ceased to be eligible to receive enhanced earnings on their account balances.  This Plan Statement, which is intended to comply with Code section 409A, is effective January 1, 2009.

 

1.2           Definitions.  When the following terms are used herein with initial capital letters, they shall have the following meanings:

 

1.2.1        Account.  “Account” means the separate bookkeeping account representing the separate unfunded and unsecured general obligation of the Participating Employers established with respect to each person who is a Participant in this Plan.  Within each Participant’s Account, separate subaccounts shall be maintained to the extent the Plan Administrator determines it to be necessary or desirable for the administration of this Plan.

 

1.2.2        Affiliate.  An “Affiliate” is the Company and all persons, with whom the Company would be considered a single employer under Code section 414(b) or 414(c).

 

1.2.3        Base Salary.   “Base Salary” with respect to a Plan Year means Certified Earnings as modified by the rules below:

 

(a)            the limits imposed by Code section 401(a)(17) will not apply;

 

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(b)            deferrals under Section 2.8 of this Plan are included as Base Salary; and

 

(c)            Bonus and Signing Bonus amounts are not included as Base Salary.

 

1.2.4        Beneficiary.  “Beneficiary” means an individual (human being), a trust that is a United Sates person within the meaning of the Code, a person that has been recognized as a charitable organization under Code section 170(b), or the Participant’s estate designated in accordance with Section 6.7 to receive all or a part of the Participant’s Account in the event of the Participant’s death prior to full distribution thereof.  A person so designated shall not be considered a Beneficiary until the death of the Participant.

 

1.2.5        Board.  “Board” is the Board of Directors of the Company, or such committee of the Board of Directors to which the Board of Directors of the Company has delegated the respective authority.

 

1.2.6        Bonus.  “Bonus” with respect to a Plan Year means that portion of Certified Earnings that is equal to the amount payable under any regular incentive plan of a Participating Employer that is earned, or intended to be earned, over a period of at least a calendar year or fiscal year as modified by the rules below:

 

(a)            the limits imposed by Code section 401(a)(17) will not apply;

 

(b)            deferrals under Section 2.9 of this Plan are included as Bonus; and

 

(c)            Signing Bonus amounts are not included as Bonus

 

1.2.7        Certified Earnings.  “ Certified Earnings” has the same meaning as the defined term in the Target 401(k) Plan.

 

1.2.8        Change-in-Control.

 

(a)            A “Change-in-Control” shall be deemed to have occurred if:

 

(i)             50% or more of the directors of the Company shall be persons other than persons

 

A)          for whose election proxies shall have been solicited by the Board, or

 

B)           who are then serving as directors appointed by the Board to fill vacancies on the Board caused by death or resignation (but not by removal) or to fill newly-created directorships, or

 

(ii)            30% or more of the outstanding voting power of the Voting Stock of the Company is acquired or beneficially owned (as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company) by any person (as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company), other than an entity resulting from a Business Combination in which clauses (x) and (y) of subparagraph (iii) apply, or

 

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(iii)           the consummation of a merger or consolidation of the Company with or into another entity, a statutory share exchange, a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the Company’s assets or a similar business combination (each, a “Business Combination”), in each case unless, immediately following such Business Combination, (x) all or substantially all of the beneficial owners of the Company’s Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the voting power of the then outstanding shares of voting stock (or comparable voting equity interests) of the surviving or acquiring entity resulting from such Business Combination (including such beneficial ownership of an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of the Company’s Voting Stock immediately prior to such Business Combination) as their beneficial ownership of the Company’s Voting Stock immediately prior to such Business Combination, and (y) no person (as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company) beneficially owns, directly or indirectly, 30% or more of the voting power of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity (other than a direct or indirect parent entity of the surviving or acquiring entity, that, after giving effect to the Business Combination, beneficially owns, directly or indirectly, 100% of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity), or

 

(iv)           approval by the shareholders of a definitive agreement or plan to liquidate or dissolve the Company.

 

For purposes of this 1.2.8, “Voting Stock” has the same meaning as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company.

 

1.2.9        Code.  “Code” means the Internal Revenue Code of 1986, as amended (including, when the context requires, all regulations, interpretations and rulings issued hereunder).

 

1.2.10      Committee.  “Committee” means the administrative committee appointed in accordance with Section 10.3.

 

1.2.11      Company.   “Company” means Target Corporation, a Minnesota corporation, or any successor thereto.

 

1.2.12      Company’s Fiscal Year.  “Company’s Fiscal Year” means the period commencing on the Sunday that immediately follows the Saturday that is nearest to the last day in January through the Saturday that is nearest to the last day in January in the following year.

 

1.2.13      Crediting Rate Alternative.   “Crediting Rate Alternative” means a hypothetical investment option used for the purpose of measuring income, gains and losses to the Accounts of Participants (as if the Accounts had in fact been so invested).  The Crediting Rate Alternatives shall be designated in writing by the Plan Administrator.

 

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1.2.14      Deferral Credit.   A “Deferral Credit” is the amount credited to a Participant’s Account pursuant to Section 3.1.

 

1.2.15      Disabled.   A Participant will be “Disabled” if he or she has become entitled to receive disability income benefits under the provisions of the Social Security Act.

 

1.2.16      Discretionary Credit.  A “Discretionary Credit” is the amount credited to a Participant’s Account pursuant to Section 3.5.

 

1.2.17      Earnings Credit.  “Earnings Credit” means the investment adjustment credited to a Participant’s Account pursuant to Section 4.3 or Section 4.5 as applicable.

 

1.2.18      EDCP.   “EDCP” means the Target Corporation EDCP, a non-qualified, unfunded deferred compensation plan maintained by the Company and certain other Affiliates.

 

1.2.19      Effective Date.   The “Effective Date” of this Plan Statement is January 1, 2009, except as otherwise provided.

 

1.2.20      Eligible Compensation.  “Eligible Compensation” means, the Base Salary, Bonus and Performance Share Award that the Participant receives or is entitled to receive from his or her Participating Employer for services rendered.

 

1.2.21      Employee.   An “Employee” is an individual who performs services for a Participating Employer as an employee of the Participating Employer (as classified by the Participating Employer at the time the services are preformed and without regard to any subsequent reclassification) and does not include any individual who is classified an independent contractor.

 

1.2.22      Enhancement.  “Enhancement” means an additional .1667% of investment earnings per month added to the applicable Crediting Rate Alternatives as provided in Section 4.4.

 

1.2.23      ERISA.   “ERISA” means the Employee Retirement Income Security Act of 1974, as amended (including, when the context requires, all regulations, interpretations and rulings issued thereunder).

 

1.2.24      ESBP.   “ESBP” means the Target Corporation Post Retirement Executive Survivor Benefit Plan.

 

1.2.25      ESBP Benefit.   “ESBP Benefit” means the actuarial lump sum present value of a Participant’s survivor benefit under the ESBP determined as of a particular determination date under Section 3.4 but without regard to whether the Participant had experienced either an “early retirement” or “normal retirement” under the Target Pension Plan as provided under the ESBP.  The present value of such survivor benefit will be determined by the Company in its sole and absolute discretion based on such interest rates, mortality factors and other assumptions deemed appropriate by the Company.

 

1.2.26      ESBP Benefit Transfer Credits.   “ESBP Benefit Transfer Credits” are the initial and annual credits to a Participant’s Account under Section 3.4.

 

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1.2.27      Newly Eligible Employee.  “Newly Eligible Employee” means an Employee who either (i) was not previously eligible to participate in this Plan or any other non-qualified, deferred compensation plans maintained by a  Participating Employer or other Affiliate, (ii) had been paid all amounts previously deferred under all non-qualified, deferred compensation plans maintained by a Participating Employer or other Affiliate and had ceased to be eligible to continue to participate in such plans on or before the date of payment of all amounts due under such plans, or (iii) was not eligible to participate in any non-qualified deferred compensation plans (other than the accrual of earnings) maintained by a Participating Employer or other Affiliate at any time during the 24-month period ending on the date the Employee has again become eligible to participate in the Plan.

 

1.2.28      Officer.  An “Officer” is a member of the executive committee and any other Employee who is designated and categorized as an officer of the Company by the Company’s Chief Executive Officer.

 

1.2.29      Participant.  A “Participant” is an Employee who becomes a Participant in this Plan in accordance with the provisions of Section 2.  An Employee who has become a Participant shall be considered to continue as a Participant in this Plan until the date when the Participant no longer has any Account under this Plan, or the date of the Participant’s death, if earlier.

 

1.2.30      Participating Employer.  “Participating Employer” means the Company and each other Affiliate that, with the consent of the Company, adopts this Plan.  A Participating Employer shall cease to be a Participating Employer on the date it ceases to be an Affiliate.

 

1.2.31      Performance Share Award.  “Performance Share Award” means a performance share award issued under the Company’s Long-Term Incentive Plan of 1999 or the Company’s Long-Term Incentive Plan of 2004.

 

1.2.32      Plan.  “Plan” means the nonqualified, unfunded income deferral program maintained by the Company and established for the benefit of Participants eligible to participate therein, as set forth in this Plan Statement.  As used herein, “Plan” does not refer to the documents pursuant to which this Plan is maintained.  That document is referred to herein as the “Plan Statement”.  The Plan shall be referred to as the “Target Corporation Officer EDCP” (formerly known as the Target Corporation SMG Executive Deferred Compensation Plan).

 

1.2.33      Plan Administrator.  “Plan Administrator” means the Company or, if affirmatively designated by the Company, some other individual or committee.

 

1.2.34      Plan Rules.  “Plan Rules” are rules, policies, practices or procedures adopted by the Plan Administrator or its delegate pursuant to Section 10.1.5.

 

1.2.35      Plan Statement.  “ Plan Statement” means this document entitled “Target Corporation Officer EDCP (2009 Plan Statement),” as adopted by the Company, effective as of January 1, 2009, as the same may be amended from time to time.

 

1.2.36      Plan Year.  “Plan Year” means the period from January 1 through December 31.

 

1.2.37      Restoration Match Credit.  “Restoration Match Credit” is the amount credited to a Participant’s Account pursuant to Section 3.2.

 

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Employment will be deemed to occur once the leave of absence exceeds six months.

 

(d)                                  Notwithstanding the foregoing, a Termination of Employment shall not occur unless such termination also qualifies as a “separation from service,” as defined under Code section 409A and related guidance thereunder.

 

1.2.45     Trust.  “Trust” means the Target Corporation Deferred Compensation Trust Agreement, dated January 1, 2009 by and between the Company and State Street Bank and Trust Company, as it is amended from time to time, or similar trust agreement.

 

1.2.46     Unforeseeable Emergency.  “Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (within the meaning of Code section 152(a)) 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, but only if and to the extent such Unforeseeable Emergency constitutes an “unforeseeable emergency” under Code section 409A.

 

1.2.47     Valuation Date.  “Valuation Date” means each business day on which the New York Stock Exchange is open.

 

1.2.48     Year of Service.  A “Year of Service” means each 12-consecutive month period an individual is an Employee after the date the individual is first eligible to participate under this Plan or any other non-qualified deferred compensation plan maintained by a Participating Employer.

 

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SECTION 2
PARTICIPATION AND DEFERRAL ELECTIONS

 

2.1          Eligibility.

 

2.1.1       An Employee is eligible to participate in this Plan on the first day of a Plan Year if, on such day, he or she:

 

(a)                                   is a “qualified employee” as that term is defined in the Target 401(k) Plan; and

 

(b)                                  is an Officer.

 

2.1.2       A Newly Eligible Employee is eligible to participate in this Plan on the date that is 30 days after he or she satisfies the requirements in Section 2.1.1.

 

2.1.3       An Employee shall, as a condition of participation in this Plan, complete such forms and make such elections in accordance with Plan Rules as the Plan Administrator may require.  An Employee who satisfies the requirements of this Section 2.1 is eligible to participate in this Plan in accordance with and subject to the requirements of this Plan.

 

2.1.4       An Employee who has had a Termination of Employment as defined in Section 1.2.44(b), will not be eligible to make deferral elections for subsequent Plan Years until otherwise notified by the Plan Administrator.  Any deferral election in effect at the time of such Termination of Employment will continue to apply with respect to any Eligible Compensation received from a Participating Employer or other Affiliate.  Such Employee will still be eligible to receive credits, if any, pursuant to Sections 3.2, 3.3, 3.4 and 3.5.

 

2.2          Special Rules for Participating Employees.  A Participant who transfers employment from one Participating Employer to another Affiliate, whether or not a Participating Employer will, for the duration of the Plan Year in which the transfer occurs, continue to participate in this Plan in accordance with the deferral election in effect at the time of such transfer.  A Participant who is simultaneously employed with more than one Participating Employer will participate in this Plan as an Employee of each such Participating Employer on the basis of a single deferral election applied separately to his or her respective, Eligible Compensation from each Participating Employer.

 

2.3          Termination of Participation.  Except as otherwise specifically provided in this Plan Statement or by the Committee, an Employee who ceases to satisfy the requirements of Section 2.1 is not eligible to continue to participate in the Plan, provided, that any deferral elections in effect, and irrevocable, will continue to apply with respect to any Eligible Compensation received from a Participating Employer or other Affiliate.  The Participant’s Account will continue to be governed by the terms of the Plan until such time as the Participant’s Account balance is paid in accordance with the terms of the Plan.  A Participant or Beneficiary will cease to be such as of the date on which his or her entire Account balance has been distributed.

 

2.4          Rehires and Transfers.

 

2.4.1       A Participant who incurs a Termination of Employment and is rehired during the same calendar year will continue Base Salary deferrals for such calendar year in accordance with his or her election in effect immediately prior to the Termination of Employment.

 

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2.4.2       A Participant who incurs a Termination of Employment and is rehired prior to the later of the end of the Plan Year or the date the Bonus for such Plan Year is paid in cash, will continue Bonus Deferrals for such Plan Year in accordance with his or her election in effect immediately prior to the Termination of Employment.

 

2.4.3       Transfers from Non-Officer Plan .  An Employee who is a Participant in the EDCP and is promoted to an Officer position will cease to be eligible to participate in the EDCP and will be eligible to participate in this Plan, subject to the following rules:

 

(a)                                   The Employee will become a Participant in this Plan immediately upon satisfying the requirements to participate hereunder.

 

(b)                                  The Employee’s deferral elections made under the EDCP will transfer to the Plan and continue as an election made under Section 2.

 

(c)                                   The Employee’s account maintained under the EDCP will be transferred to the Employee’s Account under this Plan.

 

(d)                                  The Employee’s distribution elections made under the EDCP (including any default distributions) will transfer to this Plan and continue as the distribution elections made under this Plan.

 

(e)                                   The Employee’s beneficiary designation made under the EDCP will be treated as the Employee’s Beneficiary designation under this Plan until changed in accordance with Section 6.7.

 

2.5          Effect on Employment.

 

2.5.1       Not a Term of Employment.  Neither the terms of this Plan Statement nor the benefits under this Plan (including the continuance thereof) shall be a term of the employment of any Employee.

 

2.5.2       Not an Employment Contract.   This Plan is not and shall not be deemed to constitute a contract of employment between any Participating Employer and any Employee or other person, nor shall anything herein contained be deemed to give any Employee or other person any right to be retained in any Participating Employer’s employ or in any way limit or restrict any Participating Employer’s right or power to discharge any Employee or other person at any time and to treat him or her without regard to the effect that such treatment might have upon him or her as a Participant in this Plan.

 

2.6          Condition of Participation

 

2.6.1       Cooperation.  Each Participant shall cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder and taking such other relevant action as may be requested by the Company.  If a Participant refuses to cooperate, neither the Company nor any Participating Employer shall have any further obligation to the Participant under this Plan, other than payment to such Participant of the aggregate amount of Eligible Compensation deferred under Section 3.1.

 

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2.6.2       Plan Terms and Rules.  Each Participant, as a condition of participation in this Plan, is bound by all the terms and conditions of this Plan and the Plan Rules.

 

2.7          Deferral Elections.   An Employee who satisfies the eligibility requirements of Section 2 may, at the time and in the manner provided hereunder, elect to defer the receipt of his or her Eligible Compensation.

 

2.7.1       General Rule.  Except as otherwise provided in this Plan, an election shall be made before the beginning of the Plan Year during which the Participant performs services for which the Eligible Compensation is earned.  The election must designate the percentage of the Base Salary, Bonus or Performance Share Award which shall be deferred under this Plan.  In accordance with Plan Rules, the Plan Administrator will determine the manner and timing required to file a deferral election.  No deferral election shall be effective unless prior to the deadline for making such election, the Participant has filed with the Plan Administrator, in accordance with Plan Rules, an insurance consent form permitting the Participating Employer or Company to purchase and maintain life insurance coverage on the Employee with the Participating Employer or Company as the beneficiary.  An election to defer Eligible Compensation for the Plan Year or other period is irrevocable once it has been accepted by the Plan Administrator and the deadline for making such election has expired, except as otherwise provided under this Plan.

 

2.7.2       Newly Eligible Employees.  For a Newly Eligible Employee, the deferral election may be made after the first day of a Plan Year provided it is made within 30 days after becoming eligible to participate in this Plan.  Such a deferral election by a Newly Eligible Employee is irrevocable once it has been received by the Plan Administrator and the deadline for making such election has expired, except as otherwise provided under this Plan.  Such election will be effective with respect to Eligible Compensation payable for services performed after becoming eligible for this Plan and commencing with the next full pay period after the deferral election becomes irrevocable.

 

2.7.3       Terminations of Employment.   A Participant who completes a deferral election in accordance with this Section 2.7, but who has a Termination of Employment prior to the expiration of the deadline for making such election, will be deemed to have made no deferral election for the respective period.

 

2.8          Base Salary Deferrals.   A Participant’s election to defer Base Salary is subject to the following requirements:

 

2.8.1       A Base Salary deferral election will be effective with respect to the first paycheck issued during the Plan Year, including for the payroll period that includes the last day of the preceding Plan Year, and such election will remain in effect through the last paycheck issued during the Plan Year.

 

2.8.2       Except as provided in Section 2.11, the Base Salary deferral percentage may not exceed 80%.

 

2.9          Bonus Deferrals.  A Participant’s election to defer his or her Bonus is subject to the following requirements:

 

2.9.1       A bonus deferral election will be in effect for service periods that begin in the Plan Year immediately following the date the election becomes irrevocable and continue through

 

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the end of the Plan Year or if the Bonus is paid after such Plan Year, through the date the Bonus would have been paid in cash.

 

2.9.2       Except as provided in Section 2.11, a Participant’s Bonus effective deferral percentage may not exceed 80%.  For deferral elections that become effective after the beginning of a service period, that portion of a Newly Eligible Employee’s Bonus that may be deferred is limited to the total amount of the bonus multiplied by the ratio equal to the number of days in the service period beginning after the date of the Bonus deferral election became irrevocable over the total number of days in the service period.

 

2.9.3       If the Plan Administrator determines that a Participant’s Bonus is “performance-based compensation” within the meaning of Code section 409A, then, consistent with Plan Rules, the Participant’s deferral election may be made no later than six months before the last day of the performance period during which the Bonus is earned.

 

2.9.4       If a Participant has a Termination of Employment before the end of the service period for any Bonus, but is still entitled to receive a bonus, the Participant’s existing Bonus deferral election will continue to apply.

 

2.10        Performance Share Award Deferrals.  A Participant’s election to defer his or her Performance Share Award is subject to the following requirements:

 

2.10.1     The election is available for Performance Share Awards issued in the Company’s Fiscal Year ending in calendar year 2003 and 2004.

 

2.10.2     A Participant’s Performance Share Award deferral percentage may not exceed 100%.

 

2.10.3     If the Plan Administrator determines that a Participant’s Performance Share Award is “performance-based compensation” within the meaning of Code section 409A, then the Participant’s Performance Share Award deferral election must be made no later than twenty-four (24) months prior to the date the Performance Share Award would otherwise be paid in the form of cash or Company stock, or, if earlier, six (6) months before the end of the period over which the services giving rise to the Performance Share Award were performed.

 

2.10.4     The “Plan Committee” as defined under the Company’s Long Term Incentive Plan shall determine, in its sole and absolute discretion for each Plan Year during which a Performance Share Award is issued, whether Participants in any group or class are eligible to make deferral elections under this Section 2.10 with respect to a Performance Share Award.

 

2.11        Special Code Section 162(m) Deferral Elections.  Notwithstanding Sections 2.8 and 2.9, a Participant who, prior to the beginning of a Plan Year, is identified by the Plan Administrator as a potential “covered employee” (within the meaning of Code section 162(m)) for the Company’s Fiscal Year either ending in or beginning in the Plan Year may:

 

2.11.1     Make a Base Salary deferral election for the Plan Year that consists of two parts:

 

(a)                                   the first part of the election will apply with respect to the first paycheck issued during the applicable Plan Year through the last paycheck issued prior to the end of the Company’s Fiscal Year ending in the Plan Year, and

 

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(b)                                  the second part will apply to the paychecks issued after the beginning of the Company’s Fiscal Year beginning in such Plan Year and issued prior to the end of such Plan Year.

 

2.11.2     Make a separate Bonus deferral election for the Plan Year with respect to:

 

(a)                                   The Bonus amounts that satisfy the requirements of performance-based compensation under Code section 162(m), and

 

(b)                                  All other Bonus amounts as determined by the Plan Administrator.

 

The Plan Administrator will set the maximum Bonus deferral percentage in its sole discretion, on a Participant by Participant basis.

 

2.12        Cancellation of Deferral Elections.

 

2.12.1     401(k) Hardship.  Notwithstanding any provisions in the Plan to the contrary, an election to defer under Sections 2.8, 2.9, and 2.10 will be cancelled to the extent necessary for the Participating Employer to comply with the hardship withdrawal provisions of such Participating Employer’s 401(k) plan.

 

(a)                                   An election to defer Base Salary amounts for the Plan Year during which the hardship withdrawal was made will be cancelled.  Further, no Base Salary deferral election will be effective for the next Plan Year if the hardship withdrawal occurs after June 30, and on or before December 31 of the calendar year.

 

(b)                                  Any election to defer Bonus or Performance Share Award amounts in effect at the time of the hardship withdrawal will be cancelled.  Further, no deferral election for a Bonus related to service in the next Plan Year will be effective if the hardship withdrawal occurs after June 30, and on or before December 31 of the calendar year.

 

2.12.2     Unforeseeable Emergency.  Notwithstanding any provisions in the Plan to the contrary, an election to defer under Sections 2.8, 2.9, and 2.10 will be cancelled for the remaining portion of the Plan Year in the event the Participant has received a distribution on account of an Unforeseeable Emergency under Section 6.5.  The revocation shall be made at the time and in the manner specified in Plan Rules and must otherwise comply with the requirements of Section 6.5.

 

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SECTION 3
CREDITS TO ACCOUNTS

 

3.1          Elective Deferral Credit .  The Plan Administrator shall credit to the Account of each Participant the amount, if any, of Eligible Compensation the Participant elected to defer pursuant to Section 2.  Such amount shall be credited as nearly as practicable as of the time or times when the Eligible Compensation would have been paid to the Participant but for the election to defer.

 

3.2          Restoration Match Credit.

 

3.2.1       Eligibility for Credit .  An Employee who satisfies the eligibility requirements of Section 2.1 during a Plan Year will receive a Restoration Match Credit for the Plan Year if he or she: (i) was actively employed and eligible to participate in this Plan on the last business day of the Plan Year; (ii) has experienced a Termination of Employment as defined under Section 1.2.44(a) during the Plan Year after attaining age 55 and completing five (5) “years of vesting service” as defined in the Target Pension Plan; (iii) has experienced a Termination of Employment as a result of death; or (iv) has become Disabled during such Plan Year.

 

3.2.2       Amount of Credit .  A Participant who satisfies the requirements of Section 3.2.1 is entitled to a Restoration Match Credit equal to the sum of:

 

(a)                                   5% of the Participant’s Base Salary and Bonus that is deferred under this Plan during the Plan Year; and

 

(b)                                  5% of the Participant’s Plan Year Base Salary and Bonus that is not deferred under this Plan during the Plan Year and that exceeds the compensation limit in effect under Code section 401(a)(17) for such Plan Year;

 

provided, however, that: (y) no Restoration Match Credit shall be made for Base Salary or Bonus paid prior to the date the Participant became eligible to participate in the Target 401(k) Plan, and (z) the credit under this Section 3.2.2 will not exceed the amount of Deferral Credits made by the Participant under Section 3.1 during the Plan Year.

 

3.2.3       Crediting to Account .         The Plan Administrator shall credit to a Participant’s Account as of the last business day of the Plan Year the amount of the Restoration Match Credit determined for the Plan Year for that Participant under Section 3.2.2.

 

3.2.4       Credit Upon Change-in-Control .  Upon a Change-in-Control that causes the Plan to be terminated under Section 8.3.2, the Plan Administrator shall credit to a Participant’s Account as of the date of the Plan termination a Restoration Match Credit determined for the Plan Year for that Participant under Section 3.2.2 through such date.  Any subsequent determination of the Restoration Match Credit during the same Plan Year will be made under Section 3.2.2, less any amounts previously credited under this Section 3.2.4.

 

3.3          SPP Benefit Transfer Credits .

 

3.3.1       Eligibility.  A Participant who satisfies the eligibility requirements of Section 2.1 shall receive an SPP Benefit Transfer Credit under this Plan if he or she:  (i) is classified as an Officer of the Company; and (ii) has a vested benefit under the Target Pension Plan, including a vested interest arising on account of the Participant’s death.

 

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3.3.2       Initial SPP Benefit Transfer Credit .

 

(a)                                   A Participant who satisfies the requirements of Section 3.3.1 receives an initial SPP Benefit Transfer Credit on or about the April 30 (or immediately preceding business day) immediately following the calendar year in which the Participant becomes eligible under Section 3.3.1, in an amount equal to the actuarial lump sum present value on March 31 (or immediately preceding business day) for the Participant’s SPP Benefit accrued through the preceding December 31.  In the case of Participant who is an execut