EXHIBIT
(10)H


 


TARGET CORPORATION


DEFERRED COMPENSATION PLAN


SENIOR MANAGEMENT GROUP


 


ARTICLE 1


PURPOSE


 


The purpose of this Deferred Compensation Plan (the
"Plan") is to provide a means whereby Target Corporation (the
"Company") may afford financial security to a select group of
employees who are in the Senior Management Group of the Company and its
subsidiaries and who have rendered and continue to render valuable services to
the Company or its subsidiaries and who make an important contribution towards
the Company's continued growth and success, by providing for additional future
compensation so that such employees may be retained and their productive
efforts encouraged. The Plan document has been amended to reflect certain
administrative practices in effect as of May 1, 1999.


 


ARTICLE 2


DEFINITIONS AND CERTAIN PROVISIONS


 


Active Status. “Active Status” means
the Participant is currently employed by the Company or has terminated
employment under Normal or Early Retirement or under other conditions described
in Section 5.2 and has not yet begun to receive payments from the Plan
associated with a particular Deferral Account.


 


Beneficiary. "Beneficiary"
means the person or persons designated as such in accordance with Article 6.


 


Benefit Deferral Period. "Benefit
Deferral Period" means that period of one (1) or four (4) Plan Years as
determined pursuant to Article 4 over which a Participant defers a portion of
such Participant's Earnings.


 


Committee. "Committee"
means the plan administration committee appointed to administer the Plan
pursuant to Article 3.


 


Cumulative Deferral Amount. "Cumulative
Deferral Amount" means the total cumulative amount by which a
Participant's Earnings must be reduced over the period prescribed in Section
4.1. If for a Plan Year a Matching Allocation for an Employee who is a member
of the Senior Management Group of the Company pursuant to the Target
Corporation Supplemental Retirement, Savings and Employee Stock Ownership Plan
("SRSP") cannot be made because the Before Tax Deposits or After Tax
Deposits elected by the Employee are reduced to comply with the provisions of
the SRSP, "Cumulative Deferral Amount" also includes the amount of
the Matching Allocation that cannot be made.


 


Declared Rate. “Declared Rate” means
with respect to any Plan Year the applicable rate announced in advance by the
Committee for such Plan Year. Under no circumstances shall the minimum rate be
less than twelve percent (12%) per annum and the maximum rate shall not exceed
twenty percent (20%) per annum. The rate to be announced, subject to the
minimum and maximum percentages referenced above, shall be a calculated rate
using the following formula:


 


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Moody’s Corporate Bond Yield Average. Monthly
Average Corporates as published by Moody’s Investors Service, Inc. or its
successor (or if said index is no longer available, its successor index, or if
no successor index exists, such other index as selected by the Committee as
most closely replicates the measure produced by said Moody index) for the month
of June for the year preceding the subject Plan Year to which the Declared Rate
shall apply, said rate of return to be rounded to the nearest .10% of said
reported rate, to which percentage rate shall be added six (6) percentage
points (e.g. an index of 7.16% rounded to 7.20% 
plus 6% equals a 13.2% “Declared Rate”). Provided however, if any
tax or insurance change shall occur which in the reasoned judgment of the
Committee shall have an ongoing adverse economic effect on the underlying COLI
financing assumptions related to the Plan, then the Committee may adjust said
Declared Rate to reflect such adverse economic impact but in no event below the
twelve percent (12%) minimum referenced in the first paragraph hereof.


 


Deferral Account. "Deferral
Account" means the account maintained on the books of account of the
Company pursuant to Section 4.4.


 


Early Retirement. "Early
Retirement" means the termination of a Participant's employment with the
Employer for a reason other than death on or after the date the Participant
attains age 55.


 


Earnings. "Earnings" means
the base pay and incentive pay paid to a Participant by the Company or a
subsidiary, excluding car and other allowances and other cash and non-cash
compensation.


 


Eligible Employee. "Eligible
Employee" means each Employee in the Senior Management Group of the
Company who executes an Enrollment Agreement to participate in the Plan.


 


Employee. "Employee" means
any person employed by the Employer on a regular full-time salaried basis,
including officers of the Employer.


 


Employer. "Employer" means
the Company and any of its wholly owned subsidiaries.


 


Enrollment Agreement. "Enrollment
Agreement" means the written agreement entered into by the Employer and an
Eligible Employee pursuant to which the Eligible Employee becomes a Participant
in the Plan. In the sole discretion of the Company, authorization forms filed
by any Participant by which the Participant makes the elections provided for by
this Plan may be treated as a completed and fully executed Enrollment Agreement
for all purposes under the Plan.


 


Normal Retirement. "Normal
Retirement" means the termination of a Participant's employment with the
Employer for reasons other than death on or after the date the Participant attains
age 65.


 


Participant. "Participant"
means an Eligible Employee who has filed a completed and executed Enrollment
Agreement or authorization form with the Committee and is participating in the
Plan in accordance with the provisions of Article 4. "Participant"
also means an Employee who is a member of the Senior Management Group of the
Company who has a Cumulative Deferral Amount based on Matching Allocation that
could not be made to the SRSP.


 


Pay Status. “Pay Status” means that
the Participant has terminated employment with the Company and has begun to
receive payments from the Plan associated with a particular Deferral Account.


 


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Plan Year. "Plan Year"
means the calendar year beginning January 1 and ending December 31.


 


ARTICLE 3


ADMINISTRATION OF THE PLAN


 


A Committee shall be appointed by the Chief Executive
Officer of the Company to administer the Plan and to establish, adopt or revise
such rules and regulations as it may deem necessary or advisable for the
administration of the Plan. The Committee shall have discretionary authority to
determine eligibility for benefits and to construe the terms of the Plan. Interpretations
of the Plan by the Committee shall be conclusive. Members of the Committee shall
be eligible to participate in the Plan while serving as members of the
Committee, but a member of the Committee shall not vote or act upon any matter
which relates solely to such member's interest in the Plan as a Participant.


 


ARTICLE 4


PARTICIPATION


 


4.1          Election to
Participate.    Any Employee who is a member of the Senior
Management Group of the Company may enroll in the Plan by filing a completed
and fully executed Enrollment Agreement or authorization form with the
Committee. Pursuant to said Enrollment Agreement or authorization form, the
Employee shall irrevocably designate a dollar amount by which the aggregate
Earnings of such Participant would be reduced over one (1) or four (4) Plan
Years next following the execution of the Enrollment Agreement (the
"Benefit Deferral Period"), provided, however, that:


 


(a)           Minimum Deferral.
   The reduction for any Plan Year shall not be less than Five
Thousand Dollars ($5,000.00)


 


(b)           Reduction in
Earnings.


 


(i)            In General.    Except
as otherwise provided in this Section 4.1, the Earnings of the Participant for
each of the Plan Years in the Benefit Deferral Period shall be reduced by the
amount specified in the Enrollment Agreement (including any authorization form)
applicable to such Plan Year.


 


(ii)           Accelerated
Reduction.    A Participant may elect in a written notice
with the consent of the Committee to increase the amount of the reduction of
Earnings otherwise provided for by Section 4.1(b)(i) for any of the Plan Years
remaining in the Benefit Deferral Period, provided, however, that any such
increase in the reduction of Earnings for any remaining Plan Years in the
Benefit Deferral Period shall not increase the Cumulative Deferral Amount, but
shall act to shorten the length of the Benefit Deferral Period.


 


(c)           Maximum Reduction in
Earnings.    A Participant may not elect a Cumulative
Deferral Amount or an increase in reduction of Earnings pursuant to Section
4.1(b)(ii), or any combination of the two, that would cause the aggregate total
reduction in Earnings in any Plan Year to exceed twenty-five percent (25%) of
the base pay and one hundred


 


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percent (100%) of the incentive pay payable during
such Plan Year up to a total of $250,000 per year plus the amount of any payout
made pursuant to Section 5.4, or such greater percent of base pay and/or
incentive pay or greater total amount as the Committee may permit in its sole
discretion. In the event that a Participant elects a Cumulative Deferral Amount
or increase in reduction of Earnings that would violate the limitation
described in this paragraph (c), the election shall be valid except that the
Cumulative Deferral Amount or increase in reduction of Earnings so elected
shall automatically be reduced to comply with such limitation, whichever is
most appropriate in the sole discretion of the Committee.


 


4.2          Deferral
Accounts.    The Committee shall establish and maintain a
separate Deferral Account for each Participant. The amount by which a
Participant's Earnings are reduced pursuant to Section 4.1 shall be credited by
the Employer to the Participant's Deferral Account on the fifteenth (15th) day
of the month in which such Earnings would otherwise have been paid. The
Participant's Deferral Account shall be credited with the annual SRSP lost
Matching Allocation on January 15 following the year of the lost Matching
Allocation. Such Deferral Account shall be debited by the amount of any
payments made by the Employer to the Participant or the Participant's
Beneficiary pursuant to this Plan.


 


(a)           Normal and Early
Retirement Interest.    Each Deferral Account of a
Participant who attains Normal or Early Retirement shall be deemed to bear
interest, in accordance with Appendix A, Section 1, from the date such Deferral
Account was established through the date of commencement of payment of the
Normal or Early Retirement Benefit at a rate equal to the Declared Rate which
is announced by the Committee for each Plan Year. Following the date of
commencement of payment of the Normal or Early Retirement Benefit, a
Participant's Deferral Account shall be deemed to bear interest on the balance
of such Deferral Account in accordance with Appendix A, Section 2.


 


(b)           Other Interest.    In
the case of any termination of a Participant's employment with the Employer
other than by Normal or Early Retirement or upon the Participant's termination
of enrollment in this Plan pursuant to Section 5.2(b), the Participant's
Deferral Account shall be deemed to bear interest from the date such Deferral
Account was established through the date of the earlier of termination of
employment or termination of enrollment in this Plan on the balance in such
Deferral Account in accordance with Appendix A, Section 1, except that the
interest rate used to calculate interest earned in the Deferral Account shall
be ten percent (10%) per annum, provided, however, that if more than five (5)
years have elapsed since the first day of the Benefit Deferral Period, the
Participant's Deferral Account shall be deemed to bear interest from the date
such Deferral Account was established through the date of the earlier of
termination of employment or termination of enrollment in this Plan on the
balance in such Deferral Account at a rate equal to the Declared Rate which is
announced by the Committee for each Plan Year, in accordance with Appendix A,
Section 1. Following the earlier of the date of commencement of payment of the
Termination Benefit or the date of termination of enrollment in this Plan, a
Participant's Deferral Account shall be deemed to bear interest on the balance
in such Deferral Account in accordance with Appendix A, Section 1, if the
Participant is in Active Status with respect to the Deferral Account or in
accordance with Appendix A, Section 2, if the Participant is in Pay Status with
respect to the Deferral Account. However, in either case the interest rate used
to calculate interest earned in the Deferral Account shall be twelve percent
(12%) per annum. Notwithstanding anything contained herein to the contrary, if
a Participant has begun receiving benefits under this plan and the calculation
of future benefits, using the method of calculation set forth on Appendix A
causes a reduction in


 


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benefits, the future payments shall be made in
accordance with the method used at the time of the Participant’s initial
payment.


 


4.3          Rollover
Deferred Compensation Account.    In its sole discretion,
the Committee may permit a Participant to make a special rollover election to
transfer any amounts which were previously deferred under the Company's
existing deferred compensation plans to this Plan.


 


In such event, the Committee shall establish and
maintain a separate Rollover Deferral Account for each Participant who makes a
rollover transfer to this Plan. Such Rollover Deferral Account shall be deemed
to bear interest at the same rate and subject to the same conditions as other
Deferral Accounts pursuant to Section 4.2. Each Participant who makes a
rollover transfer to a Rollover Deferral Account shall be treated for purposes
of determining benefits under the Plan as having a separate Cumulative Deferral
Amount and Deferral Account which shall initially be in the amount of the
rollover transfer. A Participant who makes a rollover transfer shall be deemed
to waive all rights under the Company's existing deferred compensation plans
from which rollover transfers are made with respect to the amounts transferred
to this Plan, including the right to make elections regarding the time or manner
of payment as permitted thereunder. Rollover transfers shall be subject to the
minimum deferral amount set forth in Section 4.1(a), but shall not be subject
to any maximum deferral limitation.


 


4.4          Valuation
of Accounts.    The value of a Deferral Account as of any
date shall equal the amounts theretofore credited to such account less any
payments debited to such account plus the interest deemed to be earned on such
account in accordance with Section 4.2. Interest shall be credited in
accordance with Appendix A.


 


4.5          Statement
of Accounts.    The Committee shall submit to each
Participant, within one hundred twenty (120) days after the close of each Plan
Year, a statement in such form as the Committee deems desirable setting forth
the balance standing to the credit of each Participant in his Deferral Account.


 


ARTICLE 5


BENEFITS


 


5.1          Normal
or Early Retirement.    Upon Normal or Early Retirement, the
payment of benefits shall commence on the first day of the month following
retirement, or following such later date which the Participant elected in his
Enrollment Agreement (including any authorization form). A Participant may
elect in his Enrollment Agreement (including any authorization form) to have
payments commence from one (1) to ten (10) years following retirement, but not
later than age 65 (or five (5) years after the first day of the Benefit
Deferral Period, if later).


 


(a)           Single Participant.
   In the case of a Participant who is single when payments
commence, the Employer shall make periodic payments to the Participant in an
amount in accordance with Appendix A, Section 2.B., for the life of the
Participant, but not less than fifteen (15) years. The payments shall be the
actuarial equivalent of the aggregate of the Participant's Deferral Account at
the time payments commence and the interest that will accrue on the unpaid
balance in such Deferral Account during the payment period pursuant to Section
4.2(a). The payment amount will be redetermined annually to reflect the changes
in the Declared Rate.


 


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(b)           Married Participant.
   In the case of a Participant who is married when payments
commence, the Employer shall make actuarially reduced payments in accordance
with Appendix A, Section 2.B., to the Participant for his life and thereafter,
if the Participant is survived by a spouse who was married to the Participant
when Normal or Early Retirement Benefit payments commenced, shall continue to
make payments to the Participant's spouse for his life, with payments to be
made for an aggregate period of not less than fifteen (15) years. The payments
shall be the actuarial equivalent of the payments which would be made to the
Participant pursuant to Section 5.1(a) if he were single. The monthly amount of
payments will be redetermined annually to reflect changes in the Declared Rate.


 


5.2          Termination Benefit.


 


(a)           Terminations of
Employment.    If a Participant shall cease to be an
Employee for any reason other than death or Normal or Early Retirement or
Certain Terminations of Employment under Section 5.2(b), the Employer shall pay
to the Participant in one lump sum an amount (the "Termination
Benefit") equal to the value of the Deferral Account as of the date of
payment and such Participant shall be entitled to no further benefits under
this Plan, provided, however, at the sole discretion of the Committee, no lump
sum shall be payable and, instead, the Employer shall pay to the Participant
the balance of the Deferral Account over a four (4) year period in accordance
with Appendix A, Section 2.C. Upon termination of employment the Participant
shall immediately cease to be eligible for any benefits under the Plan other
than the Termination Benefit. No other benefit shall be payable to either the
Participant or any Beneficiary of such Participant.


 


(b)           Certain Terminations
of Employment.    If a Participant shall cease to be an
Employee for any reason other than death or Normal or Early Retirement and
shall be at least age 50, have worked for the Company for at least 10 years and
has received an ICP Contract under the Company's Income Continuance Policy that
is signed by Participant and Company and not rescinded, the payment of benefits
shall commence on the first day of the month following termination, or
following such later date which the Participant elected in his Enrollment
Agreement (including any authorization form). A Participant may elect in his
Enrollment Agreement (including any authorization form) to have payments
commence from one (1) to ten (10) years following retirement, but not later
than age 65 (or five (5) years after the first day of the Benefit Deferral
Period, if later).


 


(i)            Single Participant.
   In the case of a Participant who is single when payments
commence, the Employer shall make periodic payments to the Participant in an
amount in accordance with Appendix A, Section 2.B for the life of the
Participant, but not less than fifteen (15) years. The payments shall be the
actuarial equivalent of the aggregate of the Participant's Deferral Account at
the time payments commence and the interest that will accrue on the unpaid
balance in such Deferral Account during the payment period pursuant to Section
4.2(a). The amount of payments will be redetermined annually to reflect changes
in the Declared Rate.


 


(ii)           Married Participant.
   In the case of a Participant who is married when payments
commence, the Employer shall make actuarially reduced payments in accordance
with Appendix A, Section 2.B, to the Participant for his life and thereafter,
if the Participant is survived by a spouse who was married to the Participant
when Normal or Early Retirement Benefit payments commenced, shall continue to
make pay period


 


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payments to the Participant's spouse for his life,
with payments to be made for an aggregate period of not less than fifteen (15)
years. The payments shall be the actuarial equivalent of the payments which
would be made to the Participant pursuant to Section 5.1(a) if he were single.
The monthly amount of payments will be redetermined annually to reflect changes
in the Declared Rate.


 


(c)           Termination of
Enrollment in Plan.    With the written consent of the
Committee, a Participant may terminate his enrollment in the Plan by filing
with the Committee a written request to terminate enrollment. The Committee
will consent to the termination of a Participant's enrollment in the Plan in
the event of an unforeseeable financial emergency of the Participant. An
unforeseeable financial emergency shall mean an unexpected need for cash
arising from an illness, casualty loss, sudden financial reversal or other such
unforeseeable occurrence. Cash needs arising from foreseeable events such as
the purchase of a house or education expenses for children shall not be considered
to be the result of an unforeseeable financial emergency. Upon termination of
enrollment, no further reductions shall be made in the Participant's Earnings
pursuant to his Enrollment Agreement, and the Participant shall immediately
cease to be eligible for any benefits under the Plan other than the Termination
Benefit. No other benefit shall be payable to either the Participant or any
Beneficiary of such Participant. In its sole discretion, the Committee may pay
the Termination Benefit on a date earlier than the Participant's termination of
employment with the Employer, in which event the Termination Benefit shall be
calculated as if the Participant had terminated employment with the Employer on
the date of such payment. Following termination of enrollment in the Plan, a
Participant's Deferral Account shall be deemed to bear interest on the balance
in such Deferral Account in accordance with Appendix A, Section 1, except that
the interest rate used to calculate interest earned in the Deferral Account shall
be twelve percent (12%) per annum.


 


5.3          Lump
Sum Election.    Other provisions of Section 5.1 and Section
5.2 notwithstanding, if a Participant in his Enrollment Agreement (including
any authorization form) has elected a lump sum payment to be made after his
retirement, the amount of his Deferral Account (including interest) for the
Benefit Deferral Period covered by that Agreement shall be paid to the
Participant in a lump sum at the time specified in that Agreement.


 


5.4          Early
Payment Option.    The Employer shall pay to the
Participant, if he is an Employee of the Company, the amount by which the
Participant's Earnings were reduced in any Plan Year pursuant to Section 4.1
during the eighth (8th) year following the Plan Year ("Early Payment"),
provided that such amount has not previously been paid out under other
provisions of the Plan. Such Early Payment shall not include any interest
credited to the Participant's Deferral Account pursuant to Section 4.2. Notwithstanding
any other provisions of this Plan, the Participant may elect prior to the
beginning of any year in which such an Early Payment will be made to him to
reduce his Earnings during the year in which such Early Payment is made by an
amount equal to the Early Payment. An Early Payment shall not result in any
change in the Survivor Benefits payable pursuant to Section 5.5, other than as
a result of the reduction in the Participant's Cumulative Deferral Account and
Deferral Account balance by the amount of the Early Payment.


 


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5.5          Survivor
Benefits.


 


(a)           If a Participant dies
while employed with an Employer prior to Early or Normal Retirement, the
Employer will pay to the Participant's Beneficiary an annual benefit for the
greater of:


 


(i)  ten (10) years, or


 


(ii)  until the Participant would otherwise have
attained age 65,


 


equal to fifty percent (50%) of the Cumulative
Deferral Amount. However, if the Committee determines that a distribution of
the Participant's Deferral Account would produce a greater benefit, such
Deferral Account balance shall be paid to the Participant's Beneficiary in
equal annual installments in accordance with Appendix A, Section 2.C.2, but
over the period specified above.


 


(b)           If a Participant dies
after Early or Normal Retirement, but prior to commencement of payment of any
Early or Normal Retirement Benefit under the Plan, the Employer will pay to the
Participant's Beneficiary the benefit that such Participant would have received
had the Participant retired on the day prior to such Participant's death,
provided, however, that if the present value of the benefit described in this
Section 5.5(b) is less than the present value of the benefit described in
Section 5.5(a), using in each case twelve percent (12%) as the discount factor,
then the Beneficiary described in this Section 5.5(b) shall receive the benefit
described in Section 5.5(a) and not the benefit described in this Section
5.5(b).


 


(c)           If a Participant (who
was unmarried at the commencement of the payment of any Early or Normal
Retirement Benefit, or whose spouse who was married to the Participant at the
time of commencement of payment of any Early or Normal Retirement Benefit
predeceases the Participant) dies after the commencement of the payment of any
Early or Normal Retirement Benefit, the Employer will pay to the Participant's
Beneficiary the remaining installments of any such benefit for the balance of
the fifteen (15) years minimum payment period. If a spouse who was married to
the Participant at the time of commencement of payment of the Early or Normal
Retirement Benefit survives beyond such fifteen (15) years minimum payment
period, payments shall continue to be made to the spouse until the spouse's
death. If the spouse who was married to the Participant at the time of
commencement of payment of the Early or Normal Retirement Benefit survives the
Participant, but does not survive past the fifteen (15) years minimum payment
period, the Employer will pay to the Participant's Beneficiary the remaining
installments of any such benefit for the balance of the fifteen (15) years
minimum payment period. In computing any benefits to be paid following the
Participant's death pursuant to this paragraph (c), the Participant's Deferral
Account shall be deemed to bear interest following the Participant's death on
the balance in such Deferral Account annually in accordance with Appendix A,
Section 2.B.


 


(d)           If a Participant, who
does not receive a lump sum Termination Benefit, dies prior to the time he has
received the four (4) annual payments referred to in Section 5.2(a), the
remaining payments for such 4 year-period shall be paid to the Participant's
Beneficiary.


 


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(e)           Notwithstanding other
provisions of the Plan, if the Beneficiary is not a spouse, the present value
of the installment payments as described in Section 5.2(a), shall be paid as
soon as administratively feasible after the death of the Participant. The
interest rate used to compute the present value shall be the average of the
Declared Rate for the Plan Year in which the Participant dies and twelve
percent (12%).


 


(f)            Solely for purposes of
this Section 5.5, a Participant who has a Certain Termination of Employment as
defined in Section 5.2(b) shall be deemed to have had an Early Retirement and
the benefit payable under Section 5.2(b) shall be deemed to be an Early
Retirement Benefit.


 


5.6          Small
Benefit.    In the event that the Committee determines in
its sole discretion that the amount of any benefit is too small to make it
administratively convenient to pay such benefit over time, the Committee may
pay the benefit in the form of a lump sum equal to the value of the Deferral
Account at the time of the distribution, notwithstanding any provision of this
Article 5 to the contrary.


 


5.7          Withholding.
   To the extent required by the law in effect at the time
payments are made, the Employer shall withhold from payments made hereunder the
minimum taxes required to be withheld by the federal or any state or local
government.


 


5.8          Lump
Sum Payout Option.    Notwithstanding any other provisions
of the Plan, at any time after retirement, but not later than ten (10) years
after retirement of the Participant, a Participant or a Beneficiary of a
deceased Participant may elect to receive an immediate lump sum payment of 50%
or 100% of the balance of his Deferral Account, reduced by a penalty, which
shall be forfeited to the Company, equal to eight percent (8%) of the amount of
his Deferral Account he elected to receive, in lieu of payments in accordance
with the form previously elected by the Participant, or provided elsewhere in
this Plan. Such election, if not 100%, may be made only twice. If less than
100% of his Deferral Account is paid out, the remainder of his Deferral Account
will be paid in accordance with the form previously elected by the Participant,
or provided elsewhere in this Plan. However, the penalty shall not apply if the
Committee determines, based on advice of counsel or a final determination by
the Internal Revenue Service or any court of competent jurisdiction, that by
reason of the foregoing provision any Participant or Beneficiary has recognized
or will recognize gross income for federal income tax purposes under this Plan
in advance of payment to him of Plan benefits. The Company shall notify all
Participants (and Beneficiaries of deceased Participants) of any such
determination. Whenever any such determination is made, the Company shall
refund all penalties which were imposed hereunder on account of making lump sum
payments at any time during or after the first year to which such determination
applies (i.e., the first year when gross income is recognized for federal
income tax purposes). Interest shall be paid on any such refunds at ten percent
(10%) for each Plan Year, compounded annually. The Committee may also reduce or
eliminate the penalty if it determines that this action will not cause any
Participant or Beneficiary to recognize gross income for federal income tax
purposes under this Plan in advance of payment to him of Plan benefits.


 


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ARTICLE 6


BENEFICIARY DESIGNATION


 


Each Participant shall have the right, at any time, to
designate any person or persons as Beneficiary or Beneficiaries to whom payment
under this Plan shall be made in the event of the Participant's death prior to
complete distribution to the Participant of the benefits due under the Plan. Each
Beneficiary designation shall become effective only when filed in writing with
the Committee during the Participant's lifetime on a form prescribed by the
Committee.


 


The filing of a new Beneficiary designation form will
cancel all Beneficiary designations previously filed. Any finalized divorce or
marriage (other than a common law marriage) of a Participant subsequent to the
date of filing of a Beneficiary designation form shall revoke such designation
unless in the case of divorce the previous spouse was not designated as
Beneficiary and unless in the case of marriage the Participant's new spouse had
previously been designated as Beneficiary. The spouse of a married Participant
domiciled in a community property jurisdiction shall join in any designation of
Beneficiary or Beneficiaries other than the spouse.


 


If a Participant fails to designate a Beneficiary as
provided above, or if his Beneficiary designation is revoked by marriage,
divorce, or otherwise without execution of a new designation, or if all
designated Beneficiaries predecease the Participant or die prior to complete
distribution of the Participant's benefits, then the Committee shall direct the
distribution of such benefits to the Participant's estate.


 


ARTICLE 7


AMENDMENT AND TERMINATION OF PLAN


 


7.1          Amendment.
  The Board of Directors of the Company may at any time amend the
Plan , in whole or in part for any reason, including but not limited to tax,
accounting or insurance changes, a result of which may be to terminate the Plan
for future deferrals (excluding from such power to terminate future deferrals
those future deferrals provided for in Section 5.4 Early Payout Option);
provided, however, that no amendment shall be effective to decrease the
benefits, nature or timing thereof payable under the Plan to any Participant
with respect to deferrals made (and benefits thereafter accruing) prior to the
date of such amendment. Written notice of any amendment shall be given each
Participant then participating in the Plan. Notwithstanding the above, the
Board authorizes the Committee to amend the Plan to make any other amendments
to this Plan deemed necessary or desirable by the Committee for the operation
and administration of this Plan provided such amendment does not have a
material financial impact on DHC. Such changes will be considered an Amendment
to this Plan and shall be effective without further action by the Board. Written
notice of any amendment shall be given to each Participant then participating
in the Plan.


 


7.2          Automatic
Termination of Plan.  The Plan shall terminate only under the
following circumstances. The Plan shall automatically terminate upon (a) a
determination by the Company that a final decision of a court of competent
jurisdiction or the U. S. Department of Labor holding that the Plan is not
maintained “primarily for the purpose of providing deferred compensation for a
select group of management or highly-compensated employees,” and therefore is
subject to Parts 2, 3 and 4 of Title I of ERISA, would require that the Plan be
funded and would result in immediate taxation to Participants of their vested
Plan benefits, or (b) a determination by the Company that a final decision of a
court of competent jurisdiction has declared that the Participants under the
Plan are in constructive receipt under the Internal Revenue Code of their
vested Plan benefits.


 


10

















 


7.3          Payments
Upon Automatic Termination.  Upon any Plan termination under Section
7.2, the Participants will be deemed to have terminated their enrollment under
the Plan as of the date of such termination. The Employer will pay all
Participants the value of each Participant’s Deferral Accounts in a lump sum,
determined as if each Participant had a Termination of Employment on the date
of such termination of the Plan as provided under Section 5.2(a) hereof.


 


7.4          Payments
Upon Change of Control.  Notwithstanding any provision of this Plan to
the contrary, if a “Change of Control” as defined in the Target Corporation
Deferred Compensation Trust Agreement (as it may be amended from time to time)
occurs and results in funding of the trust established under that Agreement,
each Participant (or Beneficiary of a deceased Participant) will be paid the
entire value at that time of his or her Deferral Accounts in a lump sum,
determined as provided in Appendix B of the Target Corporation Deferred
Compensation Trust Agreement. However, this section shall not apply, and no
amounts shall be payable to Participants or Beneficiaries under this section,
in the event the assets of said trust are returned to the Participating
Employers pursuant to the Trust Agreement because no Change of Control actually
occurred.


 




ARTICLE 8


MISCELLANEOUS


 


8.1          Unsecured
General Creditor.   Participants and their Beneficiaries, heirs,
successors, and assigns shall have no legal or equitable rights, claims, or
interests in any specific property or assets of Employer, nor shall they be
beneficiaries of, or have any rights, claims, or interests in any life
insurance policies, annuity contracts, or the proceeds therefrom owned or which
may be acquired by Employer ("Policies"). Such Policies or other
assets of Employer shall not be held under any trust for the benefit of
Participants, their Beneficiaries, heirs, successors, or assigns, or held in
any way as collateral security for the fulfilling of the obligations of
Employer under this Plan. Any and all of Employer's assets and Policies shall
be, and remain, the general, unpledged, unrestricted assets of Employer. Employer's
obligation under the Plan shall be merely that of an unfunded and unsecured
promise of Employer to pay money in the future.


 


8.2          Nonassignability.
  Neither a Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, hypothecate or convey in advance of actual receipt the amounts, if
any, payable hereunder, or any part thereof, or interest therein which are, and
all rights to which are, expressly declared to be unassignable and
non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, nor be transferable by operation of law in the event of a Participant's
or any other person's bankruptcy or insolvency.


 


8.3          Employment
Not Guaranteed.   Nothing contained in this Plan nor any action
taken hereunder shall be construed as a contract of employment or as giving any
Employee any right to be retained in the employ of the Employer.


 


8.4          Protective
Provisions.   Each Participant shall cooperate with the Employer
by furnishing any and all information requested by the Employer in order to
facilitate the payment of benefits hereunder, taking such physical examinations
as the Employer may deem necessary and taking such other relevant action as may
be requested by the Employer. If a Participant refuses so to cooperate,


 


11

















 


the Employer shall have no further obligation to the Participant under
the Plan, other than payment to such Participant of the cumulative reductions
in Earnings theretofore made pursuant to this Plan. If a Participant commits
suicide during the two (2) year period beginning on the later of (a) the date
of adoption of this Plan or (b) the first day of the first Plan Year of such
Participant's participation in the Plan, or if the Participant makes any
material misstatement of information or nondisclosure of medical history, then
no benefits will be payable hereunder to such Participant or his Beneficiary, other
than payment to such Participant of the cumulative reductions in Earnings
theretofore made pursuant to this Plan, provided, that in the Employer's sole
discretion, benefits may be payable in an amount reduced to compensate the
Employer for any loss, cost, damage or expense suffered or incurred by the
Employer as a result in any way of such misstatement or nondisclosure.


 


8.5          Gender,
Singular and Plural.   All pronouns and any variations thereof
shall be deemed to refer to the masculine or feminine as the identity of the
person or persons may require. As the context may require, the singular may be
read as the plural and the plural as the singular.


 


8.6          Captions.
  The captions of the articles, sections, and paragraphs of this Plan
are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.


 


8.7          Validity.
  In the event any provision of this Plan is held invalid, void, or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provision of this Plan.


 


8.8          Notice.
  Any notice or filing required or permitted to be given to the
Committee under the Plan shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail, to the principal office of the
Employer, directed to the attention of the President of the Employer. Such
notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration
or certification.


 


8.9          Applicable
Law.   This Plan shall be governed and construed in accordance
with the laws of the State of Minnesota as applied to contracts executed and to
be wholly performed in such state.


 


 


12

















 


APPENDIX
A


Section 1


 


Participant Deferral Account Interest Crediting
While in Active Status Assuming No Further Deferrals


 


A.    A Participant shall receive
interest credited monthly equal to the Participant’s beginning-of-year (BOY)
Deferral Account balance times the Declared Rate divided by twelve:


 


Interest crediting occurs up to the day the
Participant begins to receive annuity payments from the Plan.


 


Example of interest credited calculation


 


	
  BOY Deferral Account balance at 1/1/99

  	
   

  	
  = $500,000.00

  
	
  Declared Rate

  	
   

  	
  = 13.7%

  
	
  Declared Rate divided by 12 = 13.7%/12 = 1.1417%

  
	
  Credited interest for each month of 1999

  	
   

  	
  = $500,000  ́
  .011417 = $5,708.50

  



 


B.    A participant’s Deferral
Account balance shall be increased each month by taking the beginning-of-month
(BOM) balance plus interest credited for the month to equal the end-of-month
(EOM) balance.


 


BOM balance + monthly interest credited = EOM balance


 


Example of monthly account growth


 


	
  BOM balance at
  1/1/99

  	
   

  	
  = $500,000.00

  
	
  Monthly
  crediting dollars for 1998

  	
   

  	
  = $5,708.50

  
	
  EOM at 1/31/99

  	
   

  	
  = $500,000.00 +
  5,708.50 = $505,708.50

  
	
  EOM at 2/28/99

  	
   

  	
  = $505,708.500 +
  5,708.50 = $511,417.00

  



 


13

















 


Section 2:


Interest Crediting, Deferral Account Balances, and
Payments While in Pay Status


 


A.            Definition
of Variables for Participant Payment Calculation


 


1.      “n” = number of payments
expected to be made to a Participant and spouse. The number of expected
payments shall be determined by: (1) The ages of the Participant and spouse at
the time annuity payments first begin. (2) The number of years that the
Participant and spouse are expected to live, as determined by an
actuarially-based mortality table selected by the Committee. (3) The frequency
of payments made to the Participant. This frequency shall be determined by the
payroll procedures of the Company’s operating division responsible for
administering the Participant’s payments.


 


Example of number of expected payments (assuming
payments to begin on 10/1/99)


 


	
  Frequency of payments

  	
   

  	
  = monthly

  
	
  Participant age on 10/1/99

  	
   

  	
  = 50 yrs. old

  
	
  Spouse age on 10/1/99

  	
   

  	
  = 48 yrs. old

  
	
  Participant’s and spouse’s joint expected remaining
  lives

  	
   

  	
  = 476 months

  
	
  “n” for 10/1/99

  	
   

  	
  = 476

  
	
  “n” for 1/1/00

  	
   

  	
  = 473

  
	
  “n” for 1/1/01

  	
   

  	
  = 461

  



 


2.      “i” = interest rate per payment
period such that when compounded over the entire year equals the Declared Rate.


 


“i” shall be expressed either as a weekly or monthly
interest rate, depending on the frequency of annuity payments made by the
operating division administering the Participant’s payments. If weekly, “i” is
the interest rate that, when compounded over 52 periods, will equal the
Declared Rate. If monthly, “i” is the interest rate that, when compounded over
12 periods, will equal the Declared Rate.


 


Example of weekly and monthly interest rates


 


Declared Rate = 13.7%


Weekly “i” = (1.137)1/52 = .002472 or
..2472%


Monthly “i” = (1.137)1/12 = .010757 or
1.0757%


 


3.      The beginning-of-period
balance (BOP balance) is the Participant’s Deferral Account balance at any time
before credited interest has been added for the period and payments have been
subtracted for the period.


 


End-of-period balance (EOP balance) is the
Participant’s Deferral Account balance at any point in time after credited
interest has been added for the period and payments have been subtracted for
the period.


 


14

















 


Example of EOP balance calculation


 


EOP balance = BOP balance + interest crediting –
payment


 


B.     Payments


 


1.     Calculation
of payments


 


At the beginning of each year (or at the beginning of
a month when a Participant’s Deferral Account is first transferred from active
status to payment status), a payment shall be calculated for each Participant
who has a Deferral Account that is in the payment status. The periodicity of
payments shall depend on the payroll procedures of the operating division
administering the Participant’s payments. The amount of the payment shall be
effective for that calendar year (or portion of the calendar year).


 


The calculation of the payment amount is based on the
present value of an annuity formula. Specifically, the payment is given by:


 


 


	
  Payment =

  	
  i

  	
   x  BOP

  
	
   

  
	
  1 – 

  	
    1

  	
   

  
	
  (1 + i)n

  



 


 


Example of a calculation with monthly payments


 


n = 476 months


Monthly i = 1.0757%


BOP balance = $500,000.00


Payment = $5,411.73


 


Example of a calculation with weekly payments


 


n = 2,070 weeks


Weekly i = 0.2472%


BOP balance = $500,000.00


Payment = $1,243.50


 


2.     Interest
Crediting for Payments


 


Interest crediting shall be calculated every payment
period, with the interest amount equal to the beginning-of-period Deferral
Account balance times the periodic interest rate


 


Example of interest crediting calculation (assuming
monthly payments and a 13.7% Declared Rate)


 


BOP balance = $500,000.00


Monthly i = 1.0757%


Interest crediting = $500,000.00  ́
..010757 = $5,378.50


 


15

















 


3.     Amortization of Participant
Deferral Account Balances


 


Participant Deferral
Account balances shall be amortized over the remaining number of expected
payment periods by adding to the beginning-of-period balance the interest
credits earned during the period less the payment made for the period to
produce an end-of-period Deferral Account balance.


 


Example of Deferral Account balance amortization (assuming
monthly payments and a 13.7% Declared Rate)


 


BOP balance = $500,000.00


Monthly i = 1.0757%


Interest crediting = $5,378.50


Payment = $5,411.73


EOP balance = $500,000.00 + $5,378.50 -
$5,411.73 = $499,966.77


 


C.    Installment
Termination Payments


 


1.     At the Company’s discretion,
if a participant terminates employment with the Company prior to Normal or
Early Retirement, as described in Article 5, Section 5.2(a), a participant’s
balance may be paid out over a four (4) year installment period (one payment a
year) instead of as an immediate lump sum payment.


 


2.     The four equal annual
installment payments are determined by using the present value of an annuity
formula referenced in Section 2.B.1. of this Appendix. The interest rate used
in calculating the four payments shall be 12%.


 


Example of a four-year
annual installment payout of a Deferral Account balance


 


n = 4


Annual i = 12%


BOP balance = $500,000.00


Annual installment payments = $164,617.22


 


16