Document:

Exhibit (10)I

 

TARGET CORPORATION

DDCP

(2011 PLAN STATEMENT)

 

Effective June 8, 2011

As Amended and Restated

 

 

TARGET CORPORATION

DDCP

(2011 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   Beneficiary
    	
1
    
	
1.2.4  Board
    	
1
    
	
1.2.5  Change-in-Control
    	
1
    
	
1.2.6 Code
    	
2
    
	
1.2.7   [Intentionally left blank.]
    	
3
    
	
1.2.8 Company
    	
3
    
	
1.2.9   Crediting Rate Alternative
    	
3
    
	
1.2.10   Deferral Credit
    	
3
    
	
1.2.11 Director
    	
3
    
	
1.2.12   Earnings Credit
    	
3
    
	
1.2.13   Effective Date
    	
3
    
	
1.2.14 Newly   Eligible Director
    	
3
    
	
1.2.15   Participant
    	
3
    
	
1.2.16   Participating Employer
    	
3
    
	
1.2.17 Plan
    	
3
    
	
1.2.18 Plan   Administrator
    	
4
    
	
1.2.19 Plan   Rules
    	
4
    
	
1.2.20 Plan   Statement
    	
4
    
	
1.2.21 Plan   Year
    	
4
    
	
1.2.22   Retainer
    	
4
    
	
1.2.23   Specified Employee
    	
4
    
	
1.2.24   Termination of Employment
    	
4
    
	
1.2.25 Trust
    	
4
    
	
1.2.26   Unforeseeable Emergency
    	
4
    
	
1.2.27   Valuation Date
    	
4
    
	
SECTION 2   PARTICIPATION AND DEFERRAL ELECTIONS
    	
5
    
	
2.1   Eligibility
    	
5
    
	
2.2   Termination of Participation
    	
5
    
	
2.3 No   Guarantee of Continued Directorship
    	
5
    
	
2.4 Deferral   Elections
    	
5
    
	
2.5 Deferral   of Retainers
    	
6
    
	
2.6 Elective   Deferral Credit
    	
6
    
	
2.7   Cancellation of Deferral Elections
    	
6
    
	
SECTION 3   ADJUSTMENTS OF ACCOUNTS
    	
7
    
	
3.1   Establishment of Accounts
    	
7
    
	
3.2   Adjustments of Accounts
    	
7
    

 

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3.3 Investment   Adjustment
    	
7
    
	
3.4 Account   Adjustments Upon a Change-in-Control or Plan Termination
    	
7
    
	
SECTION 4 VESTING
    	
8
    
	
4.1   Participant Accounts
    	
8
    
	
SECTION 5 DISTRIBUTION
    	
9
    
	
5.1   Distribution Elections
    	
9
    
	
5.2 General   Requirements
    	
9
    
	
5.3 Six-Month   Suspension for Specified Employees
    	
10
    
	
5.4   Distribution on Account of Death
    	
10
    
	
5.5   Distribution on Account of Unforeseeable Emergency
    	
10
    
	
5.6   Designation of Beneficiaries
    	
11
    
	
5.7 Facility   of Payment
    	
12
    
	
5.8 Tax   Withholding
    	
13
    
	
5.9   Application for Distribution
    	
13
    
	
5.10   Acceleration of Distributions
    	
13
    
	
5.11 Delay of   Distributions
    	
13
    
	
SECTION 6 SOURCE OF PAYMENTS; NATURE OF INTEREST
    	
14
    
	
6.1 Source of   Payments
    	
14
    
	
6.2 Unfunded   Obligation
    	
14
    
	
6.3   Establishment of Trust
    	
14
    
	
6.4   Spendthrift Provision
    	
14
    
	
SECTION 7 ADOPTION, AMENDMENT AND TERMINATION
    	
15
    
	
7.1 Adoption
    	
15
    
	
7.2 Amendment
    	
15
    
	
7.3   Termination and Liquidation
    	
15
    
	
SECTION 8 CLAIM PROCEDURES
    	
17
    
	
8.1 Claim   Procedures
    	
17
    
	
8.2   Rules and Regulations
    	
18
    
	
8.3   Limitations and Exhaustion
    	
19
    
	
SECTION 9 PLAN ADMINISTRATION
    	
21
    
	
9.1 Plan   Administration
    	
21
    
	
9.2 Conflict   of Interest
    	
21
    
	
9.3 Service of   Process
    	
22
    
	
9.4 Choice of   Law
    	
22
    
	
9.5   Responsibility for Delegate
    	
22
    
	
9.6 Expenses
    	
22
    
	
9.7 Errors in   Computations
    	
22
    
	
9.8   Indemnification
    	
22
    
	
9.9 Notice
    	
22
    
	
SECTION 10 CONSTRUCTION
    	
23
    
	
10.1 IRC   Status
    	
23
    
	
10.2   Rules of Document Construction
    	
23
    
	
10.3   References to Laws
    	
23
    

 

2

 

SECTION 1
 INTRODUCTION; DEFINITIONS

 

1.1          Name of Plan; History.  This Plan (formerly known as the Target Corporation Director Deferred Compensation Plan) is a non-qualified, unfunded plan established for the purpose of allowing directors of the Company 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 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 Board ceased to be eligible to receive enhanced earnings on their account balances.  The Plan, which is intended to comply with Code section 409A, was amended and restated effective January 1, 2009.  This Plan Statement, which was amended and restated to reflect Plan administration and amendment changes authorized by the Board on November 10, 2010 and modification of the Change in Control definition, is effective as of June 8, 2011.

 

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       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 5.6 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.

 

1.2.4       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.

 

1.2.5       Change in Control.  “Change in Control” means one of the following:

 

(a)           Individuals who are Continuing Directors cease for any reason to constitute 50% or more of the directors of the Company; or

 

(b)           30% or more of the outstanding voting power of the Voting Stock of the Company is acquired or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by any Person, other than an entity resulting from a Business Combination in which clauses (x) and (y) of Section 1.2.5(c) apply; or

 

(c)           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

 

1

 

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 (within the meaning of Rule 13d-3 under the Exchange Act) 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 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

 

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

 

For purposes of this Section 1.2.5:

 

“Continuing Director” means an individual (A) who is, as of June 8, 2011, a director of the Company, or (B) who becomes a director of the Company after June 8, 2011 and whose initial appointment, or nomination for election by the Company’s shareholders, was approved by at least a majority of the then Continuing Directors; provided, however, that any individual whose initial assumption of office occurs as a result of either an actual or threatened contested election by any Person (other than the Board of Directors) seeking the election of such nominee in which the number of nominees exceeds the number of directors to be elected shall not be a Continuing Director;

 

“Person” means any individual, firm, corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any affiliate or associate (as defined in Rule 14a-1(a) of the Exchange Act) of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of any capital stock of the Company;

 

“Voting Stock” means all then-outstanding capital stock of the Company entitled to vote generally in the election of directors of the Company: and

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from time to time, and the regulations promulgated thereunder.

 

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

 

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1.2.7       [Intentionally left blank.]

 

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

 

1.2.9       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.

 

1.2.10     Deferral Credit.  A “Deferral Credit” is the amount credited to a Participant’s Account pursuant to Section 2.6.

 

1.2.11     Director.  “Director” means any person who is a director of the Company or Participating Employer.

 

1.2.12     Earnings Credit.  “Earnings Credit” means the investment adjustment credited to a Participant’s Account pursuant to Section 3.3 or Section 3.4 as applicable.

 

1.2.13     Effective Date.  The “Effective Date” of this Plan Statement is June 8, 2011, except as otherwise provided.

 

1.2.14     Newly Eligible Director.  “Newly Eligible Director” means a Director who either (i) was not previously eligible to participate in this Plan or any other non-qualified, deferred compensation plans maintained for directors or independent contractors by a Participating Employer or other Affiliate, (ii) had been paid all amounts previously deferred under all non-qualified, deferred compensation plans maintained for directors or independent contractors 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 for directors or independent contractors by a Participating Employer or other Affiliate at any time during the 24-month period ending on the date the Director has again become eligible to participate in the Plan.

 

1.2.15     Participant.  A  “Participant” is a Director who becomes a Participant in this Plan in accordance with the provisions of Section 2.  A Director 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.

 

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

 

1.2.17     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 DDCP” (formerly known as the Target Corporation Director Deferred Compensation Plan).

 

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1.2.18     Plan Administrator.  “Plan Administrator” means the individual designated in Sec. 10.1.1, or, if applicable, its delegate.

 

1.2.19     Plan Rules.  “Plan Rules” are rules, policies, practices or procedures adopted by the Plan Administrator or its delegate pursuant to Section 9.1.5.

 

1.2.20     Plan Statement.  “Plan Statement” means this document entitled “Target Corporation DDCP (2011 Plan Statement),” as adopted by the Company, effective as of June 8, 2011, as the same may be amended from time to time.

 

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

 

1.2.22     Retainer.  “Retainer” means the total cash fees paid to Participant for service on the Board (or any committee there of).

 

1.2.23     Specified Employee.  For purposes of complying with the requirements of Code section 409A(a)(2)(B)(i) (relating to the 6 month suspension of certain benefit distributions), an individual is a “Specified Employee” if on his or her Termination of Employment, the Company or other Affiliate has stock that is traded on an established securities market within the meaning of Code section 409A(a)(2)(B) and such individual is a “key employee” (defined below).  For this purpose, an individual is a “key employee” during the 12-month period beginning on April 1 immediately following the calendar year in which the individual was employed by the Company and other Affiliates, and satisfied, at any time within such calendar year, the requirements of Code section 416(i)(1)(A)(i), (ii) or (iii) (without regard to Code section 416(i)(5)).  An individual will not be treated as a Specified Employee if the individual is not required to be treated as a Specified Employee under Treasury Regulations issued under Code section 409A.

 

1.2.24     Termination of Employment.  “Termination of Employment” means a severance of a Participant’s directorship, and all independent contractor relationships, with the Company, each Participating Employer and all Affiliates, for any reason.  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.

 

1.2.25     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.

 

1.2.26     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.

 

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

 

4

 

SECTION 2
 PARTICIPATION AND DEFERRAL ELECTIONS

 

2.1          Eligibility.  A Director is eligible to participate in this Plan in accordance with and subject to the requirements of this Plan.

 

2.1.1       Eligibility for Newly Eligible Director.  A Newly Eligible Director is eligible to participate in this Plan on the date that is 30 days after he or she becomes a Director.

 

2.1.2       Initial Enrollment.  A Director 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 for the effective administration of this Plan.

 

2.2          Termination of Participation.  Except as otherwise specifically provided in this Plan Statement or by the Plan Administrator, a Director who ceases to be a Director 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 Retainers.  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.

 

2.3          No Guarantee of Continued Directorship.  Participation in this Plan does not constitute a guarantee or contract with any Participating Employer guaranteeing that the Director will continue to be a director.  Such participation shall in no way interfere with any rights the shareholders of a Participating Employer would have in the absence of such participation to determine the duration of the director’s service.

 

2.4          Deferral Elections.  A Director 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 Retainer.

 

2.4.1       General.  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 Retainer is earned.  The election must designate the percentage of the Retainer 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 Director with the Participating Employer or Company as the beneficiary.  An election to defer the Retainer 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.

 

2.4.2       Newly Eligible Director.  For a Newly Eligible Director, 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 Director 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

 

5

 

effective with respect to Retainers for services commencing with the next full calendar quarter after the deferral election becomes irrevocable.

 

2.4.3       Terminations of Employment.  A Participant who completes a deferral election in accordance with this Section 2.4, but who has a Termination of Employment prior to the deadline for making such election has expired, will be deemed to have made no deferral election for the respective period.

 

2.5          Deferral of Retainers.   A Participant’s election to defer a Retainer is subject to the following requirements:

 

2.5.1       A deferral election will be effective with respect to the first Retainer paid for services performed during the Plan Year and such election will remain in effect through the last Retainer paid for services performed during the Plan Year.

 

2.5.2       The Retainer deferral percentage may not exceed 100%.

 

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

 

2.7          Cancellation of Deferral Elections.  Notwithstanding any provisions in the Plan to the contrary, an election to defer under this Section 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 5.5.  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 5.5.

 

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SECTION 3

ADJUSTMENTS OF ACCOUNTS

 

3.1          Establishment of Accounts.  There shall be established for each Participant an Account which shall be adjusted as provided under Section 3.

 

3.2          Adjustments of Accounts.  On each Valuation Date, the Plan Administrator shall cause the value of the Account (or subaccount) to be increased (or decreased) for distributions, withdrawals, credits, debits and investment income, gains or losses charged to the Account.

 

3.3          Investment Adjustment.  The investment income, gains and losses shall be determined for the Accounts in accordance with the following:

 

3.3.1       Participant Elections.  In accordance with Plan Rules and procedures established by the Plan Administrator, each Participant shall prospectively elect, as part of the initial enrollment process, and from time to time thereafter, one or more Crediting Rate Alternatives that shall be used to measure income, gains and losses until the next Valuation Date.

 

3.3.2       Default Rate.  If a Participant fails to designate one or more Crediting Rate Alternatives to be used to measure income, gains and losses with respect to amounts credited to his or her Account, such amounts will be deemed to be invested in a default Crediting Rate Alternative designated by the Plan Administrator in accordance with Plan Rules.

 

3.3.3       Crediting.  As of each Valuation Date, each Participant’s Account shall be adjusted for income, gains and losses as if the Account had in fact been invested in the Crediting Rate Alternative(s) so selected.

 

3.3.4       Responsibility for Investing Adjustments.  The Plan Administrator will not be responsible in any manner to any Participant, Beneficiary or other person for any damages, losses or liabilities, costs or expenses of any kind arising in connection with any designation or elimination of a Crediting Rate Alternative or a Participant’s election of a Crediting Rate Alternative.

 

3.4          Account Adjustments Upon a Change-in-Control or Plan Termination.

 

3.4.1       In the event of a Plan termination following a Change-in-Control under Section 7.3.2 that causes a Trust to be established and funded pursuant to Section 6.3 where distribution of a Participant’s Account may not be made from the Trust within 60 days of the event because of restrictions imposed by Code section 409A, then the Participant’s Account as of the date of such event will no longer receive adjustments determined pursuant to Section 3.3.

 

3.4.2       On and after the date of an event described in Section 3.4.1, the Account will have an investment adjustment determined at an annual rate equal to the sum of the 10-Year U.S. Treasury Note plus 2%.  The 10-Year U.S. Treasury Note rate will be determined as of the date of the Plan termination under Section 7.3.2, or if no such rate is available on that date, the immediately preceding date such rate is available, and reset each calendar quarter as necessary.

 

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SECTION 4
  VESTING

 

4.1          Participant Accounts.  The Participant Accounts are fully (100%) vested and non-forfeitable at all times.

 

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SECTION 5

DISTRIBUTION

 

5.1          Distribution Elections.  Except as otherwise specifically provided in this Plan, a Participant may irrevocably elect for each Plan Year the form and time of distribution of the credits made to his or her Account for such Plan Year.

 

5.2          General Requirements.  A Participant’s distribution election must be made prior to the date the Participant’s deferral election becomes irrevocable.  Earnings Credits will be distributed in the same form and time as in effect for the related Account credit.  The election shall be made in the form and manner prescribed by Plan Rules.

 

5.2.1       Form of Distribution.  The Participant may elect among the following forms of distribution.

 

(a)                                  Installments.  A series of annual installments made over either five (5) years or ten (10) years commencing at a time provided under Section 5.2.2(a) or (b).  For purposes of Code section 409A, installment payments will be treated as a series of separate payments at all times.

 

(b)                                 Lump Sum.  A single lump sum payment.

 

5.2.2       Time of Payment.  The Participant may elect among the following distribution commencement times:

 

(a)                                  Termination of Employment.  Within 60 days following the Participant’s Termination of Employment.

 

(b)                                 One-Year Anniversary of Termination of Employment.  Within 60 days following the one-year anniversary of the Participant’s Termination of Employment.

 

(c)                                  Fixed Payment Date.  Within 60 days of January 1 of the calendar year elected by the Participant at the time of deferral.  If a Participant has a Termination of Employment prior to the fixed payment date, such amount shall be paid on the earlier of: (i) within 60 days following January 1 in the tenth year following the year of the Termination of Employment, or (ii) January 1 of the calendar year elected by the Participant at the time of deferral.  The Plan Administrator will establish Plan Rules, procedures and limitations on establishing the number and times of the fixed payment dates available for Participants to elect.

 

(d)                                 Payouts in 2008 and 2009.  During 2007 and 2008, consistent with transition relief available under Code section 409A, and subject to Plan Rules:

 

(i)                                     Participants had an opportunity to elect during 2007 to receive a distribution of all or a portion of their Account valued as of December 31, 2007 to be distributed in January 2008.

 

(ii)                                  Participants had an opportunity to elect during 2008 to receive a distribution of all or a portion of their Account valued as of December 31, 2008 to be distributed in January 2009.

 

9

 

5.2.3       Installment Amounts.  The amount of the annual installments shall be determined by dividing the amount of the vested portion of the Account as of the most recent Valuation Date preceding the date the installment is being paid by the number of remaining installment payments to be made (including the payment being determined).

 

5.2.4       Small Benefit.  Subject to Section 5.3,  in the event that the vested Account balance of a Participant who has died or experienced a Termination of Employment under the Plan is less than the applicable dollar amount under Code section 402(g)(1)(B) for that Plan Year as of the date on which the Plan Administrator makes such determinations, the Plan Administrator (on behalf of the Company) reserves the right to have the Participant’s entire Account paid in the form of a single lump sum payment, provided the Plan Administrator’s exercise of discretion (on behalf of the Company) complies with the requirements of Treas. Reg. Sec. 1.409A-3(j)(4)(v).

 

5.2.5       Default.  If for any reason a Participant shall have failed to make a timely designation of the form or time of distribution with respect to credits for a Plan Year (including reasons entirely beyond the control of the Participant), except as provided in Section 5.3, the distribution shall be made as a single lump sum payment within 60 days following the Participant’s Termination of Employment.

 

5.2.6       No Spousal Rights.  No spouse, former spouse, Beneficiary or other person shall have any right to participate in the Participant’s designation of a form or time of payment.

 

5.3          Six-Month Suspension for Specified Employees.  Notwithstanding any other provision in this Section 5, if a Participant is a Specified Employee at Termination of Employment, then any distributions arising on account of the Participant’s Termination of Employment (other than on account of death) shall be suspended and not be made until (6) months have elapsed since such Participant’s Termination of Employment (or, if earlier, upon the date of the Participant’s death).  Any payments that were otherwise payable during the six-month suspension period referred to in the preceding sentence, will be paid within 60 days after the end of such six-month suspension period.

 

5.4          Distribution on Account of Death.  Upon the death of a Participant, the Participant’s Account balance will be paid to the Participant’s Beneficiary in a single lump sum within 90 days following the Participant’s death.

 

5.5          Distribution on Account of Unforeseeable Emergency.

 

5.5.1       When Available.  A Participant may receive a distribution from the vested portion of his or her Account (which shall be deemed to include the deferrals that would have been made but for the cancellation under Section 5.5.3) if the Plan Administrator determines that such distribution is on account of an Unforeseeable Emergency and the conditions in Section 5.5.2 have been fulfilled.  To receive such a distribution, the Participant must request a distribution by filing an application with the Plan Administrator and furnish such supporting documentation as the Plan Administrator may require.  In the application, the Participant shall specify the basis for the distribution and the dollar amount to be distributed.  If such request is approved by the Plan Administrator, distribution shall be made in a lump sum payment within 60 days following the approval by the Plan Administrator of the completed application.

 

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5.5.2       Limitations.  The amount that may be distributed with respect to a Participant’s Unforeseeable Emergency shall not exceed the amounts necessary to satisfy the emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such Unforeseeable Emergency is or may be relieved through reimbursement or compensation by insurance or otherwise by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship), and/or cancellation of deferrals pursuant to Section 5.5.3, provided the determination of such limitation is consistent with the requirements of Code section 409A(a)(2)(B)(ii).

 

5.5.3       Cancellation of Deferral Elections.  As provided by Section 2.7, in the event of a distribution under Section 5.5.1 the Plan Administrator will cancel the Participant’s deferral elections for the balance of the applicable Plan Year.

 

5.6          Designation of Beneficiaries.

 

5.6.1       Right to Designate or Revoke.

 

(a)                                  Each Participant may designate one or more primary Beneficiaries or secondary Beneficiaries to receive all or a specified part of such Participant’s vested Account in the event of such Participant’s death.  If fewer than all designated primary or secondary Beneficiaries predecease the Participant, then the amount of such predeceased Beneficiary’s portion shall be allocated to the remaining primary or secondary Beneficiaries, as the case may be.

 

(b)                                 The Participant may change or revoke any such designation from time to time without notice to or consent from any spouse, any person named as Beneficiary or any other person.

 

(c)                                  No such designation, change or revocation shall be effective unless completed and filed with the Plan Administrator in accordance with Plan Rules during the Participant’s lifetime.

 

5.6.2       Failure of Designation.  If a Participant:

 

(a)                                  fails to designate a Beneficiary,

 

(b)                                 designates a Beneficiary and thereafter revokes such designation without naming another Beneficiary, or

 

(c)                                  designates one or more Beneficiaries and all such Beneficiaries so designated fail to survive the Participant, such Participant’s vested Account, shall be payable to the first class of the following classes of automatic Beneficiaries:

 

Participant’s surviving spouse

Representative of Participant’s estate

 

5.6.3       Disclaimers by Beneficiaries.  A Beneficiary entitled to a distribution of all or a portion of a deceased Participant’s vested Account may disclaim an interest therein subject to the Plan Rules.

 

11

 

5.6.4       Special Rules.  Unless the Participant has otherwise specified in the Participant’s Beneficiary designation, the following rules shall apply:

 

(a)                                  If there is not sufficient evidence that a person designated as a Beneficiary was living at the time of the death of the Participant, it shall be deemed that the Beneficiary was not living at the time of the death of the Participant.

 

(b)                                 The automatic Beneficiaries specified in Section 5.6.2 and the Beneficiaries designated by the Participant shall become fixed at the time of the Participant’s death (subject to Section 5.6.3) so that, if a Beneficiary survives the Participant but dies before the receipt of all payments due such Beneficiary hereunder, such remaining payments shall be payable to the representative of such Beneficiary’s estate.

 

(c)                                  If the Participant designates as a Beneficiary the person who is the Participant’s spouse on the date of the designation, either by name or by relationship, or both, the dissolution, annulment or other legal termination of the marriage between the Participant and such person shall automatically revoke such designation.  The foregoing shall not prevent the Participant from designating a former spouse as a beneficiary on a form that is both executed by the Participant and received by the Plan Administrator (i) after the date of the legal termination of the marriage between the Participant and such former spouse and (ii) during the Participant’s lifetime.

 

(d)                                 A finalized marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary designation shall revoke such designation unless the Participant’s new spouse had previously been designated as the Beneficiary.

 

(e)                                  Any designation of a nonspouse Beneficiary by name that is accompanied by a description of relationship to the Participant shall be given effect without regard to whether the relationship to the Participant exists either then or at the Participant’s death.

 

(f)                                    Any designation of a Beneficiary only by statement of relationship to the Participant shall be effective only to designate the person or persons standing in such relationship to the Participant at the Participant’s death.

 

5.7          Facility of Payment.

 

5.7.1       Legal Disability.  In case of the legal disability, including minority, of an individual entitled to receive any payment under this Plan, payment shall be made, if the Plan Administrator shall be advised of the existence of such condition:

 

(a)                                  to the duly appointed guardian, conservator or other legal representative of such individual, or

 

(b)                                 to a person or institution entrusted with the care or maintenance of the incompetent or disable Participant or Beneficiary, provided such person or institution has satisfied the Plan Administrator that the payment will be used for the best interest and assist in the care of such individual, and provided further,

 

12

 

that no prior claim for said payment has been made by a duly appointed guardian, conservator or other legal representative of such individual.

 

5.7.2       Discharge of Liability.  Any payment made in accordance with the foregoing provisions of this Section 5.7 shall constitute a complete discharge of any liability or obligation of the Participating Employers under this Plan.

 

5.8          Tax Withholding.  The Participating Employer (or any other person legally obligated to do so) shall withhold the amount of any federal, state or local income tax, payroll tax or other tax that the payer reasonably determines is required to be withheld under applicable law with respect to any amount payable under this Plan.  All benefits otherwise due hereunder shall be reduced by the amount to be withheld.

 

5.9          Application for Distribution.  A Participant may be required to make application to receive payment and to complete other forms and furnish other documentation required by the Plan Administrator.  Distribution shall not be made to any Beneficiary until such Beneficiary shall have filed an application for benefits in a form acceptable to the Plan Administrator and such application shall have been approved by the Plan Administrator and the Plan Administrator has determined that the applicant is entitled to payment.

 

5.10        Acceleration of Distributions.  The Plan Administrator in its sole discretion may exercise discretion on behalf of the Company to accelerate the distribution of any payment under this Plan to the extent allowed under Code section 409A.

 

5.11        Delay of Distributions.  The Plan Administrator in its sole discretion may exercise discretion on behalf of the Company to delay the distribution of any payment under this Plan to the extent allowed under Code section 409A, including, but not limited to, as necessary to maximize the Company’s tax deduction as allowed pursuant to Code section 162(m) or to avoid violation of securities law or other applicable law.

 

13

 

SECTION 6
  SOURCE OF PAYMENTS; NATURE OF INTEREST

 

6.1          Source of Payments.

 

6.1.1       General Assets.  Each Participating Employer will pay, from its general assets, the distribution of the Participant’s Account under Section 5, and all costs, charges and expenses relating thereto.

 

6.1.2       Trust.  Upon a Change-in-Control that causes the Plan to be terminated under Section 7.3.2, the trustee of the Trust will make distributions to Participants and Beneficiaries from the Trust in satisfaction of a Participating Employer’s obligations to make distributions under this Plan in accordance with and subject to the terms of the Trust to the extent such payments are not otherwise made directly by the Participating Employer.

 

6.2          Unfunded Obligation.  The obligation of the Participating Employers to make payments under this Plan constitutes only the unsecured (but legally enforceable) promise of the Participating Employers to make such payments.  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 the Company or a Participating 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 the Company.

 

6.3          Establishment of Trust.  The Participating Employers shall have no obligation to establish or maintain any fund, trust or account (other than a bookkeeping account or reserve) for the purpose of funding or paying the benefits promised under this Plan except as provided in the Trust.  The Participating Employers may from time to time transfer to the Trust cash, or other marketable securities or other property acceptable to the trustee in accordance with the terms of the Trust.  If the Participating Employers have deposited funds in the Trust, such funds shall remain the sole and exclusive property of the Participating Employer that deposited such funds.

 

6.4          Spendthrift Provision.  Except as otherwise provided in this Section 6.4, no Participant or Beneficiary shall have any interest in any Account which can be transferred nor shall any Participant or Beneficiary have any power to anticipate, alienate, dispose of, pledge or encumber the same while in the possession or control of the Participating Employers.  The Plan Administrator shall not recognize any such effort to convey any interest under this Plan.  No benefit payable under this Plan shall be subject to attachment, garnishment, or execution following judgment or other legal process before actual payment to such person.

 

6.4.1       Right to Designate Beneficiary.  The power to designate Beneficiaries to receive the Account of a Participant in the event of such Participant’s death shall not permit or be construed to permit such power or right to be exercised by the Participant  so as thereby to anticipate, pledge, mortgage or encumber such Participant’s Account or any part thereof, and any attempt of a Participant so to exercise said power in violation of this provision shall be of no force and effect and shall be disregarded by the Participating Employers.

 

6.4.2       Plan Administrator’s Right to Exercise Discretion.  This Section 6.4 shall not prevent the Plan Administrator from exercising, in its discretion, any of the applicable powers and options granted to it under any applicable provision hereof.

 

14

 

SECTION 7
 ADOPTION, AMENDMENT AND TERMINATION

 

7.1          Adoption.  With the prior approval of the Plan Administrator, an Affiliate may adopt the Plan and become a Participating Employer by furnishing to the Plan Administrator a certified copy of a resolution of its board of directors adopting this Plan.

 

7.2          Amendment.

 

7.2.1       General Rule.  The Company, by action of its Board of Directors, or by action of a person so authorized by resolution of the Board of Directors and subject to any limitations or conditions in such authorization, 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 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.

 

7.2.2       No Oral Amendments.  No modification of the terms of this Plan Statement shall be effective unless it is in writing.  No oral representation concerning the interpretation or effect of this Plan Statement shall be effective to amend this Plan Statement.

 

7.3          Termination and Liquidation.

 

7.3.1       General Rule.

 

(a)                                  To the extent necessary or reasonable to comply with any changes in law, the Board may at any time terminate and liquidate this Plan, provided such termination and liquidation satisfies the requirements of Code section 409A.

 

(b)                                 To the extent that a Participant’s benefit under the Plan will be immediately included in the income of the Participant, as determined by a court of competent jurisdiction or the Internal Revenue Service, to the extent permitted under Code section 409A, the Board may terminate and liquidate this Plan,  in whole or in part, as it relates to the impacted Participant.

 

7.3.2       Plan Termination and Liquidation on Account of a Change-in-Control.  Upon a Change-in-Control the Plan will terminate and payment of all amounts under the Plan will be accelerated if and to the extent provided in this Section 7.3.2.

 

(a)                                  The Plan will be terminated effective as of the first date on which there has occurred both (i) a Change-in-Control under Section 1.2.5, and (ii) a funding of the Trust on account of such Change-in-Control (referred to herein as the “Plan termination effective date”) unless, prior to such Plan termination effective date, the Board affirmatively determines that the Plan will not be terminated as of such effective date. The Board will be deemed to have taken action to irrevocably terminate the Plan as of the Plan termination effective date by its failure to affirmatively determine that the Plan will not terminate as of such date.

 

15

 

(b)                                 The determination by the Board under paragraph (a) constitutes a determination that such termination will satisfy the requirements of Code section 409A, including an agreement by the Company that it will take such additional action or refrain from taking such action as may be necessary to satisfy the requirements necessary to terminate and liquidate the Plan under paragraph (c) below.

 

(c)                                  In the event the Board does not affirmatively determine not to terminate the Plan as provided in paragraph (a),  such termination shall be subject to either (i) or (ii), as follows:

 

(i)                                     If the Change-in-Control qualifies as a “change in control event” for purposes of Code section 409A, payment of all amounts under the Plan will be accelerated and made in a lump sum as soon a administratively practicable but not more than 90 days following the Plan termination effective date, provided the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix)(B) have been satisfied.

 

(ii)                                  If the Change-in-Control does not qualify as a “change in control event” for purposes of Code section 409A, payment of all amounts under the Plan will be accelerated and made in a lump sum as soon as administratively practicable but not more than 60 days following the 12 month anniversary of the Plan termination effective date, provided the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix)(C) have been satisfied.

 

16

 

SECTION 8
 CLAIM PROCEDURES

 

8.1          Claims Procedure.  Until modified by the Plan Administrator, the claim and review procedures set forth in this Section shall be the mandatory claim and review procedures for the resolution of disputes and disposition of claims filed under this Plan.  An application for a distribution or withdrawal shall be considered as a claim for the purposes of this Section.

 

8.1.1       Initial Claim.  An individual may, subject to any applicable deadline, file with the Plan Administrator a written claim for benefits under this Plan in a form and manner prescribed by the Plan Administrator.

 

(a)                                  If the claim is denied in whole or in part, the Plan Administrator shall notify the claimant of the adverse benefit determination within ninety (90) days after receipt of the claim.

 

(b)                                 The ninety (90) day period for making the claim determination may be extended for ninety (90) days if the Plan Administrator determines that special circumstances require an extension of time for determination of the claim, provided that the Plan Administrator notifies the claimant, prior to the expiration of the initial ninety (90) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.

 

8.1.2       Notice of Initial Adverse Determination.  A notice of an adverse determination shall set forth in a manner calculated to be understood by the claimant.

 

(a)                                  The specific reasons for the adverse determinations,

 

(b)                                 references to the specific provisions of this Plan Statement (or other applicable Plan document) on which the adverse determination is based,

 

(c)                                  a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary, and

 

(d)                                 a description of the claim and review procedures.

 

8.1.3       Request for Review.  Within sixty (60) days after receipt of an initial adverse benefit determination notice, the claimant may file with the Plan Administrator a written request for a review of the adverse determination and may, in connection therewith submit written comments, documents, records and other information relating to the claim benefits.  Any request for review of the initial adverse determination not filed within sixty (60) days after receipt of the initial adverse determination notice shall be untimely.

 

8.1.4       Claim on Review.  If the claim, upon review, is denied in whole or in part, the Plan Administrator shall notify the claimant of the adverse benefit determination within sixty (60) days after receipt of such a request for review.

 

(a)                                  The sixty (60) day period for deciding the claim on review may be extended for sixty (60) days if the Plan Administrator determines that special circumstances require an extension of time for determination of the claim, provided that the

 

17

 

Plan Administrator notifies the claimant, prior to the expiration of the initial sixty (60) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.

 

(b)                                 In the event that the time period is extended due to a claimant’s failure to submit information necessary to decide a claim on review, the claimant shall have sixty (60) days within which to provide the necessary information and the period for making the claim determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information or, if earlier, the expiration of sixty (60) days.

 

(c)                                  The Plan Administrator’s review of a denied claim shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

 

8.1.5       Notice of Adverse Determination for Claim on Review.  A notice of an adverse determination for a claim on review shall set forth in a manner calculated to be understood by the claimant.

 

(a)                                  the specific reasons for the denial,

 

(b)                                 references to the specific provisions of this Plan Statement (or other applicable Plan document) on which the adverse determination is based,

 

(c)                                  a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits,

 

(d)                                 a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain information about such procedures, and

 

8.2          Rules and Regulations.

 

8.2.1       Adoption of Rules.  Any rule not in conflict or at variance with the provisions hereof may be adopted by the Plan Administrator.

 

8.2.2       Specific Rules.

 

(a)                                  No inquiry or question shall be deemed to be a claim or a request for a review of a denied claim unless made in accordance with the established claim procedures.  The Plan Administrator may require that any claim for benefits and any request for a review of a denied claim be filed on forms to be furnished by the Plan Administrator upon request.

 

(b)                                 All decisions on claims and on requests for a review of denied claims shall be made by the Plan Administrator unless delegated as provided for in the Plan, in which case references in this Section 8 to the Plan Administrator shall be treated as references to the Plan Administrator’s delegate.

 

18

 

(c)           Claimants may be represented by a lawyer or other representative at their own expense, but the Plan Administrator reserves the right to require the claimant to furnish written authorization and establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant.  A claimant’s representative shall be entitled to copies of all notices given to the claimant.

 

(d)           The decision of the Plan Administrator on a claim and on a request for a review of a denied claim may be provided to the claimant in electronic form instead of in writing at the discretion of the Plan Administrator.

 

(e)           In connection with the review of a denied claim, the claimant or the claimant’s representative shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information necessary to make a benefit determination accompanies the filing.

 

(f)            The time period within which a benefit determination will be made shall begin to run at the time a claim or request for review is filed in accordance with the claims procedures, without regard to whether all the information necessary to make a benefit determination accompanies the filing.

 

(g)           The claims and review procedures shall be administered with appropriate safeguards to that benefit claim determinations are made in accordance with governing plan documents and, where appropriate, the plan provisions have been applied consistently with respect to similarly situated claimants.

 

(h)           The Plan Administrator may, in its discretion, rely on any applicable statute of limitation or deadline as a basis for denial of any claim.

 

8.3          Limitations and Exhaustion.

 

8.3.1       Claims.  No claim shall be considered under these administrative procedures unless it is filed with the Plan Administrator within two (2) years after the Participant knew (or reasonably should have known) of the general nature of the dispute giving rise to the claim.  Every untimely claim shall be denied by the Plan Administrator without regard to the merits of the claim.

 

8.3.2       Lawsuits.  No suit may be brought by or on behalf of any Participant or Beneficiary on any matter pertaining to this Plan unless the action is commenced in the proper forum within two (2) years from the earlier of:

 

(a)           the date the Participant knew (or reasonably should have known) of the general nature of the dispute giving rise to the action, or

 

(b)           the date the claim was denied.

 

8.3.3       Exhaustion of Remedies.  These administrative procedures are the exclusive means for resolving any dispute arising under this Plan.  As to such matters:

 

19

 

(a)           no Participant or Beneficiary shall be permitted to litigate any such matter unless a timely claim has been filed under these administrative procedures and these administrative procedures have been exhausted, and

 

(b)           determinations by the Plan Administrator (including determinations as to whether the claim was timely filed shall be afforded the maximum deference permitted by law.

 

8.3.4       Imputed Knowledge.  For the purpose of applying the deadlines to file a claim or a legal action, knowledge of all facts that a Participant knew or reasonably should have known shall be imputed to every claimant who is or claims to be a Beneficiary of the Participant or otherwise claims to derive an entitlement by reference to the Participant for the purpose of applying the previously specified periods.

 

20

 

SECTION 9
 PLAN ADMINISTRATION

 

9.1          Plan Administration

 

9.1.1       Administrator.  The Company’s Vice President, Pay and Benefits (or any successor thereto) is the “administrator” of the Plan.  Except as expressly otherwise provided herein, the Plan Administrator shall control and manage the operation and administration of this Plan and make all decisions and determinations.

 

9.1.2       Authority and Delegation.  The Plan Administrator is authorized to:

 

(a)           Appoint one or more individuals or entities and delegate such of his or her powers and duties as he or she deems desirable to any individual or entity, in which case every reference herein made to Plan Administrator shall be deemed to mean or include the individual or entity as to matters within their jurisdiction.  Such individual may be an officer or other employee of a Participating Employer or Affiliate, provided that any delegation to an employee of a Participating Employer or Affiliate will automatically terminate when he or she ceases to be an employee.  Any delegation may be rescinded at any time; and

 

(b)           Select, employ and compensate from time to time such agents or consultants as the Plan Administrator may deem necessary or advisable in carrying out its duties and to rely on the advice and information provided by them.

 

9.1.3       Determination.  The Plan Administrator shall make such determinations as may be required from time to time in the administration of this Plan.  The Plan Administrator shall have the discretionary authority and responsibility to interpret and construe this Plan Statement and to determine all factual and legal questions under this Plan, including but not limited to the entitlement of Participants and Beneficiaries, and the amounts of their respective interests.  .  Each decision of the Plan Administrator shall be final and binding upon all parties.  Benefits under the Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.

 

9.1.4       Reliance.  The Plan Administrator may act and rely upon all information reported to it hereunder and need not inquire into the accuracy thereof, nor be charged with any notice to the contrary.

 

9.1.5       Rules and Regulations.  Any rule, regulation, policy, practice or procedure not in conflict or at variance with the provisions hereof may be adopted by the Plan Administrator.

 

9.2          Conflict of Interest.  If any individual to whom authority has been delegated or redelegated hereunder shall also be a Participant in this Plan, such Participant shall have no authority with respect to any matter specially affecting such Participant’s individual interest hereunder or the interest of a person superior to him or her in the organization (as distinguished from the interests of all Participants and Beneficiaries or a broad class of Participants and Beneficiaries), all such authority being reserved exclusively to other individuals as the case may be, to the exclusion of such Participant, and such Participant shall act only in such Participant’s individual capacity in connection with any such matter.

 

21

 

9.3          Service of Process.  In the absence of any designation to the contrary by the Plan Administrator, the General Counsel of the Company is designated as the appropriate and exclusive agent for the receipt of service of process directed to this Plan in any legal proceeding, including arbitration, involving this Plan.

 

9.4          Choice of Law.  Except to the extent that federal law is controlling, this Plan Statement will be construed and enforced in accordance with the laws of the State of Minnesota.

 

9.5          Responsibility for Delegate.  No person shall be liable for an act or omission of another person with regard to a responsibility that has been allocated to or delegated to such other person pursuant to the terms of the Plan Statement or pursuant to procedures set forth in the Plan Statement.

 

9.6          Expenses.  All expenses of administering the benefits due under this Plan shall be borne by the Participating Employers.

 

9.7          Errors in Computations.  It is recognized that in the operation and administration of the Plan certain mathematical and accounting errors may be made or mistakes may arise by reason of factual errors in information supplied to the Plan Administrator or trustee.  The Plan Administrator shall have power to cause such equitable adjustments to be made to correct for such errors as the Plan Administrator, in its sole discretion, considers appropriate.  Such adjustments shall be final and binding on all persons.

 

9.8          Indemnification.  In addition to any other applicable provisions for indemnification, the Participating Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer and employee of the Participating Employers against any and all liabilities, losses, costs or expenses (including legal fees) of whatsoever kind and nature which may be imposed on, incurred by or asserted against such person at any time by reason of such person’s services as an administrator in connection with this Plan, but only if such person did not act dishonestly, or in bad faith, or in willful violation of the law or regulations under which such liability, loss, cost or expense arises.

 

9.9          Notice.  Any notice required under this Plan Statement may be waived by the person entitled thereto.

 

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SECTION 10
 CONSTRUCTION

 

10.1        IRC Status.  This Plan is intended to be a nonqualified deferred compensation arrangement that will comply in form and operation with the requirements of Code section 409A and this Plan will be construed and administered in a manner that is consistent with and gives effect to such intention.

 

10.2        Rules of Document Construction.  In the event any provision of this Plan Statement is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan.  The titles given to the various Sections of this Plan Statement are inserted for convenience of reference only and are not part of this Plan Statement, and they shall not be considered in determining the scope, purpose, meaning or intent of any provision hereof.  The provisions of this Plan Statement shall be construed as a whole in such manner as to carry out the provisions thereof and shall not be construed separately without relation to the context.

 

10.3        References to Laws.  Any reference in this Plan Statement to a statute or regulation shall be considered also to mean and refer to any subsequent amendment or replacement of that statute or regulation unless, under the circumstances, it would be inappropriate to do so.

 

23Exhibit (10)J

 

TARGET CORPORATION

 

OFFICER INCOME CONTINUANCE POLICY STATEMENT

 

As Amended and Restated June 8, 2011

 

I.                                         CONCEPTS

 

A.                                   GENERAL

 

The present policy of the Corporation is to provide, under certain defined circumstances, Income Continuance Payments to certain “Officers” or “Executives” whose employment is terminated at the instance of the Corporation or who involuntarily or for good reason terminate within two years after a Change in Control. This policy is intended to assist in the occupational transition and financial security of those identified Executives whose services are no longer deemed required within the Corporation, who have during their tenure been faithful and honest employees, who do not during the period of those payments engage in disqualifying misconduct, and to the extent not compensated for services to a directly competitive employer and to assist Executives who involuntarily or for good reason terminate employment with the Corporation within two years after a Change in Control.

 

This will be known as the Officer Income Continuance Policy (“Officer-ICP”) of the Corporation. It will be interpreted and applied in accordance with this Statement of policy and with any subsequent amendment or restatement applicable to the Executive. The Corporation’s Income Continuance Policy Statement has been consolidated and transferred into the Officer-ICP.

 

The Officer-ICP has been operated in compliance with Internal Revenue Code (“Code”) Section 409A since January 1, 2005.  Effective January 1, 2009, the Officer-ICP was amended to comply with Code Section 409A with respect to all amounts payable from the Officer-ICP that are considered nonqualified deferred compensation.

 

B.                                     ELIGIBILITY

 

To be eligible under Officer-ICP, an individual must be an Officer as specified in this Statement.

 

C.                                     REASSIGNMENT

 

An Executive will continue to have income protection under Officer-ICP for at least 12 calendar months (Eligibility Period) after internal reassignment to a position which does not otherwise include eligibility for Officer-ICP benefits.

 

D.                                    SPIN-OFF

 

An Executive who is employed by a business unit on the closing date of any Spin-Off which includes such business unit is no longer eligible for Officer-ICP.

 

1

 

E.                                      DISQUALIFICATION AND REDUCTION

 

Serious and deliberate misconduct in employment by an Executive resulting in discharge for cause can disqualify an Executive from Officer-ICP eligibility. Except as otherwise expressly provided in this Statement, after termination under Officer-ICP and normal windup of former duties an Executive will not be required to perform any regular services for the Corporation, and will be free to accept any other employment. Except as otherwise provided in this Statement, Officer-ICP Payments otherwise payable to an Executive will be reduced or excused in the amount of compensation from Directly Competitive Employment as specifically defined to the Executive in advance according to this Statement. An Executive otherwise entitled to Officer-ICP Payments after Termination or Reassignment will be disqualified from receiving future Payments by reason of serious and deliberate misconduct which is unlawful or clearly and seriously harmful to the Corporation, or to its interests.

 

F.                                      INTERPRETATION

 

Subject to the express terms of this Statement, the Chief Executive Officer of the Corporation will have sole and final authority to interpret the Officer-ICP and determine its application, and will interpret it consistently. Section I of this Statement is intended as a summary of the more detailed provisions of Section II. For that reason, Section II will control in the event of any difference.

 

II.                                     APPLICATION

 

A.                                   ELIGIBILITY PERIOD - DEFINITION

 

The “Eligibility Period” of an Executive is determined by the Executive’s most recent Salary Grade on the Notice of Termination or Reassignment by the Corporation; provided, however, in the event of a downgrade or downgrades, the Eligibility Period of the Executive’s highest Salary Grade shall continue to be applicable until the expiration of the Eligibility Period for that Salary Grade and then the Eligibility Period for the next highest Salary Grade shall be used until it expires and this process shall continue until the Eligibility Period for the last Salary Grade for which this Statement covers expires. It will be calculated according to the following schedule:

 

	
Salary Grade
    	
 
    	
Eligibility Period
    
	
 
    	
 
    	
 
    
	
 
    	
37 or higher
    	
 
    	
24 months
    
	
 
    	
35-36
    	
 
    	
22 months
    
	
 
    	
32-34
    	
 
    	
20 months
    
	
 
    	
30-31
    	
 
    	
18 months
    
	
 
    	
28-29
    	
 
    	
16 months
    
	
 
    	
26-27
    	
 
    	
14 months
    
	
lower than 26
    	
 
    	
12 months
    

 

2

 

An Executive entitled to Officer-ICP Payments will not be entitled to prepayment or other change in the payment schedule.

 

B.                                     ELIGIBILITY PERIOD - USE

 

The Eligibility Period of an Executive will determine the number of consecutive calendar months for which an Executive remains eligible for Officer-ICP Payments under this Statement after:

 

1.                                       Reassignment to a new position within the Corporation which is not designated an Officer Position, or

 

2.                                       A downgrade as set forth in A. above.

 

C.                                     PAYMENT PERIOD - DEFINITION

 

The Payment Period for an Executive will consist of the same number of months as the Executive’s Eligibility Period, measured from the time when Officer-ICP Payments first become payable to the Executive under the terms of this Statement and the agreement with the Executive implementing the terms of this Statement.

 

D.                                    PAYMENTS

 

1.                                       Amount

 

Each monthly Officer-ICP amount during the Payment Period will equal one twelfth (1/12) of the Executive’s Final Annual Cash Compensation from the Corporation which will consist of the sum of:

 

a.                                       Base Compensation

 

The annual Base (regular monthly or other fixed salary) rate payable as Cash Compensation to the Executive at the time of Notice of Termination or effective date of Reassignment or downgrade, but in no event less than the highest annual rate paid to the Executive at any time during a number of months equal to the Executive’s Eligibility Period immediately before the Notice of Termination or effective date of Reassignment or downgrade, and

 

b.                                      Performance Bonus

 

The average amount of the three annual Performance Bonuses most recently paid or credited to the Executive as Cash Compensation or deferred bonus, prior to Executive’s Notice of Termination or effective date of Reassignment or downgrade. For purposes of Officer-ICP, the Performance Bonus of an Executive shall be determined according to the applicable Short Term Incentive Plan of the Corporation, shall also include, if applicable, any discretionary bonus paid during said

 

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applicable period on account of the Executive’s performance but outside of the purview of the then applicable Short Term Incentive Plan.

 

c.                                       Adjustment

 

The annual rate in dollars of each merit increase awarded to an Executive before Notice of Termination will be included in Base Compensation to determine the Executive’s Officer-ICP Payments. If the Executive’s annual rate of Base Compensation at the time of Notice of Termination has been increased or decreased to reflect a change from the Short Term Incentive Plan used to determine the Performance Bonus defined above, and the change is for the purpose of altering the future relationship of Bonus to total Annual Cash Compensation of the Executive, then the dollar amount of that increase or decrease in annual rate of Base Compensation will be excluded in determining ICP Payments.

 

d.                                      Installment Payments

 

Although the amount of an Executive’s benefit is determined on a monthly basis, such monthly amount shall be converted to and made at the same frequency as the Corporation’s standard payroll practices. With respect to any benefit under Officer-ICP that is considered deferred compensation pursuant to Code Section 409A, each installment payment shall be considered a separate payment.

 

2.                                       Commencement

 

Officer-ICP Payments, or entitlement to begin receiving them, will commence after the Corporation has received a valid unrevoked Release and Agreement from Executive, subject to any Set-offs, Adjustments and Withholding as specified herein. Unless the Executive is a Specified Employee, Officer-ICP Payments shall commence as of the date specified in the agreement with the Executive implementing the terms of an Executive’s Officer-ICP Payments, but not later than ninety (90) days following the date of the Executive’s separation from service, as defined under Code Section 409A. If at the time of the Executive’s separation from service, as defined under Code Section 409A, the Executive is a Specified Employee then no distribution of an Officer-ICP Payment that is considered deferred compensation pursuant to Code Section 409A will be made within 6 months of the separation from service, as defined under Code Section 409A, unless such Officer-ICP Payment would otherwise be exempt from the requirements of Code Section 409A. Any Officer-ICP Payments suspended during such 6 month period will be paid at the time of the first Officer-ICP Payment after such 6 month period. The Executive shall not be entitled to any compensation, benefits or perquisites, other than Officer-ICP Payments, after the date of the Executive’s separation from service, as defined under Code Section 409A.

 

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3.                                       Set-Off and Withholding

 

Officer-ICP Payments are not intended to duplicate or be in addition to any other payment due between the Corporation and the Executive.

 

a.                                       Reduction

 

Each Payment otherwise due from the Corporation to the Executive will be reduced, dollar for dollar and in timing by all amounts which the Executive receives or is entitled to receive from the Corporation or under a plan, program or agreement maintained by and at the expense of the Corporation after the Employment Severance Date. This will include but not be limited to legally required payments during any required notice period or in connection with a plant closing, mass layoff, termination, severance or redundancy under any law, regulation or order. This will also include such sources as life and disability insurance. It will not apply to accrued vacation or expense reimbursement (both will be paid in cash at termination), pension proceeds, 401(k) proceeds, deferred compensation plans, Social Security, equity awards (for example, stock options, performance shares or restricted stock awards) or benefits payable under any Worker’s Compensation or similar law or regulation. Termination of employment by reason of mandatory retirement under a lawful and uniform policy of the employer applicable to the Executive will not be treated as a termination for Officer-ICP purposes. In no circumstance whatsoever shall there be any combination or duplication of any Officer-ICP Payments with any such other legally required payment or payments which shall result in the Executive receiving because of or due to termination of employment a combined total amount from the Corporation which is greater than the amount of Officer-ICP Payments to which Executive is entitled under this Officer-ICP before accounting for such legally required other payments.

 

b.                                      Adjustments

 

Taxes and other amounts which the Corporation reasonably determines are required by law or by the Executive’s written instruction will be withheld from Officer-ICP amounts otherwise payable.

 

4.                                       Recovery of Payments.

 

In addition to any other remedies available to the Corporation on account of an Executive’s violation of the requirements under this Officer-ICP, the Corporation has the right to recover Officer-ICP Payments that have been made to the Executive as specified in the agreement with the Executive implementing the terms of an Executive’s Officer-ICP Payments.

 

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E.                                      DEATH OF EXECUTIVE

 

If an Executive should die after Notice of Termination and before completion of the Executive’s Payment Period, the remaining Payments will be made by the Corporation as follows, without unnecessary interruption:

 

1.                                       Unless the Executive has otherwise designated in unrevoked writing, acknowledged in writing by the CEO, the surviving spouse of the Executive, if any, will be entitled to all remaining Payments.

 

2.                                       If the Executive has otherwise effectively designated in unrevoked writing, acknowledged in writing by the CEO, then Payment will be made to or for the account of the person or persons so designated as identified by the Corporation.

 

3.                                       In the absence of effective prior written designation by the Executive and of a known surviving spouse, the Corporation shall pay any remaining Payments to the Executive’s estate.

 

4.                                       In the interest of providing uninterrupted income to authorized beneficiaries of the Executive, any Officer-ICP Payment made with reasonable care and in good faith by the Corporation shall conclusively constitute Payment by the Corporation in accordance with and satisfaction of the entitlement of the Executive and Executive’s beneficiaries under Officer-ICP. No interest or other charge shall be payable by the Corporation or its representatives on any Payment delayed by the Corporation to permit reasonable verification of authorized recipient(s).

 

F.                                      DISQUALIFICATION

 

1.                                       No Executive will be disqualified from receipt of future Officer-ICP Payments by reason of any act or omission of anyone other than the Executive or one or more persons acting pursuant to the conscious and effective control of the Executive. Disqualification will be interpreted as follows:

 

a.                                       While Employed in the Corporation

 

Deliberate and serious disloyal or dishonest conduct in the course of employment will disqualify if it justifies and results in prompt discharge for specific cause under the established policies and practices of the Corporation as interpreted by the CEO for this purpose. Examples would include material unlawful conduct, material and conscious falsification or unauthorized disclosure of important records or reports, embezzlement or unauthorized conversion of property, serious violation of conflict of interest or vendor relations policies, and misuse or disclosure of significant trade secrets or other information likely to be of use to the detriment of the Corporation or its interests.

 

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b.                                      After Notice of Termination

 

The Officer-ICP will not restrict an Executive’s conduct or employment opportunities after Notice of Termination, or any independent remedy of the Corporation or its representatives by reason of the Executive’s conduct while employed. The obligation of the Corporation to or for an Executive during the Eligibility and Payment Periods can be terminated only by the deliberate conduct of the Executive or one acting under the Executive’s conscious and effective control, and only as to any Officer-ICP Payments not yet due, by reason of one or more of the following events:

 

1)              Unauthorized removal, use or disclosure of strategic or operating plans, trade secrets, customer lists, internal systems or other significant proprietary information of or concerning the Corporation or its personnel, the use or disclosure of which is intended or likely to cause loss or reduction of business advantage or substantial injury to the Corporation or its management, business opportunities or interests.

 

2)              Expressing or endorsing publication of untrue statements which are intended or likely to receive broad public attention and to bring the Corporation or its interests, methods or representatives into disrepute.

 

3)              Providing materially false or misleading information concerning post-termination employment, or failure or refusal promptly and accurately to provide required information, verification or authorization required by the CEO as provided in this Statement and affecting any Officer-ICP payment due from the Corporation.

 

4)              Solicitation of or an offer to an employee within the Corporation to accept employment elsewhere, where the selection of or offer to the recruited employee was based in the whole or in part upon Executive’s knowledge or experience concerning the employee which was acquired by the Executive while employed within the Corporation or through one or more personal acquaintances employed within the Corporation.

 

5)              Exercising the discretion, authority or powers of an office or position held by an Executive after Notice of Termination, and whether or not before an Employment Severance Date, unless specifically authorized or directed in writing in advance by an authorized executive of the Corporation.

 

2.                                       Recoupment

 

Notwithstanding any other provisions of the Officer-ICP, pursuant to the Corporation’s recoupment policy as adopted by the Compensation Committee of

 

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the Board of Directors (the “Committee”), as amended from time to time, and as in effect at the date of the Officer’s Employment Severance Date (“Recoupment Policy”), an Officer who engaged in intentional misconduct that contributed directly or indirectly, in whole or in part, to the need for a restatement of the Corporation’s consolidated financial statements may be disqualified from receipt of Officer-ICP Payments and the Committee retains the discretion to recover Officer-ICP Payments in such event.

 

a.                                       If the Committee determines Officer-ICP Payments are subject to recovery by the Corporation under this Section II.F.2. and the Recoupment Policy, the Committee shall be entitled, in its discretion, to demand repayment or cancellation of all or a portion of the maximum amount that can be recovered or cancelled, to the extent necessary to avoid unjust enrichment of the recipient under the circumstances.

 

b.                                      Pending a determination by the Committee on the application of this Section II.F.2. and the Recoupment Policy to a recipient of Officer-ICP Payments, the Committee shall have the authority to suspend any payments under the Officer-ICP.

 

c.                                       Upon a determination by the Committee that Officer-ICP payments are subject to recovery by the Corporation, the Corporation shall have the right, to the extent permitted by law (and without causing payments to become taxable under Section 409A of the Code), to set-off amounts due under this Section II.F.2. and the Recoupment Policy against any amount owed by the Corporation to the recipient of Officer-ICP Payments under any deferred compensation plan.

 

d.                                      An amendment of the Recoupment Policy shall not be treated as an amendment of the Officer-ICP under Section II.M.

 

3.                                       Preservation of Rights

 

Neither Officer-ICP nor its application shall waive, excuse, preclude or otherwise affect any right or remedy which the Corporation or any agent or representative of the Corporation may have, individually or collectively, under law by reason of conduct of the Executive during or after employment within the Corporation. Any remedies or rights set forth in this Section II.F. will be additional and not exclusive remedies.

 

G.                                     COMPETITIVE EMPLOYMENT

 

An Executive will receive not less than the full amount of the specified Officer-ICP Payments from the Employment Severance Date through the full Payment Period whether or not compensated by another employer for services in that period, unless disqualified under Section F., immediately above or as provided in this Section G. Compensation from employment which is not identified as Directly Competitive Employment (“DCE”) will be in addition to and will not reduce any Officer-ICP

 

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Payment. If an Executive engages in DCE as specifically defined in advance and by this Statement, then each Officer-ICP Payment otherwise payable to the Executive will be currently reduced, dollar for dollar and in timing, by the amount of all Cash Compensation earned (whether on a current or deferred payment basis) from that source during the Payment Period.

 

These provisions will be interpreted and administered as follows:

 

1.                                       Purpose of Set-Off

 

Reduction of Officer-ICP Payments by the amount of Cash Compensation determined to be from DCE is not intended to restrict or penalize an Executive’s choice of alternative career opportunities, but only to preserve and reconcile the personal income security intended to be provided to Executives by Officer-ICP with the legitimate interests of the Shareholders of the Corporation in its highly competitive business context.

 

2.                                       Competitors Identified

 

At or about the time of Notice of Termination, the Corporation will inform the Executive in writing of those employers who have been individually and specifically determined to offer DCE for Officer-ICP purposes with respect to the Executive’s former employment within the Corporation. This designation will take into account existing operations and known plans of the Corporation and of the employers listed, and will not change during the Eligibility Period by reason of subsequent and mutually unanticipated changes in the operations or plans of either.

 

3.                                       Criteria

 

The following criteria will be employed in determining and administering Officer-ICP application to DCE.

 

a.                                       Selective Potential Detriment

 

A position will not be determined to constitute DCE for this purpose unless the CEO determines that the competitive effectiveness of the Executive and the new employer would be materially enhanced by the Executive’s current knowledge of such matters as the particular methods, policies, customers, suppliers, personnel or plans of the Corporation or its relevant business unit, as distinguished from the skills, experience and services of the Executive generally. The Corporation will identify for DCE purposes not more than five persons, firms or corporations who are determined for this purpose to be the leading direct and immediate competitors of the affected business of the Corporation.

 

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b.                                      Preservation of Employment Opportunities

 

Whether or not an Executive’s most recent employment within the Corporation involved direct participation in the management of one or more business units, this section will not be used to discourage or penalize otherwise suitable employment opportunities in retailing or otherwise. The Corporation may require, as a condition of avoiding DCE designation for the Executive, a suitable written undertaking by the Executive and the new employer that the Executive remains obliged not to use or divulge trade secrets or proprietary information of the Corporation and that the Executive will not volunteer or be expected or required to violate that obligation in the course of the new employment.

 

c.                                       Relevant Considerations

 

In determining DCE, the CEO will give suitable consideration to geographic, product and price-line marketing overlaps, the nature and content of the Executive’s particular knowledge of strategies and plans within the Corporation, and the extent to which the Executive’s knowledge, as distinguished from skills, is likely to be a significant factor in generating an employment opportunity. Employment exclusively with a component of a larger business entity, which component is not presently or known to be planned to be a direct and immediate competitor of the Executive’s former business unit, will not be treated as DCE merely because one or more other components of that entity is or may become a competitor of the Corporation or one or more of its business units.

 

4.                                       Officer-ICP Payment Reduction

 

Uniform and responsible administration of Officer-ICP will require reliable information and verification to the Corporation.

 

a.                                       Reporting

 

To be eligible for any Officer-ICP Payment during a period of DCE, an Executive must, in addition to all other required reporting, provide to the Corporation in writing an accurate statement of the amount and payment schedule of all Cash Compensation or its equivalent to be received from the new DCE employer and of any subsequent change or correction of that amount, in such form and with such verification as the CEO may request in writing. An Executive will not be or become entitled to receive or retain any portion of any Officer-ICP Payment on account of any Payment Period for which that information, and any required verification, is not currently and accurately provided.

 

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b.             Verification and Reconciliation

 

Required verification may include authorization for written confirmation from the employer and confidential disclosure of completed W-2, payroll and income tax forms of the Executive on which taxes have been or will be paid. If the Corporation withholds for more than 30 days any Officer-ICP Payment pending receipt of required information or verification which is later received and found satisfactory, the Corporation will pay interest at a realistic rate determined by the CEO for the period of delay. The Corporation and the Executive will each fairly and promptly adjust by payment any discrepancy later discovered between reported and actual Cash Compensation of the Executive, but the Corporation will have no liability for any amount not claimed by an Executive in writing before final expiration of the Executive’s Payment Period.

 

H.            REASSIGNMENT AND SPIN-OFF

 

1.             Reassignment and Other Adjustments

 

The Corporation may transfer an Executive to another position within the Corporation or reduce the Executive’s Base Compensation in Executive’s current position (collectively referred to as “Reassignment”). An Executive in the case of either event may elect Officer-ICP Payments if the Executive’s total monetary compensation after Reassignment will be measurably and substantially below the total monetary compensation of the Executive immediately before notice of Reassignment. For this purpose, total monetary compensation will include salary and bonus and continuation, or payment of the substantial equivalent in Cash Compensation, of all non-cash personal benefits and perquisites which the Executive was receiving immediately before and does not receive after the Reassignment and which are susceptible of accurate and objective measurement in dollars as determined by the CEO. An Executive who elects Officer-ICP Payments must terminate employment with the Corporation within thirty (30) days after notice of Reassignment to be eligible for such payments.

 

2.             Spin-Off

 

An Executive who is employed by a business unit on the closing date of any Spin-Off that includes such business unit is no longer eligible for Officer-ICP. A Spin-Off will be deemed to have occurred for purposes of this paragraph whether or not afterward: (a) the Executive has a personal ownership or incentive interest in the severed business unit or operation; or (b) the severed business unit or operation becomes, as a result of or after the severance, a part of one or more other legal entity or entities.

 

I.              REPORTING

 

For convenience and uniformity of administration, each Executive while eligible for or entitled to Officer-ICP Payments after Notice of Termination will be expected as a pre-

 

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condition currently and accurately to inform the Corporation in writing of the name and business address of each employer of Executive during the Eligibility and Payment Periods, including a summary description of the nature and principal business locations of the new employer and the title, principal duties, address and telephone number of the Executive. Significant changes in employment, duties or location will also be promptly reported. The Corporation will not be required to make any Officer-ICP Payment for any period for which it has not received a current and accurate report as required by, or by the CEO in accordance with, this Statement.

 

J.             INTERPRETATION

 

1.             Any decision of the CEO will be: (1) Final and conclusive of the rights and obligations of all affected parties and (2) Applied uniformly as to all Executives then similarly situated (subject to subsequent Officer-ICP amendment); and (3) Not subject to separate determination or review by any public or private agency or authority except as expressly provided in this Statement.

 

2.             References to compensation and other monetary rates or measurements in this Statement and its applications are in current dollars, unadjusted by reason of inflation, deflation or otherwise.

 

3.             Any portion of a full calendar month or year will be prorated on a full calendar basis, without differential related to such considerations as working days or holidays. Any portion of a day will be treated as a full day, and measurement days will begin and end at midnight, current time. The fiscal year of the Corporation will be treated for all purposes as it is for financial reporting purposes.

 

4.             In the event of application or interpretation of Officer-ICP to an individual Executive who is a Director of the Corporation, or otherwise in its sole discretion, the Board of Directors of the Corporation or its authorized committee shall have and may exercise the sole, exclusive and final authority and discretion of the CEO for any purpose under Officer-ICP.

 

K.            RELEASE

 

Payment and receipt of Officer-ICP Payments will be in full and final satisfaction of all claims by or through an Executive against the Corporation and its representatives by reason of the employment of the Executive and its termination, except as otherwise expressly provided in this Statement or as required by applicable law or regulation. A signed and unrevoked written Release to that effect, in form approved by the CEO, will be delivered by the Executive or the Executive’s representative to the Corporation before any Officer-ICP Payment will become payable by the Corporation to or on account of the Executive. Such Release must be delivered to the Corporation within 60 days of the date of Executive’s separation from service, as defined under Code Section 409A. The Release may, without limitation, require a representation that no confidential documents concerning the Corporation or its intentions have been or will be removed or retained by the Executive without specific authority, and that the Executive will not

 

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engage in disqualifying misconduct as defined in this Statement, in reference to the Corporation. The Release will not affect any conversion, vested or continuing rights available to an Executive under a plan of the Corporation other than Officer-ICP.

 

L.             GENERAL

 

The Officer-ICP and this Statement will not constitute or infer an obligation or undertaking to employ any person for any future period of time or in any specific position. Officer-ICP Eligibility or Payments after Notice of Termination will not create, continue or evidence any employment relationship with the Corporation. All employment privileges, benefits and perquisites not expressly and in writing reserved to an Executive under Officer-ICP will terminate on Executive’s separation from service, as defined under Code Section 409A, unless otherwise expressly agreed in advance in writing by the Corporation. This will not affect any conversion, vested or other continuing benefits or rights available to an Executive under a plan of the Corporation other than Officer-ICP.

 

M.           AMENDMENT

 

Officer-ICP and this Statement may not be terminated and may not be amended to reduce benefits with respect an Executive subject to the Officer-ICP until twelve months after the Executive receives written notice of the proposed termination or amendment. Except as set forth in the first sentence hereof, Officer-ICP and this Statement can be amended (including modification, restatement, suspension and termination) at any time, without prior written notice to or consultation with any Executive, by action of the Board of Directors or by action of a person so authorized by resolution of the Board of Directors and subject to any limitations or conditions in such authorization. Any such change will have effect as follows:

 

1.             Effective Date of Change

 

Except as set forth below, any amendment will be effective on the date of its adoption by the Board or committee or such other such subsequent date or dates as may be specified in the amendment or the resolution by which it is adopted. Unless otherwise mutually agreed in writing by the parties, (a) an amendment or termination will have no effect upon any Executive who at the time has received Notice of Termination under Officer-ICP and (b) a termination or an amendment that reduces benefits will not be effective as to an Executive subject to the Officer-ICP until twelve months after the Executive receives written notice of the termination or amendment.

 

2.             Notice of Amendment

 

The Corporation will promptly after any amendment provide to each Executive then eligible for Officer-ICP benefits a written statement of Officer-ICP as amended, and no amendment will be effective as to an Executive until the later of the date the Executive receives such written statement, or twelve months after notice as provided in 1 above. An Executive will be deemed to have received the

 

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written statement if it is delivered to the Executive in person, or after 48 hours following its hand delivery or dispatch by mail or other suitable means of delivery to the last known address of the Executive.

 

3.             Acquiescence

 

An amendment will apply in full to an Executive if mutually agreed in writing by the Executive and the Corporation, or if the Executive or the Executive’s representative knowingly receives a benefit or improvement under Officer-ICP as amended which would not have been available without the amendment. If any such benefit from an amendment is knowingly received by an Executive with the consent of the Corporation, then all elements of that amendment and all prior Officer-ICP Statements and amendments then currently in effect will also be applicable to the Executive.

 

4.             Adjustment

 

A change in or addition or deletion of any benefit or perquisite plan or program of the Corporation applicable to an Executive may be expressly made subject to prior written agreement by the Executive upon a corresponding change in the interpretation or application of Officer-ICP to the Executive, to prevent redundant or other unintended benefits or detriments to the Executive or the Corporation which might otherwise result.

 

5.             Change in Control

 

No amendment or termination that would adversely affect the benefits or protections under the Officer-ICP of any eligible Executive as of the date of such amendment or termination shall be effective as to such individual unless no Change in Control occurs within twelve (12) months of the adoption of such amendment or termination, and any such attempted amendment or termination adopted within twelve (12) months prior to a Change in Control shall retroactively be null and void from the date of adoption as it relates to all such Executives who were eligible for benefits under the Officer-ICP prior to such adoption.

 

For two (2) years after a Change in Control, the Officer-ICP and this Statement may not be amended in any manner that would adversely affect the benefits or protections under the Officer-ICP of the Executives who are eligible for benefits under the Officer-ICP at the time of the Change in Control.

 

N.            APPLICABLE LAW

 

It is intended that the decision of the CEO, as specified in the Officer-ICP statement, will be exclusive and final with respect to any application or interpretation of Officer-ICP. If any body of law should be used or applied in determining the meaning or effect of Officer-ICP, in the interest of consistency this will be deemed an agreement made

 

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and executed in the State of Minnesota and the law of the State of Minnesota will control to the extent not preempted by federal law.

 

O.            DEFINITIONS

 

As used in this Statement:

 

1.             “Cash Compensation”

 

Means all amounts earned, whether or not currently payable, as wages, salary, bonus or a combination by an Executive, payable in cash or its equivalent or agreed to be in lieu of cash compensation. This will not include any stock-based compensation (whether such stock-based compensation is settled in cash or otherwise), or the value of employee or executive perquisites or benefits accrued or received pursuant to a plan of the employer which is uniformly applied to all of the employees of the employer who are similarly situated or is consistent with established prior practice for the position occupied by the Executive.

 

2.             “CEO”

 

Means the Chief Executive Officer of Target Corporation, as then currently designated by its Board of Directors, or as otherwise expressly provided in the Officer-ICP Statement.

 

3.             “Corporation”

 

Means Target Corporation and each and all of its business units, including divisions and subsidiaries, unless otherwise clearly intended by the written context, and any person with whom Target Corporation would be considered a single employer under Code Sections 414(b) and 414(c).

 

4.             “Directly Competitive Employment” (or “DCE”)

 

Means personal services to, or for the direct and intended benefit of, a person, firm or corporation determined by the CEO and specified in writing to the Executive at or about the time of Notice of Termination as constituting DCE for Officer-ICP purposes.

 

5.             “Employment Severance Date”

 

All employment relationships between the Executive and the Corporation shall cease on the Employment Severance Date.

 

6.             “Executive” or “Officer” (both of which shall have the same definition)

 

Means an Executive Officer (as defined by the Securities and Exchange Commission) of the Corporation or an individual employed as an executive within the Corporation who currently, or within the designated Eligibility

 

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Period, has been designated and categorized by the CEO as an Officer of the Corporation.  Unless clearly otherwise intended by the written context, Executive or Officer will include all beneficiaries of and persons claiming by or through the designated employee or former employee.

 

An Executive or Officer is not eligible for Officer-ICP unless (1) his or her services are performed within the continental United States (including Alaska) or Hawaii or (2) his or her principal base of operations to which he or she frequently returns is within the continental United States (including Alaska ) or Hawaii.

 

7.             “Notice of Termination” (or “Notice”)

 

Means an unconditional written or oral statement of an Executive’s organizational superior that the Executive’s employment in the Corporation is terminated at the instance of the Corporation. Notice that an Executive’s employment will end because of achievement of the age of mandatory retirement under lawful policies of the Corporation will not be a Notice of Termination for Officer-ICP purposes.

 

8.             “Payments” (or “ICP Payments”)

 

By the Corporation will include all of those payments made by or on account of the Corporation under Officer-ICP and will include all of those made to or for the account of an Executive or a designated creditor or authorized representative or beneficiary of an Executive or deceased Executive.

 

9.             “Reassignment”

 

Means the transfer of an Executive to another position within the Corporation or a reduction on the Executive’s Base Compensation in Executive’s current position.

 

10.           “Spin-Off”

 

Means a sale of assets or stock or other disposition as a going business of the Corporation’s ownership or control of a business unit or other operation previously a part of the Corporation.

 

11.           “Change in Control”

 

“Change in Control” means one of the following:

 

(a)           Individuals who are Continuing Directors cease for any reason to constitute 50% or more of the directors of Target, or

 

(b)           30% or more of the outstanding voting power of the Voting Stock of Target is acquired or beneficially owned (within the meaning of Rule

 

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13d-3 under the Exchange Act) by any Person other than an entity resulting from a Business Combination in which clauses (x) and (y) of subparagraph (c) apply, or

 

(c)           the consummation of a merger or consolidation of Target 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 Target’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 (within the meaning of Rule 13d-3 under the Exchange Act) of Target’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 Target or all or substantially all of Target’s assets either directly or through one or more subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of Target’s Voting Stock immediately prior to such Business Combination) as their beneficial ownership of Target’s Voting Stock immediately prior to such Business Combination, and (y) no Person 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

 

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

 

For purposes of this Section II.O.11:

 

(i)            “Continuing Director” means an individual (A) who is, as of June 8, 2011, a director of Target, or (B) who becomes a director of Target after June 8, 2011, and whose initial appointment, or nomination for election by Target’s shareholders, was approved by at least a majority of the then Continuing Directors; provided, however, that any individual whose initial assumption of office occurs as a result of either an actual or threatened contested election by any Person (other than the Board of Directors) seeking the election of such nominee in which the number of nominees exceeds the number of directors to be elected shall not be a Continuing Director;

 

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(ii)           “Voting Stock” means all then-outstanding capital stock of Target entitled to vote generally in the election of directors of Target;

 

(iii)          “Person” means any individual, firm, corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any affiliate or associate (as defined in Rule 14a-1(a) of the Exchange Act) of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of any capital stock of Target;

 

(iv)          “Target” means Target Corporation, a Minnesota corporation, and any successor thereof; and

 

(v)           “Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from time to time, and the regulations promulgated thereunder.

 

12.           “Salary Grade”

 

The numerical “Salary Grade” that the Executive is assigned under the Corporation’s salary grading system.

 

13.           “Auditor”

 

The “Auditor” is the independent auditor selected by a committee of two or more members of the Compensation Committee of the Board of Directors who are appointed from time to time by the Board and who are outside, independent Board members.

 

14.           “Specified Employee”

 

“Specified Employee” means an Executive who as of the date of his or her separation from service, as defined under Code Section 409A, is a “key employee” (as defined below), and the Corporation has stock that is traded on an established securities market (within the meaning of Code Section 409A(a)(2)(B)). The Executive is a “key employee” during the 12-month period beginning on the April 1 immediately following a calendar year, any time during which such Executive was a key employee as defined in Code Section 416(i) (without regard to Code Section 416(i)(5)), of the Corporation. An Executive will not be treated as a Specified Employee if he or she would not be a “specified employee” as defined under Treasury regulations issued under Code Section 409A.

 

NOTE:        Additional Definitions for particular purposes are contained in the text.

 

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P.             CHANGE IN CONTROL

 

Other provisions of this Statement to the contrary notwithstanding, in the event of a Change in Control:

 

1.             If an Executive’s employment with the Corporation is terminated, whether involuntarily or by the Executive for “good reason” (as defined in Section II.P.5), within two years following a Change in Control, an Executive shall be eligible for Officer-ICP Payments.

 

2.             To the extent the Officer ICP-Payments are not subject to Code Section 409A (including pursuant to a short-term deferral exception under Treasury Regulation Section 1.409A-1(b)(4) and separation pay plan exception under Treasury Regulation Section 1.409A-1(b)(9)), or such Change in Control qualifies as a “change in control event” under Code Section 409A, the Officer-ICP Payments shall be made in a lump sum payment within 20 days of the Executive’s separation of service, as defined under Code Section 409A; provided that if the Executive is a Specified Employee, the distribution of any such Officer-ICP Payments subject to Code Section 409A will be made 6 months after the separation of service, as defined under Code Section 409A.  The lump sum amount shall be determined by discounting the periodic Officer-ICP Payments by a rate equivalent to the annual prime rate as published in the Wall Street Journal on the first business day following the Officer-ICP Payments.

 

3.             To the extent the Officer-ICP Payments are subject to Code Section 409A, (after considering any exceptions to Code Section 409A, including the short-term deferral exception under Treasury Regulation Section 1.409A-1(b)(4) and separation pay plan exception under Treasury Regulation Section 1.409A-1(b)(9))  and such Change in Control does not qualify as a change in control event under Code Section 409A, the Officer-ICP Payments shall be made according to the payment schedule set forth in Section II.D of this Statement; provided that if the Executive is a Specified Employee, the distribution of any such Officer-ICP Payments subject to Code Section 409A will be made 6 months after Executive’s separation from service, as defined under Code Section 409A.

 

4.             Except for the Release required by Section II.K of this Statement, all other obligations or restrictions of Executive under this Statement shall terminate.

 

5.             For purposes of this Section II.P, “good reason” shall mean any material diminution of the Executive’s position, authority, duties or responsibilities (including the assignment of duties materially inconsistent with the Executive’s position or a material increase in the time Executive is required by the Corporation or its successor to travel), any reduction in salary or in the Executive’s aggregate bonus and incentive opportunities, any material reduction in the aggregate value of the Executive’s employee benefits (including retirement, welfare and fringe benefits), or relocation to a principal work site

 

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that is more than 40 miles from the Executive’s principal work site immediately prior to the Change in Control.

 

6.             If an Executive’s employment was terminated prior to a Change in Control, such Executive is receiving or is entitled to receive Officer-ICP Payments that will continue after the Change in Control, and the Change in Control qualified as a “change in control event” for purposes of Code Section 409A, then, subject to the six month delay for Specified Employees in effect under Section II.D.2, the Officer-ICP Payments due after such change in control event will be accelerated and paid to Executive in a lump sum as soon as practicable, but not more than 90 days following such change in control event. The lump sum under this Section II.P.6 will be calculated in the same manner as the lump sum calculated under Section II.P.2 above.

 

Q.            CERTAIN REDUCTION OF PAYMENTS BY THE CORPORATION

 

1.             Anything in this Officer-ICP to the contrary notwithstanding, the provisions of this Section Q shall apply to an Executive if the Auditor determines that each of a and b below are applicable.

 

a.             Payments hereunder, determined without application of this Section Q, either alone or together with other payments in the nature of compensation to the Executive which are contingent on or accelerated by a change in the ownership or effective control of the Corporation, or in the ownership of a substantial portion of the assets of the Corporation, or otherwise, would result in any portion of the payments hereunder being subject to an excise tax on excess parachute payments imposed under Code Section 4999.

 

b.             The excise tax imposed on the Executive under Section 4999 of the Code on excess parachute payments, from whatever source, would result in a lesser net aggregate present value of payments and distributions to the Executive (after subtraction of the excise tax) than if payments and distributions to the Executive were reduced to the maximum amount that could be made without incurring the excise tax.

 

2.             Under this Section Q the payments under this Officer-ICP shall be reduced (but not below zero) so that the present value of such payments and distributions shall equal the Reduced Amount. The “Reduced Amount” (which may be zero) shall be an amount expressed as the present value of the payments and distributions under this Officer-ICP that can be made without causing such payments and distributions to be subject to the excise tax under Section 4999 of the Code. To the extent necessary, the reductions in the payments and distributions will be applied to those Officer-ICP payments nearest the Employment Severance Date until the full amount of the necessary reductions have been applied. The determinations and reductions under this Section Q shall

 

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be made before any eliminations or reductions, if any, have been made under the Corporation’s Long Term Incentive Plan.

 

3.             If the Auditor determines that this Section Q is applicable to an Executive, it shall so advise the Corporation. The Corporation shall then promptly give the Executive notice to that effect together with a copy of the detailed calculation supporting such determination which shall include a statement of the Reduced Amount. Such notice shall also include a description of which and how much of the payments shall be eliminated or reduced (as long as after such election the aggregate present value of the payments equals the Reduced Amount.) For purposes of this Section Q, present value shall be determined in accordance with Section 280G of the Code. All the foregoing determinations made by the Auditor under this Section Q shall be made as promptly as practicable after it is determined that parachute payments will be made to the Executive if an elimination or reduction is not made. As promptly as practicable following the election hereunder, the Corporation shall pay to or for the benefit of the Executive such amounts as are then due to the Executive under this Officer-ICP and shall promptly pay to or for the benefit of the Executive in the future such amounts as become due to the Executive under this Officer-ICP.

 

4.             As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Auditor hereunder, it is possible that payments under this Officer-ICP will have been made which should not have been made (“Overpayment”) or that additional payments which will have not been made could have been made (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Auditor, based upon the assertion of a deficiency by the Internal Revenue Service against the Corporation or the Executive which the Auditor believes has a high probability of success, determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Executive which the Executive shall repay together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Executive if and to the extent such payment would not reduce the amount which is subject to the excise tax under Section 4999 of the Code. In the event that the Auditor, based upon controlling precedent, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid to or for the benefit of the Executive together with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.

 

5.             In making its determination under this Section Q, the value of any non-cash benefit shall be determined by the Auditor in accordance with the principles of Section 280G(d)(3) of the Code.

 

6.             All determinations made by the Auditor under this Section Q shall be binding upon the Corporation and the Executive.

 

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CLAIMS PROCEDURE

for the

Target Corporation

Officer Income Continuance Policy Statement

 

When your employment with Target Corporation (the “Company”) terminates, the Company will tell you whether you are eligible for benefits from the above-referenced plan and, if so, the amount and timing of the payments that will be made to you.

 

If you believe that the Company’s determination is incorrect in any way, you must file a written claim with the Chief Executive Officer of the Company. The Chief Executive Officer or his or her delegate ordinarily will respond to the claim within 90 days of the date on which it is received. However, if special circumstances require an extension of the period of time for processing a claim, the 90-day period can be extended for an additional 90 days by giving you written notice of the extension and the reason that the extension is necessary.

 

If the claim for a benefit is approved, you will receive written notice of the amount of your benefit and the date on which payments will begin. If your claim is denied in whole or in part, you will be told in writing the specific reasons for the decision and will receive an explanation of the procedures for reviewing the decision.

 

If you do not agree with the decision, you can request that the Chief Executive Officer reconsider his or her decision by filing a written request for review within 60 days after receiving notice that the claim has been denied. You or your representative can also present written statements which explain why you believe that the benefit claimed should be paid and may review all pertinent plan documents.

 

Generally, the decision will be reviewed within 60 days after the Chief Executive Officer receives a request for reconsideration. However, if special circumstances require a delay, the review may take up to 120 days. (If a decision cannot be made within the 60-day period, you will be notified of this fact in writing.) You will receive a written notice of the decision which will explain the reasons for the decision by making specific reference to the Plan provisions on which the decision is based.

 

These Claims Procedures must be followed before you can file a lawsuit seeking recovery of any Officer-ICP Payments to which you claim to be entitled.

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