Document:

ex10-2.htm

 

EXHIBIT 10.2

 

		
Bank of America, N.A.

1111 E. Main Street, Suite 1800

Richmond, VA  23219

 

SECURITY AGREEMENT

(ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL)

February 1, 2016

1.  THE SECURITY AND ASSIGNMENT.  Hooker Furniture Corporation (“Borrower”) hereby grants to BANK OF AMERICA, N.A. (“Bank”) a security interest in and transfers and assigns to Bank the following property (“Collateral”):

(a)  each Life Insurance Policy described on the attached Schedule of Policies, and any supplementary contracts issued in connection therewith (a “Policy”);

(b)  all claims, options, privileges, rights, title and interest in and under each Policy.

This assignment and security interest is subject to all the terms and conditions of each Policy and to all superior liens, if any, which the issuer of each Policy (each, an “Insurer”) may have against such Policy.  Borrower shall deliver each original Policy to Bank promptly upon Bank's request, and shall cause Insurer to provide to Bank such acknowledgments of the assignment of the Collateral as Bank may request from time to time.

2.  THE INDEBTEDNESS.  The Collateral secures and will secure all Indebtedness of Borrower to Bank.  For purposes of this Security Agreement, “Indebtedness” means all loans and advances made by Bank under “Facility No. 3” as defined in the Amended and Restated Loan Agreement, dated as of the date of this Security Agreement, among Bank, Borrower, Bradington-Young, LLC and Sam Moore Furniture LLC (as amended or supplemented from time to time, the “Loan Agreement”).

3.  RIGHTS OF BANK.  The rights assigned to Bank under this Security Agreement include, but are not limited to, the following:

(a)  The sole right to collect from the Insurer the net proceeds of each Policy in a lump sum distribution when it becomes a claim by death or maturity;

(b)  The sole right to surrender each Policy and receive the cash surrender value thereof at any time provided by the terms of such Policy and at such other times as the Insurer of such Policy may allow;

 

  

  

  

(c)  The sole right to obtain one or more loans or advances on each Policy, either from the Insurer of such Policy or, at any time, from other persons, and to pledge or assign each Policy as security for such loans or advances;

(d)  The sole right to collect and receive all distributions or shares of surplus, dividend deposits or additions to each Policy now or hereafter made or apportioned to each Policy, and to exercise any and all options contained in each Policy with respect to the foregoing; provided, however, that unless and until Bank notifies the Insurer of such Policy in writing to the contrary, the distributions or shares of surplus, dividend deposits and additions shall continue to be distributed in accordance with the instructions in effect on the date of this Security Agreement;

(e)  The sole right to exercise all nonforfeiture rights permitted by the terms of each Policy or allowed by the Insurer of such Policy and to receive all benefits and advantages derived therefrom; and

(f)  The sole right to all unearned premiums paid in advance under each Policy.

It is provided, however, that Bank shall not exercise the rights provided above unless and until there has been an Event of Default under the Loan Agreement.

4.  RIGHTS NOT ASSIGNED.  This Security Agreement does not give Bank the right to do any of the following:

(a)  The right to collect from the Insurer of each Policy any disability benefit payable in cash that does not reduce the amount of insurance or the cash surrender value of such Policy;

(b)  The right to designate and change the beneficiary; or

(c)  The right to elect optional modes of settlement.

The exclusion of these rights from this Security Agreement shall not impair the right of Bank to surrender any Policy completely with all its incidents or impair any other right of Bank hereunder.

5.  COSTS AND EXPENSES INCURRED BY BANK.  Borrower agrees to pay or reimburse Bank immediately, without demand, for all advances, charges, costs, and expenses incurred or paid by Bank in exercising any right, power or remedy conferred by this Security Agreement, or in the enforcement of this Security Agreement.  This includes: paying any premium on a Policy, paying any amount on any loans or advances made by any Insurer on a Policy, and paying reasonable attorneys' fees and allocated costs of in-house counsel to the extent permitted by applicable law.  All such amounts shall be added to and considered to be part of the principal of the Indebtedness, and shall bear interest from the date the obligation arises at the highest rate provided in any instrument or agreement evidencing the Indebtedness.

 

  

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6.  PAYMENT FROM ANY POLICY.  All sums received by Bank from any Policy, either in event of death of the person whose life is insured, the maturity or surrender of such Policy, the obtaining of a loan or advance on such Policy, or otherwise, shall be applied by Bank to the payment of the following obligations in such order or preference as Bank shall determine:

(a)  The Indebtedness (or, at the option of Bank, such sums may be held by Bank as cash collateral securing the Indebtedness);

(b)  Amounts claimed (whether or not Borrower disputes such claim) by the Insurer of such Policy to be due on Premiums on such Policy;

(c)  Amounts claimed (whether or not Borrower disputes such claim) by the Insurer of such Policy to be due on principal of and/or interest on loans or advances made by the Insurer on such Policy.

The balance of any amounts received by Bank from the Insurer of such Policy after payment of the obligations described above shall be paid by Bank to the persons determined by Bank in good faith to be entitled thereto under the terms of such Policy had this Security Agreement not been executed.

7.  CHANGE IN BENEFICIARY OR SETTLEMENT OPTION.  Upon Borrower's request and without unreasonable delay, Bank shall forward any Policy to the Insurer of such Policy for endorsement of any designation or change of beneficiary or any election of an optional mode of settlement.  Any such designation or change of beneficiary or election of a mode of settlement shall be made subject to this Security Agreement and to the rights of Bank hereunder.

8.  AUTHORIZATION TO INSURER.  Each Insurer is hereby authorized to recognize Bank's claims to rights hereunder without investigating the reason for any action taken by Bank, or the validity or the amount of the Indebtedness or the existence of any default thereunder, or the giving of any notice, or the application to be made by Bank of any amounts to be paid to Bank.  The sole signature of Bank shall be sufficient for the exercise of any rights under any Policy and the sole receipt of Bank for any sums received from the Insurer of such Policy shall be a full discharge and release therefor to such Insurer.  Checks for all or any part of the sums payable under any Policy shall be drawn to the exclusive order of Bank if, when, and in such amounts as may be, requested by Bank.

9.  PAYMENT OF PREMIUMS.  Borrower agrees to pay any and all premiums, or the principal of or interest on any loans or advances on each Policy whether or not obtained by Bank, or any other charges on each Policy.  If required by Bank, Borrower shall provide Bank with proof that premiums on each Policy have been paid within twenty (20) days from the due date of such premiums.  Bank may, but is not obligated to, pay any premiums, or the principal of or interest on any loans or advances on any Policy whether or not obtained by Bank, or any other charges on any Policy, due on such Policy in the event Borrower fails to do so.

 

  

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10.  DEFAULT.   Upon the occurrence of an Event of Default under the Loan Agreement, at the option of Bank, and without the necessity of demand or notice, all or any part of the Indebtedness shall become immediately due and payable.

 

11.  WAIVERS AND AUTHORIZATIONS.   Borrower hereby waives any right to require Bank to proceed against any other person obligated on the Indebtedness, proceed against or exhaust any other collateral securing the Indebtedness, or pursue any remedy in Bank's power.  Borrower waives any defense arising by reason of any disability or other defense of any other person obligated on the Indebtedness, or by reason of the cessation from any cause whatsoever of the liability of any other person obligated on the Indebtedness.  Borrower authorizes Bank, without notice or demand and without affecting its obligation hereunder, from time to time to apply the proceeds of any amounts received from any other party or on account of any other security, and direct the order or manner of realization thereon, as Bank in its discretion may determine.

12.  EXERCISE OF RIGHTS BY BANK.  All authority, powers, rights and remedies granted to Bank under this Security Agreement are in addition to any other rights or remedies authorized by law and may be exercised by Bank at its sole option.  Bank shall not be obligated or liable for any failure to exercise, or for delay in the exercise of, such authority, powers and rights.  Any forbearance, delay, or failure by Bank in enforcing any right, power, or remedy hereunder shall not be deemed to be a waiver of such right, power, or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not preclude the further exercise thereof; and every right, power, and remedy of Bank hereunder shall continue in full force and effect until such right, power, or remedy is specifically waived by an instrument in writing executed by Bank.  Bank shall not be required to institute any suit or legal action against any Insurer, and Bank is hereby authorized and empowered to settle and compromise any claims which may arise against any Insurer.  Upon the surrender of any Policy, Bank may accept the cash value as may be determined by the Insurer of such Policy at the time of such surrender.

13.  POWER OF ATTORNEY.  To the extent permitted by applicable law, Borrower hereby grants Bank a power of attorney, which shall be irrevocable and coupled with an interest so long as this Security Agreement is in effect, to execute papers and documents and do all things necessary to carry out the intent of this Security Agreement consistent with the other provisions hereof, either in the name of Bank or in the name of Borrower, as Bank may determine in its discretion.

14.  CONFLICTS WITH OTHER AGREEMENTS.  In the event of any conflict between the provisions of this Security Agreement and the provisions of any other agreement with respect to any Policy or Bank's security interest therein, the provisions of this Security Agreement shall prevail.  Without limiting the generality of the foregoing sentence, to the extent that any provision of any “Collateral Assignment,” defined below, is inconsistent with any provision of this Security Agreement, the provision contained in this Security Agreement will control.  To the extent possible, however, the provisions of this Security Agreement and each Collateral Assignment are intended to be interpreted to complement and supplement each other, and the absence of any provision or portion of a provision in one document shall not be deemed to be an inconsistency with the other document which contains such provisions or portion.  “Collateral Assignment” means each assignment agreement signed by the Borrower in favor of the Bank with respect to any Policy, in a form approved by the Insurer that issued that Policy.  The Borrower agrees that the filing of a Collateral Assignment with any Insurer is sufficient to provide the Insurer with notice of the assignment and security interest granted under this Security Agreement.

 

  

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15.  GOVERNING LAW.  Except to the extent that any law of the United States may apply, this Agreement shall be governed and interpreted according to the laws of the Commonwealth of Virginia, without regard to any choice of law, rules or principles to the contrary.  Nothing in this paragraph shall be construed to limit or otherwise affect any rights or remedies of Bank under federal law.

Remainder of page intentionally left blank. Signature page follows.

 

 

 

 

 

 

  

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The Borrower executed this Security Agreement as of the date first shown above, intending to create an instrument executed under seal.

Hooker Furniture Corporation

By:  /s/ Paul Huckfeldt                 (Seal)

Name: Paul Huckfeldt

Title:  CFO

Hooker Furniture Corporation

440 East Commonwealth Blvd.

Martinsville, Virginia 24112

Facsimile: 276-632-0026

Attn:  Paul A. Huckfeldt

STATE OF VIRGINIA                                                  )

 )  to-wit:

CITY/COUNTY OF MARTINSVILLE                        )

The undersigned, a Notary Public in and for the State and City/County aforesaid, certifies that Paul Huckfeldt, CFO of Hooker Furniture Corporation whose name is signed to the writing above, has this day acknowledged the same before me in my City/County aforesaid.

Given under my hand this 29th day of January, 2016.

/s/ Robert W. Sherwood                                                               

Notary Public

(Reproducible Seal)

Notary Registration Number:                                                                                                

My commission expires:                                                                                                        

 

 

  

6EX-10.1

 Exhibit 10.1 

LOCKHEED MARTIN CORPORATION 

AMENDED AND RESTATED 

2006 MANAGEMENT INCENTIVE COMPENSATION PLAN 

(Performance-Based) 
 Amended
and Restated Effective January 1, 2016 
 Article I. PURPOSE OF THE PLAN 

This Plan is established to provide a further incentive to selected Employees to promote the success of Lockheed Martin Corporation by providing an opportunity
to receive additional compensation for performance measured against established goals. The Plan is intended to achieve the following: 
  

	 	1)	Link pay of executive Employees to business performance. 

  

	 	2)	Incentivize Employees to work individually and as teams to meet objectives and goals consistent with enhancing shareholder value. 

  

	 	3)	Facilitate the Company’s ability to retain qualified Employees and to attract top executive talent. 

  

	 	4)	Establish performance goals within the meaning of Section 162(m) of the Internal Revenue Code. 

Article II. DEFINITIONS 
 Section 2.01 BOARD OF
DIRECTORS – The Board of Directors of Lockheed Martin Corporation. 
 Section 2.02 CASH FLOW – For purposes of Article IV, net cash flow from
operations as determined by the Subcommittee at the end of the Plan Year in accordance with generally accepted accounting principles in the United States. Cash Flow shall be determined by the Subcommittee based upon the comparable numbers reported
on the Corporation’s audited consolidated financial statements or, if audited financial statements are not available for the period for which Cash Flow is being determined, the Subcommittee shall determine Cash Flow in a manner consistent with
the historical practices used by the Corporation in determining net cash provided by operating activities as reported in its audited consolidated statement of cash flows. The Subcommittee shall have the right to specify any other adjustment that
should be applied in determining Cash Flow that it deems necessary or appropriate to take into account any event recognized under any accounting policy or practice affecting the Corporation, provided the Subcommittee specifies the adjustment at or
prior to the time the organizational performance goals for the Corporation are reviewed with the Subcommittee, but in no event later than March 30 of the Plan Year. 

Section 2.03 CODE – The Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder. 

Section 2.04 COMMITTEE – The Management Development & Compensation Committee of the Board of Directors as from time to time appointed or
constituted by the Board of Directors. 

  
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 Section 2.05 COMPANY – Lockheed Martin Corporation and those subsidiaries of which it owns directly or
indirectly 50% or more of the voting stock or other equity. 
 Section 2.06 ELECTED OFFICER – An Employee who has been elected as an officer by
the Board of Directors. 
 Section 2.07 EMPLOYEE – Any person who is employed by the Company and who is paid a salary as distinguished from an
hourly wage. The term “Employee” includes only those individuals that the Company classifies on its payroll records as Employees and does not include consultants, independent contractors, leased employees, co-op students, interns,
temporary or casual employees, individuals paid by a third party or other individuals not classified as an Employee by the Company. Notwithstanding the foregoing, the term “Employee” shall not include any employee who, during any part of
such year, was represented by a collective bargaining agent. 
 Section 2.08 INCENTIVE COMPENSATION – An amount of compensation paid pursuant to
this Plan. 
 Section 2.09 PARTICIPANT – Any Employee selected to participate in the Plan in accordance with Article III. 

Section 2.10 PLAN – This Lockheed Martin Corporation Amended and Restated 2006 Management Incentive Compensation Plan (Performance-Based), as
amended from time to time. 
 Section 2.11 PLAN YEAR – A calendar year. 

Section 2.12 SUBCOMMITTEE – A subcommittee of the Committee, composed solely of two or more outside directors of the Company (within the meaning of
Code Section 162(m) (4) (C)) or the entire Committee if all members of the Committee are outside directors. 
 Article III. ELIGIBILITY AND
PARTICIPATION 
 The Elected Officers of the Company are eligible to participate in the Plan. An Elected Officer’s participation in the Plan for a
Plan Year is subject to the approval of the Committee. Employees who are considered by the Chief Executive Officer to be key Employees of the Company also are eligible to participate in the Plan, subject to the Employee’s selection of and
approval by the Chief Executive Officer for participation in a Plan Year. No member of the Committee shall be eligible for participation in the Plan. 

Article IV. LIMITATIONS ON INCENTIVE COMPENSATION 

Section 4.01 Notwithstanding any other provisions of the Plan that may be to the contrary, Incentive Compensation awards made to Participants who are
Elected Officers on the last day of the Plan Year are subject to this Article IV. The limitations on Incentive Compensation set forth in Section 2.02 and this Article IV were approved by the stockholders of Lockheed Martin Corporation at its
2006 Annual Meeting. 

  
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 Section 4.02 Incentive Compensation payable under the Plan to (i) the Elected Officer who is the Chief
Executive Officer shall not exceed 0.3% of Cash Flow for the Plan Year; and (ii) each of the Participants who are Elected Officers on the last day of the Plan Year, other than the Chief Executive Officer, shall not exceed 0.2% of Cash Flow for
the Plan Year. The Subcommittee shall have discretion to determine the conditions, restrictions, or other limitations, in accordance with and subject to the terms of this Plan and Code Section 162(m), on the payment of Incentive Compensation to
the Elected Officers. The Subcommittee may reserve the right to reduce the amount payable under this Section 4.02 in accordance with any standards contained in the Plan or on any other basis (including the Subcommittee’s discretion).
Neither the Subcommittee or the Committee, nor the Board of Directors shall have the authority under this Plan to increase the amount payable under this Section 4.02. 

Section 4.03 Before authorizing any Incentive Compensation payment under this Plan to a Participant who is an Elected Officer, the Subcommittee must
certify in writing (by resolution or otherwise) that the payments are consistent with Section 4.02 of the Plan and that any other material terms under this Plan for payment of Incentive Compensation were satisfied. 

Section 4.04 The provisions of Section 2.02 and Article IV shall be interpreted and administered by the Subcommittee in a manner consistent with the
requirements for “performance-based compensation” under Code Section 162(m). 
 Article V. INCENTIVE COMPENSATION PAYMENTS 

Section 5.01 Subject to Section 2.02, Article IV and any performance goals (including organizational or enterprise performance goals) established by
the Committee or its delegate for the Plan Year (such goals to be established on or before March 30 of the Plan Year), the Committee (or the Committee’s delegate in the case of Participants who are not Elected Officers) shall determine the
proposed amount of Incentive Compensation to be paid to each Participant with respect to a Plan Year. Notwithstanding the preceding sentence, in determining the proposed amount of each Participant’s Incentive Compensation award for a Plan Year,
the Committee (or the Board of Directors in the case of Participants who are Elected Officers or the Committee’s delegate in the case of Participants who are not Elected Officers) may make an upward (subject to Section 2.02 and Article IV)
or downward (including to zero) adjustment of the proposed amount of Incentive Compensation award otherwise payable to the Participant for the Plan Year on the basis of such factors as it deems relevant. 

Section 5.02 With respect to a Plan Year, the Committee shall recommend to the Board of Directors the proposed aggregate amount of Incentive Compensation
payments to be distributed by the Company to Participants and the proposed amount of Incentive Compensation award to each Participant who is an Elected Officer. The Board of Directors shall review and approve the recommendations of the Committee, or
make adjustments to the proposed amounts of Incentive Compensation payable for a Plan Year (on an aggregate level or with respect to a Participant who is an Elected Officer, or both), on the basis of such factors as it deems relevant. 

Section 5.03 The Incentive Compensation amount determined for each Participant with respect to each Plan Year shall be paid to such Participant in cash
not later than March 15 following the Plan Year or deferred at the direction of the Committee, but only to the extent permitted under Code Section 409A, until the Participant’s termination of employment. Notwithstanding the foregoing,
Participants may also elect to defer payments in accordance with the terms of the Lockheed Martin Corporation Deferred Management Incentive Compensation Plan. 

  
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 Section 5.04 Before the end of each Plan Year, the Board of Directors may set a minimum aggregate bonus
amount that must be used to pay Incentive Compensation awards under this Plan attributable to service during the Plan Year to any combination of Participants who are not Elected Officers of the Company. 

Section 5.05 All applicable U.S. Federal, state and local taxes will be withheld from all Incentive Compensation payments made under this Plan. 

Article VI. COST OF PLAN 
 The cost for this Plan is
intended to be an allowable expense. 
 Article VII. RIGHTS OF PARTICIPANTS 

Section 7.01 All payments are subject to the discretion of the Board of Directors. No Participant shall have any right to require the Board of Directors
to make any appropriation to the Plan for any Plan Year, nor shall any Participant have any vested interest or property right in any share in any amounts which may be appropriated to the Plan. 

Section 7.02 This Plan does not constitute an employment agreement of any kind, or a promise of employment for a specific term (including the Plan Year)
and does not alter the at will nature of a Participant’s employment with the Company, which may be terminated by the Company or a Participant for any or no reason and without advance notice. 

Article VIII. AUTHORITY TO RECOVER PAYMENTS 
 The Board of
Directors retains the authority to make retroactive adjustments to an Incentive Compensation payment made under the Plan on or after January 1, 2008 in accordance with the provisions regarding Recovery of Payments (Claw Back) in Exhibit A. 

Article IX. PLAN ADMINISTRATION 
 The Plan shall be
administered under the direction of the Committee. The Committee shall have the right to construe the Plan, to interpret any provision thereof, to make rules and regulations relating to the Plan, and to determine any factual question arising in
connection with the Plan’s operation after such investigation or hearing as the Committee may deem appropriate. Any decision made by the Committee under the provisions of this Article shall be conclusive and binding on all parties concerned.
The Committee may delegate to the officers or Employees of the Company the authority to execute and deliver those instruments and documents, to do all acts and things, and to take all other steps deemed necessary, advisable or convenient for the
effective administration of this Plan in accordance with its terms and purpose. The rights and obligations of the Committee under this Article IX shall be assumed by the Subcommittee in the case of Participants subject to Article IV. 

Article X. AMENDMENT OR TERMINATION OF PLAN 
 The Board of
Directors or its delegate shall have the right to terminate or amend this Plan at any time and to discontinue further payments hereunder. 

  
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 Article XI. EFFECTIVE DATE 

The Plan was first effective with respect to the operations of the Company for the Plan Year beginning January 1, 2006. The Company has further amended
and restated the Plan as of the date indicated below, effective January 1, 2016. 
  

	
	LOCKHEED MARTIN CORPORATION:
	
	  /s/ Patricia L. Lewis
	 By: Patricia L. Lewis

	 Senior Vice President, Human Resources

	
	 Date: January 21, 2016

  
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 Exhibit A 

Administrative Provisions 
 Article I.
STANDARD OF CONDUCT AND PERFORMANCE EXPECTATION 
 It is a prerequisite that before any payment under the Plan can be considered that a Participant will
have acted in accordance with the Lockheed Martin Corporation Code of Ethics and Business Conduct and fostered an atmosphere to encourage all employees acting under the Participant’s supervision to perform their duties in accordance with the
highest ethical standards. Ethical behavior is imperative. It is also a prerequisite before a payment under a Plan can be considered that a Participant be in good standing with the Company. Thus, in evaluating performance against commitments, a
Participant’s adherence to the Company’s ethical standards will be considered paramount in determining awards under the Plan. 
 Participants
whose individual performance is determined to be unacceptable are not eligible to receive Incentive Compensation awards. 
 Article II. DEFINITIONS

 With respect to a Participant, unless otherwise defined in this Article II of Exhibit A, capitalized terms used in this Document have the meanings set
forth in the Plan. 
 Section 2.01 DISABILITY – Termination of employment as a result of becoming totally disabled as evidenced by commencement of
benefits under the Company’s long-term disability plan in which the Participant is enrolled (or, if not a Participant in a Company-sponsored long-term disability plan, under circumstances which would result in the Participant becoming eligible
for benefits using the standards set forth in the Company’s long-term disability plan). 
 Section 2.02 ESP – The Lockheed Martin Corporation
Executive Severance Plan, as amended from time to time. 
 Section 2.03 RETIREMENT – Retirement under the terms of a Company-sponsored pension
plan or for Employees who do not participate in a pension plan, termination from employment with the Company following the attainment of age 55 and five years of service or attainment of age 65. 

Article III. ELIGIBILITY FOR INCENTIVE COMPENSATION AWARDS 

Section 3.01 In general, a Participant must be an Employee on active status or on paid leave of absence on January 1 through December 31 of the
Plan Year to be eligible for a full Incentive Compensation award for that Plan Year. 
 Section 3.02 Partial, pro-rated Incentive Compensation awards
for Participants may be made as provided in this Section 3.02. All pro-rated awards will be calculated to the day, i.e., the number of days an Employee is a Participant in the Plan divided by 365. 

  
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	 	(a)	Hire during a Plan Year: 

  

	 	(i)	Participant hired before October 1: Participant is eligible for a pro-rated payment if on active status on December 31 of the Plan Year. 

 

	 	(ii)	Employee hired on or after October 1: Employee is not eligible for an award under the Plan for the Plan Year. 

  

	 	(b)	Promotion during a Plan Year: 

  

	 	(i)	Employee promoted before October 1: Employee is eligible for a pro-rated payment if selected to be a Participant and on active status on December 31 of the Plan Year. 

 

	 	(ii)	Employee promoted on or after October 1: Employee is not eligible for an award under the Plan for the Plan Year. 

  

	 	(c)	Downlevel during a Plan Year: 

  

	 	(i)	Participant downleveled before October 1: Participant is eligible for a pro-rated award if on active status on December 31 of the Plan Year. 

 

	 	(ii)	Participant downleveled on or after October 1: Participant is eligible for a full award if he or she was a Participant on January 1 of the Plan Year and continues to be an Employee on active status on
December 31 of the Plan Year. 

  

	 	(d)	Voluntary termination during the Plan Year: A Participant is not eligible for an award if he or she voluntarily terminates employment, other than on account of Retirement, during the Plan Year. 

 

	 	(e)	Lay Off during a Plan Year: 

  

	 	(i)	Non-ESP-Eligible Participants: A Participant who does not receive a payment under the ESP may be considered for a pro-rated award in the Company’s discretion if the Participant has a minimum of six (6) months
as an active Employee during the Plan Year. The pro-rated award will be based on a payment made “At Target.” 

  

	 	(ii)	ESP-Eligible Participants: A Participant who receives any payment under the ESP, regardless of whether the Participant receives a supplemental payment under the ESP, is not eligible to receive an award under the Plan
with respect to the Plan Year in which the layoff occurs (even if the layoff occurs on the last day of the Plan Year). 

  

	 	(f)	Retirement during a Plan Year: A Participant who terminates employment with the Company on account of Retirement during a Plan Year may be considered for a pro-rated award in the Company’s discretion if the
Participant has a minimum of six (6) full months as an active Employee during the Plan Year. The pro-rated award will be based on year-end performance results. 

  
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	 	(g)	Disability or death during a Plan Year: A Participant who terminates employment with the Company on account of Disability or death during a Plan Year may be considered for a pro-rated award in the Company’s
discretion if the Participant has a minimum of three (3) full months as an active Employee during the Plan Year. The pro-rated award will be based on a payment made “At Target.” 

 

	 	(h)	Unpaid leave of absence during a Plan Year: A Participant who is on unpaid leave of absence for more than three (3) months during a Plan Year may be considered for a pro-rated award in the Company’s discretion
if the Participant has a minimum of three (3) full months as an active Employee during the Plan Year. 

  

	 	(i)	Termination for cause during a Plan Year: A Participant who is terminated for cause during the Plan Year is not eligible for an award under the Plan. 

Section 3.03 An Incentive Compensation award for a Participant whose target level and/or award formula changes during the Plan Year will be pro-rated to
the day, i.e., the number of days during which the original level and/or formula applied to the Participant divided by the number of days in the plan year, and the number of days during which the new level and/or formula applied to the Participant
divided by the number of days in the plan year. 
 Article IV. RECOVERY OF PAYMENTS (CLAW BACK) 

Section 4.01 The Board of Directors retains the authority to make retroactive adjustments to a payment made under the Plan on or after January 1,
2008 under the following circumstances and such other circumstances as may be specified by final regulation issued by the Securities and Exchange Commission entitling the Company to recapture or claw back amounts paid pursuant to the Plan: 

 

	 	(a)	If the Board of Directors determines, after consideration of all the facts and circumstances that the Board of Directors in its sole discretion considers relevant, that either (i) the intentional misconduct or
gross negligence of an Elected Officer, or (ii) the failure of an Elected Officer to report another person’s intentional misconduct or gross negligence of which the Elected Officer had knowledge, contributed to the Company having to
restate all or a portion of its financial statements filed with the Securities and Exchange Commission, then the Board of Directors may require the Elected Officer to repay to the Company the value of any payment under the Plan as determined by the
Board of Directors. 

  

	 	(b)	If the Board of Directors determines, after consideration of all the facts and circumstances that the Board of Directors in its sole discretion considers relevant, that an Elected Officer either (i) engaged in
fraud, bribery or other illegal act, or (ii) the Elected Officer’s intentional misconduct or gross negligence (including the failure by the Elected Officer to report the acts of another person of which the Elected Officer had knowledge)
contributed to another person’s fraud, bribery or other illegal act, which in either case adversely impacted the Company’s financial position or reputation, the Board of Directors may require the Elected Officer to repay to the Company the
value of any payment under the Plan as determined by the Board of Directors. 

 To the extent permissible under applicable law, the Board of
Directors may delegate its authority to make determinations under this Article IV to the Committee. 

  
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