<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended May 4, 1996
----------------
Commission file number 1-6049
--------
Dayton Hudson Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-0215170
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(State of incorporation or organization) (I.R.S. Employer Identification No.)
777 Nicollet Mall Minneapolis, Minnesota 55402 - 2055
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 370-6948
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None
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
The registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90 days.
The number of shares outstanding of common stock as of May 4, 1996 was
72,083,978.
<PAGE>
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE NO.
PART I FINANCIAL INFORMATION:
ITEM 1 - FINANCIAL STATEMENTS
Condensed Consolidated Results of Operations for the Three 1
Months and Twelve Months ended May 4, 1996 and April 29, 1995
Condensed Consolidated Statements of Financial Position at 2
May 4, 1996, February 3, 1996 and April 29, 1995
Condensed Consolidated Statements of Cash Flows for the Three 3
Months ended May 4, 1996 and April 29, 1995
Notes to Condensed Consolidated Financial Statements 4
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS 5-8
AND FINANCIAL CONDITION
PART II OTHER INFORMATION:
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 9
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 10
Signatures 11
Exhibit Index 12
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED Dayton Hudson Corporation
RESULTS OF OPERATIONS and Subsidiaries
(Millions of Dollars, Except per share data) Three Months Ended Twelve Months Ended
- -------------------------------------------------------------------------------------------------
MAY 4, April 29, MAY 4, April 29,
(Unaudited) 1996 1995 1996* 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $5,380 $4,757 $24,139 $21,603
COSTS AND EXPENSES
Cost of retail sales, buying and occupancy 3,949 3,504 17,972 15,887
Selling, publicity and administrative 985 889 4,139 3,687
Depreciation and amortization 157 144 607 559
Interest expense, net 109 107 444 427
Taxes other than income taxes 112 95 426 375
- -------------------------------------------------------------------------------------------------
Total Costs and Expenses 5,312 4,739 23,588 20,935
- -------------------------------------------------------------------------------------------------
Earnings Before Income Taxes 68 18 551 668
Provision for Income Taxes 27 7 210 262
- -------------------------------------------------------------------------------------------------
NET EARNINGS $ 41 $ 11 $ 341 $ 406
=================================================================================================
PRIMARY EARNINGS PER SHARE $ 0.50 $ 0.10 $ 4.43 $ 5.38
FULLY DILUTED EARNINGS PER SHARE $ 0.49 $ 0.10 $ 4.27 $ 5.16
=================================================================================================
DIVIDENDS DECLARED PER COMMON SHARE $ 0.44 $ 0.44 $ 1.76 $ 1.70
AVERAGE COMMON SHARES OUTSTANDING (Millions):
Primary 72.6 72.1 72.4 72.0
Fully Diluted 76.8 76.3 76.5 76.2
=================================================================================================
</TABLE>
*Consisted of 53 weeks.
See accompanying Notes to Condensed Consolidated Financial Statements.
1
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS Dayton Hudson Corporation
OF FINANCIAL POSITION and Subsidiaries
<TABLE>
<CAPTION>
MAY 4, February 3, April 29,
(Millions of Dollars) 1996 1996* 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS (UNAUDITED) (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 230 $ 175 $ 187
Accounts receivable 1,383 1,510 1,610
Merchandise inventories 3,175 3,018 3,031
Other 217 252 171
- --------------------------------------------------------------------------------
Total Current Assets 5,005 4,955 4,999
PROPERTY AND EQUIPMENT 10,389 10,224 9,288
Accumulated depreciation (3,006) (2,930) (2,700)
------- ------- -------
Property and Equipment, net 7,383 7,294 6,588
OTHER 397 321 353
- -------------------------------------------------------------------------------
TOTAL ASSETS $12,785 $12,570 $11,940
===============================================================================
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt and
notes payable $ 362 $ 182 $ 247
Accounts Payable 2,080 2,247 1,921
Other 1,104 1,094 1,040
- -------------------------------------------------------------------------------
Total Current Liabilities 3,546 3,523 3,208
LONG-TERM DEBT 5,125 4,959 4,922
DEFERRED INCOME TAXES AND OTHER 628 623 583
CONVERTIBLE PREFERRED STOCK, NET 51 62 50
SHAREHOLDERS' INVESTMENT 3,435 3,403 3,177
- -------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
INVESTMENT $12,785 $12,570 $11,940
===============================================================================
COMMON SHARES OUTSTANDING (Millions) 72.1 72.0 71.8
===============================================================================
</TABLE>
* The February 3, 1996 Consolidated Statement of Financial Position is
condensed from the audited financial statement.
See accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
CONDENSED CONSOLIDATED Dayton Hudson Corporation
STATEMENTS OF CASH FLOWS and Subsidiaries
<TABLE>
<CAPTION>
(Millions of Dollars) Three Months Ended
- ------------------------------------------------------------------------------
MAY 4, April 29,
(Unaudited) 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 41 $ 11
Reconciliation to cash flow:
Depreciation and amortization 157 144
Deferred tax provision (28) (4)
Other non-cash items affecting earnings 44 23
Changes in operating accounts providing/(requiring) cash:
Accounts receivable 127 200
Merchandise inventories (157) (254)
Accounts payable (167) (40)
Other 74 (130)
- ------------------------------------------------------------------------------
Cash Flow Provided / (Required) by Operations 91 (50)
==============================================================================
INVESTING ACTIVITIES
Expenditures for property and equipment, net (350) (347)
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Cash Flow Required for Investing Activities (350) (347)
- ------------------------------------------------------------------------------
Net Financing Requirements (259) (397)
==============================================================================
FINANCING ACTIVITIES
Increase in notes payable, net 131 340
Additions to long-term debt 300 150
Reductions of long-term debt (85) (17)
Dividends paid (37) (37)
Other 5 1
- ------------------------------------------------------------------------------
Cash Flow Provided for Financing Activities 314 437
==============================================================================
Net Increase in Cash and Cash Equivalents 55 40
Cash and Cash Equivalents at Beginning of Period 175 147
- ------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 230 $ 187
==============================================================================
</TABLE>
Amounts in this statement are presented on a cash basis and therefore may differ
from those shown elsewhere in this 10-Q report. Cash paid for income taxes was
$95 million and $127 million for the first three months of 1996 and 1995,
respectively. Cash paid for interest (including interest capitalized) in the
first three months of 1996 and 1995 was $69 million and $64 million,
respectively.
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
NOTES TO CONDENSED CONSOLIDATED Dayton Hudson Corporation
FINANCIAL STATEMENTS and Subsidiaries
ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements should be read in
conjunction with the financial statement disclosures contained in the
Corporation's 1995 Annual Shareholders' Report throughout pages 23-34. As
explained on page 33 of the Annual Report, the same accounting policies are
followed in preparing quarterly financial data as are followed in preparing
annual data. In the opinion of management, all adjustments necessary for a fair
presentation of quarterly operating results are reflected herein and are of a
normal, recurring nature.
Due to the seasonal nature of the retail industry, earnings for periods which
exclude the Holiday season are not indicative of the operating results that may
be expected for the full fiscal year.
PER SHARE DATA
Primary earnings per share equals net earnings, less dividend requirements on
ESOP preferred stock, divided by the average number of common shares and common
share equivalents outstanding during the period. Fully diluted earnings per
share assumes conversion of the ESOP preferred stock into common stock. Net
earnings are also adjusted for the additional expense required to fund the ESOP
debt service, which results from the assumed replacement of the ESOP preferred
dividends with common stock dividends. References to earnings per share relate
to fully diluted earnings per share.
PROPERTY AND EQUIPMENT
During first quarter 1996, the Corporation adopted Statement of Financial
Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of." The impairment loss recorded upon
adoption was not significant to the Corporation's results of operations or
financial condition taken as a whole.
LONG-TERM DEBT
During the first quarter of 1996, the Corporation issued $300 million of long-
term debt at 6.4%, maturing in 2003. The proceeds from the issuance were used
for general corporate purposes. Also during first quarter, the Corporation
purchased $30 million of 9.875% sinking fund debentures, due June 1, 2017, for
approximately $32 million and recorded a one-time charge of $2 million ($.02 per
share) related to the transaction. The replacement of this debt with lower
interest rate financing will result in future interest expense savings.
LINES OF CREDIT
During first quarter, the Corporation renegotiated the committed credit
agreements to extend the term and increase the total lines of credit from $1.4
billion to $1.6 billion, of which $800 million matures in 1997 and $800 million
matures in 2001. The committed credit agreements, which support our commercial
paper program, had no balances outstanding during the quarter.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current-year
presentation.
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 1996
ANALYSIS OF OPERATIONS
First quarter 1996 net earnings were $41 million, or $.49 per share, compared
with net earnings of $11 million, or $.10 per share, for the same period last
year. The improvement in first quarter net earnings is primarily due to very
strong sales and earnings performance at Target combined with a rebound in
profitability at Mervyn's, as well as operating expense savings associated with
our corporation-wide cost reduction initiatives.
The following table reflects the significant components of the year-over-year
change in earnings per share:
<TABLE>
<CAPTION>
First Quarter
---------------------------------------------------
<S> <C>
1995 Earnings Per Share $ .10
Changes in earnings per share due to:
Gross margin rate .09
Operating expense rate .48
Start-up expense (.06)
Interest expense, net (.02)
Corporate and other expense, net (.10)
---------------------------------------------------
1996 Earnings Per Share $ .49
===================================================
</TABLE>
Strong growth at Target, our lowest margin and expense rate division, continues
to impact our business mix. As a result, the Corporation's overall revenue
growth and total operating expense rate were favorably affected, while the
gross margin rate was unfavorably affected. If the sales mix between divisions
had remained constant with first quarter 1995, the gross margin rate variance
would have been $.10 more favorable and the operating expense rate would have
been $.14 less favorable.
The overall gross margin rate favorability to prior year is the result of gross
margin improvement at all three divisions offset by Target's growing influence
on the Corporation's overall margin structure. The overall operating expense
rate improvement reflects significant improvement at Mervyn's, strong sales
leveraging and reduced marketing expense at Target, and Target's increasing
influence on the expense rate structure of the Corporation, partially offset by
increased store expenses at DSD.
Revenues
- --------
Total revenues increased 13% in the first quarter, while comparable-store
revenues (revenues from stores open longer than a year) rose 7%.
5
<PAGE>
Revenues by business segment were as follows:
<TABLE>
<CAPTION>
First Quarter Percentage Change
----------------- -------------------
MAY 4, April 29, All Comparable
(Millions of Dollars) 1996 1995 Stores Stores
------ -------- ------ ----------
<S> <C> <C> <C> <C>
Target $3,723 $3,157 18% 9%
Mervyn's 967 914 6 3
DSD 690 686 - (1)
------ ------ -- --
Total $5,380 $4,757 13% 7%
====== ====== == ==
</TABLE>
Target's increase in revenues over the prior year reflects the strength of base-
business sales, new-store expansion, and increased sales, finance-charge
revenues and late-fee revenues associated with the continued growth of the
Target Guest Card. Mervyn's total and comparable-store revenue increases in
first quarter were primarily due to new store growth and improved sales results,
reflecting positive guest response to the strategy changes implemented during
the later half of 1995. As anticipated, DSD's total revenues were flat to last
year and comparable-store revenues declined slightly due to fewer promotional
event days associated with its new strategy, partially offset by increased sales
in better merchandise categories.
OPERATING PROFIT
First quarter 1996 operating profit increased 47% over the prior year. Operating
profit is LIFO earnings from operations before corporate expense, interest and
income taxes.
Operating profit by business segment was as follows:
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
MAY 4, April 29, Percentage
(Millions of Dollars) 1996 1995 Change
----- -------- ----------
<S> <C> <C> <C>
Target $ 133 $ 97 37%
Mervyn's 39 1 100+
DSD 28 38 (26)
----- ----- ---
Total $ 200 $ 136 47%
===== ===== ===
</TABLE>
Operating profit reflects a reduction of finance-charge revenues as well as a
reduction of bad debt expense related to the sale of securitized accounts
receivable. The net reduction to operating profit by business segment was $(1)
million, $(3) million and $(2) million for Target, Mervyn's and DSD,
respectively, for the three months ended May 4, 1996. The total reduction of
$(6) million was offset by comparable interest expense savings due to the
replacement of debt with the securitization proceeds. There was no reduction
for the three months ended April 29, 1995.
6
<PAGE>
TARGET'S first quarter operating profit increased 37% over the same period last
year, reflecting a 9% comparable-store revenue growth, as well as gross margin
rate and operating expense rate improvements. Target's first quarter gross
margin rate improved primarily due to markdown rate favorability while the
operating expense rate was favorable due to strong sales leveraging and reduced
marketing expenses. In first quarter 1996, Target realized approximately 10% of
the $50 million annualized cost savings identified as part of its broad-based
cost reduction program. Looking forward, Target's gross margin rate is expected
to remain reasonably stable and its operating expense rate should continue to
show improvement over prior year, reflecting strong expense control as well as
the annualization of higher store payroll costs.
MERVYN'S operating profit for the quarter increased to $39 million from $1
million for the first quarter last year. Mervyn's gross margin rate increased
significantly over the prior year, due to higher markup and lower clearance
markdowns, partially offset by higher promotional markdowns, consistent with its
intensified promotional strategy implemented in 1995. As a result of its $100
million cost reduction program, Mervyn's realized substantial improvement in its
operating expense rate in first quarter 1996 as a result of cost reductions
primarily in the areas of stores, marketing and headquarters. Mervyn's is
expected to continue to achieve operating profit improvement through gross
margin rate favorability, particularly during the second quarter despite
expected negative comparable-store sales, and further realization of operating
expense savings throughout the year.
DSD'S first quarter operating profit declined, as expected, to $28 million from
$38 million in the prior year. The gross margin rate increased, reflecting
lower promotional markdowns, in line with its new strategy. The operating
expense rate was unfavorable to prior year due to lower sales leveraging and
higher store expenses related to increased staffing to improve guest service.
DSD's second quarter operating profit is expected to be below last year,
reflecting slightly negative comparable-sales and an unfavorable operating
expense rate partially offset by a gross margin rate improvement. As a result
of its new strategy, DSD's profitability is expected to improve in the second
half of the year.
Other Performance Factors
- -------------------------
The last-in, first-out (LIFO) provision, included in cost of retail sales, was
zero for both first quarter 1996 and 1995. The cumulative LIFO provision was
$77 million at May 4, 1996 and February 3, 1996, and $60 million at April 29,
1995.
Net interest expense for the quarter increased $2 million over last year, as
higher average debt balances were partially offset by lower average portfolio
interest rates and interest savings related to the replacement of debt with the
proceeds from the sale of securitized accounts receivable. Higher average debt
balances and lower average portfolio interest rates are expected to continue
throughout the remainder of the year.
The estimated annual effective income tax rate is 39.5% for 1996, unchanged from
the first quarter 1995 estimated annual rate.
7
<PAGE>
ANALYSIS OF FINANCIAL CONDITION
Our financial condition remains strong. The ratio of debt to total
capitalization attributable to our retail operations, was 56% at the end of
first quarter 1996, compared with 54% a year ago and 53% at year end. We expect
to maintain a year end debt ratio of 45% to 55% for our retail operations,
however due to the seasonality of our business, quarterly comparisons will
fluctuate and may fall outside of this range.
At May 4, 1996, working capital was $1,459 million, down 19% compared to a year
ago, principally due to the decrease in accounts receivable of $227 million from
first quarter 1995. The decrease in accounts receivable reflects $173 million
in growth offset by a $400 million reduction related to the securitized accounts
receivable sold in September 1995. The decline in accounts receivable from year
end of 8% reflects a typical reduction from seasonally high levels. Compared to
last year, merchandise inventories increased approximately $144 million, or 5%,
as a result of new store growth. This inventory growth was more than fully
funded by a $159 million, or 8%, increase in accounts payable.
First quarter 1996 capital expenditures were $350 million, compared with $347
million for the same period a year ago. Approximately 83% of these expenditures
were made by Target, 5% by Mervyn's, and 12% by DSD.
We continue to fund the growth in our business through a combination of debt and
retained earnings. Our debt has increased $318 million compared to a year ago
and our shareholders' investment has grown by $258 million.
STORE DATA
At May 4, 1996, Target operated 688 stores in 34 states, Mervyn's operated 297
stores in 16 states and DSD operated 64 stores in nine states. During the
quarter, the Corporation opened 18 Target stores and two Mervyn's stores.
<TABLE>
<CAPTION>
Retail square footage was as follows:
(In thousands, reflects total square feet, less MAY 4, February 3, April 29,
office, warehouse and vacant space) 1996 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Target 73,301 71,108 65,855
Mervyn's 24,281 24,113 23,205
DSD 13,870 13,870 13,587
- -------------------------------------------------------------------------------
Total 111,452 109,091 102,647
===============================================================================
</TABLE>
8
<PAGE>
PART II. OTHER INFORMATION
--------------------------
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) The Company held its Annual Shareholders' Meeting on May 22, 1996.
c) (1). The shareholders voted for four director nominees for three-year
terms. The vote was as follows:
Name of Candidate For Withheld
----------------- ---------- ---------
Livio D. DeSimone 62,579,441 2,257,325
Roger A. Enrico 58,845,169 5,991,597
William W. George 63,618,525 1,218,241
James A. Johnson 63,619,427 1,217,339
There were no abstentions and no broker non-votes.
(2). The shareholders voted to approve the appointment of Ernst &
Young LLP independent auditors of the Corporation. The vote was
64,480,516 for, 122,797 against and 233,453 abstentions. There
were no broker non-votes.
(3). The shareholders voted against the shareholder proposal
concerning an equal employment and affirmative action report.
The vote was 5,851,337 for, 50,446,108 against and 4,751,801
abstentions. There were 3,787,520 broker non-votes.
9
<PAGE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
(2). Not applicable
(4). Instruments defining the rights of security holders, including
indentures. Registrant agrees to furnish the Commission on
request copies of instruments with respect to long-term debt.
(10). I. Deferred Compensation Plan - Senior Management Group (as
amended April 10, 1996)
J. Deferred Compensation Plan - Directors (as amended April 10,
1996)
M. SMG Executive Deferred Compensation Plan (as amended April 10,
1996)
N. Director Deferred Compensation Plan (as amended April 10,
1996)
O. Contract
(11). Statements re Computations of Per Share Earnings
(12). Statements re Computations of Ratios
(15). Not applicable
(18). Not applicable
(19). Not applicable
(22). Not applicable
(23). Not applicable
(24). Not applicable
(27). Financial Data Schedule
(99). Not applicable
b) Reports on form 8-K:
Filed during the quarter for which this report is filed:
Form 8-K dated February 8, 1996 reporting a decrease in debt
rating.
Form 8-K dated May 1, 1996 reporting a decrease in debt rating.
Filed subsequent to the end of the quarter for which this report
is filed:
Form 8-K dated June 12, 1996 reporting a stock split and an
increase in the quarterly dividend.
10
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DAYTON HUDSON CORPORATION
Registrant
Date: June 14, 1996 By /s/ Douglas A. Scovanner
---------------------------
Douglas A. Scovanner
Senior Vice President and
Chief Financial Officer
Date: June 14, 1996 By /s/ J.A. Bogdan
-------------------------------
JoAnn Bogdan
Controller and
Chief Accounting Officer
11
<PAGE>
Exhibit Index
- -------------
(10). I. Deferred Compensation Plan - Senior Management Group (as amended
April 10, 1996)
J. Deferred Compensation Plan - Directors (as amended April 10, 1996)
M. SMG Executive Deferred Compensation Plan (as amended April 10, 1996)
N. Director Deferred Compensation Plan (as amended April 10, 1996)
O. Contract
(11). Statements re Computations of Per Share Earnings
(12). Statements re Computations of Ratios
(27). Financial Data Schedule
12
<PAGE>
EXHIBIT (10)I
5-24-94
Adopted: 6-8-94
Effective: 8-1-94
Amended 4-10-96
DAYTON HUDSON CORPORATION
DEFERRED COMPENSATION PLAN
SENIOR MANAGEMENT GROUP
ARTICLE 1
PURPOSE
The purpose of this Deferred Compensation Plan (the "Plan") is to provide a
means whereby Dayton Hudson Corporation (the "Company") may afford financial
security to a select group of employees who are in the Senior Management Group
of the Company and its subsidiaries and who have rendered and continue to render
valuable services to the Company or its subsidiaries and who make an important
contribution towards the Company's continued growth and success, by providing
for additional future compensation so that such employees may be retained and
their productive efforts encouraged.
ARTICLE 2
DEFINITIONS AND CERTAIN PROVISIONS
Beneficiary. "Beneficiary" means the person or persons designated as such
------------
in accordance with Article 6.
Benefit Deferral Period. "Benefit Deferral Period" means that period of
------------------------
one (1) or four (4) Plan Years as determined pursuant to Article 4 over which a
Participant defers a portion of such Participant's Earnings.
Committee. "Committee" means the plan administration committee appointed
----------
to administer the Plan pursuant to Article 3.
Cumulative Deferral Amount. "Cumulative Deferral Amount" means the total
---------------------------
cumulative amount by which a Participant's Earnings must be reduced over the
period prescribed in Section 4.1. If for a Plan Year a Matching Allocation for
an Employee who is a member of the Senior Management Group of the Company
pursuant to the Dayton Hudson Corporation Supplemental Retirement, Savings and
Employee Stock Ownership Plan ("SRSP") cannot be made because the Before Tax
Deposits or After Tax Deposits elected by the Employee are reduced to comply
with the provisions of the SRSP, "Cumulative Deferral Amount" also includes the
amount of the Matching Allocation that cannot be made.
<PAGE>
Declared Rate. Declared Rate means with respect to any Plan Year the
--------------
applicable rate announced in advance by the Committee for such Plan Year. Under
no circumstances shall the minimum rate be less than twelve percent (12%) per
annum and the maximum rate shall not exceed twenty percent (20%) per annum. The
rate to be announced, subject to the minimum and maximum percentages referenced
above, shall be a calculated rate using the following formula:
Moodys Corporate Bond Yield Average - Monthly Average Corporates as
published by Moodys Investors Service, Inc. or its successor (or if said index
is no longer available, its successor index, or if no successor index exists,
such other index as selected by the Committee as most closely replicates the
measure produced by said Moody index) for the month of June for the year
preceding the subject Plan Year to which the Declared Rate shall apply, said
rate of return to be rounded to the nearest .10% of said reported rate, to which
percentage rate shall be added six (6) percentage points (e.g. an index of 7.16%
rounded to 7.20% plus 6% equals a 13.2% Declared Rate). Provided however, if any
-------- -------
tax or insurance change shall occur which in the reasoned judgment of the
Committee shall have an ongoing adverse economic effect on the underlying COLI
financing assumptions related to the Plan, then the Committee may adjust said
Declared Rate to reflect such adverse economic impact but in no event below the
twelve percent (12%) minimum referenced in the first paragraph hereof.
Deferral Account. "Deferral Account" means the account maintained on the
-----------------
books of account of the Company pursuant to Section 4.4.
Early Retirement. "Early Retirement" means the termination of a
-----------------
Participant's employment with the Employer for a reason other than death on or
after the date the Participant attains age 55.
Earnings. "Earnings" means the base pay and incentive pay paid to a
---------
Participant by the Company or a subsidiary, excluding car and other allowances
and other cash and non-cash compensation.
Eligible Employee. "Eligible Employee" means each Employee in the Senior
------------------
Management Group of the Company who executes an Enrollment Agreement to
participate in the Plan.
Employee. "Employee" means any person employed by the Employer on a
---------
regular full-time salaried basis, including officers of the Employer.
Employer. "Employer" means the Company and any of its wholly owned
---------
subsidiaries.
Enrollment Agreement. "Enrollment Agreement" means the written agreement
---------------------
entered into by the Employer and an Eligible Employee pursuant to which the
Eligible Employee becomes a Participant in the Plan. In the sole discretion of
the Company, authorization forms filed by any Participant by which the
Participant makes the elections provided for by this Plan may be treated as a
completed and fully executed Enrollment Agreement for all purposes under the
Plan.
2
<PAGE>
Normal Retirement. "Normal Retirement" means the termination of a
------------------
Participant's employment with the Employer for reasons other than death on or
after the date the Participant attains age 65.
Participant. "Participant" means an Eligible Employee who has filed a
------------
completed and executed Enrollment Agreement or authorization form with the
Committee and is participating in the Plan in accordance with the provisions of
Article 4. "Participant" also means an Employee who is a member of the Senior
Management Group of the Company who has a Cumulative Deferral Amount based on
Matching Allocation that could not be made to the SRSP.
Plan Year. "Plan Year" means the calendar year beginning January 1 and
----------
ending December 31.
ARTICLE 3
ADMINISTRATION OF THE PLAN
A Committee shall be appointed by the Chief Executive Officer of the
Company to administer the Plan and to establish, adopt or revise such rules and
regulations as it may deem necessary or advisable for the administration of the
Plan. The Committee shall have discretionary authority to determine eligibility
for benefits and to construe the terms of the Plan. Interpretations of the Plan
by the Committee shall be conclusive. Members of the Committee shall be eligible
to participate in the Plan while serving as members of the Committee, but a
member of the Committee shall not vote or act upon any matter which relates
solely to such member's interest in the Plan as a Participant.
ARTICLE 4
PARTICIPATION
4.1 Election to Participate. Any Employee who is a member of the
------------------------
Senior Management Group of the Company may enroll in the Plan by filing a
completed and fully executed Enrollment Agreement or authorization form with the
Committee. Pursuant to said Enrollment Agreement or authorization form, the
Employee shall irrevocably designate a dollar amount by which the aggregate
Earnings of such Participant would be reduced over one (1) or four (4) Plan
Years next following the execution of the Enrollment Agreement (the "Benefit
Deferral Period"), provided, however, that:
(a) Minimum Deferral. The reduction for any Plan Year shall not
-----------------
be less than Five Thousand Dollars ($5,000.00)
(b) Reduction in Earnings.
----------------------
3
<PAGE>
(i) In General. Except as otherwise provided in this
-----------
Section 4.1, the Earnings of the Participant for each of the Plan
Years in the Benefit Deferral Period shall be reduced by the amount
specified in the Enrollment Agreement (including any authorization
form) applicable to such Plan Year.
(ii) Accelerated Reduction. A Participant may elect in a
----------------------
written notice with the consent of the Committee to increase the
amount of the reduction of Earnings otherwise provided for by Section
4.1(b)(i) for any of the Plan Years remaining in the Benefit Deferral
Period, provided, however, that any such increase in the reduction of
Earnings for any remaining Plan Years in the Benefit Deferral Period
shall not increase the Cumulative Deferral Amount, but shall act to
shorten the length of the Benefit Deferral Period.
(c) Maximum Reduction in Earnings. A Participant may not
------------------------------
elect a Cumulative Deferral Amount or an increase in reduction of Earnings
pursuant to Section 4.1(b)(ii), or any combination of the two, that would
cause the aggregate total reduction in Earnings in any Plan Year to exceed
twenty-five percent (25%) of the base pay and one hundred percent (100%) of
the incentive pay payable during such Plan Year up to a total of $250,000
per year plus the amount of any payout made pursuant to Section 5.4, or
such greater percent of base pay and/or incentive pay or greater total
amount as the Committee may permit in its sole discretion. In the event
that a Participant elects a Cumulative Deferral Amount or increase in
reduction of Earnings that would violate the limitation described in this
paragraph (c), the election shall be valid except that the Cumulative
Deferral Amount or increase in reduction of Earnings so elected shall
automatically be reduced to comply with such limitation, whichever is most
appropriate in the sole discretion of the Committee.
4.2 Deferral Accounts. The Committee shall establish and maintain a
------------------
separate Deferral Account for each Participant. The amount by which a
Participant's Earnings are reduced pursuant to Section 4.1 shall be credited by
the Employer to the Participant's Deferral Account on the fifteenth (15th) day
of the month in which such Earnings would otherwise have been paid. The
Participant's Deferral Account shall be credited with the annual SRSP lost
Matching Allocation on January 15 following the year of the lost Matching
Allocation. Such Deferral Account shall be debited by the amount of any payments
made by the Employer to the Participant or the Participant's Beneficiary
pursuant to this Plan.
(a) Normal and Early Retirement Interest. Each Deferral Account
-------------------------------------
of a Participant who attains Normal or Early Retirement shall be deemed to
bear interest from the date such Deferral Account was established through
the date of commencement of payment of the Normal or Early Retirement
Benefit at a rate equal to the Declared Rate which is announced by the
Committee for each Plan Year, compounded annually, on the balance from
month-to-month in such Deferral Account. Following the date of commencement
of payment of the Normal or Early Retirement Benefit, a Participant's
Deferral Account shall be deemed to
4
<PAGE>
bear interest on the balance in such Deferral Account from month-to-month
at a rate equal to twelve percent (12%) per annum, compounded annually, or
such higher rate which the Committee may determine in its sole discretion.
(b) Other Interest. In the case of any termination of a
---------------
Participant's employment with the Employer other than by Normal or Early
Retirement or upon the Participant's termination of enrollment in this Plan
pursuant to Section 5.2(b), the Participant's Deferral Account shall be
deemed to bear interest from the date such Deferral Account was established
through the date of the earlier of termination of employment or termination
of enrollment in this Plan on the balance from month-to-month in such
Deferral Account at a rate equal to ten percent (10%) per annum, compounded
annually, provided, however, that if more than five (5) years have elapsed
since the first day of the Benefit Deferral Period, the Participant's
Deferral Account shall be deemed to bear interest from the date such
Deferral Account was established through the date of the earlier of
termination of employment or termination of enrollment in this Plan on the
balance from month-to-month in such Deferral Account at a rate equal to the
Declared Rate which is announced by the Committee for each Plan Year,
compounded annually. Following the earlier of the date of commencement of
payment of the Termination Benefit or the date of termination of enrollment
in this Plan, a Participant's Deferral Account shall be deemed to bear
interest on the balance in such Deferral Account from month-to-month at a
rate equal to twelve percent (12%) per annum, compounded annually.
4.3 Rollover Deferred Compensation Account. In its sole discretion,
---------------------------------------
the Committee may permit a Participant to make a special rollover election to
transfer any amounts which were previously deferred under the Company's existing
deferred compensation plans to this Plan.
In such event, the Committee shall establish and maintain a
separate Rollover Deferral Account for each Participant who makes a rollover
transfer to this Plan. Such Rollover Deferral Account shall be deemed to bear
interest at the same rate and subject to the same conditions as other Deferral
Accounts pursuant to Section 4.2. Each Participant who makes a rollover transfer
to a Rollover Deferral Account shall be treated for purposes of determining
benefits under the Plan as having a separate Cumulative Deferral Amount and
Deferral Account which shall initially be in the amount of the rollover
transfer. A Participant who makes a rollover transfer shall be deemed to waive
all rights under the Company's existing deferred compensation plans from which
rollover transfers are made with respect to the amounts transferred to this
Plan, including the right to make elections regarding the time or manner of
payment as permitted thereunder. Rollover transfers shall be subject to the
minimum deferral amount set forth in Section 4.1(a), but shall not be subject to
any maximum deferral limitation.
4.4 Valuation of Accounts. The value of a Deferral Account as of any
----------------------
date shall equal the amounts theretofore credited to such account less any
payments debited to such account plus the interest deemed to be earned on such
account in accordance with Section 4.2. Interest shall be credited monthly on
the fifteenth (15th) day of each month.
5
<PAGE>
4.5 Statement of Accounts. The Committee shall submit to each
----------------------
Participant, within one hundred twenty (120) days after the close of each Plan
Year, a statement in such form as the Committee deems desirable setting forth
the balance standing to the credit of each Participant in his Deferral Account.
ARTICLE 5
BENEFITS
5.1 Normal or Early Retirement. Upon Normal or Early Retirement, the
---------------------------
payment of benefits shall commence on the first day of the month following
retirement, or following such later date which the Participant elected in his
Enrollment Agreement (including any authorization form). A Participant may elect
in his Enrollment Agreement (including any authorization form) to have payments
commence from one (1) to ten (10) years following retirement, but not later than
age 65 (or five (5) years after the first day of the Benefit Deferral Period, if
later).
(a) Single Participant. In the case of a Participant who is
-------------------
single when payments commence, the Employer shall pay to the Participant an
amount each month for the life of the Participant, but not less than one
hundred eighty (180) months. The payments shall be the actuarial equivalent
of the aggregate of the Participant's Deferral Account at the time payments
commence and the interest that will accrue on the unpaid balance in such
Deferral Account during the payment period pursuant to Section 4.2(a). If
the Committee does not provide for a higher rate of interest than twelve
percent (12%), each monthly payment shall be in the same amount. If the
Committee does provide for a higher rate of interest for a year pursuant to
Section 4.2(a), the monthly amount may be redetermined to reflect the
increase.
(b) Married Participant. In the case of a Participant who is
--------------------
married when payments commence, the Employer shall make actuarially reduced
monthly payments to the Participant for his life and thereafter, if the
Participant is survived by a spouse who was married to the Participant when
Normal or Early Retirement Benefit payments commenced, shall continue to
make monthly payments to the Participant's spouse for her life, with
payments to be made for an aggregate period of not less than one hundred
eighty (180) months. The payments shall be the actuarial equivalent of the
payments which would be made to the Participant pursuant to Section 5.1(a)
if he were single. If the Committee provides for a higher rate of interest
than twelve percent (12%) for a year pursuant to the provisions of Section
4.2(a), the monthly amount of payments may be redetermined to reflect the
increase.
5.2 Termination Benefit.
--------------------
(a) Terminations of Employment. If a Participant shall cease to
---------------------------
be an Employee for any reason other than death or Normal or Early
Retirement or Certain
6
<PAGE>
Terminations of Employment under Section 5.2(b), the Employer shall pay to
the Participant in one lump sum an amount (the "Termination Benefit") equal
to the value of the Deferral Account as of the date of payment and such
Participant shall be entitled to no further benefits under this Plan,
provided, however, at the sole discretion of the Committee, no lump sum
shall be payable and, instead, the Employer shall pay to the Participant an
equal amount each month for a period not to exceed forty-eight (48) months
beginning on the first day of the month next following the date of
termination of employment, the sum of which payments shall equal (a) the
value as of the date of termination of employment of the Deferral Account,
plus (b) the interest that will accrue on the unpaid balance in such
Deferral Account during such period at the rate of twelve percent (12%) per
annum, compounded annually. Upon termination of employment the Participant
shall immediately cease to be eligible for any benefits under the Plan
other than the Termination Benefit. No other benefit shall be payable to
either the Participant or any Beneficiary of such Participant.
(b) Certain Terminations of Employment. If a Participant shall
-----------------------------------
cease to be an Employee for any reason other than death or Normal or Early
Retirement and shall be at least age 50, have worked for the Company for at
least 10 years and has received an ICP Contract under the Company's Income
Continuance Policy that is signed by Participant and Company and not
rescinded, the payment of benefits shall commence on the first day of the
month following termination, or following such later date which the
Participant elected in his Enrollment Agreement (including any
authorization form). A Participant may elect in his Enrollment Agreement
(including any authorization form) to have payments commence from one (1)
to ten (10) years following retirement, but not later than age 65 (or five
(5) years after the first day of the Benefit Deferral Period, if later).
(i) Single Participant. In the case of a Participant who
-------------------
is single when payments commence, the Employer shall pay to the
Participant an amount each month for the life of the Participant, but
not less than one hundred eighty (180) months. The payments shall be
the actuarial equivalent of the aggregate of the Participant's
Deferral Account at the time payments commence and the interest that
will accrue on the unpaid balance in such Deferral Account during the
payment period pursuant to Section 4.2(a). If the Committee does not
provide for a higher rate of interest than twelve percent (12%), each
monthly payment shall be in the same amount. If the Committee does
provide for a higher rate of interest for a year pursuant to Section
4.2(a), the monthly amount may be redetermined to reflect the
increase.
(ii) Married Participant. In the case of a Participant who
--------------------
is married when payments commence, the Employer shall make actuarially
reduced monthly payments to the Participant for his life and
thereafter, if the Participant is survived by a spouse who was married
to the Participant when Normal or Early Retirement Benefit payments
commenced, shall continue to make monthly payments to the
Participant's spouse for her life, with payments to be made for an
aggregate period of not less than one hundred eighty (180) months. The
payments shall be the actuarial equivalent of
7
<PAGE>
the payments which would be made to the Participant pursuant to
Section 5.1(a) if he were single. If the Committee provides for a
higher rate of interest than twelve percent (12%) for a year pursuant
to the provisions of Section 4.2(a), the monthly amount of payments
may be redetermined to reflect the increase.
(c) Termination of Enrollment in Plan. With the written consent
----------------------------------
of the Committee, a Participant may terminate his enrollment in the Plan by
filing with the Committee a written request to terminate enrollment. The
Committee will consent to the termination of a Participant's enrollment in
the Plan in the event of an unforeseeable financial emergency of the
Participant. An unforeseeable financial emergency shall mean an unexpected
need for cash arising from an illness, casualty loss, sudden financial
reversal or other such unforeseeable occurrence. Cash needs arising from
foreseeable events such as the purchase of a house or education expenses
for children shall not be considered to be the result of an unforeseeable
financial emergency. Upon termination of enrollment, no further reductions
shall be made in the Participant's Earnings pursuant to his Enrollment
Agreement, and the Participant shall immediately cease to be eligible for
any benefits under the Plan other than the Termination Benefit. No other
benefit shall be payable to either the Participant or any Beneficiary of
such Participant. In its sole discretion, the Committee may pay the
Termination Benefit on a date earlier than the Participant's termination of
employment with the Employer, in which event the Termination Benefit shall
be calculated as if the Participant had terminated employment with the
Employer on the date of such payment. Following termination of enrollment
in the Plan, a Participant's Deferral Account shall be deemed to bear
interest on the balance in such Deferral Account from month-to-month at a
rate equal to twelve percent (12%) per annum, compounded annually.
5.3 Lump Sum Election. Other provisions of Section 5.1 and Section
------------------
5.2 notwithstanding, if a Participant in his Enrollment Agreement (including any
authorization form) has elected a lump sum payment to be made after his
retirement, the amount of his Deferral Account (including interest) for the
Benefit Deferral Period covered by that Agreement shall be paid to the
Participant in a lump sum at the time specified in that Agreement.
5.4 Early Payment Option. The Employer shall pay to the Participant,
---------------------
if he is an Employee of the Company, the amount by which the Participant's
Earnings were reduced in any Plan Year pursuant to Section 4.1 during the eighth
(8th) year following the Plan Year ("Early Payment"), provided that such amount
has not previously been paid out under other provisions of the Plan. Such Early
Payment shall not include any interest credited to the Participant's Deferral
Account pursuant to Section 4.2. Notwithstanding any other provisions of this
Plan, the Participant may elect prior to the beginning of any year in which such
an Early Payment will be made to him to reduce his Earnings during the year in
which such Early Payment is made by an amount equal to the Early Payment. An
Early Payment shall not result in any change in the Survivor Benefits payable
pursuant to Section 5.5, other than as a result of the reduction in the
Participant's Cumulative Deferral Account and Deferral Account balance by the
amount of the Early Payment.
8
<PAGE>
5.5 Survivor Benefits.
------------------
(a) If a Participant dies while employed with an Employer prior
to Early or Normal Retirement, the Employer will pay to the Participant's
Beneficiary an annual benefit for the greater of:
(i) ten (10) years, or
(ii) until the Participant would otherwise have attained age
65,
equal to fifty percent (50%) of the Cumulative Deferral Amount. However, if
the Committee determines that a distribution of the Participant's Deferral
Account would produce a greater benefit, such Deferral Account balance
shall be paid to the Participant's Beneficiary in equal annual installments
over the same period as specified above based on crediting the balance from
month-to-month in such Deferral Account at a rate equal to twelve percent
(12%) per annum, compounded annually.
(b) If a Participant dies after Early or Normal Retirement, but
prior to commencement of payment of any Early or Normal Retirement Benefit
under the Plan, the Employer will pay to the Participant's Beneficiary the
benefit that such Participant would have received had the Participant
retired on the day prior to such Participant's death, provided, however,
that if the present value of the benefit described in this Section 5.5(b)
is less than the present value of the benefit described in Section 5.5(a),
using in each case twelve percent (12%) as the discount factor, then the
Beneficiary described in this Section 5.5(b) shall receive the benefit
described in Section 5.5(a) and not the benefit described in this Section
5.5(b).
(c) If a Participant (who was unmarried at the commencement of
the payment of any Early or Normal Retirement Benefit, or whose spouse who
was married to the Participant at the time of commencement of payment of
any Early or Normal Retirement Benefit predeceases the Participant) dies
after the commencement of the payment of any Early or Normal Retirement
Benefit, the Employer will pay to the Participant's Beneficiary the
remaining installments of any such benefit for the balance of the one
hundred eighty (180) months minimum payment period. If a spouse who was
married to the Participant at the time of commencement of payment of the
Early or Normal Retirement Benefit survives beyond such one hundred eighty
(180) months minimum payment period, payments shall continue to be made to
the spouse until the spouse's death. If the spouse who was married to the
Participant at the time of commencement of payment of the Early or Normal
Retirement Benefit survives the Participant, but does not survive past the
one hundred eighty (180) months minimum payment period, the Employer will
pay to the Participant's Beneficiary the remaining installments of any such
benefit for the balance of the one hundred eighty (180) months minimum
payment period. In computing any benefits to be paid following the
Participant's death pursuant to this paragraph (c), the Participant's
Deferral Account shall be deemed to bear interest following the
9
<PAGE>
Participant's death on the balance in such Deferral Account from month-to-
month at a rate equal to twelve percent (12%) per annum, compounded
annually, or such higher rate which the Committee may determine in its sole
discretion.
(d) If a Participant, who does not receive a lump sum
Termination Benefit, dies prior to the time he has received the forty-eight
(48) months payments referred to in Section 5.2(a), the remaining payments
for such 48 month period shall be paid to the Participant's Beneficiary.
(e) Notwithstanding other provisions of the Plan, if the
Beneficiary is not a spouse, the present value of the installments shall be
paid as soon as administratively feasible after the death of the
Participant. The interest rate used to compute the present value shall be
the average of the Declared Rate for the Plan Year in which the Participant
dies and twelve percent (12%).
5.6 Small Benefit. In the event that the Committee determines in its
--------------
sole discretion that the amount of any benefit is too small to make it
administratively convenient to pay such benefit over time, the Committee may pay
the benefit in the form of a lump sum, notwithstanding any provision of this
Article 5 to the contrary. Such lump sum shall be computed as the net present
value of the benefit otherwise payable using a twelve percent (12%) per annum
discount factor.
5.7 Withholding. To the extent required by the law in effect at the
------------
time payments are made, the Employer shall withhold from payments made hereunder
the minimum taxes required to be withheld by the federal or any state or local
government.
5.8 Lump Sum Payout Option. Notwithstanding any other provisions of
-----------------------
the Plan, at any time after retirement, but not later than ten (10) years after
retirement of the Participant, a Participant or a Beneficiary of a deceased
Participant may elect to receive an immediate lump sum payment of 50% or 100% of
the balance of his Deferral Account, reduced by a penalty, which shall be
forfeited to the Company, equal to eight percent (8%) of the amount of his
Deferral Account he elected to receive, in lieu of payments in accordance with
the form previously elected by the Participant, or provided elsewhere in this
Plan. Such election, if not 100%, may be made only twice. If less than 100% of
his Deferral Account is paid out, the remainder of his Deferral Account will be
paid in accordance with the form previously elected by the Participant, or
provided elsewhere in this Plan. However, the penalty shall not apply if the
Committee determines, based on advice of counsel or a final determination by the
Internal Revenue Service or any court of competent jurisdiction, that by reason
of the foregoing provision any Participant or Beneficiary has recognized or will
recognize gross income for federal income tax purposes under this Plan in
advance of payment to him of Plan benefits. The Company shall notify all
Participants (and Beneficiaries of deceased Participants) of any such
determination. Whenever any such determination is made, the Company shall refund
all penalties which were imposed hereunder on account of making lump sum
payments at any time during or after the first year to which such determination
applies (i.e., the first year when gross income is recognized for federal income
tax purposes). Interest shall be paid on any such refunds at ten percent (10%)
for
10
<PAGE>
each Plan Year, compounded annually. The Committee may also reduce or eliminate
the penalty if it determines that this action will not cause any Participant or
Beneficiary to recognize gross income for federal income tax purposes under this
Plan in advance of payment to him of Plan benefits.
ARTICLE 6
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate any
person or persons as Beneficiary or Beneficiaries to whom payment under this
Plan shall be made in the event of the Participant's death prior to complete
distribution to the Participant of the benefits due under the Plan. Each
Beneficiary designation shall become effective only when filed in writing with
the Committee during the Participant's lifetime on a form prescribed by the
Committee.
The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed. Any finalized divorce or marriage
(other than a common law marriage) of a Participant subsequent to the date of
filing of a Beneficiary designation form shall revoke such designation unless in
the case of divorce the previous spouse was not designated as Beneficiary and
unless in the case of marriage the Participant's new spouse had previously been
designated as Beneficiary. The spouse of a married Participant domiciled in a
community property jurisdiction shall join in any designation of Beneficiary or
Beneficiaries other than the spouse.
If a Participant fails to designate a Beneficiary as provided above,
or if his Beneficiary designation is revoked by marriage, divorce, or otherwise
without execution of a new designation, or if all designated Beneficiaries
predecease the Participant or die prior to complete distribution of the
Participant's benefits, then the Committee shall direct the distribution of such
benefits to the Participant's estate.
ARTICLE 7
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Board of Directors of the Company may at any time
---------
amend the Plan , in whole or in part for any reason, including but not limited
to tax, accounting or insurance changes, a result of which may be to terminate
the Plan for future deferrals (excluding from such power to terminate future
deferrals those future deferrals provided for in Section 5.4 Early Payout
------------
Option); provided, however, that no amendment shall be effective to decrease the
- ------
benefits, nature or timing thereof payable under the Plan to any Participant
with respect to deferrals made (and benefits thereafter accruing) prior to the
date of such amendment. Written notice of any amendment shall be given each
Participant then participating in the Plan.
7.2 Automatic Termination of Plan. The Plan shall terminate only under
-----------------------------
the following circumstances. The Plan shall automatically terminate upon (a) a
determination by the Company
11
<PAGE>
that a final decision of a court of competent jurisdiction or the U.S.
Department of Labor holding that the Plan is not maintained, "primarily for the
purpose of providing deferred compensation for a select group of management or
highly-compensated employees" and therefore is subject to Parts 2, 3 and 4 of
Title I of ERISA, would require that the Plan be funded and would result in
immediate taxation to Participants of their vested Plan benefits, or (b) a
determination by the Company that a final decision of a court of competent
jurisdiction has declared that the Participants under the Plan are in
constructive receipt under the Internal Revenue Code of their vested Plan
benefits.
7.3 Payments Upon Automatic Termination. Upon any Plan termination under
-----------------------------------
Section 7.2, the Participants will be deemed to have terminated their enrollment
under the Plan as of the date of such termination. The Employer will pay all
Participants the value of each Participant's Deferral Accounts in a lump sum,
determined as if each Participant had a Termination of Employment on the date of
such termination of the Plan as provided under Section 5.2(a) hereof.
ARTICLE 8
MISCELLANEOUS
8.1 Unsecured General Creditor. Participants and their
---------------------------
Beneficiaries, heirs, successors, and assigns shall have no legal or equitable
rights, claims, or interests in any specific property or assets of Employer, nor
shall they be beneficiaries of, or have any rights, claims, or interests in any
life insurance policies, annuity contracts, or the proceeds therefrom owned or
which may be acquired by Employer ("Policies"). Such Policies or other assets of
Employer shall not be held under any trust for the benefit of Participants,
their Beneficiaries, heirs, successors, or assigns, or held in any way as
collateral security for the fulfilling of the obligations of Employer under this
Plan. Any and all of Employer's assets and Policies shall be, and remain, the
general, unpledged, unrestricted assets of Employer. Employer's obligation under
the Plan shall be merely that of an unfunded and unsecured promise of Employer
to pay money in the future.
8.2 Nonassignability. Neither a Participant nor any other person
-----------------
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, or interest
therein which are, and all rights to which are, expressly declared to be
unassignable and non-transferable. No part of the amounts payable shall, prior
to actual payment, be subject to seizure or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant or any
other person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.
8.3 Employment Not Guaranteed. Nothing contained in this Plan nor
--------------------------
any action taken hereunder shall be construed as a contract of employment or as
giving any Employee any right to be retained in the employ of the Employer.
12
<PAGE>
8.4 Protective Provisions. Each Participant shall cooperate with the
----------------------
Employer by furnishing any and all information requested by the Employer in
order to facilitate the payment of benefits hereunder, taking such physical
examinations as the Employer may deem necessary and taking such other relevant
action as may be requested by the Employer. If a Participant refuses so to
cooperate, the Employer shall have no further obligation to the Participant
under the Plan, other than payment to such Participant of the cumulative
reductions in Earnings theretofore made pursuant to this Plan. If a Participant
commits suicide during the two (2) year period beginning on the later of (a) the
date of adoption of this Plan or (b) the first day of the first Plan Year of
such Participant's participation in the Plan, or if the Participant makes any
material misstatement of information or nondisclosure of medical history, then
no benefits will be payable hereunder to such Participant or his Beneficiary,
other than payment to such Participant of the cumulative reductions in Earnings
theretofore made pursuant to this Plan, provided, that in the Employer's sole
discretion, benefits may be payable in an amount reduced to compensate the
Employer for any loss, cost, damage or expense suffered or incurred by the
Employer as a result in any way of such misstatement or nondisclosure.
8.5 Gender, Singular and Plural. All pronouns and any variations
----------------------------
thereof shall be deemed to refer to the masculine or feminine as the identity of
the person or persons may require. As the context may require, the singular may
be read as the plural and the plural as the singular.
8.6 Captions. The captions of the articles, sections, and paragraphs
---------
of this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
8.7 Validity. In the event any provision of this Plan is held
---------
invalid, void, or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.
8.8 Notice. Any notice or filing required or permitted to be given
-------
to the Committee under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the principal office of
the Employer, directed to the attention of the President of the Employer. Such
notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration or
certification.
8.9 Applicable Law. This Plan shall be governed and construed in
---------------
accordance with the laws of the State of Minnesota as applied to contracts
executed and to be wholly performed in such state.
13
<PAGE>
EXHIBIT (10)J
Restated 4-8-92
Amended 4-10-96
DAYTON HUDSON CORPORATION
DEFERRED COMPENSATION PLAN
DIRECTORS
ARTICLE 1
PURPOSE
The purpose of this Deferred Compensation Plan (the "Plan") is to provide a
means whereby Dayton Hudson Corporation (the "Company") may afford additional
financial security to directors of the Company and its subsidiaries who have
rendered and continue to render valuable services to the Company or its
subsidiaries and who make an important contribution towards the Company's
continued growth and success by providing for additional future compensation so
that such directors may be retained and their productive efforts encouraged.
ARTICLE 2
DEFINITIONS AND CERTAIN PROVISIONS
Beneficiary. "Beneficiary" means the person or persons designated as such
------------
in accordance with Article 6.
Benefit Deferral Period. "Benefit Deferral Period" means that period of
------------------------
one (1) or four (4) Plan Years as determined pursuant to Article 4 over which a
Participant defers a portion of such Participant's Earnings.
Committee. "Committee" means the plan administration committee appointed
----------
to administer the Plan pursuant to Article 3.
Cumulative Deferral Amount. "Cumulative Deferral Amount" means the total
---------------------------
cumulative amount by which a Participant's Earnings must be reduced over the
period prescribed in Section 4.1.
Declared Rate. "Declared Rate" means with respect to any Plan Year the
--------------
applicable rate announced in advance by the Committee for such Plan Year. Under
no circumstances shall the minimum rate be less than twelve percent (12%) per
annum and the maximum rate shall not exceed twenty percent (20%) per annum. The
rate to be announced, subject to the minimum and maximum percentages referenced
above, shall be a calculated rate using the following formula:
<PAGE>
Moodys Corporate Bond Yield Average - Monthly Average Corporates as
published by Moodys Investors Service, Inc. or its successor (or if said index
is no longer available, its successor index, or if no successor index exists,
such other index as selected by the Committee as most closely replicates the
measure produced by said Moody index) for the month of June for the year
preceding the subject Plan Year to which the Declared Rate shall apply, said
rate of return to be rounded to the nearest .10% of said reported rate, to which
percentage rate shall be added six (6) percentage points (e.g. an index of 7.16%
rounded to 7.20% plus 6% equals a 13.2% Declared Rate). Provided however, if any
----------------
tax or insurance change shall occur which in the reasoned judgment of the
Committee shall have an ongoing adverse economic effect on the underlying COLI
financing assumptions related to the Plan, then the Committee may adjust said
Declared Rate to reflect such adverse economic impact but in no event below the
twelve percent (12%) minimum referenced in the first paragraph hereof.
RESOLVED FURTHER that "Article 7 Amendment and Termination of Plan" be
----------------
amended in its entirety to read as follows:
Deferral Account. "Deferral Account" means the account maintained on the
-----------------
books of account of the Company pursuant to Section 4.4.
Director. "Director" means any director of the Company or a subsidiary.
---------
Earnings. "Earnings" means the total fees paid to a Participant for
---------
service on the Board of Directors (or any committee thereof) of the Company or a
subsidiary.
Employer. "Employer" means the Company and any of its wholly owned
---------
subsidiaries.
Enrollment Agreement. "Enrollment Agreement" means the written agreement
---------------------
entered into by the Employer and a Director pursuant to which the Director
becomes a Participant in the Plan. In the sole discretion of the Company,
authorization forms filed by any Participant by which the Participant makes the
elections provided for by this Plan may be treated as a completed and fully
executed Enrollment Agreement for all purposes under the Plan.
Participant. "Participant" means a Director who has filed a completed and
------------
executed Enrollment Agreement or authorization form with the Committee and is
participating in the Plan in accordance with the provisions of Article 4.
Plan Year. "Plan Year" means the fiscal year beginning February 1 and
----------
ending January 31.
Retirement. "Retirement" means termination of service as a Director for
-----------
any reason whatsoever, whether voluntarily or involuntarily, except death.
2
<PAGE>
ARTICLE 3
ADMINISTRATION OF THE PLAN
A Committee shall be appointed by the Chief Executive Officer of the
Company to administer the Plan and to establish, adopt or revise such rules and
regulations as it may deem necessary or advisable for the administration of the
Plan. The Committee shall have discretionary authority to determine eligibility
for benefits and to construe the terms of the Plan. Interpretations of the Plan
by the Committee shall be conclusive. Members of the Committee shall be eligible
to participate in the Plan while serving as members of the Committee, but a
member of the Committee shall not vote or act upon any matter which relates
solely to such member's interest in the Plan as a Participant.
ARTICLE 4
PARTICIPATION
4.1 Election to Participate. Any Director may enroll in the Plan by
------------------------
filing a completed and fully executed Enrollment Agreement or authorization form
with the Committee. Pursuant to said Enrollment Agreement or authorization form,
the Director shall irrevocably designate a dollar amount (the "Cumulative
Deferral Amount") by which the aggregate Earnings of such Participant would be
reduced over one (1) or four (4) Plan Years next following the execution of the
Enrollment Agreement (the "Benefit Deferral Period"), provided, however, that:
(a) Minimum Deferral. The reduction for any Plan Year shall not be
-----------------
less than Five Thousand Dollars ($5,000.00).
(b) Reduction in Earnings.
----------------------
(i) In General. Except as otherwise provided in this Section
-----------
4.1, the Earnings of the Participant for each of the Plan Years in the
Benefit Deferral Period shall be reduced by the amount specified in
the Enrollment Agreement (including any authorization form) applicable
to such Plan Year.
(ii) Accelerated Reduction. A Participant may elect in a
----------------------
written notice with the consent of the Committee to increase the
amount of the reduction of Earnings otherwise provided for by Section
4.1(b) (i) for any of the Plan Years remaining in the Benefit Deferral
Period, provided, however, that any such increase
3
<PAGE>
in the reduction of Earnings for any remaining Plan Years in the
Benefit Deferral Period shall not increase the Cumulative Deferral
Amount, but shall act to shorten the length of the Benefit Deferral
Period.
(c) Maximum Reduction in Earnings. A Participant may not elect a
------------------------------
Cumulative Deferral Amount or an increase in reduction of Earnings pursuant
to Section 4.1(b) (ii), or any combination of the two, that would cause the
aggregate total reduction in Earnings in any Plan Year to exceed one
hundred percent (100%) of the Earnings payable during such Plan Year. In
the event that a Participant elects a Cumulative Deferral Amount or
increase in reduction of Earnings that would violate the limitation
described in this paragraph (c), the election shall be valid except that
the Cumulative Deferral Amount or increase in reduction of Earnings so
elected shall automatically be reduced to comply with such limitation,
whichever is most appropriate in the sole discretion of the Committee.
4.2 Deferral Accounts. The Committee shall establish and maintain a
------------------
separate Deferral Account for each Participant. The amount by which a
Participant's Earnings are reduced pursuant to Section 4.1 shall be credited by
the Employer to the Participant's Deferral Account on the fifteenth (15th) day
of the month in which such Earnings would otherwise have been paid. Such
Deferral Account shall be debited by the amount of any payments made by the
Employer to the Participant or the Participant's Beneficiary pursuant to this
Plan.
(a) Interest. Each Deferral Account of a Participant shall be deemed
---------
interest from the date such Deferral Account was established through the
date of commencement of payment of the Retirement Benefit at a rate equal
to the Declared Rate which is announced by the Committee for each Plan
Year, compounded annually, on the balance from month-to-month in such
Deferral Account. Following the date of commencement of payment of the
Retirement Benefit, a Participant's Deferral Account shall be deemed to
bear interest on the balance in such Deferral Account from month-to-month
at a rate equal to twelve percent (12%) per annum, compounded annually, or
such higher rate which the Committee may determine in its sole discretion.
4.3 Rollover Deferred Compensation Account. In its sole discretion, the
---------------------------------------
Committee may permit any Participant to make a special rollover election to
transfer any amounts which were previously deferred under any existing deferred
compensation plans of the Company to this Plan.
In such event, the Committee shall establish and maintain a separate
Rollover Deferral Account for each Participant who makes a rollover transfer to
this Plan. Such Rollover Deferral Account shall be deemed to bear interest at
the same rate and subject to the same conditions as other Deferral Accounts
pursuant to Section 4.2. Each Participant who makes a rollover transfer to a
Rollover Deferral Account shall be treated for purposes of determining benefits
under the Plan as having a separate Cumulative Deferral Amount which shall
initially be in
4
<PAGE>
the amount of the rollover transfer. A Participant who makes a rollover transfer
shall be deemed to waive all rights under the Company's existing deferred
compensation plans from which rollover transfers are made with respect to the
amounts transferred to this Plan, including the right to make elections
regarding the time or manner of payment as permitted thereunder. Rollover
transfers shall be subject to the minimum deferral amount set forth in Section
4.1(a), but shall not be subject to any maximum deferral limitation.
4.4 Valuation of Accounts. The value of a Deferral Account as of any date
----------------------
shall equal the amounts theretofore credited to such account less any payments
debited to such account plus the interest deemed to be earned on such account in
accordance with Section 4.2. Interest shall be credited monthly on the fifteenth
(15th) day of each month.
4.5 Statement of Accounts. The Committee shall submit to each
----------------------
Participant, within one hundred twenty (120) days after the close of each Plan
Year, a statement in such form as the Committee deems desirable setting forth
the balance standing to the credit of each Participant in his Deferral Account.
ARTICLE 5
BENEFITS
5.1 Retirement. Upon Retirement, the payment of benefits shall commence
-----------
on the first day of the month following retirement, or following such later date
which the Participant elected in his Enrollment Agreement (including any
authorization form). A Participant may elect in his Enrollment Agreement
(including any authorization form) to have payments commence from one (1) to ten
(10) years following retirement, but not later than age 65 (or five (5) years
after the first day of the Benefit Deferral Period, if later).
(a) Single Participant. In the case of a Participant who is single
-------------------
when payments commence, the Employer shall pay to the Participant an amount
each month for the life of the Participant, but not less than one hundred
eighty (180) months. The payments shall be the actuarial equivalent of the
aggregate of the Participant's Deferral Account at the time payments
commence and the interest that will accrue on the unpaid balance in such
Deferral Account during the payment period pursuant to Section 4.2(a). If
the Committee does not provide for a higher rate of interest than twelve
percent (12%), each monthly payment shall be in the same amount. If the
Committee does provide for a higher rate of interest for a year pursuant to
Section 4.2(a), the monthly amount may be redetermined each calendar year
to reflect the increase.
5
<PAGE>
(b) Married Participant. In the case of a Participant who is married
--------------------
when payments commence, the Employer shall make actuarially reduced monthly
payments to the Participant for his life and thereafter, if the Participant
is survived by a spouse who was married to the Participant when Retirement
Benefit payments commenced, shall continue to make monthly payments to the
Participant's spouse for her life, with payments to be made for an
aggregate period of not less than one hundred eighty (180) months. The
payments shall be the actuarial equivalent of the payment which would be
made to the Participant pursuant to Section 5.1(a) if he were single. If
the Committee provides for a higher rate of interest than twelve percent
(12%) for a year pursuant to the provisions of Section 4.2(a), the monthly
amount of payments may be redetermined each calendar year to reflect the
increase.
5.2 Survivor Benefits.
------------------
(a) If a Participant dies prior to Retirement, the Employer will pay
to the Participant's Beneficiary an annual benefit for the greater of:
(i) ten (10) years, or
(ii) until the Participant would otherwise have attained age 65,
equal to fifty percent (50%) of the Cumulative Deferral Amount. However, if
the Committee determines that a distribution of the Participant's Deferral
Account would produce a greater benefit, such Deferral Account balance
shall be paid to the Participant's Beneficiary in equal annual installments
over the same period as specified above based on crediting the balance from
month-to-month in such Deferral Account at a rate equal to twelve percent
(12%) per annum, compounded annually.
(b) If a Participant dies after Retirement, but prior to commencement
of payment of any Retirement Benefit under the Plan, the Employer will pay
to the Participant's Beneficiary the benefit that such Participant would
have received had the Participant retired on the day prior to such
Participant's death, provided, however, that if the present value of the
benefit described in this Section 5.2(b) is less than the present value of
the benefit described in Section 5.2(a), using in each case twelve percent
(12%) as the discount factor, then the Beneficiary described in this
Section 5.2(b) shall receive the benefit described in Section 5.2(a) and
not the benefit described in this Section 5.2(b).
(c) If a Participant (who was unmarried at the commencement of the
payment of any Retirement Benefit, or whose spouse who was married to the
Participant at the time of commencement of payment of any Retirement
Benefit predeceases the Participant) dies after the commencement of the
payment of any Retirement Benefit, the Employer will pay
6
<PAGE>
to the Participant's Beneficiary the remaining installments of any such
benefit for the balance of the one hundred eighty (180) months minimum
payment period. If a spouse who was married to the Participant at the time
of commencement of payment of the Retirement Benefit survives beyond such
one hundred eighty (180) months minimum payment period, payments shall
continue to be made to the spouse until the spouse's death. If the spouse
who was married to the Participant at the time of commencement of payment
of the Retirement Benefit survives the Participant, but does not survive
past the one hundred eighty (180) months minimum payment period, the
Employer will pay to the Participant's Beneficiary the remaining
installments of any such benefit for the balance of the one hundred eighty
(180) months minimum payment period. In computing any benefits to be paid
following the Participant's death pursuant to this paragraph (c), the
Participant's Deferral Account shall be deemed to bear interest following
the Participant's death on the balance in such Deferral Account from
month-to-month at a rate equal to twelve percent (12%) per annum,
compounded annually.
(d) Notwithstanding other provisions of the Plan, if the Beneficiary
is not a spouse, the present value of the installments shall be paid as
soon as administratively feasible after the death of the Participant. The
interest rate used to compute the present value shall be the average of the
declared rate for the Plan Year in which the Participant dies and twelve
percent (12%).
5.3 Small Benefit. In the event that the Committee determines in its sole
--------------
discretion that the amount of any benefit is too small to make it
administratively convenient to pay such benefit over time, the Committee may pay
the benefit in the form of a lump sum, notwithstanding any provision of this
Article 5 to the contrary. Such lump sum shall be computed as the net present
value of the benefit otherwise payable using a twelve percent (12%) per annum
discount factor.
5.4 Withholding. To the extent required by the law in effect at the time
------------
payments are made, the Employer shall withhold from payments made hereunder the
minimum taxes required to be withheld by the federal or any state or local
government.
5.5 Lump Sum Election. Other provisions of Section 5.1 notwithstanding,
------------------
if a Participant in his Enrollment Agreement (including any authorization form)
has elected a lump sum payment to be made after his Retirement, the amount of
his Deferral Account (including interest) for the Benefit Deferral Period
covered by that Agreement shall be paid to the Participant in a lump sum at the
time specified in that Agreement.
5.6 Lump Sum Payout Option. Notwithstanding any other provisions of the
-----------------------
Plan, at any time after Retirement, but not later than ten (10) years after
Retirement of the Participant, a Participant or a Beneficiary of a deceased
Participant may elect to receive an immediate lump sum payment of 50% or 100% of
the balance of his Deferral Account, reduced by a penalty, which shall
7
<PAGE>
be forfeited to the Company, equal to eight percent (8%) of the amount of his
Deferral Account he elected to receive, in lieu of payments in accordance with
the form previously elected by the Participant, or provided elsewhere in this
Plan. Such election, if not 100%, may be made only twice. If less than 100% of
his Deferral Account is paid out, the remainder of his Deferral Account will be
paid in accordance with the form previously elected by the Participant, or
provided elsewhere in this Plan. However, the penalty shall not apply if the
Committee determines, based on advice of counsel or a final determination by the
Internal Revenue Service or any court of competent jurisdiction, that by reason
of the foregoing provision any Participant or Beneficiary has recognized or will
recognize gross income for federal income tax purposes under this Plan in
advance of payment to him of Plan benefits. The Company shall notify all
Participants (and Beneficiaries of deceased Participants) of any such
determination. Whenever any such determination is made, the Company shall refund
all penalties which were imposed hereunder on account of making lump sum
payments at any time during or after the first year to which such determination
applies (i.e., the first year when gross income is recognized for federal income
tax purposes). Interest shall be paid on any such refunds at ten percent (10%)
for each Plan Year, compounded annually. The Committee may also reduce or
eliminate the penalty if it determines that this action will not cause any
Participant or Beneficiary to recognize gross income for federal income tax
purposes under this Plan in advance of payment to him of Plan benefits.
ARTICLE 6
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate any person
or persons as Beneficiary or Beneficiaries to whom payment under this Plan shall
be made in the event of the Participant's death prior to complete distribution
to the Participant of the benefits due under the Plan. Each Beneficiary
designation shall become effective only when filed in writing with the Committee
during the Participant's lifetime on a form prescribed by the Committee.
The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed. Any finalized divorce or marriage
(other than a common law marriage) of a Participant subsequent to the date of
filing of a Beneficiary designation form shall revoke such designation unless in
the case of divorce the previous spouse was not designated as Beneficiary and
unless in the case of marriage the Participant's new spouse had previously been
designated as Beneficiary. The spouse of a married Participant domiciled in a
community property jurisdiction shall join in any designation of Beneficiary or
Beneficiaries other than the spouse.
If a Participant fails to designate a Beneficiary as provided above, or if
his Beneficiary designation is revoked by marriage, divorce, or otherwise
without execution of a new designation, or if all designated Beneficiaries
predecease the Participant or die prior to complete distribution of
8
<PAGE>
the Participant's benefits, then the Committee shall direct the distribution of
such benefits to the Participant's estate.
ARTICLE 7
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Board of Directors of the Company may at any time
---------
amend the Plan , in whole or in part for any reason, including but not limited
to tax, accounting or insurance changes, a result of which may be to terminate
the Plan for future deferrals; 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 Automatic Termination of Plan. The Plan shall terminate only under
-----------------------------
the following circumstances. The Plan shall automatically terminate upon a
determination by the Company that a final decision of a court of competent
jurisdiction has declared that the Participants under the Plan are in
constructive receipt under the Internal Revenue Code of their vested Plan
benefits.
7.3 Payments Upon Automatic Termination. Upon any Plan termination under
-----------------------------------
Section 7.2, the Participants will be deemed to have terminated their enrollment
under the Plan as of the date of such termination. The Company will pay all
Participants the value of each Participant's Deferral Accounts in a lump sum.
The interest rate used to compute the present value shall be the average of the
declared rate for the Plan Year in which the lump sum is to be paid and twelve
percent (12%).
ARTICLE 8
MISCELLANEOUS
8.1 Unsecured General Creditor. Participants and their Beneficiaries,
---------------------------
heirs, successors, and assigns shall have no legal or equitable rights, claims,
or interests in any specific property or assets of Employer, nor shall they be
beneficiaries of, or have any rights, claims, or interests in any life insurance
policies, annuity contracts, or the proceeds therefrom owned or which may be
acquired by Employer ("Policies"). Such Policies or other assets of Employer
shall not be held under any trust for the benefit of Participants, their
Beneficiaries, heirs, successors, or assigns, or held in any way as collateral
security for the fulfilling of the obligations of Employer under this Plan. Any
and all of Employer's assets and Policies shall be, and remain, the general,
unpledged,
9
<PAGE>
unrestricted assets of Employer. Employer's obligation under the Plan shall be
merely that of an unfunded and unsecured promise of Employer to pay money in the
future.
8.2 Nonassignability. Neither a Participant nor any other person shall,
-----------------
have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage
or otherwise encumber, hypothecate or convey in advance of actual receipt the
amounts, if any, payable hereunder, or any part thereof, or interest therein
which are, and all rights to which are, expressly declared to be unassignable
and non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, nor be transferable by operation of law in the event of a Participant's
or any other person's bankruptcy or insolvency.
8.3 Service Not Guaranteed. Nothing contained in this Plan nor any action
-----------------------
taken hereunder shall be construed as a contract of employment or as giving any
Director any right to be retained as a Director of the Employer.
8.4 Protective Provisions. Each Participant shall cooperate with the
----------------------
Employer by furnishing any and all information requested by the Employer in
order to facilitate the payment of benefits hereunder, taking such physical
examinations as the Employer may deem necessary and taking such other relevant
action as may be requested by the Employer. If a Participant refuses so to
cooperate, the Employer shall have no further obligation to the Participant
under the Plan, other than payment to such Participant of the cumulative
reductions in Earnings theretofore made pursuant to this Plan. If a Participant
commits suicide during the two (2) year period beginning on the later of (a) the
date of adoption of this Plan or (b) the first day of the first Plan Year of
such Participant's participation in the Plan, or if the Participant makes any
material misstatement of information or nondisclosure of medical history, then
no benefits will be payable hereunder to such Participant or his Beneficiary,
other than payment to such Participant of the cumulative reductions in Earnings
theretofore made pursuant to this Plan, provided, that in the Employer's sole
discretion, benefits may be payable in an amount reduced to compensate the
Employer for any loss, cost, damage or expense suffered or incurred by the
Employer as a result in any way of such misstatement or nondisclosure.
8.5 Gender, Singular and Plural. All pronouns and any variations thereof
----------------------------
shall be deemed to refer to the masculine or feminine as the identity of the
person or persons may require. As the context may require, the singular may be
read as the plural and the plural as the singular.
8.6 Captions. The captions of the articles, sections, and paragraphs of
---------
this Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.
10
<PAGE>
8.7 Validity. In the event any provision of this Plan is held invalid,
---------
void, or unenforceable, the same shall not affect, in any respect whatsoever,
the validity of any other provision of this Plan.
8.8 Notice. Any notice or filing required or permitted to be given to the
-------
Committee under the Plan shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail, to the principal office of the
Employer, directed to the attention of the President of the Employer. Such
notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration or
certification.
8.9 Applicable Law. This Plan shall be governed and construed in
---------------
accordance with the laws of the State of Minnesota as applied to contracts
executed and to be wholly performed in such state.
11
<PAGE>
EXHIBIT (10)M
11-29-94
Adopted: 12-14-94
Effective: 1/1/97
Amended 4-10-96
DAYTON HUDSON CORPORATION
SMG EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I
GENERAL
-------
Sec. 1.1 Name of Plan. The name of the Plan set forth herein is the
------------
Dayton Hudson Corporation SMG Executive Deferred Compensation Plan. It is
referred to herein as the "Plan".
Sec. 1.2 Purpose. The purpose of the Plan is to provide a means whereby
-------
Dayton Hudson Corporation (the "Company") may afford financial security to a
select group of employees of the Company and its subsidiaries who have rendered
and continue to render valuable services to the Company or its subsidiaries and
who make an important contribution towards the Company's continued growth and
success, by providing for additional future compensation so that such employees
may be retained and their productive efforts encouraged.
Sec. 1.3 Effective Date. The Effective Date of the Plan is January 1,
--------------
1997.
Sec. 1.4 Company. "Company" means all of the following:
-------
(a) Dayton Hudson Corporation, a Minnesota corporation.
(b) Any successor of Dayton Hudson Corporation (whether direct or
indirect, by purchase of a majority of the outstanding voting stock of
Dayton Hudson Corporation or all or substantially all of the assets of
Dayton Hudson Corporation, or by merger, consolidation or otherwise).
(c) Any person that becomes liable for the obligations hereunder of the
entities specified in (a) and (b) above by operation of law.
Sec. 1.5 Participating Employers. The Company is a Participating Employer
-----------------------
in the Plan. With the consent of the Company, by action of the Board or any duly
authorized officer, any wholly-owned subsidiary of the Company may, by action of
its board of directors or any duly authorized officer, also become a
Participating Employer in the Plan effective as of the date specified by it in
its adoption of the Plan; but the subsidiary shall cease to be a Participating
Employer on the date it ceases to be a wholly-owned subsidiary of the Company.
The other Participating Employers on the Effective Date are:
<PAGE>
Dayton's Commercial Interiors, Inc. (Minnesota)
Dayton's Travel Service, Inc. (Minnesota)
Mervyn's (California)
DHC Milwaukee, Inc. (Wisconsin)
DHC Wisconsin, Inc. (Wisconsin)
Marshall Field & Company (Delaware)
Marshall Field Stores, Inc. (Delaware)
Retailers National Bank
Sec. 1.6 Construction and Applicable Law. The Plan is intended to be an
-------------------------------
unfunded benefit plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees,
subject to the applicable requirements of ERISA. The Plan shall be administered
and construed consistently with said intent. It shall also be construed and
administered according to the laws of the State of Minnesota to the extent such
laws are not preempted by laws of the United States of America. All
controversies, disputes, and claims arising hereunder shall be submitted to the
United States District Court for the District of Minnesota.
Sec. 1.7 Rules of Construction. The Plan shall be construed in accordance
---------------------
with the following:
(a) Headings at the beginning of articles and sections hereof are for
convenience of reference, shall not be considered as part of the text
of the Plan, and shall not influence its construction.
(b) Capitalized terms used in the Plan shall have their meaning as defined
in the Plan unless the context clearly indicates to the contrary.
(c) All pronouns and any variations thereof shall be deemed to refer to
the masculine or feminine as the identity of the person or persons may
require. As the context may require, the singular may be read as the
plural and the plural as the singular.
(d) Use of the words "hereof", "herein", "hereunder" or similar compounds
of the word "here" shall mean and refer to the entire Plan unless the
context clearly indicates to the contrary.
(e) The provisions of the Plan 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.
2
<PAGE>
ARTICLE II
DEFINITIONS
-----------
Sec. 2.1 Base Salary. "Base Salary" is the salary an Employee is expected
-----------
to earn in a Benefit Deferral Period, assuming the Employee is employed for the
full Benefit Deferral Period.
Sec. 2.2 Beneficiary. "Beneficiary" means the person or persons
-----------
designated as such in accordance with Article VI.
Sec. 2.3 Benefit Deferral Period. "Benefit Deferral Period" means that
-----------------------
period of one Plan Year as determined pursuant to Article IV over which a
Participant defers a portion of such Participant's Base Salary and/or Bonus.
Sec. 2.4 Bonus. "Bonus" is the bonus, under any bonus plan of a
-----
Participating Employer. Any part of a "Bonus" earned in a Benefit Deferral
Period, but otherwise payable in the year following the Benefit Deferral Period
is governed by the deferral election made for the Benefit Deferral Period.
Sec. 2.5 Board. "Board" means the board of directors of the Company, and
-----
includes any committee thereof authorized to act for said board of directors.
Sec. 2.6 Continuing Participating Salary. "Continuing Participating
-------------------------------
Salary" shall be set by the Vice President of Personnel. The "Continuing
Participating Salary" shall be within $1,000 of 1.25 times the amount determined
under Code Section 414(q)(1)(C). The amount is $50,000 (as indexed for cost of
living increases for each calendar year after 1987 as provided in the applicable
Treasury regulations) for the prior year.
Sec. 2.7 Credited Service. "Credited Service" of a Participant means the
----------------
number of years of service for vesting purposes a Participant would have under
the applicable defined benefit pension plan of the Company and/or a
Participating Employer.
Sec. 2.8 Crediting Rate Alternative. "Crediting Rate Alternative" means
--------------------------
the S&P Crediting Rate or the Variable Interest Crediting Rate.
Sec. 2.9 Cumulative Deferral Amount. "Cumulative Deferral Amount" means
--------------------------
the total cumulative amount by which a Participant's Base Salary and/or Bonus
must be reduced over the period prescribed in Section 4.1. If for a Plan Year a
Matching Allocation for a Participant pursuant to the SRSP cannot be made
because the Before Tax Deposits or After Tax Deposits elected by the Employee
are reduced to comply with the provisions of the SRSP, "Cumulative Deferral
Amount" also includes the amount of the Matching Allocation that cannot be made.
"Cumulative Deferral Amount" also includes amounts transferred from the HCCAP.
3
<PAGE>
Sec. 2.10 Deferral Account. "Deferral Account" means the accounts
----------------
maintained on the books of account of the Company pursuant to Section 4.2.
Sec. 2.11 Employee. "Employee" means any person employed by a
--------
Participating Employer on a salaried basis.
Sec. 2.12 Enhancement. "Enhancement" means an additional .1667% per month
-----------
added to the S&P Crediting Rate and the Variable Interest Crediting Rate.
Sec. 2.13 Enrollment Agreement. "Enrollment Agreement" means the written
--------------------
agreement entered into by the Company and an Employee pursuant to which the
Employee becomes a Participant in the Plan. In the sole discretion of the
Company, authorization forms filed by any Participant by which the Participant
makes the elections provided for by this Plan may be treated as a completed and
fully executed Enrollment Agreement for all purposes under the Plan.
Sec. 2.14 ERISA. "ERISA" means the Employee Retirement Income Security
-----
Act of 1974 as from time to time amended.
Sec. 2.15 HCCAP. "HCCAP" is the Company's Highly Compensated Capital
-----
Accumulation Plan.
Sec. 2.16 Initial Participating Salary. "Initial Participating Salary"
----------------------------
shall be set by the Vice President of Personnel. The "Initial Participating
Salary" shall be within $1,000 of 1.3 times the amount determined under Code
Section 414(q). The amount is $50,000 (as indexed for cost of living increases
for each calendar year after 1987 as provided in the applicable Treasury
regulations) for the prior year. For 1995 the amount is $85,000.
Sec. 2.17 Named Fiduciary. The Company and the Vice President of
---------------
Personnel are a "Named Fiduciary" for purposes of ERISA with authority to
control and manage the operation and administration of the Plan. Other persons
are also Named Fiduciaries under ERISA if so provided thereunder or if so
identified by the Company, by action of the Board or the Chief Executive
Officer. Such other person or persons shall have such authority to control or
manage the operation and administration of the Plan as may be provided by ERISA
or as may be allocated by the Company, by action of the Board or the Chief
Executive Officer or the Vice President of Personnel.
Sec. 2.18 Participant. "Participant" means an eligible Employee who has
-----------
filed a completed and executed Enrollment Agreement or authorization form with
the Company and is participating in the Plan in accordance with the provisions
of Article IV. "Participant" also means an Employee of the Company who has a
Cumulative Deferral Amount based on Matching Allocation that could not be made
to the SRSP.
4
<PAGE>
Sec. 2.19 Person. "Person" means an individual, partnership, corporation,
------
estate, trust, or other entity.
Sec. 2.20 Plan Year. "Plan Year" means the period commencing with the
---------
Effective Date and ending December 31, 1997 and each subsequent calendar year.
Sec. 2.21 Reduced Salary. "Reduced Salary" is the salary below which a
--------------
Participant can not reduce his or her Base Salary. The "Reduced Salary" for a
Benefit Deferral Period shall be set by the Vice President of Personnel. The
"Reduced Salary" shall be within $1,000 of the amount expected to be determined
under Code Section 414(q)(1)(C). The amount is $50,000 (as indexed for cost of
living increases for each calendar year after 1987 as provided in the applicable
Treasury regulations) for the year. For 1995 the amount is $68,000.
Sec. 2.22 S&P Crediting Rate. "S&P Crediting Rate" means the earnings or
------------------
losses for a month on the S&P Index Fund of the SRSP, or if such Index Fund
ceases to exist, such other index as selected by the Board as most closely
replicates the measure produced by the S&P Index Fund of the SRSP.
Sec. 2.23 SMG. A "SMG" is a member of the Senior Management Group of the
---
Company or a Participating Employer, as that term is defined by the Vice
President of Personnel.
Sec. 2.24 SRSP. "SRSP" is the Dayton Hudson Corporation Supplemental
----
Retirement, Savings, and Employee Stock Ownership Plan.
Sec. 2.25 Termination of Employment. The "Termination of Employment" of
-------------------------
an employee from his Participating Employer for purposes of the Plan shall be
deemed to occur upon his or her resignation, discharge, retirement, death,
failure to return to active work at the end of an authorized leave of absence or
the authorized extension or extensions thereof, failure to return to work when
duly called following a temporary layoff, or upon the happening of any other
event or circumstance which, under the policy of his Participating Employer as
in effect from time to time, results in the termination of the employer-employee
relationship; provided, however, that "Termination of Employment" shall not be
deemed to occur upon a transfer between any combination of Participating
Employers, affiliates, and predecessor employers.
Sec. 2.26 Variable Interest Crediting Rate. "Variable Interest Crediting
--------------------------------
Rate" means the earnings or losses for a month on the Variable Interest Fund of
the SRSP, or if such fund ceases to exist, such other index as selected by the
Board as most closely replicates the measure produced by the Variable Interest
Fund of the SRSP.
Sec. 2.27 Year of Vesting. A "Year of Vesting" is a full year of
---------------
participation under HCCAP or a full year of participation in a deferred
compensation plan of the Company.
5
<PAGE>
ARTICLE III
ELIGIBILITY
-----------
Sec. 3.1 Eligibility. An Employee shall be a Participant while, and only
-----------
while, he or she is a regular employee of a Participating Employer, subject to
the following:
(a) An Employee will become a Participant only if he or she has a Base
Salary equal to or greater than the Initial Participating Salary.
(b) An Employee must be an SMG, or he or she cannot become a Participant.
(c) If an employee's Base Salary is below the Continuing Participating
Salary, he or she will continue to be a Participant, but no further
deferrals will be allowed and no SRSP match will be added to the
Cumulative Deferral Amount.
(d) The employee must sign an enrollment and insurance consent form, in
the form that the Company determines in order to defer Base Salary
and/or Bonus. The insurance consent form will allow Company to
purchase life insurance on the employee with the Company as
beneficiary.
Sec. 3.2 No Guarantee of Employment. Participation in the Plan does not
--------------------------
constitute a guarantee or contract of employment with any Participating
Employer. Such participation shall in no way interfere with any rights a
Participating Employer would have in the absence of such participation to
determine the duration of the employee's employment.
ARTICLE IV
PARTICIPATION AND BENEFITS
--------------------------
Sec. 4.1 Election to Participate. Any Employee of a Participating
-----------------------
Employer who is eligible to participate may enroll in the Plan by filing a
completed and fully executed Enrollment Agreement or authorization form with the
Company. Pursuant to said Enrollment Agreement or authorization form, the
Employee shall irrevocably designate a dollar amount by which the Base Salary
and/or the percentage of the Bonus of such Participant would be reduced over the
Benefit Deferral Period next following the execution of the Enrollment
Agreement, provided, however, that:
(a) Minimum Deferral. The reduction of Base Salary for any Plan Year
----------------
shall not be less than Five Thousand Dollars ($5,000.00).
(b) Reduction in Earnings. Except as otherwise provided in this Section
---------------------
4.1, the Base Salary and/or Bonus of the Participant for the Benefit
Deferral Period shall be
6
<PAGE>
reduced by the amount specified in the Enrollment Agreement (including
any authorization form) applicable to such Plan Year.
(c) Maximum Reduction in Earnings. A Participant may not elect a
-----------------------------
Cumulative Deferral Amount that would cause the reduction in Base
Salary in any Plan Year to exceed eighty percent (80%) of the Base
Salary and ninety percent (90%) of the Bonus payable during such Plan
Year plus the amount of any payout made pursuant to Section 5.2, or
such greater amount or percent of base pay and/or incentive pay or
greater total amount as the Company may permit in its sole discretion.
In no event can Base Salary be reduced below Reduced Salary. In the
event that a Participant elects a Cumulative Deferral Amount that
would violate the limitation described in this paragraph (c), the
election shall be valid except that the Cumulative Deferral Amount so
elected shall automatically be reduced to comply with such limitation,
whichever is most appropriate in the sole discretion of the Company.
Sec. 4.2 Deferral Accounts. The Company shall establish and maintain
-----------------
separate Deferral Accounts for each Participant. The amount by which a
Participant's Base Salary or Bonus are reduced pursuant to Section 4.1 shall be
credited by the Company to the Participant's Deferral Accounts at the end of the
month in which such Base Salary or Bonus would otherwise have been paid. The
Participant's Deferral Account shall be credited with the annual SRSP lost
Matching Allocation on the last day of February following the year of the lost
Matching Allocation. Such Deferral Accounts shall be debited by the amount of
any payments made by the Company to the Participant or the Participant's
Beneficiary pursuant to this Plan. A separate Deferral Account shall be
maintained for each type of deferral election made and for each Crediting Rate
Alternative.
Sec. 4.3 HCCAP. All persons who become Participants in this Plan on
-----
January 1, 1997 will have the balance of their HCCAP Account transferred to this
Plan effective January 1, 1997. All persons who become Participants in this Plan
after January 1, 1997 will have the balance in their HCCAP account transferred
on the January 1 they become Participants. The Deferral Accounts transferred
from HCCAP will be paid in immediate lump sum payouts after Termination of
Employment.
Sec. 4.4 Crediting Rate Alternatives. The Participant shall select the
----------------------------
Crediting Rate Alternatives, using full percentages, that are to be applied to
his or her Deferral Accounts. Participants may change their Crediting Rate
Alternatives quarterly (January, April, July or October) by completing a Rate of
Return Alternative Change Form. The Change Form must be received by the
Compensation Department of the Company at least fifteen days and not more than
forty days before the beginning of the applicable quarter. If a Participant
does not make an election, the Crediting Rate Alternative will be the S&P
Crediting Rate.
7
<PAGE>
Sec. 4.5 Benefit Payment Elections. At the time a Participant executes an
--------------------------
Enrollment Agreement, he or she must also elect the method of benefit payment
and the time to start the benefit. The elections are to be made for each Plan
Year.
(a) Method of Benefit Payment. Benefits for each Plan Year can be paid in
--------------------------
a lump sum, five annual installments or ten annual installments.
(b) Commencement of Benefit. The benefit for each Plan Year may be
------------------------
started as soon as possible following Termination of Employment or
one year following Termination of Employment.
Sec. 4.6 Crediting. Each Deferral Account will be credited at the end of
----------
a month at the following rates on the balance in the Deferral Account on the
first day of the month.
(a) Employee. Each Deferral Account of an Employee will be credited using
---------
the Crediting Rate Alternative plus the Enhancement.
(b) Terminated Employee. Each Deferral Account of an Employee who has had
--------------------
a Termination of Employment will be credited using the Crediting Rate
Alternative.
(c) Vesting. Each Employee who has a Termination of Employment and does
--------
not have five Years of Vesting will have his or her Deferral Accounts
revalued using only the Crediting Rate Alternative and not receiving
the Enhancement. Provided, however, if an Employee's Termination of
Employment is because of death or permanent and total disability, the
Employee will be treated as if he or she have five years of vesting.
Sec. 4.7 Time of Payment. If a Participant has a Termination of
----------------
Employment after age fifty-five or an involuntary termination after age fifty
with ten years of Credited Service, the participant's Deferral Accounts will be
paid pursuant to his or her elections. If a Participant has a Termination of
Employment that does not qualify under the first sentence of this section, the
Participant's Deferral Accounts will be paid in a lump sum as soon as possible
following Termination of Employment.
Sec. 4.8 Statement of Accounts. The Company shall submit to each
----------------------
Participant, within one hundred twenty days after the close of each Plan Year, a
statement in such form as the Company deems desirable, setting forth the balance
standing to the credit of each Participant in his Deferral Accounts.
8
<PAGE>
ARTICLE V
CERTAIN BENEFIT PAYMENTS
------------------------
Sec. 5.1 Termination of Enrollment in Plan. With the written consent of
----------------------------------
the Company, a Participant may terminate his or her enrollment in the Plan by
filing with the Company a written request to terminate enrollment. The Company
will consent to the termination of a Participant's enrollment in the Plan in the
event of an unforeseeable financial emergency of the Participant. An
unforeseeable financial emergency shall mean an unexpected need for cash arising
from an illness, casualty loss, sudden financial reversal or other such
unforeseeable occurrence. Cash needs arising from foreseeable events such as the
purchase of a house or education expenses for children shall not be considered
to be the result of an unforeseeable financial emergency. Upon termination of
enrollment, no further reductions shall be made in the Participant's Base Salary
or Bonus pursuant to his or her Enrollment Agreement, and the Participant shall
immediately cease to be eligible for any benefits under the Plan other than
payments from his or her Deferral Accounts. In its sole discretion, the
Committee may pay the Deferral Accounts on a date earlier than the Participant's
Termination of Employment with the Participating Employer, in which event the
amounts shall be calculated as if the Participant had a Termination of
Employment with the Participating Employer on the date of such payment.
Following termination of enrollment in the Plan, a Participant's Deferral
Account shall be credited at the Crediting Rate Alternative with no Enhancement.
Sec. 5.2 Early Payment. The Company shall pay to the Participant, if he
--------------
is an Employee of the Company or a Participating Employer, the amount by which
the Participant's Base Salary and/or Bonus were reduced in any Plan year
pursuant to Section 4.1 during the eighth (8th) year following the Plan Year
("Early Payment"), provided that such amount has not previously been paid out
under other provisions of the Plan. Such Early Payment shall not include any
amounts credited to the Participant's Deferral Account pursuant to Section 4.6
or the SRSP Lost Matching Contribution. Notwithstanding any other provisions of
this Plan, the Participant may elect prior to the beginning of any year in which
such an Early Payment will be made to him or her to deposit all or a part of
such amount in his or her Deferral Accounts.
Sec. 5.3 Survivor Benefits
-----------------
(a) Death While Employed. If a Participant dies while employed by a
---------------------
Participating Employer, the Company will pay the amount in his or her
Deferral Accounts to the Participant's Beneficiary as soon as possible
after death in a lump sum.
(b) Death After Termination of Employment. If a Participant dies after
--------------------------------------
Termination of Employment, and has not received all of his or her
payments, and the Participant's Beneficiary is his or her spouse,
payments shall be made to the spouse pursuant to the Participant's
payout elections. If the Participant's spouse dies before receiving
all payments, the remaining amount in the Deferral Accounts will be
paid in a lump
9
<PAGE>
sum as soon as possible after the spouse's death to the spouse's
estate. If a Participant dies after Termination of Employment, has not
received all of his or her payments, and the Participant's Beneficiary
is a Person other than his or her spouse, then payment shall be made
in a lump sum as soon as possible after the Participant's death.
Sec. 5.4 Small Benefit. In the event that the Company determines in its
--------------
sole discretion that the amount of any benefit is too small to make it
administratively convenient to pay such benefit over time, the Company may pay
the benefit in the form of a lump sum, notwithstanding any provision of this
Article or Article IV to the contrary.
Sec. 5.5 Withholding. To the extent required by the law in effect at the
------------
time payments are made, the Company shall withhold from payments made hereunder
or any other payment owing by the Company to the Participant the taxes required
to be withheld by the federal or any state or local government.
Sec. 5.6 Lump Sum Payout Option. Notwithstanding any other provisions of
-----------------------
the Plan, at any time after Termination of Employment, but not later than ten
years after Termination of Employment of the Participant, a Participant or a
Beneficiary of a deceased Participant may elect to receive an immediate lump sum
payment of 100% of the balance of his or her Deferral Accounts, if any, reduced
by a penalty, which shall be forfeited to the Company, equal to eight percent of
the amount of his or her Deferral Accounts he or she elected to receive, in lieu
of payments in accordance with the form previously elected by the Participant,
or provided elsewhere in this Plan. However, the penalty shall not apply if the
Company determines, based on advice of counsel or a final determination by the
Internal Revenue Service or any court of competent jurisdiction, that by reason
of the foregoing provision any Participant or Beneficiary has recognized or will
recognize gross income for federal income tax purposes under this Plan in
advance of payment to him of Plan benefits. The Company shall notify all
Participants (and Beneficiaries of deceased Participants) of any such
determination. Whenever any such determination is made, the Company shall refund
all penalties which were imposed hereunder on account of making lump sum
payments at any time during or after the first year to which such determination
applies (i.e., the first year when gross income is recognized for federal income
tax purposes). Interest shall be paid on any such refunds at Variable Interest
Crediting Rate for each Plan Year, compounded annually. The Committee may also
reduce or eliminate the penalty if it determines that this action will not cause
any Participant or Beneficiary to recognize gross income for federal income tax
purposes under this Plan in advance of payment to him of Plan benefits.
ARTICLE VI
BENEFICIARY DESIGNATION
-----------------------
Each Participant shall have the right, at any time, to designate any person
or persons as Beneficiary or Beneficiaries to whom payment under this Plan shall
be made in the event of the
10
<PAGE>
Participant's death prior to complete distribution to the Participant of the
benefits due under the Plan. Each Beneficiary designation shall be come
effective only when filed in writing with the Company during the Participant's
lifetime on a form prescribed by the Company.
The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed. Any finalized divorce or marriage
(other than a common law marriage) of a Participant subsequent to the date of
filing of a Beneficiary designation form shall revoke such designation unless in
the case of divorce the previous spouse was not designated as Beneficiary and
unless in the case of marriage the Participant's new spouse had previously been
designated as Beneficiary.
If a Participant fails to designate a Beneficiary as provided above, or if
his or her Beneficiary designation is revoked by marriage, divorce, or otherwise
without execution of a new designation, or if all designated Beneficiaries
predecease the Participant or die prior to complete distribution of the
Participant's benefits, then the Company shall direct the distribution of such
benefits to the Participant's spouse, if any, and if there is no spouse to the
Participant's estate.
ARTICLE VII
ADMINISTRATION OF PLAN
----------------------
Sec. 7.1 Administration by Company. The Company is the "administrator" of
--------------------------
the Plan for purposes of ERISA. Except as expressly otherwise provided herein,
the Company shall control and manage the operation and administration of the
Plan, make all decisions and determinations incident thereto, and construe the
provisions thereof. In carrying out its Plan responsibilities, the Company shall
have discretionary authority to construe the terms of the Plan. Except in cases
where the Plan expressly requires action on behalf of the Company to be taken by
the Board, action on behalf of the Company may be taken by any of the following:
(a) The Board.
(b) The Chief Executive Officer of the Company.
(c) The Vice President of Personnel of the Company.
(d) Any person or persons, natural or otherwise, or committee, to whom
responsibilities for the operation and administration of the Plan are
allocated by the Company, by resolution of the Board or by written
instrument executed by the Chief Executive Officer or the Vice
President of Personnel of the Company and filed with its permanent
records, but action of such person or persons or committee shall be
within the scope of said allocation.
Sec. 7.2 Certain Fiduciary Provisions. For purposes of the Plan:
-----------------------------
11
<PAGE>
(a) Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan.
(b) A Named Fiduciary, or a fiduciary designated by a Named Fiduciary
pursuant to the provisions of the Plan, may employ one or more persons
to render advice with regard to any responsibility such fiduciary has
under the Plan.
(c) Any time the Plan has more than one Named Fiduciary, if pursuant to
the Plan provisions fiduciary responsibilities are not already
allocated among such Named Fiduciaries, the Company, by action of the
Board or its chief executive officer, may provide for such allocation.
(d) Unless expressly prohibited in the appointment of a Named Fiduciary
which is not the Company acting as provided in Sec. 7.1, such Named
Fiduciary by written instrument may designate a person or persons
other than such Named Fiduciary to carry out any or all of the
fiduciary responsibilities under the Plan of such Named Fiduciary.
(e) A person who is a fiduciary with respect to the Plan, including a
Named Fiduciary, shall be recognized and treated as a fiduciary only
with respect to the particular fiduciary functions as to which such
person has responsibility.
Sec. 7.3 Evidence. Evidence required of anyone under this Plan may be by
---------
certificate, affidavit, document, or other instrument which the person acting in
reliance thereon considers to be pertinent and reliable and to be signed, made,
or presented by the proper party.
Sec. 7.4 Records. Each Participating Employer, each fiduciary with
--------
respect to the Plan, and each other person performing any functions in the
operation or administration of the Plan shall keep such records as may be
necessary or appropriate in the discharge of their respective functions
hereunder, including records required by ERISA or any other applicable law.
Records shall be retained as long as necessary for the proper administration of
the Plan and at least for any period required by ERISA or other applicable law.
Sec. 7.5 General Fiduciary Standard. Each fiduciary shall discharge his
---------------------------
duties with respect to the Plan solely in the interests of Participants and with
the care, skill, prudence, and diligence under the circumstances then prevailing
that a prudent man acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like
aims.
Sec. 7.6 Waiver of Notice. Any notice required hereunder may be waived by
-----------------
the person entitled thereto.
12
<PAGE>
Sec. 7.7 Agent for Legal Process. The Company shall be the agent for
------------------------
service of legal process with respect to any matter concerning the Plan, unless
and until the Company designates some other person as such agent.
Sec. 7.8 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 a fiduciary in
connection with the 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.
Sec. 8.1 Amendment. The Board may at any time amend the Plan , in whole or
---------
in part for any reason, including but not limited to tax, accounting or
insurance changes, a result of which may be to terminate the Plan for future
deferrals (excluding from such power to terminate future deferrals those future
deferrals provided for in Section 5.2 Early Payment); 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.
Sec. 8.2 Automatic Termination of Plan. The Plan shall terminate only
-----------------------------
under the following circumstances. The Plan shall automatically terminate upon
(a) a determination by the Company that a final decision of a court of competent
jurisdiction or the U.S. Department of Labor holding that the Plan is not
maintained "primarily for the purpose of providing deferred compensation for a
select group of management or highly-compensated employees," and therefore is
subject to Parts 2, 3 and 4 of Title I of ERISA, would require that the Plan be
funded and would result in immediate taxation to Participants of their vested
Plan benefits, or (b) a determination by the Company that a final decision of a
court of competent jurisdiction has declared that the Participants under the
Plan are in constructive receipt under the Internal Revenue Code of their vested
Plan benefits.
Sec. 8.3 Payments Upon Automatic Termination. Upon any Plan termination
-----------------------------------
under Sec. 8.2, the Participants will be deemed to have terminated their
enrollment under the Plan as of the date of such termination. The Company will
pay all Participants the value of each Participant's Deferral Accounts in a lump
sum, determined as if each Participant had a Termination of Employment on the
date of such termination of the Plan and elected to be paid as soon as possible
following Termination of Employment.
13
<PAGE>
ARTICLE VIII
AMENDMENT AND TERMINATION OF PLAN
---------------------------------
ARTICLE IX
MISCELLANEOUS
-------------
Sec. 9.1 Unsecured General Creditor. Participants and their
---------------------------
Beneficiaries, heirs, successors, and assigns shall have no legal or equitable
rights, claims, or interests in any specific property or assets of 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 Company
("Policies"). Such Policies or other assets of Participating Employers shall not
be held under any trust (except they may be placed in a Rabbi Trust) for the
benefit of Participants, their Beneficiaries, heirs, successors, or assigns, or
held in any way as collateral security for the fulfilling of the obligations of
Participating Employers under this Plan. Any and all of a Participating
Employer's assets and Policies shall be, and remain, the general, unpledged,
unrestricted assets of the Participating Employer. Participating Employers
obligations under the Plan shall be merely that of an unfunded and unsecured
promise of a Participating Employer to pay money in the future.
Sec. 9.2 Nonassignability. Neither a Participant nor any other person
-----------------
shall have any right to sell, assign, transfer, pledge, anticipate, mortgage,
commute or otherwise encumber, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, or interest
therein which are, and all rights to which are, expressly declared to be
unassignable and non-transferable. No part of the amounts payable shall, prior
to actual payment, be subject to seizure or sequestration for the payment of any
debts, judgements, alimony or separate maintenance owed by a Participant or any
other person, not be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency
Sec. 9.3 Protective Provisions. Each Participant shall cooperate with the
----------------------
Company by furnishing any and all information requested by the Company in order
to facilitate the payment of benefits hereunder, taking such physical
examinations as the Company may deem necessary and taking such other relevant
action as may be requested by the Company. If a Participant refuses so to
cooperate, the Company shall have no further obligation to the Participant under
the Plan, other than payment to such participant of the cumulative reductions in
base salary and or bonus theretofore made pursuant to this Plan. If a
Participant commits suicide during the two (2) year period beginning on the
later of (a) the date of adoption of this Plan or (b) the first day of the first
Plan Year of such Participant's participation in the Plan, or if the Participant
makes any material misstatement of information or nondisclosure of medical
history, then no benefits will be payable hereunder to such Participant or his
Beneficiary, other than payment to such Participant of the cumulative reductions
in Base Salary and or Bonus theretofore made pursuant to this Plan, provided,
that in the Company's sole discretion, benefits may be payable in an amount
reduced to
14
<PAGE>
compensate the Company for any loss, cost, damage or expense suffered or
incurred by the Company as a result in any way of such misstatement or
nondisclosure.
Sec. 9.4 Validity. In the event any provision of this Plan is held
---------
invalid, void, or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.
Sec. 9.5 Notice. Any notice or filing required or permitted to be given
-------
to the Company under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the principal office of
the Company, directed to the attention of the President of the Company. Such
notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration or
certification.
Sec. 9.6 Applicable Law. This Plan shall be governed and construed in
---------------
accordance with the laws of the State of Minnesota as applied to contracts
executed and to be wholly performed in such state.
15
<PAGE>
EXHIBIT (10)N
12-10-94
Adopted: 12-14-94
Effective: 1-1-97
Amended: 4-10-96
DAYTON HUDSON CORPORATION
DIRECTOR DEFERRED COMPENSATION PLAN
ARTICLE I
GENERAL
-------
Sec. 1.1 Name of Plan. The name of the Plan set forth herein is the
------------
Dayton Hudson Corporation Director Deferred Compensation Plan. It is referred to
herein as the "Plan".
Sec. 1.2 Purpose. The purpose of the Plan is to provide a means whereby
-------
Dayton Hudson Corporation (the "Company") may allow certain directors a way to
defer compensation.
Sec. 1.3 Effective Date. The Effective Date of the Plan is January 1,
--------------
1997.
Sec. 1.4 Company. "Company" means all of the following:
-------
(a) Dayton Hudson Corporation, a Minnesota corporation.
(b) Any successor of Dayton Hudson Corporation (whether direct or
indirect, by purchase of a majority of the outstanding voting stock of
Dayton Hudson Corporation or all or substantially all of the assets of
Dayton Hudson Corporation, or by merger, consolidation or otherwise).
(c) Any person that becomes liable for the obligations hereunder of the
entities specified in (a) and (b) above by operation of law.
Sec. 1.5 Participating Employers. The Company is a Participating Employer
-----------------------
in the Plan. With the consent of the Company, by action of the Board or any duly
authorized officer, any wholly-owned subsidiary of the Company may, by action of
its board of directors or any duly authorized officer, also become a
Participating Employer in the Plan effective as of the date specified by it in
its adoption of the Plan; but the subsidiary shall cease to be a Participating
Employer on the date it ceases to be a wholly-owned subsidiary of the Company.
Sec. 1.6 Construction and Applicable Law. The Plan is intended to be an
-------------------------------
unfunded benefit plan maintained for the purpose of providing deferred
compensation for certain directors. The Plan
<PAGE>
shall be construed and administered according to the laws of the State of
Minnesota. All controversies, disputes, and claims arising hereunder shall be
submitted to the United States District Court for the District of Minnesota.
Sec. 1.7 Rules of Construction. The Plan shall be construed in accordance
---------------------
with the following:
(a) Headings at the beginning of articles and sections hereof are for
convenience of reference, shall not be considered as part of the text
of the Plan, and shall not influence its construction.
(b) Capitalized terms used in the Plan shall have their meaning as defined
in the Plan unless the context clearly indicates to the contrary.
(c) All pronouns and any variations thereof shall be deemed to refer to
the masculine or feminine as the identity of the person or persons may
require. As the context may require, the singular may be read as the
plural and the plural as the singular.
(d) Use of the words "hereof", "herein", "hereunder" or similar compounds
of the word "here" shall mean and refer to the entire Plan unless the
context clearly indicates to the contrary.
(e) The provisions of the Plan 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.
ARTICLE II
DEFINITIONS
-----------
Sec. 2.1 Beneficiary. "Beneficiary" means the person or persons
-----------
designated as such in accordance with Article VI.
Sec. 2.2 Benefit Deferral Period. "Benefit Deferral Period" means that
-----------------------
period of one Plan Year as determined pursuant to Article IV over which a
Participant defers a portion of such Participant's Earnings.
Sec. 2.3 Board. "Board" means the board of directors of the Company, and
-----
includes any committee thereof authorized to act for said board of directors.
Sec. 2.4 Crediting Rate Alternative. "Crediting Rate Alternative" means
--------------------------
the S&P Crediting Rate or the Variable Interest Crediting Rate.
2
<PAGE>
Sec. 2.5 Cumulative Deferral Amount. "Cumulative Deferral Amount" means
--------------------------
the total cumulative amount by which a Participant's Earnings must be reduced
over the period prescribed in Section 4.1.
Sec. 2.6 Deferral Account. "Deferral Account" means the accounts
----------------
maintained on the books of account of the Company pursuant to Section 4.2.
Sec. 2.7 Director. "Director" means any person who is a director of the
--------
Company or another Participating Employer but is not an Employee of a
Participating Employer.
Sec. 2.8 Earnings. "Earnings" means the total fees paid to a Participant
--------
for service on the Board (or any committee thereof) or a board of a
Participating Employer.
Sec. 2.9 Employee. "Employee" means any person employed by a
--------
Participating Employer.
Sec. 2.10 Enhancement. "Enhancement" means an additional .1667% per month
-----------
added to the S&P Crediting Rate and the Variable Interest Crediting Rate.
Sec. 2.11 Enrollment Agreement. "Enrollment Agreement" means the written
--------------------
agreement entered into by the Company and a Director pursuant to which the
Director becomes a Participant in the Plan. In the sole discretion of the
Company, authorization forms filed by any Participant by which the Participant
makes the elections provided for by this Plan may be treated as a completed and
fully executed Enrollment Agreement for all purposes under the Plan.
Sec. 2.12 Participant. "Participant" means an eligible Director who has
-----------
filed a completed and executed Enrollment Agreement or authorization form with
the Company and is participating in the Plan in accordance with the provisions
of Article IV.
Sec. 2.13 Person. "Person" means an individual, partnership, corporation,
------
estate, trust, or other entity.
Sec. 2.14 Plan Year. "Plan Year" means the period commencing with the
---------
Effective Date and ending December 31, 1997 and each subsequent calendar year.
Sec. 2.15 Retirement. "Retirement" shall mean when the Director ceases to
----------
be a director of all Participating Employers.
Sec. 2.16 S&P Crediting Rate. S&P Crediting Rate means the earnings or
------------------
losses for a month on the S&P Index Fund of the SRSP, or if such Index Fund
ceases to exist, such other index as selected by the Board as most closely
replicates the measure produced by the S&P Index Fund of the SRSP.
3
<PAGE>
Sec. 2.17 SRSP. SRSP is the Dayton Hudson Corporation Supplemental
----
Retirement, Savings, and Employee Stock Ownership Plan.
Sec. 2.18 Variable Interest Crediting Rate. "Variable Interest Crediting
--------------------------------
Rate" means the earnings or losses for a month on the Variable Interest Fund of
the SRSP, or if such fund ceases to exist, such other index as selected by the
Board as most closely replicates the measure produced by the Variable Interest
Fund of the SRSP.
ARTICLE III
ELIGIBILITY
-----------
Sec. 3.1 Eligibility. A Director shall be a Participant while, and only
-----------
while, he or she is a director of a Participating Employer, subject to the
following:
(a) The Director must sign an enrollment and insurance consent form, in
the form that the Company determines in order to defer Earnings. The
insurance consent form will allow Company to purchase life insurance
on the Director with the Company as beneficiary.
Sec. 3.2 No Guarantee of Continued Directorship. Participation in the
--------------------------------------
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.
ARTICLE IV
PARTICIPATION AND BENEFITS
--------------------------
Sec. 4.1 Election to Participate. Any Director of a Participating
-----------------------
Employer who is eligible to participate may enroll in the Plan by filing a
completed and fully executed Enrollment Agreement or authorization form with the
Company. Pursuant to said Enrollment Agreement or authorization form, the
Director shall irrevocably designate a dollar amount by which the Earnings of
such Participant would be reduced over the Benefit Deferral Period next
following the execution of the Enrollment Agreement, provided, however, that:
(a) Minimum Deferral. The reduction of Earnings for any Plan Year shall
----------------
not be less than Five Thousand Dollars ($5,000.00).
4
<PAGE>
(b) Reduction in Earnings. Except as otherwise provided in this Section
---------------------
4.1, the Earnings of the Participant for the Benefit Deferral Period
shall be reduced by the amount specified in the Enrollment Agreement
(including any authorization form) applicable to such Plan Year.
(c) Maximum Reduction in Earnings. A Participant may not elect a
-----------------------------
Cumulative Deferral Amount that would cause the reduction in Earnings
to exceed one hundred percent (100%) of Earnings payable during such
Plan Year. In the event that a Participant elects a Cumulative
Deferral Amount that would violate the limitation described in this
paragraph (c), the election shall be valid except that the Cumulative
Deferral Amount so elected shall automatically be reduced to comply
with such limitation.
Sec. 4.2 Deferral Accounts. The Company shall establish and maintain
-----------------
separate Deferral Accounts for each Participant. The amount by which a
Participant's Earnings are reduced pursuant to Section 4.1 shall be credited by
the Company to the Participant's Deferral Accounts at the end of the month in
which such Earnings would otherwise have been paid. Such Deferral Accounts shall
be debited by the amount of any payments made by the Company to the Participant
or the Participant's Beneficiary pursuant to this Plan. A separate Deferral
Account shall be maintained for each type of deferral election made and for each
Crediting Rate Alternative.
Sec. 4.3 Crediting Rate Alternatives. The Participant shall select the
----------------------------
Crediting Rate Alternatives, using full percentages, that are to be applied to
his or her Deferral Accounts. Participants may change their Crediting Rate
Alternatives quarterly (January, April, July or October) by completing a Rate of
Return Alternative Change Form. The Change Form must be received by the
Compensation Department of the Company at least fifteen days and not more than
forty days before the beginning of the applicable quarter. If a Participant does
not make an election, the Crediting Rate Alternative will be the S&P Crediting
Rate.
Sec. 4.4 Benefit Payment Elections. At the time a Participant executes an
--------------------------
Enrollment Agreement, he or she must also elect the method of benefit payment
and the time to start the benefit. The elections are to be made for each Plan
Year.
(a) Method of Benefit Payment. Benefits for each Plan Year can be paid in
--------------------------
a lump sum, five annual installments or ten annual installments.
(b) Commencement of Benefit. The benefit for each Plan Year may be
------------------------
started as soon as possible following Retirement or one year following
Retirement.
Sec. 4.5 Crediting. Each Deferral Account will be credited at the end of
---------
a month at the following rates on the balance in the Deferral Account on the
first day of the month.
5
<PAGE>
(a) Director. Each Deferral Account of Director will be credited using
---------
the Crediting Rate Alternative plus the Enhancement.
(b) Former Director. Each Deferral Account of a Director who has had a
----------------
Retirement will be credited using the Crediting Rate Alternative.
Sec. 4.6 Statement of Accounts. The Company shall submit to each
---------------------
Participant, within one hundred twenty days after the close of each Plan Year, a
statement in such form as the Company deems desirable, setting forth the balance
standing to the credit of each Participant in his Deferral Accounts.
ARTICLE V
CERTAIN BENEFIT PAYMENTS
------------------------
Sec. 5.1 Termination of Enrollment in Plan. With the written consent of
---------------------------------
the Company, a Participant may terminate his or her enrollment in the Plan by
filing with the Company a written request to terminate enrollment. The Company
will consent to the termination of a Participant's enrollment in the Plan in the
event of an unforeseeable financial emergency of the Participant. An
unforeseeable financial emergency shall mean an unexpected need for cash arising
from an illness, casualty loss, sudden financial reversal or other such
unforeseeable occurrence. Cash needs arising from foreseeable events such as the
purchase of a house or education expenses for children shall not be considered
to be the result of an unforeseeable financial emergency. Upon termination of
enrollment, no further reductions shall be made in the Participant's Earnings
pursuant to his or her Enrollment Agreement, and the Participant shall
immediately cease to be eligible for any benefits under the Plan other than
payments from his or her Deferral Accounts. In its sole discretion, the
Committee may pay the Deferral Accounts on a date earlier than the Participant's
Retirement with the Participating Employer, in which event the amounts shall be
calculated as if the Participant had a Retirement with the Participating
Employer on the date of such payment. Following termination of enrollment in the
Plan, a Participant's Deferral Account shall be credited at the Crediting Rate
Alternative with no Enhancement.
Sec. 5.2 Survivor Benefits
-----------------
(a) Death While Employed. If a Participant dies while a Director of a
---------------------
Participating Employer, the Company will pay the amount in his or her
Deferral Accounts to the Participant's Beneficiary as soon as possible
after death in a lump sum.
(b) Death After Retirement. If a Participant dies after Retirement, and
-----------------------
has not received all of his or her payments, and the Participant's
Beneficiary is his or her spouse, payments shall be made to the spouse
pursuant to the Participant's payout elections. If the Participant's
spouse dies before receiving all payments, the remaining amount
6
<PAGE>
in the Deferral Accounts will be paid in a lump sum as soon as
possible after the spouse's death to the spouse's estate. If a
Participant dies after Retirement, has not received all of his or her
payments, and the Participant's Beneficiary is a Person other than his
or her spouse, then payment shall be made in a lump sum as soon as
possible after the Participant's death.
Sec. 5.3 Small Benefit. In the event that the Company determines in its
-------------
sole discretion that the amount of any benefit is too small to make it
administratively convenient to pay such benefit over time, the Company may pay
the benefit in the form of a lump sum, notwithstanding any provision of this
Article or Article IV to the contrary.
Sec. 5.4 Withholding. To the extent required by the law in effect at the
-----------
time payments are made, the Company shall withhold from payments made hereunder
or any other payment owing by the Company to the Participant the taxes required
to be withheld by the federal or any state or local government.
Sec. 5.5 Lump Sum Payout Option. Notwithstanding any other provisions of
----------------------
the Plan, at any time after Retirement, but not later than ten years after
Retirement of the Participant, a Participant or a Beneficiary of a deceased
Participant may elect to receive an immediate lump sum payment of 100% of the
balance of his or her Deferral Accounts, if any, reduced by a penalty, which
shall be forfeited to the Company, equal to eight percent of the amount of his
or her Deferral Accounts he or she elected to receive, in lieu of payments in
accordance with the form previously elected by the Participant, or provided
elsewhere in this Plan. However, the penalty shall not apply if the Company
determines, based on advice of counsel or a final determination by the Internal
Revenue Service or any court of competent jurisdiction, that by reason of the
foregoing provision any Participant or Beneficiary has recognized or will
recognize gross income for federal income tax purposes under this Plan in
advance of payment to him of Plan benefits. The Company shall notify all
Participants (and Beneficiaries of deceased Participants) of any such
determination. Whenever any such determination is made, the Company shall refund
all penalties which were imposed hereunder on account of making lump sum
payments at any time during or after the first year to which such determination
applies (i.e., the first year when gross income is recognized for federal income
tax purposes). Interest shall be paid on any such refunds at the Variable
Interest Crediting Rate for each Plan Year, compounded annually. The Committee
may also reduce or eliminate the penalty if it determines that this action will
not cause any Participant or Beneficiary to recognize gross income for federal
income tax purposes under this Plan in advance of payment to him of Plan
benefits.
ARTICLE VI
BENEFICIARY DESIGNATION
-----------------------
Each Participant shall have the right, at any time, to designate any person
or persons as Beneficiary or Beneficiaries to whom payment under this Plan shall
be made in the event of the
7
<PAGE>
Participant's death prior to complete distribution to the Participant of the
benefits due under the Plan. Each Beneficiary designation shall be come
effective only when filed in writing with the Company during the Participant's
lifetime on a form prescribed by the Company.
The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed. Any finalized divorce or marriage
(other than a common law marriage) of a Participant subsequent to the date of
filing of a Beneficiary designation form shall revoke such designation unless in
the case of divorce the previous spouse was not designated as Beneficiary and
unless in the case of marriage the Participant's new spouse had previously been
designated as Beneficiary.
If a Participant fails to designate a Beneficiary as provided above, or if
his or her Beneficiary designation is revoked by marriage, divorce, or otherwise
without execution of a new designation, or if all designated Beneficiaries
predecease the Participant or die prior to complete distribution of the
Participant's benefits, then the Company shall direct the distribution of such
benefits to the Participant's spouse, if any, and if there is no spouse to the
Participant's estate.
ARTICLE VII
ADMINISTRATION OF PLAN
----------------------
Sec. 7.1 Administration by Company. The Company is the "administrator" of
-------------------------
the Plan. Except as expressly otherwise provided herein, the Company shall
control and manage the operation and administration of the Plan, make all
decisions and determinations incident thereto, and construe the provisions
thereof. In carrying out its Plan responsibilities, the Company shall have
discretionary authority to construe the terms of the Plan. Except in cases where
the Plan expressly requires action on behalf of the Company to be taken by the
Board, action on behalf of the Company may be taken by any of the following:
(a) The Board.
(b) The Chief Executive Officer of the Company.
(c) The Vice President of Personnel of the Company.
(d) Any person or persons, natural or otherwise, or committee, to whom
responsibilities for the operation and administration of the Plan are
allocated by the Company, by resolution of the Board or by written
instrument executed by the Chief Executive Officer or the Vice
President of Personnel of the Company and filed with its permanent
records, but action of such person or persons or committee shall be
within the scope of said allocation.
8
<PAGE>
Sec. 7.2 Certain Fiduciary Provisions. For purposes of the Plan:
-----------------------------
(a) Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan.
(b) A Named Fiduciary, or a fiduciary designated by a Named Fiduciary
pursuant to the provisions of the Plan, may employ one or more persons
to render advice with regard to any responsibility such fiduciary has
under the Plan.
(c) Any time the Plan has more than one Named Fiduciary, if pursuant to
the Plan provisions fiduciary responsibilities are not already
allocated among such Named Fiduciaries, the Company, by action of the
Board or its chief executive officer, may provide for such allocation.
(d) Unless expressly prohibited in the appointment of a Named Fiduciary
which is not the Company acting as provided in Sec. 7.1, such Named
Fiduciary by written instrument may designate a person or persons
other than such Named Fiduciary to carry out any or all of the
fiduciary responsibilities under the Plan of such Named Fiduciary.
(e) A person who is a fiduciary with respect to the Plan, including a
Named Fiduciary, shall be recognized and treated as a fiduciary only
with respect to the particular fiduciary functions as to which such
person has responsibility.
Sec. 7.3 Evidence. Evidence required of anyone under this Plan may be by
---------
certificate, affidavit, document, or other instrument which the person acting in
reliance thereon considers to be pertinent and reliable and to be signed, made,
or presented by the proper party.
Sec. 7.4 Records. Each Participating Employer, each fiduciary with
--------
respect to the Plan, and each other person performing any functions in the
operation or administration of the Plan shall keep such records as may be
necessary or appropriate in the discharge of their respective functions
hereunder, including records required by applicable law. Records shall be
retained as long as necessary for the proper administration of the Plan and at
least for any period required by applicable law.
Sec. 7.5 General Fiduciary Standard. Each fiduciary shall discharge his
---------------------------
duties with respect to the Plan solely in the interests of Participants and with
the care, skill, prudence, and diligence under the circumstances then prevailing
that a prudent man acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like
aims.
Sec. 7.6 Waiver of Notice. Any notice required hereunder may be waived by
-----------------
the person entitled thereto.
9
<PAGE>
Sec. 7.7 Agent for Legal Process. The Company shall be the agent for
-----------------------
service of legal process with respect to any matter concerning the Plan, unless
and until the Company designates some other person as such agent.
Sec. 7.8 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 a fiduciary in
connection with the 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.
ARTICLE VIII
AMENDMENT AND TERMINATION OF PLAN
---------------------------------
Sec. 8.1 Amendment. The Board 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.
Sec. 8.2 Automatic Termination of Plan. The Plan shall terminate only
-----------------------------
under the following circumstances. The Plan shall automatically terminate upon a
determination by the Company that a final decision of a court of competent
jurisdiction has declared that the Participants under the Plan are in
constructive receipt under the Internal Revenue Code of their vested Plan
benefits.
Sec. 8.3 Payments Upon Automatic Termination. Upon any Plan termination
-----------------------------------
under Sec. 8.2, the Participants will be deemed to have terminated their
enrollment under the Plan as of the date of such termination. The Company will
pay all Participants the value of each Participant's Deferral Accounts in a lump
sum, determined as if each Participant had a Termination of Employment on the
date of such termination of the Plan and elected to be paid as soon as possible
following Termination of Employment.
10
<PAGE>
ARTICLE IX
MISCELLANEOUS
-------------
Sec. 9.1 Unsecured General Creditor. Participants and their
--------------------------
Beneficiaries, heirs, successors, and assigns shall have no legal or equitable
rights, claims, or interests in any specific property or assets of 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 Company
("Policies"). Such Policies or other assets of Participating Employers shall not
be held under any trust (except they may be placed in a Rabbi Trust) for the
benefit of Participants, their Beneficiaries, heirs, successors, or assigns, or
held in any way as collateral security for the fulfilling of the obligations of
Participating Employers under this Plan. Any and all of a Participating
Employer's assets and Policies shall be, and remain, the general, unpledged,
unrestricted assets of the Participating Employer. Participating Employers
obligations under the Plan shall be merely that of an unfunded and unsecured
promise of a Participating Employer to pay money in the future.
Sec. 9.2 Nonassignability. Neither a Participant nor any other person
----------------
shall have any right to sell, assign, transfer, pledge, anticipate, mortgage,
commute or otherwise encumber, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, or interest
therein which are, and all rights to which are, expressly declared to be
unassignable and non-transferable. No part of the amounts payable shall, prior
to actual payment, be subject to seizure or sequestration for the payment of any
debts, judgements, alimony or separate maintenance owed by a Participant or any
other person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency
Sec. 9.3 Protective Provisions. Each Participant shall cooperate with the
----------------------
Company by furnishing any and all information requested by the Company in order
to facilitate the payment of benefits hereunder, taking such physical
examinations as the Company may deem necessary and taking such other relevant
action as may be requested by the Company. If a Participant refuses so to
cooperate, the Company shall have no further obligation to the Participant under
the Plan, other than payment to such participant of the cumulative reductions in
Earnings theretofore made pursuant to this Plan. If a Participant commits
suicide during the two (2) year period beginning on the later of (a) the date of
adoption of this Plan or (b) the first day of the first Plan Year of such
Participant's participation in the Plan, or if the Participant makes any
material misstatement of information or nondisclosure of medical history, then
no benefits will be payable hereunder to such Participant or his Beneficiary,
other than payment to such Participant of the cumulative reductions in Earnings
theretofore made pursuant to this Plan, provided, that in the Company's sole
discretion, benefits may be payable in an amount reduced to compensate the
Company for any loss, cost, damage or expense suffered or incurred by the
Company as a result in any way of such misstatement or nondisclosure.
11
<PAGE>
Sec. 9.4 Validity. In the event any provision of this Plan is held
--------
invalid, void, or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.
Sec. 9.5 Notice. Any notice or filing required or permitted to be given
------
to the Company under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the principal office of
the Company, directed to the attention of the President of the Company. Such
notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration or
certification.
Sec. 9.6 Applicable Law. This Plan shall be governed and construed in
---------------
accordance with the laws of the State of Minnesota as applied to contracts
executed and to be wholly performed in such state.
12
<PAGE>
Exhibit (10)O 2/21/96
AGREEMENT
---------
THIS AGREEMENT is made as of the _____ day of _____________, 1996 by
and between DAYTON HUDSON CORPORATION (herein called the "Company") and STEPHEN
E. WATSON (herein called "Executive").
RECITALS
--------
A. Executive is employed by Company; and
B. Executive has resigned from the Company effective March 1, 1996
and Company and Executive wish to sever Company's and Executive's ties as
employer and employee respectively, on the terms and conditions hereafter set
forth; and
C. Executive acknowledges he has been advised and encouraged to
review this Agreement with an attorney and is fully aware of the potential
rights and remedies he may have as a result of his termination; and
D. Executive and the Company wish to memorialize herein the
resolution and settlement of all their respective rights, remedies and
obligations whatsoever, flowing from Executive's employment and relationships
with the Company and the severance and termination of that employment and said
relationships.
1. Effective Termination Date. From the date of this Agreement to and
--------------------------
through March 1, 1996, Executive shall act and perform his current duties for
the Company. Effective on March 2, 1996 (unless sooner terminated) the employer-
employee relationship of Company and Executive shall be severed and terminated.
<PAGE>
2. Salary. Executive shall be paid his regular salary for services
------
rendered as an employee under paragraph 1 hereof, subject to all required and
voluntary withholdings. Executive will not be entitled to a bonus for Fiscal
1995.
3. Supplemental Payments. Executive shall be entitled to supplemental
---------------------
payments as follows: (a) 42 weekly checks with the first check to be paid on
March 15, 1996 and the last check to be paid on December 27, 1996. Each weekly
check shall be $19,047.62, reduced for taxes withheld by the Company, and (b) 61
weekly checks with the first check to be paid on January 3, 1997 and the last
check to be paid on February 27, 1998. Each weekly check will be $18,170.81,
reduced for taxes withheld by Company.
4. Vacation Pay. Company shall pay to Executive any unused accrued
------------
vacation due Executive on March 15, 1996.
5. Health Insurance. Executive may continue to participate in Company's
----------------
medical and dental program to the extent, if any, permitted by Company's Health
Service Providers. In order to continue such coverage, Executive must maintain
continuous coverage under the Company Plans and pay 102% of the full cost of
such Plans. Executive acknowledges that Company may modify its premium
structure, the terms of its plans and the coverages of the plans, including the
termination of all or part of a plan. All insurance coverage shall terminate at
the earlier of July 31, 1997, or when Executive becomes a participant under
another group medical plan, whether or not that plan has a pre-existing
conditions clause, (provided however, if that plan has a pre-existing conditions
clause and Executive or a dependent are excluded from coverage because of that
clause Executive or such dependent can continue coverage until the end of the
pre-existing condition provision or other termination provisions set forth in
this sentence, whichever is earlier) or similar
2
<PAGE>
clauses or when the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA") permits terminations. Executive agrees to notify Company when
Executive is eligible to participate in another group plan, when he begins to
participate in another group plan and when a pre-existing condition expires.
6. Life Insurance. Executive may take his universal life insurance
--------------
policy with him after March 1, 1996. In order to continue such policy, he will
be required to make all payments with respect to the policy.
7. Pension Plan - Savings Plan. Executive's rights under the Dayton
----------------------------
Hudson Corporation Employees' Retirement Plan and the Dayton Hudson Corporation
Supplemental Retirement, Savings, and Employee Stock Ownership Plan will be
determined under the terms of such plans as they are constituted on any relevant
date.
8. Deferred Compensation Plan. Executive will be paid his benefits for
--------------------------
his deferred compensation under the Dayton Hudson Corporation Deferred
Compensation Plan Senior Management Group under the terms of the plan as it is
in effect on March 1, 1996. Executive acknowledges that the attached schedule
shows the accrued amounts and scheduled commencement dates of payment that are
to be made.
9. Excess Pension Plan. Executive will be paid his benefits under the
-------------------
Dayton Hudson Corporation Excess Pension Plan, if any, under the terms of such
plans as they are constituted on any relevant date.
10. Option Plans. Executive's rights under the Company Executive Long
------------
Term Incentive Plan ("LTIP") will be determined under such plan. Executive
acknowledges that eligibility for the extension of option exercise under Section
6.1(b)(iii) of LTIP and extension of
3
<PAGE>
performance shares under Section 5.5 of the LTIP require the consent of the
Compensation Committee of the Board of Directors of the Company. Executive
acknowledges that such consent is in the sole discretion of such Committee.
Under the terms of that approval, Stock Options and Performance Shares shall
continue to accrue under the LTIP and Stock Options may be exercised within five
years after Executive's Date of Employment Termination or ten years and one day
after the date of grant of the option, whichever first occurs; provided however,
Stock Options and Performance Shares may be terminated earlier as provided in
this Agreement. On February 3, 1997, Executive will be issued 4,315 shares of
Dayton Hudson Corporation Common Stock (the Restricted Stock). The Company will
recommend to the Compensation Committee that they extend the Options and
Performance Shares and pay the Restricted Stock. The extensions and payment of
Restricted Stock are effective only if Executive executes this Agreement and
does not rescind it.
a. Stock Options. If a Disqualifying Event (as that term is defined in
this Agreement) occurs, no further accrual of Stock Options shall
occur after the date of the Disqualifying Event. Any Stock Options
for which installments have already accrued shall terminate 30 days
after Company sends notice of the Disqualifying Event to Executive.
b. Performance Shares. If a Disqualifying Event (as that term is defined
in the Agreement) occurs, the right to receive Performance Shares
shall immediately terminate.
4
<PAGE>
c. Restricted Stock. If a Disqualifying Event (as that term is defined
in the Agreement) occurs, the right to receive Restricted Stock shall
immediately terminate.
d. Disqualifying Event. A Disqualifying Event shall occur when:
(1) Executive recruits directly or indirectly any employee of Company
or any subsidiary or operating company of Company for employment
with any other operation, at any time between Executive's date of
Employment Termination and March 1, 2001. Such recruiting shall
not be a Disqualifying Event if Executive has a written agreement
signed by the Chief Personnel Officer of Company allowing him to
recruit persons named in the Agreement.
(2) Executive in any way directly or indirectly in any manner by word
or action or any combination thereof or by any means enters into
or performs conduct detrimental to Company or any subsidiary of
Company or its or their reputation.
11. Other Benefits. The Company will pay up to $20,000 for outplacement
--------------
services for Executive. The outplacement agency shall submit its bills to the
Company and Company shall pay the agency directly. In no case shall the Company
pay more than $20,000 for outplacement services. Executive is entitled to the
DSD retiree discount as it is in effect from time to time. Executive may
purchase his Company car from the Company at book value as of March 1, 1996.
Executive acknowledges he is not entitled to any benefits under the Companys
Income
5
<PAGE>
Continuance Policy. Except as specifically herein set forth, Executive shall be
entitled to no other employee benefits, fringe benefits or other remuneration or
compensation.
12. Non-Recruiting. Executive agrees, unless he has a written agreement
--------------
signed by the Chief Personnel Officer of the Company allowing him to recruit
persons named in that agreement, that he will not as an employee or for the
period March 1, 1996 to March 1, 2001, recruit directly or indirectly any
employee of the Company or any subsidiary of the Company for employment with any
other operations. Violation of this agreement will result in the termination of
paragraphs 2, 3 and any extensions and right to receive Restricted Stock, if
any, granted under paragraph 10.
13. Serving as a Witness. Executive agrees that he will cooperate, make
--------------------
himself available, and testify on the Company's behalf, if the Company requests,
without requiring a subpoena, in any and all lawsuits or administrative hearings
arising out of acts, occurrences, or decisions while he was employed of which he
has direct knowledge and to which the Company's attorneys believe Executive's
testimony is necessary for the prosecution, defense or favorable resolution of
the claims or matter. The Company agrees to reimburse Executive for any
reasonable out-of-pocket expenses he incurs as a result of such activities.
14. Confidentiality. Executive agrees that he will not disclose the
---------------
terms or conditions of this Agreement or any of them, including without
limitation, the payments hereunder, the detrimental conduct provisions hereunder
or the benefits hereunder except as follows: (1) to his spouse, attorney,
certified public accountant and financial and estate planning advisors/its
outside attorney, auditors or others directly associated with its business or
operations and needing to know thereof, provided any such thereof agrees to keep
them confidential or (2) pursuant to a legally enforceable order, provided that
he notifies the Company of the proceeding and allows the
6
<PAGE>
Company to oppose or contest the order on his behalf. Executive recognizes and
acknowledges that the confidential information of various kinds, including but
without limitation to lists of the Company's (as used herein includes the
Company's subsidiaries) executives and employees, the ratings, performance
appraisal scores and other employee data, as well as the Company's strategic
plans and manpower planning plans and goals, the Company's new strategies, plans
and proposals as they may exist from time to time, are valuable, special and
unique assets of the Company's business. Executive will not, during or after the
term of his employment as an employee or a recipient of payments described in
paragraph 3, disclose or cause or permit to be disclosed any of such information
or any other information the Company treats as confidential, to any person,
firm, corporation, association, or other entity for any reason or purpose
whatsoever. In the event of a breach or threatened breach by Executive of the
provisions of this paragraph or the violation of paragraph 12, the Company shall
be entitled to an injunction restraining Executive from violating paragraph 12
of this Agreement, from disclosing, in whole or in part, any of the information
listed above or any other information the Company treats as confidential, or
from rendering any services to any person, firm, corporation, association, or
other entity to whom such information, in whole or in part, has been disclosed
or is threatened to be disclosed by act or default of Executive. Nothing in this
Agreement shall be construed as prohibiting the Company from pursuing any other
remedy or remedies available to it for such breach or threatened breach,
including but without limitation to the recovery of damages, together with costs
and attorneys' fees, from or on account of Executive.
15. Detrimental Conduct. Executive agrees that he will not directly or
-------------------
indirectly in any manner by word or action or any combination thereof or by any
other means enter into or perform conduct detrimental to the Company or any
subsidiary of the Company, or its or their reputation.
7
<PAGE>
16. Termination of Payments. In the event Executive violates any covenant
-----------------------
in this Agreement, including without limitation paragraphs 12, 14 or 15 hereof,
the Company shall be relieved of all liability and obligations to make any
payments under this Agreement, and to terminate the provisions of paragraphs 2
and 3 and any extensions or payment of Restricted Stock, if any, granted under
paragraph 10 shall terminate immediately. Notwithstanding any termination of
payments under this paragraph, the requirements of paragraph 12, 13, 14 and 15
hereof and the Release set forth in paragraph 17 hereof shall remain in full
force and effect.
17. Release.
-------
A. DEFINITIONS. All words used in this Release are intended to have
their plain meanings in ordinary English. Specific terms in this Release have
the following meanings:
1) Executive includes both Executive and anyone who has or
---------
obtains any legal rights or claims through Executive.
2) Company means Dayton Hudson Corporation and any company
-------
related to Company in the present or past, any company providing insurance to
Company in the present or past, any present or past employee benefit plan
sponsored by Company, Company's present or past officers, directors, employees
and agents and any person who acted on behalf of Company or on instructions from
Company.
3) Executive Claims means all of the rights Executive has
----------------
now to any relief of any kind from Company, whether or not Executive knows about
the rights or claims, including without limitation:
a. All claims Executive has now arising out of his
employment with Company and his employment termination including, but not
limited to, claims for breach of
8
<PAGE>
contract; claims for unpaid compensation or benefits; breach of the covenant of
good faith and fair dealing; promissory or equitable estoppel; breach of
fiduciary duty; violation of the Age Discrimination in Employment Act, Title VII
of the Civil Rights Act of 1964, Civil Rights Act of 1991, Section 1981 of the
Civil Rights Act of 1866, the Equal Pay Act of 1963, Americans with Disabilities
Act, The Minnesota Human Rights Act and other federal, state, and local civil
rights or discrimination laws; violation of the Employee Retirement Income
Security Act of 1974; violation of the National Labor Relations Act; harassment;
retaliation or reprisal; constructive discharge; invasion of privacy; violation
of public policy; Executive's conduct as a "whistleblower"; fraud or
misrepresentation; defamation; intentional or negligent infliction of emotional
distress; negligence; interference with contractual or business relationships;
interference with prospective economic advantage; wrongful termination of
employment; assault; battery; and any other claims for unlawful employment
practices, including all claims or causes of action in tort or contract;/1/ and
b. All claims for attorneys' fees and costs.
B. AGREEMENT TO RELEASE EMPLOYEE CLAIMS. In exchange for Company
having entered into this Agreement, Executive agrees to give up all Executive
Claims against Company as described above. Executive will not bring any lawsuits
or make any other demands against Company based on Executive Claims. The money
Executive will receive is a full and fair payment for the release of Executive
Claims. Company does not owe Executive anything in addition to what Executive
will be receiving.
C. ADDITIONAL AGREEMENTS AND UNDERSTANDINGS. Even though Company
will pay Executive to release Executive Claims against it, Company does not
admit
___________________
/(1)/ Any reference to government statutes include any amendments to such
statutes.
9
<PAGE>
that it may be responsible or legally obligated to Executive. In fact, Company
denies that it is responsible or legally obligated for Executive Claims or that
it has engaged in any wrongdoing.
18. Miscellaneous. The services under this Agreement are personal
-------------
services and this Agreement may not be assigned by Executive. This Agreement
shall be binding upon the Company and its successors and assigns and the
Executive, his heirs, executors, successors and assigns. This Agreement embodies
the entire Agreement and understandings between the Company and Executive and
supersedes all prior agreements and understandings (oral or written) relating to
the subject matter (including those with any subsidiary of the Company). The
terms of this Agreement may only be modified by an agreement in writing signed
by Executive and a senior corporate officer of the Company. In the event
Executive violates the terms of this Agreement and Company sues or is sued and
prevails, Executive shall pay Companys reasonable expenses and attorneys fees
relating to the suit.
19. Minnesota Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of Minnesota, without giving
effect to the conflict of laws principles.
20. Revocation. Executive understands that he may revoke, that is, cancel
----------
the Release set forth in Paragraph 17, if he does so within 15 calendar days
after he signs this Agreement. To revoke he must do so in writing. The writing
must be hand delivered or postmarked within 15 calendar days of the date that
Executive signs this Agreement and must be addressed to the Corporate Secretary,
Dayton Hudson Corporation, 777 Nicollet Mall, Minneapolis, Minnesota 55402.
Executive understands that, if he mails his revocation, mailing by certified
mail, return receipt requested, is recommended to show proof of mailing.
10
<PAGE>
Please read carefully before signing
------------------------------------
. Executive acknowledges that he has carefully read and understands the
terms of this Agreement.
. Executive acknowledges that he has been advised and encouraged to
consult with an attorney prior to signing this Agreement.
. Executive acknowledges that he has been given 21 days (or more) to
consider whether to sign this Agreement. Executive acknowledges that if he signs
this Agreement before the end of the 21 day period, it will be Executive's
personal, voluntary decision to do so.
. In agreeing to sign this Agreement, Executive acknowledges that he has
not relied on any statements or explanations made by Company or its attorneys.
. Executive understands that if he revokes this Release he will not
receive any payments or benefits set forth in paragraphs 2, 3 or 10 (extension
of options and performance shares and proration of Restricted Stock).
IN WITNESS WHEREOF the parties have hereto executed this Agreement.
DAYTON HUDSON CORPORATION
Date:____________________ By: ______________________________
Title: ______________________________
Date:____________________ _____________________________________
STEPHEN E. WATSON
11
<PAGE>
EXHIBIT (11)
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
COMPUTATIONS OF PER SHARE EARNINGS
(In Millions, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
------------------------------------- -------------------------------------
MAY 4, 1996 April 29, 1995 MAY 4, 1996 April 29, 1995
------------------ ------------------ ------------------ ------------------
EARNINGS SHARES Earnings Shares EARNINGS SHARES Earnings Shares
---------- ------- ---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Primary Computations
- --------------------
Net earnings.......................................... $ 41 $ 11 $ 341 $ 406
Less: Dividend requirements on ESOP
preferred stock, net of tax benefit on
unallocated shares................................... (5) (4) (20) (18)
----- ----- ----- -----
Adjusted net earnings................................. $ 36 $ 7 $ 321 $ 388
===== ===== ===== =====
Average common shares outstanding..................... 72.0 71.7 71.9 71.5
Average number of common share equivalents:
Stock options....................................... 0.3 0.1 0.2 0.2
Performance shares.................................. 0.3 0.3 0.3 0.3
---- ---- ---- ----
Adjusted common equivalent shares
outstanding-primary.................................. 72.6 72.1 72.4 72.0
==== ==== ==== ====
PRIMARY EARNINGS PER SHARE............................ $0.50 $0.10 $4.43 $5.38
===== ===== ===== =====
Fully Diluted Computations
- --------------------------
Net earnings.......................................... $ 41 $ 11 $ 341 $ 406
Less: Earnings impact of assumed ESOP
preferred share conversion, net of tax benefit
on unallocated shares................................ (3) (3) (14) (13)
----- ----- ----- -----
Adjusted net earnings................................. $ 38 $ 8 $ 327 $ 393
===== ===== ===== =====
Average common and common equivalent
shares-primary....................................... 72.6 72.1 72.4 72.0
Additional common share equivalents
attributable to application of the treasury
stock method......................................... 0.2 0.1 - -
Assumed conversion of ESOP preferred shares........... 4.0 4.1 4.1 4.2
---- ---- ---- ----
Adjusted common equivalent shares
outstanding-fully diluted............................ 76.8 76.3 76.5 76.2
==== ==== ==== ====
FULLY DILUTED EARNINGS PER SHARE...................... $0.49 $0.10 $4.27 $5.16
===== ===== ===== =====
AVERAGE ALLOCATED ESOP PREFERRED
SHARES OUTSTANDING (IN MILLIONS)..................... 2.9 2.3 2.7 2.1
==== ==== ==== ====
</TABLE>
<PAGE>
EXHIBIT (12)
DAYTON HUDSON CORPORATION AND SUBSIDIARIES
COMPUTATIONS OF RATIOS OF EARNINGS TO FIXED CHARGES AND
RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS FOR THE
THREE MONTHS ENDED MAY 4, 1996 AND APRIL 29, 1995
AND FOR THE FIVE YEARS ENDED FEBRUARY 3, 1996
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
Three Months Ended Fiscal Year Ended
------------------ --------------------------------------------------
May 4, Apr. 29, Feb. 3, Jan. 28, Jan. 29, Jan. 30, Feb. 1,
1996 1995 1996 1995 1994 1993 1992
------ -------- ------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES:
Earnings:
Consolidated net earnings.............. $ 41 $ 11 $ 311 $ 434 $ 375 $ 383 $ 301
Income taxes.......................... 27 7 190 280 232 228 171
----- ----- ------ ------ ------ ------ -----
Total earnings...................... 68 18 501 714 607 611 472
----- ----- ------ ------ ------ ------ -----
Fixed charges:
Interest expense...................... 115 111 461 439 459 454 421
Interest portion of rental expense.... 15 16 59 56 45 43 39
----- ----- ------ ------ ------ ------ -----
Total fixed charges................. 130 127 520 495 504 497 460
----- ----- ------ ------ ------ ------ -----
Less:
Capitalized interest.................. (5) (3) (14) (7) (5) (6) (11)
----- ----- ------ ------ ------ ------ -----
Fixed charges in earnings........... 125 124 506 488 499 491 449
----- ----- ------ ------ ------ ------ -----
Earnings available for fixed charges.... $ 193 $ 142 $1,007 $1,202 $1,106 $1,102 $ 921
===== ===== ====== ====== ====== ====== =====
Ratio of earnings to fixed charges...... 1.48 1.12 1.94 2.43 2.19 2.22 2.00
===== ===== ====== ====== ====== ====== =====
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS:
Total fixed charges, as above........... $ 130 $ 127 $ 520 $ 495 $ 504 $ 497 $ 460
Dividends on preferred stock
(pre-tax basis)....................... 8 10 37 39 39 39 39
----- ----- ------ ------ ------ ------ -----
Total fixed charges and preferred
stock dividends................... 138 137 557 534 543 536 499
----- ----- ------ ------ ------ ------ -----
Earnings available for fixed charges
and preferred stock dividends......... $ 193 $ 142 $1,007 $1,202 $1,106 $1,102 $ 921
===== ===== ====== ====== ====== ====== =====
Ratio of earnings to fixed charges
and preferred stock dividends......... 1.39 1.04 1.81 2.25 2.04 2.06 1.85
===== ===== ====== ====== ====== ====== =====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Dayton Hudson Corporation's Form 10Q for the first quarter ended May 4, 1996
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-START> FEB-04-1996
<PERIOD-END> MAY-04-1996
<CASH> 230
<SECURITIES> 0
<RECEIVABLES> 1449
<ALLOWANCES> 66
<INVENTORY> 3175
<CURRENT-ASSETS> 5005
<PP&E> 10389
<DEPRECIATION> 3006
<TOTAL-ASSETS> 12785
<CURRENT-LIABILITIES> 3546
<BONDS> 5125
<COMMON> 51
0
72
<OTHER-SE> 3363
<TOTAL-LIABILITY-AND-EQUITY> 12785
<SALES> 5380
<TOTAL-REVENUES> 5380
<CGS> 3949
<TOTAL-COSTS> 3949
<OTHER-EXPENSES> 1234
<LOSS-PROVISION> 20
<INTEREST-EXPENSE> 109
<INCOME-PRETAX> 68
<INCOME-TAX> 27
<INCOME-CONTINUING> 41
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41
<EPS-PRIMARY> 0.50
<EPS-DILUTED> 0.49
</TABLE>
