{"id":38308,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/1998-management-deferred-compensation-and-restoration-plan.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"1998-management-deferred-compensation-and-restoration-plan","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/1998-management-deferred-compensation-and-restoration-plan.html","title":{"rendered":"1998 Management Deferred Compensation and Restoration Plan &#8211; Kmart Corp."},"content":{"rendered":"<pre>                    AMENDED AND RESTATED \n                    KMART CORPORATION \n                    1998 MANAGEMENT DEFERRED \n                    COMPENSATION AND RESTORATION PLAN \n                    and restated as of September 1, 1998; and \n                    further amended as of September 19, 2000\n\n\n\n\n\n   2\n\n\nCONTENTS\n\n\n\n\nArticle 1. Establishment and Purpose                                      1\n\nArticle 2. Definitions                                                    1\n\nArticle 3. Administration                                                 8\n\nArticle 4. Eligibility and Participation                                  8\n\nArticle 5. Voluntary Deferrals - Base Pay                                 8\n\nArticle 6. Voluntary Deferrals - Annual Bonus                             9\n\nArticle 7. Mandatory Deferrals                                           10\n\nArticle 8. Voluntary Stock Unit Deferrals                                11\n\nArticle 9. Company 401(k) Match Restoration                              12\n\nArticle 10. Company Profit Sharing Restoration                           13\n\nArticle 11. Discretionary Company Credits                                14\n\nArticle 12. Participant Accounts and Rabbi Trust                         14\n\nArticle 13. Allocation of Prior Deferrals and Company Credits            16\n\nArticle 14. Beneficiary Designation                                      17\n\nArticle 15. Withholding of Taxes                                         17\n\nArticle 16. Employment\/Misconduct                                        17\n\nArticle 17. Amendment and Termination                                    18\n\nArticle 18. Miscellaneous                                                18\n\n\n   3\n\n\nAMENDED AND RESTATED KMART CORPORATION 1998 MANAGEMENT\nDEFERRED COMPENSATION AND RESTORATION PLAN\n\nARTICLE 1. ESTABLISHMENT AND PURPOSE\n      1.1 ESTABLISHMENT. Kmart Corporation, a Michigan corporation ( the\n\"Company\"), hereby establishes, effective as of January 1, 1998 (the \"Effective\nDate\"), a deferred compensation and savings restoration plan for key management\nemployees as described herein, which shall be known as the \"Kmart Corporation\n1998 Management Deferred Compensation and Restoration Plan\" (the \"Plan\").\n\n      1.2 PURPOSE. The primary purpose of the Plan is to provide key management\nemployees of the Company and of its participating subsidiaries and affiliates\nwith the opportunity to defer a portion of their compensation and to restore\ncertain retirement benefits lost due to statutory limits imposed by the Code,\nsubject to the terms of the Plan. By adopting the Plan, the Company desires to\nenhance its ability to attract and retain key management employees.\n\nARTICLE 2. DEFINITIONS\n      2.1 DEFINITIONS. Whenever used herein, the following terms shall have the\nmeanings set forth below, and when the meaning is intended, the term is\ncapitalized:\n\n              (a)    \"Accrued Account Balances\" means the then current aggregate\n                     account balances of a Participant through a specific date\n                     in question, including Voluntary Deferrals (as described in\n                     Articles 5 and 6 hereof), Mandatory Deferrals (as described\n                     in Article 7 hereof), Voluntary Stock Unit Deferrals (as\n                     described in Article 8 hereof); Company 401(k) Match\n                     Restoration (as described in Article 9 hereof), Company\n                     Profit Sharing Restoration (as described in Article 10\n                     hereof), Discretionary Company Credits (as described in\n                     Article 11 hereof), and earnings thereon (as described in\n                     Article 12 hereof).\n\n              (b)    \"Accrued Rabbi Trust Obligations\" means the then current\n                     Accrued Account Balances of all Participants through a\n                     specific date in question.\n\n              (c)    \"Annual Bonus\" means the bonus earned by a Participant\n                     under the Kmart Corporation Annual Incentive Bonus Plan, as\n                     amended from time to time, or other annual incentive bonus\n                     plan.\n\n              (d)    \"Base Pay\" means, before any deductions, all wages,\n                     overtime, salary, and commissions and any extraordinary\n                     bonuses and awards which are determined to be part of Base\n                     Pay by the Company earned by a Participant for services\n                     rendered during a Plan Year.\n\n              (e)    \"Beneficial Ownership\" has the same meaning ascribed to\n                     such term in Rule 13d-3 of the General Rules and\n                     Regulations under the Exchange Act.\n\n                                       1\n   4\n\n              (f)    \"Board\" or \"Board of Directors\" means the Board of\n                     Directors of the Company.\n\n              (g)    \"Change in Control\" of the Company is deemed to have\n                     occurred as of the first day that any one or more of the\n                     following conditions shall have been satisfied:\n\n                       (i)    The \"Beneficial Ownership\" of securities\n                              representing more than thirty-three percent (33%)\n                              of the combined voting power of the Company is\n                              acquired by any \"person\" as defined in Sections\n                              13(d) and 14(d) of the Exchange Act (other than\n                              the Company, any trustee or other fiduciary\n                              holding securities under an employee benefit plan\n                              of the Company, or any corporation owned, directly\n                              or indirectly, by the stockholders of the Company\n                              in substantially the same proportions as their\n                              ownership of stock of the Company); or\n\n                      (ii)    The stockholders of the Company approve a\n                              definitive agreement to merge or consolidate the\n                              Company with or into another corporation or to\n                              sell or otherwise dispose of all or substantially\n                              all of its assets, or adopt a plan of liquidation;\n                              or\n\n                     (iii)    During any period of three consecutive years,\n                              individuals who at the beginning of such period\n                              were members of the Board cease for any reason to\n                              constitute at least a majority thereof (unless the\n                              election, or the nomination for election by the\n                              stockholders of the Company, of each new director\n                              was approved by a vote of at least a majority of\n                              the directors then still in office who were\n                              directors at the beginning of such period or whose\n                              election or nomination was previously so\n                              approved).\n\n              (h)    \"Closing Price\" means the last price at which the Company\n                     Stock shall have been sold on the specific date in\n                     question, or if no such sale was made on such date then on\n                     the next preceding day on which there was such a sale of\n                     Company Stock. The price shall be as reported on the\n                     Composite Transactions reporting system, or if not so\n                     reported, as reported by the New York Stock Exchange.\n\n              (i)    \"Code\" means the Internal Revenue Code of 1986, as amended\n                     from time to time.\n\n              (j)    \"Committee\" means the Compensation and Incentives Committee\n                     of the Board (or such other committee as designated by the\n                     Board as a successor thereto) which has the authority to\n                     administer the Plan.\n\n              (k)    \"Company Stock\" means the common stock of Kmart\n                     Corporation.\n\n              (l)    \"Company Stock Fund\" has the same meaning ascribed to such\n                     term in the Retirement Savings Plan.\n\n              (m)    \"Compensation\" has the same meaning ascribed to such term\n                     in the Retirement Savings Plan.\n\n\n\n                                       2\n   5\n\n              (n)    \"Deferral Period\" means the beginning of a month following\n                     the pay period for services rendered prior to the date a\n                     deferral election in made through the earlier of the end of\n                     the Plan Year or the date a Participant is no longer\n                     eligible to participate in the Plan.\n\n              (o)    \"Disability\" means \"total and permanent disability\" as\n                     defined in the Kmart Corporation Long-Term Disability Plan.\n\n              (p)    \"Discretionary Company Credits Account\" has the meaning set\n                     forth in Section 11.2 hereof.\n\n              (q)    \"Employee Directed Contributions\" has the same meaning\n                     ascribed to such term in the Retirement Savings Plan.\n\n              (r)    \"Employer Matching Contributions\" has the same meaning\n                     ascribed to such term in the Retirement Savings Plan.\n\n              (s)    \"ERISA\" means the Employee Retirement Income Security Act\n                     of 1974, as amended from time to time, or any successor\n                     thereto.\n\n              (t)    \"Exchange Act\" means the Securities Exchange Act of 1934,\n                     as amended from time to time, or any successor act thereto.\n\n              (u)    \"Exercise Date\" has the meaning set forth in Section 8.2\n                     hereof.\n\n              (v)    \"Expiration Date\" has the meaning set forth in Section 8.2\n                     hereof.\n\n              (w)    \"Form of Payout\" means a Participant's elected method of\n                     payout. A Participant may choose either (i) a Lump-Sum\n                     Payment or (ii) Installment Payments. If no Form of Payout\n                     is elected, then payment will be made in a Lump-Sum\n                     Payment.\n\n                     A Participant may at any time, at least six (6) months\n                     prior to a Payout Commencement Date, petition the Committee\n                     or its delegate to change the Form of Payout previously\n                     elected by such Participant to a different Form of Payout\n                     otherwise available under the Plan (i.e., a Lump-Sum\n                     Payment or Installment Payments); provided, however, the\n                     Committee must approve any change in the Form of Payout of\n                     Company Stock for Section 16 Officers.\n\n                     If a Participant remains employed with the Company through\n                     a Payout Commencement Date, and if the Accrued Account\n                     Balances payable on such Payout Commencement Date are less\n                     than ten thousand dollars ($10,000), then the Accrued\n                     Account Balances shall be paid as soon as administratively\n                     practicable following the Payout Commencement Date, in a\n                     Lump-Sum Payment regardless of the Participant's previous\n                     elections.\n\n\n\n                                       3\n   6\n\n                     If a Participant's employment with the Company terminates\n                     for any reason and the Participant's Accrued Account\n                     Balances payable on any coincident or future Payout\n                     Commencement Date are less than ten thousand dollars\n                     ($10,000) at the time of such termination of employment,\n                     then the Accrued Account Balances payable on such Payout\n                     Commencement Date(s) shall be paid as soon as\n                     administratively practicable following the Payout\n                     Commencement Date, in a Lump-Sum Payment regardless of the\n                     Participant's previous elections.\n\n                     If a Participant's employment with the Company terminates\n                     due to Disability or death, and the Participant's Accrued\n                     Account Balances payable on any coincident or future Payout\n                     Commencement Date are individually equal to or greater than\n                     ten thousand dollars ($10,000), such Participant, or such\n                     Participant's estate, as the case may be, may petition the\n                     Committee or its delegate to pay out the Accrued Account\n                     Balances in a Lump-Sum Payment as soon as administratively\n                     practicable regardless of the Participant's previous\n                     elections. In the case of employment termination due to\n                     Disability, the termination shall be deemed to have\n                     occurred on the day that the Committee or its delegate\n                     determines the Disability to be total and permanent. The\n                     decision of whether to allow for an accelerated Lump-Sum\n                     Payment shall be at the discretion of the Committee or its\n                     delegate.\n\n              (x)    \"Installment Payments\" means a series of payments, from two\n                     (2) up to twenty (20) approximately equal annual payments,\n                     as elected by the Participant, to be made in cash or\n                     Company Stock, as applicable, with the initial payment due\n                     within thirty (30) calendar days after the applicable\n                     Payout Commencement Date elected by the Participant. Each\n                     of the remaining Installment Payments shall be made in cash\n                     or Company Stock, as applicable, each year thereafter on\n                     the anniversary of such Payout Commencement Date, until all\n                     Accrued Account Balances deferred to such Payout\n                     Commencement Date have been paid in full. Earnings shall\n                     continue to accrue on any remaining Accrued Account\n                     Balances in the manner provided in Section 12.2 hereof\n                     until all Accrued Account Balances deferred to such Payout\n                     Commencement Date have been paid in full. The amount of\n                     each Installment Payment shall be equal to the applicable\n                     portion of the Accrued Account Balances remaining\n                     immediately prior to each such payment, multiplied by a\n                     fraction, the numerator of which is one (1) and the\n                     denominator of which is the number of Installment Payments\n                     remaining to be paid (including such payment).\n\n              (y)    \"Investment Funds\" has the same meaning ascribed to such\n                     term in the Retirement Savings Plan.\n\n              (z)    \"Lump-Sum Payment\" means a single payment to be made in\n                     cash or Company Stock, as applicable, within thirty (30)\n                     calendar days after the applicable Payout Commencement\n                     Date.\n\n              (aa)   \"Mandatory Deferral Account\" has the meaning set forth in\n                     Section 7.1 hereof.\n\n\n\n                                       4\n   7\n\n              (bb)   \"Match Restoration Account\" has the meaning set forth in\n                     Section 9.2 hereof.\n\n              (cc)   \"Participant\" means:\n\n                     Each Senior Officer, Divisional Vice President, Operations\n                     Vice President, and Regional Vice President of the Company;\n\n                     (i)      Each Senior Officer, Divisional Vice President,\n                              Operations Vice President, and Regional Vice\n                              President of the Company;\n\n                     (ii)     Each key management employee of the Company,\n                              except for Participants described in (i) above,\n                              who (i) is qualified to participate in the\n                              Retirement Savings Plan; and (ii) experiences a\n                              cutback in Employee Directed Contributions,\n                              Employer Matching Contributions, and\/or Profit\n                              Sharing Contributions due to the limitations\n                              imposed by the Code; and (iii) meets such other\n                              qualification standards (including pay level) as\n                              determined by the Committee or its delegate from\n                              time to time, and who is thereby selected for\n                              participation in the Plan by the Committee or its\n                              delegate; and\n\n                     (iii)    Each other employee of the Company, its\n                              subsidiaries or its affiliates so designated by\n                              the Committee or its delegate.\n\n               (dd)  \"Payout Commencement Date\" means a date elected by a\n                     Participant, or as otherwise provided herein, upon which\n                     payment of Accrued Account Balances begins.\n\n                     A Participant may, at any time at least six (6) months\n                     prior to a Payout Commencement Date, petition the Committee\n                     or its delegate to change the Payout Commencement Date\n                     previously elected by such Participant to a different\n                     Payout Commencement Date otherwise available under the\n                     Plan; provided, however, the Committee must approve any\n                     change in the Form of Payout of Company Stock for Section\n                     16 Officers.\n\n                     A Payout Commencement Date elected by a Participant shall\n                     be no earlier than one year following the end of the year\n                     in which amounts deferred hereunder are otherwise earned,\n                     and no later than the later of (i) the January following\n                     the Participant's sixty-fifth (65th) birthday; or (ii) the\n                     Participant's termination of employment with the Company if\n                     such Participant is employed on his or her sixty-fifth\n                     (65th birthday). No limit exists on the number of different\n                     Payout Commencement Dates that can be elected by each\n                     Participant.\n\n                     If no Payout Commencement Date is specified by a\n                     Participant for any Voluntary Deferrals or Voluntary Stock\n                     Unit Deferrals, then payout of these amounts shall occur in\n                     the January following the Participant's termination of\n                     employment.\n\n\n\n                                       5\n   8\n\n                     All Company Profit Sharing Restoration and Company 401(k)\n                     Match Restoration shall automatically be paid out beginning\n                     in the January following the Participant's termination of\n                     employment.\n\n              (ee)   \"Plan Year\" means the calendar year.\n\n              (ff)   \"Predecessory Deferral\/Restoration Arrangements\" has the\n                     meaning set forth in Article 13 hereof.\n\n              (gg)   \"Profit Sharing Contributions\" has the same meaning\n                     ascribed to such term in the Retirement Savings Plan.\n\n              (hh)   \"Profit Sharing Restoration Account\" has the meaning set\n                     forth in Section 10.2 hereof.\n\n              (ii)   \"Rabbi Trust\" means a grantor trust, as intended by\n                     Sections 671-678 of the Code, established by the Company\n                     for the benefit of Participants and their beneficiaries.\n\n              (jj)   \"Retirement Savings Plan\" means the Kmart Corporation\n                     Retirement Savings Plan A and Plan B.\n\n              (kk)   \"Section 16 Officer\" means any Participant who is an\n                     officer within the meaning of Rule 16a-1(f) promulgated\n                     under the Securities Exchange Act of 1934 and who are\n                     subject to the reporting requirements under Section 16 of\n                     the Securities Exchange Act of 1934 with respect to Company\n                     Stock.\n\n              (ll)   \"Stock Unit\" means a bookkeeping entry which is the\n                     equivalent of one share of Company Stock.\n\n              (mm)   \"Stock Unit Subaccount\" means the bookkeeping account\n                     established for a Participant which is credited with Stock\n                     Units equal to the number of shares of Company Stock\n                     (including fractions of a share) that could have been\n                     purchased with the corresponding amount of Company 401(k)\n                     Match Restoration (as provided under Article 9 hereof) at\n                     the Closing Price of the shares of Company Stock on the\n                     date as of which such Stock Unit Subaccount is so credited.\n                     The Stock Unit Subaccount shall be reduced in a similar\n                     manner as of the date that any Company Stock is distributed\n                     from such Subaccount to the Participant.\n\n                           As of the date that any dividend is paid to holders\n                     of shares of Company Stock, a Participant's Stock Unit\n                     Subaccount shall be credited with additional Stock Units\n                     equal to the number of shares of Company Stock (including\n                     fractions of a share) that could have been purchased, at\n                     the Closing Price of a share of Company Stock on such date,\n                     with the amount that would have been paid as dividends on\n                     that number of shares of Company Stock (including fractions\n                     of a share) which is equal to the number of Stock Units\n                     attributable to the Participant's Stock Unit Subaccount as\n                     of the record date of such dividend. In the case of\n\n\n\n                                       6\n   9\n\n                     dividends paid in property, the amount of the dividend\n                     shall be deemed to be the fair market value of the property\n                     at the time of the payment thereof, as determined by the\n                     Committee or its delegate. A distribution from the Stock\n                     Unit Subaccount shall be paid in a number of shares of\n                     Company Stock equal to the number of Stock Units\n                     distributable.\n\n              (nn)   \"Voluntary Deferral Account\" means the bookkeeping account\n                     established for a Participant which is credited with Base\n                     Pay and\/or Annual Bonus deferrals which are voluntarily\n                     elected by the Participant pursuant to Articles 5 and\/or 6\n                     hereof.\n\n              (oo)   \"Voluntary Stock Unit Deferral Account\" means the\n                     bookkeeping account established for a Participant which is\n                     credited with Stock Units equal to the number of shares of\n                     Company Stock (including fractions of a share) that were\n                     voluntarily deferred into the Voluntary Stock Unit Deferral\n                     Account by a Participant in connection with a stock option\n                     exercise, or the lapse of restrictions on a restricted\n                     stock grant or purchase, pursuant to the provisions of a\n                     Company stock plan. The Voluntary Stock Unit Deferral\n                     Account shall be reduced in a similar manner as of the date\n                     that any Company Stock is distributed from such account to\n                     the Participant.\n\n                     As of the date that any dividend is paid to holders of\n                     shares of Company Stock, a Participant's Voluntary Stock\n                     Unit Deferral Account shall be credited with additional\n                     Stock Units equal to the number of shares of Company Stock\n                     (including fractions of a share) that could have been\n                     purchased, at the Closing Price of a share of Company Stock\n                     on such date, with the amount that would have been paid as\n                     dividends on that number of shares of Company Stock\n                     (including fractions of a share) which is equal to the\n                     number of Stock Units attributable to the Participant's\n                     Voluntary Stock Unit Deferral Account as of the record date\n                     of such dividend. In the case of dividends paid in\n                     property, the amount of the dividend shall be deemed to be\n                     the fair market value of the property at the time of the\n                     payment thereof, as determined by the Committee. A\n                     distribution from the Voluntary Stock Unit Deferral Account\n                     shall be paid in a number of shares of Company Stock equal\n                     to the number of Stock Units distributable.\n\n              (pp)   \"Voluntary Stock Unit Deferral\" has the same meaning\n                     ascribed to such term in Article 8 hereof.\n\n      2.2 GENDER AND NUMBER. Except where otherwise indicated by the context,\nany masculine term used herein shall include the feminine, the plural shall\ninclude the singular, and the singular shall include the plural.\n\nARTICLE 3. ADMINISTRATION\n      3.1 ADMINISTRATION OF THE PLAN. The Plan shall be administered by the\nCommittee or its delegate except as limited by law or by the Articles of\nIncorporation or the Bylaws of the Company. Subject to the terms hereof, the\nCommittee shall have full power to (a) determine the terms and \n\n\n\n                                       7\n   10\n\nconditions of each Participant's participation in the Plan; (b) construe and\ninterpret the Plan and any agreement or instrument entered into under the Plan;\n(c) establish, amend, or waive rules and regulations for the Plan's\nadministration; (d) amend (subject to the provisions of Article 17 hereof) the\nterms and conditions of the Plan and any agreement or instrument entered into\nunder the Plan; (e) designate one or more persons to administer the Plan; and\n(f) make other determinations which may be necessary or advisable for the\nadministration of the Plan.\n\n      3.2 DECISIONS BINDING. All determinations and decisions of the Committee\nas to any disputed question arising under the Plan, including questions of\nconstruction and interpretation, shall be final, conclusive and binding on all\nparties.\n\nARTICLE 4. ELIGIBILITY AND PARTICIPATION\n      4.1 ELIGIBILITY. Eligibility to participate in the Plan shall be limited\nto Participants. In the event a Participant no longer meets the requirements\nfor eligibility to participate in the Plan, such Participant shall become an\ninactive Participant retaining all of the rights described under the Plan\npertaining to such Participant's then Accrued Account Balances, except the right\nto make any further deferrals hereunder and the right to receive any further\nCompany credits. An inactive Participant may become an active Participant again\nin the future.\n\n      4.2 PARTICIPATION. When a Participant first becomes eligible to\nparticipate in the Plan, such Participant shall, as soon as practicable\nthereafter, be notified of his or her eligibility to participate. At such time,\nor as soon as administratively practicable thereafter, the Participant shall be\nprovided with deferral and investment election forms; such election forms must\nbe completed and returned, within the time period specified, to the Company in\norder for the Participant to participate in the Plan.\n\nARTICLE 5. VOLUNTARY DEFERRALS - BASE PAY\n      5.1 DEFERRAL. Prior to the beginning of a Deferral Period in which Base\nPay is otherwise earned, or in advance of earning(s) at intervals reasonably\ndetermined by the Committee or its delegate, a Participant may voluntarily elect\nto defer up to one hundred percent (100%) of his or her Base Pay for that\nDeferral Period. Any amount deferred pursuant to this Section 5.1, and earnings\nthereon, shall be credited to such Participant's Voluntary Deferral Account.\nEach Participant shall be one hundred percent (100%) vested in any amount\ndeferred pursuant to this Section 5.1, and earnings thereon, at all times. A new\ndeferral election will be required by each Participant prior to the beginning of\neach new Plan Year for which they are eligible to defer Base Pay.\n\n      Notwithstanding anything herein to the contrary, the amount of Base Pay\nthat a Participant may defer pursuant to this Section 5.1 shall be limited by\n(a) amounts deferred pursuant to the Retirement Savings Plan; (b) amounts\nwithheld for applicable federal, state, and local taxes; (c) amounts deducted\npursuant to any insurance or benefit program; (d) voluntary payroll deductions\n(e.g., United Way contributions); (e) involuntary payroll deductions (e.g.,\ngarnishments); and (f) all other proper deductions, as determined by the\nCommittee or its delegate.\n\n      5.2 PARTIAL PLAN YEAR PARTICIPATION. In the event a Participant first\nbecomes eligible to participate in the Plan after the beginning of a Plan Year,\nthe Committee or its delegate may, in its \n\n\n\n                                       8\n   11\n\ndiscretion, allow such Participant to complete a deferral election form and\ninvestment election form within thirty (30) calendar days of becoming eligible\nto participate.\n\n      5.3 DEFERRAL ELECTION. A Participant shall make an election to defer Base\nPay: (i) prior to the beginning of the Deferral Period in which the Base Pay is\notherwise earned, or (ii) in advance of earning, at intervals reasonably\ndetermined by the Committee or its delegate, or (iii) not later than thirty (30)\ncalendar days following notification of initial eligibility to participate for a\npartial Plan Year, as applicable. The deferral election shall apply only to Base\nPay earned on or after the first day of the month following the date on which a\nvalid deferral election form is received by the Committee or its delegate. Each\nsuch election shall indicate the following:\n\n              (a)    The amount of Base Pay earned during the Plan Year to be\n                     deferred, which shall apply only to Base Pay earned on or\n                     after the first day of the month following the date on\n                     which a valid deferral election is received by the\n                     Committee or its delegate;\n\n              (b)    The Payout Commencement Date for the deferred Base Pay, and\n                     earnings thereon, which shall pertain to a Plan Year\n                     pursuant to Section 2.1(dd) hereof; and\n\n              (c)    The Form of Payout which shall pertain to a Plan Year\n                     pursuant to Section 2.1(w) hereof.\n\n      5.4 LENGTH OF DEFERRAL AND FORM OF PAYOUT. Subject to Section 2.1(dd)\nhereof, a Participant may elect the length of deferral of Base Pay deferred each\nPlan Year by designating a corresponding Payout Commencement Date for such\ndeferral. The Form of Payout shall be as elected by the Participant pursuant to\nSection 2.1(w) hereof.\n\nARTICLE 6. VOLUNTARY DEFERRALS - ANNUAL BONUS\n6.1 DEFERRAL. The option to defer annual Bonus pursuant to the terms of this\narticle 6 shall be effective with the Plan Year beginning January 1, 2001. Prior\nto the beginning of the Plan Year in which Annual Bonus is otherwise earned, or\nin advance of earning at intervals reasonably determined by the Committee or its\ndelegate, a Participant may voluntarily elect to defer up to one hundred percent\n(100%) of his or her Annual Bonus for that Plan Year. Any amount deferred\npursuant to this Section 6.1, and earnings thereon, shall be credited to such\nParticipant's Voluntary Deferral Account. A Participant shall be one hundred\npercent (100%) vested in any amount deferred pursuant to this Section 6.1, and\nearnings thereon, at all times.\n\n              Notwithstanding anything herein to the contrary, the amount of\nAnnual Bonus that a Participant may defer pursuant to this Section 6.1 shall be\nlimited by (a) amounts deferred pursuant to the Retirement Savings Plan; (b)\namounts withheld for applicable federal, state, and local taxes; (c) amounts\ndeducted pursuant to any insurance or benefit program; (d) voluntary payroll\ndeductions (e.g., United Way contributions); (e) involuntary payroll deductions\n(e.g., garnishments); and (f) all other proper deductions, as determined by the\nCommittee or its delegate.\n\n\n\n                                       9\n   12\n\n      6.2. PARTIAL PLAN YEAR PARTICIPATION. In the event a Participant first\n           becomes eligible to participate IN THE PLAN AFTER THE BEGINNING OF A\n           PLAN YEAR, THE COMMITTEE OR ITS DELEGATE MAY, IN ITS DISCRETION,\n           ALLOW SUCH PARTICIPANT TO COMPLETE A DEFERRAL ELECTION FORM AND\n           INVESTMENT ELECTION FORM WITHIN THIRTY (30) CALENDAR DAYS OF BECOMING\n           ELIGIBLE TO PARTICIPATE.\n\n      6.3 DEFERRAL ELECTION. A Participant shall make an election to defer\nAnnual Bonus: (i) prior to the beginning of the Plan Year in which the Annual\nBonus is otherwise earned, or (ii) in advance of earning, at intervals\nreasonably determined by the Committee or its delegate, or (iii) not later than\nthirty (30) calendar days following notification of initial eligibility to\nparticipate for a partial Plan Year, as applicable. The deferral election shall\napply only to Annual Bonus earned subsequent to the first day of the month\nfollowing the date on which a valid deferral election form is received by the\nCommittee or its delegate. Each such election shall indicate the following:\n\n              (a)    The amount of Annual Bonus earned during the Plan Year to\n                     be deferred;\n\n              (b)    The Payout Commencement Date for the deferred Annual Bonus,\n                     and earnings thereon, which shall pertain to a Plan Year\n                     pursuant to Section 2.1(dd) hereof; and\n\n              (c)    The Form of Payout which shall pertain to a Plan Year\n                     pursuant to Section 2.1(v) hereof.\n\n      6.4 LENGTH OF DEFERRAL AND FORM OF PAYOUT. Subject to Section 2.1(dd)\nhereof, a Participant may elect the length of deferral of Annual Bonus deferred\neach Plan Year by designating a corresponding Payout Commencement Date for such\ndeferral. The Form of Payout shall be as elected by the Participant pursuant to\nSection 2.1(w) hereof.\n\nARTICLE 7.  MANDATORY DEFERRALS\n      7.1 DEFERRAL. If the Committee determines that, with respect to any tax\nyear, a Participant is a \"covered employee\" for purposes of Section 162(m) of\nthe Code, the Committee may, in its discretion, impose a mandatory deferral of\nall amounts otherwise payable to such employee by the Company to the extent that\nsuch amounts meet the definition of \"applicable employee remuneration\" (as such\nterm is defined in Section 162(m) of the Code) and such amounts exceed\n$1,000,000 (or such other amount as may be specified by Section 162(m) from time\nto time) as determined by the Committee.\n\n      Amounts deferred pursuant to this Section 7.1 shall be credited to such\nParticipant's Mandatory Deferral Account. The Participant shall be one hundred\npercent (100%) vested in amounts deferred pursuant to this Section 7.1, and\nearnings thereon, at all times.\n\n      7.2 LENGTH OF DEFERRAL. Any amount deferred pursuant to Section 7.1\nhereof, and earnings thereon, shall be paid out to the Participant on the\nearliest date on which such amount can be received by the Participant without\nsubjecting the Company to a loss of deductibility (due to Section 162(m) of the\nCode) with respect to any part of such amounts. However, subject to Section\n2.1(dd) hereof, a Participant can make an irrevocable election to have these\namounts deferred to a later Payout Commencement Date at which time no loss of\nthe Company deduction \n\n\n\n                                       10\n   13\n\nwould occur (due to Section 162(m)); such election must be made prior to lapse \nof the restriction set forth in this Section 7.2.\n\n      7.3 FORM OF PAYOUT. Subject to Sections 7.2 and 7.4 hereof, the payout of\nMandatory Deferrals, and earnings thereon, shall be in a Lump-Sum Payment to the\nextent not deferred by the Participant to a Payout Commencement Date. If\ndeferred to a Payout Commencement Date, the Form of Payout shall be as elected\nby such Participant pursuant to Section 2.1(w) hereof.\n\n      7.4 COMMITTEE DISCRETION. In the event that any payment under this Plan\nwould cause the Company a loss of deductibility (due to Section 162(m)), the\nCommittee reserves the right hereunder to (i) delay such payment; (ii) require\nadditional mandatory deferrals to offset such payment; or (iii) to take any\nother action necessary and appropriate to avoid such loss of deductibility.\n\nARTICLE 8. VOLUNTARY STOCK UNIT DEFERRALS\n      8.1 PARTICIPATION. A Participant may voluntarily defer the receipt of\nshares of Company Stock which were voluntarily cancelled and Stock Units granted\nin lieu thereof by the election of the Participant in connection with (a) the\nexercise of a stock option under a Company stock plan, or (b) the lapse of\nrestrictions on restricted stock granted or purchased under a Company stock\nplan.\n\n      8.2 DEFERRAL. At least six (6) months prior to the exercise of a stock\noption (the \"Exercise Date\") under a Company stock plan or the lapse of\nrestrictions (the \"Expiration Date\") on restricted stock granted or purchased\nunder a Company stock plan, a Participant may voluntarily elect to cancel the\napplicable shares of Company Stock and receive Stock Units in lieu thereof and\nto defer such Stock Units pursuant to the terms hereof.\n\n      Subject to the terms hereof, such election shall be irrevocable. Such\nStock Units deferred pursuant to this Section 8.2, and earnings thereon, shall\nbe credited to the Participant's Voluntary Stock Unit Deferral Account. A\nParticipant shall be one hundred percent (100%) vested in such Stock Units\ndeferred pursuant to this Section 8.2, and earnings thereon, at all times.\n\n      8.3 DEFERRAL ELECTION. A Participant shall make an election to defer Stock\nUnits as described in Section 8.2 hereof by submitting a valid deferral election\nform to the Committee or its delegate at least six (6) months prior to the\nExercise Date or Expiration Date, as applicable, and by entering into a written\nagreement with the Company under the applicable Company stock plan. Each such\nelection shall indicate the following:\n\n              (a)    The number of restricted shares, or option shares, as\n                     applicable, to be deferred as Voluntary Stock Unit\n                     Deferrals, which shall be irrevocable pursuant to Section\n                     8.2 hereof;\n\n              (b)    The Payout Commencement Date for the Voluntary Stock Unit\n                     Deferrals, and earnings thereon, which shall be irrevocable\n                     pursuant to Section 8.4 hereof; and\n\n              (c)    The Form of Payout pursuant to Section 2.1(w) hereof.\n\n\n\n                                       11\n   14\n\n      8.4 LENGTH OF DEFERRAL AND FORM OF PAYOUT. Subject to Section 2.1(dd)\nhereof, a Participant may elect the length of deferral of each Voluntary Stock\nUnit Deferral by designating a corresponding Payout Commencement Date for each\nsuch Deferral. Any Stock Units credited to a Participant's Voluntary Stock Unit\nDeferral Account shall be paid out to the Participant in shares of Company\nStock. The Form of Payout shall be as elected by such Participant pursuant to\nSection 2.1(w) hereof.\n\nARTICLE 9. COMPANY 401(K) MATCH RESTORATION\n      9.1 PARTICIPATION. Subject to Section 9.3 hereof, a Participant who is\neligible to participate in the Retirement Savings Plan and experiences a cutback\nin Employer Matching Contributions due to the limitations imposed by the Code\nshall be eligible to receive Company credits pursuant to this Article 9 for such\nPlan Year.\n\n      9.2 COMPANY 401(K) MATCH RESTORATION. For each Plan Year in which an\nemployee is eligible to receive Company credits pursuant to this Article 9, the\nCompany shall credit to such Participant's Match Restoration Account an amount\nequal to the excess of (a) over (b):\n\n              (a)    The Employer Matching Contribution that would have been\n                     credited to the Participant's account for that Plan Year\n                     under the Retirement Savings Plan had the contribution been\n                     based on the Participant's total Compensation for the Plan\n                     Year (including all deferred compensation), unreduced by\n                     tax-qualified plan limits of the Code, and increased by\n                     amounts deferred pursuant to the Retirement Savings Plan.\n\n              (b)    The actual Employer Matching Contribution credited to the\n                     Participant's account for that Plan Year under the\n                     Retirement Savings Plan.\n\n      A Participant shall become one hundred percent (100%) vested in amounts\ncredited to such Participant's Match Restoration Account pursuant to this\nSection 9.2, and earnings thereon, upon the date such Participant becomes one\nhundred percent (100%) vested in Employer Matching Contributions credited to\nsuch Participant under the Retirement Savings Plan. Notwithstanding the\nimmediately preceding sentence, a Participant, who is an active employee of the\nCompany, automatically becomes one hundred percent (100%) vested in amounts\ncredited to such Participant's Match Restoration Account pursuant to this\nSection 9.2, and earnings thereon, upon such Participant's sixty-fifth (65th)\nbirthday or death.\n\n      9.3 PARTIAL PLAN YEAR PARTICIPATION. In the event a Participant first\nbecomes eligible to participate in the Plan after the beginning of a Plan Year,\nthe Committee or its delegate may, in its discretion, allow such Participant to\nparticipate during such partial Plan Year.\n\n      9.4 LENGTH OF DEFERRAL AND FORM OF PAYOUT. Subject to Section 2.1(dd)\nhereof, any vested amount credited to a Participant's Match Restoration Account\npursuant to Section 9.2 hereof, and earnings thereon, shall be paid out to the\nParticipant in shares of Company Stock beginning in the January following such\nParticipant's termination of employment with the Company. The Form of Payout\nshall be as elected by such Participant pursuant to Section 2.1(w) hereof.\n\n\n\n                                       12\n   15\n\nARTICLE 10. COMPANY PROFIT SHARING RESTORATION\n      10.1 PARTICIPATION. Subject to Section 10.3 hereof, a Participant who is\neligible to participate in the Retirement Savings Plan and experiences a cutback\nin Profit Sharing Contributions due to the limitations imposed by the Code shall\nbe eligible to receive Company credits pursuant to this Article 10 for such Plan\nYear.\n\n      10.2 COMPANY PROFIT SHARING RESTORATION. For each Plan Year in which a\nParticipant is eligible to receive Company credits pursuant to this Article 10,\nthe Company shall credit to such Participant's Profit Sharing Restoration\nAccount an amount equal to the excess of (a) over (b):\n\n              (a)    The Profit Sharing Contribution that would have been\n                     credited to the Participant's account for the Plan Year\n                     under the Retirement Savings Plan had the contribution been\n                     based on the Participant's total Compensation for the Plan\n                     Year (including all deferred compensation), unreduced by\n                     tax-qualified plan limits of the Code, and increased by\n                     amounts deferred pursuant to the Retirement Savings Plan.\n\n              (b)    The actual Profit Sharing Contribution credited to the\n                     Participant's account for that Plan Year under the\n                     Retirement Savings Plan.\n\n      A Participant shall become one hundred percent (100%) vested in any amount\ncredited to the Participant's Profit Sharing Restoration Account pursuant to\nthis Section 10.2, and earnings thereon, automatically upon the first to occur\nof (a) five (5) years of service with the Company; (b) the Participant's\nsixty-fifth (65th) birthday; or (c) the Participant's death.\n\n      Company credits credited to a Participant pursuant to this Section 10.2\nshall in no way reduce amounts available to the Company to make Profit Sharing\nContributions under the Retirement Savings Plan.\n\n      10.3 PARTIAL PLAN YEAR PARTICIPATION. In the event a Participant first\nbecomes eligible to participate in the Plan after the beginning of a Plan Year,\nthe Committee or its delegate may, in its discretion, allow such Participant to\nparticipate during such partial Plan Year.\n\n      10.4 LENGTH OF DEFERRAL AND FORM OF PAYOUT. Subject to Section 2.1(dd)\nhereof, any vested amounts credited to a Participant's Profit Sharing\nRestoration Account pursuant to Section 10.2 hereof, and earnings thereon, shall\nbe paid out to the Participant beginning in the January following the\nParticipant's termination of employment with the Company. The Form of Payout\nshall be as elected by the Participant pursuant to Section 2.1(w) hereof.\n\nARTICLE 11. DISCRETIONARY COMPANY CREDITS\n      11.1 PARTICIPATION. Any Participant designated by the Committee in its\ndiscretion is eligible to receive Company credits pursuant to this Article 11.\n\n      11.2 DISCRETIONARY COMPANY CREDITS. In addition to the Company 401(k)\nMatch Restoration and Company Profit Sharing Restoration, as set forth in\nSections 9.2 and 10.2 hereof, the Committee in its discretion may cause\nadditional Company credits to be credited to the Discretionary Company \n\n\n\n                                       13\n   16\n\nCredits Account of a Participant, or group of Participants, for any reason\nwhatsoever. The Committee shall establish rules and procedures for, and the\nterms of, such credits.\n\nARTICLE 12. PARTICIPANT ACCOUNTS AND  RABBI TRUST\n      12.1 PARTICIPANT ACCOUNTS. The Company shall establish and maintain\nindividual bookkeeping accounts for each Participant's Accrued Account Balances.\nEach component of a Participant's Accrued Account Balances shall be credited to\nthe Participant's bookkeeping account as soon as administratively practicable\nfollowing the date such credits can first be calculated. The establishment and\nmaintenance of such accounts, however, shall not be construed as entitling a\nParticipant to any specific asset of the Company.\n\n      A Participant who has a balance in any account shall be furnished a\nstatement of his or her Accrued Account Balances at least annually.\n\n      12.2 INVESTMENT ELECTIONS. All Accrued Account Balances shall be credited\nwith earnings based upon the rate of return actually achieved by the underlying\ninvestments, as described in this Section 12.2.\n\n              (a) Amounts credited to a Participant's Voluntary Deferral Account\n      shall be invested as elected by the Participant in one or more Investment\n      Funds, except for any investment choice excluded due to applicable law or\n      regulation or by action of the Committee.\n\n              (b) Amounts credited to a Participant's Mandatory Deferral Account\n      shall be invested as elected by the Participant in one or more Investment\n      Funds, except for any investment choices excluded due to applicable law or\n      regulation or by action of the Committee.\n\n              (c) Stock Units credited to a Participant's Match Restoration\n      Account shall be automatically credited to the Stock Unit Subaccount. Once\n      a Participant reaches age fifty-five (55), all or any part of the Stock\n      Units credited both before or after age fifty-five (55), to such\n      Participant's Match Restoration Account shall be invested as elected by\n      each Participant in either (i) the Stock Unit Subaccount; or (ii) one or\n      more Investment Funds except for any investment choices excluded due to\n      applicable law or regulation or by action of the Committee. No such\n      transfer is allowed prior to a Participant's fifty-fifth (55th) birthday.\n      A Participant may not make transfers into the Stock Unit Subaccount from\n      any other account. Once amounts are transferred out of the Stock Unit\n      Subaccount, they cannot be transferred back into this investment choice.\n\n              (d) Voluntary Stock Unit Deferrals shall be credited to a\n      Participant's Voluntary Stock Unit Deferral Account. A Participant may not\n      make transfers into or out of the Voluntary Stock Unit Deferral Account.\n\n              (e) Amounts credited to a Participant's Profit Sharing Restoration\n      Account shall be invested as elected by the Participant in one or more\n      Investment Funds, except for any investment choices excluded due to\n      applicable law or regulation or by action of the Committee.\n\n\n\n                                       14\n   17\n\n              (f) Amounts credited to a Participant's Discretionary Company\n      Credits Account shall be invested pursuant to the rules and procedures\n      determined by the Committee in its discretion.\n\n      A Participants shall be permitted to change his or her investment\nelections in the same frequency as a participant under the Retirement Savings\nPlan except that a Section 16 Officer may not make transfers into and out of the\nCompany Stock Fund. Investment elections are not permitted with respect to the\nVoluntary Stock Unit Deferral Account, or, except as provided in Section\n12.2(c), with respect to the Match Restoration Account.\n\n      Notwithstanding anything herein to the contrary, the Committee reserves\nthe right to (a) change the number and availability of the investment\nalternatives at any time; and (b) not actually invest deferrals and\/or Company\ncredits into the investment alternatives elected by a Participant.\n\n      12.3 CHARGES AGAINST ACCOUNTS. There shall be charged against a\nParticipant's Accrued Account Balances any payments made thereunder to the\nParticipant or to his or her beneficiary.\n\n      12.4 ESTABLISHMENT OF RABBI TRUST. As soon as administratively practicable\nfollowing the Effective Date, the Company shall establish an irrevocable Rabbi\nTrust, governed by a Rabbi Trust Agreement (which shall be a grantor trust\nwithin the meaning of Code Sections 671-678) for the benefit of Participants and\nbeneficiaries of Participants, as appropriate and applicable. The Rabbi Trust\nshall have an independent Trustee (such Trustee to have a fiduciary duty to\ncarry out the terms and conditions of the Trust) as selected by the Company, and\nshall have restrictions as to the Company's ability to amend the Trust or to\ncancel benefits provided thereunder.\n\n      Assets contained in the Rabbi Trust shall at all times be specifically\nsubject to the claims of the Company's general creditors in the event of\ninsolvency; such term shall be specifically defined within the provisions of the\nRabbi Trust, along with a required procedure for notifying the Trustee of any\nsuch insolvency.\n\n      All benefits hereunder shall be paid first from the Rabbi Trust, to the\nextent assets exist in the Rabbi Trust and then, as necessary, by the Company\nfrom general assets.\n\n      12.5 FUNDING OF RABBI TRUST. At the discretion of the Committee, the\nCompany may contribute cash, cash equivalents, and\/or Kmart stock to the Rabbi\nTrust, for the benefit of Participants and beneficiaries of Participants, as the\nCommittee deems appropriate. It is intended that the Rabbi Trust shall be fully\nfunded at all times to cover the Accrued Rabbi Trust Obligations of the Company.\nUpon a Change in Control, the Company shall be required to make an immediate\ncontribution to the Rabbi Trust to cause all Accrued Rabbi Trust Obligations to\nbe fully or overfunded as of that date.\n\nARTICLE 13. ALLOCATION OF PRIOR DEFERRALS AND COMPANY CREDITS\n      Any outstanding Participant deferrals and Company 401(k) match or profit\nsharing restoration amounts, and earnings thereon, credited to any Participant\naccount under either the Kmart Corporation Supplemental Savings Plan or the\nKmart Corporation Executive Deferred \n\n\n\n                                       15\n   18\n\nCompensation Plan (together the \"Predecessory Deferral\/Restoration\nArrangements\"), as of the Effective Date of this Plan, shall be withdrawn and\nautomatically transferred to such Participant's account under this Plan within\nninety (90) calendar days from the Effective Date, or as soon as otherwise\nadministratively practicable.\n\n      Amounts transferred pursuant to this Article 13 shall be invested as\nfollows:\n\n      (a)     Amounts transferred, and earnings thereon, that meet the\n              definition of Employer Matching Contributions and that were\n              originally credited to a Participant under the Kmart Corporation\n              Supplemental Savings Plan shall be invested pursuant to Section\n              12.2(c) hereof;\n\n      (b)     Amounts transferred, and earnings thereon, that meet the\n              definition of Mandatory Deferrals and that were originally\n              credited to a Participant pursuant to Section 2(b) of the Kmart\n              Corporation Executive Deferred Compensation Plan shall be invested\n              as elected by the Participant in one or more Investment Funds,\n              except for any investment choices excluded due to applicable law\n              or regulation or by action of the Committee; and\n\n      (c)     All other amounts transferred, and earnings thereon, shall be\n              invested as elected by the Participant in one or more Investment\n              Funds, except for any investment choices excluded due to\n              applicable law or regulation or by action of the Committee.\n\n      By no later than the end of the first Plan Year, the Company shall\ncontribute cash, cash equivalents, and\/or Kmart Stock to the Rabbi Trust for the\nbenefit of Participants in an amount equal to the amount of all deferrals and\nCompany credits, and earnings thereon, accrued in prior years under Predecessory\nDeferral\/Restoration Arrangements.\n\n      It is intended that this Plan replace the Predecessory\nDeferral\/Restoration Arrangements. No Participant shall be allowed to defer any\namounts or accrue any benefits under the Predecessory Deferral\/Restoration\nArrangements after the Effective Date hereof.\n\nARTICLE 14. BENEFICIARY DESIGNATION\n      14.1 DESIGNATION OF BENEFICIARY. A Participant may designate or change a\nbeneficiary or beneficiaries who, upon the Participant's death, shall receive\nthe amounts that otherwise would have been paid to the Participant under the\nPlan. Any such designation of beneficiary and any change thereto shall be signed\nby the Participant, and shall be in such form as prescribed by the Committee or\nits delegate. A designation of beneficiary shall be effective as of the date\ndelivered to the designated Company employee The payment of an amount equal to\nthe amount that otherwise would have been paid to the Participant shall be paid\nin accordance with the last unrevoked written designation of beneficiary that\nhas been signed by the Participant and delivered by the Participant to the\ndesignated Company delegate employee prior to the Participant's death.\n\n      14.2 DEATH OF BENEFICIARY. In the event that all of the beneficiaries\nnamed by a Participant, pursuant to Section 14.1 hereof, predecease the\nParticipant, the amount that otherwise would have \n\n\n\n                                       16\n   19\n\nbeen paid to the Participant or the Participant's beneficiaries under the Plan\nshall be paid to the Participant's estate or the person designated by the\nParticipant's estate.\n\n      14.3 INEFFECTIVE DESIGNATION. In the event a Participant does not\ndesignate a beneficiary, or for any reason such designation is ineffective, in\nwhole or in part, the amounts that otherwise would have been paid to the\nParticipant or the Participant's beneficiaries under the Plan shall be paid to\nthe person or persons that the Participant designated as the beneficiary or\nbeneficiaries under the Retirement Savings Plan, and if no such designation was\nmade, then to the Participant's estate or the person designated by the\nParticipant's estate.\n\n      14.4 INDEMNITY. The Company may require an indemnity and\/or evidence or\nother assurances as it deems necessary in connection with any payment hereunder\nto a Participant's beneficiary, estate, legal representative, or guardian.\n\nARTICLE 15. WITHHOLDING OF TAXES\n      The Company shall have the right to require a Participant to remit to the\nCompany, or any person or entity designated by the Committee to administer the\nPlan, an amount sufficient to satisfy federal, state, and local tax withholding\nrequirements, or to deduct from all payments made pursuant to the Plan amounts\nsufficient to satisfy such withholding requirements.\n\nARTICLE 16. EMPLOYMENT\/MISCONDUCT\n      16.1 EMPLOYMENT. No provision of the Plan, nor any action taken by the\nCommittee or the Company pursuant to the Plan, shall give or be construed as\ngiving a Participant any right to be retained in the employ of the Company, or\naffect or limit in any way the right of the Company to terminate his or her\nemployment.\n\n      16.2 MISCONDUCT. Notwithstanding anything herein to the contrary, all\nrights with respect to the Accrued Account Balances of a Participant are subject\nto the conditions that the Participant not engage or have engaged (a) in fraud,\ndishonesty, conduct in violation of Company, subsidiary, or affiliate policy, as\napplicable, or similar acts at any time while an employee of the Company, its\nsubsidiaries, or affiliates; or (b) in activity directly or indirectly in\ncompetition with any business of the Company, its subsidiaries or affiliates, as\napplicable, or in other conduct inimical to the best interests of the Company,\nits subsidiaries, and affiliates during or following the Participant's\nemployment with the Company, its subsidiaries, or its affiliates. If it is\ndetermined by the Committee, either before or after termination of employment of\na Participant, that there has been a failure of any such conditions, the\nCommittee shall:\n\n              (a)    Withhold, and the Participant shall forfeit all rights with\n                     respect to, all amounts then remaining in such\n                     Participant's Match Restoration Account, Profit Sharing\n                     Restoration Account, and\/or Discretionary Company Credits\n                     Account; and\n\n              (b)    Accelerate the payout amounts then remaining in such\n                     Participant's Voluntary Deferral Account, Mandatory\n                     Deferral Account, and\/or Voluntary Stock Unit Deferral\n                     Account to a date to be determined by the Committee or its\n                     delegate, in its discretion.\n\n\n\n                                       17\n   20\n\nARTICLE 17. AMENDMENT AND TERMINATION\n      The Company hereby reserves the right to amend, suspend, or terminate the\nPlan at any time by action of the Board, in its sole discretion. No such\namendment, suspension, or termination shall in any material manner adversely\naffect any Participant's rights to amounts theretofore accrued and payable\nhereunder, without the written consent of the Participant.\n\nARTICLE 18. MISCELLANEOUS\n      18.1 FINANCIAL OR MEDICAL HARDSHIP. The Committee or its delegate shall\nhave the authority to alter the timing or manner of payment of Accrued Account\nBalances in the event that a Participant establishes, to the satisfaction of the\nCommittee or its delegate, severe financial or medical hardship. In such event,\nthe Committee or its delegate may, in its discretion:\n\n              (a)    Authorize the cessation of Voluntary Deferrals pursuant to\n                     Section 5.2 and Section 6.2 hereof;\n\n              (b)    Provide that all, or a portion, of the Accrued Account\n                     Balances shall immediately be paid in cash in a Lump-Sum\n                     Payment; and\/or\n\n              (c)    Provide that all, or a portion of, Installment Payments\n                     payable over a period of time shall instead be paid\n                     immediately in cash in a Lump-Sum Payment; and\/or\n\n              (d)    Provide for such other payment schedule as deemed\n                     appropriate by the Committee or its delegate under the\n                     circumstances.\n\n      However, the amount paid pursuant to this Section 18.1 shall not exceed\nthat amount which the Committee or its delegate determines to be reasonably\nnecessary for the Participant to meet the financial or medical hardships at the\ntime of such payment. The severity of the financial or medical hardship shall be\njudged by the Committee or its delegate. Severe financial or medical hardship\nshall be deemed to exist in the event of the Participant's long and serious\nillness, impending bankruptcy, or similar unforeseeable and extraordinary\ncircumstances arising as a result of events beyond the control of the\nParticipant. The decision of the Committee or its delegate with respect to the\nseverity of financial or medical hardship and the manner in which, if at all,\nthe Participant's future deferral opportunities hereunder shall cease, and\/or\nthe manner in which, if at all, the payment of Accrued Account Balances to the\nParticipant shall be altered or modified, shall be final, conclusive, and not\nsubject to appeal.\n\n      18.2 NOTICE. Any notice or filing required or permitted to be given to the\nCompany under the Plan shall be sufficient if in writing and hand delivered, or\nsent by registered or certified mail to the Chairman of the Committee or its\ndelegate. Such notice, if mailed, shall be addressed to the principal executive\noffices of the Company. Notice mailed to a Participant shall be at the last\nknown address as is given in the records of the Company. A notice shall be\ndeemed given as of the date of delivery or, if delivery is made by mail, as of\nthe date shown on the postmark on the receipt for registration or certification.\n\n\n\n                                       18\n   21\n\n      18.3 UNFUNDED PLAN. This Plan is intended to be an unfunded plan\nmaintained primarily to provide deferred compensation benefits for \"a select\ngroup of management or highly compensated employees\" within the meaning of\nSections 201, 301, and 401 of ERISA, and therefore is further intended to be\nexempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA.\nAccordingly, the Committee may terminate the Plan for any or all Participants,\nsubject to Article 17 hereof, in order to achieve and maintain this intended\nresult.\n\n      18.4 SUCCESSORS. All obligations of the Company under the Plan shall be\nbinding on any successor to the Company, whether the existence of such successor\nis the result of a direct or indirect purchase, merger, consolidation, or\notherwise, of all or substantially all of the business and\/or assets of the\nCompany.\n\n      18.5. EFFECT OF CERTAIN CHANGES. In the event of any extraordinary\ndividend, stock dividend, recapitalization, merger, consolidation, stock split,\nwarrant or rights issuance, or combination or exchange of shares, or other\nsimilar transactions with respect to the Company Stock, the number of Stock\nUnits credited to the Stock Unit Subaccount, and the number of shares of Company\nStock to be distributed hereunder, including, without limitation, pursuant to\nArticles 5, 6, 7, 9, 11 and 12 (as applicable), shall be equitably adjusted by\nthe Committee to reflect such event and to preserve the value of such Stock\nUnits, and the Committee may make such other adjustments to the terms of\noutstanding Stock Units as it may deem equitable under the circumstances;\nprovided, however, that any fractional shares resulting from such adjustment\nshall be disregarded.\n\n      18.6 NONTRANSFERABILITY. A Participant's right to Accrued Account Balances\nunder the Plan may not be sold, transferred, assigned, or otherwise alienated or\nhypothecated, other than pursuant to Article 14 hereof or by will or by the laws\nof descent and distribution. In no event shall the Company make any payment\nunder the Plan to any assignee or creditor of a Participant.\n\n      18.7 SEVERABILITY. In the event any provision of the Plan shall be held\nillegal or invalid for any reason, the illegality or invalidity shall not affect\nthe remaining parts of the Plan, and the Plan shall be construed and enforced as\nif the illegal or invalid provision had not been included.\n\n      18.8 COSTS OF THE PLAN. All costs of implementing and administering the\nPlan shall be borne by the Company.\n\n      18.9 OTHER PERMITTED DEFERRAL OPPORTUNITIES. The Committee may, in its\ndiscretion, permit a Participant to defer such Participant's receipt, if any, of\nthe payment of cash or the delivery of capital stock of the Company that would\notherwise be due to such Participant pursuant to the terms of the 1997 Kmart\nCorporation Long-Term Equity Compensation Plan, or any other stock plan of the\nCompany, and any successor plans thereto. The Committee shall establish rules\nand procedures for such deferrals.\n\n      18.10 GOVERNING LAW. The Plan shall be governed by and construed in\naccordance with the internal laws of the State of Michigan without giving effect\nto any choice or conflicts of laws provision or rule.\n\nEffective Date: January 1, 1998; amended and restated as of September 1, 1998;\nand further amended as of September 19, 2000.\n\n\n                                       19\n\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7994],"corporate_contracts_industries":[9495],"corporate_contracts_types":[9539,9542],"class_list":["post-38308","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-kmart-corp","corporate_contracts_industries-retail__department","corporate_contracts_types-compensation","corporate_contracts_types-compensation__deferred"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/38308","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=38308"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=38308"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=38308"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=38308"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}