Exhibit 10(D)


 


TARGET CORPORATION


LONG-TERM INCENTIVE PLAN


(As amended and restated on May 28, 2009)


 


ARTICLE I


ESTABLISHMENT OF THE PLAN


 


1.1           PLAN NAME.  This plan is known as the “Target Corporation
Long-Term Incentive Plan” (hereinafter called the “Plan”).


 


1.2           PURPOSE. 
The purpose of the Plan is to advance the performance and long-term
growth of the Company by offering long-term incentives to directors and
employees of the Company and its Subsidiaries and such other Participants who
the Plan Committee determines will contribute to such performance and growth
inuring to the benefit of the shareholders of the Company.  This Plan is also intended to facilitate
recruiting and retaining personnel of outstanding ability.


 


ARTICLE II


DEFINITIONS


 


2.1           AWARD.  An “Award” is a grant of Stock Options, Stock
Appreciation Rights, Dividend Equivalents, Performance Awards, Restricted Stock
or Restricted Stock Units under the Plan.


 


2.2           BOARD.  The “Board” is the Board of Directors of the
Company.


 


2.3           CASH PROCEEDS.  “Cash Proceeds” means the cash actually
received by the Company for the purchase price payable upon exercise of a Stock
Option plus the maximum tax benefit that could be realized by the Company as a
result of the exercise of such Stock Options, which tax benefit shall be
determined by multiplying (a) the amount that is deductible as a result of
any such Stock Option exercise (currently equal to the amount upon which the
Participant’s tax withholding obligation is calculated), times (b) the
maximum federal corporate income tax rate for the year of exercise.  To the extent a Participant pays the exercise
price and/or withholding taxes with shares, Cash Proceeds shall not be
calculated with respect to the amounts so paid.


 


2.4           CHANGE IN CONTROL.  A “Change in Control” shall be deemed to have
occurred if:


 


(a)           50% or more of the directors of the Company shall be
persons other than persons


 


(i)            for whose
election proxies shall have been solicited by the Board, or


 


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(ii)           who are then serving as directors appointed by the
Board to fill vacancies on the Board caused by death or resignation (but not by
removal) or to fill newly-created directorships, or


 


(b)           30% or more of
the outstanding voting power of the Voting Stock of the Company is acquired or
beneficially owned (as defined in Article IV of the Restated Articles of
Incorporation, as amended, of the Company) by any person (as defined in Article IV
of the Restated Articles of Incorporation, as amended, of the Company), other
than an entity resulting from a Business Combination in which clauses (x) and
(y) of Section 2.4(c) apply, or


 


(c)           the
consummation of a merger or consolidation of the Company with or into another
entity, a statutory share exchange, a sale or other disposition (in one
transaction or a series of transactions) of all or substantially all of the
Company’s assets or a similar business combination (each, a “Business
Combination”), in each case unless, immediately following such Business
Combination, (x) all or substantially all of the beneficial owners of the
Company’s Voting Stock immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the voting power of
the then outstanding shares of voting stock (or comparable voting equity
interests) of the surviving or acquiring entity resulting from such Business
Combination (including such beneficial ownership of an entity that, as a result
of such transaction, owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries), in substantially
the same proportions (as compared to the other beneficial owners of the Company’s
Voting Stock immediately prior to such Business Combination) as their
beneficial ownership of the Company’s Voting Stock immediately prior to such
Business Combination, and (y) no person (as defined in Article IV of
the Restated Articles of Incorporation, as amended, of the Company)
beneficially owns, directly or indirectly, 30% or more of the voting power of
the outstanding voting stock (or comparable equity interests) of the surviving
or acquiring entity (other than a direct or indirect parent entity of the
surviving or acquiring entity, that, after giving effect to the Business
Combination, beneficially owns, directly or indirectly, 100% of the outstanding
voting stock (or comparable equity interests) of the surviving or acquiring
entity), or


 


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


 


For
purposes of this Section 2.4, “Voting Stock” has the same meaning as
defined in Article IV of the Restated Articles of Incorporation, as
amended, of the Company.


 


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2.5           CODE.  The “Code” is the Internal Revenue Code of
1986, as amended, and rules and regulations thereunder, as now in force or
as hereafter amended.


 


2.6           COMPANY.  The “Company” is Target Corporation, a
Minnesota corporation, and any successor thereof.


 


2.7           COMMON STOCK.  “Common Stock” is the common stock, $.0833
par value per share (as such par value may be adjusted from time to time) of
the Company.


 


2.8           DATE OF GRANT.  The “Date of Grant” of an Award is the date
designated in the resolution by the Plan Committee as the date of an Award,
which shall not be earlier than the date of the resolution and action thereon
by the Plan Committee.  In the absence of
a designated date or a fixed method of computing such date being specifically
set forth in the Plan Committee’s resolution, then the Date of Grant shall be
the date of the Plan Committee’s resolution or action.


 


2.9           DIVIDEND EQUIVALENT.  A “Dividend Equivalent” is a right to receive
an amount equal to the regular cash dividend paid on one share of Common
Stock.  Dividend Equivalents may only be
granted in connection with the grant of an Award that is based on but does not
consist of shares of Common Stock (whether or not restricted).  The number of Dividend Equivalents so granted
shall not exceed the number of related stock-based rights.  (For example, the number of Dividend
Equivalents granted in connection with a grant of Stock Appreciation Rights may
equal the number of such Stock Appreciation Rights, even though the number of
shares actually paid upon exercise of those Stock Appreciation Rights
necessarily will be less than the number of Stock Appreciation Rights and
Dividend Equivalents granted.)  Dividend
Equivalents shall be subject to such terms and conditions as may be established
by the Plan Committee, but they shall expire no later than the date on which
their related stock-based rights are either exercised, expire or are forfeited
(whichever occurs first).  The amounts
payable due to a grant of Dividend Equivalents may be paid in cash, either
currently or deferred, or converted into shares of Common Stock, as determined
by the Plan Committee.


 


2.10         EXCHANGE
ACT.  The “Exchange Act” is the
Securities Exchange Act of 1934, as amended, and rules and regulations
thereunder, as now in force or as hereafter amended.


 


2.11         FAIR MARKET VALUE.


 


(a)           Solely for purposes of
determining the exercise price of a Stock Option or Stock Appreciation Right, “Fair
Market Value” of a share of Common Stock on any date is the Volume Weighted
Average Price for such stock as reported for such stock by Bloomberg L.P. on
such date, or in the absence of such report the Volume Weighted Average Price
for such stock as reported for such stock by the New York Stock Exchange on
such date or, if no sale has been recorded by Bloomberg L.P. or the New York
Stock 


 


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Exchange on such date, then on the last preceding
date on which any such sale shall have been made in the order of primacy
indicated above.


 


(b)           For all other purposes of
the Plan, “Fair Market Value” of a share of Common Stock shall be the amount
determined by the Company using such criteria as it shall determine, in its
sole discretion, to be appropriate for valuation.


 


2.12         INCENTIVE STOCK
OPTIONS.  An “Incentive Stock Option” is
a Stock Option that is intended to qualify as an “incentive stock option” under
Section 422 of the Code.


 


2.13         NON-QUALIFIED OPTIONS.  A “Non-Qualified Option” is a Stock Option
that is not intended to qualify as an “incentive stock option” under Section 422
of the Code.


 


2.14         PARTICIPANT.  A “Participant” is a person who has been
designated as such by the Plan Committee and granted an Award under this Plan
pursuant to Article III hereof.


 


2.15         PERFORMANCE GOALS.  “Performance Goals” are the performance
conditions, if any, established pursuant to Section 4.1 hereof by the Plan
Committee in connection with an Award.


 


2.16         PERFORMANCE PERIOD.  The “Performance Period” with respect to a
Performance Award is a period of not less than one calendar year or one fiscal
year of the Company, beginning not earlier than the year in which such
Performance Award is granted, which may be referred to herein and by the Plan
Committee by use of the calendar or fiscal year in which a particular
Performance Period commences.


 


2.17         PERFORMANCE AWARD.  A “Performance Award” is any of: a number of
shares of Common Stock subject to Performance Goals (“Performance Shares”), a
right to receive a number of shares of Common Stock subject to Performance
Goals (“Performance Share Units”), or a cash amount subject to Performance
Goals (“Performance Units”), determined (in all cases) in accordance with Article IV
of this Plan based on the extent to which the applicable Performance Goals are
achieved.  A Performance Award shall be
of no value to a Participant unless and until earned in accordance with Article IV
hereof.


 


2.18         PLAN COMMITTEE.  The “Plan Committee” is the committee
described in Section 8.1 hereof.


 


2.19         PLAN YEAR.  The “Plan Year” shall be a fiscal year of the
Company falling within the term of this Plan.


 


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2.20         RESTRICTED STOCK.  “Restricted Stock” is Common Stock granted
subject to terms and conditions, including a risk of forfeiture, established by
the Plan Committee pursuant to Article VI of this Plan.


 


2.21         RESTRICTED STOCK UNIT.  A “Restricted Stock Unit” is a right to
receive one share of Common Stock at a future date that has been granted
subject to terms and conditions, including a risk of forfeiture, established by
the Plan Committee pursuant to Article VI of this Plan.


 


2.22         STOCK APPRECIATION
RIGHT.  A “Stock Appreciation Right” is a
right to receive, upon exercise of that right, an amount, which may be paid in
cash, shares of Common Stock or a combination thereof in the discretion of the
Plan Committee, equal to the difference between the Fair Market Value of one
share of Common Stock as of the date of exercise and the exercise price for
that right as determined by the Plan Committee on or before the Date of Grant.  Stock Appreciation Rights may be granted in
tandem with Stock Options or other Awards or may be freestanding.


 


2.23         STOCK OPTION.  A “Stock Option” is a right to purchase from
the Company at any time not more than ten years following the Date of Grant,
one share of Common Stock for an exercise price not less than the Fair Market
Value of a share of Common Stock on the Date of Grant, subject to such terms
and conditions established pursuant to Article V hereof.  Stock Options may be either Non-Qualified
Options or Incentive Stock Options.


 


2.24         SUBSIDIARY CORPORATION.   The
terms “Subsidiary” or “Subsidiary Corporation” mean any corporation (other than
the Company) in an unbroken chain of corporations beginning with the Company,
in which each of the corporations other than the last corporation in the
unbroken chain owns stock possessing fifty percent or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain as determined at the point in time when reference is made to such
“Subsidiary” or “Subsidiary Corporation” in this Plan.


 


ARTICLE III


GRANTING OF AWARDS TO PARTICIPANTS


 


3.1           ELIGIBLE
PARTICIPANTS.  Awards may be granted by
the Plan Committee to any employee of the Company or a Subsidiary Corporation,
including any employee who is also a director of the Company or a Subsidiary
Corporation.  Awards other than grants of
Incentive Stock Options may also be granted to (a) a director of the
Company who is not an employee of the Company or a Subsidiary Corporation and (b) any
individual or entity, other than an employee, who provides services to the
Company or a Subsidiary Corporation in the capacity of an advisor or
consultant. References in this Plan to “employment” and similar terms (except “employee”)
shall include the providing of services in the capacity of a director, advisor
or consultant, and references to termination of employment shall mean
termination of the relationship (employee, director, advisor or consultant)
under which the Award was granted, even if the person 


 


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continues in another relationship. A person
who has been engaged by the Company for employment shall be eligible for Awards
other than Incentive Stock Options, provided such person actually reports for
and commences such employment within 90 days after the Date of Grant.  Incentive Stock Options may be granted only
to individuals who are employees on the Date of Grant.


 


3.2           DESIGNATION OF
PARTICIPANTS.  At any time and from time
to time during the Plan Year, the Plan Committee may designate the employees of
the Company and its Subsidiaries and other Participants eligible for Awards.


 


3.3           ALLOCATION OF AWARDS.  Contemporaneously with the designation of a
Participant pursuant to Section 3.2 hereof, the Plan Committee shall
determine the size, type and Date of Grant for each Award, taking into
consideration such factors as it deems relevant, which may include the
following:


 


(a)           the total number of shares
of Common Stock available for Awards under the Plan;


 


(b)           the work assignment or the
position of the Participant and its sensitivity and/or impact in relationship
to the profitability and growth of the Company and its Subsidiaries; and


 


(c)           the Participant’s
performance in reference to such factors.


 


The Plan Committee may grant
a Participant only one type of Award or it may grant any combination of Awards
in whatever relationship one to the other, if any, as the Plan Committee in its
discretion so determines.


 


3.4           NOTIFICATION TO PARTICIPANTS
AND DELIVERY OF DOCUMENTS.  As soon as
practicable after such determinations have been made, each Participant shall be
notified of (a) his/her designation as a Participant, (b) the Date of
Grant, (c) the number and type of Awards granted to the Participant, (d) in
the case of Performance Awards, the Performance Period and Performance Goals,
and (e) in the case of Restricted Stock or Restricted Stock Units, the
Restriction Period. The Participant shall thereafter be supplied with written
evidence of any such Awards.


 


ARTICLE IV


PERFORMANCE AWARDS


 


4.1           ESTABLISHMENT OF PERFORMANCE
GOALS.  Performance Goals applicable to a
Performance Award shall be established by the Plan Committee in its absolute
discretion on or before the Date of Grant and not more than a reasonable period
of time after the beginning of the relevant Performance Period.  Such Performance Goals may include or be
based upon any one or more of the following criteria:  net sales; comparable store sales; total
revenue; gross margin rate; selling, general and administrative expense rate;
earnings before interest, taxes, depreciation and 


 


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amortization; earnings before interest and taxes; earnings before
taxes; net earnings; earnings per share; Target Corporation share price; total
shareholder return; return on equity; return on sales; return on assets; return
on invested capital; cash flow return on investment; economic value added;
credit card segment profitability; credit card segment pre-tax return on
invested capital; credit card spread to LIBOR; operating cash flow; free cash
flow; working capital; interest coverage; net debt to earnings before interest,
taxes, depreciation, amortization and rent expense ratio; debt leverage; and
total net debt.  Performance Goals may be
absolute in their terms or be measured against or in relationship to the
performance of other companies or indices, whether comparably, similarly or
otherwise situated to the Company. 
Performance Goals may be based on the Company’s consolidated results or
the results of any segment or other subset of the Company’s business, and may
be calculated in accordance with generally accepted accounting principles or
any other management accounting principle. 
At any time prior to distribution of a Performance Award, the Plan
Committee may, in its sole discretion, modify the Performance Goals applicable
to such Performance Award if it determines that unforeseen events have occurred
which have had a substantial effect on the Performance Goals and such
unforeseen events would otherwise make application of the original Performance
Goals unfair; provided, however, that no such change or modification may be
made to the extent it increases the amount of compensation payable to any
Participant who is a “covered employee” within the meaning of Code Section 162(m).


 


4.2           LEVELS OF PERFORMANCE
REQUIRED TO EARN PERFORMANCE AWARDS.   At or about the same time that Performance
Goals are established for a specific period, the Plan Committee shall in its
absolute discretion establish the percentage of the Performance Awards granted
for such Performance Period which shall be earned by the Participant for
various levels of performance measured in relation to achievement of
Performance Goals for such Performance Period.


 


4.3           OTHER RESTRICTIONS.  The Plan Committee shall determine the terms
and conditions applicable to any Performance Award, which may include
restrictions on the delivery of Common Stock payable in connection with the
Performance Award and restrictions that could result in the future forfeiture
of all or part of any Common Stock earned. The Plan Committee may provide that
shares of Common Stock issued in connection with a Performance Award be held in
escrow and/or legended.


 


4.4           NOTIFICATION TO
PARTICIPANTS.  Promptly after the Plan
Committee has established or modified the Performance Goals with respect to a
Performance Award, the Participant shall be provided with written notice of the
Performance Goals so established or modified.


 


4.5           MEASUREMENT OF PERFORMANCE
AGAINST PERFORMANCE GOALS.  The Plan
Committee shall, as soon as practicable after the close of a Performance
Period, determine:


 


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(a)           the extent to which the
Performance Goals for such Performance Period have been achieved; and


 


(b)           the percentage of the
Performance Awards earned as a result.


 


Notwithstanding
the foregoing, if and to the extent the applicable Performance Award agreement
permits, the Plan Committee may, in its sole discretion, reduce the percentage
of any Performance Award otherwise determined for a Performance Period, and
such reduced percentage shall be the amount earned by the Participant. All
determinations of the Plan Committee shall be absolute and final as to the
facts and conclusions therein made and be binding on all parties. Promptly
after the Plan Committee has made the foregoing determination, each Participant
who has earned Performance Awards shall be notified, in writing thereof. For
all purposes of this Plan, notice shall be deemed to have been given the date
action is taken by the Plan Committee making the determination.  Participants may not sell, transfer, pledge,
exchange, hypothecate or otherwise dispose of all or any portion of their
Performance Awards during the Performance Period, except that Performance
Awards may be transferable by assignment by a Participant to the extent
provided in the applicable Performance Award agreement.


 


4.6           TREATMENT OF PERFORMANCE
AWARDS EARNED.  Upon the Plan Committee’s
determination that a percentage of any Performance Awards have been earned for
a Performance Period, Participants to whom such earned Performance Awards have
been granted and who have been (or were) in the employ of the Company or a
Subsidiary thereof continuously from the Date of Grant, subject to the
exceptions set forth at Section 4.9 and Section 4.10 hereof, shall be
entitled, subject to the other conditions of this Plan, to payment in
accordance with the terms and conditions of their Performance Awards.  Such terms and conditions may permit or
require that any applicable tax withholding be deducted from the amount
payable.  Performance Awards shall under
no circumstances become earned or have any value whatsoever for any Participant
who is not in the employ of the Company or its Subsidiaries continuously during
the entire Performance Period for which such Performance Award was granted,
except as provided at Section 4.9 or Section 4.10 hereof.


 


4.7           DISTRIBUTION.  Distributions payable pursuant to Section 4.6
above shall be made as soon as practicable after the Plan Committee determines
the Performance Awards have been earned unless the provisions of Section 4.8
hereof are applicable to a Participant.


 


4.8           DEFERRAL OF RECEIPT OF
PERFORMANCE AWARD DISTRIBUTIONS.  With
the consent of the Plan Committee, a Participant who has been granted a
Performance Award may by compliance with the then applicable procedures under
the Plan irrevocably elect in writing to defer receipt of all or any part of
any distribution associated with that Performance Award.  The terms and conditions of any such
deferral, including but not limited to, the period of time for, and form of,
election; the manner and method of payout; the plan and form in which the
deferred amount shall be held; the interest equivalent or other payment that
shall accrue pending its payout; and 


 


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the use and form of Dividend Equivalents in respect of stock-based
units resulting from such deferral, shall be as determined by the Plan
Committee.  The Plan Committee may, at
any time and from time to time, but prospectively only, amend, modify, change,
suspend or cancel any and all of the rights, procedures, mechanics and timing
parameters relating to such deferrals. An election made prior to December 31,
2008 to defer receipt of any distribution associated with a Performance Award
relating to Performance Periods ending after December 31, 2004 is subject
to the provisions of Appendix A.


 


4.9           NON-DISQUALIFYING
TERMINATION OF EMPLOYMENT.  Except for Section 4.10
hereof, the only exceptions to the requirement of continuous employment during
a Performance Period for Performance Award distribution are termination of a
Participant’s employment by reason of death (in which event the Performance
Award may be transferable by will or the laws of descent and distribution only
to such Participant’s beneficiary designated to receive the Performance Award
or to the Participant’s applicable legal representatives, heirs or legatees),
total and permanent disability, with the consent of the Plan Committee, normal
or late retirement or early retirement, with the consent of the Plan Committee,
or transfer of an executive in a spin-off, with the consent of the Plan
Committee, occurring during the Performance Period applicable to the subject
Performance Award. In such instance a distribution of the Performance Award
shall be made at the end of the Performance Period, and the percentage of the
total Performance Award that would have been earned during the Performance
Period shall be earned and paid out; provided, however, in a spin-off situation
the Plan Committee may set additional conditions, such as, without limiting the
generality of the foregoing, continuous employment with the spin-off entity. If
a Participant’s termination of employment does not meet the criteria set forth
above, but the Participant had at least 15 years of employment with the Company
or a Subsidiary or any combination thereof, the Plan Committee may allow
distribution of the percentage (or a portion thereof) of the total Performance
Award that is earned for the Performance Period, subject to any conditions that
the Plan Committee shall determine.


 


4.10         CHANGE IN CONTROL.  In the event of a Change in Control, the
Performance Period shall be deemed to have ended and a pro rata portion of all
outstanding Performance Awards under the Plan shall be deemed to have been
earned. Specifically, the pro rata amount earned shall be determined by
multiplying 100% of each Performance Award by a fraction, the numerator of which
shall be the number of months that have elapsed in the applicable Performance
Period prior to the Change in Control and the denominator of which shall be the
total number of months in the Performance Period. Distribution of the amount
deemed earned shall be made within ten days after the Change in Control or
later if so provided in the applicable Award agreement, a related deferral
election or, if applicable, Appendix A.


 


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ARTICLE V


STOCK OPTIONS AND


STOCK APPRECIATION RIGHTS


 


5.1           NON-QUALIFIED
OPTION.  Non-Qualified Options granted
under the Plan are Stock Options that are not intended to be Incentive Stock
Options under the provisions of Section 422 of the Code. Non-Qualified
Options shall be evidenced by written agreements in such form and not
inconsistent with the Plan as the Plan Committee shall in its sole discretion
approve from time to time, which agreements shall specify the number of shares
to which they pertain and the purchase price of such shares.


 


5.2           INCENTIVE STOCK OPTION.  Incentive Stock Options granted under the
Plan are Stock Options that are intended to be “incentive stock options” under Section 422
of the Code, and the Plan shall be administered, except with respect to the
right to exercise options after termination of employment, to qualify Incentive
Stock Options issued hereunder as incentive stock options under Section 422
of the Code. An Incentive Stock Option shall not be granted to an employee who
owns, or is deemed under Section 424(d) of the Code to own, stock of
the Company (or of any parent or Subsidiary of the Company) possessing more
than 10% of the total combined voting power of all classes of stock therein.
The aggregate Fair Market Value (determined as of the time the option is
granted) of the stock with respect to which Incentive Stock Options are
exercisable for the first time by any Participant during any calendar year
(under all incentive stock option plans of the Company or any parent or
Subsidiary of the Company) shall not exceed $100,000. Incentive Stock Options
shall be evidenced by written agreements in such form and not inconsistent with
the Plan as the Plan Committee shall in its sole discretion approve from time
to time, which agreements shall specify the number of shares to which they
pertain and the purchase price of such shares.


 


5.3          OPTION TERMS. 
Stock Options granted under this Plan shall be subject to the following
terms and conditions:


 


(a)           Option Period.  Each Stock Option shall expire and all rights
to purchase shares thereunder shall cease not more than ten years after its
Date of Grant or on such date prior thereto as may be fixed by the Plan
Committee, or on such other date as is provided by this Plan in the event of
termination of employment, death or reorganization.  No Stock Option shall permit the purchase of
any shares thereunder during the first year after its Date of Grant, except as
provided in Section 5.5 hereof or as otherwise determined by the Plan
Committee.


 


(b)           Exercise Price.  The purchase price per share payable upon
exercise of a Stock Option shall not be less than the Fair Market Value of a
share of Common Stock on the Date of Grant of the Stock Option.


 


(c)           Transferability
and Termination of Options.  During the lifetime of an individual to whom
a Stock Option is granted, the Stock Option may be exercised only by such
individual and only while such individual is an employee of the Company or a
Subsidiary and only if the Participant has been continuously so employed by any
one or combination thereof since the Date of Grant of the Stock Option,
provided, however, that if the


 


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employment of such Participant by the Company
or a Subsidiary Corporation terminates, the Stock Option may additionally be
exercised as follows, or in any other manner provided by the Plan Committee,
but in no event later than ten years after the Date of Grant of the Stock
Option, except as set forth in (ii) and (v) below:


 


(i)            If a
Participant’s termination of employment occurs by reason of normal or late
retirement under any retirement plan of the Company or its Subsidiaries, such
Participant’s Stock Options may be exercised within five years after the date
of such termination of employment.  If a
Participant’s termination of employment occurs by reason of early retirement
under any retirement plan of the Company or its Subsidiaries, or by reason of
the transfer of a Participant in a spin-off, or by reason of total and
permanent disability, as determined by the Plan Committee, without retirement,
then such Participant’s Stock Options shall be exercisable for a period of up
to five years after the date of such termination of employment if the Plan
Committee consents to such an extension. 
During the extension period, the right to exercise Stock Options, if
any, accruing in installments, shall continue unless the Plan Committee
provides otherwise; provided, however, that if the Stock Options are Incentive
Stock Options all installments shall be immediately exercisable; and provided
further, that the Plan Committee may set additional conditions, such as,
without limiting the generality of the foregoing, an agreement to not provide
services to a competitor of the Company and its Subsidiaries and/or continuous
employment with a spin-off entity.


 


(ii)           If a Participant’s
termination of employment occurs by reason of death, then such Participant’s
outstanding Stock Options shall all become immediately exercisable and may be
exercised within five years after the date of death or the life of the option,
whichever is less, but in the case of Non-Qualified Options in no event less
than one year after the date of death, unless the Plan Committee provides
otherwise.


 


(iii)          If a Participant’s
termination of employment occurs for any reason other than as specified in Section 5.3(c)(i) or
(ii) hereof, the Participant has been employed by the Company or a
Subsidiary or any combination for more than 15 years, and if the Plan Committee
so approves, then such Participant’s Stock Options may be exercised within a
period of up to five years after the date of termination of employment.  During the extension period, the right to
exercise options, if any, accruing in installments shall continue 


 


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unless the Plan Committee provides otherwise;
provided, however, the Plan Committee may set additional conditions.


 


(iv)          If a Participant’s
termination of employment occurs for any reason other than as specified in Section 5.3(c)(i) or
(ii) hereof and the Plan Committee has not approved an extension, then,
except as provided below and only with respect to installments that have as of
the date of termination already accrued, such Participant’s Stock Options may
be exercised within ninety days after the date of such termination of
employment except in the case of Participants who would at the time be subject
to the provisions of Section 16(b) of the Exchange Act, in which
instance the period of exercise shall be two hundred ten days after
termination.  Notwithstanding the
foregoing, those Participants whose employment is terminated because of
deliberate and serious disloyal or dishonest conduct in the course of
employment that justifies and results in prompt discharge for specific cause
under the established policies and practices of the Company as interpreted by
the Plan Committee shall have no additional period after termination of
employment in which to exercise their options. Examples of such deliberate and
serious disloyal or dishonest conduct would include material unlawful conduct,
material and conscious falsification or unauthorized disclosure of important
records, embezzlement or unauthorized conversion of property, serious violation
of conflict of interest or vendor relations policies, and misuse or disclosure
of significant trade secrets or other information likely to be of use to the
detriment of the Company or its interests.


 


(v)           Rights accruing to a
Participant under Sections 5.3(c)(i), 5.3(c)(iii) and 5.3(c)(iv) may,
upon the death of a Participant subsequent to his/her termination of
employment, be exercised by his/her duly designated beneficiary or otherwise by
his/her applicable legal representatives, heirs or legatees to the extent
vested in and unexercised or perfected by the Participant at the date of
his/her death.  In the case of
Non-Qualified Options, the period for such exercise shall not expire less than
one year after the date of the Participant’s death, unless the Plan Committee
provides otherwise.


 


(vi)          Absence on a leave of
absence approved by the Plan Committee shall not be deemed a termination or
interruption of continuous employment for the purposes of the Plan.


 


No Stock Option shall be assignable or transferable
by the individual to whom it is granted, except that it may be transferable (X) by
assignment by the Participant to the extent provided in the applicable option
agreement (or as subsequently allowed by the Plan Committee), or (Y) by 


 


12

















 


will or the laws of descent and distribution in
accordance with the provisions of this Plan. 
Upon the death of the Participant an option may only be exercised by
such individual’s beneficiary designated to exercise the option or otherwise by
his/her applicable legal representatives, heirs or legatees, and only within
the specific time period set forth above and only to the extent vested in and
unexercised by the Participant at the date of his/her death, except as provided
in Section 5.3(c)(ii).


 


In no event, whether by the Participant directly or
by his/her proper assignee or beneficiary or other representative, shall any
option be exercisable at any time after its expiration date as stated in the
option agreement, except as provided in Section 5.3(c)(ii) and
(v).  When an option is no longer
exercisable it shall be deemed for all purposes and without further act to have
lapsed and terminated.  The Plan
Committee may, in its sole discretion, determine solely for the purposes of the
Plan that a Participant is permanently and totally disabled, and the acts and
decisions of the Plan Committee made in good faith in relation to any such
determination shall be conclusive upon all persons and interests affected
thereby.


 


(d)           Exercise of
Options.  An individual entitled to
exercise Stock Options may, subject to their terms and conditions and the terms
and conditions of the Plan, exercise them in whole or in part by delivery of
written notice of exercise to the Company at its principal office or such other
manner as the Company may direct, specifying the number of whole shares of
Common Stock with respect to which the Stock Options are being exercised.  Before shares may be issued, payment must be
made in full, in legal United States tender, in the amount of the purchase
price of the shares to be purchased at the time and any amounts for withholding
as provided in Section 10.8 hereof; provided, however, in lieu of paying
for the exercise price in cash as described above, the individual may pay
(subject to such conditions and procedures as the Plan Committee may establish)
all or part of such exercise price by tendering (either actually or by
attestation) owned and unencumbered shares of Common Stock acceptable to the
Plan Committee and having a Fair Market Value on the date of exercise of the
Stock Options equal to or less than the exercise price of the Stock Options
exercised, with cash, as set forth above, for the remainder, if any, of the purchase
price; provided, further, that the Plan Committee may permit a Participant to
elect to pay the exercise price by authorizing a third party to sell shares of
Common Stock (or a sufficient portion of the shares) acquired upon exercise of
the Stock Options and remit to the Company a sufficient portion of the sale
proceeds to pay the entire exercise price and any tax withholding resulting
from such exercise.  Subject to rules established
by the Plan Committee, the withholdings required by Section 10.8 hereof
may be satisfied by the Company withholding shares of Common Stock issued on
exercise that have a Fair Market Value on the 


 


13

















 


date of exercise of the Stock Options equal
to or less than the withholding required by Section 10.8 hereof.


 


(e)           Repricing Prohibited.  Subject to Sections 5.5, 7.3 and 10.7,
outstanding Stock Options granted under this Plan shall not be repriced.


 


5.4           STOCK APPRECIATION
RIGHTS.  Stock Appreciation Rights may be
granted to Participants either alone (“freestanding”) or in tandem with other
Awards, including Performance Awards, Stock Options and Restricted Stock.  Stock Appreciation Rights granted in tandem
with Incentive Stock Options must be granted at the same time as the Incentive
Stock Options are granted.  Stock
Appreciation Rights granted in tandem with any other Award may be granted at
any time prior to the earlier of the exercise or expiration of such Award.  Stock Appreciation Rights granted in tandem
with Stock Options shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Options.  The Plan Committee shall establish the terms
and conditions applicable to any Stock Appreciation Rights, which terms and
conditions need not be uniform but may not be inconsistent with the terms of
the Plan.  Freestanding Stock
Appreciation Rights shall generally be subject to terms and conditions
substantially similar to those described in Section 5.3 for Stock Options,
including the requirements of 5.3(a), (b) and (e) regarding the
maximum period, minimum price and prohibition on repricing.


 


5.5           CHANGE IN CONTROL.  In the event of a Change in Control:


 


(a)           If the Company is the
surviving entity and any adjustments necessary to preserve the value of the Participant’s
outstanding Stock Options and Stock Appreciation Rights have been made, or the
Company’s successor at the time of the Change in Control irrevocably assumes
the Company’s obligations under this Plan or replaces the Participant’s
outstanding Stock Options and Stock Appreciation Rights with stock options and
stock appreciation rights having substantially the same value and having terms
and conditions no less favorable to the Participant than those applicable to
the Participant’s Stock Options and Stock Appreciation Rights immediately prior
to the Change in Control (collectively, an “Equitable Assumption or Replacement”),
then such Awards or their replacement awards shall become immediately
exercisable in full only if within two years after the Change in Control the
Participant’s employment:


 


(i)            is terminated without “Cause”, which for purposes of
this Section 5.5 shall mean (x) willful and continued failure to
substantially perform the Participant’s duties (other than failure resulting
from incapacity due to physical or mental illness) after receipt of a written
demand for such performance specifically identifying such failure, or (y) the
willful engaging by the Participant in illegal conduct or gross misconduct that
is materially and demonstrably injurious to the Company or its successor;


 


(ii)           terminates with “Good Reason”, which for purposes of
this Section 5.5 shall mean any material diminution of the Participant’s
position, 


 


14

















 


authority, duties or responsibilities
(including the assignment of duties materially inconsistent with the
Participant’s position or a material increase in the time Participant is
required by the Company or its successor to travel), any reduction in salary or
in the Participant’s aggregate bonus and incentive opportunities, any material
reduction in the aggregate value of the Participant’s employee benefits
(including retirement, welfare and fringe benefits), or relocation to a
principal work site that is more than 40 miles from the Participant’s principal
work site immediately prior to the Change in Control; or


 


(iii)          terminates under circumstances that entitle the
Participant to accelerated exercisability under any individual employment
agreement between the Participant and the Company, a Subsidiary, or any
successor thereof.


 


(b)           If there is no Equitable
Assumption or Replacement, then without any action by the Plan Committee or the
Board, each outstanding Stock Option and Stock Appreciation Right granted under
the Plan that has not been previously exercised or otherwise lapsed and
terminated shall become immediately exercisable in full; provided, however,
that the Plan Committee, in its sole discretion, and without the consent of any
Participant affected thereby, may determine that a cash payment shall be made
promptly following the Change in Control in lieu of all or any portion of the
outstanding Stock Options and Stock Appreciation Rights granted under this
Plan.  The amount payable with respect to
each share of Common Stock subject to an affected Stock Option and each
affected Stock Appreciation Right shall equal the excess of the Fair Market
Value of a share of Common Stock immediately prior to such Change in Control
over the exercise price of such Stock Option or Stock Appreciation Right.  After such a determination by the Plan
Committee, each Stock Option and Stock Appreciation Right, with respect to
which a cash payment is to be made shall terminate, and the Participant shall
have no further rights thereunder except the right to receive such cash
payment.


 


ARTICLE VI


RESTRICTED STOCK AND RESTRICTED STOCK UNITS


 


6.1           RESTRICTION PERIOD.  At the time an Award of Restricted Stock or
Restricted Stock Units is made, the Plan Committee shall establish the terms
and conditions applicable to such Award, including the period of time (the “Restriction
Period”) during which certain restrictions established by the Plan Committee
shall apply to the Award.  The
Restriction Period shall not be less than three years, provided, however, that
for Awards to non-employee directors of the Company, the terms of the Award may
allow for the ratable release of the restrictions over a minimum period of one
year. Each such Award, and designated portions of the same Award, may have a
different Restriction Period, at the discretion of the Plan Committee. Except
as permitted or 


 


15

















 


pursuant to Sections 6.4, 6.5 or 10.7 hereof, the Restriction Period
applicable to a particular Award shall not be changed.


 


6.2           RESTRICTED STOCK TERMS AND
CONDITIONS.  Restricted Stock shall be
represented by a stock certificate registered in the name of the Participant
granted such Restricted Stock.  Such
Participant shall have the right to enjoy all shareholder rights during the
Restriction Period except that:


 


(a)           The Participant shall not be
entitled to delivery of the stock certificate until the Restriction Period
shall have expired.


 


(b)           The Company may
either issue shares subject to such restrictive legends and/or stop-transfer
instructions as it deems appropriate or provide for retention of custody of the
Common Stock during the Restriction Period.


 


(c)           The Participant may not
sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the
Common Stock during the Restriction Period, except that it may be transferable
by assignment by the Participant to the extent provided in the applicable
Restricted Stock Award agreement.


 


(d)           A breach of the terms and
conditions established by the Plan Committee with respect to the Restricted
Stock shall cause a forfeiture of the Restricted Stock, and any dividends
withheld thereon.


 


(e)           Dividends payable in cash or
in shares of stock or otherwise may be either currently paid or withheld by the
Company for the Participant’s account. 
At the discretion of the Plan Committee, interest may be paid on the
amount of cash dividends withheld, including cash dividends on stock dividends,
at a rate and subject to such terms as determined by the Plan Committee.


 


Provided,
however, and the provisions of Section 6.4 to the contrary
notwithstanding, in lieu of the foregoing, the Plan Committee may provide that
no shares of Common Stock be issued until the Restriction Period is over and
further provide that the shares of Common Stock issued after the Restriction
Period has been completed, be issued in escrow and/or be legended and that the
Common Stock be subject to restrictions including the forfeiture of all or a
part of the shares.


 


6.3           PAYMENT FOR RESTRICTED
STOCK.  A Participant shall not be
required to make any payment for Restricted Stock unless the Plan Committee so
requires.


 


16

















 


6.4           FORFEITURE PROVISIONS.  Subject to Section 6.5, in the event a
Participant terminates employment during a Restriction Period for the
Participant’s Restricted Stock or Restricted Stock Units, such Awards will be
forfeited; provided, however, that the Plan Committee may provide for proration
or full payout in the event of (a) a termination of employment because of
normal or late retirement, (b) with the consent of the Plan Committee,
early retirement or spin-off, (c) death, (d) total and permanent
disability, as determined by the Plan Committee, (e) with the consent of
the Plan Committee, termination of employment after 15 years of employment with
the Company or a Subsidiary or any combination thereof, or (f) in the case
of a non-employee director, a departure from the Board following the completion
of the director’s term of office, all subject to any other conditions the Plan
Committee may determine. Any Restricted Stock Unit that is not, in all cases,
due and payable not later than the 15th day of the
third month following the calendar year, or if later, the Company’s fiscal
year, in which the Restricted Stock Unit ceases to be subject to a “substantial
risk of forfeiture” within the meaning Section 409A of the Code, will be
subject to the provisions of Appendix A.


 


6.5           CHANGE IN
CONTROL.  In the event of a Change in
Control, restrictions on a fraction of each Participant’s outstanding
Restricted Stock and Restricted Stock Units granted under the Plan will
lapse.  The numerator of such fraction
with respect to an Award shall be the number of months that have elapsed in the
applicable Restriction Period prior to the Change in Control and the
denominator shall be the number of months in such Restriction Period.
Distribution of any shares not previously distributed shall be made within ten
days after the Change in Control or later if so provided in the applicable Award
agreement, a related deferral election or if applicable, Appendix A.


 


6.6           DEFERRAL OF
RECEIPT OF RESTRICTED STOCK UNITS.  With
the consent of the Plan Committee, a Participant who has been granted a
Restricted Stock Unit may by compliance with the then applicable procedures
under the Plan irrevocably elect in writing to defer receipt of all or any part
of any distribution associated with that Award. 
The terms and conditions of any such deferral, including but not limited
to, the period of time for, and form of, election; the manner and method of
payout; the plan and form in which the deferred amount shall be held; the
interest equivalent or other payment that shall accrue pending its payout; and
the use and form of Dividend Equivalents in respect of stock-based units
resulting from such deferral, shall be as determined by the Plan
Committee.  The Plan Committee may, at
any time and from time to time, but prospectively only, amend, modify, change,
suspend or cancel any and all of the rights, procedures, mechanics and timing
parameters relating to such deferrals. An election made prior to December 31,
2008 to defer receipt of any distribution associated with a Restricted Stock
Unit relating to a Restriction Period ending after December 31, 2004 is
subject to the provisions of Appendix A.


 


17

















 


ARTICLE VII


SHARES OF STOCK SUBJECT TO THE PLAN; MAXIMUM AWARDS


 


7.1           SHARES AVAILABLE.  Subject to the other provisions of this Article VII,
the total number of shares available for grant as Awards pursuant to the Plan
shall not exceed in the aggregate 81,000,000 shares of Common Stock.  (This limit includes the 44,000,000 shares
that were originally made available under this Plan.)  Solely for the purpose of applying the limitation
in the preceding sentence and subject to the replenishment and adjustment
provisions of Sections 7.2 and 7.3 below:


 


(a)           each Award granted under
this Plan prior to May 19, 2004 (the date the Plan was last approved by
shareholders) shall reduce the number of shares available for grant by one
share for every one share granted;


 


(b)           each Stock Option or Stock
Appreciation Right granted under this Plan on or after May 19, 2004 shall
reduce the number of shares available for grant by one share for every one
share granted;


 


(c)           each Award
granted under this Plan on or after May 19, 2004 that may result in the
issuance of Common Stock, other than a Stock Option, Stock Appreciation Right,
or Dividend Equivalent, shall reduce the number of shares available for grant
by two shares for every one share granted;


 


(d)           each Dividend
Equivalent that the Corporation has determined may result in the issuance of
Common Stock shall reduce the number of shares available for grant by two
shares for every share that would be issuable if the accumulated value of the
Dividend Equivalent were converted into Common Stock at Fair Market Value, but
such reduction shall only occur if the corresponding dividends payable to
shareholders were paid in cash; and


 


(e)           if Awards are
granted in tandem, so that only one of the Awards may actually be exercised,
only the Award that results in the greater reduction in the number of shares
available for grant shall result in a reduction of the shares so available, and
the other Award shall be disregarded.


 


Shares available for grant under the Plan may
be authorized and unissued shares, treasury shares held by the Company or
shares purchased or held by the Company or a Subsidiary for purposes of the
Plan, or any combination thereof.  Shares
issued upon assumption or conversion of outstanding stock-based awards granted
by an acquired company shall be disregarded in applying the limitation set
forth in this Section 7.1.


 


7.2           SHARES AGAIN AVAILABLE.  In the event all or any portion of an Award
is forfeited or cancelled, expires, is settled for cash, or otherwise does not
result in the issuance of all or a portion of the shares subject to the Award
in connection with the exercise or settlement of such Award, the number of
shares not issued that were deducted for such Award pursuant to Section 7.1
above shall be restored and may again be used for Awards under the Plan. If a
Participant uses shares of Common Stock to pay a purchase or exercise price or
tax withholding, either by having the Company withhold shares or tendering
shares (either actually or by attestation), an equal number of such shares
shall 


 


18

















 


be restored and may again be used for Awards under the Plan.  In addition, shares may be reacquired on the
open market by the Company using the Cash Proceeds received by the Company from
the exercise on or after May 19, 2004 of Stock Options granted under the
Plan to restore an equal number of shares that may again be used for Awards
under the Plan; provided, however, that the number of shares so restored does
not exceed the number that could be purchased at Fair Market Value with the
Cash Proceeds on the date of exercise of the Stock Option giving rise to such
Cash Proceeds.


 


If one of the events described
in the first sentence of the preceding paragraph occurs with respect to an
award that was granted under a Prior Plan (as defined in Section 10.11)
but was outstanding on May 19, 2004, the total number of shares available
for grant under this Plan shall be increased by one share for each share
subject to that award that is not issued.


 


Notwithstanding anything in
this Section 7.2 to the contrary and solely for purposes of determining
whether shares are available for the issuance of Incentive Stock Options, the
maximum aggregate number of shares that may be granted under this Plan shall be
determined without regard to any shares restored pursuant to this Section 7.2
that, if taken into account, would cause the Plan to fail the requirement under
Code Section 422 that the Plan designate the maximum aggregate number of
shares that may be issued.


 


7.3           RELEVANT CHANGE ADJUSTMENTS.   In
the event of any equity restructuring (within the meaning of Financial
Accounting Standards No. 123 (revised 2004)) other than: (1) any
distribution of securities or other property by the Company to shareholders in
a spin-off or split-up that does not qualify as a tax-free spin-off or split-up
under Section 355 of the Code (or any successor provision of the Code); or
(2) any cash dividend (including extraordinary cash dividends),
appropriate adjustments in the number of shares available for grant and in any
outstanding Awards, including adjustments in the size of the Award and in the
exercise price per share of Stock Options and Stock Appreciation Rights, shall
be made by the Plan Committee to give effect to such equity restructuring to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan. No such adjustment shall be required to
reflect the events described in clauses (1) and (2) above, or any
other change in capitalization that does not constitute an equity
restructuring, however such adjustment may be made: (x) if necessary to
comply with Section 409A of the Code, the adjustment qualifies as a
substitution or assumption under Treasury Regulation Section 1.424-1; and (y) the
Plan Committee affirmatively determines, in its discretion, that such an
adjustment is appropriate.


 


7.4           MAXIMUM PER PARTICIPANT
AWARD.  During any consecutive thirty-six
month period, no Participant may receive Awards that, in the aggregate, could
result in that Participant receiving, earning or acquiring, subject to the
adjustments described in Section 7.3:


 


19

















 


(a)           Stock Options and Stock
Appreciation Rights for, in the aggregate, more than 4,000,000 shares of Common
Stock;


(b)           Performance Shares,
Restricted Stock and Restricted Stock Units for, in the aggregate, more than
700,000 shares of Common Stock;


(c)           A number of Dividend
Equivalents greater than the number of shares of Common Stock the Participant
could receive, earn or acquire in connection with the related stock-based
Awards granted to the Participant; and


(d)           Performance Units with a
value exceeding $15,000,000.


 


In
addition, during any consecutive thirty-six month period, no Participant who is
a non-employee director may receive Awards that, in the aggregate, could result
in that Participant receiving, earning or acquiring, subject to the adjustments
described in Section 7.3, more than 75,000 shares of Common Stock.  For purposes of applying the limits described
in this Section 7.4, if Awards subject to the same limit are granted in
tandem, so that only one of the Awards may actually be exercised, only one of
the Awards shall be counted.


 


ARTICLE VIII


ADMINISTRATION


 


8.1           PLAN
COMMITTEE.  The Plan will be administered
by a committee of two or more members of the Compensation Committee of the
Board who are appointed from time to time by the Board and who are outside,
independent Board members who, in the judgment of the Board, are qualified to
administer the Plan as contemplated by (a) Rule 16b-3 of the
Securities and Exchange Act of 1934 (or any successor rule), (b) Section 162(m) of
the Code, as amended, and the regulations thereunder (or any successor Section and
regulations), and (c) any rules and regulations of a stock exchange
on which Common Stock is traded.  Any
member of the committee administering the Plan who does not satisfy or ceases
to satisfy the qualifications set out in the preceding sentence may recuse
himself or herself from any vote or other action taken by such committee.  The Board may, at any time and in its
complete discretion, remove any member of such committee and may fill any vacancy
on such committee.


 


8.2           POWERS.  The Plan Committee shall have and exercise
all of the powers and responsibilities granted expressly or by implication to
it by the provisions of the Plan. 
Subject to and as limited by such provisions, the Plan Committee may
from time to time enact, amend and rescind such rules, regulations and
procedures with respect to the administration of the Plan as it deems
appropriate or convenient.


 


8.3           INTERPRETATION.  All questions arising under the Plan, any
Award agreement, or any rule, regulation or procedure adopted by the Plan
Committee shall be determined by the Plan Committee, and its determination
thereof shall be conclusive and binding upon all parties.


 


20
















 


8.4           COMMITTEE PROCEDURE.  Any action required or permitted to be taken
by the Plan Committee under the Plan shall require the affirmative vote of a
majority of a quorum of the members of the Plan Committee.  A majority of all members of the Plan
Committee shall constitute a “quorum” for Plan Committee business. The Plan
Committee may act by written determination instead of by affirmative vote at a
meeting, provided that any written determination shall be signed by all members
of the Plan Committee, and any such written determination shall be as fully
effective as a majority vote of a quorum at a meeting.


 


8.5           DELEGATION.  The Plan Committee may delegate all or any
part of its authority under the Plan to a subcommittee of directors and/or
officers of the Company for purposes of determining and administering Awards
granted to persons who are not then subject to the reporting requirements of Section 16
of the Exchange Act.


 


ARTICLE IX


REDUCTION IN AWARDS


 


9.1           WHEN APPLICABLE.  Anything in this Plan to the contrary
notwithstanding, the provisions of this Article IX shall apply to a
Participant if an independent auditor selected by the Plan Committee (the “Auditor”)
determines that each of (a) and (b) below are applicable.


 


(a)           Payments or
distributions hereunder, determined without application of this Article IX,
either alone or together with other payments in the nature of compensation to
the Participant which are contingent on a change in the ownership or effective
control of the Company, or in the ownership of a substantial portion of the
assets of the Company, or otherwise (but after any elimination or reduction of
such payments under the terms of the Company’s Officer Income Continuance
Policy Statement, as amended), would result in any portion of the payments
hereunder being subject to an excise tax on excess parachute payments imposed
under Section 4999 of the Code.


 


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


 


9.2           REDUCED
AMOUNT.  Under this Article IX the
payments and distributions under this Plan shall be reduced (but not below
zero) so that the present value of such payments and distributions shall equal
the Reduced Amount. The “Reduced Amount” (which may be zero) shall be an amount
expressed in present value which maximizes the aggregate present value of
payments and distributions under this Plan 


 


21

















 


which can be made without causing any such payment
to be subject to the excise tax under Section 4999 of the Code. The
determinations and reductions under this Section 9.2 shall be made after
eliminations or reductions, if any, have been made under the Company’s Officer
Income Continuance Policy Statement, as amended.


 


9.3           PROCEDURE.  If the Auditor determines that this Article IX
is applicable to a Participant, it shall so advise the Plan Committee in
writing. The Plan Committee shall then promptly give the Participant notice to
that effect together with a copy of the detailed calculation supporting such
determination which shall include a statement of the Reduced Amount. Such
notice shall also include a description of which and how much of the Awards
shall be eliminated or reduced (as long as their aggregate present value equals
the Reduced Amount). For purposes of this Article IX, Awards shall be
reduced in the following order: (1) Stock Options with an exercise price
above the then Fair Market Value of a share of Common Stock that have a
positive value for purposes of Section 280G of the Code, as determined
under applicable IRS guidance; (2) pro rata among Awards that constitute
deferred compensation subject to Section 409A of the Code; and (3) if
a further reduction is necessary to reach the Reduced Amount, among the Awards
that are not subject to Section 409A of the Code. Present value shall be
determined in accordance with Section 280G of the Code. All the foregoing
determinations made by the Auditor under this Article IX shall be made as
promptly as practicable after it is determined that excess parachute payments
(as defined in Section 280G of the Code) will be made to the Participant
if an elimination or reduction is not made. As promptly as practicable, the
Company shall provide to or for the benefit of the Participant such amounts and
shares as are then due to the Participant under this Plan and shall promptly
provide to or for the benefit of the Participant in the future such amounts and
shares as become due to the Participant under this Plan.


 


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


 


22

















 


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


 


9.6           DETERMINATIONS BINDING.  All determinations made by the Auditor under
this Article IX shall be binding upon the Company, the Plan Committee and
the Participant.


 


ARTICLE X


GENERAL PROVISIONS


 


10.1         AMENDMENT OR TERMINATION OF
PLAN.  The
Board may at any time amend, suspend, discontinue or terminate the Plan
(including the making of any necessary enabling, conforming and procedural
amendments to the Plan to authorize and implement the granting of Incentive
Stock Options or other income tax preferred stock options which may be
authorized by federal law subsequent to the effective date of this Plan);
provided, however, that no amendment by the Board shall, without further
approval of the shareholders of the Company, increase the total number of
shares of Common Stock which may be made subject to the Plan, except as provided
at Section 7.3 hereof, or make any other change for which shareholder
approval is required by law or under the applicable rules of the New York
Stock Exchange.  No action taken pursuant
to this Section 10.1 of the Plan shall, without the consent of the Participant,
adversely affect any Awards which have been previously granted to a Participant
except pursuant to Section 10.5 of the Plan.


 


10.2         NON-ALIENATION OF RIGHTS AND
BENEFITS.  Except as expressly provided
herein, no right or benefit under the Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance or charge and any attempt to
anticipate, alienate, sell, assign, pledge, encumber or charge the same shall
be void. No right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities or torts of the person entitled to
such right or benefit. If any Participant or beneficiary hereunder should
become bankrupt or attempt to anticipate, alienate, sell, assign, pledge,
encumber or charge any right or benefit hereunder (other than as expressly
provided herein), then such right or benefit shall, in the sole discretion of
the Plan Committee, cease and in such event the Company may hold or apply the
same or any or no part thereof for the benefit of the Participant or
beneficiary, his/her spouse, children or other dependents or any of them in any
such manner and in such proportion as the Plan Committee in its sole discretion
may deem proper.


 


10.3         NO RIGHTS AS
SHAREHOLDER.  The granting of Awards
under the Plan shall not entitle a Participant or any other person succeeding
to his/her rights, to any dividend, voting or other right as a shareholder of
the Company unless and until the issuance of a stock certificate to the
Participant or such other person pursuant to the provisions of the Plan and
then only subsequent to the date of issuance thereof.


 


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10.4         LIMITATION OF LIABILITY OR
OBLIGATION OF THE COMPANY.  As
illustrative only of the limitations of liability or obligation of the Company
and not intended to be exhaustive thereof, nothing in the Plan shall be
construed:


 


(a)           to give any
employee of the Company any right to be granted any Award other than at the
sole discretion of the Plan Committee;


 


(b)           to give any Participant any
rights whatsoever with respect to shares of Common Stock except as specifically
provided in the Plan;


 


(c)           to limit in any way the
right of the Company or any Subsidiary to terminate, change or modify, with or
without cause, the employment of any Participant at any time; or


 


(d)           to be evidence of any
agreement or understanding, express or implied, that the Company or any
Subsidiary will employ any Participant in any particular position at any
particular rate of compensation or for any particular period of time.


 


Payments
and other benefits received by a Participant under an Award shall not be deemed
part of a Participant’s regular, recurring compensation for purposes of any
termination, indemnity or severance pay laws and shall not be included in, nor
have any effect on, the determination of benefits under any other employee
benefit plan, contract or similar arrangement provided by the Company or any
Subsidiary, unless expressly so provided by such other plan, contract or arrangement
or the Plan Committee determines that an Award or portion of an Award should be
included to reflect competitive compensation practices or to recognize that an
Award has been made in lieu of a portion of competitive cash compensation.


 


10.5         GOVERNMENT REGULATIONS.  Notwithstanding any other provisions of the
Plan seemingly to the contrary, the obligation of the Company with respect to
Awards granted under the Plan shall at all times be subject to any and all
applicable laws, rules and regulations and such approvals by any
government agencies as may be required or deemed by the Board or Plan Committee
as reasonably necessary or appropriate for the protection of the Company.


 


In connection with any sale,
issuance or transfer hereunder, the Participant acquiring the shares shall, if
requested by the Company, give assurances satisfactory to counsel of the
Company that the shares are being acquired for investment and not with a view
to resale or distribution thereof and assurances in respect of such other
matters as the Company may deem desirable to assure compliance with all
applicable legal requirements.


 


10.6         NON-EXCLUSIVITY OF THE
PLAN.  Neither the adoption of the Plan
by the Board nor the submission of the Plan to shareholders of the Company for
approval shall be construed as creating any limitations on the power or
authority of the Board to 


 


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adopt such other or additional incentive or other compensation
arrangements of whatever nature as the Board may deem necessary or desirable or
preclude or limit the continuation of any other plan, practice or arrangement
for the payment of compensation or fringe benefits to employees generally, or
to any class or group of employees, which the Company or any Subsidiary now has
lawfully put into effect, including, without limitation, any retirement,
pension, savings, profit sharing or stock purchase plan, insurance, death and
disability benefits, and executive short term incentive plans.


 


10.7         REORGANIZATION.  In case the Company is merged or consolidated
with another corporation, or in case the property or stock of the Company is
acquired by another corporation, or in case of a separation, reorganization or
liquidation of the Company (for purposes hereof any such occurrence being
referred to as an “Event”), the Plan Committee or a comparable committee of any
corporation assuming the obligations of the Company hereunder, shall either:


 


(a)           make appropriate provision for the protection of any
outstanding stock-based Awards granted thereunder by the substitution on an
equitable basis of appropriate stock, stock units, stock options or stock
appreciation rights of the Company, or of the merged, consolidated or otherwise
reorganized corporation which will be issuable in respect to the Awards.  Stock to be issued pursuant to such
substitute awards shall be limited so that the excess of the aggregate fair
market value of the shares subject to such substitute awards immediately after such
substitution over the purchase price thereof (if any) is not more than the
excess of the aggregate fair market value of the shares subject to such
substitute awards immediately before such substitution over the purchase price
thereof (if any); or


 


(b)           upon written notice to the
Participant, declare that all Performance Awards granted to the Participant are
deemed earned, that the Restriction Period of all Restricted Stock and
Restricted Stock Units has been eliminated and that all outstanding Stock
Options and Stock Appreciation Rights shall accelerate and become exercisable
in full but that all outstanding Stock Options and Stock Appreciation Rights,
whether or not exercisable prior to such acceleration, must be exercised within
the period of time set forth in such notice or they will terminate.  In connection with any declaration pursuant
to this Section 10.7(b), the Plan Committee may, but shall not be
obligated to, cause a cash payment to be made to each Participant who holds a
Stock Option or Stock Appreciation Right that is terminated in an amount equal
to the product obtained by multiplying (x) the amount (if any) by which
the Event Proceeds Per Share (as hereinafter defined) exceeds the exercise
price per share covered by such Stock Option times (y) the number of
shares of Common Stock covered by such Stock Option or Stock Appreciation
Right.  For purposes of this Section 10.7(b),
“Event Proceeds Per Share” shall mean the cash plus the fair market value, as
determined in good faith by the Plan Committee, of the non-cash 


 


25

















 


consideration to be received per share by the
shareholders of the Company upon the occurrence of the Event.


 


10.8         WITHHOLDING
TAXES, ETC.   All distributions under the Plan shall be
subject to any required withholding taxes and other withholdings and, in case
of distributions in Common Stock, the Participant or other recipient may, as a
condition precedent to the delivery of Common Stock, be required to pay to
his/her participating employer the excess, if any, of the amount of required
withholding over the withholdings, if any, from any distributions in cash under
the Plan.  All or a portion of such
payment may, in the discretion of the Plan Committee and upon the election of
the Participant, be made (a) by withholding from shares that would
otherwise be delivered to the Participant a number of shares sufficient to
satisfy the remaining required tax withholding or (b) by tendering (either
actually or by attestation) owned and unencumbered shares of Common Stock
acceptable to the Plan Committee and having a Fair Market Value on the date of
tender equal to or less than the remaining required tax withholding.  No distribution under the Plan shall be made
in fractional shares of Common Stock, but the proportional market value thereof
shall be paid in cash.


 


10.9         GENERAL RESTRICTION.  Each Award shall be subject to the
requirement that, if at any time the Board shall determine, in its discretion,
that the listing, registration or qualification of the shares subject to such
option and/or right upon any securities exchange or under any state or federal
law, or the consent or approval of any government regulatory body, is necessary
or desirable as a condition of, or in connection with the granting of such
Award or the issue or purchase of shares respectively thereunder, such Award
may not be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board.


 


10.10       USE OF PROCEEDS.  The proceeds derived by the Company from the
sale of the stock pursuant to Awards granted under the Plan shall constitute
general funds of the Company.


 


10.11       PRIOR PLANS.  Notwithstanding the adoption of this Plan by
the Board, the Company’s Executive Long Term Incentive Plan of 1981 and the
Director Stock Option Plan of 1995, as the same have been amended from time to
time (the “Prior Plans”), shall remain in effect, and all grants and awards
heretofore made under the Prior Plans shall be governed by the terms of the
Prior Plans. The Plan Committee shall not, however, make any additional grants
pursuant to the Prior Plans.


 


10.12       DURATION OF PLAN.  This Plan shall remain in effect until the
earliest of the following events occurs: (a) distribution of all shares of
Common Stock subject to the Plan, (b) termination of this Plan pursuant to
Section 10.1 hereof, or (c) May 19, 2014; provided, however,
that Awards made before the termination or expiration of this Plan may be
exercised, vested, settled or otherwise effectuated after such date in
accordance with the terms of such Awards.


 


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10.13       SEVERABILITY.  In the event any provision of this Plan shall
be held to be illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of this Plan, and this Plan shall be
construed and enforced as if the illegal or invalid provision had not been
included.


 


10.14       GOVERNING LAW.  To the extent that federal laws do not otherwise
control, this Plan and all determinations made and actions taken pursuant to
this Plan shall be governed by the laws of Minnesota and construed accordingly.


 


10.15       HEADINGS.  The headings of the Articles and their
subparts in this Plan are for convenience of reading only and are not meant to
be of substantive significance and shall not add to or detract from the meaning
of such Article or subpart to which it refers.


 


10.16       STOCK CERTIFICATES.  Notwithstanding anything in the Plan to the
contrary, to the extent the Plan provides for the issuance of stock
certificates to reflect the issuance of shares of Common Stock or Restricted
Stock, the issuance may be effected on a non-certificated basis, to the extent
not prohibited by applicable law or the applicable rules of any stock
exchange on which the Common Stock is traded.


 


27

















 


APPENDIX A


 


A-1         PURPOSE AND EFFECT. This Appendix A to the
Target Corporation Long-Term Incentive Plan modifies the terms of any deferred
Performance Award and any Restricted Stock Unit that is subject to Section 409A
of the Code that was awarded prior to December 31, 2008 and that is
paid or payable after December 31, 2008. The provisions of this
Appendix A will supersede any inconsistent terms of any award that is covered
by this Appendix A. Awards covered by this Appendix A (collectively referred to
herein as “Appendix A Awards”) include:


 


(a)   Any Performance Award
deferred prior to December 31, 2008 for a Performance Period ending
after December 31, 2004 (“Deferred Performance Share Unit”);


 


(b)   Any Restricted Stock Unit
(other than a Deferred Restricted Stock Unit defined below) for which
distribution is not, in all cases, due and payable not later than the 15th day of the third month following the calendar
year, or if later, the Company’s fiscal year, in which the Restricted Stock
Unit ceases to be subject to a “substantial risk of forfeiture” within the
meaning of Section 409A of the Code; and


 


(c)   Any Restricted Stock Unit
relating to a Restriction Period ending after December 31, 2004 for
which an election was made prior to December 31, 2008 to defer
receipt of any distribution associated with such Restricted Stock Unit (“Deferred
Restricted Stock Unit”).


 


A-2         DEFINITIONS. The capitalized terms in
this Addendum that are not defined below, shall have the same meaning as in the
Agreement, or, if not defined in the Agreement, as defined in the Plan.


 


(a)   Company. For purposes
of this Addendum, Company includes any person that would be treated as a single
employer with the Company under Section 414(b) or 414(c) of the
Code.


 


(b)   Disabled. An employee
Participant will be Disabled if, by reason of any medically-determinable
physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than twelve months,
Participant (i) is unable to engage in any substantial gainful activity or
(ii) is receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the
Company. An employee Participant will be deemed to be Disabled if he or she is
determined to be totally disabled by the Social Security Administration.


 


(c)   Termination of Employment. For purposes
of determining an employee Participant’s entitlement to payment of an Appendix
A Award, “Termination 


 


28

















 


of Employment” means a
severance of such Participant’s employment relationship with the Company, for
any reason. For purposes of determining when a distribution will be made under
Appendix A, a “Termination of Employment” will be deemed to occur if, based on
the relevant facts and circumstances to the Participant, the Company and
Participant reasonably anticipate that future services to be performed by the
Participant for the Company will permanently decrease to no more than 20% of
the average level of services performed over the immediately preceding 36-month
period. A bona fide leave of absence that is six months or less, or during
which an individual retains a reemployment right, will not cause a Termination
of Employment. In the case of a leave of absence without a right of
reemployment that exceeds the time periods described in this paragraph, a Termination
of Employment will be deemed to occur once the leave of absence exceeds six
months. Notwithstanding the foregoing, a Termination of Employment shall not
occur unless such termination also qualifies as a “separation from service,” as
defined under Section 409A of the Code and related guidance thereunder.


 


(d)   Trust. Trust means
the Target Corporation Deferred Compensation Trust, established by agreement
dated January 1, 2005, by and between the Company and State Street Bank
and Trust Company, as amended, or similar trust agreement.


 


A-3         PAYMENT OF EMPLOYEE PARTICIPANT’S RESTRICTED
STOCK UNITS. The
vested amount of an employee Participant’s Restricted Stock Units and Deferred
Restricted Stock Units shall convert to shares of Common Stock and shall be issued
to or on behalf of the Participant upon the earlier of the following:


 


(a)   the employee Participant’s
death;


 


(b)   the date the employee
Participant becomes Disabled;


 


(c)   for a Participant’s Deferred Restricted
Stock Units, the later of the Vesting Date or the first day of the month next
following the date that is six (6) months after the employee Participant’s
Termination of Employment; and for a Participant’s Restricted Stock Units that
are not Deferred Restricted Stock Units, the earlier of the Vesting Date or the
first day of the month next following the date that is six (6) months
after the employee Participant’s Termination of Employment; or


 


(d)   the termination and liquidation of
employee Participant’s Restricted Stock Units or Deferred Restricted Stock
Units under Section A-7 below.


 


Payments under Paragraphs (a), (b) and (c) will
be made within 90 days of such distribution event and payment on account of
Paragraph (d) will be made in accordance with Section A-7.


 


29

















 


A-4         PAYMENT OF NON-EMPLOYEE DIRECTOR
PARTICIPANT’S RESTRICTED STOCK UNITS. The vested amount of a non-employee director
Participant’s Restricted Stock Units shall convert to shares of Common Stock
and shall be issued to or on behalf of the Participant upon the earlier of the
following:


 


(a) the date of the Participant’s death; or


 


(b) the date the non-employee director
Participant ceases to be a member of the Board of Directors of the Company,
provided the Participant has ceased all contractual relationships as an
independent contractor with the Company and has experienced a “separation from
service” under Section 409A of the Code, provided further, if the
Participant is a “specified employee,” as defined under Section 409A of
the Code, on the date of his or her separation from service, payment will be
suspended for six (6) months following the Participant’s separation from
service, or, if earlier, until the Participant’s death.


 


A-5         PAYMENT OF DEFERRED PERFORMANCE AWARD. 
The vested amount of the percentage of a Participant’s Deferred
Performance Share Units shall convert to shares of Common Stock and shall be
issued to or on behalf of a Participant as soon as practicable, but not more
than 90 days, after the later of the following:


 


(a) the end of the Performance Period; or


 


(b) the first of the following events to
occur:


 


(1)           the Participant’s death;


(2)           the date the Participant becomes
Disabled;


(3)           the first day of the month next following
the date that is six (6) months after the Participant’s Termination of
Employment;


(4)           the fixed distribution date, if any,
designated by the Participant pursuant to a written distribution election made
in accordance with Plan procedures; or


(5)           the termination and liquidation of the
Participant’s Deferred Performance Share units under Section A-7 below.


 


A-6         FUNDING UPON A CHANGE IN CONTROL. In the event a Change in Control causes the
Trust to be funded, the Company shall:


 


(a)           determine the amount of the Company’s
obligation to Participants who are entitled to a distribution of Appendix A
Awards, by multiplying the number of Units earned as of the Change in Control
by the Fair Market Value of one share of Common Stock on the date of the Change
in Control;


 


(b)           credit the amounts determined in
paragraph (a) to a bookkeeping account in the name of each applicable
Participant;


 


30

















 


(c)           on and after the date of the Change in
Control, credit to such bookkeeping accounts investment earnings at an annual
rate equal to the sum of the 10-Year United States Treasury Note rate plus
2%.  The 10-Year United States Treasury
Note rate will be determined on the date of the Change in Control, or if no
such rate is available on that date, the immediately preceding date such rate
is available, and such rate will be reset each calendar quarter as necessary;
and


 


(d)           transfer cash or other property to the
Trust as provided under the Trust.  Such
transfer shall be made to the extent permitted by, subject to, and in
accordance with, the terms of the Trust.


 


A-7         AWARD TERMINATION AND LIQUIDATION ON ACCOUNT
OF A CHANGE IN CONTROL.  Upon a Change in Control the Appendix A
Awards will terminate and payment of all amounts under such Awards will be
accelerated if and to the extent provided in this Section A-7.


 


(a)   The Appendix A Awards will
be terminated effective as of the first date on which there has occurred both (i) a
Change in Control under Section 2.4(a) and (ii) a funding of the
Trust on account of such Change in Control (referred to herein as the “Appendix
A termination effective date”) unless, prior to such Appendix A termination
effective date the Board affirmatively determines that the Appendix A Awards
will not be terminated as of such effective date. The Board will be deemed to
have taken action to irrevocably terminate the Appendix A Awards as of the
Appendix A termination effective date by its failure to affirmatively determine
that the Appendix A Awards will not terminate as of such date.


 


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


 


(c)   In the event the Board does
not affirmatively determine not to terminate the Appendix A Awards as provided
in paragraph (a), such termination shall be subject to either (1) or (2) as
follows:


 


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


 


31

















 


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


 


A-8         LIMITATIONS ON TRANSFER. Awards
subject to this Appendix A may not be assigned or transferred by a Participant
during their lifetime, other than to a former spouse incident to divorce if and
to the extent required by a qualified domestic relations order and permitted
under the terms of the applicable Award agreement, and the Awards shall not be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance or
hypothecation, execution, attachment or similar process. Any attempt to
anticipate, alienate, sell, assign, transfer, pledge, encumber, hypothecate, charge
or otherwise dispose of an Award in a manner contrary to the provisions hereof,
and the levy of any attachment or similar process upon the awards, shall be
null and void.


 


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