Exhibit 10(H)


 


TARGET CORPORATION


OFFICER DEFERRED COMPENSATION PLAN


 


ARTICLE 1


PURPOSE


 


The purpose of this Target Corporation Officer
Deferred Compensation Plan, formerly known as the Target Corporation Deferred
Compensation Plan — Senior Management Group, (the “Plan”) is to provide a means
whereby Target Corporation (the “Company”) may afford financial security to a
select group of employees who are in the Senior Management Group of the Company
and its subsidiaries and who have rendered and continue to render valuable
services to the Company or its subsidiaries and who make an important
contribution towards the Company’s continued growth and success, by providing
for additional future compensation so that such employees may be retained and
their productive efforts encouraged. 
Participants ceased to be eligible to defer Earnings into the Plan after
December 31, 1996.  This Plan document, which is intended to
comply with Code section 409A, is effective January 1, 2009.


 


ARTICLE 2


DEFINITIONS AND CERTAIN PROVISIONS


 


Active Status.  “Active Status” means the Participant is
currently employed by the Company or has terminated employment under Normal or
Early Retirement or under other conditions described in Section 5.2 and
has not yet begun to receive payments from the Plan associated with a
particular Deferral Account.


 


Affiliate. 
An “Affiliate” is the
Company and all persons, with whom the Company would be considered a single
employer under Code section 414(b) or 414(c).


 


Beneficiary.  “Beneficiary” means the person or persons
designated as such in accordance with Article 6.


 


Benefit Deferral Period.  “Benefit Deferral Period” means that period
of one (1) or four (4) Plan Years as determined pursuant to Article 4
over which a Participant defers a portion of such Participant’s Earnings.


 


Committee.  “Committee” means the plan administration
committee appointed to administer the Plan pursuant to Article 3.


 


Cumulative Deferral Amount.  “Cumulative Deferral Amount” means the total
cumulative amount by which a Participant’s Earnings must be reduced over the
period prescribed in Section 4.1. 
If for a Plan Year a Matching Allocation for an Employee who is a member
of the Senior Management Group of the Company pursuant to the Target
Corporation Supplemental Retirement, Savings and Employee Stock Ownership Plan
(“SRSP”) cannot be made because the Before Tax Deposits or After Tax Deposits
elected by the Employee are reduced to comply with the provisions of the SRSP, “Cumulative
Deferral Amount” also includes the amount of the Matching Allocation that
cannot be made.


 


1

















 


Declared Rate.  “Declared Rate” means with respect to any
Plan Year the applicable rate announced in advance by the Committee for such
Plan Year.  Under no circumstances shall
the minimum rate be less than twelve percent (12%) per annum and the maximum
rate shall not exceed twenty percent (20%) per annum.  The rate to be announced, subject to the
minimum and maximum percentages referenced above, shall be a calculated rate
using the following formula:


 


Moody’s Corporate Bond Yield Average.  Monthly Average Corporates as published by
Moody’s Investors Service, Inc. or its successor (or if said index is no
longer available, its successor index, or if no successor index exists, such
other index as selected by the Committee as most closely replicates the measure
produced by said Moody index) for the month of June for the year preceding
the subject Plan Year to which the Declared Rate shall apply, said rate of
return to be rounded to the nearest .10% of said reported rate, to which
percentage rate shall be added six (6) percentage points (e.g. an index of
7.16% rounded to 7.20%  plus 6% equals a
13.2% “Declared Rate”).  Provided
however, if any tax or insurance change shall occur which in the reasoned
judgment of the Committee shall have an ongoing adverse economic effect on the
underlying COLI financing assumptions related to the Plan, then the Committee
may adjust said Declared Rate to reflect such adverse economic impact but in no
event below the twelve percent (12%) minimum referenced in the first paragraph
hereof.


 


Deferral Account. “Deferral Account”
means the account maintained on the books of account of the Company pursuant to
Section 4.4.


 


Early Retirement.  “Early Retirement” means the Participant’s
Termination of Employment for a reason other than death on or after the date
the Participant attains age 55 and prior to the date the Participant attains
age 65.


 


Earnings.  “Earnings” means the base pay and incentive
pay paid to a Participant by the Company or a subsidiary, excluding car and
other allowances and other cash and non-cash compensation.


 


Eligible Employee.  “Eligible Employee” means each Employee in
the Senior Management Group of the Company who executes an Enrollment Agreement
to participate in the Plan.


 


Employee.  “Employee” means any person employed by the
Employer on a regular salaried basis, including officers of the Employer.


 


Employer.  “Employer” means the Company and any of its
wholly owned subsidiaries.


 


Enrollment Agreement.  “Enrollment Agreement” means the written
agreement entered into by the Employer and an Eligible Employee pursuant to
which the Eligible Employee becomes a Participant in the Plan.  In the sole discretion of the Company, authorization
forms filed by any Participant by which the Participant makes the elections
provided for by this Plan may be treated as a completed and fully executed
Enrollment Agreement for all purposes under the Plan.


 


Normal Retirement.  “Normal Retirement” means the Termination of
Employment of a Participant with the Employer for reasons other than death on
or after the date the Participant attains age 65.


 


2

















 


Participant.  “Participant” means an Eligible Employee who
has filed a completed and executed Enrollment Agreement or authorization form
with the Committee and is participating in the Plan in accordance with the
provisions of Article 4.  “Participant”
also means an Employee who is a member of the Senior Management Group of the
Company who has a Cumulative Deferral Amount based on Matching Allocation that
could not be made to the SRSP.


 


Pay Status.  “Pay Status” means that the Participant has
had a Termination of Employment with the Company and has begun to receive
payments from the Plan associated with a particular Deferral Account.


 


Plan Year.  “Plan Year” means the calendar year beginning
January 1 and ending December 31.


 


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


 


Termination of Employment.


 


(a)                                For purposes of determining entitlement to or
amount of benefits under the Plan, “Termination of Employment” means a
severance of a Participant’s employment relationship with the Employer and all
other Affiliates, for any reason.


 


(b)                               For purposes of determining when a
distribution will be made under the Plan, a “Termination of Employment” will be
deemed to occur if, based on the relevant facts and circumstances to the
Participant, the Employer, all other Affiliates, and Participant reasonably
anticipate that the level of
bona fide future services to be
performed by the Participant for the Employer and all other Affiliates will
permanently decrease to no more than 20% of the average level of bona fide services performed over the immediately preceding 36-month period.


 


(c)                                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.


 


(d)                               Notwithstanding the foregoing, a Termination
of Employment shall not occur unless such termination also qualifies as a “separation
from service,” as defined under Code section 409A and related guidance
thereunder.


 


3

















 


ARTICLE 3


ADMINISTRATION OF
THE PLAN


 


A Committee shall be
appointed by the Chief Executive Officer of the Company to administer the Plan
and to establish, adopt or revise such rules and regulations as it may
deem necessary or advisable for the administration of the Plan.  The Committee shall have discretionary
authority to determine eligibility for benefits and to construe the terms of
the Plan.  Interpretations of the Plan by
the Committee shall be conclusive. 
Members of the Committee shall be eligible to participate in the Plan
while serving as members of the Committee, but a member of the Committee shall
not vote or act upon any matter which relates solely to such member’s interest
in the Plan as a Participant.


 


4

















 


ARTICLE 4


PARTICIPATION


 


4.1                               Election
to Participate.  Effective for Plan
Years beginning on and after January 1, 1997, Participants ceased to be
eligible to defer Earnings into this Plan. 
For Plan Years beginning prior to January 1, 1997, any Employee who
is a member of the Senior Management Group of the Company may enroll in the
Plan by filing a completed and fully executed Enrollment Agreement or
authorization form with the Committee. Pursuant to said Enrollment Agreement or
authorization form, the Employee shall irrevocably designate a dollar amount by
which the aggregate Earnings of such Participant would be reduced over one (1) or
four (4) Plan Years next following the execution of the Enrollment
Agreement (the “Benefit Deferral Period”), provided, however, that:


 


(a)                                Minimum
Deferral.  The reduction for any Plan
Year shall not be less than Five Thousand Dollars ($5,000.00)


 


(b)                               Reduction
in Earnings.


 


(i)                                     In
General.  Except as otherwise
provided in this Section 4.1, the Earnings of the Participant for each of
the Plan Years in the Benefit Deferral Period shall be reduced by the amount
specified in the Enrollment Agreement (including any authorization form)
applicable to such Plan Year.


 


(ii)                                  Accelerated
Reduction.  A Participant may elect
in a written notice with the consent of the Committee to increase the amount of
the reduction of Earnings otherwise provided for by Section 4.1(b)(i) for
any of the Plan Years remaining in the Benefit Deferral Period, provided,
however, that any such increase in the reduction of Earnings for any remaining
Plan Years in the Benefit Deferral Period shall not increase the Cumulative
Deferral Amount, but shall act to shorten the length of the Benefit Deferral
Period.


 


(c)                                Maximum
Reduction in Earnings.  A Participant
may not elect a Cumulative Deferral Amount or an increase in reduction of
Earnings pursuant to Section 4.1(b)(ii), or any combination of the two,
that would cause the aggregate total reduction in Earnings in any Plan Year to
exceed twenty-five percent (25%) of the base pay and one hundred percent (100%)
of the incentive pay payable during such Plan Year up to a total of $250,000
per year plus the amount of any payout made pursuant to Section 5.4, or
such greater percent of base pay and/or incentive pay or greater total amount
as the Committee may permit in its sole discretion.  In the event that a Participant elects a
Cumulative Deferral Amount or increase in reduction of Earnings that would
violate the limitation described in this paragraph (c), the election shall be
valid except that the Cumulative Deferral Amount or increase in reduction of
Earnings so elected shall automatically be reduced to comply with such
limitation, whichever is most appropriate in the sole discretion of the
Committee.


 


4.2                               Deferral
Accounts.  The Committee shall
establish and maintain a separate Deferral Account for each Participant. The
amount by which a Participant’s Earnings are reduced pursuant to Section 4.1
shall be credited by the Employer to the Participant’s Deferral Account on the
fifteenth (15th) day of the month in which such Earnings would otherwise have
been paid.  The Participant’s Deferral
Account shall be credited with the annual SRSP lost Matching Allocation on 


 


5

















 


January 15
following the year of the lost Matching Allocation.  Effective for Plan Years beginning on and
after January 1, 1997, Participants ceased to be eligible for the annual
SRSP lost Matching Allocation.  Such
Deferral Account shall be debited by the amount of any payments made by the
Employer to the Participant or the Participant’s Beneficiary pursuant to this
Plan.


 


(a)                                Normal
and Early Retirement Interest.  Each
Deferral Account of a Participant who retires as a Normal or Early Retirement
shall be deemed to bear interest, in accordance with Appendix A, Section 1,
from the date such Deferral Account was established through the date of
commencement of payment of the Normal or Early Retirement Benefit at a rate
equal to the Declared Rate which is announced by the Committee for each Plan
Year.  Following the date of commencement
of payment of the Normal or Early Retirement Benefit, a Participant’s Deferral
Account shall be deemed to bear interest on the balance of such Deferral
Account in accordance with Appendix A, Section 2.


 


(b)                               Other
Interest.  In the case of any
Termination of Employment other than by Normal or Early Retirement or upon the
Participant’s termination of enrollment in this Plan pursuant to Section 5.2(b),
the Participant’s Deferral Account shall be deemed to bear interest from the
date such Deferral Account was established through the date of the earlier of
Termination of Employment or termination of enrollment in this Plan under Section 5.2(c) on
the balance in such Deferral Account in accordance with Appendix A, Section 1,
except that the interest rate used to calculate interest earned in the Deferral
Account shall be ten percent (10%) per annum, provided, however, that if more
than five (5) years have elapsed since the first day of the Benefit
Deferral Period, the Participant’s Deferral Account shall be deemed to bear
interest from the date such Deferral Account was established through the date
of the earlier of Termination of Employment or termination of enrollment in
this Plan on the balance in such Deferral Account at a rate equal to the
Declared Rate which is announced by the Committee for each Plan Year, in
accordance with Appendix A, Section 1. 
Following the earlier of the date of commencement of payment of the
Termination Benefit or the date of termination of enrollment in this Plan, a
Participant’s Deferral Account shall be deemed to bear interest on the balance
in such Deferral Account in accordance with Appendix A, Section 1, if the
Participant is in Active Status with respect to the Deferral Account or in
accordance with Appendix A, Section 2, if the Participant is in Pay Status
with respect to the Deferral Account. 
However, in either case the interest rate used to calculate interest
earned in the Deferral Account shall be twelve percent (12%) per annum.  Notwithstanding anything contained herein to
the contrary, if a Participant has begun receiving benefits under this Plan and
the calculation of future benefits, using the method of calculation set forth
on Appendix A causes a reduction in benefits, the future payments shall be made
in accordance with the method used at the time of the Participant’s initial
payment.


 


4.3                               Rollover
Deferred Compensation Account.  In
its sole discretion, the Committee may permit a Participant to make a special
rollover election to transfer any amounts which were previously deferred under
the Company’s existing deferred compensation plans to this Plan.  Notwithstanding the foregoing, no such
special rollover elections or transfers to this Plan shall be permitted after December 31,
2008.


 


In such event, the Committee shall establish and maintain a separate
Rollover Deferral Account for each Participant who makes a rollover transfer to
this Plan.  Such Rollover Deferral
Account shall be deemed to bear interest at the same rate and subject to the
same conditions as other Deferral Accounts pursuant to Section 4.2.  Each Participant who makes a rollover
transfer to a 


 


6

















 


Rollover Deferral
Account shall be treated for purposes of determining benefits under the Plan as
having a separate Cumulative Deferral Amount and Deferral Account which shall
initially be in the amount of the rollover transfer.  A Participant who makes a rollover transfer
shall be deemed to waive all rights under the Company’s existing deferred
compensation plans from which rollover transfers are made with respect to the
amounts transferred to this Plan, including the right to make elections
regarding the time or manner of payment as permitted thereunder. Rollover
transfers shall be subject to the minimum deferral amount set forth in Section 4.1(a),
but shall not be subject to any maximum deferral limitation.


 


4.4                               Valuation
of Accounts.  The value of a Deferral
Account as of any date shall equal the amounts theretofore credited to such
account less any payments debited to such account plus the interest deemed to
be earned on such account in accordance with Section 4.2.  Interest shall be credited in accordance with
Appendix A.


 


4.5                               Statement
of Accounts.  The Committee shall
submit to each Participant, within one hundred twenty (120) days after the
close of each Plan Year, a statement in such form as the Committee deems
desirable setting forth the balance standing to the credit of each Participant
in his Deferral Account.


 


4.6                               No
Future Deferrals.   No Employee or
Participant can make additional deferrals into the Plan.


 


ARTICLE 5


BENEFITS


 


5.1                               Normal
or Early Retirement.  Upon a
Participant’s Normal or Early Retirement, the payment of benefits shall
commence on the first day of the month following such Termination of
Employment, or following such later date which the Participant elected in his
Enrollment Agreement (including any authorization form).  A Participant may elect in his Enrollment
Agreement (including any authorization form) to have payments commence from one
(1) to ten (10) years following Termination of Employment, but not
later than age 65 (or five (5) years after the first day of the Benefit
Deferral Period, if later).


 


(a)                                Single
Participant.  In the case of a
Participant who is single when payments commence, the Employer shall make
periodic payments to the Participant in an amount in accordance with Appendix
A, Section 2.B., for the life of the Participant, but not less than
fifteen (15) years.  The payments shall
be the actuarial equivalent of the aggregate of the Participant’s Deferral
Account at the time payments commence and the interest that will accrue on the
unpaid balance in such Deferral Account during the payment period pursuant to Section 4.2(a).  The payment amount will be redetermined
annually to reflect the changes in the Declared Rate.


 


(b)                               Married
Participant.  In the case of a
Participant who is married when payments commence, the Employer shall make
actuarially reduced payments in accordance with Appendix A, Section 2.B.,
to the Participant for his life and thereafter, if the Participant is survived
by a spouse who was married to the Participant when Normal or Early Retirement
Benefit payments commenced, shall continue to make payments to the Participant’s
spouse for 


 


7

















 


his life, with payments to be made for an aggregate period of not less
than fifteen (15) years.  The payments
shall be the actuarial equivalent of the payments which would be made to the
Participant pursuant to Section 5.1(a) if he were single.  The monthly amount of payments will be
redetermined annually to reflect changes in the Declared Rate.


 


5.2                               Termination
Benefit.


 


(a)                                Terminations
of Employment.  If a Participant has
a Termination of Employment for any reason other than death or Normal or Early
Retirement, the Employer shall pay to the Participant in one immediate lump sum
an amount (the “Termination Benefit”) equal to the value of the Deferral
Account as of the date of payment and such Participant shall be entitled to no
further benefits under this Plan.  Upon
Termination of Employment (as defined in paragraph (a) of that definition)
the Participant shall immediately cease to be eligible for any benefits under
the Plan other than the Termination Benefit. 
Payment will be made as soon as practicable but not more than 90 days following
the Participant’s Termination of Employment or at such later time provided in Section 5.3.  Except as provided in paragraph (b) below,
no other benefit shall be payable to either the Participant or any Beneficiary
of such Participant.


 


(b)                               Certain
Terminations of Employment.  If a
Participant has a Termination of Employment after attaining age 50, but prior
to attaining age 55, and the Participant has worked for the Company for at
least 10 years, and has received an ICP Contract under the Company’s Income
Continuance Policy that is signed by Participant and Company and not rescinded,
the Participant will be entitled to an additional, immediate lump sum
distribution equal to the difference between:


 


(i) The actuarial equivalent lump sum value of
the periodic payments scheduled to be made to the Participant determined in
accordance with Appendix A, Section 2.B for the life of the Participant,
but not less than fifteen (15) years payments; and


 


(ii)  The value of the Participant’s Deferral
Account.


 


(c)                                Termination
of Enrollment in Plan.  With the
written consent of the Committee, a Participant may terminate his enrollment in
the Plan by filing with the Committee a written request to terminate
enrollment.  The Committee will consent
to the termination of a Participant’s enrollment in the Plan in the event of an
unforeseeable financial emergency of the Participant.  An unforeseeable financial emergency shall
mean an unexpected need for cash arising from an illness, casualty loss, sudden
financial reversal or other such unforeseeable occurrence, but only if and to the extent such
unforeseeable emergency constitutes an “unforeseeable emergency” under Code
section 409A.  Cash needs arising
from foreseeable events such as the purchase of a house or education expenses
for children shall not be considered to be the result of an unforeseeable
financial emergency.  Upon termination of
enrollment, no further reductions shall be made in the Participant’s Earnings
pursuant to his Enrollment Agreement, and the Participant shall immediately
cease to be eligible for any benefits under the Plan other than the Termination
Benefit.  No other benefit shall be
payable to either the Participant or any Beneficiary of such Participant.  In its sole discretion, to the extent
necessary to relieve the unforeseeable emergency, the Committee may pay such
benefit on a date earlier than the Participant’s Termination of Employment with
the Employer.  Following termination of
enrollment in the Plan, a Participant’s Deferral Account shall be deemed to
bear interest on the 


 


8

















 


balance in such Deferral
Account in accordance with Appendix A, Section 1, except that the interest
rate used to calculate interest earned in the Deferral Account shall be twelve
percent (12%) per annum.


 


5.3                                         Lump
Sum Election.  Other provisions of Section 5.1
and Section 5.2 notwithstanding, if a Participant in his Enrollment
Agreement (including any authorization form) has elected a lump sum payment to
be made after his Termination of Employment, the amount of his Deferral Account
(including interest) for the Benefit Deferral Period covered by that Agreement
shall be paid to the Participant in a lump sum at the time specified in that
Agreement.


 


5.4                                         [Deleted]


 


5.5                               Survivor
Benefits.  Paragraphs (a) and (b) shall
apply to Participants whose death occurs prior to Termination of
Employment.  Paragraph (c) reflects
the survivor benefit rules that apply to annuity benefits that are payable
on account of a Participant’s Termination of Employment.


 


(a)                      If a
Participant dies prior to his or her Termination of Employment prior to
attaining age 55, the Employer will pay to the Participant’s Beneficiary an
annual benefit for the greater of:


 


(i)  ten (10) years,
or


 


(ii)  until
the Participant would otherwise have attained age 65,


 


in an amount equal to
fifty percent (50%) of the Cumulative Deferral Amount; provided, however, if
the Committee determines that installment distribution of the Participant’s
Deferral Account (determined below) would produce a greater benefit, such
Deferral Account balance shall be paid to the Participant’s Beneficiary in
equal annual installments in accordance with Appendix A, Section 2.C.2,
but over the period specified above. 
Payments will commence immediately (within 60 days) following the
Participant’s death, and will be made each subsequent anniversary of the
Participant’s death.


 


(b)                     If a
Participant dies prior to Termination of Employment after attaining age 55, the
Employer will pay to the Participant’s Beneficiary the benefit that such
Participant would have received had the Participant retired on the day prior to
such Participant’s death.  Payments will
commence immediately (within 60 days) following the Participant’s death, and
will be made each subsequent anniversary of the Participant’s death.  Additionally, if the present value of the
benefit described in this Section 5.5(b) is less than the present
value of the benefit described in Section 5.5(a), using in each case
twelve percent (12%) as the discount factor, then the Beneficiary shall receive
an immediate lump sum payment equal to difference of such present values.


 


(c)                      If a
Participant (who was unmarried at the commencement of the payment of any Early
or Normal Retirement Benefit, or whose spouse who was married to the
Participant at the time of commencement of payment of any Early or Normal
Retirement Benefit predeceases the Participant) dies after the commencement of
the payment of any Early or Normal Retirement Benefit, the Employer will pay to
the Participant’s Beneficiary the remaining installments of any such benefit
for the balance of the fifteen (15) years minimum payment period.  If a spouse who was married to the
Participant at the time of commencement of payment 


 


9

















 


of the Early or Normal
Retirement Benefit survives beyond such fifteen (15) years minimum payment
period, payments shall continue to be made to the spouse until the spouse’s
death.  If the spouse who was married to
the Participant at the time of commencement of payment of the Early or Normal
Retirement Benefit survives the Participant, but does not survive past the
fifteen (15) years minimum payment period, the Employer will pay to the
Participant’s Beneficiary the remaining installments of any such benefit for
the balance of the fifteen (15) years minimum payment period.  In computing any benefits to be paid
following the Participant’s death pursuant to this paragraph (c), the
Participant’s Deferral Account shall be deemed to bear interest following the
Participant’s death on the balance in such Deferral Account annually in
accordance with Appendix A, Section 2.B.


 


5.6           Small Benefit.  Subject to Section 5.8, in the event that the vested Deferral
Account balance under the Plan of a Participant who has died or experienced a
Termination of Employment is less than the applicable dollar amount under Code
section 402(g)(1)(B) for that Plan Year as of the date on which the
Company makes such determinations, the Company reserves the right to have the
Participant’s entire Deferral Account paid in the form of a single lump sum
payment provided the Company’s exercise of discretion complies with the
requirements of Treas. Reg. Sec. 1.409A-3(j)(4)(v).


 


5.7           Withholding.  To the extent required by the law in effect
at the time payments are made, the Employer shall withhold from payments made
hereunder the minimum taxes that the Employer reasonably determines is required
to be withheld by the federal or any state or local government.


 


5.8           Delay in Payment Required by Code Section 409A.  Notwithstanding any other provision in this Article 5,
if a Participant is a Specified Employee at Termination of Employment, then any
distributions arising on account of the Participant’s Termination of Employment
(other than on account of death) shall be suspended and not be made until (6) months
have elapsed since such Participant’s Termination of Employment (or, if
earlier, upon the date of the Participant’s death).  Any payments that were otherwise payable
during the six-month suspension period referred to in the preceding sentence,
will be paid within 60 days after the end of such six-month suspension period. 
During the six-month suspension period, delayed payments will earn
interest at the Declared Rate.


 


5.9           Acceleration of Distributions.  The Committee in its sole discretion may
exercise discretion to accelerate the distribution of any payment under this
Plan to the extent allowed under Code section 409A.


 


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


 


10














 


ARTICLE 6


BENEFICIARY DESIGNATION


 


Each Participant shall
have the right, at any time, to designate any person or persons as Beneficiary
or Beneficiaries to whom payment under this Plan shall be made in the event of
the Participant’s death prior to complete distribution to the Participant of
the benefits due under the Plan.  Each
Beneficiary designation shall become effective only when filed in writing with
the Committee during the Participant’s lifetime on a form prescribed by the
Committee.


 


The filing of a new
Beneficiary designation form will cancel all Beneficiary designations
previously filed.  Any finalized divorce
or marriage (other than a common law marriage) of a Participant subsequent to
the date of filing of a Beneficiary designation form shall revoke such
designation unless in the case of divorce the previous spouse was not
designated as Beneficiary and unless in the case of marriage the Participant’s
new spouse had previously been designated as Beneficiary.  The spouse of a married Participant domiciled
in a community property jurisdiction shall join in any designation of
Beneficiary or Beneficiaries other than the spouse.


 


If a Participant fails to
designate a Beneficiary as provided above, or if his Beneficiary designation is
revoked by marriage, divorce, or otherwise without execution of a new
designation, or if all designated Beneficiaries predecease the Participant or
die prior to complete distribution of the Participant’s benefits, then the
Committee shall direct the distribution of such benefits to the Participant’s
estate.


 


ARTICLE 7


AMENDMENT AND TERMINATION OF PLAN


 


7.1           Amendment.  The Board of Directors of the Company may at
any time amend the Plan, in whole or in part for any reason, including but not
limited to tax, accounting or insurance changes, a result of which may be to
terminate the Plan for future deferrals (excluding from such power to terminate
future deferrals those future deferrals provided for in Section 5.4 Early
Payout Option); provided, however,
that no amendment shall be effective to decrease the benefits, nature or
timing thereof payable under the Plan to any Participant with respect to
deferrals made (and benefits thereafter accruing) prior to the date of such
amendment.  Written notice of any
amendment shall be given each Participant then participating in the Plan.  Notwithstanding the above, the Board
authorizes the Committee to amend the Plan to make any other amendments to this
Plan deemed necessary or desirable by the Committee for the operation and
administration of this Plan provided such amendment does not have a material
financial impact on the Company.  Such
changes will be considered an Amendment to this Plan and shall be effective
without further action by the Board.


 


7.2           Termination of Plan.  The Plan shall terminate only under the
following circumstances.


 


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


 


11

















 


Participant.  Upon any such termination of the Plan, the Employer
will pay the respective Participant the value of the Participant’s Deferral
Accounts in an immediate lump sum, determined as if the Participant had a
Termination of Employment on the date of such termination of the Plan as
provided under Section 5.2(a) hereof.


 


(b)           Plan Termination and Liquidation on Account
of a Change-in-Control.  Upon a Change-in-Control, as defined in Section 7.3
hereof, the Plan will terminate and payment of all amounts under the Plan will
be accelerated if and to the extent provided in this Section 7.2(b) hereof.


 


(i)            The Plan will be terminated effective as of
the first date on which there has occurred both (i) a Change-in-Control
under Section 7.3(a), and (ii) a funding of the trust on account of
such Change-in-Control (referred to herein as the “Plan termination effective
date”) unless, prior to such Plan termination effective date, the Board
affirmatively determines that the Plan will not be terminated as of such
effective date. The Board will be deemed to have taken action to irrevocably
terminate the Plan as of the Plan termination effective date by its failure to
affirmatively determine that the Plan will not terminate as of such date.


 


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


 


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


 


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


 


 


(B)         If the Change-in-Control does not qualify as a “change in control event”
for purposes of Code section 409A, payment of all amounts under the Plan will
be accelerated and made in a lump sum as soon as administratively practicable
but not more than 90 days following the 12 month anniversary of the Plan
termination effective date, provided the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix)(C) have
been satisfied.


 


(iv)          Any lump sums paid
pursuant to this Section 7.2(b) will be calculated as provided in
Appendix B of the Target Corporation Deferred Compensation Trust Agreement.


 


12

















 


7.3           Change-in-Control
Definition.


 


(a)           A “Change-in-Control” shall be deemed to have occurred if:


 


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


 


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


 


(B)           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


 


(ii)                           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
subparagraph (iii) apply, or


 


(iii)                          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 


 


13

















 


Business Combination,
beneficially owns, directly or indirectly, 100% of the outstanding voting stock
(or comparable equity interests) of the surviving or acquiring entity), or


 


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


 


For purposes of this 7.3, “Voting
Stock” has the same meaning as defined in Article IV of the Restated
Articles of Incorporation, as amended, of the Company.


 


ARTICLE 8


MISCELLANEOUS


 


8.1              Unsecured
General Creditor.  Participants and
their Beneficiaries, heirs, successors, and assigns shall have no legal or
equitable rights, claims, or interests in any specific property or assets of
Employer, nor shall they be beneficiaries of, or have any rights, claims, or
interests in any life insurance policies, annuity contracts, or the proceeds
therefrom owned or which may be acquired by Employer (“Policies”).  Such Policies or other assets of Employer
shall not be held under any trust for the benefit of Participants, their
Beneficiaries, heirs, successors, or assigns, or held in any way as collateral
security for the fulfilling of the obligations of Employer under this
Plan.  Any and all of Employer’s assets
and Policies shall be, and remain, the general, unpledged, unrestricted assets
of Employer.  Employer’s obligation under
the Plan shall be merely that of an unfunded and unsecured promise of Employer
to pay money in the future.


 


8.2              Nonassignability.  Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, or
interest therein which are, and all rights to which are, expressly declared to
be unassignable and non-transferable.  No
part of the amounts payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant’s or any other
person’s bankruptcy or insolvency.


 


8.3              Employment
Not Guaranteed.  Nothing contained in
this Plan nor any action taken hereunder shall be construed as a contract of
employment or as giving any Employee any right to be retained in the employ of
the Employer.


 


8.4              Protective
Provisions.  Each Participant shall
cooperate with the Employer by furnishing any and all information requested by
the Employer in order to facilitate the payment of benefits hereunder, taking
such physical examinations as the Employer may deem necessary and taking such
other relevant action as may be requested by the Employer.  If a Participant refuses so to cooperate, the
Employer shall have no further obligation to the Participant under the Plan,
other than payment to such Participant of the cumulative reductions in Earnings
theretofore made pursuant to this Plan. 
If a Participant commits suicide during the two (2) year period
beginning on the later of (a) the date of adoption of this Plan or (b) the
first day of the first Plan Year of such Participant’s participation in the


 


14

















 


Plan, or if the Participant makes any material
misstatement of information or nondisclosure of medical history, then no
benefits will be payable hereunder to such Participant or his Beneficiary,
other than payment to such Participant of the cumulative reductions in Earnings
theretofore made pursuant to this Plan, provided, that in the Employer’s sole
discretion, benefits may be payable in an amount reduced to compensate the
Employer for any loss, cost, damage or expense suffered or incurred by the Employer
as a result in any way of such misstatement or nondisclosure.


 


8.5              Gender,
Singular and Plural.  All pronouns
and any variations thereof shall be deemed to refer to the masculine or
feminine as the identity of the person or persons may require. As the context
may require, the singular may be read as the plural and the plural as the
singular.


 


8.6              Captions.  The captions of the articles, sections, and
paragraphs of this Plan are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.


 


8.7              Validity.  In the event any provision of this Plan is
held invalid, void, or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.


 


8.8              Notice.  Any notice or filing required or permitted to
be given to the Committee under the Plan shall be sufficient if in writing and
hand delivered, or sent by registered or certified mail, to the principal
office of the Employer, directed to the attention of the President of the
Employer.  Such notice shall be deemed
given as of the date of delivery or, if delivery is made by mail, as of the
date shown on the postmark on the receipt for registration or certification.


 


8.9              Applicable
Law.  This Plan shall be governed and
construed in accordance with the laws of the State of Minnesota as applied to
contracts executed and to be wholly performed in such state.


 


15

















 


APPENDIX
A


Section 1


 


Participant Deferral Account Interest Crediting
While in Active Status Assuming No Further Deferrals


 


A.    A Participant shall receive
interest credited monthly equal to the Participant’s beginning-of-year (BOY)
Deferral Account balance times the Declared Rate divided by twelve:


 


Interest crediting occurs up to the day the
Participant begins to receive annuity payments from the Plan.


 


Example of interest credited calculation


 


	
  BOY Deferral
  Account balance at 1/1/99

  	
  = $500,000.00

  
	
  Declared Rate

  	
  = 13.7%

  
	
  Declared Rate divided by 12  = 13.7%/12 =
  1.1417%

  
	
  Credited interest for each month of 1999

  	
  = $500,000  ́
  .011417 = $5,708.50

  



 


B.    A participant’s Deferral
Account balance shall be increased each month by taking the beginning-of-month
(BOM) balance plus interest credited for the month to equal the end-of-month
(EOM) balance.


 


	
  BOM balance +
  monthly interest credited = EOM balance

  
	
   

  	
   

  
	
  Example of
  monthly account growth

  	
   

  
	
   

  	
   

  
	
  BOM balance at
  1/1/99

  	
  = $500,000.00

  
	
  Monthly
  crediting dollars for 1998

  	
  = $5,708.50

  
	
  EOM at 1/31/99

  	
  = $500,000.00 +
  5,708.50 = $505,708.50

  
	
  EOM at 2/28/99

  	
  = $505,708.500 +
  5,708.50 = $511,417.00

  



 


16

















 


Section 2:


Interest Crediting, Deferral Account Balances, and
Payments While in Pay Status


 


A.            Definition of
Variables for Participant Payment Calculation


 


1.     “n” = number of payments
expected to be made to a Participant and spouse. The number of expected
payments shall be determined by: (1) The ages of the Participant and
spouse at the time annuity payments first begin. (2) The number of years
that the Participant and spouse are expected to live, as determined by an
actuarially-based mortality table selected by the Committee. (3) The
frequency of payments made to the Participant. This frequency shall be
determined by the payroll procedures of the Company’s operating division
responsible for administering the Participant’s payments.


 


Example of number of expected payments (assuming payments to begin on
10/1/99)


 


	
  Frequency of payments

  	
  = monthly

  
	
  Participant age on 10/1/99

  	
  = 50 yrs. old

  
	
  Spouse age on 10/1/99

  	
  = 48 yrs. old

  
	
  Participant’s and spouse’s joint expected remaining
  lives

  	
  = 476 months

  
	
  “n” for 10/1/99

  	
  = 476

  
	
  “n” for 1/1/00

  	
  = 473

  
	
  “n” for 1/1/01

  	
  = 461

  



 


2.     “i” = interest rate per
payment period such that when compounded over the entire year equals the
Declared Rate.


 


“i” shall be expressed either as a weekly or monthly interest rate,
depending on the frequency of annuity payments made by the operating division
administering the Participant’s payments. If weekly, “i” is the interest rate
that, when compounded over 52 periods, will equal the Declared Rate. If
monthly, “i” is the interest rate that, when compounded over 12 periods, will
equal the Declared Rate.


 


Example of weekly and monthly interest rates


 


Declared Rate = 13.7%


Weekly “i” = (1.137)1/52 = .002472 or .2472%


Monthly “i” = (1.137)1/12 = .010757 or 1.0757%


 


3.     The beginning-of-period
balance (BOP balance) is the Participant’s Deferral Account balance at any time
before credited interest has been added for the period and payments have been
subtracted for the period.


 


End-of-period balance (EOP balance) is the Participant’s Deferral
Account balance at any point in time after credited interest has been added for
the period and payments have been subtracted for the period.


 


Example of EOP balance calculation


 


EOP balance = BOP balance + interest crediting – payment


 


17

















 


B.    Payments


 


1.     Calculation of payments


 


At the beginning of each year (or at the beginning of a month when a
Participant’s Deferral Account is first transferred from active status to
payment status), a payment shall be calculated for each Participant who has a
Deferral Account that is in the payment status. The periodicity of payments
shall depend on the payroll procedures of the operating division administering
the Participant’s payments. The amount of the payment shall be effective for
that calendar year (or portion of the calendar year).


 


The calculation of the payment amount is based on the present value of
an annuity formula. Specifically, the payment is given by:


 





 


Example of a calculation
with monthly payments


 


n = 476 months


Monthly i = 1.0757%


BOP balance = $500,000.00


Payment = $5,411.73


 


Example of a calculation
with weekly payments


 


n = 2,070 weeks


Weekly i = 0.2472%


BOP balance = $500,000.00


Payment = $1,243.50


 


2.     Interest Crediting for
Payments


 


Interest crediting shall be calculated every payment
period, with the interest amount equal to the beginning-of-period Deferral
Account balance times the periodic interest rate


 


Example of interest
crediting calculation (assuming monthly payments and a 13.7% Declared Rate)


 


BOP balance = $500,000.00


Monthly i = 1.0757%


Interest crediting = $500,000.00  ́
..010757 = $5,378.50


 


18

















 


3.     Amortization of Participant
Deferral Account Balances


 


Participant Deferral Account balances shall be
amortized over the remaining number of expected 
payment periods by adding to the beginning-of-period balance the
interest credits earned during the period less the payment made for the period
to produce an end-of-period Deferral Account balance.


 


Example of Deferral
Account balance amortization (assuming monthly payments and a 13.7% Declared
Rate)


 


BOP balance = $500,000.00


Monthly i = 1.0757%


Interest crediting = $5,378.50


Payment = $5,411.73


EOP balance = $500,000.00 + $5,378.50 -
$5,411.73 = $499,966.77


 


C.    Installment
Termination Payments


 


1.     [Intentionally left blank.]


 


2.     The four equal annual
installment payments are determined by using the present value of an annuity
formula referenced in Section 2.B.1. of this Appendix. The interest rate
used in calculating the four payments shall be 12%.


 


Example of a four-year annual installment payout of a
Deferral Account balance


 


n = 4


Annual i = 12%


BOP balance = $500,000.00


Annual installment
payments = $164,617.22


 


19