Exhibit 10(D)


 


TARGET CORPORATION


LONG-TERM INCENTIVE PLAN


(As amended and restated on November 12,
2008)


 


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 of the following criteria: pretax operating
contribution; economic value added; consolidated profits of the Company
expressed as a percent; earnings per share; return on capital; return on
investment; return on shareholders’ equity; 


 


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revenue; working capital; pre-tax segment profit; sales volume; return
on sales; comparable store sales; earnings before interest and taxes; earnings
before interest, taxes, depreciation and amortization; return on assets; cash
flow; gross margin rate; expense rate; market price; and total shareholder
return.  Performance Goals may be
absolute in their terms or be measured against or in relationship to other
companies comparably, similarly or otherwise situated. The Plan Committee, in
its sole discretion, may modify the Performance Goals if it determines that
circumstances have changed and modification is required to reflect the original
intent of the Performance Goals; 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). The Plan Committee may in its discretion classify
Participants into as many groups as it determines, and as to any Participant
relate his/her Performance Goals partially, or entirely, to the measured
performance, either absolutely or relatively, of an identified Subsidiary,
operating company or test strategy or new venture of the Company.


 


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:


 


(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 


 


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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 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.


 


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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.


 


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.


 


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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 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:


 


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(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 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 


 


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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
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).


 


12

















 


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 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.


 


13

















 


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, 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 


 


14

















 


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 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 


 


15

















 


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.


 


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 


 


16

















 


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.


 


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:


 


17

















 


(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 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 


 


18

















 


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:


 


(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 


 


19

















 


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.


 


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 


 


20














 


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 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.


 


21

















 


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.


 


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.


 


22

















 


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.


 


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:


 


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(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 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 


 


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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 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 


 


25

















 


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.


 


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.


 


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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.


 


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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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