Document:

Exhibit (10)E

 

DAYTON HUDSON CORPORATION

 

EXECUTIVE LONG TERM INCENTIVE PLAN

OF 1981

 

(As amended and restated on January 10, 2007)

 

 

ARTICLE I

ESTABLISHMENT OF THE PLAN

 

1.1    The
name of this plan shall be “The Dayton Hudson Corporation Executive Long Term
Incentive Plan of 1981” (hereinafter called the “Plan”).

 

1.2    The
purpose of the Plan is to advance the interim performance and long-term growth
of the Company by offering long-term incentives, in addition to current
compensation and other benefits, to those key employees of the Company and its
Subsidiaries who the Plan Committee determines will contribute to such
performance and growth inuring to the benefit of the shareholders of the
Company. Such long-term incentives may take the form of Stock Options, or
Performance Shares, or Restricted Stock Awards or any combination.

 

ARTICLE II

DEFINITIONS

 

2.1    AWARD.      An
“Award” is used at times in the Plan to refer to the act of granting a Stock
Option, Performance Share or Restricted Stock Award under the Plan.

 

2.2    BOARD.      ”Board”
is the Board of Directors of Dayton Hudson Corporation.

 

2.3    CODE.      ”Code”
is the Internal Revenue Code of 1986, as amended, as now in force or as
hereafter amended.

 

2.4    COMPANY.        ”Company” is Dayton Hudson
Corporation, a Minnesota corporation, and any successor thereof.

 

2.5    COVERED
OFFICER.    ”Covered Officer” includes all Participants
whose compensation, in the year in which the Award is made, is subject to the
compensation expense deduction limitations set forth in Section 162(m) of
the Code.

 

2.6    DATE
OF GRANT.    ”Date of Grant” shall be the date designated
in the resolution by the Plan Committee as the date of such Stock Option(s) or
Performance Share(s) or Restricted Stock Award(s), but such date shall not be
earlier than the date of the resolution and action thereon by the Plan
Committee, or earlier than the effective date of the Plan, and in the absence
of a date of grant 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 such Plan Committee’s resolution and action.

 

 

2.7    FAIR
MARKET VALUE.    ”Fair Market Value” of a share of Company
common stock on any date is 100% of the mean between the high and low prices
for such stock as reported for such stock on the New York Stock Exchange
Composite Transactions Listing (“Composite Listing”) on such date, or in the
absence of such report 100% of the mean between the high and low prices of such
stock on the New York Stock Exchange on such date or, if no sale has been
recorded on the Composite Listing or made on such Exchange on such date, then
on the last preceding date on which any such sale shall have been made in the
order of primacy above indicated.

 

2.8    HOLDER.    A
“Holder” is a person who has been granted a Restricted Stock Award.

 

2.9    INCENTIVE
STOCK OPTIONS.    ”Incentive Stock Options” are Stock
Options that are intended to qualify under Section 422 of the Code.

 

2.10  NON-QUALIFIED
OPTIONS.    ”Non-Qualified Options” are Stock Options that
are not intended to qualify under Section 422 of the Code.

 

2.11  PARTICIPANT.    A
“Participant” is a person designated as such by the Plan Committee, pursuant to
Article III hereof, for participation in the Plan.

 

2.12  PERFORMANCE
GOALS.    ”Performance Goals” are defined in Section 4.1
hereof.

 

2.13  PERFORMANCE
PERIOD.    ”Performance Period”, with respect to a
Performance Share, is a period of four consecutive fiscal years of the Company,
beginning with the fiscal year in which such Performance Share is granted and
may be referred to herein and by the Plan Committee by use of the calendar year
in which a particular Performance Period commences.

 

2.14  PERFORMANCE
SHARE.    A “Performance Share” is a potential award
consisting of a right to one share of the Company’s $.3333 par value common
stock (subject to increase as provided in Section 4.2 hereof) or a lesser
number of shares and the cash payment set forth in Section 5.2 hereof. A
Performance Share shall be of no value to a Participant unless and until earned
in accordance with Article V hereof.

 

2.15  PLAN
COMMITTEE.    The “Plan Committee” is the Committee
referenced in Article IX hereof.

 

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

 

2.17  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, 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 if
the Plan Committee affirmatively determines, in its discretion, that such an
adjustment is appropriate.

 

2.18  RESTRICTED
STOCK AWARD.    A “Restricted Stock Award” is an Award
granted under Article VII of this Plan.

 

2.19  STOCK
OPTION.    A “Stock Option” is a right accruing in a
Participant to purchase from the Company one share of the Company’s $.3333 par
value common stock at the Fair Market Value of such share of common stock on
the Date of Grant of the Stock Option, such exercise of option to be made any
time within ten years and one day (ten years with respect to Incentive Stock
Options) following the Date of Grant, and containing the terms and conditions
set forth or allowed under Article VI hereof. Stock Options may be either
Non-Qualified Options or Incentive Stock Options.

 

2.20  SUBSIDIARY
CORPORATION.    For purposes of this Plan, the term “Subsidiary”
or “Subsidiary Corporation” means 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.

 

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

 

(a)  a majority 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

 

(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,

 

(b)  30% or more of the outstanding Voting Stock
(as defined in Article IV of the Restated Articles of Incorporation, as
amended, of the Company) 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), or

 

(c)  the shareholders of the Company approve a
definitive agreement or plan to

 

(i)  merge or consolidate the Company with or into
another corporation (other than (1) a merger or consolidation with a
Subsidiary of the Company or (2) a merger in which the Company is the
surviving corporation and either (A) no outstanding Voting Stock of the

 

 

Company (other than
fractional shares) held by shareholders immediately prior to the merger is
converted into cash (except cash upon the exercise by holders of Voting Stock
of the Company of statutory dissenters’ rights), securities, or other property
or (B) all holders of outstanding Voting Stock of the Company (other than
fractional shares) immediately prior to the merger (except those that exercise statutory
dissenters’ rights) have substantially the same proportionate ownership of the
Voting Stock of the Company or its parent corporation immediately after the
merger),

 

(ii)  exchange, pursuant to a statutory exchange of
shares of Voting Stock of the Company held by shareholders of the Company
immediately prior to the exchange, shares of one or more classes or series of
Voting Stock of the Company for shares of another corporation or other
securities, cash or other property,

 

(iii)  sell or otherwise dispose of all or
substantially all of the assets of the Company (in one transaction or a series
of transactions) or

 

(iv)  liquidate or dissolve the Company.

 

ARTICLE III

GRANTING OF STOCK OPTIONS, PERFORMANCE SHARES

AND RESTRICTED STOCK AWARDS TO PARTICIPANTS

 

3.1      ELIGIBLE
EMPLOYEES.    Stock Options, Restricted Stock Awards or
Performance Shares may be granted by the Plan Committee to any key employee of
the Company or a Subsidiary Corporation. A Stock Option(s) or Performance
Share(s) or Restricted Stock Award(s) may be granted to a director of the
Company provided that he/she is also at the time of grant a key employee of the
Company or a Subsidiary Corporation. No Stock Option(s) or Performance Share(s)
or Restricted Stock Award(s) shall be granted to a person who is at the time of
award a member of the Plan Committee. A person who has been engaged by the
Company for employment shall be eligible for grants under the Plan, provided
such person actually reports for and commences such employment within ninety days
after 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 key employees of the
Company and its Subsidiaries eligible for Awards.

 

3.3      ALLOCATION
OF STOCK OPTION(S), PERFORMANCE SHARE(S) OR RESTRICTED STOCK
AWARD(S).    Contemporaneously with the designation of a
Participant pursuant to Section 3.2 hereof, the Plan Committee shall
determine the number of Stock Option(s) and/or Restricted Stock Award(s) and/or
Performance Share(s) to be granted to such Participant and the Date of Grant
for such related Stock Option or Performance Share or Restricted Stock Award,
taking into consideration such factors as it deems relevant, which may include
the following:

 

(a)  the total number of Stock Option(s) and/or
Restricted Stock Award(s) and/or Performance Share(s) available for allocation
to all Participants; and

 

 

(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 current and potential
performance in reference to such factors.

 

Allocation of Awards may,
in the discretion of the Plan Committee, be in the form of Stock Option(s)
solely or Performance Share(s) solely, or Restricted Stock Award(s) solely, or
any combination in whatever relationship one to the other, if any, as the Plan
Committee in its discretion so determines. Allocation of Stock Options may, in
the discretion of the Plan Committee, be in the form of Incentive Stock
Option(s) solely or Non-Qualified Option(s) solely or a combination in whatever
relationship 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 (i) his/her designation as a Participant, (ii) the
Date of Grant, and (iii) the number of Stock Option(s), and/or Restricted
Stock Award(s) and/or the number of Performance Share(s) granted to the
Participant, and in the case of Performance Share(s), the Performance Period
and in the case of Restricted Stock Award(s), the Restriction Period. The
Participant shall thereafter be supplied with written evidence of any such
granted Performance Share(s) and/or Restricted Stock Award(s), and shall
receive a Stock Option exercisable for purchase of one share of the Company’s
$.3333 par value common stock for each Stock Option granted to the Participant
pursuant to this Plan or indicating the aggregate of such grant, which option
agreement(s) shall be in conformity with the provisions of Article VI
hereof.

 

ARTICLE IV

PERFORMANCE GOALS AND MAXIMUM AWARD

 

4.1      ESTABLISHMENT
OF GOALS.    Within a reasonable period of time after the
beginning of each Performance Period, Performance Goals relative to such
Performance Period shall be established by the Plan Committee in its absolute
discretion. Such Performance Goals may include, but, except as provided below,
are not limited to, criteria such as PTOC, EVA, amount or rate of growth in
consolidated profits of the Company expressed as a percent, earnings per share,
return on capital, return on investment, return on shareholders’ equity.
Performance Goals for Covered Officers must be based upon one or more of the
foregoing specifically described performance goals. 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. The Plan Committee may in its discretion
classify Participants into as many groups as it determines, and as to any
Participant(s) 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 SHARES.    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 (not to exceed 150% thereof) of the Performance Share(s) 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 may provide
restrictions on the delivery of common stock of the Company upon the earning of
Performance Shares, including the future forfeiture of all or part of the
common stock earned. The Plan Committee may provide that the shares of the
Company’s .3333 par value common stock issued on Performance Shares Earned be
held in escrow and/or legended.

 

4.4      NOTIFICATION
TO PARTICIPANTS.    Promptly after the Plan Committee has
established Performance Goals for a specific Performance Period or modified
such goals, each Participant who has received a grant of any Performance
Share(s) for that period shall be provided with written evidence of the
Performance Goals so established or modified.

 

4.5      During
any Plan Year, no Covered Officer may receive Awards that, in the aggregate,
could result in that Participant receiving, earning or acquiring more than
1,000,000 shares of the Company’s $.3333 par value common stock, subject to the
adjustments described in Section 2.17.

 

ARTICLE V

EARNING OF PERFORMANCE SHARES

 

5.1      MEASUREMENT
OF PERFORMANCE AGAINST PERFORMANCE GOALS.    The Plan
Committee shall as soon as practicable after the close of each Performance
Period, make a determination of:

 

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

 

(b)  the percentage of the Performance Shares
granted for such Performance Period which are earned for such Performance
Period by Participants who have been from his/her date of hire in the
continuous employ of the Company or Subsidiary or a combination thereof, during
the subject Performance Period; and

 

(c)  the percentage of Performance Shares to be
paid in cash, if any. The percentage paid in cash shall be uniform for all
Participants in a particular Performance Period.

 

These determinations
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 Share(s) based
thereon shall be notified, in writing, of the number of Performance Shares so
earned. 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. The
Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of Performance Shares or any part of a Performance Share Award during
the

 

 

Performance Period,
except that Performance Share awards may be transferable by assignment by the
Participant to the extent provided in the applicable Performance Share
agreement.

 

5.2      TREATMENT
OF PERFORMANCE SHARES EARNED.    Upon the determination
that a percentage of the Performance Share(s) has been earned for a Performance
Period, a Participant to whom such earned Performance Share(s) has been granted
and who has been (or was) in the employ of the Company or a Subsidiary thereof
continuously from the date of his/her hire during the subject Performance
Period to which the grant relates, subject to the exceptions set forth at
Section 5.5 and Section 5.6 hereof, shall be entitled, subject to the
other conditions of this Plan, to receive the shares of the Company’s $.3333
par value common stock for each Performance Share earned (less the shares paid
in cash), plus a cash payment in the amount of the Fair Market Value of the
shares of common stock to be paid in cash as determined in
Section 5.1(c) hereof, calculated as of the close of business on the
date of the notice referred to in Section 5.1 hereof. The provisions of
Section 5.5 to the contrary notwithstanding, the Plan Committee may
provide that the issued shares of common stock be held in escrow and/or be
legended and that the common stock be subject to restrictions, including the
future forfeiture of all or a part of the shares. Performance Shares 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
Shares are granted, except as provided at Section 5.5 or Section 5.6
hereof.

 

5.3      STOCK-CASH
DISTRIBUTION.    Each distribution determined in accordance
with Section 5.2 above shall be made as soon as practicable after
Performance Shares have been determined to have been earned unless the
provisions of Section 5.4(a) hereof are applicable to a Participant.

 

5.4(a) DEFERRAL OF RECEIPT OF PERFORMANCE SHARE
EARNOUT.    A Participant who has received a grant of
Performance Shares may by compliance with the then applicable procedures under
the Plan irrevocably elect in writing to defer receipt of all or any part of
the stock-cash distribution associated with the earnout, if any, of the
Performance Shares (the combination thereof hereafter referred to as the “deferred
account”). The deferral shall be effective until the Participant terminates
his/her employment with the Company and its Subsidiaries except as otherwise
provided herein.

 

The
terms and conditions of such deferral, including but not limited to, the period
of time for, and form of, election; the manner and method of payout; the form
in which the deferred account shall be held; the interest equivalent or other
payment that shall accrue upon the deferred account pending its payout; and the
use and form of dividend equivalents in respect of stock units included within
any deferred account, shall be as determined from time to time by the Plan
Committee, which Plan Committee may change any and all of the terms and
conditions at any time applicable to deferrals thereafter made.

 

5.4(b)    AMENDMENT OF DEFERRAL
ARRANGEMENTS.    The Plan Committee may, at any time and
from time to time, but prospectively only except as hereinafter provided,
amend, modify, change, suspend or cancel any and all of the rights, procedures,
mechanics and timing parameters relating to the deferral of receipt of
Performance Share earnout under the Plan as set forth at
Section 5.4(a) hereof. In addition, the Plan Committee may, in its
sole discretion,

 

 

accelerate the payout of
the deferred account, or any portion thereof, either in a lump sum or in a
series of payments, but under the following conditions only:

 

(a)  the Federal tax statutes, regulations or
interpretations are amended, modified, or otherwise changed or affected in such
a manner as to adversely alter or modify the tax effect of the “deferred
account” as it is comprehended under the tax law and interpretations in effect
for deferred accounts as of the effective date of this Plan, or

 

(b)  the deferred account holder suffers or incurs
an event that would qualify for a “withdrawal” of contributions that have not
been accumulated for two years without adverse consequences on the tax status
of a qualified profit-sharing or stock bonus plan under the Federal tax laws
applicable from time to time to such types of plans.

 

5.5  NON-DISQUALIFYING TERMINATION OF
EMPLOYMENT.    Except for Section 5.6 hereof, the only
exceptions to the requirement of continuous employment during a Performance
Period for Performance Share earnout eligibility are termination of a
Participant’s employment by reason of death (in which event the Performance
Shares may be transferable by will or the laws of descent and distribution only
to such Participant’s beneficiary designated to receive the Performance Shares
or to the Participant’s applicable legal representatives, heirs or legatees),
total and permanent disability, 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 share grant. In such
instance an earnout of the Performance Shares shall be made, as of the end of
the Performance Period, and 100% of the total Performance Shares 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 continuous employment with the Corporation or a
Subsidiary or any combination thereof, provided that if the person is not an
Executive Officer (as defined under the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder) of the Corporation at time
of termination such 15 years need not be continuous, the Plan Committee may
allow earn-outs of up to 100% of the total Performance Shares for the
Performance Period(s) in which the termination of employment occurred, subject
to any conditions that the Plan Committee shall determine.

 

5.6      CHANGE
IN CONTROL.    In the event of a Change in Control, all
outstanding Performance Shares granted under the Plan shall be proratably
payable ten days after the Change in Control; provided that no Performance
Share shall be payable to a Participant within six months after the Date of
Grant. The amount of Performance Shares payable shall be determined by
multiplying 100% of each Performance Share grant by a fraction, the numerator
of which shall be the number of months that have elapsed in the applicable
Performance Period and the denominator of which shall be forty-eight.

 

 

ARTICLE VI

STOCK OPTIONS

 

6.1      NON-QUALIFIED
OPTION.    Non-Qualified Options granted under the Plan are
not intended to be Incentive Stock Options under the provisions of
Section 422 of the Code. The Non-Qualified Options shall be evidenced by
Non-Qualified Option 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 and shall, but without limitation, contain in
substance the following terms and conditions:

 

(a)  OPTION PERIOD.    Each
option granted shall expire and all rights to purchase shares thereunder shall
cease ten years and one day after the Date of Grant of the Stock Option or on
such date prior thereto as may be fixed by the Plan Committee, or on such date
prior thereto as is provided by this Plan in the event of termination of
employment or death or reorganization pursuant to
Section 11.8(b) hereof. No option shall permit the purchase of any
shares thereunder during the first year after the Date of Grant of such option,
except as provided in Section 6.3 hereof.

 

(b)  TRANSFERABILITY AND TERMINATION OF
OPTIONS.    During the lifetime of an individual to whom an
option is granted, the 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 option; provided, however, that if the
employment of such Participant by the Company or a Subsidiary Corporation
terminates, the option may additionally be exercised as follows, or in any
other manner provided by the Plan Committee, but in no event later than 10
years and one day after the Date of Grant of the Stock Option, except as set
forth in (ii) below:

 

(i) if a Participant’s
termination of employment occurs by reason of normal or late retirement under
any retirement plan of the Company or its Subsidiaries, such Participant’s
Stock Options may be exercised within five years after the date of such
termination of employment. If a Participant’s termination of employment occurs
by reason of early retirement under any retirement plan of the Company or its
Subsidiaries, or, by reason of the transfer of an executive 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 options, if any, accruing in
installments, shall continue; provided, however, in an early retirement or a
spin-off situation 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 the spin-off entity.

(ii)  if a Participant’s termination of employment
occurs by reason of death, then within five years after the date of death or
the life of the option, whichever is less, but in no

 

 

event less than one year
after the date of death, during which time installments shall continue to
accrue.

 

(iii)  if a Participant’s termination of employment
occurs for any reason other than as specified in Section 6.1(b)(i) or
(ii) hereof, the Participant has been continuously employed by the Company or a
Subsidiary or any combination for more than 15 years, provided that if the person
is not an Executive Officer (as defined under the Securities Exchange Act of
1934, as amended, and the regulations promulgated thereunder) of the
Corporation at the time of termination such 15 years need not be continuous,
and if the Plan Committee so approves, then within a period of up to five years
after the date of termination of employment. During the period the right to
exercise options, if any, accruing in installments shall continue; 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 6.1(b)(i) or (ii) hereof, the Plan Committee has not approved
an extension pursuant to Section 6.1(b)(iii) and Participant’s
termination of employment is not occasioned by the commission of a dishonest or
other illegal act, then, but only with respect to installments that have as of
the date of termination already accrued, 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
Securities Exchange Act of 1934, in which instance the period of exercise shall
be two hundred ten days after termination. Those Participants terminated
because of the commission of a dishonest or other illegal act shall have no
additional period after termination of employment in which to exercise their
options. 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.

 

(v) Rights accruing to a
Participant under the aforesaid Subsections (b)(i), (b)(iii) and
(b)(iv) may, upon the death of a Participant subsequent to his/her
termination of employment, be exercised or perfected 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.

 

No 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 (Y) by will or the laws of descent and distribution in accordance
with the provisions of this Plan. An option transferred after the death of the
Participant to whom it is granted 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
6.1(b)(ii).

 

 

In no event, whether by the Participant directly or by
his/her proper assignee or beneficiary or other representative, shall any
option be exercisable at any time after its expiration date as stated in the
option agreement, except as provided in Section 6.1(b)(ii). 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, but shall not be required to, 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.

 

(c)  EXERCISE OF OPTIONS.    An
individual entitled to exercise an option may, subject to its terms and
conditions and the terms and conditions of the Plan, exercise it in whole at
any time, or in part from time to time, by delivery to the Company at its principal
office of written notice of exercise, specifying the number of whole shares
with respect to which the option is 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 11.9 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 delivering owned
and unencumbered shares of the Company common stock having a Fair Market Value
on the date of exercise of the option equal to or less than the exercise price
of the options exercised, with cash, as set forth above, for the remainder, if
any, of the purchase price. Subject to rules established by the Plan
Committee, the withholdings required by Section 11.9 hereof may be
satisfied by the Company withholding shares of Company common stock issued on
exercise that have a Fair Market Value on the date of exercise of the option
equal to or less than the withholding required by Section 11.9 hereof.

 

6.2      INCENTIVE
STOCK OPTION.    Incentive Stock Options granted under the
Plan 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. The Incentive Stock Options shall be evidenced by
Incentive Stock Option 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.

 

 

The terms and conditions set forth in Subsections
(a) through (c) of Section 6.1 hereof shall apply to an
Incentive Stock Option; provided that the term of the Incentive Stock Option
shall not exceed ten years; and provided, further, that in the event Section 6.1(b)(i) hereof
is applicable, all installments shall become immediately exercisable.

 

6.3      CHANGE
IN CONTROL.    In the event of a Change in Control, all
outstanding options granted under the Plan shall accelerate and will be
exercisable in full for a period of two hundred ten (210) days after the Change
in Control; provided that no option shall be exercisable by a Participant
(i) within six months after the Date of Grant of the option or
(ii) after the termination date of the option.

 

ARTICLE VII

RESTRICTED STOCK

 

7.1      RESTRICTION
PERIOD TO BE ESTABLISHED BY THE PLAN COMMITTEE.    At the
time a Restricted Stock Award is made, the Plan Committee shall establish a
period of time (the “Restriction Period”) applicable to such Award, which shall
be not less than three years. Each Restricted Stock Award may have a different
Restriction Period, at the discretion of the Plan Committee. Except as
permitted or pursuant to Sections 7.4, 7.5 or 11.8 hereof, the Restriction
Period applicable to a particular Restricted Stock Award shall not be changed.

 

7.2      OTHER
TERMS AND CONDITIONS.    Company common stock awarded
pursuant to a Restricted Stock Award shall be represented by a stock
certificate registered in the name of the Holder of such Restricted Stock
Award. The Holder shall have the right to enjoy all shareholder rights during
the Restriction Period with the exception that:

 

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

 

(ii)  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 Company common stock
during the Restriction Period.

 

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

 

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

 

(v)  Dividends payable in cash or in shares of
stock or otherwise may be either currently paid or withheld by the Company for
the Holder’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 7.4 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.

 

7.3      PAYMENT
FOR RESTRICTED STOCK.    A Holder shall not be required to
make any payment for Company common stock received pursuant to a Restricted
Stock Award, unless the Plan Committee requires payment for such stock in the
Restricted Stock Award.

 

7.4      FORFEITURE
PROVISIONS.    Subject to Section 7.5, in the event a
Holder terminates employment during a Restriction Period, a Restricted Stock
Award will be forfeited; provided, however, when the Plan Committee issues the
Restricted Stock Award, it may provide in the Restricted Stock Award agreement
for proration or full payout in the event of a termination of employment
because of normal or late retirement, early retirement or spin-off with the
consent of the Plan Committee, or death or total and permanent disability, as
determined by the Plan Committee, or termination of employment after 15 years
of continuous employment with the Corporation or a Subsidiary or any
combination thereof, provided that if the person is not an Executive Officer (as
defined under the Securities Exchange Act of 1934, as amended, and the
regulations promulgated thereunder) of the Corporation at the time of
termination such 15 years need not be continuous, subject to any other
conditions the Plan Committee may determine.

 

7.5      CHANGE
IN CONTROL.    In the event of a Change in Control, all
outstanding Restricted Stock Awards granted under the Plan will be proratably
payable ten days after the Change in Control; provided that no Restricted Stock
Award shall be payable to a Participant within six months after the Date of
Grant. The amount of Company common stock payable shall be determined by
multiplying each Restricted Stock Award granted by a fraction, the numerator of
which shall be the number of months that have elapsed in the applicable
Restriction Period and the denominator of which shall be the number of months
in the Restriction Period.

 

ARTICLE VIII

SHARES OF STOCK SUBJECT TO THE PLAN

 

8.1      The
total number of shares that may be available for issuance under all Performance
Shares, Stock Options and Restricted Stock Awards granted pursuant to the Plan
shall not exceed in the aggregate 18,600,000 shares of the Company’s $.3333 par
value common stock. Shares covered by granted Performance Shares which are not
earned pursuant to any of the provisions of Article V hereof, or Stock
Options or Performance Shares or Restricted Stock Awards which are forfeited
for any reason or are not distributed or are covered by options that lapse or
are cancelled before exercise, shall (unless the Plan shall have been
terminated) again be available in the same relative amounts for other
Performance Share, Restricted Stock Award and Stock Option grants under the
Plan (except for shares for which cash equivalent payments are received by
Participants pursuant to the Plan), except that 660,825 shares for Stock
Options, Performance Shares or

 

Restricted Stock Awards
that were outstanding on April 10, 1991 that are not earned or are
forfeited for any reason or are not distributed or lapse or are cancelled
before exercise shall be available for future grants and any additional shares
for Stock Options, Performance Shares or Restricted Stock Awards that were
outstanding on April 10, 1991 that are not earned or are forfeited for any
reason or are not distributed or lapse or are cancelled before exercise shall
not be available for future Performance Shares, Restricted Stock Awards or
Stock Option Grants. Such shares may be authorized and unissued shares, or may
be treasury shares held by the Company or may be shares purchased or held by
the Company or a Subsidiary for purposes of the Plan, or any combination
thereof.

 

ARTICLE IX

ADMINISTRATION OF THE PLAN

 

9.1      The
Plan will be administered by a committee of the Board appointed from time to
time by the Board. Each member of the committee shall be a “non-employee
director” as that term is defined under Rule 16b-3, promulgated under the
Securities Exchange Act of 1934, as amended, or any successor statute or
regulation comprehending the same subject matter.

 

9.2      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.

 

9.3      All
questions arising under the Plan, any Incentive Stock Option, Non-Qualified
Stock Option, Performance Share or Restricted Stock 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.

 

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

 

ARTICLE X

REDUCTION IN AWARDS

 

10.1    Anything
in this Plan to the contrary notwithstanding, the provisions of this
Article X shall apply to a Participant if Ernst & Young
determines that each of (a) and (b) below are applicable.

 

(a) Payments or
distributions hereunder, determined without application of this Article X,
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 Income Continuance Policy Statement or SMG Income
Continuance Policy Statement), 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.

 

10.2    Under
this Article X 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
paragraph shall be made after eliminations or reductions, if any, have been
made under the Company’s Income Continuance Policy Statement or SMG Income
Continuance Policy Statement.

 

10.3    If
Ernst & Young determines that this Article X is applicable to a
Participant, it shall so advise the Plan Committee. 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. The Participant may then elect, in his/her
sole discretion, which and how much of the Stock Options, Restricted Stock
Awards and/or Performance Shares otherwise awarded under this Plan shall be
eliminated or reduced (as long as after such election the aggregate present
value of the remaining Stock Options, Restricted Stock Awards and/or
Performance Shares under this Plan equals the Reduced Amount), and shall advise
the Plan Committee in writing of his/her election within ten days of his/her
receipt of notice. If no such election is made by the Participant within such
ten-day period, the Plan Committee may elect which and how much of the Stock
Options, Restricted Stock Awards, and/or Performance Shares shall be eliminated
or reduced (as long as after such election their aggregate present value equals
the Reduced Amount) and shall notify the Participant promptly of such election.
For purposes of this Article X, present value shall be determined in
accordance with Section 280G of the Code. All the foregoing determinations
made by Ernst & Young under this Article X shall be made as
promptly as practicable after it is determined that parachute payments will be
made to the Participant if an elimination or reduction is not made. As promptly
as practicable following the election hereunder, 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.

 

10.4    As a
result of the uncertainty in the application of Section 280G of the Code at the
time of the initial determination by Ernst & Young 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 Ernst & Young,
based upon the assertion of a deficiency by the Internal Revenue Service
against the Company or the Participant which Ernst & Young 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
Ernst & Young, 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.

 

10.5    In
making its determination under this Article X, the value of any non-cash
benefit shall be determined by Ernst & Young in accordance with the
principles of Section 280G(d)(3) of the Code.

 

10.6    All
determinations made by Ernst & Young under this Article X shall
be binding upon the Company, the Plan Committee and the Participant.

 

ARTICLE XI

GENERAL PROVISIONS

 

11.1    AMENDMENT
OR TERMINATION.    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 qualified Stock Options or other income
tax preferred stock options which may be authorized by enactment of the United
States Congress and/or the Internal Revenue Service 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:

 

(a) except as provided at
Section 2.17 hereof, increase the total number of shares of Company common
stock which may be made subject to the Plan; or

 

(b) except as provided at
Section 2.17 hereof, change the purchase price of Company common stock
under the Plan; or

 

(c) materially modify the
class of employees that are eligible to receive Stock Options and/or
Performance Shares and/or Restricted Stock Awards pursuant to the Plan.

 

No action taken pursuant
to this Section 11.1 of the Plan shall, without the consent of a
Participant, adversely affect any Performance Share(s) or Stock Option(s) or
Restricted Stock Award(s) which have been previously granted to a Participant.

 

 

11.2    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, 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.

 

11.3    NO
RIGHTS AS SHAREHOLDER.    The granting of Performance
Share(s) and/or Stock Option(s) and/or Restricted Stock Award(s) 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.

 

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

 

(a) to give any employee
of the Company any right to be granted any Stock Option and/or Performance
Share and/or Restricted Stock Award other than at the sole discretion of the
Plan Committee;

 

(b) to give any
Participant any rights whatsoever with respect to shares of the Company’s
$.3333 par value 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.

 

11.5    GOVERNMENT
REGULATIONS.    Notwithstanding any other provisions of the
Plan seemingly to the contrary, the obligation of the Company with respect to
Performance Shares, Stock Options or Restricted Stock 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.

 

11.6    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 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.

 

11.7    EFFECTIVE
DATE.    Subject to the approval of this restated Plan by
the holders of a majority of the voting power of the shares present and
entitled to vote at the Company’s Annual Meeting of Shareholders to be held
May 21, 1997 and any necessary approval being obtained from any
department, board or agency of the United States or states having jurisdiction,
the Plan shall be effective as of May 21, 1997.

 

11.8    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, 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 Performance Shares, Stock
Options and Restricted Stock Awards granted thereunder by the substitution on
an equitable basis of appropriate stock of the Company, or of the merged,
consolidated or otherwise reorganized corporation which will be issuable in
respect to the shares of the Company’s $.3333 par value common stock. Stock to
be issued pursuant to such Performance Shares shall be limited so that the
excess of the aggregate fair market value of the shares subject to the
Performance Shares immediately after such substitution over the purchase price
thereof is not more than the excess of the aggregate fair market value of the
shares subject to such Performance Shares immediately before such substitution
over the purchase price thereof; or

 

(b) upon written notice
to the Participant, provide that all Performance Shares granted to the
Participant are deemed earned, that the Restriction Period of all Restricted
Stock Awards has been eliminated and that all outstanding Stock Options shall
accelerate and become exercisable in full but that all outstanding Stock
Options, whether or not exercisable prior to such acceleration, must be
exercised within not less than sixty days of the date of such notice or they will
be terminated. In any such case the Plan Committee may, in its discretion,
extend the sixty-day exercise period.

 

11.9    WITHHOLDING
TAXES, ETC.    All distributions under the Plan shall be
subject to any required withholding taxes and other withholdings and, in case
of distributions in Company

 

 

common stock, the
Participant or other recipient may, as a condition precedent to the delivery of
the 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. No distribution under the
Plan shall be made in fractional shares of the Company’s common stock, but the
proportional market value thereof shall be paid in cash.

 

11.10  GENERAL RESTRICTION.    Each
Performance Share, Stock Option and Restricted Stock 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 Performance Share or Stock Option or Restricted Stock Award or
the issue or purchase of shares respectively thereunder, such Performance Share
or Stock Option or Restricted Stock 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.

 

11.11  USE OF PROCEEDS.    The proceeds
derived from the sale of the stock pursuant to Stock Options or Restricted
Stock Awards granted under the Plan shall constitute general funds of the
Company.

 

11.12  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.EXHIBIT
(10)H

 

TARGET CORPORATION

DEFERRED COMPENSATION PLAN

SENIOR MANAGEMENT GROUP

 

ARTICLE 1

PURPOSE

 

The purpose of this Deferred Compensation Plan (the
"Plan") is to provide a means whereby Target Corporation (the
"Company") may afford financial security to a select group of
employees who are in the Senior Management Group of the Company and its
subsidiaries and who have rendered and continue to render valuable services to
the Company or its subsidiaries and who make an important contribution towards
the Company's continued growth and success, by providing for additional future
compensation so that such employees may be retained and their productive
efforts encouraged. The Plan document has been amended to reflect certain
administrative practices in effect as of May 1, 1999.

 

ARTICLE 2

DEFINITIONS AND CERTAIN PROVISIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

Early Retirement. "Early
Retirement" means the termination of a Participant's employment with the
Employer for a reason other than death on or after the date the Participant
attains age 55.

 

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

 

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

 

Employee. "Employee" means
any person employed by the Employer on a regular full-time salaried basis,
including officers of the Employer.

 

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

 

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

 

Normal Retirement. "Normal
Retirement" means the termination of a Participant's employment with the
Employer for reasons other than death on or after the date the Participant attains
age 65.

 

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

 

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

 

2

 

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

 

ARTICLE 3

ADMINISTRATION OF THE PLAN

 

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

 

ARTICLE 4

PARTICIPATION

 

4.1          Election to
Participate.    Any Employee who is a member of the Senior
Management Group of the Company may enroll in the Plan by filing a completed
and fully executed Enrollment Agreement or authorization form with the
Committee. Pursuant to said Enrollment Agreement or authorization form, the
Employee shall irrevocably designate a dollar amount by which the aggregate
Earnings of such Participant would be reduced over one (1) or four (4) Plan
Years next following the execution of the Enrollment Agreement (the
"Benefit Deferral Period"), provided, however, that:

 

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

 

(b)           Reduction in
Earnings.

 

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

 

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

 

(c)           Maximum Reduction in
Earnings.    A Participant may not elect a Cumulative
Deferral Amount or an increase in reduction of Earnings pursuant to Section
4.1(b)(ii), or any combination of the two, that would cause the aggregate total
reduction in Earnings in any Plan Year to exceed twenty-five percent (25%) of
the base pay and one hundred

 

3

 

percent (100%) of the incentive pay payable during
such Plan Year up to a total of $250,000 per year plus the amount of any payout
made pursuant to Section 5.4, or such greater percent of base pay and/or
incentive pay or greater total amount as the Committee may permit in its sole
discretion. In the event that a Participant elects a Cumulative Deferral Amount
or increase in reduction of Earnings that would violate the limitation
described in this paragraph (c), the election shall be valid except that the
Cumulative Deferral Amount or increase in reduction of Earnings so elected
shall automatically be reduced to comply with such limitation, whichever is
most appropriate in the sole discretion of the Committee.

 

4.2          Deferral
Accounts.    The Committee shall establish and maintain a
separate Deferral Account for each Participant. The amount by which a
Participant's Earnings are reduced pursuant to Section 4.1 shall be credited by
the Employer to the Participant's Deferral Account on the fifteenth (15th) day
of the month in which such Earnings would otherwise have been paid. The
Participant's Deferral Account shall be credited with the annual SRSP lost
Matching Allocation on January 15 following the year of the lost Matching
Allocation. Such Deferral Account shall be debited by the amount of any
payments made by the Employer to the Participant or the Participant's
Beneficiary pursuant to this Plan.

 

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

 

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

 

4

 

benefits, the future payments shall be made in
accordance with the method used at the time of the Participant’s initial
payment.

 

4.3          Rollover
Deferred Compensation Account.    In its sole discretion,
the Committee may permit a Participant to make a special rollover election to
transfer any amounts which were previously deferred under the Company's
existing deferred compensation plans to this Plan.

 

In such event, the Committee shall establish and
maintain a separate Rollover Deferral Account for each Participant who makes a
rollover transfer to this Plan. Such Rollover Deferral Account shall be deemed
to bear interest at the same rate and subject to the same conditions as other
Deferral Accounts pursuant to Section 4.2. Each Participant who makes a
rollover transfer to a Rollover Deferral Account shall be treated for purposes
of determining benefits under the Plan as having a separate Cumulative Deferral
Amount and Deferral Account which shall initially be in the amount of the
rollover transfer. A Participant who makes a rollover transfer shall be deemed
to waive all rights under the Company's existing deferred compensation plans
from which rollover transfers are made with respect to the amounts transferred
to this Plan, including the right to make elections regarding the time or manner
of payment as permitted thereunder. Rollover transfers shall be subject to the
minimum deferral amount set forth in Section 4.1(a), but shall not be subject
to any maximum deferral limitation.

 

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

 

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

 

ARTICLE 5

BENEFITS

 

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

 

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

 

5

 

(b)           Married Participant.
   In the case of a Participant who is married when payments
commence, the Employer shall make actuarially reduced payments in accordance
with Appendix A, Section 2.B., to the Participant for his life and thereafter,
if the Participant is survived by a spouse who was married to the Participant
when Normal or Early Retirement Benefit payments commenced, shall continue to
make payments to the Participant's spouse for his life, with payments to be
made for an aggregate period of not less than fifteen (15) years. The payments
shall be the actuarial equivalent of the payments which would be made to the
Participant pursuant to Section 5.1(a) if he were single. The monthly amount of
payments will be redetermined annually to reflect changes in the Declared Rate.

 

5.2          Termination Benefit.

 

(a)           Terminations of
Employment.    If a Participant shall cease to be an
Employee for any reason other than death or Normal or Early Retirement or
Certain Terminations of Employment under Section 5.2(b), the Employer shall pay
to the Participant in one lump sum an amount (the "Termination
Benefit") equal to the value of the Deferral Account as of the date of
payment and such Participant shall be entitled to no further benefits under
this Plan, provided, however, at the sole discretion of the Committee, no lump
sum shall be payable and, instead, the Employer shall pay to the Participant
the balance of the Deferral Account over a four (4) year period in accordance
with Appendix A, Section 2.C. Upon termination of employment the Participant
shall immediately cease to be eligible for any benefits under the Plan other
than the Termination Benefit. No other benefit shall be payable to either the
Participant or any Beneficiary of such Participant.

 

(b)           Certain Terminations
of Employment.    If a Participant shall cease to be an
Employee for any reason other than death or Normal or Early Retirement and
shall be at least age 50, have worked for the Company for at least 10 years and
has received an ICP Contract under the Company's Income Continuance Policy that
is signed by Participant and Company and not rescinded, the payment of benefits
shall commence on the first day of the month following termination, or
following such later date which the Participant elected in his Enrollment
Agreement (including any authorization form). A Participant may elect in his
Enrollment Agreement (including any authorization form) to have payments
commence from one (1) to ten (10) years following retirement, but not later
than age 65 (or five (5) years after the first day of the Benefit Deferral
Period, if later).

 

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

 

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

 

6

 

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

 

(c)           Termination of
Enrollment in Plan.    With the written consent of the
Committee, a Participant may terminate his enrollment in the Plan by filing
with the Committee a written request to terminate enrollment. The Committee
will consent to the termination of a Participant's enrollment in the Plan in
the event of an unforeseeable financial emergency of the Participant. An
unforeseeable financial emergency shall mean an unexpected need for cash
arising from an illness, casualty loss, sudden financial reversal or other such
unforeseeable occurrence. Cash needs arising from foreseeable events such as
the purchase of a house or education expenses for children shall not be considered
to be the result of an unforeseeable financial emergency. Upon termination of
enrollment, no further reductions shall be made in the Participant's Earnings
pursuant to his Enrollment Agreement, and the Participant shall immediately
cease to be eligible for any benefits under the Plan other than the Termination
Benefit. No other benefit shall be payable to either the Participant or any
Beneficiary of such Participant. In its sole discretion, the Committee may pay
the Termination Benefit on a date earlier than the Participant's termination of
employment with the Employer, in which event the Termination Benefit shall be
calculated as if the Participant had terminated employment with the Employer on
the date of such payment. Following termination of enrollment in the Plan, a
Participant's Deferral Account shall be deemed to bear interest on the balance
in such Deferral Account in accordance with Appendix A, Section 1, except that
the interest rate used to calculate interest earned in the Deferral Account shall
be twelve percent (12%) per annum.

 

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

 

5.4          Early
Payment Option.    The Employer shall pay to the
Participant, if he is an Employee of the Company, the amount by which the
Participant's Earnings were reduced in any Plan Year pursuant to Section 4.1
during the eighth (8th) year following the Plan Year ("Early Payment"),
provided that such amount has not previously been paid out under other
provisions of the Plan. Such Early Payment shall not include any interest
credited to the Participant's Deferral Account pursuant to Section 4.2. Notwithstanding
any other provisions of this Plan, the Participant may elect prior to the
beginning of any year in which such an Early Payment will be made to him to
reduce his Earnings during the year in which such Early Payment is made by an
amount equal to the Early Payment. An Early Payment shall not result in any
change in the Survivor Benefits payable pursuant to Section 5.5, other than as
a result of the reduction in the Participant's Cumulative Deferral Account and
Deferral Account balance by the amount of the Early Payment.

 

7

 

5.5          Survivor
Benefits.

 

(a)           If a Participant dies
while employed with an Employer prior to Early or Normal Retirement, the
Employer will pay to the Participant's Beneficiary an annual benefit for the
greater of:

 

(i)  ten (10) years, or

 

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

 

equal to fifty percent (50%) of the Cumulative
Deferral Amount. However, if the Committee determines that a distribution of
the Participant's Deferral Account would produce a greater benefit, such
Deferral Account balance shall be paid to the Participant's Beneficiary in
equal annual installments in accordance with Appendix A, Section 2.C.2, but
over the period specified above.

 

(b)           If a Participant dies
after Early or Normal Retirement, but prior to commencement of payment of any
Early or Normal Retirement Benefit under the Plan, the Employer will pay to the
Participant's Beneficiary the benefit that such Participant would have received
had the Participant retired on the day prior to such Participant's death,
provided, however, that if the present value of the benefit described in this
Section 5.5(b) is less than the present value of the benefit described in
Section 5.5(a), using in each case twelve percent (12%) as the discount factor,
then the Beneficiary described in this Section 5.5(b) shall receive the benefit
described in Section 5.5(a) and not the benefit described in this Section
5.5(b).

 

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

 

(d)           If a Participant, who
does not receive a lump sum Termination Benefit, dies prior to the time he has
received the four (4) annual payments referred to in Section 5.2(a), the
remaining payments for such 4 year-period shall be paid to the Participant's
Beneficiary.

 

8

 

(e)           Notwithstanding other
provisions of the Plan, if the Beneficiary is not a spouse, the present value
of the installment payments as described in Section 5.2(a), shall be paid as
soon as administratively feasible after the death of the Participant. The
interest rate used to compute the present value shall be the average of the
Declared Rate for the Plan Year in which the Participant dies and twelve
percent (12%).

 

(f)            Solely for purposes of
this Section 5.5, a Participant who has a Certain Termination of Employment as
defined in Section 5.2(b) shall be deemed to have had an Early Retirement and
the benefit payable under Section 5.2(b) shall be deemed to be an Early
Retirement Benefit.

 

5.6          Small
Benefit.    In the event that the Committee determines in
its sole discretion that the amount of any benefit is too small to make it
administratively convenient to pay such benefit over time, the Committee may
pay the benefit in the form of a lump sum equal to the value of the Deferral
Account at the time of the distribution, notwithstanding any provision of this
Article 5 to the contrary.

 

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

 

5.8          Lump
Sum Payout Option.    Notwithstanding any other provisions
of the Plan, at any time after retirement, but not later than ten (10) years
after retirement of the Participant, a Participant or a Beneficiary of a
deceased Participant may elect to receive an immediate lump sum payment of 50%
or 100% of the balance of his Deferral Account, reduced by a penalty, which
shall be forfeited to the Company, equal to eight percent (8%) of the amount of
his Deferral Account he elected to receive, in lieu of payments in accordance
with the form previously elected by the Participant, or provided elsewhere in
this Plan. Such election, if not 100%, may be made only twice. If less than
100% of his Deferral Account is paid out, the remainder of his Deferral Account
will be paid in accordance with the form previously elected by the Participant,
or provided elsewhere in this Plan. However, the penalty shall not apply if the
Committee determines, based on advice of counsel or a final determination by
the Internal Revenue Service or any court of competent jurisdiction, that by
reason of the foregoing provision any Participant or Beneficiary has recognized
or will recognize gross income for federal income tax purposes under this Plan
in advance of payment to him of Plan benefits. The Company shall notify all
Participants (and Beneficiaries of deceased Participants) of any such
determination. Whenever any such determination is made, the Company shall
refund all penalties which were imposed hereunder on account of making lump sum
payments at any time during or after the first year to which such determination
applies (i.e., the first year when gross income is recognized for federal
income tax purposes). Interest shall be paid on any such refunds at ten percent
(10%) for each Plan Year, compounded annually. The Committee may also reduce or
eliminate the penalty if it determines that this action will not cause any
Participant or Beneficiary to recognize gross income for federal income tax
purposes under this Plan in advance of payment to him of Plan benefits.

 

9

 

ARTICLE 6

BENEFICIARY DESIGNATION

 

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

 

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

 

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

 

ARTICLE 7

AMENDMENT AND TERMINATION OF PLAN

 

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

 

7.2          Automatic
Termination of Plan.  The Plan shall terminate only under the
following circumstances. The Plan shall automatically terminate upon (a) a
determination by the Company that a final decision of a court of competent
jurisdiction or the U. S. Department of Labor holding that the Plan is not
maintained “primarily for the purpose of providing deferred compensation for a
select group of management or highly-compensated employees,” and therefore is
subject to Parts 2, 3 and 4 of Title I of ERISA, would require that the Plan be
funded and would result in immediate taxation to Participants of their vested
Plan benefits, or (b) a determination by the Company that a final decision of a
court of competent jurisdiction has declared that the Participants under the
Plan are in constructive receipt under the Internal Revenue Code of their
vested Plan benefits.

 

10

 

7.3          Payments
Upon Automatic Termination.  Upon any Plan termination under Section
7.2, the Participants will be deemed to have terminated their enrollment under
the Plan as of the date of such termination. The Employer will pay all
Participants the value of each Participant’s Deferral Accounts in a lump sum,
determined as if each Participant had a Termination of Employment on the date
of such termination of the Plan as provided under Section 5.2(a) hereof.

 

7.4          Payments
Upon Change of Control.  Notwithstanding any provision of this Plan to
the contrary, if a “Change of Control” as defined in the Target Corporation
Deferred Compensation Trust Agreement (as it may be amended from time to time)
occurs and results in funding of the trust established under that Agreement,
each Participant (or Beneficiary of a deceased Participant) will be paid the
entire value at that time of his or her Deferral Accounts in a lump sum,
determined as provided in Appendix B of the Target Corporation Deferred
Compensation Trust Agreement. However, this section shall not apply, and no
amounts shall be payable to Participants or Beneficiaries under this section,
in the event the assets of said trust are returned to the Participating
Employers pursuant to the Trust Agreement because no Change of Control actually
occurred.

 

ARTICLE 8

MISCELLANEOUS

 

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

 

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

 

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

 

8.4          Protective
Provisions.   Each Participant shall cooperate with the Employer
by furnishing any and all information requested by the Employer in order to
facilitate the payment of benefits hereunder, taking such physical examinations
as the Employer may deem necessary and taking such other relevant action as may
be requested by the Employer. If a Participant refuses so to cooperate,

 

11

 

the Employer shall have no further obligation to the Participant under
the Plan, other than payment to such Participant of the cumulative reductions
in Earnings theretofore made pursuant to this Plan. If a Participant commits
suicide during the two (2) year period beginning on the later of (a) the date
of adoption of this Plan or (b) the first day of the first Plan Year of such
Participant's participation in the Plan, or if the Participant makes any
material misstatement of information or nondisclosure of medical history, then
no benefits will be payable hereunder to such Participant or his Beneficiary, other
than payment to such Participant of the cumulative reductions in Earnings
theretofore made pursuant to this Plan, provided, that in the Employer's sole
discretion, benefits may be payable in an amount reduced to compensate the
Employer for any loss, cost, damage or expense suffered or incurred by the
Employer as a result in any way of such misstatement or nondisclosure.

 

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

 

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

 

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

 

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

 

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

 

 

12

 

APPENDIX
A

Section 1

 

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

 

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

 

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

 

Example of interest credited calculation

 

	
  BOY Deferral Account balance at 1/1/99

  	
   

  	
  = $500,000.00

  
	
  Declared Rate

  	
   

  	
  = 13.7%

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

  
	
  Credited interest for each month of 1999

  	
   

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

  

 

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

 

BOM balance + monthly interest credited = EOM balance

 

Example of monthly account growth

 

	
  BOM balance at
  1/1/99

  	
   

  	
  = $500,000.00

  
	
  Monthly
  crediting dollars for 1998

  	
   

  	
  = $5,708.50

  
	
  EOM at 1/31/99

  	
   

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

  
	
  EOM at 2/28/99

  	
   

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

  

 

13

 

Section 2:

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

 

A.            Definition
of Variables for Participant Payment Calculation

 

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

 

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

 

	
  Frequency of payments

  	
   

  	
  = monthly

  
	
  Participant age on 10/1/99

  	
   

  	
  = 50 yrs. old

  
	
  Spouse age on 10/1/99

  	
   

  	
  = 48 yrs. old

  
	
  Participant’s and spouse’s joint expected remaining
  lives

  	
   

  	
  = 476 months

  
	
  “n” for 10/1/99

  	
   

  	
  = 476

  
	
  “n” for 1/1/00

  	
   

  	
  = 473

  
	
  “n” for 1/1/01

  	
   

  	
  = 461

  

 

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

 

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

 

Example of weekly and monthly interest rates

 

Declared Rate = 13.7%

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

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

 

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

 

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

 

14

 

Example of EOP balance calculation

 

EOP balance = BOP balance + interest crediting –
payment

 

B.     Payments

 

1.     Calculation
of payments

 

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

 

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

 

 

	
  Payment =

  	
  i

  	
   x  BOP

  
	
   

  
	
  1 – 

  	
    1

  	
   

  
	
  (1 + i)n

  

 

 

Example of a calculation with monthly payments

 

n = 476 months

Monthly i = 1.0757%

BOP balance = $500,000.00

Payment = $5,411.73

 

Example of a calculation with weekly payments

 

n = 2,070 weeks

Weekly i = 0.2472%

BOP balance = $500,000.00

Payment = $1,243.50

 

2.     Interest
Crediting for Payments

 

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

 

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

 

BOP balance = $500,000.00

Monthly i = 1.0757%

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

 

15

 

3.     Amortization of Participant
Deferral Account Balances

 

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

 

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

 

BOP balance = $500,000.00

Monthly i = 1.0757%

Interest crediting = $5,378.50

Payment = $5,411.73

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

 

C.    Installment
Termination Payments

 

1.     At the Company’s discretion,
if a participant terminates employment with the Company prior to Normal or
Early Retirement, as described in Article 5, Section 5.2(a), a participant’s
balance may be paid out over a four (4) year installment period (one payment a
year) instead of as an immediate lump sum payment.

 

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

 

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

 

n = 4

Annual i = 12%

BOP balance = $500,000.00

Annual installment payments = $164,617.22

 

16

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