Document:

EXHIBIT (10)N

 

TARGET CORPORATION

DIRECTOR DEFERRED COMPENSATION PLAN

 

ARTICLE I

GENERAL

 

Sec  1.1              Name of Plan. The name of the Plan
set forth herein is the Target Corporation Director Deferred Compensation Plan.
It is referred to herein as the “Plan.”

 

Sec  1.2              Purpose. The purpose of the Plan
is to provide a means whereby Target Corporation (the “Company”) may allow
certain directors a way to defer compensation.

 

Sec  1.3              Effective Date. The Effective Date
of the Plan is January 1, 1997.

 

Sec  1.4              Company. “Company” means all of
the following:

 

(a)                                         Target
Corporation, a Minnesota corporation.

 

(b)                                           Any
successor of Target Corporation (whether direct or indirect, by purchase of a
majority of the outstanding voting stock of Target Corporation or all or substantially
all of the assets of Target Corporation, or by merger, consolidation or
otherwise).

 

(c)                                            Any
person that becomes liable for the obligations hereunder of the entities
specified in (a) and (b) above by operation of law.

 

Sec  1.5              Participating Employers. The
Company is a Participating Employer in the Plan. With the consent of the
Company, by action of the Board or any duly authorized officer, any
wholly-owned subsidiary of the Company may, by action of its board of directors
or any duly authorized officer, also become a Participating Employer in the
Plan effective as of the date specified by it in its adoption of the Plan; but
the subsidiary shall cease to be a Participating Employer on the date it ceases
to be a wholly-owned subsidiary of the Company.

 

Sec  1.6              Construction and Applicable Law. The
Plan is intended to be an unfunded benefit plan maintained for the purpose of
providing deferred compensation for certain directors. The Plan shall be
construed and administered according to the laws of the State of Minnesota. All
controversies, disputes and claims arising hereunder shall be submitted to the
United States District Court for the District of Minnesota.

 

Sec  1.7              Rules of Construction. The Plan
shall be construed in accordance with the following:

 

(a)                                           Headings
at the beginning of articles and sections hereof are for convenience of
reference, shall not be considered as part of the text of the Plan and shall
not influence its construction.

 

(b)                                           Capitalized
terms used in the Plan shall have their meaning as defined in the Plan unless
the context clearly indicates to the contrary.

 

 

(c)                                            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.

 

(d)                                           Use
of the words “hereof,” “herein,” “hereunder” or similar compounds of the word “here”
shall mean and refer to the entire Plan unless the context clearly indicates to
the contrary.

 

(e)                                            The
provisions of the Plan shall be construed as a whole in such manner as to carry
out the provisions thereof and shall not be construed separately without
relation to the context.

 

ARTICLE II

DEFINITIONS

 

Sec  2.1              Beneficiary. “Beneficiary” means
the person or persons designated as such in accordance with Article VI.

 

Sec  2.2              Benefit Deferral Period. “Benefit
Deferral Period” means that period of one Plan Year as determined pursuant to
Article IV over which a Participant defers a portion of such Participant’s
Earnings.

 

Sec  2.3              Board. “Board” means the board of
directors of the Company, and includes any committee thereof authorized to act
for said board of directors.

 

Sec  2.4              Committee. “Committee” means the
Plan Administrative Committee appointed in accordance with Section 7.1(d)
hereof which is authorized by the Board of Directors of the Company to act on
behalf of the Company in accordance with the terms of this Plan.

 

Sec  2.5              Crediting Rate. “Crediting Rate”
means the earnings or losses for a day on the Crediting Rate Alternative(s)
available for the Plan.

 

Sec  2.6              Crediting Rate Alternative. “Crediting
Rate Alternative” means the Crediting Rate for any investment fund options
available to Participants of the TGT 401(k) Plan.

 

Sec  2.7              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.

 

Sec  2.8              TGT 401(k) Plan. “TGT
401(k) Plan” or “TGT 401(k)” means the Target Corporation 401(k) Plan,
formerly known as the “SRSP” (Dayton Hudson Corporation Supplemental Retirement
Savings and Employee Stock Ownership Plan).

 

Sec  2.9              Deferral Account. “Deferral
Account” means the accounts maintained on the books of account of the Company
pursuant to Section 4.2.

 

Sec  2.10       Director. “Director” means any person who
is a director of the Company or another Participating Employer but who is not
an Employee of a Participating Employer.

 

2

 

Sec  2.11       Earnings. “Earnings” means the total fees
paid to a Participant for service on the Board (or any committee thereof) or on
a board of a Participating Employer.

 

Sec  2.12       Employee. “Employee” means a Qualified
Employee as that term is defined in  the TGT
401(k) Plan.

 

Sec  2.13       Enhancement. “Enhancement” means an
additional .1667% per month added to each Crediting Rate Alternative.

 

Sec  2.14       Enrollment Agreement. “Enrollment
Agreement” means the agreement entered into by the Company and a Director
pursuant to which the Director 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.

 

Sec  2.15       Participant. “Participant” means an
eligible Director who has filed a completed and executed Enrollment Agreement
or authorization form with the Company and is participating in the Plan in
accordance with the provisions of Article IV.

 

Sec  2.16       Person. “Person” means an individual,
partnership, corporation, estate, trust or other entity.

 

Sec  2.17       Plan Year. “Plan Year” means the period
commencing with the Effective Date and ending December 31, 1997 and each
subsequent calendar year.

 

Sec  2.18       Rate of Return Alternative Change Form. “Rate
of Return Alternative Change Form” means the form of authorization approved by
the Company by which the Participant notifies the Plan of its choices for
Crediting Rate Alternatives for his account under the Plans.

 

Sec  2.19       Retirement. “Retirement” shall mean when
the Director ceases to be a director of all Participating Employers.

 

Sec  2.20       Signature. “Signature” or “sign” as used
herein shall mean either the Participant’s written signature or the Participant’s
electronic signature evidenced by the use of an electronic personal
identification number.

 

ARTICLE
III

ELIGIBILITY

 

Sec  3.1              Eligibility. A Director shall be a
Participant while, and only while, he or she is a director of a Participating
Employer, subject to the following:

 

(a)                                           The
Director must complete an enrollment and sign an insurance consent form, in the
form that the Company determines in order to defer Earnings. The insurance
consent form will allow the Company to purchase life insurance on the Director
with the Company as beneficiary.

 

Sec  3.2              No Guarantee of Continued Directorship.
Participation in the Plan does not constitute a guarantee or contract with any
Participating Employer guaranteeing that the Director 

 

3

 

will continue to be a director. Such participation
shall in no way interfere with any rights the shareholders of a Participating
Employer would have in the absence of such participation to determine the
duration of the director’s service.

 

ARTICLE IV

PARTICIPATION AND BENEFITS

 

Sec  4.1              Election to Participate. Any
Director of a Participating Employer who is eligible to participate may enroll
in the Plan by filing a completed and fully executed Enrollment Agreement or
authorization form with the Company. Pursuant to said Enrollment Agreement or
authorization form, the Director shall irrevocably designate a percent by which
the Earnings of such Participant would be reduced over the Benefit Deferral
Period next following the execution of the Enrollment Agreement; provided,
however, that:

 

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

 

(b)                                           Maximum
Reduction in Earnings. A Participant may not elect a Cumulative Deferral
Amount that would cause the reduction in Earnings to exceed one hundred percent
(100%) of Earnings payable during such Plan Year. In the event that a
Participant elects a Cumulative Deferral Amount that would violate the
limitation described in this paragraph (c), the election shall be valid except
that the Cumulative Deferral Amount so elected shall automatically be reduced
to comply with such limitation.

 

(c)                                            Mid-Year
Elections to Participate. Notwithstanding any provision of the Plan to the
contrary, a Director who did not file an Enrollment Agreement prior to the
Benefit Deferral Period commencing on the first day of the Plan Year may file
an Enrollment Agreement in advance of July 1 of that year during a period
specified by the Committee and in accordance with such rules as the Committee
may establish, which shall be effective as of July 1, and shall apply to the
Participant’s Earnings payable during the last six months of the Plan Year.

 

Sec  4.2              Deferral Accounts. The Company
shall establish and maintain separate Deferral Accounts for each Participant. The
amount by which a Participant’s Earnings are reduced pursuant to Section 4.1
shall be credited by the Company to the Participant’s Deferral Accounts as soon
as administratively possible after each payment would otherwise have been paid.
Such Deferral Accounts shall be debited by the amount of any payments made by
the Company to the Participant or the Participant’s Beneficiary pursuant to
this Plan. A separate Deferral Account shall be maintained for each type of deferral
election made and for each Crediting Rate Alternative.

 

Sec  4.3              Crediting Rate Alternatives. The
Participant shall select the Crediting Rate Alternatives, using full
percentages, that are to be applied to his or her Deferral Accounts. Participants
may change their Crediting Rate Alternatives daily, by completing a Rate of
Return 

 

4

 

Alternative Change Form. If a Participant does not
make an election, the Crediting Rate Alternative will be a default Crediting
Rate Alternative selected by the Committee.

 

Sec  4.4              Benefit Payment Elections. At the
time a Participant completes an Enrollment Agreement, he or she must also elect
the method of benefit payment and the time to start the benefit. The elections are
to be made for each Plan Year.

 

(a)                                           Method
of Benefit Payment. Benefits for each Plan Year can be paid in a lump sum,
five annual installments or ten annual installments.

 

(b)                                           Commencement
of Benefit. The benefit for each Plan Year may be started as soon as
possible following Retirement or one year following Retirement.

 

Sec  4.5              Each Deferral Account will be credited on
the balance in the Deferral Account as follows:

 

(a)                                           Director.

 

(i)                 Crediting
Rate Alternative. Each Deferral Account of a Director will be credited at
the end of a day on the balance in the Deferral Account at the beginning of
that day using the Crediting Rate Alternative.

 

(ii)              Enhancement.
The total balance in all Deferral Accounts on the first day of the month
will be credited at the end of the month at a rate equal to the Enhancement. The
amount will be credited among Participant’s Deferral Accounts at the time the
Enhancement is credited in an amount equal to the proportion which each
Deferral Account has to the Participant’s entire balance No Enhancement will be
credited on behalf of a Participant with respect to any date after January 29,
2006.

 

(b)                                           Former
Director. Each Deferral Account of a Director who has had a Retirement will
be credited at the end of a day on the balance in the Deferral Account at the
beginning of that day, using the Crediting Rate Alternative.

 

(c)                                            One-Time
Election to Change Payment Method. A Participant may file with the
Committee a one-time election to change the method and time of payment of the
Participant’s existing benefits under this Plan, subject to the following:

 

(i)                 An
election under this subsection will be effective as of the last day of the
second Plan Year following the Plan Year in which the election is filed;
provided that the Participant is still a Director on that effective date.

 

(ii)              An
election under this subsection will apply to all of the Participant’s Deferral
Accounts outstanding on the effective date of the election, as determined under
paragraph (i), including any Account attributable to deferrals of Earnings
during the Plan Year preceding said effective date. However, the election will
not apply to deferrals of Earnings for the Plan 

 

5

 

         Year
containing the effective date of the election or subsequent Plan Years.

 

(iii)           Upon the effective date of an election under
this subsection, the method of payment of the benefits described in paragraph
(ii) shall be changed to payment in ten annual installments. The Participant’s
election under this subsection must specify whether said installments are to
begin as soon as possible following Termination of Employment or one year
following Termination of Employment.

 

(iv)          Only
one election under this subsection may be made by a Participant during the Participant’s
lifetime.

 

Sec  4.6              Statement of Accounts. The Company
shall submit to each Participant, within one hundred twenty days after the
close of each Plan Year, a statement in such form as the Company deems
desirable, setting forth the balance standing to the credit of each Participant
in his Deferral Accounts.

 

ARTICLE V

CERTAIN BENEFIT PAYMENTS

 

Sec  5.1              Termination of Enrollment in Plan. With
the written consent of the Company, a Participant may terminate his or her
enrollment in the Plan by filing with the Company a written request to
terminate enrollment. The Committee will review the request on behalf of the
Company and 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 or her Enrollment Agreement, and the
Participant shall immediately cease to be eligible for any benefits under the
Plan other than payments from his or her Deferral Accounts for the current Plan
Year. In its sole discretion, the Committee may pay the Deferral Accounts on a
date earlier than the Participant’s Retirement with the Participating Employer,
in which event the Committee shall calculate an amount which is appropriate in
accordance with the unforeseeable financial emergency and that amount shall be
paid as if the Participant had a Retirement with the Participating Employer on
the date of such payment.

 

Sec  5.2              Survivor Benefits

 

(a)                                           Death
While Employed. If a Participant dies while a Director of a Participating
Employer, the Company will pay the amount in his or her Deferral Accounts to
the Participant’s Beneficiary as soon as possible after death in a lump sum.

 

(b)                                           Death
After Retirement. If a Participant dies after Retirement, and has not
received all of his or her payments, and the Participant’s Beneficiary is his
or her spouse, payments shall be made to the spouse pursuant to the Participant’s
payout 

 

6

 

elections. If the
Participant’s spouse dies before receiving all payments, the remaining amount
in the Deferral Accounts will be paid in a lump sum as soon as possible after
the spouse’s death to the spouse’s estate. If a Participant dies after
Retirement, has not received all of his or her payments and the Participant’s
Beneficiary is a Person other than his or her spouse, then payment shall be
made in a lump sum as soon as possible after the Participant’s death.

 

Sec  5.3              Small Benefit. In the event that
the Company 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 Company may pay the benefit in the form of a lump sum, or reduce the number
of installments notwithstanding any provision of this Article or Article IV to
the contrary.

 

Sec  5.4              Withholding. To the extent
required by the law in effect at the time payments are made, the Company shall
withhold from payments made hereunder or any other payment owing by the Company
to the Participant the taxes required to be withheld by the federal or any
state or local government.

 

Sec  5.5              Lump Sum Payout Option. Notwithstanding
any other provisions of the Plan, at any time after Retirement, but not later
than ten 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 100% of the balance of his or her Deferral Accounts, if any,
reduced by a penalty, which shall be forfeited to the Company, equal to eight
percent of the amount of his or her Deferral Accounts he or she elected to
receive, in lieu of payments in accordance with the form previously elected by
the Participant, or provided elsewhere in this Plan. However, the penalty shall
not apply if the Company 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 the Variable Interest Crediting Rate 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.

 

ARTICLE VI

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 Company during the Participant’s lifetime on a form prescribed by the
Company.

 

7

 

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.

 

If a Participant fails to
designate a Beneficiary as provided above, or if his or her 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
Company shall direct the distribution of such benefits to the Participant’s
spouse, if any, and if there is no spouse to the Participant’s estate.

 

ARTICLE VII

ADMINISTRATION OF PLAN

 

Sec  7.1              Administration by Company. The
Company is the “administrator” of the Plan. Except as expressly otherwise
provided herein, the Company shall control and manage the operation and
administration of the Plan, make all decisions and determinations incident
thereto and construe the provisions thereof. In carrying out its Plan
responsibilities, the Company shall have discretionary authority to construe
the terms of the Plan. Except in cases where the Plan expressly requires action
on behalf of the Company to be taken by the Board, action on behalf of the
Company may be taken by any of the following:

 

(a)                                           The
Board.

 

(b)                                           The
Chief Executive Officer of the Company.

 

(c)                                            The
Vice President of Personnel of the Company.

 

(d)                                           Any
person or persons, natural or otherwise, or committee, to whom responsibilities
for the operation and administration of the Plan are allocated by the Company,
by resolution of the Board or by written instrument executed by the Chief
Executive Officer or the Vice President of Personnel of the Company and filed
with its permanent records, but action of such person or persons or committee
shall be within the scope of said allocation.

 

Sec  7.2              Certain Fiduciary Provisions. For
purposes of the Plan:

 

(a)                                           Any
person or group of persons may serve in more than one fiduciary capacity with
respect to the Plan.

 

(b)                                           A
Named Fiduciary, or a fiduciary designated by a Named Fiduciary pursuant to the
provisions of the Plan, may employ one or more persons to render advice with
regard to any responsibility such fiduciary has under the Plan.

 

(c)                                            Any
time the Plan has more than one Named Fiduciary, if pursuant to the Plan
provisions fiduciary responsibilities are not already allocated among such
Named 

 

8

 

                   Fiduciaries,
the Company, by action of the Board or its chief executive officer, may provide
for such allocation.

 

(d)                                           Unless
expressly prohibited in the appointment of a Named Fiduciary which is not the
Company acting as provided in Sec. 7.1, such Named Fiduciary by written
instrument may designate a person or persons other than such Named Fiduciary to
carry out any or all of the fiduciary responsibilities under the Plan of such
Named Fiduciary.

 

(e)                                            A
person who is a fiduciary with respect to the Plan, including a Named
Fiduciary, shall be recognized and treated as a fiduciary only with respect to
the particular fiduciary functions as to which such person has responsibility.

 

Sec  7.3              Evidence. Evidence required of
anyone under this Plan may be by certificate, affidavit, document or other
instrument which the person acting in reliance thereon considers to be
pertinent and reliable and to be signed, made or presented by the proper party.

 

Sec  7.4              Records. Each Participating
Employer, each fiduciary with respect to the Plan and each other person
performing any functions in the operation or administration of the Plan shall
keep such records as may be necessary or appropriate in the discharge of their
respective functions hereunder, including records required by applicable law. Records
shall be retained as long as necessary for the proper administration of the
Plan and at least for any period required by applicable law.

 

Sec  7.5              General Fiduciary Standard. Each
fiduciary shall discharge his duties with respect to the Plan solely in the
interests of Participants and with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims.

 

Sec  7.6              Waiver of Notice. Any notice
required hereunder may be waived by the person entitled thereto.

 

Sec  7.7              Agent for Legal Process. The
Company shall be the agent for service of legal process with respect to any
matter concerning the Plan, unless and until the Company designates some other
person as such agent.

 

Sec  7.8              Indemnification. In addition to
any other applicable provisions for indemnification, the Participating
Employers jointly and severally agree to indemnify and hold harmless, to the
extent permitted by law, each director, officer and employee of the
Participating Employers against any and all liabilities, losses, costs or
expenses (including legal fees) of whatsoever kind and nature which may be
imposed on, incurred by or asserted against such person at any time by reason
of such person’s services as a fiduciary in connection with the Plan, but only
if such person did not act dishonestly, or in bad faith or in willful violation
of the law or regulations under which such liability, loss, cost or expense
arises.

 

Sec  7.9              Correction of Errors. It is
recognized that in the operation and administration of the Plan certain
mathematical and accounting errors may be made or mistakes may arise by 

 

9

 

reason of factual errors in information supplied to
the Company or Trustee. The Company shall have power to cause such equitable
adjustments to be made to correct for such errors as the Company, in its
discretion, considers appropriate. Such adjustments shall be final and binding
on all persons.

 

ARTICLE VIII

AMENDMENT AND TERMINATION OF PLAN

 

Sec  8.1              Amendment. The Board 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; 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 to each Participant then participating in the Plan.
Notwithstanding the above, the Board authorizes the Committee to amend the Plan
to make changes to the Crediting Rate Alternatives by either adding any new or
deleting any existing Crediting Rate Alternative, and to impose limitations on
selection of or deferral into any Crediting Rate Alternative by the action of
the Committee. Such changes will be considered an Amendment to this Plan and
shall be effective without further action by the Board.

 

Sec  8.2              Automatic Termination of Plan. The
Plan shall terminate only under the following circumstances. The Plan shall
automatically terminate upon 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.

 

Sec  8.3              Payments Upon Automatic Termination.
Upon any Plan termination under Sec. 8.2, the Participants will be deemed to
have terminated their enrollment under the Plan as of the date of such
termination. The Company 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 and elected to be paid as soon as possible following Termination of
Employment.

 

Sec  8.4              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 of his or her Deferral
Accounts in a lump sum, determined as if the Participant’s Retirement had
occurred on the date the Change of Control occurs, and the Participant had
elected to be paid his or her entire benefit in a lump sum as soon as possible
following Retirement. 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.

 

10

 

ARTICLE IX

MISCELLANEOUS

 

Sec  9.1              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 the
Company or a Participating 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 the
Company (“Policies”). Such Policies or other assets of Participating Employers
shall not be held under any trust (except they may be placed in a Rabbi 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 Participating Employers under this Plan. Any and all of a
Participating Employer’s assets and Policies shall be, and remain, the general,
unpledged, unrestricted assets of the Participating Employer. Participating
Employers obligations under the Plan shall be merely that of an unfunded and
unsecured promise of a Participating Employer to pay money in the future.

 

Sec  9.2              Nonassignability. Neither a
Participant nor any other person shall have any right to sell, assign,
transfer, pledge, anticipate, mortgage, commute 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.

 

Sec  9.3              Protective Provisions. Each
Participant shall cooperate with the Company by furnishing any and all
information requested by the Company in order to facilitate the payment of
benefits hereunder, taking such physical examinations as the Company may deem
necessary and taking such other relevant action as may be requested by the
Company. If a Participant refuses so to cooperate, the Company 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 Company’s sole discretion, benefits may be payable in an
amount reduced to compensate the Company for any loss, cost, damage or expense
suffered or incurred by the Company as a result in any way of such misstatement
or nondisclosure.

 

Sec  9.4              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.

 

11

 

Sec  9.5              Notice. Any notice or filing
required or permitted to be given to the Company 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 Company, directed to the attention of the
President of the Company. 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.

 

Sec  9.6              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.

 

12EXHIBIT (10)P

 

TARGET CORPORATION

LONG-TERM INCENTIVE PLAN

(As amended and restated on January 10, 2007)

 

ARTICLE I

ESTABLISHMENT OF THE PLAN

 

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

 

1.2          EFFECTIVE DATE. This amended and restated
plan document (the “2007 Restatement”) shall become effective on January 10,
2007 (the “Effective Date”). Awards made on or after the Effective Date shall
be subject to the terms and conditions of this 2007 Restatement as amended from
time to time and not to the terms and conditions of any prior version of the
plan document. To the extent that a Participant’s rights under any Awards made
prior to the Effective Date are adversely affected by this 2007 Restatement, as
amended from time to time, such Awards shall be subject to the terms and
conditions of the plan document in effect on the Award’s Date of Grant. Any
future amendments to the Plan shall be subject to Section 10.1 hereof.

 

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

 

ARTICLE
II

DEFINITIONS

 

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

 

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

 

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

 

 

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

 

(a)           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

 

2

 

(iv)          liquidate or dissolve the Company.

 

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

 

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

 

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

 

2.8          DATE
OF GRANT. The “Date of Grant” of an Award is the date designated in the
resolution by the Plan Committee as the date of an Award, which shall not be
earlier than the date of the resolution and action thereon by the Plan
Committee. In the absence of a designated date or a fixed method of computing
such date being specifically set forth in the Plan Committee’s resolution, then
the Date of Grant shall be the date of the Plan Committee’s resolution or
action. In no event shall the Date of Grant of any Award that is authorized by
the Plan Committee on or after the Effective Date be earlier than the Effective
Date.

 

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

 

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

 

2.11        FAIR MARKET VALUE. “Fair Market Value” of a
share of Common Stock on any date is the Volume Weighted Average Price for such
stock as reported for such stock by Bloomberg L.P. on such date, or in the
absence of such report the Volume Weighted Average Price for such stock as
reported for such stock by the New York Stock Exchange on such date or, if no
sale has been recorded by Bloomberg L.P. or the New 

 

3

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

ARTICLE III

GRANTING OF AWARDS TO PARTICIPANTS

 

3.1          ELIGIBLE PARTICIPANTS. Awards may be granted
by the Plan Committee to any employee of the Company or a Subsidiary
Corporation, including any employee who is also a director of the Company or a
Subsidiary Corporation. Awards other than grants of Incentive Stock Options may
also be granted to (a) a director of the Company who is not an employee of the
Company or a Subsidiary Corporation and (b) any individual or entity, other
than an employee, who provides services to the Company or a Subsidiary
Corporation in the capacity of an advisor or consultant. References in this
Plan to “employment” and similar terms (except “employee”) shall include the
providing of services in the capacity of a director, advisor or consultant. A
person who has been engaged by the Company for employment shall be eligible for
Awards other than Incentive Stock Options, provided such person actually
reports for and commences such employment within 90 days after the Date of
Grant. Incentive Stock Options may be granted only to individuals who are
employees on the Date of Grant.

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
IV

PERFORMANCE AWARDS

 

4.1          ESTABLISHMENT
OF PERFORMANCE GOALS. Performance Goals applicable to a Performance Award shall
be established by the Plan Committee in its absolute discretion on or before
the Date of Grant and not more than a reasonable period of time after the
beginning of the relevant Performance Period. Such Performance Goals may
include or be based upon any of the following criteria: pretax operating
contribution; economic value added; consolidated profits of the Company
expressed as a percent; earnings per share; return on capital; return on
investment; return on shareholders’ equity; revenue; working capital; pre-tax
segment profit; sales volume; return on sales; comparable store sales; earnings
before interest and taxes; earnings before interest, taxes, depreciation and
amortization; return on assets; cash flow; gross margin rate; expense rate;
market price; and total shareholder return. Performance Goals may be absolute
in their terms or be measured against or in relationship to other companies
comparably, similarly or otherwise situated. The Plan Committee, in its sole
discretion, may modify the Performance Goals if it determines that
circumstances have changed and modification is required to reflect the original
intent of the Performance Goals; provided, however, that no such change or
modification may be made to the extent it increases the amount of compensation
payable to any Participant who is a “covered employee” within the 

 

6

 

meaning of Code Section 162(m). The Plan Committee may in its
discretion classify Participants into as many groups as it determines, and as
to any Participant relate his/her Performance Goals partially, or entirely, to
the measured performance, either absolutely or relatively, of an identified
Subsidiary, operating company or test strategy or new venture of the Company.

 

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

 

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

 

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

 

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

 

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

 

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

 

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 Awards shall be notified, in writing thereof. For all purposes of
this Plan, notice shall be deemed to have been given the date action is taken
by the Plan Committee making the determination. Participants may not sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of all or any
portion of their Performance Awards during the Performance Period, except that
Performance Awards may be transferable by assignment by a Participant to the
extent provided in the applicable Performance Award agreement.

 

4.6          TREATMENT
OF PERFORMANCE AWARDS EARNED. Upon the Plan Committee’s determination that a
percentage of any Performance Awards have been 

 

7

 

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

 

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

 

4.8          DEFERRAL
OF RECEIPT OF PERFORMANCE AWARD DISTRIBUTIONS. With the consent of the Plan
Committee, a Participant who has been granted a Performance Award may by
compliance with the then applicable procedures under the Plan irrevocably elect
in writing to defer receipt of all or any part of any distribution associated
with that Performance Award. The terms and conditions of any such deferral,
including but not limited to, the period of time for, and form of, election;
the manner and method of payout; the plan and form in which the deferred amount
shall be held; the interest equivalent or other payment that shall accrue
pending its payout; and the use and form of Dividend Equivalents in respect of
stock-based units resulting from such deferral, shall be as determined by the
Plan Committee. The Plan Committee may, at any time and from time to time, but
prospectively only except as hereinafter provided, amend, modify, change,
suspend or cancel any and all of the rights, procedures, mechanics and timing
parameters relating to such deferrals. In addition, the Plan Committee may, in
its sole discretion, accelerate the payout of such deferrals (and any earnings
thereon), 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 such deferrals; or

 

(b)           the Participant 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.

 

4.9          NON-DISQUALIFYING
TERMINATION OF EMPLOYMENT. Except for Section 4.10 hereof, the only exceptions
to the requirement of continuous

 

8

 

employment during a Performance Period for Performance Award
distribution are termination of a Participant’s employment by reason of death
(in which event the Performance Award may be transferable by will or the laws
of descent and distribution only to such Participant’s beneficiary designated
to receive the Performance Award or to the Participant’s applicable legal
representatives, heirs or legatees), total and permanent disability, with the
consent of the Plan Committee, normal or late retirement or early retirement,
with the consent of the Plan Committee, or transfer of an executive in a
spin-off, with the consent of the Plan Committee, occurring during the
Performance Period applicable to the subject Performance Award. In such
instance a distribution of the Performance Award shall be made, as of the end
of the Performance Period, and 100% of the total Performance Award that would
have been earned during the Performance Period shall be earned and paid out;
provided, however, in a spin-off situation the Plan Committee may set additional
conditions, such as, without limiting the generality of the foregoing,
continuous employment with the spin-off entity. If a Participant’s termination
of employment does not meet the criteria set forth above, but the Participant
had at least 15 years of employment with the Company or a Subsidiary or any
combination thereof, the Plan Committee may allow distribution of up to 100% of
the total Performance Award for the Performance Period(s) in which the
termination of employment occurred, subject to any conditions that the Plan
Committee shall determine.

 

4.10        CHANGE
IN CONTROL. In the event of a Change in Control, a pro rata portion of all
outstanding Performance Awards under the Plan shall be payable ten days after
the Change in Control. The amount payable shall be determined by assuming that
100% of each Performance Award was earned, and by multiplying the earned amount
by a fraction, the numerator of which shall be the number of months that have
elapsed in the applicable Performance Period prior to the Change in Control and
the denominator of which shall be the total number of months in the Performance
Period.

 

ARTICLE V

STOCK OPTIONS AND

STOCK APPRECIATION RIGHTS

 

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

 

5.2          INCENTIVE
STOCK OPTION. Incentive Stock Options granted under the Plan are Stock Options
that are intended to be “incentive stock options” under Section 422 of the
Code, and the Plan shall be administered, except with respect to the right to
exercise options after termination of employment, to qualify Incentive Stock
Options issued hereunder as incentive stock options under Section 422 of the
Code. An Incentive Stock Option shall not be granted to an employee who owns,
or is deemed under Section 424(d) of the Code to own, stock of the Company (or
of any parent or Subsidiary of the 

 

9

 

Company) possessing more than 10% of the total combined voting power of
all classes of stock therein. The aggregate Fair Market Value (determined as of
the time the option is granted) of the stock with respect to which Incentive
Stock Options are exercisable for the first time by any Participant during any
calendar year (under all incentive stock option plans of the Company or any
parent or Subsidiary of the Company) shall not exceed $100,000. Incentive Stock
Options shall be evidenced by written agreements in such form and not
inconsistent with the Plan as the Plan Committee shall in its sole discretion
approve from time to time, which agreements shall specify the number of shares
to which they pertain and the purchase price of such shares.

 

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

 

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

 

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

 

(c)           Transferability and Termination of Options. During the lifetime of an individual to
whom a Stock Option is granted, the Stock Option may be exercised only by such
individual and only while such individual is an employee of the Company or a
Subsidiary and only if the Participant has been continuously so employed by any
one or combination thereof since the Date of Grant of the Stock Option,
provided, however, that if the employment of such Participant by the Company or
a Subsidiary Corporation terminates, the Stock Option may additionally be
exercised as follows, or in any other manner provided by the Plan Committee,
but in no event later than ten years after the Date of Grant of the Stock
Option, except as set forth in (ii) and (v) below:

 

(i)            If a Participant’s termination of employment
occurs by reason of normal or late retirement under any retirement plan of the
Company or its Subsidiaries, such Participant’s Stock Options may be exercised
within five years after the date of such termination of employment. If a
Participant’s termination of employment occurs by reason of early retirement
under any retirement plan of the Company or its Subsidiaries, or by reason of
the transfer of a Participant in a spin-off, or by reason of total and
permanent 

 

10

 

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

 

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

 

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

 

(iv)          If a Participant’s termination of employment
occurs for any reason other than as specified in Section 5.3(c)(i) or (ii)
hereof, the Plan Committee has not approved an extension 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, such Participant’s Stock Options may
be exercised within ninety days after the date of such termination of
employment except in the case of Participants who would at the time be subject
to the provisions of Section 16(b) of the Exchange Act, in which instance the
period of exercise shall be two hundred ten days after termination. Those
Participants terminated because of the 

 

11

 

commission of a dishonest or other illegal act shall have no additional
period after termination of employment in which to exercise their options.

 

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

 

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

 

No Stock Option shall be assignable or transferable by the individual
to whom it is granted, except that it may be transferable (X) by assignment by
the Participant to the extent provided in the applicable option agreement, or
(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 5.3(c)(ii).

 

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

 

(d)           Exercise of Options. An individual entitled to exercise Stock
Options may, subject to their terms and conditions and the terms and conditions
of the Plan, exercise them in whole or in part by delivery of written notice of

 

12

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

(ii)           terminates with “Good Reason”, which for
purposes of this Section 5.5 shall mean any material diminution of the
Participant’s position, authority, duties or responsibilities (including the
assignment of duties materially inconsistent with the Participant’s position or
a material increase in the time Participant is required by the Company or its
successor to travel), any reduction in salary or in the Participant’s aggregate
bonus and incentive opportunities, any material reduction in the aggregate
value of the Participant’s employee benefits (including retirement, welfare and
fringe benefits), or relocation to a principal work site that is more than 40
miles from the Participant’s principal work site immediately prior to the
Change in Control; or

 

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

 

(b)           If there is no Equitable Assumption or
Replacement, then without any action by the Plan Committee or the Board, each
outstanding Stock Option and Stock Appreciation Right granted under the Plan
that has not been previously exercised or otherwise lapsed and terminated shall
become immediately exercisable in full; provided, however, that the Plan
Committee, in its sole discretion, and without the consent of any Participant
affected thereby, may determine that a cash payment shall be made promptly
following the Change in Control in lieu of all or any portion of the
outstanding Stock Options and Stock Appreciation Rights 

 

14

 

granted under this Plan. The amount payable with respect to each share
of Common Stock subject to an affected Stock Option and each affected Stock
Appreciation Right shall equal the excess of the Fair Market Value of a share
of Common Stock immediately prior to such Change in Control over the exercise
price of such Stock Option or Stock Appreciation Right. After such a
determination by the Plan Committee, each Stock Option and Stock Appreciation
Right, with respect to which a cash payment is to be made shall terminate, and
the Participant shall have no further rights thereunder except the right to
receive such cash payment.

 

ARTICLE VI

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 

6.1          RESTRICTION
PERIOD. At the time an Award of Restricted Stock or Restricted Stock Units is
made, the Plan Committee shall establish the terms and conditions applicable to
such Award, including the period of time (the “Restriction Period”) during
which certain restrictions established by the Plan Committee shall apply to the
Award. The Restriction Period shall be not less than three years, provided,
however, that for Awards to non-employee directors of the Company, the terms of
the Award may allow for the ratable release of the restrictions over a minimum
period of three years. Each such Award, and designated portions of the same
Award, may have a different Restriction Period, at the discretion of the Plan
Committee. Except as permitted or pursuant to Sections 6.4, 6.5 or 10.7 hereof,
the Restriction Period applicable to a particular Award shall not be changed.

 

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

 

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

 

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

 

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

 

(d)           A breach of the terms and conditions
established by the Plan Committee with respect to the Restricted Stock shall
cause a 

 

15

 

forfeiture of the Restricted Stock, and any dividends withheld thereon.

 

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

 

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

 

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

 

6.4          FORFEITURE
PROVISIONS. Subject to Section 6.5, in the event a Participant terminates
employment during a Restriction Period for the Participant’s Restricted Stock
or Restricted Stock Units, such Awards will be forfeited; provided, however,
that the Plan Committee may provide for proration or full payout in the event
of (a) a termination of employment because of normal or late retirement, (b)
with the consent of the Plan Committee, early retirement or spin-off, (c)
death, (d) total and permanent disability, as determined by the Plan Committee,
(e) with the consent of the Plan Committee, termination of employment after 15
years of employment with the Company or a Subsidiary or any combination
thereof, or (f) in the case of a non-employee director, a departure from the
Board following the completion of the director’s term of office, all subject to
any other conditions the Plan Committee may determine.

 

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

 

ARTICLE
VII

SHARES OF STOCK SUBJECT TO THE PLAN; MAXIMUM
AWARDS

 

7.1          SHARES
AVAILABLE. Subject to the other provisions of this Article VII, the total number
of shares available for grant as Awards pursuant to the Plan shall 

 

16

 

not exceed in the aggregate 81,000,000 shares of Common Stock. (This
limit includes the 44,000,000 shares that were originally made available under
this Plan.)  Solely for the purpose of
applying the limitation in the preceding sentence and subject to the
replenishment and adjustment provisions of Sections 7.2 and 7.3 below:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

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

 

18

 

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

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

 

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

 

ARTICLE
VIII

ADMINISTRATION

 

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

 

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

 

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

 

8.4          COMMITTEE
PROCEDURE. Any action required or permitted to be taken by the Plan Committee
under the Plan shall require the affirmative vote of a majority of a quorum of
the members of the Plan Committee. A majority of all members of the Plan
Committee shall constitute a “quorum” for Plan Committee business. The Plan
Committee may act by written determination instead of by affirmative vote at a 

 

19

 

meeting, provided that any written determination shall be signed by all
members of the Plan Committee, and any such written determination shall be as
fully effective as a majority vote of a quorum at a meeting.

 

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

 

ARTICLE
IX

REDUCTION IN AWARDS

 

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

 

(a)           Payments or distributions hereunder, determined without application of
this Article IX, either alone or together with other payments in the nature of
compensation to the Participant which are contingent on a change in the
ownership or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company, or otherwise (but after any
elimination or reduction of such payments under the terms of the Company’s
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.

 

9.2          REDUCED AMOUNT. Under this Article IX the
payments and distributions under this Plan shall be reduced (but not below
zero) so that the present value of such payments and distributions shall equal
the Reduced Amount. The “Reduced Amount” (which may be zero) shall be an amount
expressed in present value which maximizes the aggregate present value of
payments and distributions under this Plan which can be made without causing
any such payment to be subject to the excise tax under Section 4999 of the
Code. The determinations and reductions under this Section 9.2 shall be made
after eliminations or reductions, if any, have been made under the 

 

20

 

Company’s Income Continuance Policy Statement
or SMG Income Continuance Policy Statement.

 

9.3          PROCEDURE.
If the Auditor determines that this Article IX is applicable to a Participant,
it shall so advise the Plan Committee in writing. The Plan Committee shall then
promptly give the Participant notice to that effect together with a copy of the
detailed calculation supporting such determination which shall include a
statement of the Reduced Amount. The Participant may then elect, in his/her
sole discretion, which and how much of the Awards otherwise awarded under this
Plan shall be eliminated or reduced (as long as after such election the
aggregate present value of the remaining Awards 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 Awards 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 IX, present value shall be determined in accordance with Section
280G of the Code. All the foregoing determinations made by the Auditor under
this Article IX shall be made as promptly as practicable after it is determined
that excess parachute payments (as defined in Section 280G of the Code) will be
made to the Participant if an elimination or reduction is not made. As promptly
as practicable 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.

 

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

 

21

 

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

 

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

 

ARTICLE X

GENERAL
PROVISIONS

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

10.11      PRIOR
PLANS. Notwithstanding the adoption of this 2007 Restatement of the Plan by the
Board, the Company’s Executive Long Term Incentive Plan of 1981 and the
Director Stock Option Plan of 1995, as the same have been amended from time to
time (the “Prior Plans”), shall remain in effect, and all grants and awards
heretofore made under the Prior Plans shall be governed by the terms of the
Prior Plans. The Plan Committee shall not, however, make any additional grants
pursuant to the Prior Plans, nor shall it grant any additional Awards on or
after the Effective Date that are subject to the terms and conditions of the Plan
in effect prior to the Effective Date.

 

10.12      DURATION
OF PLAN. This Plan shall remain in effect until the earliest of the following
events occurs: (a) distribution of all shares of Common Stock subject to the
Plan, (b) termination of this Plan pursuant to Section 10.1 hereof, or (c) the
tenth anniversary of the Effective Date.

 

25

 

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

 

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

 

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

 

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

 

26

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}]]