
<PAGE>

                                                                   EXHIBIT (10)B
 
                           DAYTON HUDSON CORPORATION

                       EXECUTIVE LONG TERM INCENTIVE PLAN
                                    OF 1981
                  (AS AMENDED AND RESTATED OCTOBER 12, 1994)


                                   ARTICLE I
                           ESTABLISHMENT OF THE PLAN

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

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

                                   ARTICLE II
                                  DEFINITIONS

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

     2.2  Board.  "Board" is the Board of Directors of Dayton Hudson 
Corporation.

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

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

     2.5  Date of Grant.  "Date of Grant" shall be the date designated in the 
resolution by the Plan Committee as the date of such Stock Option(s) or
Performance Share(s) or Restricted Stock Award(s), but such date shall not be
earlier than the date of the resolution and action thereon by the Plan
Committee, or earlier than the effective date of the Plan, and in the absence of
a date of grant or a fixed method of computing such date being specifically set
forth in the Plan Committee's resolution, then the Date of Grant shall be the
date of such Plan Committee's resolution and action.

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

     2.7  Holder.  A "Holder" is a person who has been granted a Restricted 
Stock Award.

     2.8  Incentive Stock Options.  "Incentive Stock Options" are Stock Options
that are intended to qualify under Section 422 of the Code.  No Stock Options 
granted prior to August 11, 1982 shall be Incentive Stock Options.

     2.9  Non-Qualified Options.  "Non-Qualified Options" are Stock Options 
that are not intended to qualify under Section 422 of the Code.

     2.10  Participant.  A "Participant" is a person designated as such by the 
Plan Committee, pursuant to Article III hereof, for participation in the Plan.

     2.11  Performance Goals.  "Performance Goals" are defined in Section 4.1 
hereof.

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

     2.13  Performance Share.  A "Performance Share" is a potential award
consisting of a right to one share of the Company's $1.00 par value common stock
(subject to increase as provided in Section 4.2 hereof) or a lesser number of
shares and the cash payment set forth in Section 5.2 hereof.  A Performance
Share shall be of no value to a Participant unless and until earned in
accordance with Article V hereof.

     2.14  Plan Committee.  The "Plan Committee" is the Committee referenced in
Article IX hereof.

     2.15  Plan Year.  The "Plan Year" shall be a fiscal year of the Company 
falling within the term of this Plan except for the first year of the Plan, for
which the Plan Year shall commence as of the effective date of the Plan and 
terminate as of January 31, 1982.

     2.16  Relevant Change Adjustments.  Appropriate adjustments in the number 
of shares and in the option price per share designated in Sections 2.13, 2.17 
and 2.18 of this Article II, may be made by the Plan Committee, in its
discretion except as provided in Section 11.8 hereof, to give effect to
adjustments made in the number of shares of Company common stock through a
merger, consolidation, recapitalization, reclassification, combination, spin-
off, common stock dividend, stock split or other relevant change.

                                       2
<PAGE>
 
     2.17  Restricted Stock Award.  A "Restricted Stock Award" is an Award
granted under Article VII of this Plan.

     2.18  Stock Option.  A "Stock Option" is a right accruing in a
Participant to purchase from the Company one share of the Company's $1.00 par
value common stock at the Fair Market Value of such share of common stock on the
Date of Grant of the Stock Option, such exercise of option to be made any time
within ten years and one day (ten years with respect to Incentive Stock Options)
following the Date of Grant, and containing the terms and conditions set forth
or allowed under Article VI hereof.  Stock Options may be either Non-Qualified
Options or Incentive Stock Options.

     2.19  Subsidiary Corporation.  For purposes of this Plan, the term
"Subsidiary" or "Subsidiary Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, in
which each of the corporations other than the last corporation in the unbroken
chain owns stock possessing fifty percent or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain as
determined at the point in time when reference is made to such "Subsidiary" or
"Subsidiary Corporation" in this Plan.

     2.20  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

                                       3
<PAGE>
 
               Company of statutory dissenters' rights), securities, or other
               property or (B) all holders of outstanding Voting Stock of the
               Company (other than fractional shares) immediately prior to the
               merger (except those that exercise statutory dissenters' rights)
               have substantially the same proportionate ownership of the Voting
               Stock of the Company or its parent corporation immediately after
               the merger),

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

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

          (iv) liquidate or dissolve the Company.

                                  ARTICLE III
                 GRANTING OF STOCK OPTIONS, PERFORMANCE SHARES
                  AND RESTRICTED STOCK AWARDS TO PARTICIPANTS

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

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

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

                                       4
<PAGE>
 
     (a)  the total number of Stock Option(s) and/or Restricted Stock Award(s)
          and/or Performance Share(s) available for allocation to all
          Participants; and

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

     (c)  the Participant's current and potential performance in reference to
          such factors.

Allocation of Awards may, in the discretion of the Plan Committee, be in the
form of Stock Option(s) solely or Performance Share(s) solely, or Restricted
Stock Award(s) solely, or any combination in whatever relationship one to the
other, if any, as the Plan Committee in its discretion so determines.
Allocation of Stock Options may, in the discretion of the Plan Committee, be in
the form of Incentive Stock Option(s) solely or Non-Qualified Option(s) solely
or a combination in whatever relationship to the other, if any, as the Plan
Committee in its discretion so determines.

     3.4  Notification to Participants and Delivery of Documents.  As soon as
practicable after such determinations have been made, each Participant, shall be
notified of (i) his/her designation as a Participant, (ii) the Date of Grant,
and (iii) the number of Stock Option(s), and/or Restricted Stock Award(s) and/or
the number of Performance Share(s) granted to the Participant, and in the case
of Performance Share(s), the Performance Period and in the case of Restricted
Stock Award(s), the Restriction Period.  The Participant shall thereafter be
supplied with written evidence of any such granted Performance Share(s) and/or
Restricted Stock Award(s), and shall receive a Stock Option exercisable for
purchase of one share of the Company's $1.00 par value common stock for each
Stock Option granted to the Participant pursuant to this Plan or indicating the
aggregate of such grant, which option agreement(s) shall be in conformity with
the provisions of Article VI hereof.

                                   ARTICLE IV
                               PERFORMANCE GOALS

     4.1  Establishment of Goals.  Within a reasonable period of time after the
beginning of each Performance Period, Performance Goals relative to such
Performance Period shall be established by the Plan Committee in its absolute
discretion.  Such Performance Goals may include, but shall not necessarily be
limited to, amounts or rates of growth in consolidated profits of the Company
expressed in dollars, earnings per share, return on capital, return on
investment, return on shareholder's equity, or other similar or relevant
measurement which may be absolute in their terms or be measured against or in
relationship to other companies comparably, similarly or otherwise situated.
The Plan Committee, in its sole discretion, may modify the Performance Goals if
it determines that circumstances have changed and modification is required to
reflect the original intent of the Performance Goals.  The Plan Committee may in
its discretion classify Participants into as many groups as it determines, and
as to any Participant(s) relate his/her Performance Goals partially, or
entirely, to the measured performance, either absolutely or

                                       5
<PAGE>
 
relatively, of an identified Subsidiary, operating company or test strategy or
new venture of the Company.

     4.2  Levels of Performance Required to Earn Performance Shares.  At or
about the same time that Performance Goals are established for a specific
period, the Plan Committee shall in its absolute discretion establish the
percentage (not to exceed 150% thereof) of the Performance Share(s) granted for
such Performance Period which shall be earned by the Participant for various
levels of performance measured in relation to achievement of Performance Goals
for such Performance Period.

     4.3  Other Restrictions.  The Plan Committee may provide restrictions on
the delivery of common stock of the Company upon the earning of Performance
Shares, including the future forfeiture of all or part of the common stock
earned.  The Plan Committee may provide that the shares of the Company's one
dollar par value common stock issued on Performance Shares Earned be held in
escrow and/or legended.

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

                                   ARTICLE V
                         EARNING OF PERFORMANCE SHARES

     5.1  Measurement of Performance against Performance Goals.  The Plan
Committee shall as soon as practicable after the close of each Performance
Period, make a determination of:

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

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

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

These determinations shall be absolute and final as to the facts and conclusions
therein made and be binding on all parties.  Promptly after the Plan Committee
has made the foregoing determination each Participant who has earned Performance
Share(s) based thereon shall be notified, in writing, of the number of
Performance Shares so earned.  For all purposes of this

                                       6
<PAGE>
 
Plan notice shall be deemed to have been given the date action is taken by the
Plan Committee making the determination.

     5.2  Treatment of Performance Shares Earned.  Upon the determination that a
percentage of the Performance Share(s) has been earned for a Performance Period,
a Participant to whom such earned Performance Share(s) has been granted and who
has been (or was) in the employ of the Company or a Subsidiary thereof
continuously from the date of his/her hire during the subject Performance Period
to which the grant relates, subject to the exceptions set forth at Section 5.5
and Section 5.6 hereof, shall be entitled, subject to the other conditions of
this Plan, to receive the shares of the Company's $1.00 par value common stock
for each Performance Share earned (less the shares paid in cash), plus a cash
payment in the amount of the Fair Market Value of the shares of common stock to
be paid in cash as determined in Section 5.1(c) hereof, calculated as of the
close of business on the date of the notice referred to in Section 5.1 hereof.
The provisions of Section 5.5 to the contrary notwithstanding, the Plan
Committee may provide that the issued shares of common stock be held in escrow
and/or be legended and that the common stock be subject to restrictions,
including the future forfeiture of all or a part of the shares.  Performance
Shares shall under no circumstances become earned or have any value whatsoever
for any Participant who is not in the employ of the Company or its Subsidiaries
continuously during the entire Performance Period for which such Performance
Shares are granted, except as provided at Section 5.5 or Section 5.6 hereof.

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

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

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

     5.4(b)  Amendment of Deferral Arrangements.  The Plan Committee may, at any
time and from time to time, but prospectively only except as hereinafter
provided, amend, modify, change, suspend or cancel any and all of the rights,
procedures, mechanics and timing parameters relating

                                       7
<PAGE>
 
to the deferral of receipt of Performance Share earnout under the Plan as set
forth at Section 5.4(a) hereof.  In addition, the Plan Committee may, in its
sole discretion, accelerate the payout of the deferred account, or any portion
thereof, either in a lump sum or in a series of payments, but under the
following conditions only:

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

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

     5.5  Non-Disqualifying Termination of Employment.  Except for Section 5.6
hereof, the only exceptions to the requirement of continuous employment during a
Performance Period for Performance Share earnout eligibility are termination of
a Participant's employment by reason of death (in which event the Performance
Shares may be transferable by will or the laws of descent and distribution only
to such Participant's beneficiary designated to receive the Performance Shares
or to the Participant's applicable legal representatives, heirs or legatees),
total and permanent disability, normal or late retirement or early retirement,
with the consent of the Plan Committee, or transfer of an executive in a spin-
off, with the consent of the Plan Committee, occurring during the Performance
Period applicable to the subject Performance share grant.  In such instance an
earnout of the Performance Shares shall be made, as of the end of the
Performance Period, and 100% of the total Performance Shares that would have
been earned during the Performance Period shall be earned and paid out;
provided, however, in a spin-off situation the Plan Committee may set additional
conditions, such as, without limiting the generality of the foregoing,
continuous employment with the spin-off entity.  If a Participant's termination
of employment does not meet the criteria set forth above, but the Participant
had at least 15 years of continuous employment with the Corporation or a
Subsidiary or any combination thereof, provided that if the person is not an
Executive Officer (as defined under the Securities Exchange Act 1934, as
amended, and the regulations promulgated thereunder) of the Corporation at time
of termination such 15 years need not be continuous, the Plan Committee may
allow earn-outs of up to 100% of the total Performance Shares for the
Performance Period(s) in which the termination of employment occurred, subject
to any conditions that the Plan Committee shall determine.

     5.6  Change in Control.  In the event of a Change in Control, all
outstanding Performance Shares granted under the Plan shall be proratably
payable ten days after the Change in Control; provided that no Performance Share
shall be payable to a Participant within six months after the Date of Grant.
The amount of Performance Shares payable shall be determined by multiplying

                                       8
<PAGE>
 
100% of each Performance Share grant by a fraction, the numerator of which shall
be the number of months that have elapsed in the applicable Performance Period
and the denominator of which shall be forty-eight.

                                   ARTICLE VI
                                 STOCK OPTIONS

     6.1  Non-Qualified Option.  Non-Qualified Options granted under the Plan
are not intended to be Incentive Stock Options under the provisions of Section
422 of the Code.  The Non-Qualified Options shall be evidenced by Non-Qualified
Option agreements in such form and not inconsistent with the Plan as the Plan
Committee shall in its sole discretion approve from time to time, which
agreements shall specify the number of shares to which they pertain and the
purchase price of such shares and shall, but without limitation, contain in
substance the following terms and conditions:

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

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

          (i)  if a Participant's termination of employment occurs by reason of
               normal or late retirement under any retirement plan of the
               Company or its Subsidiaries or, with the consent of the Plan
               Committee, by reason of early retirement under any retirement
               plan of the Company or its Subsidiaries, or, with the consent of
               the Plan Committee, the transfer of an executive in a spin-off,
               or by reason of total and permanent disability, as determined by
               the Plan Committee, without retirement, then within five years
               after the date of such termination of employment.  During the
               five-year period the right to exercise options, if any, accruing
               in installments, shall continue; provided, however, in a spin-off
               situation the Plan Committee may set

                                       9
<PAGE>
 
               additional conditions, such as, without limiting the generality
               of the foregoing, continuous employment with the spin-off entity.

          (ii) if a Participant's termination of employment occurs by reason of
               death, then within five years after the date of death or the life
               of the option, whichever is less, but in no event less than one
               year after the date of death, during which time installments
               shall continue to accrue.

         (iii) if a Participant's termination of employment occurs for any
               reason other than as specified in Section 6.1(b)(i) or (ii)
               hereof, the Participant has been continuously employed by the
               Company or a Subsidiary or any combination for more than 15
               years, provided that if the person is not an Executive Officer
               (as defined under the Securities Exchange Act 1934, as amended,
               and the regulations promulgated thereunder) of the Corporation at
               the time of termination such 15 years need not be continuous, and
               if the Plan Committee so approves, then within a period of up to
               five years after the date of termination of employment.  During
               the period the right to exercise options, if any, accruing in
               installments shall continue; provided, however, the Plan
               Committee may set additional conditions.

          (iv) if a Participant's termination of employment occurs for any
               reason other than as specified in Section 6.1(b)(i) or (ii)
               hereof, the Plan Committee has not approved an extension pursuant
               to Section 6.1(b)(iii) and Participant's termination of
               employment is not occasioned by the commission of a dishonest or
               other illegal act, then, but only with respect to installments
               that have as of the date of termination already accrued, within
               ninety days after the date of such termination of employment
               except in the case of Participants who would at the time be
               subject to the provisions of Section 16(b) of the Securities
               Exchange Act of 1934, in which instance the period of exercise
               shall be two hundred ten days after termination.  Those
               Participants terminated because of the commission of a dishonest
               or other illegal act shall have no additional period after
               termination of employment in which to exercise their options.
               Absence on a leave of absence approved by the Plan Committee
               shall not be deemed a termination or interruption of continuous
               employment for the purposes of the Plan.

          (v)  Rights accruing to a Participant under the aforesaid Subsections
               (b)(i), (b)(iii) and (b)(iv) may, upon the death of a Participant
               subsequent to his/her termination of employment, be exercised or
               perfected by his/her duly designated beneficiary or otherwise by
               his/her applicable legal representatives, heirs or legatees to
               the extent vested in and unexercised or perfected by the
               Participant at the date of his/her death.

                                       10
<PAGE>
 
               No option shall be assignable or transferable by the individual
               to whom it is granted, except that it may be transferable by will
               or the laws of descent and distribution in accordance with the
               provisions of the Plan.  An option, if so transferable, may be
               exercised after the death of the individual to whom it is granted
               only 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.

               In no event whether by the Participant directly or by his/her
               beneficiary or other representative shall any option be
               exercisable at any time after its expiration date as stated in
               the option agreement.  When an option is no longer exercisable it
               shall be deemed for all purposes and without further act to have
               lapsed and terminated.  The Plan Committee may in its sole
               discretion, but shall not be required to, determine, solely for
               the purposes of the Plan, that a Participant is permanently and
               totally disabled and the acts and decisions of the Plan Committee
               made in good faith in relation to any such determination shall be
               conclusive upon all persons and interests affected thereby.

     (c)  Exercise of Options.  An individual entitled to exercise an option
          may, subject to its terms and conditions and the terms and conditions
          of the Plan, exercise it in whole at any time, or in part from time to
          time, by delivery to the Company at its principal office of written
          notice of exercise, specifying the number of whole shares with respect
          to which the option is being exercised.  Before shares may be issued
          payment must be made in full, in legal United States tender, in the
          amount of the purchase price of the shares to be purchased at the time
          and any amounts for withholding as provided in Section 11.9 hereof;
          provided, however, in lieu of paying for the exercise price in cash as
          described above, the individual may pay all or part of such exercise
          price by delivering owned and unencumbered shares of the Company
          common stock having a Fair Market Value on the date of exercise of the
          option equal to or less than the exercise price of the options
          exercised, with cash, as set forth above, for the remainder, if any,
          of the purchase price.  Subject to rules established by the Plan
          Committee, the withholdings required by Section 11.9 hereof may be
          satisfied by the Company withholding shares of Company common stock
          issued on exercise that have a Fair Market Value on the date of
          exercise of the option equal to or less than the withholding required
          by Section 11.9 hereof.

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

                                       11
<PAGE>
 
of the Company) possessing more than 10% of the total combined voting power of
all classes of stock therein.  The aggregate Fair Market Value (determined as of
the time the option is granted) of the stock with respect to which Incentive
Stock Options are exercisable for the first time by any Participant during any
calendar year (under all Incentive Stock Option Plans of the Company or any
parent or Subsidiary of the Company) shall not exceed $100,000.  The Incentive
Stock Options shall be evidenced by Incentive Stock Option Agreements in such
form and not inconsistent with the Plan as the Plan Committee shall in its sole
discretion approve from time to time, which agreements shall specify the number
of shares to which they pertain and the purchase price of such shares.

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

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

                                  ARTICLE VII
                                RESTRICTED STOCK

     7.1  Restriction Period to be Established by the Plan Committee.  At the
time a Restricted Stock Award is made, the Plan Committee shall establish a
period of time (the "Restriction Period") applicable to such Award, which shall
be not less than three years.  Each Restricted Stock Award may have a different
Restriction Period, at the discretion of the Plan Committee.  Except as
permitted or pursuant to Sections 7.4, 7.5 or 11.8 hereof, the Restriction
Period applicable to a particular Restricted Stock Award shall not be changed.

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

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

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

                                       12
<PAGE>
 
    (iii) The Holder may not sell, transfer, pledge, exchange, hypothecate or
          otherwise dispose of the Company common stock during the Restriction
          Period.

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

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

Provided, however, and the provisions of Section 7.4 to the contrary
notwithstanding, in lieu of the foregoing, the Plan Committee may provide that
no shares of common stock be issued until the Restriction Period is over and
further provide that the shares of common stock issued after the Restriction
Period has been completed, be issued in escrow and or be legended and that the
common stock be subject to restrictions including the forfeiture of all or a
part of the shares.

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

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

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

                                       13
<PAGE>
 
                                 ARTICLE VIII
                      SHARES OF STOCK SUBJECT TO THE PLAN

     8.1  The total number of shares that may be available for issuance under 
all Performance Shares, Stock Options and Restricted Stock Awards granted
pursuant to the Plan shall not exceed in the aggregate 6,200,000 shares of the
Company's $1.00 par value common stock.  Shares covered by granted Performance
Shares which are not earned pursuant to any of the provisions of Article V
hereof, or Stock Options or Performance Shares or Restricted Stock Awards which
are forfeited for any reason or are not distributed or are covered by options
that lapse or are canceled before exercise, shall (unless the Plan shall have
been terminated) again be available in the same relative amounts for other
Performance Share, Restricted Stock Award and Stock Option grants under the Plan
(except for shares for which cash equivalent payments are received by
Participants pursuant to the Plan), except that 220,275 shares for Stock
Options, Performance Shares or Restricted Stock Awards that were outstanding on
April 10, 1991 that are not earned or are forfeited for any reason or are not
distributed or lapse or are cancelled before exercise shall be available for
future grants and any additional shares for Stock Options, Performance Shares or
Restricted Stock Awards that were outstanding on April 10, 1991 that are not
earned or are forfeited for any reason or are not distributed or lapse or are
cancelled before exercise shall not be available for future Performance Shares,
Restricted Stock Awards or Stock Option Grants.  Such shares may be authorized
and unissued shares, or may be treasury shares held by the Company or may be
shares purchased or held by the Company or a Subsidiary for purposes of the
Plan, or any combination thereof.

                                   ARTICLE IX
                           ADMINISTRATION OF THE PLAN

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

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

     9.3  All questions arising under the Plan, any Incentive Stock Option,
Non-Qualified Stock Option, Performance Share or Restricted Stock Award
agreement, or any rule, regulation or procedure adopted by the Plan Committee
shall be determined by the Plan Committee, and its determination thereof shall
be conclusive and binding upon all parties.

     9.4  Any action required or permitted to be taken by the Plan Committee 
under the Plan shall require the affirmative vote of a majority of a quorum of 
the members of the Plan

                                       14
<PAGE>
 
Committee.  A majority of all members of the Plan Committee shall constitute a
"quorum" for Plan Committee business.  The Plan Committee may act by written
determination instead of by affirmative vote at a meeting, provided that any
written determination shall be signed by all members of the Plan Committee, and
any such written determination shall be as fully effective as a majority vote of
a quorum at a meeting.

                                   ARTICLE X
                              REDUCTION IN AWARDS

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

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

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

     10.2  Under this Article X the payments and distributions under this Plan
shall be reduced (but not below zero) so that the present value of such payments
and distributions shall equal the Reduced Amount.  The "Reduced Amount" (which
may be zero) shall be an amount expressed in present value which maximizes the
aggregate present value of payments and distributions under this Plan which can
be made without causing any such payment to be subject to the excise tax under
Section 4999 of the Code.  The determinations and reductions under this
paragraph shall be made after eliminations or reductions, if any, have been made
under the Company's Income Continuance Policy Statement or SMG Income
Continuance Policy Statement.

     10.3  If Ernst & Young determines that this Article X is applicable to a
Participant, it shall so advise the Plan Committee.  The Plan Committee shall
then promptly give the Participant notice to that effect together with a copy of
the detailed calculation supporting such determination which shall include a
statement of the Reduced Amount.  The Participant may then elect, in his/her
sole discretion, which and how much of the Stock Options, Restricted Stock
Awards

                                       15
<PAGE>
 
and/or Performance Shares otherwise awarded under this Plan shall be eliminated
or reduced (as long as after such election the aggregate present value of the
remaining Stock Options, Restricted Stock Awards and/or Performance Shares under
this Plan equals the Reduced Amount), and shall advise the Plan Committee in
writing of his/her election within ten days of his/her receipt of notice.  If no
such election is made by the Participant within such ten-day period, the Plan
Committee may elect which and how much of the Stock Options, Restricted Stock
Awards, and/or Performance Shares shall be eliminated or reduced (as long as
after such election their aggregate present value equals the Reduced Amount) and
shall notify the Participant promptly of such election.  For purposes of this
Article X, present value shall be determined in accordance with Section 280G of
the Code.  All the foregoing determinations made by Ernst & Young under this
Article X shall be made as promptly as practicable after it is determined that
parachute payments will be made to the Participant if an elimination or
reduction is not made.  As promptly as practicable following the election
hereunder, the Company shall provide to or for the benefit of the Participant
such amounts and shares as are then due to the Participant under this Plan and
shall promptly provide to or for the benefit of the Participant in the future
such amounts and shares as become due to the Participant under this Plan.

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

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

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

                                       16
<PAGE>
 
                                  ARTICLE XI
                              GENERAL PROVISIONS

     11.1  Amendment or Termination.  The Board may at any time amend, suspend,
discontinue or terminate the Plan (including the making of any necessary 
enabling, conforming and procedural amendments to the Plan to authorize and 
implement the granting of qualified Stock Options or other income tax preferred
stock options which may be authorized by enactment of the United States 
Congress and/or the Internal Revenue Service subsequent to the effective date 
of this Plan); provided, however, that no amendment by the Board shall, without
further approval of the shareholders of the Company:

     (a)  except as provided at Section 2.16 hereof increase the total number of
          shares of Company common stock which may be made subject to the Plan;
          or

     (b)  except as provided at Section 2.16 hereof change the purchase price of
          Company common stock under the Plan; or

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

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

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

     11.3  No Rights as Shareholder.  The granting of Performance Share(s)
and/or Stock Option(s) and/or Restricted Stock Award(s) under the Plan shall not
entitle a Participant or any other person succeeding to his/her rights, to any
dividend, voting or other right as a shareholder of the Company unless and until
the issuance of a stock certificate to the Participant or such other person
pursuant to the provisions of the Plan and then only subsequent to the date of
issuance thereof.

                                       17
<PAGE>
 
     11.4  Limitation of Liability or Obligation of the Company.  As
illustrative only of the limitations of liability or obligation of the Company
and not intended to be exhaustive thereof, nothing in the Plan shall be
construed:

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

     (b)  to give any Participant any rights whatsoever with respect to shares
          of the Company's $1.00 par value common stock except as specifically
          provided in the Plan,

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

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

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

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

     11.6  Non-exclusivity of the Plan.  Neither the adoption of the Plan by the
Board nor the submission of the Plan to shareholders of the Company for approval
shall be construed as creating any limitations on the power or authority of the
Board to adopt such other or additional incentive or other compensation
arrangements of whatever nature as the Board may deem necessary or desirable or
preclude or limit the continuation of any other plan, practice or arrangement
for the payment of compensation or fringe benefits to employees generally, or to
any class or group of employees, which the Company or any Subsidiary now has
lawfully put into effect, including, without limitation, any retirement,
pension, savings, profit sharing or stock purchase plan, insurance, death and
disability benefits, and executive short term incentive plans.

                                       18
<PAGE>
 
     11.7  Effective Date.  Subject to the approval of this restated Plan by the
holders of a majority of the voting power of the shares present and entitled to
vote at the Company's Annual Meeting of Shareholders to be held May 29, 1991 and
any necessary approval being obtained from any department, board or agency of
the United States or states having jurisdiction, the Plan shall be effective as
of May 29, 1991.

     11.8  Reorganization.  In case the Company is merged or consolidated with
another corporation, or in case the property or stock of the Company is acquired
by another corporation, or in case of a separation, reorganization or
liquidation of the Company, the Plan Committee or a comparable committee of any
corporation assuming the obligations of the Company hereunder, shall either:

     (a)  make appropriate provision for the protection of any outstanding
          Performance Shares, Stock Options and Restricted Stock Awards granted
          thereunder by the substitution on an equitable basis of appropriate
          stock of the Company, or of the merged, consolidated or otherwise
          reorganized corporation which will be issuable in respect to the
          shares of the Company's $1.00 par value common stock.  Stock to be
          issued pursuant to such Performance Shares shall be limited so that
          the excess of the aggregate fair market value of the shares subject to
          the Performance Shares immediately after such substitution over the
          purchase price thereof is not more than the excess of the aggregate
          fair market value of the shares subject to such Performance Shares
          immediately before such substitution over the purchase price thereof;
          or

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

     11.9  Withholding Taxes, etc.  All distributions under the Plan shall be
subject to any required withholding taxes and other withholdings and, in case of
distributions in Company common stock, the Participant or other recipient may,
as a condition precedent to the delivery of the common stock, be required to pay
to his/her participating employer the excess, if any, of the amount of required
withholding over the withholdings, if any, from any distributions in cash under
the Plan.  No distribution under the Plan shall be made in fractional shares of
the Company's common stock, but the proportional market value thereof shall be
paid in cash.

     11.10  General Restriction.  Each Performance Share, Stock Option and
Restricted Stock Award shall be subject to the requirement that, if at any time
the Board shall determine, in its discretion, that the listing, registration or
qualification of the shares subject to such option and/or

                                       19
<PAGE>
 
right upon any securities exchange or under any state or Federal Law, or the
consent or approval of any government regulatory body, is necessary or desirable
as a condition of, or in connection with the granting of such Performance Share
or Stock Option or Restricted Stock Award or the issue or purchase of shares
respectively thereunder, such Performance Share or Stock Option or Restricted
Stock Award may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board.

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

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

                                       20
