WALGREEN CO
AMMENDED NONEMPLOYEE DIRECTOR STOCK PLAN
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<FILENAME>ex10a.htm
<DESCRIPTION>AMMENDED NONEMPLOYEE DIRECTOR STOCK PLAN
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	 <P>&nbsp;</P>
	 <P ALIGN="CENTER">Walgreen Co.</P>
	 <P ALIGN="CENTER">Nonemployee Director Stock Plan</P>
	 <P ALIGN="CENTER"></P>
	 <P ALIGN="CENTER">(Amended and Restated Effective January 14, 2004)</P>
	 <P><B><FONT SIZE="4">Contents</FONT></B></P>
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	 <P>	<FONT SIZE="4">Page</FONT></P>
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	 <P>Article 1. Establishment, Purpose, and Duration 1</P>
	 <P>Article 2. Definitions 1</P>
	 <P>Article 3. Administration 3</P>
	 <P>Article 4. Participation 3</P>
	 <P>Article 5. Annual Equity Grants 4</P>
	 <P>Article 6. Retainer Share Payments 4</P>
	 <P>Article 7. Annual Deferral Opportunity 4</P>
	 <P>Article 8. Deferred Stock Units 6</P>
	 <P>Article 9. Amendment, Modification, and Termination 6</P>
	 <P>Article 10. Miscellaneous 7</P>
	 <P ALIGN="CENTER"></P>
	 <P ALIGN="CENTER"><B>WALGREEN CO.</B></P>
	 <P ALIGN="CENTER">NONEMPLOYEE DIRECTOR STOCK PLAN</P>
	 <P ALIGN="CENTER"></P>
	 <P ALIGN="CENTER">&nbsp;</P>
	 <P>Article 1. Establishment, Purpose, and Duration</P>
	 <P> &nbsp;1.1 Establishment of the Plan. Walgreen Co. established an
		incentive compensation plan known as the "Walgreen Co. Nonemployee Director
		Stock Plan" (the "Plan") effective November 1, 1996, and the Plan has been
		subsequently amended from time to time. The Plan provides for the grant of
		Shares to Nonemployee Directors and for the acquisition of Deferred Stock Units
		by Nonemployee Directors, subject to the terms and provisions set forth herein.
		</P>
	 <P> This document constitutes an amendment and restatement of the Plan,
		effective January 14, 2004, subject to shareholder approval of the amended and
		restated Plan. The Plan shall remain in effect as provided in Section&nbsp;1.3
		herein. </P>
	 <P> &nbsp;<B>1.2 Purpose of the Plan. </B>The purpose of the Plan is to
		promote the achievement of long-term objectives of the Company by linking the
		personal interests of Nonemployee Directors to those of the Company's
		shareholders and to attract and retain Nonemployee Directors of outstanding
		competence. </P>
	 <P> &nbsp;<B>1.3 Duration of the Plan. </B>This amended and restated Plan
		shall commence on January 14, 2004, and shall remain in effect until January
		14, 2014, subject to the right of the Board of Directors to amend or terminate
		the Plan pursuant to Article 9. </P>
	 <P>&nbsp;</P>
	 <P><B>Article 2. Definitions</B></P>
	 <P> Whenever used in the Plan, the following terms shall have the meanings
		set forth below and, when the defined meaning is intended, the initial letter
		of the word is capitalized: </P>
	 <P> (a) "Annual Retainer" means the annual base compensation received by a
		Nonemployee Director for service on the Board. </P>
	 <P> (b) "Award" means, individually or collectively, an award under this
		Plan of Shares or Deferred Stock Units. </P>
	 <P> (c) "Board" or "Board of Directors" means the Board of Directors of the
		Company. </P>
	 <P> (d) "Code" means the Internal Revenue Code of 1986, as amended from
		time to time. </P>
	 <P> (e) "Committee" means the Nominating and Governance Committee of the
		Board of Directors. </P>
	 <P> (f) "Committee Fees" means compensation received by a Nonemployee
		Director for service on one or more Board committees. </P>
	 <P> (g) "Company" means Walgreen Co., an Illinois corporation, and any
		successor thereto as provided in Section&nbsp;10.6. </P>
	 <P> (h) "Decreased Value" means the depreciation in the worth of a Deferred
		Stock Unit from the date of award up to and including the Valuation Date, as
		determined by the Committee pursuant to a Valuation. </P>
	 <P> (i) "Deferred Cash Compensation Account" means an account established
		pursuant to Section&nbsp;7.5 to provide for the deferral of the cash component
		of Annual Retainers, Committee Fees, and Meeting Fees. </P>
	 <P> (j) "Deferred Stock Unit" or "Unit" means an Award acquired by a
		Participant as a measure of participation under the Plan, and having a value
		which changes in direct relation to changes in the value of Shares, as
		determined pursuant to a Valuation. </P>
	 <P> (k) "Director" means any individual who is a member of the Board of
		Directors. </P>
	 <P> (l) "Employee" means any common law employee of the Company or of the
		Company's Subsidiaries. For purposes of the Plan, an individual whose only
		service relationship with the Company is as a Director, shall not be deemed to
		be an Employee. </P>
	 <P> (m) "Fair Market Value" shall mean the closing price on the New York
		Stock Exchange on the relevant date, or (if there were no sales on such date)
		on the last trading date preceding the relevant date.<I> </I></P>
	 <P> (n) "Increased Value" means the appreciation in the worth of a Deferred
		Stock Unit from the date of award up to and including the Valuation Date, as
		determined by the Committee pursuant to a Valuation. </P>
	 <P> (o) "Initial Value" means the value of a Deferred Stock Unit on the
		date of award, as determined in accordance with the provisions of the Plan.
		</P>
	 <P> (p) "Meeting Fees" means compensation received by a Nonemployee
		Director for meetings attended in relation to Board service. </P>
	 <P> (q) "Nonemployee Director" means any individual who is a member of the
		Board of Directors, but who is not otherwise an Employee of the Company or a
		Company Subsidiary. </P>
	 <P> (r) "Participant" means a Nonemployee Director who has an outstanding
		Award granted under the Plan. </P>
	 <P> (s) "Shares" means the shares of Common Stock of the Company, par value
		$.0787125 per share.</P>
	 <P> (t) "Subsidiary" means any corporation in which the Company owns
		directly, or indirectly through subsidiaries, at least fifty percent (50%) of
		the total combined voting power of all classes of stock, or any other entity
		(including, but not limited to, partnerships and joint ventures) in which the
		Company owns at least fifty percent (50%) of the combined equity thereof. </P>
	 <P> (u) "Valuation" means an evaluation of the worth of a Deferred Stock
		Unit based on changes in the Fair Market Value of the Shares, as determined by
		the Committee pursuant to the Plan. </P>
	 <P> (v) "Valuation Date" means the date on which Deferred Stock Units are
		valued pursuant to the Plan. </P>
	 <P>&nbsp;</P>
	 <P><B>Article 3. Administration</B></P>
	 <P> &nbsp;3.1 The Nominating and Governance Committee. The Plan shall be
		administered by the Committee, subject to the restrictions set forth in the
		Plan. </P>
	 <P> &nbsp;<B>3.2 Administration by the Committee. </B>Subject to the terms
		of the Plan and the powers granted to the full Board of Directors, the
		Committee shall have the full power, discretion, and authority to interpret and
		administer the Plan in a manner which is consistent with the Plan's provisions.
		The Committee may establish rules and forms for the administration of the Plan
		and may delegate specific duties and responsibilities to officers or other
		employees of the Company.</P>
	 <P> &nbsp;<B>3.3 Decisions Binding. </B>All determinations and decisions
		made by the Committee pursuant to the Plan, and all related orders or
		resolutions of the Committee shall be final, conclusive, and binding on all
		persons and entities, including the Company, its shareholders, Employees,
		Nonemployee Directors, Participants, and their estates and beneficiaries. </P>
	 <P>&nbsp;</P>
	 <P><B>Article 4. Participation</B></P>
	 <P>Persons eligible to participate in the Plan are limited to Nonemployee
		Directors who are serving on the Board on the date of each scheduled Award
		under the Plan. </P>
	 <P>&nbsp;</P>
	 <P><B>Article 5. Annual Equity Grants for Nonemployee Directors</B></P>
	 <P> &nbsp;5.1 Annual Equity Grants. Commencing November<I>&nbsp;</I>1,
		2004, and on each November<I>&nbsp;</I>1 thereafter, each Nonemployee Director
		shall receive an annual equity grant of Shares, with said number of Shares
		equal to the number determined by dividing a dollar amount by the Fair Market
		Value of a Share on November<I>&nbsp;</I>1 of the relevant year, or a
		proportionate share of such grant based on full months of service as a
		Nonemployee Director since the prior November<I>&nbsp;</I>1. This dollar amount
		shall be $80,000 or such lesser or greater amount as may be approved by the
		Committee from time to time as part of its ongoing evaluation of Nonemployee
		Director compensation (subject to a $250,000 per Nonemployee Director maximum
		annual dollar amount over the 10-year term of the Plan). In lieu of issuing
		fractional Shares, the Company shall round to the nearest full Share. </P>
	 <P> &nbsp;<B>5.2 Timing of Payout. </B>The certificates for the Shares
		shall be issued as soon as administratively possible following November&nbsp;1
		of each year. </P>
	 <P> &nbsp;<B>5.3 Annual Review. </B>The Committee shall conduct an annual
		review of the appropriateness of the equity Awards granted pursuant to this
		Article&nbsp;5. In the event the Committee determines that an adjustment in the
		amount of equity Awards pursuant to this Article&nbsp;5 is appropriate, the
		Committee shall make a recommendation to the Board for an appropriate
		adjustment, subject to the limitations set forth in Section 5.1 above. </P>
	 <P>&nbsp;</P>
	 <P><B>Article 6. Retainer Share Payments</B></P>
	 <P> &nbsp;6.1 Portion of Retainers Paid in Shares. During the term of this
		Plan, Nonemployee Directors shall receive fifty percent (50%) of their Annual
		Retainer in the form of Shares. </P>
	 <P> &nbsp;<B>6.2 Number of Shares Paid. </B>The number of Shares to be
		issued pursuant to Section&nbsp;6.1 will be determined on a quarterly basis and
		shall equal the portion of the Annual Retainer being paid in the form of
		Shares, divided by the Fair Market Value of a Share on the first trading day of
		the fiscal quarter. In lieu of issuing fractional Shares, the Company shall
		round to the nearest full Share.<I> </I></P>
	 <P> &nbsp;<B>6.3 Timing of Payout. </B>The certificates for the Shares
		shall be issued as soon as administratively possible following the beginning of
		the calendar quarter that begins within each fiscal quarter. </P>
	 <P>&nbsp;</P>
	 <P><B>Article&nbsp;7. Annual Deferral Opportunity</B></P>
	 <P> &nbsp;<B>7.1 Deferral of Retainers, Committee Fees, and Meeting Fees.
		</B>During the term of this Plan, any Nonemployee Director may elect to receive
		all or a portion of the cash component of his or her Annual Retainer, Committee
		Fees, Meeting Fees or any similar fees for service as a Nonemployee Director in
		the form of Deferred Stock Units or to have such amounts placed in a Deferred
		Cash Compensation Account. During the term of this Plan, any Nonemployee
		Director may also elect to receive all or a portion of the Share component of
		his or her Annual Retainer in the form of Deferred Stock Units. An election to
		receive Deferred Stock Units or to defer amounts into the Deferred Cash
		Compensation Account pursuant to this Section&nbsp;7.1 shall be subject to the
		provisions of this Article&nbsp;7. </P>
	 <P> &nbsp;<B>7.2 Election. </B>An election to receive all or a portion of a
		Nonemployee Director's Annual Retainer, Committee Fees, Meeting Fees or any
		similar fees for service as a Nonemployee Director in the form of Deferred
		Stock Units or to defer amounts into the Deferred Cash Compensation Account, as
		provided in Section&nbsp;7.1, shall be made by December&nbsp;1 for all payments
		to be made in the succeeding calendar year. New Nonemployee Directors shall
		make their election with respect to their initial retainer upon their original
		election to the Board. Each such election may pertain to more than one
		(1)&nbsp;calendar year of scheduled payments. Deferral elections may be made
		only in ten&nbsp;percent (10%)&nbsp;increments. </P>
	 <P> &nbsp;<B>7.3 Number of Deferred Stock Units. </B>The number of Deferred
		Stock Units to be granted in connection with an election pursuant to
		Section&nbsp;7.2 shall equal the portion of the Annual Retainer, Committee
		Fees, and Meeting Fees being deferred into Deferred Stock Units, divided by the
		Fair Market Value of a Share on the date of the scheduled payment of the amount
		deferred. </P>
	 <P> &nbsp;<B>7.4 Vesting of Deferred Stock Units. </B>Subject to the terms
		of this Plan, all Deferred Stock Units acquired under this Article&nbsp;7 shall
		vest one hundred percent (100%) upon the acquisition of such Deferred Stock
		Units. </P>
	 <P> &nbsp;<B>7.5 Deferred Cash Compensation Account. </B>All amounts
		deferred into the Deferred Cash Compensation Account in connection with an
		election pursuant to Section&nbsp;7.2 shall accrue interest on a monthly basis
		at a monthly compounding rate equal to one hundred twenty percent (120%) of the
		applicable federal midterm rate (as determined under Internal Revenue Code
		Section&nbsp;1274(d) and the regulations thereunder) until the Participant's
		termination of service on the board. </P>
	 <P> &nbsp;<B>7.6 Vesting of Deferred Cash Compensation Account.</B> Subject
		to the terms of this Plan, all amounts deferred into the Deferred Cash
		Compensation Account under this Article&nbsp;7 shall vest one hundred percent
		(100%) upon the deferral of amounts into the Deferred Cash Compensation
		Account. All interest earned in the Deferred Cash Compensation Account pursuant
		to Section&nbsp;7.5 shall vest one hundred percent (100%) as such interest is
		earned. </P>
	 <P> &nbsp;<B>7.7 Payout of Deferred Cash Compensation Account. </B>Except
		as provided otherwise in this Plan, the payout of the Deferred Cash
		Compensation Account shall be made in two (2) equal cash payments. The first
		payment shall be made within thirty (30)&nbsp;days following the participant's
		termination of service on the Board. The second payment shall be made one
		(1)&nbsp;year after the Participant's first payment. The second payment shall
		accrue interest from the Participant's termination of service on the Board on a
		monthly basis at a monthly compounding rate equal to the prime lending rate of
		interest in effect as of the first business day of that month (as quoted by the
		Company's then current lending bank financing service for commercial
		borrowings). The accrued interest shall be paid with the second payment under
		this Section&nbsp;7.7. </P>
	 <P>&nbsp;</P>
	 <P><B>Article 8. Deferred Stock Units</B></P>
	 <P> &nbsp;8.1 Value of Deferred Stock Units. Each Deferred Stock Unit shall
		have an Initial Value that is equal to the Fair Market Value determined for
		purposes of Section&nbsp;7.3. Subsequent to such date of award or acquisition,
		the value of each Deferred Stock Unit shall change in direct relationship to
		changes in the value of a Share as determined pursuant to a Valuation. </P>
	 <P> &nbsp;<B>8.2 Dividend Equivalents. </B>Dividend equivalents shall be
		earned on Deferred Stock Units provided under this Plan. Such dividend
		equivalents shall be converted into an equivalent amount of Deferred Stock
		Units based upon the Valuation of a Deferred Stock Unit on the date the
		dividend equivalents are converted into Deferred Stock Units. The converted
		Deferred Stock Units will be fully vested upon conversion. </P>
	 <P> &nbsp;<B>8.3 Timing and Amount of Payout. </B>Except as provided
		otherwise in this Plan, the payout of the Initial Value combined with the
		Increased Value or the Decreased Value of the vested Deferred Stock Units shall
		be made in two cash payments. The first payment shall be equal to 50% of this
		combined Value and shall be made within thirty (30) days following the
		Participant's termination of service on the Board. The second payment shall be
		equal to the remaining 50%, plus accrued interest, and shall be made one year
		after the Participant's first payment. Interest shall accrue on a monthly basis
		at a monthly compounding rate equal to the prime lending rate of interest in
		effect as of the first business day of that month (as quoted by the Company's
		then current lending bank financing source for commercial borrowings).</P>
	 <P> &nbsp;<B>8.4 Deferred Stock Unit Account. </B>A Deferred Stock Unit
		Account (the "Account") shall be established and maintained by the Company for
		each Participant that receives Deferred Stock Units under the Plan. As the
		value of each Deferred Stock Unit changes pursuant to Section&nbsp;8.1, the
		Account established on behalf of each Participant shall be adjusted
		accordingly. Each Account shall be the record of the Deferred Stock Units
		granted to the Participant under Article&nbsp;7 of the Plan on each applicable
		grant date, is maintained solely for accounting purposes, and shall not require
		a segregation of any Company assets. </P>
	 <P> &nbsp;<B>8.5 Quarterly Reports. </B>Participants with Deferred Stock
		Units shall receive quarterly reports providing detailed information about
		their Accounts and changes in their Accounts during the preceding quarter. </P>

	 <P>&nbsp;</P>
	 <P><B>Article 9. Amendment, Modification, and Termination</B></P>
	 <P> &nbsp;<B>9.1 Amendment, Modification, and Termination. </B>The Board
		may terminate, amend, or modify the Plan at any time and from time to time,
		subject to any shareholder approval requirements that may apply under
		applicable laws and regulations. </P>
	 <P> &nbsp;<B>9.2 Awards Previously Granted. </B>Unless required by law, no
		termination, amendment, or modification of the Plan shall in any material
		manner adversely affect any Award previously provided under the Plan, without
		the written consent of the Participant holding the Award. </P>
	 <P>&nbsp;</P>
	 <P><B>Article 10. Miscellaneous</B></P>
	 <P>	<B>10.1 Gender and Number. </B>Except where otherwise indicated by the
		context, any masculine term used herein also shall include the feminine; the
		plural shall include the singular and the singular shall include the plural.
		</P>
	 <P>	<B>10.2 Severability. </B>In the event any provision of the Plan shall
		be held illegal or invalid for any reason, the illegality or invalidity shall
		not affect the remaining parts of the Plan, and the Plan shall be construed and
		enforced as if the illegal or invalid provision had not been included. </P>
	 <P>	<B>10.3 Benefit Transfers. </B>The interests of any Participant or
		beneficiary entitled to payments hereunder shall not be subject to attachment
		or garnishment or other legal process by any creditor of any such Participant
		or beneficiary nor shall any such Participant or beneficiary have any right to
		alienate, anticipate, commute, pledge, encumber, or assign any of the benefits
		or rights which he or she may expect to receive, contingently or otherwise
		under this Plan except as may be required by the tax withholding provisions of
		the Code or of a state's income tax act. Notwithstanding the foregoing,
		amounts<I> </I>payable with respect to a Participant hereunder may be paid as
		follows: </P>
	 <P> (a) Payments<I> </I>with respect to a disabled or incapacitated person
		may be paid to such person's legal representative for such person's benefit, to
		a custodian under the Uniform Gifts or Transfers to Minors Act of any state, or
		to a relative or friend of such person for such person's benefit; and </P>
	 <P> (b) Transfers by the Participant to a grantor trust established
		pursuant to Sections&nbsp;674, 675, 676, and 677 of the Internal Revenue Code
		of 1986 for the benefit of the participant or a person or persons who are
		members of his or her immediate family (or for the benefit of their
		descendants) shall be recognized and given effect, provided that any such
		transfer has not been disclaimed prior to the payment, and the trustee of such
		trust certifies to the Committee that such transfer occurred without any
		payment of consideration for such transfer. </P>
	 <P>	<B>10.4 Beneficiary Designation. </B>Each Participant under the Plan
		may, from time to time, name any beneficiary or beneficiaries (who may be named
		contingently or successively) to whom any benefit under the Plan is to be paid
		in the event of his or her death. Each designation will revoke all prior
		designations by the same Participant, shall be in a form provided by the
		Company, and will be effective only when filed by the Participant in writing
		with the Committee during his or her lifetime. In the absence of any such
		designation, benefits remaining unpaid at the Participant's death shall be paid
		to the Participant's estate. </P>
	 <P>	<B>10.5 No Right of Nomination. </B>Nothing in the Plan shall be deemed
		to create any obligation on the part of the Board to nominate any Director for
		reelection by the Company's shareholders. </P>
	 <P><B> 10.6 Shares Available. </B>The Shares delivered under the Plan shall
		be either treasury Shares or Shares that have been reacquired by the Company,
		including Shares purchased in the open market. </P>
	 <P>	<B>10.7 Stock Splits/Stock Dividends.</B> In the event of any change in
		corporate capitalization of the Company, such as a stock split, or a corporate
		transaction, such&nbsp;as any merger, consolidation, separation, including a
		spin-off, or other distribution of stock or property of the Company, any
		reorganization (whether or not such reorganization comes within the definition
		of such term in Code Section 368) or any partial or complete liquidation of the
		Company, such adjustment shall be made in the number and class of Shares
		available for issuance under the Plan and the number and unit price of Deferred
		Stock Units that are outstanding under the Plan, as may be determined to be
		appropriate and equitable by the Committee, in its sole discretion, to prevent
		dilution or enlargement of rights.</P>
	 <P>	<B>10.8 Successors. </B>All obligations of the Company under the Plan
		with respect to Awards granted hereunder shall be binding on any successor to
		the Company, whether the existence of such successor is the result of a direct
		or indirect purchase, merger, consolidation, or otherwise, of all or
		substantially all of the business and/or assets of the Company. </P>
	 <P>	<B>10.9 Requirements of Law.</B> The granting of Awards under the Plan
		shall be subject to all applicable laws, rules, and regulations, and to such
		approvals by any governmental agencies or national securities exchanges as may
		be required. </P>
	 <P>	<B>10.10 Governing Law. </B>The Plan, and all agreements hereunder,
		shall be construed in accordance with and governed by the internal, substantive
		laws of the State of Illinois. </P>
	 <P>	<B>10.11 Unfunded Plan. </B>The Deferred Cash Compensation Accounts and
		Deferred Stock Unit Accounts maintained for Participants under the Plan shall
		be bookkeeping accounts, which shall at all times be reflected on the Company's
		books as general unsecured and unfunded obligations of the Company, and this
		Plan shall not give any person or entity any right or security interest in any
		asset of the Company nor shall it imply any trust or segregation of assets by
		the Company.</P> </BODY>
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