EMPLOYMENT AGREEMENT DATED AS OF JANUARY 29, 2010 BETWEEN AND AMONG PAUL SWEETENHAM, TJX UK, AND THE TJX COMPANIES, INC.
Exhibit 10.9
DATED AS OF JANUARY 29, 2010
BETWEEN AND AMONG
XXXX XXXXXXXXXX, TJX UK, AND THE TJX COMPANIES, INC.
INDEX
| PAGE | ||||
1. EFFECTIVE DATE; TERM OF AGREEMENT |
1 | |||
2. SCOPE OF EMPLOYMENT |
1 | |||
3. COMPENSATION AND BENEFITS |
2 | |||
4. TERMINATION OF EMPLOYMENT; IN GENERAL |
3 | |||
5. BENEFITS UPON NON-VOLUNTARY TERMINATION OF EMPLOYMENT |
4 | |||
6. OTHER TERMINATION |
6 | |||
7. BENEFITS UPON CHANGE OF CONTROL |
7 | |||
8. AGREEMENT NOT TO SOLICIT OR COMPETE |
7 | |||
9. ASSIGNMENT |
11 | |||
10. NOTICES |
11 | |||
11. WITHHOLDING; CERTAIN TAX MATTERS; CERTAIN DEDUCTIONS |
11 | |||
12. GOVERNING LAW |
12 | |||
13. CERTAIN STOCK-BASED RIGHTS |
12 | |||
14. TERMINATION OF EMPLOYMENT AND SEPARATION FROM SERVICE |
12 | |||
15. ENTIRE AGREEMENT |
12 | |||
EXHIBIT A Certain Definitions |
A-1 | |||
EXHIBIT B Definition of “Change of Control” |
B-1 | |||
EXHIBIT C Change of Control Benefits |
X-0 | |||
XXXXXXX X Xxxxxxxxxxx Xxxxxxxxxx |
X-0 | |||
EXHIBIT E Certain International Benefits and Related Provisions |
E-1 | |||
-i-
XXXX XXXXXXXXXX
AGREEMENT dated as of January 29, 2010 between and among Xxxx Xxxxxxxxxx (“Executive”), TJX UK
(the “Company”), and The TJX Companies, Inc. (“Parent”).
RECITALS
The Company and Executive intend that Executive shall be employed by the Company and be
entitled to receive compensation and benefits from the Company and Parent on the terms set forth
below and, to that end, deem it desirable and appropriate to enter into this Agreement.
AGREEMENT
The parties hereto, in consideration of the mutual agreements hereinafter contained, agree as
follows:
1. EFFECTIVE DATE; TERM OF AGREEMENT. This Agreement shall become effective as of January 29,
2010 (the “Effective Date”). Upon effectiveness of this Agreement on the Effective Date, the
Employment Agreement between the Company and the Executive dated as of January 28, 2007 (as
amended, the “Prior Agreement”) shall terminate and be of no further force and effect. Subject to
earlier termination as provided herein, Executive’s employment hereunder shall continue on the
terms provided herein until February 2, 2013 (the “End Date”). The period of Executive’s
employment by the Company from and after the Effective Date, whether under this Agreement or
otherwise, is referred to in this Agreement as the “Employment Period,” it being understood that
nothing in this Agreement shall be construed as entitling Executive to continuation of his
employment beyond the End Date and that any such continuation shall be subject to the agreement of
the parties. Executive’s previous employment with the Company shall count as part of his
continuous employment, which therefore began on November 15, 1993. This Agreement is intended to
comply with the applicable requirements of Section 409A and shall be construed accordingly.
2. SCOPE OF EMPLOYMENT.
(a) Nature of Services. Executive shall diligently perform such duties and assume
such responsibilities as shall from time to time be specified by the Company Board.
(b) Extent of Services. Except for illnesses and vacation periods, Executive shall
devote substantially all his working time and attention and his best efforts to the performance of
his duties and responsibilities under this Agreement. However, Executive may (i) make any passive
investments where he is not obligated or required to, and shall not in fact, devote any managerial
efforts, (ii) subject to approval by Parent’s Chief Executive Officer (which approval shall not be
unreasonably withheld or withdrawn), participate in charitable or community activities or in trade
or professional organizations, and (iii) subject to approval by Parent’s Chief Executive Officer
(which approval shall not be unreasonably withheld or withdrawn), hold directorships in
-1-
public companies, except only that Parent’s Chief Executive Officer shall have the right to
limit such services as a director or such participation in charitable or community activities or in
trade or professional organizations whenever Parent’s Chief Executive Officer shall believe that
the time spent on such activities infringes in any material respect upon the time required by
Executive for the performance of his duties under this Agreement or is otherwise incompatible with
those duties.
3. COMPENSATION AND BENEFITS.
(a) Base Salary. Executive shall be paid a base salary at the rate hereinafter
specified, such Base Salary to be paid in the same manner and at the same times as the Company
shall pay base salary to other executive employees. Executive’s Base Salary shall be £462,000 per
year. Effective as of February 1, 2010 (the “Designated Date”), Executive’s Base Salary shall be
$850,000 per year (subject to conversion as described below) or such other amount (not less than
$850,000 per year and subject to conversion as described below) as the Company Board with the
approval of the Committee may determine from time to time, after review not less frequently than
annually (any such Base Salary that is denominated in U.S. dollars, the “U.S. Reference Salary”).
On the Designated Date, the U.S. Reference Salary shall be converted into an amount in pounds
sterling based on the U.S. dollar/pound exchange rate of $1 to £0.6177 (i.e., £525,045). If
effective as of any date following the Designated Date the Company Board, with the approval of the
Committee, determines to adjust the U.S. Reference Salary (to an amount not less than $850,000 per
year), such Base Salary, as so adjusted, shall be converted into an amount in pounds sterling based
on the U.S. dollar/pound exchange rate in effect on the effective date of the salary adjustment
(such date, a “Determination Date”); it being understood that if the rate of Executive’s Base
Salary in pounds sterling on any Determination Date would be less than the rate of Executive’s Base
Salary in pounds sterling immediately prior to such Determination Date solely as a result of the
U.S. dollar/pound exchange rate in effect on the applicable Determination Date, the U.S. Reference
Salary shall be increased to a level that will provide Executive with a rate of Base Salary in
pounds sterling equal to the rate of Executive’s Base Salary in pounds sterling immediately prior
to such Determination Date. All determinations necessary to construe or effectuate the foregoing,
including, without limitation, the determination of the exchange rate, shall be made by the Parent.
(b) Existing Awards. Reference is made to outstanding awards to Executive of stock
options and of performance-based restricted stock made prior to the Effective Date under Parent’s
Stock Incentive Plan (including any successor, the “Stock Incentive Plan”), to the award
opportunity granted to Executive for FYE 2010 under Parent’s Management Incentive Plan (“MIP”), and
to award opportunities granted to Executive under Parent’s Long Range Performance Incentive Plan
(“LRPIP”) for cycles beginning before the Effective Date. Each of such awards outstanding
immediately prior to the Effective Date shall continue for such period or periods and in accordance
with such terms as are set out in the applicable grant, award certificate, award agreement, and
other governing documents relating to such awards, and shall not be affected by the terms of this
Agreement except as otherwise expressly provided herein.
(c) New Stock Awards. Consistent with the terms of the Stock Incentive Plan, during
the Employment Period, Executive will be entitled to stock-based awards under the Stock Incentive
-2-
Plan at levels commensurate with his position and responsibilities and subject to such terms
as shall be established by the Committee.
(d) LRPIP. During the Employment Period, Executive will be eligible to participate
in annual grants under LRPIP at a level commensurate with his position and responsibilities and
subject to such terms as shall be established by the Committee.
(e) MIP. During the Employment Period, Executive will be eligible to participate in
annual awards under MIP at a level commensurate with his position and responsibilities and subject
to such terms as shall be established by the Committee.
(f) Retirement and Other Deferred Compensation Plans. Executive shall be entitled
during the Employment Period to participate in the Company’s retirement and profit-sharing plans,
in each case in accordance with the terms of the applicable plan (including, for the avoidance of
doubt and without limitation, the amendment and termination provisions thereof). In particular,
Executive shall be entitled to participate in The T.K. Maxx Pension Plan (the “Company Pension”)
and the Company shall match Executive’s contributions to the Company Pension, up to an amount
equivalent to 8.0% of Executive’s pensionable salary, subject to its rule from time to time in
force and any statutory limits imposed from time to time. The Company reserves the right to vary
the benefits payable under the Company Pension or terminate or substitute another pension scheme
for the existing Company Pension at any time.
(g) Policies and Fringe Benefits. Executive shall be subject to policies of Parent
and/or the Company applicable to executives generally, and shall be entitled to receive all such
fringe benefits as shall from time to time be made available to other executives of Parent and its
Subsidiaries generally (subject to the terms of any applicable fringe benefit plan). In addition,
in connection with Executive’s performance of services in the United States for Parent and its
affiliates, Executive shall be entitled to receive the benefits described in Exhibit E (subject to
the limitations set forth therein).
(h) Other. The Company is entitled to terminate Executive’s employment
notwithstanding the fact that Executive may lose entitlement to benefits under the arrangements
described above. Upon termination of his employment, Executive shall have no claim against the
Company or Parent for loss arising out of ineligibility to exercise any stock options granted to
him or otherwise in relation to any of the stock options or other stock-based awards granted to
Executive, and the rights of Executive shall be determined solely by the rules of the relevant
award document and plan.
4. TERMINATION OF EMPLOYMENT; IN GENERAL.
(a) The Company shall have the right to end Executive’s employment at any time and for any
reason, with or without Cause.
(b) Executive’s employment shall terminate upon written notice by the Company to Executive
(or, if earlier, to the extent consistent with the requirements of Section 409A, upon the
expiration of the twenty-nine (29)-month period commencing upon Executive’s absence from work) if,
by reason of Disability, Executive is unable to perform his duties for at least six continuous
months. Any termination pursuant to this Section 4(b) shall be treated for purposes
-3-
of Section 5 and the definition of “Change of Control Termination” at subsection (e) of
Exhibit A as a termination by reason of Disability.
(c) Whenever his employment shall terminate, Executive shall resign all offices or other
positions he shall hold with the Company, Parent and any affiliated corporations. For the
avoidance of doubt, the Employment Period shall terminate upon termination of Executive’s
employment for any reason.
(d) During any period following notice of termination of employment (whether given by the
Company or Executive), the Company shall be under no obligation to assign any duties to Executive
and shall be entitled to exclude him from its premises, and require Executive not to contact any
customers, suppliers or employees, provided that this shall not affect Executive’s entitlement, if
any, during such period of exclusion to receive his Base Salary in accordance with Section 3(a) and
benefits in accordance with Section 3(g). During any such period of exclusion Executive will
continue to be bound by all of the provisions of this Agreement and shall at all times conduct
himself with good faith towards the Company, Parent, and its Subsidiaries.
5. BENEFITS UPON NON-VOLUNTARY TERMINATION OF EMPLOYMENT.
(a) Certain Terminations Prior to the End Date. If the Employment Period shall have
terminated prior to the End Date by reason of (I) death or Disability of Executive, (II)
termination by the Company for any reason other than Cause or (III) a Constructive Termination,
then all compensation and benefits for Executive shall be as follows:
(i) For a period of twelve (12) months after the Date of Termination (the “termination
period”), the Company will pay to Executive or his legal representative, without reduction
for compensation earned from other employment or self employment, continued Base Salary at a
rate equal to Executive’s U.S. Reference Salary in effect at termination of employment
(without regard to the rate of Executive’s Base Salary in pounds sterling at such time),
which U.S. Reference Salary shall be converted to pounds sterling based on the U.S.
dollar/pound exchange rate in effect on the Date of Termination, such Base Salary to be paid
in accordance with its regular payroll practices for executive employees of the Company (but
not less frequently than monthly); provided, that if Executive is a Specified Employee at
the relevant time, the Base Salary that would otherwise be payable during the six-month
period beginning on the Date of Termination shall instead be accumulated and paid, without
interest, in a lump sum on the date that is six (6) months and one day after such date (or,
if earlier, the date of Executive’s death); and further provided, that if Executive is
eligible for long-term disability compensation benefits under the Company’s long-term
disability plan, the amount payable under this clause shall be paid at a rate equal to the
excess of (a) the rate of Base Salary determined as provided above in this Section 5(a)(i),
over (b) the long-term disability compensation benefits for which Executive is approved
under such plan.
(ii) The Company will pay to Executive or his legal representative, without offset for
compensation earned from other employment or self-employment, (A) any unpaid amounts to
which Executive is entitled under MIP for the fiscal year of Parent ended immediately prior
to Executive’s termination of employment, plus (B) any unpaid
-4-
amounts owing with respect to LRPIP cycles in which Executive participated and which
were completed prior to termination. These amounts will be paid at the same time as other
awards for such prior year or cycle are paid.
(iii) For any MIP performance period in which Executive participates that begins
before and ends after the Date of Termination, and at the same time as other MIP awards for
such performance period are paid, but in no event later than by the 15th day of the third
month following the close of the fiscal year to which such MIP award relates, the Company
will pay to Executive or his legal representative, without offset for compensation earned
from other employment or self-employment, an amount equal to (A) the MIP award, if any, that
Executive would have earned and been paid had he continued in office through the end of such
fiscal year, determined without regard to any adjustment for individual performance factors,
multiplied by (B) a fraction, the numerator of which is three hundred and sixty-five (365)
plus the number of days during such fiscal year prior to termination, and the denominator of
which is seven hundred and thirty (730); provided, however, that if the Employment Period
shall have terminated by reason of Executive’s death or Disability, this clause (iii) shall
not apply and Executive instead shall be entitled to the MIP benefit described in Section
5(a)(vii) below; and further provided, that if Executive is a Specified Employee at the
relevant time, the amounts described in this clause (iii) shall be paid not sooner than six
(6) months and one day after termination.
(iv) For each LRPIP cycle in which Executive participates that begins before and ends
after the Date of Termination, and at the same time as other LRPIP awards for such cycle are
paid, but in no event later than by the 15th day of the third month following the close of
the last of Parent’s fiscal years in such cycle, the Company will pay to Executive or his
legal representative, without offset for compensation earned from other employment or
self-employment, an amount equal to (A) the LRPIP award, if any, that Executive would have
earned and been paid had he continued in office through the end of such cycle, determined
without regard to any adjustment for individual performance factors, multiplied by (B) a
fraction, the numerator of which is the number of full months in such cycle completed prior
to termination of employment and the denominator of which is the number of full months in
such cycle; provided, that if Executive is a Specified Employee at the relevant time, the
amounts described in this clause (iv) shall be paid not sooner than six (6) months and one
day after termination.
(v) In addition, Executive or his legal representative shall be entitled to the Stock
Incentive Plan benefits described in Section 3(b) (Existing Awards) and Section 3(c) (New
Stock Awards), in each case in accordance with and subject to the terms of the applicable
arrangement, and to payment of his vested benefits, if any, under the plans described in
Section 3(f) (Retirement and Other Deferred Compensation Plans).
(vi) If termination occurs by reason of Disability, Executive shall also be entitled
to such compensation, if any, as is payable pursuant to the Company’s long-term disability
plan. If for any period Executive receives long-term disability compensation payments under
a long-term disability plan of the Company as well as payments under Section 5(a)(i) above,
and if the sum of such payments (the “combined salary/disability
-5-
benefit”) exceeds the payment for such period to which Executive is entitled under
Section 5(a)(i) above (determined without regard to the proviso set forth therein), he shall
promptly pay such excess in reimbursement to the Company; provided, that in no event shall
application of this sentence result in reduction of Executive’s combined salary/disability
benefit below the level of long-term disability compensation payments to which Executive is
entitled under the long-term disability plan or plans of the Company.
(vii) If termination occurs by reason of death or Disability, Executive shall also be
entitled to an amount equal to Executive’s MIP Target Award for the year of termination,
without proration. This amount will be paid at the same time as other MIP awards for such
performance period are paid.
(viii) Except as expressly set forth above or as required by law, Executive shall not
be entitled to continue participation during the termination period in any employee benefit
or fringe benefit plans, except for continuation of any automobile allowance which shall be
added to the amounts otherwise payable under Section 5(a)(i) above during the continuation
of such coverage but not beyond the end of the termination period.
(b) Termination on the End Date. Unless earlier terminated or except as otherwise
mutually agreed by Executive and the Company, Executive’s employment with the Company shall
terminate on the End Date. Unless the Company in connection with such termination shall offer to
Executive continued service in a position on reasonable terms, Executive shall be treated as having
been terminated under Section 5(a)(II) on the day immediately preceding the End Date and shall be
entitled to the compensation and benefits described in Section 5(a) in respect of such a
termination, subject, for the avoidance of doubt, to the other provisions of this Agreement
including, without limitation, Section 8. If the Company in connection with such termination
offers to Executive continued service in a position on reasonable terms, and Executive declines
such service, he shall be treated for all purposes of this Agreement as having terminated his
employment voluntarily on the End Date and he shall be entitled only to those benefits to which he
would be entitled under Section 6(a) (“Voluntary termination of employment”). For purposes of the
two preceding sentences, “service in a position on reasonable terms” shall mean service in a
position comparable to the position in which Executive was serving immediately prior to the End
Date, as reasonably determined by the Committee.
6. OTHER TERMINATION.
(a) Voluntary termination of employment. If Executive terminates his employment
voluntarily, Executive or his legal representative shall be entitled (in each case in accordance
with and subject to the terms of the applicable arrangement) to any Stock Incentive Plan benefits
described in Section 3(b) (Existing Awards) or Section 3(c) (New Stock Awards) and to any vested
benefits under the plans described in Section 3(f) (Retirement and Other Deferred Compensation
Plans). In addition, the Company will pay to Executive or his legal representative any unpaid
amounts to which Executive is entitled under MIP for the fiscal year of the Company ended
immediately prior to Executive’s termination of employment, plus any unpaid amounts owing with
respect to LRPIP cycles in which Executive participated and which were completed prior to
termination, in each case at the same time as other awards for such prior year or cycle are
-6-
paid. No other benefits shall be paid under this Agreement upon a voluntary termination of
employment.
(b) Termination for Cause. If the Company should end Executive’s employment for
Cause all compensation and benefits otherwise payable pursuant to this Agreement shall cease, other
than (i) any vested benefits to which Executive is entitled by law under the Company’s retirement
plans; and (ii) Stock Incentive Plan benefits, if any, to which Executive may be entitled (in each
case in accordance with and subject to the terms of the applicable arrangement) under Sections 3(b)
(Existing Awards) and 3(c) (New Stock Awards).
7. BENEFITS UPON CHANGE OF CONTROL. Notwithstanding any other provision of this Agreement, in
the event of a Change of Control, the determination and payment of any benefits payable thereafter
with respect to Executive shall be governed exclusively by the provisions of Exhibit C; provided,
for the avoidance of doubt, that the provisions of Section 11 of this Agreement shall also apply to
the determination and payment of any payments or benefits pursuant to Exhibit C.
8. AGREEMENT NOT TO SOLICIT OR COMPETE.
(a) During the Employment Period and for a period of twelve (12) months thereafter (the
“Nonsolicitation Period”), Executive shall not, and shall not direct any other individual or entity
to, directly or indirectly (including as a partner, shareholder, joint venturer or other investor)
(i) hire, offer to hire, attempt to hire or assist in the hiring of, any protected person as an
employee, director, consultant, advisor or other service provider, (ii) recommend any protected
person for employment or other engagement with any person or entity other than Parent and its
Subsidiaries, (iii) solicit for employment or other engagement any protected person, or seek to
persuade, induce or encourage any protected person to discontinue employment or engagement with
Parent or its Subsidiaries, or recommend to any protected person any employment or engagement other
than with Parent or its Subsidiaries, (iv) accept services of any sort (whether for compensation or
otherwise) from any protected person, or (v) participate with any other person or entity in any of
the foregoing activities.
Any individual or entity to which Executive provides services (as an employee, director,
consultant, advisor or otherwise) or in which Executive is a shareholder, member, partner, joint
venturer or investor, excluding interests in the common stock of any publicly traded corporation of
one percent (1%) or less, and any individual or entity that is affiliated with any such individual
or entity, shall, for purposes of the preceding sentence, be irrebuttably presumed to have acted at
the direction of Executive with respect to any “protected person” who worked with Executive at any
time during the six months prior to termination of the Employment Period.
A “protected person” is a person who at the time of termination of the Employment Period, or
within six months prior thereto, is or was employed by Parent or any of its Subsidiaries either in
a position of Assistant Vice President or higher, or in a salaried position in any merchandising
group.
As to (I) each “protected person” to whom the foregoing applies, (II) each subcategory of
“protected person,” as defined above, (III) each limitation on (A) employment or other
-7-
engagement, (B) solicitation and (C) unsolicited acceptance of services, of each “protected person”
and (IV) each month of the period during which the provisions of this subsection (a) apply to each
of the foregoing, the provisions set forth in this subsection (a) shall be deemed to be separate
and independent agreements. In the event of unenforceability of any one or more such agreement(s),
such unenforceable agreement(s) shall be deemed automatically reformed in order to allow for the
greatest degree of enforceability authorized by law or, if no such reformation is possible, deleted
from the provisions hereof entirely, and such reformation or deletion shall not affect the
enforceability of any other provision of this subsection (a) or any other term of this Agreement.
(b) During the course of his employment, Executive will have learned vital trade secrets of
Parent and its Subsidiaries and will have access to confidential and proprietary information and
business plans of Parent and its Subsidiaries. Therefore, during the Employment Period and for a
period of twelve (12) months thereafter (the “Noncompetition Period”), Executive will not, directly
or indirectly, be a shareholder, member, partner, joint venturer or investor (disregarding in this
connection passive ownership for investment purposes of common stock representing one percent (1%)
or less of the voting power or value of any publicly traded corporation) in, serve as a director or
manager of, be engaged in any employment, consulting, or fees-for-services relationship or
arrangement with, or advise with respect to the organization or conduct of, or any investment in,
any “competitive business” as hereinafter defined or any Person that engages in any “competitive
business” as hereinafter defined, nor shall Executive undertake any planning to engage in any such
activities; provided, however, that this restriction shall apply only in North America (including,
for the avoidance of doubt, Mexico) and Europe, and in such countries outside of North America and
Europe if Parent or any Subsidiary was engaged, with Executive’s involvement, in business in such
country at any time during the 12-month period immediately preceding the Date of Termination.
The term “competitive business” (i) shall mean any business (however organized or conducted)
that competes with a business in which Parent or any of its Subsidiaries was engaged, or in which
Parent or any Subsidiary was planning to engage, at any time during the 12-month period immediately
preceding the date on which the Employment Period ends, and (ii) shall conclusively be presumed to
include, but shall not be limited to, (A) any business specified on Exhibit D to this Agreement,
and (B) any other off-price, promotional, or warehouse-club-type retail business, however organized
or conducted, that sells apparel, footwear, home fashions, home furnishings, jewelry, accessories,
or any other category of merchandise sold by Parent or any of its Subsidiaries at the termination
of the Employment Period.
For purposes of this subsection (b), a “Person” means an individual, a corporation, a limited
liability company, an association, a partnership, an estate, a trust and any other entity or
organization, other than Parent or its Subsidiaries.
For purposes of this subsection (b), reference to any Person (the “first Person”) shall be
deemed to include any other Person that controls, is controlled by or is under common control with
the first Person.
If, at any time, pursuant to action of any court, administrative, arbitral or governmental
body or other tribunal, the operation of any part of this subsection shall be determined to be
-8-
unlawful or otherwise unenforceable, then the coverage of this subsection shall be deemed to be
reformed and restricted as to substantive reach, duration, geographic scope or otherwise, as the
case may be, to the extent, and only to the extent, necessary to make this paragraph lawful and
enforceable to the greatest extent possible in the particular jurisdiction in which such
determination is made.
(c) Executive shall never use or disclose any confidential or proprietary information of
Parent or its Subsidiaries other than as required by applicable law or during the Employment Period
for the proper performance of Executive’s duties and responsibilities to Parent and its
Subsidiaries. This restriction shall continue to apply after Executive’s employment terminates,
regardless of the reason for such termination. All documents, records and files, in any media,
relating to the business, present or otherwise, of Parent and its Subsidiaries and any copies
(“Documents”), whether or not prepared by Executive, are the exclusive property of Parent and its
Subsidiaries. Executive must diligently safeguard all Documents, and must surrender to the Company
at such time or times as the Company may specify all Documents then in Executive’s possession or
control. In addition, upon termination of employment for any reason other than the death of
Executive, Executive shall immediately return all Documents, and shall execute a certificate
representing and warranting that he has returned all such Documents in Executive’s possession or
under his control. This Section 8(c) shall only bind Executive to the extent allowed by the
applicable law of the jurisdiction in which enforcement is sought, and nothing in this Section 8(c)
shall prevent Executive from making a statutory disclosure.
(d) If, during the Employment Period or at any time following termination of the Employment
Period, regardless of the reason for such termination, Executive breaches any provision of this
Section 8, the Company’s obligation, if any, to pay benefits under Section 5 hereof shall forthwith
cease and Executive shall immediately forfeit and disgorge to the Company, or in the case of any
stock-based benefits to Parent, with interest at the prime rate in effect at Bank of America, or
its successor, all of the following: (i) any benefits theretofore paid to Executive under Section
5; (ii) any unexercised stock options and stock appreciation rights held by Executive; (iii) if any
other stock-based award vested in connection with termination of the Employment Period, whether
occurring prior to, simultaneously with, or following such breach, or subsequent to such breach and
prior to termination of the Employment Period, the value of such stock-based award at time of
vesting plus any additional gain realized on a subsequent sale or disposition of the award or the
underlying stock; and (iv) in respect of each stock option or stock appreciation right exercised by
Executive within six (6) months prior to any such breach or subsequent thereto and prior to the
forfeiture and disgorgement required by this Section 8(d), the excess over the exercise price (or
base value, in the case of a stock appreciation right) of the greater of (A) the fair market value
at time of exercise of the shares of stock subject to the award, or (B) the number of shares of
stock subject to such award multiplied by the per-share proceeds of any sale of such stock by
Executive.
(e) Executive shall notify the Company and Parent immediately upon securing employment or
becoming self-employed at any time within the Noncompetition Period or the Nonsolicitation Period,
and shall provide to the Company and Parent such details concerning such employment or
self-employment as either of them may reasonably request in order to ensure compliance with the
terms hereof.
-9-
(f) Executive hereby advises the Company that Executive has carefully read and considered all
the terms and conditions of this Agreement, including the restraints imposed on Executive under
this Section 8, and agrees without reservation that each of the restraints contained herein is
necessary for the reasonable and proper protection of the good will, confidential information and
other legitimate business interests of Parent and its Subsidiaries, that each and every one of
those restraints is reasonable in respect to subject matter, length of time and geographic
area; and that these restraints will not prevent Executive from obtaining other suitable
employment during the period in which Executive is bound by them.
Executive agrees that Executive will never assert, or permit to be asserted on his behalf, in
any forum, any position contrary to the foregoing.
Executive also acknowledges and agrees that, were Executive to breach any of the provisions of
this Section 8, the harm to Parent and its Subsidiaries would be irreparable. Executive therefore
agrees that, in the event of such a breach or threatened breach, the Company and/or Parent shall,
in addition to any other remedies available to it, have the right to obtain preliminary and
permanent injunctive relief against any such breach or threatened breach without having to post
bond, and will additionally be entitled to an award of attorney’s fees incurred in connection with
enforcing its rights hereunder.
Executive further agrees that, in the event that any provision of this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable by reason of its being
extended over too great a time, too large a geographic area or too great a range of activities,
such provision shall be deemed to be modified to permit its enforcement to the maximum extent
permitted by law.
Finally, Executive agrees that the Nonsolicitation Period and the Noncompetition Period shall
be tolled, and shall not run, during any period of time in which Executive is in violation of any
of the terms of this Section 8, in order that the Company shall have the agreed-upon temporal
protection recited herein.
(g) Executive agrees that if any of the restrictions in this Section 8 is held to be void or
ineffective for any reason but would be held to be valid and effective if part of its wording were
deleted, that restriction shall apply with such deletions as may be necessary to make it valid and
effective. The Executive further agrees that the restrictions contained in each subsection of this
Section 8 shall be construed as separate and individual restrictions and shall each be capable of
being severed without prejudice to the other restrictions or to the remaining provisions.
(h) Executive expressly consents to be bound by the provisions of this Agreement for the
benefit of the Company, Parent and its Subsidiaries, and any successor or permitted assign to whose
employ Executive may be transferred, without the necessity that this Agreement be re-signed at the
time of such transfer. Executive further agrees that no changes in the nature or scope of his
employment with the Company will operate to extinguish the terms and conditions set forth in
Section 8, or otherwise require the parties to re-sign this Agreement.
(i) The provisions of this Section 8 shall survive the termination of the Employment Period
and the termination of this Agreement, regardless of the reason or reasons therefor, and
-10-
shall be binding on Executive regardless of any breach by the Company of any other provision
of this Agreement.
9. ASSIGNMENT. The rights and obligations of the Company and Parent shall inure to the
benefit of and shall be binding upon their respective successors and assigns. The rights and
obligations of Executive are not assignable, except only that stock issuable, awards and payments
payable to him after death shall be made to his estate, except as otherwise provided by the
applicable plan or award documentation, if any.
10. NOTICES. All notices and other communications required hereunder shall be in writing and
shall be given by mailing the same by certified or registered mail, return receipt requested,
postage prepaid. If sent to the Company, the same shall be mailed to the Company, with a copy to
Parent, in each case at 000 Xxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Chairman
of the Executive Compensation Committee, or such other address as the Company (with respect to the
Company) or Parent (with respect to Parent) may hereafter designate by notice to Executive; and, if
sent to Executive, the same shall be mailed to Executive at his address as set forth in the records
of the Company or at such other address as Executive may hereafter designate by notice to the
Company with a copy to Parent.
11. WITHHOLDING; CERTAIN TAX MATTERS; CERTAIN DEDUCTIONS. Anything to the contrary
notwithstanding, (a) all payments required to be made by the Company hereunder to Executive shall
be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions
as the Company may reasonably determine it should withhold pursuant to any applicable law or
regulation, and (b) to the extent any payment hereunder that is payable by reason of termination of
Executive’s employment constitutes “nonqualified deferred compensation” subject to Section 409A and
would otherwise have been required to be paid during the six (6)-month period following such
termination of employment, it shall instead (unless at the relevant time Executive is no longer a
Specified Employee) be delayed and paid, without interest, in a lump sum on the date that is six
(6) months and one day after Executive’s termination (or, if earlier, the date of Executive’s
death). Executive acknowledges that he has reviewed the provisions of this Agreement with his
advisors and agrees that except for any benefit under any tax equalization policy or program
maintained by Parent or the Company in which Executive participates, as any such policy or program
may be amended and in effect from time to time, neither the Company nor Parent shall be liable to
make Executive whole for any taxes that may become due or payable by reason of this Agreement or
any payment, benefit or entitlement hereunder.
Without limiting any other provision of this agreement, Executive hereby authorizes the
Company, Parent, and any of their affiliates to deduct from his remuneration, to the extent
consistent with the offset-limitation and related provisions of Section 409A, any sums then due
from him to the Company, Parent, or any of their affiliates, including, without limitation, any
overpayments of salary, overpayments of holiday pay whether in respect of holiday taken in excess
of that accrued during the holiday year or otherwise, loans or advances (if any) permitted under
applicable law (including without limitation U.S. law) to be made to him by the Company, Parent, or
any of their affiliates, any fines incurred by Executive and paid by the Company, Parent, or any of
their affiliates, the cost of repairing any damage or loss to the property of the Company, Parent,
or any of their affiliates caused by him and all losses suffered by the
-11-
Company, Parent, or any of their affiliates as a result of any negligence or breach of duty by
Executive.
12. GOVERNING LAW. This Agreement and the rights and obligations of the parties hereunder
shall be governed, except as provided in Section 13, by the laws of the England.
13. CERTAIN STOCK-BASED RIGHTS. Executive acknowledges that the stock-based rights to which
reference is made under Section 8 of this Agreement consist currently of awards made under the
Stock Incentive Plan or a predecessor plan of Parent and may include awards made in the future
under the Stock Incentive Plan (the “subject awards”). Executive agrees that, notwithstanding any
provision of this Agreement to the contrary, the provisions of Section 8(d), insofar as they
pertain to the subject awards, as well as the provisions of this Section 13, shall be construed and
shall be enforceable under, and shall be subject to, the laws of the Commonwealth of Massachusetts,
applied without regard to the choice of laws provisions thereof. Executive further agrees that he
will not assert as a defense to any attempted enforcement of Section 8(d) or this Section 13, or
otherwise, the purported applicability of the laws of any other jurisdiction. The provisions of
this Section 13 shall survive the termination of the Employment Period.
14. TERMINATION OF EMPLOYMENT AND SEPARATION FROM SERVICE. All references in the Agreement to
termination of employment, a termination of the Employment Period, or separation from service, and
correlative terms, that result in the payment or vesting of any amounts or benefits that constitute
“nonqualified deferred compensation” within the meaning of Section 409A shall be construed to
require a Separation from Service, and the Date of Termination in any such case shall be construed
to mean the date of the Separation from Service.
15. ENTIRE AGREEMENT. This Agreement, including Exhibits, represents the entire agreement
between the parties relating to the terms of Executive’s employment by the Company and supersedes
all prior written or oral agreements, including, without limitation, the Prior Agreement, between
them.
| /s/ Xxxx Xxxxxxxxxx | ||||
| Executive | ||||
| TJX UK |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| THE TJX COMPANIES, INC. |
||||
| By: | /s/ Xxxxx Xxxxxxxxx | |||
-12-
EXHIBIT A
Certain Definitions
(a) “Base Salary” means, for any period, the amount described in Section 3(a).
(b) “Cause” means dishonesty by Executive in the performance of his duties, conviction of a
felony (other than a conviction arising solely under a statutory provision imposing criminal
liability upon Executive on a per se basis due to the Company or Parent offices held by Executive,
so long as any act or omission of Executive with respect to such matter was not taken or omitted in
contravention of any applicable policy or directive of the Company Board or the Parent Board),
gross neglect of duties (other than as a result of Disability or death), or conflict of interest
which conflict shall continue for thirty (30) days after the Company gives written notice to
Executive requesting the cessation of such conflict.
In respect of any termination during a Standstill Period, Executive shall not be deemed to
have been terminated for Cause until the later to occur of (i) the 30th day after notice of
termination is given and (ii) the delivery to Executive of a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of the directors of the Parent Board at a meeting
called and held for that purpose (after reasonable notice to Executive), and at which Executive
together with his counsel was given an opportunity to be heard, finding that Executive was guilty
of conduct described in the definition of “Cause” above, and specifying the particulars thereof in
detail; provided, however, that the Company may suspend Executive and withhold payment of his Base
Salary from the date that notice of termination is given until the earliest to occur of
(A) termination of Executive for Cause effected in accordance with the foregoing procedures (in
which case Executive shall not be entitled to his Base Salary for such period), (B) a determination
by a majority of the directors of the Parent Board that Executive was not guilty of the conduct
described in the definition of “Cause” effected in accordance with the foregoing procedures (in
which case Executive shall be reinstated and paid any of his previously unpaid Base Salary for such
period), or (C) ninety (90) days after notice of termination is given (in which case Executive
shall then be reinstated and paid any of his previously unpaid Base Salary for such period). If
Base Salary is withheld and then paid pursuant to clause (B) or (C) of the preceding sentence, the
amount thereof shall be accompanied by simple interest, calculated on a daily basis, at a rate per
annum equal to the prime or base lending rate, as in effect at the time, of the Company’s principal
commercial bank. The Company shall exercise its discretion under this paragraph consistent with the
requirements of Section 409A or the requirements for exemption from Section 409A.
(c) “Change in Control Event” means a “change in control event” (as that term is defined in
section 1.409A-3(i)(5) of the Treasury Regulations under Section 409A) with respect to the Company.
(d) “Change of Control” has the meaning given it in Exhibit B.
A-1
(e) “Change of Control Termination” means the termination of Executive’s employment during a
Standstill Period (1) by the Company other than for Cause, or (2) by Executive for good reason, or
(3) by reason of death or Disability.
For purposes of this definition, termination for “good reason” shall mean the voluntary
termination by Executive of his employment within one hundred and twenty (120) days after the
occurrence without Executive’s express written consent of any one of the events described below,
provided, that Executive gives notice to the Company within sixty (60) days of the first occurrence
of any such event or condition, requesting that the pertinent event or condition described therein
be remedied, and the situation remains unremedied upon expiration of the thirty (30)-day period
commencing upon receipt by the Company of such notice:
| (I) | the assignment to him of any duties inconsistent with his positions, duties, responsibilities, and status with the Company immediately prior to the Change of Control, or any removal of Executive from or any failure to reelect him to such positions, except in connection with the termination of Executive’s employment by the Company for Cause or by Executive other than for good reason, or any other action by the Company which results in a diminishment in such position, authority, duties or responsibilities; or | ||
| (II) | if Executive’s rate of Base Salary for any fiscal year is less than 100% of the rate of Base Salary paid to Executive in the completed fiscal year immediately preceding the Change of Control or if Executive’s total cash compensation opportunities, including salary and incentives, for any fiscal year are less than 100% of the total cash compensation opportunities made available to Executive in the completed fiscal year immediately preceding the Change of Control; or | ||
| (III) | the failure of Parent or its Subsidiaries to continue in effect any benefits or perquisites, or any pension, life insurance, medical insurance or disability plan in which Executive was participating immediately prior to the Change of Control unless Parent or its Subsidiaries provide Executive with a plan or plans that provide substantially similar benefits, or the taking of any action by Parent or its Subsidiaries that would adversely affect Executive’s participation in or materially reduce Executive’s benefits under any of such plans or deprive Executive of any material fringe benefit enjoyed by Executive immediately prior to the Change of Control; or | ||
| (IV) | any purported termination of Executive’s employment by the Company for Cause during a Standstill Period which is not effected in compliance with paragraph (b) above; or | ||
| (V) | any relocation of Executive of more than forty (40) miles from the place where Executive was located at the time of the Change of Control; or | ||
| (VI) | any other breach by the Company of any provision of this Agreement; or |
A-2
| (VII) | Parent sells or otherwise disposes of, in one transaction or a series of related transactions, assets or earning power aggregating more than 30% of the assets (taken at asset value as stated on the books of Parent determined in accordance with generally accepted accounting principles consistently applied) or earning power of Parent (on an individual basis) or Parent and its Subsidiaries (on a consolidated basis) to any other Person or Persons (as those terms are defined in Exhibit B).. |
(f) “Code” means the Internal Revenue Code of 1986, as amended.
(g) “Committee” means the Executive Compensation Committee of the Parent Board.
(h) “Company” means TJX UK.
(i) “Company Board” means the Board of Directors of the Company.
(j) “Constructive Termination” means a termination of employment by Executive occurring
within one hundred twenty (120) days of a requirement by the Company that Executive relocate,
without his prior written consent, more than forty (40) miles from the current corporate
headquarters of the Company, but only if (i) Executive shall have given to the Company notice of
intent to terminate within sixty (60) days following notice to Executive of such required
relocation and (ii) the Company shall have failed, within thirty (30) days thereafter, to withdraw
its notice requiring Executive to relocate. For purposes of the preceding sentence, the one
hundred twenty (120) day period shall commence upon the end of the thirty (30)-day cure period, if
the Company fails to cure within such period.
(k) “Date of Termination” means the date on which Executive’s employment terminates.
(l) “Disabled”/“Disability” means a medically determinable physical or mental impairment that
(i) can be expected either to result in death or to last for a continuous period of not less than
six months and (ii) causes Executive to be unable to perform the duties of his position of
employment or any substantially similar position of employment to the reasonable satisfaction of
the Committee.
(m) “End Date” has the meaning set forth in Section 1 of the Agreement.
(n) “LRPIP” has the meaning set forth in Section 3(b) of the Agreement.
(o) “MIP” has the meaning set forth in Section 3(b) of the Agreement.
(p) “Parent” means The TJX Companies, Inc.
(q) “Parent Board” means the Board of Directors of Parent.
(r) “Section 409A” means Section 409A of the Code.
(s) “Separation from Service” shall mean a “separation from service” (as that term is defined
at Section 1.409A-1(h) of the Treasury Regulations under Section 409A) from the
A-3
Company and from all other corporations and trades or businesses, if any, that would be
treated as a single “service recipient” with the Company under Section 1.409A-1(h)(3) of such
Treasury Regulations. The Committee may, but need not, elect in writing, subject to the applicable
limitations under Section 409A, any of the special elective rules prescribed in Section 1.409A-1(h)
of the Treasury Regulations for purposes of determining whether a “separation from service” has
occurred. Any such written election shall be deemed part of the Agreement.
(t) “Specified Employee” shall mean an individual determined by the Committee or its delegate
to be a specified employee as defined in subsection (a)(2)(B)(i) of Section 409A. The Committee
may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any
of the special elective rules prescribed in Section 1.409A-1(i) of the Treasury Regulations for
purposes of determining “specified employee” status. Any such written election shall be deemed
part of the Agreement.
(u) “Standstill Period” means the period commencing on the date of a Change of Control and
continuing until the close of business on the earlier of the day immediately preceding the End Date
or the last business day of the 24th calendar month following such Change of Control.
(v) “Stock” means the common stock, $1.00 par value, of the Company.
(w) “Stock Incentive Plan” has the meaning set forth in Section 3(b) of the Agreement.
(x) “Subsidiary” means any corporation in which Parent owns, directly or indirectly, 50% or more
of the total combined voting power of all classes of stock.
A-4
EXHIBIT B
Definition of “Change of Control”
“Change of Control” shall mean the occurrence of any one of the following events:
(a) there occurs a change of control of Parent of a nature that would be required to be
reported in response to Item 5.01 of the Current Report on Form 8-K (as amended in 2004) pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) or in any other
filing under the Exchange Act; provided, however, that no transaction shall be deemed to be a
Change of Control (i) if the person or each member of a group of persons acquiring control is
excluded from the definition of the term “Person” hereunder or (ii) unless the Committee shall
otherwise determine prior to such occurrence, if Executive or an Executive Related Party is the
Person or a member of a group constituting the Person acquiring control; or
(b) any Person other than Parent, any wholly-owned subsidiary of Parent, or any employee
benefit plan of Parent or such a subsidiary becomes the owner of 20% or more of Parent’s Common
Stock and thereafter individuals who were not directors of Parent prior to the date such Person
became a 20% owner are elected as directors pursuant to an arrangement or understanding with, or
upon the request of or nomination by, such Person and constitute a majority of Parent’s Board of
Directors; provided, however, that unless the Committee shall otherwise determine prior to the
acquisition of such 20% ownership, such acquisition of ownership shall not constitute a Change of
Control if Executive or an Executive Related Party is the Person or a member of a group
constituting the Person acquiring such ownership; or
(c) there occurs any solicitation or series of solicitations of proxies by or on behalf of
any Person other than Parent’s Board of Directors and thereafter individuals who were not directors
of Parent prior to the commencement of such solicitation or series of solicitations are elected as
directors pursuant to an arrangement or understanding with, or upon the request of or nomination
by, such Person and constitute a majority of Parent’s Board of Directors; or
(d) Parent executes an agreement of acquisition, merger or consolidation which contemplates
that (i) after the effective date provided for in the agreement, all or substantially all of the
business and/or assets of Parent shall be owned, leased or otherwise controlled by another Person
and (ii) individuals who are directors of Parent when such agreement is executed shall not
constitute a majority of the board of directors of the survivor or successor entity immediately
after the effective date provided for in such agreement; provided, however, that unless otherwise
determined by the Committee, no transaction shall constitute a Change of Control if, immediately
after such transaction, Executive or any Executive Related Party shall own equity securities of any
surviving corporation (“Surviving Entity”) having a fair value as a percentage of the fair value of
the equity securities of such Surviving Entity greater than 125% of the fair value of the equity
securities of Parent owned by Executive and any Executive Related Party immediately prior to such
transaction, expressed as a percentage of the fair value of all equity securities of Parent
immediately prior to such transaction (for purposes of this paragraph ownership of equity
securities shall be determined in the same manner as ownership of Common Stock); and provided,
further, that, for purposes of this paragraph (d), a Change of Control shall not be deemed to have
taken place unless and until the acquisition, merger, or consolidation
B-1
contemplated by such agreement is consummated (but immediately prior to the consummation of
such acquisition, merger, or consolidation, a Change of Control shall be deemed to have occurred on
the date of execution of such agreement).
In addition, for purposes of this Exhibit B the following terms have the meanings set forth
below:
“Common Stock” shall mean the then outstanding Common Stock of Parent plus, for purposes of
determining the stock ownership of any Person, the number of unissued shares of Common Stock which
such Person has the right to acquire (whether such right is exercisable immediately or only after
the passage of time) upon the exercise of conversion rights, exchange rights, warrants or options
or otherwise. Notwithstanding the foregoing, the term Common Stock shall not include shares of
Preferred Stock or convertible debt or options or warrants to acquire shares of Common Stock
(including any shares of Common Stock issued or issuable upon the conversion or exercise thereof)
to the extent that the Board of Directors of Parent shall expressly so determine in any future
transaction or transactions.
A Person shall be deemed to be the “owner” of any Common Stock:
(i) of which such Person would be the “beneficial owner,” as such term is defined in
Rule 13d-3 promulgated by the Securities and Exchange Commission (the “Commission”) under
the Exchange Act, as in effect on March 1, 1989; or
(ii) of which such Person would be the “beneficial owner” for purposes of Section 16
of the Exchange Act and the rules of the Commission promulgated thereunder, as in effect on
March 1, 1989; or
(iii) which such Person or any of its affiliates or associates (as such terms are
defined in Rule 12b-2 promulgated by the Commission under the Exchange Act, as in effect on
March 1, 1989), has the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or options or otherwise.
“Person” shall have the meaning used in Section 13(d) of the Exchange Act, as in effect on
March 1, 1989.
An “Executive Related Party” shall mean any affiliate or associate of Executive other than
Parent or a majority-owned subsidiary of Parent. The terms “affiliate” and “associate” shall have
the meanings ascribed thereto in Rule 12b-2 under the Exchange Act (the term “registrant” in the
definition of “associate” meaning, in this case, Parent).
B-2
EXHIBIT C
Change of Control Benefits
C.1. Benefits Upon a Change of Control Termination.
(a) The Company shall pay the following to Executive (i) as hereinafter provided an amount
equal to two times his Base Salary for one year at the rate equal to Executive’s U.S. Reference
Salary in effect immediately prior to the Date of Termination or the Change of Control, whichever
is higher (and without regard to the rate of Executive’s Base Salary in pounds sterling at such
times), which U.S. Reference Salary shall be converted to pounds sterling based on the U.S.
dollar/pound exchange rate in effect on the Date of Termination, plus (ii) within thirty (30) days
following the Change of Control Termination, the accrued and unpaid portion of his Base Salary
through the Date of Termination, subject to the following. If Executive is eligible for long-term
disability compensation benefits under the Company’s long-term disability plan, the amount payable
under (i) shall be reduced by the annual long-term disability compensation benefit for which
Executive is eligible under such plan for the two-year period over which the amount payable under
(i) is measured. If for any period Executive receives long-term disability compensation payments
under a long-term disability plan of the Company as well as payments under the first sentence of
this subsection (a), and if the sum of such payments (the “combined Change of Control/disability
benefit”) exceeds the payment for such period to which Executive is entitled under the first
sentence of this subsection (a) (determined without regard to the second sentence of this
subsection (a)), he shall promptly pay such excess in reimbursement to the Company; provided, that
in no event shall application of this sentence result in reduction of Executive’s combined Change
of Control/disability benefit below the level of long-term disability compensation payments to
which Executive is entitled under the long-term disability plan or plans of the Company. If the
Change of Control Termination occurs in connection with a Change of Control that is also a Change
in Control Event, the amount described in subsection (a)(i) shall be paid in a lump sum on the date
that is six (6) months and one day following the date of the Change of Control Termination (or, if
earlier, the date of Executive’s death), unless the Executive is not a Specified Employee on the
relevant date, in which case the amount described in this subsection (a) shall instead be paid
thirty (30) days following the date of the Change of Control Termination. If the Change of Control
Termination occurs in connection with a Change of Control that is not a Change in Control Event,
the amount described in subsection (a)(i) above shall be paid, except as otherwise required by
Section 11 of the Agreement, in the same manner as it would have been paid in the case of a
termination by the Company other than for Cause under Section 5(a), and in lieu of the MIP and
LRPIP benefits described in Section C.2, Executive shall be entitled to the MIP and LRPIP benefits,
if any, described in Section 5(a)(iii) and Section 5(a)(iv) of the Agreement, payable in accordance
with such Sections.
(b) Until the second anniversary of the Date of Termination, the Company shall maintain in
full force and effect for the continued benefit of Executive and his family all life insurance and
medical insurance plans and programs in which Executive was entitled to participate immediately
prior to the Change of Control, provided, that Executive’s continued participation is possible
under the general terms and provisions of such plans and programs. In the event that Executive is
ineligible to participate in such plans or programs, the Company shall arrange upon
C-1
comparable terms to provide Executive with benefits substantially similar to those which he is
entitled to receive under such plans and programs. Notwithstanding the foregoing, the Company’s
obligations hereunder with respect to life or medical coverage or benefits shall be deemed
satisfied to the extent (but only to the extent) of any such coverage or benefits provided by
another employer.
(c) On the date that is six (6) months and one day following the date of the Change of
Control Termination (or, if earlier, the date of Executive’s death), the Company shall pay to
Executive or his estate, in lieu of any automobile allowance, the present value of the automobile
allowance (at the rate in effect prior to the Change of Control) it would have paid for the two
years following the Change of Control Termination (or until the earlier date of Executive’s death,
if Executive dies prior to the date of the payment under this Section C.1(c)); provided, that if
the Change of Control is not a Change of Control Event, such amount shall instead be paid in the
same manner as Executive’s automobile allowance would have been paid in the case of a termination
by the Company other than for Cause under Section 5(a); and further provided, that if Executive is
not a Specified Employee on the relevant date, any lump sum payable under this Section C.1(c) shall
instead by paid within thirty (30) days following the Change of Control Termination.
C.2. Incentive Benefits Upon a Change of Control. Within thirty (30) days following
a Change of Control that is also a Change in Control Event, whether or not Executive’s employment
has terminated or been terminated, the Company shall pay to Executive, in a lump sum, the sum of
(i) and (ii), where:
(i) is the sum of (A) the “Target Award” under MIP or any other annual incentive plan
which is applicable to Executive for the fiscal year in which the Change of Control occurs,
plus (B) an amount equal to such Target Award prorated for the period of active employment
during such fiscal year through the Change of Control, plus (C) any unpaid amounts to which
Executive is entitled under MIP with respect to any fiscal year completed prior to the
Change of Control; and
(ii) the sum of (A) for Performance Cycles not completed prior to the Change of
Control, an amount with respect to each such cycle equal to the maximum Award under LRPIP
specified for Executive for such cycle, plus (B) any unpaid amounts owing with respect to
LRPIP cycles completed prior to the Change of Control.
If the Change of Control is not also a Change in Control Event, for the avoidance of doubt,
Executive shall continue to participate in MIP and LRPIP (or such other incentive plans, if any, in
which Executive was participating) in accordance with their terms, subject to Section C.1. above,
and shall not be entitled to the supplemental or accelerated payments described in Section C.2.(i)
and Section C.2.(ii) above.
C.3. Payment Adjustment. Payments under Section C.1. and Section C.2. of this Exhibit
shall be made without regard to whether the deductibility of such payments (or any other payments
or benefits to or for the benefit of Executive) would be limited or precluded by Section 280G of
the Code (“Section 280G”) and without regard to whether such payments (or any other payments or
benefits) would subject Executive to the federal excise tax levied on
C-2
certain “excess parachute payments” under Section 4999 of the Code (the “Excise Tax”);
provided, that if the total of all payments to or for the benefit of Executive, after reduction for
all federal taxes (including the excise tax under Section 4999 of the Code) with respect to such
payments (“Executive’s total after-tax payments”), would be increased by the limitation or
elimination of any payment under Section C.1. or Section C.2. of this Exhibit, or by an adjustment
to the vesting of any equity-based awards that would otherwise vest on an accelerated basis in
connection with the Change of Control, amounts payable under Section C.1. and Section C.2. of this
Exhibit shall be reduced and the vesting of equity-based awards shall be adjusted to the extent,
and only to the extent, necessary to maximize Executive’s total after-tax payments. Any reduction
in payments or adjustment of vesting required by the preceding sentence shall be applied, first,
against any benefits payable under Section C.1(a)(i) of this Exhibit, then against any benefits
payable under Section C.2. of this Exhibit, then against the vesting of any performance-based
restricted stock awards that would otherwise have vested in connection with the Change of Control,
then against the vesting of any other equity-based awards, if any, that would otherwise have vested
in connection with the Change of Control, and finally against all other payments, if any. The
determination as to whether Executive’s payments and benefits include “excess parachute payments”
and, if so, the amount and ordering of any reductions in payment required by the provisions of this
Section C.3. shall be made at the Company’s expense by PricewaterhouseCoopers LLP or by such other
certified public accounting firm as the Committee may designate prior to a Change of Control (the
“accounting firm”). In the event of any underpayment or overpayment hereunder, as determined by
the accounting firm, the amount of such underpayment or overpayment shall forthwith and in all
events within thirty (30) days of such determination be paid to Executive or refunded to the
Company, as the case may be, with interest at the applicable Federal rate provided for in Section
7872(f)(2) of the Code.
C.4. Other Benefits. In addition to the amounts described in Sections C.1. and C.2.,
Executive or his legal representative shall be entitled to his Stock Incentive Plan benefits, if
any, under Section 3(b) (Existing Awards) and Section 3(c) (New Stock Awards), and to the payment
of his vested benefits under the plans described in Section 3(f) (Retirement and Other Deferred
Compensation Plans).
C.5. Noncompetition; No Mitigation of Damages; etc.
(a) Noncompetition. Upon a Change of Control, any agreement by Executive not to
engage in competition with Parent and its Subsidiaries subsequent to the termination of his
employment, whether contained in an employment agreement or other agreement, shall no longer be
effective.
(b) No Duty to Mitigate Damages. Executive’s benefits under this Exhibit C shall be
considered severance pay in consideration of his past service and his continued service from the
date of this Agreement, and his entitlement thereto shall neither be governed by any duty to
mitigate his damages by seeking further employment nor offset by any compensation which he may
receive from future employment.
(c) Legal Fees and Expenses. The Company shall pay all legal fees and expenses,
including but not limited to counsel fees, stenographer fees, printing costs, etc. reasonably
incurred by Executive in contesting or disputing that the termination of his employment during a
C-3
Standstill Period is for Cause or other than for good reason (as defined in the definition of
Change of Control Termination) or obtaining any right or benefit to which Executive is entitled
under this Agreement following a Change of Control. Any amount payable under this Agreement that
is not paid when due shall accrue interest at the prime rate as from time to time in effect at Bank
of America, or its successor, until paid in full. All payments and reimbursements under this
Section shall be made consistent with the applicable requirements of Section 409A.
(d) Notice of Termination. During a Standstill Period, Executive’s employment may be
terminated by the Company only upon thirty (30) days’ written notice to Executive.
(e) Continued Affiliation With Parent A Condition Precedent. The provisions of this
Exhibit C shall not apply unless, at the time of the Change of Control, the Company is a Subsidiary
of Parent.
C-4
EXHIBIT E
Certain International Benefits and Related Provisions
E.1. From and after the Effective Date, and for so long as Executive’s duties and responsibilities
include the performance of services in the United States for Parent or its affiliates, Executive
shall be eligible to receive the following compensation and benefits from Parent or its affiliates
in respect of such services:
| (a) | the provision of rental housing in the Boston area, the cost of which is paid by Parent or its affiliates and subject to a cap of $7,200 per month or such higher amount, if any, as may be approved in writing by Parent or its affiliates to reflect reasonable increases in the cost of rental housing in such area; | ||
| (b) | the payment of immigration expenses associated with Executive’s visa enabling him to work in the United States. |
All benefits under this Section E.1 shall cease upon the termination of Executive’s employment for
any reason.
E.2. The Company or its affiliates shall provide, in accordance with any tax equalization policy or
program maintained by Parent or its affiliates, as any such policy or program may be amended and in
effect from time to time, (i) tax equalization assistance for any additional tax liability
Executive incurs in respect of his services in the United States that Executive would not have
incurred had he only provided services and remained located in the United Kingdom, (ii) a
tax-gross-up payment or payments for applicable U.S. federal, state, and local and U.K. taxes paid
by Executive in connection with the compensation and benefits paid to Executive under Section E.1,
and (iii) tax preparation assistance to Executive for filing his U.S. federal and Massachusetts tax
returns. Payments under this Section E.2 are intended to be consistent with the requirements of
Section 409A or an exemption from Section 409A; provided, that in no event shall Parent or its
affiliates be liable by reason of any failure of such arrangements, or any of them, to comply with
Section 409A or the requirements for an exemption from Section 409A. Any tax equalization payments
under this Section E.2 with respect to Executive’s compensation for a particular year (a
“compensation year”) shall be paid no later than the end of the second calendar year following the
calendar year in which Executive’s U.S. federal tax return is required to be filed (including any
extensions) for the compensation year, or at such other time consistent with the requirements for
an exemption from Section 409A under Treasury Regulation § 1.409A-1(b)(8)(iii). Any tax gross-up
payments under this Section E.2 shall be paid no later than the end of the calendar year following
the calendar year in which the underlying taxes were paid by Executive. Executive shall cooperate
with the Company to provide any documentation necessary for the determination of any tax
equalization assistance due to Executive under this Section E.2.
E.3. Parent’s 409A Reimbursement Policy is hereby incorporated by reference. For the avoidance of
doubt, all reimbursements, benefits, and payments under this Exhibit E shall be subject to the
terms of Parent’s 409A Reimbursement Policy, as amended and in effect from time to time, to the
extent applicable.
E-1
