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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
AGREEMENT dated as of April 9, 1999 between Xxxxx Xxxxxxxxx, whose address
is 0 Xxxxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxxxxxxxxx 00000, ("Executive") and The TJX
Companies, Inc., a Delaware corporation, whose principal office is in
Framingham, Massachusetts ("Company").
WHEREAS, The Company desires that Executive serve as Senior Vice President,
Merchandising of the Marmaxx Division of The TJX Companies, Inc.
NOW THEREFORE, the parties hereto, in consideration of the mutual
agreements hereinafter contained, agree as follows:
1. EMPLOYMENT. The Company will employ Executive and Executive will be an
employee of the Company under the terms and conditions hereinafter set forth.
This Agreement supersedes and replaces any prior employment agreement between
Executive and the Company or any of its subsidiaries or divisions.
2. TERM. Executive's employment hereunder shall commence upon the
commencement of her performance of her duties hereunder, which shall be on a
mutually agreeable date not later than September 15, 1999 (the "Start Date"),
and shall continue until the third anniversary of the Start Date (the "Original
Term") and thereafter until terminated by either Executive or the Company,
subject to earlier termination as provided herein (such period of employment
hereinafter called the "Employment Period").
3. DUTIES. Executive shall diligently perform the duties and exercise the
responsibilities of Senior Vice President, Merchandising of the Company's
Marmaxx Division and such additional executive duties and responsibilities as
shall from time to time be assigned to her by the Board of Directors or by the
Executive Vice President, Merchandising of the Marmaxx Division. Unless the
Employment Period shall have earlier terminated, Executive will be promoted to
Executive Vice President, Merchandising of the Marmaxx Division, reporting to
the President of the Division, no later than 8-12 months after the Start Date.
4. EXTENT OF SERVICES. Except for illnesses and vacation periods,
Executive shall devote all her working time and attention and her best efforts
to the performance of her duties and responsibilities under this Employment
Agreement; PROVIDED, HOWEVER, that nothing herein contained shall be deemed to
prevent or limit the right of Executive (a) to make any passive
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investments where Executive is not obligated or required to, and shall not in
fact, devote any managerial efforts or (b) to participate in charitable or
community activities or in trade or professional organizations except only that
the President of the Company shall have the right to limit such participation if
the President believes that the time spent on such activities infringes upon the
time required by Executive for the performance of her duties under this
Agreement or is otherwise incompatible with those duties.
5. COMPENSATION AND BENEFITS.
(a) Base Salary. During the Employment Period, Executive shall receive a
base salary at the rate of $500,000 per year, rising to $525,000 in June, 2000
and to $555,000 in June 2001, or such higher amount as the Company may determine
from time to time. Base salary shall be payable in such manner and at such times
as the Company shall pay base salary to other executive employees.
(b) Signing Bonus. Executive shall be entitled to receive a $200,000
signing bonus 60 days after the Start Date.
(c) MIP. During the Employment Period, Executive shall be eligible to
receive annual awards under the Company's Management Incentive Plan ("MIP"). To
the extent provided in Section 162(m) of the Code, the goals, scope and
conditions of any award shall be established annually by the Executive
Compensation Committee ("Committee"). Subject to the foregoing, Executive shall
be entitled to earn up to a specified percentage (initially 40%) of her Base
Salary actually earned during each fiscal year if the target established by the
Committee for the Marmaxx Division is met and up to a specified percentage
(initially 80%) of such salary if such target is exceeded by a specified amount.
Although Executive will start her employment after the current MIP year has
commenced, Executive will be entitled to receive payments under the MIP goals as
if she were participating in the current years MIP, subject to the following:
- For the current MIP year, Executive will be guaranteed a minimum
payment of $200,000.00 and will participate (pro rated for her period
of employment during such year) on the basis of the Marmaxx Division's
performance for the entire fiscal year.
(d) LRPIP. During the Employment Period, Executive will be entitled to
participate in the Company's Long Range Performance Incentive Plan ("LRPIP") at
a level commensurate with her position in the Company. To the extent provided in
Section 162(m) of the Code, the terms of such awards shall be established by the
Committee. Subject to the foregoing, Executive shall be entitled to earn 100% of
her target award (initially $225,000) for a complete three year cycle if the
target established by the
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Committee is met by the Marmaxx Division and up to 150% of her target award
(initially $337,500) if the target is exceeded by a specified amount.
Although Executive will start her employment after the three year cycles ending
in January, 2000, 2001 and 2002 have commenced, Executive will be entitled to
receive payments with respect to each of such cycles as if she were
participating in such cycles, subject to the following:
- For the three year cycle ending in January, 2000, Executive will
receive a fixed $75,000.00 payment contingent on her being employed by
the Company at the end of fiscal 2000.
- For the three year cycle ending in January, 2001, Executive can earn
$150,000.00 if the 3 year target performance goals are met and a
maximum of $225,000.00 if such goals are exceeded by a specified
amount.
- For the three year cycle ending in January 2002, Executive can earn up
to $225,000.00 if target performance goals are met and up to 150% of
target or $337,500.00) if such goals are exceeded by a specified
amount.
(e) Stock Options. At the earlier of the first meeting of the Committee
following the Start Date or the September, 1999 meeting of the Committee,
Executive will be granted a non qualified stock option for 50,000 shares of
common stock pursuant to the Company's 1986 Stock Incentive Plan, as amended
(the "Plan"). The exercise price of the shares will be the closing price of the
stock on the later of the Start Date and the applicable Committee meeting date,
such date constituting the grant date for purposes of the Plan. The option will
expire ten years from the grant date and will be exercisable cumulatively at the
rate of 33 1/3% each year on the anniversary of the grant date. The options will
otherwise have the terms provided for in the Plan or as set forth in the form of
grant award previously furnished to Executive.
(f) SERP. Except as provided in [Exhibit C] ("Change of Control
Benefits"), Executive will be entitled to the greater of Category B or C
benefits determined and made payable in accordance with the generally applicable
provisions of the Company's Supplemental Executive Retirement Plan ("SERP"),
including vesting requirements. Executive will receive service credit for her
period of prior employment with the Company and its subsidiaries.
(g) Restricted Stock. At the earlier of the first meeting of the Committee
to be held following the Start Date or the September, 1999 meeting of the
Committee, Executive will be
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granted, effective as of the later of the Start Date or the applicable Committee
meeting date, an award of shares of Restricted Stock under the Plan equal to the
number derived by dividing $1.5 million by the closing price of the Company's
common stock on the effective date. The shares will vest as follows:
- No vesting until completion of three years of service from the Start
Date, at which time 75% of the shares will vest, except that such 75%
shall automatically vest upon any (i) termination of employment
hereunder by the Company other than for cause, disability or
incapacity, other than any termination of employment hereunder by
reason of death or(ii) termination by Executive within 30 days of the
relocation of her principal place of employment more than 50 miles
from her present residence ("Relocation Termination"). In the event of
termination of employment by reason of death, disability or
incapacity, Executive shall vest in such shares on a pro rata basis
according to the length of the Employment Period in relation to the
three year period commencing on the Start Date.
- The final 25% of the shares will vest upon completion of four years of
service from the Start Date.
- In the event that the Employment Period is not renewed by reason of
the Company choosing not to so renew, and the Employment Period is not
terminated for any reason by the Company or Executive prior to the
last day of the Original Term, the final 25% of the shares will
automatically vest on such date.
The shares of Restricted Stock will otherwise have the terms provided
for in the Plan or as set forth in the form of certificate for
Restricted Stock previously furnished to Executive.
(h) FlexPlus. Executive will be eligible to participate in the Company's
FlexPlus Plan which covers medical, dental, life insurance and disability
program. Upon the Start Date, Executive will be provided with Management Life
Insurance in the amount of $975,000.00, plus FlexPlus basic life insurance for
an additional $100,000.00 under a Company group policy. In addition, Executive
may elect Optional Life coverage up to an additional $300,000.00. Executive will
also be eligible for the Company's alternative Split Dollar Life Insurance
Program instead of FlexPlus Management Life Insurance.
(i) Qualified Plans. Executive shall be entitled during the Employment
Period to participate in the Company's tax-qualified retirement plan and 401(k)
plan and its General
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Deferred Compensation Plan and Executive Savings Plan in accordance with the
terms of those plans.
(j) Policies and Fringe Benefits. Executive shall be subject to Company
policies applicable to its Executives generally and Executive shall be entitled
to receive all such fringe benefits as the Company shall from time to time make
available to other executives generally (subject to the terms of any applicable
fringe benefit plan).
6. 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. Cause shall consist of
dishonesty relating to or arising from Executive's employment hereunder or the
affairs of the Company, conviction of a felony, gross neglect of duties (other
than as a result of disability or death), or conflict of interest which conflict
continues for 30 days after the Company gives written notice to Executive
requesting the cessation of such conflict.
(b) The Employment Period shall terminate should the Executive become
entitled to receive long-term disability compensation pursuant to the Company's
long-term disability plan ("disability"). In addition, if by reason of any
disability (other than a disability as defined) or other impairment of health
that renders her unable to perform her duties to the satisfaction of the
Committee, Executive is unable to perform her duties for at least six months in
any twelve month period ("incapacity"), upon written notice by the Company to
Executive, the Employment Period will be terminated for incapacity.
(c) Whenever the Employment Period shall terminate, Executive shall resign
all office or other positions she shall hold with the Company and any
subsidiaries or divisions of the Company.
7. BENEFITS UPON TERMINATION OF EMPLOYMENT.
(a) Termination on or Prior to the last day of the Original Term by The
Company Other Than For Cause, Disability or Incapacity or by Executive for a
Relocation Termination. If the Employment Period shall have been terminated on
or prior to the last day of the Original Term by the Company for any reason
other than cause, disability or incapacity, or by Executive for a Relocation
Termination, no compensation or other benefits shall be payable to or accrue to
Executive hereunder except as follows:
(i) For the longer of twelve months after such termination or until the
last day of the Original Term, the Company will continue to pay to
Executive her base salary at the rate in effect at termination of
employment. Base salary shall be paid for the first twelve months of the
period without reduction for compensation earned from other employment or
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self-employment, and shall thereafter be reduced by such compensation.
(ii) Until the expiration of the period of base salary payments described
in (i) immediately above or until Executive shall commence other employment
or self-employment, whichever shall first occur, the Company will provide
such medical and dental insurance (but not long-term disability insurance
or life insurance) for Executive and her family, comparable to the
insurance provided for executives generally, as the Company shall
reasonably determine in good faith, and upon the same terms and conditions
as shall be provided for the Company executives generally.
(iii) Executive shall not be entitled to any MIP payment but shall be
entitled to payment, if any, in the nature of severance equal to the
payment she would have earned under MIP if her employment had continued
until the end of the fiscal year (pro-rated for the period of active
employment during such year).
Executive shall also be entitled to payments or benefits under other grants
hereunder (including (i) payment of the signing bonus referred to in Section
5(b) and (ii)the automatic vesting of the shares of Restricted Stock referred to
in the first bullet under Section 5(g)) and under other Company plans to the
extent, if any, therein provided in the circumstances.
(b) Termination after the last day of the Original Term by The Company
Other Than For Cause, Disability or Incapacity or by Executive for a Relocation
Termination. If the Employment Period shall have been terminated after the last
day of the Original Term (i) by the Company for any reason other than cause,
disability or incapacity, or (ii) by Executive for a Relocation Termination, no
compensation or other benefits shall be payable to or accrue to Executive
hereunder except as follows:
(i) The Company will continue to pay to Executive her then base salary for
a period of twelve months from the date of termination, which base salary
shall be reduced after six months for compensation earned from other
employment or self-employment.
(ii) Until the expiration of the period of base salary payments described
in (i) immediately above or until Executive shall commence other employment
or self-employment, whichever shall first occur, the Company will provide
such medical and dental insurance (but not long-term disability insurance
or life insurance) for Executive and her family, comparable to the
insurance provided for executives generally, as the Company shall
reasonably determine in good faith, and upon the same terms and
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conditions as shall be provided for the Company executives generally.
(iii) Executive shall not be entitled to any MIP payment but shall be
entitled to payment, if any, in the nature of severance equal to the
payment she would have earned under MIP if her employment had continued
until the end of the fiscal year (pro-rated for the period of active
employment during such year).
Executive shall also be entitled to payments or benefits under other grants
hereunder and under other Company plans to the extent provided therein in the
circumstances.
(c) Termination for Death, Disability or Incapacity. If the Employment
Period shall terminate at any time by reason of death, disability or incapacity,
no compensation or other benefits shall be payable to or accrue to Executive
hereunder except as follows:
Executive shall not be entitled to any MIP payment but shall be entitled to
payment, if any, in the nature of severance equal to the payment she would have
earned under MIP if her employment had continued until the end of the fiscal
year (pro-rated for the period of active employment during such year).
Executive shall also be entitled to payments or benefits under other grants
hereunder and under other Company plans, including any long-term disability
plan, to the extent therein provided in the circumstances.
(d) Voluntary Termination; Termination for Cause; Violation of Certain
Covenants. If Executive should end her employment voluntarily (other than for a
Relocation Termination) or if the Company should end Executive's employment for
cause, or if Executive should violate the protected persons or noncompetition
provisions of Section 8, all compensation and benefits otherwise payable
pursuant to this Agreement shall cease. Executive shall be entitled to (i)
payment of accrued but unpaid Base Salary and other fully accrued but unpaid
benefits to the extent not inconsistent with the provisions of any applicable
plan and (ii) such rights, if any, as shall be applicable in the circumstances
under the terms of any grant hereunder or any Company plan. The Company does not
waive any rights it may have for damages or for injunctive relief and, in
addition to any arbitration rights under Section 16, may pursue any claim for
injunctive relief in any court of competent jurisdiction.
(e) Employment Period Not Extended. If the Company determines not to
extend the Employment Period beyond the Original Term or any extension thereof,
or offers to extend the Employment Period on terms less favorable to Executive
than those set forth herein, and Executive declines, it shall be deemed a
termination of the Employment Period by the Company pursuant to
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(a) above. If Executive should choose not to continue her employment beyond the
Original Term or any extension of the Employment Period, other than in response
to an offer by the Company to extend the Employment Period on terms less
favorable to Executive than those set forth herein, it shall be deemed a
voluntary termination by Executive and the provisions of (d) above shall apply.
8. AGREEMENT NOT TO SOLICIT OR COMPETE.
(a) Upon the termination of the Employment Period at any time for any
reason, Executive shall not during the Prohibited Period under any circumstances
employ, solicit the employment of, or accept unsolicited the services of, any
"protected person" or recommend the employment of any "protected person" to any
other business organization in which Executive has any direct or indirect
interest (other than a less-than-one percent equity interest in an entity), with
which Executive is affiliated or for which Executive renders any services.
"Prohibited Period" shall mean a period coterminous with the period of base
salary continuation (without regard to reduction for income from other
employment or self-employment) which is applicable or which would have been
applicable had the termination been pursuant to Section 7(a), in the case of
termination on or prior to the last day of the Original Term, or 7(b), in the
case of termination after the last day of the Original Term. A "protected
person" shall be a person known by Executive to be employed by the Company or
its subsidiaries at or within six months prior to the commencement of
conversations with such person with respect to employment.
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 of, (B) solicitation of, and (C) unsolicited acceptance of services
from, 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) are deemed to be separate and independent
agreements and in the event of unenforceability of any such agreement, such
unenforceable agreement shall be deemed automatically deleted from the
provisions hereof and such 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 her employment, Executive will have learned many
trade secrets of the Company and will have access to confidential information
and business plans of the Company. Therefore, if Executive should end her
employment voluntarily at any time, including by reason of retirement or
disability, or if the Company should end Executive's employment at any time for
cause, then during the Prohibited Period, Executive will not engage, either as a
principal, employee, partner, consultant or investor (other than a less-than-one
percent equity interest in an entity), in a business which is a
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competitor of the Company. A business shall be deemed a competitor of the
Company only if it shall then be so regarded by retailers generally or if it
shall operate a promotional off-price family apparel store (such as T.J. Maxx,
Marshalls, X.X. Xxxxxx or an off price home fashion store such as Home Goods)
within ten miles of any "then existing" T.J. Maxx, Marshalls, X.X. Xxxxxx or
Home Goods store". The term "then existing" in the previous sentence shall refer
to any such location that is, at the time of termination of the Employment
Period, operated by the Company or any wholly-owned subsidiary of the Company or
under lease for operation as aforesaid. Nothing herein shall restrict the right
of Executive to engage in a business that operates a conventional or full
xxxx-up department store. Executive agrees that if, at any time, pursuant to
action of any court, administrative or governmental body or other arbitral
tribunal, the operation of any part of this paragraph shall be determined to be
unlawful or otherwise unenforceable, then the coverage of this paragraph shall
be deemed to be restricted as to duration, geographical scope or otherwise, to
the extent, and only to the extent, necessary to make this paragraph lawful and
enforceable in the particular jurisdiction in which such determination is made.
If the Employment Period terminates, Executive agrees (i) to notify the
Company immediately upon her securing employment or becoming self-employed
during any period when Executive's compensation from the Company shall be
subject to reduction or her benefits provided by the Company shall be subject to
termination as provided in Section 7 and (ii) to furnish to the Company written
evidence of her compensation earned from any such employment or self-employment
as the Company shall from time to time request. In addition, upon termination of
the Employment Period for any reason other than death of Executive, Executive
shall immediately return all written trade secrets, confidential information and
business plans of the Company and shall execute a certificate certifying that
she has returned all such items in her possession or under her control.
9. RELATIONSHIP WITH CHANGE OF CONTROL SEVERANCE AGREEMENT. Upon the
occurrence of a Change of Control under Executive's Change of Control Severance
Agreement, Executive's rights under MIP for the fiscal year of such occurrence
and her rights under LRPIP for the cycles then in effect shall be governed by
such agreement and not by this Agreement. Upon a Qualified Termination under the
Change of Control Severance Agreement, Executive's rights to base salary
continuation and under SERP shall be governed by such agreement and not by this
Agreement.
10. EXECUTIVE ACKNOWLEDGMENT. Executive acknowledges that she and the
Company have not entered into, and you have not relied on any agreements or
representations, written or oral, express or implied, with respect to her
employment that are not set forth expressly in this Agreement. In addition,
Executive
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acknowledges and represents that (a) she has fully disclosed to the Company all
prior employment agreements or understandings to which she is a party or by
which she is bound; and (b) she has not and will not disclose to the Company or
to any division thereof, or use for the benefit of the Company or any division
thereof, any trade secrets or proprietary information of any prior employer.
11. ASSIGNMENT. The rights and obligations of the Company shall inure to
the benefit of and shall be binding upon the successors and assigns of the
Company. The rights and obligations of Executive are not assignable except only
that payments payable to her after her death shall be made to her estate.
12. INDEMNIFICATION. The Company shall defend, indemnify and hold
Executive harmless of and from any and all amounts that may be claimed from
Executive by, or that may become due from Executive to, Brylane, Inc. or any of
its affiliates or successors ("Brylane") at any time (other than amounts for
which she is otherwise indemnified or insured),and any Lost Compensation
(meaning any base salary, Management Incentive Plan entitlement, car or car
allowance, and health benefits other than disability and life insurance that
would have accrued from the date of the Company offer letter dated February 24,
1999 to the earliest Start Date proposed by the Company) that otherwise would
have but that is not in fact paid to Executive under her employment agreement
with Brylane as now in effect, to the extent any such amount or any such Lost
Compensation arises from the making to Executive by the Company of any offer of
employment, any acceptance by Executive of any such offer of employment, the
communication of the making of such offer to Brylane or the taking of any action
by Brylane arising therefrom. Executive shall promptly notify the Company of any
actual or potential amount, or any actual or potential Lost Compensation, as to
which Executive has or would have a right of indemnification hereunder (an
"Indemnifiable Matter"); provided that the failure to give such prompt notice
shall affect such indemnification rights only to the extent the Company is
prejudiced thereby. The Company shall have the right to control, defend and
settle any Indemnifiable Matter, including without limitation the right to
determine in good faith any and all actions to be taken by Executive in defense
of or otherwise regarding the Indemnifiable Matter in question and the right to
retain counsel of the Company's choice to represent Executive in regard to such
Indemnifiable Matter. The Company shall not effect a settlement of any claim
against Executive without Executive's prior written consent (which consent shall
not be unreasonably withheld) unless the settlement includes a complete release
of the Executive with respect to such claim. In the event of any Indemnifiable
Matter, the Company shall be subrogated to all rights of Executive against
Brylane or any other third party in respect of such Indemnifiable Matter, and
such right of subrogation shall include without limitation the right to bring
actions, including
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arbitration proceedings, in Executive's name to enforce such rights of
Executive. Executive shall cooperate fully with the Company at the Company's
expense in the Company's exercise of its right of control and its right of
subrogation in respect of any Indemnifiable Matter and, in so cooperating, in
addition to and without limitation upon such other actions as the Company may
reasonably request, shall at the Company's request at the Company's expense
attend hearings and trials and reasonably assist in effecting settlements, in
securing and giving evidence, in obtaining the attendance of witnesses and in
conducting suits as to any Indemnifiable Matter, provided the Company acts
reasonably in accordance with the Executive's schedule. Notwithstanding any
provisions of this Agreement to the contrary, the provisions of this Section 12
shall survive any termination of this Agreement.
13. LEGAL EXPENSES. The Company shall pay the reasonable fees and expenses
(not to exceed $15,000) of Xxxx and Xxxx LLP counsel for Executive, in the
negotiation and drafting of this Agreement and the related Change of Control
Severance Agreement.
14. NOTICES. All notices and other communications required hereunder shall
be in writing and shall be given either by personal delivery or 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 at: 000
Xxxxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000, Attention: General Counsel, or other such
address as the Company may hereafter designate by notice to Executive; and if
sent to Executive, the same shall be mailed to Executive at her address set
forth above, or at such other address as Executive may hereafter designate by
notice to the Company, with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxx Xxxxxxxxx, Esq.
Notices shall be effective upon receipt.
15. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be governed by the laws of The Commonwealth of
Massachusetts.
16. ARBITRATION. Except for claims or disputes failing within the last
sentence of this paragraph, in the event that there is any claim or dispute
arising out of or relating to this Agreement, or an alleged breach thereof, such
claim or dispute, shall be settled exclusively by binding arbitration in Boston,
Massachusetts, in accordance with the Rules Governing Resolution of Employment
Disputes of the American Arbitration Association by an arbitrator mutually
agreed upon by the parties hereto or, in the absence of such agreement, by an
arbitrator selected according to such Rules, and judgment upon the award
rendered by
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the Arbitrator shall be entered in any Court having jurisdiction thereof upon
the application of either party. Nothing in this Section 16 shall prevent the
Company or Executive from seeking interim measures of protection in the form of
pre-award attachment of assets or preliminary or temporary equitable relief.
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In witness whereof the parties have entered into this Agreement as of April
9, 1999.
/s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
THE TJX COMPANIES, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
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Title: President and Chief Executive Officer
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CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT between The TJX Companies, Inc., a
Delaware corporation (the "Company"), and Xxxxx Xxxxxxxxx ("Executive"), is
dated as of April 9, 1999.
Executive is expected to be a key executive of the Company or a Subsidiary
and an integral part of its management.
The Company recognizes that the possibility of a change of control of the
Company may result in the departure or distraction of management to the
detriment of the Company and its shareholders.
The Company wishes to assure Executive of fair severance should her
employment terminate in specified circumstances following a change of control of
the Company and to assure Executive of certain other benefits upon a change of
control.
In consideration of Executive's continued employment with the Company or a
Subsidiary and other good and valuable consideration, the parties agree as
follows:
1. DEFINITIONS. The following terms as used in this Agreement shall have
the following meanings:
(a) "Base Salary" shall mean Executive's annual base salary, exclusive of
any bonus or other benefits she may receive.
(b) "Cause" shall mean dishonesty relating to or arising from Executive's
employment hereunder or the affairs of the Company, conviction of a felony,
gross neglect of duties (other than as a result of Disability or death), or
conflict of interest which conflict shall continue for 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 Company's directors at a meeting called and held for
that purpose (after reasonable notice to Executive), and at which Executive,
together with her 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,
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that the Company may suspend Executive (but not withhold payment of her 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, (b) a determination by a majority of the Company's
directors that Executive was not guilty of the conduct described in the
definition of "Cause" above (in which case Executive shall be reinstated), or
(c) the 90th day after notice of termination is given (in which case Executive
shall be reinstated).
(c) "Change of Control" shall have the meaning set forth in Exhibit A.
(d) "Committee" shall mean the Executive Compensation Committee of the
Board of Directors of the Company.
(e) "Company" shall mean The TJX Companies, Inc. or any successor.
(f) "Current Title" shall mean Executive's title on the date 180 days
prior to the commencement of a Standstill Period.
(g) "Date of Termination" shall mean the date on which Executive's
employment is terminated.
(h) "Disability" shall have the meaning given it in the Company's
long-term disability plan. Executive's employment shall be deemed to be
terminated for Disability on the date on which Executive is entitled to receive
long-term disability compensation pursuant to such long-term disability plan.
(i) "Incapacity" shall mean a disability (other than Disability within the
meaning of the immediately preceding definition) or other impairment of health
that renders Executive unable to perform her duties to the satisfaction of the
Committee. If by reason of Incapacity Executive is unable to perform her duties
for at least six months in any twelve month period, upon written notice by the
Company the employment of Executive shall be deemed to have terminated by reason
of Incapacity
(j) "Executive" shall have the meaning set forth in the first paragraph of
this Agreement.
(k) "Qualified Termination" shall mean 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, Incapacity or
Disability.
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For purposes of this definition, termination for "good reason" shall mean
the voluntary termination by Executive of her employment (A) within 120 days
after the occurrence without Executive's express written consent of any of the
events described in clauses (I), (II), (III), (IV), (V) or (VI) below, provided
that Executive gives notice to the Company at least 30 days in advance
requesting that the situation described in those clauses be remedied, and the
situation remains unremedied upon expiration of such 30-day period; (B) within
120 days after the occurrence without Executive's express written consent of the
events described in clauses (VII) or (VIII) below, provided that Executive gives
notice to the Company at least 30 days in advance; or (C) upon occurrence of the
events described in clauses (IX) or (X) below, provided that Executive gives
notice to the Company at least 30 days in advance:
(I) The assignment to her of any duties inconsistent with her positions,
duties, responsibilities, reporting requirements, and status with the Company
(or a Subsidiary) immediately prior to a Change of Control, or a substantive
change in Executive's titles or offices as in effect immediately prior to a
Change of Control, or any removal of Executive from or any failure to re-elect
her to such positions, except in connection with the termination of Executive's
employment by the Company (or a Subsidiary) for Cause or by the Executive other
than for good reason; or any other action by the Company (or a Subsidiary) which
results in a diminishment in such position, authority, duties or
responsibilities, other than an insubstantial and inadvertent action which is
remedied by the Company or the Subsidiary promptly after receipt of notice
thereof given by Executive; or
(II) if Executive's Base Salary for any fiscal year is less than 100
percent of the 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 percent of the total cash compensation opportunities made
available to Executive in the completed fiscal year immediately preceding the
Change of Control, unless any further reduction represents an overall reduction
in the Base Salary paid or cash compensation opportunities made available, as
the case may be, to executives in the same organizational level (it being the
Company's burden to establish this fact); or
(III) the failure of the Company (or a Subsidiary) 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 a
Change of Control unless the Company (or a Subsidiary) provides Executive
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with a plan or plans that provide substantially similar benefits, or the taking
of any action by the Company (or a Subsidiary) 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 a Change of Control, unless the elimination or
reduction of any such benefit, perquisite or plan affects all other executives
in the same organizational level (it being the Company's burden to establish
this fact); or
(IV) any purported termination of Executive's employment by the Company (or
a Subsidiary) 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 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
of Executive's employment agreement with the Company; or
(VII) the Company sells or otherwise disposes of, in one transaction or a
series of related transactions, assets or earning power aggregating more than 30
percent of the assets (taken at asset value as stated on the books of the
Company determined in accordance with generally accepted accounting principles
consistently applied) or earning power of the Company (on an individual basis)
or the Company and its Subsidiaries (on a consolidated basis) to any other
Person or Persons (as those terms are defined in Exhibit A); or
(VIII) if Executive is employed by a Subsidiary of the Company, such
Subsidiary either ceases to be a Subsidiary of the Company or sells or otherwise
disposes of, in one transaction or a series of related transactions, assets or
earning power aggregating more than 30 percent of the assets (taken at asset
value as stated on the books of the Subsidiary determined in accordance with
generally accepted accounting principles consistently applied) or earning power
of such Subsidiary (on an individual basis) or such Subsidiary and its
subsidiaries (on a consolidated basis) to any other Person or Persons (as those
terms are defined in Exhibit A); or
(IX) termination by Executive of her employment for Retirement; or
(X) the voluntary termination by Executive of her employment (i) at any
time within one year after the Change of
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Control or (ii) at any time during the second year after the Change of Control
until the Company (or a Subsidiary) offers Executive an employment contract
having a minimum two-year duration which provides Executive with substantially
the same title, responsibilities, annual and long-range compensation, benefits
and perquisites that she had immediately prior to the Standstill Period.
Notwithstanding the foregoing, the Board of Directors of the Company may
expressly waive the application of this clause (X) if it waives the
applicability of substantially similar provisions with respect to all persons
with whom the Company has a written severance agreement (or may condition its
application on any additional requirements or employee agreements which such
Board shall in its discretion deem appropriate in the circumstances). The
determination of whether to waive or impose conditions on the application of
this clause (X) shall be within the complete discretion of the Board of
Directors of the Company but shall be made prior to the Change of Control.
(1) "Retirement" shall mean voluntary termination by Executive of her
employment in accordance with the Company's retirement plan or program generally
applicable to its salaried employees or in accordance with any retirement
arrangement established with Executive's consent with respect to her. Nothing in
this Agreement shall affect any agreement between Executive and the Company with
respect to her retirement.
(m) "Standstill Period" shall be the period commencing on the date of a
Change of Control and continuing until the close of business on the last
business day of the 24th calendar month following such Change of Control.
(n) "Subsidiary" shall mean any corporation in which the Company owns,
directly or indirectly, 50 percent or more of the total combined voting power of
all classes of stock.
2. BENEFITS UPON CHANGE OF CONTROL.
2.1 BENEFITS FOLLOWING TERMINATION OF EMPLOYMENT.
Executive shall be entitled to the following benefits upon a Qualified
Termination:
(a) Within 30 days following the Date of Termination, the Company shall
pay to Executive the following in a lump sum:
(i) an amount equal to two times Executive's Base Salary for one year
at the rate in effect immediately prior to the Date of Termination or the Change
of Control (or if Executive's title was changed to a level below that of
Executive's Current Title within 180 days before the commencement
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of a Standstill Period, the rate in effect immediately prior to such change),
whichever is highest, plus the accrued and unpaid portion of Executive's Base
Salary through the Date of Termination. Any payments made to Executive under any
long term disability plan of the Company with respect to the two years following
termination of employment shall be offset against such two times Base Salary
payment. Executive shall promptly make reimbursement payments to the Company to
the extent any such disability payments are received after the Base Salary
payment.
(ii) if Executive was a participant in the Company's Supplemental
Executive Retirement Plan ("SERP") immediately prior to a Change of Control and
the number of years Executive has been employed by the Company (or a Subsidiary)
is five or more, including if applicable service for Zayre Corp. and its
subsidiaries, an amount equal to the present value of the payments that
Executive would have been entitled to receive under SERP as the higher of a
Category B or C participant (regardless of whether she was participating in SERP
on the Date of Termination). The present value of such payment shall be
calculated using the following rules and assumptions.
(A) a credit equal to the number of Years of Service (as that term is
defined in SERP) that Executive has been employed by the Company and
Subsidiaries at the Date of Termination, including if applicable service for
Zayre Corp. and its Subsidiaries, shall be added to her Years of Service in
determining Executive's total Years of Service. However, the total Years of
Service determined hereunder shall not exceed the lesser of (x) 20 or (y) the
Years of Service that Executive would have had if she had retired at the age of
65;
(B) Executive's Average Compensation (as that term is defined in SERP)
shall be determined as of the Date of Termination;
(C) Executive's Primary Social Security Benefit (as that term is defined
in SERP) shall mean the annual primary insurance amount to which Executive is
entitled or would, upon application therefor, become entitled at age 65 under
the provisions of the Federal Social Security Act as in effect on the Date of
Termination assuming that Executive received annual income at the rate of her
Base Salary from the Date of Termination until her 65th birthdate which would be
treated as wages for purposes of the Social Security Act;
(D) the monthly benefit under SERP determined using the criteria set forth
in (A), (B), and (C) above shall be multiplied by 12 to determine an annual
benefit; and
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(E) the present value of such annual benefit shall be determined by
multiplying the result in (D) by the appropriate actuarial factor from the most
recently published table 4A (or its equivalent) as published by the Pension
Benefit Guaranty Corporation and which is effective for plan terminations
occurring on the Date of Termination, using Executive's age to the nearest year
determined as of that date. If, as of the Date of Termination, Executive has
previously satisfied the eligibility requirements for Early Retirement under the
Company's Retirement Plan, then the appropriate factor shall be that based on
the most recently published "PBGC Actuarial Value of $1.00 Per Year Deferred to
Age 60 and Payable for Life Thereafter - Healthy Lives", except that if
Executive's age to the nearest year is more than 60, then such higher age shall
be substituted for 60. If, as of the Date of Termination, Executive has not
satisfied the eligibility requirements for Early Retirement under the Company's
Retirement Plan, then the appropriate factor shall be based on the most recently
published "PBGC Actuarial Value of $1.00 Per Year Deferred to Age 65 and Payable
for Life Thereafter - Healthy Lives".
If Executive receives a payment under this subparagraph (ii), she shall not
be entitled to any other payments under SERP.
(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 her family all life insurance, medical insurance and disability plans and
programs in which Executive was entitled to participate immediately prior to the
Change of Control (or if Executive's title was changed to a level below that of
Executive's Current Title within 180 days before the commencement of a
Standstill Period, all such plans and programs in which Executive was entitled
to participate immediately prior to such change, if the benefits thereunder are
greater), 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 comparable terms to provide Executive with benefits
substantially similar to those which she is entitled to receive under such plans
and programs. Notwithstanding the foregoing, the Company's obligations hereunder
with respect to life, medical or disability coverage or benefits shall be deemed
satisfied to the extent (but only to the extent) of any such coverage of
benefits provided by another employer.
(c) For a period of two years after the Date of Termination, the Company
shall make available to Executive the use of any automobile that was made
available to Executive immediately prior to the Date of Termination, including
ordinary
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replacement thereof in accordance with the Company's automobile policy in effect
immediately prior to the Change of Control, or if Executive's title was changed
to a level below that of Executive's Current Title within 180 days before the
commencement of a Standstill Period, the Company shall make available to
Executive the use of an automobile of a type comparable to the automobile that
was made available to her immediately prior to such change (or, in lieu of
making such automobile available, the Company may at its option pay to Executive
the present value of its cost of providing such automobile). If, immediately
prior to the Date of Termination, the Company provided Executive with an
automobile allowance rather than with the use of an automobile, the Company
shall pay to Executive in a lump sum within 30 days following the Date of
Termination an amount equal to (i) two times Executive's automobile allowance
for one year at the rate in effect immediately prior to the Date of Termination
or the Change of Control (or if Executive's title was changed to a level below
that of Executive's Current Title within 180 days before the commencement of a
Standstill Period, the rate in effect immediately prior to such change),
whichever is highest, including any increase in such rate which would have
become effective during the two-year period following the Date of Termination
(had a Qualified Termination not occurred), in accordance with the Company's
automobile policy in effect immediately prior to the Change of Control, plus
(ii) the accrued and unpaid portion of Executive's automobile allowance through
the Date of Termination.
Payments under this Section 2.1 and Section 2.2 below shall be made without
regard to whether the deductibility of such payments (or any other payments to
or for the benefit of Executive) would be limited or precluded by Internal
Revenue Code Section 280G and without regard to whether such payments (or any
other payments) would subject Executive to the federal excise tax levied on
certain "excess parachute payments" under Internal Revenue Code Section 4999;
PROVIDED, that if the total of all payments to or for the benefit of Executive,
after reduction for all federal taxes (including the tax described in Internal
Revenue Code Section 4999, if applicable) with respect to such payments
("Executive's total after-tax payments"), would be increased by the limitation
or elimination of any payment under this Section 2.1 or Section 2.2, amounts
payable under this Section 2.1 and Section 2.2 shall be reduced to the extent,
and only to the extent, necessary to maximize Executive's total after-tax
payments. The determination as to whether and to what extent payments under this
Section 2.1 or Section 2.2 are required to be reduced in accordance with the
preceding sentence shall be made at the Company's expense by Pricewaterhouse-
Coopers LLC or by such other certified public accounting firm as the Committee
may designate prior to a Change of Control. In the
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event of any underpayment or overpayment under this Section 2.1 or Section 2.2,
as determined by PricewaterhouseCoopers LLC (or such other firm as may have been
designated in accordance with the preceding sentence), the amount of such
underpayment or overpayment shall forthwith 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 Internal Revenue Code.
2.2 OTHER BENEFITS. Within 30 days following a Change of Control, whether
or not Executive's employment has been terminated, the Company shall pay to
Executive the following in a lump sum:
(i) an amount equal to the "Target Bonus" under the Company's Management
Incentive Plan or any other annual incentive plan which is applicable to
Executive for the fiscal year in which the Change of Control occurs (or if
Executive's title was changed to a level below that of Executive's Current Title
within 180 days before the commencement of a Standstill Period, the "Target
Bonus" applicable to Executive for the fiscal year in which such change occurred
as if she continued to hold Executive's Current Title, if higher); and
(ii) if Executive is a participant in the Company's Long Range Management
Incentive Plan ("LRMIP"), Long Range Performance Incentive Plan ("LRPIP") or any
other performance-based long-range incentive plan at the Change of Control, an
amount with respect to each Award Period (as that term is defined in LRMIP) or
Performance Cycle (as that term is defined in LRPIP) for which Executive has
been designated as a participant equal to 50 percent of the product of (A) the
maximum award payable to Executive for such Award Period or Performance Cycle,
as designated by the Committee under LRMIP or LRPIP, as the case may be (or, if
Executive's title was changed to a level below that of Executive's Current Title
within 180 days before the commencement of a Standstill Period, in the case of
an Award Period or Performance Cycle which commences after such change, the
maximum award payable to Executive for such Award Period or Performance Cycle
shall be deemed to be the maximum award payable to Executive for the Award
Period or Performance Cycle which commenced immediately prior to such change, if
higher), and (B) a fraction, the denominator of which is the total number of
fiscal years in the Award Period or Performance Cycle and the numerator of which
is the number of years which have elapsed in such Award Period or Performance
Cycle prior to the Change of Control (for purposes of this fraction, if the
Change of Control occurs during the first quarter of a fiscal year, then
one-quarter of the fiscal year shall be deemed to have elapsed prior to the
Change of Control, and if the Change of Control occurs after the first
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quarter of the fiscal year, then the full fiscal year shall be deemed to have
elapsed prior to the Change of Control).
3. NONCOMPETITION; NO MITIGATION OF DAMAGES; OTHER SEVERANCE PAYMENTS;
WITHHOLDING.
3.1 NONCOMPETITION. Upon a Change of Control, any agreement by Executive
not to engage in competition with the Company subsequent to the termination of
her employment, whether contained in an employment contract or other agreement,
shall no longer be effective.
3.2 NO DUTY TO MITIGATE DAMAGES. Executive's benefits under this Agreement
shall be considered severance pay in consideration of her past service and her
continued service from the date of this Agreement, and her entitlement thereto
shall neither be governed by any duty to mitigate her damages by seeking further
employment nor offset by any compensation which she may receive from future
employment.
3.3 OTHER SEVERANCE PAYMENTS. In the event that Executive has an
employment contract or any other agreement with the Company (or a Subsidiary)
which entitles Executive to severance payments upon the termination of her
employment with the Company, the amount of any such severance payments shall be
deducted from the payments to be made under this Agreement.
3.4 WITHHOLDING. Anything to the contrary notwithstanding, 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.
4. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled exclusively by
arbitration in Boston, Massachusetts in accordance with the Rules Governing
Resolution of Employment Disputes of the American Arbitration Association then
in effect, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
5. 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 her employment during a Standstill Period is for Cause or
other than for good reason (as defined in Section 1(k)) or in obtaining any
right or benefit to which Executive is entitled under this Agreement. Any amount
payable under this
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Agreement that is not paid when due shall accrue interest at the prime rate as
from time to time in effect at the First National Bank of Boston, until paid in
full.
6. NOTICE OF TERMINATION. During a Standstill Period, Executive's
employment may be terminated by the Company (or a Subsidiary) only upon 30 days'
written notice to Executive.
7. NOTICES. All notices shall be in writing and shall be deemed given
five days after mailing in the continental United States by registered or
certified mail, or upon personal receipt after delivery, telex, telecopy or
telegram, to the party entitled thereto at the address stated below or to such
changed address as the addressee may have given by a similar notice:
To the Company: The TJX Companies, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: General Counsel
To the Executive: At her home address,
as last shown on the
records of the Company
8. SEVERABILITY. In the event that any provision of this Agreement shall
be determined to be invalid or unenforceable, such provision shall be
enforceable in any other jurisdiction in which valid and enforceable and in any
event the remaining provisions shall remain in full force and effect to the
fullest extent permitted by law.
9. GENERAL PROVISIONS
9.1 BINDING AGREEMENT. This Agreement shall be binding upon and inure to
the benefit of the parties and be enforceable by Executive's personal or legal
representatives or successors. If Executive dies while any amounts would still
be payable to her hereunder, benefits would still be provided to her family
hereunder or rights would still be exercisable by her hereunder as if she had
continued to live, such amounts shall be paid to Executive's estate, such
benefits shall be provided to Executive's family and such rights shall remain
exercisable by Executive's estate in accordance with the terms of this
Agreement. This Agreement shall not otherwise be assignable by Executive.
9.2 SUCCESSORS. This Agreement shall inure to and be binding upon the
Company's successors. The Company will require any successor to all or
substantially all of the business and/or assets of the Company by sale, merger
(where the Company is not
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the surviving corporation), lease or otherwise, by agreement in form and
substance satisfactory to Executive, to assume expressly this Agreement. If the
Company shall not obtain such agreement prior to the effective date of any
succession, Executive shall have all rights resulting from termination by
Executive for good reason (as defined in Section 1(k) under this Agreement).
This Agreement shall not otherwise be assignable by the Company.
9.3 AMENDMENT OR MODIFICATION; WAIVER. This Agreement may not be amended
unless agreed to in writing by Executive and the Company. No waiver by either
party of any breach of this Agreement shall be deemed a waiver of a subsequent
breach.
9.4 TITLES. No provision of this Agreement is to be construed by reference
to the title of any section.
9.5 CONTINUED EMPLOYMENT. This Agreement shall not give Executive any
right of continued employment or any right to compensation or benefits from the
Company or any Subsidiary except the right specifically stated herein to certain
severance and other benefits, and shall not limit the Company's (or a
Subsidiary's) right to change the terms of or to terminate Executive's
employment, with or without Cause, at any time other than during a Standstill
Period, except as may be otherwise provided in a written employment agreement
between the Company (or a Subsidiary) and Executive.
9.6 TERMINATION OF AGREEMENT OUTSIDE OF STANDSTILL PERIOD. This Agreement
shall be automatically terminated upon the first to occur of (i) the termination
of Executive's employment for any reason, whether voluntary or involuntary, at
any time other than during a Standstill Period or (ii) if Executive is employed
by a Subsidiary of the Company, the date on which the Subsidiary either ceases
to be a Subsidiary of the Company or sells or otherwise disposes of all or
substantially all of its assets, unless such event occurs during a Standstill
Period and Executive's employment shall have been terminated in a Qualified
Termination within 90 days of such event.
9.7 PRIOR AGREEMENT. This Agreement shall supersede and replace any prior
change of control severance agreement between the Company or any of its
Subsidiaries, or any predecessor, and Executive.
9.8 BINDING ON SUCCESSORS. This Agreement shall be binding on any
successor to all or substantially all of the Company's business or assets.
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9.9 GOVERNING LAW. The validity, interpretation, performance and
enforcement of this Agreement shall be governed by the laws of The Commonwealth
of Massachusetts.
9.10 EMPLOYMENT AGREEMENT. This Agreement shall only become effective on
the Start Date as defined in the related Employment Agreement between Executive
and the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
THE TJX COMPANIES, INC.
By: /s/ Xxxxxx English
-----------------------------------------
/s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Executive
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EXHIBIT A
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 the Company of a nature that would
be required to be reported in response to Item 1(a) of the Current Report on
Form 8-K 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 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 the Company, any wholly-owned subsidiary of the
Company, or any employee benefit plan of the Company or such a subsidiary
becomes the owner of 20% or more of the Company's Common Stock and thereafter
individuals who were not directors of the Company 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 at least 1/4 of the Company'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 the Company's Board of Directors and
thereafter individuals who were not directors of the Company 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 at least 1/4 of the Company's
Board of Directors; or
(d) the Company executes an agreement of acquisition, merger or
consolidation which contemplates that (i) after the effective date provided for
in such agreement, all or substantially all of the business and/or assets of the
Company shall be owned, leased or otherwise controlled by another Person
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and (ii) individuals who are directors of the Company 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
the Company 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 the Company 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), if such agreement requires as a condition precedent
approval by the Company's shareholders of the agreement or transaction, a Change
of Control shall not be deemed to have taken place unless and until such
approval is secured (but upon any such approval, 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 A the following terms have the
meanings set forth below:
"Common Stock" shall mean the then outstanding Common Stock of the Company
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 the Company 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
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(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 the Company or a Subsidiary of the Company. 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, the Company).
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