EMPLOYMENT AGREEMENT DATED AS OF FEBRUARY 1, 2009 BETWEEN CAROL MEYROWITZ AND THE TJX COMPANIES, INC.
Exhibit 10.1
DATED AS OF FEBRUARY 1, 2009
BETWEEN XXXXX XXXXXXXXX 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 |
4 | |||
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. CERTAIN EXPENSES |
11 | |||
12. WITHHOLDING; CERTAIN TAX MATTERS |
11 | |||
13. GOVERNING LAW |
12 | |||
14. ARBITRATION |
12 | |||
15. TERMINATION OF EMPLOYMENT AND SEPARATION FROM SERVICE |
12 | |||
16. ENTIRE AGREEMENT |
13 | |||
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 | |||
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XXXXX XXXXXXXXX
AGREEMENT dated as of February 1, 2009 between Xxxxx Xxxxxxxxx (“Executive”) and The TJX
Companies, Inc., a Delaware corporation whose principal office is in Xxxxxxxxxx, Xxxxxxxxxxxxx
00000(xxx “Company”).
RECITALS
The Company and Executive intend that Executive shall be employed by the Company 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 February 1,
2009 (the “Effective Date”). Subject to earlier termination as provided herein, Executive’s
employment hereunder shall continue on the terms provided herein until January 29, 2011 (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.” 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 the duties and assume the
responsibilities of Chief Executive Officer and President of the Company and such other duties and
responsibilities as shall from time to time be specified by the Board.
(b) Extent of Services. Except for illnesses and vacation periods, Executive shall
devote substantially all her working time and attention and her best efforts to the performance of
her duties and responsibilities under this Agreement. However, Executive may (i) make any passive
investments where she is not obligated or required to, and shall not in fact, devote any managerial
efforts, (ii) subject to approval by the Board (which approval shall not be unreasonably withheld
or withdrawn), participate in charitable or community activities or in trade or professional
organizations, or (iii) subject to approval by the Board (which approval shall not be unreasonably
withheld or withdrawn), hold directorships in public companies, except only that the Board 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 the Board shall believe
that the time spent on such activities infringes in any material respect upon the time
required by Executive for the performance of her 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. The rate at which Executive’s Base Salary
shall be paid shall be $1,475,000 per year or such other rate (not less than $1,475,000 per year)
as the Committee may determine after Committee review not less frequently than annually.
(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 the
Company’s Stock Incentive Plan (including any successor, the “Stock Incentive Plan”), to the award
opportunity granted to Executive for FYE 2009 under the Company’s Management Incentive Plan
(“MIP”), and to award opportunities granted to Executive under the Company’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 Awards. During the Employment Period, Executive will be eligible to
participate in awards under the Stock Incentive Plan, MIP and LRPIP at a level commensurate with
her position and responsibilities and subject to such terms as shall be established by the
Committee including without limitation an award of 300,000 shares of performance-based restricted
stock in connection with the execution of this Agreement (the “new PBRS award”) that shall be
subject to the vesting terms describe in (i) and (ii) below.
(i) Subject to satisfaction by Executive of the service condition specified in Section
3(c)(ii) below, the new PBRS award will vest as follows: (A) as to 150,000 shares (the
“2010 tranche”) on the April date in calendar 2010 when the Committee certifies as to MIP
performance results for FYE 2010 (the “2010 tranche determination date”) but only if the
Committee certifies that MIP performance for FYE 2010 has been achieved at a level providing
for MIP payout of at least 67% of the target payout amount; provided that, if for FYE 2010
the Committee certifies that MIP performance has been achieved at a level authorizing some
MIP payout but less than 67% of the target payout amount, the number of shares of the 2010
tranche vesting for such fiscal year shall be prorated on a straight line basis (with zero
shares vesting if no MIP payout is authorized); and (B) as to the remaining 150,000 shares
(the “2011 tranche”) on the April date in calendar 2011 when the Committee certifies as to
MIP performance results for FYE 2011 (the “2011 tranche determination date”) but only if the
Committee certifies that MIP performance for FYE 2011 has been achieved at a level providing
for MIP payout of at least 67% of the target payout amount; provided that, if for FYE 2011
the Committee certifies that MIP performance has been achieved at a level authorizing some
MIP payout but less than 67% of the target payout amount, the number of shares of the 2011
tranche
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vesting for such fiscal year shall be prorated on a straight line basis (with zero shares
vesting if no MIP payout is authorized).
(ii) Except as hereinafter provided, the 2010 tranche shall not vest unless Executive
remains employed through January 30, 2010 and the 2011 tranche shall not vest unless
Executive remains employed through January 29, 2011. Notwithstanding the foregoing, if
Executive’s employment by the Company is terminated by the Company other than for Cause
prior to January 29, 2011, subject to Section 8 below, (A) any portion of the 2010 tranche
not previously vested shall remain outstanding following such termination and shall vest, if
at all, in accordance with Section 3(c)(i) above, provided that, to the extent any portion
of the 2010 tranche does not so vest, such portion shall be forfeited as of the 2010 tranche
determination date and (B) any portion of the 2011 tranche not previously vested shall
remain outstanding following such termination and shall vest, if at all, in accordance with
Section 3(c)(i) above, provided that, to the extent any portion of the 2011 tranche does not
so vest, such portion shall be forfeited as of the 2011 tranche determination date.
If Executive’s employment by the Company is terminated by the Company other than for Cause prior to
January 29, 2011, subject to Section 8 below, any stock options held by Executive immediately prior
to such termination will vest to the extent not previously vested and will thereafter remain
exercisable only for such post-termination exercise period as is provided under the terms of the
award. Executive will be entitled to tender shares acquired under the awards, or to have shares of
stock deliverable under the awards held back, in satisfaction of the minimum withholding taxes
required in respect of income realized in connection with the awards. Each award opportunity
granted to Executive under MIP and LRPIP shall have a target award level that is one hundred
percent (100%) of Executive’s Base Salary, determined in accordance with MIP and LRPIP.
(d) Qualified Plans; Other Deferred Compensation Plans. Executive shall be entitled
during the Employment Period to participate in the Company’s tax-qualified retirement and
profit-sharing plans, in SERP (Category B benefits or Category C benefits, whichever are greater),
and in the ESP, 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);
provided, that, subject to the foregoing, Executive’s accrued benefit under SERP shall at all times
be fully vested; and further provided, that Executive shall not be entitled to matching credits
under ESP. The parties hereto acknowledge and agree that Executive is credited with the maximum
number of years of service (20) taken into account in determining Category B benefits under SERP.
(e) Policies and Fringe Benefits. Executive shall be subject to Company policies
applicable to its executives generally and shall be entitled to receive an automobile allowance
commensurate with her position and all such other 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).
(f) Other. The Company is entitled to terminate Executive’s employment
notwithstanding the fact that Executive may lose entitlement to benefits under the arrangements
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described above. Upon termination of her employment, Executive shall have no claim against
the Company or Parent for loss arising out of ineligibility to exercise any stock options granted
to her 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 plan
and award document (including, for the avoidance of doubt, any award-related provisions of this
Agreement). In the event of any conflict between the provisions of this Agreement and the
provisions of any plan or award document the provisions of this Agreement shall control.
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 her duties for at least six continuous
months. Any termination pursuant to this Section 4(b) shall be treated for purposes of Section 5
and the definition of “Change of Control Termination” at subsection (f) of Exhibit A as a
termination by reason of Disability.
(c) Whenever her employment shall terminate, Executive shall resign all offices or other
positions she shall hold with the Company and any affiliated corporations. For the avoidance of
doubt, the Employment Period shall terminate upon termination of Executive’s employment for any
reason.
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 twenty-four (24) months after the Date of Termination (the
“termination period”), the Company will pay to Executive or her legal representative,
without reduction for compensation earned from other employment or self employment,
continued Base Salary at the rate in effect at termination of employment 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 in effect at termination of employment, over (b) the
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long-term disability compensation benefits for which Executive is approved under such
plan.
(ii) If Executive elects so-called “COBRA” continuation of group health plan coverage
provided pursuant to Part 6 of Subtitle B of Title I of the Employee Retirement Income
Security Act of 1974, as amended, there shall be added to the amounts otherwise payable
under Section 5(a)(i) above, during the continuation of such coverage, an amount (grossed up
for federal and state income taxes) equal to the participant cost of such coverage, except
to the extent that Executive shall obtain no less favorable coverage from another employer
or from self-employment, in which case such additional payments shall cease immediately.
(iii) The Company will pay to Executive or her 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 the Company ended immediately
prior to Executive’s termination of employment, plus (B) any unpaid 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.
(iv) 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 her 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 she 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 (iv) shall
not apply and Executive instead shall be entitled to the MIP benefit described in Section
5(a)(viii) below; and further 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) 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 the Company’s fiscal years in such cycle, the Company will pay to Executive or
her 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 she 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
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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 (v) shall be paid not
sooner than six (6) months and one day after termination.
(vi) In addition, Executive or her legal representative shall be entitled to the Stock
Incentive Plan benefits described in Section 3(b) (Existing Awards) and Section 3(c) (New
Awards), in each case in accordance with and subject to the terms of the applicable
arrangement, and to payment of her vested benefits under the plans described in Section 3(d)
(Qualified Plans; Other Deferred Compensation Plans), including any vested benefits under
the Company’s frozen GDCP.
(vii) 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 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), she shall promptly pay such
excess in reimbursement to the Company.
(viii) 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.
(ix) 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. Upon termination of Executive’s employment with the Company on the End
Date, 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.
6. OTHER TERMINATION.
(a) Voluntary termination of employment. If Executive terminates her employment
voluntarily, Executive or her 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
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described in Section 3(b) (Existing Awards) or Section 3(c) (New Awards) and to any vested
benefits under the plans described in Section 3(d) (Qualified Plans; Other Deferred Compensation
Plans), including any vested benefits under the Company’s frozen GDCP. In addition, the Company
will pay to Executive or her 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 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 (x) such vested amounts as are credited to Executive’s account (but not received) under GDCP
and ESP in accordance with the terms of those programs; (y) any vested benefits to which Executive
is entitled under the Company’s tax-qualified plans; and (z) 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 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 12 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 twenty-four (24) 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 the Company 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 the
Company or its Subsidiaries, or recommend to any protected person any employment or engagement
other than with the Company 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.
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A “protected person” is a person who at the time of termination of the Employment Period, or
within six (6) months prior thereto, is or was employed by the Company 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 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 her employment, Executive will have learned vital trade secrets of
the Company and its Subsidiaries and will have access to confidential and proprietary information
and business plans of the Company and its Subsidiaries. Therefore, during the Employment Period
and for a period of twenty-four (24) 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. The term “competitive business” (i) shall mean any
business (however organized or conducted) that competes with a business in which the Company or any
of its Subsidiaries was engaged, or in which the Company 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 in Part I of 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 the Company 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 the Company or its Subsidiaries, and 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. Notwithstanding the foregoing, Executive will not be
deemed to have violated the provisions of this Section 8(b) merely by reason of serving as a
director on the board of directors of a company listed in Part II of Exhibit D or merely by reason
of being engaged, after the first anniversary of the Date of Termination, in an employment,
consulting or other fees-for-services arrangement with an entity that manages a private equity,
venture capital or leveraged buyout fund that in turn invests in one or more businesses deemed
competitors of the Company and its Subsidiaries under this Section 8(b), provided that (I) such
fund is not intended
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to, and does not in fact, invest primarily in a “specified competitive business” with respect
to the Company as hereinafter defined, and (II) Executive demonstrates to the reasonable
satisfaction of the Company that her arrangement with such entity will not involve the provision of
employment, consulting or other services, directly or indirectly, to any “specified competitive
business” with respect to the Company or to the fund with respect to its investment or proposed
investment in any “specified competitive business” with respect to the Company and that she will
not participate in any meetings, discussions, or interactions in which any such business or any
such proposed investment is proposed or is likely to be discussed. For purposes of the foregoing,
a business shall be deemed a “specified competitive business” with respect to the Company if and
only if (aa) it shall be regarded as a competitor of the Company and its Subsidiaries by retailers
generally, or (bb) it shall be a business specified in Part I of Exhibit D to this Agreement, or
(cc) it shall operate an off-price apparel, off-price footwear, off-price jewelry, off-price
accessories, off-price home furnishings and/or off-price home fashions business, including any such
business that is store-based, catalogue-based, or an on-line, “e-commerce” or other off-price
internet-based business. 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 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 the
Company 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 the Company 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 the Company and its Subsidiaries and any copies
(“Documents”), whether or not prepared by Executive, are the exclusive property of the Company 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 she has returned all such Documents in Executive’s
possession or under her control.
(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, including
without limitation any SERP benefits, shall forthwith cease and Executive shall immediately forfeit
and disgorge to the Company, 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,
including without limitation any SERP benefits; (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
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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 immediately upon securing employment or becoming
self-employed at any time within the Noncompetition Period, and shall provide to the Company such
details concerning such employment or self-employment as it may reasonably request in order to
ensure compliance with the terms hereof.
(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 the Company 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/her 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 the Company and its Subsidiaries would be irreparable.
Executive therefore agrees that, in the event of such a breach or threatened breach, the Company
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 Noncompetition Period and the
Nonsolicitation 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. 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.
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(h) Executive expressly consents to be bound by the provisions of this Agreement for the
benefit of the Company 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 her 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 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 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 stock issuable, awards and payments payable to her
after her death shall be made to her 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 at 000 Xxxxxxxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Chairman of the Executive Compensation
Committee, 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 as set forth in the
records of the Company or at such other address as Executive may hereafter designate by notice to
the Company.
11. CERTAIN EXPENSES. The Company shall bear the reasonable fees and costs of Executive’s
legal and financial advisors incurred in negotiating this Agreement.
12. WITHHOLDING; CERTAIN TAX MATTERS. 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). The
parties hereto acknowledge that in addition to any delay required under Section 12(b), it may be
desirable, in view of regulations or other guidance issued under Section 409A, to amend provisions
of this Agreement to avoid the acceleration of tax or the imposition of additional tax under
Section 409A and that the Company will not unreasonably withhold its consent to any such amendments
which in its determination are (i) feasible and necessary to avoid adverse tax consequences under
Section 409A for Executive, and (ii) not adverse to the interests of the Company. Executive
acknowledges that
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she has reviewed the provisions of this Agreement with her advisors and agrees that except for
the gross-up entitlement described in Section 5(a)(ii) of this Agreement, the Company shall not 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.
13. GOVERNING LAW. This Agreement and the rights and obligations of the parties hereunder
shall be governed by the laws of the Commonwealth of Massachusetts.
14. ARBITRATION. In the event that there is any claim or dispute arising out of or relating
to this Agreement, or the breach thereof, and the parties hereto shall not have resolved such claim
or dispute within sixty (60) days after written notice from one party to the other setting forth
the nature of such claim or dispute, then such claim or dispute shall be settled exclusively by
binding arbitration in Boston, Massachusetts in accordance with the Rules Governing Resolutions 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. Notwithstanding the foregoing, if either the Company or Executive shall request, such
arbitration shall be conducted by a panel of three arbitrators, one selected by the Company, one
selected by Executive and the third selected by agreement of the first two, or, in the absence of
such agreement, in accordance with such Rules. Judgment upon the award rendered by such
arbitrator(s) shall be entered in any Court having jurisdiction thereof upon the application of
either party.
15. 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.
Remainder of Page Intentionally Left Blank
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16. 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 between them except to the extent provided herein.
| /s/ Xxxxx Xxxxxxxxx
|
||||||
| THE TJX COMPANIES, INC. | ||||||
| By: | /s/ Xxxxxxx Xxxxxxxxx
|
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EXHIBIT A
Certain Definitions
(a) “Base Salary” means, for any period, the amount described in Section 3(a).
(b) “Board” means the Board of Directors of the Company.
(c) “Cause” means dishonesty by Executive in the performance of her 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 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 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 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, that the Company may suspend Executive and 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 (in which case Executive
shall not be entitled to her Base Salary for such period), (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” effected in accordance with the foregoing procedures (in which case Executive shall be
reinstated and paid any of her 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 her 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.
(d) “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.
(e) “Change of Control” has the meaning given it in Exhibit B.
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(f) “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 her 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 her of any duties inconsistent with her 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 her 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 the Company 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 the Company provides Executive with a plan or plans that provide substantially similar benefits, or the taking of any action by the Company 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 (c) 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 |
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| (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% 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 B). |
(g) “Code” means the Internal Revenue Code of 1986, as amended.
(h) “Committee” means the Executive Compensation Committee of the Board.
(i) “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 her 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.
(j) “Date of Termination” means the date on which Executive’s employment terminates.
(k) “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 her position of
employment or any substantially similar position of employment to the reasonable satisfaction of
the Committee.
(l) “End Date” has the meaning set forth in Section 1 of the Agreement.
(m) “ESP” means the Company’s Executive Savings Plan.
(n) “GDCP” means the Company’s General Deferred Compensation Plan or any successor plan.
(o) “LRPIP” has the meaning set forth in Section 3(b) of the Agreement.
(p) “MIP” has the meaning set forth in Section 3(b) of the Agreement..
(q) “Section 409A” means Section 409A of the Code.
(r) “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 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
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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.
(s) “SERP” means the Company’s Supplemental Executive Retirement Plan.
(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 the Company 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 the Company 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 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 a majority
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 a majority 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 the agreement, all or substantially
all of the business and/or assets of the Company shall be owned, leased or otherwise controlled by
another Person 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
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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 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 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
(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 majority-owned 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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EXHIBIT C
Change of Control Benefits
C.1. Benefits Upon a Change of Control Termination.
(a) The Company shall pay to Executive following a Change of Control Termination::
(i) (A) as hereinafter provided, an amount equal to two times her Base Salary for one
year at the rate in effect immediately prior to the Date of Termination or the Change of
Control, whichever is higher, plus (B) within thirty (30) days following the Change of
Control Termination, the accrued and unpaid portion of her 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 (A) 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 (A) 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)), she 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
(ii) as hereinafter provided, and in lieu of any other benefits under SERP, an amount
equal to the present value of the payments that Executive would have been entitled to
receive under SERP as a Category B or C participant, whichever is greater, applying the
following rules and assumptions:
(A) the monthly benefit under SERP determined using the foregoing criteria
shall be multiplied by twelve (12) to determine an annual benefit; and
(B) the present value of such annual benefit shall be determined by
multiplying the result in (A) by the appropriate actuarial factor, using the most
recently published interest and mortality rates published by the Pension Benefit
Guaranty Corporation which are 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 TJX Companies, Inc.
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 sixty (60), then such higher age shall be
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substituted for sixty (60). If, as of the Date of Termination, Executive has
not satisfied the eligibility requirements for Early Retirement under The TJX
Companies, Inc. 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.”
(C) the benefit determined under (B) above shall be reduced by the value of
any portion of Executive’s SERP benefit already paid or provided to her in cash or
through the transfer of an annuity contract.
If the Change of Control Termination occurs in connection with a Change of Control that is
also a Change in Control Event, the amounts described in clause (i)(A) and clause (ii) of
this Section C.1.(a) 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 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 amounts described in clause (i) and clause (ii) of this Section C.1.(a) shall be
paid, except as otherwise required by Section 12 of the Agreement, in the same manner as
they 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)(iv) and Section 5(a)(v) 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 her 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 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 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 her 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 (or immediately prior to the Date
of Termination if greater)) 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
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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 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 new PBRS 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
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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 her legal representative shall be entitled to her Stock Incentive Plan benefits, if
any, under Section 3(b) (Existing Awards) and Section 3(c) (New Awards), and to the payment of her
vested benefits under the plans described in Section 3(d) (Qualified Plans; Other Deferred
Compensation Plans), including any vested benefits under the Company’s frozen GDCP.
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 the Company subsequent to the termination of her 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 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.
(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 her employment during a
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.
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