TD BANKNORTH INC. AMENDED AND RESTATED PARTICIPATION AGREEMENT
Exhibit 10.1
2005 PERFORMANCE BASED RESTRICTED SHARE UNIT PLAN
AMENDED AND RESTATED PARTICIPATION AGREEMENT
1. The Award. This Participation Agreement is being amended and restated as of February 21, 2007
to (i) include the performance criteria for 2006 previously attached as an addendum, and (ii) set
forth the performance criteria for 2007 in accordance with the Agreement and Plan of Merger dated
as of November 19, 2006 with The Toronto-Dominion Bank and Bonn Merger Co. (the “Merger
Agreement”). Pursuant and subject to the provisions of the 2005 Performance Based Restricted Share
Unit Plan (the “Plan”), TD Xxxxxxxxx previously made an Award to (the
“Participant”) as follows:
Award Date: |
March 1, 2005 | |
Amount of Award: |
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Number of Initial Units: |
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Maturity Date: |
March 1, 2008 | |
Share Price Used to Determine Number of Units: |
$40.78 |
2. Participant’s Agreement to be Bound. This Award is subject to the agreement of the Participant
to be bound by the Plan and this Amended and Restated Participation Agreement.
3. Defined Terms. Defined terms in the Plan shall have the same meaning when used herein. In the
event of any inconsistency between the terms of the Plan and this document, the terms of the Plan
shall govern, except as set forth in Section 9 hereof.
4. Performance Target
(i) Performance Target for Year One. The Performance Target to be used for calculating Year
One Units is EPS for fiscal 2005 that is 10% greater than the EPS reported for fiscal 2004, as set
forth in Section 5(i) below. The Performance Target for calculating Year One Units shall be
calculated in the manner set forth in Section 8 below.
(ii) Performance Target for Year Two. The Performance Target to be used for calculating Year
Two Units is EPS for fiscal 2006 that is 6% greater than the EPS reported for fiscal 2005, as set
forth in Section 5(ii) below. The Performance Target for calculating Year Two Units shall be
calculated in the manner set forth in Section 8 below.
(iii) Performance Target for Year Three. Notwithstanding anything set forth in the Plan to
the contrary, the Performance Target to be used for calculating Year Three Units will be the average Total Shareholder Return achieved by a comparative group of major banks over the
one-year period from the end of the fiscal year of The Toronto-Dominion Bank immediately preceding
January 1, 2007 to the end of the fiscal year of The Toronto-Dominion Bank immediately preceding
the Maturity Date, as set forth in Section 5(iii) below. The comparative group of major banks for
purposes of this Participation Agreement will be the group selected by The Toronto-Dominion Bank
under the TDBFG Performance Share Unit Plan for awards with similar performance periods, as
determined by the Committee.
5. Performance Factor. The Performance Factor is a multiple that is determined by comparing the
Performance Result and the Performance Target pursuant to the formula determined by the Committee
each year of the Award.
(i) Performance Factor For Year One. The Performance Factor for Year One of the Award will be
a multiple which is equal to the percentage shown opposite the applicable Percentage Growth line
below for the year in which the Units are being determined. For example, if EPS for TD Banknorth
for Year One was $2.47, and therefore 7% greater than EPS for the previous year, the Performance
Factor shall be 91%. If the Performance Result for 2005 is EPS between $2.43 and $2.66 per share,
but the EPS is not shown in the table below, the Performance Factor shall be pro-rated between the
Performance Factors related to the next higher and lower EPS figures. For example, if the
Performance Result for 2005 is EPS of $2.48, the Performance Factor shall be pro-rated between the
Performance Factors for EPS of $2.47 and $2.49 in the table below, for a Performance Factor of
92.5%. The Performance Factor is then multiplied by one-third of the number of Initial Units to
determine the number of Year One Units.
| PERFORMANCE | PERFORMANCE | |||||||||||||||
| TARGET: | TARGET: | ILLUSTRATIVE | ||||||||||||||
| PERCENTAGE | 2005 | PERFORMANCE | NUMBER OF | |||||||||||||
| GROWTH IN EPS | EPS | FACTOR | YEAR ONE UNITS(1) | |||||||||||||
| 4.0 | % | $ | 2.40 | 85 | % | 85 | ||||||||||
| 5.0 | % | $ | 2.43 | 85 | % | 85 | ||||||||||
| 6.0 | % | $ | 2.45 | 88 | % | 88 | ||||||||||
| 7.0 | % | $ | 2.47 | 91 | % | 91 | ||||||||||
| 8.0 | % | $ | 2.49 | 94 | % | 94 | ||||||||||
| 9.0 | % | $ | 2.52 | 97 | % | 97 | ||||||||||
Performance Target: |
10.0 | % | $ | 2.54 | 100 | % | 100 | |||||||||
| 11.0 | % | $ | 2.56 | 103 | % | 103 | ||||||||||
| 12.0 | % | $ | 2.59 | 106 | % | 106 | ||||||||||
| 13.0 | % | $ | 2.61 | 109 | % | 109 | ||||||||||
| 14.0 | % | $ | 2.63 | 112 | % | 112 | ||||||||||
| 15.0 | % | $ | 2.66 | 115 | % | 115 | ||||||||||
| 16.0 | % | $ | 2.68 | 115 | % | 115 | ||||||||||
| (1) | Based on an assumed Award of 300 Initial Units, which is for illustrative purposes only. |
Based on TD Xxxxxxxxx’s performance for 2005, the Performance Factor for Year One shall be
92.50%.
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(ii) Performance Factor for Year Two. The Performance Factor for Year Two of the Award will
be a multiple which is equal to the percentage shown opposite the applicable Percentage Growth line
below. If the Performance Result for 2006 is EPS between $2.40 and $2.68 per share, but the EPS is
not shown in the table below, the Performance Factor shall be pro-rated between the Performance
Factors related to the next higher and lower EPS figures. The Performance Factor is then
multiplied by one-third of the number of Initial Units to determine the number of Year Two Units.
| Performance | ||||||||||||
| Performance Target: | Target: | Performance | Illustrative Number | |||||||||
| Percentage Growth in EPS | 2006 EPS | Factor | of Year Two Units (1) | |||||||||
4.0% or less |
$ | 2.58 | 85 | % | 85 | |||||||
4.4% |
$ | 2.59 | 88 | % | 88 | |||||||
4.8% |
$ | 2.60 | 91 | % | 91 | |||||||
5.2% |
$ | 2.61 | 94 | % | 94 | |||||||
5.6% |
$ | 2.62 | 97 | % | 97 | |||||||
6.0% — Performance Target |
$ | 2.63 | 100 | % | 100 | |||||||
6.5% |
$ | 2.64 | 103 | % | 103 | |||||||
6.9% |
$ | 2.65 | 106 | % | 106 | |||||||
7.3% |
$ | 2.66 | 109 | % | 109 | |||||||
7.7% |
$ | 2.67 | 112 | % | 112 | |||||||
8.0% or higher |
$ | 2.68 | 115 | % | 115 | |||||||
| (1) | Based on an assumed Award of 300 Initial Units, which is for illustrative purposes only. |
Based on TD Xxxxxxxxx’s performance for 2006, the Performance Factor for Year Two shall be
85.00%.
(iii) Performance Factor for Year Three. (A) The Performance Factor for Year Three of the
Award will be a multiple expressed as a percentage that is determined by comparing the Performance
Result to the Performance Target, pursuant to the following formula, and rounded to one decimal
place:
Performance Factor = (Performance Result — Performance Target) x 1) + 100
The “Performance Result” to be used for calculating the Performance Factor is the Total
Shareholder Return achieved by The Toronto-Dominion Bank over the one-year period from the end of
the fiscal year of The Toronto-Dominion Bank immediately preceding January 1, 2007 to the end of
the fiscal year of The Toronto-Dominion bank immediately preceding the Maturity Date. “Total
Shareholder Return” is the change in market value of the common shares of The Toronto-Dominion Bank
(the “Parent Common Shares”) (or the common shares of the other major banks in the peer group, as
the case may be) calculated as at the end of the fiscal year immediately preceding the Maturity
Date, expressed as a percentage of the market value calculated as at the end of the fiscal year
immediately preceding January 1, 2007 (based on the closing price on the last trading day in
October 2006) and compounded annually, assuming quarterly reinvestment of dividends.
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As an example, a percentage of ten percent shall be shown as
10.0%, and the percentages shall be rounded to one decimal place.
(B) The Performance Factor for Year Three shall be multiplied by one-third of the number of
Initial Units to determine the number of Year Three Units.
6. Limitation on Performance Factor. The Performance Factor for any given Year can never be less
than 85% even if the Performance Result is less than the performance equating to an 85% Performance
Factor, and the Performance Factor can never be more than 115% even if the Performance Result is
greater than the performance equating to a 115% Performance Factor.
7. Calculation of Final Units. A Participant’s Final Units will equal the sum of the Participant’s
Year One Units, Year Two Units and Year Three Units. For example, if a Participant’s Initial Units
amount to 300, and based on the Performance Factors for Years One and Two of 92.5% and 85.0%,
respectively, and the fact that the Performance Factor for Year Three ranges from 85% to 115%, the
Final Units cannot be less than 262.5 or more than 292.5 in such example. However, notwithstanding
anything contained in this Participation Agreement to the contrary, in the event that the
transactions contemplated by the Merger Agreement are consummated, the number of Final Units shall
equal the greater of (i) the sum of the Participant’s Year One Units, Year Two Units and Year Three
Units, or (ii) the number of Initial Units.
8. Performance Target and Performance Result. TD Banknorth and the Participant expressly agree
that, notwithstanding any term of the Participant’s Employment and Retention Agreement, the
calculations of the Performance Target and Performance Result for Year One and Year Two shall be
exclusive of the after-tax effects of (i) merger and consolidation costs, (ii) deleveraging
programs implemented by TD Banknorth, (iii) changes in unrealized gain (loss) on speculative
derivatives, (iv) the amortization of intangible assets and (v) extraordinary items, and shall take
into account cost and revenue synergies between TD and TD Banknorth as determined by the Committee
in its sole discretion. Notwithstanding anything to the contrary contained in the Participant’s
Employment or Retention Agreement, the expense, if any, related to the expensing of stock options,
restricted stock and other stock or stock-based awards shall not be deducted in the calculation of
the applicable Performance Target and Performance Result for Years One and Two.
9. Other Amended Terms. In addition to the changes set forth in Section 8 of this Participation
Agreement, TD Banknorth and the Participant expressly agree that, notwithstanding any term of the
Plan or the Employment and Retention Agreement to the contrary, (i) the term “Disability” shall
have the meaning set forth in the Plan, as required by recently-enacted Section 409A of the Code,
and not as set forth in the Employment and Retention Agreements, (ii) the Redemption Value shall be
paid within five business days following the Maturity Date rather than on the Maturity Date as set
forth in the Employment and Retention Agreements, except as set forth in clause (iii) below, (iii)
following a termination of Service pursuant to Section 6.2 of the Plan, the payment of the
Redemption Value shall be delayed until the later of (y) the six-month anniversary of the
termination of Service as required by recently-enacted Section 409A of the Code or (z) within five
business days after the Maturity Date, and (iv) the Performance Factor and Performance Target for
Year Three shall be calculated as set forth above rather than based on an EPS target. The
Participant agrees to the changes set forth in this Section 9 and Section 8, and that except as
expressly noted in this Section 9 and Section 8, this Participation Agreement shall not by implication or otherwise alter, modify, amend or in any way affect any of
the terms of the Plan or the Participant’s Employment and Retention Agreement.
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10. Changes to the Plan. If the Plan is amended as permitted under the Plan, the amendments or
additional provisions shall be deemed to be part of the Plan and this Participation Agreement and
the Participant shall be bound thereby.
11. No Right to Employment or to Future Awards. Participation in the Plan does not give the
Participant the right to be retained in the Service of TD Banknorth or interfere with the right of
TD Banknorth to terminate the Participant’s employment at any time at will, whether by dismissal,
discharge, or with Cause or without Cause. Participation in the Plan does not impose any
obligation, express or implied, on TD Banknorth to grant any future Award or pay any other form of
discretionary compensation to the Participant. Failure of TD Banknorth to grant an Award under
this Plan, or a similar award, shall not support a claim for constructive dismissal.
12. Notices. Any notice given hereunder to TD Xxxxxxxxx shall be addressed to TD Banknorth Inc.,
Attention: Xxxxxxx Xxxxxxxx, Executive Vice President — Human Resources, TD Banknorth Inc., P.O.
Box 9540, Two Portland Square, Portland, Maine 04112-9540, and any notice given hereunder to the
Participant shall be addressed to the Participant at the Participant’s address as shown on the
records of TD Banknorth.
13. Agreement to be Bound. The Participant acknowledges that he or she obtained a copy of the Plan
document and that he or she reviewed and understood all of the terms and conditions of the Plan
including the provisions concerning forfeiture of Awards. The Participant agrees to be bound by
the terms and conditions of the Plan and by this Amended and Restated Participation Agreement. The
Participant agrees to complete, sign and deliver this Participation Agreement to the address shown
below.
Dated: February 21, 2007.
TD Banknorth, by its duly authorized officer, and the Participant have executed this
Participation Agreement in duplicate as of the day and year first above written.
| TD BANKNORTH INC. | ||||
By: |
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| Title: | ||||
| PARTICIPANT | ||||
Name: |
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