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Exhibit 10.2
EMPLOYMENT AGREEMENT
DATED AS OF JANUARY 26, 1997
BETWEEN ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ AND THE TJX COMPANIES, INC.
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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......................................7
5. BENEFITS UPON NON-VOLUNTARY TERMINATION OF EMPLOYMENT OR
UPON EXPIRATION OF THE AGREEMENT......................................7
6. OTHER TERMINATION; VIOLATION OF CERTAIN AGREEMENTS........................10
7. BENEFITS UPON CHANGE IN CONTROL...........................................11
8. AGREEMENT NOT TO SOLICIT OR COMPETE.......................................11
9. SPECIAL DEFERRAL ACCOUNT; TRUST...........................................12
10. ASSIGNMENT................................................................15
11. NOTICES...................................................................16
12. CERTAIN EXPENSES..........................................................16
13. WITHHOLDING...............................................................16
14. GOVERNING LAW.............................................................16
15. ARBITRATION...............................................................16
16. ENTIRE AGREEMENT..........................................................17
EXHIBIT A
Terms of 75,000 Share Deferred Stock Award Under Section 3(c)(i)....A-1
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EXHIBIT B
Terms of 150,000 Share Deferred Stock Award Under Section 3(c)(ii)..B-1
EXHIBIT C
Certain Definitions.................................................C-1
EXHIBIT D
Definition of "Change of Control"...................................D-1
EXHIBIT E
Change of Control Benefits..........................................E-1
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
EMPLOYMENT AGREEMENT
AGREEMENT dated as of January 26, 1997 between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ of ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Executive") and The TJX Companies,
Inc., a Delaware corporation whose principal office is in ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
RECITALS
Executive has been employed by The TJX Companies, Inc. (the "Company")
as its President and Chief Executive Officer, most recently pursuant to an
employment agreement dated as of January 30, 1994 (the "Prior Agreement"). The
Company and Executive intend that Executive should continue to serve 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 January 26, 1997 (the "Effective Date") and, as of that date,
shall supersede the Prior Agreement. Executive's employment shall continue on
the terms provided herein until January 26, 2002, subject to earlier termination
as provided herein (such period of employment hereinafter called the "Employment
Period").
2. SCOPE OF EMPLOYMENT.
(a) Nature of Services. Executive shall diligently perform the duties
and assume the responsibilities of President and Chief Executive Officer of the
Company and such additional executive duties and responsibilities as shall from
time to time be assigned to him by the Board.
(b) Extent of Services. Except for illnesses and vacation periods,
Executive shall devote substantially all his working time and attention and his
best efforts to the performance
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of his duties and responsibilities under this Agreement. However, Executive may
(i) make any passive investments where he is not obligated or required to, and
shall not in fact, devote any managerial efforts, (ii) participate in charitable
or community activities or in trade or professional organizations, or (iii)
subject to Board approval (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
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 his duties under this Agreement or is otherwise incompatible with
those duties. The parties hereto acknowledge that Executive's involvement as an
investor in and director of the Sterling Country Club constitutes a passive
investment that does not involve managerial effort within the meaning of (i)
above.
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 $1,200,000 per
year or such other rate (not less than $1,200,000 per year) as the Board may
determine after Board review at the beginning of the Company's FYE 2000 and FYE
2002; provided, that so much of Executive's Base Salary for any fiscal year of
the Company as exceeds the Section 162(m) Current Salary Maximum shall be
credited to the Account described at Section 9 below and paid out in accordance
with Section 9(f) below.
(b) Existing Awards Under 1986 Stock Incentive Plan (Including LRPIP).
Reference is made to the following awards previously made to Executive under the
Company's 1986 Stock Incentive Plan (including any successor, the "1986 Plan"),
including awards under the Long Range Performance Incentive Plan:
(i) PARS: The award for 100,000 shares referenced in Section
3(d) of the employment agreement between Executive and the Company
dated as of June 1, 1989 (the "1989 Agreement"), and the award dated
September 17, 1990;
(ii) PBDS: The award for a maximum of 150,000 shares
referenced in Section 3(c) of the Prior Agreement;
(iii) Existing Options: Grant Nos. 86-40, 86-42, 86-46, and
86-48; and
(iv) LRPIP: Awards made prior to the date of this Agreement
under the terms of LRPIP.
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Each of the above-referenced awards shall continue for such period or periods
and in accordance with such terms as are set out in the grant and other
governing documents relating to such awards (including for this purpose the
Prior Agreement and the 1989 Agreement insofar as they relate to any such
awards), and shall not be affected by the terms of this Agreement except as
otherwise expressly provided herein; provided, that by executing this Agreement,
Executive waives any and all right to receive any shares under Section A.2(e) of
Schedule A of the Prior Agreement and acknowledges that all references hereunder
to his PBDS award under the Prior Agreement shall exclude amounts, if any,
determined under said Section A.2(e).
(c) Additional Awards under 1986 Plan. The Committee has determined to
grant to Executive the following additional awards under the 1986 Plan:
(i) Effective upon execution of this Agreement, Executive
shall be awarded a bonus of 75,000 shares of Deferred Stock on the
terms and conditions set forth in Exhibit A to this Agreement. This
Agreement, including Exhibit A, shall constitute the Award Agreement in
respect of such shares required by the 1986 Plan.
(ii) Also effective upon execution of this Agreement,
Executive shall be awarded an additional 150,000 shares of Deferred
Stock on the terms and conditions set forth in Exhibit B to this
Agreement. This Agreement, including Exhibit B, shall constitute the
Award Agreement in respect of such shares required by the 1986 Plan.
(iii) Also effective upon execution of this Agreement,
Executive shall be awarded two stock options under the 1986 Plan for an
aggregate of 350,000 shares of Stock: one option (the "First New
Option") to purchase 100,000 shares of Stock and the second (the
"Second New Option") to purchase 250,000 shares of Stock. The First and
Second New Options shall be identical in their terms except that the
First New Option shall vest (become exercisable) on a cumulative basis
at the rate of 33 1/3% per year beginning on June 4, 1997, subject to
acceleration in accordance with the 1986 Plan and this Agreement, and
the Second New Option shall vest (become exercisable) on a cumulative
basis at the rate of 33 1/3% per year beginning on the first
anniversary of the date of grant, subject to acceleration in accordance
with the 1986 Plan and this Agreement. The exercise price for each New
Option shall be the fair market value of the Stock on the date of
grant, and each New Option shall have a term of ten years, subject to
earlier termination in accordance with the 1986 Plan and this
Agreement. Executive shall also be eligible to receive normal annual
awards of non-statutory stock options (including any such awards made
in the Company's fiscal year ending in 1998), but only if at the time
of such award Executive is still serving as Chief Executive Officer
(such additional option awards, if any, together with the First New
Option and the Second New Option being hereinafter referred to as the
"New Options"). If prior
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to January 26, 2002 (A) Executive dies or becomes Disabled, or (B) a
Change of Control occurs while Executive is employed by the Company, or
(C) Executive voluntarily terminates the Employment Period for Valid
Reason, or (D) Executive's employment is terminated by the Company
other than for Cause, then all of Executive's previously granted stock
options (including but not limited to the New Options) ("Options") then
outstanding, to the extent not already vested, shall be immediately
vested. If Executive dies or becomes Disabled while employed by the
Company, all his Options shall remain exercisable for a period of three
years or, if less, the remainder of the original option term, and shall
then terminate. In the event Executive retires under the terms of the
1986 Plan, all his Options shall remain exercisable (to the extent they
were exercisable immediately prior to such retirement) for a period of
three years or, if less, the remainder of the original option term, and
then shall terminate. Upon any other termination of employment the
Options shall remain exercisable (to the extent they were exercisable
immediately prior to such termination, taking into account any
applicable accelerated vesting as described above) for a period equal
to the lesser of (i) three months, or (ii) the remainder of their
original term, and then shall terminate. However, if Executive is
terminated for Cause all the Options shall immediately terminate.
(d) LRPIP. During the Employment Period, Executive will be eligible to
participate in annual grants under LRPIP. To the extent provided in Section
162(m) of the Code, the terms of any such award shall be established by the
Committee. Subject to the foregoing, Executive shall be entitled with respect to
each award cycle (beginning with the FYE 1998 to FYE 2000 cycle) to earn up to
70% of his Base Salary as in effect at the beginning of the cycle if the target
established by the Committee is met and up to 105% of such Base Salary if such
target is exceeded, with the payment potential ranging from 0% to 105% of
Executive's Base Salary as established by the terms of the award. To the extent
the material terms of LRPIP are required to be approved by stockholders,
Executive's eligibility to receive awards under LRPIP for any cycle to which
such stockholder vote pertains shall be subject to such stockholder approval.
(e) 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 Committee. Subject
to the foregoing, Executive shall be entitled to earn up to 60% of his Base
Salary if the target established by the Committee is met and up to 120% of his
Base Salary if such target is exceeded, with the payment potential ranging from
0% to 120% of Executive's Base Salary as established by the terms of the award.
To the extent the material terms of MIP are required to be approved by
stockholders, Executive's eligibility to receive annual awards under MIP for any
year to which such stockholder vote pertains shall be subject to such
stockholder approval.
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(f) Additional Bonus Awards. The following additional awards shall be
made and shall be credited to Executive's Account under Section 9:
(i) Subject to the provisions of this paragraph (f)(i),
Executive shall be entitled to a deferred award equal to (i) the
positive excess, if any, of the closing price of a share of Stock on
each vesting date of the First New Option described in paragraph
(c)(iii) above (each, a "vesting determination date"), taking into
account any accelerated vesting of such Option (or the closing price of
a share of Stock on the first day prior to the vesting determination
date on which the Stock is traded if the Stock is not traded on the
vesting determination date), over $34.875 (provided, that in no event
shall such positive excess exceed $7.875), multiplied by (B) the number
of shares of Stock as to which the First New Option vests on such
vesting determination date, subject in each case to appropriate
adjustment (as to dollar amounts and number of shares) for stock
splits, stock dividends and similar transactions occurring after June
4, 1996. The portion of the award described in this paragraph that is
determined on any vesting determination date shall be credited to
Executive's Account under Section 9 as of such date, regardless of
whether the First New Option is exercised or remains exercisable.
(ii) On the date in 1999 on which LRPIP awards, if any, for
the FYE 1997-1999 cycle are determined and paid, there shall be
credited to Executive's Account under Section 9, if Executive is then
still employed by the Company and its Subsidiaries, an amount equal to
the award, if any, to which Executive would have been entitled if he
had participated in the LRPIP FYE 1997-1999 cycle.
(g) SERP. Except as provided in Exhibit E ("Change of Control
Benefits") and this subsection (g), Executive is entitled to Category B benefits
determined and made payable in accordance with the generally applicable
provisions of the Company's Supplemental Executive Retirement Plan.
(i) Benefits vested to the extent accrued. Subject to the
provisions of Section 6 below, Executive has a fully vested right to
his accrued benefit under SERP based (except as provided in Exhibit E)
on his actual years of service. Executive shall continue to be fully
vested in any future accruals (if any) under SERP.
(ii) Death benefit. If Executive should die unmarried during
the Employment Period, the Company shall pay a lump sum death benefit
to his designated beneficiary, or if none to his estate. The lump sum
death benefit payable in accordance with this paragraph shall be paid
as soon as practicable following the date of Executive's death (the
"benefit determination date") and shall be in lieu of any other death
benefit then payable under SERP. The
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amount of such lump sum death benefit shall be determined by assuming
that Executive:
(A) was married to a spouse of the same age as
himself;
(B) retired on the benefit determination date and
deferred receipt of his SERP benefit until age 65;
(C) commenced receiving his SERP benefit at age 65 in
the form of a reduced joint and survivor annuity with a 50%
continuance to such spouse if she survived him; and
(D) died immediately after commencement of that
annuity.
The lump sum death benefit described in this subsection (g) shall be
the actuarial present value, determined as of the benefit determination
date, of the hypothetical survivor-spouse annuity determined in
accordance with the assumptions described in (A) through (D) above. For
purposes of making this actuarial present-value determination, the same
interest rate and mortality assumptions shall be applied as would apply
in determining a Category B SERP participant's retirement lump sum
benefit payable as of the benefit determination date.
For purposes of this subsection (g), Executive's designated
beneficiary shall be such person (including a trust) as Executive shall
have specified by a written notice delivered to the Company in
accordance with Section 11. Executive may change his beneficiary
designation at any time by a subsequent written notice delivered in the
same manner. If no beneficiary designation under this subsection (g) is
in effect at the time of Executive's death, the death benefit, if any,
payable under this subsection (g) shall be paid to Executive's estate.
(h) Qualified Plans. Executive shall be entitled during the Employment
Period to participate in the Company's tax-qualified retirement and
profit-sharing plans in accordance with the terms of those plans.
(i) Policies and Fringe Benefits. Executive shall be subject to Company
policies applicable to its executives generally and 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).
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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) The Employment Period shall terminate when Executive becomes
Disabled. In addition, if by reason of Incapacity Executive is unable to perform
his duties for at least six continuous months, 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 offices or other positions he shall hold with the Company and any
affiliated corporations, including any position on the Board.
5. BENEFITS UPON NON-VOLUNTARY TERMINATION OF EMPLOYMENT OR UPON
EXPIRATION OF THE AGREEMENT.
(a) Certain Terminations Prior to January 26, 2002. If the Employment
Period shall have terminated prior to January 26, 2002 by reason of (i) death,
Disability or Incapacity of Executive, (ii) termination by the Company for any
reason other than Cause or (iii) termination by Executive in the event that
either (A) Executive shall be removed from or fail to be reelected to the
offices of Chief Executive Officer, a Director and a member of any Executive
Committee of the Board, or (B) Executive is relocated more than 40 miles from
the current corporate headquarters of the Company, in either case without his
prior written consent (a "Constructive Termination"), then all compensation and
benefits for Executive shall be as follows:
(i) For the longer of twelve (12) months after such
termination or until January 26, 2002 (the "termination period"), the
Company will pay to Executive or his legal representative continued
Base Salary at the rate in effect at termination of employment, subject
to the following:
(A) If Executive is eligible for long-term disability
compensation benefits under the Company's long-term disability
plan or any successor Company long-term disability plan, the
amount payable under this clause shall be paid at a rate equal
to the excess of (I) the rate of Base Salary in effect at
termination of employment, over (II) the long-term disability
compensation benefits for which Executive is eligible under
such plan.
(B) Payments pursuant to this clause (a)(i) shall be
paid for the first twelve months of the termination period
without reduction for compensation
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earned from other employment or self-employment, and shall
thereafter be reduced by such compensation received by
Executive from other employment or self-employment.
(ii) Until the expiration of the termination period as defined
at (a)(i) above and subject to such minimum coverage-continuation
requirements as may be required by law, the Company will provide
(except to the extent that Executive shall obtain the same from another
employer or from self-employment) such medical and hospital insurance,
long-term disability insurance and term life insurance for Executive
and his family, comparable to the insurance provided for executives
generally, as the Company shall determine, and upon the same terms and
conditions as the same shall be provided for other Company executives
generally; provided, however, that in no event shall such benefits or
the terms and conditions thereof be less favorable to Executive than
those afforded to him as of the date of termination.
(iii) The Company will pay to Executive or his legal
representative, without offset for compensation earned from other
employment or self-employment, (A) any 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, plus (C) if
the LRPIP FYE 1997-1999 cycle has been completed, any bonus to which
Executive is entitled under Section 3(f)(ii), unless such bonus has
already been credited to Executive's Account under Section 9. These
amounts will be paid at the same time as other awards for such prior
year or cycle are paid.
(iv) The Company will pay to Executive or his legal
representative, without offset for compensation earned from other
employment or self-employment, an amount in the nature of severance
equal to the sum of (A) Executive's MIP Target Award, if any, for the
year of termination, multiplied by a fraction, the numerator of which
is three hundred and sixty-five (365) plus the number of days during
such year prior to termination, and the denominator of which is seven
hundred and thirty (730), plus (B) with respect to each LRPIP cycle in
which Executive participated and which had not ended prior to
termination of employment, 1/36 of an amount equal to Executive's LRPIP
Target Award for such cycle multiplied by the number of full months in
such cycle completed prior to termination of employment, plus (C) with
respect to the bonus described in Section 3(f)(ii) (if the LRPIP FYE
1997-1999 cycle has not yet been completed), an amount equal to $70,000
for each month in the FYE 1997-1999 LRPIP cycle ended prior to
termination of employment. The severance component described in clause
(a)(iv)(A) above will be paid not later than MIP awards for the year of
termination are paid. The severance component described in clause
(a)(iv)(B) above, to
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the extent measured by the LRPIP Target Award for any cycle, will be
paid not later than the date on which LRPIP awards for such cycle are
paid or would have been paid. The severance component described in
clause (a)(iv)(C) above will be paid not later than the date in 1999 on
which LRPIP awards for the FYE 1997-1999 cycle are paid or would have
been paid. In no event shall the severance described in this paragraph
be treated as paid under MIP or LRPIP.
(v) In addition, the Company (A) will pay to Executive or his
legal representative such vested amounts as shall have been deferred
for Executive's account (but not received) under the GDCP in accordance
with its terms plus such amounts, if any, as shall then remain credited
to Executive's Account under Section 9; and (B) shall deliver to
Executive or his legal representative any shares of Stock which
Executive shall have earned but deferred in respect of his PBDS award
referred to in Section 3(b)(ii).
(vi) Executive or his legal representative shall be entitled
to the benefits described in Sections 3(b)(i) (PARS), 3(b)(ii) (PBDS)
(other than those referenced under Section 6(a)(v) above), 3(b)(iii)
(Existing Options), Section 3(c)(iii) (New Options), 3(g) (SERP), and
3(h) (Qualified Plans).
(vii) If termination occurs by reason of Incapacity or
Disability, Executive shall be entitled to such compensation, if any,
as is payable pursuant to the Company's long-term disability plan or
any successor Company 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 (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 (a)(i) above (determined without regard to paragraph (A)
thereof), he shall promptly pay such excess in reimbursement to the
Company; provided, that in no event shall application of this sentence
result in reduction of Executive's combined salary/disability benefit
below the level of long-term disability compensation payments to which
Executive is entitled under the long-term disability plan or plans of
the Company.
(b) Terminations after January 25, 2002. Unless earlier terminated or
except as otherwise mutually agreed by Executive and the Company, Executive's
employment with the Company shall terminate on January 26, 2002. Unless the
Company in connection with such termination shall offer to Executive continued
service in a position acceptable to Executive and upon mutually and reasonably
agreeable terms, Executive shall be entitled upon such termination to receive,
for the period beginning on such termination and ending on the date of the
annual meeting of stockholders occurring in 2003, continuation of Base Salary at
the rate in effect at termination of employment plus medical, dental,
life-insurance and disability
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coverage (but not including continued participation in the Company's retirement
or 401(k) plan(s) or continued participation in SERP or any other fringe
benefit, other than a Company provided automobile or automobile allowance)
comparable to the benefits of such type to which he was entitled at time of
termination; provided, that to the extent it is impossible or impracticable to
provide any such benefits to Executive under the Company's then existing
employee benefit plans or arrangements, the Company shall arrange for
alternative comparable coverage or, if such alternative coverage is not
available, shall pay to Executive the cost of such coverage, all as reasonably
determined by the Committee. If the Company in connection with such termination
offers to Executive continued service in a position acceptable to Executive and
upon mutually and reasonably agreeable terms, and Executive declines such
service, he shall be treated for all purposes of this Agreement as having
terminated his employment voluntarily (other than for Valid Reason) on January
26, 2002 and he shall be entitled only to those benefits to which he would be
entitled under Section 6(a) ("Voluntary termination of employment"). For
purposes of the two preceding sentences, "service in a position acceptable to
Executive" shall mean service as Chief Executive Officer of the Company or
service as Chairman of the Board, or service in such other position, if any, as
may be acceptable to Executive.
6. OTHER TERMINATION; VIOLATION OF CERTAIN AGREEMENTS.
(a) Voluntary termination of employment. If Executive
terminates his employment voluntarily, Executive or his legal
representative shall be entitled to: (i) such vested amounts as shall
have been deferred for Executive's account (but not received) under the
GDCP in accordance with its terms and such amounts, if any, as shall
then remain credited to Executive's Account under Section 9; (ii) any
shares of Stock which Executive shall have earned but deferred in
respect of his PBDS award referred to in Section 3(b)(ii); and (iii)
the benefits described in Sections 3(b)(i) (PARS), 3(b)(ii) (PBDS)
(other than those referenced under Section 6(a)(ii) above), 3(b)(iii)
(Existing Options), Section 3(c)(iii) (New Options), 3(g) (SERP), and
3(h) (Qualified Plans). No other benefits shall be paid under this
Agreement upon a voluntary termination of employment.
(b) Termination for Cause; violation of certain agreements. If
the Company should end Executive's employment for Cause, or,
notwithstanding Section 5 and Section 6(a) above, 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, other than (w) such amounts as Executive shall
have deferred (but not received) under the GDCP in accordance with its
terms and such amounts as are credited to Executive's Account under
Section 9, (x) any shares which Executive has earned but deferred in
respect of his PBDS award referred to in Section 3(b)(ii); (y) any
benefits to which Executive may be entitled under SERP (provided,
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that if Executive should end his employment voluntarily, such benefits
shall be payable only if Executive does not violate the provisions of
Section 8), and (z) benefits, if any, to which Executive may be
entitled under Sections 3(b)(i) (PARS), 3(b)(ii) (PBDS) (other than
those referenced under (x) above), 3(b)(iii) (Existing Options),
3(c)(iii) (New Stock Options), and 3(h) (Qualified Plans). The Company
does not waive any rights it may have for damages or for injunctive
relief.
7. BENEFITS UPON CHANGE IN 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 E.
8. AGREEMENT NOT TO SOLICIT OR COMPETE.
(a) Upon the termination of employment at any time, then for a period
of two years after the termination of the Employment Period, Executive shall not
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. A "protected person"
shall be a person known by Executive to be employed by the Company or its
Subsidiaries or to have been employed by Company or its Subsidiaries 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, (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) are deemed to be separate and independent
agreements and in the events 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 his employment, Executive will have learned
many trade secrets of the Company and will have access to confidential
information and business plans for the Company. Therefore, upon automatic
termination of the Employment Period on January 26, 2002, or if Executive should
end his employment voluntarily at any time, including by reason of retirement or
disability but not including a voluntary termination for Valid Reason, or if the
Company should end Executive's employment at any time for Cause, then for a
period of two years thereafter, Executive will not engage, either as a
principal, employee, partner, consultant or investor (other than a less-than-1%
stock interest in a
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corporation), in a business which is a competitor of the Company. A business
shall be deemed a competitor of the Company if and only if it shall then be so
regarded by retailers generally or if it shall operate a promotional off-price
family apparel store within 10 miles of any "then existing T.J. Maxx or
Marshalls store." The term "then existing" in the previous sentence shall refer
to any such store 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 ▇▇▇▇-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.
(c) If the Employment Period terminates, Executive agrees (i) to notify
the Company immediately upon his securing employment or becoming self-employed
during any period when Executive's compensation from the Company shall be
subject to reduction or his benefits provided by the Company shall be subject to
termination as provided in Section 6 and (ii) to furnish to the Company written
evidence of his 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 the 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 he has returned all such items in his possession or under his
control.
9. SPECIAL DEFERRAL ACCOUNT; TRUST.
(a) The Company shall maintain on its books a special
memorandum Account reflecting the following deferred compensation
obligations of the Company to Executive: (i) an opening balance of
$55,000, which shall be credited to the Account as of the date of
execution of this Agreement; (ii) the Deferred Stock award described in
Exhibit A, which shall be credited to the Account as of the date of
execution of this Agreement; (iii) the Deferred Stock award described
in Exhibit B, which shall be credited to the Account as of the date of
this Agreement; (iv) any Base Salary deferred under Section 3(a), which
shall be credited to the Account as of the date such deferred Base
Salary would have been paid had it not been deferred; (v) the amounts,
if any, described in Section 3(f)(i) above, which shall be credited to
the Account as of the date(s) such amounts, if any, are earned under
Section 3(f)(i); (v) the amount, if any, described in Section 3(f)(ii)
above, which shall be credited to the Account as of the date
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16
awards (if any) for the LRPIP FYE 1997-1999 cycle are paid; and (vi)
notional investment experience with respect to such deferrals, as
hereinafter described.
(b) The Company's obligations with respect to the Account
represent an unsecured and unfunded promise by the Company to pay or
deliver cash or property in the future, and Executive's rights to
amounts credited to the Account shall be those of an unsecured general
creditor of the Company.
(c) Amounts credited to the Account shall be adjusted for
notional investment experience determined under this paragraph. For
purposes of determining the amount of the Company's unfunded obligation
to Executive hereunder, all amounts initially credited to the Account
under (a)(ii) or (a)(iii) above shall be deemed invested in Stock and
all other amounts initially credited to the Account, except as the same
may be notionally invested or reinvested as described below, shall bear
interest at the rate specified in the GDCP until such time as the
Company shall have established a brokerage account (either directly or
under the trust described in (e) below) to make "hedging investments"
(as that term is defined in (d) below) and thereafter at the rate of
return earned on uninvested cash in such brokerage account. Executive
shall have the right, at any time and from time to time from and after
the date any amount is credited to the Account, to specify by advance
written notice to the Treasurer's Office of the Company the Authorized
Investment(s) in which such amount shall be notionally invested;
provided, that except as the Committee may otherwise authorize, no such
specification with respect to the Account shall result in any one
notional transaction that involves an amount less than $50,000; and
further provided, that any such specification involving a notional sale
of Stock shall be effective under this paragraph only (i) to the extent
the Company could sell an equivalent number of shares of Stock pursuant
to an effective Registration Statement under the Securities Act of 1933
(it being the agreement of the parties hereto that the Company shall
cause a Registration Statement to be filed with the Securities and
Exchange Commission as soon as practicable following execution of this
Agreement) and in compliance with all applicable federal and state
securities laws, and (ii) at such times as an executive officer of the
Company would be free under applicable securities laws and Company
practices applicable to executive officers generally to sell an
equivalent number of shares of Stock. Any notional sale or purchase
hereunder shall be effective on such date as Executive may specify (but
not earlier than the first business day following the business day on
which Executive provides to the Treasurer's Office written notice of
such transaction) and shall be treated as having been effected, in the
case of a security listed on an exchange or Nasdaq, at the closing
price of such security on such effective date as reasonably determined
by the Company based on reported third-party sources (such as, but not
limited to, quotations in The Wall Street Journal); provided, that if
Executive specifies a notional transaction subject to a minimum sale
price, maximum
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purchase price or similar limitation, such limitation shall be taken
into account to the extent practicable in the Company's reasonable
determination as to whether, when and at what price the notional
transaction specification is to be given effect; and further provided,
that in the case of any transaction as to which the Company makes (or
causes to be made) a "hedging transaction" as that term is defined in
paragraph (d) below, the provisions of paragraph (d) below shall apply
in determining the amount, price and other terms of notional
transactions. Subject to paragraph (d) below, the Account shall be
adjusted for income, gain, loss and expenses associated with the
Authorized Investments specified by Executive in the same manner as if
the Account had actually been invested in such Investments. In the case
of any portion of the Account notionally invested in Stock, any deemed
cash dividends shall be treated as having been notionally reinvested in
Authorized Investments other than Stock, and any deemed distributions
of property other than Stock shall continue to be treated as notionally
invested in such property until Executive shall specify another
notional investment.
(d) Notional investment experience under (c) above shall be
determined net of brokerage commissions, loads and other transaction
costs as provided in this paragraph. The Company in its discretion may
cause assets of the Company (including assets held in the trust
described at (e) below) to be invested in Authorized Investments
matching those specified by Executive as the measure of notional
investment experience under the Account (a "hedging investment"). If
the Company chooses to make any such hedging investments for its own
account, and so notifies Executive in writing, the notional investment
experience under the Account related to any investment specification by
Executive that is so hedged shall be determined after taking into
account the Company's actual investment-related expenses (other than
expenses associated with the preparation and filing of the registration
statement or other compliance measures referred to at (c) above) and
any actual loads or surrender charges with respect to such investment.
If the Company notifies Executive in writing that it intends to hedge a
notional investment, Executive's notional investment specifications
shall take effect only at such time or times and to such extent as the
Company's hedging investments are made. If the Company does not choose
to hedge any notional investment specification made by Executive or
does so without notifying Executive in writing (an "unhedged notional
transaction"), the notional investment experience under the Account
related to any such unhedged notional transaction shall be determined
after taking into account deemed brokerage commissions equal to the
Fidelity discount brokerage commission rates then in effect and such
loads or surrender charges, if any, as would have been borne with
respect to comparable investments, as reasonably determined by the
Committee.
(e) As soon as practicable following execution of this
Agreement, the Company shall cause a trust (of the type commonly
referred to as a "rabbi trust") (the "Trust") to
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be established. As of each date that a credit described in (a)(i)
through (a)(v) above is credited to the Account, the Company shall
cause to be contributed to the Trust an amount equal to such credit. In
the case of the credits described in (a)(ii) and (a)(iii) above, such
contributions shall be made in shares of Stock; otherwise, all such
contributions shall be made in cash. The Trust shall be irrevocable,
subject only to the rights of the Company's general creditors to reach
Trust assets in the event of the Company's insolvency or bankruptcy (as
determined in a manner consistent with continued treatment of the Trust
as a "grantor trust" under I.R.S. Revenue Procedure 92-64 and other
applicable I.R.S. guidance) and subject to the remaining provisions of
this paragraph. To the extent of any payment to Executive in respect of
the Company's obligations under the Account, the Company may either
make such payment directly and cause itself to be reimbursed for such
payment out of the Trust, or may cause the trustee of the Trust to make
the payment directly out of the Trust. Any payment from the Trust to
Executive shall be treated to the extent of such payment as a discharge
of the Company's obligations hereunder. If, after full payment of all
amounts owing hereunder to Executive in respect of the Account, there
remain any assets in the Trust, the Company shall have the right to
recover such assets from the Trust and to terminate the Trust. Prior to
termination of the Trust, not less frequently than once each calendar
quarter the value of the assets held in the Trust shall be determined
and compared to the balance then standing to the Account. If the
balance in the Trust as of any such measurement date is more than the
balance standing to the Account as of such date, the excess over such
Account balance shall be paid to the Company at its request. If the
balance in the Trust as of any measurement date is less than the
balance standing to the Account as of such date, the Company shall
promptly contribute to the Trust funds sufficient to cause the Trust
balance to equal the Account balance as so determined.
(f) Distribution to Executive of amounts credited to the
Account described at (a) above shall be made as soon as practicable
following termination of Executive's status as an employee for any
reason; provided, that if the Committee determines that because of a
change in law or circumstances the deduction associated with an earlier
distribution would not be limited by Section 162(m) of the Internal
Revenue Code and the regulations thereunder, the Committee shall cause
such distribution to be made at or as soon as practicable after the
first date on which such limitation on deductions would not apply.
10. ASSIGNMENT. The rights and obligations of the Company shall enure
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 him after his death shall be made by devise or descent.
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19
11. 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 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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 the Executive, the same shall
be mailed to Executive at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at
such other address as Executive may hereafter designate by notice to the
Company.
12. CERTAIN EXPENSES. The Company shall bear the reasonable fees and
costs of Executive's legal and financial advisors (not to exceed $35,000 in the
aggregate) incurred in negotiating this Agreement.
13. 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.
14. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be governed by the laws of the Commonwealth of
Massachusetts.
15. 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 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
Commercial Arbitration Rules 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.
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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.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------
Executive
THE TJX COMPANIES, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------------
Chairman of the Executive Compensation Committee
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EXHIBIT A
Terms of 75,000 Share Deferred Stock Award Under Section 3(c)(i)
The following terms shall govern the award of Deferred Stock under the
1986 Plan described at Section 3(c)(i) of the Agreement (the "Section 3(c)(i)
Award"):
A.1. Number of Shares. The number of shares of Stock subject to the
Section 3(c)(i) Award shall be 75,000. An amount representing such shares shall
be credited to the Account described at Section 9 of the Agreement as of the
date of execution of the Agreement, and shall thereafter be notionally invested
or reinvested, and otherwise adjusted, pursuant to Section 9.
A.2. Transfer of Shares. To the extent that, as of the date of
distribution of the Account described at Section 9 of the Agreement, that
portion of the Account attributable to the Section 3(c)(i) Award remains
notionally invested in Stock, there shall be transferred to Executive in
satisfaction of the Company's obligation with respect to that portion of the
Account shares of Stock equal in number to the number of such notionally
invested shares; provided, that if the total number of shares to be distributed
pursuant to this A.2. plus the total number of shares (if any) to be distributed
pursuant to Section B.2. of Exhibit B includes a fractional share, the total
such number shall be rounded down to the nearest whole number and the fractional
share amount shall be distributed in cash.
A.3. Voting. Executive shall be entitled to vote only those shares of
Stock subject to the Section 3(c)(i) Award that have actually been transferred
to him.
A - 1
22
EXHIBIT B
Terms of 150,000 Share Deferred Stock Award Under Section 3(c)(ii)
The following terms shall govern the award of Deferred Stock under the
1986 Plan described at Section 3(c)(ii) of the Agreement (the "Section 3(c)(ii)
Award"):
B.1. Number of Shares. The number of shares of Stock subject to the
Section 3(c)(ii) Award shall be 150,000. An amount representing such shares
shall be credited to the Account described at Section 9 of the Agreement as of
the date of execution of the Agreement, and shall thereafter be notionally
invested or reinvested, and otherwise adjusted, pursuant to Section 9.
B.2. Transfer of Shares. To the extent that, as of the date of
distribution of the Account described at Section 9 of the Agreement, that
portion of the Account attributable to the Section 3(c)(ii) Award remains
notionally invested in Stock, there shall be transferred to Executive in
satisfaction of the Company's obligation with respect to that portion of the
Account shares of Stock equal in number to the number of such notionally
invested shares; provided, that if the total number of shares to be distributed
pursuant to this B.2. plus the total number of shares (if any) to be distributed
pursuant to Section A.2. of Exhibit A includes a fractional share, the total
such number shall be rounded down to the nearest whole number and the fractional
share amount shall be distributed in cash.
B.3. Voting. Executive shall be entitled to vote only those shares of
Stock subject to the Section 3(c)(ii) Award that have actually been transferred
to him.
B.4. Noncompetition, etc. In consideration of the Section 3(c)(ii)
Award, Executive agrees that upon automatic termination of the Employment Period
on January 26, 2002, or if Executive should end his employment voluntarily at
any time, including by reason of retirement or disability but not including a
voluntary termination for Valid Reason, or if the Company should end Executive's
employment at any time for Cause, then for a period of five years thereafter
(instead of the two years specified in Section 8 of the Agreement) Executive
shall be bound by the terms and conditions of Section 8 of the Agreement. The
Company does not waive any rights it may have for damages or for injunctive
relief in respect of the noncompetition agreement described in this Section.
B - 1
23
EXHIBIT C
Certain Definitions
In this Agreement, the following terms shall have the following meanings:
(a) "Account" shall mean the deferred compensation memorandum
account described at Section 9 of the Agreement.
(b) "Authorized Investment" means cash, shares in investment
companies registered under the Investment Company Act of 1940,
investments permitted as an investment for current contributions under
the Company's 401(k) plan or plans, bank obligations, commercial paper
rated ▇-▇, ▇-▇ ▇▇ ▇-▇ or their equivalent, direct or guaranteed federal
or state governmental obligations, and freely tradeable shares of
common stock in companies listed on the New York Stock Exchange, the
American Stock Exchange, or Nasdaq; provided, that Stock shall be
considered an Authorized Investment only with respect to amounts
initially credited to the Account under Section 9(a)(ii) or Section
9(a)(iii) and, with respect to any such amount, only until such time,
as any, as Executive specifies that such amount be notionally
reinvested in another Authorized Investment. An investment shall not
constitute an Authorized Investment if it (i) represents five percent
(5%) or more of the outstanding shares of any class of stock of the
issuer, or (ii) if made by the Company or by Executive, would be
illegal or require registration, consent or reporting with, from or to
any governmental agency or other person, or (iii) would be subject to
any restriction on transfer.
(c) "Base Salary" means, for any period, the amount described
in Section 3(a).
(d) "Board" means the Board of Directors of the Company.
(e) "Committee" means the Executive Compensation Committee of
the Board.
(f) "Cause" means dishonesty by Executive in the performance
of his duties, conviction of a felony (other than a conviction arising
solely under a statutory provision imposing criminal liability upon
Executive on a per se basis due to the Company 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 30 days after the Company gives written
notice to Executive requesting the cessation of such conflict.
C - 1
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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 his counsel was given an opportunity to be heard, finding that the
Executive was guilty of conduct described in the definition of "Cause"
above, and specifying the particulars thereof in detail; provided,
however, that the Company may suspend Executive and withhold payment of
his Base Salary from the date that notice of termination is given until
the earliest to occur of (A) termination of Executive for Cause (in
which case Executive shall not be entitled to his 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" above (in which case Executive shall be
reinstated and paid any of his previously unpaid Base Salary for such
period), or (C) 90 days after notice of termination is given (in which
case Executive shall then be reinstated and paid any of his previously
unpaid Base Salary for such period). If Base Salary is withheld and
then paid pursuant to clauses (B) and (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.
(g) "Change of Control" has the meaning given it in Exhibit D.
(h) "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, Incapacity or Disability.
For purposes of this definition, termination for "good reason"
shall mean the voluntary termination by Executive of his employment (A)
within 120 days after the occurrence without Executive's express
written consent of any one 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
pertinent situation described therein 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 event described in clause (VII), provided that Executive
gives notice to the Company at least 30 days in advance of his intent
to terminate his employment in respect of such event; or (C) under the
circumstances described in clause (VIII) below, provided that Executive
gives notice to the Company at least 30 days in advance:
C - 2
25
(I) the assignment to him of any duties inconsistent with his
positions, duties, responsibilities, reporting
requirements, and status with the Company immediately
prior to the Change of Control, or any removal of
Executive from or any failure to reelect him to such
positions, except in connection with the termination of
Executive's employment by the Company for Cause or by
Executive other than for good reason, or any other action
by the Company which results in a diminishment in such
position, authority, duties or responsibilities, other
than an insubstantial and inadvertent action which is
remedied by the Company promptly after receipt of notice
thereof given by Executive; or
(II) if Executive's rate of Base Salary for any fiscal year is
less than 100 percent 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 percent
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 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 (d) 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
(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
C - 3
26
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 D); or
(VIII) The voluntary termination by Executive of his employment
at any time within one year after the Change of Control.
Notwithstanding the foregoing, the Board may expressly
waive the application of this clause (VIII) 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
the 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 (VIII)
shall be within the complete discretion of the Board but
shall be made prior to the Change of Control.
(i) "Date of Termination" means the date on which Executive's
employment terminates.
(j) "Disability" has 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.
(k) "GDCP" means the Company's General Deferred Compensation
Plan, or, if the General Deferred Compensation Plan is no longer
maintained by the Company, a nonqualified deferred compensation plan or
arrangement the terms of which are not less favorable to Executive than
the terms of the General Deferred Compensation Plan as in effect on the
Effective Date.
(l) "Incapacity" means a disability (other than Disability
within the meaning of (j) above) or other impairment of health that
renders Executive unable to perform his duties to the reasonable
satisfaction of the Committee.
(m) "Section 162(m) Current Salary Maximum" means, for any
fiscal year of the Company, $1,000,000 plus that portion of Executive's
Base Salary as is deferred by salary reduction into the Company's
401(k) plan or plans, minus the sum of taxable fringe benefits provided
to Executive for which the Company would be entitled to a deduction
(determined without regard to Section 162(m) of the Code).
C - 4
27
(n) "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 January 26, 2002 or the last business day of the 24th
calendar month following such Change of Control.
(o) "Stock" means the common stock, $1.00 par value, of the
Company.
(p) "Subsidiary" means 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.
(q) "Valid Reason" means the voluntary termination by
Executive of his employment (A) within 120 days after the occurrence
without Executive's express written consent of any one of the events
described in clauses (I), (II), (III), (IV), or (V) below, provided
that Executive gives notice to the Company at least 30 days in advance
requesting that the pertinent situation described therein be remedied,
and the situation remains unremedied upon expiration of such 30-day
period; or (B) within 120 days after the occurrence without Executive's
express written consent of the event described in clause (VI) below:
(I) the assignment to him of any duties inconsistent with
his positions, duties, responsibilities, reporting
requirements, and status with the Company immediately
prior to such assignment, or a substantive change in
Executive's titles or offices as in effect
immediately prior to such assignment, or any removal
of Executive from or any failure to reelect him to
such positions, except in connection with the
termination of Executive's employment by the Company
for Cause or by Executive other than for Valid
Reason, or any other action by the Company 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 promptly after receipt of
notice thereof given by Executive; or
(II) 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 such failure 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
benefits under any of such plans or deprive Executive
of any material fringe benefit enjoyed by Executive
immediately prior to such action, unless the
elimination or reduction of any such benefit,
perquisite or plan affects all other
C - 5
28
executives in the same organizational level (it being
the Company's burden to establish this fact); or
(III) any purported termination of Executive's employment
by the Company for Cause which is not effected in
compliance with paragraph (d) above; or
(IV) any relocation of Executive of more than 40 miles
from the place where Executive was located at the
time of such relocation; or
(V) any other breach by the Company of any provision of
this Agreement; or
(VI) 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 D).
C - 6
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EXHIBIT D
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 (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 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 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
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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 D 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
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31
(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 E
Change of Control Benefits
E.1. Benefits Upon a Change of Control Termination.
(a) The Company shall pay the following to Executive in a lump sum
within 30 days following a Change of Control Termination:
(i) an amount equal to (A) two times his 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) the accrued and
unpaid portion of his Base Salary through the Date of Termination,
subject to the following. If Executive is eligible for long term
disability compensation benefits under the Company's long-term
disability plan or any successor Company 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 clause
(i), 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 clause (i)
(determined without regard to the second sentence of this clause (i)),
he shall promptly pay such excess in reimbursement to the Company;
provided, that in no event shall application of this sentence result in
reduction of Executive's combined Change of Control/disability benefit
below the level of long-term disability compensation payments to which
Executive is entitled under the long-term disability plan or plans of
the Company.
(ii) 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 participant, applying
the following rules and assumptions:
(A) Executive's Primary Social Security Benefit (as
that term is defined in SERP) shall mean the annual primary
insurance amount to which the 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 his Base Salary from the Date of
Termination until his 65th birthdate which would be treated as
wages for purposes of the Social Security Act;
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33
(B) the monthly benefit under SERP determined using
the foregoing criteria shall be multiplied by 12 to determine
an annual benefit; and
(C) the present value of such annual benefit shall be
determined by multiplying the result in (B) 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, the 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
the 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, the 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."
(D) the benefit determined under (E) above shall be
reduced by the value of any portion of Executive's SERP
benefit already paid or provided to him in cash or through the
transfer of an annuity contract.
(b) Until the second anniversary of the Date of Termination, the
Company shall maintain in full force and effect for the continued benefit of
Executive and his family all life insurance, medical insurance and disability
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 he 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 or 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 prior to the Date of Termination, including ordinary
replacement thereof in accordance with the Company's automobile policy in effect
immediately prior to the Change of Control (or, in lieu
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34
of making such automobile available, the Company may at its option pay to
Executive the present value of its cost of providing such automobile).
E.2. Incentive Benefits Upon a Change of Control. Within 30 days
following a Change of Control, whether or not Executive's employment has
terminated or been terminated, the Company shall pay to the Executive, in a lump
sum, the sum of (i) and (ii), where:
(i) is the sum of (A) the "Target Award" 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, 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; 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) if the Change of Control occurs prior to the close of
the fiscal year ended in 1999, $1,260,000 in lieu of any award under
Section 3(f)(ii) of the Agreement, plus (C) any unpaid amounts owing
with respect to cycles completed prior to the Change of Control (and,
if the Change of Control occurs after the close of the fiscal year
ended in 1999, any unpaid amount owing with respect to the award
described in Section 3(f)(ii) of the Agreement).
E.3. Payments under Section E.1. and Section E.2. of this Exhibit 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 Section E.1. or Section E.2.,
amounts payable under Section E.1. and Section E.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 Section E.1. or Section E.2. are required to be reduced in accordance with
the preceding sentence shall be made at the Company's expense by Coopers &
▇▇▇▇▇▇▇ or by such other certified public accounting firm as the Committee may
designate prior to a Change of Control. In the event of any underpayment or
overpayment under Section E.1. or Section E.2., as determined by Coopers &
▇▇▇▇▇▇▇ (or such other firm as may have been designated in accordance with the
preceding sentence), the amount of such underpayment or overpayment
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35
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.
E.4. Other Benefits. In addition to the amounts described in Sections
E.1. and E.2., Executive shall be entitled to his benefits, if any, under
Sections 3(b)(i) (PARS), 3(b)(ii) (PBDS), 3(b)(iii) (Existing Options), 3(c)
(Additional Awards), 3(f) (Additional Bonus Awards), and 3(h) (Qualified Plans).
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 his employment, whether contained in an employment
contract or other agreement, shall no longer be effective.
(b) No Duty to Mitigate Damages. Executive's benefits under
this Exhibit E shall be considered severance pay in consideration of
his past service and his continued service from the date of this
Agreement, and his entitlement thereto shall neither be governed by any
duty to mitigate his damages by seeking further employment nor offset
by any compensation which he may receive from future employment.
(c) Legal Fees and Expenses. The Company shall pay all legal
fees and expenses, including but not limited to counsel fees,
stenographer fees, printing costs, etc. reasonably incurred by
Executive in contesting or disputing that the termination of his
employment during a 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 the First
National Bank of Boston, until paid in full.
(e) Notice of Termination. During a Standstill Period,
executive's employment may be terminated by the Company only upon 30
days' written notice to Executive.
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