Exhibit 10.1
EMPLOYMENT AGREEMENT
DATED AS OF JUNE 6, 2006
BETWEEN BERNARD CAMMARATA 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     3  
5.
  BENEFITS UPON NON-VOLUNTARY TERMINATION OF EMPLOYMENT OR     4  
 
  UPON EXPIRATION OF THE AGREEMENT        
6.
  OTHER TERMINATION; VIOLATION OF CERTAIN AGREEMENTS     6  
7.
  BENEFITS UPON CHANGE IN CONTROL     6  
8.
  AGREEMENT NOT TO SOLICIT OR COMPETE     6  
9.
  ASSIGNMENT     8  
10.
  NOTICES     8  
11.
  WITHHOLDING     8  
12.
  GOVERNING LAW     8  
13.
  ARBITRATION     8  
14.
  ENTIRE AGREEMENT     9  

          EXHIBIT A    
 
  CERTAIN DEFINITIONS   A-1
 
        EXHIBIT B    
 
  DEFINITION OF CHANGE IN CONTROL   B-1
 
        EXHIBIT C    
 
  CHANGE IN CONTROL BENEFITS   C-1

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BERNARD CAMMARATA
EMPLOYMENT AGREEMENT
     AGREEMENT dated as of June 6, 2006 between BERNARD CAMMARATA (“Executive”)
and The TJX Companies, Inc., a Delaware corporation whose principal office is in
Framingham, Massachusetts 01701 (the “Company”).
RECITALS
     Executive has been employed by the Company as Chairman of the Board and in
other executive capacities, most recently pursuant to an employment agreement
dated as of June 3, 2003, as amended. The Company and Executive intend that
Executive shall continue to serve the Company as Chairman of the Board and in
other capacities 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 June 6, 2006 (the “Effective Date”) and, as of that date, shall supersede the
employment agreement dated as of June 3, 2003, as amended by letter agreement
dated November 14, 2005. Executive’s employment as Chairman of the Board shall
continue on the terms provided herein until the date of the annual meeting of
stockholders of the Company occurring in 2009 (the “2009 meeting date”), subject
to earlier termination as provided herein (such period of employment hereinafter
called the “Employment Period”).
2. SCOPE OF EMPLOYMENT.
     (a) Nature of Services. During the term hereof, Executive shall diligently
perform the duties and assume the responsibilities of Chairman of the Board and
such additional executive duties and responsibilities as shall from time to time
be assigned to him by the Board. Without limiting the generality of the
foregoing, the parties hereto acknowledge and agree that Executive (i) as of the
Effective Date is also serving as Acting Chief Executive Officer of the Company,
and (ii) will continue to serve as Acting Chief Executive Officer during such
period (the “Acting CEO Period”) from and after the Effective Date as may be
mutually acceptable to the Board and Executive, subject to the following
provisions of this Agreement. The Acting CEO Period shall terminate when
Executive is no longer serving as Acting Chief Executive Officer of the Company.
The Board may at any time remove Executive from the position of Acting Chief
Executive Officer of the Company, and Executive upon not less than ninety
(90) days’ advance written notice to the Board may at any time resign from such
position. The

 

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Board’s removal of Executive from the position of Acting Chief Executive Officer
of the Company, or Executive’s resignation from such position, shall not,
without more, constitute a termination of the Employment Period. In any matter
in which the Board or Committee deliberates or takes action with respect to this
Agreement, Executive, if then a member of the body so deliberating or taking
action, shall recuse himself.
     (b) Extent of Services. Executive shall devote such time and efforts as are
reasonably necessary to the proper performance of his duties hereunder, it being
understood that except during the Acting CEO Period such duties are not expected
to require Executive’s full-time attention and that Executive may, during the
Employment Period, participate in other activities (including, without
limitation, charitable or community activities, activities in trade or
professional organizations, service on other boards or similar bodies, and
investments in other enterprises), provided that such other activities (i) would
be permitted under Section 8 if engaged in by Executive during the two-year
period following a voluntary termination of employment (during the Employment
Period) other than for Valid Reason, and (ii) are not otherwise inconsistent
with Executive’s position, duties and responsibilities hereunder; and further
provided, that with respect to the Acting CEO Period the Board shall have the
right to limit Executive’s participation in other activities described or
referred to in this Section 3(b) whenever it shall believe that the time spent
on such participation or activities infringes in any material respect upon the
time required for the performance of Executive’s duties during the Acting CEO
Period or is otherwise incompatible with those duties.
3. COMPENSATION AND BENEFITS.
     (a) Base Salary. Executive shall be paid a Base Salary at the rate of
$400,000 per year or such higher amount as the Committee may determine (the rate
described in this sentence as in effect at any relevant time being herein
referred to as the “Chairman Rate”). Notwithstanding the foregoing, for any
portion of the Employment Period that is also within the Acting CEO Period,
Executive shall be paid a Base Salary at the rate of $900,000 per year or such
higher amount as the Committee may determine (the rate described in this
sentence as in effect at any relevant time being herein referred to as the
“Acting CEO Rate”). Executive’s Base Salary shall be paid in the same manner and
at the same times as the Company shall pay base salary to other executive
employees.
     (b) Existing Awards Under Stock Incentive Plan. Reference is made to the
following stock-based awards previously made to Executive under the Company’s
Stock Incentive Plan (including any successor, the “Stock Incentive Plan”) which
were outstanding as of the Effective Date: (i) stock option Grant Nos. 86-51,
86-55 and 86-56; (ii) Executive’s November 2005 performance-based deferred stock
award; and (iii) Executive’s November 2005 performance-based restricted stock
award. Each of the stock-based awards referenced in the preceding sentence 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 any prior employment agreement in effect between
Executive and the Company insofar as it relates by its express terms to any such
awards), and shall not be affected by the terms of this Agreement except as
otherwise expressly provided herein. For the avoidance of doubt, in the case of
the awards referenced under clause (ii) and (iii) above, references in the award
documentation to terms described in Executive’s “Employment Agreement” shall be
deemed to

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refer both to this Agreement and to Executive’s agreement with the Company dated
as of June 3, 2003.
     (c) Continued Participation in Certain Benefits. During the Employment
Period, Executive shall continue to be eligible to participate in the employee
benefit and fringe benefit plans and programs in effect on the date hereof and
made available to executives of the Company generally (including, without
limitation, GDCP and ESP (subject to clause (iii) below)), in each case in
accordance with the terms of such plans or programs as in effect from time to
time, subject to the following:
     (i) Executive shall not be entitled to participate in any awards under the
Company’s Long Range Performance Incentive Plan or under the Company’s
Management Incentive Plan.
     (ii) Except as provided at Section 3(b) above, Executive shall not be
entitled to participate in any awards under the Stock Incentive Plan.
     (iii) Executive shall not be entitled to any employer credits under ESP.
     (iv) Executive shall have no rights to benefits under the Company’s
Supplemental Executive Retirement Plan (“SERP”).
Except as provided in Section 3(c)(iii) above, Executive’s entitlement to
benefits, if any, under those Company employee and fringe benefit plans and
programs in which he participates will be determined in accordance with the
terms of the applicable plan or program.
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. A termination by the Company of
Executive’s services as Acting Chief Executive Officer shall not be deemed to
result in a termination of Executive’s employment under this Agreement
generally, and therefore shall not be deemed to result in a termination of the
Employment Period, unless the Company in connection therewith terminates
Executive’s employment under this Agreement generally.
     (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) The Employment Period shall terminate if Executive shall fail to be
nominated to serve, or shall fail to be elected to serve, as a member of the
Board.
     (d) 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 all positions on the Board.

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5. BENEFITS UPON NON-VOLUNTARY TERMINATION OF EMPLOYMENT OR UPON EXPIRATION OF
THE AGREEMENT.
     (a) Certain Terminations Prior to the 2009 meeting date. If the Employment
Period shall have terminated prior to the 2009 meeting date 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 as
a Director or as Chairman, or (B) Executive is relocated more than forty
(40) miles from the current corporate headquarters of the Company, in either
case without his prior written consent, then all compensation and benefits for
Executive shall be as follows:
     (i) For the longer of twelve (12) months after such termination or until
the 2009 meeting date (the “termination period”), the Company will pay to
Executive or his legal representative continued Base Salary at the Chairman Rate
(provided, that if immediately prior to such termination Executive was being
paid Base Salary at the Acting CEO Rate, payment shall be made for the first six
(6) months at the Acting CEO Rate and thereafter until the end of the
termination period at the Chairman Rate), subject to the following:
     (A) If Executive is eligible for long-term disability compensation benefits
under the Company’s long-term disability plan, the amount payable under this
clause shall be paid at a rate equal to the excess of (I) the applicable rate of
Base Salary payable under the first sentence of this clause (a)(i) (that is, the
Chairman Rate or the Acting CEO Rate, as the case may be), 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 (12) months of the termination period without reduction for compensation
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 no less favorable coverage from another employer or from
self-employment) such medical and hospital 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; and further provided, that to the extent it is
impossible or impracticable to provide any such coverage to Executive under the
Company’s then existing employee benefit plans or arrangements, the Company
shall arrange 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.

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     (iii) In addition, the Company will pay to Executive or his legal
representative such vested amounts as shall have been deferred for Executive’s
account (but not received) under GDCP in accordance with its terms plus such
amounts, if any, as shall then remain credited to Executive’s account under ESP.
     (iv) Executive or his legal representative shall be entitled to the
benefits described in Sections 3(b) (Existing Awards Under Stock Incentive Plan)
and to his benefits under the Company’s tax qualified Retirement Plan and
Savings/Profit-Sharing Plan (such qualified-plan benefits being hereinafter
referred to as Executive’s “Qualified-Plan Benefits”).
     (v) 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.
     (vi) Except as expressly set forth above or as required by law, Executive
shall not be entitled to continue participation during the termination period in
any employee benefit or fringe benefit plans, other than a Company-provided
automobile allowance.
     (b) Terminations on or after the 2009 meeting date. Unless earlier
terminated or except as otherwise mutually agreed by Executive and the Company,
Executive’s employment with the Company shall terminate on the 2009 meeting
date. 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 2010,
continuation of Base Salary at the Chairman Rate (provided, that if immediately
prior to such termination Executive was being paid Base Salary at the Acting CEO
Rate, payment shall be made for the first six (6) months at the Acting CEO Rate
and thereafter until the annual meeting of stockholders occurring in 2010 at the
Chairman Rate) plus medical, dental and life-insurance coverage (but not
including continued participation in the Company’s retirement or 401(k) plan(s)
or continued participation in any other employee or fringe benefit plan or
program, other than a Company-provided 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

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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 on the 2009 meeting date and he shall be
entitled only to those benefits to which he would be entitled under Section 6(a)
(“Voluntary termination of employment”). For purposes of the two preceding
sentences, “service in a position acceptable to Executive” shall mean service as
Chairman 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
(in each case in accordance with and subject to the terms of the applicable
arrangement) to the following: (i) such vested amounts, if any, as are credited
to Executive’s account (but not received) under GDCP and ESP; (ii) any benefits
described at Sections 3(b) (Existing Awards Under Stock Incentive Plan), and
(iii) Executive’s Qualified-Plan Benefits. 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 the benefits
described at (a) above. 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 C.
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 event of unenforceability of any such agreement, such
unenforceable agreement shall

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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 termination of the
Employment Period on the 2009 meeting date or if Executive should earlier 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 (2) years thereafter, Executive will not, directly or indirectly
(including, without limitation, indirectly through any entity or its
subsidiaries or affiliates), be a partner or investor in, or be engaged in any
employment, consulting, or fees-for-services arrangement with, any business
which is a competitor of the Company and its Subsidiaries, nor shall Executive
undertake any planning to engage in any such business. A business shall be
deemed a competitor of the Company and its Subsidiaries if (i) it shall then be
so regarded by retailers generally, or (ii) it shall operate an off-price
apparel, off-price footwear, off-price jewelry, off-price accessories, off-price
giftware, off-price toys and games, off-price home furnishings and/or off-price
home fashions business, including any such business that is store-based,
catalogue-based, media-based or an on-line, “e-commerce” or other off-price
internet-based business. 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, as
the case may be, 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, during the two-year period following termination of the Employment
Period at any time or for any reason and while he is still entitled to benefits
under Section 5 of this Agreement, Executive engages in any activity that would
be prohibited under Section 8(b) above following a voluntary termination (other
than a voluntary termination for Valid Reason) of employment, the Company’s
obligation to pay benefits under Section 5 shall forthwith cease and Executive
shall be entitled only to (x) payment of such vested amounts, if any, as are
credited to Executive’s account (but not received) under GDCP and ESP in
accordance with the terms of those programs; (y) payment of any vested benefits
to which Executive is entitled under the Company’s tax-qualified plans; and
(z) such rights, if any, under any stock options or other stock-based awards
that were granted under the Stock Incentive Plan and that are held by Executive
on the Date of Termination as are provided under the terms of those awards.
     (d) 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

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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. 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.
10. NOTICES. All notices and other communications required hereunder shall be in
writing and shall be given by mailing the same by certified or registered mail,
return receipt requested, postage prepaid. If sent to the Company the same shall
be mailed to the Company at 770 Cochituate Road, Framingham, Massachusetts
01701, Attention: Chairman of the Executive Compensation Committee, or other
such address as the Company may hereafter designate by notice to Executive; and
if sent to Executive, the same shall be mailed to Executive at his address as
set forth in the records of the Company or at such other address as Executive
may hereafter designate by notice to the Company.
11. WITHHOLDING; CERTAIN TAX MATTERS. Anything to the contrary notwithstanding,
(a) all payments required to be made by the Company hereunder to Executive shall
be subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation, and (b) to the extent any payment
hereunder shall be required to be delayed until six months following separation
from service to comply with the “specified employee” rules of Section 409A of
the Code it shall be so delayed (but not more than is required to comply with
such rules). The parties hereto acknowledge that in addition to any delay
required under 11(b), it may be desirable, in view of regulations or other
guidance issued by the IRS under Section 409A of the Code, to amend provisions
of the Agreement to avoid the acceleration of tax or the imposition of
additional tax under Section 409A of the Code and that the Company will not
unreasonably withhold its consent to any such amendments which in its
determination are (i) feasible and necessary to avoid adverse tax consequences
under Section 409A of the Code for Executive, and (ii) not adverse to the
interests of the Company.
12. GOVERNING LAW. This Agreement and the rights and obligations of the parties
hereunder shall be governed by the laws of the Commonwealth of Massachusetts.
13. ARBITRATION. In the event that there is any claim or dispute arising out of
or relating to this Agreement, or an alleged breach thereof, and the parties
hereto shall not have resolved such claim or dispute within sixty (60) days
after written notice from one party to the other setting forth the nature of
such claim or dispute, then such claim or dispute shall be settled exclusively
by binding arbitration in Boston, Massachusetts in accordance with the Rules
Governing Resolutions of Employment Disputes of the American Arbitration
Association by an arbitrator mutually agreed upon by the parties hereto or, in
the absence of such agreement, by an arbitrator selected according to such
Rules. Notwithstanding the foregoing, if either the Company or Executive shall
request, such arbitration shall be conducted by a panel of three arbitrators,
one selected by the Company, one selected by Executive and the third selected by
agreement of the first two, or, in the absence of such agreement, in accordance
with such Rules.

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Judgment upon the award rendered by such arbitrator(s) shall be entered in any
Court having jurisdiction thereof upon the application of either party.
14. 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”;
provided, that this Agreement shall not be construed as superseding or modifying
the Restoration Agreement dated December 31, 2002 between the Company and
Executive and the letter agreement dated December 31, 2002 relating to certain
tax matters.

             
 
                     /s/ Bernard Cammarata                   Executive    
 
                THE TJX COMPANIES, INC.    
 
           
 
  By   /s/ Jeffrey G. Naylor    
 
           
 
            Senior Executive Vice President and    
 
           Chief Financial Officer    

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EXHIBIT A
Certain Definitions
     In this Agreement, the following terms shall have the following meanings:
     (a) “Base Salary” means, for any period, the amount described in
Section 3(a). The terms “Chairman Rate” and “Acting CEO Rate” shall have the
meanings assigned to them in Section 3(a).
     (b) “Board” means the Board of Directors of the Company.
     (c) “Committee” means the Executive Compensation Committee of the Board.
     (d) “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 thirty (30) days after the Company gives written
notice to Executive requesting the cessation of such conflict.
     In respect of any termination during a Standstill Period, Executive shall
not be deemed to have been terminated for Cause until the later to occur of
(i) the 30th day after notice of termination is given and (ii) the delivery to
Executive of a copy of a resolution duly adopted by the affirmative vote of not
less than a majority of the Company’s directors at a meeting called and held for
that purpose (after reasonable notice to Executive), and at which Executive
together with his counsel was given an opportunity to be heard, finding that
Executive was guilty of conduct described in the definition of “Cause” above,
and specifying the particulars thereof in detail; provided, however, that the
Company may suspend Executive and withhold payment of his Base Salary from the
date that notice of termination is given until the earliest to occur of
(A) termination of Executive for Cause effected in accordance with the foregoing
procedures (in which case Executive shall not be entitled to his Base Salary for
such period), (B) a determination by a majority of the Company’s directors that
Executive was not guilty of the conduct described in the definition of “Cause”
effected in accordance with the foregoing procedures (in which case Executive
shall be reinstated and paid any of his previously unpaid Base Salary for such
period), or (C) ninety (90) days after notice of termination is given (in which
case Executive shall then be reinstated and paid any of his previously unpaid
Base Salary for such period). If Base Salary is withheld and then paid pursuant
to 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.
     (e) “Change of Control” has the meaning given it in Exhibit B.
A-1

 

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     (f) “Change of Control Termination” means the termination of Executive’s
employment during a Standstill Period (1) by the Company other than for Cause,
or (2) by Executive for good reason, or (3) by reason of death, Incapacity or
Disability.
     For purposes of this definition, termination for “good reason” shall mean
the voluntary termination by Executive of his employment (A) within one hundred
and twenty (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
thirty (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 one hundred and twenty (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
thirty (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 thirty (30) days in
advance:

  (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% of the
rate of Base Salary paid to Executive in the completed fiscal year immediately
preceding the Change of Control or if Executive’s total cash compensation
opportunities, including salary and incentives, for any fiscal year are less
than 100% of the total cash compensation opportunities made available to
Executive in the completed fiscal year immediately preceding the Change of
Control; or     (III)   the failure of the Company to continue in effect any
benefits or perquisites, or any pension, life insurance, medical insurance or
disability plan in which Executive was participating immediately prior to the
Change of Control unless the Company provides Executive with a plan or plans
that provide substantially similar benefits, or the taking of any action by the
Company that would adversely affect Executive’s participation in or materially
reduce Executive’s benefits under any of such plans or deprive Executive of any
material fringe benefit enjoyed by Executive immediately prior to the Change of
Control; or     (IV)   any purported termination of Executive’s employment by
the Company for Cause during a Standstill Period which is not effected in
compliance with paragraph (d) above; or

 

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A-2

  (V)   any relocation of Executive of more than forty (40) miles from the place
where Executive was located at the time of the Change of Control; or     (VI)  
any other breach by the Company of any provision of this Agreement; or     (VII)
  the Company sells or otherwise disposes of, in one transaction or a series of
related transactions, assets or earning power aggregating more than 30% of the
assets (taken at asset value as stated on the books of the Company determined in
accordance with generally accepted accounting principles consistently applied)
or earning power of the Company (on an individual basis) or the Company and its
Subsidiaries (on a consolidated basis) to any other Person or Persons (as those
terms are defined in Exhibit B); 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.

     (g) “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
     (h) “Date of Termination” means the date on which Executive’s employment
terminates.
     (i) “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.
     (j) “Effective Date” has the meaning set forth in Section 1.
     (k) “Employment Period” has the meaning set forth in Section 1.
     (l) “ESP” means the Company’s Executive Savings Plan.
     (m) “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 (other than the ESP) 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.
     (n) “Qualified-Plan Benefits” has the meaning set forth in
Section 5(a)(iv).
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     (o) “SERP” has the meaning set forth in Section 3(c)(iv).
     (p) “Incapacity” means a disability (other than Disability within the
meaning of (h) above) or other impairment of health that renders Executive
unable to perform his duties to the reasonable satisfaction of the Committee.
     (q) “Standstill Period” means the period commencing on the date of a Change
of Control and continuing until the close of business on the earlier of the 2009
meeting date or the last business day of the 24th calendar month following such
Change of Control.
     (r) “Stock” means the common stock, $1.00 par value, of the Company.
     (s) “Stock Incentive Plan” has the meaning set forth in Section 3(b).
     (t) “Subsidiary” means any corporation in which the Company owns, directly
or indirectly, 50% or more of the total combined voting power of all classes of
stock.
     (u) “2009 meeting date” has the meaning set forth in Section 1.
     (v) “Valid Reason” means the voluntary termination by Executive of his
employment (A) within one hundred and twenty (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 thirty (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 one hundred and
twenty (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; provided, that termination by the Company of
Executive’s services as Acting Chief Executive Officer shall not, in and of
itself and without more, be deemed to constitute an assignment, change, removal,
failure or other action described in this clause (I); 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

A-4

 

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      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 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
forty (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% of the assets (taken at asset value as stated on the
books of the Company determined in accordance with generally accepted accounting
principles consistently applied) or earning power of the Company (on an
individual basis) or the Company and its Subsidiaries (on a consolidated basis)
to any other Person or Persons (as those terms are defined in Exhibit B).

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EXHIBIT B
Definition of “Change of Control”
     “Change of Control” shall mean the occurrence of any one of the following
events:
     (a) there occurs a change of control of the Company of a nature that would
be required to be reported in response to Item 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 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
B-1

 

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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 B the following terms have the
meanings set forth below:
     “Common Stock” shall mean the then outstanding Common Stock of the Company
plus, for purposes of determining the stock ownership of any Person, the number
of unissued shares of Common Stock which such Person has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise. Notwithstanding the foregoing, the term Common Stock shall
not include shares of Preferred Stock or convertible debt or options or warrants
to acquire shares of Common Stock (including any shares of Common Stock issued
or issuable upon the conversion or exercise thereof) to the extent that the
Board of Directors of the Company shall expressly so determine in any future
transaction or transactions.
     A Person shall be deemed to be the “owner” of any Common Stock:
     (i) of which such Person would be the “beneficial owner,” as such term is
defined in Rule 13d-3 promulgated by the Securities and Exchange Commission (the
“Commission”) under the Exchange Act, as in effect on March 1, 1989; or
     (ii) of which such Person would be the “beneficial owner” for purposes of
Section 16 of the Exchange Act and the rules of the Commission promulgated
thereunder, as in effect on March 1, 1989; or
     (iii) which such Person or any of its affiliates or associates (as such
terms are defined in Rule 12b-2 promulgated by the Commission under the Exchange
Act, as in effect on March 1, 1989), has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options or otherwise.
     “Person” shall have the meaning used in Section 13(d) of the Exchange Act,
as in effect on March 1, 1989.
     An “Executive Related Party” shall mean any affiliate or associate of
Executive other than the Company or a majority-owned subsidiary of the Company.
The terms “affiliate” and “associate” shall have the meanings ascribed thereto
in Rule 12b-2 under the Exchange Act (the term “registrant” in the definition of
“associate” meaning, in this case, the Company).
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EXHIBIT C
Change Of Control Benefits
     C.1. Benefits Upon a Change of Control Termination.
     (a) The Company shall pay to Executive, in a lump sum within thirty
(30) days following a Change of Control Termination, an amount equal to (A) two
times his Base Salary for one year at the Chairman Rate in effect immediately
prior to the Date of Termination or the Change of Control, whichever is higher
(provided, that if immediately prior to the Change of Control Executive was
being paid Base Salary at the Acting CEO Rate, the lump-sum amount payable under
this clause (A) shall equal six (6) months’ worth of Base Salary at such Acting
CEO Rate plus eighteen months’ worth of Base Salary at the Chairman Rate) 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,
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 paragraph (a), and if the sum of such payments (the “combined
Change of Control/disability benefit”) exceeds the payment for such period to
which Executive is entitled under the first sentence of this paragraph (a)
(determined without regard to the second sentence of this paragraph (a)), he
shall promptly pay such excess in reimbursement to the Company; provided, that
in no event shall application of this sentence result in reduction of
Executive’s combined Change of Control/disability benefit below the level of
long-term disability compensation payments to which Executive is entitled under
the long-term disability plan or plans of the Company.
     (b) Until the second anniversary of the Date of Termination, the Company
shall maintain in full force and effect for the continued benefit of Executive
and his family all life insurance and medical insurance plans and programs in
which Executive was entitled to participate immediately prior to the Change of
Control provided that Executive’s continued participation is possible under the
general terms and provisions of such plans and programs. In the event that
Executive is ineligible to participate in such plans or programs, the Company
shall arrange upon comparable terms to provide Executive with benefits
substantially similar to those which he is entitled to receive under such plans
and programs. Notwithstanding the foregoing, the Company’s obligations hereunder
with respect to life or medical coverage or benefits shall be deemed satisfied
to the extent (but only to the extent) of any such coverage or benefits provided
by another employer.
     (c) For a period of two years after the Date of Termination, the Company
shall continue to provide to Executive the automobile allowance that it was
providing to him prior to the Change of Control.
     C.2. Gross-Up Payment. Payments under Section C.1. of this Exhibit shall be
made without regard to whether the deductibility of such payments (or any other
payments or benefits to or for the benefit of Executive) would be limited or
precluded by Section 280G of the Code
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(“Section 280G”) and without regard to whether such payments (or any other
payments or benefits) would subject Executive to the federal excise tax levied
on certain “excess parachute payments” under Section 4999 of the Code (the
“Excise Tax”). If any portion of the payments or benefits to or for the benefit
of Executive (including, but not limited to, payments and benefits under this
Agreement but determined without regard to this paragraph) constitutes an
“excess parachute payment” within the meaning of Section 280G (the aggregate of
such payments being hereinafter referred to as the “Excess Parachute Payments”),
the Company shall promptly pay to Executive an additional amount (the “gross-up
payment”) that after reduction for all taxes (including but not limited to the
Excise Tax) with respect to such gross-up payment equals the Excise Tax with
respect to the Excess Parachute Payments; provided, that to the extent any
gross-up payment would be considered “deferred compensation” for purposes of
Section 409A of the Code, the manner and time of payment, and the provisions of
this Section C.2, shall be adjusted to the extent necessary (but only to the
extent necessary) to comply with the requirements of Section 409A with respect
to such payment so that the payment does not give rise to the interest or
additional tax amounts described at Section 409A(a)(1)(B) or Section 409A(b)(4)
of the Code (the “Section 409A penalties”); and further provided, that if,
notwithstanding the immediately preceding proviso, the gross-up payment cannot
be made to conform to the requirements of Section 409A of the Code, the amount
of the gross-up payment shall be determined without regard to any gross-up for
the Section 409A penalties. The determination as to whether Executive’s payments
and benefits include Excess Parachute Payments and, if so, the amount of such
payments, the amount of any Excise Tax owed with respect thereto, and the amount
of any gross-up payment shall be made at the Company’s expense by
PricewaterhouseCoopers LLP or by such other certified public accounting firm as
the Committee may designate prior to a Change of Control (the “accounting
firm”). Notwithstanding the foregoing, if the Internal Revenue Service shall
assert an Excise Tax liability that is higher than the Excise Tax (if any)
determined by the accounting firm, the Company shall promptly augment the
gross-up payment to address such higher Excise Tax liability.
     C.3. Other Benefits. In addition to the amounts described in Section C.1.,
Executive shall be entitled to the benefits, if any, described at Sections 3(b)
(Existing Awards Under Stock Incentive Plan), and to payment of his
Qualified-Plan Benefits.
     C.4. 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 C
shall be considered severance pay in consideration of his past service and his
continued service from the date of this Agreement, and his entitlement thereto
shall neither be governed by any duty to mitigate his damages by seeking further
employment nor offset by any compensation which he may receive from future
employment.
     (c) Legal Fees and Expenses. The Company shall pay all legal fees and
expenses, including but not limited to counsel fees, stenographer fees, printing
costs, etc. reasonably
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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
Bank of America, or its successor, until paid in full.
     (d) Notice of Termination. During a Standstill Period, Executive’s
employment may be terminated by the Company only upon thirty (30) days’ written
notice to Executive.
C-3