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Exhibit 10.3
TRANSITIONAL SERVICES AGREEMENT
This Agreement dated as of November 17, 1995 is between Melville
Corporation, a New York corporation ("Melville"); The TJX Companies, Inc., a
Delaware corporation ("TJX"); and Marshall's, Inc., a Massachusetts
corporation, on behalf of Marshalls (as defined below).
WITNESSETH:
WHEREAS, Melville and TJX have entered into a Stock Purchase Agreement
dated as of October 14, 1995, as amended from time to time (the "Stock Purchase
Agreement"), with respect to the purchase and sale of Marshalls of Roseville,
Minn., Inc. (together with its Subsidiaries, "Marshalls");
WHEREAS, Melville and TJX desire to set forth the respective services
to be performed by each Provider hereunder in order to allow for an orderly
transition of ownership of the Marshalls business (as currently conducted, the
"Business");
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, the parties hereto agree as follows:
1. DEFINITIONS
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(a) As used herein, the following terms shall have the following
meanings:
"Agreement" means this Transitional Services Agreement including all
Exhibits hereto, as amended from time to time.
"Costs" means (i) with respect to Melville Services, Melville Costs,
(ii) with respect to Marshalls Services, Marshalls Costs, and (iii) Incremental
Costs.
"Incremental Costs" means any and all incremental costs of performing
any Service hereunder that are incurred as a result of or otherwise arise from
any lessor or other counterparty consent required in connection with (i) the
provision of such Service hereunder or (ii) the performance by a Provider of
its obligations hereunder (including, without limitation, any consent required
in connection with the assignment of the licenses contemplated in Exhibit A-2).
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"Marshalls Costs" means the direct costs incurred by Marshalls with
respect to the performance by Marshalls of Marshalls Services hereunder
(including any costs referred to in the Exhibits hereto).
"Marshalls Services" means the services (and related agreements) set
forth on Exhibits B-1, B-2 and B-3 hereto.
"Melville Costs" means the direct costs incurred by Melville or its
Affiliates with respect to its performing the Melville Services hereunder
(including any costs referred to in the Exhibits hereto).
"Melville Services" means the services (and related agreements) set
forth on Exhibits A-1, A-2, A-3, A-4 and A-5 hereto.
"Provider" means each or any of Melville and Marshalls.
"Services" means the Melville Services and the Marshalls Services.
"Term" means, with respect to any Service, the term applicable to the
provision of such Service hereunder as determined pursuant to Section 4.
(b) Capitalized terms used herein and not otherwise defined herein are
used herein as defined in the Stock Purchase Agreement.
2. PROVISION OF SERVICES
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(a) During the Term applicable to the provision or performance of each
Melville Service to be provided or performed by Melville (or an Affiliate) to
Marshalls with respect to the Business hereunder (as set forth in Exhibits A-1
through A- 5 hereto), Marshalls shall purchase and pay for, and Melville (or
such Affiliate) shall provide and perform, each such Melville Service, upon the
terms and conditions set forth in this Agreement (including the applicable
Exhibits hereto). Notwithstanding anything else contained herein, TJX shall be
jointly and severally liable for such obligations of Marshalls to purchase and
pay for Melville Services hereunder.
(b) During the Term applicable to the provision or performance of each
Marshalls Service to be provided or performed by Marshalls to Melville
hereunder (as set forth in Exhibits B-1 through B-3 hereto), Melville shall
purchase and pay for, and Marshalls shall provide and perform, each such
Marshalls Service, upon the terms and conditions set forth in this Agreement
(including the applicable Exhibits hereto). TJX shall cause Marshalls to
provide and perform such Marshalls Services hereunder.
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(c) All Services provided or performed by a Provider or its Affiliate
hereunder shall be performed in a manner consistent with past practice
applicable to the provision or performance of such Services by such Provider or
Affiliate.
(d) Each of Melville, TJX and Marshalls will use reasonable efforts to
complete the transition as promptly as practicable.
3. SERVICE CHARGES
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(a) Marshalls shall reimburse Melville for all Melville Costs
attributable to the performance by Melville of Melville Services hereunder.
Such reimbursement shall be made as provided in Section 5.
(b) Melville shall reimburse Marshalls for all Marshalls Costs
attributable to the performance by Marshalls of Marshalls Services hereunder.
Such reimbursement shall be made as provided in Section 5.
(c) Any Incremental Costs that are incurred by a Provider with the
consent of the other Provider shall be borne equally by the Providers. The
Provider incurring any Incremental Costs in connection with the performance by
such Provider of its obligations hereunder shall make payment of such
Incremental Costs to the third party to whom such Incremental Costs are
payable. The other Provider shall reimburse such Provider for an amount equal
to 50% of any and all payments made by such Provider in respect of Incremental
Costs. Such reimbursement shall be made as provided in Section 5.
Notwithstanding anything else contained herein or in the Exhibits hereto, a
Provider will be deemed to have satisfied all its obligations with respect to
the performance of its obligations hereunder where any consent is needed in
connection therewith in the event that the other Provider does not consent to
the incurrence of Incremental Costs, if any, with respect thereto.
(d) Except as set forth above or in Exhibit A-2 or A-4 hereto, neither
Marshalls nor TJX will have any obligations or liabilities with respect to any
equipment or related lease referred to on Schedule 4.8(f) to the Stock Purchase
Agreement or marked with an asterisk on Schedule 4.8(g) or 4.8(h) to the Stock
Purchase Agreement.
4. TERM OF PROVISION OF SERVICES
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The obligation of a Provider to provide or perform any Service
hereunder shall terminate on the last day of the term for which such Service is
required to be provided or performed hereunder (as specified in the applicable
Exhibit hereto), after giving effect to the valid exercise of any extension
option with respect to, or termination of, the term applicable to the provision
or performance of such Service.
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5. PAYMENT TERMS
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All Costs required to be reimbursed to a Provider hereunder shall be
invoiced monthly by such Provider. Invoiced amounts shall be due and payable
thirty (30) days from date of receipt of invoice.
6. INSPECTION; REVIEW OF COSTS
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(a) Each Provider shall, during normal business hours and with
reasonable prior notice to the other Provider, have reasonable access to the
properties, offices, books and records of the other Provider for the purpose of
observing that Services are being performed in accordance with the terms of
this Agreement and past practices relevant to the provision or performance of
such Services and to verify Cost amounts.
(b) The Providers shall, from time to time but not more often than
once each month, review the basis and amounts of Costs charged to each other
hereunder. In the course of such review, the Providers shall in good faith (i)
establish principles for determining Costs to be charged hereunder on a
prospective basis and (ii) determine the amount of any adjustment, if any,
payable by one Provider to the other with respect to Costs charged and
reimbursed in respect of any preceding period.
7. FORCE MAJEURE
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Neither Provider shall be liable to the other Provider for any delay or
default in performance where occasioned by any cause of any kind or extent
beyond its control including, by way of example, but not limitation, any act of
God, any act, regulation or law of any government, war, civil commotion,
destruction of production facilities or materials by fire, earthquake or storm,
labor disturbance, epidemic, equipment breakdown or failure, or failure of
suppliers, public utilities or common carriers ("Force Majeure"). The Provider
claiming relief hereunder shall promptly notify the other Provider in writing
of the Force Majeure causing delay or default in performance, the probable
extent to which it will be unable to perform, and the actions it intends to
take to remove such Force Majeure, to the extent reasonably possible to do so.
Each Provider shall take reasonable action within its control to alleviate the
Force Majeure causing delay or default in performance.
8. ASSIGNMENT
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No party hereto may assign its rights or delegate its obligations
hereunder without the prior written consent of the other parties, and any
attempted assignment or delegation without such consent shall be void. Any
Services required to be performed by a Provider hereunder may be performed by
an Affiliate of such Provider, provided that such Provider shall not thereby be
relieved of its obligations hereunder. For purposes of this Agreement,
Marshalls shall be considered to be an Affiliate of TJX and not of Melville.
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9. DEFAULT
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If a Provider shall be in default of any payment obligation hereunder,
the other Provider may terminate this Agreement by giving thirty (30) days'
written notice to the Provider so in default, specifying the basis for
termination, PROVIDED if within thirty (30) days after receipt of such notice
the Provider so in default shall make the required payment, such notice shall
cease to be operational and this Agreement shall continue in full force. The
right of either Provider to terminate this Agreement, as hereinabove provided,
shall not be affected in any way by its waiver of, or failure to take action
with respect to, any previous payment defaults.
Notwithstanding the foregoing, the occurrence of any of the following
events with respect to a party hereto shall be deemed to constitute a default
which shall give rise to an immediate right of any other party (that is not an
Affiliate of such party) to terminate this Agreement without notice: the making
of a general assignment for the benefit of creditors, insolvency, the
institution of bankruptcy, reorganization, liquidation or receivership
proceedings by or against a party hereto and, if instituted against such party,
its consent thereto or the failure to cause such proceedings to be discharged
within thirty (30) days thereafter.
The remedies provided for in this Section 9 are not intended to be
exclusive, and shall be in addition to any rights and remedies which the
parties have at law or in equity.
10. EXCULPATION; INDEMNIFICATION
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(a) A party hereto shall not be liable to any other party for any
damages, losses or liabilities directly or indirectly arising out of, relating
to or in connection with this Agreement or the performance or non-performance
of Services hereunder, except to the extent such damages, losses or liabilities
are attributable to such party's bad faith, gross negligence or wilful
misconduct.
(b) A Provider (an "Indemnifying Party") to or for which Services are
provided by the other Provider (an "Indemnified Party") hereunder shall
indemnify the Indemnified Party for, and hold the Indemnified Party harmless
from and against, any and all damages, losses and liabilities (other than Costs
payable by an Indemnified Party hereunder) to any third party (including all
reasonable legal fees and expenses with respect thereto) arising out of,
relating to or in connection with this Agreement or the performance or
non-performance of Services hereunder, except to the extent such damages,
losses or liabilities are attributable to such Indemnified Party's bad faith,
gross negligence or wilful misconduct. Notwithstanding anything else contained
herein, TJX shall be jointly and severally liable with Marshalls for any and
all of Marshalls' indemnification obligations under this Section 10(b).
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11. MISCELLANEOUS
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(a) NOTICES. All notices, statements or other communications
hereunder shall be in writing (including telecopy or similar transmission) and
shall be delivered as provided hereunder. A notice shall be deemed to have
been received by a party if delivered by (i) overnight courier, on the date of
actual delivery to the recipient's address (evidenced by confirmation of
delivery from the courier service making such delivery), (ii) mail, three
Business Days after being sent, if sent by registered or certified mail, with
first-class postage prepaid, or (iii) telecopier, upon receipt (evidenced by
receipt of a transmission confirmation form or the recipient's confirmation of
receipt). Notices shall be delivered to each party at the following addresses
or at such other address as may be designated by such party by notice in
writing sent in like manner.
For Marshalls or TJX: The TJX Companies, Inc.
770 Cochituate Road
Framingham, MA 01701
Attention: Donald G. Campbell
Telecopier: (508) 390-2199
With a copy to: Ropes & Gray
One International Place
Boston, MA 02110
Telecopier: 617-951-7050
Attention: Arthur S. Siler, Esq
For Melville: Melville Corporation
One Theall Road
Rye, New York 10580
Attention: Gary L. Crittenden
Telecopier: (914) 925-4052
With a copy to: Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopier: 212-450-5744
Attention: Dennis S. Hersch
(b) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the exhibits
hereto contain all of the terms and conditions of performance of Services
hereunder and constitute the complete understanding of the parties with respect
thereto. This Agreement may not be amended except by written agreement
executed by each of the parties hereto.
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(c) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without regard
to its conflict of laws provisions).
(d) INDEPENDENT CONTRACTORS. The parties hereto are independent
contractors. Nothing in this Agreement is intended or shall be deemed to
constitute a partnership, agency, franchise or joint venture relationship
between the parties. No party shall incur any debts or make any commitments
for the other, except to the extent, if at all, specifically provided herein.
(e) NO WAIVER. Any party's failure to insist upon strict
performance of any provision of this Agreement shall not be deemed to be a
waiver thereof. No waiver shall be effective unless specifically made in
writing and signed by a duly authorized representative of the party granting
such waiver.
(f) SEVERABILITY. If it shall be determined by court order not
subject to appeal or discretionary review that any provision or wording of this
Agreement shall be invalid or unenforceable under applicable law, such
invalidity or unenforceability shall not invalidate the entire Agreement and
shall be construed so as to limit any term or provision so as to make it
enforceable or valid within the requirements of applicable law, and, in the
event such term or provision cannot be so limited, this Agreement shall be
construed to omit such invalid or unenforceable provisions.
(g) COUNTERPARTS. This Agreement may be signed in any number of
counterparts and by the different parties on separate counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
(h) HEADINGS. The paragraph headings used herein have been
inserted for convenience only and shall not be used in any way to construe or
interpret this Agreement or performance hereunder.
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IN WITNESS WHEREOF, the parties have caused this Transitional
Services Agreement to be executed as of the day and year first above written.
MELVILLE CORPORATION
By __________________________
Name:
Title:
THE TJX COMPANIES, INC.
By _________________________
Name:
Title:
MARSHALL'S, INC.
By _________________________
Name:
Title:
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EXHIBIT A
Services Provided by Melville to Marshalls
with respect to the Business
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EXHIBIT A-1
COMPUTER EQUIPMENT SERVICES
DEFINITIONS
"HUB Services" means the HUB services currently provided by
Melville to Marshalls, or outsourced HUB services procured by
Melville.
"IBM Computer Services" means the use of or the provision of
computer access time with respect to the IBM Computer System.
"IBM Computer System" means the IBM9021-941 system and all of
the associated data center computer equipment located at
Marshalls offices in Andover, Massachusetts (excluding, for
the avoidance of doubt, point of sale equipment).
"VSAT Computer Services" means use of the Hughes VSAT
equipment.
SERVICES AND RELATED AGREEMENTS
During the Term set forth below and on the terms and
conditions set forth herein and in the Agreement, Melville
will provide the IBM Computer Services, the VSAT Computer
Services and the Hub Services to Marshalls with respect to the
Business.
Melville will retain ownership of the IBM Computer System and
the Hughes VSAT equipment located at Marshalls offices in
Andover, Massachusetts and/or store locations and will retain
responsibility for all such equipment.
As soon as reasonably practicable, Melville will determine
which components of the IBM Computer System, the Hughes VSAT
equipment and the HUB Services equipment are no longer needed
by Melville and will notify Marshalls of such determination.
Marshalls will consider the purchase at fair market value, as
determined by an independent analyst acceptable to both
Melville and Marshalls, of such components as are so
determined to be no longer needed by Melville. Melville's
obligations hereunder will not be affected by Melville's
determination as to whether it needs any such equipment
(except if Marshalls purchases such equipment) or by
Marshalls' failure to purchase any such equipment.
It is understood that all computer equipment installed at
Marshalls and not listed as Leased Equipment on Schedule
4.8(f) to the Stock Purchase Agreement is an asset of
Marshalls (and is indirectly acquired by TJX under the Stock
Purchase Agreement),
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other than computer equipment physically located in the space
occupied by the travel, check collection and audit functions
of Melville located at Marshalls.
The Thom McAn and CDI workloads will be removed from the IBM
Computer System by January 31, 1996.
TERM
INITIAL TERM: Services covered by this Exhibit A-1 will be
provided from the date hereof up to and including June 30,
1996, unless extended as provided under "Extension Option"
below.
EXTENSION OPTION: Marshalls shall have the option to extend
the Term, with respect to any or all Services covered by this
Exhibit A-1, for successive three-month periods as provided
hereunder. Marshalls may, by written notice to Melville
(given, in the case of the first exercise of the option to
extend, two months prior to expiration of the then applicable
Term, and in the case of any subsequent extension, 15 days
prior to expiration of the then applicable Term), extend the
Term for a three-month period; PROVIDED that (i) such
extension shall be reasonably required to facilitate
transition of ownership of the Business and (ii) Melville will
be provided reasonable time to remove its equipment if
Marshalls declines to exercise its extension option.
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EXHIBIT A-2
MOST/MANUGISTICS SOFTWARE
DEFINITIONS
"Software Fees" means license fees paid by Melville
for use of the MOST software and the Manugistics
software but only to the extent relating to the use
of such software at or by Marshalls.
"Software Rights" means all rights of Marshalls under
the MOST software licenses (version 3.2) from Park
City held by Melville and the Manugistics software
license from Manugistics held by Melville to the
extent that such rights relate to the use of the MOST
software and the Manugistics software at or by
Marshalls.
"Store Hardware" means computer hardware used to the
date hereof to execute the MOST software and the
Manugistics software at Marshalls including, without
limitation, home office and stores.
SERVICES AND RELATED AGREEMENTS
(a) During the Term set forth below, Melville will
provide manuals relating to MOST, and such
operational, technical and programming support and
training as is reasonably required in connection with
the transition (it being understood that Marshalls
staff does not rely on Melville input to operate the
Most/Manugistics systems).
(b) The Software Rights will be assigned by Melville
to Marshalls; PROVIDED that no such assignment shall
be made without consent of the relevant licensor,
which consent Melville shall use its reasonable best
efforts to obtain.
(c) All licenses to and leases of Store Hardware, to
the extent used to execute the Most and Manugistics
software at Marshalls, will be assigned by Melville
to Marshalls (and assumed by Marshalls); PROVIDED that
such assignment shall not be made without consent of
the relevant licensor or lessor, which consent
Melville shall use its reasonable best efforts to
obtain.
(d) All Software Fees for services provided prior to
the Closing for the Software Rights, including,
without limitation, all fees for upgrades and all
disputed fees in respect of periods prior to Closing,
have been paid or will be paid by Melville and do not
constitute Melville Costs or Incremental Costs.
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(e) It is understood that the AS/400 computer system
used to execute the Home Office MOST software is a
Marshalls asset.
(f) It is understood that all software and hardware
used to execute the Manugistics Logistic system shall
remain a Marshalls asset.
TERM
INITIAL TERM: Services covered by this Exhibit A-2 will be
provided from the date hereof up to and including June 30,
1996, unless extended as provided under "Extension Option"
below.
EXTENSION OPTION: Marshalls shall have the option to extend
the Term, with respect to any or all Services covered by this
Exhibit A-2, for one three-month period as provided hereunder.
Marshalls may, by written notice to Melville (given 15 days
prior to expiration of the Initial Term), extend the Term
(except as to the technical and programming support referred
to in clause (a) under "Services and Related Agreements" above
which shall expire at June 30, 1996) for one three-month
period; PROVIDED that such extension shall be reasonably
required to facilitate transition of ownership of the
Business. Melville's obligations to assign Software Rights,
licenses and leases (and to seek any necessary consents
therefor) as provided in clauses (b) and (c) under "Services
and Related Agreements" above shall, subject to Section 3(c)
of this Agreement, continue notwithstanding the expiration of
the Term.
CANCELLATION: Any service under this Exhibit A-2 may be
cancelled by Marshalls at any time upon 30 days' written
notice to Melville.
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EXHIBIT A-3
BAD DEBT COLLECTION AND PREVENTION
SERVICES AND RELATED AGREEMENTS
Ownership of the bad debt collection and prevention services
operation shall remain in Melville. All Marshalls employees
who prior to the Closing Date are employed primarily in this
operational area will be transferred to Melville prior to the
Closing. The number of such employees necessary to perform
the bad debt collection and prevention services provided for
herein will be leased back to Marshalls.
Melville hereby grants to TJX and its Subsidiaries (including
Marshalls) a world-wide, perpetual, non-transferable,
royalty-free license to use the Melville software system for
bad debt collection and check authorization (the "Bad Debt
System"). Such license shall only be to the Bad Debt System
as developed through the time of cessation of Marshalls'
involvement in the development thereof and shall not be for
improvements thereto developed by Melville or its Affiliates
after such time. Ownership of the Bad Debt System shall
remain with Melville and neither TJX nor its Subsidiaries
shall assert any ownership interest therein. TJX and its
Subsidiaries (including Marshalls) shall not (i) use the Bad
Debt System to engage in any services business relating to bad
debt collection or prevention or check authorization, or (ii)
for a period of 2 years after the Closing Date, offer to
employ or employ Messrs. Milgram or Nash who are currently
employees of Melville.
Such license to the Bad Debt System may not be sublicensed or
otherwise transferred by TJX or its Subsidiaries and shall
terminate with respect to any Subsidiary of TJX (including the
Company and its Subsidiaries) at the expiration of 12 months
after the earliest time that such Subsidiary ceases to be a
Subsidiary of TJX (and during such 12-month period such
license shall be limited to use of the Bad Debt System in the
business of such Subsidiary as conducted immediately prior to
such time of cessation and shall not otherwise be used in the
business of the acquiror of such Subsidiary); PROVIDED that
Marshalls shall, subject to the restrictions contained herein,
continue to hold such license following the sale of
substantially all the Marshalls business (whether by merger,
stock sale, asset sale or otherwise) to another Person. TJX
will be responsible for obtaining any consent from IBM
necessary with respect to the use of the Bad Debt System or
the license granted by Melville hereunder with respect thereto
(it being understood that no such license is required for such
use by Marshalls).
During the Term specified below, Melville will permit
Marshalls to use Melville's bad debt collection and prevention
services (including unlimited access to the negative
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check file). Access by Marshalls to the negative check file
can only be continued if Marshalls continues the ETC/SCAN
Services Agreement (since Electronic Transaction Corporation
("ETC") is the owner of the negative check file). ETC has
verbally agreed to this continuation during the transition
period as the original Melville agreement with ETC includes
Marshalls. ETC has verbally advised that the ETC rates that
Marshalls currently incurs will remain the same during the
transition period.
Information relating to Marshalls customers will be subject to
appropriate protection to preserve confidentiality from, and
preclude any use by, Melville and its Affiliates, except that
Melville shall have unlimited access to Marshalls' positive
check file. In addition, Marshalls will have unlimited access
to Melville's positive check file, as these positive check
files are presently mutually inclusive.
Separate collection letters and telephone collection calls
will be made on Marshalls bad checks.
Costs for collections will be calculated on the same per item
basis that has been used for the past three years, but will be
reduced to the extent necessary to exclude any employee
compensation and related costs paid by Marshalls in respect of
leased employees. The total charges to Marshalls will not
exceed the direct cost to Melville of providing such services.
Costs of authorizations will cover Marshalls' reasonable share
of future software development and system maintenance as well
as CPU costs, but will be reduced to the extent necessary to
exclude any employee compensation and related costs paid by
Marshalls in respect of leased employees. The total charges
to Marshalls will not exceed the direct cost to Melville of
providing such services. Such costs will be apportioned to
all users of the authorization system on a per transaction
basis.
TERM
INITIAL TERM: Services (including, without limitation,
employee leases) covered by this Exhibit A-3 will be provided
from the date hereof up to and including June 30, 1996, unless
extended as provided under "Extension Option" below.
EXTENSION OPTION: Marshalls shall have the option to extend
the Term for up to an additional six months following
expiration of the Initial Term, by giving written notice of
extension to Melville (specifying the period of such
extension) no later than 15 days prior to expiration of the
then applicable Term; PROVIDED that such extension shall be
reasonably required to facilitate transition of ownership of
the Business.
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EXHIBIT A-4
CERTAIN OTHER SERVICES
TRAVEL SERVICES: For the period from the date hereof up to
and including June 30, 1996 (or earlier, if Marshalls so
elects upon 30 days' written notice), Melville will provide to
Marshalls travel department services consistent with the
travel department services provided by Melville to Marshalls
as of the date hereof.
GENERAL MOTORS PARTNERSHIP PROGRAM SERVICES: It is understood
that TJX has given Melville notice of cancellation of these
services with respect to Marshalls, but Marshalls will
continue to use these services until January 31, 1996.
Marshalls will make payments relating to such program only for
the period through December 31, 1995. Any rebate, advertising
support payment or similar amount paid to or for the benefit
of Marshalls from General Motors or its Affiliates will be
paid to Melville to the extent the amount so paid was
previously advanced to Marshalls from Melville and was so
reflected in Marshalls books and records prior to the Closing;
and any such rebate, advertising support payment or similar
amount paid to or for the benefit of Marshalls from General
Motors or its Affiliates in excess of such advance amount will
be paid to Marshalls.
HEALTH, MEDICAL AND OTHER EMPLOYEE BENEFIT SERVICES: For the
period from the Closing Date up to and including April 30,
1996 (or earlier, if Marshalls so elects upon 30 days' written
notice to Melville) (the "Benefit Transition Period"),
Melville will arrange for continuation of benefits under the
respective Melville plans for the medical, dental, life and
disability benefit programs of Marshalls employees. Melville
will charge Marshalls for all claim and administration
expenses incurred by Melville related to each plan for claims
incurred during the Benefit Transition Period, plus claim
runout after the end of the Benefit Transition Period (if
Marshalls requests Melville to provide claims processing
services with respect to runout claims), such claim and
administration expenses to be determined on a basis consistent
with past practice, PROVIDED that the total charges shall not
exceed the direct costs incurred by Melville in providing such
services. Notwithstanding the foregoing. TJX or an Affiliate
or an employee benefit fund maintained by any of them may
arrange to pay HMO premiums directly during the Benefit
Transition Period.
Melville will transfer all pre-paid benefits-related funds
(e.g., dependent care spending accounts) as promptly as
practicable to the extent such funds are held at Melville.
After the Closing Date, dependent care spending account
charges for Marshalls employees will be charged directly to
Marshalls by the dependent care spending account
provider/administrator, rather than to Melville as is
currently done.
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Nothing in this Exhibit or any other provision of this
Agreement shall be construed as directly or indirectly
entitling Melville to reimbursement for any benefit-related
costs or expenses which are the responsibility of Melville
under the Stock Purchase Agreement.
ESOP AND PROFIT SHARING PLANS: Marshalls' participation in
the Melville plans will cease as of the Closing Date without
liability to Marshalls. Melville will process Marshalls
participant ESOP distributions as quickly as practicable.
Melville will perform a trust to trust transfer to a TJX plan
of the Marshalls participant 401(k) Profit Sharing account
balances in accordance with the terms of Section 9.6 of the
Stock Purchase Agreement and of a trust-to-trust transfer
agreement mutually reasonably acceptable to the parties and
consistent with such Section 9.6. All ESOP and 401(k) Profit
Sharing account balances of Marshalls employees will be 100%
vested as of the Closing Date.
MELVILLE (EUROPE) PURCHASING: Melville will cause the
Purchasing Services Agreement dated as of July 21, 1992
between Melville (Europe) Purchasing Limited ("Melville
(Europe)") and Marshalls, Inc. (the "Purchasing Agreement")
not to be terminated by Melville (Europe) before December 31,
1997 other than for cause. Notwithstanding Section 3 or any
other provision of this Agreement, the fee for this service
shall be the fees and costs set forth in the Purchasing
Agreement.
REMS TRANSITION: The following individuals (Bill Popkin and
Bill Peart) will continue to be employees of Marshalls until
December 3, 1995. During the period from Closing until
December 3, 1995 Melville will have reasonable access to such
individuals, and such individuals will allocate a reasonable
portion of their work time to development of Melville's Real
Estate Management System. Starting December 4, 1995, these
individuals will become employees of Melville. Marshalls will
have reasonable access to these individuals from December 4,
1995 until February 4, 1996. Any severance or similar costs
associated with the transfer of such employees will be for the
account of Melville.
SHARING OF BENEFITS-RELATED INFORMATION: The Providers will
cooperate in providing employee-related and plan- related data
to facilitate accomplishment of the foregoing, including, but
not limited to, any data needed to achieve a smooth
welfare-plan transition to TJX and/or its service providers at
the end of the Benefit Transition Period. Any such data will
be provided at cost to the party requesting such data.
SALES TAX PROCESSING: For the period from the Closing Date
through and including February 29, 1996, which period may be
extended for one three-month period upon written notice to
Melville 15 days prior to the expiration of the initial Term,
Melville shall perform all sales tax processing for Marshalls.
Notwithstanding Section 3 of this Agreement, the fee for such
services shall be $2,000 per month.
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UNPAID AFFILIATE BALANCES: No unpaid Affiliate balances owed
to Melville or any Affiliate of Melville (other than
Marshalls) by Marshalls for periods prior to Closing will be
outstanding as of Closing or be assumed by TJX.
TEAM II: From the Closing Date through March 31, 1996,
Melville will provide to Marshalls the services of Mary
Wadlinger to complete the Team II project; PROVIDED, HOWEVER,
that Marshalls may terminate her services within thirty (30)
days after the date hereof and in the event of such
termination shall not be required to pay the Melville's Cost
for such services through the date of termination.
PBX: Marshalls will have the right to use the PBX equipment
located at Marshalls that is owned by Melville until November
30, 1996. Marshalls will have the right to extend the period
of such usage for one one-year extension period. The cost for
such usage will be the amount, if any, of Melville's
depreciation expense related to such equipment during the term
of such usage PLUS an interest factor equal to 7% per annum on
the net book value, if greater than zero, from time to time of
such equipment during such term.
Marshalls will have the right, at its election, to purchase
from Melville any PBX equipment that is owned by Melville at a
price determined by an independent analyst mutually acceptable
to the parties.
VIDEO STORE EQUIPMENT: Marshalls will have the right to use
the video store equipment located at approximately 42
Marshalls stores (which equipment is owned by Melville) until
June 30, 1996. The cost for such usage will be the amount, if
any, of Melville's depreciation expense related to such
equipment during the term of such usage PLUS an interest
factor equal to 7% per annum on the net book value, if greater
than zero, from time to time of such equipment during such
term.
Marshalls will have the right, at its election, to purchase
the video store equipment from Melville at a price determined
by an independent analyst mutually acceptable to the parties.
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EXHIBIT A-5
OTHER CORPORATE SERVICES
DEFINITIONS
"Melville Corporate Services" means corporate services that
have customarily been provided by Melville to Marshalls to
date, excluding (i) services specifically otherwise provided
for in this Agreement, (ii) services that are not specifically
contemplated to be provided pursuant to Exhibits A-1 through
A-4 of this Agreement but are customarily provided by TJX to
its divisions, including but not limited to insurance and risk
management, treasury, legal, lease, audit, CAM audit,
industrial buying and process improvement and (iii) any
service (other than those covered by clause (i) of this
definition) that, upon Closing, TJX elects will not be
provided by Melville hereunder.
SERVICE
During the Term set forth below, Melville will provide the
Melville Corporate Services to Marshalls with respect to the
Business.
TERM
INITIAL TERM: Services covered by this Exhibit A-5 will be
provided from the date hereof up to and including June 30,
1996, unless extended as provided under "Extension Option"
below.
EXTENSION OPTION: Marshalls shall have the option to extend
the Term, with respect to any or all Services covered by this
Exhibit A-5, for successive three-month periods as provided
hereunder. Marshalls may, by written notice to Melville
(given, in the case of the first exercise of the option to
extend, two months prior to expiration of the then applicable
Term, and in the case of any subsequent extension, 15 days
prior to expiration of the then applicable Term), extend the
Term for a three-month period; PROVIDED that (i) such
extension shall be reasonably required to facilitate
transition of ownership of the Business, (ii) Melville will,
if applicable, be provided reasonable time to remove its
equipment if Marshalls declines to exercise its extension
option, and (iii) Marshalls will not, without Melville's
written consent, be entitled to more than three such
three-month extensions of the Term.
Marshalls may terminate the provision of any Melville
Corporate Service at any time after Closing by giving 30 days'
written notice of such termination to Melville.
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EXHIBIT B
Services Provided by Marshalls to Melville
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EXHIBIT B-1
LICENSES
LICENSE AGREEMENTS AND RELATED SERVICES
Marshalls will license such Marshalls office space to Melville
as is currently used by Melville for the provision of travel
services, such license to be for a term ending June 30, 1996,
at cost. Melville may cancel such license with respect to all
or part of such space at any time upon thirty days' written
notice of such cancellation.
Marshalls will license to Melville the Marshalls office space
used up to the date hereof in connection with casualty claims
management services, such license to be for a term ending June
30, 1996, at cost. Melville may cancel such license at any
time upon thirty days' written notice of such cancellation.
Marshalls will license to Melville, at cost, the office space
that is currently occupied for the purpose of the bad debt
collection and prevention services referred to in Exhibit A-3,
such license to be for a term ending at the expiration of the
term for which such services are to be provided to Marshalls
under Exhibit A-3. Melville may cancel such license at any
time upon thirty days' written notice of such cancellation.
The office space at Marshalls used to date by personnel in
Melville's internal audit function will be licensed to
Melville for a period of one year following Closing, at cost.
Such license may be terminated by Melville at any time upon 30
days' written notice of termination to Marshalls.
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EXHIBIT B-2
DATA PROCESSING SERVICES
SERVICE AND RELATED AGREEMENTS
Marshalls will provide data processing services for Thom McAn
and CDI through January 31, 1996. Marshalls will provide data
processing services to support the bad check collection and
prevention services provided for in Exhibit A-3 during the
term of such Services referred to in Exhibit A-3.
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EXHIBIT B-3
MARSHALLS CORPORATE SERVICES
DEFINITIONS
"Marshalls Corporate Services" means corporate services that
have customarily been provided by Marshalls to Melville or its
Subsidiaries to date other than the services set forth in
Exhibits B-1 and B-2 above.
SERVICE
During the Term set forth below, Marshalls will provide the
Marshalls Corporate Services to Melville and its Subsidiaries.
TERM
INITIAL TERM: Services covered by this Exhibit B-3 will be
provided from the date hereof up to and including June 30,
1996, unless extended as provided under "Extension Option"
below.
EXTENSION OPTION: Melville shall have the option to extend
the Term, with respect to any or all Services covered by this
Exhibit B-3, for successive three-month periods as provided
hereunder. Melville may, by written notice to Marshalls
(given, in the case of the first exercise of the option to
extend, two months prior to expiration of the then applicable
Term, and in the case of any subsequent extension, 15 days
prior to expiration of the then applicable Term), extend the
Term for a three-month period; PROVIDED that (i) such
extension shall be reasonably required to facilitate the
transition, and (ii) Melville will not, without Marshalls'
written consent, be entitled to more than two such three-month
extensions of the Term.
Melville may terminate the provision of any Marshalls
Corporate Service at any time after Closing by giving 30 days'
written notice of such termination to Marshalls.
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