IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

Transcription

1 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE LOUISIANA MUNICIPAL POLICE EMPLOYEES RETIREMENT SYSTEM, Derivatively on Behalf of THE TJX COMPANIES, INC., v. Plaintiff, JOSE B. ALVAREZ, ALAN M. BENNETT, DAVID A. BRANDON, BERNARD CAMMARATA, DAVID T. CHING, GARY L. CRITTENDEN, GAIL DEEGAN, DENNIS F. HIGHTOWER, MICHAEL F. HINES, AMY B. LANE, RICHARD G. LESSER, CAROL MEYROWITZ, JOHN F. O BRIEN, ROBERT F. SHAPIRO, WILLOW B. SHIRE, and FLETCHER H. WILEY, and THE TJX COMPANIES, INC., Defendants, Nominal Defendant. C.A. No VCN NOTICE OF PENDENCY AND SETTLEMENT OF SHAREHOLDER DERIVATIVE ACTION TO: ALL CURRENT SHAREHOLDERS OF THE TJX COMPANIES, INC. (THE COMPANY PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY AS IT CONTAINS IMPORTANT INFORMATION REGARDING YOUR RIGHTS. THIS NOTICE RELATES TO THE PROPOSED SETTLEMENT OF THE ABOVE-CAPTIONED SHAREHOLDER DERIVATIVE ACTION. AS EXPLAINED BELOW, THE DELAWARE COURT OF CHANCERY WILL HOLD A FINAL SETTLEMENT HEARING ON SEPTEMBER 27, 2010, TO DETERMINE WHETHER TO APPROVE THIS SETTLEMENT. YOU HAVE AN OPPORTUNITY TO BE HEARD AT THIS HEARING. PLEASE NOTE THAT THE ACTION IS A DERIVATIVE ACTION BROUGHT BY SHAREHOLDERS OF THE COMPANY FOR THE BENEFIT OF THE COMPANY, AND NO INDIVIDUAL HAS A RIGHT TO BE COMPENSATED AS A RESULT OF THE SETTLEMENT OF THE DERIVATIVE ACTION. THE FOLLOWING RECITATIONS ARE MADE BY THE PARTIES TO THE DERIVATIVE ACTION AND THE COURTS HAVE NOT RULED ON THE MERITS OF THE DERIVATIVE ACTION. I. WHY YOU ARE RECEIVING THIS NOTICE This Notice is provided pursuant to Delaware Chancery Court Rule 23.1 and by Order of the Chancery Court of the State of Delaware (the Court. The purpose of this Notice is to advise you that, subject to approval of the Court, a proposed Settlement (defined below has been reached in the action styled Louisiana Municipal Police Employees Retirement Fund v. Alvarez, Civil Action No VCN (the Derivative Action. The proposed Settlement would fully, finally and forever resolve the Derivative Action on the terms and conditions summarized in this Notice. The parties to the Derivative Action will submit a settlement agreement (the Settlement Agreement to the Court for approval.

2 A hearing in the Derivative Action (the Settlement Hearing will be held on September 27, 2010, at 2:00 p.m., before the Honorable John W. Noble in the Kent County Courthouse, 38 The Green, Dover, DE 19901, for the purpose of considering (i whether the Settlement is fair, reasonable and adequate, and in the best interests of the Company, and should be approved by the Court; (ii whether a Judgment will be entered giving final approval to the Settlement, dismissing the Derivative Action with prejudice and effectuating the releases described below; (iii whether the Court will approve Plaintiff s Counsel s application for an award of attorneys fees and expenses; and (iv such other necessary and proper matters. II. SUMMARY OF THE DERIVATIVE ACTION THE SUMMARY OF THE DERIVATIVE ACTION AND SETTLEMENT WHICH FOLLOWS HAS BEEN PREPARED BY COUNSEL FOR THE PARTIES TO THE DERIVATIVE ACTION. THE COURT HAS MADE NO FINDINGS WITH RESPECT TO SUCH MATTERS, AND THIS NOTICE IS NOT AN EXPRESSION OR STATEMENT BY THE COURT OF FINDINGS OF FACT. The Company suffered one or more unlawful and unauthorized intrusions into portions of its computer system that process and store information related to customer transactions at Company stores, and as a result, certain data relating to some customer transactions during the period from December 31, 2002 through December 18, 2006 may have been placed at risk of being stolen (such intrusion or intrusions collectively, the Intrusion ; Subsequent to the Intrusion, the Company has thoroughly investigated the Intrusion and has further strengthened the security of its computer security system; On February 26, 2007, Arkansas Carpenters Pension Fund ( ACPF, through its counsel, sent a letter to the Chairman of the Company s Board of Directors (the Board demanding to inspect and copy certain Company books and records that concerned the Intrusion; On March 19, 2007, ACPF, through its counsel, filed Arkansas Carpenters Pension Fund v. The TJX Companies, Inc., C.A. No VCN, in the Court of Chancery of the State of Delaware (the Section 220 Action seeking to inspect certain Company books and records related to the Intrusion on behalf of the Company, a Delaware corporation; The Company agreed to allow ACPF to inspect certain of those books and records as agreed between the parties to the Section 220 Action; The Company has produced documents responsive to ACPF s document requests in the Section 220 Action in accordance with the Stipulation and Order for the Production and Exchange of Confidential Information ( Confidentiality Order, which the Court granted on July 14, 2008; Louisiana Municipal Employees Retirement Fund ( Plaintiff, in accordance with the terms of the Confidentiality Order, reviewed the documents produced by the Company in the Section 220 Action; Plaintiff determined to file the Derivative Action against the Company and certain of its current and former directors and officers; Counsel for ACPF and Plaintiff conducted an investigation relating to the claims and the underlying events and transactions alleged in the Section 220 Action and the Derivative Action (collectively, the Actions that has included, among other things, research of the applicable law with respect to the claims asserted in the Actions and the potential defenses thereto and a review and analysis of documents produced by the Company, a deposition of an officer of the Company, and evidence developed as a result of counsel for ACPF and Plaintiff s own investigation; Counsel for ACPF and Plaintiff and Defendants Counsel engaged in arm s-length negotiations concerning a global settlement of the Actions and, on May 30, 2008, reached an agreement in principle, set forth in a Memorandum of Understanding ( MOU, providing for the settlement of the Actions on the terms and subject to the conditions stated in the Settlement Agreement (the Settlement ; 2

3 Plaintiff has provided Defendants with its written comments to the report provided under Section 2.4 of the Settlement Agreement ( Plaintiff s Comments ; The Defendants deny any and all allegations of wrongdoing, fault, liability or damage and deny that they or any of the Company s other officers engaged in, committed or aided or abetted the commission of any wrongdoing or violation of law or breach of duty, deny that the Company or any of its stockholders suffered any damage whatsoever, deny that they acted improperly in any way, believe that they acted properly at all times, maintain that they diligently and scrupulously complied with their fiduciary duties, and maintain that they have committed no disclosure violations or any other breach of duty whatsoever in connection with the Intrusion; but the Defendants wish to settle all disputes on the terms and conditions stated in the Settlement Agreement solely to eliminate the uncertainties, burden and expense of further protracted litigation and to put the claims to be released hereby to rest finally and forever; ACPF and Plaintiff believe that the claims asserted in the Actions have merit, but have agreed to settle the claims raised in the Actions pursuant to the terms and provisions of the Settlement Agreement, after considering (a the substantial benefits that the Company and its shareholders will receive from the Settlement, (b the attendant risks, uncertainties, costs, and delays of further litigation, and (c the desirability of permitting the Settlement to be consummated as provided by the terms of this Settlement Agreement; The Parties have agreed that Settlement of the Actions as contemplated by the Settlement Agreement would be fair, reasonable and adequate and in the best interests of the Company and its stockholders; TO DATE, NO COURT HAS RULED ON THE MERITS OF PLAINTIFF S CLAIMS OR DEFENDANTS DEFENSES. THIS NOTICE DOES NOT, AND IS NOT INTENDED TO, IMPLY HOW THE COURTS WOULD RULE WITH RESPECT TO THE CLAIMS ASSERTED IN THE ACTIONS. III. TERMS OF THE PROPOSED SETTLEMENT The principal terms and conditions of the proposed Settlement are set forth in the Settlement Agreement on file with the Court. The following description of the terms of the proposed Settlement is only a summary. Unless otherwise herein defined, all capitalized terms used herein shall have the same meanings as set forth in the Settlement Agreement. By entering into the Settlement Agreement, the Company is resolving the derivative litigation related to the Intrusion. Accordingly, the consideration set forth below constitutes consideration for the Settlement of the Derivative Action and is in exchange for the releases and dismissals described below. Furthermore, the Company, without admitting any wrongdoing, acknowledges that the filing, prosecution, and Settlement of the Actions were substantial factors underlying the decision to provide and/or continue the benefits summarized below. Plaintiff and the Company conducted extensive, arm s-length negotiations regarding various corporate governance issues. As a result of the negotiations and the Settlement Agreement, the Company agreed to maintain the toll free number to handle questions about card cancellations, credit theft, etc. for an additional period through and including December 31, Additionally as a result of the negotiations and the Settlement Agreement, the Company confirmed that the Audit Committee of the Board of Directors of the Company will undertake as part of its responsibilities on behalf of the Board of Directors through at least December 31, 2015 to oversee security of the Company s computer system with respect to customer data, to make reports on such security to the full Board of Directors as it deems necessary (having already done so at least once a year during the years 2008 and 2009, and to assume oversight responsibility on behalf of the Board of Directors for compliance by the Company with any related settlement agreement or any agreements with or orders of any regulatory authority with respect to the Intrusion, and that the Company will on or before December 31, 2010 update its Associate Code of Conduct to include any recommendations of the Company s Chief Privacy Officer and the Audit Committee as a result of their oversight. 3

4 Finally, Plaintiff s Counsel was provided secure access to the same report made available to Plaintiffs in the Retail Security Breach Litigation, as described in Section 2.5 of the Retail Security Breach Settlement Agreement. Plaintiff s Counsel provided suggestions to the Company to prevent future intrusions based on such report that were limited to issues of corporate governance. Upon approval of the Settlement the Board of Directors will consider those suggestions at a regularly scheduled Board Meeting. IV. WHAT CLAIMS THE SETTLEMENTS WILL RELEASE If the Court approves the Settlement, the following releases will occur: Upon the Effective Date (as defined below of the Settlement Agreement, each of the Releasing Persons (as defined below, and each of such Releasing Person s respective heirs, executors, administrators, estates, predecessors in interest, predecessors, successors in interest, successors, and assigns, shall fully, finally, and forever release, relinquish, and discharge the Released Claims (as defined below, including, without limitation: (a all Released Claims against the Released Persons (as defined below, and (b any and all claims, including Unknown Claims (as defined below, arising out of the Settlement or resolution of the Actions against the Released Persons (except for claims by the Parties to enforce the Settlement Agreement. Upon the Effective Date (as defined below of the Settlement, each of the Released Persons shall be deemed to have, and by operation of the Judgment in the Derivative Action shall have, fully, completely, finally, and forever released, relinquished and discharged ACPF, Plaintiff and Plaintiff s Counsel from all claims, including Unknown Claims, arising out of or relating to, the institution, prosecution, settlement, or resolution of the Actions (except for claims by the Parties to enforce the Settlement Agreement. Defendants means the Individual Defendants and the Company as the Nominal Defendant, collectively The Effective Date shall be the first business day following the date the Judgment, becomes Final (as defined below. Final means final and unappealable, whether by affirmance on or exhaustion of any possible appeal or review, writ of certiorari, lapse of time or otherwise; provided, however, that any proceeding, order, or appeal pertaining solely to an application for attorneys fees, costs, or expenses, shall not in any way delay or preclude a Judgment from becoming Final. Individual Defendants means Jose B. Alvarez, Alan M. Bennett, Bernard Cammarata, David T. Ching, David A. Brandon, Gary L. Crittenden, Gail Deegan, Dennis F. Hightower, Michael F. Hines, Amy B. Lane, Richard G. Lesser, Carol Meyrowitz, John F. O Brien, Robert F. Shapiro, Willow B. Shire, and Fletcher H. Wiley. Parties means the Defendants, ACPF and Plaintiff, collectively. Related Persons means (1 any of the Defendants respective past, present or future direct or indirect parent entities, controlling persons, associates, investment advisers, general partners, managing members, affiliates, subsidiaries, controlled entities or families, and (2 each and all of the respective past, present or future direct or indirect officers, directors, stockholders, principals, managing directors, representatives, employees, attorneys, fiduciaries, financial advisers, investment advisers, insurers, co-insurers, reinsurers, consultants, accountants, investment bankers, commercial bankers, underwriters, lenders, brokers, dealers, advisers, agents, heirs, beneficiaries, distributees, executors, trustees, trusts, foundations, partners, partnerships, general and limited partners and partnerships, corporations, divisions, limited liability companies, managing members, managing agents, members, member firms, associated entities, joint ventures, family members, spouses, personal and legal representatives, estates, administrators, predecessors, successors and assigns, of any of the Defendants and of each and all of the foregoing. Released Claims shall collectively mean any and all manner of claims, demands, rights, actions, potential actions, causes of action, liabilities, damages, losses, obligations, judgments, duties, suits, agreements, costs, expenses, debts, interest, penalties, sanctions, fees, attorneys fees, judgments, decrees, matters, issues, and controversies of any kind, nature or description whatsoever, whether known or unknown, 4

5 contingent or absolute, suspected or unsuspected, foreseen or unforeseen, disclosed or undisclosed, liquidated or unliquidated, matured or unmatured, fixed or contingent, accrued or unaccrued, apparent or unapparent, including Unknown Claims (defined below, that are, have been, could have been, could now be or in the future can or might be asserted in the Derivative Action, or the Section 220 Action, or in any court, tribunal or proceeding (including, but not limited to, any stockholder derivative claims for, based upon or arising out of any actual or alleged breach of fiduciary or other duty, negligence, fraud or misrepresentation, or any other claims based upon or arising under any federal, state, local, foreign, statutory, regulatory, common or other law or rule, which shall be deemed to include but is not limited to any federal or state securities, antitrust, or consumer protection laws, whether or not within the exclusive jurisdiction of the federal courts, by or on behalf of Plaintiff or ACPF or derivatively by any of the Releasing Persons, whether legal, equitable, or any other type, against any of the Released Persons, which have arisen, could have arisen, now arise, hereafter may arise out of, are based upon, relate in any manner to, or involve, directly or indirectly, any of the acts, events, facts, matters, transactions, occurrences, conduct, statements, representations, misrepresentations, omissions, allegations, practices, or claims, or any other matters, things or causes whatsoever, or any series thereof, that were, could or might have been, or in the future could or might be alleged, asserted, set forth, claimed, embraced, involved or referred to in, directly or indirectly, the Derivative Action or the Section 220 Action or that otherwise relate to any of the allegations set forth in the complaints filed in the respective Actions or the subject matter of the Derivative Action or the Section 220 Action (including, but not limited to, any and all claims which are based upon, arise out of, relate in any way to, or involve, directly or indirectly, (i the Intrusion, (ii any actions, deliberations, decisions or negotiations or failure to act, deliberate, decide or negotiate in connection with the Intrusion, including but not limited to the process of deliberation by the Company and any of its officers, directors or advisors, (iii any disclosures, public filings, periodic reports, press releases, proxy statements or other statements issued, made available or filed relating, directly or indirectly, to the Intrusion, including but not limited to claims under the federal securities laws within the exclusive jurisdiction of the federal courts, (iv any actions or investments with respect to (including, but not limited to, purchases, repurchases, sales, exercises of rights with respect to and decisions to hold securities issued by the Company or its respective affiliates, (v the fiduciary obligations of the Released Persons in connection with the Intrusion, (vi any fees, expenses, costs or penalties incurred in prosecuting, defending, or settling any actual or threatened investigation, action, litigation or proceeding in connection with the Intrusion, including but not limited to the Actions, (vii any losses, damages, fees, expenses, costs or penalties suffered, incurred or paid, directly or indirectly, in connection with the Intrusion, (viii any failure to detect, prevent or take action in response to the Intrusion or (ix the fiduciary or disclosure obligations of the Company, any of its affiliates, or any other Released Person in connection with any of the foregoing, provided however, that the Released Claims shall not include the right of the Parties to enforce the terms of the Settlement Agreement or the Settlement, including Plaintiff s Counsel s application for an award of fees and expenses. Released Persons means the Defendants and the Related Persons. Releasing Persons means Plaintiff, ACPF and any other past or present stockholder of the Company, and any of their respective heirs, executors, administrators, estates, predecessors in interest, predecessors, successors in interest, successors or assigns (or any person claiming by, through, in the right of or on behalf of them or the Company by subrogation, assignment or otherwise. The releases contemplated by the Settlement Agreement extend to claims that any of the Releasing Persons do not know or suspect exist in his, her, or its favor at the time of the release of the Released Claims, which if known might have affected the decision to enter into this Settlement (the Unknown Claims. In granting the releases herein, the Parties have acknowledged that they have read and understand California Civil Code Section 1542, which reads as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. 5

6 The Parties have stipulated and agreed that upon the Effective Date, ACPF and Plaintiff and each of the other Releasing Persons shall be deemed to have, and by operation of the Judgment shall have, expressly waived, relinquished and released all provisions, rights and benefits conferred by or under California Civil Code Section 1542 or any law of the United States or any state of the United States or territory of the United States, or principle of common law, which is similar, comparable or equivalent to California Civil Code Section The Parties acknowledge that the foregoing waiver, relinquishment and release and the inclusion of Unknown Claims in the definition of Released Claims were separately bargained for and key elements of the Settlement and were relied upon by each and all of the Defendants in entering into the Settlement Agreement. ACPF and Plaintiff acknowledge, and each of the other Releasing Persons by operation of law shall be deemed to have acknowledged, that they may discover facts different from, or in addition to, those which they now know or believe to be true with respect to the Released Claims, and in this event agree, or by operation of law shall be deemed to have agreed, that the releases contained in the Settlement Agreement shall be and remain effective in all respects and that it is the intention of the Releasing Persons to completely, fully, finally and forever extinguish any and all Released Claims, known or unknown, suspected or unsuspected, which now exist, or heretofore existed, or may hereafter exist, and without regard to the subsequent discovery of additional or different facts. V. PLAINTIFF S COUNSEL S ATTORNEYS FEES Plaintiff s Counsel will seek approval of their application for attorneys fees and expenses at the Settlement Hearing, with any such fees and expenses awarded by the Court to be paid by the Company. The Company has agreed not to oppose any application by Plaintiff s Counsel not to exceed $595,000 in attorneys fees and expenses. To date, Plaintiff s Counsel have not received any payment of fees for their services in prosecuting the Derivative Action, nor have they been reimbursed for their out-of-pocket expenses. The award of attorneys fees and expenses would compensate Plaintiff s Counsel for their efforts in achieving the benefits described in this Notice, and for the risks they undertook to represent the Plaintiff on a fully-contingent basis. VI. RIGHT TO BE HEARD AT SETTLEMENT HEARINGS The Settlement Hearing will occur in the Court before the Honorable John W. Noble of the Delaware Court of Chancery, on September 27, 2010, at 2:00 p.m., at the Kent County Courthouse, 38 The Green, Dover, DE At the Settlement Hearing, the Court will consider whether to grant final approval to the Settlement and Plaintiff s Counsel s application for an award of attorneys fees and expenses. The Court may adjourn and reconvene the Settlement Hearing by oral announcement at such hearing or at any time without notice of any kind to anyone other than the parties to the Derivative Action. The Court may approve the Settlement with or without modifications, enter a Judgment, and order the payment of attorneys fees and expenses without further notice of any kind. CURRENT COMPANY SHAREHOLDERS WHO HAVE NO OBJECTION TO THE PROPOSED SETTLEMENT NEED NOT TAKE ANY FURTHER ACTION. If you are a current Company shareholder, you have the right to object to any aspect of the Settlement and may, but are not required to, appear in person or through counsel at the Settlement Hearing to object to the terms of the proposed Settlement or Plaintiff s Counsel s application for an award of attorneys fees and expenses, or otherwise present evidence or arguments that may be proper and relevant. IF YOU CHOOSE TO OBJECT, YOU MUST FOLLOW THE FOLLOWING PROCEDURES or you shall not be heard, and no papers, briefs, or other documents by you shall be received and considered by the Court. No later than ten (10 business days prior to the Settlement Hearing, you must file with the Register in Chancery the following: (a a written notice of objection with your name, address and telephone number, along with a representation as to whether you intend to appear at the Settlement Hearing; (b competent evidence that you currently own shares of Company stock; 6

7 (c a statement of your objections to any matters before the Court, the grounds therefore and the reasons for your desiring to appear and be heard, as well as all documents or writings you desire the Court to consider; and (d the identities of any witnesses you plan on calling at the Settlement Hearing, along with a summary of their likely testimony. The Register in Chancery s address is: Register in Chancery Kent County Courthouse 38 The Green Dover, DE In addition, on or before ten (10 business days prior to the Settlement Hearing, you must also serve the same documents by hand, first class mail or overnight delivery upon all of the following counsel of record: Joseph Sternberg, Esq. Labaton Sucharow LLP 140 Broadway New York, NY Kevin G. Abrams, Esq. Abrams & Bayliss LLP 20 Montchanin Road, Suite 200 Wilmington, DE Brian D. Long, Esq. Rigrodsky & Long P.A. 919 North Market Street, Suite 980 Wilmington, DE John D. Donovan, Jr., Esq. Ropes and Gray LLP One International Place Boston, MA Plaintiff s Counsel Defendants Counsel If you follow the above procedures, even if you do not appear at the Settlement Hearing, the Court will consider your written submission. Unless the Court otherwise directs, you shall not be entitled to object to the approval of the Settlement, to any Order or Judgment entered thereon, to the Plaintiff s Counsel s application for an award of attorneys fees and expenses, or to otherwise be heard, except by serving and filing a written objection and supporting papers and documents as prescribed above. If you fail to object in the manner and within the time prescribed above you shall be deemed to have waived any right to object (including the right to appeal and shall forever be barred from raising such objection(s in this or any other action or proceeding. VII. FURTHER INFORMATION This Notice contains only a summary of the Derivative Action and the terms of the Settlement. For additional details regarding the Derivative Action or Settlement, you may inspect the case files, including select pleadings, the Settlement Agreement, and other papers and documents filed with the Court by appearing in person, during regular business hours, at the Kent County Courthouse, 38 The Green, Dover, DE Any other inquiries should be addressed in the first instance as follows: Joseph Sternberg, Esq. Labaton Sucharow LLP 140 Broadway New York, NY Brian D. Long Rigrodsky & Long, P.A. 919 North Market Street Suite 980 Wilmington, DE PLEASE DO NOT CONTACT THE COURT REGARDING THIS NOTICE. 7

8 VIII. NOTICE TO BANKS, BROKERS AND OTHER NOMINEES Any banks, brokerage firms, institutions, and other persons who are nominees who hold Common Stock of the Company for the beneficial interest of other persons, within ten (10 days of receipt of this Notice, are requested to either (a provide the Company with the names and addresses of such beneficial holders, or (b forward a copy of this Notice to each such beneficial holder and provide the Company with written confirmation that the Notice has been so forwarded. Additional copies of the Notice may be obtained from the Company for forwarding to such beneficial owners. All such correspondence should be addressed to the Company as follows: The TJX Companies, Inc. c/o John Ferguson Morrow & Co., LLC 470 West Avenue Stamford, CT DATED: July 15, 2010 BY ORDER OF THE DELAWARE COURT OF CHANCERY /s/ Kenneth J. Lagowski Register in Chancery 8