<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended July 26, 1997
Commission file number 1-13143
BJ'S WHOLESALE CLUB, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 04-3360747
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Mercer Road
Natick, Massachusetts 01760
(Address of principal executive offices) (Zip Code)
(508) 651-7400
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
The number of shares of the Registrant's common stock outstanding as of August
23, 1997: 37,460,248
<PAGE>
PART I. FINANCIAL INFORMATION
BJ'S WHOLESALE CLUB, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------------------
July 26, July 27,
1997 1996
------------ ------------
(In Thousands Except Per Share Amounts)
<S> <C> <C>
Net sales $ 773,682 $ 720,022
Membership fees and other 11,773 13,666
------------ ------------
Total revenues 785,455 733,688
------------ ------------
Cost of sales, including buying and occupancy costs 703,275 657,235
Selling, general and administrative expenses 54,222 51,587
------------ ------------
Operating income 27,958 24,866
Interest on debt and capital leases (net) 3,600 3,957
------------ ------------
Income before income taxes 24,358 20,909
Provision for income taxes 9,403 8,223
------------ ------------
Net income $ 14,955 $ 12,686
============ ============
Net income per common share: $ 0.40 $ *
Primary and fully diluted ============ ============
Number of common shares for earnings per share computation:
Primary and fully diluted 37,485 *
</TABLE>
* In accordance with SEC rules, historical earnings per share for periods
prior to the public issuance of common stock are not presented.
The accompanying notes are an integral part of the financial statements.
<PAGE>
BJ'S WHOLESALE CLUB, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
---------------------------------
July 26, July 27,
1997 1996
------------ -----------
(In Thousands Except Per Share Amounts)
<S> <C> <C>
Net sales $ 1,437,940 $ 1,328,648
Membership fees and other 26,462 27,428
------------ -----------
Total revenues 1,464,402 1,356,076
------------ -----------
Cost of sales, including buying and occupancy costs 1,315,474 1,219,544
Selling, general and administrative expenses 105,596 98,602
------------ -----------
Operating income 43,332 37,930
Interest on debt and capital leases (net) 7,482 8,211
------------ -----------
Income before income taxes 35,850 29,719
Provision for income taxes 13,838 11,650
------------ -----------
Net income $ 22,012 $ 18,069
============ ===========
Net income per common share: $ 0.59 $ *
Primary and fully diluted ============ ===========
Number of common shares for earnings per share computation:
Primary and fully diluted 37,485 *
</TABLE>
* In accordance with SEC rules, historical earnings per share for periods
prior to the public issuance of common stock are not presented.
The accompanying notes are an integral part of the financial statements.
<PAGE>
BJ'S WHOLESALE CLUB, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
July 26, January 25, July 27,
1997 1997 1996
--------------- -------------- ---------------
(Dollars In Thousands)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,000 $ - $ -
Accounts receivable 24,981 34,006 27,456
Merchandise inventories 333,324 295,216 298,984
Current deferred income taxes 6,605 6,549 8,221
Prepaid expenses 8,178 6,091 6,511
--------------- -------------- ---------------
Total current assets 378,088 341,862 341,172
--------------- -------------- ---------------
Property at cost:
Land and buildings 274,533 265,971 254,785
Leasehold costs and improvements 39,923 34,764 33,595
Furniture, fixtures and equipment 196,980 186,696 176,830
--------------- -------------- ---------------
511,436 487,431 465,210
Less accumulated depreciation and amortization 128,034 106,821 97,846
--------------- -------------- ---------------
383,402 380,610 367,364
--------------- -------------- ---------------
Property under capital leases 6,219 6,219 3,871
Less accumulated amortization 1,701 1,618 2,031
--------------- -------------- ---------------
4,518 4,601 1,840
--------------- -------------- ---------------
Other assets 10,553 10,138 8,213
--------------- -------------- ---------------
Total assets $ 776,561 $ 737,211 $ 718,589
=============== ============== ===============
LIABILITIES
Current liabilities:
Accounts payable $ 211,678 $ 200,024 $ 184,200
Accrued expenses and other current liabilities 57,288 66,302 58,149
Accrued federal and state income taxes 1,485 12,431 4,436
Obligations under capital leases due within one year 177 163 180
--------------- -------------- ---------------
Total current liabilities 270,628 278,920 246,965
--------------- -------------- ---------------
Long-term debt 72,000 - -
Obligations under capital leases, less portion
due within one year 2,513 2,592 2,667
Other noncurrent liabilities 30,676 28,466 30,239
Deferred income taxes 1,706 3,545 2,762
Loans and advances from Waban Inc. - 148,081 195,904
STOCKHOLDERS' EQUITY
Common stock, par value $.01, authorized 180,000,000
shares, issued and outstanding 37,484,937 shares 375 375 375
Additional paid-in capital 101,419 - -
Retained earnings 297,244 275,232 239,677
--------------- -------------- ---------------
Total stockholders' equity 399,038 275,607 240,052
--------------- -------------- ---------------
Total liabilities and stockholders' equity $ 776,561 $ 737,211 $ 718,589
=============== ============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
BJ'S WHOLESALE CLUB, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
-------------------------------------
July 26, July 27,
1997 1996
------------- -------------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 22,012 $ 18,069
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property 18,300 16,202
Loss on property disposals 226 88
Deferred income taxes (1,895) (1,002)
Increase (decrease) in cash
due to changes in:
Accounts receivable 9,025 3,486
Merchandise inventories (38,108) (27,546)
Prepaid expenses (2,087) 221
Other assets (415) 193
Accounts payable 11,654 15,085
Accrued expenses (6,980) (134)
Accrued income taxes (10,946) (5,666)
Other noncurrent liabilities 2,210 4,205
------------- -------------
Net cash provided by operating activities 2,996 23,201
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (23,544) (37,244)
Property disposals 275 8
------------- -------------
Net cash used in investing activities (23,269) (37,236)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of capital lease obligations (65) (139)
Borrowings of long-term debt 72,000 -
Increase (decrease) in loans and advances from Waban Inc. (46,662) 14,174
------------- -------------
Net cash provided by financing activities 25,273 14,035
------------- -------------
Net increase in cash and cash equivalents 5,000 -
Cash and cash equivalents at beginning of year - -
------------- -------------
Cash and cash equivalents at end of period $ 5,000 $ -
============= =============
Supplemental cash flow information:
Interest paid $ 7,500 $ 8,231
Income taxes paid 26,679 18,318
Noncash financing and investing activities:
Contribution to capital by Waban Inc. 101,419 -
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
BJ'S WHOLESALE CLUB, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands Except Per Share Amounts)
----------------------------------------------------------------
Common Additional Total
Stock Paid-in Retained Stockholders'
Par Value $.01 Capital Earnings Equity
------------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Balance, January 27, 1996 $ 375 $ - $ 221,608 $ 221,983
Net income - - 18,069 18,069
--------------- ------------- ------------ ------------
Balance, July 27, 1996 $ 375 $ - $ 239,677 $ 240,052
=============== ============= ============ ============
Balance, January 25, 1997 $ 375 $ - $ 275,232 $ 275,607
Net income - - 22,012 22,012
Contribution to capital by Waban Inc. - 101,419 - 101,419
--------------- ------------- ------------ ------------
Balance, July 26, 1997 $ 375 $ 101,419 $ 297,244 $ 399,038
=============== ============= ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BJ's Wholesale Club, Inc. ("BJI" or the "Company"), which previously had
been a wholly-owned subsidiary of Waban Inc. ("Waban"), became a separate public
entity on July 28, 1997, when Waban distributed to its stockholders on a pro
rata basis all of the Company's outstanding common stock (the "Distribution").
The financial statements of the Company include the financial statements of
those subsidiaries of Waban which, prior to the Distribution, operated Waban's
BJ's Wholesale Club Division.
As of July 26, 1997, Waban transferred all of the assets and liabilities of its
BJ's Wholesale Club Division to the Company and contributed all of the Company's
intercompany debt of $101.4 million to the Company's equity.
2. The results for the first six months are not necessarily indicative of the
results for the full fiscal year because, among other things, the Company's
business, in common with the business of retailers generally, is subject to
seasonal influences. The Company's sales and operating income have typically
been strongest in the Christmas holiday season and lowest in the first quarter
of each fiscal year.
3. The interim financial statements are unaudited and reflect all normal
recurring adjustments considered necessary by the Company for a fair
presentation of its financial statements in accordance with generally accepted
accounting principles.
4. These interim financial statements should be read in conjunction with the
combined financial statements and related notes for the fiscal year ended
January 25, 1997 contained in the Company's Registration Statement on Form S-1
(Registration No. 333-25511) filed with the Securities and Exchange Commission.
5. Interest on debt and capital leases (net) included interest on intercompany
indebtedness to Waban of $3,742,000 and $7,642,000 in the quarter and six months
ended July 26, 1997, respectively, and $4,263,000 and $8,689,000 in the quarter
and six months ended July 27, 1996, respectively.
Selling, general and administrative expenses ("SG&A") included certain
allocations of overhead incurred by Waban that supported the Company's business.
These allocated expenses totalled $1,049,000 and $2,246,000 in the quarter and
six months ended July 26, 1997, respectively, and $1,020,000 and $1,992,000 in
the quarter and six months ended July 27, 1996, respectively.
6. Under Waban's cash management system, checks issued by its divisions but not
yet presented to banks resulted in overdraft balances for accounting purposes in
certain periods. The Company had overdraft balances of $2.3 million and $4.4
million as of January 25, 1997 and July 27, 1996, respectively. These balances
were included in accrued expenses and other current liabilities on the balance
sheet.
The Company's long-term debt as of July 26, 1997 included an allocation of $72
million of borrowings under Waban's bank credit line, which was repaid primarily
with borrowings under
<PAGE>
the Company's new bank credit agreement.
7. The historical capitalization of the Company has been retroactively restated
to reflect the issuance of 37,484,937 shares of common stock, the number of
shares of the Company's common stock distributed to Waban's stockholders on July
28, 1997. Earnings per share calculations for the quarterly and year-to-date
periods ended July 26, 1997 are based on 37,484,937 shares outstanding.
8. Waban's Board of Directors approved the termination of the Waban Inc.
Retirement Plan effective July 26, 1997. However, in accordance with generally
accepted accounting principles, the additional cost to terminate the Plan is not
recognized until the Plan termination is settled. Prior to the Distribution,
Waban Inc. contributed to the Plan amounts sufficient to make the Plan's assets
equal to its estimated termination liabilities, based on actuarial projections.
The Company's share of these amounts is included in prepaid expenses on its
balance sheet. BJI expects to record a post-tax charge applicable to its Plan
participants of approximately $.5 million in the fourth quarter of the current
fiscal year or in the first quarter of the following fiscal year, when the Plan
termination is settled.
9. The Company operated 82 warehouse clubs on July 26, 1997 versus 77 warehouse
clubs on July 27, 1996.
10. Certain amounts in the prior year's financial statements have been
reclassified for comparative purposes.
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Thirteen Weeks (Second Quarter) and Twenty-Six Weeks (Six Months) Ended July 26,
1997 versus Thirteen and Twenty-Six Weeks Ended July 27, 1996.
Forward-Looking Information
- ---------------------------
This report contains "forward-looking statements," including statements
regarding expected expenses to be incurred by BJI as a stand-alone entity,
planned capital expenditures, membership fees to be realized in the second half
of the year, certain charges expected to be incurred in connection with the
termination of the Waban Inc. Retirement Plan and other information with respect
to the Company's plans and strategies. Any statements contained herein that are
not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects" and similar expressions are intended to identify
forward-looking statements. There are a number of important factors that could
cause actual events or the Company's actual results to differ materially from
those indicated by such forward-looking statements. These factors include,
without limitation, the success of the Company's management team in
transitioning the Company to its status as a stand-alone entity, general
economic conditions prevailing in the Company's markets, competition and the
other factors included in the Company's Registration Statement on Form S-1, File
No. 333-25511 under the heading "Risk Factors."
Results of Operations
- ---------------------
Net sales for the second quarter ended July 26, 1997 rose 7.5% to $774 million
from $720 million reported in last year's second quarter. Sales for the first
half of the year totaled $1.4 billion, 8.2% higher than last year's comparable
period. These increases were due to the opening of new stores and to comparable
store sales increases of 1.5% in the second quarter and 1.9% year to date.
Total revenues in the second quarter included membership fees of $9.8 million
versus $11.6 million in last year's second quarter. Year-to-date membership fees
were $22.8 million versus $23.7 million last year. The decrease in membership
fees in this year's second quarter resulted from differences in the trial
membership programs offered in both years. The Company believes that a
significant amount of the second quarter's shortfall represents membership fees
that will be realized in the second half of this year.
Cost of sales (including buying and occupancy costs) was 90.9% of net sales in
the second quarter versus 91.3% in the comparable period last year. For the
first six months, the cost of sales percentage was 91.5% this year versus
91.8% last year. A favorable merchandise mix resulted in higher gross
merchandise margins this year.
Selling, general and administrative ("SG&A") expenses were 7.0% of net sales in
the second
<PAGE>
quarter versus 7.2% in last year's comparable period. Year-to-date SG&A expenses
were 7.3% of net sales this year versus 7.4% last year. These decreases were due
mainly to effective control over operating expenses, including leverage from
operating a larger number of warehouse clubs.
The components of net interest expense were as follows (in thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
-------------------- ----------------------
July 26, July 27, July 26, July 27,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest expense on debt (net) $ 3,529 $3,881 $7,340 $8,058
Interest on capital leases 71 76 142 153
------ ----- ----- -----
Interest on debt and capital leases (net) $ 3,600 $3,957 $7,482 $8,211
======= ====== ====== ======
</TABLE>
Interest expense on debt was net of capitalized interest of $204,000 in this
year's second quarter and $284,000 year-to-date. Last year's capitalized
interest was $371,000 in the second quarter and $611,000 year-to-date.
The year-to-date provision rate for income taxes was 38.6% this year versus
39.2% last year. This decrease was attributable to a lower state income tax
rate.
Net income for the second quarter rose 17.9% to $15.0 million, or $.40 per
share, from $12.7 million in the second quarter of last year. For the first six
months, net income rose 21.8% to $22.0 million, or $.59 per share, from $18.1
million last year.
BJ's Wholesale Club, Inc. commenced operations as a separate entity following
its July 28, 1997 spin-off from Waban Inc. Therefore, reported financial results
for the second quarter and first half of 1997 reflect BJ's historical position
as a division of Waban Inc. and, as such, may not be indicative of future
performance. As a publicly owned company, BJI is expected to incur SG&A costs of
approximately $500,000 per quarter in addition to the amounts shown in the
historical financial statements, which represent an allocation of Waban Inc.'s
SG&A expenses. BJI's interest expense, however, is expected to be less than that
presented in the historical statements, as interest on intercompany borrowings
at an annual rate of 10% will be replaced by interest on bank borrowings at
approximately 6.5% per year. The level of debt is also expected to be lower than
BJ's historical debt due to the contribution to capital of $101.4 million of
BJI's intercompany debt in connection with the spin-off. Restating historical
results for these changes, and reflecting common stock equivalents expected to
be included in earnings per share calculations, second quarter net income would
have been $16.1 million, or $.42 per share, versus $14.0 million, or $.37 per
share, last year. First half net income would have been $24.3 million, or $.64
per share, compared to last year's $20.6 million, or $.54 per share. (See
"Analytical and Historical Financial Data" below for additional information.)
Waban's Board of Directors approved the termination of the Waban Inc. Retirement
Plan effective July 26, 1997. However, in accordance with generally accepted
accounting principles, the additional cost to terminate the Plan is not
recognized until the Plan termination is settled. Prior to the Distribution,
Waban contributed to the Plan amounts sufficient to make the Plan's assets equal
to its estimated termination liabilities, based on actuarial projections. The
<PAGE>
Company's share of these amounts is included in prepaid expenses on its balance
sheet. BJI expects to record a post-tax charge applicable to its Plan
participants of approximately $.5 million in the fourth quarter of the current
fiscal year or in the first quarter of the following fiscal year, when the Plan
termination is settled.
The Company's business, in common with the business of retailers generally, is
subject to seasonal influences. The Company's sales and operating income have
typically been strongest in the Christmas holiday season and lowest in the first
quarter of each fiscal year.
Liquidity and Capital Resources
- -------------------------------
Net cash provided by net income plus depreciation in this year's first six
months was $40.3 million versus $34.3 million in last year's comparable period.
A total of $3.0 million was provided by operating activities in the first half
of this year; $23.2 million was provided by operating activities in the same
period last year. This variance was attributable mainly to a higher accounts
payable-to-inventory ratio at the beginning of this year as compared to the
beginning of last year.
Year-to-date cash expended for property additions was $23.5 million this year
versus $37.2 million in the same period last year. The Company opened two new
clubs during the first half of this fiscal year and an additional club shortly
after the end of the half. Last year the Company opened six new clubs in the
first half. One club in the Hartford, Connecticut market was closed in the first
quarter of this year.
The Company's capital expenditures are expected to total approximately $75
million in the current fiscal year, based on opening approximately eight or nine
new clubs. The Company has announced its plans to enter the Cleveland, Ohio
market by opening three or four new clubs in 1998. The timing of actual club
openings and the amount of related expenditures could vary from these estimates
due, among other things, to the complexity of the real estate development
process.
To date, the Company's operations and expansion have been financed through loans
advanced by Waban as needed. In July 1997, the Company entered into a $200
million unsecured credit agreement with a group of banks which expires July 9,
2002. The agreement includes a $50 million sub-facility for letters of credit.
The Company is required to pay an annual facility fee which is currently 0.15%
of the total commitment. Interest on borrowings is payable at the Company's
option either at (a) the Eurodollar rate plus a margin which is currently 0.30%,
(b) the agent bank's prime rate or (c) at a rate determined by competitive
bidding. The facility fee and Eurodollar margin are both subject to change based
upon the Company's fixed charge coverage ratio. The agreement contains covenants
which, among other things, include minimum net worth and fixed charge coverage
requirements and a maximum funded debt-to-capital limitation, and which prohibit
the payment of cash dividends. The Company's long-term debt as of July 26, 1997
included an allocation of $72 million of borrowings under Waban's bank credit
line, which was repaid primarily with borrowings under the Company's new bank
credit agreement.
The Company also maintains a separate credit line in the amount of $30 million
for letters of credit. Subsequent to the end of the quarter, the Company
arranged an additional $20 million
<PAGE>
uncommitted credit line for short-term borrowings.
Cash and cash equivalents totaled $5.0 million as of July 26, 1997. The Company
expects that its current resources, together with anticipated cash flow from
operations, will be sufficient to finance its operations through January 30,
1999. However, the Company may from time to time seek to obtain additional
financing.
Analytical and Historical Financial Data
- ----------------------------------------
The schedules which follow present selected unaudited "analytical" and
"historical" financial data by quarter for the fiscal years ended January 1995,
1996 and 1997 and for the first two quarters of the current fiscal year.
Earnings per share for periods prior to the public issuance of common stock are
not presented in the historical financial statements. The presentation of
earnings per share in the attached supplemental historical financial data
assumes 37,484,937 shares outstanding (the same basis for EPS for the period
ended July 26, 1997) for all prior periods.
The analytical presentation adjusts the data contained in the historical
presentation to reflect certain changes to ongoing operations after the
Distribution:
a) The analytical presentation of SG&A expenses assumes an additional $500,000
per quarter to reflect estimated incremental costs that the Company will
incur as a separate public entity.
b) The analytical presentation assumes a reduced level of interest expense as a
result of the reduction in debt in connection with the Distribution. Prior
period debt levels were determined by starting with the $72 million of debt
outstanding on July 26, 1997 and reflecting changes in cash flow during prior
periods. Interest on those adjusted debt levels was then calculated at an
assumed rate of 6.5% for all periods presented to reflect current borrowing
rates in lieu of the 10% interest rate applied to historical intercompany
borrowings.
c) The analytical presentation of earnings per share is based on an assumption
of 38,000,000 outstanding shares (including the estimated dilutive effect of
common stock equivalents) in all periods. Historical earnings per share for
the periods ended July 26, 1997 were based on shares outstanding only. During
the third quarter of the current fiscal year, BJ's Wholesale Club, Inc. stock
options will be issued to Company employees to replace their Waban options at
exercise prices which will preserve the value inherent in the replaced
options.
d) The analytical presentation of the provision for income taxes assumes the
historical tax provision adjusted for the incremental taxes resulting from
changes to historical pre-tax income.
The information contained in the presentations which follow are based on a
number of estimates and assumptions which management in good faith considers
reasonable under the circumstances. This information does not purport to
represent what the results of operations of the Company would have actually been
if the Distribution had in fact been consummated in prior periods or at any
future date or what the results of operations of the Company will be for any
future period.
<PAGE>
BJ's Wholesale Club, Inc.
Supplemental Financial Data (unaudited)
(Dollars and Shares in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Analytical Presentation
-----------------------
FYE 1/98 Percent to Net Sales
-------------------------------------- ----------------------------
Q1 Q2 Q1 Q2
-- -- -- --
<S> <C> <C> <C> <C>
Net Sales $664,258 $773,682 100.00% 100.00%
Membership Fees and Other 14,689 11,773 2.21% 1.52%
------- ------- ----- -----
Total Revenues 678,947 785,455 102.21% 101.52%
Cost of Sales, including buying
and occupancy costs 612,199 703,275 92.16% 90.90%
Selling, general and
administrative expenses 51,874 54,722 7.81% 7.07%
------- ------- ----- -----
Operating Income 14,874 27,458 2.24% 3.55%
Interest on debt and capital
leases, net 1,453 1,169 0.22% 0.15%
------- ------- ----- -----
Income before Income Taxes 13,421 26,289 2.02% 3.40%
Provision for Income Taxes 5,194 10,173 0.78% 1.31%
------- ------- ----- -----
Net Income $8,227 $16,116 1.24% 2.08%
======= ======= ===== =====
Net Income per Share $ 0.22 $ 0.42
Number of Common Shares for
Earnings per Share Computation 38,000 38,000
----------------------------------- ----------------------------
Operating Data
- --------------
Net Sales Growth 9.1% 7.5%
Comp Sales Growth 2.5% 1.5%
Number of Clubs
- ---------------
Large Format 71 73
Small Format 9 9
- -
Total Number of Clubs 80 82
Selling Square Footage 8,580,036 8,798,474
</TABLE>
<PAGE>
BJ's Wholesale Club, Inc.
Supplemental Financial Data (unaudited)
(Dollars and Shares in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Analytical Presentation
-----------------------
FYE 1/97
---------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Year
-- -- -- -- ---------
<S> <C> <C> <C> <C> <C>
Net Sales $608,626 $720,022 $681,847 $849,455 $2,859,950
Membership Fees and Other 13,762 13,666 15,971 19,483 62,882
------ ------ ------ ------ ------
Total Revenues 622,388 733,688 697,818 868,938 2,922,832
Cost of Sales, including buying
and occupancy costs 562,309 657,235 623,912 762,146 2,605,602
Selling, general and
administrative expenses 47,515 52,087 54,099 60,959 214,660
------ ------ ------ ------ -------
Operating Income 12,564 24,366 19,807 45,833 102,570
Interest on debt and capital
leases, net 1,650 1,451 1,890 1,480 6,471
----- ----- ----- ----- -----
Income before Income Taxes 10,914 22,915 17,917 44,353 96,099
Provision for Income Taxes 4,259 8,941 6,991 17,306 37,497
----- ----- ----- ------ ------
Net Income $6,655 $13,974 $10,926 $27,047 $58,602
====== ======= ======= ======= =======
Net Income per Share $0.18 $0.37 $0.29 $0.71 $1.54
Number of Common Shares for
Earnings per Share Computation 38,000 38,000 38,000 38,000 38,000
---------------------------------------------------------------------------------------
Operating Data
- --------------
Net Sales Growth 17.3% 16.5% 15.6% 14.3% 15.8%
Comp Sales Growth 7.3% 6.0% 3.8% 6.0% 5.6%
Number of Clubs
- ---------------
Large Format 66 69 70 72
Small Format 6 8 9 9
- - - -
Total Number of Clubs 72 77 79 81
Selling Square Footage 7,793,913 8,269,795 8,453,615 8,684,268
<CAPTION>
Percent to Net Sales
-------------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Year
-- -- -- -- ---------
<S> <C> <C> <C> <C> <C>
Net Sales 100.00% 100.00% 100.00% 100.00% 100.00%
Membership Fees and Other 2.26% 1.90% 2.34% 2.29% 2.20%
----- ----- ----- ----- -----
Total Revenues 102.26% 101.90% 102.34% 102.29% 102.20%
Cost of Sales, including buying
and occupancy costs 92.39% 91.28% 91.50% 89.72% 91.11%
Selling, general and
administrative expenses 7.81% 7.23% 7.93% 7.18% 7.51%
----- ----- ----- ----- -----
Operating Income 2.06% 3.38% 2.90% 5.40% 3.59%
Interest on debt and capital
leases, net 0.27% 0.20% 0.28% 0.17% 0.23%
----- ----- ----- ----- -----
Income before Income Taxes 1.79% 3.18% 2.63% 5.22% 3.36%
Provision for Income Taxes 0.70% 1.24% 1.03% 2.04% 1.31%
----- ----- ----- ----- -----
Net Income 1.09% 1.94% 1.60% 3.18% 2.05%
===== ===== ===== ===== =====
</TABLE>
<PAGE>
BJ's Wholesale Club, Inc.
Supplemental Financial Data (unaudited)
(Dollars and Shares in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Analytical Presentation
-----------------------
FYE 1/96
-----------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Year
-- -- -- -- ---------
Net Sales $518,957 $618,263 $589,908 $743,179 $2,470,307
Membership Fees and Other 12,149 14,108 14,518 18,526 59,301
------- ------- ------- ------- -------
Total Revenues 531,106 632,371 604,426 761,705 2,529,608
Cost of Sales, including buying
and occupancy costs 482,147 567,020 542,707 671,658 2,263,532
Selling, general and
administrative expenses 40,497 45,767 47,277 51,878 185,419
------- ------- ------- ------- --------
Operating Income 8,462 19,584 14,442 38,169 80,657
Interest on debt and capital
leases, net 1,391 1,152 1,236 1,335 5,114
------ ------ ------ ------ ------
Income before Income Taxes 7,071 18,432 13,206 36,834 75,543
Provision for Income Taxes 2,756 7,185 5,147 14,357 29,445
------ ------ ------ ------- -------
Net Income $4,315 $11,247 $8,059 $22,477 $46,098
======= ======== ======= ======== ========
Net Income per Share $ 0.11 $ 0.30 $ 0.21 $ 0.59 $ 1.21
Number of Common Shares for
Earnings per Share Computation 38,000 38,000 38,000 38,000 38,000
-----------------------------------------------------------------------------------------
Operating Data
- --------------
Total Sales Growth 9.3% 12.3% 8.0% 11.6% 10.4%
Comp Sales Growth -3.4% 3.1% 0.6% 2.5% 0.4%
Number of Clubs
- ---------------
Large Format 60 61 63 65
Small Format 2 4 5 6
- - - -
Total Number of Clubs 62 65 68 71
Selling Square Footage 6,834,347 7,096,455 7,387,729 7,678,253
<CAPTION>
Percent to Net Sales
---------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Year
-- -- -- -- ---------
<S> <C> <C> <C> <C> <C>
Net Sales 100.00% 100.00% 100.00% 100.00% 100.00%
Membership Fees and Other 2.34% 2.28% 2.46% 2.49% 2.40%
----- ----- ----- ----- -----
Total Revenues 102.34% 102.28% 102.46% 102.49% 102.40%
Cost of Sales, including buying
and occupancy costs 92.91% 91.71% 92.00% 90.38% 91.63%
Selling, general and
administrative expenses 7.80% 7.40% 8.01% 6.98% 7.51%
----- ----- ----- ----- -----
Operating Income 1.63% 3.17% 2.45% 5.14% 3.27%
Interest on debt and capital
leases, net 0.27% 0.19% 0.21% 0.18% 0.21%
----- ----- ----- ----- -----
Income before Income Taxes 1.36% 2.98% 2.24% 4.96% 3.06%
Provision for Income Taxes 0.53% 1.16% 0.87% 1.93% 1.19%
----- ----- ----- ----- -----
Net Income 0.83% 1.82% 1.37% 3.02% 1.87%
===== ===== ===== ===== =====
</TABLE>
<PAGE>
BJ's Wholesale Club, Inc.
Supplemental Financial Data (unaudited)
(Dollars and Shares in Thousands Except Per Share Amounts)
Analytical Presentation
-----------------------
<TABLE>
<CAPTION>
FYE 1/95
-----------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Year
-- -- -- -- ---------
<S> <C> <C> <C> <C> <C>
Net Sales $474,895 $550,442 $545,987 $665,705 $2,237,029
Membership Fees and Other 11,892 13,681 13,012 17,477 56,062
------ ------ ------ ------ ------
Total Revenues 486,787 564,123 558,999 683,182 2,293,091
Cost of Sales, including buying
and occupancy costs 442,815 506,396 503,179 601,777 2,054,167
Selling, general and
administrative expenses 37,347 42,938 44,764 51,367 176,416
------ ------ ------ ------ -------
Operating Income 6,625 14,789 11,056 30,038 62,508
Interest on debt and capital
leases, net 963 786 1,170 1,055 3,974
--- --- ----- ----- -----
Income before Income Taxes 5,662 14,003 9,886 28,983 58,534
Provision for Income Taxes 2,230 5,516 3,894 11,416 23,056
----- ----- ----- ------ ------
Net Income $3,432 $8,487 $5,992 $17,567 $35,478
====== ====== ====== ======= =======
Net Income per Share $0.09 $0.22 $0.16 $0.46 $0.93
Number of Common Shares for
Earnings per Share Computation 38,000 38,000 38,000 38,000 38,000
-----------------------------------------------------------------------------------------
Operating Data
- --------------
Total Sales Growth 15.9% 12.8% 15.1% 13.7% 14.3%
Comp Sales Growth -4.1% -3.8% -1.3% -0.3% -2.7%
Number of Clubs
- ---------------
Large Format 52 57 59 60
Small Format 0 0 0 2
- - - -
Total Number of Clubs 52 57 59 62
Selling Square Footage 5,776,023 6,351,007 6,582,327 6,834,347
<CAPTION>
Percent to Net Sales
----------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Year
-- -- -- -- ---------
<S> <C> <C> <C> <C> <C>
Net Sales 100.00% 100.00% 100.00% 100.00% 100.00%
Membership Fees and Other 2.50% 2.49% 2.38% 2.63% 2.51%
----- ----- ----- ----- -----
Total Revenues 102.50% 102.49% 102.38% 102.63% 102.51%
Cost of Sales, including buying
and occupancy costs 93.24% 92.00% 92.16% 90.40% 91.83%
Selling, general and
administrative expenses 7.86% 7.80% 8.20% 7.72% 7.89%
----- ----- ----- ----- -----
Operating Income 1.40% 2.69% 2.03% 4.51% 2.79%
Interest on debt and capital
leases, net 0.20% 0.14% 0.21% 0.16% 0.18%
----- ----- ----- ----- -----
Income before Income Taxes 1.19% 2.54% 1.81% 4.35% 2.62%
Provision for Income Taxes 0.47% 1.00% 0.71% 1.71% 1.03%
----- ----- ----- ----- -----
Net Income 0.72% 1.54% 1.10% 2.64% 1.59%
===== ===== ===== ===== =====
</TABLE>
<PAGE>
BJ's Wholesale Club, Inc.
Supplemental Financial Data (unaudited)
(Dollars and Shares in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Historical Presentation
-----------------------
FYE 1/98 Percent to Net Sales
-------------------------------- --------------------------------
Q1 Q2 Q1 Q2
-- -- -- --
<S> <C> <C> <C> <C>
Net Sales $664,258 $773,682 100.00% 100.00%
Membership Fees and Other 14,689 11,773 2.21% 1.52%
------- ------- ----- -----
Total Revenues 678,947 785,455 102.21% 101.52%
Cost of Sales, including buying
and occupancy costs 612,199 703,275 92.16% 90.90%
Selling, general and
administrative expenses 51,374 54,222 7.73% 7.01%
------- ------- ----- -----
Operating Income 15,374 27,958 2.31% 3.61%
Interest on debt and capital
leases, net 3,882 3,600 0.58% 0.47%
------ ------ ----- -----
Income before Income Taxes 11,492 24,358 1.73% 3.15%
Provision for Income Taxes 4,435 9,403 0.67% 1.22%
------ ------ ----- -----
Net Income $7,057 $14,955 1.06% 1.93%
====== ======= ===== =====
Net Income per Share $ 0.19 $ 0.40
Number of Common Shares for
Earnings per Share Computation 37,485 37,485
-------------------------------- --------------------------------
Operating Data
- --------------
Net Sales Growth 9.1% 7.5%
Comp Sales Growth 2.5% 1.5%
Number of Clubs
- ---------------
Large Format 71 73
Small Format 9 9
- -
Total Number of Clubs 80 82
Selling Square Footage 8,580,036 8,798,474
</TABLE>
<PAGE>
BJ's Wholesale Club, Inc.
Supplemental Financial Data (unaudited)
(Dollars and Shares in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Historical Presentation
-----------------------
FYE 1/97
----------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Year
-- -- -- -- ---------
<S> <C> <C> <C> <C> <C>
Net Sales $608,626 $720,022 $681,847 $849,455 $2,859,950
Membership Fees and Other 13,762 13,666 15,971 19,483 62,882
------- ------- ------- ------- -------
Total Revenues 622,388 733,688 697,818 868,938 2,922,832
Cost of Sales, including buying
and occupancy costs 562,309 657,235 623,912 762,146 2,605,602
Selling, general and
administrative expenses 47,015 51,587 53,599 60,459 212,660
------- ------- ------- ------- --------
Operating Income 13,064 24,866 20,307 46,333 104,570
Interest on debt and capital
leases, net 4,254 3,957 4,620 4,007 16,838
------ ------ ------ ------ -------
Income before Income Taxes 8,810 20,909 15,687 42,326 87,732
Provision for Income Taxes 3,427 8,223 6,012 16,446 34,108
------ ------ ------ ------- -------
Net Income $5,383 $12,686 $9,675 $25,880 $53,624
====== ======= ====== ======= =======
Net Income per Share $ 0.14 $ 0.34 $ 0.26 $ 0.69 $ 1.43
Number of Common Shares for
Earnings per Share Computation 37,485 37,485 37,485 37,485 37,485
---------------------------------------------------------------------------------------
Operating Data
- --------------
Net Sales Growth 17.3% 16.5% 15.6% 14.3% 15.8%
Comp Sales Growth 7.3% 6.0% 3.8% 6.0% 5.6%
Number of Clubs
- ---------------
Large Format 66 69 70 72
Small Format 6 8 9 9
- - - -
Total Number of Clubs 72 77 79 81
Selling Square Footage 7,793,913 8,269,795 8,453,615 8,684,268
<CAPTION>
Historical Presentation
-----------------------
Percent to Net Sales
-----------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Year
-- -- -- -- ---------
<S> <C> <C> <C> <C> <C>
Net Sales 100.00% 100.00% 100.00% 100.00% 100.00%
Membership Fees and Other 2.26% 1.90% 2.34% 2.29% 2.20%
----- ----- ----- ----- -----
Total Revenues 102.26% 101.90% 102.34% 102.29% 102.20%
Cost of Sales, including buying
and occupancy costs 92.39% 91.28% 91.50% 89.72% 91.11%
Selling, general and
administrative expenses 7.72% 7.16% 7.86% 7.12% 7.44%
----- ----- ----- ----- -----
Operating Income 2.15% 3.45% 2.98% 5.45% 3.66%
Interest on debt and capital
leases, net 0.70% 0.55% 0.68% 0.47% 0.59%
----- ----- ----- ----- -----
Income before Income Taxes 1.45% 2.90% 2.30% 4.98% 3.07%
Provision for Income Taxes 0.56% 1.14% 0.88% 1.94% 1.19%
----- ----- ----- ----- -----
Net Income 0.88% 1.76% 1.42% 3.05% 1.87%
===== ===== ===== ===== =====
</TABLE>
<PAGE>
BJ's Wholesale Club, Inc.
Supplemental Financial Data (unaudited)
(Dollars and Shares in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Historical Presentation
-----------------------
FYE 1/96
-------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Year
-- -- -- -- ---------
<S> <C> <C> <C> <C> <C>
Net Sales $518,957 $618,263 $589,908 $743,179 $2,470,307
Membership Fees and Other 12,149 14,108 14,518 18,526 59,301
------- ------- ------- ------- -------
Total Revenues 531,106 632,371 604,426 761,705 2,529,608
Cost of Sales, including buying
and occupancy costs 482,147 567,020 542,707 671,658 2,263,532
Selling, general and
administrative expenses 39,997 45,267 46,777 51,378 183,419
------- ------- ------- ------- --------
Operating Income 8,962 20,084 14,942 38,669 82,657
Interest on debt and capital
leases, net 3,858 3,496 3,624 3,779 14,757
------ ------ ------ ------ -------
Income before Income Taxes 5,104 16,588 11,318 34,890 67,900
Provision for Income Taxes 1,980 6,436 4,392 13,542 26,350
------ ------ ------ ------- -------
Net Income $3,124 $10,152 $6,926 $21,348 $41,550
======= ======== ======= ======== ========
Net Income per Share $ 0.08 $ 0.27 $ 0.18 $ 0.57 $ 1.11
Number of Common Shares for
Earnings per Share Computation 37,485 37,485 37,485 37,485 37,485
--------------------------------------------------------------------------------------
Operating Data
- --------------
Total Sales Growth 9.3% 12.3% 8.0% 11.6% 10.4%
Comp Sales Growth -3.4% 3.1% 0.6% 2.5% 0.4%
Number of Clubs
- ---------------
Large Format 60 61 63 65
Small Format 2 4 5 6
-- -- -- -
Total Number of Clubs 62 65 68 71
Selling Square Footage 6,834,347 7,096,455 7,387,729 7,678,253
<CAPTION>
Historical Presentation
-----------------------
Percent to Net Sales
---------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Year
-- -- -- -- ---------
<S> <C> <C> <C> <C> <C>
Net Sales 100.00% 100.00% 100.00% 100.00% 100.00%
Membership Fees and Other 2.34% 2.28% 2.46% 2.49% 2.40%
----- ----- ----- ----- -----
Total Revenues 102.34% 102.28% 102.46% 102.49% 102.40%
Cost of Sales, including buying
and occupancy costs 92.91% 91.71% 92.00% 90.38% 91.63%
Selling, general and
administrative expenses 7.71% 7.32% 7.93% 6.91% 7.42%
----- ----- ----- ----- -----
Operating Income 1.73% 3.25% 2.53% 5.20% 3.35%
Interest on debt and capital
leases, net 0.74% 0.57% 0.61% 0.51% 0.60%
----- ----- ----- ----- -----
Income before Income Taxes 0.98% 2.68% 1.92% 4.69% 2.75%
Provision for Income Taxes 0.38% 1.04% 0.74% 1.82% 1.07%
----- ----- ----- ----- -----
Net Income 0.60% 1.64% 1.17% 2.87% 1.68%
===== ===== ===== ===== =====
</TABLE>
<PAGE>
BJ's Wholesale Club, Inc.
Supplemental Financial Data (unaudited)
(Dollars and Shares in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Historical Presentation
-----------------------
FYE 1/95
----------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Year
-- -- -- -- ---------
<S> <C> <C> <C> <C> <C>
Net Sales $474,895 $550,442 $545,987 $665,705 $2,237,029
Membership Fees and Other 11,892 13,681 13,012 17,477 56,062
------- ------- ------- ------- -------
Total Revenues 486,787 564,123 558,999 683,182 2,293,091
Cost of Sales, including buying
and occupancy costs 442,815 506,396 503,179 601,777 2,054,167
Selling, general and
administrative expenses 36,847 42,438 44,264 50,867 174,416
------- ------- ------- ------- --------
Operating Income 7,125 15,289 11,556 30,538 64,508
Interest on debt and capital
leases, net 3,363 3,161 3,664 3,477 13,665
------ ------ ------ ------ -------
Income before Income Taxes 3,762 12,128 7,892 27,061 50,843
Provision for Income Taxes 1,475 4,757 3,096 10,613 19,941
------ ------ ------ ------- -------
Net Income $2,287 $7,371 $4,796 $16,448 $30,902
======= ======= ======= ======== ========
Net Income per Share $ 0.06 $ 0.20 $ 0.13 $ 0.44 $ 0.82
Number of Common Shares for
Earnings per Share Computation 37,485 37,485 37,485 37,485 37,485
----------------------------------------------------------------------------------------
Operating Data
- --------------
Total Sales Growth 15.9% 12.8% 15.1% 13.7% 14.3%
Comp Sales Growth -4.1% -3.8% -1.3% -0.3% -2.7%
Number of Clubs
- ---------------
Large Format 52 57 59 60
Small Format 0 0 0 2
-- -- -- -
Total Number of Clubs 52 57 59 62
Selling Square Footage 5,776,023 6,351,007 6,582,327 6,834,347
<CAPTION>
Historical Presentation
-----------------------
Percent to Net Sales
----------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4 Full Year
-- -- -- -- ---------
<S> <C> <C> <C> <C> <C>
Net Sales 100.00% 100.00% 100.00% 100.00% 100.00%
Membership Fees and Other 2.50% 2.49% 2.38% 2.63% 2.51%
----- ----- ----- ----- -----
Total Revenues 102.50% 102.49% 102.38% 102.63% 102.51%
Cost of Sales, including buying
and occupancy costs 93.24% 92.00% 92.16% 90.40% 91.83%
Selling, general and
administrative expenses 7.76% 7.71% 8.11% 7.64% 7.80%
----- ----- ----- ----- -----
Operating Income 1.50% 2.78% 2.12% 4.59% 2.88%
Interest on debt and capital
leases, net 0.71% 0.57% 0.67% 0.52% 0.61%
----- ----- ----- ----- -----
Income before Income Taxes 0.79% 2.20% 1.45% 4.06% 2.27%
Provision for Income Taxes 0.31% 0.86% 0.57% 1.59% 0.89%
----- ----- ----- ----- -----
Net Income 0.48% 1.34% 0.88% 2.47% 1.38%
===== ===== ===== ===== =====
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
Item 2 - Changes in Securities
---------------------
(a) On July 10, 1997, the Company filed an Amended and Restated
Certificate of Incorporation with the Secretary of State of the
State of Delaware. See Exhibit 3.1 hereto.
On July 10, 1997, the Company's Amended and Restated By-Laws
became effective. See Exhibit 3.2 hereto.
The Company entered into a Rights Agreement, dated as of July
10, 1997 between the Company and First Chicago Trust Company of
New York. See Exhibit 4.1 hereto.
(c) On July 26, 1997, in connection with the Distribution, the
Company issued a total of 37,484,837 shares of its Common Stock
to its parent corporation, Waban. On July 28, 1997, the spin-off
of the Company was effected by the tax-free distribution (the
"Distribution"), paid in the form of a special dividend to Waban
stockholders of record on July 18, 1997 (the "Record Date"), of
one share of common stock of the Company for each share of Waban
common stock outstanding on the Record Date. A total of
37,484,937 shares of the Company's Common Stock, representing
100% of the issued and outstanding Common Stock of the Company,
was distributed in the Distribution, pursuant to a Registration
Statement on Form S-1.
Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
By Written Action of Sole Stockholder in Lieu of a Meeting, dated July 10,
1997 (the "Written Action"), Waban, the sole stockholder of the Company at the
time, approved and adopted:
1. The Amended and Restated Certificate of Incorporation of the Company;
2. The Amended and Restated By-Laws of the Company;
3. The BJ's Wholesale Club, Inc. 1997 Replacement Stock Incentive Plan;
4. The BJ's Wholesale Club, Inc. 1997 Stock Incentive Plan;
5. The BJ's Wholesale Club, Inc. Management Incentive Plan;
6. The BJ's Wholesale Club, Inc. Growth Incentive Plan; and
<PAGE>
7. The BJ's Wholesale Club, Inc. 1997 Director Stock Option Plan.
In addition, pursuant to the Written Action and effective on July 28, 1997
(the date Waban completed the Distribution), the size of the Board of Directors
was increased to eight and the following persons were elected to serve as
directors of the Company:
Class I directors: S. James Coppersmith
(term expiring at the Thomas J. Shields
1998 Annual Meeting) Herbert J. Zarkin
Class II directors: Allyn L. Levy
(term expiring at the Lorne R. Waxlax
1999 Annual Meeting) Edward J. Weisberger
Class III directors:
(term expiring at the Kerry L. Hamilton
2000 Annual Meeting) John J. Nugent
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
3.1 Amended and Restated Certificate of Incorporation is incorporated
herein by reference to the Company's Registration Statement on
Form S-8, dated July 10, 1997 (Commission File No. 333-31015)
3.2 Amended and Restated By-Laws is incorporated herein by reference
to the Company's Registration Statement on Form S-8, dated July
10, 1997 (Commission File No. 333-31015)
4.1 Rights Agreement, dated as of July 10, 1997, between the Company
and First Chicago Trust Company of New York is incorporated herein
by reference to the Company's Report on Form 8-A, dated July 10,
1997 (Commission File No. 1-13143)
10.1 Separation and Distribution Agreement, dated as of July 10, 1997,
between the Company and Waban Inc. is incorporated herein by
reference to the Current Report on Form 8-K, dated July 28, 1997,
of HomeBase, Inc. (Commission File No. 1-10259)
10.2 Services Agreement, dated as of July 28, 1997, between the Company
and Waban Inc. is incorporated herein by reference to the Current
Report on Form 8-K, dated July 28, 1997, of HomeBase, Inc.
(Commission File No. 1-10259)
10.3 Tax Sharing Agreement, dated as of July 28, 1997, between the
Company and Waban Inc. is incorporated herein by reference to the
Current Report on Form 8-K, dated July 28, 1997, of HomeBase, Inc.
(Commission File No. 1-10259)
10.4 Employee Benefits Agreement, dated as of July 28, 1997, between
the Company and Waban Inc. is incorporated herein by reference to
the Current Report on Form 8-K, dated July 28, 1997, of HomeBase,
Inc. (Commission File No. 1-10259)
10.5 BJ's Wholesale Club, Inc. Management Incentive Plan
10.6 BJ's Wholesale Club, Inc. Growth Incentive Plan
<PAGE>
10.7 BJ's Wholesale Club, Inc. 1997 Director Stock Option Plan
10.8 BJ's Wholesale Club, Inc. Executive Retirement Plan
10.9 BJ's Wholesale Club, Inc. 1997 Replacement Stock Incentive Plan
10.10 BJ's Wholesale Club, Inc. 1997 Stock Incentive Plan
10.11 BJ's Wholesale Club, Inc. General Deferred Compensation Plan
10.12 Employment Agreement, dated as of July 28, 1997 with Herbert J.
Zarkin
10.13 Employment Agreement, dated as of July 28, 1997 with John J.
Nugent
10.14 Employment Agreement, dated as of July 28, 1997 with Edward J.
Weisberger
10.15 Employment Agreement, dated as of July 28, 1997 with Frank D.
Forward
10.16 Employment Agreement, dated as of July 28, 1997 with Michael T.
Wedge
10.17 Employment Agreement, dated as of July 28, 1997 with Laura J. Sen
10.18 Employment Agreement, dated as of July 28, 1997 with Sarah M.
Gallivan
10.19 Form of Change of Control Severance Agreement between the Company
and officers of the Company
10.20 Form of Indemnification Agreement between the Company and
officers of the Company
10.21 BJ's Wholesale Club, Inc. Change of Control Severance Benefit
Plan for Key Employees
10.22 Credit Agreement, dated July 9, 1997, among the Company and
certain banks
10.23 Indemnification Agreement, dated as of April 18, 1997, between
the Company and The TJX Companies, Inc. is incorporated herein by
reference to the Company's Registration Statement on Form S-1
(Commission File No. 333-25511)
27.0 Financial Data Schedule
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K with the
Securities and Exchange Commission during the quarter ended July
26, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BJ'S WHOLESALE CLUB, INC.
-------------------------
(Registrant)
Date: September 9, 1997 /s/ JOHN J. NUGENT
---------------------- -------------------------------------
John J. Nugent
President and Chief Executive Officer
(Principal Executive Officer)
Date: September 9, 1997 /s/ FRANK D. FORWARD
---------------------- -----------------------------
Frank D. Forward
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT 10.5
BJ'S WHOLESALE CLUB, INC.
MANAGEMENT INCENTIVE PLAN
1. Purpose
The purpose of the BJ's Wholesale Club, Inc. Management Incentive
Plan (the "Plan") is to provide officers and other employees who are key
to the growth and profitability of BJ's Wholesale Club, Inc. and its
subsidiaries with reward opportunities commensurate with their
performance relative to annual objectives.
2. Definitions
Unless the context requires otherwise, the following expressions as
used in the Plan shall have the meanings ascribed to each below, it being
understood that masculine, feminine and neuter pronouns are used
interchangeably, and that each comprehends the others.
"Committee" shall mean the BJ's Wholesale Club, Inc. Incentive Plan
Committee, consisting of the President and Chief Executive Officer of
BJ's Wholesale Club, Inc., who shall serve as the Chairman of the
Committee; the Chairman of the Board of BJ's Wholesale Club, Inc.; the
Chief Financial Officer of BJ's Wholesale Club, Inc.; and others who from
time to time are designated by the Chairman of the Committee to serve as
members of the Committee.
"Company" shall mean BJ's Wholesale Club, Inc. and its subsidiaries.
"ECC" shall mean the Executive Compensation Committee of the Board
of Directors of BJ's Wholesale Club, Inc.
"Effective Date" shall mean the date on which Waban Inc. completes
the spin-off of the Company by distributing to Waban's stockholders on a
pro rata basis all of the outstanding shares of Common Stock of the
Company held by Waban Inc.
"Fiscal Year" shall mean the period ending on the last Saturday in
January, and commencing on (i) the Sunday following the last Saturday in
January of the preceding calendar year or (ii) with respect to the Fiscal
Year in which the Effective Date occurs, such Effective Date.
"Participant" shall mean an officer or other employee of the Company
who is designated a participant pursuant to Section 5 below.
<PAGE>
"Performance Criteria" shall mean the standards of measurement of
Company performance and individual performance for each Performance
Period as established by the Committee and the ECC pursuant to paragraph
(a) of Section 6 below.
"Performance Goals" shall mean the levels of performance with
respect to each Performance Criterion at which awards are payable
pursuant to this Plan. Performance goals are established by the Committee
and the ECC pursuant to paragraph (b) of Section 6 below.
"Performance Period" shall mean one Fiscal Year or, with respect to
the Fiscal Year in which the Effective Date occurs, the remainder of such
Fiscal Year.
3. Administration
This Plan shall be administered by the ECC, which in its sole
discretion may take into account recommendations of the Committee. The
ECC shall have full authority to interpret the Plan; to establish, amend,
and rescind rules for carrying out the Plan; to administer the Plan; to
determine the terms and provisions of any agreements pertaining to the
Plan; and to make all other determinations necessary or advisable for its
administration.
Any person objecting to any interpretation, rule, determination or
other action made or taken by the Committee or the ECC which affects said
person shall have the right to appeal in writing to the ECC, setting
forth the objections in reasonable detail, provided that such appeal
shall be made within 90 days after promulgation of such interpretation,
rule, or other determination, or such additional time as the ECC shall
deem reasonable.
The ECC shall not be bound to any standards of uniformity or
similarity of action, interpretation or conduct in the discharge of its
duties hereunder, regardless of the apparent similarity of the matters
coming before the ECC. Its determination shall be binding on all parties.
No member or former member of the Committee, the ECC, or the Board
of Directors of the Company shall be liable for any action or
determination made in good faith with respect to the Plan or any award or
payment made under the Plan.
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4. Eligibility
For each Performance Period, the ECC shall designate, based upon
recommendations of the Committee, Participants to receive annual
management incentive awards, subject to the terms and conditions of the
Plan. Participants in the Plan shall be key employees of the Company,
including such executives and other full-time employees of the Company as
the ECC shall, at any time, designate as Participants for said
Performance Period.
5. Description of Awards
(a) Designation of Performance Criteria
At the commencement of each Performance Period, the Committee shall
recommend, for the ECC's approval, one or more Performance Criteria
for said Performance Period and the relative weight to be given to
each Performance Criterion. Performance Criteria and the weighting
thereof may vary by Participant and may be different for different
Performance Periods. Such Performance Criteria shall include only
the following measures: operating income, pre-tax income, net
income, gross profit dollars, costs, any of the preceding measures
as a percent of sales, earnings per share, sales, return on equity,
and return on investment.
(b) Performance Goals
At the commencement of each Performance Period, the Committee shall
establish a range of Performance Goals from minimum to target to
maximum for each Performance Criterion for said Performance Period.
Performance Goals may vary by Participant and may be different for
different Performance Periods.
At any time designated by the ECC during a Performance Period or
thereafter, but prior to award payment, appropriate adjustments in
the Performance Goals may be made to avoid undue windfalls or
hardships due to external conditions outside the control of
management, nonrecurring or abnormal items, changes in accounting
practices or such other matters as the Committee shall, in its sole
discretion, determine, subject to paragraph (d) below.
Performance Goals and any adjustments thereto shall be reported to
the ECC. The ECC shall have the right at its election to reject any
Performance Goals or adjustments and direct reconsideration by the
Committee.
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<PAGE>
(c) Award Opportunity
At the commencement of each Performance Period, the Committee shall
assign to each Participant the minimum, target, and maximum award
opportunities to be earned for said Performance Period based upon
the Participant's position and ability to impact annual performance
relative to goals during the Performance Period. Said award
opportunities are subject to the approval of the ECC. Award
opportunity may be expressed as a fixed amount or as a percentage of
the Participant's base salary earned for the Performance Period. No
individual award opportunity in any calendar year shall exceed
$1,000,000 or, if less, 100% of the base salary earned by the
Participant for the applicable Performance Period.
From time to time, discretionary awards, in addition to the annual
management incentive awards, may be made by the Committee to any
Participant due to outstanding performance or extraordinary
circumstances which occur during the Performance Period. No
discretionary award shall be made to any Participant whose
compensation is subject to the approval of the ECC, unless such
award shall be approved by the ECC. All discretionary awards shall
be reported to the ECC for each Performance Period.
(d) Adjustments to Performance Goals for Certain Officers
The Committee shall make no adjustments to the Performance Goals
whose effect is to increase the incentive payment to the Chief
Executive Officer or to other executive officers as of the end of
the fiscal year who are named in the proxy statement, except for the
following:
1) Events classified as extraordinary items or discontinued
operations or presented as special nonrecurring charges (or
income) in accordance with generally accepted accounting
principles.
2) Disposal of a business segment or a group of two or more
warehouse stores, a major administrative unit, or major assets,
if quantified and disclosed in Management's Discussion and
Analysis of Financial Condition and Results of Operations of the
Company's Annual Report on Form 10-K.
3) Conversion of convertible bonds or preferred stock convertible
into common stock; a repurchase by the Company of outstanding
shares of stock, if such a repurchase has a material impact on
the performance that is being measured; or an increase in the
number of shares of common stock for earnings per share
calculation
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<PAGE>
purposes due to a new equity or convertible debenture offering,
but not by exercise of stock options, restricted stock or other
stock-based awards under the Company's 1997 Stock Incentive
Plans or any similar plan.
4) Balance sheet recapitalization or restructuring that materially
alters the allocation between debt and equity for the Company.
5) Changes in accounting practice to comply with new legislation or
with rules promulgated by the Securities and Exchange Commission
or the Financial Accounting Standards Board and changes in tax
laws that affect tax rates, credits, or the definition of
taxable income, if material.
6) Unusual and material losses beyond the Company's control, such
as acts of God (e.g., earthquake or widespread hurricane
damage).
7) Reserves for future period events which will not occur until
after the performance measurement period.
8) Adjustments attributable to prior periods in the case of a newly
acquired business.
9) Adjustments of goals made immediately after completion by the
Company's independent public accountants of the audit of the
Company's financial statements for the fiscal year immediately
preceding the Performance Period, made solely to "true-up" goals
that were based on estimated results for said preceding year.
10) Gains and losses from sales of a minority interest in a
subsidiary.
11) Net incremental expense incurred by the Company as a result of
opening new warehouse stores in excess of the number
incorporated in the Performance Goals. The amount of the
adjustment shall be equal to the average operating loss incurred
by new warehouse stores opened by the Company in the same fiscal
year.
In no event, however, shall the Committee make any adjustment which
would cause incentive awards not to qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as
amended.
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<PAGE>
6. Determination of Awards
(a) Upon completion of each Performance Period and certification of the
Company's financial statements by the Company's independent public
accountants for the Fiscal Year included in such Performance Period,
the ECC will review performance relative to Performance Goals, as
adjusted from time to time in accordance with paragraph (b) of
Section 5 above, and determine the value of the awards for each
Performance Period.
Achievement of all Performance Goals will result in payment of a
Participant's target award. Failure to achieve Performance Goals
will result in a decrease or elimination of the Participant's award.
Exceeding performance goals will result in an award greater than the
target award but not greater than the maximum award.
(b) If an employee becomes a Participant after the beginning of a
Performance Period, the award payable to such employee will be pro-
rated in accordance with the portion of the Performance Period
during which such employee is a Participant.
(c) In the event of termination of employment of a Participant for any
reason prior to the last day of the Performance Period, a
Participant shall have no further rights under the Plan thereafter
and shall not be entitled to payment of any award.
If termination of employment occurs (i) by reason of death, (ii) due
to normal retirement under a retirement plan of the Company, or
(iii) due to early retirement after age 55 with the consent of the
Company, the ECC may, in its sole discretion, value and direct that
some portion of the award be deemed earned and payable, taking into
account the duration or employment during the Performance Period,
the Participant's performance, and such other matters as the ECC
shall deem appropriate.
In the event of termination of employment for cause, as defined and
determined by the ECC in its sole discretion, no payment shall be
made with regard to any prior or current Performance Period.
(d) If a Participant shall be actively employed less than a full
Performance Period because of an accident or illness but shall
complete active employment during one-half of the weeks of said
Performance Period, the incentive award otherwise payable to said
Participant for said Performance Period shall not be reduced because
of a failure of active employment because of such accident or
illness.
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<PAGE>
If a Participant shall be actively employed less than a full
Performance Period because of an accident or illness and shall not
complete active employment during one-half of the weeks of said
Performance Period, said Participant shall receive such incentive
award, if any, for said Performance Period as the Committee shall
determine, subject to approval by the ECC. The time during which a
Participant receives sick leave and/or vacation payments shall be
deemed active employment time. Time during which a Participant
receives short-term income protection, short-term disability and/or
long-term disability payments shall not be deemed active employment
time.
7. Payment of Awards
As soon as practicable after valuation of the award for each
Performance Period, payment will be made in cash with respect to the
award earned by each Participant.
8. Deferral of Awards
Participants who are designated by the ECC as being eligible to
participate in the Company's General Deferred Compensation Plan may elect
to defer all or a portion of their awards in accordance with the terms of
such General Deferred Compensation Plan.
9. Designation of Beneficiary
(a) Subject to applicable law, each Participant shall have the right to
file with the Company, to the attention of the ECC or the Committee,
a written designation of one or more persons as the beneficiary(ies)
who shall be entitled to receive the amount, if any, payable under
the Plan upon his death. A Participant may from time to time revoke
or change the beneficiary by filing a new designation with the ECC
or the Committee. The last such designation received by the ECC or
the Committee shall be controlling; provided, however, that no
designation, change, or revocation thereof shall be effective unless
received by the ECC or the Committee prior to the Participant's
death, and in no event shall it be effective as of a date prior to
receipt.
(b) If no such beneficiary designation is in effect at the time of a
Participant's death, or if no designated beneficiary survives the
Participant, or if such designation conflicts with law, the payment
of the amount, if any, payable under the Plan upon the Participant's
death shall be made to the Participant's estate by the Committee. If
the Committee is in doubt as to the right of any person to receive
any amount, the Committee may retain
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<PAGE>
such amount, without liability for any interest thereon, until the
rights thereto are determined, or the Committee may pay such amount
into any court of appropriate jurisdiction, and such payment shall
be a complete discharge of the liability of the Plan, the Company,
the Committee and the ECC therefor.
10. Notices
Each Participant whose employment relationship with the Company has
terminated, either voluntarily or involuntarily, shall be responsible for
furnishing the Committee or the Chief Financial Officer of the Company
with the current and proper address for mailing of notices and the
delivery of agreements and payments. Any notice required or permitted to
be given shall be deemed given if directed to the person to whom
addressed at such address and mailed by regular United States mail,
first-class and prepaid. If any item mailed to such address is returned
undeliverable to the addressee, mailing will be suspended until the
Participant furnishes the proper address.
11. Rights of Participants
Nothing contained in the Plan and no action taken pursuant to the
Plan shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Participant or such
Participant's legal representative or designated beneficiary, or other
persons.
If and to the extent that any Participant or his legal
representative or designated beneficiary, as the case may be, acquires a
right to receive any payment from the Company pursuant to the Plan, such
right shall be no greater than the right of an unsecured general creditor
of the Company.
12. No Employment Rights
Nothing in the Plan or any other document describing or referring to
the Plan shall be deemed to confer on any Participant the right to
continue in the employ of the Company or affect the right of the Company
to terminate the employment of any such person with or without cause.
13. Certain Payments Upon a Change of Control
If, upon a Change of Control (as defined in Annex A hereto) of the
Company, amounts payable or that would or might be payable in respect of
an individual under the Plan instead are paid to such individual or such
individual's estate or beneficiary pursuant to any change of control
severance plan or agreement, or any similar plan, agreement or
arrangement to which the Company
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<PAGE>
is a party, payments in respect of such individual hereunder shall be
reduced pro tanto.
14. Nonalienation of Awards
No amounts payable or other rights under the Plan shall be sold,
transferred, assigned, pledged, or otherwise disposed of or encumbered by
a Participant, except as provided herein, nor shall they be subject to
attachment, garnishment, execution, or other creditor's processes.
15. Withholding Taxes
The Company shall have the right to deduct withholding taxes from
any payments made pursuant to the Plan, or make such other provisions as
it deems necessary or appropriate to satisfy its obligations for
withholding federal, state, or local income or other taxes from payments
to the Participant.
16. Termination, Amendment, and Modification
The Committee, ECC or the Board of Directors may from time to time
amend, modify, or discontinue the Plan or any provision hereof. No
amendment to, or discontinuance or termination of, the Plan shall,
without the written consent of the Participant, adversely affect any
rights of such Participant that have vested. This Plan shall continue
until terminated by the Committee, ECC or the Board of Directors of the
Company.
17. Headings and Captions
The headings and captions herein are provided for reference and
convenience only, shall not be considered part of the Plan, and shall not
be employed in the construction of the Plan.
18. Controlling Law
This Plan shall be construed and enforced according to the laws of
the Commonwealth of Massachusetts, to the extent not preempted by Federal
law, which shall otherwise control.
19. Miscellaneous Provisions
(a) All costs and expenses involved in administering the Plan as
provided herein, or incident thereto, shall be borne by the Company.
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<PAGE>
(b) If any Participant shall also participate in other annual incentive
plans of the Company, the ECC shall determine the amount, if any, by
which such Participant's award under the Plan shall be adjusted, so
as to coordinate the benefits under the Plan with the other plans.
(c) The Committee or the ECC may, in its sole discretion, reduce or
eliminate awards granted or money payable to any Participant or all
Participants if it determines that such awards or payments may cause
the Company to violate any applicable law, regulation, controls, or
guidelines. Such reduction or elimination may be made
notwithstanding that the possible violation might be eliminated by
reducing or not increasing compensation or benefits of other
associates, it being the intent of the Plan not to inhibit the
discretion of the Company to provide such forms and amounts of
compensation and benefits to employees as it deems advisable.
20. Continuation Incentive Awards and Replacement Incentive Awards Granted in
Connection with Spin-Off
Notwithstanding any other provision of the Plan, in connection with
the spin-off of the Company by Waban Inc. ("Waban"), the Committee,
subject to the approval of the ECC, which approval may be granted or
withheld in the ECC's sole discretion, may grant to any Participant (i)
incentive awards which are intended to serve as a continuation of
incentive awards previously granted to such Participant ("Continuation
Incentive Awards") under the Waban Management Incentive Plan (the
"WMIP"), and (ii) incentive awards which are intended to serve as a
replacement of incentive awards previously granted to such Participant
("Replacement Incentive Awards") under the WMIP.
Each Continuation Incentive Award shall (i) be considered to be a
continuation of the incentive award previously granted under the WMIP, as
adjusted to reflect the assumption by the Company of Waban's obligations
under such incentive award, (ii) be based upon the same Performance
Periods and Performance Criteria as the continued incentive award, as
adjusted to reflect the effects of the spin-off on the Company structure
(e.g., interest expense, corporate overhead), and (iii) as determined by
the Committee (subject to the approval of the ECC), provide no additional
value or benefits other than those provided by the continued incentive
award, the approval of the ECC to be final and binding for all purposes.
In addition, with respect to each Continuation Incentive Award, a Change
in Control shall have the meaning set forth in Annex B hereto. Except as
otherwise set forth in this Section 20 or determined by the Committee
(subject to the approval of the ECC), each Continuation Incentive Award
shall be subject to all other terms of the Plan and shall be subject,
before payment, to certification by the ECC that all Performance Criteria
have been satisfied.
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<PAGE>
Each Replacement Incentive Award shall be granted upon such terms and
conditions as the Committee (subject to the approval of the ECC) deems
appropriate and in accordance with such Performance Periods (including a
Performance Period beginning prior to the effective date of the Plan) and
Performance Criteria as the Committee deems appropriate.
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<PAGE>
ANNEX A
DEFINITION OF CHANGE IN CONTROL
-------------------------------
For the purposes of this Plan, a "Change of Control" shall mean:
(a) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (iv)
any acquisition by any corporation pursuant to a transaction which satisfies the
criteria set forth in clauses (i), (ii) and (iii) of subsection (c) of this
definition; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequently
to the date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board (except that this proviso shall
not apply to any individual whose initial assumption of office as a director
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board); or
(c) Consummation of a reorganization, merger or consolidation
involving the Company or a sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case, unless,
immediately following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, of the
corporation resulting from such Business Combination (which as used in section
(c) of this definition shall include, without limitation, a corporation which as
a result of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business
<PAGE>
Combination, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation and (iii) at least half
of the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
<PAGE>
ANNEX B
DEFINITION OF CHANGE IN CONTROL
WITH RESPECT TO CONTINUATION INCENTIVE AWARDS
---------------------------------------------
For the purposes of the Plan, "Change of Control" with respect to
Continuation Incentive Awards 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"); provided,
however, that no transaction shall be deemed to be a Change of
Control as to a Participant (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 ECC shall
otherwise determine prior to such occurrence, if the Participant
or a Participant 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 ECC shall otherwise determine
prior to the acquisition of such 20% ownership, such acquisition
of ownership shall not constitute a Change of Control as to a
Participant if the Participant or a Participant 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 such agreement, all or substantially all of the
business and/or assets of the Company shall be owned, leased or
otherwise controlled by another
<PAGE>
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 ECC, no
transaction shall constitute a Change of Control as to Participant
if, immediately after such transaction, the Participant or any
Participant 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 the Participant and any
Participant Related Party immediately prior to such transaction,
expressed as a percentage of the fair value of all equity
securities of the Company immediately prior to such transaction
(for purposes of this paragraph ownership of equity securities
shall be determined in the same manner as ownership of Common
Stock); and provided, further, that, for purposes of this
paragraph (d), if such agreement requires as a condition precedent
approval by the Company's shareholders of the agreement or
transaction, a Change of Control shall not be deemed to have taken
place unless and until such approval is secured (but upon any such
approval, a Change of Control shall be deemed to have occurred on
the date of execution of such agreement).
In addition, for purposes of this Annex 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
<PAGE>
(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; provided, however, that the term "Person"
shall not include (a) any individuals who are descendants of Max Feldberg or
Morris Feldberg, (b) any relatives of the fourth degree of consanguinity or
closer of such descendants or (c) custodians, trustees or legal representatives
of such persons.
A "Participant Related Party" shall mean any affiliate or associate of
the Participant other than the Company or a 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).
"Participant" means a participant in the Plan.
<PAGE>
EXHIBIT 10.6
BJ'S WHOLESALE CLUB, INC.
GROWTH INCENTIVE PLAN
WHEREAS, the Participants are in high-level management positions in the
Company or its subsidiaries and are key to the long-term success of the Company;
WHEREAS, the Company desires to provide an incentive to focus the
Participants' attention and efforts on long-term growth and profitability;
NOW THEREFORE, the Company hereby adopts the Plan, as hereinafter set
forth, effective as of the Effective Date.
* * * * * *
ARTICLE 1. DEFINITIONS
The following terms as used in the Plan shall have the following meanings:
"Award Period" shall mean a period of a certain number of consecutive
fiscal years (or portions thereof), as determined by the Committee in its
discretion. Award Periods may overlap and employees may participate
simultaneously with respect to more than one Award Period.
"Committee" shall mean the Executive Compensation Committee of the Board of
Directors of BJ's Wholesale Club, Inc.
"Company" shall mean BJ's Wholesale Club, Inc. and its subsidiaries.
"Effective Date" shall mean the date on which Waban Inc. completes the
spin-off of the Company by distributing to Waban's stockholders on a pro rata
basis all of the outstanding shares of Common Stock of the Company held by Waban
Inc.
"Incentive Measurement" shall mean any one or combination of the following
objective measures of performance or growth, as the Committee shall determine:
operating income, pre-tax income, net income, costs, any of the preceding
measures as a percent of sales, earnings per share, sales, return on equity, and
return on investment.
"Incentive Unit" shall mean an incentive unit granted to each Participant,
the value of which equals a certain percentage of the growth in the Incentive
Measurement achieved over the Award Period, as determined by the Committee.
<PAGE>
"Participant" shall mean an employee in a high-level management position in
the Company who is selected by the Committee, in its discretion, to be a
participant in the Plan.
"Plan" shall mean the BJ's Wholesale Club, Inc. Growth Incentive Plan, as
herein set forth, including any and all amendments hereto and restatements
hereof.
ARTICLE 2. BENEFITS UNDER THE PLAN
2.1 Granting of Awards.
(a) The Grant. On or before the commencement of each Award Period,
the Committee shall determine (i) which employees shall be Participants in the
Plan, (ii) the amount of Incentive Units to be granted to each Participant, and
(iii) the method or formula for determining the value of each Incentive Unit,
based on the Incentive Measurement.
(b) Payment Dates. On or before the commencement of each Award
Period, the Committee shall determine (i) the date or dates on or about which
payment in respect of Incentive Units shall be made, and (ii) the amount of each
Participant's Incentive Units which may be redeemed on such payment dates. One
such payment date shall occur at some time within three (3) months after the end
of the Award Period and other payment date(s) may occur one (1) or more years
after such date (the "Deferred Payment Date").
2.2 Value of Incentive Units. On or before the commencement of each Award
Period, the Committee shall determine (i) the factor(s) comprising the Incentive
Measurement, and (ii) the Incentive Measurement's base value, i.e., the value
against which growth shall be measured. Notwithstanding the prior sentence, the
Incentive Measurement's base value may be appropriately adjusted by the
Committee, pursuant to Section 2.5(i) hereof, after the certification of the
Company's financial statements by the Company's independent public accountant
for the fiscal year immediately preceding the commencement of the Award Period.
In the Committee's discretion, Incentive Measurements may vary with respect to
Incentive Unit grants made to individual Participants or groups of Participants.
2.3 Award Opportunity. Upon the completion of each Award Period and the
certification of the Company's financial statements by the Company's independent
public accountants for the last fiscal year in said Award Period, the Committee
shall cause to be re-valued the Incentive Measurement in order to determine the
growth over the Incentive Measurement's base value and, thus, the value of each
Incentive Unit. Notwithstanding anything to the contrary herein contained or
implied, the Committee may make appropriate adjustments to the value of the
Incentive Measurement to avoid
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<PAGE>
undue windfalls or hardships due to external conditions outside the control of
management, nonrecurring or abnormal items, changes in accounting practices, or
such other matters as the Committee, in its discretion, shall determine;
however, the Committee shall make no adjustments to the performance criteria
whose effect is to increase the growth incentive payment to the Chief Executive
Officer or to other executive officers as of the end of the year who are named
in the proxy statement, except as provided in Section 2.5 hereof.
2.4 Payment of Awards.
(a) Employees on Last Day of Award Period or Deferred Payment Date.
Participants employed by the Company on the last day of the Award Period shall
be entitled to receive payment (to the extent not deferred) as soon as
practicable thereafter; Participants employed on the Deferred Payment Date shall
be entitled to receive payment of deferred amounts, if applicable, as soon as
practicable thereafter. Notwithstanding anything to the contrary herein
contained or implied, in no event shall a Participant's incentive payment for an
Award Period exceed $2,000,000 in any calendar year.
(b) Termination of Employment in the Event of Death, Disability or
Retirement. If the termination of employment of a Participant occurs before the
end of an Award Period due to: (i) death, (ii) disability (as defined under the
Company's long-term disability plan), or (iii) retirement on or after the
attainment of age fifty-five (55), the Participant shall be entitled to pro-
rated payment in respect of Incentive Units, determined as of the end of the
fiscal year in which the Participant's termination of employment due to death,
disability or retirement occurs. Payment shall be made as soon as practicable
following the end of the fiscal year in which termination of employment due to
death, disability or retirement has occurred. In the event of termination of
employment due to death, disability or retirement after the end of the Award
Period and prior to a Deferred Payment Date, payment with respect to any
outstanding deferred payment amount shall be made as soon as practicable after
such termination.
(c) Termination of Employment for Any Reason Other than Death,
Disability or Retirement. In the event of the Participant's termination of
employment for any reason other than death, disability or retirement prior to
the end of the Award Period, the Participant shall have no rights under the Plan
and shall not be entitled to receive payment with respect to any Incentive Unit.
In the event of the Participant's termination of employment for any reason other
than death, disability or retirement prior to a Deferred Payment Date, the
Participant shall not be entitled to receive payment with respect to any
outstanding deferred payment amount.
2.5 Restrictions on Adjustments to Incentive Measurement. The Committee
shall make no adjustments to the Incentive Measurement whose effect is to
increase the
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<PAGE>
growth incentive payment to the Chief Executive Officer or to other executive
officers as of the end of the year who are named in the proxy statement, except
for the following:
(a) Events classified as extraordinary items or discontinued
operations or presented as special nonrecurring charges (or income) in
accordance with generally accepted accounting principles.
(b) Disposal of a business segment or a group of two or more
warehouse stores, a major administrative unit, or major assets, if quantified
and disclosed in Management's Discussion and Analysis of Financial Condition and
Results of Operations of the Company's Annual Report on Form 10-K.
(c) Conversion of convertible bonds or convertible preferred stock
into common stock; a repurchase by the Company of outstanding shares of stock,
if such a repurchase has a material impact on the Incentive Measurement; or an
increase in the number of common shares for earnings per share calculation
purposes due to a new equity or convertible debenture offering, but not by stock
options, restricted stock or other stock-based awards under the Company's 1997
Stock Incentive Plans or any similar plan.
(d) Balance sheet recapitalization or restructuring that materially
alters the allocation between debt and equity for the Company.
(e) Changes in accounting practice to comply with new legislation or
with rules promulgated by the Securities and Exchange Commission or the
Financial Accounting Standards Board and changes in tax laws that affect tax
rates, credits, or the definition of taxable income, if material.
(f) Unusual and material losses beyond the Company's control, such as
acts of God (e.g., earthquake or widespread hurricane damage).
(g) Reserves for future period events which will not occur until
after the performance measurement period.
(h) Adjustments attributable to prior periods in the case of a newly
acquired business.
(i) Adjustments of the Incentive Measurement's base value made
immediately after completion of the audit of the fiscal year immediately
preceding the Award Period, made solely to "true-up" amounts that were based on
estimated results for said preceding year.
(j) Gains and losses from sales of a minority interest in a
subsidiary.
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<PAGE>
(k) Net incremental expense incurred by the Company as a result of
opening new warehouse stores in excess of the number incorporated in the
Incentive Measurement. The amount of the adjustment shall be equal to the
average operating loss incurred by new warehouse stores opened by the Company in
the same fiscal year.
In no event, however, shall the Committee make any adjustment which
would cause incentive awards not to qualify as performance-based compensation
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code").
ARTICLE 3. DESIGNATION OF BENEFICIARY
Each Participant shall have the right to file with the Committee a written
designation of one or more persons as beneficiary(ies) who shall be entitled to
receive the amount, if any, payable under the Plan upon the Participant's death.
A Participant may modify the beneficiary designation by filing a new designation
with the Committee. The last such designation received by the Committee shall be
controlling; provided, however, that no designation or modification thereof
shall be effective unless received by the Committee prior to the Participant's
death.
If no such beneficiary designation is in effect at the time of a
Participant's death, or if no designated beneficiary survives the Participant,
the amount payable under the Plan upon the Participant's death shall be made to
the Participant's surviving spouse; if there is no surviving spouse, payment
shall be made to the Participant's estate.
ARTICLE 4. PLAN ADMINISTRATION AND INDEMNIFICATION
4.1 Plan Administration. This Plan shall be administered by the
Committee. The Committee shall have full authority to interpret the Plan; to
establish, amend, and rescind rules for carrying out the Plan; to interpret the
terms and provisions of the Plan; and to make all other determinations necessary
or advisable for its administration. The Committee's determination shall be
final and binding on all parties.
4.2 Indemnification. The Company shall indemnify and save harmless each
member of the Committee against all expenses and liabilities arising out of
membership on such Committee, excepting only expenses and liabilities arising
from such member's own gross negligence or willful misconduct, as determined by
the Board of Directors or outside counsel designated by the Board of Directors.
-5-
<PAGE>
ARTICLE 5. EFFECT ON EMPLOYMENT RIGHTS
The Plan shall not constitute an employment contract and nothing contained
in the Plan shall confer upon the Participant the right to be retained in the
service of the Company nor limit the right of the Company to discharge or
otherwise deal with the Participant without regard to the existence of the Plan.
ARTICLE 6. CHANGE OF CONTROL
In the event of the merger, sale, consolidation, dissolution, liquidation,
or Change of Control of the Company (as defined in Annex A hereto), the
Committee shall thereupon cause to be re-valued the Incentive Measurement, in
the manner described herein, and shall provide that Incentive Units be redeemed
as soon as practicable thereafter in lieu of payments that would otherwise be
made under Article 2 hereof, regardless of when the end of the Award Period or
Deferred Payment Date is scheduled to occur. Such re-valuation of the Incentive
Measurement shall be determined based on (i) the Company's actual performance or
growth with respect to those fiscal years within the Award Period which have
ended prior to the merger, sale, consolidation, dissolution, liquidation, or
Change of Control, plus (ii) for the fiscal year in which occurs the merger,
sale, consolidation, dissolution, liquidation, or Change of Control, the
Company's projected performance or growth as provided in the fiscal year's
financial plan (as presented to the Company's Board of Directors at the
beginning of the fiscal year) pro-rated based on the number of days in said
fiscal year preceding the merger, sale, consolidation, dissolution, liquidation,
or Change of Control.
ARTICLE 7. AMENDMENT OR TERMINATION OF THE PLAN
The Plan may be amended, suspended or terminated in whole or in part at any
time and from time to time by the Committee. No such amendment, suspension or
termination shall retroactively impair or otherwise adversely affect the rights
of any Participant to benefits under this Plan if the end of the Award Period
has occurred prior to the date of such amendment, suspension or termination.
ARTICLE 8. NON-ASSIGNMENT
The right to benefits hereunder shall not be assignable, and the
Participant shall not be entitled to have such payments commuted or made
otherwise than in accordance with the provisions of the Plan.
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<PAGE>
ARTICLE 9. CONSTRUCTION
9.1 Heading and Captions. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.
9.2 Singular Includes Plural. Except where otherwise clearly indicated by
context, the singular shall include the plural, and vice-versa.
ARTICLE 10. CONTINUATION INCENTIVE UNITS AND REPLACEMENT INCENTIVE
UNITS GRANTED IN CONNECTION WITH SPIN-OFF
Notwithstanding any other provision of the Plan, in connection with the
spin-off of the Company by Waban Inc. ("Waban"), the Committee may grant to any
Participant (i) incentive units which are intended to serve as a continuation of
incentive units previously granted to such Participant ("Continuation Incentive
Units") under the Waban Growth Incentive Plan (the "WGIP"), and (ii) incentive
units which are intended to serve as a replacement of incentive units previously
granted to such Participant ("Replacement Incentive Units") under the WGIP.
Each Continuation Incentive Unit shall (i) be considered to be a
continuation of the incentive unit previously granted under the WGIP, as
adjusted to reflect the assumption by the Company of Waban's obligations under
such incentive unit, (ii) be based upon the same Award Periods and Incentive
Measurements as the continued incentive unit, as adjusted to reflect the effects
of the spin-off on the Company structure (e.g., interest expense, corporate
overhead), and (iii) as determined by the Committee, provide no additional value
or benefits other than those provided by the continued incentive unit, the
approval of the Committee to be final and binding for all purposes. In addition,
with respect to each Continuation Incentive Unit, a Change in Control shall have
the meaning set forth in Annex B hereto. Except as otherwise set forth in this
Article 10 or determined by the Committee, each Continuation Incentive Unit
shall be subject to all other terms of the Plan and shall be subject, before
payment, to certification by the Committee that all Incentive Measurements have
been satisfied.
Each Replacement Incentive Unit shall be granted upon such terms and
conditions, and in accordance with such Award Periods (including an Award Period
beginning prior to the current Fiscal Year) and Incentive Measurements, as the
Committee deems appropriate.
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<PAGE>
ARTICLE 11. RELEVANT LAW
This Plan shall be construed and enforced in accordance with the laws of
the Commonwealth of Massachusetts to the extent such laws are not preempted by
federal law.
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<PAGE>
ANNEX A
DEFINITION OF CHANGE IN CONTROL
-------------------------------
For the purposes of this Plan, a "Change of Control" shall mean:
(a) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (iv)
any acquisition by any corporation pursuant to a transaction which satisfies the
criteria set forth in clauses (i), (ii) and (iii) of subsection (c) of this
definition; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequently
to the date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board (except that this proviso shall
not apply to any individual whose initial assumption of office as a director
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board); or
(c) Consummation of a reorganization, merger or consolidation
involving the Company or a sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case, unless,
immediately following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, of the
corporation resulting from such Business Combination (which as used in section
(c) of this definition shall include, without limitation, a corporation which as
a result of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) in
substantially
<PAGE>
the same proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation and (iii) at least half
of the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
<PAGE>
ANNEX B
DEFINITION OF CHANGE IN CONTROL
WITH RESPECT TO CONTINUATION INCENTIVE UNITS
--------------------------------------------
For the purposes of the Plan, "Change of Control" with respect to
Continuation Incentive Units 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"); provided, however, that no
transaction shall be deemed to be a Change of Control as to a
Participant (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 ECC shall otherwise determine prior to
such occurrence, if the Participant or a Participant 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
ECC shall otherwise determine prior to the acquisition of such 20%
ownership, such acquisition of ownership shall not constitute a Change
of Control as to a Participant if the Participant or a Participant
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 such agreement, all or substantially all of the
business and/or assets of the Company shall be owned, leased or
otherwise controlled by another
<PAGE>
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 ECC, no transaction shall constitute a
Change of Control as to Participant if, immediately after such transaction,
the Participant or any Participant 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 the Participant and any Participant
Related Party immediately prior to such transaction, expressed as a
percentage of the fair value of all equity securities of the Company
immediately prior to such transaction (for purposes of this paragraph
ownership of equity securities shall be determined in the same manner as
ownership of Common Stock); and provided, further, that, for purposes of
this paragraph (d), if such agreement requires as a condition precedent
approval by the Company's shareholders of the agreement or transaction, a
Change of Control shall not be deemed to have taken place unless and until
such approval is secured (but upon any such approval, a Change of Control
shall be deemed to have occurred on the date of execution of such
agreement).
In addition, for purposes of this Annex 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
<PAGE>
(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; provided, however, that the term "Person"
shall not include (a) any individuals who are descendants of Max Feldberg or
Morris Feldberg, (b) any relatives of the fourth degree of consanguinity or
closer of such descendants or (c) custodians, trustees or legal representatives
of such persons.
A "Participant Related Party" shall mean any affiliate or associate of
the Participant other than the Company or a 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).
"Participant" means a participant in the Plan.
<PAGE>
EXHIBIT 10.7
BJ'S WHOLESALE CLUB, INC.
1997 DIRECTOR STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1997 Director Stock Option Plan (the "Plan") of BJ's
Wholesale Club, Inc. (the "Company") is to encourage ownership in the Company by
non-employee directors of the Company whose continued services are considered
essential to the Company's future progress and to provide them with a further
incentive to remain as directors of the Company.
2. ADMINISTRATION
The Board of Directors shall supervise and administer the Plan. Grants of
stock options under the Plan and the amount and nature of the awards to be
granted shall be automatic in accordance with Section 5. However, all questions
of interpretation of the Plan or of any options issued under it shall be
determined by the Board of Directors and such determination shall be final and
binding upon all persons having an interest in the Plan. The Board of Directors
may, to the full extent permitted by or consistent with applicable laws or
regulations, delegate any or all of its powers under the Plan to a committee
appointed by the Board of Directors, and if a committee is so appointed, all
references to the Board of Directors in the Plan shall mean and relate to such
committee.
3. PARTICIPATION IN THE PLAN
Directors of the Company who are not employees of the Company or any
subsidiary of the Company shall be eligible to participate in the Plan.
4. STOCK SUBJECT TO THE PLAN
(a) The maximum number of shares which may be issued under the Plan shall
be 150,000 shares of the Company's Common Stock, par value $0.01 per share
("Common Stock"), subject to adjustment as provided in Section 8 of the Plan.
(b) If any outstanding option under the Plan for any reason expires or is
terminated without having been exercised in full, the shares allocable to the
unexercised portion of such option shall again become available for grant
pursuant to the Plan.
(c) All options granted under the Plan shall be non-statutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of 1986, as amended to date and as it may be amended from time to time (the
"Code").
<PAGE>
(d) Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
5. TERMS, CONDITIONS AND FORM OF OPTIONS
Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:
(a) Option Grant Dates and Number of Options.
----------------------------------------
(1) Annual Grants. Upon the date of each annual meeting of the
-------------
stockholders of the Company held after the Distribution Date (as defined in
Section 6(a)), the Company shall grant (i) to each eligible director elected as
a director for the first time at such meeting (other than persons who were
directors of Waban Inc. immediately prior to the Distribution Date) an option
for 3,000 shares of Common Stock and (ii) to each other eligible director
continuing in office after, or elected at, such meeting (including, without
limitation, any directors of Waban Inc. who became directors of the Company on
or prior to the Distribution Date) an option for 1,500 shares of Common Stock.
For purposes of this paragraph, and subject to the parenthetical in clause (i)
in the previous sentence, each eligible director initially elected other than at
an annual meeting of stockholders shall be deemed to have been elected as a
director for the first time at the next annual meeting of stockholders following
his or her election as a director (provided such person is serving as a director
on the date of such annual meeting).
(2) Replacement Options.
-------------------
(A) General. Following the Distribution Date, the Company will grant
-------
options under the Plan in replacement or adjustment of options previously
granted under the Waban Inc. 1995 Director Stock Option Plan (the "Waban Plan").
Except as provided below, the vesting schedule and other terms of such options
shall be substantially similar to those of the applicable Waban option. For
purposes of this section, the term "Stock Value Ratio" means the number
determined by dividing the Waban Common Stock Value by the BJI Common Stock
Value, where (i) the "Waban Common Stock Value" equals the average of the
closing prices of Waban Common Stock on the NYSE during the ten trading days
immediately preceding the Distribution Date and (ii) the "BJI Common Stock
Value" equals the average of the closing prices of BJI Common Stock on the NYSE
during the ten trading days immediately following the Distribution Date.
(B) For Eligible Directors of BJI Who Will Not Be Waban Directors.
-------------------------------------------------------------
The Company shall grant a replacement option to each eligible director who is no
longer serving as a director of Waban immediately after the Distribution Date,
upon the
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<PAGE>
cancellation, forfeiture or other expiration of each unexercised option under
the Waban Plan held by such eligible director. Each such replacement option
shall (i) be for the number of shares of Common Stock determined by multiplying
the number of shares of Waban Common Stock subject to the applicable Waban
option by the Stock Value Ratio (rounded down to the nearest whole share) and
(ii) have an exercise price determined by dividing the per share exercise price
of the applicable Waban option by the Stock Value Ratio (rounded up to the next
higher cent).
(C) For Eligible Directors of BJI Who Will Also Be Waban Directors.
--------------------------------------------------------------
The Company shall grant an adjustment option to each eligible director who is
continuing to serve as a director of Waban immediately after the Distribution
Date. Such adjustment option shall (i) be for the same aggregate number of
shares of Common Stock as the unexercised portion of the applicable Waban option
and (ii) have an exercise price determined by dividing the per share exercise
price of the applicable Waban option by the Stock Value Ratio (rounded up to the
next higher cent).
(b) Option Exercise Price. Except as set forth in Section 5(a)(2) with
---------------------
respect to replacement options, the option exercise price per share for each
option granted under the Plan shall equal the closing sale price per share of
the Common Stock on the New York Stock Exchange on the date of grant (or if no
such price is reported on such date such price as reported on the nearest
preceding day) as reported in The Wall Street Journal (Eastern Edition). If the
Common Stock is instead listed on another nationally recognized securities
exchange on the date of grant, the option exercise price per share for each
option granted under the Plan shall equal the reported closing sale price per
share of the Common Stock by such exchange on the date of grant or if the Common
Stock is traded on the Nasdaq National Market or another automated quotation
system, the last reported sale price per share of the Company's Common Stock on
such system on the date of grant (or if no such price is reported on such date,
such price as reported on the nearest preceding day) as reported in The Wall
Street Journal (Eastern Edition). If the Common Stock is not listed on an
exchange or reported in an automated quotation system, the fair market value per
share on the date of grant shall be determined by the Board of Directors.
(c) Transferability of Options. Except as the Board may otherwise
--------------------------
determine or provide in an option granted under the Plan, options shall not be
sold, assigned, transferred, pledged or otherwise encumbered by the person to
whom they are granted, either voluntarily or by operation of law, except by will
or the laws of descent and distribution, and, during the life of the
Participant, shall be exercisable only by the Participant. References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.
(d) Exercise Period. Except as set forth in Section 5(a)(2) with respect
---------------
to replacement options, each option shall become exercisable on a cumulative
basis as to one-third of the shares subject to the option on each of the first
day of the month of the
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<PAGE>
first three anniversaries of the date of grant of such option. In the event an
optionee ceases to serve as a director, each such option may be exercised by the
optionee (or, in the event of the optionee's death, by the optionee's
administrator, executor or heirs), at any time within 12 months after the
optionee ceases to serve as a director, to the extent such option was
exercisable at the time of such cessation of service. Notwithstanding the
foregoing, no option shall be exercisable after the expiration of ten years from
the date of grant.
(e) Exercise Procedure. Options may be exercised only by written notice to
------------------
the Company at its principal office accompanied by (i) payment in cash or by
certified or bank check of the full consideration for the shares as to which
they are exercised, (ii) delivery of outstanding shares of the Company's Common
Stock (which, in the case of shares acquired from the Company, have been
outstanding for at least six months) having a fair market value on the last
business day preceding the date of exercise equal to the option exercise price,
or (iii) an irrevocable undertaking by a broker (who is a member of the New York
Stock Exchange) to deliver promptly to the Company sufficient funds to pay the
exercise price or delivery of irrevocable instructions to a broker (who is a
member of the New York Stock Exchange) to deliver promptly to the Company cash
or a check sufficient to pay the exercise price.
6. EFFECTIVE DATE AND TERMINATION
(a) The effective date of the Plan is the date on which Waban Inc.
distributes to its stockholders, on a pro-rata basis, all of the then
outstanding shares of common stock of the Company (the "Distribution Date").
(b) Unless sooner terminated in accordance with its terms, the Plan shall
terminate on the day following the date of the Company's annual meeting of
stockholders for the year 2002. Options outstanding on such date shall continue
to have force and effect in accordance with the provisions of the instruments
evidencing such options.
7. LIMITATION OF RIGHTS
(a) No Right to Continue as a Director. Neither the Plan, nor the granting
----------------------------------
of an option nor any other action taken pursuant to the Plan, shall constitute
or be evidence of any agreement or understanding, express or implied, that the
Company will retain a director for any period of time.
(b) No Stockholders' Rights for Options. An optionee shall have no rights
-----------------------------------
as a stockholder with respect to the shares covered by such optionee's options
until the date of the issuance to such optionee of a stock certificate therefor,
and no adjustment will be made for dividends or other rights (except as provided
in Section 8) for which the record date is prior to the date such certificate is
issued.
-4-
<PAGE>
(c) Compliance with Securities Laws. Each option shall be subject to the
-------------------------------
requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject to such option
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, or the disclosure of non-
public information or the satisfaction of any other condition is necessary as a
condition of, or in connection with, the issuance or purchase of shares
thereunder, such option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable to
the Board of Directors. Nothing herein shall be deemed to require the Company to
apply for or to obtain such listing, registration or qualification, or to
satisfy such condition.
8. CHANGES IN COMMON STOCK
(a) Subject to paragraph (b) below, if the outstanding shares of Common
Stock are increased, decreased or exchanged for a different number or kind of
shares or other securities, or if additional shares or new or different shares
or other securities are distributed with respect to such shares of Common Stock
or other securities, through merger, consolidation, sale of all or substantially
all of the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
distribution with respect to such shares of Common Stock, or other securities,
an appropriate and proportionate adjustment will be made in (i) the maximum
number and kind of shares reserved for issuance under the Plan, (ii) the number
and kind of shares or other securities subject to then outstanding options under
the Plan, and (iii) the price for each share subject to any then outstanding
options under the Plan, without changing the aggregate purchase price as to
which such options remain exercisable. No fractional shares will be issued
under the Plan on account of any such adjustments.
(b) In the event that the Company is merged or consolidated into or with
another corporation (in which consolidation or merger the stockholders of the
Company receive distributions of cash or securities of another issuer as a
result thereof), or in the event that all or substantially all of the assets of
the Company are acquired by any other person or entity, or in the event of a
reorganization or liquidation of the Company, all unexercised options will
become exercisable in full beginning 20 days prior to the consummation of such
merger, consolidation, acquisition, reorganization or liquidation and, to the
extent not exercised, shall terminate effective immediately after the
consummation of such merger, consolidation, acquisition, reorganization or
liquidation.
-5-
<PAGE>
9. AMENDMENT OF THE PLAN
The Board of Directors may suspend or discontinue the Plan or amend it in
any respect whatsoever; provided, however, that without approval of the
stockholders of the Company no revision or amendment shall change the number of
shares subject to the Plan (except as provided in Section 8).
10. NOTICE
Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Treasurer of the Company and shall become
effective when it is received.
11. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the internal laws of the Commonwealth of Massachusetts
(without regard to any applicable conflicts of law).
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<PAGE>
EXHIBIT 10.8
BJ'S WHOLESALE CLUB, INC.
EXECUTIVE RETIREMENT PLAN
_______________
<PAGE>
BJ'S WHOLESALE CLUB, INC.
EXECUTIVE RETIREMENT PLAN
_______________
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
ARTICLE 1. DEFINITIONS....................................................1
ARTICLE 2. BENEFITS UNDER THIS PLAN.......................................3
ARTICLE 3. FUNDING........................................................4
ARTICLE 4. EFFECT ON EMPLOYMENT RIGHTS....................................4
ARTICLE 5. ADMINISTRATION.................................................4
ARTICLE 6. AMENDMENT OR TERMINATION OF PLAN...............................5
ARTICLE 7. NON-ASSIGNMENT.................................................5
ARTICLE 8. CONSTRUCTION...................................................5
ARTICLE 9. RELEVANT LAW...................................................6
<PAGE>
BJ'S WHOLESALE CLUB, INC.
EXECUTIVE RETIREMENT PLAN
_______________
BJ's Wholesale Club, Inc. (the "Company") hereby establishes the BJ's
Wholesale Club, Inc. Executive Retirement Plan, effective as of July 27, 1997
(the "Plan").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Waban Inc. maintained the Waban Inc. Executive Retirement Plan
effective as of January 30, 1994;
WHEREAS, certain persons, who had been in high-level management positions
at Waban Inc. and were Participants in the Waban Inc. Executive Retirement Plan,
are employed by the Company, a "spin-off" entity of Waban Inc.
WHEREAS, the Company desires to maintain the Plan which is a clone of the
Waban Inc. Executive Retirement Plan on behalf of the aforementioned employees
and certain new employees in high-level management positions, as such employees
are key to the profitability and long-term success of the Company;
WHEREAS, in recognition of the Participants' services to the Company, the
Company desires to provide the Participants with certain retirement benefits;
NOW THEREFORE, the Company hereby adopts the Plan, as hereinafter set
forth, effective as of July 27, 1997.
* * * * * *
ARTICLE 1. DEFINITIONS. The following terms as used in this Plan
-----------
shall have the following meanings:
1.1 "Code" shall mean the Internal Revenue Code of 1986, as the same
presently exists and as the same may hereafter be amended, or any successor
statute of similar purpose.
1.2 "Committee" shall mean the Executive Compensation Committee of the
Board of Directors of BJ's Wholesale Club, Inc.
1.3 "Company" shall mean BJ's Wholesale Club, Inc. and any wholly-owned
subsidiaries.
<PAGE>
1.4 "Compensation" shall mean, for any Plan Year, a Participant's actual
base salary earned during the Plan Year (before taking into account any
reduction in base salary pursuant to a salary reduction agreement under Section
401(k) or Section 125 of the Code). Any base salary that is deferred under a
non-qualified deferred compensation plan shall be included as "Compensation" for
the Plan Year in which the salary is earned but not included for the Plan Year
in which such deferred compensation is paid.
1.5 "Effective Date" shall mean July 27, 1997.
1.6 "Plan" shall mean the BJ's Wholesale Club, Inc. Executive Retirement
Plan, as herein set forth, including any and all amendments hereto and
restatements hereof.
1.7 "Plan Year" shall mean the Company's fiscal year.
1.8 "Participant" shall mean an employee of the Company selected by the
Committee to be a Participant in the Plan; provided, however, that the Committee
-------- ------- ----
shall in no event designate as a Participant hereunder any employee who is not a
highly compensated employee or a member of the Company's select group of
management-level employees. The list of Participants is attached as "Schedule
A" hereto, which list shall be periodically updated. The Committee, in its sole
and absolute discretion, may designate new Participants and remove persons as
Participants hereunder, provided that the Committee may not take any action so
-------- ----
as to reduce a former Participant's funded benefit hereunder. Notwithstanding
the foregoing, all Company employees as of the Effective Date who immediately
prior to the Effective Date were Waban Inc. employees who participated in the
Waban Inc. Executive Retirement Plan shall (i) be Participants in the Plan, and
(ii) all Years of Service, Annual Retirement Contributions, accrued benefits and
other benefits, rights and features of or attributable to such employees under
the Waban Inc. Executive Retirement Plan shall continue in full force and effect
and carry over into this Plan.
1.9 "Annual Retirement Contribution" shall mean that amount the Company
contributes on behalf of each Participant pursuant to Article 2 hereof.
1.10 "Years of Service" shall mean each 52 or 53 week period of
uninterrupted service with the Company, including Waban Inc., and their
subsidiaries, ending on the last Saturday in January. A non-compensated leave
of absence shall be excluded from Years of Service.
2
<PAGE>
ARTICLE 2. BENEFITS UNDER THIS PLAN
------------------------
2.1 Annual Retirement Contribution. The Committee shall determine, in its
------------------------------
sole discretion, at any time within two (2) months prior to the end of the Plan
Year but no later than two and one-half (2-1/2) months following the close of
the Plan Year, the amount of the Annual Retirement Contribution the Company will
make on behalf of each Participant, which amount shall be distributed or deemed
distributed (as the case may be) as soon as practicable after the Committee's
determination.
A Participant hereunder shall be entitled to an Annual Retirement
Contribution in a Plan Year only if the Participant was actively employed by the
Company on the last day of such Plan Year, unless the Participant's termination
------
of employment during the Plan Year occurred due to either the Participant's (i)
retirement on or after the attainment of age fifty-five (55), or (ii) disability
(as defined under the Company's long-term disability plan).
2.2 Amount of Annual Retirement Contribution. The Committee shall have
----------------------------------------
sole and absolute discretion to determine the amount of the Annual Retirement
Contribution; provided that the smallest Annual Retirement Contribution the
-------- ----
Committee may determine on behalf of each Participant shall be that amount
sufficient to provide the Participant with a benefit equal to three percent (3%)
of the Participant's Compensation on an "after-tax" basis, taking into account
the Participant's appropriate marginal tax bracket. The "after-tax" value of
the Annual Retirement Contribution is hereinafter referred to as the "After-Tax
Benefit".
2.3 Investment of After-Tax Benefit. As a condition of being a
-------------------------------
Participant hereunder, each Participant agrees, understands and accepts that the
After-Tax Benefit will be used to fund an appropriate vehicle to provide
retirement income and benefit to the Participant (such as an insurance policy),
which such vehicle shall be chosen by the Committee. If the Committee chooses
an insurance program as said appropriate vehicle, then in the Committee's sole
discretion either: (i) the Participant shall apply the After-Tax Benefit to
purchase and maintain an individual policy (with the Participant as the owner
thereof), or (ii) the Committee shall, on behalf of the Participant, apply the
After-Tax Benefit to purchase and maintain an individual account (with the
Participant as the owner thereof) under a group policy.
The Committee reserves the right not to make Annual Retirement
Contributions on behalf of a Participant if it becomes aware or determines that
prior Annual Retirement Contributions are not being applied in accordance with
the terms and intent of this paragraph 2.3.
3
<PAGE>
ARTICLE 3. FUNDING
-------
3.1 Four Year Rule. Notwithstanding anything to the contrary herein
--------------
contained or implied, including Section 2.1 hereof, the Company will make
payment in respect of a Participant's Annual Retirement Contribution for a Plan
Year only if the Participant has been credited with at least four (4) Years of
Service by, and is employed by the Company at, the end of such Plan Year.
3.2 Treatment of Participants With Less Than Four Years of Service. If a
--------------------------------------------------------------
Participant hereunder is credited with less than four (4) Years of Service by
the end of the applicable Plan Year, the Participant will accrue the right to an
Annual Retirement Contribution for that Plan Year, based on (i) the Annual
Retirement Contribution approved by the Committee for that Plan Year, and (ii)
the Participant's Compensation for that Plan Year.
In the Plan Year in which the Participant is first credited with four (4)
Years of Service, the Company will, in the time-frame determined in accordance
with Section 2.1 hereof, make an aggregate retirement contribution on behalf of
the Participant equal to: (i) the amount of the Annual Retirement Contribution
for such Plan Year, plus (ii) the Annual Retirement Contribution amounts the
Participant had accrued in the prior three (3) Plan Years, as determined
pursuant to the first sentence of this Section 3.2. The aggregate retirement
contribution shall be treated as provided in Section 2.3 hereof.
3.3 Forfeitures. If a Participant hereunder terminates employment with
-----------
the Company prior to being credited with four (4) Years of Service, the
Participant shall forfeit the right to any benefit accrued hereunder.
3.4 Modification. By virtue of participating in this Plan, each
------------
Participant authorizes the Company to adjust the amounts of insurance for
whatever reason, such as to account for changes in salary, modifications in
benefit formula, etc.
ARTICLE 4. EFFECT ON EMPLOYMENT RIGHTS. This Plan shall not constitute an
---------------------------
employment contract and nothing contained in this Plan shall confer upon the
Participant the right to be retained in the service of the Company nor limit the
right of the Company to discharge or otherwise deal with the Participant without
regard to the existence of this Plan.
ARTICLE 5. ADMINISTRATION.
--------------
5.1 Plan Administration. The authority to control and manage the
-------------------
operation and administration of the Plan shall be placed in the Committee. The
Committee shall
4
<PAGE>
have full power, discretion and authority to interpret, construe and administer
the Plan and any part thereof.
Subject to the limitations of this Plan, the Committee from time to time
may establish rules for the administration and interpretation of the Plan and
the transaction of its business. The determination of the Committee as to any
disputed question shall be conclusive.
The members of the Committee may authorize one or more of their number or
any officer of the Company to execute or deliver any instrument, make any
payment or perform any other act which the Plan authorizes or requires the
Committee to do.
The Committee may employ counsel and other agents and may procure such
clerical, accounting, actuarial, consulting and other services as it may require
in carrying out the provisions of the Plan.
5.2 Indemnification. The Company shall indemnify and save harmless each
---------------
member of the Committee against all expenses and liabilities arising out of
membership on such Committee, excepting only expenses and liabilities arising
from such member's own gross negligence or willful misconduct, as determined by
the Board of Directors or outside counsel designated by the Board of Directors.
ARTICLE 6. AMENDMENT OR TERMINATION OF PLAN. The Plan may be amended,
--------------------------------
suspended or terminated in whole or in part at any time and from time to time by
the Committee. No such amendment, suspension or termination shall retroactively
impair or otherwise adversely affect the rights of any Participant to benefits
under this Plan that have been funded prior to the date of such amendment,
suspension or termination.
ARTICLE 7. NONASSIGNMENT. The right to benefits hereunder shall not be
-------------
assignable, and the Participant shall not be entitled to have such payments
commuted or made otherwise than in accordance with the provisions of the Plan.
ARTICLE 8. CONSTRUCTION.
------------
8.1 Heading and Captions. The headings and captions herein are provided
--------------------
for reference and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.
5
<PAGE>
8.2 Singular Includes Plural. Except where otherwise clearly indicated by
------------------------
context, the singular shall include the plural, and vice-versa.
ARTICLE 9. RELEVANT LAW. This Plan shall be construed and enforced in
------------
accordance with the laws of the Commonwealth of Massachusetts to the extent such
laws are not preempted by federal law.
6
<PAGE>
EXHIBIT 10.9
BJ'S WHOLESALE CLUB, INC.
1997 REPLACEMENT STOCK INCENTIVE PLAN
The BJ's Wholesale Club, Inc. 1997 Replacement Stock Incentive Plan (the
"Plan") is being adopted by BJ's Wholesale Company, Inc. (the "Company") in
connection with the spin-off of the Company by Waban Inc. ("Waban"). The
effective date of the Plan is the date on which Waban completes the spin-off by
distributing to its stockholders, on a pro-rata basis, all of the then
outstanding shares of common stock of the Company (the "Distribution Date").
Following the Distribution Date, the Company will grant Awards (as defined
below) under the Plan in replacement for awards previously granted under the
Waban Inc. 1989 Stock Incentive Plan which are held by persons who (i) leave
employment at Waban on the Distribution Date or within three months thereafter
and become employees of the Company, or (ii) continue as employees at Waban and
also become employees of the Company on the Distribution Date. Replacement
options granted under the Plan are intended to comply with the requirements of
Sections 424(a) and 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), relating to the replacement of options in connection with corporate
reorganizations.
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS.
The purpose of the Plan is to secure for the Company and its stockholders the
benefit of the incentives inherent in Common Stock ownership and the receipt of
incentive awards by selected key employees of the Company and its Subsidiaries
who contribute to and will be responsible for its continued long-term growth.
The Plan is intended to stimulate the efforts of such key employees by providing
an opportunity for capital appreciation and giving suitable recognition for
services which contribute materially to the success of the Company.
The following terms shall be defined as set forth below:
(a) "Act" means the Securities Exchange Act of 1934.
(b) "Award" or "Awards" except where referring to a particular category of
grant under the Plan shall include Incentive Stock Options, Non-Qualified
Stock Options, Stock Appreciation Rights, Restricted Stock Awards,
Unrestricted Stock Awards, Deferred Stock Awards, Performance Unit Awards and
Other Stock-based Awards.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means a felony conviction of a participant or the failure of a
participant to contest prosecution for a felony, or a participant's willful
<PAGE>
misconduct or dishonesty, any of which is directly harmful to the business
or reputation of the Company or any Subsidiary.
(e) "Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
(f) "Committee" means the Committee referred to in Section 2. If at any time
no Committee shall be in office, the functions of the Committee shall be
exercised by the Board.
(g) "Deferred Stock Award" is defined in Section 9(a).
(h) "Disability" means disability as determined in accordance with standards
and procedures similar to those used under the Company's long term
disability program.
(i) "Fair Market Value" on any given date means the last sale price regular
way at which Stock is traded on such date as reflected in the New York Stock
Exchange Composite Transactions Index or, where applicable, the value of a
share of Stock as determined by the Committee in accordance with the
applicable provisions of the Code.
(j) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" as defined in the Code.
(k) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(l) "Normal Retirement" means retirement from active employment with the
Company and its Subsidiaries on or after the normal retirement date specified
in the Waban Inc. Retirement Plan as in effect on the Distribution Date.
(m) "Other Stock-based Award" is defined in Section 11(a).
(n) "Performance Unit Award" is defined in Section 10(a).
(o) "Restricted Stock Award" is defined in Section 8(a).
(p) "Stock" means the Common Stock, $.01 par value, of the Company, subject
to adjustments pursuant to Section 3.
(q) "Stock Appreciation Right" means a right described in Section 7(a) and
granted, either independently of other Awards or in tandem with the grant
of a Stock Option.
-2-
<PAGE>
(r) "Stock Option" means any option to purchase shares of Stock granted
pursuant to Section 6.
(s) "Subsidiary" means any corporation or other entity (other than the
Company) 50% or more of the total combined voting power of all classes of
stock or other interests of which is owned, directly or indirectly, by the
Company.
(t) "Unrestricted Stock Award" is defined in Section 8(b).
SECTION 2. COMMITTEE AUTHORITY TO SELECT PARTICIPANTS AND DETERMINE AWARDS, ETC.
The Plan shall be administered by a Committee of not less than two members,
who shall be appointed by the Board and who shall serve at the pleasure of the
Board.
The Committee shall have the power and authority to grant Awards consistent
with the terms of the Plan, including the power and authority:
(i) to select the officers and other key employees of the Company and its
Subsidiaries to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of
Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Unrestricted Stock, Deferred
Stock, Performance Units and any Other Stock-based Awards, or any
combination of the foregoing, granted to any one or more participants;
(iii) to determine the number of shares to be covered by any Award (subject,
however, to the per participant limitation contained in Section 3(a));
(iv) to determine the terms and conditions, including restrictions, not
inconsistent with the terms of the Plan, of any Award, which terms and
conditions may differ among individual Awards and participants;
(v) to determine whether, to what extent, and under what circumstances
Stock and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the participant
and whether and to what extent the Company shall pay or credit amounts
equal to interest (at rates determined by the Committee) or dividends
or deemed dividends on such deferrals; and
(vi) to adopt, alter and repeal such rules, guidelines and practices for
administration of the Plan and for its own acts and proceedings as it
shall deem advisable; to interpret the terms and provisions of the
Plan and any
-3-
<PAGE>
Award (including related Award Agreements); to make all
determinations it deems advisable for the administration of the
Plan; to decide all disputes arising in connection with the Plan;
and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION.
(a) Shares Issuable; Per Participant Limit.
The maximum number of shares of Stock reserved and available for issuance
under the Plan shall be 2,500,000, including shares issued in lieu of or upon
reinvestment of dividends arising from Awards. For purposes of this limitation,
Awards and Stock which are forfeited, reacquired by the Company or satisfied
without the issuance of Stock shall not be counted and such limitation shall
apply only to shares which have become free of any restrictions under the Plan.
Subject to such overall limitation, shares may be issued up to such maximum
pursuant to any type or types of Award, including Incentive Stock Options.
Shares issued under the Plan may be authorized but unissued shares or shares
reacquired by the Company. Subject to adjustment as provided in Section 3(b)
below, the maximum number of shares of Stock with respect to which Stock Options
and Stock Appreciation Rights may be granted to any employee under the Plan
shall not exceed 700,000 shares of Stock during any one calendar year. For
purposes of calculating such maximum number, (i) each Stock Option and Stock
Appreciation Right shall continue to be treated as outstanding notwithstanding
its repricing, cancellation or expiration, (ii) the repricing of an outstanding
Stock Option or Stock Appreciation Right or the issuance of a new Stock Option
or Stock Appreciation Right in substitution for a cancelled Stock Option or
Stock Appreciation Right shall be deemed to constitute the grant of a new
additional Stock Option or Stock Appreciation Right separate from the original
grant of the Stock Option or Stock Appreciation Right that is repriced or
cancelled and (iii) a Stock Appreciation Right that is granted in tandem with a
Stock Option shall not be included.
(b) Stock Dividends, Mergers, etc.
In the event of a stock dividend, stock split or similar change in
capitalization affecting the Stock, the Committee shall make appropriate
adjustments in (i) the number and kind of shares of stock or securities on which
Awards may thereafter be granted, (ii) the number and kind of shares remaining
subject to outstanding Awards, and (iii) the option or purchase price in respect
of such shares. In the event of any merger, consolidation, dissolution or
liquidation of the Company, the Committee in its sole discretion may, as to any
outstanding Awards, make such substitution or adjustment in the aggregate number
of shares reserved for issuance under the Plan and in the number
-4-
<PAGE>
and purchase price (if any) of shares subject to such Awards as it may
determine, or accelerate, amend or terminate such Awards upon such terms and
conditions as it shall provide (which, in the case of the termination of the
vested portion of any Award, shall require payment or other consideration which
the Committee deems equitable in the circumstances), subject, however, to the
provisions of Section 15.
(c) Substitute Awards.
The Company may grant Awards under the Plan in substitution for stock and
stock-based awards held by employees of another corporation who concurrently
become employees of the Company or a Subsidiary as the result of a merger or
consolidation of the employing corporation with the Company or a Subsidiary or
the acquisition by the Company or a Subsidiary of property or stock of the
employing corporation. The Committee may direct that the substitute Awards be
granted on such terms and conditions as the Committee considers appropriate in
the circumstances.
SECTION 4. ELIGIBILITY.
Participants in the Plan will be such full or part time officers and other
key employees of the Company and its Subsidiaries (excluding any director who is
not an employee) who are responsible for or contribute to the management, growth
or profitability of the Company and its Subsidiaries and who are selected from
time to time by the Committee, in its sole discretion. Persons who are not
employees of the Company or a subsidiary (within the meaning of Section 422 of
the Code) shall not be eligible to receive grants of Incentive Stock Options.
SECTION 5. LIMITATIONS ON TERM AND DATES OF AWARDS.
(a) Duration of Awards.
Subject to Sections 16(a) and 16(c) below, no restrictions or limitations
on Awards shall extend beyond 10 years (or 10 years and one day in the case of
Non-Qualified Stock Options) from the grant date, except that deferrals elected
by participants of the receipt of Stock or other benefits under the Plan may
extend beyond such date.
(b) Latest Grant Date.
No Award shall be granted more than six months after the Distribution Date,
but then-outstanding Awards may extend beyond such date.
SECTION 6. STOCK OPTIONS.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
-5-
<PAGE>
Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options. To the extent that any option does not qualify
as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted to the Committee under the Plan be
so exercised, so as to disqualify the Plan or, without the consent of the
optionee, any Incentive Stock Option under Section 422 of the Code.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price.
The option price per share of Stock purchasable under a Stock Option shall
be determined by the Committee at the time of grant but shall be not less than
100% of Fair Market Value on the date of grant. If an employee owns or is deemed
to own (by reason of the attribution rules applicable under Section 424(d) of
the Code) more than 10% of the combined voting power of all classes of stock of
the Company or any Subsidiary or parent corporation and an Incentive Stock
Option is granted to such employee, the option price shall be not less than 110%
of Fair Market Value on the grant date.
(b) Option Term.
The term of each Stock Option shall be fixed by the Committee, but no
Incentive Stock Option shall be exercisable more than ten years after the date
the option is granted and no Non-Qualified Stock Option shall be exercisable
more than ten years and one day after the date the option is granted. If an
employee owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10% of the combined voting power of all classes of
stock of the Company or any Subsidiary or parent corporation and an Incentive
Stock Option is granted to such employee, the term of such option shall be no
more than five years from the date of grant.
(c) Exercisability.
Stock Options shall be exercisable at such future time or times, whether or
not in installments, as shall be determined by the Committee at or after the
grant date. The Committee may at any time accelerate the exercisability of all
or any portion of any Stock Option.
-6-
<PAGE>
(d) Method of Exercise.
Stock Options may be exercised in whole or in part, by giving written
notice of exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price, either by certified or bank check or other instrument acceptable to the
Committee. As determined by the Committee, in its discretion, at (or, in the
case of Non-Qualified Stock Options, at or after) grant, payment in full or in
part may also be made either (i) through the surrender by the optionee of shares
of Stock not then subject to restrictions under any Company plan or (ii) through
the withholding by the Company of shares of Stock which would otherwise be
delivered to the optionee upon exercise of the option. Such surrendered or
withheld shares shall be valued at Fair Market Value on the exercise date. An
optionee shall have the rights of a shareholder only as to shares acquired upon
the exercise of a Stock Option and not as to unexercised Stock Options.
Notwithstanding the foregoing paragraph, during the 60-day period following
a Change of Control as defined in Exhibit A, any optionee shall have the right
(by giving written notice to the Company in form satisfactory to the Committee)
to surrender all or part of the Stock Option to the Company and to receive a
cash payment equal to the excess of the fair market value per share of Stock on
the date of exercise over the option exercise price per share times the number
of shares subject to the surrendered Stock Option. The foregoing right shall not
apply to (i) any Stock Option as to which the Committee shall expressly exclude
such right at the date of grant, (ii) any Stock Option held by an optionee who
initiates the Change of Control or (iii) any Stock Option held by an optionee
described in any of the following provisions of the definition of Change of
Control set forth in Exhibit A: the proviso to paragraph (a) of such definition;
the proviso to paragraph (b) of such definition; or the first proviso to
paragraph (d) of such definition. For purposes of clause (iii) of the
immediately preceding sentence, whether an optionee is described in any of the
provisos specified in such clause shall be determined without regard to any
discretionary determination by the Committee pursuant to the terms of Exhibit A
hereto. As used in this paragraph with respect to an election by an optionee to
receive cash in respect of a Non-Qualified Stock Option the term "fair market
value" shall mean the higher of (x) the highest reported sales price, regular
way, of a share of the Stock on the New York Stock Exchange Composite
Transactions Index during the 60-day period prior to the Change of Control and
(y) if the Change of Control is the result of a transaction or series of
transactions described in paragraphs (a), (b) or (d) of the definition of Change
of Control set forth in Exhibit A, the highest price per share of the Stock paid
in such transaction or series of transactions (which in the case of paragraph
(b) shall be the highest price per share of the Stock as reflected in a Schedule
13D filed by the person having made the acquisition), and as used in this
paragraph with respect to an election by an optionee to receive cash in respect
of an Incentive Stock Option the term "fair market value" shall mean Fair Market
Value.
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(e) Non-transferability of Options.
No Stock Option shall be transferable by the optionee otherwise then by
will or by the laws of descent and distribution, and all Stock Options shall be
exercisable, during the optionee's lifetime, only by the optionee.
(f) Termination by Death.
If an optionee's employment by the Company and its Subsidiaries terminates
by reason of death, the Stock Option may thereafter be exercised, to the extent
then exercisable (or on such accelerated basis as the Committee shall at any
time determine prior to death), by the legal representative or legatee of the
optionee, for a period of three years (or such shorter period as the Committee
shall specify at time of grant) from the date of death or until the expiration
of the stated term of the option, if earlier.
(g) Termination by Reason of Disability.
Any Stock Option held by an optionee whose employment by the Company and
its Subsidiaries has terminated, or who has been designated an inactive
employee, by reason of Disability may thereafter be exercised to the extent it
was exercisable at the time of the earlier of such termination or such
designation (or on such accelerated basis as the Committee shall at any time
determine prior to such termination or designation) for a period of three years
(or such shorter period as the Committee shall specify at time of grant) from
the date of such termination of employment or designation or until the
expiration of the stated term of the option, if earlier. Except as otherwise
provided by the Committee at the time of grant, the death of an optionee during
the final year of such exercise period shall extend such period for one year
following death, subject to termination on the expiration of the stated term of
the option, if earlier. The Committee shall have the authority to determine
whether a participant has been terminated or designated an inactive employee by
reason of Disability.
(h) Termination by Reason of Normal Retirement.
If an optionee's employment by the Company and its Subsidiaries terminates
by reason of Normal Retirement, any Stock Option held by such optionee may
thereafter be exercised to the extent that it was then exercisable (or on such
accelerated basis as the Committee shall at any time determine) for a period of
three years (or such shorter period as the Committee shall specify at time of
grant) from the date of Normal Retirement or until the expiration of the stated
term of the option, if earlier. Except as otherwise provided by the Committee at
the time of grant, the death of an optionee during the final year of such
exercise period shall extend such period for one year following death, subject
to earlier termination on the expiration of the stated term of the option, if
earlier.
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(i) Other Termination.
Unless otherwise determined by the Committee, if an optionee's employment
by the Company and its Subsidiaries terminates for any reason other than death,
Disability, Normal Retirement, or for Cause, any Stock Option held by such
optionee may thereafter be exercised to the extent it was exercisable on the
date of termination of employment (or on such accelerated basis as the Committee
shall determine at or after grant) for a period of three months (or such longer
period up to three years as the Committee shall specify at or after grant) from
the date of termination of employment or until the expiration of the stated term
of the option, if earlier. If an optionee's employment terminates for Cause, the
unexercised portion of any Stock Option then held by the optionee shall
immediately terminate.
(j) Form of Settlement.
Subject to Section 16(a) and Section 16(c) below, shares of Stock issued
upon exercise of a Stock Option shall be free of all restrictions under the
Plan, except as provided in the following sentence. The Committee may provide at
time of grant that the shares to be issued upon the exercise of a Stock Option
shall be in the form of Restricted Stock or Deferred Stock, or may reserve the
right to so provide after time of grant.
SECTION 7. STOCK APPRECIATION RIGHTS; DISCRETIONARY PAYMENTS.
(a) Nature of Stock Appreciation Right.
A Stock Appreciation Right is an Award entitling the recipient to receive
an amount in cash or shares of Stock (or in a form of payment permitted under
paragraph (e) below) or a combination thereof having a value equal to (or if the
Committee shall so determine at time of grant, less than) the excess of the Fair
Market Value of a share of Stock on the date of exercise over the Fair Market
Value of a share of Stock on the date of grant (or over the option exercise
price, if the Stock Appreciation Right was granted in tandem with a Stock
Option) multiplied by the number of shares with respect to which the Stock
Appreciation Right shall have been exercised, with the Committee having the
right to determine the form of payment.
(b) Grant and Exercise of Stock Appreciation Rights.
Stock Appreciation Rights may be granted in tandem with, or independently
of, any Stock Option granted under the Plan. In the case of a Stock Appreciation
Right granted in tandem with a Non-Qualified Stock Option, such Right may be
granted either at or after the time of the grant of such option. In the case of
a Stock Appreciation Right granted in tandem with an Incentive Stock Option,
such Right may be granted only at the time of the grant of the option.
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A Stock Appreciation Right or applicable portion thereof granted in tandem
with a given Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that a Stock
Appreciation Right granted with respect to less than the full number of shares
covered by a related Stock Option shall not be reduced until the exercise or
termination of the related Stock Option exceeds the number of shares not covered
by the Stock Appreciation Right.
(c) Terms and Conditions of Stock Appreciation Rights.
Stock Appreciation Rights shall be subject to such terms and conditions as
shall be determined from time to time by the Committee, subject to the
following:
(i) Stock Appreciation Rights granted in tandem with Stock Options
shall be exercisable only at such time or times and to the
extent that the related Stock Options shall be exercisable.
(ii) Upon the exercise of a Stock Appreciation Right, the applicable
portion of any related Stock Option shall be surrendered.
(iii) Stock Appreciation Rights granted in tandem with a Stock Option
shall be transferable only with such Stock Option. Other Stock
Appreciation Rights shall not be transferable otherwise than by
will or the laws of descent and distribution. All Stock
Appreciation Rights shall be exercisable during the
participant's lifetime only by the participant or the
participant's legal representative.
(iv) A Stock Appreciation Right granted in tandem with an Incentive
Stock Option may be exercised only when the market price of the
Stock subject to the Incentive Stock Option exceeds the
exercise price of such option.
(d) Discretionary Payments.
Notwithstanding that a Stock Option at the time of exercise shall not be
accompanied by a related Stock Appreciation Right, if the market price of the
shares subject to such Stock Option exceeds the exercise price of such Stock
Option at the time of its exercise, the Committee may, in its discretion, cancel
such Stock Option, in which event the Company shall pay to the person exercising
such Stock Option an amount equal to the difference between the Fair Market
Value of the Stock to have been purchased pursuant to such exercise of such
Stock Option (determined on the date the Stock Option is cancelled) and the
aggregate consideration to have been paid by such person upon such exercise.
Such payment shall be by check, bank draft or in Stock (or in a form of payment
permitted under paragraph (e) below) having a Fair Market Value (determined on
the date the payment is to be made) equal to the amount of such
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payments or any combination thereof, as determined by the Committee. The
Committee may exercise its discretion under the first sentence of this paragraph
(d) only in the event of a written request of the person exercising the option,
which request shall not be binding on the Committee.
(e) Settlement in the Form of Restricted Shares or Rights to Receive
Deferred Stock.
Subject to Sections 16(a) and 16(c) below, shares of Stock issued upon
exercise of a Stock Appreciation Right or as a Discretionary Payment shall be
free of all restrictions under the Plan, except as provided in the following
sentence. The Committee may provide at the time of grant in the case of a Stock
Appreciation Right (and at the time of payment in the case of a Discretionary
Payment) that such shares shall be in the form of shares of Restricted Stock or
rights to acquire Deferred Stock, or in the case of a Stock Appreciation Right
may reserve the right to so provide at any time after the time of grant. Any
such shares and any shares subject to rights to acquire Deferred Stock shall be
valued at Fair Market Value on the date of exercise of the Stock Appreciation
Right or the date the Stock Option is cancelled in the case of Discretionary
Payments.
SECTION 8. RESTRICTED STOCK; UNRESTRICTED STOCK.
(a) Nature of Restricted Stock Award.
A Restricted Stock Award is an Award entitling the recipient to acquire
shares of Stock for a purchase price (which may be zero) equal to or less than
their par value, subject to such conditions, including a Company right during a
specified period or periods to repurchase such shares at their original purchase
price (or to require forfeiture of such shares, if the purchase price was zero)
upon participant's termination of employment, as the Committee may determine at
the time of grant.
(b) Award Agreement.
A participant who is granted a Restricted Stock Award shall have no rights
with respect to such Award unless the participant shall have accepted the Award
within 60 days (or such shorter date as the Committee may specify) following the
award date by making payment to the Company by certified or bank check or other
instrument acceptable to the Committee in an amount equal to the specified
purchase price, if any, of the shares covered by the Award and by executing and
delivering to the Company a Restricted Stock Award Agreement in such form as the
Committee shall determine.
(c) Rights as a Shareholder.
Upon complying with paragraph (b) above, a participant shall have all the
rights of a shareholder with respect to the Restricted Stock including voting
and dividend
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rights, subject to nontransferability restrictions and Company repurchase or
forfeiture rights described in this Section and subject to any other conditions
contained in the Award Agreement. Unless the Committee shall otherwise
determine, certificates evidencing shares of Restricted Stock shall remain in
the possession of the Company until such shares are free of any restrictions
under the Plan.
(d) Restrictions.
Shares of Restricted Stock may not be sold, assigned, transferred, pledged
or otherwise encumbered or disposed of except as specifically provided herein.
In the event of termination of employment with the Company and its subsidiaries
for any reason such shares shall be resold to the Company at their purchase
price, or forfeited to the Company if the purchase price was zero, except as set
forth below.
(i) The Committee at the time of grant shall specify the date or
dates (which may depend upon or be related to the attainment of
performance goals and other conditions) on which the
nontransferability of the Restricted Stock and the obligation to
resell such shares to the Company shall lapse. The Committee at
any time may accelerate such date or dates and otherwise waive
or, subject to Section 13, amend any conditions of the Award.
(ii) Except as may otherwise be provided in the Award Agreement, in
the event of termination of employment by the Company and its
Subsidiaries for any reason (including death), a participant or
the participant's legal representative shall offer to resell to
the Company, at the price paid therefor, all Restricted Stock,
and the Company shall have the right to purchase the same at
such price, or if the price was zero to require forfeiture of
the same, provided that except as otherwise specified in the
Award Agreement, the Company must exercise such right of
repurchase or forfeiture not later than the 60th day following
such termination of employment.
(e) Waiver, Deferral and Reinvestment of Dividends.
The Restricted Stock Award Agreement may require or permit the immediate
payment, waiver, deferral or investment of dividends paid on the Restricted
Stock. Unless otherwise specified in the Award Agreement, dividends will be paid
at the same time as dividends are paid with respect to shares of Stock not
subject to restrictions under the Plan.
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(f) Unrestricted Stock.
The Committee may, in its sole discretion, grant (or sell at a purchase
price not to exceed par value per share) to any participant shares of Stock free
of restrictions under the Plan ("Unrestricted Stock"). Shares of Unrestricted
Stock may be granted or sold as described in the preceding sentence in respect
of past services or other valid consideration.
SECTION 9. DEFERRED STOCK AWARDS.
(a) Nature of Deferred Stock Award.
A Deferred Stock Award is an award entitling the recipient to acquire
shares of Stock without payment in one or more installments at a future date or
dates, all as determined by the Committee. The Committee may condition such
acquisition on the attainment of specified performance goals.
(b) Award Agreement.
A participant who is granted a Deferred Stock Award shall have no rights
with respect to a such Award unless within 60 days of the grant of such Award or
such shorter period as the Committee may specify, the participant shall have
accepted the Award by executing and delivering to the Company a Deferred Stock
Award Agreement.
(c) Restrictions on Transfer.
Deferred Stock Awards and all rights with respect to such Awards may not be
sold, assigned, transferred, pledged or otherwise encumbered. Rights with
respect to such Awards shall be exercisable during the participant's lifetime
only by the participant or the participant's legal representative.
(d) Rights as a Shareholder.
A participant receiving a Deferred Stock Award will have rights of a
shareholder only as to shares actually received by the participant under the
Plan and not with respect to shares subject to the Award but not actually
received by the participant. A participant shall be entitled to receive a stock
certificate for shares of Deferred Stock only upon satisfaction of all
conditions therefor specified in the Deferred Stock Award Agreement.
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(e) Termination.
Except as may otherwise be provided by the Committee at any time prior to
termination of employment, a participant's rights in all Deferred Stock Awards
shall automatically terminate upon the participant's termination of employment
by the Company and its Subsidiaries for any reason (including death).
(f) Acceleration, Waiver, etc.
At any time prior to the participant's termination of employment the
Committee may in its discretion accelerate, waive, or, subject to Section 13,
amend any or all of the restrictions or conditions imposed under any Deferred
Stock Award.
(g) Payments in Respect of Deferred Stock.
Without limiting the right of the Committee to specify different terms, the
Deferred Stock Award Agreement may either make no provisions for, or may require
or permit the immediate payment, deferral or investment of amounts equal to, or
less than, any cash dividends which would have been payable on the Deferred
Stock had such Stock been outstanding, all as determined by the Committee in its
sole discretion.
SECTION 10. PERFORMANCE UNIT AWARDS.
(a) Nature of Performance Units.
A Performance Unit Award is an award entitling the recipient to acquire
cash or shares of Stock, or a combination of cash and Stock, upon the attainment
of specified performance goals. The Committee in its sole discretion shall
determine whether and to whom Performance Unit Awards shall be made, the
performance goals applicable under each such Award, the periods during which
performance is to be measured, and all other limitations and conditions
applicable to the awarded Performance Unit. Performance Units may be awarded
independently of or in connection with the granting of any other Award under the
Plan.
(b) Award Agreement.
A participant shall have no rights with respect to a Performance Unit Award
unless within 60 days of the grant of such Award or such shorter period as the
Committee may specify, the participant shall have accepted the Award by
executing and delivering to the Company a Performance Unit Award Agreement.
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(c) Restrictions on Transfer.
Performance Unit Awards and all rights with respect to such Awards may not
be sold, assigned, transferred, pledged or otherwise encumbered, and if
exercisable over a specified period, shall be exercisable during the
participant's lifetime only by the participant or the participant's legal
representative.
(d) Rights as a Shareholder.
A participant receiving a Performance Unit Award will have rights of a
shareholder only as to shares actually received by the participant under the
Plan and not with respect to shares subject to the Award but not actually
received by the participant. A participant shall be entitled to receive a stock
certificate evidencing the acquisition of shares of Stock under a Performance
Unit Award only upon satisfaction of all conditions therefor specified in the
Performance Unit Award Agreement.
(e) Termination.
Except as may otherwise be provided by the Committee at any time prior to
termination of employment, a participant's rights in all Performance Unit Awards
shall automatically terminate upon the participant's termination of employment
by the Company and its Subsidiaries for any reason (including death).
(f) Acceleration, Waiver, etc.
At any time prior to the participant's termination of employment by the
Company and its Subsidiaries, the Committee may in its sole discretion
accelerate, waive or, subject to Section 13, amend any or all of the goals,
restrictions or conditions imposed under any Performance Unit Award.
(g) Exercise.
The Committee in its sole discretion shall establish procedures to be
followed in exercising any Performance Unit, which procedures shall be set forth
in the Performance Unit Award Agreement. The Committee may at any time provide
that payment under a Performance Unit shall be made, upon satisfaction of the
applicable performance goals, without exercise by the participant. Except as
otherwise specified by the Committee, (i) a Performance Unit granted in tandem
with a Stock Option may be exercised only while the Stock Option is exercisable,
and (ii) the exercise of a Performance Unit granted in tandem with any Award
shall reduce the number of shares subject to the related Award on such basis as
is specified in the Performance Unit Award Agreement.
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SECTION 11. OTHER STOCK-BASED AWARDS; SUPPLEMENTAL GRANTS.
(a) Nature of Awards.
The Committee may grant other Awards under which Stock is or may in the
future be acquired ("Other Stock-based Awards"). Such awards may include,
without limitation, securities (including shares of Preferred Stock not
exceeding in the aggregate 500,000 shares) convertible into or exchangeable for
shares of Stock upon such conditions, including attainment of performance goals,
as the Committee shall determine. Subject to the purchase price limitations in
paragraph (b) below, such convertible or exchangeable securities may have such
terms and conditions as the Committee may determine at the time of grant.
However, no convertible or exchangeable debt or preferred stock shall be issued
unless the Committee shall have provided (by Company right of repurchase, right
to require conversion or exchange or other means deemed appropriate by the
Committee) a means of avoiding any right of the holders of such debt or
Preferred Stock to prevent a Company transaction by reason of covenants in such
debt or voting rights in such Preferred Stock.
(b) Purchase Price; Form of Payment.
The Committee may determine the consideration, if any, payable upon the
issuance or exercise of an Other Stock-based Award, subject to the following
conditions. No equity security other than Stock may be issued pursuant to an
Other Stock-based Award unless (i) issued at no cost to the recipient (or for a
purchase price not in excess of the par value of any preferred stock so issued)
or (ii) sold by the Company and the Company shall have received payment for such
equity security equal to at least 50% of its par value on the grant or issuance
date, as determined in good faith by the Committee. In addition, no shares of
Stock (whether acquired by purchase, conversion or exchange or otherwise) shall
be issued unless (i) issued at no cost to the recipient (or for a purchase price
not in excess of the par value of the Stock) or (ii) sold, converted or
exchanged by the Company, and the Company shall have received payment for such
Stock or securities so exchanged or converted equal to at least 50% of Fair
Market Value of the Stock on the grant or effective date, or the exchange or
conversion date, under the Award, as specified by the Committee. The Committee
may permit payment by certified check or bank check or other instrument
acceptable to the Committee or by surrender of other shares of Stock (excluding
shares then subject to restrictions under the Plan).
(c) Forfeiture of Awards; Repurchase of Stock; Acceleration or Waiver of
Restrictions.
The Committee may determine the conditions under which an Other Stock-based
Award shall be forfeited or, in the case of an Award involving a payment by the
recipient, the conditions under which the Company may or must repurchase such
Award or related Stock. At any time the Committee may in its sole discretion
accelerate,
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waive or, subject to Section 13, amend any or all of the limitations or
conditions imposed under any Other Stock-based Award.
(d) Award Agreements.
A participant shall have no rights with respect to any Other Stock-based
Award unless within 60 days after the grant of such Award (or such shorter
period as the Committee may specify) the participant shall have accepted the
Award by executing and delivering to the Company an Other Stock-based Award
Agreement.
(e) Nontransferability.
Other Stock-based Awards may not be sold, assigned, transferred, pledged or
encumbered except as may be provided in the Other Stock-based Award Agreement.
However, in no event shall any Other Stock-based Award be transferred other than
by will or by the laws of descent and distribution or be exercisable during the
participant's lifetime by other than the participant or the participant's legal
representative.
(f) Rights as a Shareholder.
A recipient of any Other Stock-based Award will have rights of a
shareholder only at the time and to the extent, if any, specified by the
Committee in the Other Stock-based Award Agreement.
(g) Deemed Dividend Payments; Deferrals.
Without limiting the right of the Committee to specify different terms at
or after grant, an Other Stock-based Award Agreement may require or permit the
immediate payment, waiver, deferral or investment of dividends or deemed
dividends payable on Stock subject to the Award.
(h) Supplemental Grants.
The Company may in its sole discretion make a loan to the recipient of an
Award hereunder, either on or after the date of grant of such Award. Such loans
may be made either in connection with the exercise of a Stock Option, a Stock
Appreciation Right, or an Other Stock-based Award, in connection with the
purchase of shares under any Award, or in connection with the payment of any
federal income tax in respect of income recognized under an Award. The Committee
shall have full authority to decide whether to make a loan hereunder and to
determine the amount, term and provisions of any such loan, including the
interest rate (which may be zero) charged in respect of any such loan, whether
the loan is to be secured or unsecured or with or without recourse against the
borrower, the terms on which the loan is to be repaid and the conditions, if
any, under which it may be forgiven. However, no loan hereunder shall
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have a term (including extensions) exceeding ten years in duration or be in an
amount exceeding the total exercise or purchase price paid by the borrower under
an Award under the Plan plus an amount equal to the cash payment permitted in
the following paragraph.
The Committee may at any time authorize a cash payment, in respect of the
grant or exercise of an Award under the Plan or the lapse or waiver of
restrictions under an Award, which shall not exceed the amount which would be
required in order to pay in full the federal income tax due as a result of
ordinary income recognized by the recipient under both the Award and such cash
payment, in each case assuming that such income is taxed at the regular maximum
marginal rate applicable to individuals under the Code as in effect at the time
such income is includable in the recipient's income. Subject to the foregoing,
the Committee shall have complete authority to decide whether to make such cash
payments in any case, to make provision for such payments either simultaneously
with or after the grant of the associated Award, and to determine the amount of
each such payment.
SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or
from the Company to a Subsidiary, or from one Subsidiary to another;
(b) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the employee's
right to reemployment is guaranteed either by a statute or by
contract or under the policy pursuant to which the leave of absence
was granted or if the Committee otherwise so provides in writing.
For purposes of the Plan, the employees of a Subsidiary of the Company shall be
deemed to have terminated their employment on the date on which such Subsidiary
ceases to be a Subsidiary of the Company.
SECTION 13. AMENDMENTS AND TERMINATION.
The Board may at any time amend or discontinue the Plan and the Committee
may at any time amend or cancel any outstanding Award (or provide substitute
Awards at the same or reduced exercise or purchase price or with no exercise or
purchase price, but such price, if any, must satisfy the requirements which
would apply to the substitute or amended Award if it were then initially granted
under this Plan) for the purpose of satisfying changes in law or for any other
lawful purpose, but no such action shall adversely affect rights under any
outstanding Award without the holder's consent.
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However, no such amendment, unless approved by stockholders, shall be effective
if it would cause the Plan to fail to satisfy the incentive stock option
requirements of the Code as in effect on the date of such amendment.
SECTION 14. STATUS OF PLAN.
With respect to the portion of any Award which has not been exercised and
any payments in cash, stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the provision of the foregoing sentence.
SECTION 15. CHANGE OF CONTROL PROVISIONS.
As used herein, a Change of Control and related definitions shall have the
meanings set forth in Exhibit A to this Plan.
Upon the occurrence of a Change of Control:
(a) Each Stock Option and Stock Appreciation Right shall automatically
become fully exercisable unless the Committee shall otherwise
expressly provide at the time of grant.
(b) Restrictions and conditions on Restricted Stock, Deferred Stock,
Performance Units and Other Stock-based Awards shall automatically
be deemed waived only if and to the extent, if any, specified
(whether at or after time of grant) by the Committee.
The Committee may at any time prior to or after a Change of Control accelerate
the exercisability of any Stock Options and Stock Appreciation Rights and may
waive restrictions, limitations and conditions on Restricted Stock, Deferred
Stock, Performance Units and Other Stock-based Awards to the extent it shall in
its sole discretion determine.
SECTION 16. GENERAL PROVISIONS.
(a) No Distribution; Compliance with Legal Requirements, etc.
The Committee may require each person acquiring shares pursuant to an Award
to represent to and agree with the Company in writing that such person is
acquiring the shares without a view to distribution thereof.
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No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange requirements have
been satisfied. The Committee may require the placing of such stop-orders and
restrictive legends on certificates for Stock and Awards as it deems
appropriate.
(b) Other Compensation Arrangements; No Employment Rights.
Nothing contained in this Plan shall prevent the Board of Directors from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of the
Plan does not confer upon any employee any right to continued employment with
the Company or a Subsidiary, nor does it interfere in any way with the right of
the Company or a Subsidiary to terminate the employment of any of its employees
at any time.
(c) Tax Withholding, etc.
Each participant shall, no later than the date as of which the value of an
Award or of any Stock or other amounts received thereunder first becomes
includable in the gross income of the participant for Federal income tax
purposes, pay to the Company, or make arrangements satisfactory to the Committee
regarding payment of, any Federal, state, or local taxes of any kind required by
law to be withheld with respect to such income. The Company and its Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant.
The Committee may provide, in respect of any transfer of Stock or Preferred
Stock under an Award, that if and to the extent withholding of any Federal,
state or local tax is required in respect of such transfer, the participant may
elect, at such time and in such manner as the Committee shall prescribe, to have
the Company hold back from the transfer Stock (or Preferred Stock) having a
value calculated to satisfy such withholding obligation.
SECTION 17. EFFECTIVE DATE OF PLAN.
The Plan was adopted by the Board of the Company on May 30, 1997 and
approved by the stockholders of Waban Inc. on July 10, 1997 and by Waban Inc. as
the sole stockholder of the Company on July 10, 1997. The effective date of the
Plan is the Distribution Date.
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<PAGE>
EXHIBIT A
---------
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
- -------- -------
as to a Participant (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 the Participant or a Participant 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 as to a Participant if the Participant or a Participant 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 such 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 as to a
Participant if, immediately after such transaction, the Participant or any
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<PAGE>
Participant 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 the Participant and
any Participant Related Party immediately prior to such transaction, expressed
as a percentage of the fair value of all equity securities of the Company
immediately prior to such transaction (for purposes of this paragraph ownership
of equity securities shall be determined in the same manner as ownership of
Common Stock); and provided, further, that, for purposes of this paragraph (d),
-------- -------
if such agreement requires as a condition precedent approval by the Company's
shareholders of the agreement or transaction, a Change of Control shall not be
deemed to have taken place unless and until such approval is secured (but upon
any such approval, a Change of Control shall be deemed to have occurred on the
date of execution of such agreement).
In addition, for purposes of this Exhibit A 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.
-22-
<PAGE>
"Person" shall have the meaning used in Section 13(d) of the Exchange Act,
as in effect on March 1, 1989; provided, however, that the term "Person" shall
not include (a) any individuals who are descendants of Max Feldberg or Morris
Feldberg, (b) any relatives of the fourth degree of consanguinity or closer of
such descendants or (c) custodians, trustees or legal representatives of such
persons.
A "Participant Related Party" shall mean, with respect to a Participant,
any affiliate or associate of the Participant other than the Company or a
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).
"Participant" means a participant in the Plan.
-23-
<PAGE>
EXHIBIT 10.10
BJ's WHOLESALE CLUB, INC.
1997 STOCK INCENTIVE PLAN
-------------------------
1. Purpose
-------
The purpose of this 1997 Stock Incentive Plan (the "Plan") of BJ's
Wholesale Club, Inc., a Delaware corporation (the "Company"), is to advance the
interests of the Company's stockholders by enhancing the Company's ability to
attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company's stockholders.
Except where the context otherwise requires, the term "Company" shall include
any present or future subsidiary corporations of BJ's Wholesale Club, Inc. as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder (the "Code").
2. Eligibility
-----------
All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock, or other stock-
based awards (each, an "Award") under the Plan. Any person who has been granted
an Award under the Plan shall be deemed a "Participant".
3. Administration, Delegation
--------------------------
(a) Administration by Board of Directors. The Plan will be administered by
------------------------------------
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
(b) Delegation to Executive Officers. To the extent permitted by
--------------------------------
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to
<PAGE>
Awards and the maximum number of shares for any one Participant to be made by
such executive officers.
(c) Appointment of Committees. To the extent permitted by applicable law,
-------------------------
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). The Board shall
appoint one such Committee of not less than two members, each member of which
shall be an "outside director" within the meaning of Section 162(m) of the Code
and a "non-employee director" as defined in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board or the
executive officer referred to in Section 3(b) to the extent that the Board's
powers or authority under the Plan have been delegated to such Committee or
executive officer.
4. Stock Available for Awards
--------------------------
(a) Number of Shares. Subject to adjustment under Section 4(c), Awards may
----------------
be made under the Plan for up to the sum of (i) 1,000,000 shares of common
stock, $0.01 par value per share, of the Company (the "Common Stock") plus (ii)
such additional number of shares of Common Stock (up to 2,000,000) as is equal
to the sum of (x) the number of shares which remain available for grant under
the Company's 1997 Replacement Stock Incentive Plan (the "Replacement Plan")
upon its expiration and (y) the number of shares subject to awards granted under
the Replacement Plan which are not actually issued pursuant to such awards
because such awards expire or are terminated, surrendered or cancelled without
having been fully exercised or are forfeited in whole or in part or otherwise
result in any Common Stock not being issued. If any Award expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not being issued,
the unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive Stock
Options (as hereinafter defined), to any limitation required under the Code.
Shares issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
(b) Per-Participant Limit. Subject to adjustment under Section 4(c), for
---------------------
Awards granted after the Common Stock is registered under the Exchange Act, the
maximum number of shares with respect to which an Award may be granted to any
Participant under the Plan shall be 500,000 per calendar year. The per-
participant limit described in this Section 4(b) shall be construed and applied
consistently with Section 162(m) of the Code.
(c) Adjustment to Common Stock. In the event of any stock split, stock
--------------------------
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any
-2-
<PAGE>
distribution to holders of Common Stock other than a normal cash dividend, (i)
the number and class of securities available under this Plan, (ii) the number
and class of security and exercise price per share subject to each outstanding
Option, (iii) the repurchase price per security subject to each outstanding
Restricted Stock Award, and (iv) the terms of each other outstanding stock-based
Award shall be appropriately adjusted by the Company (or substituted Awards may
be made, if applicable) to the extent the Board shall determine, in good faith,
that such an adjustment (or substitution) is necessary and appropriate. If
this Section 4(c) applies and Section 8(e)(1) and/or Section 8(e)(2) also
applies to any event, then Section 8(e)(2) or Section 8(e)(1) (in that order)
shall be applicable to such event, and this Section 4(c) shall not be
applicable.
5. Stock Options
-------------
(a) General. The Board may grant options to purchase Common Stock (each,
-------
an "Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive
Stock Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) Incentive Stock Options. An Option that the Board intends to be an
-----------------------
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
(c) Exercise Price. The Board shall establish the exercise price at the
--------------
time each Option is granted and specify it in the applicable option agreement;
provided, however, that no Option shall be granted at an exercise price of less
than 100% of fair market value on the date of grant.
(d) Duration of Options. Each Option shall be exercisable at such times
-------------------
and subject to such terms and conditions as the Board may specify in the
applicable option agreement; provided, however that no Option will be granted
for a term in excess of ten years.
(e) Exercise of Option. Options may be exercised only by delivery to the
------------------
Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 5(f) for the number of shares for
which the Option is exercised.
-3-
<PAGE>
(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
----------------------
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may otherwise provide in an Option Agreement,
by (i) delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay
the exercise price, (ii) delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the exercise price or
(iii) delivery of shares of Common Stock owned by the Participant valued at
their fair market value as determined by the Board in good faith ("Fair Market
Value"), which Common Stock was owned by the Participant at least six months
prior to such delivery;
(3) to the extent permitted by the Board and explicitly provided in an
Option Agreement (i) by delivery of a promissory note of the Participant to the
Company on terms determined by the Board or (ii) by payment of such other lawful
consideration as the Board may determine; or
(4) any combination of the above permitted forms of payment.
6. Restricted Stock
----------------
(a) Grants. The Board may grant Awards entitling recipients to acquire
------
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, "Restricted Stock Award").
(b) Terms and Conditions. The Board shall determine the terms and
--------------------
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
-4-
<PAGE>
7. Other Stock-Based Awards
------------------------
The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.
8. General Provisions Applicable to Awards
---------------------------------------
(a) Transferability of Awards. Except as the Board may otherwise determine
-------------------------
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.
(b) Documentation. Each Award under the Plan shall be evidenced by a
-------------
written instrument in such form as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each type
----------------
of Award may be made alone or in addition or in relation to any other type of
Award. The terms of each type of Award need not be identical, and the Board
need not treat Participants uniformly.
(d) Termination of Status. The Board shall determine the effect on an
---------------------
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) Acquisition Events; Change of Control Events
--------------------------------------------
(1) Consequences of Acquisition Events. Subject to Section 8(e)(2),
-----------------------------------
upon the occurrence of an Acquisition Event (as defined below), or the execution
by the Company of any agreement with respect to an Acquisition Event, the Board
shall take any one or more of the following actions with respect to then
outstanding Awards: (i) provide that outstanding Options shall be assumed, or
equivalent Options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), provided that any such Options
substituted for Incentive Stock Options shall satisfy, in the determination of
the Board, the requirements of Section 424(a) of the Code; (ii) upon written
notice to the Participants, provide that all then unexercised Options will
become
-5-
<PAGE>
exercisable in full as of a specified time (the "Acceleration Time") prior to
the Acquisition Event and will terminate immediately prior to the consummation
of such Acquisition Event, except to the extent exercised by the Participants
between the Acceleration Time and the consummation of such Acquisition Event;
(iii) in the event of an Acquisition Event under the terms of which holders of
Common Stock will receive upon consummation thereof a cash payment for each
share of Common Stock surrendered pursuant to such Acquisition Event (the
"Acquisition Price"), provide that all outstanding Options shall terminate upon
consummation of such Acquisition Event and each Participant shall receive, in
exchange therefor, a cash payment equal to the amount (if any) by which (A) the
Acquisition Price multiplied by the number of shares of Common Stock subject to
such outstanding Options (whether or not then exercisable), exceeds (B) the
aggregate exercise price of such Options; (iv) provide that all Restricted Stock
Awards then outstanding shall become free of all restrictions prior to the
consummation of the Acquisition Event; and (v) provide that any other stock-
based Awards outstanding (A) shall become exercisable, realizable or vested in
full, or shall be free of all conditions or restrictions, as applicable to each
such Award, prior to the consummation of the Acquisition Event, or (B), if
applicable, shall be assumed, or equivalent Awards shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof).
An "Acquisition Event" shall mean: (a) any merger or consolidation which
results in the voting securities of the Company outstanding immediately prior
thereto representing immediately thereafter (either by remaining outstanding or
by being converted into voting securities of the surviving or acquiring entity)
less than 50% of the combined voting power of the voting securities of the
Company or such surviving or acquiring entity outstanding immediately after such
merger or consolidation; (b) any sale of all or substantially all of the assets
of the Company; or (c) the complete liquidation of the Company.
(2) Consequences of Change of Control Events. Except to the extent
----------------------------------------
otherwise provided in the instrument evidencing an Award or in any other
agreement between a Participant and the Company, (i) upon the occurrence of a
Change of Control Event, all Options and stock appreciation rights then
outstanding shall automatically become immediately exercisable in full and (ii)
the restrictions and conditions on all other Awards then outstanding shall
automatically be deemed waived only if and to the extent, if any, specified
(whether at the time of grant or otherwise) by the Board.
A "Change of Control Event" shall have the meaning set forth on Annex A
hereto.
(3) Assumption of Options Upon Certain Events. The Board may grant
------------------------------------------
Awards under the Plan in substitution for stock and stock-based awards held by
employees of another corporation who become employees of the Company as a result
of a merger or consolidation of the employing corporation with the Company or
the acquisition by the Company of property or stock of the employing
corporation. The
-6-
<PAGE>
substitute Awards shall be granted on such terms and conditions as the Board
considers appropriate in the circumstances.
(f) Withholding. Each Participant shall pay to the Company, or make
-----------
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. The Board may allow Participants to
satisfy such tax obligations in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise due to a
Participant.
(g) Amendment of Award. The Board may amend, modify or terminate any
------------------
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(h) Conditions on Delivery of Stock. The Company will not be obligated to
-------------------------------
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(i) Acceleration. The Board may at any time provide that any Options shall
------------
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of all restrictions or that any other stock-based Awards
may become exercisable in full or in part or free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.
9. Miscellaneous
-------------
(a) No Right To Employment or Other Status. No person shall have any claim
--------------------------------------
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or
-7-
<PAGE>
otherwise terminate its relationship with a Participant free from any liability
or claim under the Plan, except as expressly provided in the applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the applicable
------------------------
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
(c) Effective Date and Term of Plan.
-------------------------------
(1) The Plan was adopted by the Board on May 30, 1997 and approved by
the stockholders of Waban Inc. on July 10, 1997 and by Waban Inc. as the sole
stockholder of the Company on July 10, 1997. The Plan shall become effective on
the date on which Waban Inc. completes the spin-off of the Company by
distributing to the stockholders of Waban Inc., on a pro rata basis, in a tax-
free distribution, all of the then outstanding shares of Common Stock of the
Company (the "Distribution Date").
(2) No Awards shall be granted under the Plan after the completion of
ten years from the Distribution Date, but Awards previously granted may extend
beyond that date.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
-----------------
or any portion thereof at any time, provided that no Award granted to a
Participant designated as subject to Section 162(m) by the Board after the date
of such amendment shall become exercisable, realizable or vested, as applicable
to such Award (to the extent that such amendment to the Plan was required to
grant such Award to a particular Participant), unless and until such amendment
shall have been approved by the Company's stockholders.
(e) Stockholder Approval. For purposes of this Plan, stockholder approval
--------------------
shall mean approval by a vote of the stockholders in accordance with the
requirements of Section 162(m) of the Code.
(f) Governing Law. The provisions of the Plan and all Awards made
-------------
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
-8-
<PAGE>
ANNEX A
DEFINITION OF CHANGE OF CONTROL EVENT
-------------------------------------
For the purpose of this Plan, a "Change of Control" shall mean:
(a) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"))(a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (iv)
any acquisition by any corporation pursuant to a transaction which satisfies the
criteria set forth in clauses (i), (ii) and (iii) of subsection (c) of this
definition; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequently
to the date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board (except that this proviso shall
not apply to any individual whose initial assumption of office as a director
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board); or
(c) Consummation of a reorganization, merger or consolidation involving
the Company or a sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless,
immediately following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, of the
corporation resulting from such Business Combination (which as used in section
(c) of this definition shall include, without limitation, a corporation which as
<PAGE>
a result of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation and (iii) at least half
of the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
-10-
<PAGE>
EXHIBIT 10.11
BJ'S WHOLESALE CLUB, INC.
GENERAL DEFERRED COMPENSATION PLAN
1. Purpose
-------
The purpose of the BJ's Wholesale Club, Inc. General Deferred Compensation
Plan is to provide a means for selected participants to defer the payment
of compensation.
2. Definitions
-----------
a) "Company" shall mean BJ's Wholesale Club, Inc. and its subsidiaries,
except that as used in Exhibit A the term "Company" shall mean BJ's
---------
Wholesale Club, Inc. As used in the preceding sentence and in
Exhibit A, "subsidiary" means any corporation or other entity 50% or
---------
more of the total combined voting power of all classes of stock or
other interests of which are owned, directly or indirectly, by BJ's
Wholesale Club, Inc.
b) "Deferral Period" shall mean the period of time commencing on the date
a Participant makes an election to defer Eligible Compensation pursuant
to Section 4 and ending on the date on which payment of such Deferred
Compensation commences.
c) "Deferred Compensation" shall mean "Eligible Compensation," the payment
of which has been deferred by a "Participant."
d) "E.C.C." shall mean the Executive Compensation Committee of the Board
of Directors of BJ's Wholesale Club, Inc.
e) "Effective Date" shall mean the date on which Waban Inc. completes the
spin-off of the Company by distributing to Waban's stockholders on a
pro rata basis all of the outstanding shares of Common Stock of the
Company held by Waban Inc.
f) "Eligible Compensation" shall mean (i) any base salary payable, (ii)
any cash bonus payable pursuant to an annual or long-term incentive
plan of the Company, (iii) any annual retainer and/or meeting fees
payable to directors of BJ's Wholesale Club, Inc., and (iv) subject to
such exceptions as the E.C.C. may provide, other cash compensation
payable to a "Participant."
<PAGE>
g) "Eligible Participant" shall mean (i) an employee of the Company who
has been selected by the E.C.C. as eligible to defer compensation or
(ii) a director of the Company.
h) "Fiscal Year" shall mean the period ending on the last Saturday in
January, and commencing on (i) the Sunday following the last Saturday
in January of the preceding calendar year or (ii) with respect to the
fiscal year in which the Effective Date occurs, such Effective Date.
The First Quarter commences on the Sunday following the last Saturday
in January of the preceding calendar year and includes the first
through thirteenth week of a Fiscal Year; the Second Quarter includes
the fourteenth through twenty-sixth week of a Fiscal Year; the Third
Quarter includes the twenty-seventh through thirty-ninth week of a
Fiscal Year; the Fourth Quarter includes the fortieth through fifty-
second or fifty-third week of a Fiscal Year. Said Four Quarters are the
Fiscal Quarters of a Fiscal Year. If the Fiscal Year does not begin on
the Sunday following the last Saturday in January, then the Fiscal
Quarters shall include the balance of the Fiscal Quarter in which the
Effective Date occurs and the remaining Fiscal Quarters in such Fiscal
Year
i) "Interest Rate" for a Fiscal Year shall mean a rate equal to the yield
as quoted in the Wall Street Journal on the first Monday of each Fiscal
Month upon the issue of United States Treasury Notes which have a
period remaining to maturity of not less than, but closest to, ten
years after the first day of such Fiscal Month, averaged over the
previous 12 months, or if there is no such quote, the E.C.C. shall
determine a rate of interest which is consistent with the foregoing.
j) "Participant" shall mean an Eligible Participant who has elected to
defer compensation in accordance with the Plan.
k) "Plan" shall mean this BJ's Wholesale Club, Inc. General Deferred
Compensation Plan as it may be amended from time to time.
l) "Termination Date" shall mean (i) in the case of an employee, the date
of severance of a Participant's employment with the Company, whether by
death, disability, retirement, resignation, discharge, or otherwise or
(ii) in the case of a director, the date the individual ceases to be a
director of the Company.
-2-
<PAGE>
3. Administration
--------------
This Plan shall be administered by the E.C.C. which, in addition to the
authority, power, and duty expressly set forth in the Plan, shall have the
authority, power, and duty, subject to the provisions of the Plan, to (A)
make rules and regulations for the deferral of compensation, the designation
of beneficiaries, and the payment of Deferred Compensation, (B) interpret
the Plan, and (C) make any other determinations that it believes necessary
or advisable for the administration of the Plan. Decisions and
determinations made by the E.C.C. shall be final and binding upon all
persons.
4. Deferral of Compensation
------------------------
A. Election to Defer
-----------------
Each Eligible Participant may make any election to defer receipt of all
or any part of payment of Eligible Compensation, pursuant to the rules
and regulations established by the E.C.C. for deferral.
At the time of making an election to defer, each Participant shall
elect (i) the specific date or event, before or after the Participant's
Termination Date, following which the first payment of any Deferred
Compensation and interest thereon will be made, and (ii) whether
payment(s) shall be made in a lump sum or in designated monthly
installments, not to exceed 120 months. If the Participant fails to
designate the payment period and/or schedule for payment with respect
to any Deferred Compensation, the payment of said Deferred Compensation
and interest thereon will be made in 120 monthly installments,
commencing as soon as reasonably practicable after the Participant's
Termination Date.
B. Notice of Election to Defer
---------------------------
Each Participant shall, within the time limits specified in paragraph C
below, notify the Company in writing on forms provided by the Company
of an election to defer the receipt of all or any part of payment of
Eligible Compensation. Each such notice shall state:
(1) the amount or percentage of the Eligible Compensation to be
deferred;
(2) the date on which, or the event following which, payment of said
Deferred Compensation is to commence;
-3-
<PAGE>
(3) the payment period, including number of months and schedule elected
for payment;
(4) the Beneficiary(ies), if any, with respect to said Deferred
Compensation (see Section 7(C) below).
For purposes of (1) above, the E.C.C. may specify a minimum amount or
percentage of deferral.
For purposes of (2) above, the E.C.C. may specify a minimum period of
deferral.
C. Time of Notice of Election to Defer
-----------------------------------
The Participant's written notice of election to defer all or any part of
Eligible Compensation must be received by the Company within the
following time limits:
Type of Compensation Notice Required
-------------------- ---------------
Base Salary For all or any part of base salary to be earned
in a Fiscal Quarter, the election shall be filed
with the E.C.C. prior to the close of the
immediately preceding Fiscal Quarter.
Annual Incentive For all or any part of any cash bonus to be
earned in a Fiscal Year pursuant to an annual
incentive plan, the election shall be filed with
the E.C.C. prior to the close of the Third
Quarter of the Fiscal Year to which such
election relates.
Long-Term Incentive For all or any part of any cash bonus to be
earned in a multi-year award period pursuant to
a long-term incentive plan, the election shall
be filed with the E.C.C. prior to the January
1st immediately preceding the last Fiscal Year
of the applicable award period to which such
election relates.
Annual Retainer and/or For all or any part of directors' annual
Meeting Fees retainer and/or meeting fees to be earned in a
Fiscal Quarter, the election(s) shall be filed
with
-4-
<PAGE>
the E.C.C. prior to the close of the immediately
preceding Fiscal Quarter.
D. Revocation of Election
----------------------
(1) Within Eligible Time Periods for Filing Election. A Participant may
------------------------------------------------
revoke or modify an election to defer any compensation duly made
provided that notice of the same is filed with the E.C.C. prior to
the last day stated above for making an election to defer such
compensation.
(2) Hardships and Unusual Circumstances. In the case of hardship or
-----------------------------------
unusual circumstance, the E.C.C., in its sole discretion, may
modify any election previously made to defer any compensation
pursuant to this Section 4, if such modification shall be requested
by said Participant, or after the Participant's death, by his
designated Beneficiary or his estate, as the case may be.
5. Establishment of Deferred Account
---------------------------------
The Company shall establish and maintain a separate Deferred Account for
each deferral made by a Participant, except that a single aggregated
Deferred Account may be maintained for all deferrals by a Participant
having identical payout periods.
Each Deferred Account of a Participant shall consist of an amount of money
credited to such account by reason of the Participant's election to defer
Eligible Compensation, as follows:
(1) Principal
---------
The Participant's Deferred Account shall be credited with the amount of
such Eligible Compensation as the Participant shall elect to defer as of
the date on which it would be payable but for said deferral.
(2) Interest
--------
On the last day of each Fiscal Quarter of each Fiscal Year, the
Participant's Deferred Account shall be credited with interest computed on
the average monthly balance of said account during the Fiscal Quarter at
the Interest Rate designated for the Fiscal Year.
-5-
<PAGE>
After the close of each Fiscal Year, the Company shall deliver to each
Participant a written report summarizing the balance of the Participant's
Deferred Account(s) as of the last day of the Fiscal Year.
6. Payment of Deferred Compensation
--------------------------------
A. Amount of Payment
-----------------
Unless the Participant has selected a lump sum payment or some other
payment schedule or formula which has been approved by the E.C.C., the
amount to be paid to a Participant in any month during the payout
period specified in the Participant's election shall be paid in cash
and computed by multiplying the amount credited to the Deferred Account
by a fraction, the numerator of which is one and the denominator of
which is the number of months remaining in the applicable payment
period.
B. Time of Payment
---------------
(1) Distribution While Actively Employed. In the case in which a
------------------------------------
Participant elects to receive payment on a specified date or event
and the Participant is actively employed by the Company at such
date or event, all payments shall be made in accordance with the
election(s) filed with the Company.
(2) Distribution Upon Termination Date. The entire amount, if any, then
----------------------------------
credited to each Deferred Account of a Participant shall be paid to
him or his designated Beneficiary or his estate, as the case may
be, in accordance with the election(s) filed by the Participant
with the Company.
7. General Provisions
------------------
A. Assignment
----------
No Participant's interest in any Deferred Account is assignable, either
by voluntary or involuntary assignment or by operation of law. No part
of any Deferred Compensation may be paid over, loaned, sold, assigned,
transferred, discontinued, pledged as collateral for a loan, or in any
other way encumbered until after the Deferral Period with respect to
such Deferred Compensation.
-6-
<PAGE>
B. Unsegregated Funds
------------------
The Company shall be under no obligation to segregate any deferred
funds, and an election to defer Eligible Compensation hereunder shall
constitute an acknowledgement and agreement by the Participant that
such unsegregated funds belong absolutely and unconditionally to the
Company and are subject to the claims of the Company's unsecured
general creditors. Nothing herein contained shall be construed as
creating any trust, express or implied, for the benefit of any
Participant. Notwithstanding the foregoing, the Company in its
discretion may establish and fund a so-called "rabbi trust" or similar
grantor trust to provide for the payment of benefits hereunder.
C. Designation of Beneficiary
--------------------------
Subject to applicable law, each Participant may designate a
Beneficiary(ies) to receive payments to be made of Deferred
Compensation, if any, after the Participant's death. In the absence of
such designation, all such amounts shall be paid to the Participant's
estate. The designation shall be made on a form to be supplied by the
E.C.C. and may be revoked or superseded at any time. Payments to a
Beneficiary(ies) shall be made in accordance with a schedule designated
by the Participant.
D. Reservation of Rights
---------------------
Nothing in this Plan shall be construed to (i) give any employee any
right to defer compensation other than as expressly authorized and
permitted by the E.C.C., (ii) limit in any way the right of the Company
to terminate a Participant's employment with the Company, or (iii) be
evidence of any agreement or understanding, express or implied, that
the Company will employ a Participant at any particular rate of
remuneration.
E. Amendment or Termination of the Plan
------------------------------------
The Board of Directors may, at any time, terminate or amend this Plan
provided that any such termination or amendment shall not adversely
affect the rights of Participants or Beneficiaries to payments of
amounts standing to the credit of Participants in their Deferred
Accounts at the time of such amendment or termination. In the event of
termination of this Plan, the E.C.C., in its sole discretion, may
establish classes of Participants and/or beneficiaries and apply
different payment rules to such classes and distribute all amounts in
the Deferred Accounts in such manner as it shall determine.
-7-
<PAGE>
F. Withholding
-----------
The Company shall have the right to deduct or withhold from all
payments of Deferred Compensation any taxes or levies required by law
to be withheld from an employee with respect to such payments.
G. Change in Employment or Law
---------------------------
The E.C.C. may, in its sole discretion, make appropriate adjustments
with respect to the terms of the Plan and its applicability to
Participants, including termination of individual deferral agreements
or dilution or suspension of any provision of such agreements, in the
event (i) of a discontinuance by the Company of a Participant's
employment with the Company resulting from an event such as the merger,
sale or consolidation of the Company, or (ii) any of the anticipated
benefits of deferral pursuant to this Plan or any provision hereof are
altered by reason of any interpretation of or change in law, policy or
regulation.
H. Effective Date
--------------
This Plan shall become effective on the date on which Waban Inc.
completes the spin-off of the Company by distributing to the
stockholders of Waban Inc. on a pro rata basis all of the then
outstanding shares of Common Stock of the Company.
I. Change of Control
-----------------
Notwithstanding any other provision of the Plan, upon a Change of
Control (as defined in Exhibit A) of the Company no further deferrals
---------
under Section 4 (whether elected prior to the Change of Control or not)
shall be permitted; the entire amount then credited to each Deferred
Account of each Participant shall promptly be paid to such Participant
(or his designated Beneficiary or his estate) in a lump sum payment;
and the Plan shall terminate.
J. Named Fiduciary
---------------
The E.C.C. shall serve as the Named Fiduciary of the Plan. With respect
to any claim for benefits made under the Plan, the E.C.C. shall follow
the claims and review procedure set forth in any savings plan
maintained by the Company which is subject to the requirements of the
Employee Retirement Income Security Act of 1974, as amended; provided
that the E.C.C. may designate one of its members to review initial
claims for benefits, but the full membership of the E.C.C. shall review
any denied
-8-
<PAGE>
claim when requested to do so by the claimant in accordance with the
procedure.
-9-
<PAGE>
EXHIBIT A
---------
Definition of "Change of Control"
--------------------------------
"Change of Control" shall mean the occurrence of any one of the following
events:
(a) The acquisition by an individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (iv)
any acquisition by any corporation pursuant to a transaction which satisfies the
criteria set forth in clauses (i), (ii) and (iii) of subsection (c) of this
definition; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequently
to the date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board (except that this proviso shall
not apply to any individual whose initial assumption of office as a director
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board); or
(c) Consummation of a reorganization, merger or consolidation involving the
Company or a sale or other disposition of all or substantially all of the assets
of the Company (a "Business Combination"), in each case, unless, immediately
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, of the
corporation resulting from such Business Combination (which as used in section
(c) of this definition shall include, without limitation, a corporation which as
a result of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) in
substantially
<PAGE>
the same proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation and (iii) at least half
of the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.
<PAGE>
EXHIBIT 10.12
EMPLOYMENT AGREEMENT
---------------------
AGREEMENT dated as of July 28, 1997 between Herbert J Zarkin of 8 Lands End
Lane, Sudbury, Massachusetts 01776 ("Executive") and BJ's Wholesale Club, Inc.,
a Delaware corporation (the "Company"), whose principal office is in Natick,
Massachusetts 01760.
RECITALS
--------
The Executive has served as President and Chief Executive Officer of Waban
Inc., a Delaware corporation ("Waban"), renamed HomeBase, Inc. as of the date
hereof, with its principal offices in California ("HomeBase"), under an
Employment Agreement dated as of September 19, 1996, with a term ending January
29, 2000.
In connection with distribution of common stock of the Company by Waban to
its shareholders (the "Distribution"), the Company and Executive desire to enter
into an agreement with respect to Executive's employment by Company, following
the Distribution, as Chairman of the Board of Directors of the Company.
The Company and Executive deem it desirable and appropriate, therefore, 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 the date first written above (the "Effective Date"). This
Agreement shall supersede any other employment agreement including, without
limitation, the Employment Agreement dated as of September 19, 1996 between
Executive and Waban, other than the Employment Agreement dated as of the date
hereof between the Executive and HomeBase (the "HomeBase Employment Agreement")
and the Change of Control Severance Agreement dated as of the date hereof
between the Company and Executive (the "Change of Control Agreement").
Executive's employment by the Company shall continue on the terms provided
herein until July 31, 2000 and thereafter until terminated by either Executive
or the Company, subject to earlier termination as provided herein (such period
of employment hereinafter called "Employment Period").
<PAGE>
2. SCOPE OF EMPLOYMENT.
--------------------
(a) Nature of Services. Executive shall diligently perform the duties and
------------------
the responsibilities of Chairman of the Board of Directors of the Company and
such additional duties and responsibilities as an employee of the Company as
shall from time to time be agreed by him and the Board.
(b) Extent of Services. Executive shall devote approximately one-half
------------------
(1/2) of his working time and attention and his best efforts to the performance
of his duties and responsibilities under this Agreement, provided that, to the
-------- ----
extent of any conflicts between the time required to be devoted under this
Agreement and under the HomeBase Employment Agreement, the Employee shall
allocate his time between the Company and HomeBase in such manner as he deems
reasonably appropriate under the circumstances. However, Executive may (a) make
any passive investments where he is not obligated or required to, and shall not
in fact, devote any managerial efforts, (b) participate in charitable or
community activities or in trade or professional organizations or (c) subject to
Board approval (which approval shall not be unreasonably withheld or withdrawn),
hold directorships in public companies, except only that the Board shall have
the right to limit such services as a director or such participation whenever
the Board shall believe that the time spent on such activities infringes in any
material respect upon the time required by Executive for the performance of his
duties under this Agreement or is otherwise incompatible with those duties.
3. COMPENSATION AND BENEFITS.
--------------------------
(a) Base Salary. Executive shall be paid a base salary at the rate of
-----------
$350,000 per year to be reviewed annually by the Committee (the "Base Salary");
however, any reduction in the Base Salary shall be subject to Executive's
consent. Base Salary shall be payable in such manner and at such times as the
Company shall pay base salary to other executive employees.
(b) New MIP Awards. Executive shall be eligible to receive awards under
--------------
the Company's Management Incentive Plan ("MIP") applicable to Executive. The
goals, scope, and conditions of any award shall be established annually by
mutual agreement between Executive and the Committee. In each fiscal year,
Executive shall be entitled to earn up to a specified percentage of his Base
Salary as a Target, or Maximum Award, as the case may be. For each fiscal year
of the Company, the Target Award shall equal 50% of Executive's Base Salary
earned during the fiscal year under this Agreement, and the Maximum Award shall
equal $1,000,000, or if less, 100% of the Executive's Base Salary earned by the
Executive during the fiscal year (as defined in the MIP) with respect to which
the Award is made, with the payment potential scaling from 0% to the Maximum
Award, as established by the terms of the Award.
-2-
<PAGE>
(c) Qualified Plans. Executive shall be entitled during the Employment
---------------
Period to participate in the Company's tax-qualified retirement and profit-
sharing plans, if any, in accordance with the provisions of those plans.
(d) Policies and Fringe Benefits. Executive shall be subject to Company
----------------------------
policies applicable to its executives generally and Executive shall be entitled
to receive all such fringe benefits as the Company shall from time to time make
available to other executives generally (subject to the terms of any applicable
fringe benefits plan other than terms requiring minimum hours served for
participation).
4. TERMINATION OF EMPLOYMENT; IN GENERAL.
--------------------------------------
(a) The Company and the Executive shall each have the right to end the
Executive's employment at any time and for any reason, with or without Cause.
(b) The Employment Period shall terminate when Executive becomes Disabled.
In addition, if by reason of Incapacity Executive is unable to perform his
duties for at least six continuous months, upon written notice by the Company to
Executive the Employment Period will be terminated for Incapacity.
(c) Whenever the Employment Period shall terminate, Executive shall resign
all offices or other positions he shall hold with the Company and any affiliated
corporations, including his position as a Director of the Company.
5. BENEFITS UPON TERMINATION OF EMPLOYMENT.
----------------------------------------
(a) Certain Terminations for Death, Disability or Incapacity; Termination
---------------------------------------------------------------------
by Company without Cause; Termination under Specified Circumstances. If the
- -------------------------------------------------------------------
Employment Period shall be terminated prior to, on, or after July 31, 2000 (i)
by reason of death, Disability or Incapacity of Executive, (ii) by termination
by the Company for any reason other than Cause or (iii) by termination by
Executive in the event that either (A) Executive shall be removed from or fail
to be reelected to the office of Chairman of the Board of Directors and a member
of the Executive Committee of the Board (other than in connection with
termination of Executive's employment for Cause or by Executive's voluntary
termination for reasons not specified in this clause (iii)) or (B) Executive is
relocated more than 40 miles from the current corporate headquarters of the
Company, in either case without his prior written consent (a "Specified
Voluntary Termination," which termination shall not constitute a voluntary
termination for any purpose of this Agreement), then all compensation and
benefits for Executive shall be as follows:
(i) For 12 months after such termination, the Company will continue to pay
to Executive Base Salary at the rate in effect at termination of employment.
Base Salary shall be paid for the first three months of the period without
reduction for
-3-
<PAGE>
compensation earned from other employment or self-employment, and shall
thereafter be reduced by such compensation earned from other employment or self-
employment (other than any compensation received from HomeBase).
(ii) Until the expiration of the period of Base Salary payments described
in (i) above, except to the extent that Executive shall obtain the same from
another employer or from self-employment (other than such employment by
HomeBase), the Company will provide such medical and hospital insurance, and
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 his termination of employment.
(iii) The Company will pay to Executive, without offset for
compensation earned from other employment or self-employment, the following
amounts under the Company's MIP applicable to Executive:
. First, if not already paid, any amounts to which Executive is entitled
under MIP for the fiscal year of the Company ended immediately prior
to Executive's termination of employment. These amounts will be paid
at the same time as other awards for such prior year are paid.
. Second, such amount as Executive would have earned under MIP if his
employment had continued until the end of the fiscal year during which
the termination of employment occurs (prorated for the period of
active employment during such fiscal year). This amount will be paid
at the same time as other MIP awards for the year of termination are
paid.
In addition, the Company will pay to Executive such amounts as Executive
shall have deferred (but not received) under the Company's General Deferred
Compensation Plan in accordance with the provisions of that Plan.
(iv) Executive shall also be entitled to the benefits with respect to any
Stock Options or other Stock-based awards held by Executive on his termination
of employment as provided under the terms of any Company options or any
applicable Company equity incentive plan including, without limitation, the
benefit of continued vesting following such termination of employment; provided
that if any option does not expire by its terms (or the terms of the option plan
under which it was issued) by the third anniversary of the Executive's
termination of employment, then such options shall terminate on such third
anniversary.
-4-
<PAGE>
(v) In addition, Executive shall be entitled to payments or benefits under
other Company plans, such as the Company's 401(k) Savings Plan, to the extent
that such plans provide benefits following a termination of employment.
(vi) 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.
Any payments made to Executive under any long-term disability plan of the
Company with respect to the salary continuation period in clause (i) above shall
be offset against such salary continuation payments and to the extent not so
offset, Executive shall promptly make reimbursement payments to the Company of
such disability payments.
(b) Certain Voluntary Terminations; Termination for Cause; Violation of
-------------------------------------------------------------------
Certain Agreements. If, prior to, on, or after July 31, 2000, Executive should
- ------------------
end his employment voluntarily or if the Company should end Executive's
employment for Cause, or, notwithstanding (a) above, if Executive should violate
the protected persons or noncompetition provisions of Section 6 to the extent
then applicable, all compensation and benefits otherwise payable pursuant to
this Agreement shall cease, other than (x) such amounts as Executive shall have
deferred (but not received) under the Company's General Deferred Compensation
Plan in accordance with the provisions of that Plan, and (y) any benefits to
which the Executive may be entitled under other Company plans to the extent, if
any, such plans provide benefits following such termination of employment. The
Company does not waive any rights it may have for damages or for injunctive
relief.
(c) Benefits Upon Change of Control. Following a Change of Control (as
-------------------------------
defined in the Change of Control Agreement), any rights of Executive under this
Agreement or any other agreement or plan with respect to uncompleted MIP periods
shall be governed solely by the Change of Control Agreement. Upon a termination
constituting Qualified Termination (as defined in the Change of Control
Agreement), all rights of Executive with respect to salary continuation, life
insurance, medical insurance and disability benefits shall be governed solely by
the Change of Control Agreement unless Executive shall elect to have all such
rights governed by the applicable terms of this Agreement (including a
determination of whether the termination was voluntary or involuntary), in which
case the Change of Control Agreement shall have no effect as to such rights
(upon such election, the nature of the termination, e.g. voluntary, involuntary
or for Specified Voluntary Termination, shall be determined by reference to this
Agreement and shall not be determined by reference to the classification of the
termination under the Change of Control Agreement). To be effective, written
notice of such election must be furnished by Executive to the Company within
seven days following the Qualified Termination.
-5-
<PAGE>
6. 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 (i) to be employed by the Company or its
Subsidiaries or (ii) to have been employed by the 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
limitation on (A) employment, (B) solicitation and (C) unsolicited acceptance of
services of each "protected person" and (iii) 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 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 has learned many trade
secrets of the Company and has had access to confidential information and
business plans for the Company. Therefore, if Executive should end his
employment at any time during the Employment Period for any reason, including by
reason of retirement or disability, or if the Company should end Executive's
employment at any time during the Employment Period for any reason, and whether
with or without Cause, then for a period of two years thereafter, Executive will
not engage, either as a principal, employee, partner, consultant or investor
(other than a less-than-1% stock interest in a corporation), in a business which
is a competitor of the Company (a "Competitive Business"). A business shall be
deemed a Competitive Business if it shall operate a chain of membership
warehouse clubs (such as Sam's Club or Costco), or warehouse stores selling food
and/or general merchandise, that includes a warehouse store located within 10
miles of any "then existing" BJ's Wholesale Club warehouse store. The term
"then existing" in the previous sentence shall refer to any such warehouse store
that is, at the time of termination of the Employment Period, operated by the
Company or any of its subsidiaries or divisions or under lease for operation as
aforesaid. Nothing herein shall restrict the right of the Executive to engage
in a business that operates exclusively a chain of home improvement stores,
conventional or full mark-up department stores, general merchandise discount
department stores, or apparel stores. Executive agrees that if, at any time,
pursuant to action of any court or administrative or governmental body, 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,
-6-
<PAGE>
geographical scope or otherwise, to the extent, and only to the extent,
necessary to make this paragraph lawful and enforceable in the particular
jurisdiction in which such determination is made. In addition, if during a
period of salary continuation under Section 5(a)(i) following Executive's
termination by the Company for any reason other than Cause, Executive so engages
in a Competitive Business (whether or not the provisions of this paragraph (b)
are otherwise then applicable to Executive), Executive's rights to any further
salary continuation or benefits continuation under Sections 5(a)(i) and 5(a)(ii)
shall terminate.
(c) If the Employment Period terminates, Executive agrees (i) to notify the
Company promptly 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 5 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 reasonably request. In addition, upon
termination of the Employment Period for any reason other than the death of
Executive, Executive shall immediately return all written trade secrets,
confidential information and business plans of the Company and shall execute a
certificate certifying that he has returned all such items in his possession or
under his control. In the event of the death of Executive, Executive's estate
shall comply with this obligation.
7. ASSIGNMENT. The rights and obligations of the Company shall inure 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.
8. 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 One Mercer Road, Natick,
Massachusetts 01701, Attention: President, or such other address as the
Company may hereafter designate by notice to Executive; and if sent to
Executive, the same shall be mailed to Executive at 8 Lands End Lane, Sudbury ,
Massachusetts 01776 or at such other address as Executive may hereafter
designate by notice to the Company.
9. WITHHOLDING. Anything to the contrary notwithstanding, all payments
-----------
required to be made by the Company hereunder to Executive shall be subject to
the withholding of such amounts, if any, relating to tax and other payroll
deductions as the Company may reasonably determine it should withhold pursuant
to any applicable law or regulation.
-7-
<PAGE>
10. GOVERNING LAW. This Agreement and the rights and obligations of the
-------------
parties hereunder shall be governed by and construed in accordance with the
domestic substantive laws of The Commonwealth of Massachusetts without giving
effect to any choice or conflict of laws, rules or provisions that would cause
the application of the domestic substantive laws of any other jurisdiction.
11. LEGAL FEES. The Company will pay the reasonable fees and expenses of
----------
Executive's legal counsel in connection with Executive's entering into this
Agreement.
12. ENTIRE AGREEMENT. This Agreement, including Exhibit A, supersedes all
-----------------
prior written or oral agreements between the Company and Executive and
represents the entire agreement between the parties relating to the terms of
Executive's employment by the Company, except the Change of Control Agreement.
/s/ HERBERT J ZARKIN
-----------------------------------
Herbert J Zarkin
BJ'S WHOLESALE CLUB, INC.
By: /s/ John J. Nugent
-----------------------
President
-8-
<PAGE>
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).
(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 Incapacity, Disability, or death), or conflict of
interest which conflict shall continue for 30 days after the Company gives
written notice to Executive requesting the cessation of such conflict.
(e) "Termination of Employment" means the date on which Executive's
employment is terminated.
(f) "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.
(g) "Incapacity" means a disability (other than Disability within the
meaning of (f) above) or other impairment of health that renders Executive
unable to perform his duties to the reasonable satisfaction of the Board.
(h) "Stock" means the common stock, $0.01 par value, of the Company.
(i) "Subsidiary" means any corporation in which the Company owns, directly
or indirectly 50 percent or more of the total combined voting power of all
classes of stock.
-9-
<PAGE>
EXHIBIT 10.13
John J. Nugent
--------------
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 28, 1997 between John J. Nugent, whose
address is 1001 Marina Drive, Apt. 410E, Quincy, Massachusetts 02171
("Executive"), and BJ's Wholesale Club, Inc., a Delaware corporation, whose
principal office is in Natick, Massachusetts ("Employer" or "Company").
The parties hereto, in consideration of the mutual agreements
hereinafter contained and intending to be legally bound hereby, agree as
follows:
1. Employment. The Executive is currently an employee of Waban Inc.
----------
After the spinoff of the Company from Waban Inc., Employer will employ Executive
and Executive will be an employee of Employer under the terms and conditions
hereinafter set forth. This Agreement supersedes and replaces any prior
employment agreement between Executive and Waban Inc. or its subsidiaries or
divisions, except for any Change of Control Severance Agreement between
Executive and Employer.
2. Term. Executive's employment under the terms of this Agreement shall
----
commence on the date hereof and shall continue until July 31, 1998 and
thereafter until terminated by either Executive or Employer, subject to earlier
termination as provided herein (such period of employment hereinafter called the
"Employment Period").
3. Duties. Executive shall diligently perform the duties and the
------
responsibilities of President and Chief Executive Officer of the Company and
such additional duties and responsibilities as shall from time to time be agreed
by Executive and the Board of Directors.
4. Extent of Services. Except for illnesses and vacation periods,
------------------
Executive shall devote substantially all Executive's working time and attention
and Executive's best efforts to the performance of Executive's duties and
responsibilities under this Employment Agreement; provided, however, that
-------- -------
nothing herein contained shall be deemed to prevent or limit the right of
Executive (a) to make any passive investments where Executive is not obligated
or required to, and shall not in fact, devote any managerial efforts or (b) to
participate in charitable or community activities or in trade or professional
organizations, except only that the Board of Directors of Employer shall have
the right to limit such participation if the Board of Directors believes that
the time spent on such activities infringes upon the time required by Executive
for the performance of Executive's duties under this Agreement or is otherwise
incompatible with those duties.
<PAGE>
5. Base Salary. During the Employment Period, Executive shall receive
-----------
a base salary at the rate of $520,000.00 per year, or such higher amount as
Employer shall determine from time to time. Base salary shall be payable in such
manner and at such times as Employer shall pay base salary to other executive
employees.
6. Policies and Fringe Benefits. Executive shall be subject to
----------------------------
Employer's policies applicable to its executives generally, and Executive shall
be entitled to receive all such fringe benefits as Employer shall from time to
time make available to other Employer executives generally (subject to the terms
of any applicable fringe benefit plan).
7. Termination of Employment; in General.
-------------------------------------
a) Employer shall have the right to end Executive's employment at any
time and for any reason, with or without cause. Cause shall mean dishonesty by
Executive in the performance of Executive's 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 of Directors of the Company), gross neglect of duties
(other than as a result of incapacity, disability or death), or conflict of
interest which conflict shall continue for 30 days after the Company gives
written notice to Executive requesting the cessation of such conflict.
b) The Employment Period shall terminate when Executive becomes
entitled to receive long-term disability compensation pursuant to Employer's
long-term disability plan. In addition, if by reason of any incapacity Executive
is unable to perform Executive's duties for at least six months in any 12 month
period, the Employment Period will be terminated for incapacity upon written
notice by Employer to Executive.
c) Whenever the Employment Period shall terminate, Executive shall
resign all offices or other positions Executive shall hold with Employer or any
parent corporation and any subsidiaries or divisions of Employer or any such
parent.
8. BENEFITS UPON TERMINATION OF EMPLOYMENT.
---------------------------------------
a) Termination by Employer Other Than for Cause, Disability or
-----------------------------------------------------------
Incapacity. If the Employment Period shall have been terminated by Employer for
- ----------
any reason other than cause, disability or incapacity, no compensation or other
benefits shall be payable to or accrue to Executive hereunder except as follows:
2
<PAGE>
(i) Vested vacation pay accrued at date of termination shall be
paid one week after date of termination.
(ii) Employer will continue to pay to Executive Executive's then
base salary for a period of 12 months from the date of termination,
which base salary shall be reduced after three months for compensation
earned from other employment or self-employment.
(iii) Until the expiration of the period of base salary payments
described in (ii) immediately above or until Executive shall commence
other employment or self-employment, whichever shall first occur,
Employer will provide such medical and hospital insurance and life
insurance (but not long-term disability insurance) for Executive and
Executive's family, comparable to the insurance provided for executives
generally, as Employer shall determine, and upon the same terms and
conditions as shall be provided for Employer's executives generally.
(iv) Employer will pay to Executive, without offset for
compensation earned from other employment or self-employment, the
following amounts under Employer's Management Incentive Plan ("MIP")
applicable to Executive:
First, if not already paid, any amounts to which Executive is
entitled under MIP for the fiscal year ended immediately prior to
Executive's termination of employment. These amounts will be paid
at the same time as other awards for such prior year are paid.
Second, such amount as Executive would have earned under MIP if
Executive's employment had continued until the end of the fiscal
year during which the termination of employment occurs (prorated
for the period of active employment during such fiscal year). This
amount will be paid at the same time as other MIP awards for the
year of termination are paid.
(v) Executive shall also be entitled to payments or benefits
under other plans of Employer to the extent that such plans provide
benefits following a termination of employment.
b) Termination for Death, Disability or Incapacity. If the Employment
-----------------------------------------------
Period shall terminate at any time by reason of death, disability or incapacity,
no compensation or other benefits shall be payable to or accrue to Executive
hereunder except as follows:
(i) Vested vacation pay accrued at date of termination shall be
paid one week after date of termination.
3
<PAGE>
(ii) Employer will pay to Executive, without offset for
compensation earned from other employment or self-employment, the
following amounts under MIP applicable to Executive:
First, if not already paid, any amounts to which Executive is
entitled under MIP for the fiscal year ended immediately prior to
Executive's termination of employment. These amounts will be paid
at the same time as other awards for such prior year are paid.
Second, such amount as Executive would have earned under MIP if
Executive's employment had continued until the end of the fiscal
year during which the termination of employment occurs (prorated
for the period of active employment during such fiscal year). This
amount will be paid at the same time as other MIP awards for the
year of termination are paid.
(iii) Executive shall also be entitled to payments or benefits
under other plans of Employer to the extent that such plans provide
benefits following a termination of employment.
c) Voluntary Termination; Termination for Cause; Violation of Certain
------------------------------------------------------------------
Covenants. If Executive should end Executive's employment voluntarily or if
- ---------
Employer should end Executive's employment for cause, or if Executive should
violate the protected persons or noncompetition provisions of Section 9, all
compensation and benefits otherwise payable pursuant to this Agreement shall
cease. Employer does not waive any rights it may have for damages or for
injunctive relief.
9. Agreement Not to Solicit or Compete.
-----------------------------------
(a) Upon the termination of the Employment Period at any time for any
reason, Executive shall not during the Prohibited Period 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 in which Executive has any direct or indirect
interest (other than a less-than-one percent equity interest in an entity), with
which Executive is affiliated or for which Executive renders any services.
"Prohibited Period" shall mean a period coterminous with the period of base
salary continuation (without regard to reduction for income from other
employment or self-employment) which is applicable or which would have been
applicable had the termination been pursuant to Section 8(a). A "protected
person" shall be a person known by Executive to be employed by Employer or its
subsidiaries at or within six months prior to the commencement of conversations
with such person with respect to employment.
4
<PAGE>
As to (i) each "protected person" to whom the foregoing applies, (ii)
each limitation on (A) employment of, (B) solicitation of, and (C) unsolicited
acceptance of services from, each "protected person" and (iii) 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 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 Executive's employment, Executive will have
learned many trade secrets of the Company and will have access to confidential
information and business plans of the Employer. Therefore, if Executive should
end Executive's employment voluntarily at any time, including by reason of
retirement, disability or incapacity, or if Employer should end Executive's
employment at any time for cause, then during the Prohibited Period, Executive
will not engage, either as a principal, employee, partner, consultant or
investor (other than a less-than-one percent equity interest in an entity), in a
business which is a competitor of Employer. A business shall be deemed a
competitor of Employer if it shall operate a chain of membership warehouse clubs
(such as Sam's Club or Costco), or warehouse stores selling food and/or general
merchandise, that includes a warehouse store located within 10 miles of any
"then existing" BJ's Wholesale Club warehouse store. The term "then existing" in
the previous sentence shall refer to any such warehouse store that is, at the
time of termination of the Employment Period, operated by the Company or any of
its subsidiaries or divisions or under lease for operation as aforesaid. Nothing
herein shall restrict the right of Executive to engage in a business that
operates exclusively a chain of home improvement stores, conventional or full
mark-up department stores, general merchandise discount department stores, or
apparel stores. Executive agrees that if, at any time, pursuant to action of any
court or administrative or governmental body, the operation of any part of this
paragraph shall be determined to be unlawful or otherwise unenforceable, then
the coverage of this paragraph shall be deemed to be restricted as to duration,
geographical scope or otherwise, to the extent, and only to the extent,
necessary to make this paragraph lawful and enforceable in the particular
jurisdiction in which such determination is made.
If the Employment Period terminates, Executive agrees (i) to notify
Employer immediately upon Executive's securing employment or becoming
self-employed during any period when Executive's compensation from Employer
shall be subject to reduction or Executive's benefits provided by Employer shall
be subject to
5
<PAGE>
termination as provided in Section 8, and (ii) to furnish to Employer written
evidence of Executive's compensation earned from any such employment or
self-employment as Employer 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 to Employer all written trade
secrets, confidential information and business plans of Employer and shall
execute a certificate certifying that Executive has returned all such items in
Executive's possession or under Executive's control. In the event of the death
of Executive, Executive's estate shall comply with this obligation.
10. ASSIGNMENT. The rights and obligations of Employer shall inure to
----------
the benefit of and shall be binding upon the successors and assigns of Employer.
The rights and obligations of Executive are not assignable except only that
payments payable to Executive after Executive's death shall be made to
Executive's estate.
11. NOTICES. All notices and other communications required hereunder
-------
shall be in writing and shall be given either by personal delivery or by mailing
the same by certified or registered mail, return receipt requested, postage
prepaid. If sent to Employer, the same shall be mailed to Employer at One Mercer
Road, Natick, MA 01760, Attention: Chairman of the Board, or such other address
as Employer may hereafter designate by notice to Executive; and if sent to
Executive, the same shall be mailed to Executive at his address set forth above,
or at such other address as Executive may hereafter designate by notice to
Employer. Notices shall be effective upon receipt.
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.
WITNESS the execution hereof the day and year first above written.
/s/ John J. Nugent
----------------------------
Executive
BJ'S WHOLESALE CLUB, INC.
By /s/ Herbert J. Zarkin
--------------------------
Herbert J Zarkin
Chairman of the Board
6
<PAGE>
EXHIBIT 10.14
Edward J. Weisberger
--------------------
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 28, 1997 between Edward J. Weisberger, whose
address is 451 Winch Street, Framingham, Massachusetts 01701 ("Executive"), and
BJ's Wholesale Club, Inc., a Delaware corporation, whose principal office is in
Natick, Massachusetts ("Employer" or "Company").
The parties hereto, in consideration of the mutual agreements
hereinafter contained and intending to be legally bound hereby, agree as
follows:
1. Employment. The Executive is currently an employee of Waban Inc.
----------
After the spinoff of the Company from Waban Inc., Employer will employ Executive
and Executive will be an employee of Employer under the terms and conditions
hereinafter set forth. This Agreement supersedes and replaces any prior
employment agreement between Executive and Waban Inc. or its subsidiaries or
divisions, except for any Change of Control Severance Agreement between
Executive and Employer.
2. Term. Executive's employment under the terms of this Agreement shall
----
commence on the date hereof and shall continue until July 29, 2000, subject to
earlier termination as provided herein (such period of employment hereinafter
called the "Employment Period").
3. Duties. Executive shall diligently perform the duties of Senior
------
Vice President, Finance of the Company or such executive duties and
responsibilities as shall from time to time be assigned to Executive by the
President or the Chairman of the Board of Directors.
4. Extent of Services. Except for illnesses and vacation periods,
------------------
Executive shall devote his best efforts and such amount of working time and
attention to the performance of Executive's duties and responsibilities under
this Employment Agreement as are consistent with those duties and
responsibilities. Employer acknowledges that Executive is simultaneously being
employed by HomeBase, Inc. in a similar capacity and, therefore, is not expected
or required to devote more than 50% of his working time and attention to the
business affairs of Employer; provided, however, that nothing herein contained
shall be deemed to prevent or limit the right of Executive (a) to make any
passive investments where Executive is not obligated or required
to, and shall not in fact, devote any managerial efforts or (b) to participate
in charitable or community activities or in trade or
<PAGE>
professional organizations, except only that Employer shall have the right to
limit such participation if the Board of Directors believes that the time spent
on such activities infringes upon the time required by Executive for the
performance of Executive's duties under this Agreement or is otherwise
incompatible with those duties.
5. Base Salary. During the Employment Period, Executive shall receive a
-----------
base salary at the rate of $150,000.00 per year, or such higher amount as
Employer shall determine from time to time. Base salary shall be payable in such
manner and at such times as Employer shall pay base salary to other executive
employees.
6. Policies and Fringe Benefits. Executive shall be subject to
----------------------------
Employer's policies applicable to its executives generally, and Executive shall
be entitled to receive all such fringe benefits as Employer shall from time to
time make available to other Employer executives generally (subject to the terms
of any applicable fringe benefit plan).
7. Termination of Employment; in General.
-------------------------------------
a) Employer shall have the right to end Executive's employment at any
time and for any reason, with or without cause. Cause shall mean dishonesty by
Executive in the performance of Executive's 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 of Directors of the Company), gross neglect of duties
(other than as a result of incapacity, disability or death), or conflict of
interest which conflict shall continue for 30 days after the Company gives
written notice to Executive requesting the cessation of such conflict.
b) The Employment Period shall terminate when Executive becomes
entitled to receive long-term disability compensation pursuant to Employer's
long-term disability plan. In addition, if by reason of any incapacity Executive
is unable to perform Executive's duties for at least six months in any 12 month
period, the Employment Period will be terminated for incapacity upon written
notice by Employer to Executive.
c) Whenever the Employment Period shall terminate, Executive shall
resign all offices or other positions Executive shall hold with Employer or any
parent corporation and any subsidiaries or divisions of Employer or any such
parent.
2
<PAGE>
8. BENEFITS UPON TERMINATION OF EMPLOYMENT.
---------------------------------------
a) Termination by Employer Other Than for Cause, Disability or
-----------------------------------------------------------
Incapacity. If the Employment Period shall have been terminated by Employer
- ----------
prior to July 29, 2000 for any reason other than cause, disability or
incapacity, no compensation or other benefits shall be payable to or accrue to
Executive hereunder except as follows:
(i) Vested vacation pay accrued at date of termination shall be
paid one week after date of termination.
(ii) Employer will continue to pay to Executive Executive's then
base salary for a period of 12 months from the date of termination or
through July 29, 2000, if earlier, which base salary shall be reduced
after three months for compensation earned from other employment or
self-employment; provided, however, such base salary shall not be
reduced for compensation earned from employment with HomeBase, Inc.
(iii) Until the expiration of the period of base salary payments
described in (ii) immediately above or until Executive shall commence
other employment or self-employment, whichever shall first occur,
Employer will provide such medical and hospital insurance and life
insurance (but not long-term disability insurance) for Executive and
Executive's family, comparable to the insurance provided for executives
generally, as Employer shall determine, and upon the same terms and
conditions as shall be provided for Employer's executives generally.
(iv) Employer will pay to Executive, without offset for
compensation earned from other employment or self-employment, the
following amounts under Employer's Management Incentive Plan ("MIP")
applicable to Executive:
First, if not already paid, any amounts to which Executive is
entitled under MIP for the fiscal year ended immediately prior
to Executive's termination of employment. These amounts will
be paid at the same time as other awards for such prior year
are paid.
Second, such amount as Executive would have earned under MIP
if Executive's employment had continued until the end of the
fiscal year during which the termination of employment occurs
(prorated for the period of active employment during such
fiscal year). This amount will be paid at the same time as
other MIP awards for the year of termination are paid.
3
<PAGE>
(v) Executive shall also be entitled to payments or benefits
under other plans of Employer to the extent that such plans provide
benefits following a termination of employment.
b) Termination for Death, Disability or Incapacity. If the Employment
-----------------------------------------------
Period shall terminate at any time by reason of death, disability or incapacity,
no compensation or other benefits shall be payable to or accrue to Executive
hereunder except as follows:
(i) Vested vacation pay accrued at date of termination shall be
paid one week after date of termination.
(ii) Employer will pay to Executive, without offset for
compensation earned from other employment or self-employment, the
following amounts under MIP applicable to Executive:
First, if not already paid, any amounts to which Executive is
entitled under MIP for the fiscal year ended immediately prior
to Executive's termination of employment. These amounts will
be paid at the same time as other awards for such prior year
are paid.
Second, such amount as Executive would have earned under MIP
if Executive's employment had continued until the end of the
fiscal year during which the termination of employment occurs
(prorated for the period of active employment during such
fiscal year). This amount will be paid at the same time as
other MIP awards for the year of termination are paid.
(iii) Executive shall also be entitled to payments or benefits under
other plans of Employer to the extent that such plans provide benefits
following a termination of employment.
c) Voluntary Termination; Termination for Cause; Violation of Certain
------------------------------------------------------------------
Covenants. If Executive should end Executive's employment voluntarily or if
- ---------
Employer should end Executive's employment for cause, or if Executive should
violate the protected persons or noncompetition provisions of Section 9, all
compensation and benefits otherwise payable pursuant to this Agreement shall
cease. Employer does not waive any rights it may have for damages or for
injunctive relief.
9. Agreement Not to Solicit or Compete.
-----------------------------------
(a) Upon the termination of the Employment Period at any time for any
reason, Executive shall not during the Prohibited
4
<PAGE>
Period 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 in which Executive
has any direct or indirect interest (other than a less-than-one percent equity
interest in an entity), with which Executive is affiliated or for which
Executive renders any services. "Prohibited Period" shall mean a period
coterminous with the period of base salary continuation (without regard to
reduction for income from other employment or self-employment) which is
applicable or which would have been applicable had the termination been pursuant
to Section 8(a). A "protected person" shall be a person known by Executive to be
employed by Employer or its subsidiaries at or 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 limitation on (A) employment of, (B) solicitation of, and (C) unsolicited
acceptance of services from, each "protected person" and (iii) 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 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 Executive's employment, Executive will have
learned many trade secrets of the Company and will have access to confidential
information and business plans of the Employer. Therefore, if Executive should
end Executive's employment voluntarily at any time, including by reason of
retirement, disability or incapacity, or if Employer should end Executive's
employment at any time for cause, then during the Prohibited Period, Executive
will not engage, either as a principal, employee, partner, consultant or
investor (other than a less-than-one percent equity interest in an entity), in a
business which is a competitor of Employer. A business shall be deemed a
competitor of Employer if it shall operate a chain of membership warehouse clubs
(such as Sam's Club or Costco), or warehouse stores selling food and/or general
merchandise, that includes a warehouse store located within 10 miles of any
"then existing" BJ's Wholesale Club warehouse store. The term "then existing" in
the previous sentence shall refer to any such warehouse store that is, at the
time of termination of the Employment Period, operated by the Company or any of
its subsidiaries or divisions or under lease for operation as aforesaid. Nothing
herein shall restrict the right of
5
<PAGE>
Executive to engage in a business that operates exclusively a chain of home
improvement stores, conventional or full mark-up department stores, general
merchandise discount department stores, or apparel stores. Executive agrees that
if, at any time, pursuant to action of any court or administrative or
governmental body, the operation of any part of this paragraph shall be
determined to be unlawful or otherwise unenforceable, then the coverage of this
paragraph shall be deemed to be restricted as to duration, geographical scope or
otherwise, to the extent, and only to the extent, necessary to make this
paragraph lawful and enforceable in the particular jurisdiction in which such
determination is made.
If the Employment Period terminates, Executive agrees (i) to notify
Employer immediately upon Executive's securing employment or becoming
self-employed during any period when Executive's compensation from Employer
shall be subject to reduction or Executive's benefits provided by Employer shall
be subject to termination as provided in Section 8, and (ii) to furnish to
Employer written evidence of Executive's compensation earned from any such
employment or self-employment as Employer 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 to Employer all
written trade secrets, confidential information and business plans of Employer
and shall execute a certificate certifying that Executive has returned all such
items in Executive's possession or under Executive's control. In the event of
death of Executive, Executive's estate shall comply with this obligation.
10. ASSIGNMENT. The rights and obligations of Employer shall inure to
----------
the benefit of and shall be binding upon the successors and assigns of Employer.
The rights and obligations of Executive are not assignable except only that
payments payable to Executive after Executive's death shall be made to
Executive's estate.
11. NOTICES. All notices and other communications required hereunder
-------
shall be in writing and shall be given either by personal delivery or by mailing
the same by certified or registered mail, return receipt requested, postage
prepaid. If sent to Employer, the same shall be mailed to Employer at One Mercer
Road, Natick, MA 01760, Attention: Chairman of the Board, or such other address
as Employer may hereafter designate by notice to Executive; and if sent to
Executive, the same shall be mailed to Executive at his address set forth above,
or at such other address as Executive may hereafter designate by notice to
Employer. Notices shall be effective upon receipt.
6
<PAGE>
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.
WITNESS the execution hereof the day and year first above written.
/s/ E.J. Weisberger
-----------------------------------
Executive
BJ'S WHOLESALE CLUB, INC.
By /s/ Herbert J Zarkin
---------------------------------
Herbert J Zarkin
Chairman of the Board
7
<PAGE>
EXHIBIT 10.15
Frank D. Forward
----------------
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 28, 1997 between Frank D. Forward, whose address
is 8 Gibbs Valley Path, Framingham, Massachusetts 01701 ("Executive"), and BJ's
Wholesale Club, Inc., a Delaware corporation, whose principal office is in
Natick, Massachusetts ("Employer" or "Company").
The parties hereto, in consideration of the mutual agreements hereinafter
contained and intending to be legally bound hereby, agree as follows:
1. Employment. The Executive is currently an employee of Waban Inc.
----------
After the spinoff of the Company from Waban Inc., Employer will employ Executive
and Executive will be an employee of Employer under the terms and conditions
hereinafter set forth. This Agreement supersedes and replaces any prior
employment agreement between Executive and Waban Inc. or its subsidiaries or
divisions, except for any Change of Control Severance Agreement between
Executive and Employer.
2. Term. Executive's employment under the terms of this Agreement shall
----
commence on the date hereof and shall continue until July 31, 1998 and
thereafter until terminated by either Executive or Employer, subject to earlier
termination as provided herein (such period of employment hereinafter called the
"Employment Period").
3. Duties. Executive shall diligently perform the duties of Executive
------
Vice President and Chief Financial Officer of the Company and such additional
duties and responsibilities as shall from time to time be assigned to Executive
by the President.
4. Extent of Services. Except for illnesses and vacation periods,
------------------
Executive shall devote substantially all Executive's working time and attention
and Executive's best efforts to the performance of Executive's duties and
responsibilities under this Employment Agreement; provided, however, that
-------- -------
nothing herein contained shall be deemed to prevent or limit the right of
Executive (a) to make any passive investments where Executive is not obligated
or required to, and shall not in fact, devote any managerial efforts or (b) to
participate in charitable or community activities or in trade or professional
organizations, except only that Employer shall have the right to limit such
participation if the President believes that the time spent on such activities
infringes upon the time required by Executive for the performance of Executive's
duties under this Agreement or is otherwise incompatible with those duties.
<PAGE>
5. Base Salary. During the Employment Period, Executive shall receive a
-----------
base salary at the rate of $180,000.00 per year, or such higher amount as
Employer shall determine from time to time. Base salary shall be payable in such
manner and at such times as Employer shall pay base salary to other executive
employees.
6. Policies and Fringe Benefits. Executive shall be subject to
----------------------------
Employer's policies applicable to its executives generally, and Executive shall
be entitled to receive all such fringe benefits as Employer shall from time to
time make available to other Employer executives generally (subject to the terms
of any applicable fringe benefit plan).
7. Termination of Employment; in General.
-------------------------------------
a) Employer shall have the right to end Executive's employment at any
time and for any reason, with or without cause. Cause shall mean dishonesty by
Executive in the performance of Executive's 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 of Directors of the Company), gross neglect of duties
(other than as a result of incapacity, disability or death), or conflict of
interest which conflict shall continue for 30 days after the Company gives
written notice to Executive requesting the cessation of such conflict.
b) The Employment Period shall terminate when Executive becomes entitled
to receive long-term disability compensation pursuant to Employer's long-term
disability plan. In addition, if by reason of any incapacity, Executive is
unable to perform Executive's duties for at least six months in any 12 month
period, the Employment Period will be terminated for incapacity upon written
notice by Employer to Executive.
c) Whenever the Employment Period shall terminate, Executive shall
resign all offices or other positions Executive shall hold with Employer or any
parent corporation and any subsidiaries or divisions of Employer or any such
parent.
8. BENEFITS UPON TERMINATION OF EMPLOYMENT.
---------------------------------------
a) Termination by Employer Other Than for Cause, Disability or
-----------------------------------------------------------
Incapacity. If the Employment Period shall have been terminated by Employer for
- ----------
any reason other than cause, disability or incapacity, no compensation or other
benefits shall be payable to or accrue to Executive hereunder except as follows:
2
<PAGE>
(i) Vested vacation pay accrued at date of termination shall be
paid one week after date of termination.
(ii) Employer will continue to pay to Executive Executive's then
base salary for a period of 12 months from the date of termination, which
base salary shall be reduced after three months for compensation earned
from other employment or self-employment.
(iii) Until the expiration of the period of base salary payments
described in (ii) immediately above or until Executive shall commence other
employment or self-employment, whichever shall first occur, Employer will
provide such medical and hospital insurance and life insurance (but not
long-term disability insurance) for Executive and Executive's family,
comparable to the insurance provided for executives generally, as Employer
shall determine, and upon the same terms and conditions as shall be
provided for Employer's executives generally.
(iv) Employer will pay to Executive, without offset for compensation
earned from other employment or self-employment, the following amounts
under Employer's Management Incentive Plan ("MIP") applicable to Executive:
First, if not already paid, any amounts to which Executive is
entitled under MIP for the fiscal year ended immediately prior to
Executive's termination of employment. These amounts will be paid at
the same time as other awards for such prior year are paid.
Second, such amount as Executive would have earned under MIP if
Executive's employment had continued until the end of the fiscal year
during which the termination of employment occurs (prorated for the
period of active employment during such fiscal year). This amount
will be paid at the same time as other MIP awards for the year of
termination are paid.
(v) Executive shall also be entitled to payments or benefits under
other plans of Employer to the extent that such plans provide benefits
following a termination of employment.
b) Termination for Death, Disability or Incapacity. If the Employment
-----------------------------------------------
Period shall terminate at any time by reason of death, disability or incapacity,
no compensation or other benefits shall be payable to or accrue to Executive
hereunder except as follows:
(i) Vested vacation pay accrued at date of termination shall be
paid one week after date of
3
<PAGE>
termination.
(ii) Employer will pay to Executive, without offset for compensation
earned from other employment or self-employment, the following amounts
under MIP applicable to Executive:
First, if not already paid, any amounts to which Executive is
entitled under MIP for the fiscal year ended immediately prior to
Executive's termination of employment. These amounts will be paid at
the same time as other awards for such prior year are paid.
Second, such amount as Executive would have earned under MIP if
Executive's employment had continued until the end of the fiscal year
during which the termination of employment occurs (prorated for the
period of active employment during such fiscal year). This amount
will be paid at the same time as other MIP awards for the year of
termination are paid.
(iii) Executive shall also be entitled to payments or benefits under
other plans of Employer to the extent that such plans provide benefits
following a termination of employment.
c) Voluntary Termination; Termination for Cause; Violation of Certain
------------------------------------------------------------------
Covenants. If Executive should end Executive's employment voluntarily or if
- ---------
Employer should end Executive's employment for cause, or if Executive should
violate the protected persons or noncompetition provisions of Section 9, all
compensation and benefits otherwise payable pursuant to this Agreement shall
cease. Employer does not waive any rights it may have for damages or for
injunctive relief.
9. Agreement Not to Solicit or Compete.
-----------------------------------
(a) Upon the termination of the Employment Period at any time for any
reason, Executive shall not during the Prohibited Period 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 in which Executive has any direct or indirect
interest (other than a less-than-one percent equity interest in an entity), with
which Executive is affiliated or for which Executive renders any services.
"Prohibited Period" shall mean a period coterminous with the period of base
salary continuation (without regard to reduction for income from other
employment or self-employment) which is applicable or which would have been
applicable had the termination been pursuant to Section 8(a). A "protected
person" shall be a person known by Executive to be employed by Employer or its
subsidiaries at or within six months prior to the commencement of conversations
with such
4
<PAGE>
person with respect to employment.
As to (i) each "protected person" to whom the foregoing applies, (ii) each
limitation on (A) employment of, (B) solicitation of, and (C) unsolicited
acceptance of services from, each "protected person" and (iii) 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 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 Executive's employment, Executive will have
learned many trade secrets of the Company and will have access to confidential
information and business plans of the Employer. Therefore, if Executive should
end Executive's employment voluntarily at any time, including by reason of
retirement, disability or incapacity, or if Employer should end Executive's
employment at any time for cause, then during the Prohibited Period, Executive
will not engage, either as a principal, employee, partner, consultant or
investor (other than a less-than-one percent equity interest in an entity), in a
business which is a competitor of Employer. A business shall be deemed a
competitor of Employer if it shall operate a chain of membership warehouse clubs
(such as Sam's Club or Costco), or warehouse stores selling food and/or general
merchandise, that includes a warehouse store located within 10 miles of any
"then existing" BJ's Wholesale Club warehouse store. The term "then existing" in
the previous sentence shall refer to any such warehouse store that is, at the
time of termination of the Employment Period, operated by the Company or any of
its subsidiaries or divisions or under lease for operation as aforesaid. Nothing
herein shall restrict the right of Executive to engage in a business that
operates exclusively a chain of home improvement stores, conventional or full
mark-up department stores, general merchandise discount department stores, or
apparel stores. Executive agrees that if, at any time, pursuant to action of any
court or administrative or governmental body, the operation of any part of this
paragraph shall be determined to be unlawful or otherwise unenforceable, then
the coverage of this paragraph shall be deemed to be restricted as to duration,
geographical scope or otherwise, to the extent, and only to the extent,
necessary to make this paragraph lawful and enforceable in the particular
jurisdiction in which such determination is made.
If the Employment Period terminates, Executive agrees (i) to notify
Employer immediately upon Executive's securing employment or becoming self-
employed during any period when Executive's
5
<PAGE>
compensation from Employer shall be subject to reduction or Executive's benefits
provided by Employer shall be subject to termination as provided in Section 8,
and (ii) to furnish to Employer written evidence of Executive's compensation
earned from any such employment or self-employment as Employer 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 to
Employer all written trade secrets, confidential information and business plans
of Employer and shall execute a certificate certifying that Executive has
returned all such items in Executive's possession or under Executive's control.
In the event of the death of Executive, Executive's estate shall comply with
this obligation.
10. ASSIGNMENT. The rights and obligations of Employer shall inure to
----------
the benefit of and shall be binding upon the successors and assigns of Employer.
The rights and obligations of Executive are not assignable except only that
payments payable to Executive after Executive's death shall be made to
Executive's estate.
11. NOTICES. All notices and other communications required hereunder
-------
shall be in writing and shall be given either by personal delivery or by mailing
the same by certified or registered mail, return receipt requested, postage
prepaid. If sent to Employer, the same shall be mailed to Employer at One Mercer
Road, Natick, MA 01760, Attention: President, or such other address as Employer
may hereafter designate by notice to Executive; and if sent to Executive, the
same shall be mailed to Executive at his address set forth above, or at such
other address as Executive may hereafter designate by notice to Employer.
Notices shall be effective upon receipt.
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.
WITNESS the execution hereof the day and year first above written.
/s/ Frank Forward
------------------------------------
Executive
BJ'S WHOLESALE CLUB, INC.
By /s/ John J. Nugent
----------------------------------
John J. Nugent
President
6
<PAGE>
EXHIBIT 10.16
Michael T. Wedge
----------------
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 28, 1997 between Michael T. Wedge, whose
address is 48 Bridle Path, Franklin, Massachusetts 02038 ("Executive"), and BJ's
Wholesale Club, Inc., a Delaware corporation, whose principal office is in
Natick, Massachusetts ("Employer" or "Company").
The parties hereto, in consideration of the mutual agreements
hereinafter contained and intending to be legally bound hereby, agree as
follows:
1. Employment. The Executive is currently an employee of Waban Inc.
-----------
After the spinoff of the Company from Waban Inc., Employer will employ Executive
and Executive will be an employee of Employer under the terms and conditions
hereinafter set forth. This Agreement supersedes and replaces any prior
employment agreement between Executive and Waban Inc. or its subsidiaries or
divisions, except for any Change of Control Severance Agreement between
Executive and Employer.
2. Term. Executive's employment under the terms of this Agreement
----
shall commence on the date hereof and shall continue until July 31, 1998 and
thereafter until terminated by either Executive or Employer, subject to earlier
termination as provided herein (such period of employment hereinafter called the
"Employment Period").
3. Duties. Executive shall diligently perform the duties of Executive
------
Vice President, Club Operations of the Company and such additional duties and
responsibilities as shall from time to time be assigned to Executive by the
President.
4. Extent of Services. Except for illnesses and vacation periods,
------------------
Executive shall devote substantially all Executive's working time and attention
and Executive's best efforts to the performance of Executive's duties and
responsibilities under this Employment Agreement; provided, however, that
-------- -------
nothing herein contained shall be deemed to prevent or limit the right of
Executive (a) to make any passive investments where Executive is not obligated
or required to, and shall not in fact, devote any managerial efforts or (b) to
participate in charitable or community activities or in trade or professional
organizations, except only that Employer shall have the right to limit such
participation if the President believes that the time spent on such activities
infringes upon the time required by Executive for the performance of Executive's
duties under this Agreement or is otherwise incompatible with those duties.
<PAGE>
5. Base Salary. During the Employment Period, Executive shall receive
-----------
a base salary at the rate of $230,000.00 per year, or such higher amount as
Employer shall determine from time to time. Base salary shall be payable in such
manner and at such times as Employer shall pay base salary to other executive
employees.
6. Policies and Fringe Benefits. Executive shall be subject to
----------------------------
Employer's policies applicable to its executives generally, and Executive shall
be entitled to receive all such fringe benefits as Employer shall from time to
time make available to other Employer executives generally (subject to the terms
of any applicable fringe benefit plan).
7. Termination of Employment; in General.
-------------------------------------
a) Employer shall have the right to end Executive's employment at any
time and for any reason, with or without cause. Cause shall mean dishonesty by
Executive in the performance of Executive's 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 of Directors of the Company), gross neglect of duties
(other than as a result of incapacity, disability or death), or conflict of
interest which conflict shall continue for 30 days after the Company gives
written notice to Executive requesting the cessation of such conflict.
b) The Employment Period shall terminate when Executive becomes
entitled to receive long-term disability compensation pursuant to Employer's
long-term disability plan. In addition, if by reason of any incapacity Executive
is unable to perform Executive's duties for at least six months in any 12 month
period, the Employment Period will be terminated for incapacity upon written
notice by Employer to Executive.
c) Whenever the Employment Period shall terminate, Executive shall
resign all offices or other positions Executive shall hold with Employer or any
parent corporation and any subsidiaries or divisions of Employer or any such
parent.
8. BENEFITS UPON TERMINATION OF EMPLOYMENT.
---------------------------------------
a) Termination by Employer Other Than for Cause, Disability or
-----------------------------------------------------------
Incapacity. If the Employment Period shall have been terminated by Employer for
- ----------
any reason other than cause, disability or incapacity, no compensation or other
benefits shall be payable to or accrue to Executive hereunder except as follows:
2
<PAGE>
(i) Vested vacation pay accrued at date of termination shall be
paid one week after date of termination.
(ii) Employer will continue to pay to Executive Executive's then
base salary for a period of 12 months from the date of termination,
which base salary shall be reduced after three months for compensation
earned from other employment or self-employment.
(iii) Until the expiration of the period of base salary payments
described in (ii) immediately above or until Executive shall commence
other employment or self- employment, whichever shall first occur,
Employer will provide such medical and hospital insurance and life
insurance (but not long-term disability insurance) for Executive and
Executive's family, comparable to the insurance provided for executives
generally, as Employer shall determine, and upon the same terms and
conditions as shall be provided for Employer's executives generally.
(iv) Employer will pay to Executive, without offset for
compensation earned from other employment or self- employment, the
following amounts under Employer's Management Incentive Plan ("MIP")
applicable to Executive:
First, if not already paid, any amounts to which Executive is
entitled under MIP for the fiscal year ended immediately prior to
Executive's termination of employment. These amounts will be paid
at the same time as other awards for such prior year are paid.
Second, such amount as Executive would have earned under MIP if
Executive's employment had continued until the end of the fiscal
year during which the termination of employment occurs (prorated
for the period of active employment during such fiscal year). This
amount will be paid at the same time as other MIP awards for the
year of termination are paid.
(v) Executive shall also be entitled to payments or benefits
under other plans of Employer to the extent that such plans provide
benefits following a termination of employment.
b) Termination for Death, Disability or Incapacity. If the Employment
-----------------------------------------------
Period shall terminate at any time by reason of death, disability or incapacity,
no compensation or other benefits shall be payable to or accrue to Executive
hereunder except as follows:
(i) Vested vacation pay accrued at date of termination shall be
paid one week after date of termination.
3
<PAGE>
(ii) Employer will pay to Executive, without offset for
compensation earned from other employment or self- employment, the
following amounts under MIP applicable to Executive:
First, if not already paid, any amounts to which Executive is
entitled under MIP for the fiscal year ended immediately prior to
Executive's termination of employment. These amounts will be paid
at the same time as other awards for such prior year are paid.
Second, such amount as Executive would have earned under MIP if
Executive's employment had continued until the end of the fiscal
year during which the termination of employment occurs (prorated
for the period of active employment during such fiscal year). This
amount will be paid at the same time as other MIP awards for the
year of termination are paid.
(iii) Executive shall also be entitled to payments or benefits
under other plans of Employer to the extent that such plans provide
benefits following a termination of employment.
c) Voluntary Termination; Termination for Cause; Violation of Certain
------------------------------------------------------------------
Covenants. If Executive should end Executive's employment voluntarily or if
- ---------
Employer should end Executive's employment for cause, or if Executive should
violate the protected persons or noncompetition provisions of Section 9, all
compensation and benefits otherwise payable pursuant to this Agreement shall
cease. Employer does not waive any rights it may have for damages or for
injunctive relief.
9. Agreement Not to Solicit or Compete.
-----------------------------------
(a) Upon the termination of the Employment Period at any time for any
reason, Executive shall not during the Prohibited Period 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 in which Executive has any direct or indirect
interest (other than a less-than-one percent equity interest in an entity), with
which Executive is affiliated or for which Executive renders any services.
"Prohibited Period" shall mean a period coterminous with the period of base
salary continuation (without regard to reduction for income from other
employment or self-employment) which is applicable or which would have been
applicable had the termination been pursuant to Section 8(a). A "protected
person" shall be a person known by Executive to be employed by Employer or its
subsidiaries at or within six months prior to the commencement of conversations
with such person with respect to employment.
4
<PAGE>
As to (i) each "protected person" to whom the foregoing applies, (ii)
each limitation on (A) employment of, (B) solicitation of, and (C) unsolicited
acceptance of services from, each "protected person" and (iii) 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 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 Executive's employment, Executive will have
learned many trade secrets of the Company and will have access to confidential
information and business plans of the Employer. Therefore, if Executive should
end Executive's employment voluntarily at any time, including by reason of
retirement, disability or incapacity, or if Employer should end Executive's
employment at any time for cause, then during the Prohibited Period, Executive
will not engage, either as a principal, employee, partner, consultant or
investor (other than a less-than-one percent equity interest in an entity), in a
business which is a competitor of Employer. A business shall be deemed a
competitor of Employer if it shall operate a chain of membership warehouse clubs
(such as Sam's Club or Costco), or warehouse stores selling food and/or general
merchandise, that includes a warehouse store located within 10 miles of any
"then existing" BJ's Wholesale Club warehouse store. The term "then existing" in
the previous sentence shall refer to any such warehouse store that is, at the
time of termination of the Employment Period, operated by the Company or any of
its subsidiaries or divisions or under lease for operation as aforesaid. Nothing
herein shall restrict the right of Executive to engage in a business that
operates exclusively a chain of home improvement stores, conventional or full
mark-up department stores, general merchandise discount department stores,
conventional supermarkets, or apparel stores. Executive agrees that if, at any
time, pursuant to action of any court or administrative or governmental body,
the operation of any part of this paragraph shall be determined to be unlawful
or otherwise unenforceable, then the coverage of this paragraph shall be deemed
to be restricted as to duration, geographical scope or otherwise, to the extent,
and only to the extent, necessary to make this paragraph lawful and enforceable
in the particular jurisdiction in which such determination is made.
If the Employment Period terminates, Executive agrees (i) to notify
Employer immediately upon Executive's securing employment or becoming
self-employed during any period when Executive's compensation from Employer
shall be subject to reduction or Executive's benefits provided by Employer shall
be subject to termination as provided in Section 8, and (ii) to furnish to
5
<PAGE>
Employer written evidence of Executive's compensation earned from any such
employment or self-employment as Employer 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 to Employer all
written trade secrets, confidential information and business plans of Employer
and shall execute a certificate certifying that Executive has returned all such
items in Executive's possession or under Executive's control. In the event of
the death of Executive, Executive's estate shall comply with this obligation.
10. ASSIGNMENT. The rights and obligations of Employer shall inure to
----------
the benefit of and shall be binding upon the successors and assigns of Employer.
The rights and obligations of Executive are not assignable except only that
payments payable to Executive after Executive's death shall be made to
Executive's estate.
11. NOTICES. All notices and other communications required hereunder
-------
shall be in writing and shall be given either by personal delivery or by mailing
the same by certified or registered mail, return receipt requested, postage
prepaid. If sent to Employer, the same shall be mailed to Employer at One Mercer
Road, Natick, MA 01760, Attention: President, or such other address as Employer
may hereafter designate by notice to Executive; and if sent to Executive, the
same shall be mailed to Executive at his address set forth above, or at such
other address as Executive may hereafter designate by notice to Employer.
Notices shall be effective upon receipt.
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.
WITNESS the execution hereof the day and year first above written.
/s/ Michael T. Wedge
-------------------------
Executive
BJ'S WHOLESALE CLUB, INC.
By /s/ John J. Nugent
-----------------------
John J. Nugent
President
6
<PAGE>
EXHIBIT 10.17
Laura J.Sen
-----------
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 28, 1997 between Laura J.Sen, whose address
is 90 Babcock Street, Brookline, Massachusetts 02146 ("Executive"), and BJ's
Wholesale Club, Inc., a Delaware corporation, whose principal office is in
Natick, Massachusetts ("Employer" or "Company").
The parties hereto, in consideration of the mutual agreements
hereinafter contained and intending to be legally bound hereby, agree as
follows:
1. Employment. The Executive is currently an employee of Waban Inc.
----------
After the spinoff of the Company from Waban Inc., Employer will employ Executive
and Executive will be an employee of Employer under the terms and conditions
hereinafter set forth. This Agreement supersedes and replaces any prior
employment agreement between Executive and Waban Inc. or its subsidiaries or
divisions, except for any Change of Control Severance Agreement between
Executive and Employer.
2. Term. Executive's employment under the terms of this Agreement
----
shall commence on the date hereof and shall continue until July 31, 1998 and
thereafter until terminated by either Executive or Employer, subject to earlier
termination as provided herein (such period of employment hereinafter called the
"Employment Period").
3. Duties. Executive shall diligently perform the duties of Executive
------
Vice President, Merchandising of the Company and such additional duties and
responsibilities as shall from time to time be assigned to Executive by the
President.
4. Extent of Services. Except for illnesses and vacation periods,
------------------
Executive shall devote substantially all Executive's working time and attention
and Executive's best efforts to the performance of Executive's duties and
responsibilities under this Employment Agreement; provided, however, that
-------- -------
nothing herein contained shall be deemed to prevent or limit the right of
Executive (a) to make any passive investments where Executive is not obligated
or required to, and shall not in fact, devote any managerial efforts or (b) to
participate in charitable or community activities or in trade or professional
organizations, except only that Employer shall have the right to limit such
participation if the President believes that the time spent on such activities
infringes upon the time required by Executive for the performance of Executive's
duties under this Agreement or is otherwise incompatible with those duties.
<PAGE>
5. Base Salary. During the Employment Period, Executive shall receive
-----------
a base salary at the rate of $230,000.00 per year, or such higher amount as
Employer shall determine from time to time. Base salary shall be payable in such
manner and at such times as Employer shall pay base salary to other executive
employees.
6. Policies and Fringe Benefits. Executive shall be subject to
----------------------------
Employer's policies applicable to its executives generally, and Executive shall
be entitled to receive all such fringe benefits as Employer shall from time to
time make available to other Employer executives generally (subject to the terms
of any applicable fringe benefit plan).
7. Termination of Employment; in General.
-------------------------------------
a) Employer shall have the right to end Executive's employment at any
time and for any reason, with or without cause. Cause shall mean dishonesty by
Executive in the performance of Executive's 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 of Directors of the Company), gross neglect of duties
(other than as a result of incapacity, disability or death), or conflict of
interest which conflict shall continue for 30 days after the Company gives
written notice to Executive requesting the cessation of such conflict.
b) The Employment Period shall terminate when Executive becomes
entitled to receive long-term disability compensation pursuant to Employer's
long-term disability plan. In addition, if by reason of any incapacity Executive
is unable to perform Executive's duties for at least six months in any 12 month
period, the Employment Period will be terminated for incapacity upon written
notice by Employer to Executive.
c) Whenever the Employment Period shall terminate, Executive shall
resign all offices or other positions Executive shall hold with Employer or any
parent corporation and any subsidiaries or divisions of Employer or any such
parent.
8. BENEFITS UPON TERMINATION OF EMPLOYMENT.
---------------------------------------
a) Termination by Employer Other Than for Cause, Disability or
-----------------------------------------------------------
Incapacity. If the Employment Period shall have been terminated by Employer for
- ----------
any reason other than cause, disability or incapacity, no compensation or other
benefits shall be payable to or accrue to Executive hereunder except as follows:
2
<PAGE>
(i) Vested vacation pay accrued at date of termination shall be
paid one week after date of termination.
(ii) Employer will continue to pay to Executive Executive's then
base salary for a period of 12 months from the date of termination,
which base salary shall be reduced after three months for compensation
earned from other employment or self-employment.
(iii) Until the expiration of the period of base salary payments
described in (ii) immediately above or until Executive shall commence
other employment or self-employment, whichever shall first occur,
Employer will provide such medical and hospital insurance and life
insurance (but not long-term disability insurance) for Executive and
Executive's family, comparable to the insurance provided for executives
generally, as Employer shall determine, and upon the same terms and
conditions as shall be provided for Employer's executives generally.
(iv) Employer will pay to Executive, without offset for
compensation earned from other employment or self-employment, the
following amounts under Employer's Management Incentive Plan ("MIP")
applicable to Executive:
First, if not already paid, any amounts to which Executive is
entitled under MIP for the fiscal year ended immediately prior to
Executive's termination of employment. These amounts will be paid
at the same time as other awards for such prior year are paid.
Second, such amount as Executive would have earned under MIP if
Executive's employment had continued until the end of the fiscal
year during which the termination of employment occurs (prorated
for the period of active employment during such fiscal year). This
amount will be paid at the same time as other MIP awards for the
year of termination are paid.
(v) Executive shall also be entitled to payments or benefits
under other plans of Employer to the extent that such plans provide
benefits following a termination of employment.
b) Termination for Death, Disability or Incapacity. If the Employment
-----------------------------------------------
Period shall terminate at any time by reason of death, disability or incapacity,
no compensation or other benefits shall be payable to or accrue to Executive
hereunder except as follows:
(i) Vested vacation pay accrued at date of termination shall be
paid one week after date of
3
<PAGE>
termination.
(ii) Employer will pay to Executive, without offset for
compensation earned from other employment or self-employment, the
following amounts under MIP applicable to Executive:
First, if not already paid, any amounts to which Executive is
entitled under MIP for the fiscal year ended immediately prior to
Executive's termination of employment. These amounts will be paid
at the same time as other awards for such prior year are paid.
Second, such amount as Executive would have earned under MIP if
Executive's employment had continued until the end of the fiscal
year during which the termination of employment occurs (prorated
for the period of active employment during such fiscal year). This
amount will be paid at the same time as other MIP awards for the
year of termination are paid.
(iii) Executive shall also be entitled to payments or benefits
under other plans of Employer to the extent that such plans provide
benefits following a termination of employment.
c) Voluntary Termination; Termination for Cause; Violation of Certain
------------------------------------------------------------------
Covenants. If Executive should end Executive's employment voluntarily or if
- ---------
Employer should end Executive's employment for cause, or if Executive should
violate the protected persons or noncompetition provisions of Section 9, all
compensation and benefits otherwise payable pursuant to this Agreement shall
cease. Employer does not waive any rights it may have for damages or for
injunctive relief.
9. Agreement Not to Solicit or Compete.
-----------------------------------
(a) Upon the termination of the Employment Period at any time for any
reason, Executive shall not during the Prohibited Period 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 in which Executive has any direct or indirect
interest (other than a less-than-one percent equity interest in an entity), with
which Executive is affiliated or for which Executive renders any services.
"Prohibited Period" shall mean a period coterminous with the period of base
salary continuation (without regard to reduction for income from other
employment or self-employment) which is applicable or which would have been
applicable had the termination been pursuant to Section 8(a). A "protected
person" shall be a person known by Executive to be employed by Employer or its
subsidiaries at or within six months prior to the commencement of conversations
with such person with respect to employment.
4
<PAGE>
As to (i) each "protected person" to whom the foregoing applies, (ii)
each limitation on (A) employment of, (B) solicitation of, and (C) unsolicited
acceptance of services from, each "protected person" and (iii) 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 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 Executive's employment, Executive will have
learned many trade secrets of the Company and will have access to confidential
information and business plans of the Employer. Therefore, if Executive should
end Executive's employment voluntarily at any time, including by reason of
retirement, disability or incapacity, or if Employer should end Executive's
employment at any time for cause, then during the Prohibited Period, Executive
will not engage, either as a principal, employee, partner, consultant or
investor (other than a less-than-one percent equity interest in an entity), in a
business which is a competitor of Employer. A business shall be deemed a
competitor of Employer if it shall operate a chain of membership warehouse clubs
(such as Sam's Club or Costco), or warehouse stores selling food and/or general
merchandise, that includes a warehouse store located within 10 miles of any
"then existing" BJ's Wholesale Club warehouse store. The term "then existing" in
the previous sentence shall refer to any such warehouse store that is, at the
time of termination of the Employment Period, operated by the Company or any of
its subsidiaries or divisions or under lease for operation as aforesaid. Nothing
herein shall restrict the right of Executive to engage in a business that
operates exclusively a chain of home improvement stores, conventional or full
mark-up department stores, general merchandise discount department stores, or
apparel stores. Executive agrees that if, at any time, pursuant to action of any
court or administrative or governmental body, the operation of any part of this
paragraph shall be determined to be unlawful or otherwise unenforceable, then
the coverage of this paragraph shall be deemed to be restricted as to duration,
geographical scope or otherwise, to the extent, and only to the extent,
necessary to make this paragraph lawful and enforceable in the particular
jurisdiction in which such determination is made.
If the Employment Period terminates, Executive agrees (i) to notify
Employer immediately upon Executive's securing employment or becoming
self-employed during any period when Executive's compensation from Employer
shall be subject to reduction or Executive's benefits provided by Employer shall
be subject to termination as provided in Section 8, and (ii) to furnish to
5
<PAGE>
Employer written evidence of Executive's compensation earned from any such
employment or self-employment as Employer 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 to Employer all
written trade secrets, confidential information and business plans of Employer
and shall execute a certificate certifying that Executive has returned all such
items in Executive's possession or under Executive's control. In the event of
the death of Executive, Executive's estate shall comply with this obligation.
10. ASSIGNMENT. The rights and obligations of Employer shall inure to
----------
the benefit of and shall be binding upon the successors and assigns of Employer.
The rights and obligations of Executive are not assignable except only that
payments payable to Executive after Executive's death shall be made to
Executive's estate.
11. NOTICES. All notices and other communications required hereunder
-------
shall be in writing and shall be given either by personal delivery or by mailing
the same by certified or registered mail, return receipt requested, postage
prepaid. If sent to Employer, the same shall be mailed to Employer at One Mercer
Road, Natick, MA 01760, Attention: President, or such other address as Employer
may hereafter designate by notice to Executive; and if sent to Executive, the
same shall be mailed to Executive at her address set forth above, or at such
other address as Executive may hereafter designate by notice to Employer.
Notices shall be effective upon receipt.
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.
WITNESS the execution hereof the day and year first above written.
/s/ Laura J. Sen
--------------------------------------
Executive
BJ'S WHOLESALE CLUB, INC.
By /s/ John J. Nugent
------------------------------------
John J. Nugent
President
6
<PAGE>
EXHIBIT 10.18
Sarah M. Gallivan
-----------------
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 28, 1997 between Sarah M. Gallivan, whose
address is 35 Prentiss Street, Cambridge, Massachusetts 02140 ("Executive"), and
BJ's Wholesale Club, Inc., a Delaware corporation, whose principal office is in
Natick, Massachusetts ("Employer" or "Company").
The parties hereto, in consideration of the mutual agreements
hereinafter contained and intending to be legally bound hereby, agree as
follows:
1. Employment. The Executive is currently an employee of Waban Inc.
----------
After the spinoff of the Company from Waban Inc., Employer will employ Executive
and Executive will be an employee of Employer under the terms and conditions
hereinafter set forth. This Agreement supersedes and replaces any prior
employment agreement between Executive and Waban Inc. or its subsidiaries or
divisions, except for any Change of Control Severance Agreement between
Executive and Employer.
2. Term. Executive's employment under the terms of this Agreement
----
shall commence on the date hereof and shall continue until July 31, 1998 and
thereafter until terminated by either Executive or Employer, subject to earlier
termination as provided herein (such period of employment hereinafter called the
"Employment Period").
3. Duties. Executive shall diligently perform the duties of Vice
------
President, General Counsel and Secretary of the Company and such additional
duties and responsibilities as shall from time to time be assigned to Executive
by the President.
4. Extent of Services. Except for illnesses and vacation periods,
------------------
Executive shall devote substantially all Executive's working time and attention
and Executive's best efforts to the performance of Executive's duties and
responsibilities under this Employment Agreement; provided, however, that
-------- -------
nothing herein contained shall be deemed to prevent or limit the right of
Executive (a) to make any passive investments where Executive is not obligated
or required to, and shall not in fact, devote any managerial efforts or (b) to
participate in charitable or community activities or in trade or professional
organizations, except only that Employer shall have the right to limit such
participation if the President believes that the time spent on such activities
infringes upon the time required by Executive for the performance of Executive's
duties under this Agreement or is otherwise incompatible with those duties.
<PAGE>
5. Base Salary. During the Employment Period, Executive shall receive
-----------
a base salary at the rate of $162,700.00 per year, or such higher amount as
Employer shall determine from time to time. Base salary shall be payable in such
manner and at such times as Employer shall pay base salary to other executive
employees.
6. Policies and Fringe Benefits. Executive shall be subject to
----------------------------
Employer's policies applicable to its executives generally, and Executive shall
be entitled to receive all such fringe benefits as Employer shall from time to
time make available to other Employer executives generally (subject to the terms
of any applicable fringe benefit plan).
7. Termination of Employment; in General.
-------------------------------------
a) Employer shall have the right to end Executive's employment at any
time and for any reason, with or without cause. Cause shall mean dishonesty by
Executive in the performance of Executive's 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 of Directors of the Company), gross neglect of duties
(other than as a result of incapacity, disability or death), or conflict of
interest which conflict shall continue for 30 days after the Company gives
written notice to Executive requesting the cessation of such conflict.
b) The Employment Period shall terminate when Executive becomes
entitled to receive long-term disability compensation pursuant to Employer's
long-term disability plan. In addition, if by reason of any incapacity Executive
is unable to perform Executive's duties for at least six months in any 12 month
period, the Employment Period will be terminated for incapacity upon written
notice by Employer to Executive.
c) Whenever the Employment Period shall terminate, Executive shall
resign all offices or other positions Executive shall hold with Employer or any
parent corporation and any subsidiaries or divisions of Employer or any such
parent.
8. BENEFITS UPON TERMINATION OF EMPLOYMENT.
---------------------------------------
a) Termination by Employer Other Than for Cause, Disability or
-----------------------------------------------------------
Incapacity. If the Employment Period shall have been terminated by Employer for
- ----------
any reason other than cause, disability or incapacity, no compensation or other
benefits shall be payable to or accrue to Executive hereunder except as follows:
2
<PAGE>
(i) Vested vacation pay accrued at date of termination shall be
paid one week after date of termination.
(ii) Employer will continue to pay to Executive Executive's then
base salary for a period of 12 months from the date of termination, which
base salary shall be reduced after three months for compensation earned
from other employment or self-employment.
(iii) Until the expiration of the period of base salary payments
described in (ii) immediately above or until Executive shall commence other
employment or self-employment, whichever shall first occur, Employer will
provide such medical and hospital insurance and life insurance (but not
long-term disability insurance) for Executive and Executive's family,
comparable to the insurance provided for executives generally, as Employer
shall determine, and upon the same terms and conditions as shall be
provided for Employer's executives generally.
(iv) Employer will pay to Executive, without offset for compensation
earned from other employment or self-employment, the following amounts
under Employer's Management Incentive Plan ("MIP") applicable to Executive:
First, if not already paid, any amounts to which Executive is entitled
under MIP for the fiscal year ended immediately prior to Executive's
termination of employment. These amounts will be paid at the same time
as other awards for such prior year are paid.
Second, such amount as Executive would have earned under MIP if
Executive's employment had continued until the end of the fiscal year
during which the termination of employment occurs (prorated for the
period of active employment during such fiscal year). This amount will
be paid at the same time as other MIP awards for the year of
termination are paid.
(v) Executive shall also be entitled to payments or benefits under
other plans of Employer to the extent that such plans provide benefits
following a termination of employment.
b) Termination for Death, Disability or Incapacity. If the Employment
-----------------------------------------------
Period shall terminate at any time by reason of death, disability or incapacity,
no compensation or other benefits shall be payable to or accrue to Executive
hereunder except as follows:
(i) Vested vacation pay accrued at date of termination shall be
paid one week after date of termination.
3
<PAGE>
(ii) Employer will pay to Executive, without offset for compensation
earned from other employment or self-employment, the following amounts
under MIP applicable to Executive:
First, if not already paid, any amounts to which Executive is entitled
under MIP for the fiscal year ended immediately prior to Executive's
termination of employment. These amounts will be paid at the same time
as other awards for such prior year are paid.
Second, such amount as Executive would have earned under MIP if
Executive's employment had continued until the end of the fiscal year
during which the termination of employment occurs (prorated for the
period of active employment during such fiscal year). This amount will
be paid at the same time as other MIP awards for the year of
termination are paid.
(iii) Executive shall also be entitled to payments or benefits under
other plans of Employer to the extent that such plans provide benefits
following a termination of employment.
c) Voluntary Termination; Termination for Cause; Violation of Certain
------------------------------------------------------------------
Covenants. If Executive should end Executive's employment voluntarily or if
- ---------
Employer should end Executive's employment for cause, or if Executive should
violate the protected persons or noncompetition provisions of Section 9, all
compensation and benefits otherwise payable pursuant to this Agreement shall
cease. Employer does not waive any rights it may have for damages or for
injunctive relief.
9. Agreement Not to Solicit or Compete.
-----------------------------------
(a) Upon the termination of the Employment Period at any time for any
reason, Executive shall not during the Prohibited Period 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 in which Executive has any direct or indirect
interest (other than a less-than-one percent equity interest in an entity), with
which Executive is affiliated or for which Executive renders any services.
"Prohibited Period" shall mean a period coterminous with the period of base
salary continuation (without regard to reduction for income from other
employment or self-employment) which is applicable or which would have been
applicable had the termination been pursuant to Section 8(a). A "protected
person" shall be a person known by Executive to be employed by Employer or its
subsidiaries at or within six months prior to the commencement of conversations
with such person with respect to employment.
4
<PAGE>
As to (i) each "protected person" to whom the foregoing applies, (ii)
each limitation on (A) employment of, (B) solicitation of, and (C) unsolicited
acceptance of services from, each "protected person" and (iii) 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 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 Executive's employment, Executive will have
learned many trade secrets of the Company and will have access to confidential
information and business plans of the Employer. Therefore, if Executive should
end Executive's employment voluntarily at any time, including by reason of
retirement, disability or incapacity, or if Employer should end Executive's
employment at any time for cause, then during the Prohibited Period, Executive
will not engage, either as a principal, employee, partner, consultant or
investor (other than a less-than-one percent equity interest in an entity), in a
business which is a competitor of Employer. A business shall be deemed a
competitor of Employer if it shall operate a chain of membership warehouse clubs
(such as Sam's Club or Costco), or warehouse stores selling food and/or general
merchandise, that includes a warehouse store located within 10 miles of any
"then existing" BJ's Wholesale Club warehouse store. The term "then existing" in
the previous sentence shall refer to any such warehouse store that is, at the
time of termination of the Employment Period, operated by the Company or any of
its subsidiaries or divisions or under lease for operation as aforesaid. Nothing
herein shall restrict the right of Executive to engage in a business that
operates exclusively a chainof home improvement stores, conventional or full
mark-up department stores, general merchandise discount department stores, or
apparel stores. Executive agrees that if, at any time, pursuant to action of any
court or administrative or governmental body, the operation of any part of this
paragraph shall be determined to be unlawful or otherwise unenforceable, then
the coverage of this paragraph shall be deemed to be restricted as to duration,
geographical scope or otherwise, to the extent, and only to the extent,
necessary to make this paragraph lawful and enforceable in the particular
jurisdiction in which such determination is made.
If the Employment Period terminates, Executive agrees (i) to notify
Employer immediately upon Executive's securing employment or becoming
self-employed during any period when Executive's compensation from Employer
shall be subject to reduction or Executive's benefits provided by Employer shall
be subject to
5
<PAGE>
termination as provided in Section 8, and (ii) to furnish to Employer written
evidence of Executive's compensation earned from any such employment or
self-employment as Employer 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 to Employer all written trade
secrets, confidential information and business plans of Employer and shall
execute a certificate certifying that Executive has returned all such items in
Executive's possession or under Executive's control. In the event of the death
of Executive, Executive's estate shall comply with this obligation.
10. ASSIGNMENT. The rights and obligations of Employer shall inure to
----------
the benefit of and shall be binding upon the successors and assigns of Employer.
The rights and obligations of Executive are not assignable except only that
payments payable to Executive after Executive's death shall be made to
Executive's estate.
11. NOTICES. All notices and other communications required hereunder
-------
shall be in writing and shall be given either by personal delivery or by mailing
the same by certified or registered mail, return receipt requested, postage
prepaid. If sent to Employer, the same shall be mailed to Employer at One Mercer
Road, Natick, MA 01760, Attention: President, or such other address as Employer
may hereafter designate by notice to Executive; and if sent to Executive, the
same shall be mailed to Executive at her address set forth above, or at such
other address as Executive may hereafter designate by notice to Employer.
Notices shall be effective upon receipt.
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.
WITNESS the execution hereof the day and year first above written.
/s/ Sarah M. Gallivan
-----------------------------
Executive
BJ'S WHOLESALE CLUB, INC.
By /s/ John J. Nugent
---------------------------
John J. Nugent
President
6
<PAGE>
EXHIBIT 10.19
-------------
CHANGE OF CONTROL SEVERANCE AGREEMENT
-------------------------------------
THIS AGREEMENT between BJ's Wholesale Club, Inc., a Delaware
corporation (the "Company"), and ________________ ("Executive"), dated as of
July 28, 1997.
Executive is a key executive of the Company or a Subsidiary and an
integral part of its management.
The Company recognizes that the possibility of a change of control of
the Company may result in the departure or distraction of management to the
detriment of the Company and its shareholders.
The Company wishes to assure Executive of fair severance should
Executive's employment terminate in specified circumstances following a change
of control of the Company and to assure Executive of certain other benefits upon
a change of control.
In consideration of Executive's continued employment with the Company
or a Subsidiary and other good and valuable consideration, the parties agree as
follows:
1. Benefits Upon Change of Control.
-------------------------------
1.1 In General. Within 30 days following a Change of Control, whether
----------
or not Executive's employment has been terminated, the Company shall pay to
Executive the following in a lump sum:
(a) an amount equal to the "Target Bonus" under the Company's
Management Incentive Plan or any other annual incentive plan which is
applicable to Executive for the fiscal year in which the Change of
Control occurs (or if the Target Bonus is reduced within 180 days
before the commencement of a Standstill Period, the "Target Bonus"
applicable to Executive for the fiscal year in which such reduction
occurred); and
(b) if Executive is a participant in a performance-based long-
range incentive plan at the Change of Control, such amount as is
required to be paid to Executive upon a Change of Control pursuant to
the provisions of such plan.
1.2 Benefits Following Qualified Termination of Employment. Executive
------------------------------------------------------
shall be entitled to the following benefits upon a Qualified Termination:
<PAGE>
(a) Within 30 days following the Date of Termination, the Company
shall pay to Executive the following in a lump sum:
(i) an amount equal to two times Executive's Base Salary for
one year at the rate in effect immediately prior to the Date
of Termination or the Change of Control (or if Executive's
Base Salary was reduced within 180 days before the
commencement of a Standstill Period, the rate in effect
immediately prior to such reduction), plus the accrued and
unpaid portion of Executive's Base Salary through the Date of
Termination. Any payments made to Executive under any long
term disability plan of the Company with respect to the two
years following termination of employment shall be offset
against such two times Base Salary payment. Executive shall
promptly make reimbursement payments to the Company to the
extent any such disability payments are received after the
Base Salary payment; and
(ii) an amount equal to two times Executive's automobile
allowance for one year at the rate in effect immediately prior
to the Date of Termination or the Change of Control, (or if
such automobile allowance was reduced within 180 days before
the commencement of a Standstill Period, the rate in effect
immediately prior to such reduction unless such reduction was
offset by an increase in Base Salary during such 180-day
period), whichever is highest, plus any portion of Executive's
automobile allowance payable but unpaid through the Date of
Termination; and
(iii) an amount equal to the Target Bonus amount, as defined
and determined under Section 1.1(a) above.
(b)(i) 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 Executive's family all life insurance and medical insurance (other
than long-term disability) plans and programs in which Executive was entitled to
participate immediately prior to the Change of Control (or if Executive's title
was changed to a level below that of Executive's Current Title within 180 days
before the commencement of a Standstill Period, all such plans and programs in
which Executive was entitled to participate immediately prior to such change, if
the benefits thereunder are greater), provided that Executive's continued
participation is possible under the general terms and provisions of such plans
and programs. In the event that participation in such plans or programs is not
available to
2
<PAGE>
Executive for any reason, including termination of the plan, the Company shall
arrange upon comparable terms to provide Executive with benefits substantially
similar to those which Executive is entitled to receive under such plans and
programs. Notwithstanding the foregoing, the Company's obligations hereunder
with respect to life insurance or medical insurance plans and programs shall be
deemed satisfied to the extent (but only to the extent) of any such insurance
coverage or benefits provided by another employer.
(b)(ii) If Qualified Termination occurs by reason of Disability, the
Company shall maintain in full force and effect for the continued benefit of
Executive, disability benefits and/or disability insurance at the same level to
which Executive was entitled immediately prior to the Qualified Termination.
1.3 Coordination With Certain Tax Rules. Payments under Sections 1.1
-----------------------------------
and 1.2 shall be made without regard to whether the deductibility of such
payments (or any other payments to or for the benefit of Executive) would be
limited or precluded by Internal Revenue Code Section 280G and without regard to
whether such payments (or any other payments) would subject Executive to the
federal excise tax levied on certain "excess parachute payments" under Internal
Revenue Code Section 4999; provided, that if the total of all payments to or for
--------
the benefit of Executive, after reduction for all federal taxes (including the
tax described in Internal Revenue Code Section 4999, if applicable) with respect
to such payments ("Executive's total after-tax payments"), would be increased by
the limitation or elimination of any payment under Sections 1.1 or 1.2, amounts
payable under Sections 1.1 and 1.2 shall be reduced to the extent, and only to
the extent, necessary to maximize Executive's total after-tax payments. The
determination as to whether and to what extent payments under Sections 1.1 or
1.2 are required to be reduced in accordance with the preceding sentence shall
be made at the Company's expense by Coopers & Lybrand or by such other certified
public accounting firm as the Executive Compensation Committee of the Company's
Board of Directors may designate prior to a Change of Control. In the event of
any underpayment or overpayment under Sections 1.1 or 1.2, as determined by
Coopers & Lybrand (or such other firm as may have been designated in accordance
with the preceding sentence), the amount of such underpayment or overpayment
shall forthwith be paid to Executive or refunded to the Company, as the case may
be, with interest at the applicable Federal rate provided for in Section
7872(f)(2) of the Internal Revenue Code.
2. Noncompetition; No Mitigation of Damages; Other Severance Payments;
-------------------------------------------------------------------
Withholding.
- -----------
2.1 Noncompetition. Upon a Qualified Termination, any agreement by
--------------
Executive not to engage in competition with the
3
<PAGE>
Company subsequent to the termination of Executive's employment, whether
contained in an employment contract or other agreement, shall no longer be
effective.
2.2 No Duty to Mitigate Damages. Executive's benefits under this
---------------------------
Agreement shall be considered severance pay in consideration of Executive's past
service and Executive's continued service from the date of this Agreement, and
Executive's entitlement thereto shall neither be governed by any duty to
mitigate Executive's damages by seeking further employment nor offset by any
compensation which Executive may receive from future employment.
2.3 Other Severance Payments. In the event that Executive has an
------------------------
employment contract or any other agreement with the Company (or a Subsidiary)
which entitles Executive to severance payments upon the termination of
Executive's employment with the Company, the amount of any such severance
payments shall be deducted from the payments to be made under this Agreement.
2.4 Withholding. Anything to the contrary notwithstanding, all
-----------
payments required to be made by the Company hereunder to Executive shall be
subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation.
3. Arbitration. Any controversy or claim arising out of or relating to
-----------
this Agreement, or the breach thereof, shall be settled exclusively by
arbitration in Boston, Massachusetts in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
4. Legal Fees and Expenses. The Company shall pay all legal fees and
-----------------------
expenses, including but not limited to counsel fees, stenographer fees, printing
costs, etc. reasonably incurred by Executive in contesting or disputing that the
termination of Executive's employment during a Standstill Period is for Cause or
other than for good reason (as defined in paragraph (j) of Exhibit A) or in
obtaining any right or benefit to which Executive is entitled under this
Agreement. 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
BankBoston, N.A., until paid in full.
5. Notice of Termination. During a Standstill Period, Executive's
---------------------
employment may be terminated by the Company (or a Subsidiary) only upon 30 days'
written notice to Executive.
4
<PAGE>
6. Notices. All notices shall be in writing and shall be deemed given
-------
five days after mailing in the continental United States by registered or
certified mail, or upon personal receipt after delivery, telex, telecopy or
telegram, to the party entitled thereto at the address stated below or to such
changed address as the addressee may have given by a similar notice:
To the Company: BJ's Wholesale Club, Inc.
One Mercer Road
Natick, MA 01760
Attention: President
To Executive: At Executive's home address, as last
shown on the records of the Company
7. Severability. In the event that any provision of this Agreement
------------
shall be determined to be invalid or unenforceable, such provision shall be
enforceable in any other jurisdiction in which valid and enforceable and in any
event the remaining provisions shall remain in full force and effect to the
fullest extent permitted by law.
8. General Provisions.
------------------
8.1 Binding Agreement. This Agreement shall be binding upon and inure
-----------------
to the benefit of the parties and be enforceable by Executive's personal or
legal representatives or successors. If Executive dies while any amounts would
still be payable to Executive hereunder, benefits would still be provided to
Executive's family hereunder or rights would still be exercisable by Executive
hereunder as if Executive had continued to live, such amounts shall be paid to
Executive's estate, such benefits shall be provided to Executive's family and
such rights shall remain exercisable by Executive's estate in accordance with
the terms of this Agreement. This Agreement shall not otherwise be assignable by
Executive.
8.2 Successors. This Agreement shall inure to and be binding upon the
----------
Company's successors, including any successor to all or substantially all of the
Company's business and/or assets. The Company will require any successor to all
or substantially all of the business and/or assets of the Company by sale,
merger (where the Company is not the surviving corporation), lease or otherwise,
by agreement in form and substance satisfactory to Executive, to assume
expressly this Agreement. If the Company shall not obtain such agreement prior
to the effective date of any such succession, Executive shall have all rights
resulting
5
<PAGE>
from termination by Executive for good reason (as defined in paragraph (j) of
Exhibit A) under this Agreement. This Agreement shall not otherwise be
assignable by the Company.
8.3 Amendment or Modification; Waiver. This Agreement may not be
---------------------------------
amended unless agreed to in writing by Executive and the Company. No waiver by
either party of any breach of this Agreement shall be deemed a waiver of a
subsequent breach.
8.4 Titles. No provision of this Agreement is to be construed by
------
reference to the title of any section.
8.5 Continued Employment. This Agreement shall not give Executive any
--------------------
right of continued employment or any right to compensation or benefits from the
Company or any Subsidiary except the right specifically stated herein to certain
severance and other benefits, and shall not limit the Company's (or a
Subsidiary's) right to change the terms of or to terminate Executive's
employment, with or without Cause, at any time other than during a Standstill
Period, except as may be otherwise provided in a written employment agreement
between the Company (or a Subsidiary) and Executive.
8.6 Termination of Agreement Outside of Standstill Period. This
-----------------------------------------------------
Agreement shall be automatically terminated upon the first to occur of (i) the
termination of Executive's employment for any reason, whether voluntary or
involuntary, at any time other than during a Standstill Period or (ii) the 180th
day after a change in Executive's title to a level below that of Executive's
Current Title unless a Standstill Period was in effect on the date of such
change or within 180 days thereafter or (iii) if Executive is employed by a
Subsidiary of the Company, the date on which the Subsidiary either ceases to be
a Subsidiary of the Company or sells or otherwise disposes of all or
substantially all of its assets, unless such event occurs during a Standstill
Period and Executive's employment shall have been terminated in a Qualified
Termination within 90 days of such event.
8.7 Prior Agreement. This Agreement amends and restates and shall
---------------
supersede and replace any prior change of control severance agreement between
the Company or any of its subsidiaries, or any predecessor, and Executive.
8.8 Definitions. The terms defined in Exhibits A and B hereto are
-----------
used herein as so defined.
6
<PAGE>
8.9 Governing Law. The validity, interpretation, performance and
-------------
enforcement of this Agreement shall be governed by the laws of the Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
BJ'S WHOLESALE CLUB, INC.
By
---------------------------
-----------------------------
EXECUTIVE
7
<PAGE>
EXHIBIT A
---------
Definitions
-----------
The following terms as used in this Agreement shall have the following
meanings:
(a) "Base Salary" shall mean Executive's annual base salary, exclusive
of any bonus or other benefits Executive may receive.
(b) "Cause" shall mean dishonesty, conviction of a felony, gross
neglect of duties (other than as a result of Incapacity, Disability or death),
or conflict of interest which conflict shall continue for 30 days after the
Company gives written notice to Executive requesting the cessation of such
conflict.
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 Executive's 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 Executive's Base
Salary for such period), (b) a determination by a majority of the Company's
directors that Executive was not guilty of the conduct described in the
definition of "Cause" above (in which case Executive shall be reinstated and
paid any of Executive's previously unpaid Base Salary for such period), or (c)
the 90th day after notice of termination is given (in which case Executive shall
be reinstated and paid any of Executive's previously unpaid Base Salary for such
period).
(c) "Change of Control" shall have the meaning set forth in Exhibit B.
(d) "Company" shall mean BJ's Wholesale Club, Inc. or any successor.
8
<PAGE>
(e) "Current Title" shall mean Executive's title on the date 180 days
prior to the commencement of a Standstill Period.
(f) "Date of Termination" shall mean the date on which Executive's
employment is terminated.
(g) "Disability" shall have 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.
(h) "Executive" shall have the meaning set forth in the first paragraph of
this Agreement.
(i) "Incapacity" shall mean a disability (other than Disability within
the meaning of the immediately preceding definition) or other impairment of
health that renders Executive unable to perform Executive's duties to the
reasonable satisfaction of the Board of Directors of the Company. If by reason
of Incapacity Executive is unable to perform Executive's duties for at least six
months in any 12- month period, upon written notice by the Company the
employment of Executive shall be deemed to have terminated by reason of
Incapacity.
(j) "Qualified Termination" shall mean 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 Executive's employment (A) within
120 days after the occurrence without Executive's express written consent of any
of the events described in clauses (I), (II), (III), (IV), (V) or (VI) below,
provided that Executive gives notice to the Company at least 30 days in advance
requesting that the situation described in those clauses be remedied, and the
situation remains unremedied upon expiration of such 30-day period; (B) within
120 days after the occurrence without Executive's express written consent (which
must expressly refer to such consent as being given under this Agreement) of the
events described in clauses (VII) or (VIII) below, provided that Executive gives
notice to the Company at least
9
<PAGE>
30 days in advance; or (C) upon occurrence of the events described in clause(IX)
below, provided that Executive gives notice to the Company at least 30 days in
advance:
(I) the assignment to Executive of any duties inconsistent with
Executive's positions, duties, responsibilities, reporting
requirements, and status with the Company (or a Subsidiary)
immediately prior to a Change of Control, or a substantive
change in Executive's titles or offices as in effect
immediately prior to a Change of Control, or any removal of
Executive from or any failure to reelect Executive to such
positions, except in connection with the termination of
Executive's employment by the Company (or a Subsidiary) for
Cause or by Executive other than for good reason; or any other
action by the Company (or a Subsidiary) 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 or the Subsidiary
promptly after receipt of notice thereof given by Executive;
or
(II) if Executive's rate of Base Salary for any fiscal year is less
than 100 percent of the rate of Base Salary paid to Executive
in the completed fiscal year immediately preceding the Change
of Control, or if Executive's total cash compensation
opportunities, including salary and incentives, for any fiscal
year are less than 100 percent of the total cash compensation
opportunities made available to Executive in the completed
fiscal year immediately preceding the Change of Control,
unless any such reduction represents an overall reduction in
the rate of Base Salary paid or cash compensation
opportunities made available, as the case may be, to
executives in the same organizational level (it being the
Company's burden to establish this fact); or
(III) the failure of the Company (or a Subsidiary) 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 a Change of
Control unless the Company (or a Subsidiary) provides
Executive with a plan or plans that provide substantially
similar benefits, or the taking of any action by the Company
(or a Subsidiary) that would adversely affect Executive's
participation in or materially reduce Executive's
10
<PAGE>
benefits under any of such plans or deprive Executive of any
material fringe benefit enjoyed by Executive immediately prior
to a Change of Control, 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
(IV) any purported termination of Executive's employment by the
Company (or a Subsidiary) for Cause during a Standstill Period
which is not effected in compliance with paragraph (b) of this
Exhibit; or
(V) any relocation of Executive of more than 40 miles from the
place where Executive was located at the time of the Change of
Control; or
(VI) any other breach by the Company of any provision of this
Agreement; or
(VII) the Company sells or otherwise disposes of, in one transaction
or a series of related transactions, assets or earning power
aggregating more than 30 percent of the assets (taken at asset
value as stated on the books 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) if Executive is employed by a Subsidiary of the Company, such
Subsidiary either ceases to be a Subsidiary of the Company or
sells or otherwise disposes of, in one transaction or a series
of related transactions, assets or earning power aggregating
more than 30 percent of the assets (taken at asset value as
stated on the books of the Subsidiary determined in accordance
with generally accepted accounting principles consistently
applied) or earning power of such Subsidiary (on an individual
basis) or such Subsidiary and its subsidiaries (on a
consolidated basis) to any other Person or Persons (as those
terms are defined in Exhibit B); or
(IX) the voluntary termination by Executive of Executive's
employment at any time during the period commencing eight
months plus one day after the Change of Control and ending 12
months after
11
<PAGE>
the Change of Control, provided, that in the event of any such
--------
voluntary termination pursuant to this clause (IX), the
Executive shall be entitled to receive only one-half (1/2) of
the lump sum amount provided for in Section 1.2(a) and the
benefits provided for in Section 1.2(b)(i) shall be provided
for one year rather than two years from the Date of
Termination.
(k) "Standstill Period" shall be the period commencing on the date of a
Change of Control and continuing until the close of business on the last
business day of the 24th calendar month following such Change of Control.
(l) "Subsidiary" shall mean any corporation in which the Company owns,
directly or indirectly, 50 percent or more of the total combined voting power of
all classes of stock.
12
<PAGE>
EXHIBIT B
---------
Definition of Change of Control
-------------------------------
A "Change of Control" shall mean:
(a) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (iv)
any acquisition by any corporation pursuant to a transaction which satisfies the
criteria set forth in clauses (i), (ii) and (iii) of subsection (c) of this
definition; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequently
to the date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board (except that this proviso shall
not apply to any individual whose initial assumption of office as a director
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board); or
(c) Consummation of a reorganization, merger or consolidation
involving the Company or a sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case, unless,
immediately following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting
13
<PAGE>
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of directors, of
the corporation resulting from such Business Combination (which as used in
section (c) of this definition shall include, without limitation, a corporation
which as a result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately prior to
such Business Combination, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination, or the
combined voting power of the then-outstanding voting securities of such
corporation and (iii) at least half of the members of the board of directors of
the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
14
<PAGE>
EXHIBIT 10.20
BJ'S WHOLESALE CLUB, INC.
INDEMNIFICATION AGREEMENT
This Agreement, made and entered into as of this ____ day of
__________________ (the "Agreement"), is between BJ's Wholesale Club, Inc., a
Delaware corporation (the "Company," which term shall include any one or more of
its subsidiaries where appropriate), and ____________________________ (the
"Indemnitee"):
WHEREAS, highly competent persons are reluctant to serve public
companies as directors or as officers or in other capacities unless they are
provided with adequate indemnification against inordinate risks of claims and
actions against them arising out of their service to, and activities on behalf
of, such companies; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company; and
WHEREAS, Indemnitee is willing to serve, continue to serve and/or to
take on additional service for or on behalf of the Company on the condition that
he or she be so indemnified;
NOW THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. Definitions. For purposes of this Agreement:
-----------
(a) "Change of Control" shall have the meaning set forth on
Exhibit A hereto.
(b) "Corporate Status" describes the status of a person who is
or was or has agreed to become a director of the Company or any of its
subsidiaries, or is or was or has agreed to become an officer or
fiduciary of the Company or of any other corporation, partnership,
joint venture, limited liability company, trust, employee benefit plan
or other enterprise which such person is or was serving or has agreed
to serve at the request of the Company.
(c) "Disinterested Director" means a director of the Company
who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, travel
expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees and all other
-1-
<PAGE>
disbursements or expenses of the types customarily incurred in
connection with prosecuting, defending, preparing to prosecute or
defend or investigating a Proceeding, but shall not include the amount
of judgments, fines or penalties against Indemnitee.
(e) "Independent Counsel" means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to
represent the Company or Indemnitee in any matter material to either
such party. Notwithstanding the forgoing, the term "Independent
Counsel" shall not include any person who, under the applicable
standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or Indemnitee
in an action to determine Indemnitee's rights under this Agreement.
(f) "Proceeding" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative
hearing, appeal or any other proceeding, whether civil, criminal,
administrative or investigative, arising on or after the date of this
Agreement (and regardless of when the Indemnitee's act or failure to
act occurred), except one initiated by an Indemnitee pursuant to
Section 10 of this Agreement to enforce his or her rights under this
Agreement.
2. Services by Indemnitee. Indemnitee agrees to serve or continue to
----------------------
serve as a director or officer of the Company and/or one or more of its
subsidiaries. This Agreement shall not impose any obligation on the Indemnitee
or the Company or any of its subsidiaries to continue the Indemnitee's position
with the Company or any of its subsidiaries beyond any period otherwise
applicable.
3. General. The Company shall indemnify, and shall advance Expenses
-------
to, Indemnitee as provided in this Agreement with respect to any matters
pertaining to Indemnitee's Corporate Status and to the fullest extent permitted
by law.
4. Proceedings Other Than Proceedings by or in the Right of the
------------------------------------------------------------
Company. Indemnitee shall be entitled to the rights of indemnification provided
- -------
in this Section 4 if, by reason of his or her Corporate Status, he or she is, or
is threatened to be made, a party to any threatened, pending, or completed
Proceeding other than a Proceeding by or in the right of the Company. Pursuant
to this Section 4, Indemnitee shall be indemnified against Expenses, judgments,
penalties and fines and amounts paid in settlement actually and reasonably
incurred by him or her or on his or her behalf in connection with any such
Proceeding or any claim, issue or matter therein, if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal Proceeding,
had no reasonable cause to believe his or her conduct was unlawful.
Notwithstanding the preceding provisions of this Section
-2-
<PAGE>
4, it is the intention of the parties hereto that Indemnitee shall be
indemnified to the full extent authorized or permitted by Delaware law and,
therefore, to the extent Delaware law shall permit broader contractual
indemnification, this contract shall be deemed amended to incorporate such
broader indemnification.
5. Proceedings by or in the Right of the Company. Indemnitee shall
---------------------------------------------
be entitled to the rights of indemnification provided in this Section 5 if, by
reason of his or her Corporate Status, he or she is, or is threatened to be
made, a party to any threatened, pending or completed Proceeding brought by or
in the right of the Company to procure a judgment in its favor. Pursuant to this
Section 5, Indemnitee shall be indemnified against Expenses and, to the extent
permitted by applicable law, amounts paid in settlement actually and reasonably
incurred by him or her on his or her behalf in connection with such Proceeding
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the Company. Notwithstanding
the preceding provisions of this Section 5, it is the intention of the parties
hereto that Indemnitee shall be indemnified to the full extent authorized or
permitted by Delaware law and, therefore, to the extent Delaware law shall
permit broader contractual indemnification, this contract shall be deemed
amended to incorporate such broader indemnification. Notwithstanding the
foregoing provisions of this Section 5, no indemnification against such Expenses
shall be made in respect of any claim, issue or matter as to which Indemnitee
shall have been adjudged to be liable to the Company; provided, however, that
indemnification against Expenses shall nevertheless be made by the Company in
such event to the extent that the Court of Chancery of the State of Delaware, or
the court in which such Proceeding shall have been brought or is pending, shall
determine.
6. Indemnification for Expenses of a Party who is Wholly or Partly
---------------------------------------------------------------
Successful. Notwithstanding any other provision of this Agreement, but subject
- ----------
to Section 14, to the extent that Indemnitee is, by reason of his or her
Corporate Status, a party to and is successful, on the merits or otherwise, in
any Proceeding, he or she shall be indemnified against all Expenses actually and
reasonably incurred by him or her on his or her behalf in connection therewith.
If Indemnitee is not wholly successful in such Proceeding but is successful, on
the merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or her on his or her behalf in
connection with each successfully resolved claim, issue or matter. For purposes
of this Section 6 and without limitation, the termination of any claim, issue or
matter in such a Proceeding by dismissal or withdrawal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.
7. Advance of Expenses. The Company shall advance all reasonable
-------------------
Expenses incurred by or on behalf of Indemnitee in connection with any
Proceeding within 20 days
-3-
<PAGE>
after the receipt by the Company of a statement or statements from Indemnitee
requesting such advance or advances from time to time, whether prior to or after
final disposition of such Proceeding. Such statement or statements shall
reasonably evidence the Expenses incurred or to be incurred by Indemnitee and
shall include or be preceded or accompanied by an undertaking by or on behalf of
Indemnitee to repay any Expenses advanced to the extent it shall ultimately be
determined that Indemnitee is not entitled to be indemnified hereunder against
such Expenses.
8. Procedure for Determination of Entitlement to Indemnification.
-------------------------------------------------------------
(a) To obtain indemnification under this Agreement, Indemnitee
shall submit to the Company a written request, including therein or
therewith such documentation and information as is reasonably available
to Indemnitee and is reasonably necessary to determine whether and to
what extent Indemnitee is entitled to indemnification hereunder.
(b) Upon written request by Indemnitee for indemnification
pursuant to Section 8(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto under
Delaware law shall be made in the specific case: (i) if a Change of
Control shall have occurred, by Independent Counsel (unless Indemnitee
shall request that such determination be made by the Board of Directors
or the stockholders, in which case the determination shall be made in
the manner provided below in clauses (ii) or (iii), as the case may be)
in a written opinion to the Board of Directors, a copy of which shall
be delivered to Indemnitee; (ii) if a Change of Control shall not have
occurred, (A) by the Board of Directors by a majority vote of a quorum
consisting of Disinterested Directors, or (B) if a quorum of the Board
of Directors consisting of Disinterested Directors is not obtainable,
or, even if obtainable, such quorum of Disinterested Directors so
directs, by Independent Counsel in a written opinion to the Board of
Directors, a copy of which shall be delivered to Indemnitee, or (C) by
the stockholders of the Company; or (iii) as provided in Section 9(b)
of this Agreement; and, if it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within
ten days after such determination. Indemnitee shall cooperate with the
person, persons or entity making such determination with respect to
Indemnitee's entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to
Indemnitee and reasonably necessary to such determination. Any costs or
expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating shall be borne by the Company
(irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
-4-
<PAGE>
(c) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 8(b) of this
Agreement, the Independent Counsel shall be selected as provided in
this Section 8(c). If a Change of Control shall not have occurred, the
Independent Counsel shall be selected by the Board of Directors, and
the Company shall give written notice to Indemnitee advising him or her
of the identity of the Independent Counsel so selected. If a Change of
Control shall have occurred, the Independent Counsel shall be selected
by Indemnitee (unless Indemnitee shall request that such selection be
made by the Board of Directors, in which event the preceding sentence
shall apply), and Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected. In
either event, Indemnitee or the Company, as the case may be, may,
within seven days after such written notice of selection shall have
been given, deliver to the Company or to Indemnitee, as the case may
be, a written objection to such selection. Such objection may be
asserted only on the ground that the Independent Counsel so selected
does not meet the requirements of "Independent Counsel" as defined in
Section 1 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. If such written
objection is made, the Independent Counsel so selected may not serve as
Independent Counsel unless and until a court has determined that such
objection is without merit. If, within 20 days after submission by
Indemnitee of a written request for indemnification pursuant to Section
8(a) hereof, no Independent Counsel shall have been selected or if
selected, shall have been objected to, in accordance with this Section
8(c), either the Company or Indemnitee may petition the Court of
Chancery of the State of Delaware or other court of competent
jurisdiction for resolution of any objection which shall have been made
by the Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person
selected by the Court or by such other person as the Court shall
designate, and the person with respect to whom an objection is
favorably resolved or the person so appointed shall act as Independent
Counsel under Section 8(b) hereof. The Company shall pay any and all
reasonable fees and expenses of Independent Counsel incurred by such
Independent Counsel in connection with acting pursuant to Section 8(b)
hereof, and the Company shall pay all reasonable fees and expenses
incident to the procedures of this Section 8(c), regardless of the
manner in which such Independent Counsel was selected or appointed.
9. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to
indemnification hereunder, the person, persons or entity making such
determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a
request for indemnification in
-5-
<PAGE>
accordance with Section 8(a) of this Agreement, and the Company shall
have the burden of proof to overcome that presumption in connection
with the making by any person, persons or entity of any determination
contrary to that presumption.
(b) If the person, persons or entity empowered or selected
under Section 8 of this Agreement to determine whether Indemnitee is
entitled to indemnification shall not have made such determination
within 60 days after receipt by the Company of the request therefor,
the requisite determination of entitlement to indemnification shall be
deemed to have been made and Indemnitee shall be entitled to such
indemnification, absent (i) a misstatement by Indemnitee of a material
fact, or an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such 60-day period may be
extended for a reasonable time, not to exceed an additional 30 days, if
the person, persons or entity making the determination with respect to
entitlement to indemnification in good faith requires such additional
time for the obtaining or evaluating of documentation and/or
information relating thereto; and provided, further, that the foregoing
provisions of this Section 9(b) shall not apply if the determination of
entitlement to indemnification is to be made by the stockholders
pursuant to Section 8(b) of this Agreement and if (A) within 15 days
after receipt by the Company of the request for such determination the
Board of Directors has resolved to submit such determination to the
stockholders for their consideration at an annual meeting thereof to be
held within 75 days after such receipt and such determination is made
thereat, or (B) a special meeting of stockholders is called within 15
days after such receipt for the purpose of making such determination,
such meeting is held for such purpose within 60 days after having been
so called and such determination is made thereat.
(c) The termination of any Proceeding or of any claim, issue
or matter therein by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent, shall not (except as
otherwise expressly provided in this Agreement) of itself adversely
affect the right of Indemnitee to indemnification or create a
presumption that Indemnitee did not act in good faith and in a manner
which he or she reasonably believed to be in or not opposed to the best
interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his or her conduct
was unlawful.
10. Remedies of Indemnitee.
----------------------
(a) In the event that (i) a determination is made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to
indemnification under this
-6-
<PAGE>
Agreement, (ii) advancement of Expenses is not timely made pursuant to
Section 7 of this Agreement, (iii) payment of indemnification is not
made pursuant to Section 6 of this Agreement within ten days after
receipt by the Company of a written request therefor, or (iv) payment
of indemnification is not made within ten days after a determination
has been made that Indemnitee is entitled to indemnification or such
determination is deemed to have been made pursuant to Section 9(b) of
this Agreement, Indemnitee shall be entitled to an adjudication in an
appropriate court of the State of Delaware, or in any other court of
competent jurisdiction, of his or her entitlement to such
indemnification or advancement of Expenses. Alternatively, Indemnitee,
at his or her option, may seek an award in arbitration to be conducted
by a single arbitrator pursuant to the rules of the American
Arbitration Association. The Company shall not oppose Indemnitee's
right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made
pursuant to Section 8 of this Agreement that Indemnitee is not entitled
to indemnification, any judicial proceeding or arbitration commenced
pursuant to this Section 10 shall be conducted in all respects as a de
novo trial, or arbitration, on the merits and Indemnitee shall not be
prejudiced by reason of that adverse determination. In any judicial
proceeding or arbitration commenced pursuant to this Section 10 the
Company shall have the burden of proving that Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case may
be.
(c) If a determination shall have been made or deemed to have
been made pursuant to Section 8 or Section 9 of this Agreement that
Indemnitee is entitled to indemnification, the Company shall be bound
by such determination in any judicial proceeding or arbitration
commenced pursuant to this Section 10, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition
of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section
10 that the procedures and presumptions of this Agreement are not
valid, binding and enforceable and shall stipulate in any such court or
before any such arbitrator that the Company is bound by all the
provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 10,
seeks a judicial adjudication of or an award in arbitration to enforce
his or her rights under, or to recover damages for breach of, this
Agreement, Indemnitee shall be entitled to recover from the Company,
and shall be indemnified by the Company against,
-7-
<PAGE>
any and all expenses (of the types described in the definition of
Expenses in Section 1 of this Agreement) actually and reasonably
incurred by him or her in such judicial adjudication or arbitration,
but only if he or she prevails therein. If it shall be determined in
said judicial adjudication or arbitration that Indemnitee is entitled
to receive part but not all of the indemnification or advancement of
expenses sought, the expenses incurred by Indemnitee in connection with
such judicial adjudication or arbitration shall be appropriately
prorated.
11. Security. To the extent requested by the Indemnitee and approved by
--------
the Board of Directors, the Company may at any time and from time to time
provide security to the Indemnitee for the Company's obligations hereunder
through an irrevocable bank line of credit, funded trust or other collateral.
Any such security, once provided to the Indemnitee, may not be revoked or
released without the prior written consent of Indemnitee.
12. Non-Exclusivity; Duration of Agreement; Subrogation.
---------------------------------------------------
(a) The rights of indemnification and to receive advancement
of Expenses as provided by this Agreement shall not be deemed exclusive
of any other rights to which Indemnitee may at any time be entitled
under applicable law, the Company's certificate of incorporation or
by-laws, any other agreement, a vote of stockholders or a resolution of
directors, or otherwise. This Agreement shall continue as to Indemnitee
even though his or her Corporate Status may have ceased and shall inure
to the benefit of Indemnitee and his or her heirs, executors and
administrators.
(b) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required
and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to
bring suit to enforce such rights.
(c) The Company shall not be liable under this Agreement to
make any payment of amounts otherwise indemnifiable hereunder if and to
the extent that Indemnitee has otherwise actually received such payment
under any insurance policy, contract, agreement or otherwise.
13. Severability. If any provision or provisions of this Agreement
------------
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions of
this Agreement (including without limitation, each portion of any Section of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby; and (b) to the fullest
-8-
<PAGE>
extent permitted by applicable law, the provisions of this Agreement (including,
without limitation, each portion of any Section of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
14. Exception to Right of Indemnification or Advancement of Expenses.
----------------------------------------------------------------
Notwithstanding any other provision of this Agreement, except as otherwise
provided in Section 10, Indemnitee shall not be entitled to indemnification or
advancement of Expenses under this Agreement with respect to any Proceeding, or
any claim therein, brought or made by him or her against the Company without the
prior written consent of the Company.
15. Headings. The headings of the paragraphs of this Agreement
--------
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
16. Modification and Waiver. This Agreement may be amended from time to
-----------------------
time to reflect changes in Delaware law or for other reasons. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
17. Notice by Indemnitee. Indemnitee agrees promptly to notify the
--------------------
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder; provided, however, that the failure to give any such notice
shall not disqualify the Indemnitee from indemnification hereunder.
18. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Indemnitee to:
-----------------------
-----------------------
-----------------------
-9-
<PAGE>
(b) If to the Company to:
BJ's Wholesale Club, Inc.
One Mercer Road
Natick, Massachusetts 01760
Attention: President
or to such other address as may have been furnished to Indemnitee by the Company
or the Company by Indemnitee, as the case may be.
19. Governing Law. The parties agree that this Agreement shall be
-------------
governed by, and construed and enforced in accordance with, the domestic
substantive laws of the State of Delaware without giving effect to any choice or
conflict of laws rule or provision that would result in the application of the
domestic substantive laws of any other jurisdiction.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
BJ'S WHOLESALE CLUB, INC.
By
----------------------------
INDEMNITEE
------------------------------
-11-
<PAGE>
EXHIBIT A
Definition of "Change of Control"
--------------------------------
For the purpose of this Agreement, a "Change of Control" shall mean:
(a) The acquisition by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"))(a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (i) the then-outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined voting power of
the then-outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (iv)
any acquisition by any corporation pursuant to a transaction which satisfies the
criteria set forth in clauses (i), (ii) and (iii) of subsection (c) of this
definition; or
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequently to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board
(except that this proviso shall not apply to any individual whose initial
assumption of office as a director occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board); or
(c) Consummation of a reorganization, merger or consolidation
involving the Company or a sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case, unless,
immediately following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, of
A-1
<PAGE>
the corporation resulting from such Business Combination (which as used in
section (c) of this definition shall include, without limitation, a corporation
which as a result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately prior to
such Business Combination, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination, or the
combined voting power of the then-outstanding voting securities of such
corporation and (iii) at least half of the members of the board of directors of
the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
A-2
<PAGE>
EXHIBIT 10.21
BJ'S WHOLESALE CLUB, INC.
Change of Control Severance Benefit
Plan for Key Employees
BJ's Wholesale Club, Inc. (the "Company") desires to assure that it and its
Subsidiaries (collectively, the "Employer") will have the benefit of the
continued service and experience of certain of their key employees and to assure
the Employer and such employees of the continuity of management of the Company
and the Employer in the event of a change of control of the Company, and adopts
this plan (the "Plan") to provide such assurances. This Plan is intended to
cover as Participants those employees of the Employer who are designated or
otherwise described as a Participant in Exhibit A, paragraph (j).
1. Benefits Upon Change of Control.
-------------------------------
1.01 In General. Within 30 days following a Change of Control, whether or
----------
not a Participant's employment has been terminated, the Company shall pay to the
Participant the following in a lump sum:
(a) an amount equal to the product of (i) the "Target Bonus" under
the BJ's Wholesale Club, Inc. Management Incentive Plan or any other annual
incentive plan which is applicable to the Participant for the fiscal year
in which the Change of Control occurs and (ii) a fraction, the numerator of
which is the number of days in such fiscal year prior to the Change of
Control and the denominator of which is 365; and
(b) if the Participant is a participant in any long-range incentive
plan at the time of the Change of Control, the benefits and payment
provided for by the terms of such plan upon the occurrence of a Change of
Control.
1.02 Benefits Following a Qualified Termination. Participants whose
------------------------------------------
employment terminates in a Qualified Termination shall be entitled to the
following additional benefits:
(a) Within 30 days following the Participant's Date of Termination,
the Employer shall pay to the Participant an amount equal to the accrued
and unpaid portion of the Participant's Base Salary through the Date of
Termination.
(b) In addition to the amount described in paragraph (a) above, but
subject to paragraph (c) below, the Employer shall pay and/or provide to
the
<PAGE>
Participant all other benefits to which the Participant is entitled
upon termination of the Participant's employment as set forth in the
Company's Severance Policy in existence immediately prior to the Change of
Control (or in existence on the Date of Termination, if the benefits
thereunder are greater), at the times and in the manner described in such
Severance Policy.
(c) In addition to amounts described in paragraph (a) above, the
Employer shall pay in a single lump sum an amount equal to the
Participant's Base Salary, determined as hereinafter provided, multiplied
by the Applicable Number of Weeks, determined as provided on Exhibit B, to
any Participant who had been employed by the Employer for at least 12
months prior to the Date of Termination. The Base Salary payable under
this paragraph shall equal the Participant's Base Salary as in effect
immediately prior to the Change of Control or, if greater, the
Participant's Base Salary as in effect immediately prior to the Date of
Termination. The benefit described in this paragraph shall be paid in lieu
of the benefit described in paragraph (b) unless the benefit described in
paragraph (b) is greater, in which case the benefit described in paragraph
(b) shall be paid in lieu of the benefit described in this paragraph (c).
(d) The Employer shall arrange and pay for continuation of medical
and life insurance benefits for the Participant (which shall be in amount
and terms substantially comparable to those in effect immediately prior to
the Change of Control) for a period commencing on the Date of Termination
and continuing for the Applicable Number of Weeks. To the extent the
Participant, immediately prior to the Change of Control, was responsible
for paying a portion of the premiums with respect to such insurance
benefits, the Participant shall be required to continue to pay such amount.
1.03 Coordination with Certain Tax Rules. Payments under Sections 1.01 and
-----------------------------------
1.02 shall be made without regard to whether the deductibility of such payments
(or any other payments to or for the benefit of the Participant) would be
limited or precluded by Internal Revenue Code Section 280G and without regard to
whether such payments (or any other payments) would subject the Participant to
the federal excise tax levied on certain "excess parachute payments" under
Internal Revenue Code Section 4999; provided, that if the total of all payments
--------
to or for the benefit of the Participant, after reduction for all federal taxes
(including the tax described in Internal Revenue Code Section 4999, if
applicable) with respect to such payments (the "Participant's total after-tax
payments"), would be increased by the limitation or elimination of any payment
under Sections 1.01 or 1.02, amounts payable under Sections 1.01 and 1.02 shall
be reduced to the extent, and only to the extent, necessary to maximize the
Participant's total after-tax payments. The determination as to whether and to
what extent payments under Sections 1.01 and 1.02 are required to be reduced in
accordance with the preceding sentence shall be made at the Company's expense by
Coopers & Lybrand L.L.P. or by such other certified public accounting firm as
the Executive Compensation
-2-
<PAGE>
Committee of the Company's Board of Directors may designate prior to a Change of
Control. In the event of any underpayment or overpayment under Sections 1.01 or
1.02 as determined by Coopers & Lybrand L.L.P. (or such other firm as may have
been designated in accordance with the preceding sentence), the amount of such
underpayment or overpayment shall forthwith be paid to the Participant or
refunded to the Company, as the case may be, with interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Internal Revenue Code.
2. Noncompetition; No Mitigation of Damages; Other Severance Payments;
-------------------------------------------------------------------
Withholding.
-----------
2.01 Noncompetition. Upon a Change of Control, any agreement by a
--------------
Participant not to engage in competition with the Employer subsequent to the
termination of his employment, whether contained in an employment contract or
other agreement, shall no longer be effective.
2.02 No Duty to Mitigate Damages. A Participant's benefits under this Plan
---------------------------
shall be considered severance pay in consideration of his past and future
services, and his entitlement thereto shall neither be governed by any duty to
mitigate his damages by seeking further employment nor offset by any
compensation he may receive from future employment.
2.03 Other Severance Payments. In the event that the Participant has an
------------------------
employment contract or any other agreement with the Employer which entitles the
Participant to severance payments upon the termination of his employment with
the Employer (other than payments to be made under the Company's Severance
Policy as described in Section 1.02(b)), the amount of any such severance
payments shall be deducted from the payments to be made to the Participant under
this Plan so as to avoid duplication of severance benefits.
2.04 Withholding. Anything to the contrary notwithstanding, all payments
-----------
required to be made by the Employer hereunder to a Participant shall be subject
to the withholding of such amounts, if any, relating to tax and other payroll
deductions as the Employer may reasonably determine it should withhold pursuant
to any applicable law or regulation.
3. Notice of Termination. During a Standstill Period, a Participant's
---------------------
employment may be terminated by the Employer only upon 30 days' written notice
to the Participant.
4. Notices. All notices shall be in writing and shall be deemed given
-------
five days after mailing in the continental United States by registered or
certified mail, or upon personal receipt after delivery, telex, telecopy or
telegram, to the party entitled
-3-
<PAGE>
thereto at the address stated below or to such changed address as the addressee
may have given by a similar notice:
To the Employer: c/o BJ's Wholesale Club, Inc.
One Mercer Road
Natick, Massachusetts 01760
Attention: Treasurer
To the Participant: At his home address,
as last shown on the
records of the Employer
5. Severability. In the event that any provision of this Plan shall
------------
be determined to be invalid or unenforceable, such provision shall be
enforceable in any other jurisdiction in which valid and enforceable. In any
event the remaining provisions shall remain in full force and effect to the
fullest extent permitted by law.
6. Continued Employment. This Plan shall not give a Participant any
--------------------
right of continued employment or any right to any compensation or benefits from
the Company or the Employer except the benefits specifically provided for herein
and shall not limit the Employer's right to change the terms of or terminate the
Participant's employment, with or without Cause, at any time other than during a
Standstill Period, except as may be otherwise provided in a written employment
agreement between the Participant and the Employer.
7. Amendment and Termination. This Plan shall be effective for three
-------------------------
years starting from the Effective Date and thereafter for successive three-year
periods if, prior to the conclusion of each such period (including the initial
term) the Company, acting through its Board of Directors, elects to renew this
Plan. The Board of Directors of the Company shall review this Plan every three
years, such review to commence at least one year prior to the scheduled
termination of this Plan. Notwithstanding the foregoing, this Plan and the
employee benefits described herein may be amended or terminated as to all
Participants or as to any specific Participant at any time by the Company acting
by its Board of Directors and shall be terminated with respect to any specific
Participant upon the first to occur of the following: (i) he no longer has the
title "Senior Vice President," "Vice President," "Assistant Vice President,"
"Manager of," "Buyer," or "Regional Manager" (or such other management title as
the Board of Directors of the Company may from time to time specify for purposes
of Exhibit A, paragraph (j)) or (ii) his employment is terminated or (iii) if he
is employed by a Subsidiary of the Company, the Subsidiary either ceases to be a
Subsidiary of the Company or sells or otherwise disposes of all or substantially
all of its assets; provided that no such amendment or termination which occurs
during a Standstill Period shall terminate or affect the existing rights of any
Participant hereunder except that all such rights shall terminate as to a
Participant employed by a Subsidiary which has either ceased to be a Subsidiary
of the
-4-
<PAGE>
Company or sold all or substantially all of its assets during a Standstill
Period unless the employment of the Participant shall have been terminated in a
Qualified Termination within 90 days of such event.
8. Legal Fees and Expenses. The Employer shall pay all legal fees and
-----------------------
expenses, including but not limited to counsel fees, stenographer fees, printing
costs, etc. incurred by a Participant in reasonably 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 Exhibit A, paragraph (k)) or in
obtaining any right or benefit to which the Participant is entitled under this
Plan. Any amount payable under this Plan that is not paid when due shall accrue
interest at the prime rate as from time to time in effect at BankBoston (or any
successor thereto, or if there is no successor entity thereto, such other
commercial banking institution as shall be selected by the Executive
Compensation Committee of the Company's Board of Directors) until paid in full.
9. Binding on Successors. This Plan shall be binding on any successor
---------------------
to all or substantially all of the Company's business or assets.
10. Governing Law. This Plan shall be governed by the laws of the
-------------
Commonwealth of Massachusetts.
-5-
<PAGE>
EXHIBIT A
Definitions
-----------
The following terms as used in this Plan and Exhibits shall have the
following meanings:
(a) "Base Salary" shall mean the Participant's weekly base salary,
exclusive of any bonus or other benefits he may receive; provided, however, that
-------- -------
for purposes of Section 1.02(c) only, Base Salary shall include the dollar
amount of any auto allowance.
(b) "Cause" shall mean, with respect to any Participant, dishonesty,
conviction of a felony, gross neglect of duties (other than as a result of
Disability or death), or conflict of interest which conflict shall continue for
30 days after the Company gives written notice to the Participant requesting the
cessation of such conflict.
In respect of any termination during a Standstill Period, the Participant
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 the Participant 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 the Participant), and at
which the Participant together with his counsel was given an opportunity to be
heard, finding that the Participant 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 the Participant 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 the Participant for Cause
effected in accordance with the foregoing procedures (in which case the
Participant shall not be entitled to his Base Salary for such period), (b) a
determination by a majority of the Company's directors that the Participant was
not guilty of the conduct described in the definition of "Cause" above (in which
case the Participant shall be reinstated and paid any of his previously unpaid
Base Salary for such period), or (c) the 90th day after notice of termination is
given (in which case the Participant shall be reinstated and paid any of his
previously unpaid Base Salary for such period).
(c) "Change of Control" shall have the meaning set forth in Exhibit C.
(d) "Company" shall mean BJ's Wholesale Club, Inc. or any successor.
(e) "Date of Termination" shall mean the date on which the Participant's
employment is terminated.
(f) "Disability" shall have the meaning given it in the Company's long-
term disability plan. A Participant's employment shall be deemed to be
terminated for
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<PAGE>
Disability on the date on which the Participant is entitled to receive long-term
disability compensation pursuant to such long-term disability plan.
(g) "Employer" shall have the meaning set forth in the first paragraph
of this Plan.
(h) "Effective Date" shall mean the date on which Waban Inc. completes
the spin-off of the Company by distributing to the stockholders of Waban Inc.,
on a pro rata basis, all of the then outstanding shares of Common Stock of the
Company.
(i) "Incapacity" shall mean a disability (other than Disability within
the meaning of paragraph (f) of this Exhibit A) or other impairment of health
that renders the Participant unable to perform his duties to the satisfaction of
the Executive Compensation Committee of the Board of Directors of the Company.
If by reason of Incapacity the Participant is unable to perform his duties for
at least six months in any 12-month period, upon written notice by the Company
to the Participant the employment of the Participant shall be deemed to have
been terminated by reason of Incapacity.
(j) "Participant" shall mean any employee of the Employer who has the
management title "Senior Vice President," "Vice President," "Assistant Vice
President," "Manager of," "Buyer," or "Regional Manager" (or such other
management title as the Board of Directors of the Company may from time to time
specify, with reference to this definition), and who does not have a separate
severance agreement with the Employer relating to a Change of Control. The
Company shall keep a current list of the names of all Participants.
(k) "Qualified Termination" shall mean the termination of the
Participant's employment during a Standstill Period (i) by the Employer other
than for Cause, or (ii) by the Participant for good reason, or (iii) by reason
of death, Incapacity or Disability.
For purposes of this definition, termination for "good reason" shall mean,
with respect to any Participant, the voluntary termination by the Participant of
his employment (A) within 120 days after the occurrence without the
Participant's express written consent of any of the events described in clauses
(I), (II), (III), (IV), (V) or (VI) below, provided that the Participant gives
notice to the Company at least 30 days in advance requesting that the situation
described in those clauses be remedied, and the situation remains unremedied
upon expiration of such 30-day period; or (B) within 120 days after the
occurrence without the Participant's express written consent of the events
described in clauses (VII) or (VIII) below, provided that the Participant gives
notice to the Company at least 30 days in advance:
(I) the assignment to him of any duties inconsistent with his positions,
duties, responsibilities, and status with the Employer immediately
prior to a
-7-
<PAGE>
Change of Control, or a change in the Participant's titles or
offices as in effect immediately prior to a Change of Control, or
any removal of the Participant from or any failure to reelect him to
such positions, except in connection with the termination of the
Participant's employment by the Employer for Cause or by the
Participant other than for good reason; or
(II) if the Participant's rate of Base Salary for any fiscal year is less
than 100 percent of the rate of Base Salary paid to the Participant
in the completed fiscal year immediately preceding the Change of
Control, or if the Participant's total cash compensation
opportunities, including salary and incentives, for any fiscal year
are less than 100 percent of the total cash compensation
opportunities made available to the Participant in the completed
fiscal year immediately preceding the Change of Control, unless any
such reduction represents an overall reduction in the rate of Base
Salary paid or cash compensation opportunities made available, as
the case may be, to employees having similar job titles (it being
the Employer's burden to establish this fact); or
(III) the failure of the Employer to continue in effect any benefit or
perquisite, or any pension, life insurance, medical insurance or
disability plan in which the Participant was participating
immediately prior to a Change of Control unless the Employer
provides the Participant with a plan or plans that provide
substantially similar benefits, or the taking of any action by the
Employer that would adversely affect the Participant's participation
in or materially reduce the Participant's benefits under any of such
plans or deprive the Participant of any material fringe benefit
enjoyed by the Participant immediately prior to a Change of Control,
unless the elimination or reduction of any such benefit, perquisite
or plan affects all other employees having similar job titles (it
being the Employer's burden to establish this fact); or
(IV) any purported termination of the Participant's employment by the
Employer for Cause during a Standstill Period which is not effected
in compliance with paragraph (b) of this Exhibit; or
(V) any relocation of the Participant of more than 40 miles from the
place where the Participant was located at the time of the Change of
Control; or
(VI) any other breach by the Company with respect to the Participant of
any provision of this Plan; or
(VII) the Company sells or otherwise disposes of, in one transaction or a
series of related transactions, assets or earning power aggregating
more than 30 percent of the assets (taken at asset value as stated
on the books of the
-8-
<PAGE>
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 C); or
(VIII) if the Participant is employed by a Subsidiary of the Company, such
Subsidiary either ceases to be a subsidiary of the Company or sells
or otherwise disposes of, in one transaction or a series of related
transactions, assets or earning power aggregating more than 30
percent of the assets (taken at asset value as stated on the books
of the Subsidiary determined in accordance with generally accepted
accounting principles consistently applied) or earning power of such
Subsidiary (on an individual basis) or such Subsidiary and its
subsidiaries (on a consolidated basis) to any other Person or
Persons (as those terms are defined in Exhibit C).
(l) "Standstill Period" shall be the period commencing on the date of a
Change of Control and continuing until the close of business on the last
business day of the 24th calendar month following such Change of Control.
(m) "Subsidiary" shall mean any corporation in which the Company owns,
directly or indirectly, 50 percent or more of the total combined voting power of
all classes of stock.
-9-
<PAGE>
EXHIBIT B
Determination of Benefits Following a Qualified Termination
-----------------------------------------------------------
The "Applicable Number of Weeks" with respect to a Participant is as
follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------
If the Participant's title Then the Applicable
immediately prior to the Number of Weeks
Change of Control is... is...
----------------------- --------------------
----------------------------------------------------------------
<S> <C>
Senior Vice President 78 weeks
----------------------------------------------------------------
Vice President 65 weeks
----------------------------------------------------------------
Assistant Vice President 52 weeks
----------------------------------------------------------------
Manager of 26 weeks
----------------------------------------------------------------
Buyer 26 weeks
----------------------------------------------------------------
Regional Manager 26 weeks
----------------------------------------------------------------
</TABLE>
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<PAGE>
EXHIBIT C
Definition of Change of Control
-------------------------------
For the purposes of this Plan, a "Change of Control" shall mean:
(a) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (iv)
any acquisition by any corporation pursuant to a transaction which satisfies the
criteria set forth in clauses (i), (ii) and (iii) of subsection (c) of this
definition; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequently to the date hereof whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board (except that this proviso shall
not apply to any individual whose initial assumption of office as a director
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board); or
(c) Consummation of a reorganization, merger or consolidation
involving the Company or a sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case, unless,
immediately following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, of the
corporation resulting from such Business Combination (which as used in section
(c) of this definition shall include, without limitation, a corporation which as
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<PAGE>
a result of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation and (iii) at least half
of the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
-12-
<PAGE>
EXHIBIT 10.22
$200,000,000
CREDIT AGREEMENT
AMONG
BJ'S WHOLESALE CLUB, INC.,
THE LENDERS PARTY HERETO,
THE FIRST NATIONAL BANK OF CHICAGO, as Agent
BANKBOSTON, N.A., as Syndication Agent,
FLEET NATIONAL BANK, as Documentation Agent
Dated as of July 9, 1997
Arranged by:
FIRST CHICAGO CAPITAL MARKETS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - DEFINITIONS........................................ 8
ARTICLE II - THE CREDITS....................................... 26
2.1. Description of Facility............................... 26
2.2. Availability of Facility.............................. 26
2.3. Committed Advances.................................... 26
2.3.1. Commitment............................................ 26
2.3.2. Ratable Loans; Types of Advances...................... 27
2.3.3. Minimum Amount of Each Committed Advance.............. 27
2.3.4. Applicable Margin..................................... 27
2.3.5. Method of Selecting Types and Interest Periods for New
Committed Advances.................................... 28
2.3.6. Conversion and Continuation of Outstanding Committed
Advances.............................................. 29
2.4. Competitive Bid Advances.............................. 29
2.4.1. Competitive Bid Option; Repayment of Competitive Bid
Advances.............................................. 29
2.4.2. Competitive Bid Quote Request......................... 30
2.4.3. Invitation for Competitive Bid Quotes................. 30
2.4.4. Submission and Contents of Competitive Bid Quotes..... 31
2.4.5. Notice to Borrower.................................... 32
2.4.6. Acceptance and Notice by Borrower..................... 32
2.4.7. Allocation by the Agent............................... 32
2.5. Method of Borrowing................................... 33
2.6. Swing Line Loans...................................... 33
2.7. Fees.................................................. 36
2.7.1. Facility Fee.......................................... 36
2.7.2. Agent Fees............................................ 36
2.8. Reductions in Aggregate Commitment;
Principal Payments................................... 36
2.8.1. Reductions in Aggregate Commitment.................... 36
2.8.2. Principal Payments.................................... 36
2.10. Rates Applicable After Default........................ 37
2.11. Method of Payment..................................... 37
2.12. Notes; Telephonic Notices............................. 38
2.14. Notification by Agent................................. 38
2.15. Lending Installations................................. 39
2.16. Non-Receipt of Funds by the Agent..................... 39
2.17. Taxes................................................. 39
2.18. Change in Circumstances............................... 41
2.18.1. Yield Protection...................................... 41
2.18.2. Changes in Capital Adequacy Regulations............... 41
2.18.3. Availability of Types of Advances..................... 42
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
2.18.4. Funding Indemnification............................... 42
2.18.5. Mitigation of Additional Costs;
Replacement of Lenders............................... 42
2.18.6. Lender Statements; Survival of Indemnity.............. 43
ARTICLE III - THE LETTER OF CREDIT SUBFACILITY................. 44
3.1. Obligation to Issue................................... 44
3.2. Types and Amounts..................................... 44
3.3. Conditions............................................ 44
3.4. Procedure for Issuance of Facility Letters of Credit.. 45
3.5. Reimbursement Obligations; Duties of Issuing Banks.... 46
3.6. Participation......................................... 47
3.7. Payment of Reimbursement Obligations.................. 48
3.8. Compensation for Facility Letters of Credit........... 49
ARTICLE IV - CONDITIONS PRECEDENT.............................. 50
4.1. Initial Advance....................................... 50
4.2. Each Advance or Issuance of a Facility
Letter of Credit..................................... 52
ARTICLE V - REPRESENTATIONS AND WARRANTIES..................... 53
5.1. Corporate Existence and Standing...................... 53
5.2. Authorization and Validity............................ 53
5.3. No Conflict; Government Consent....................... 53
5.4. Financial Statements.................................. 54
5.5. Material Adverse Change............................... 54
5.6. Taxes................................................. 54
5.7. Litigation and Contingent Obligations................. 54
5.8. Subsidiaries.......................................... 55
5.9. ERISA................................................. 55
5.10. Accuracy of Information............................... 55
5.11. Federal Reserve Regulations........................... 55
5.12. Material Agreements................................... 55
5.13. Compliance With Laws.................................. 56
5.14. Ownership of Properties............................... 56
5.15. Investment Company Act................................ 56
5.16. Public Utility Holding Company Act.................... 56
5.17. Insurance............................................. 56
5.18. Solvency.............................................. 56
5.19. Transaction Documents................................. 56
ARTICLE VI - COVENANTS......................................... 57
6.1. Financial Reporting................................... 57
6.2. Use of Proceeds....................................... 59
6.3. Notice of Default..................................... 59
6.4. Conduct of Business................................... 59
6.5. Taxes................................................. 59
6.6. Insurance............................................. 60
6.7. Compliance with Laws.................................. 60
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
6.8. Maintenance of Properties............................. 60
6.10. Dividends............................................. 60
6.11. Indebtedness.......................................... 61
6.12. Merger................................................ 62
6.13. Sale of Assets........................................ 62
6.14. Letters of Credit..................................... 63
6.15. Investments and Acquisitions.......................... 63
6.16. Liens................................................. 65
6.17. Affiliates............................................ 67
6.18. Amendments............................................ 67
6.19. Rate Hedging Obligations.............................. 67
6.20. Financial Covenants................................... 67
6.20.1. Funded Debt to Capital Ratio.......................... 68
6.20.2. Fixed Charge Coverage Ratio........................... 68
6.20.3. Tangible Net Worth.................................... 68
6.21. Subsidiary Guaranties................................. 68
6.22. Intercompany Indebtedness............................. 69
ARTICLE VII - DEFAULTS......................................... 69
7.1. ...................................................... 69
7.2. ...................................................... 69
7.3. ...................................................... 69
7.4. ...................................................... 69
7.5. ...................................................... 69
7.6. ...................................................... 70
7.7. ...................................................... 70
7.8. ...................................................... 70
7.9. ...................................................... 70
7.10. ...................................................... 70
7.11. ...................................................... 70
ARTICLE VIII - ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES.. 71
8.1. Acceleration.......................................... 71
8.2. Amendments............................................ 71
8.3. Preservation of Rights................................ 72
ARTICLE IX - GENERAL PROVISIONS................................ 73
9.1. Survival of Representations........................... 73
9.2. Governmental Regulation............................... 73
9.3. Taxes................................................. 73
9.4. Headings.............................................. 73
9.5. Entire Agreement...................................... 73
9.6. Several Obligations; Benefits of this Agreement....... 73
9.7. Expenses; Indemnification............................. 74
9.8. Numbers of Documents.................................. 74
9.9. Accounting............................................ 74
9.10. Severability of Provisions............................ 74
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
9.11. Nonliability of Lenders............................... 75
9.12. Choice of Law......................................... 75
9.13. Consent to Jurisdiction............................... 75
9.14. Waiver of Jury Trial.................................. 75
9.15. Confidentiality....................................... 75
ARTICLE X - THE AGENT.......................................... 76
10.1. Appointment........................................... 76
10.2. Powers................................................ 76
10.3. General Immunity...................................... 76
10.4. No Responsibility for Loans, Recitals, etc. .......... 76
10.5. Action on Instructions of Lenders..................... 77
10.6. Employment of Agents and Counsel...................... 77
10.7. Reliance on Documents; Counsel........................ 77
10.8. Agent's Reimbursement and Indemnification............. 77
10.9. Rights as a Lender.................................... 78
10.10. Lender Credit Decision................................ 78
10.11. Successor Agent....................................... 78
10.12. Notice of Default..................................... 79
ARTICLE XI - SETOFF; RATABLE PAYMENTS.......................... 79
11.1. Setoff................................................ 79
11.2. Ratable Payments...................................... 79
ARTICLE XII - BENEFIT OF AGREEMENT; ASSIGNMENTS;
PARTICIPATIONS............................................... 80
12.1. Successors and Assigns................................ 80
12.2. Participations........................................ 80
12.2.1. Permitted Participants; Effect........................ 80
12.2.2. Voting Rights......................................... 80
12.2.3. Benefit of Setoff..................................... 81
12.3. Assignments........................................... 81
12.3.1. Permitted Assignments................................. 81
12.3.2. Effect; Effective Date................................ 81
12.4. Dissemination of Information.......................... 82
12.5. Tax Treatment......................................... 82
ARTICLE XIII - NOTICES......................................... 83
13.1. Giving Notice......................................... 83
13.2. Change of Address..................................... 83
ARTICLE XIV - COUNTERPARTS..................................... 83
</TABLE>
5
<PAGE>
EXHIBITS
EXHIBIT "A-1" - COMMITTED NOTE
EXHIBIT "A-2" - COMPETITIVE BID NOTE
EXHIBIT "B" - COMPETITIVE BID QUOTE REQUEST
EXHIBIT "C" - INVITATION FOR COMPETITIVE BID QUOTES
EXHIBIT "D" - COMPETITIVE BID QUOTE
EXHIBIT "E" - FORM OF OPINION
EXHIBIT "F" - LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
EXHIBIT "G" - COMPLIANCE CERTIFICATE
EXHIBIT "H" - ASSIGNMENT AGREEMENT
EXHIBIT "I" - SUBSIDIARY GUARANTY
SCHEDULES
SCHEDULE "1" - PERCENTAGES
SCHEDULE "2" - SUBSIDIARIES AND OTHER INVESTMENTS
SCHEDULE "3" - INDEBTEDNESS AND LIENS
SCHEDULE "4" - EXISTING FACILITY LETTERS OF CREDIT
SCHEDULE "5" - DESCRIPTION OF TRANSACTIONS
SCHEDULE "6" - PRO FORMA AND PRO FORMA ACCOUNTING PRINCIPLES
6
<PAGE>
CREDIT AGREEMENT
This Agreement, dated as of July 9, 1997, is among BJ's Wholesale Club,
Inc., the Lenders and The First National Bank of Chicago, as Agent. The parties
hereto agree as follows:
R E C I T A L S:
A. The Borrower has requested the Lenders to make financial
accommodations to it in the aggregate principal amount of $200,000,000, the
proceeds of which the Borrower will use for the working capital and general
corporate needs of the Borrower and its Subsidiaries.
B. The Lenders are willing to extend such financial accommodations on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the
Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Absolute Rate" means, with respect to a Loan made by a given Lender for
the relevant Absolute Rate Interest Period, the rate of interest per annum
(rounded to the nearest 1/100 of 1%) offered by such Lender and accepted by the
Borrower pursuant to Section 2.4.6 hereof.
"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Absolute Rate Interest
Period.
"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to Section 2.4 hereof.
"Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance or an Absolute Rate Loan, a period of not less than seven (7) and not
more than one hundred eighty (180) days commencing on a Business Day selected by
the Borrower pursuant to this Agreement, but in no event extending beyond the
7
<PAGE>
Termination Date. If such Absolute Rate Interest Period would end on a day
which is not a Business Day, such Absolute Rate Interest Period shall end on the
next succeeding Business Day.
"Absolute Rate Loan" means a Loan which bears interest at an Absolute Rate.
"Acquisition" means any transaction, or any series of related transactions,
consummated after the Effective Date, by which the Borrower or any of its
Subsidiaries (i) acquires any going business or all or substantially all of the
assets of any firm, corporation or division thereof, whether through purchase of
assets, merger or otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions) at
least a majority (in number of votes) of the securities of a corporation which
have ordinary voting power for the election of directors (other than securities
having such power only by reason of the happening of a contingency) or a
majority (by percentage or voting power) of the outstanding partnership
interests of a partnership.
"Active Subsidiary" means a Subsidiary that has total assets of at least
$500,000.
"Advance" means a borrowing hereunder consisting of the aggregate amount of
one or more Loans made on the same Borrowing Date by some or all of the Lenders
to the Borrower of the same Type (or on the same interest basis in the case of
Competitive Bid Advances) and, in the case of Fixed Rate Advances, for the same
Interest Period and includes both a Committed Advance and a Competitive Bid
Advance and the Swing Line Loans.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means The First National Bank of Chicago in its capacity as agent
for the Lenders pursuant to Article X, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article X.
"Aggregate Available Commitment" means at any time the Aggregate Commitment
minus the sum of (a) Facility Letter of Credit Obligations at such time and (b)
the aggregate principal amount of outstanding Loans at such time.
8
<PAGE>
"Aggregate Commitment" means $200,000,000, as such amount may be reduced
from time to time pursuant to the terms hereof.
"Agreement" means this credit agreement, as it may be amended or modified
and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.4
hereof; provided, however, that for purposes of all computations required to be
made with respect to compliance by the Borrower with Section 6.20, such term
shall mean generally accepted accounting principles as in effect on the date
hereof, applied in a manner consistent with those used in preparing the
Financial Statements.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day and (ii) the sum
of Federal Funds Effective Rate for such day plus 1/2% per annum.
"Alternate Base Rate Advance" means an Advance which bears interest at the
Alternate Base Rate.
"Alternate Base Rate Loan" means a Loan which bears interest at the
Alternate Base Rate.
"Applicable Margin" means, at any date of determination thereof with
respect to any Eurodollar Committed Advance, the facility fees payable pursuant
to Section 2.7.1 hereof and the Facility Letter of Credit Fees, the respective
rates per annum or percentages, as applicable, for such Eurodollar Committed
Advance, facility fees and Facility Letter of Credit Fees calculated in
accordance with the terms of Section 2.3.4 hereof.
"Arranger" means First Chicago Capital Markets, Inc. and its successors.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the Chairman, President, Chief Financial
Officer, Treasurer, Controller or any Vice President-Finance of the Borrower,
acting singly, as such Authorized Officers may be modified from time to time in
writing by the Agent and a then existing Authorized Officer of the Borrower.
"Borrower" means BJ's Wholesale Club, Inc., a Delaware corporation, and its
successors and assigns.
9
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"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.10 hereof.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.
"Capital" means, as of any date of determination, the sum of Net Worth plus
Funded Debt.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Change" is defined in Section 2.18.2 hereof.
"Change in Control" means the acquisition by any Person, or two or more
Persons acting in concert (a "group"), of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 40% or more of the outstanding shares of
voting stock of the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commercial Letter of Credit" means a trade or commercial Facility Letter
of Credit issued by an Issuing Bank pursuant to Article III.
"Commitment" means, for each Lender, the obligation of such Lender to make
Committed Loans and participate in Facility Letters of Credit not exceeding the
amount set forth opposite its name on Schedule 1 or as set forth in any Notice
of Assignment relating to any assignment which has become effective pursuant to
Section 12.3.2 hereof, as such amount may be modified from time to time pursuant
to the terms hereof.
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"Committed Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Committed Loans made by the Lenders to the Borrower at the
same time, of the same Type and, in the case of Eurodollar Committed Advances,
for the same Interest Period.
"Committed Borrowing Notice" is defined in Section 2.3.5 hereof.
"Committed Loan" means a Loan made by a Lender pursuant to Section 2.3
hereof.
"Committed Note" means a promissory note in substantially the form of
Exhibit "A-1" hereto, with appropriate insertions, duly executed and delivered
to the Agent by the Borrower for the account of a Lender and payable to the
order of such Lender in the amount of its Commitment, including any amendment,
modification, renewal or replacement of such promissory note.
"Competitive Bid Acceptance Notice" is defined in Section 2.4.6 hereof.
"Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of the
Lenders to the Borrower at the same time, at the same interest basis, and for
the same Interest Period.
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute Rate
Loan, as the case may be.
"Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Base Rate.
"Competitive Bid Note" means a promissory note in substantially the form of
Exhibit "A-2" hereto, with appropriate insertions, duly executed and delivered
to the Agent by the Borrower for the account of a Lender and payable to the
order of such Lender, including any amendment, modification, renewal or
replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote substantially in the
form of Exhibit "D" hereto completed and delivered by a Lender to the Agent in
accordance with Section 2.4.4 hereof.
"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of Exhibit "B" hereto completed and delivered by the
Borrower to the Agent in accordance with Section 2.4.2 hereof.
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"Condemnation" is defined in Section 7.8 hereof.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement or take-or-pay contract (but does not include (i) any application for
a Letter of Credit or (ii) obligation of any Person to pay the purchase price of
real estate, subject to the satisfaction of customary conditions precedent,
contracted for in the ordinary course of business or (iii) the indemnification
by Borrower of any liabilities which the TJX Companies, Inc. ("TJX") may incur
with respect to those certain real estate leases of HomeBase, Inc. as provided
for in the Indemnification Agreement dated April 18, 1997 between the Borrower
and TJX, unless Borrower has received written notice from TJX seeking
enforcement of, or payment under, such indemnification).
"Conversion/Continuation Notice" is defined in Section 2.3.6 hereof.
"Convertible Subordinated Debt" means that certain $108,600,000 of 6.5%
Convertible Subordinated Debentures Due 2002 issued pursuant to an Indenture,
dated as of July 1, 1992, between Waban Inc. as issuer and Bank of America
Illinois (f/k/a Continental Bank, National Association), as Trustee.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when and
as said corporate base rate changes. The Corporate Base Rate is a reference rate
and does not necessarily represent the lowest or best rate of interest actually
charged to any customer. First Chicago may make commercial loans or other loans
at rates of interest at, above or below the Corporate Base Rate.
"Current Maturities" means, as of any date of determination, the sum of all
amounts which were due and payable within 12 months prior to such date with
respect to any Indebtedness with an original term in excess of one year (it
being understood that Indebtedness under this Agreement shall not be included),
all determined on a consolidated basis for the Borrower and its Subsidiaries.
"Default" means an event described in Article VII.
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"Distribution" means the distribution by Waban Inc. to its shareholders of
all the outstanding shares of common stock of the Borrower.
"EBITR" means, for any period, earnings before interest expense, income
taxes and Rentals, all determined on a consolidated basis for the Borrower and
its Subsidiaries.
"Effective Date" is defined in Section 4.1 hereof.
"ERISA" means the Employee Retirement Income Security Act of l974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means a Eurodollar Committed Advance or a Eurodollar
Bid Rate Advance, as applicable.
"Eurodollar Auction" means a solicitation of Competitive Bid Quotes setting
forth Competitive Bid Margins pursuant to Section 2.4 hereof.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the rate determined by the Agent to be the
rate at which deposits in U.S. dollars are offered by First Chicago to first-
class banks in the London interbank market at approximately 11 a.m. (London
time) two Business Days prior to the first day of such Eurodollar Interest
Period, in the approximate amount of First Chicago's relevant Eurodollar Loan,
or, in the case of a Eurodollar Bid Rate Advance, the amount of the Eurodollar
Bid Rate Advance requested by the Borrower, and having a maturity approximately
equal to such Eurodollar Interest Period.
"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate Loan
made by a given Lender for the relevant Eurodollar Interest Period, the sum of
(i) the Eurodollar Base Rate and (ii) the Competitive Bid Margin offered by such
Lender and accepted by the Borrower pursuant to Section 2.4.6 hereof.
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Competitive Bid Loan which bears
interest at a Eurodollar Bid Rate. "Eurodollar Committed Advance" means an
Advance which bears interest at a Eurodollar Rate requested by the Borrower
pursuant to Section 2.3 hereof.
"Eurodollar Committed Loan" means a Loan which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to Section 2.3 hereof.
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"Eurodollar Interest Period" means, with respect to a Eurodollar Advance, a
period of one, two, three or six months commencing on a Business Day selected by
the Borrower pursuant to this Agreement. Such Eurodollar Interest Period shall
end on (but exclude) the day which corresponds numerically to such date one,
two, three or six months thereafter, provided, however, that if there is no such
numerically corresponding day in such next, second, third or sixth succeeding
month, such Eurodollar Interest Period shall end on the last Business Day of
such next, second, third or sixth succeeding month. If a Eurodollar Interest
Period would otherwise end on a day which is not a Business Day, such Eurodollar
Interest Period shall end on the next succeeding Business Day, provided,
however, that if said next succeeding Business Day falls in a new calendar
month, such Eurodollar Interest Period shall end on the immediately preceding
Business Day.
"Eurodollar Loan" means a Eurodollar Committed Loan or a Eurodollar Bid
Rate Loan, as applicable.
"Eurodollar Rate" means, with respect to a Eurodollar Committed Advance for
the relevant Eurodollar Interest Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by
(b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus (ii) the Applicable Margin; provided,
however, if the Applicable Margin for Eurodollar Rate Loans adjusts during any
Interest Period, the Eurodollar Rate shall change to give effect to such
adjustment when and as such Applicable Margin adjusts. The Eurodollar Rate
shall be rounded to the next higher multiple of 1/16 of 1% if the rate is not
such a multiple.
"Execution Date" means the date of July 9, 1997.
"Facility Fee" is defined in Section 2.7.1 hereof.
"Facility Letter of Credit" means an irrevocable Letter of Credit issued
(i) prior to the Effective Date and listed on Schedule "4" hereto or (ii) by an
Issuing Bank pursuant to Section 3.1 hereof.
"Facility Letter of Credit Fee" is defined in Section 3.8 hereof.
"Facility Letter of Credit Obligations" means, as at the time of
determination thereof, all liabilities, whether actual or contingent, of the
Borrower with respect to Facility Letters of Credit, including the sum of (a)
the Reimbursement Obligations and (b) the aggregate undrawn face amount of the
then outstanding Facility Letters of Credit.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions
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with members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published for such day (or, if such day is not a Business Day, for
the immediately preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations at approximately 10 a.m. (Chicago time) on such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent in its sole discretion.
"Financial Statement" is defined in Section 5.4 hereof.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
"Fixed Charge Coverage Ratio" means a ratio of (i) EBITR for such fiscal
quarter and the three immediately preceding fiscal quarters to (ii) the sum of
interest expense and Rentals for such fiscal quarter and the three immediately
preceding fiscal quarters plus Current Maturities as of the end of such fiscal
quarter, all determined on a consolidated basis for the Borrower and its
Subsidiaries.
"Fixed Rate" means the Eurodollar Rate, the Eurodollar Bid Rate or the
Absolute Rate.
"Fixed Rate Advance" means an Advance which bears interest at a Fixed Rate.
"Fixed Rate Loan" means a Loan which bears interest at a Fixed Rate.
"Funded Debt" means, as of any date of determination, for the Borrower and
its Subsidiaries on a consolidated basis, the sum of (i) the outstanding
principal amount of all Indebtedness plus (ii) the product of eight (8) times
Rentals (for the twelve (12) months prior to the date of determination.
"Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, which are secured by Liens or payable out of specified
proceeds or production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
instruments, (v) Capitalized Lease Obligations, (vi) net liabilities under Rate
Hedging Obligations, (vii) unreimbursed draws under Letters of Credit and (viii)
Contingent Obligations.
"Interest Period" means a Eurodollar Interest Period or an Absolute Rate
Interest Period.
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"Investment" of a Person means any loan, advance (other than advances to
officers and employees made in the ordinary course of business), extension of
credit (other than accounts receivable arising in the ordinary course of
business on terms customary in the trade), deposit account or contribution of
capital by such Person to any other Person or any investment in, or purchase or
other acquisition of, the stock, partnership interests, membership interests,
notes, debentures or other securities of any other Person made by such Person.
"Investment Subsidiary" means Natick Security Corp., a Massachusetts
corporation and a Wholly-Owned Subsidiary of the Borrower, and its successors.
"Invitation for Competitive Bid Quotes" means an Invitation for Competitive
Bid Quotes substantially in the form of Exhibit "C" hereto, completed and
delivered by the Agent to the Lenders in accordance with Section 2.4.3 hereof.
"Issuance Date" is defined in Section 3.4(a)(2) hereof.
"Issuance Notice" is defined in Section 3.4(c) hereof.
"Issuing Bank" means, with respect to each Facility Letter of Credit, First
Chicago or such other Lender selected by the Borrower to issue such Facility
Letter of Credit so long as such other Lender consents to act in such capacity.
"LC Factor" is a fraction (i) the numerator of which is (y) for the initial
payment of the Facility Letter of Credit Fee for any specific Facility Letter of
Credit, the number of days subsequent to the Issuance Date of such Facility
Letter of Credit to and including the first Payment Date and (z) for subsequent
payments of the Facility Letter of Credit Fee for any specific Facility Letter
of Credit, the number of days subsequent to the Payment Date on which the
Facility Letter of Credit Fee was last paid for such Facility Letter of Credit
to and including the next Payment Date, the Termination Date or the expiration
date of such Facility Letter of Credit, as applicable, and (ii) the denominator
of which is 360.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent, any
office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Letter of Credit Request" is defined in Section 3.4(a) hereof.
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"Level I Status" is defined in Section 2.3.4 hereof.
"Level II Status" is defined in Section 2.3.4 hereof.
"Level III Status" is defined in Section 2.3.4 hereof.
"Level IV Status" is defined in Section 2.3.4 hereof.
"Level V Status" is defined in Section 2.3.4 hereof.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loans" means, collectively, the Swing Line Loans, Fixed Rate Loans and
Alternate Base Rate Loans and "Loan" means use of the Loans.
"Loan Documents" means this Agreement, the Note and the Facility Letters of
Credit.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Agent or the Lenders thereunder.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Net Income" means, for any period, the net income (or loss) of the
Borrower and its Subsidiaries on a consolidated basis for such period determined
in conformity with Agreement Accounting Principles; provided, however, that to
the extent reported as a separate item on the Borrower's financial statements
delivered pursuant to Section 6.1 hereof, there shall be excluded (i) the income
(or loss) of any Affiliate of the Borrower or other Person (other than a
Subsidiary of the Borrower) in which any Person (other than the Borrower or any
of its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to the Borrower, or any of its
Subsidiaries by such Affiliate or other Person during such period and (ii) the
income (or loss) of any Person accrued prior to the date such
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Person becomes a Subsidiary of the Borrower or is merged into or consolidated
with the Borrower or any of its Subsidiaries or that Person's assets are
acquired by the Borrower or any of its Subsidiaries.
"Net Worth" means the aggregate amount of shareholders equity as determined
from a consolidated balance sheet of the Borrower and its Subsidiaries, prepared
in accordance with Agreement Accounting Principles.
"Non-Excluded Taxes" is defined in Section 2.19 hereof.
"Notes" means, collectively, the Competitive Bid Notes, the Committed Notes
and the Swing Line Note; and "Note" means any one of the Notes.
"Notice of Assignment" is defined in Section 12.3.2 hereof.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Notes, the Facility Letter of Credit Obligations, all accrued and unpaid
fees and all expenses, reimbursements, indemnities and other obligations of the
Borrower to the Lenders or to any Lender, the Agent or any indemnified party
hereunder arising under the Loan Documents.
"Participants" is defined in Section 12.2.1 hereof.
"Payment Date" means the last day of each March, June, September and
December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Percentage" means, for each Lender the percentage set forth opposite its
name on Schedule "1" attached hereto, as such percentage (and such schedule) may
be modified from time to time pursuant to the terms hereof, including but not
limited to the provisions of Section 12.3.2 hereof. Ratable and ratably, as
used herein, shall have correlative meanings.
"Permitted Investments" means Investments in any of the following:
(i) Short-term obligations of, or fully guaranteed by, the United States of
America;
(ii) Commercial paper rated A-2 or better by Standard and Poor's
Corporation or P-2 or better by Moody's Investors Service, Inc. and securities
commonly known as "short-term bank notes" issued by any Lender denominated in
United States dollars which at the time of purchase have been rated and the
ratings
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for which are not less than P-2 if rated by Moody's Investors Services,
Inc., and not less than A-2 if rated by Standard and Poor's Corporation;
(iii) Demand deposit accounts maintained in the ordinary course of
business;
(iv) Certificates of deposit issued by and time deposits with commercial
banks (whether domestic or foreign) having capital and surplus in excess of
$100,000,000;
(v) Tax-free government securities rated "A" or better as rated by Standard
and Poor's Corporation or Moody's Investors Service, Inc. and government
securities mutual funds which have a weighted average life of less than two (2)
years;
(vi) Corporate debt securities rated "A" or better as rated by Standard and
Poor's Corporation or Moody's Investors Service, Inc. that mature within two (2)
years from the date the Investment is made by the Borrower or any of its
Subsidiaries;
(vii) Collateralized mortgage obligations rated "A" or better as rated
by Standard and Poor's Corporation or Moody's Investors Service, Inc. with an
average life less than two (2) years; provided that after giving effect to any
such Investment, the aggregate cost of all such Investments does not exceed
$25,000,000;
(viii) Money market preferred stock investments rated "A" or better as
rated by Standard and Poor's Corporation or Moody's Investors Service, Inc.;
provided that after giving effect to any such Investment, the aggregate cost of
all such Investments does not exceed $25,000,000;
(ix) Repurchase agreements relating to a security which is rated "A" or
better as rated by Standard and Poor's Corporation or Moody's Investors Service,
Inc. that mature within two (2) years from the date the Investment is made by
the Borrower or any of its Subsidiaries; provided that after giving effect to
any such Investment, the aggregate cost of all such Investments does not exceed
$25,000,000; and
(x) Tax free government securities rated "SP2" or better by Standard and
Poor's Corporation or "MIG2" or better by Moody's Investors Service, Inc. with
an average life of less than two (2) years; provided, that after giving effect
to any such Investment, the aggregate cost of all such Investments does not
exceed $25,000,000.
"Person" means any natural person, corporation, firm, joint venture,
limited liability company, partnership, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
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"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.
"Pro Forma" is defined in Section 5.4 hereof.
"Pro Forma Accounting Principles" means Agreement Accounting Principles as
modified as set forth in Schedule "6" hereto to reflect pro forma adjustments
required due to the Transactions.
"Prior Agreement" means the Credit Agreement dated as of April 4, 1995
among Waban Inc., The First National Bank of Chicago, as agent, and the Lenders
party thereto, as amended through the Effective Date.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Purchasers" is defined in Section 12.3.1 hereof.
"Rate Hedging Agreements" of a Person means (i) any and all agreements,
devices or arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange transactions,
including, but not limited to, dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest rate
options, puts and warrants, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any of the foregoing.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under Rate Hedging
Agreements. "Real Estate Subsidiary" means any Wholly-Owned Subsidiary of the
Borrower existing on the Effective Date or formed after the Effective Date (A)
for the purpose of (i) purchasing, developing and/or carrying real estate or
lending money to the Borrower which is secured by real estate or (ii) acting as
a holding company for Subsidiaries which purchase, develop and/or carry real
estate, (B) which conducts no business other than that which is incidental to
(i) purchasing, developing and/or carrying real estate or lending money to the
Borrower which is secured by real estate and (C) which owns no significant
assets other than real estate, Subsidiaries which are Real Estate Subsidiaries
or mortgages on real estate owned by the Borrower.
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"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation G" means Regulation G of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by Persons other than banks, brokers and dealers for
the purpose of purchasing or carrying margin stocks applicable to such Persons.
"Regulation T" means Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of such Board of Governors relating
to the extension of credit by securities brokers and dealers for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by the specified lenders for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
"Reimbursement Obligations" means, at any time, the aggregate of the
obligations of the Borrower to the Lenders, the Issuing Banks and the Agent in
respect of all unreimbursed payments or disbursements made by the Lenders, the
Issuing Banks and the Agent under or in respect of the Facility Letters of
Credit.
"Rentals" means all rental expense of the Borrower and its Subsidiaries
under operating leases.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice
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requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Required Lenders" means Lenders whose Commitments, in the aggregate, are
equal to at least 60% of the Aggregate Commitment or, if the Aggregate
Commitment has been terminated, Lenders in the aggregate holding at least 60% of
the sum of (i) the aggregate unpaid principal amount of the outstanding Advances
plus (ii) the Facility Letter of Credit Obligations.
"Reserve Requirement" means, with respect to a Eurodollar Interest Period,
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Risk-Based Capital Guidelines" is defined in Section 2.18.2 hereof.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Senior Notes" means the certain $12,000,000 9.58% unsecured senior notes
due May 31, 1998.
"Senior Subordinated Debt" means that certain $100,000,000 of 11% Senior
Subordinated Notes due May 15, 2004 issued pursuant to an Indenture, dated as of
May 11, 1994, between Waban Inc., as Issuer and The First National Bank of
Boston, as Trustee.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Solvent" means, when used with respect to a Person, that (a) the fair
saleable value of the assets of such Person is in excess of the total amount of
the present value of its liabilities (including for purposes of this definition
all liabilities (including loss reserves as determined by such Person), whether
or not reflected on a balance sheet prepared in accordance with Agreement
Accounting Principles and whether direct or indirect, fixed or contingent,
secured or unsecured, disputed or undisputed), (b) such Person is able to pay
its debts or obligations in the ordinary course as they mature and (c) such
Person does not have unreasonably small capital to carry out its business as
conducted and as proposed to be conducted. "Solvency" shall have a correlative
meaning.
"Standby Letter of Credit" means a Facility Letter of Credit which is not a
Commercial Letter of Credit.
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"Status" means, at any date of determination thereof, whichever of Level I
Status, Level II Status, Level III Status, Level IV Status or Level V Status
exists at such date.
"Subordinated Indebtedness" means the Convertible Subordinated Debt and the
Senior Subordinated Debt.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, limited liability company, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled or of
which such Person, directly or indirectly, is the general partner. Unless
otherwise expressly provided, all references herein to a "Subsidiary" shall mean
a Subsidiary of the Borrower.
"Subsidiary Guaranty" means that certain Guaranty, in the form of Exhibit I
hereto, to be executed and delivered by the applicable Subsidiaries in favor of
the Agent, on behalf of the Lenders, as and when required by Section 6.21
hereof, as the same may be amended, supplemented or otherwise modified from time
to time.
"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which represents more than 10% of the
consolidated assets of the Borrower and its Subsidiaries as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries as at
the beginning of the twelve-month period ending with the month in which such
determination is made.
"Swing Line Bank" means First Chicago.
"Swing Line Loan" means a Loan made by the Swing Line Bank pursuant to
Section 2.6 hereof.
"Swing Line Note" means a promissory note substantially in the form of
Exhibit A-3 hereto, with appropriate insertions, duly executed and delivered to
the Agent by the Borrower and payable to the order of the Swing Line Bank in the
amount of $10,000,000, including any amendment, modification, renewal or
replacement of such promissory note.
"Swing Line Option" means the ability of the Swing Line Bank to make Swing
Line Loans hereunder, if it chooses to do so in its sole discretion, in an
aggregate amount at any one time outstanding not to exceed $10,000,000, as the
same may be terminated or permanently reduced from time to time hereunder. The
Swing Line Option will automatically and permanently terminate on the
Termination Date.
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<PAGE>
"Tangible Net Worth" means Net Worth minus Intangible Assets. For
purposes of this definition "Intangible Assets" means the amount (to the extent
reflected in determining Net Worth) of (i) all write-ups (other than write-ups
resulting from foreign currency translations or from increases in the value of
Permitted Investments owned by the Borrower or the Investment Subsidiary)
subsequent to January 25, 1997 in the book value of any asset owned by the
Borrower or a consolidated Subsidiary, (ii) all investments in unconsolidated
Subsidiaries and all equity investments in Persons which are not Subsidiaries
and (iii) all unamortized debt discount and expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible items.
"Termination Date" means July 9, 2002, or such earlier date on which the
Agreement is terminated by the parties hereto.
"Trademark Subsidiaries" means Natick Corporation, a Delaware corporation,
and any other Wholly-Owned Subsidiary of the Borrower formed after the Effective
Date for the purpose of (i) owning trademarks and/or other intellectual property
and whose income is primarily derived from royalties received from the Borrower
and its Subsidiaries for the use of such trademarks and/or other intellectual
property and/or (ii) owning and operating retail stores in states in which the
Borrower has determined there are advantages to operating retail stores in such
state through a Wholly-Owned Subsidiary.
"Transactions" shall mean (i) the repayment of the Senior Notes, (ii) the
retirement or defeasance of the Senior Subordinated Debt, (iii) the redemption
or conversion of the Convertible Subordinated Debt into the Common Stock of
Waban Inc. and (iv) the Distribution.
"Transaction Documents" means the documents pursuant to which the
Transactions occur and includes, without limitation the Separation and
Distribution Agreement between Waban Inc. and the Borrower, Services Agreement
between Waban Inc. and the Borrower, Tax Sharing Agreement between Waban Inc.
and the Borrower, Employee Benefit Agreement between Waban Inc. and the
Borrower, and Proxy Statement/Prospectus dated June 6, 1997.
"Transferee" is defined in Section 12.4 hereof.
"Type" means, with respect to any Loan or Advance, its nature as an
Alternate Base Rate Advance or Loan, Eurodollar Committed Advance or Loan,
Eurodollar Bid Rate Advance or Loan or Absolute Rate Advance or Loan.
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested nonforfeitable benefits under all Single Employer Plans exceeds
the fair
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<PAGE>
market value of all such Plan assets allocable to such benefits, all determined
as of the then most recent valuation date for such Plans.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Unfunded Swing Line Loans" is defined in Section 2.6(d) hereof.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which (other than director qualifying shares)
shall at the time be owned or controlled, directly or indirectly, by such Person
or one or more Wholly-Owned Subsidiaries of such Person, or (ii) any
partnership, limited liability company, association, joint venture or similar
business organization 100% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references to a "Wholly-Owned Subsidiary" shall mean a
Wholly-Owned Subsidiary of the Borrower.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. Description of Facility. Upon the terms and subject to the
conditions set forth in this Credit Agreement, the Lenders hereby grant to the
Borrower a revolving credit facility pursuant to which: (i) each Lender
severally agrees to make Committed Loans to the Borrower in accordance with
Section 2.3; and (ii) each Lender may, in its sole discretion, make bids to make
Competitive Bid Loans to the Borrower in accordance with Section 2.4; provided
that in no event may the sum of the aggregate principal amount of all
outstanding Advances plus the amount of Facility Letter of Credit Obligations
exceed the Aggregate Commitment.
2.2. Availability of Facility. Subject to all of the terms and
conditions of this Agreement, the facility is available from the Effective Date
to the Termination Date, and the Borrower may borrow, repay and reborrow at any
time prior to the Termination Date.
2.3. Committed Advances.
2.3.1. Commitment. From and including the Effective Date and prior
to the Termination Date, each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Committed Loans to the Borrower
from time to time in amounts not to exceed in the aggregate at any one time
outstanding (after
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<PAGE>
giving effect to the intended use of proceeds of any Committed Advance used to
repay any outstanding Reimbursement Obligations or Swing Line Loans) an amount
equal to such Lender's Percentage of the Aggregate Available Commitment. The
Commitments to lend hereunder shall expire on the Termination Date.
2.3.2. Ratable Loans; Types of Advances. Each Committed Advance
hereunder shall consist of Loans made from the several Lenders ratably in
proportion to the ratio that their respective Commitments bear to the Aggregate
Commitment. The Committed Advances may be Alternate Base Rate Advances or
Eurodollar Committed Advances, or a combination thereof, selected by the
Borrower in accordance with Sections 2.3.5 and 2.3.6; provided, however, that
there shall not be more than six Eurodollar Committed Advances outstanding at
any one time. Committed Advances shall be evidenced by the Committed Notes.
2.3.3. Minimum Amount of Each Committed Advance. Each Committed
Advance shall be in the minimum amount of $3,000,000 (and in multiples of
$500,000 if in excess thereof); provided, however, that any Alternate Base Rate
Advance may be in the amount of the unused Aggregate Available Commitment.
2.3.4. Applicable Margin. The Applicable Margin set forth below
with respect to each Committed Advance and for Facility Fees and Facility Letter
of Credit Fees payable hereunder, shall be subject to adjustment (upwards or
downwards, as appropriate) based on the Borrower's Status as at the end of each
fiscal quarter in accordance with the table set forth below. The Borrower's
Status as at the last day of each fiscal quarter shall be determined from the
then most recent annual or quarterly financial statements of the Borrower
delivered with the compliance certificate required pursuant to Section 6.1(iii)
(collectively, the "Financials"). The adjustment, if any, to the Applicable
Margin shall take place on, and be effective from and after, the fifth Business
Day following the date on which the Agent has received the Financials. In the
event that the Borrower shall at any time fail to furnish to the Lenders the
Financials within the time limitations specified by Section 6.1, then the
Borrower's Status shall be Level V Status from the date of such failure until
five Business Days after such Financials are so delivered. Notwithstanding
anything to the contrary contained herein, the Borrower's Status from the
Execution Date until the delivery of the audited Financials required pursuant to
Section 6.1(a) hereof, shall be Level III Status, unless the Borrower's Status
becomes Level IV or Level V Status as determined from the quarterly Financials
delivered pursuant to Section 6.1.
<TABLE>
<CAPTION>
Applicable Margin Level I Level II Level III Level IV Level V
Status Status Status Status Status
<S> <C> <C> <C> <C> <C>
Eurodollar Rate 250% 275% 300% 375% 450%
Facility Letter
of Credit Fee 250% 275% 300% 375% 450%
Facility Fee 100% 125% 150% 175% 200%
</TABLE>
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<PAGE>
For purposes of this Agreement, the Borrower's Status will be determined based
on the following definitions:
"Level I Status" exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the Financials, the Fixed Charge Coverage
Ratio is greater than or equal to 3.50 to 1.0.
"Level II Status" exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the Financials, (i) the requirements
necessary to achieve Level I Status shall not have been satisfied and (ii) the
Fixed Charge Coverage Ratio is greater than or equal to 3.00 to 1.0.
"Level III Status" exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the Financials, (i) the requirements
necessary to achieve Level II status shall not have been satisfied and (ii) the
Fixed Charge Coverage Ratio is greater than or equal to 2.50 to 1.0.
"Level IV Status" exists any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the Financials, (i) the requirements
necessary to achieve Level III status shall not have been satisfied and (ii) the
Fixed Charge Coverage Ratio is greater than or equal to 2.00 to 1.0.
"Level V Status" exists at any date if the requirements necessary to
achieve Level I Status, Level II Status, Level III Status or Level IV Status
shall not have been satisfied.
2.3.5. Method of Selecting Types and Interest Periods for New
Committed Advances. The Borrower shall select the Type of Committed Advance,
and in the case of each Eurodollar Committed Advance the Interest Period
applicable thereto, for each such Committed Advance; provided, however, that for
a period of forty-five (45) days after the Effective Date (or for such shorter
period as the Agent may agree), the Borrower will keep all of the Loans in a
Eurodollar Advance with a one month Interest Period and with the same maturity
date, or in a combination of Alternate Base Rate Advances and one Eurodollar
Advance meeting the qualifications set forth above. The Borrower shall give
the Agent irrevocable notice (a "Committed Borrowing Notice") not later than
10:00 a.m. (Chicago time) on the Borrowing Date for each Alternate Base Rate
Advance and three Business Days before the Borrowing Date for each Eurodollar
Committed Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Committed Advance,
(ii) the aggregate amount of such Committed Advance,
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<PAGE>
(iii) the Type of Committed Advance selected, and
(iv) in the case of each Eurodollar Committed Advance, the
Interest Period applicable thereto.
2.3.6. Conversion and Continuation of Outstanding Committed
Advances. Alternate Base Rate Advances shall continue as Alternate Base Rate
Advances unless and until such Alternate Base Rate Advances are converted into
Eurodollar Committed Advances. Each Eurodollar Committed Advance shall continue
as a Eurodollar Committed Advance until the end of the then applicable Interest
Period therefor, at which time such Eurodollar Committed Advance shall be
automatically converted into an Alternate Base Rate Advance unless such
Eurodollar Committed Advance is paid by the Borrower or the Borrower shall have
given the Agent a Conversion/Continuation Notice requesting that, at the end of
such Interest Period, such Eurodollar Committed Advance continue as a Eurodollar
Committed Advance for the same or another Interest Period. Subject to the terms
of Section 2.3.3, the Borrower may elect from time to time to convert all or any
part of an Alternate Base Rate Advance into a Eurodollar Committed Advance. The
Borrower shall give the Agent irrevocable notice (a "Conversion/Continuation
Notice") of each conversion of an Alternate Base Rate Advance or continuation of
a Eurodollar Committed Advance not later than 10:00 a.m. (Chicago time) at least
three Business Days prior to the date of the requested conversion or
continuation, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Committed Advance
which is to be converted or continued; and
(iii) the amount and Type(s) of Committed Advance(s) into
which such Committed Advance is to be converted or continued and, in the case of
a conversion into or continuation of a Eurodollar Committed Advance, the
duration of the Interest Period applicable thereto.
2.4. Competitive Bid Advances.
2.4.1. Competitive Bid Option; Repayment of Competitive Bid
Advances. In addition to Committed Advances pursuant to Section 2.3, but
subject to all of the terms and conditions of this Agreement (including, without
limitation, the limitation set forth in Section 2.1 as to the maximum aggregate
principal amount of all outstanding Advances hereunder), the Borrower may, as
set forth in this Section 2.4, request the Lenders, prior to the Termination
Date, to make offers to make Competitive Bid Advances to the Borrower. Each
Lender may, but shall have no obligation to, make such offers and the Borrower
may, but shall have no obligation
28
<PAGE>
to, accept any such offers in the manner set forth in this Section 2.4. No
Lender shall at any time be liable for the Competitive Bid Loans of any other
Lender made hereunder. Competitive Bid Advances shall be evidenced by the
Competitive Bid Notes. Each Competitive Bid Advance shall be repaid in full by
the Borrower on the last day of the Interest Period applicable thereto.
2.4.2. Competitive Bid Quote Request. When the Borrower wishes to
request offers to make Competitive Bid Loans under this Section 2.4, the
Borrower shall transmit to the Agent by telecopy a Competitive Bid Quote Request
so as to be received no later than (x) 10:00 a.m., Chicago time, at least five
Business Days prior to the Borrowing Date proposed therein, in the case of a
Eurodollar Auction, or (y) 9:00 a.m., Chicago time, at least one Business Day
prior to the Borrowing Date proposed therein, in the case of an Absolute Rate
Auction, specifying in accordance with all of the terms of this Credit
Agreement:
(i) the proposed Borrowing Date for the proposed Competitive Bid
Advance;
(ii) the aggregate principal amount of such Competitive Bid
Advance;
(iii) whether the Competitive Bid Quotes requested are to set
forth a Competitive Bid Margin or an Absolute Rate, or both; and
(iv) the Interest Period applicable thereto.
The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period and for a Eurodollar Auction and an Absolute Rate Auction in a
single Competitive Bid Quote Request. No Competitive Bid Quote Request shall be
given within five Business Days (or upon reasonable prior notice to the Lenders,
such other number of days as the Borrower and the Agent may agree) of any other
Competitive Bid Quote Request. Each Competitive Bid Quote Request shall be in a
minimum amount of $5,000,000 or a larger multiple of $1,000,000. A Competitive
Bid Quote Request that does not conform substantially to the format of Exhibit
"B" hereto shall be rejected, and the Agent shall promptly notify the Borrower
of such rejection by telecopy.
2.4.3. Invitation for Competitive Bid Quotes. Promptly upon
receipt of a Competitive Bid Quote Request that is not rejected pursuant to
Section 2.4.2, the Agent shall send to each of the Lenders by telecopy an
Invitation for Competitive Bid Quotes which shall constitute an invitation by
the Borrower to each Lender to submit Competitive Bid Quotes offering to make
the Competitive Bid Loans to which such Competitive Bid Quote Request relates in
accordance with this Section 2.4.
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<PAGE>
2.4.4. Submission and Contents of Competitive Bid Quotes.
(a) Each Lender may, in its sole discretion, submit a Competitive Bid
Quote containing an offer or offers to make Competitive Bid Loans in response to
any Invitation for Competitive Bid Quotes. Each Competitive Bid Quote must
comply with the requirements of this Section 2.4.4 and must be submitted to the
Agent by telecopy at its offices specified in or pursuant to Article XIII not
later than (i) (A) 12:45 p.m., Chicago time, in the case of First Chicago and
(B) 1:00 p.m., Chicago time, in the case of each other Lender, at least four
Business Days prior to the proposed Borrowing Date in the case of a Eurodollar
Auction, or (ii) (A) 8:45 a.m., Chicago time, in the case of First Chicago and
(B) 9:00 a.m., Chicago time, in the case of each other Lender, on the proposed
Borrowing Date in the case of an Absolute Rate Auction (or, in any such case
upon reasonable prior notice to the Lenders, such other time and date as the
Borrower and the Agent may agree; provided that First Chicago shall always be
required to submit its Competitive Bid Quotes not less than fifteen minutes
prior to the other Lenders). Subject to Articles IV and VIII, any Competitive
Bid Quote so made shall be irrevocable except with the written consent of the
Agent given on the instructions of the Borrower.
(b) Each Competitive Bid Quote shall in any case specify: (i) the
proposed Borrowing Date, which shall be the same as that set forth in the
applicable Invitation for Competitive Bid Quotes; (ii) the principal amount of
the Competitive Bid Loan for which each such offer is being made, (1) which
principal amount may be greater than, less than or equal to the Commitment of
the quoting Lender, but in no case greater than the unutilized Aggregate
Available Commitment, (2) which principal amount must be at least $5,000,000 and
in integral multiples of $1,000,000, and (3) which principal amount may not
exceed the principal amount of Competitive Bid Loans for which offers were
requested; (iii) in the case of a Eurodollar Auction, the Competitive Bid Margin
offered for each such Competitive Bid Loan; (iv) the minimum or maximum amount,
if any, of the Competitive Bid Loan which may be accepted by the Borrower; (v)
in the case of an Absolute Rate Auction, the Absolute Rate offered for each such
Competitive Bid Loan; (vi) the applicable Interest Period; and (vii) the
identity of the quoting Lender.
(c) The Agent shall reject any Competitive Bid Quote that: (i) is not
substantially in the form of Exhibit "D" hereto or does not specify all of the
information required by Section 2.4.4(b); (ii) contains qualifying, conditional
or similar language, other than any such language contained in Exhibit "D"
hereto; (iii) proposes terms other than or in addition to those set forth in the
applicable Invitation for Competitive Bid Quotes; or (iv) arrives after the time
set forth in Section 2.4.4(a).
(d) If any Competitive Bid Quote shall be rejected pursuant to Section
2.4.4(c), then the Agent shall notify the Borrower and the relevant Lender of
such rejection as soon as practicable.
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<PAGE>
2.4.5. Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms (i) of any Competitive Bid Quote submitted by a Lender
that is in accordance with Section 2.4.4 and (ii) of any Competitive Bid Quote
that is in accordance with Section 2.4.4 and amends, modifies or is otherwise
inconsistent with a previous Competitive Bid Quote submitted by such Lender with
respect to the same Competitive Bid Quote Request. Any such subsequent
Competitive Bid Quote shall be disregarded by the Agent unless such subsequent
Competitive Bid Quote specifically states that it is submitted solely to correct
a manifest error in such former Competitive Bid Quote. The Agent's notice to
the Borrower shall specify the aggregate principal amount of Competitive Bid
Loans for which offers have been received for each Interest Period specified in
the related Competitive Bid Quote Request and the respective principal amounts
and Competitive Bid Margins or Absolute Rates, as the case may be, so offered.
2.4.6. Acceptance and Notice by Borrower. Subject to the receipt
of the notice from the Agent referred to in Section 2.4.5, not later than (i)
10:00 a.m. (Chicago time) at least three Business Days prior to the proposed
Borrowing Date, in the case of a Eurodollar Auction or (ii) 10:00 a.m. (Chicago
time) on the proposed Borrowing Date, in the case of an Absolute Rate Auction,
the Borrower shall notify the Agent of the Borrower's acceptance or rejection of
the offers so notified to it pursuant to Section 2.4.5; provided, however, that
the failure by the Borrower to give such notice to the Agent shall be deemed to
be a rejection by the Borrower of all such offers. In the case of acceptance,
such notice (a "Competitive Bid Acceptance Notice") shall specify the aggregate
principal amount of offers for each Interest Period that are accepted. The
Borrower may accept or reject any Competitive Bid Quote in whole or in part
(subject to the terms of Section 2.4.4(b)(iv)); provided that:
(i) the aggregate principal amount of each Competitive Bid Advance may
not exceed the applicable amount set forth in the related Competitive Bid Quote
Request;
(ii) acceptance of offers may only be made on the basis of ascending
Competitive Bid Margins or Absolute Rates, as the case may be; and
(iii) the Borrower may not accept any offer of the type
described in Section 2.4.4(c) or that otherwise fails to comply with the
requirements of this Agreement for the purpose of obtaining a Competitive Bid
Loan under this Agreement.
2.4.7. Allocation by the Agent. If offers are made by two or more
Lenders with the same Competitive Bid Margins or Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of which
offers are permitted to be accepted for the related Interest Period, the
principal amount of Competitive Bid Loans in respect of which such offers are
accepted shall
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<PAGE>
be allocated by the Agent among such Lenders as nearly as possible (in such
multiples as the Agent may deem appropriate) in proportion to the aggregate
principal amount of such offers; provided, however, that no Lender shall be
allocated a portion of any Competitive Bid Advance which is less than the
minimum amount which such Lender has indicated that it is willing to accept.
Allocations by the Agent of the amounts of Competitive Bid Loans shall be
conclusive in the absence of manifest error. The Agent shall promptly, but in
any event on the same Business Day in the case of Eurodollar Bid Rate Advances,
and by 11:00 a.m. (Chicago time) on the same Business Day in the case of
Absolute Rate Advances, notify each Lender of its receipt of a Competitive Bid
Acceptance Notice and the aggregate principal amount of each Competitive Bid
Advance allocated to each participating Lender.
2.5. Method of Borrowing. On each Borrowing Date, each Lender shall
make available its Loan or Loans, if any, not later than noon, Chicago time, in
funds immediately available to the Agent, in Chicago, Illinois at its address
specified pursuant to Article XIII. The Agent will make the funds so received
from the Lenders available to the Borrower at the Agent's aforesaid address.
Notwithstanding the foregoing provisions of this Section 2.5, to the extent that
a Loan made by a Lender matures on the Borrowing Date of a requested Loan, such
Lender shall apply the proceeds of the Loan it is then making to the repayment
of principal of the maturing Loan.
2.6. Swing Line Loans.
(a) On the terms and subject to the conditions and relying upon the
representations and warranties of the Borrower herein set forth, the Swing Line
Bank may, in its sole discretion at any time and from time to time from and
including the Effective Date to but excluding the earlier of the Termination
Date and the termination of the Commitments or the Swing Line Option, in
accordance with the terms hereof, make Swing Line Loans to the Borrower in an
aggregate principal amount at any time outstanding not to exceed the least of
(i) the amount of the Swing Line Option, (ii) an amount equal to the Aggregate
Available Commitment at such time and (iii) an amount equal to the Commitment of
First Chicago as set forth on Schedule I less the sum of (a) the aggregate
outstanding principal amount of Loans made by First Chicago plus, (b) its
Percentage interest in all Facility Letter of Credit Obligations ("Swing Line
Availability"). All Swing Line Loans shall be in a minimum amount of $750,000
and in any integral multiple of $500,000 if in excess thereof and shall bear
interest at the Alternate Base Rate. In no event shall any Swing Line Loan be
made hereunder if (i) the Agent or the Swing Line Bank shall have received
notice from any Lender prior to making any such Swing Line Loan that a condition
specified in Section 4.1 or 4.2 has not been satisfied and (ii) such condition
shall not have been subsequently waived in compliance with Section 8.2.
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<PAGE>
(b) The Borrower shall give the Swing Line Bank (with a copy to the
Agent) telephonic, written or telecopy notice (in the case of telephonic notice,
such notice shall be promptly confirmed in writing or by telecopy) not later
than 1:00 p.m., Chicago time, on a day of a proposed Swing Line Loan. Such
notice shall be delivered on a Business Day, shall be irrevocable and shall
refer to this Agreement and shall specify the requested Borrowing Date (which
shall be a Business Day) and amount of such Swing Line Loan. The Swing Line
Bank may, in its sole discretion by 2:00 p.m., Chicago time, on the requested
Borrowing Date, make the requested Swing Line Loan by crediting the principal
amount thereof, in immediately available funds, to the account of the Borrower
maintained with the Swing Line Bank, unless such Loan shall not occur on such
date because any condition precedent herein specified shall not have been met or
the Swing Line Bank elects in its sole discretion not to make such Swing Line
Loan.
(c) Notwithstanding the occurrence of any Default or noncompliance
with the conditions precedent set forth in Article IV, if (i) any Swing Line
Loans aggregating $2,000,000 or more shall remain outstanding at 10:00 a.m.,
Chicago time, on the fifth Business Day following the Borrowing Date thereof and
if by such time on such fifth Business Day the Agent shall have received neither
(A) a Borrowing Notice delivered by the Borrower pursuant to Section 2.12
requesting that Alternate Base Rate Loans be made pursuant to Section 2.3 on the
immediately succeeding Business Day in an amount at least equal to the aggregate
principal amount of such Swing Line Loans nor (B) any other notice satisfactory
to the Swing Line Bank indicating the Borrower's intent to repay all such Swing
Line Loans on or before the immediately succeeding Business Day with funds
obtained from other sources, or (ii) on any date the Swing Line Bank in its sole
discretion shall so request with respect to the outstanding Swing Line Loans,
the Agent shall be deemed to have received a Borrowing Notice from the Borrower
pursuant to Section 2.9 requesting that a Committed Advance of Alternate Base
Rate Loans be made pursuant to Section 2.3 on such immediately succeeding
Business Day in an amount equal to the aggregate principal amount of and
interest on such Swing Line Loans, and the procedures set forth in Section 2.9
shall be followed in making such Alternate Base Rate Loans, provided that the
proceeds of such Alternate Base Rate Loans received by the Agent shall be
immediately delivered to the Swing Line Bank and applied to the direct repayment
of the Swing Line Loans. Effective on the day such Committed Loans are made,
the Swing Line Loans so paid shall no longer be outstanding as Swing Line Loans
and shall be outstanding as Committed Loans of the Lenders bearing interest at a
rate determined by reference to the Alternate Base Rate, in accordance with the
provisions of this Article II. The Borrower authorizes the Agent and the Swing
Line Bank to charge the Borrower's account maintained with the Swing Line Bank
(up to the amount available in such account) in order to immediately pay the
amount of such Swing Line Loans to the extent amounts received from the Lenders
are not sufficient to repay in full such Swing Line Loans and interest accrued
thereon. If any portion of any such amount paid (or deemed
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<PAGE>
paid) to the Swing Line Bank should be recovered by or on behalf of the Borrower
from the Swing Line Bank in the event of the bankruptcy or reorganization of the
Borrower or otherwise, the loss of the amount so recovered shall be ratably
shared among all Lenders in the manner contemplated by Section 11.2.
(d) If, for any reason (including, without limitation, the occurrence
of a Default described in Sections 7.6 or 7.7, Alternate Base Rate Loans may not
be, or are not, made pursuant to paragraph (c) of this Section to repay Swing
Line Loans as required by such paragraph, effective on the date such Alternate
Base Rate Loans would otherwise have been made, (i) each Lender severally,
unconditionally and irrevocably agrees that it shall, without regard to the
occurrence of any Default, purchase a participating interest in such Swing Line
Loans ("Unrefunded Swing Line Loans") in an amount equal to the amount of
Alternate Base Rate Loans which would otherwise have been made by such Lender
pursuant to paragraph (c) of this Section 2.6 and (ii) each Unrefunded Swing
Line Loan shall commence accruing interest at the Alternative Base Rate. Each
Lender will immediately transfer to the Agent, in immediately available funds,
the amount of its participation, and the proceeds of such participation shall be
distributed by the Agent to the Swing Line Bank in such amount as will reduce
the amount of the participating interest retained by the Swing Line Bank in the
Swing Line Loans to the amount of the Alternate Base Rate Loans which were to
have been made by the Swing Line Bank pursuant to paragraph (c) of this Section
2.6. In the event a Lender fails to make available to the Swing Line Bank the
amount of such Lender's participation as provided in this paragraph (d), the
Swing Line Bank shall be entitled to recover such amount on demand from such
Lender together with interest at the customary rate set by the Swing Line Bank
for correction of errors among banks for one Business Day and thereafter at the
Alternate Base Rate then in effect. All payments in respect of Unrefunded Swing
Line Loans and participations therein shall be made in accordance with Section
2.11.
(e) Each Lender's obligation to make Committed Loans pursuant to
paragraph (c) of this Section 2.6 and to purchase participating interests
pursuant to paragraph (d) of this Section 2.6 shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any setoff, counterclaim, recoupment, defense or other right
which such Lender or the Borrower may have against the Swing Line Bank, the
Borrower or any other Person, as the case may be, for any reason whatsoever;
(ii) the occurrence or continuance of a Default; (iii) any adverse change in the
condition (financial or otherwise) of the Borrower or any of its Subsidiaries;
(iv) any breach of this Agreement by the Borrower, any of its Subsidiaries or
any Lender other than a funding by the Swing Line Lender in breach of the last
sentence of Section 2.6(a) or a funding by the Swing Line Lender in excess of
the Swing Line Availability (but in such event only to the extent of such
overfunding); or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
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2.7. Fees. In addition to the Facility Letter of Credit Fees and
issuance fees identified in Section 3.8, the Borrower agrees to pay the
following fees:
2.7.1. Facility Fee. The Borrower agrees to pay to the Agent for
the account of each Lender, for the period from the Execution Date to and
including the Termination Date, a facility fee (the "Facility Fee") in an amount
equal to the product of (i) such Lender's Commitment (whether or not used or
available) times (ii) the percentage indicated as the Applicable Margin for the
Facility Fee times (iii) a fraction (A) the numerator of which is (y) for the
initial payment of the Facility Fee, the number of days subsequent to the
Execution Date to and including the first Payment Date and (z) for all other
payments of the Facility Fee, the number of days subsequent to the Payment Date
on which the Facility Fee was last paid to and including the next Payment Date
or Termination Date, as applicable, and (B) the denominator of which is 360,
payable in arrears on each Payment Date hereafter, on the Termination Date and
on the effective date of any termination of the obligations of the Lenders to
make Loans and participate in Facility Letters of Credit hereunder.
2.7.2. Agent Fees. The Borrower agrees to pay certain fees to the
Agent and the Arranger on the dates and in the amounts set forth in that certain
fee letter between Waban Inc., the Borrower, the Agent and the Arranger dated
June 13, 1997, as it may be amended from time to time.
2.8. Reductions in Aggregate Commitment; Principal Payments.
2.8.1. Reductions in Aggregate Commitment. The Borrower may
permanently reduce the Aggregate Commitment in whole, or in part ratably among
the Lenders in a minimum aggregate amount of $5,000,000 and multiple amounts of
$5,000,000, upon at least three Business Days' written notice to the Agent,
which notice shall specify the amount of any such reduction; provided, however,
that the amount of the Aggregate Commitment may not be reduced below the sum of
(i) the aggregate principal amount of the outstanding Advances plus (ii) the
Facility Letter of Credit Obligations.
2.8.2. Principal Payments.
(i) Optional Payments. The Borrower may from time to time pay,
without penalty or premium, all outstanding Alternate Base Rate Advances, or, in
a minimum aggregate amount of $1,000,000 or any integral multiple of $1,000,000
in excess thereof, any portion of the outstanding Alternate Base Rate Advances
upon one Business Day's prior notice to the Agent. A Eurodollar Committed
Advance may be paid in full by the Borrower upon three Business Days' prior
written notice to the Agent; provided that the Borrower compensates the Lenders
as required pursuant to Section 2.18.4. A Fixed Rate Advance, other than a
Eurodollar Committed Advance
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(as described above), may not be paid prior to the last day of the applicable
Interest Period.
(ii) Termination. Any outstanding Advances and all other unpaid
Obligations shall be paid in full by the Borrower on the Termination Date.
2.9. Changes in Interest Rate, etc. Alternate Base Rate Advances (including
Swing Line Loans) shall bear interest on the outstanding principal amount
thereof, for each day from and including the date such Advance is made or is
converted from a Eurodollar Committed Advance into an Alternate Base Rate
Advance pursuant to Section 2.3.6 to but excluding the date it becomes due or is
converted into a Eurodollar Committed Advance pursuant to Section 2.3.6 hereof,
at a rate per annum equal to the Alternate Base Rate for such day. Changes in
the rate of interest on that portion of any Advance maintained as an Alternate
Base Rate Advance will take effect simultaneously with each change in the
Alternate Base Rate. Each Fixed Rate Advance shall bear interest from and
including the first day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the interest rate determined
as applicable to such Fixed Rate Advance. No Interest Period may end after the
Termination Date.
2.10. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Sections 2.3.5 or 2.3.6, during the continuance of a
Default or Unmatured Default no Advance may be made as, converted into or
continued as a Eurodollar Committed Advance unless otherwise consented to by the
Required Lenders. During the continuance of a Default the Required Lenders may,
at their option, by notice to the Borrower, declare that (i) each Fixed Rate
Advance shall bear interest for the remainder of the applicable Interest Period
at the rate otherwise applicable to such Interest Period plus 2% per annum and
(ii) each Alternate Base Rate Advance shall bear interest at a rate per annum
equal to the Alternate Base Rate otherwise applicable to the Alternate Base Rate
Advance plus 2% per annum. While any such declaration is in effect, interest
shall be payable in accordance with Section 2.13 and on demand.
2.11. Method of Payment. All payments of the Obligations hereunder
shall be made, without setoff, deduction or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XIII, or at any other Lending Installation of the Agent specified in
writing by the Agent to the Borrower, by noon (Chicago time) on the date when
due and shall be applied ratably (other than with respect to Swing Line Loans)
by the Agent among the Lenders. Each payment delivered to the Agent for the
account of any Lender shall be delivered promptly by the Agent to such Lender in
the same type of funds that the Agent received at its address specified pursuant
to Article XIII or at any Lending Installation specified in a notice received by
the Agent from such Lender. The Agent is hereby authorized to charge the
account of the Borrower maintained with First Chicago for each payment of
principal, interest and fees as it becomes due hereunder.
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2.12. Notes; Telephonic Notices. Each Lender is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Notes; provided, however, that neither the failure to
so record nor any error in such recordation shall affect the Borrower's
obligations under such Notes. The Borrower hereby authorizes the Lenders and the
Agent to extend, convert or continue Advances, effect selections of Types of
Advances and to transfer funds, and authorizes the Issuing Bank to issue
Facility Letters of Credit, based on telephonic notices made by any person or
persons the Agent or any Lender in good faith believes to be acting on behalf of
the Borrower. The Borrower agrees to deliver promptly to the Agent a written
confirmation, if such confirmation is requested by the Agent or any Lender, of
each telephonic notice signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the Agent
and the Lenders, the records of the Agent and the Lenders shall govern absent
manifest error.
2.13. Interest Payment Dates; Interest and Fee Basis. Interest accrued on
each Alternate Base Rate Advance shall be payable on the last day of each month,
commencing with the first such date to occur after the date hereof, on any date
on which the Alternate Base Rate Advance is repaid (including, with respect to
Swing Line Loans, pursuant to Section 2.6(c) hereof), whether due to
acceleration or otherwise, and at maturity. Interest accrued on that portion of
the outstanding principal amount of any Alternate Base Rate Advance converted
into a Eurodollar Committed Advance on a day other than the last day of each
month shall be payable on the date of conversion. Interest accrued on each
Fixed Rate Advance shall be payable on the last day of its applicable Interest
Period, on any date on which the Fixed Rate Advance is prepaid, whether by
acceleration or otherwise, and at maturity. Interest accrued on each Fixed Rate
Advance having an Interest Period longer than three months shall also be payable
on the last day of each three-month interval during such Interest Period.
Interest and fees shall be calculated for actual days elapsed on the basis of a
360-day year. Interest shall be payable for the day an Advance is made but not
for the day of any payment on the amount paid if payment is received prior to
noon (Chicago time) at the place of payment. If any payment of principal of or
interest on an Advance shall become due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day and, in the case
of a principal payment, such extension of time shall be included in computing
interest in connection with such payment.
2.14. Notification by Agent. Promptly after receipt thereof, the
Agent will notify each Lender of the contents of each Aggregate Commitment
reduction notice, Committed Borrowing Notice, Competitive Bid Acceptance Notice,
Conversion/Continuation Notice, Letter of Credit Request, Issuance Notice and
repayment notice received by it hereunder. The Agent will notify each Lender
affected thereby of the interest rate applicable to each Fixed Rate Advance
promptly
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upon determination of such interest rate and will give each Lender prompt notice
of each change in the Alternate Base Rate.
2.15. Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Agent and the Borrower, designate a Lending Installation through
which Loans will be made by it and for whose account Loan payments are to be
made.
2.16. Non-Receipt of Funds by the Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or its share of the unreimbursed amount pursuant to Section
3.6(b) or its share of Unfunded Swing Line Loans or (ii) in the case of the
Borrower, a payment of principal, interest or fees to the Agent for the account
of the Lenders, that it does not intend to make such payment, the Agent may
assume that such payment has been made. The Agent may, but shall not be
obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. If the Borrower has not in fact
made such payment to the Agent, the Lenders shall, on demand by the Agent, repay
to the Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so
made available by the Agent until the date the Agent recovers such amount at a
rate per annum equal to the Federal Funds Effective Rate for such day. If any
Lender has not in fact made such payment to the Agent, such Lender or the
Borrower shall, on demand by the Agent, repay to the Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to (a)
in the case of payment by a Lender, the Federal Funds Effective Rate for such
day, or (b) in the case of payment by the Borrower, the interest rate applicable
to the relevant Loan.
2.17. Taxes.
(a) Any payments made by the Borrower under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes or any other tax based upon net income imposed
on the Agent or any Lender by the jurisdiction in which the Agent or such Lender
is incorporated or has its principal place of business. If any such non-
excluded taxes,
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levies, imposts, duties, charges, fees, deductions or withholdings ("Non-
Excluded Taxes") are required to be withheld from any amounts payable to the
Agent or any Lender hereunder, the amounts so payable to the Agent or such
Lender shall be increased to the extent necessary to yield to the Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in or
pursuant to this Agreement; provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the U.S. or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this Section 2.17. Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as practicable
thereafter the Borrower shall send to the Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Agent and the Lenders for
any incremental taxes, interest or penalties that may become payable by any
Agent or any Lender as a result of any such failure. The agreements in this
Section 2.17 shall survive the termination of this Agreement and the payment of
all other amounts payable hereunder.
(b) At least five Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any Lender, each
Lender that is not incorporated under the laws of the United States of America,
or a state thereof, agrees that it will deliver to each of the Borrower and the
Agent two duly completed copies of United States Internal Revenue Service Form
1001 or 4224, certifying in either case that such Lender is entitled to receive
payments under this Agreement and the Notes without deduction or withholding of
any United States federal income taxes. Each Lender which so delivers a Form
1001 or 4224 further undertakes to deliver to each of the Borrower and the Agent
two additional copies of such form (or a successor form) on or before the date
that such form expires (currently, three successive calendar years for Form 1001
and one calendar year for Form 4224) or becomes obsolete or after the occurrence
of any event requiring a change in the most recent forms so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such Lender
is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes, unless an
event (including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender advises the Borrower and the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.
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2.18. Change in Circumstances.
2.18.1. Yield Protection. If any law or any governmental or quasi-
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law), or any interpretation thereof, or the compliance of
any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation to any
tax, duty, charge or withholding on or from payments due from the Borrower
(excluding federal taxation of the overall net income of any Lender or
applicable Lending Installation), or changes the basis of taxation of payments
to any Lender in respect of its Loans, its interest in the Facility Letters of
Credit or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to Fixed Rate Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Installation of
making, funding, issuing, participating in or maintaining loans or letters of
credit or reduces any amount receivable by any Lender or any applicable Lending
Installation in connection with loans or letters of credit, or requires any
Lender or any applicable Lending Installation to make any payment calculated by
reference to the amount of loans held, letters of credit issued or participated
in or interest received by it, by an amount deemed material by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Loans, its interest in the Facility Letters of Credit, and its
Commitment; provided, however, that the Borrower shall not be liable for any
such increased expense incurred or reduction in an amount received which the
applicable Lender knew or reasonably should have known arose with respect to any
period of time more than 120 days prior to the date that such Lender makes
demand therefor.
2.18.2. Changes in Capital Adequacy Regulations. If a Lender
determines the amount of capital required to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such
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Lender determines is attributable to this Agreement, its Loans, its interest in
the Facility Letters of Credit, or its obligation to make Loans, participate in
or issue Facility Letters of Credit hereunder (after taking into account such
Lender's policies as to capital adequacy). "Change" means (i) any change after
the Execution Date in the Risk-Based Capital Guidelines or (ii) any adoption of
or change in any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the force
of law) after the Execution Date which affects the amount of capital required or
expected to be maintained by any Lender or any Lending Installation or any
corporation controlling any Lender. "Risk-Based Capital Guidelines" means (i)
the risk-based capital guidelines in effect in the United States on the
Execution Date, including transition rules, and (ii) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the Execution Date.
2.18.3. Availability of Types of Advances. If any Lender determines
that maintenance of any of its Eurodollar Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation or directive,
whether or not having the force of law, the Agent shall suspend the availability
of the affected Type of Advance and require any Eurodollar Advances of the
affected Type to be repaid; or if the Required Lenders determine that (i)
deposits of a type or maturity appropriate to match fund Eurodollar Advances are
not available, the Agent shall suspend the availability of the affected Type of
Advance with respect to any Eurodollar Advances made after the date of any such
determination, or (ii) an interest rate applicable to a Type of Advance does not
accurately reflect the cost of making a Eurodollar Advance of such Type, then,
if for any reason whatsoever the provisions of Section 2.18.1 are inapplicable,
the Agent shall suspend the availability of the affected Type of Advance with
respect to any Eurodollar Advances made after the date of any such
determination.
2.18.4. Funding Indemnification. If any payment of a Fixed Rate
Advance occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise, or a Fixed
Rate Advance is not made on the date specified by the Borrower for any reason
other than default by the Lenders, the Borrower will indemnify each Lender for
any loss or cost incurred by it resulting therefrom, including, without
limitation, any loss or cost in liquidating or employing deposits acquired to
fund or maintain the Fixed Rate Advance.
2.18.5. Mitigation of Additional Costs; Replacement of Lenders. If,
in respect of any Lender, circumstances arise which would or would upon the
giving of notice result in:
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(i) an increase in the liability of the Borrower to such Lender
under Sections 2.18.1 or 2.18.2;
(ii) the unavailability of a Type of Committed Advance under
Section 2.18.3; or
(iii) a Lender being incapable of receiving payments without
deduction or withholding of United States federal income tax;
then, without in any way limiting, reducing or otherwise qualifying the
Borrower's obligations under any of the Sections referred to above in this
Section 2.18.5, such Lender shall promptly upon becoming aware of such
circumstances notify the Agent thereof and such Lender shall, in consultation
with the Agent and the Borrower and to the extent that it can do so without
disadvantaging itself, take such reasonable steps as may be reasonably available
to it to mitigate the effects of such circumstances (including, without
limitation, the designation of an alternate Lending Installation or the transfer
of its Loans to another Lending Installation). If and so long as a Lender has
been unable to take, or has not taken, steps acceptable to the Borrower to
mitigate the effect of the circumstances in question, such Lender shall be
obliged, at the request of the Borrower, to assign all its rights and
obligations hereunder to another Person nominated by the Borrower with the
approval of the Agent (which shall not be unreasonably withheld) and willing to
participate in the facility in place of such Lender; provided that such Person
satisfies all of the requirements of this Agreement including, but not limited
to, providing the forms required by Sections 2.16 and 12.3.2 and, except with
the consent of the selling Lender, such Person purchases such rights and
obligations for an amount not less than the par value of the Obligations which
are owed to such Lender. Notwithstanding any such assignment, the obligations of
the Borrower under Sections 2.18.1, 2.18.2 and 9.7 shall survive any such
assignment and be enforceable by such Lender.
2.18.6. Lender Statements; Survival of Indemnity. Each Lender shall
deliver a written statement of such Lender as to the amount due, if any, under
Sections 2.18.1, 2.18.2 or 2.18.4. Such written statement shall set forth in
reasonable detail the calculations upon which such Lender determined such amount
and shall be final, conclusive and binding on the Borrower in the absence of
manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Loan shall be calculated as though each Lender
funded its Eurodollar Loan through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Loan, whether in fact that is the case or
not. Unless otherwise provided herein, the amount specified in the written
statement shall be payable on demand after receipt by the Borrower of the
written statement; provided, however, that no amount shall be payable by the
Borrower pursuant to Section 2.18.1, 2.18.2 or 2.18.4 with respect to
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any period commencing more than 120 days before the applicable Lender knew or
reasonably should have known that amounts are owed to it pursuant to such
Sections. The obligations of the Borrower under Sections 2.18.1, 2.18.2 and
2.18.4 shall survive payment of the Obligations and termination of this
Agreement.
ARTICLE III
THE LETTER OF CREDIT SUBFACILITY
3.1. Obligation to Issue. On the terms and subject to the conditions
of this Agreement and relying upon the representations and warranties of the
Borrower herein set forth, each Issuing Bank hereby agrees to issue for the
account of the Borrower through such of the Issuing Bank's branches as it and
the Borrower may jointly agree, one or more Facility Letters of Credit in
accordance with this Article III, from time to time during the period,
commencing on the Effective Date and ending on the date five (5) Business Days
prior to the Termination Date.
3.2. Types and Amounts. The issuance of a Facility Letter of Credit
shall be subject to the following conditions:
(a) the aggregate maximum amount then available for drawing under
Letters of Credit issued by such Issuing Bank, after giving effect to the
Facility Letter of Credit requested hereunder, shall not exceed any limit
imposed by law or regulation upon such Issuing Bank;
(b) after giving effect thereto, the sum of (a) the aggregate unpaid
principal balance of the Advances plus (b) the Facility Letter of Credit
Obligations does not exceed the Aggregate Commitment as then in effect;
(c) it does not have an expiration date later than five (5) Business
Days prior to the Termination Date;
(d) it does not have an expiration date more than twelve (12) months
after the date of its issuance; provided, that it may provide for the renewal
thereof for additional twelve (12) month periods so long as no renewal shall
extend beyond the date provided in Section 3.2(c); or
(e) the Facility Letter of Credit Obligations, after giving effect to
any Facility Letter of Credit requested hereunder, do not exceed $50,000,000.
3.3. Conditions. In addition to being subject to the satisfaction of
the conditions contained in Section 4.2, the obligation of an Issuing Bank to
issue any Facility Letter of Credit is subject to the satisfaction in full of
the following conditions:
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(a) the Borrower shall have delivered to such Issuing Bank at such
times and in such manner as such Issuing Bank may reasonably prescribe such
documents and materials as may be required pursuant to the terms of the proposed
Facility Letter of Credit (it being understood that if any inconsistency exists
between such documents and the Loan Documents, the terms of the Loan Documents
shall control) and the proposed Facility Letter of Credit shall be reasonably
satisfactory to the Issuing Bank as to form and content;
(b) as of the date of issuance, no order, judgment or decree of any
court, arbitrator or Governmental Authority shall purport by its terms to enjoin
or restrain such Issuing Bank from issuing the requested Facility Letter of
Credit and no law, rule or regulation applicable to that Issuing Bank and no
request or directive (whether or not having the force of law) from any
governmental authority with jurisdiction over that Issuing Bank shall prohibit
or request that such Issuing Bank refrain from the issuance of Letters of Credit
generally or the issuance of the requested Facility Letter or Credit in
particular; and
(c) the Issuing Bank and the Borrower having agreed on the fee
referred to in Section 3.8(b).
3.4. Procedure for Issuance of Facility Letters of Credit.
(a) The Borrower shall give the Issuing Bank and the Agent at least
two (2) Business Days' prior written notice of any requested issuance of a
Facility Letter of Credit under this Agreement (a "Letter of Credit Request")
(except that, in lieu of such written notice, the Borrower may give the Issuing
Bank and the Agent telephonic notice of such request if confirmed in writing by
delivery to the Issuing Bank and the Agent (i) immediately (A) of a telecopy of
the written notice required hereunder which has been signed by an Authorized
Officer or (B) of a telex containing all information required to be contained in
such written notice and (ii) promptly (but in no event later than the requested
date of issuance) of the written notice required hereunder containing the
original signature of an Authorized Officer); such notice shall be irrevocable
and shall specify:
(1) the stated amount of the Facility Letter of Credit requested
(which stated amount shall not be less than $500,000);
(2) the effective date (which day shall be a Business Day) of
issuance of such requested Facility Letter of Credit (the "Issuance Date");
(3) the date on which such requested Facility Letter of Credit
is to expire (which date shall be a Business Day and shall in no event be later
than the earlier of five (5) Business Days prior to the Termination Date and a
date which is twelve (12) months after the Issuance Date);
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(4) the name of the Issuing Bank chosen by the Borrower as the
issuer of the requested Facility Letter of Credit;
(5) the purpose for which such Facility Letter of Credit is to
be issued; and
(6) the Person for whose benefit the requested Facility Letter
of Credit is to be issued.
At the time such request is made, the Borrower shall also provide the Agent and
the Issuing Bank with a copy of the form of the Facility Letter of Credit it is
requesting be issued. Such notice, to be effective, must be received by such
Issuing Bank and the Agent not later than 2:00 p.m. (Chicago time) on the last
Business Day on which notice can be given under this Section 3.4(a).
(b) Subject to the terms and conditions of this Article III and
provided that the applicable conditions set forth in Section 4.2 hereof have
been satisfied, such Issuing Bank shall, on the Issuance Date, issue a Facility
Letter of Credit on behalf of the Borrower in accordance with the Issuing Bank's
usual and customary business practices unless the Issuing Bank has actually
received (i) written notice from the Borrower specifically revoking the Letter
of Credit Request with respect to such Facility Letter of Credit, (ii) written
notice from a Lender, which complies with the provisions of Section 3.6(a) or
(iii) written or telephonic notice from the Agent stating that the issuance of
such Facility Letter of Credit would violate Section 3.2.
(c) Each Issuing Bank shall give the Agent and the Borrower written or
telex notice, or telephonic notice confirmed promptly thereafter in writing, of
the issuance of a Facility Letter of Credit (the "Issuance Notice").
(d) An Issuing Bank shall not extend or amend any Facility Letter of
Credit or allow any Facility Letter of Credit to be automatically extended
unless the requirements of this Agreement are met as though a new Facility
Letter of Credit was being requested and issued.
3.5. Reimbursement Obligations; Duties of Issuing Banks.
(a) (i) Each Issuing Bank shall promptly notify the Borrower and the
Agent of any draw under a Facility Letter of Credit and the Borrower shall
reimburse such Issuing Bank in accordance with Section 3.7; and
(ii) any Reimbursement Obligation with respect to any Facility Letter
of Credit shall bear interest from the date of the relevant drawings under the
pertinent Facility Letter of Credit until payment in full is received by the
pertinent
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Issuing Bank at (A) the Alternate Base Rate until the next succeeding
Business Day and (B) the Default interest rate for Alternate Base Rate Advances
calculated in accordance with Section 2.10 for each day thereafter.
(b) Any action taken or omitted to be taken by an Issuing Bank under
or in connection with any Facility Letter of Credit, if taken or omitted in the
absence of willful misconduct or gross negligence, shall not put that Issuing
Bank under any resulting liability to any Lender or, assuming that such Issuing
Bank has complied with the procedures specified in Section 3.4, all conditions
to the issuance of a Facility Letter of Credit have been satisfied and such
Lender has not given a notice contemplated by Section 3.6(a) that continues in
full force and effect, relieve that Lender of its obligations hereunder to that
Issuing Bank. In determining whether to pay under any Facility Letter of
Credit, an Issuing Bank shall have no obligation relative to the Lenders other
than to confirm that any documents required to be delivered under such Facility
Letter of Credit appear to have been delivered in compliance and that they
appear to comply on their face, with the requirements of such Facility Letter of
Credit.
3.6. Participation.
(a) Immediately upon (i) the Effective Date for those Facility Letters
of Credit issued prior to such date and (ii) issuance by an Issuing Bank of any
Facility Letter of Credit in accordance with the procedures set forth in Section
3.4, each Lender shall be deemed to have irrevocably and unconditionally
purchased and received from that Issuing Bank, without recourse, representation
or warranty, an undivided interest and participation equal to its Percentage in
such Facility Letter of Credit (including, without limitation, all obligations
of the Borrower with respect thereto) and any security therefor or guaranty
pertaining thereto; provided, that a Letter of Credit issued by any Issuing Bank
shall not be deemed to be a Facility Letter of Credit for purposes of this
Section 3.6 if (A) such Letter of Credit has an expiration date which is later
than five (5) Business Days prior to the Termination Date or (B) such Issuing
Bank shall have received written notice from any Lender on or before the
Business Day prior to the date of its issuance of such Letter of Credit that one
or more of the conditions to the issuance of a Facility Letter of Credit is not
then satisfied, and, in the event an Issuing Bank receives such a notice, it
shall have no further obligation to issue any Facility Letter of Credit until
such notice is withdrawn by that Lender or it receives a notice from the Agent
that such condition has been effectively waived in accordance with the
provisions of this Agreement.
(b) In the event that any Issuing Bank makes any payment under any
Facility Letter of Credit and the Borrower shall not have repaid such amount to
such Issuing Bank pursuant to Section 3.7 hereof, such Issuing Bank shall
promptly notify the Agent, which shall promptly notify each Lender, of such
failure, and each Lender shall promptly and unconditionally pay to the Agent for
the account of such
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Issuing Bank the amount of such Lender's Percentage of the unreimbursed amount
of such payment, and the Agent shall promptly pay such amount to the Issuing
Bank. The failure of any Lender to make available to the Agent for the account
of any Issuing Bank its Percentage of the unreimbursed amount of any such
payment shall not relieve any other Lender of its obligation hereunder to make
available to the Agent for the account of such Issuing Bank its Percentage of
the unreimbursed amount of any payment on the date such payment is to be made,
but no Lender shall be responsible for the failure of any other Lender to make
available to the Agent its Percentage of the unreimbursed amount of any payment
on the date such payment is to be made.
(c) Whenever an Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, it shall promptly pay
to the Agent and the Agent shall promptly pay to each Lender which has funded
its participating interest therein, in immediately available funds, an amount
equal to such Lender's Percentage thereof.
(d) Upon the request of the Agent or any Lender, an Issuing Bank shall
furnish to such Agent or Lender copies of any Facility Letter of Credit to which
that Issuing Bank is party and such other documentation as may reasonably be
requested by the Agent or Lender.
(e) The obligations of a Lender to make payments to the Agent for the
account of each Issuing Bank with respect to a Facility Letter of Credit shall
be absolute, unconditional and irrevocable, not subject to any counterclaim,
set-off, qualification or exception whatsoever and shall be made in accordance
with the terms and conditions of this Agreement under all circumstances.
3.7. Payment of Reimbursement Obligations.
(a) The Borrower agrees to pay to each Issuing Bank the amount of all
Reimbursement Obligations, interest and other amounts payable to such Issuing
Bank under or in connection with any Facility Letter of Credit immediately when
due (and in any event shall reimburse an Issuing Bank for drawings under a
Facility Letter of Credit issued by it no later than the next succeeding
Business Day after the payment by that Issuing Bank), irrespective of any claim,
set-off, defense or other right which the Borrower or any Subsidiary may have at
any time against any Issuing Bank or any other Person, under all circumstances,
including without limitation any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
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(ii) the existence of any claim, setoff, defense or other right which
the Borrower may have at any time against a beneficiary named in a Facility
Letter of Credit or any transferee of any Facility Letter of Credit (or any
Person for whom any such transferee may be acting), the Agent, the Issuing Bank,
any Lender, or any other Person, whether in connection with this Agreement, any
Facility Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between the Borrower or any
Subsidiary and the beneficiary named in any Facility Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Facility Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Loan Documents; or
(v) the occurrence of any Default or Unmatured Default.
(b) In the event any payment by the Borrower or any Subsidiary
received by an Issuing Bank with respect to a Facility Letter of Credit and
distributed by the Agent to the Lenders on account of their participations is
thereafter set aside, avoided or recovered from that Issuing Bank in connection
with any receivership, liquidation, reorganization or bankruptcy proceeding,
each Lender which received such distribution shall, upon demand by that Issuing
Bank, contribute such Lender's Percentage of the amount set aside, avoided or
recovered together with interest at the rate required to be paid by that Issuing
Bank upon the amount required to be repaid by it.
3.8. Compensation for Facility Letters of Credit.
(a) The Borrower shall pay to the Agent, for the ratable account of
the Lenders, based upon the Lenders' respective Percentages, a fee (the
"Facility Letter of Credit Fee") (i) with respect to each Standby Letter of
Credit, in an amount equal to the product of the average daily undrawn amount of
such Standby Letter of Credit times the percentage indicated as the Applicable
Margin for the Facility Letter of Credit Fee times the LC Factor, for the period
from the Issuance Date thereof to but including the final expiration date
thereof and (ii) with respect to each Commercial Letter of Credit, 50% of an
amount equal to the product of the average daily undrawn amount of such
Commercial Letter of Credit times the percentage indicated on the Applicable
Margin for the Facility Letter of Credit Fee times the LC Factor, for the period
from the Issuance Date thereof to but including the final expiration date
thereof. The Facility Letter of Credit Fee shall be due and payable in arrears
on each Payment Date and, to the extent any such fees are then due and unpaid,
on the Termination Date. The Agent shall promptly remit such Facility
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Letter of Credit Fees, when paid, to the other Lenders in accordance with their
Percentages thereof.
(b) Each Issuing Bank shall have the right to receive solely for its
own account such amounts as it and the Borrower may agree, in writing, to pay to
such Issuing Bank with respect to issuance fees for any Facility Letter of
Credit. In addition, each Issuing Bank shall be entitled to receive its usual
and customary costs and fees of issuing, fronting and servicing Facility Letters
of Credit.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Advance. The Lenders shall not be required to make the
initial Advance and, if the initial Advance shall not have been made, an Issuing
Bank shall not be obligated to issue any Facility Letter of Credit hereunder
unless the Borrower has furnished to the Agent with sufficient copies for the
Lenders the following items (and the date upon which all such items shall have
been so furnished is referred to as the "Effective Date"):
(i) Copies of the certificate of incorporation of the Borrower,
together with all amendments, and certificates of good standing for the Borrower
and each of Natick Realty, Inc., the Trademark Subsidiary and the Investment
Subsidiary, all certified by the appropriate governmental officer in its
jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary of the
Borrower, of its by-laws and of its Board of Directors' resolutions (and
resolutions of other bodies, if any are deemed necessary by counsel for any
Lender) authorizing the execution of the Loan Documents.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify by name and title and
bear the signature of the officers of the Borrower authorized to sign the Loan
Documents and, to make borrowings and request Facility Letters of Credit
hereunder, upon which certificate the Agent and the Lenders shall be entitled to
rely until informed of any change in writing by the Borrower.
(iv) A completed compliance certificate, in substantially the form of
Exhibit "G" attached hereto, signed by the chief financial officer of the
Borrower and dated as of the Effective Date.
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(v) A written opinion or opinions of the Borrower's counsel, addressed
to the Lenders covering in substance those items contained in Exhibit "E"
hereto.
(vi) Notes payable to the order of each of the Lenders.
(vii) Fully executed originals of this Agreement.
(viii) Written money transfer instructions, in substantially the
form of Exhibit "F" hereto, addressed to the Agent and signed by an Authorized
Officer, together with such other related money transfer authorizations as the
Agent may have reasonably requested.
(ix) Evidence that concurrently with the initial Advance hereunder,
the Prior Agreement is terminated and all amounts due and payable thereunder
paid.
(x) Payment of all fees described in Section 2.7, which are required
to be paid on or prior to the Effective Date.
(xi) Evidence satisfactory to the Agent that the Distribution and the
other Transactions have occurred in accordance with Schedule 5 hereto.
(xii) A written solvency certificate from American Appraisal
Associates Inc. in form and content satisfactory to the Agent, dated July 10,
1997, with respect to the value, Solvency and other factual information of, or
relating to, as the case may be, the Borrower on a consolidated basis, after
giving effect to the Distribution and the other Transactions.
(xiii) The Agent and the Lenders shall have received (i) the Pro
Forma, which must not be materially less favorable, in the Agent's and Required
Lenders' reasonable judgment, than the projections previously provided to them
and which must demonstrate, in their reasonable judgment, together with all
other information then available to the Agent and the Required Lenders, that the
Borrower and its Subsidiaries can repay their debts and satisfy their respective
other obligations as and when due, and can comply with the financial covenants
set forth herein and (ii) such information as the Agent and the Required Lenders
may reasonably request to confirm the tax, legal and business assumptions made
in such pro forma financial statements.
(xiv) A certificate, dated the Effective Date, signed by an Authorized
Officer of the Borrower, in form and substance satisfactory to the Agent, to the
effect that: (i) on such date (both before and after giving effect to the
consummation of the Transactions contemplated hereby and the making of the Loans
hereunder) no Default or Unmatured Default has occurred and is continuing; (ii)
no injunction or
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temporary restraining order which would prohibit the making of the Loans, or
other litigation which could reasonably be expected to have a Material
Adverse Effect is pending or, to the best of such Person's knowledge,
threatened; (iii) the Transaction Documents are in full force and effect and
no material term or condition thereof has been amended, modified or waived
after the execution thereof except with the written consent of the Agent;
and (v) the Transactions have been consummated in accordance with the
Transaction Documents and Schedule 5.
(xv) Such other documents as any Lender or its counsel may have
reasonably requested.
4.2. Each Advance or Issuance of a Facility Letter of Credit. The
Lenders shall not be required to make any Advance (other than an Advance that,
after giving effect thereto and to the application of the proceeds thereof, does
not increase the aggregate amount of outstanding Advances) and an Issuing Bank
shall not be obligated to issue any Facility Letter of Credit, unless on the
applicable Borrowing Date or Issuance Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V are
true and correct as of such Borrowing Date or Issuance Date except to the extent
any such representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty shall be true and correct on
and as of such earlier date (other than the representation and warranty made
under Section 5.4, which shall be deemed to refer to the most recent annual
audited financial statements furnished to the Lenders pursuant to Section 6.1(i)
hereof).
(iii) All legal matters incident to the making of such Advance or
issuance of such Facility Letter of Credit shall be satisfactory to the Lenders
and their counsel.
Each Borrowing Notice with respect to each such Advance and each Letter of
Credit Request with respect to each Facility Letter of Credit shall constitute a
representation and warranty by the Borrower that the conditions contained in
Sections 4.2(i) and (ii) have been satisfied. Any Lender or Issuing Bank may
require a duly completed compliance certificate in substantially the form of
Exhibit "G" hereto as a condition to making an Advance or issuing a Facility
Letter of Credit.
This Agreement shall terminate on July 30, 1997 if the conditions set forth
in Sections 4.1 and 4.2 are not met on or prior to such date.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Corporate Existence and Standing. The Borrower and each of its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted, except where the failure to have such requisite authority
would not have a Material Adverse Effect.
5.2. Authorization and Validity. The Borrower has the corporate
power and authority and legal right to execute and deliver the Loan Documents
and to perform its obligations thereunder. The execution, delivery and
performance by the Borrower of the Loan Documents has been, and the Transaction
Documents will be by the Effective Date, duly authorized by proper corporate
proceedings, and the Loan Documents constitute, and the Transaction Documents
will, on the Effective Date, constitute, legal, valid and binding obligations of
the Borrower enforceable against the Borrower in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
5.3. No Conflict; Government Consent. Neither the execution and
delivery by the Borrower of the Loan Documents and the Transaction Documents,
nor the consummation of the transactions therein contemplated, nor compliance
with the provisions thereof violated or will violate any law, rule, regulation
(including Regulations G, T, U and X), order, writ, judgment, injunction, decree
or award binding on the Borrower or any of its Subsidiaries or the Borrower's or
any Subsidiary's articles of incorporation or by-laws or the provisions of any
indenture, instrument or agreement to which the Borrower or any of its
Subsidiaries is a party or is subject, or by which it, or its Property, is
bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien in, of or on the Property of the Borrower or
a Subsidiary pursuant to the terms of any such indenture, instrument or
agreement. No order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
any of the Loan Documents or the Transaction Documents which have not previously
or contemporaneously herewith been obtained or obtained by the Effective Date.
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5.4. Financial Statements. (a) The January 25, 1997 consolidated
financial statements of Waban Inc. and its Subsidiaries, (b) the unaudited
consolidated financial statements of Waban Inc. and its Subsidiaries through
April 26, 1997 and the pro forma consolidated financial statements of the
Borrower and its Subsidiaries dated January 25, 1997 (collectively, the
"Financial Statements") heretofore delivered to the Lenders were prepared in
accordance with generally accepted accounting principles in effect on the date
such statements were prepared and fairly present the consolidated financial
condition and operations of Waban Inc. and its Subsidiaries and the Borrower and
its Subsidiaries, as applicable, at such date and the consolidated results of
their operations for the period then ended. The estimated pro forma balance
sheet of the Borrower and its Subsidiaries on a consolidated basis as of July
26, 1997 is attached hereto as Schedule 6. Schedule 6 will be updated by August
31, 1997 by the actual pro forma balance sheet (the "Pro Forma") of the Borrower
and its Subsidiaries on a consolidated basis as of July 26, 1997. As of the
Execution Date, the estimated pro forma is, and the Pro Forma upon delivery will
be, complete and accurate and fairly represent the Borrower's and the
Subsidiaries' assets, liabilities, financial condition on a consolidated basis
in accordance with Agreement Accounting Principles, consistently applied, and
taking into account the Distribution and the other Transactions and actions
contemplated by the Loan Documents and Transaction Documents. The Pro Forma
will not differ from the estimated pro forma in such a manner as to constitute a
Material Adverse Effect.
5.5. Material Adverse Change. Other than the Distribution and the
other Transactions, since January 25, 1997, there has been no change in the
business, Property, prospects, condition (financial or otherwise) or results of
operations of the Borrower and its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect. No Default or Unmatured Default
exists.
5.6. Taxes. The Borrower and its Subsidiaries have filed all United
States federal tax returns and all other tax returns which are required to be
filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided. The United States income tax returns of the
Borrower and its Subsidiaries have been audited by the Internal Revenue Service
through the fiscal year ended January 1992, for which no tax liens have been
filed and no claims are being asserted. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of any taxes or other
governmental charges are adequate.
5.7. Litigation and Contingent Obligations. Except as disclosed to
the Lenders in writing prior to the Execution Date, there is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of their officers, threatened against or affecting the
Borrower or any of its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect.
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The Borrower has no material contingent obligations not provided for or
disclosed in the Financial Statements.
5.8. Subsidiaries. As of the Effective Date, Schedule "2" hereto
contains an accurate list of all of the Subsidiaries of the Borrower after
giving effect to the Distribution, setting forth their respective jurisdictions
of incorporation and the percentage of their respective capital stock owned by
the Borrower or other Subsidiaries. All of the issued and outstanding shares of
capital stock of such Subsidiaries have been duly authorized and issued and are
fully paid and non-assessable.
5.9. ERISA. There are no Unfunded Liabilities for any Single
Employer Plans in excess of $250,000. Neither the Borrower nor any other member
of the Controlled Group has incurred, or is reasonably expected to incur, any
withdrawal liability to Multiemployer Plans. Each Plan complies in all material
respects with all applicable requirements of law and regulations, no Reportable
Event has occurred with respect to any Plan, neither the Borrower nor any other
members of the Controlled Group has withdrawn from any Plan or initiated steps
to do so, and no steps have been taken to reorganize or terminate any Plan for
which the Borrower or other member of the Controlled Group has any Unfunded
Liability.
5.10. Accuracy of Information. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein not
misleading.
5.11. Federal Reserve Regulations. Neither the Borrower nor any
Subsidiary is engaged, directly or indirectly, principally, or as one of its
important activities, in the business of extending, or arranging for the
extension of, credit for the purpose of purchasing or carrying Margin Stock. No
part of the proceeds of any Loan will be used in a manner which would violate,
or result in a violation of, Regulation T, Regulation U or Regulation X.
Neither the making of any Advance hereunder nor the use of the proceeds thereof
will violate or be inconsistent with the provisions of Regulation G, Regulation
T, Regulation U or Regulation X. Margin stock (as defined in Regulation U)
constitutes less than 25% of those assets of the Borrower and its Subsidiaries
which are subject to any limitation on sale, pledge, or other restriction
hereunder.
5.12. Material Agreements. Other than as contemplated by the
Transaction Documents, neither the Borrower nor any Subsidiary is a party to any
agreement or instrument or subject to any charter or other corporate restriction
which could reasonably be expected to have a Material Adverse Effect. Neither
the Borrower nor any Subsidiary is in default in the performance, observance or
fulfillment of any of
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the obligations, covenants or conditions contained in (i) any agreement to which
it is a party, which default could reasonably be expected to have a Material
Adverse Effect or (ii) any agreement or instrument evidencing or governing
Indebtedness.
5.13. Compliance With Laws. The Borrower and its Subsidiaries have
complied in all material respects with all applicable material statutes, rules,
regulations, orders and restrictions of any Governmental Authority having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property. Neither the Borrower nor any Subsidiary has received
any notice to the effect that its operations are not in material compliance with
any of the requirements of applicable federal, state and local environmental,
health and safety statutes and regulations or the subject of any federal or
state investigation evaluating whether any remedial action is needed to respond
to a release of any toxic or hazardous waste or substance into the environment,
which non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect.
5.14. Ownership of Properties. On the Effective Date and thereafter,
the Borrower and its Subsidiaries will have good title to or a valid leasehold
interest in, free of all Liens other than those permitted by Section 6.16, all
of the Property and assets reflected in the financial statements as owned by it.
5.15. Investment Company Act. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
5.16. Public Utility Holding Company Act. Neither the Borrower nor
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
5.17. Insurance. The property and casualty insurance program carried
by the Borrower is adequate for its business needs.
5.18. Solvency. As of the Effective Date, after giving effect to the
consummation of the transactions contemplated by the Loan Documents and the
Transaction Documents and the payment of all fees, costs and expenses payable by
the Borrower with respect to the transactions contemplated by the Loan Documents
and the Transaction Documents, each of the Borrower or its Subsidiaries and each
Subsidiary is Solvent.
5.19. Transaction Documents. The Borrower has delivered to each of
the Lenders true, complete and correct copies of the Transaction Documents as in
existence on the Execution Date (including all schedules, exhibits, annexes,
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amendments, supplements, modifications, and all other documents delivered
pursuant thereto or in connection therewith). Such Transaction Documents shall
not be amended, waived, supplemented or modified in a manner which would result
in a Material Adverse Effect. Neither the Borrower nor any other party thereto
is in default in the performance of or compliance with any provisions thereof
the results of which would have a Material Advance Effect.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Lenders:
(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by Coopers & Lybrand L.L.P. or other
independent certified public accountants, acceptable to the Lenders, prepared in
accordance with Agreement Accounting Principles on a consolidated basis for
itself and the Subsidiaries, including balance sheets as of the end of such
period, related profit and loss and reconciliation of surplus statements, and a
statement of cash flows, accompanied by any management letter prepared by said
accountants.
(ii) Within 50 days after the close of (i) the first three quarterly
periods of each of its fiscal years, for itself and the Subsidiaries, a
consolidated unaudited balance sheet as at the close of each such period and
consolidated profit and loss and reconciliation of surplus statements and a
statement of cash flows for the period from the beginning of such fiscal year to
the end of such quarter, all certified by its chief financial officer and (ii)
the fourth fiscal quarter of each of its fiscal years, for itself and its
Subsidiaries, a consolidated unaudited balance sheet as of the close of such
period and a consolidated profit and loss statement for such fiscal year all
certified by its chief financial officer.
(iii) Together with the financial statements required under each of
clause (i) and (ii) hereof, a compliance certificate in substantially the form
of Exhibit "G" hereto signed by its chief financial officer showing the
calculations necessary to determine compliance with this Agreement and stating
that no Default or Unmatured Default exists, or if any Default or Unmatured
Default exists, stating the nature and status thereof.
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(iv) Within 270 days after the close of each fiscal year, a statement
of the Unfunded Liabilities of each Single Employer Plan, if any, certified as
correct by an actuary enrolled under ERISA.
(v) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect to any Plan,
a statement, signed by the chief financial officer of the Borrower, describing
said Reportable Event and the action which the Borrower proposes to take with
respect thereto.
(vi) As soon as possible and in any event within 10 days after receipt
by the Borrower, a copy of (a) any notice or claim to the effect that the
Borrower or any of its Subsidiaries is or may be liable to any Person as a
result of the release by the Borrower, any of its Subsidiaries, or any other
Person of any toxic or hazardous waste or substance into the environment, (b)
any notice alleging any violation of any federal, state or local environmental,
health or safety law or regulation by the Borrower or any of its Subsidiaries
and (c) any notice of any event or occurrence or the assertion or commencement
of any claims, actions, or other proceeding or against or affecting the Borrower
or any Subsidiary which, in the case of clause (a), (b) or (c) could reasonably
be expected to have a Material Adverse Effect.
(vii) As soon as available, but in any event on or before the last day
of the first fiscal quarter of each fiscal year of the Borrower, a copy of the
plan and forecast (including a one year projected consolidated balance sheet,
income statement and funds flow statement) of the Borrower and its Subsidiaries
for such fiscal year.
(viii) For any fiscal quarter during which the Borrower has created
a new Subsidiary or terminated the existence of any existing Subsidiary as may
be permitted hereunder, together with the financial statements required
hereunder covering such period, a certificate signed by an Authorized Officer
attaching a revised Schedule "2" which modifies the list of Subsidiaries
contained therein to show any such additions and deletions (which revised
Schedule shall replace the old Schedule and shall be deemed to have become part
of the Agreement), the delivery of which shall be deemed to be a representation
and warranty of the Borrower as to the accuracy of such revised Schedule.
(ix) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy statements so
furnished.
(x) Promptly upon the filing thereof, copies (excluding exhibits) of
all registration statements and annual, quarterly, monthly or other regular
reports which the Borrower or any of its Subsidiaries files with the Securities
and Exchange Commission.
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(xi) Together with each delivery of financial statements required by
subsection 6.1(i) above, the Borrower shall deliver to the Lenders a certificate
of the accountants who performed the audit in connection with such statements
(i) stating that in making the audit necessary to the issuance of a report on
such financial statements, they have obtained no knowledge of any Default or
Unmatured Default, or, if such accountants have obtained knowledge of a Default
or Unmatured Default, specifying the nature and period of existence thereof and
(ii) setting forth the calculation of the covenants set forth in Section 6.20
hereof. Such accountants shall not be liable by reason of any failure to obtain
knowledge of any Default or Unmatured Default which would not be disclosed in
the ordinary course of an audit.
(xii) Within fifty days after the end of each fiscal quarter of the
Borrower in which Facility Letters of Credit have been issued, expired or
terminated, a certificate of an Authorized Officer of the Borrower certifying
the number of Facility Letters of Credit outstanding and the amount of the
undrawn face amount of each such Facility Letter of Credit.
(xiii) Such other information (including non-financial information)
as the Agent or any Lender may from time to time reasonably request.
6.2. Use of Proceeds. The Borrower will use the Facility Letters of
Credit and the proceeds of the Advances for general corporate purposes and to
repay outstanding Advances and Reimbursement Obligations. The Borrower will
not, nor will it permit any Subsidiary to, use any of the Facility Letters of
Credit or the proceeds of the Advances to purchase or carry any "margin stock"
(as defined in Regulation U).
6.3. Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of the occurrence of
any Default or Unmatured Default and of any other development, financial or
otherwise, which could reasonably be expected to have a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause each
Active Subsidiary to, carry on and conduct its business in substantially the
same manner and in substantially the same fields of enterprise as it is
presently conducted and to do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted, except
where the failure to conduct business, remain incorporated or have such
requisite authority would not have a Material Adverse Effect.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to,
pay when due all taxes, assessments and governmental charges and levies upon it
or its income, profits or Property, except those which are being contested in
good faith by
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appropriate proceedings and with respect to which adequate reserves have been
set aside.
6.6. Insurance. The Borrower will, and will cause each Subsidiary
to, maintain with financially sound and reputable insurance companies (and/or
through a self insurance program) insurance on all their Property in such
amounts (and/or with such reserves) and covering such risks as is consistent
with sound business practice, and the Borrower will furnish to any Lender upon
request full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply in all material respects with all material laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject.
6.8. Maintenance of Properties. The Borrower will, and will cause
each Subsidiary to, do all things necessary to maintain, preserve, protect and
keep its Property which is used or useful in the business of the Borrower or any
of its Subsidiaries in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times.
6.9. Inspection. The Borrower will, and will cause each
Subsidiary to, permit the Lenders, by their respective representatives and
agents, to inspect any of the Property, corporate books and financial records of
the Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each Subsidiary
with, and to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Lenders may designate.
6.10. Dividends. The Borrower will not, nor will it permit any
Subsidiary to, declare or pay any dividends on its capital stock (other than
dividends payable in its own capital stock) or redeem, repurchase or otherwise
acquire or retire any of its capital stock at any time outstanding, except that
(i) any Subsidiary may declare and pay dividends to the Borrower or to a Wholly-
Owned Subsidiary and (ii) the Borrower may (a) purchase or otherwise acquire
shares of its capital stock with the proceeds received from the issue of new
shares of its capital stock, (b) repurchase for cash shares of common stock
issued under the Borrower's 1997 Replacement Stock Incentive Plan, 1997 Stock
Incentive Plan or the 1997 Director Stock Option Plan, as from time to time in
effect, provided that the aggregate amount of repurchases permitted by this
clause shall not exceed $2,000,000 in the aggregate during the term of this
Agreement, and (c) so long as prior to and after giving effect thereto no
Default or Unmatured Default shall exist, repurchase shares of its common stock
in a so-called open market purchase program or similar transaction; provided
that the
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aggregate amount of repurchases permitted by this clause shall not exceed
$50,000,000 in the aggregate during the term of this Agreement.
6.11. Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(i) The Loans and the Reimbursement Obligations.
(ii) Indebtedness existing on the Effective Date and described in
Schedule "3" hereto.
(iii) Contingent Obligations (a) by endorsement of instruments for
deposit or collection in the ordinary course of business, (b) to purchase real
property from another Person or guaranties incurred in the ordinary course of
business in connection with the purchase or lease of stores or distribution
centers, provided that (A) not less than eighty percent (80%) of the total
square footage of each such store or distribution center so purchased or leased
shall be utilized by the Borrower and its Subsidiaries and (B) the aggregate
amount of such Contingent Obligations pursuant to this clause (b) at any time
outstanding shall not exceed $30,000,000 and (c) consisting of guaranties
incurred by the Borrower to support operating leases and/or Indebtedness
incurred by any Subsidiary permitted by Section 6.11 (vii) or (viii).
(iv) Bankers' acceptances utilized in the ordinary course of business
to purchase inventory.
(v) Indebtedness of one or more special purpose Wholly-Owned
Subsidiaries in connection with a transfer by the Borrower or a Wholly-Owned
Subsidiary of interests in accounts or notes receivable on a limited recourse
basis, provided that (a) such transfer qualifies as a sale under generally
accepted accounting principles and (b) any such Indebtedness, at any time
outstanding, does not exceed $50,000,000 in the aggregate.
(vi) Capitalized Lease Obligations due from the Borrower or any Real
Estate Subsidiary not to exceed, at any time outstanding, $50,000,000 in the
aggregate.
(vii) Indebtedness, at any time outstanding, of the Borrower or any
Real Estate Subsidiary incurred in the ordinary course of business in connection
with the financing of real property in an amount not to exceed $75,000,000 in
the aggregate.
(viii) Indebtedness, at any time outstanding, of the Trademark
Subsidiaries to the Borrower in an aggregate amount not to exceed ten percent
(10%)
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of an amount equal to (i) the book value of the Borrower's consolidated assets
less (ii) the book value of real estate owned by the Real Estate Subsidiaries.
(ix) So long as the aggregate unpaid principal balance of the Advances
is less than $25,000,000, Indebtedness of the Investment Subsidiary owed to the
Borrower.
(x) Indebtedness owed by the Borrower to any Subsidiary.
(xi) Indebtedness subordinated to the Obligations on terms and
conditions reasonably satisfactory to the Required Lenders in an aggregate
amount not to exceed $150,000,000 at any time outstanding.
(xii) Additional Indebtedness, at any time outstanding, not to exceed
$50,000,000 in the aggregate; provided that no more than $25,000,000 of such
Indebtedness may be incurred by or exist at the Borrower's Subsidiaries.
6.12. Merger. The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person, except that:
(i) a Subsidiary may merge with and into the Borrower or a Wholly-
Owned Subsidiary;
(ii) the Borrower may merge or consolidate with any Person which is in
a business related to the Borrower's business; and
(iii) any Subsidiary of the Borrower may merge or consolidate with or
into another Person in a transaction constituting (A) a disposition of assets by
the Borrower so long as such disposition is permitted by Section 6.13 hereof or
(B) an Acquisition so long as such Acquisition is permitted by Section 6.15,
provided that in each such case, (a) immediately after giving effect thereto, no
event shall occur and be continuing that constitutes a Default or Unmatured
Default and, (b) in the case of any such merger or consolidation to which the
Borrower is a party, the Borrower is the surviving corporation.
6.13. Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property, to any other
Person except:
(i) for sales of inventory in the ordinary course of business and
obsolete, worn out or no longer useful equipment in the ordinary course of
business;
(ii) that (A) any Subsidiary may sell, lease or otherwise dispose of
assets to any other Subsidiary or to the Borrower, (B) the Borrower may transfer
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liquor licenses owned by the Borrower or other permits obtained by the Borrower
and used in the operation of any of the stores to any such Subsidiary and (C)
the Borrower may transfer or sell operating assets to a Trademark Subsidiary in
the ordinary course of business consistent with the past practices of Waban
Inc.;
(iii) for any transfer of an interest in accounts or notes receivable
on a limited recourse basis, provided that such transfer qualifies as a sale
under generally accepted accounting principles;
(iv) for leases, sales or other dispositions of its Property that,
together with all other Property of the Borrower and its Subsidiaries previously
leased, sold or disposed of (other than dispositions permitted under clauses
(i), (ii) and (iii) above) as permitted by this Section during the twelve-month
period ending with the month in which any such lease, sale or other disposition
occurs, do not constitute a Substantial Portion of the Property of the Borrower
and its Subsidiaries;
provided that in each such case, immediately after giving effect thereto, no
event shall have occurred and be continuing that constitutes a Default or an
Unmatured Default.
6.14. Letters of Credit. The Borrower will not, nor will it permit
any Subsidiary to, apply for or become liable upon any Letter of Credit, except
for: (i) Facility Letters of Credit; (ii) other standby Letters of Credit,
provided that the aggregate amount of issued but undrawn standby Letters of
Credit (which are not Facility Letters of Credit) and all unreimbursed drawings
thereunder shall not at any time exceed $25,000,000; and (iii) commercial
Letters of Credit utilized in the ordinary course of business to purchase
inventory, provided that the aggregate amount of issued but undrawn commercial
Letters of Credit shall not at any time exceed ten percent (10%) of the value of
the Borrower's consolidated merchandise inventory.
6.15. Investments and Acquisitions. The Borrower will not, nor will
it permit any Subsidiary to,
(a) make or suffer to exist any Investments (including without
limitation, loans and advances to, and other Investments in, Subsidiaries), or
commitments therefor, or to create any Subsidiary or to become or remain a
partner in any partnership or joint venture, except:
(i) Investments in Subsidiaries made prior to the Effective Date
and described in Schedule "2" hereto.
(ii) Permitted Investments.
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(iii) Investments consisting of loans to participants, or the
purchase of securities of the Borrower from participants, made pursuant to the
provisions of any employee benefit plan, including without limitation the
Borrower's 1997 Replacement Stock Incentive Plan, 1997 Stock Incentive Plan or
the 1997 Director Stock Option Plan;
(iv) Investments consisting of stock or other securities acquired in
connection with the satisfaction or enforcement of Indebtedness or other claims
due or owing to the Borrower or any Subsidiary or as security for any such
Indebtedness or claim;
(v) Loans made by the Borrower in connection with the development of
new retail establishments or distribution centers for the Borrower; provided
that the aggregate outstanding amount of all such loans, as and when any such
loan is made, shall not exceed five percent (5%) of the Borrower's consolidated
assets as of the last day of the most recently ended fiscal quarter of the
Borrower.
(vi) So long as the aggregate unpaid principal balance of the Advances
is less than $25,000,000, Investments made by the Borrower in the Investment
Subsidiary for the purpose of making Permitted Investments.
(vii) Investments made by any Subsidiary in the Borrower.
(viii) Investments in Trademark Subsidiaries; provided that
when aggregated with Investments made pursuant to clause 6.15(a)(i) hereof, (A)
the aggregate amount of all such Investments shall not exceed twenty five
percent (25%) of an amount equal to (i) the book value of the Borrower's
consolidated assets less (ii) the book value of real estate owned by the Real
Estate Subsidiaries and (B) the aggregate amount of all such Investments in any
individual Trademark Subsidiary shall not exceed an amount equal to fifteen
percent (15%) of an amount equal to (i) the book value of the Borrower's
consolidated assets less (ii) the book value of real estate owned by the Real
Estate Subsidiaries.
(ix) Investments made by the Borrower or any Trademark Subsidiary in
any Real Estate Subsidiary, so long as, for any such Real Estate Subsidiary, the
sum of such Investments plus any other Indebtedness of such Real Estate
Subsidiary does not exceed 105% of the acquisition cost of the real estate owned
by such Real Estate Subsidiary.
(x) Investments made by means of a merger or consolidation
permitted by Section 6.12 hereof.
(xi) For the Borrower only: any Investment consisting of (A) the
acquisition of stock or other equity interests which constitutes an Acquisition
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permitted pursuant to the terms of Section 6.15(b); (B) the creation of any new
Subsidiary to act as the purchaser in an Acquisition permitted pursuant to the
terms of Section 6.15(b); and (C) an Investment in a Subsidiary for the purpose
of facilitating an Acquisition permitted pursuant to the terms of Section
6.15(b), provided, however, that the aggregate amount of such Investments made
since the Effective Date is less than thirty percent (30%) of Net Worth.
(xii) The creation of any new Wholly-Owned Subsidiary.
(xiii) Investments in one or more special purpose entities
made in connection with a transfer by the Borrower or a Wholly-Owned Subsidiary
of interests in accounts or notes receivable on a limited recourse basis,
provided that (a) such transfer qualifies as a sale under generally accepted
accounting principles and (b) any such Investments, at any time outstanding, do
not exceed $50,000,000 in the aggregate.
(xiv) Additional Investments, at any time outstanding, not to
exceed $10,000,000 in the aggregate.
(b) make any Acquisition of any Person, except for an Acquisition: (i)
for which the board of directors of the Person being acquired has approved the
terms of the Acquisition, (ii) the purchase price of which (including the
aggregate amount of (i) assumed liabilities for borrowed money, (ii) deferred
compensation and (iii) non-compete and earn-out payments), when added to the
purchase price of all other Acquisitions made during the same fiscal year, is
less than twenty five percent (25%) of the Borrower's consolidated assets as of
the beginning of such fiscal year, (iii) the giving effect to which will not
cause a Default or an Unmatured Default and (iv) for which the Borrower has
previously provided the Lenders with (a) financial information with respect to
the entity to be acquired (including historical financial statements, pro-forma
statements after giving effect to the Acquisition and projections) and (b) to
the extent available, a detailed description of the entity to be acquired, its
products, markets served and customer concentrations.
6.16. Liens. The Borrower will not, nor will it permit any Subsidiary
to, create, incur, or suffer to exist any Lien in, of or on the Property of the
Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or levies on
its Property if the same shall not at the time be delinquent or thereafter can
be paid without penalty, or are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with generally
accepted principles of accounting shall have been set aside on its books.
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(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Borrower or the Subsidiaries.
(v) Liens existing on the Effective Date and described in Schedule "3"
hereto.
(vi) Liens incurred in connection with purchase money financing of
Property in the ordinary course of business, provided that such Liens shall
attach solely to the Property acquired and any improvement thereon and shall not
attach to any other Property.
(vii) Liens existing on Property acquired by the Borrower or any of
its Subsidiaries at the time of its Acquisition, so long as such Lien was not
created in contemplation of such Acquisition.
(viii) Liens resulting from commitments of the Borrower and its
Subsidiaries under Capitalized Leases.
(ix) Liens incurred in connection with any transfer of an interest in
accounts or notes receivable, that at the time of such transfer, qualified as a
sale under generally accepted accounting principles.
(x) Liens under leases of personalty or real estate to which the
Borrower and any of its Subsidiaries is a party, provided that such Liens (A) do
not attach to inventory held for sale in leased stores or warehouses except only
after bankruptcy, insolvency or similar events to the extent of any landlord's
lien, (B) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit by the Borrower or any of its Subsidiaries, and
(C) do not in the aggregate materially detract from the value of the Property of
the Borrower and its Subsidiaries or materially impair the use thereof in the
operation of their respective businesses.
(xi) Liens incidental to the conduct of the business of the Borrower
or any of its Subsidiaries which do not cover accounts receivable, cover only de
minimis amounts of inventory sold to the Borrower and its Subsidiaries by
certain
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suppliers to secure the amounts owing such suppliers for the same, are
not incurred in connection with the borrowing of money or the obtaining of
advances or credits or in connection with the acquisition of real property or
machinery or equipment except incidental to the acquisition of business
properties as a whole or as a going concern, and which do not in the aggregate
materially detract from the value of the Property of the Borrower or any of its
Subsidiaries or materially impair the use thereof in the operation of their
respective businesses.
(xii) Liens granted by any Subsidiary to the Borrower or a Wholly-
Owned Subsidiary to secure loans from the Borrower or such Wholly-Owned
Subsidiary, which loans were permitted by Section 6.15(a) and Liens on real
estate granted by the Borrower to any Real Estate Subsidiary which secure
Indebtedness permitted by Section 6.11(x) in an aggregate amount at any time
outstanding not in excess of $20,000,000.
(xiii) Liens on real property which relate to Indebtedness
permitted by Section 6.11(vii).
(xiv) In addition to Liens otherwise permitted by this Section 6.16,
Liens on assets of the Borrower and its Subsidiaries securing obligations not
exceeding $10,000,000 in the aggregate at any time outstanding.
6.17. Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate (other than the Borrower or a Wholly-Owned Subsidiary
with respect to transactions other than the sale, transfer or other disposition
of assets) except (i) in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary
than the Borrower or such Subsidiary would obtain in a comparable arms-length
transaction or (ii) as set forth in the Transaction Documents.
6.18. Amendments. The Borrower will not, and will not permit any
Subsidiary to make any material waiver, termination or amendment to any of the
Transaction Documents.
6.19. Rate Hedging Obligations. The Borrower will not, and will not
permit any Subsidiary to, enter into or remain liable upon any Rate Hedging
Obligations, except for Rate Hedging Obligations in a notional amount not to
exceed $50,000,000.
6.20. Financial Covenants. On and subsequent to the Effective Date,
the Borrower shall maintain, for itself and its Subsidiaries on a consolidated
basis, each of the following financial covenants, each calculated in accordance
with (i) Pro Forma
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Accounting Principles from the Effective Date until the end of the fiscal
quarter ending April 25, 1998 and (ii) Agreement Accounting Principles
thereafter.
6.20.1. Funded Debt to Capital Ratio. The Borrower shall maintain,
on a consolidated basis, as of the end of each fiscal quarter a ratio of Funded
Debt to Capital not exceeding .60 to 1.0.
6.20.2. Fixed Charge Coverage Ratio. The Borrower shall maintain,
on a consolidated basis, as of the end of each fiscal quarter a Fixed Charge
Coverage Ratio greater than 1.75 to 1.0.
6.20.3. Tangible Net Worth. The Borrower shall maintain, on a
consolidated basis, at all times a Tangible Net Worth that is greater than or
equal to the sum of (i) $355,000,000 plus (ii) 50% of the Borrower's quarterly
Net Income, if positive, for each fiscal quarter ending after the Effective Date
plus (iii) 50% of the aggregate net proceeds of any equity offering received by
the Borrower after the Effective Date.
6.21. Subsidiary Guaranties. If the Subsidiaries (other than
the Real Estate Subsidiaries) have assets which in the aggregate have a book
value equal to or greater than twenty-five percent (25%) of an amount equal to
(i) the book value of the Borrower's total consolidated assets less (ii) the
book value of real estate owned by the Real Estate Subsidiaries, each determined
on a consolidated basis as at the end of any fiscal quarter, the Borrower shall
cause all Subsidiaries other than the Real Estate Subsidiaries to deliver to the
Agent, on behalf of the Lenders, within 30 days after the end of any such fiscal
quarter (i) an executed guaranty in substantially the form attached hereto as
Exhibit "I" or a joinder agreement in substantially the form attached to such
guaranty and (ii) an opinion of counsel to such Subsidiaries that such guaranty
has been duly executed and delivered and is a legal, valid and binding
obligation of such Subsidiaries enforceable in accordance with its terms
(subject to customary exceptions). If any Subsidiary (other than a Real Estate
Subsidiary) has assets which in the aggregate have a book value equal to or
greater than fifteen percent (15%) of an amount equal to (i) the book value of
the Borrower's total consolidated assets less (ii) the book value of real estate
owned by the Real Estate Subsidiaries, each determined on a consolidated basis
as at the end of any fiscal quarter, the Borrower shall cause such Subsidiary to
deliver to the Agent, on behalf of the Lenders, within 30 days after the end of
any such fiscal quarter (i) an executed guaranty in substantially the form
attached hereto as Exhibit "I" or a joinder agreement in substantially the form
attached to such guaranty and (ii) an opinion of counsel to such Subsidiary that
such guaranty has been duly executed and delivered and is a legal, valid and
binding obligation of such Subsidiary enforceable in accordance with its terms
(subject to customary exceptions).
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6.22. Intercompany Indebtedness. After the occurrence and during the
continuance of a Default or an Unmatured Default, the Borrower will not prepay,
defease or in substance defease, purchase, redeem, retire or otherwise acquire,
any Indebtedness owed to any Subsidiary.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
7.1. Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent
under or in connection with this Agreement, any Loan, any Facility Letter of
Credit, or any certificate or information delivered in connection with this
Agreement or any other Loan Document shall be materially false on the date when
made.
7.2. Nonpayment of principal of any Note when due, nonpayment of any
Reimbursement Obligation when due, or nonpayment of interest upon any Note or of
any fee or other obligations under any of the Loan Documents within five days
after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
Sections 6.2, 6.3, 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.18, 6.19, 6.20,
6.21 or 6.22.
7.4. The breach by the Borrower (other than a breach which
constitutes a Default under Sections 7.1, 7.2 or 7.3) of any of the terms or
provisions of this Agreement which is not remedied within 20 days after written
notice from the Agent or any Lender.
7.5. Failure of the Borrower or any of its Subsidiaries to pay any
Indebtedness with a principal amount in excess of $10,000,000 when due; or the
default by the Borrower or any of its Subsidiaries in the performance of any
material term, provision or condition contained in any agreement under which any
Indebtedness with a principal amount in excess of $10,000,000 was created or is
governed, or any other material event shall occur or material condition shall
exist (and in each case shall be continuing), the effect of which is to cause,
or to permit the holder or holders of such Indebtedness to cause, such
Indebtedness to become due prior to its stated maturity; or any Indebtedness
with a principal amount in excess of $10,000,000 of the Borrower or any of its
Subsidiaries shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the stated maturity
thereof; or the Borrower or any of its Subsidiaries shall
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not pay, or admit in writing its inability to pay, its debts generally as they
become due.
7.6. The Borrower or any of its Active Subsidiaries shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any of its Property which constitutes a Substantial Portion, (iv)
institute any proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any corporate
action to authorize or effect any of the foregoing actions set forth in this
Section 7.6 or (vi) fail to contest in good faith any appointment or proceeding
described in Section 7.7.
7.7. Without the application, approval or consent of the Borrower or
any of its Active Subsidiaries, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower or any of its Active
Subsidiaries or any of its Property which constitutes a Substantial Portion, or
a proceeding described in Section 7.6(iv) shall be instituted against the
Borrower or any of its Active Subsidiaries and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of 60 consecutive days.
7.8. Any court, government or governmental agency shall condemn,
seize or otherwise appropriate, or take custody or control of (each a
"Condemnation"), all or any portion of the Property of the Borrower and its
Subsidiaries which, when taken together with all other Property of the Borrower
and its Subsidiaries so condemned, seized, appropriated, or taken custody or
control of, during the twelve-month period ending with the month in which any
such Condemnation occurs, constitutes a Substantial Portion.
7.9. The Borrower or any of its Subsidiaries shall fail within 30
days to pay, bond or otherwise discharge any judgment or order for the payment
of money, which is not stayed on appeal or otherwise being appropriately
contested in good faith and which, when added to all other similar judgments or
orders for the payment of money, exceeds $10,000,000.
7.10. Any Change in Control shall occur.
7.11. Subsequent to the execution of the Subsidiary Guaranty, the
Subsidiary Guaranty shall fail to remain in full force or effect or any action
shall be taken to
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discontinue or to assert the invalidity or unenforceability of the Subsidiary
Guaranty, or any Subsidiary shall fail to comply with any of the terms or
provisions of the Subsidiary Guaranty or any Subsidiary denies that it has any
further liability under the Subsidiary Guaranty or gives notice to such effect.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Sections 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans and of an Issuing Bank to issue Facility Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Agent or any Lender.
If any other Default occurs, the Required Lenders may terminate or suspend the
obligations of the Lenders to make Loans and of an Issuing Bank to issue
Facility Letters of Credit hereunder, or declare the Obligations to be due and
payable, or both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which the Borrower hereby expressly waives. In addition to the foregoing
following the occurrence and during the continuance of a Default, so long as any
Facility Letter of Credit has not been fully drawn and has not been cancelled or
expired by its terms, upon demand by the Agent the Borrower shall pay to the
Agent, for the benefit of the Lenders, cash in an amount equal to the aggregate
undrawn face amount of all outstanding Facility Letters of Credit and all fees
and other amounts due or which may become due with respect thereto, to be
applied to such Obligations. If any such Facility Letter of Credit is
subsequently cancelled or expires by its terms without having been fully drawn,
the Agent and the Lenders shall promptly account to the Borrower for any amount
required to be paid to the Borrower on account thereof.
If, within 30 days after acceleration of the maturity of the Obligations or
termination of the obligations of the Lenders to make Loans and of an Issuing
Bank to issue Facility Letters of Credit hereunder as a result of any Default
(other than any Default as described in Sections 7.6 or 7.7 with respect to the
Borrower) and before any judgment or decree for the payment of the Obligations
due shall have been obtained or entered, all Lenders (in their sole discretion)
shall so direct, the Agent shall, by notice to the Borrower, rescind and annul
such acceleration and/or termination.
8.2. Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default
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hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender directly or indirectly affected thereby:
(i) Extend the maturity of any Loan or Note or forgive all or any
portion of the principal amount thereof, or reduce the rate or extend the time
of payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of Required
Lenders.
(iii) Extend the Termination Date, or reduce the amount or extend the
payment date for, the mandatory payments required under Section 2.8.2(ii), or
increase the amount of any Commitment of any Lender hereunder, or permit the
Borrower to assign its rights under this Agreement.
(iv) Amend (a) this Section 8.2 or (b) Sections 3.2, 3.4(b), 3.6(a),
7.6 or 7.7.
(v) Increase the maximum drawable amount or extend the expiration date
of any outstanding Facility Letter of Credit (other than in accordance with
Article III) or reduce the principal amount of or extend the time of payment of
any Reimbursement Obligation or fee associated with any Facility Letter of
Credit.
(vi) Release any guarantor of any Obligations or, release collateral,
if any, with a book value in excess of $5,000,000 in the aggregate during the
term hereof securing any Obligations.
(vii) Increase the amount of the Swing Line Option or extend the date
in Section 2.6(c) on which the Agent shall be deemed to have received a
Borrowing Notice to refund the Swing Line Loan.
No amendment or waiver of any provision of the Agreement relating to the Swing
Line Loan shall be effective without the consent of the Swing Line Bank. No
amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 12.3.2 without obtaining the consent of any
other party to this Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders or
the Agent to exercise any right under the Loan Documents shall impair such right
or be construed to be a waiver of any Default or an acquiescence therein, and
the making of a Loan or the issuance of a Facility Letter of Credit
notwithstanding the existence of a Default or the inability of the Borrower to
satisfy the conditions precedent to such Loan or Facility Letter of Credit shall
not constitute any waiver or acquiescence.
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Any single or partial exercise of any such right shall not preclude other or
further exercise thereof or the exercise of any other right, and no waiver,
amendment or other variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in writing signed by the Lenders
required pursuant to Section 8.2, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan Documents or by law
afforded shall be cumulative and all shall be available to the Agent and the
Lenders until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and warranties
of the Borrower contained in this Agreement shall survive delivery of the Notes
and the making of the Loans and the issuance of the Facility Letters of Credit
herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, no Lender shall be obligated to extend credit
to the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. Taxes. Any taxes (excluding federal income taxes or state
income taxes on the overall net income of any Lender) or other similar
assessments or charges made by any governmental or revenue authority in respect
of the Loan Documents shall be paid by the Borrower, together with interest and
penalties, if any.
9.4. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
9.5. Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrower, each Subsidiary, the Agent and
the Lenders and supersede all prior agreements and understandings among the
Borrower, each Subsidiary, the Agent and the Lenders relating to the subject
matter thereof.
9.6. Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any
of its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder, but no Lender shall be responsible for the failure of any
other Lender to perform its obligations hereunder. This Agreement shall not be
construed so as to
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confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.
9.7. Expenses; Indemnification. The Borrower shall reimburse the
Agent and the Arranger for any reasonable costs, internal charges and out-of-
pocket expenses (including attorneys' fees and time charges of attorneys for the
Agent or the Arranger, which attorneys may be employees of the Agent or the
Arranger) paid or incurred by the Agent or the Arranger in connection with the
preparation, negotiation, execution, delivery, review, syndication amendment,
modification, and administration of the Loan Documents. The Borrower also
agrees to reimburse the Agent, the Arranger and the Lenders for any reasonable
costs, internal charges and out-of-pocket expenses (including attorneys' fees
and time charges of attorneys for the Agent, the Arranger and the Lenders, which
attorneys may be employees of the Agent or the Arranger or the Lenders) paid or
incurred by the Agent, the Arranger or any Lender in connection with the
collection and enforcement of the Loan Documents. The Borrower further agrees
to indemnify the Agent, the Arranger and each Lender, its directors, officers
and employees (each, an "indemnified party") against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or not
the Agent, the Arranger or any Lender is a party thereto, collectively, the
"losses") which any of them may pay or incur arising out of or relating to this
Agreement, the other Loan Documents, the Transaction Documents, the transactions
contemplated hereby or thereby, the direct or indirect application or proposed
application of the proceeds of any Loan or the use or intended use of any
Facility Letter of Credit hereunder or the issuance or performance under or the
participation in any Facility Letter of Credit, except that the Borrower shall
not be liable for any portion of the losses resulting from the gross negligence
or wilful misconduct of any indemnified party as determined in a final judgment
by a court of competent jurisdiction. The obligations of the Borrower under
this Section shall survive the termination of this Agreement.
9.8. Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders.
9.9. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.10. Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that
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provision in any other jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.
9.11. Nonliability of Lenders. The relationship between the Borrower
and the Lenders and the Agent shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities to
the Borrower. Neither the Agent nor any Lender undertakes any responsibility to
the Borrower to review or inform the Borrower of any matter in connection with
any phase of the Borrower's business or operations.
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING
A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS,
BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR
ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A
COURT IN CHICAGO, ILLINOIS.
9.14. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
9.15. Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Borrower or any Subsidiary pursuant to
this Agreement in confidence, except for disclosure (i) to its Affiliates and
other
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Lenders and their respective Affiliates, (ii) to legal counsel, accountants, and
other professional advisors to that Lender or to a Transferee, (iii) to
regulatory officials, (iv) to any Person as requested pursuant to or as required
by law, regulation, or legal process, (v) to any Person in connection with any
legal proceeding to which that Lender is a party, and (vi) permitted by Section
12.4; provided that in connection with any disclosure pursuant to clauses (i),
(ii) or (vi), such Lender shall instruct such Persons to treat the information
in a confidential manner.
ARTICLE X
THE AGENT
10.1. Appointment. The First National Bank of Chicago is hereby
appointed Agent hereunder and under each other Loan Document, and each of the
Lenders irrevocably authorizes the Agent to act as the agent of such Lender.
The Agent agrees to act as such upon the express conditions contained in this
Article X. The Agent shall not have a fiduciary relationship in respect of the
Borrower or any Lender by reason of this Agreement.
10.2. Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
10.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, any Subsidiary,
the Lenders or any Lender for any action taken or omitted to be taken by it or
them hereunder or under any other Loan Document or in connection herewith or
therewith except for its or their own gross negligence or willful misconduct.
10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent
nor any of its directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into, or verify (i) any statement,
warranty or representation made in connection with any Loan Document or any
borrowing hereunder; (ii) the performance or observance of any of the covenants
or agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent; (iv) the validity,
effectiveness or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith; or (v) the value, sufficiency,
creation, perfection or priority of any interest in any collateral security. The
Agent shall have no duty to disclose to the Lenders information that is not
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required to be furnished by the Borrower to the Agent at such time, but is
voluntarily furnished by the Borrower to the Agent (either in its capacity as
Agent or in its individual capacity).
10.5. Action on Instructions of Lenders. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and under
any other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and on all holders of
Notes. The Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.
10.6. Employment of Agents and Counsel. The Agent may execute any of
its duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (i) for any amounts not reimbursed by the Borrower for which the
Agent is entitled to reimbursement by the Borrower under the Loan Documents,
(ii) for any other reasonable expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery, administration
and enforcement of the Loan Documents and (iii) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents, provided that no Lender shall
be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent. The
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obligations of the Lenders under this Section 10.8 shall survive payment of the
Obligations and termination of this Agreement.
10.9. Rights as a Lender. In the event the Agent is a Lender
(including its capacity as an Issuing Bank), the Agent shall have the same
rights and powers hereunder and under any other Loan Document as any Lender and
may exercise the same as though it were not the Agent, and the term "Lender" or
"Lenders" shall, at any time when the Agent is a Lender, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent
may accept deposits from, lend money to, and generally engage in any kind of
trust, debt, equity or other transaction, in addition to those contemplated by
this Agreement or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person. The Agent, in its individual capacity, is
not obligated to remain a Lender; provided that at any time that the Agent is
not a Lender, the Agent agrees to resign in accordance with Section 10.11 upon
the request of the Borrower or the Required Lenders.
10.10. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
10.11. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Required Lenders shall have
the right to appoint, on behalf of the Borrower and the Lenders, a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Agent's giving notice of its
intention to resign, then the resigning Agent may appoint, on behalf of the
Borrower and the Lenders, a successor Agent. If the Agent has resigned and no
successor Agent has been appointed, the Lenders may perform all the duties of
the Agent hereunder and the Borrower shall make all payments in respect of the
Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment. Any such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $100,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become
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vested with all the rights, powers, privileges and duties of the resigning
Agent. Upon the effectiveness of the resignation of the Agent, the resigning
Agent shall be discharged from its duties and obligations hereunder and under
the Loan Documents. After the effectiveness of the resignation of an Agent, the
provisions of this Article X shall continue in effect for the benefit of such
Agent in respect of any actions taken or omitted to be taken by it while it was
acting as the Agent hereunder and under the other Loan Documents.
10.12. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default hereunder unless the Agent
has received written notice from a Lender or the Borrower referring to this
Agreement describing such Default or Unmatured Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Lenders.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any rights
of the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or owing by
any Lender to or for the credit or account of the Borrower may be offset and
applied toward the payment of the Obligations owing to such Lender, whether or
not the Obligations, or any part hereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its share of any Advance or Reimbursement
Obligation (other than payments received pursuant to Sections 2.18.1, 2.18.2 or
2.18.4) in a greater proportion than that received by any other Lender (other
than with respect to Swing Line Loans), such Lender agrees, promptly upon
demand, to purchase a portion of that Advance or Reimbursement Obligation held
by the other Lenders so that after such purchase each Lender will hold its
ratable proportion of that Advance or Reimbursement Obligation. If any Lender,
whether in connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its Obligations or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral or other protection ratably in proportion to their
Commitments. In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made.
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ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower, the
Subsidiaries and the Lenders and their respective successors and assigns, except
that (i) neither the Borrower nor any Subsidiary shall have the right to assign
its rights or obligations under the Loan Documents and (ii) any assignment by
any Lender must be made in compliance with Section 12.3. Notwithstanding clause
(ii) of this Section, any Lender may at any time, without the consent of the
Borrower or the Agent, assign all or any portion of its rights under this
Agreement and its Notes to a Federal Reserve Bank; provided, however, that no
such assignment shall release the transferor Lender from its obligations
hereunder. The Agent may treat the payee of any Note as the owner thereof for
all purposes hereof unless and until such payee complies with Section 12.3 in
the case of an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with the Agent. Any assignee or
transferee of a Note agrees by acceptance thereof to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
12.2. Participations.
12.2.1. Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Note held by such Lender, any
interest in Facility Letters of Credit, any Commitment of such Lender or any
other interest of such Lender under the Loan Documents. In the event of any
such sale by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the Borrower under
this Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
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modification or waiver with respect to any Loan, Facility Letter of Credit or
Commitment in which such Participant has an interest which forgives principal,
interest or fees or reduces the interest rate or fees payable with respect to
any such Loan, Facility Letter of Credit or Commitment, postpones any date fixed
for any regularly scheduled payment of principal of, or interest or fees on, any
such Loan, Facility Letter of Credit or Commitment, releases any guarantor of
any such Loan or Facility Letter of Credit or releases any substantial portion
of collateral, if any, securing any such Loan or Facility Letter of Credit.
12.2.3. Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in Section 11.1
in respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under the Loan Documents, provided that each
Lender shall retain the right of setoff provided in Section 11.1 with respect to
the amount of participating interests sold to each Participant. The Lenders
agree to share with each Participant, and each Participant, by exercising the
right of setoff provided in Section 11.1, agrees to share with each Lender, any
amount received pursuant to the exercise of its right of setoff, such amounts to
be shared in accordance with Section 11.2 as if each Participant were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities (excluding entities registered under the
Investment Company Act of 1940) with a net worth and/or capital and surplus of
at least $500,000,000 ("Purchasers") all or any part of its rights and
obligations under the Loan Documents; provided, however, that (i) any such
assignment shall be in a minimum amount of at least $5,000,000 or, if less, the
total amount of such Lender's Commitment hereunder and (ii) if a Default has
occurred and is continuing, the restriction against assignments to entities
registered under the Investment Company Act of 1940 shall not apply. Such
assignment shall be substantially in the form of Exhibit "H" hereto or in such
other form as may be agreed to by the parties thereto. The consent of the
Borrower and the Agent shall be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate
thereof; provided, however, that if a Default has occurred and is continuing,
the consent of the Borrower shall not be required. Such consent shall not be
unreasonably withheld.
12.3.2. Effect; Effective Date. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as Annex "I" to Exhibit
"H" hereto (a "Notice of Assignment"), together with any consents required by
Section 12.3.1, and (ii) payment of a $3,500 fee to the Agent for processing
such assignment, such
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assignment shall become effective on the effective date specified in such Notice
of Assignment. The Notice of Assignment shall contain a representation by the
Purchaser to the effect that none of the consideration used to make the purchase
of the Commitment, Facility Letters of Credit and Loans under the applicable
assignment agreement are "plan assets" as defined under ERISA and that the
rights and interests of the Purchaser in and under the Loan Documents will not
be "plan assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and no further consent or action
by the Borrower, the Lenders or the Agent shall be required to release the
transferor Lender with respect to the Percentage of the Aggregate Commitment,
Facility Letters of Credit and Loans assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this Section 12.3.2,
the transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that replacement Notes are issued to such transferor Lender and
new Notes or, as appropriate, replacement Notes, are issued to such Purchaser,
in each case in principal amounts reflecting their Commitment, as adjusted
pursuant to such assignment. In addition, within a reasonable time after the
effective date of any assignment, the Agent shall, and is hereby authorized and
directed to, revise Schedule "1" reflecting the revised Percentages of each of
the Lenders and shall distribute such revised Schedule "1" to each of the
Lenders and the Borrower and such revised Schedule "1" shall replace the old
Schedule "1" and become part of this Agreement.
12.4. Dissemination of Information. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person acquiring
an interest in the Loan Documents by operation of law (each a "Transferee") and
any prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries; provided
that each Transferee and prospective Transferee agrees in writing, prior to such
disclosure, to be bound by Section 9.15 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.17(b).
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<PAGE>
ARTICLE XIII
NOTICES
13.1. Giving Notice. Except as otherwise permitted by Section 2.6(a)
with respect to borrowing notices for Swing Line Loans, Section 2.12 with
respect to Borrowing Notices, and Section 3.4(a) with respect to a Letter of
Credit Request, all notices and other communications provided to any party
hereto under this Agreement or any other Loan Document shall be in writing or by
telex or by facsimile and addressed or delivered to such party at its address
set forth below its signature hereto or at such other address as may be
designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall be deemed
given when transmitted (answerback confirmed in the case of telexes).
13.2. Change of Address. The Borrower, the Agent and any Lender may
each change the address for service of notice upon it by a notice in writing to
the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower, the Agent and the Lenders
and each party has notified the Agent by telex or telephone, that it has taken
such action.
Rest of page intentionally left blank
82
<PAGE>
In Witness Whereof, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
BJ'S WHOLESALE CLUB, INC.
By: /s/ Frank D. Forward
-----------------------
Print Name: Frank D. Forward
----------------
Title: Treasurer
---------------------
One Mercer Road
P.O. Box 9600
Natick, Massachusetts 01760
Phone: (508) 651-6500
Fax: (508) 651-6623
Attention: Frank D. Forward,
Executive Vice President and Chief
Financial Officer
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ John D. Runger
-----------------------
Print Name: John D. Runger
---------------
Title: Managing Director
--------------------
One First National Plaza
Chicago, Illinois 60670
Phone: (312) 732-7101
Fax: (312) 732-1117
Attention: John D. Runger, Vice President
83
<PAGE>
BANKBOSTON, N.A., Individually and as
Syndication Agent
By: /s/ Linda Thomas
-----------------------
Print Name: Linda Thomas
---------------
Title: Director
--------------------
100 Federal Street
Mail Stop 01-09-04
Boston, Massachusetts 02110
Phone: (617) 434-7000
Fax: (617) 434-7980
FLEET NATIONAL BANK, Individually and
as Documentation Agent
By: /s/ Gerry Sheehan
----------------------
Print Name: Gerry Sheehan
--------------
Title: Assistant Vice President
------------------------
One Federal Street
Mail Code MAOF-0320
Boston, Massachusetts
Phone: (617) 346-0609
Fax: (617) 346-0580
FIRST UNION NATIONAL BANK
By: Mark M. Harden
-----------------------
Print Name: Mark M. Harden
---------------
Title: Vice President
--------------------
One First Union Center
DC-5
Charlotte, North Carolina 28288-0745
Phone: (704) 383-7629
Fax: (704) 374-2802
84
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BJ'S
WHOLESALE CLUB, INC. CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED BALANCE
SHEETS FILED WITH THE FORM 10-Q FOR THE QUARTER ENDED JULY 26, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> JUL-26-1997
<CASH> 5,000
<SECURITIES> 0
<RECEIVABLES> 24,981
<ALLOWANCES> 0
<INVENTORY> 333,324
<CURRENT-ASSETS> 378,088
<PP&E> 517,655
<DEPRECIATION> 129,735
<TOTAL-ASSETS> 776,561
<CURRENT-LIABILITIES> 270,628
<BONDS> 74,513
0
0
<COMMON> 375
<OTHER-SE> 398,663
<TOTAL-LIABILITY-AND-EQUITY> 776,561
<SALES> 1,437,940
<TOTAL-REVENUES> 1,464,402
<CGS> 1,315,474
<TOTAL-COSTS> 1,315,474
<OTHER-EXPENSES> 105,596
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,482
<INCOME-PRETAX> 35,850
<INCOME-TAX> 13,838
<INCOME-CONTINUING> 22,012
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,012
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.59
</TABLE>
