<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1997
FORM S-1: REGISTRATION NO. 333-25511
FORM S-3: REGISTRATION NO. 333-25511-01
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORMS S-1 AND S-3
REGISTRATION STATEMENTS UNDER THE SECURITIES ACT OF 1933
---------------
BJ'S WHOLESALE CLUB, INC.
(EXACT NAME OF REGISTRANT ON FORM S-1 AS SPECIFIED IN ITS CHARTER)
DELAWARE 5399 04-3360747
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NUMBER)
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION) ---------------
WABAN INC.
(EXACT NAME OF REGISTRANT ON FORM S-3 AS SPECIFIED IN ITS CHARTER)
DELAWARE 33-0109661
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
---------------
ONE MERCER ROAD, NATICK, MASSACHUSETTS 01760
(508) 651-6500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
---------------
HERBERT J. ZARKIN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
WABAN INC.
ONE MERCER ROAD
NATICK, MASSACHUSETTS 01760 (508) 651-6500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
MARK G. BORDEN, ESQ.
HALE AND DORR LLP
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
TELEPHONE: (617) 526-6000
TELECOPY: (617) 526-5000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date hereof.
---------------
As to Form S-1
If any of the securities being registered on this Form S-1 are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [_]
If this Form S-1 is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form S-1 is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If delivery of the Form S-1 prospectus is expected to be made pursuant to
Rule 434, please check the following box. [_]
As to Form S-3
If the only securities being registered on this Form S-3 are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form S-3 are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form S-3 is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form S-3 is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If delivery of the Form S-3 prospectus is expected to be made pursuant to
Rule 434, please check the following box. [_]
---------------
EACH OF THE REGISTRANTS HEREBY AMENDS ITS RESPECTIVE REGISTRATION STATEMENT
ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
SUCH REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
ITS RESPECTIVE REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE
RESPECTIVE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-
25511) of BJ's Wholesale Club, Inc. and the Registration Statement on Form S-3
(File No. 333-25511-01) of Waban Inc. is filed solely to file the exhibits
listed in Item 16 hereto.
<PAGE>
ITEM 16 TO FORM S-1 AND FORM S-3. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
See the Exhibit Indexes included immediately preceding the exhibits to the
Form S-1 and Form S-3, respectively.
(B) FINANCIAL STATEMENT SCHEDULES
Incorporated by reference to Waban's Annual Report on Form 10-K for the
fiscal year ended January 25, 1997.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the Town of
Natick, Commonwealth of Massachusetts, on this 13th day of May, 1997.
BJ'S WHOLESALE CLUB, INC.
/s/ John J. Nugent
By: __________________________________
John J. Nugent
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities indicated below on the 13th day of May, 1997.
SIGNATURE TITLE
/s/ John J. Nugent President
- ------------------------------------ (Principal
JOHN J. NUGENT Executive Officer)
* Treasurer
- ------------------------------------ (Principal
FRANK D. FORWARD Financial and
Accounting
Officer)
* Director
- ------------------------------------
HERBERT J. ZARKIN
/s/ Edward J. Weisberger Director
- ------------------------------------
EDWARD J. WEISBERGER
* By: /s/ Edward J. Weisberger
--------------------------------
EDWARD J. WEISBERGER
ATTORNEY-IN-FACT
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the Town of
Natick, Commonwealth of Massachusetts, on the 13th day of May, 1997.
WABAN INC.
/s/ Edward J. Weisberger
By: _________________________________
Edward J. Weisberger
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities indicated below on the 13th day of May, 1997.
SIGNATURE TITLE
* Chairman of the
- ------------------------------------- Board
LORNE R. WAXLAX
* President, Chief
- ------------------------------------- Executive Officer
HERBERT J. ZARKIN and Director
(Principal
Executive Officer)
/s/ Edward J. Weisberger Senior Vice
- ------------------------------------- President and Chief
EDWARD J. WEISBERGER Financial Officer
(Principal
Financial and
Accounting Officer)
* Director
- -------------------------------------
S. JAMES COPPERSMITH
* Director
- -------------------------------------
STANLEY H. FELDBERG
* Director
- -------------------------------------
KERRY L. HAMILTON
* Director
- -------------------------------------
ALLYN L. LEVY
* Director
- -------------------------------------
ARTHUR F. LOEWY
* Director
- -------------------------------------
THOMAS J. SHIELDS
/s/ Edward J. Weisberger
*By:________________________________
EDWARD J. WEISBERGER
ATTORNEY-IN-FACT
II-3
<PAGE>
BJ'S WHOLESALE CLUB, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S> <C>
3.1* Certificate of Incorporation of BJI.
3.2 Form of Amended and Restated Certificate of Incorporation of
BJI, to be filed prior to the Distribution.
3.3* By-Laws of BJI.
3.4 Form of Amended and Restated By-Laws of BJI, to be effective
prior to the Distribution.
4.1** Specimen Certificate for Shares of Common Stock, $.01 par
value per share, of BJI.
4.2** Form of Rights Agreement to be entered into between BJI and
the Rights Agent thereunder.
5** Opinion of Hale and Dorr LLP with respect to the validity of
the securities being registered.
10.1 Form of Separation and Distribution Agreement to be entered
into between BJI and Waban.
10.2 Form of Services Agreement to be entered into between BJI
and Waban.
10.3 Form of Tax Sharing Agreement to be entered into between BJI
and Waban.
10.4 Form of Employee Benefits Agreement to be entered into
between BJI and Waban.
10.5 Management Incentive Plan of BJI.
10.6 Growth Incentive Plan of BJI.
10.7 1997 Director Stock Option Plan of BJI.
10.8 Executive Retirement Plan of BJI.
10.9 Form of Indemnification Agreement between BJI and each of
its directors and executive officers.
10.10 1997 Replacement Stock Incentive Plan of BJI.
10.11 1997 Stock Incentive Plan of BJI.
10.12 General Deferred Compensation Plan of BJI.
10.13 Indemnification Agreement, dated as of April 18, 1997,
between BJI and The TJX Companies, Inc.
21 Subsidiaries of BJI.
23.1** Consent of Hale and Dorr LLP (included in Exhibit 5).
23.2* Consent of Coopers & Lybrand L.L.P.
23.3* Consent of S. James Coppersmith.
23.4* Consent of Thomas J. Shields.
23.5* Consent of Herbert J. Zarkin.
23.6* Consent of Allyn L. Levy.
23.7* Consent of Lorne R. Waxlax.
23.8* Consent of Edward J. Weisberger.
23.9* Consent of Kerry L. Hamilton.
23.10* Consent of John J. Nugent.
24* Power of Attorney.
</TABLE>
- --------
* Previously filed.
** To be filed by amendment.
<PAGE>
WABAN INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S> <C>
4A.1 Restated Certificate of Incorporation of Waban(1)
4A.2 By-laws, as amended, of Waban(2)
4A.3 Rights Agreement dated as of May 23, 1989 between Waban and
Morgan Shareholder Services Trust Company, as Rights Agent(1)
4A.4 Indenture dated as of July 1, 1992 between Waban and
Continental Bank, National Association, as Trustee, with
respect to 6 1/2% Convertible Subordinated Debentures due
July 1, 2002(3)
5A** Opinion of Hale and Dorr LLP
23A.1 Consent of Coopers & Lybrand L.L.P.
23A.2** Consent of Hale and Dorr LLP (included in Exhibit 5)
23A.3* Consent of Allan P. Sherman
24A* Power of Attorney
99A.1** Letter of Transmittal
</TABLE>
- --------
* Previously filed.
** To be filed by amendment.
(1) Incorporated herein by reference to the Registrant's Form 10 (#1-10259)
(2) Incorporated herein by reference to the Registrant's Form 10-K for the
fiscal year ended January 27, 1990 (#1-10259)
(3) Incorporated herein by reference to the Registrant's Form S-3 (#33-48423)
<PAGE>
EXHIBIT 3.2
-----------
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BJ'S WHOLESALE CLUB, INC.
The Certificate of Incorporation of BJ's Wholesale Club, Inc. (which was
originally incorporated in Delaware on November 1, 1996), is hereby amended and
restated, pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, to read in its entirety as follows:
ARTICLE I
The name of the Corporation is BJ's Wholesale Club, Inc.
ARTICLE II
The registered office of the Corporation in the State of Delaware is
located at 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE IV
The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 200,000,000 shares, consisting of 180,000,000
shares of Common Stock, $.01 par value per share (the "Common Stock"), and
20,000,000 shares of Preferred Stock, $.01 par value per share (the "Preferred
Stock").
ARTICLE V
5.1. The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Amended and Restated Certificate of
Incorporation, to provide for the issuance of the shares of Preferred Stock in
series and, by filing a certificate pursuant to the applicable law of the State
of Delaware, to establish from time to time the number of shares to be included
in each such series, and to fix the designations, powers, preferences and rights
of the shares of each such series and the qualifications, limitations
<PAGE>
or restrictions thereof. Except as may be required by law, the shares in any
series of Preferred Stock or any shares of stock of any other class need not be
identical. Such authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
(i) The number of shares constituting that series and the
distinctive designation of that series;
(ii) Whether that series shall have dividend rights and, if so, the
dividend rate on the shares of that series, whether dividends shall be
cumulative, and, if so, from which date or dates, and the relative rights
of priority, if any, of payment of dividends on shares of that series;
(iii) Whether that series shall have voting rights in addition to the
voting rights provided by law and, if so, the terms of such voting rights;
(iv) Whether that series shall have conversion or exchange
privileges, and, if so, the terms and conditions of such conversion or
exchange, including provision for adjustment of the conversion or exchange
rate in such events as the Board of Directors shall determine;
(v) Whether or not the shares of that series shall be redeemable
and, if so, the terms and conditions of such redemption, including the
manner of selecting shares for redemption if less than all shares are to be
redeemed, the date or dates upon or after which they shall be redeemable,
and the amount per share payable in case of redemption, which amount may
vary under different conditions and at different redemption dates;
(vi) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series and, if so, the terms and
amount of such sinking fund;
(vii) The right of the shares of that series to the benefit of any
conditions or restrictions upon the actions, conditions or affairs of the
Corporation or any subsidiary, including without limitation: (a)
conditions or restrictions upon the creation of indebtedness of the
Corporation or any subsidiary, upon the issuance of any additional stock
(including additional shares of such series or any other series) and upon
the payment of dividends or the making of other distributions on, or the
purchase, redemption or other acquisition by the Corporation or any
subsidiary of, any outstanding stock of the Corporation, and (b) conditions
or restrictions in the nature of financial covenants;
-2-
<PAGE>
(viii) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of
shares of that series; and
(ix) Any other powers, or other designations, preferences or
relative, participating, optional or other special rights, qualifications,
limitations or restrictions of that series.
5.2. Any preferential dividends on outstanding shares of any series of
Preferred Stock shall be paid, or declared and set apart for payment, before any
dividends shall be paid or declared and set apart for payment on outstanding
shares of Common Stock or any other series of Preferred Stock not entitled to
preferential dividends with respect to such series. Except as otherwise
provided by the resolution or resolutions providing for the issue of any series
of Preferred Stock, if upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the assets available for
distribution to holders of shares of Preferred Stock of all series shall be
insufficient to pay such holders the full preferential amount to which they are
entitled, then such assets shall be distributed ratably among the shares of all
series of Preferred Stock in accordance with the respective preferential amounts
(including unpaid cumulative dividends, if any) payable with respect thereto.
5.3. Shares of any series of Preferred Stock which have been redeemed
(whether through the operation of a sinking fund or otherwise) or which, if
convertible or exchangeable, have been converted into or exchanged for shares of
stock of any other class or classes shall have the status of authorized and
unissued shares of Preferred Stock of the same series and may be reissued as a
part of the series of which they were originally a part or may be reclassified
and reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors or as part of any other
series of Preferred Stock, all subject to the conditions and the restrictions on
issuance set forth in the resolution or resolutions adopted by the Board of
Directors providing for the issue of any series of Preferred Stock.
5.4. Subject to the provisions of any applicable law, this Amended and
Restated Certificate of Incorporation and the resolution or resolutions
providing for the issue of any series of Preferred Stock, the holders of
outstanding shares of Common Stock shall exclusively possess voting power for
the election of directors and for all other purposes, each holder of record of
shares of Common Stock being entitled to one vote for each share of Common Stock
standing in such holder's name on the books of the Corporation.
5.5. Except as otherwise provided by the resolution or resolutions
providing for the issue of any series of Preferred Stock, after payment shall
have been made to the holders of Preferred Stock of the full amount of dividends
to which they shall be entitled pursuant to the resolution or resolutions
providing for the issue of any series of Preferred Stock, the holders of Common
Stock shall be entitled, to the exclusion of the
-3-
<PAGE>
holders of Preferred Stock of any and all series, to receive such dividends as
from time to time may be declared by the Board of Directors.
5.6. Except as otherwise provided by the resolution or resolutions
providing for the issue of any series of Preferred Stock, in the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment shall have been made to the holders of Preferred
Stock of the full amount to which they shall be entitled pursuant to the
resolution or resolutions providing for the issue of any series of Preferred
Stock, the holders of Common Stock shall be entitled, to the exclusion of
holders of Preferred Stock of any and all series, to share ratably according to
the number of shares of Common Stock held by them, in all remaining assets of
the Corporation available for distribution.
ARTICLE VI
Subject to the terms of any series of Preferred Stock or any other
securities of the Corporation with respect to the voting of shares of such
series or of such other securities, as the case may be, following the spin-off
of the Corporation by Waban Inc., a Delaware corporation ("Waban"), any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at a duly called annual or special meeting of stockholders of the
Corporation and may not be effected by any consent in writing by such
stockholders. Subject to any such terms of any series of Preferred Stock or any
such other securities of the Corporation, special meetings of stockholders of
the Corporation may be called only as provided in the By-laws of the
Corporation.
ARTICLE VII
The books of the Corporation may (subject to any statutory requirements) be
kept outside the State of Delaware as may be designated by the Board of
Directors or in the Bylaws of the Corporation.
ARTICLE VIII
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by law and this Amended and Restated
Certificate of Incorporation, and all rights conferred upon stockholders herein
are granted subject to this reservation.
ARTICLE IX
9.1. Subject to the rights of the holders of any series of Preferred Stock
or any other securities of the Corporation to elect additional directors under
specified circumstances, the directors of the Corporation shall be classified,
with respect to the time for which they severally hold office, into three
classes, as nearly equal in number
-4-
<PAGE>
as possible, as shall be provided in the By-laws of the Corporation, one class
whose term expires at the annual meeting of stockholders to be held in calendar
year 1998, another class whose term expires at the annual meeting of
stockholders to be held in calendar year 1999, and another class whose term
expires at the annual meeting of stockholders to be held in calendar year 2000,
with each class to hold office until its successors are elected and qualified.
The classes shall be initially comprised of directors serving on the Board of
Directors on the effective date of the filing of this Amended and Restated
Certificate of Incorporation, and the membership of each class shall be
initially determined by the Board of Directors at (or prior to) such time. At
each annual meeting of the stockholders of the Corporation, the date of which
shall be fixed by or pursuant to the By-laws of the Corporation, the successors
of the class of directors whose term expires at that meeting shall be elected to
hold office for a term expiring at the annual meeting of stockholders held in
the third year following the year of their election. No decrease in the number
of directors constituting the Board of Directors shall shorten the term of any
incumbent director. Any director elected to fill a newly created directorship or
any vacancy on the Board of Directors resulting from any death, resignation,
removal or other cause shall hold office for the remainder of the full term of
the class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified.
9.2. Except as otherwise provided by the terms of any series of Preferred
Stock or any other securities of the Corporation with respect to directorships
which may be established upon specified circumstances and filled by the vote of
such series or such other securities, as the case may be, any director of the
Corporation may be removed from office only for cause and only by the
affirmative vote of the holders of 67% of the then outstanding shares of Common
Stock. For purposes of this Section 9.2 "cause" shall mean the willful and
continuous failure of a director to substantially perform such director's duties
to the Corporation (other than any such failure resulting from incapacity due to
physical or mental illness) or the willful engaging by a director in gross
misconduct materially and demonstrably injurious to the Corporation.
ARTICLE X
The Corporation shall, to the maximum extent permitted from time to time
under the law of the State of Delaware, indemnify and upon request shall advance
expenses to any person who is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit, proceeding or claim,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was or has agreed to be a director or officer of the
Corporation or while a director or officer is or was serving at the request of
the Corporation as a director, officer, partner, trustee, employee or agent of
any corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, against expenses
(including attorneys' fees and expenses), judgments, fines, penalties and
amounts paid in settlement incurred in connection with the investigation,
preparation to defend or
-5-
<PAGE>
defense of such action, suit, proceeding or claim; provided, however, that the
foregoing shall not require the Corporation to indemnify or advance expenses to
any person in connection with any action, suit, proceeding, claim or
counterclaim initiated by or on behalf of such person. Such indemnification
shall not be exclusive of other indemnification rights arising under any by-law,
agreement, vote of directors or stockholders or otherwise and shall inure to the
benefit of the heirs and legal representatives of such person. Any person
seeking indemnification under this Article X shall be deemed to have met the
standard of conduct required for such indemnification unless the contrary shall
be established. Any repeal or modification of the foregoing provisions of this
Article X shall not adversely affect any right or protection of a director or
officer of the Corporation with respect to any acts or omissions of such
director or officer occurring prior to such repeal or modification.
ARTICLE XI
A director of the Corporation shall not be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent that exculpation from liability is not permitted under the
Delaware General Corporation Law as in effect at the time such liability is
determined. No amendment or repeal of this Article XI shall apply to or have
any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
ARTICLE XII
The election of directors need not be by ballot unless the By-laws shall so
require.
ARTICLE XIII
In addition to any other considerations which the Board of Directors may
lawfully take into account in determining whether to take or to refrain from
taking corporate action on any matter, including proposing any matter to the
stockholders of the Corporation, the Board of Directors may take into account
the interests of creditors, customers, employees and other constituencies of the
Corporation and its subsidiaries and the effect thereof upon communities in
which the Corporation and its subsidiaries do business.
ARTICLE XIV
In furtherance and not in limitation of the powers conferred by law or in
this Amended and Restated Certificate of Incorporation, the Board of Directors
(and any committee of the Board of Directors) is expressly authorized to take
such action or actions as the Board or such committee may determine to be
reasonably necessary or desirable to (A) encourage any person to enter into
negotiations with the Board of Directors and management of the
-6-
<PAGE>
Corporation with respect to any transaction which may result in a change in
control of the Corporation which is proposed or initiated by such person or (B)
contest or oppose any such transaction which the Board of Directors or such
committee determines to be unfair, abusive or otherwise undesirable with respect
to the Corporation and its business, assets or properties or the stockholders of
the Corporation, including, without limitation, the adoption of such plans or
the issuance of such rights, options, capital stock, notes, debentures or other
evidence of indebtedness or other securities of the Corporation, which rights,
options, capital stock, notes, evidences of indebtedness and other securities
(i) may be exchangeable for or convertible into cash or other securities on such
terms and conditions as may be determined by the Board of Directors (or any such
committee) and (ii) may provide for the treatment of any holder or class of
holders thereof designated by the Board of Directors (or any such committee) in
respect of the terms, conditions, provisions and rights of such securities which
is different from, and unequal to, the terms, conditions, provisions and rights
applicable to all other holders thereof.
ARTICLE XV
15.1. In addition to any requirements of law and any other provisions
of this Amended and Restated Certificate of Incorporation or the terms of any
series of Preferred Stock or any other securities of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified by law, this
Amended and Restated Certificate of Incorporation or the terms of any series of
Preferred Stock or any other securities of the Corporation), following the spin-
off of the Corporation by Waban, the affirmative vote of the holders of 80% or
more of the then outstanding shares of Common Stock of the Corporation shall be
required (x) to authorize any amendment, alteration or repeal of any provision
of Article VI, Article IX, Article XIII, Article XIV or this Article XV, or (y)
to adopt any provision in this Amended and Restated Certificate of Incorporation
which is inconsistent with Article VI, Article IX, Article XIII or Article XIV
or this Article XV.
15.2. In furtherance and not in limitation of the power conferred upon
the Board of Directors by law, the Board of Directors shall have power to make,
adopt, alter, amend and repeal from time to time By-laws of the Corporation,
subject to the right of the stockholders entitled to vote with respect thereto
to amend, alter and repeal, in accordance with Section 15.3 hereof, By-laws made
by the Board of Directors.
15.3. In addition to any requirements of law and any other provisions
of this Amended and Restated Certificate of Incorporation or the terms of any
series of Preferred Stock or any other securities of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified by law, this
Amended and Restated Certificate of Incorporation or the terms of any series of
Preferred Stock or any such other securities of the Corporation), any amendment,
alteration or repeal of any provision of the By-laws by the stockholders of the
Corporation shall require the affirmative vote of the holders of 80% of the then
outstanding shares of Common Stock of the Corporation. In addition, the
affirmative
-7-
<PAGE>
votes of said holders shall be required to permit the stockholders to adopt any
provision of the Certificate of Incorporation which is inconsistent with any
provision of the By-laws.
IN WITNESS WHEREOF, BJ'S WHOLESALE CLUB, INC. has caused this Certificate
to be signed in its name and on its behalf by its President this _____ day of
June, 1997.
BJ'S WHOLESALE CLUB, INC.
By: ___________________________________
President
-8-
<PAGE>
EXHIBIT 3.4
-----------
BY-LAWS
OF
BJ'S WHOLESALE CLUB, INC.
SECTION 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS
1.1. These by-laws are subject to the Certificate of Incorporation of the
Corporation. In these by-laws, references to law, the Certificate of
Incorporation and by-laws mean the law, the provisions of the Certificate of
Incorporation of the Corporation and these by-laws as from time to time in
effect.
SECTION 2. STOCKHOLDERS
2.1. Annual Meeting. The annual meeting of stockholders shall be held
--------------
at such date and time as shall be designated by the Board of Directors and
stated in the notice of the meeting, at which meeting the stockholders shall
elect directors and transact such other business as may be required by law or
these by-laws or as may properly come before the meeting.
At any annual meeting of stockholders, only such business shall be
conducted as shall have been brought before the annual meeting (i) by or at the
direction of the Board of Directors or (ii) by any stockholder who complies with
the procedures set forth below in this paragraph. For business properly to be
brought by a stockholder before an annual meeting, the stockholder must have
given timely notice thereof in proper written form to the secretary. To be
timely, a stockholder's notice must be delivered to, or mailed and received by,
the secretary at the principal executive offices of the Corporation not less
than 70 days nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced by more than 20 days, or delayed by more
than 70 days, from such anniversary date, notice by the stockholder to be timely
must be so delivered or received not earlier than the ninetieth day prior to
such annual meeting and not later than the close of business on the later of the
seventieth day prior to such annual meeting or the tenth day following the day
on which public announcement of the date of such meeting is first made. To be
in proper written form, a stockholder's notice shall set forth in writing as to
each matter the stockholder proposes to bring before the annual
<PAGE>
meeting: (i) a brief description of the business desired be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting; (ii) the name and address, as they appear on the Corporation's books,
of the stockholder proposing such business; (iii) the person or persons who are
the beneficial owner of such shares, if different in any respect from the record
owner; (iv) the class and number of shares of the Corporation which are
beneficially owned by the stockholder and any other persons referred to in the
preceding clause (iii); and (v) any material interest of the stockholder or such
other persons in such business. The chairman of the annual meeting shall, if the
facts warrant, determine that business was not properly brought before the
annual meeting in accordance with the provisions of this Section 2.1 and, if he
should so determine, he shall so declare to the annual meeting and any such
business not properly brought before the annual meeting shall not be transacted.
2.2. Special Meetings. Subject to the provisions of any series of
----------------
preferred stock or any other securities of the Corporation with respect to the
voting of such series or such other securities, a special meeting of the
stockholders may be called only by notice given by the chairman, the president
or a majority of the Board of Directors. Only such business as is specified in
the notice of a special meeting of stockholders shall come before such meeting.
Any such notice shall state the place, date, hour and purposes of the meeting.
2.3. Place of Meeting. All meetings of the stockholders shall be held at
----------------
such place within or without the State of Delaware as may be determined from
time to time by the chairman, the president or the Board of Directors. Any
adjourned session of any meeting of the stockholders shall be held at the place
designated in the vote of adjournment.
2.4. Notice of Meetings. Except as otherwise provided by law, a written
------------------
notice of each meeting of stockholders stating the place, day and hour thereof
and, in the case of a special meeting, the purposes for which the meeting is
called, shall be given not less then ten nor more than 60 days before the
meeting, to each stockholder entitled to vote thereat, and to each stockholder
who, by law, by the Certificate of Incorporation or by these by-laws, is
entitled to notice, by leaving such notice with him or at his residence or usual
place of business, or by depositing it in the United States mail, postage
prepaid, and addressed to such stockholder at his address as it appears in the
records of the Corporation. Such notice shall be given by the secretary, or by
an officer or person designated by the Board of Directors, or in the case of a
special meeting by the officer calling the meeting or by the Board of Directors,
as the case may be. As to any adjourned session of any meeting of stockholders,
notice of the adjourned meeting need not be given if the time and place thereof
are announced at the meeting at which the adjournment was taken except that if
the adjournment is for more than 30 days or if after the adjournment a new
record date is set for the adjourned session, notice of any such adjourned
session of the meeting shall be given in the manner heretofore described.
-2-
<PAGE>
No notice of any meeting of stockholders or any adjourned session thereof need
be given to a stockholder if a written waiver of notice, executed before or
after the meeting or such adjourned session by such stockholder, is filed with
the records of the meeting or if the stockholder attends such meeting without
objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any meeting of the stockholders or any
adjourned session thereof need be specified in any written waiver of notice.
2.5. Quorum of Stockholders. At any meeting of the stockholders a quorum
----------------------
as to any matter shall consist of a majority of the votes entitled to be cast on
the matter, except where a larger quorum is required by law, by the Certificate
of Incorporation or by these by-laws. Any meeting may be adjourned from time to
time by a majority of the votes properly cast upon the question, whether or not
a quorum is present. If a quorum is present at an original meeting, a quorum
need not be present at an adjourned session of that meeting. Shares of its own
stock belonging to the Corporation or to another corporation, if a majority of
the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of any such corporation to vote stock
held by it in a fiduciary capacity.
2.6. Action by Vote. When a quorum is present at any meeting, a plurality
--------------
of the votes properly cast for election to any office shall elect to such office
and a majority of the votes properly cast upon any question other than an
election to an office shall decide the question, except when a larger vote is
required by law, by the Certificate of Incorporation or by these by-laws. No
ballot shall be required for any election unless requested by a stockholder
present or represented at the meeting and entitled to vote in the election.
2.7. Proxy Representation. Every stockholder may authorize another person
--------------------
or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, objecting to
or voting or participating at a meeting or expressing consent or dissent without
a meeting. Every proxy must be signed by the stockholder or by his duly
authorized attorney-in-fact. No proxy shall be voted or acted upon after three
years from its date unless such proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and, if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally. The authorization of a proxy may but
need not be limited to specified action; provided, however, that if a proxy
limits its authorization to a meeting or meetings of stockholders, unless
otherwise specifically provided such
-3-
<PAGE>
proxy shall entitle the holder thereof to vote at any adjourned session but
shall not be valid after the final adjournment thereof.
2.8. Inspectors. The Board of Directors or the chairman of the meeting
----------
shall appoint one or more inspectors of election and any substitute inspectors
to act at the meeting or any adjournment thereof. Each inspector, before
entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors shall
determine the number of shares of stock outstanding and the voting power of
each, the shares of stock represented at the meeting, the existence of a quorum,
the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the chairman of the
meeting, the inspectors shall make a report in writing of any challenge,
question or matter determined by them and execute a certificate of any fact
found by them.
2.9. List of Stockholders. The secretary shall prepare and make available,
--------------------
at least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at such meeting, arranged in alphabetical order
and showing the address of each stockholder and the number of shares registered
in his name. The stock ledger shall be the only evidence as to who are
stockholders entitled to examine such list or to vote in person or by proxy at
such meeting.
SECTION 3. BOARD OF DIRECTORS
3.1. Number. Except as otherwise fixed by or pursuant to the Certificate
------
of Incorporation, the number of directors which shall constitute the whole board
shall be determined from time to time by vote of a majority of the Board of
Directors, provided that the number thereof may not be less than three.
3.2. Tenure. Except as otherwise provided by law, by the Certificate of
------
Incorporation or by these by-laws, the directors, other than those who may be
elected upon specified circumstances by the holders of shares of any series of
Preferred Stock or any other securities of the Corporation, shall be classified,
with respect to the time for which they severally hold office, into three
classes as nearly equal in number as possible: one class whose term expires at
the annual meeting of stockholders to be held in calendar 1998, another class
whose term expires at the annual meeting of stockholders to be held in calendar
1999 and another class whose term expires at the annual meeting of stockholders
to be held in calendar 2000, with each class to hold office until its successors
are elected and qualified. The classes (and the membership of each class) shall
be initially comprised as provided in the Certificate of Incorporation. If the
number
-4-
<PAGE>
of directors is changed by the Board of Directors, any newly created
directorships or any decrease in directorships shall be so apportioned among the
classes as to make all classes as nearly equal as possible; provided, however,
that no decrease in the number of directors shall shorten the term of any
incumbent director. At each annual meeting of stockholders, subject to the
aforesaid rights of the holders of any Preferred Stock or any other securities
of the Corporation, the successors of the class of directors whose term expires
at that meeting shall be elected to hold office for a term expiring at the
annual meeting of stockholders held in the third year following the year of
their election, with such class to hold office until its successors are elected
and qualified. Directors need not be stockholders.
3.3. Notification of Nominations. Subject to the rights of the holders of
---------------------------
any shares of any series of Preferred Stock or any other securities of the
Corporation to elect directors upon specified circumstances, nominations for the
election of directors may be made by the Board of Directors or by any
stockholder entitled to vote for the election of directors. Any stockholder
entitled to vote for the election of directors at a meeting may nominate persons
for election as directors by giving timely notice thereof in proper written form
to the secretary. To be timely, a stockholder's notice must be delivered to, or
mailed and received by, the secretary at the principal executive offices of the
Corporation not less than 70 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 20 days,
or delayed by more than 70 days, from such anniversary date, notice by the
stockholder to be timely must be so delivered or received not earlier than the
ninetieth day prior to such annual meeting and not later than the close of
business on the later of the seventieth day prior to such annual meeting or the
tenth day following the day on which public announcement of the date of such
meeting is first made. To be timely, a stockholder's notice of nominations of
persons for election to the Board of Directors at a special meeting of
stockholders at which a vacant newly created directorship is to be filled must
be delivered to the secretary at the principal executive offices of the
Corporation not earlier than the ninetieth day prior to such special meeting and
not later than the close of business on the later of the seventieth day prior to
such special meeting or the tenth day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. To be
in proper written form, a stockholder's notice shall set forth in writing: (a)
as to each nominee proposed by such stockholder (i) the name and address of each
nominee, (ii) such other information regarding each nominee as would have been
required to be included in a proxy statement filed pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (or any successor
provisions of law) had each nominee been nominated, or intended to be nominated,
by the Board of Directors, and (iii) the consent of each nominee to be named as
a nominee and to serve as a director if so elected; and (b) as to the
stockholder giving the notice (i) the name and address of, and the class and
number of shares of the Corporation held by, the stockholder who intends to make
the nomination and the beneficial owner, if any, on whose behalf the
-5-
<PAGE>
nomination is being made, (ii) a representation that the stockholder is a holder
of record of stock of the Corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice, (iii) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder. At the request of the Board of
Directors, any person nominated by the Board of Directors for election as a
director shall furnish to the secretary the information required to be set forth
in a stockholder's notice of nomination which pertains to the nominee. The
Corporation may require any proposed nominee to furnish such other information
as may reasonably be required by the Corporation to determine the eligibility of
such proposed nominee to serve as a director of the Corporation. In the event
that a stockholder seeks to nominate one or more directors, the secretary shall
appoint one or more inspectors to determine whether a stockholder has complied
with this Section 3.3. If the inspectors shall determine that a stockholder has
not complied with this Section 3.3, the inspectors shall direct the chairman of
the meeting to declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by the by-laws, and the chairman shall
so declare to the meeting and the defective nomination shall be disregarded.
3.4. Powers. The business and affairs of the Corporation shall be managed
------
by or under the direction of the Board of Directors who shall have and may
exercise all the powers of the Corporation and do all such lawful acts and
things as are not by law, the Certificate of Incorporation or these by-laws
directed or required to be exercised or done by the stockholders.
3.5. Vacancies. Subject to the rights of the holders of any shares of any
---------
series of Preferred Stock or any other securities of the Corporation to elect
directors upon specified circumstances, any vacancies on the Board of Directors
resulting from death, resignation or removal shall only be filled by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors, or by a sole remaining
director, and newly created directorships resulting from any increase in the
number of directors shall be filled by the Board of Directors, or if not so
filled, by the stockholders at the next annual meeting thereof or at a special
meeting called for that purpose in accordance with these by-laws. Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor shall have been elected and qualified. The Board of Directors shall
have and may exercise all their powers notwithstanding the existence of one or
more vacancies in their number, subject to any requirements of law or of the
Certificate of Incorporation or of these by-laws as to the number of directors
required for a quorum or for any vote or other actions.
-6-
<PAGE>
3.6. Committees. The Board of Directors may (a) designate, change the
----------
membership of or terminate the existence of any committee or committees, each
committee to consist of one or more of the directors; (b) designate one or more
directors as alternate members of any such committee who may replace any absent
or disqualified member at any meeting of the committee; and (c) determine the
extent to which each such committee shall have and may exercise the powers of
the Board of Directors in the management of the business and affairs of the
Corporation, including the power to authorize the seal of the Corporation to be
affixed to all papers which require it and the power and authority to declare
dividends or to authorize the issuance of stock; excepting, however, such powers
which by law, by the Certificate of Incorporation or by these by-laws the Board
of Directors is prohibited from so delegating. In the absence or
disqualification of any member of such committee and his alternate, if any, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not constituting a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member. Except as the Board of Directors may otherwise
determine, any committee may make rules for the conduct of its business, but
unless otherwise provided by the Board or such rules, its business shall be
conducted as nearly as may be in the same manner as is provided by these by-laws
for the conduct of business by the Board of Directors. Each Committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
upon request.
3.7. Regular Meetings. Regular meetings of the Board of Directors may be
----------------
held without call or notice at such places within or without the State of
Delaware and at such times as the Board of Directors may from time to time
determine; provided, however, that notice of the first regular meeting following
any such determination shall be given to absent directors. In addition, regular
meetings of the Board of Directors may be held without call or notice
immediately after and at the same place as the annual meeting of stockholders.
3.8. Special Meetings. Special meetings of the Board of Directors may be
----------------
held at any time and at any place within or without the State of Delaware
designated in the notice of the meeting, when called by the chairman, the
president or by a majority of the directors, reasonable notice thereof being
given to each director by the secretary, the chairman, the president or any one
of the directors calling the meeting.
3.9. Notice. It shall be reasonable and sufficient notice to a director to
------
send notice by mail at least 48 hours or by telegram at least 24 hours before
the meeting addressed to him at his usual or last known business or residence
address or to give notice to him in person or by telephone at least 24 hours
before the meeting. Notice of a meeting need not be given to any director if a
written waiver of notice, executed by him before or after the meeting, is filed
with the records of the meeting, or to any director who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him. Neither notice of a meeting nor a waiver of
-7-
<PAGE>
a notice need specify the purposes of the meeting.
3.10. Quorum. Except as may be otherwise provided by law, by the
------
Certificate of Incorporation or by these by-laws, at any meeting of the Board of
Directors a majority of the directors then in office shall constitute a quorum;
a quorum shall not in any case be less than one-third of the total number of
directors constituting the whole Board of Directors. Any meeting may be
adjourned from time to time by a majority of the votes cast upon the question,
whether or not a quorum is present, and the meeting may be held as adjourned
without further notice.
3.11. Action by Vote. Except as may be otherwise provided by law, by the
--------------
Certificate of Incorporation or by these by-laws, when a quorum is present
at any meeting the vote of a majority of the directors present shall be the act
of the Board of Directors.
3.12. Action Without a Meeting. Any action required or permitted to be
------------------------
taken at any meeting of the Board of Directors or a committee thereof may be
taken without a meeting if all the members of the Board of Directors or of such
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the records of the meetings of the Board of Directors or
of such committee. Such consent shall be treated for all purposes as the act of
the Board of Directors or of such committee, as the case may be.
3.13. Participation in Meetings by Conference Telephone. Members of the
-------------------------------------------------
Board of Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors or such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other or by any other means
permitted by law. Such participation shall constitute presence in person at such
meeting.
3.14. Compensation. In the discretion of the Board of Directors, each
------------
director may be paid such fees for his services as director and be reimbursed
for his reasonable expenses incurred in the performance of his duties as
director as the Board of Directors from time to time may determine. Nothing
contained in this Section 3.14 shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving reasonable
compensation therefor.
SECTION 4. OFFICERS AND AGENTS
4.1. Enumeration; Qualification. The officers of the Corporation shall be
--------------------------
a chairman, a president, a treasurer, a secretary and such other officers, if
any, as the Board of Directors from time to time may in its discretion elect or
appoint including without limitation one or more vice presidents and a
controller. The Corporation may
-8-
<PAGE>
also have such agents, if any, as the Board of Directors from time to time may
in its discretion choose. Any officer may be but none need be a director or
stockholder. Any two or more offices may be held by the same person. Any officer
may be required by the Board of Directors to secure the faithful performance of
his duties to the Corporation by giving bond in such amount and with sureties or
otherwise as the Board of Directors may determine.
4.2. Powers. Subject to law, to the Certificate of Incorporation and to
------
the other provisions of these by-laws, each officer shall have, in addition to
the duties and powers herein set forth, such duties and powers as are commonly
incident to his office and such additional duties and powers as the Board of
Directors may from time to time designate.
4.3. Election. The officers may be elected by the Board of Directors at
--------
their first meeting following the annual meeting of the stockholders or at any
other time. At any time or from time to time the directors may delegate to any
officer their power to elect or appoint any other officer or any agents.
4.4. Tenure. Each officer shall hold office until the first meeting of the
------
Board of Directors following the next annual meeting of the stockholders and
until his respective successor is chosen and qualified unless a shorter period
shall have been specified by the terms of his election or appointment, or in
each case until he sooner dies, resigns, is removed or becomes disqualified.
Each agent shall retain his authority at the pleasure of the Board of Directors,
or the officer by whom he was appointed or by the officer who then holds agent-
appointive power.
4.5. Chairman of the Board of Directors; President and Vice President. The
----------------------------------------------------------------
chairman of the board shall participate in matters of planning and policy, both
financial and operational. The chairman shall preside at all meetings of the
stockholders and of the Board of Directors at which he is present, except that
in the absence of the chairman, or at the request of the chairman, the president
shall preside. The chairman shall have such other duties and powers as may be
designated from time to time by the Board of Directors.
Each vice chairman, if any, shall have such duties and powers as shall be
designated from time to time by the Board of Directors.
Unless the Board of Directors otherwise specifies, the president shall be
the chief executive officer and shall have direct charge of all business
operations of the Corporation and, subject to the control of the Board of
Directors, shall have general charge and supervision of the business of the
Corporation.
Any vice presidents shall have such duties and powers as shall be set forth
in these by-laws or as shall be designated from time to time by the Board of
Directors or by the president.
-9-
<PAGE>
4.6. Chief Financial Officer; Treasurer and Assistant Treasurers. The
-----------------------------------------------------------
chief financial officer shall be responsible for execution of all financial
policies, plans, procedures and controls of the Company, and the maintenance of
books and records with respect thereto, including accounting and treasury
functions, internal audit, budgets, borrowings, securities offerings,
investments, tax reporting and financial reporting, all subject to the control
of the Board of Directors, the president and the chairman. The chief financial
officer shall have such other duties and powers as may be designated from time
to time by the Board of Directors, the president or the chairman.
The treasurer shall be in charge of the funds and valuable papers of the
Company and shall have such other duties and powers as may be designated from
time to time by the Board of Directors, by the president or by the chief
financial officer. If no controller is elected, the treasurer shall, unless the
Board of Directors otherwise specifies, also have the duties and powers of the
controller.
Any assistant treasurers shall have such duties and powers as shall be
designated from time to time by the Board of Directors, the president or the
treasurer.
4.7. Controller and Assistant Controllers. If a controller is elected, he
------------------------------------
or she shall, unless the Board of Directors otherwise specifies, be the chief
accounting officer of the Corporation and be in charge of its books of account
and accounting records, and of its accounting procedures. The controller shall
have such other duties and powers as may be designated from time to time by the
Board of Directors, the president or the treasurer.
Any assistant controller shall have such duties and powers as shall be
designated from time to time by the Board of Directors, the president, the
treasurer or the controller.
4.8. Secretary and Assistant Secretaries. The secretary shall record all
-----------------------------------
proceedings of the stockholders, of the Board of Directors and of committees of
the Board of Directors in a book or series of books to be kept therefor and
shall file therein all actions by written consent of stockholders or directors.
In the absence of the secretary from any meeting, an assistant secretary, or if
there be none or he is absent, a temporary secretary chosen at the meeting,
shall record the proceedings thereof. Unless a transfer agent has been
appointed, the secretary shall keep or cause to be kept the stock and transfer
records of the Corporation, which shall contain the names and record addresses
of all stockholders and the number of shares registered in the name of each
stockholder. He shall have such other duties and powers as may from time to
time be designated by the Board of Directors or the president.
Any assistant secretaries shall have such duties and powers as shall be
designated from time to time by the Board of Directors, the president or the
secretary.
-10-
<PAGE>
SECTION 5. RESIGNATIONS AND REMOVALS
5.1. Any director or officer may resign at any time by delivering his
resignation in writing to the chairman, the president, the secretary or to a
meeting of the Board of Directors. Such resignation shall be effective upon
receipt unless specified to be effective at some other time, and without in
either case the necessity of its being accepted unless the resignation shall so
state. Members of the Board of Directors may be removed only as provided in the
Certificate of Incorporation. The Board of Directors may at any time remove any
officer either with or without cause. The Board of Directors may at any time
terminate or modify the authority of any agent.
SECTION 6. VACANCIES
6.1. If the office of the chairman, the president, the treasurer or the
secretary becomes vacant, the Board of Directors may elect a successor by vote
of a majority of the directors then in office. If the office of any other
officer becomes vacant, any person or body empowered to elect or appoint that
officer may choose a successor. Each such successor shall hold office for the
unexpired term, and in the case of the president, the treasurer and the
secretary, until a successor is chosen and qualified or in each case until he or
she sooner dies, resigns, is removed or becomes disqualified. Any vacancy of a
directorship shall be filled as specified in Section 3.5 of these by-laws.
SECTION 7. CAPITAL STOCK
7.1. Stock Certificates. Each stockholder shall be entitled to a
------------------
certificate stating the number and the class and the designation of the series,
if any, of the shares held by him, in such form as shall, in conformity to law,
the Certificate of Incorporation and the by-laws, be prescribed from time to
time by the Board of Directors. Such certificate shall be signed by (i) the
chairman or vice chairman, if any, or the president or a vice president and (ii)
the treasurer or an assistant treasurer or the secretary or an assistant
secretary. Any or all of the signatures on the certificate may be a facsimile.
In case an officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the time of its issue.
7.2. Loss of Certificate. In the case of the alleged theft, loss,
-------------------
destruction or mutilation of a certificate of stock, a duplicate certificate may
be issued in place thereof, upon such terms, including receipt of a bond
sufficient to indemnify the Corporation against any claim on account thereof, as
the Board of Directors may prescribe.
-11-
<PAGE>
SECTION 8. TRANSFER OF SHARES OF STOCK
8.1. Transfer on Books. Subject to the restrictions, if any, stated or
-----------------
noted on the stock certificate, shares of stock may be transferred on the books
of the Corporation by the surrender to the Corporation or its transfer agent of
the certificate therefor properly endorsed or accompanied by a written
assignment and power of attorney properly executed, with necessary transfer
stamps affixed, and with such proof of the authenticity of signature as the
Board of Directors or the transfer agent of the Corporation may reasonably
require. Except as may be otherwise required by law, by the Certificate of
Incorporation or by these by-laws, the Corporation shall be entitled to treat
the record holder of stock as shown on its books as the owner of such stock for
all purposes, including the payment of dividends and the right to receive notice
and to vote or to give any consent with respect thereto and to be held liable
for such calls and assessments, if any, as may lawfully be made thereon,
regardless of any transfer, pledge or other disposition of such stock until the
shares have been properly transferred on the books of the Corporation.
It shall be the duty of each stockholder to notify the Corporation of his
post office address.
8.2. Record Date. In order that the Corporation may determine the
-----------
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than 60 nor less than ten days before the date of such meeting. If
no such record date is fixed by the Board of Directors, the record date for
determining the stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or to exercise any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors may
fix a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record date shall be not
more than 60 days prior to such payment, exercise or other action. If no such
record date is fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
-12-
<PAGE>
SECTION 9. CORPORATE SEAL
9.1. Subject to alteration by the Board of Directors, the seal of the
Corporation shall consist of a flat-faced circular die with the word "Delaware"
and the name of the Corporation cut or engraved thereon, together with such
other words, dates or images as may be approved from time to time by the Board
of Directors.
SECTION 10. EXECUTION OF PAPERS
10.1. Except as the Board of Directors may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
transfers, contracts, bonds, notes, checks, drafts or other obligations made,
accepted or endorsed by the Corporation shall be signed by the chairman, the
president, a vice president or the treasurer.
SECTION 11. FISCAL YEAR
11.1. The fiscal year of the Corporation shall end on the last Saturday of
January of each year.
SECTION 12. AMENDMENTS
12.1. Subject to any special voting requirements contained in the
Certificate of Incorporation, these by-laws may be adopted, amended or repealed
by vote of a majority of the entire Board of Directors at any meeting thereof.
The stockholders shall have the power to amend, alter or repeal any provision of
these by-laws only to the extent and in the manner provided in the Certificate
of Incorporation.
-13-
<PAGE>
EXHIBIT 10.1
================================================================================
SEPARATION AND DISTRIBUTION AGREEMENT
Dated as of June ____, 1997
BETWEEN
WABAN INC.
AND
BJ'S WHOLESALE CLUB, INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINITIONS................................................. 1
ARTICLE 2 THE SEPARATION.............................................. 6
2.1 Adoption of BJI Charter, BJI By-Laws and BJI Rights Plan..... 6
2.2 Transfer of BJI Assets and Assumption of BJI Assumed
Liabilities.................................................. 6
2.2.1 BJI Assets............................................ 6
2.2.2 BJI Assumed Liabilities............................... 6
2.2.3 Transfers Not Consummated On or Prior to the
Distribution Date..................................... 7
2.2.4 Further Assurances; Subsequent Transfers.............. 7
2.2.5 No Representations or Warranties; Consents............ 8
2.3 Intercompany Accounts......................................... 9
2.4 Ancillary Agreements.......................................... 9
2.5 Issuance of BJI Common Stock.................................. 9
2.6 Resignations.................................................. 9
2.7 Insurance..................................................... 10
2.7.1. General................................................ 10
2.7.2 Certain Insured Claims................................. 10
2.8 Non-Exclusive License to Name................................. 11
ARTICLE 3 THE DISTRIBUTION............................................. 11
3.1 Action Prior to the Distribution.............................. 11
3.1.1 BJI Form 8-A........................................... 11
3.1.2 S-8 Registration Statement............................. 11
3.1.3 Matters Pertaining to Blue Sky Laws Compliance......... 11
3.1.4 New York Stock Exchange Listing........................ 12
3.2 Conditions Precedent to the Distribution...................... 12
3.3 Waban Board Action............................................ 13
3.4 The Distribution.............................................. 13
ARTICLE 4 CERTAIN MATTERS RELATING TO LEASE LIABILITIES................ 13
4.1 Certain Definitions........................................... 13
4.2 Indemnified Home Base Lease Liabilities....................... 15
4.2.1 Control of HomeBase Third Party Claims................. 15
4.2.2 Reports................................................ 17
4.2.3 Settlements............................................ 17
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
4.2.4 Indemnification Agreement............................ 17
4.3 Lease Renewals.............................................. 17
4.4 Reimbursement............................................... 18
ARTICLE 5 INDEMNIFICATION............................................ 18
5.1 Certain Definitions......................................... 18
5.2 Indemnification by Waban.................................... 19
5.3 Indemnification by BJI...................................... 19
5.4 Limitations on Indemnification Obligations.................. 19
5.5 Procedure for Indemnification............................... 20
5.5.1 Third Party Claims; Notice........................... 20
5.5.2 Defense of Third Party Claims........................ 20
5.5.3 Cooperation by Indemnitee............................ 20
5.5.4 Limitation on Authority to Settle Claim.............. 21
5.5.5 Other Claims......................................... 21
5.5.6 Advancement of Certain Expenses...................... 21
5.5.7 Subrogation to Rights of Indemnitee.................. 22
5.6 Special Provision Relating to Certain Pre-Distribution
Liabilities................................................. 22
5.7 Remedies Cumulative......................................... 22
ARTICLE 6 ACCESS TO INFORMATION...................................... 22
6.1 Provision of Corporate Records.............................. 22
6.2 Access to Information....................................... 22
6.3 Production of Witnesses..................................... 23
6.4 Reimbursement............................................... 23
6.5 Retention of Records........................................ 23
6.6 Confidentiality............................................. 24
ARTICLE 7 MISCELLANEOUS.............................................. 24
7.1 Rule of Construction........................................ 24
7.2 Survival of Agreements...................................... 24
7.3 Expenses.................................................... 24
7.4 Governing Law............................................... 25
7.5 Notices..................................................... 25
7.6 Amendments.................................................. 25
Successors and Assigns...................................... 25
7.8 Termination................................................. 26
7.9 No Third Party Beneficiaries................................ 26
7.10 Titles and Headings......................................... 26
7.11 Exhibits and Schedules...................................... 26
</TABLE>
-ii-
<PAGE>
7.12 Counterparts................................................ 26
7.13 Legal Enforceability........................................ 26
EXHIBITS
A BJ's By-Laws
B BJ's Charter
C Employee Benefits Agreement
D Services Agreement
E Tax Sharing Agreement
SCHEDULES
A BJ's Assets
B BJ's Assumed Liabilities
C BJ's Subsidiaries
D HomeBase Subsidiaries
E Intercompany Accounts
-iii-
<PAGE>
SEPARATION AND DISTRIBUTION AGREEMENT
This SEPARATION AND DISTRIBUTION AGREEMENT (the "Agreement"), dated as of
June ___, 1997, is between Waban Inc., a Delaware corporation ("Waban"), and
BJ's Wholesale Club, Inc., a Delaware corporation and, as of the date hereof, a
wholly owned subsidiary of Waban ("BJI").
WHEREAS, Waban currently owns and operates "BJ's Wholesale Club," a food
and general merchandise warehouse club business, and "HomeBase", a home
improvement warehouse business;
WHEREAS, the Board of Directors of Waban has determined that it is in the
best interests of Waban and its stockholders to separate the "BJ's Wholesale
Club" and "HomeBase" businesses into two distinct companies by transferring the
BJ's Wholesale Club business to BJI (the "Separation") and, then, distributing
all of the outstanding shares of BJI Common Stock on a pro rata basis to the
holders of Waban Common Stock (the "Distribution"); and
WHEREAS, Waban and BJI have determined that it is necessary and desirable
to set forth the principal corporate transactions required to effect the
Separation and the Distribution and to set forth other agreements that will
govern certain relationships and other matters between Waban and BJI in
connection with, and following, the Distribution.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Action" means any action, suit, arbitration, inquiry, proceeding or
------
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
"Affiliate" means "affiliate" as defined in Rule 12b-2 promulgated under
---------
the Exchange Act, as such Rule is in effect on the date hereof; provided,
--------
however, that
- -------
-1-
<PAGE>
BJI and the BJI Subsidiaries, on the one hand, and Waban and the Waban
Subsidiaries, on the other hand, shall not be deemed Affiliates of each other
for purposes of this Agreement.
"Ancillary Agreements" means all of the agreements, instruments,
--------------------
understandings, assignments or other arrangements entered into in connection
with the Distribution, including, without limitation, (i) the Conveyancing
Instruments, (ii) the Services Agreement, (iii) the Tax Sharing Agreement and
(iv) the Employee Benefits Agreement.
"BJI" has the meaning ascribed in the Preamble.
---
"BJI Assets" means collectively, those assets of Waban identified on
----------
Schedule A hereto to be transferred to BJI in accordance with Article 2 of this
- ----------
Agreement.
"BJI Assumed Liabilities" means collectively, those Liabilities of Waban
-----------------------
identified on Schedule B hereto to be assumed by BJI in accordance with Article
----------
2 of this Agreement.
"BJI Board" means the Board of Directors of BJI.
---------
"BJI Business" means the business, assets and operations of the "BJ's
------------
Wholesale Club" division of Waban, including without limitation all businesses,
assets or operations managed or operated by, or operationally related to, such
business which have been sold or otherwise disposed of or discontinued prior to
the Distribution Date (provided, however, that the warehouse clubs initially
operated by the BJ's Wholesale Club division and subsequently transferred to the
HomeBase division shall be considered part of the BJI Business only for the
period operated by the BJ's Wholesale Club division).
"BJI By-Laws" means the Amended and Restated By-Laws of BJI, substantially
-----------
in the form of Exhibit A hereto, to be in effect on the Distribution Date.
---------
"BJI Charter" means the Amended and Restated Certificate of Incorporation
-----------
of BJI, substantially in the form of Exhibit B hereto, to be in effect on the
---------
Distribution Date.
"BJI Common Stock" means the common stock, par value $.01 per share, of
----------------
BJI.
"BJI Default Period" has the meaning ascribed in Section 4.1.
------------------
"BJI Form S-1" means the Registration Statement on Form S-1 filed by BJI
------------
and the Registration Statement on Form S-3 filed by Waban with the Commission to
-2-
<PAGE>
effect, among other things, the registration of the BJI Common Stock and the BJI
Rights to be issued in the Distribution pursuant to the Securities Act.
"BJI Indemnitees" has the meaning ascribed in Section 5.1.
---------------
"BJI Lease" has the meaning ascribed in Section 4.1.
---------
"BJI Rights" means the Preferred Stock Purchase Rights of BJI issued under
----------
the BJI Rights Plan.
"BJI Rights Plan" means the BJI Preferred Stock Purchase Rights Plan to be
---------------
adopted by BJI prior to the Distribution Date.
"BJI Subsidiaries" means the Subsidiaries of Waban listed on Schedule C
---------------- ----------
hereto, each of which will become Subsidiaries of BJI, or of another Subsidiary
of BJI, on or prior to the Distribution Date.
"Code" means the Internal Revenue Code of 1986, as amended, and shall
----
include corresponding provisions of any subsequently enacted federal tax law.
"Commission" means the Securities and Exchange Commission.
----------
"Conveyancing Instruments" means collectively, the various agreements,
------------------------
instruments and other documents, in form and substance mutually satisfactory to
Waban and BJI, to be entered into to effect the transfer of the BJI Assets by
Waban to BJI and the assumption by BJI of the BJI Assumed Liabilities.
"Distribution" has the meaning ascribed in the Preamble.
------------
"Distribution Agent" means the distribution agent for the stockholders of
------------------
Waban, as appointed by Waban, to distribute shares of BJI Common Stock and the
BJI Rights pursuant to the Distribution.
"Distribution Date" means the close of business on the date determined by
-----------------
the Waban Board as of which the Distribution shall be effected.
"Distribution Record Date" means the close of business on the date to be
------------------------
determined by the Waban Board as the record date for the Distribution.
"Employee Benefits Agreement" means the Employee Benefits Agreement in
---------------------------
substantially the form of Exhibit C hereto to be entered into between Waban and
---------
BJI.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
-3-
<PAGE>
"HomeBase Control Event" has the meaning ascribed in Section 4.2.
----------------------
"HomeBase Control Period" has the meaning ascribed in Section 4.1.
-----------------------
"HomeBase Business" means the business, assets and operations of the
-----------------
"HomeBase" division of Waban, including without limitation all businesses,
assets or operations managed or operated by, or operationally related to, such
business which have been sold or otherwise disposed of or discontinued prior to
Distribution Date (provided, however, that the warehouse clubs initially
operated by the BJ's Wholesale Club division of Waban and subsequently
transferred to the HomeBase division shall not be considered part of the
HomeBase Business for the period operated by the BJ's Wholesale Club division).
"HomeBase Lease" has the meaning ascribed in Section 4.1.
--------------
"HomeBase Third Party Claim" has the meaning ascribed in Section 4.1.
--------------------------
"Indemnifiable Losses" has the meaning ascribed in Section 5.1.
--------------------
"Indemnified HomeBase Lease Liabilities" has the meaning ascribed in
--------------------------------------
Section 4.1.
"Indemnifying Party" has the meaning ascribed in Section 5.4.
------------------
"Indemnitee" has the meaning ascribed in Section 5.4.
----------
"Information" has the meaning ascribed in Section 6.2.
-----------
"Insurance Program" means the various insurance policies maintained by
-----------------
Waban pursuant to which various insurance carriers provide insurance coverage to
Waban and its subsidiaries (including, prior to the Distribution Date, BJI and
the BJI Subsidiaries).
"IRS" means the Internal Revenue Service.
---
"Liabilities" means any and all debts, liabilities and obligations,
-----------
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising (unless otherwise
specified in this Agreement), including all costs and expenses (including
attorneys fees) relating thereto, and including, without limitation, those
debts, liabilities and obligations arising under any law, rule, regulation,
Action, threatened Action, order or consent decree of any governmental entity or
any award of any arbitrator of any kind, and those arising under any contract,
commitment or undertaking.
-4-
<PAGE>
"Person" means any natural person or any corporation, association,
------
partnership, limited liability company, joint venture, company, trust,
organization, business or government or any governmental agency or political
subdivision thereof.
"Prospectus/Proxy Statement" means the Prospectus/Proxy Statement included
--------------------------
in the BJ's Form S-1 and sent to the holders of Waban Common Stock in connection
with the meeting of stockholders of Waban called to approve the Distribution.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Services Agreement" means the Services Agreement in substantially the form
------------------
of Exhibit D hereto pursuant to which BJI will provide various services to
---------
Waban.
"Subsidiary" means with respect to any Person, any other Person of which
----------
such Person shall at the time own, directly or indirectly through one or more
Subsidiaries, at least a majority of the outstanding capital stock (or other
shares of beneficial interest) entitled to vote generally, or shall hold at
least a majority of partnership or similar interests, or shall be a general
partner.
"Tax Sharing Agreement" means the Tax Sharing Agreement in substantially
---------------------
the form of Exhibit E hereto to be entered into between Waban and BJI.
---------
"Third Party Claim" has the meaning ascribed in Section 5.5.1.
-----------------
"TJX" means The TJX Companies, Inc.
---
"TJX Indemnification Agreement" has the meaning ascribed in Section 4.1.
-----------------------------
"Waban" has the meaning ascribed in the Preamble.
-----
"Waban Board" means the Board of Directors of Waban.
-----------
"Waban Business" means the assets, business and operations of Waban
--------------
heretofore, currently or hereafter held or conducted, including without
limitation all businesses, assets or operations managed or operated by, or
operationally related to, any of such businesses which have been sold or
otherwise disposed of or discontinued prior to the Distribution Date, in each
case other than the BJI Business.
"Waban Common Stock" means the common stock, par value $.01 per share, of
------------------
Waban.
"Waban Indemnitees" has the meaning ascribed in Section 5.1.
-----------------
-5-
<PAGE>
"Waban Liabilities" means all Liabilities of Waban or any Waban Subsidiary,
-----------------
including all Liabilities arising out of or in connection with or relating
principally to the Waban Business including, without limitation, any and all
liabilities arising under any lease for which Waban is or may be liable, other
than leases which are BJI Assumed Liabilities (such leases, excluding leases
which are BJI Assumed Liabilities, being referred to as the "Waban Leases");
provided, however, that the term "Waban Liabilities" shall not include any BJI
- -------- -------
Assumed Liabilities.
"Waban Rights" means the Preferred Stock Purchase Rights of Waban issued
------------
under Waban's Preferred Stock Purchase Rights Plan.
"Waban Subsidiaries" means the Subsidiaries of Waban other than BJI or any
------------------
BJI Subsidiary, including, without limitation, the entities listed on
Schedule D.
- ----------
ARTICLE 2
THE SEPARATION
This Article 2 sets forth certain transactions to be consummated on or
prior to the Distribution Date in connection with the separation of Waban's BJ's
Wholesale Club and HomeBase divisions into two separate companies and the
transfer of the BJ's Wholesale Club business of Waban to BJI in contemplation of
the Distribution. Subject to the terms and conditions of this Agreement, the
parties shall consummate such transactions on or prior to the Distribution Date
at such times and in such sequence as they shall mutually agree.
2.1 Adoption of BJI Charter, BJI By-Laws and BJI Rights Plan. On or prior
--------------------------------------------------------
to the Distribution Date, BJI and Waban shall cause the Certificate of
Incorporation and By-Laws of BJI to be amended and restated, substantially in
the form of the BJI Charter and the BJI By-Laws, respectively, and shall cause
the BJI Rights Plan, in a form mutually satisfactory to BJI and Waban, to be
adopted.
2.2 Transfer of BJI Assets and Assumption of BJI Assumed Liabilities.
----------------------------------------------------------------
2.2.1 BJI Assets. On or prior to the Distribution Date, Waban
----------
shall, by means of appropriate Conveyancing Instruments, convey, transfer,
assign and deliver to BJI, and BJI will accept from Waban, all of Waban's
rights, title and interest in and to all of the BJI Assets, which transfers
shall be deemed to be effective as of ________, 1997.
-6-
<PAGE>
2.2.2 BJI Assumed Liabilities. On or prior to the Distribution
-----------------------
Date, except as set forth in the Tax Sharing Agreement or the Employee
Benefits Agreement, BJI shall, by means of appropriate Conveyancing
Instruments, assume all of Waban's duties, obligations and responsibilities
with respect to the BJI Assumed Liabilities, which assumption shall be
deemed to be effective as of ________, 1997.
2.2.3 Transfers Not Consummated On or Prior to the Distribution Date.
--------------------------------------------------------------
Subject to Section 2.2.4 hereof, to the extent that the transfer to BJI of
any of the BJI Assets or the assumption by BJI of any of the BJI Assumed
Liabilities shall not have been consummated on or prior to the Distribution
Date, Waban and BJI shall cooperate to effect such consummation as promptly
thereafter as shall be practicable, it nonetheless being understood and
agreed by Waban and BJI that neither shall be liable in any manner to any
person who is not a party to this Agreement for any failure of any of the
transfers contemplated by Section 2 to be consummated on or subsequent to
the Distribution Date. Whether or not all of the BJI Assets or the BJI
Assumed Liabilities shall have been legally transferred to BJI as of the
Distribution Date, Waban and BJI agree that, as of the Distribution Date,
BJI shall have, and shall be deemed to have acquired, complete and sole
beneficial ownership over all of the BJI Assets, together with all of
Waban's rights, powers and privileges incident thereto, and shall be deemed
to have assumed in accordance with the terms of this Agreement all of the
BJI Assumed Liabilities and all of Waban's duties, obligations and
responsibilities incident thereto.
2.2.4 Further Assurances; Subsequent Transfers.
----------------------------------------
(a) Each of Waban and BJI will execute and deliver such further
instruments of conveyance, transfer and assignment and will take such other
actions as each of them may reasonably request of the other in order to
effectuate the purposes of this Agreement and to carry out the terms
hereof. Without limiting the generality of the foregoing, at any time and
from time to time after the Distribution Date, at the request of BJI and
without further consideration, Waban will execute and deliver to BJI such
other instruments of transfer, conveyance, assignment and confirmation
(including estoppel certificates) and take such action as BJI may
reasonably deem necessary or desirable in order to more effectively
transfer, convey and assign to BJI and to confirm BJI's title to all of the
BJI Assets, to put BJI in actual possession and operating control thereof
and to permit BJI to exercise all rights with respect thereto (including,
without limitation, rights under contracts and other arrangements as to
which the consent of any third party to the transfer thereof shall not have
previously been obtained) and BJI will execute and deliver to Waban all
instruments, undertakings or other documents and take such other
-7-
<PAGE>
action as Waban may reasonably deem necessary or desirable in order to have
BJI properly assume and discharge the BJI Assumed Liabilities and relieve
Waban of any Liability or obligations with respect thereto and evidence the
same to third parties. Notwithstanding the foregoing, Waban and BJI shall
not be obligated, in connection with the foregoing, to expend monies other
than reasonable out-of-pocket expenses and attorneys' fees.
(b) Waban and BJI will use their best efforts to obtain any consent
required to assign all agreements, leases, licenses and other rights of any
nature whatsoever relating to the BJI Assets to BJI and the BJI
Subsidiaries; provided, however, that Waban shall not be obligated to pay
-------- -------
any consideration therefor (except for filing fees and other administrative
charges) to the third party from whom such consents, approvals and
amendments are requested. In the event and to the extent that Waban is
unable to obtain any such required consent, (i) Waban shall continue to be
bound thereby and (ii) unless not permitted by law or the terms thereof,
BJI shall pay, perform and discharge fully all the obligations of Waban
thereunder from and after the Distribution Date and indemnify Waban for all
Indemnifiable Losses arising out of such performance by BJI. Waban shall,
without further consideration therefor, pay, assign and remit to BJI
promptly all monies, rights and other considerations received in respect of
such performance. Waban shall exercise or exploit its rights and options
under all such agreements, leases, licenses and other rights and
commitments referred to in this Section 2.2.4(b) only as reasonably
directed by BJI and at BJI's expense. If and when any such consent shall be
obtained or such agreement, lease, license or other right shall otherwise
become assignable or able to be novated, Waban shall promptly assign and
novate all its rights and obligations thereunder to BJI without payment of
further consideration and BJI shall, without the payment of any further
consideration therefor, assume such rights and obligations.
2.2.5 No Representations or Warranties; Consents. BJI understands and
------------------------------------------
hereby agrees that Waban is not, in this Agreement or in any other
agreement or document contemplated by this Agreement or otherwise, nor
shall Waban be deemed or implied to be, representing or warranting in any
way (i) as to the value or freedom from encumbrance of, or any other matter
concerning, any assets to be transferred to BJI as contemplated by this
Section 2.2 or (ii) as to the legal sufficiency to convey title to any such
asset of the execution, delivery and filing of this Agreement or any
Conveyancing Instrument, IT BEING UNDERSTOOD AND HEREBY AGREED THAT ALL
SUCH ASSETS ARE BEING TRANSFERRED "AS IS, WHERE IS" and that BJI shall bear
the economic and legal risk that any conveyances of such assets shall prove
to be insufficient (subject to Section 2.2.4(a)) or that BJI or any of its
Subsidiaries' title to any such assets shall be other than good and
marketable
-8-
<PAGE>
and free from encumbrances. Similarly, BJI understands and hereby agrees
that Waban is not, in this Agreement or in any other agreement or document
contemplated by this Agreement or otherwise, nor shall Waban be deemed or
implied to be, representing or warranting in any way that the obtaining of
any consents or approvals, the execution and delivery of any amendatory
agreements and the making of any filings or applications contemplated by
this Agreement or such other agreements or documents shall satisfy the
provisions of any or all applicable agreements or the requirements of any
or all applicable laws or judgments, it being understood and hereby agreed
that BJI shall bear the economic and legal risk that any necessary consents
or approvals are not obtained or that any requirements of laws or judgments
are not complied with. Notwithstanding the foregoing, the parties shall use
reasonable efforts to obtain all consents and approvals, to enter into all
amendatory agreements and to make all filings and applications which may be
required for the consummation of the transactions contemplated by this
Agreement.
2.3 Intercompany Accounts. On or prior to the Distribution Date, Waban
---------------------
and BJI shall pay or otherwise settle all intercompany accounts between them all
as more specifically provided on Schedule E and shall make the other payments or
----------
dividends specifically provided on Schedule E.
----------
2.4 Ancillary Agreements. On or prior to the Distribution Date, Waban and
--------------------
BJI shall enter into each of the (i) Tax Sharing Agreement, (ii) the Services
Agreement and (iii) the Employee Benefits Agreement.
2.5 Issuance of BJI Common Stock. In consideration for the conveyance,
----------------------------
assignment, transfer and delivery of the BJI Assets pursuant to Article 2
hereof, BJI shall issue to Waban, on or prior to the Distribution Date, one
share of BJI Common Stock (including one BJI Right) for each share of Waban
Common Stock outstanding on the Distribution Record Date, reduced by the number
of shares of BJI Common Stock (and associated BJI Rights) theretofore held by
Waban.
2.6 Resignations. Each party shall cause all of its own and all of
------------
its Subsidiaries' employees to resign, effective upon the Distribution, from all
boards of directors or similar governing bodies of the other party or any
Subsidiary of the other party on which they serve, and from all positions as
officers of the other party or any Subsidiary of the other party in which they
serve, except as otherwise provided in the Prospectus/Proxy Statement with
respect to individuals continuing to hold positions with both Waban and BJI.
-9-
<PAGE>
Prior to the Distribution Date, Waban shall take all steps necessary so that,
effective immediately after the Distribution, the directors and officers of BJI
shall be those individuals named in the Prospectus/Proxy Statement.
2.7. Insurance.
---------
2.7.1. General. Waban shall keep in effect all policies under its
-------
Insurance Program in effect as of the date of this Agreement insuring the
BJI Assets and operations of the BJI Business until 12:00 midnight on the
Distribution Date, unless BJI shall have earlier obtained appropriate
coverage and notified Waban in writing to that effect. In addition, Waban
shall keep in effect all property insurance policies under its Insurance
Program in effect as of the date of this Agreement insuring the BJI Assets
and operations of the BJI Business until 12:00 midnight on October 31,
1997, unless BJI shall have earlier obtained appropriate coverage and
notified Waban in writing to that effect. BJI agrees that, prior to the
expiration of each insurance policy referred to in the first two sentences
of this Section, it will purchase insurance policies which (i) provide
coverage similar to that provided by the policies maintained by Waban
under the Insurance Program with respect to the BJI Assets and the BJI
Business and (ii) allow BJI to make claims for occurrences prior to the
Distribution Date (provided, however, that clause (ii) shall not apply to
the Director and Officer liability policy to be obtained by BJI). Waban
shall, if so requested by BJI, use reasonable efforts to assist BJI in
obtaining such initial insurance coverage for BJI from and after the
Distribution Date in such amounts as are agreed upon by Waban and BJI.
Following the Distribution Date, each of Waban and BJI shall cooperate with
and assist the other party in the prevention of conflicts or gaps in
insurance coverage and/or collection of proceeds.
2.7.2 Certain Insured Claims. Notwithstanding anything to the contrary
----------------------
in this Agreement, Waban will indemnify and hold BJI harmless from and
against any and all Indemnifiable Losses resulting, directly or indirectly,
from claims made or deemed made (under the applicable insurance policy)
prior to the Distribution Date (or with respect to property insurance
policies, prior to October 31, 1997) which relate to the BJI Assets or the
BJI Business and which arise from or relate to events or occurrences prior
to the Distribution Date (or with respect to property insurance policies,
prior to October 31, 1997), if such claims would be covered by the
Insurance Program; provided, however, that Waban shall only be required to
-------- -------
indemnify and hold BJI harmless pursuant to this Section 2.7.2 (i) to the
extent such Indemnifiable Losses exceed any applicable deductibles under
the Insurance Program (the payment of which deductibles shall be the
responsibility of BJI) and (ii) to the
-10-
<PAGE>
extent Waban actually receives a payment under the Insurance Program with
respect to such Indemnifiable Losses. To the extent that BJI seeks any
indemnity pursuant to this Section 2.7.2, the provisions of Section 5
hereof shall apply thereto, and BJI shall be treated as the Indemnitee and
Waban shall be treated as the Indemnifying Party under such provisions;
provided, however, that BJI shall pay all out of pocket costs which are
-------- -------
reasonably incurred by Waban after the Distribution Date in defending any
such claims under an insurance policy relating to the BJI Assets or the BJI
Business and BJI shall make available to Waban such of its employees as
Waban may reasonably request as witnesses or deponents in connection with
Waban's defense of claims, at BJI's sole cost and expense.
2.8 Non-Exclusive License to Name. Waban hereby grants to BJI a non-
-----------------------------
exclusive right and license during the period commencing on the Distribution
Date and ending on the date which is six months after the Distribution Date to
use the trademark "Waban" in connection with the BJI Business.
ARTICLE 3
THE DISTRIBUTION
3.1 Action Prior to the Distribution.
--------------------------------
3.1.1 BJI Form 8-A. Waban and BJI shall prepare, and shall cause to
------------
be filed with the Commission, the BJI Form 8-A with respect to the BJI
Common Stock and the BJI Rights. Waban and BJI shall use reasonable efforts
to cause the BJI Form 8-A to become effective under the Exchange Act.
3.1.2 S-8 Registration Statements. Waban and BJI shall cooperate in
---------------------------
preparing and filing with the Commission any registration statements or
amendments thereof which are necessary or appropriate to reflect the
establishment of, or amendments to, any employee benefit and other plans
contemplated by the Employee Benefits Agreement or otherwise described in
the Prospectus/Proxy Statement.
3.1.3 Matters Pertaining to Blue Sky Laws Compliance. Waban and BJI
----------------------------------------------
shall use reasonable efforts to take all such action as may be necessary or
appropriate under the securities or blue sky laws of states or political
subdivisions of the United States in connection with the transactions
contemplated by this Agreement.
-11-
<PAGE>
3.1.4 New York Stock Exchange Listing. Waban and BJI shall prepare,
-------------------------------
and BJI shall file and seek to make effective, an application to permit the
listing of BJI Common Stock and the BJI Rights on the New York Stock
Exchange, subject to official notice of issuance.
3.2 Conditions Precedent to the Distribution. The obligation of the
----------------------------------------
parties hereto to consummate the Distribution shall be subject to each of the
following conditions, any of which may be waived by Waban in its sole
discretion:
(a) the declaration by the Waban Board of the Distribution;
(b) the conversion into Waban Common Stock or redemption for cash of
Waban's 6.5% Convertible Subordinated Debentures due 2002 (the "Convertible
Debentures") and, if the Convertible Debentures are redeemed, the closing of an
equity offering by BJI to reduce the indebtedness that Waban would incur to
finance the redemption;
(c) the transactions contemplated by Article 2 hereof shall have been
consummated in all material respects;
(d) the BJI Common Stock and the BJI Rights shall have been approved
for listing on the New York Stock Exchange, subject to official notice of
issuance;
(e) BJI and Waban having entered into agreements with lenders to
provide sufficient financing upon consummation of the Distribution;
(f) the BJI Form 8-A shall have been declared or become effective and
the transactions contemplated by this Agreement shall otherwise be in compliance
with all applicable federal and state securities laws; and
(g) as of the Distribution Date, the private letter ruling previously
received by Waban shall remain applicable or Waban shall have received a new
private letter ruling of the IRS with respect to the tax-free nature of the
Distribution;
provided, however, that the satisfaction of such conditions shall not create any
- -----------------
obligation on the part of Waban to effect the Distribution or in any way limit
Waban's power of termination set forth in Section 7.8 hereof or alter the
consequences of any such termination from those specified in said Section 7.8.
-12-
<PAGE>
3.3 Waban Board Action. Subject to the satisfaction of the conditions set
------------------
forth in Section 3.2, the Waban Board shall, in its sole discretion, establish
the Distribution Record Date and the Distribution Date and any appropriate
procedures in connection with the Distribution.
3.4 The Distribution. Prior to the Distribution Date, subject to the terms
----------------
and conditions of this Agreement, Waban shall deliver to the Distribution Agent
a certificate representing all of the then outstanding shares of BJI Common
Stock (including the associated BJI Rights) owned by Waban. Subject to the terms
and conditions of this Agreement, Waban and BJI shall instruct the Distribution
Agent to distribute, on or as soon as practicable following the Distribution
Date, one share of BJI Common Stock (including the associated BJI Right) in
respect of each share of Waban Common Stock held by holders of record of Waban
Common Stock on the Distribution Record Date. BJI agrees to provide all
certificates that the Distribution Agent shall require in order to effect the
Distribution. All of the shares of BJI Common Stock issued in the Distribution
shall be fully paid, nonassessable and free of preemptive rights.
ARTICLE 4
CERTAIN MATTERS RELATING TO LEASE LIABILITIES
4.1 Certain Definitions.
-------------------
"BJI Default Period" shall mean a period commencing upon the occurrence of
------------------
any of the events set forth in clauses (i) through (iv) below and ending on the
first date thereafter when none of the events set forth in clauses (i) through
(iv) below are continuing:
(i) BJI is in default with respect to rent payments under at least five BJI
Leases, which such defaults have not been cured within the applicable grace
period;
(ii) (a) BJI shall fail to maintain at the end of any fiscal quarter an
actual or implied senior debt rating of at least B- by Standard & Poor's or B3
by Moody's Investors Service ("Moody's"), or, if not rated by Standard & Poor's
or Moody's, a National Association of Insurance Commissioners ("NAIC") rating of
at least 4, and (b) at the end of such quarter, BJI shall have failed to
maintain on a consolidated basis as of the end of such fiscal quarter a Fixed
Charge Coverage Ratio (as such term is defined in the Agreement, dated as of
April 4, 1995, between Waban, The First National Bank of Boston, and the other
lenders party thereto, without regard to any subsequent amendments) greater than
1.20 to 1.0;
-13-
<PAGE>
(iii) BJI or any of its subsidiaries shall be in default in the payment of
any obligation for borrowed money exceeding $10 million in principal amount
which has been accelerated and is beyond any grace period provided with respect
thereto; or
(iv) any of the following bankruptcy events shall have occurred and be
continuing:
(a) any decree or order for relief in respect of BJI or any
Significant Subsidiary (as defined in SEC Regulation S-X) of BJI
or any other three subsidiaries of BJI is entered under any
bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law
(collectively, the "Bankruptcy Law") of any jurisdiction; or
(b) BJI or any Significant Subsidiary of BJI or any other three
subsidiaries of BJI petitions or applies to any tribunal for, or
consents to, the appointment of, or the taking of possession by,
a trustee, receiver, custodian, liquidator or similar official of
BJI or any Significant Subsidiary of BJI or any other three
subsidiaries of BJI, or of any substantial part of the assets of
BJI or any Significant Subsidiary of BJI or any other three
subsidiaries of BJI, or commences a voluntary case under the
Bankruptcy Law of the United States or any similar proceedings
relating to BJI or any Significant Subsidiary of BJI or any
other three subsidiaries of BJI under the Bankruptcy Law of any
other jurisdiction; or
(c) any petition or application referred to in clause (b) above is
filed, or any such proceedings are commenced, against BJI, any
Significant Subsidiary of BJI or any other three subsidiaries of
BJI and BJI or such Significant Subsidiary or such other three
subsidiaries by any act indicates its or their approval thereof
or acquiescence therein, or an order, judgment or decree is
entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any
such proceedings, and such order, judgment or decree remains
unstayed and in effect for more than 60 days.
"BJI Lease" means any lease that constitutes a BJI Assumed Liability.
---------
"HomeBase Control Period" shall mean the period commencing on the date
-----------------------
hereof and ending upon a HomeBase Control Event (as defined in Article 4).
-14-
<PAGE>
"HomeBase Lease" means any lease under which Waban may be liable as a
--------------
tenant, sublessee, surety or guarantor, other than leases that constitute BJI
Assumed Liabilities.
"HomeBase Third Party Claim" means the assertion by any Person (other
--------------------------
than Waban, BJI or any of their Affiliates) of any claim, or the commencement by
any such Person of any Action, against BJI or Waban with respect to an
Indemnified HomeBase Lease Liability.
"Indemnified HomeBase Lease Liabilities" means any liabilities of Waban
--------------------------------------
that arise under a HomeBase Lease and for which BJI may have liability,
including liability for indemnification to TJX under the TJX Indemnification
Agreement.
"TJX Indemnification Agreement" means the Indemnification Agreement dated
-----------------------------
as of April 18, 1997 between BJI and TJX.
Section 4.2 Indemnified HomeBase Lease Liabilities.
--------------------------------------
4.2.1. Control of HomeBase Third Party Claims.
--------------------------------------
(a) During the HomeBase Control Period, (i) Waban shall have the right
to control the defense and settlement of all HomeBase Third Party Claims, (ii)
BJI shall have the right to participate, at its expense, with Waban in the
defense and settlement of any such HomeBase Third Party Claims, and (iii) Waban
shall not consent to the entry of any judgment or enter into any settlement with
respect to any HomeBase Third Party Claims without the prior written consent of
BJI, which consent will not be unreasonably withheld.
(b) BJI shall have the right at any time following the occurrence of a
HomeBase Control Event (as defined below), which is not cured within 30 days
following written notice thereof by BJI to Waban, to elect to control the
defense and settlement of all HomeBase Third Party Claims. A HomeBase Control
Event shall mean the occurrence of any of the following events:
(i) the first date on which Waban is in default with respect to
rent payments under at least five HomeBase Leases;
(ii) Waban shall have failed to perform in a material respect
any of its obligations hereunder;
(iii) (a) Waban shall have failed to maintain at the end of
any fiscal quarter an actual or implied senior debt rating of at least B- by
Standard & Poor's or B3 by Moody's or, if not rated by Standard & Poor's or
Moody's, a NAIC
-15-
<PAGE>
rating of at least 4, and (b) at the end of such quarter, Waban shall have
failed to maintain on a consolidated basis as of the end of such fiscal quarter
a Fixed Charge Coverage Ratio (as such term is defined in the Agreement, dated
as of April 4, 1995, between Waban, The First National Bank of Boston, and the
other lenders party thereto, without regard to any subsequent amendments)
greater than 1.20 to 1.0;
(iv) Waban or any of its subsidiaries shall have defaulted in
the payment of any obligation for borrowed money exceeding $10 million in
principal amount which has been accelerated and is beyond any grace period
provided with respect thereto; or
(v) any of the following bankruptcy events shall have
occurred:
(a) any decree or order for relief in respect of Waban or
any Significant Subsidiary (as defined in SEC
Regulation S-X) of Waban or any other three
subsidiaries of Waban is entered under any Bankruptcy
Law, of any jurisdiction; or
(b) Waban or any Significant Subsidiary of Waban or any
other three subsidiaries of Waban petitions or applies
to any tribunal for, or consents to, the appointment
of, or the taking of possession by, a trustee,
receiver, custodian, liquidator or similar official of
Waban or any Significant Subsidiary of Waban or any
other three subsidiaries of Waban, or of any
substantial part of the assets of Waban or any
Significant Subsidiary of Waban or any other three
subsidiaries of Waban, or commences a voluntary case
under the Bankruptcy Law of the United States or any
similar proceedings relating to Waban or any
Significant Subsidiary of Waban or any other three
subsidiaries of Waban under the Bankruptcy Law of any
other jurisdiction; or
(c) any petition or application referred to in clause (b)
above is filed, or any such proceedings are commenced,
against Waban, any Significant Subsidiary of Waban or
any other three subsidiaries of Waban and Waban or such
Significant Subsidiary or such other three subsidiaries
by any act indicates its or their approval thereof or
acquiescence therein, or an order, judgment or decree
is entered appointing any
-16-
<PAGE>
such trustee, receiver, custodian, liquidator or
similar official, or approving the petition in any
such proceedings, and such order, judgment or
decree remains unstayed and in effect for more
than 60 days.
4.2.2 Reports. Waban shall promptly report in writing to BJI any failure
-------
at any time of Waban to comply with any of the tests set forth in Section
4.2.1(b).
4.2.3 Settlements. After the exercise by BJI of the right to control
-----------
HomeBase Third Party Claims pursuant to Section 4.2.1(b), BJI shall have the
right to consent to the entry of any judgment or enter into any settlement with
respect to any HomeBase Third Party Claims in any manner it may deem
appropriate. BJI shall provide Waban with prior written notice of any
settlement agreement between BJI and the holder of any HomeBase Third Party
Claim. Waban shall have the right to participate, at its expense, in the
defense and settlement of any such HomeBase Third Party Claim.
4.2.4 Indemnification Agreement. Notwithstanding anything to the
-------------------------
contract in this Article 4, all rights of Waban and BJI with respect to the
defense and settlement of HomeBase Third Party Claims shall be subject to the
rights of TJX under the TJX Indemnification Agreement, and to the extent of any
inconsistency between the rights of the parties under this Agreement and the
rights of BJI and TJX under the TJX Indemnification Agreement, the provisions of
the TJX Indemnification Agreement shall control.
Section 4.3 Lease Renewals.
--------------
(a) Waban hereby covenants that it shall not increase the amount of base
rents scheduled to come due under, extend the term of, or exercise any option to
renew or extend any HomeBase Lease without first securing from the Person
holding the landlord's interest and from any mortgagee with respect to the
HomeBase Lease in question (if the consent of such Person or mortgagee is
required to release any liability of TJX and its Affiliates or BJI and its
Affiliates, as the case may be, on such HomeBase Lease), a full and complete
release of liability of TJX and its Affiliates, or BJI and its Affiliates, as
the case may be, on any such HomeBase Lease, in a form reasonably satisfactory
to BJI. Waban shall not transfer or assign any HomeBase Lease unless the
transferee or assignee shall execute and deliver an agreement to be bound by
terms equivalent to the terms of this Section 4.3 (which would also condition
subsequent transfers or assignments upon an equivalent transfer restriction),
and Waban shall be liable to BJI for any breach thereof.
-17-
<PAGE>
(b) BJI hereby covenants that it will not, during any BJI Default
Period, increase the amount of base rents scheduled to come due under, extend
the term of, or exercise any option to renew or extend any BJI Lease without
first securing from the Person holding the landlord's interest and from any
mortgagee with respect to the BJI Lease in question (if the consent of such
Person or mortgagee is required to release any liability of Waban and its
Affiliates on such BJI Lease), a full and complete release of liability of Waban
and its Affiliates on any such BJI Lease, in a form reasonably satisfactory to
Waban.
Section 4.4 Reimbursement. If BJI is required to make any payment to any
-------------
Person other than Waban with respect to any HomeBase Third Party Claim, Waban
shall promptly reimburse BJI for any such payments. To the extent of any
inconsistency between the provisions of this Article 4 and Article 5, the
provisions of this Article 4 shall control.
ARTICLE 5
INDEMNIFICATION
5.1 Certain Definitions.
-------------------
"BJI Indemnitees" means BJI and each Affiliate of BJI and each of
---------------
their respective directors, officers, employees and agents and each of the
heirs, executors, successors and assigns of any of the foregoing.
"Indemnifiable Losses" means all losses, liabilities, claims, damages,
--------------------
obligations, payments, costs and expenses, matured or unmatured, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, known or unknown
(including, without limitation, the costs and expenses of any and all Actions,
threatened Actions, demands, assessments, judgments, settlements and compromises
relating thereto and reasonable attorneys' fees and any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any such Actions or threatened Actions).
"Waban Indemnitees" means Waban and each Affiliate of Waban and each
-----------------
of their respective directors, officers, employees and agents and each of the
heirs, executors, successors and assigns of any of the foregoing.
5.2 Indemnification by Waban. Except as set forth in the Tax Sharing
------------------------
Agreement, the Services Agreement or the Employee Benefits Agreement, Waban
shall indemnify, defend and hold harmless the BJI Indemnitees from and against:
-18-
<PAGE>
(i) the Waban Liabilities; and
(ii) any and all Indemnifiable Losses of the BJI Indemnitees arising
out of, or due to, directly or indirectly, any failure to perform, or violation
of, any provision of this Agreement, the Ancillary Agreements or any other
agreement entered into in connection with this Agreement, which is to be
performed or complied with by Waban or the Waban Subsidiaries.
5.3 Indemnification by BJI. Except as set forth in the Tax Sharing
----------------------
Agreement, the Services Agreement or the Employee Benefits Agreement, BJI shall
indemnify, defend and hold harmless the Waban Indemnitees from and against:
(i) the BJI Assumed Liabilities; and
(ii) any and all Indemnifiable Losses of the Waban Indemnities arising
out of, or due to, directly or indirectly, any failure to perform, or violation
of, any provision of this Agreement, the Ancillary Agreements or any other
agreements to be entered into in connection with this Agreement, which is to be
performed or complied with by BJI or the BJI Subsidiaries.
5.4 Limitations on Indemnification Obligations. The amount which any
------------------------------------------
party (an "Indemnifying Party") is or may be required to pay to any other party
(an "Indemnitee") pursuant to Sections 5.2 or 5.3 hereof shall be reduced
(including, without limitation, retroactively) by any insurance proceeds or
other amounts actually recovered by or on behalf of such Indemnitee in reduction
of the related Indemnifiable Loss. If any Indemnitee shall have received the
payment required by this Agreement from an Indemnifying Party in respect of an
Indemnifiable Loss and shall subsequently actually receive insurance proceeds or
other amounts in respect of such Indemnifiable Loss, then such Indemnitee shall
pay to such Indemnifying Party a sum equal to the amount of such insurance
proceeds or other amounts actually received (net of any expenses in obtaining
the same), but not to exceed the net amount of the payments previously received
by the Indemnitee from the Indemnifying Party in respect of such Indemnifiable
Loss.
5.5 Procedure for Indemnification.
-----------------------------
5.5.1 Third Party Claims; Notice. If an Indemnitee shall receive
--------------------------
notice or otherwise learn of the assertion by any other Person of any claim
or of the commencement by any such Person of any Action (a "Third Party
Claim") with respect to which an Indemnifying Party may be obligated to
provide indemnification pursuant to this Article 5, such Indemnitee shall
give the Indemnifying Party written notice thereof within 10 business days
after becoming aware of such Third Party Claim; provided, however, that the
-------- -------
failure
-19-
<PAGE>
of any Indemnitee to give notice as provided in this Section 5.5.1 shall
not relieve the related Indemnifying Party of its obligations under this
Article 5, except to the extent that such Indemnifying Party actually is
prejudiced by such failure to give notice. Such notice shall describe the
Third Party Claim in reasonable detail, and shall indicate the amount
(estimated if necessary) of the Indemnifiable Loss that has been or may be
sustained by such Indemnitee. Thereafter, such Indemnitee shall deliver to
such Indemnifying Party, within five business days after the Indemnitee's
receipt thereof, copies of all notices and documents (including court
papers) received by the Indemnitee relating to the Third Party Claim.
5.5.2 Defense of Third Party Claims. In case any Third Party Claim is
-----------------------------
brought against an Indemnitee, the Indemnifying Party will be entitled to
participate in and to assume the defense thereof to the extent that it may
wish, with counsel reasonably satisfactory to such Indemnitee, and after
notice from an Indemnifying Party to such Indemnitee of its election so to
assume the defense thereof and for so long as the Indemnifying Party
diligently pursues such defense, such Indemnifying Party will not be liable
to such Indemnitee for any legal or other expenses subsequently incurred by
such Indemnitee in connection with the defense thereof; provided, however,
-------- -------
that, if the defendants in any such claim include both the Indemnifying
Party and one or more Indemnitees and in any Indemnitee's reasonable
judgment a conflict of interest between one or more of such Indemnitees and
such Indemnifying Party exists in respect of such claim, such Indemnitees
shall have the right to employ separate counsel to represent such
Indemnitees, and in that event the reasonable fees and expenses of such
separate counsel (but not more than one separate counsel reasonably
satisfactory to the Indemnifying Party for all Indemnitees with respect to
any single Third Party Claim or group of consolidated related Third Party
Claims) shall be paid by such Indemnifying Party. If the Indemnifying Party
undertakes to assume the defense of a Third Party Claim, it shall promptly
notify the Indemnitee in writing of its intention to do so.
5.5.3 Cooperation by Indemnitee. If an Indemnifying Party chooses to
-------------------------
defend or to seek to compromise or settle any Third Party Claim, each
related Indemnitee shall make available to such Indemnifying Party any
personnel or any books, records or other documents within its control or
which it otherwise has the ability to make available that are necessary or
appropriate for such defense, settlement or comprise, and shall otherwise
cooperate in the defense, settlement or compromise of such Third Party
Claim.
5.5.4 Limitation on Authority to Settle Claim. Notwithstanding
---------------------------------------
anything else in this Section 5.5 to the contrary, neither an Indemnifying
Party
-20-
<PAGE>
nor an Indemnitee shall settle or compromise any Third Party Claim over the
objection of the other; provided, however, that consent to compromise or
-------- -------
settlement shall not be unreasonably withheld, except that consent to any
compromise or settlement involving equitable or injunctive relief against any
Indemnifying Party or Indemnitee may be withheld by such Indemnifying Party or
Indemnitee for any reason. No Indemnifying Party shall consent to any judgment
or enter into any settlement or compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
related Indemnitee of a written release from all Liability with respect to such
Third Party Claim.
5.5.5 Other Claims. Any claim on account of any Indemnifiable Loss
------------
which does not result from a Third Party Claim shall be asserted by written
notice given by the Indemnitee to the related Indemnifying Party. Such
Indemnifying Party shall have a period of 30 days after the receipt of such
notice within which to respond thereto. If such Indemnifying Party does not
respond within such 30-day period, such Indemnifying Party shall be deemed to
have accepted responsibility to make payment and shall have no further right to
contest the validity of such claim. If such Indemnifying Party does respond
within such 30-day period and rejects such claim in whole or in part, such
Indemnitee shall be free to pursue such remedies as may be available to such
Indemnitee under applicable law.
5.5.6 Advancement of Certain Expenses. Upon the written demand of an
-------------------------------
Indemnitee, an Indemnifying Party shall reimburse or advance funds to such
Indemnitee for all Indemnifiable Losses reasonably incurred by it in connection
with investigating or defending any Third Party Claim in advance of its final
disposition; provided, however, that such reimbursement need be made only upon
-------- -------
delivery to the Indemnifying Party of an undertaking by such Indemnitee to repay
all amounts so reimbursed or advanced if it shall ultimately be determined that
such Indemnitee is not entitled to indemnification under this Article 5 or
otherwise.
5.5.7 Subrogation to Rights of Indemnitee. In the event of payment by
-----------------------------------
an Indemnifying Party to any Indemnitee in connection with any Third Party Claim
of the full amount payable under this Article 5 in respect thereof, such
Indemnifying Party shall be subrogated to and shall stand in the place of such
Indemnitee as to any events or circumstances in respect of which such Indemnitee
may have any right or claim relating to such Third Party Claim against any
claimant or plaintiff asserting such Third Party Claim or as against any other
Person. In such event, such Indemnitee shall cooperate with such Indemnifying
Party in a reasonable manner, and at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right or claim.
-21-
<PAGE>
5.6 Special Provision Relating to Certain Pre-Distribution
------------------------------------------------------
Liabilities. Notwithstanding anything contained herein to the contrary, if a
- -----------
Third Party Claim relates to a Liability of Waban not specifically allocable to
the BJI Business or the HomeBase Business relating to events occurring prior to
the Distribution or any Actions relating thereto (i.e., a Liability referred to
in Item 2(b) of Schedule B as to which BJI is assuming 75% of the Liability),
then BJI shall have the right to control the defense and settlement of such
claim.
5.7 Remedies Cumulative. The remedies provided in this Article 5
-------------------
shall be cumulative and shall not preclude assertion by any Indemnitee of any
other rights or the seeking of any and all other remedies against any
Indemnifying Party; provided, however, that all remedies sought or asserted by
-------- -------
an Indemnitee against an Indemnifying Party with respect to an Indemnifiable
Loss shall be limited by and be subject to the provisions of this Article 5.
ARTICLE 6
ACCESS TO INFORMATION
6.1 Provision of Corporate Records. Prior to or as soon as
------------------------------
practicable following the Distribution Date, Waban shall deliver to BJI all
existing corporate books and records in Waban's possession relating to the BJI
Business, including original corporate minute books, stock ledgers and
certificates and corporate seals of each of BJI and each BJI Subsidiary, and all
active agreements, active litigation files and records of filings. From and
after the Distribution Date, all such books and records shall be the property of
BJI.
6.2 Access to Information. From and after the Distribution Date,
---------------------
each of Waban and BJI shall afford to the other and the other's authorized
accountants, counsel and other designated representatives reasonable access
(including using reasonable efforts to give access to third parties possessing
information and providing reasonable access to its own employees who are in
possession of relevant information) and duplicating rights during normal
business hours to all records, books, contracts, instruments, computer data and
other data and information (collectively, "Information") within the possession
or control of Waban or BJI, as the case may be, relating to the other's pre-
Distribution business, insofar as such access is reasonably required by the
other party. Information may be requested under this Section 6.2 for, without
limitation, audit, accounting, claims, litigation, insurance and tax purposes,
as well as for purposes of fulfilling disclosure and reporting obligations and
for performing this Agreement and the transactions contemplated hereby.
-22-
<PAGE>
6.3 Production of Witnesses. From and after the Distribution Date,
-----------------------
each of BJI and Waban shall use reasonable efforts to make available to the
other upon written request, its and its Subsidiaries' officers, directors,
employees and agents as witnesses to the extent that such persons may reasonably
be required in connection with any legal, administrative or other proceedings in
which the requesting party may from time to time be involved relating to its
pre-Distribution business.
6.4 Reimbursement. Except to the extent otherwise contemplated by
-------------
the Services Agreement or any other Ancillary Agreement, a party providing
Information or personnel to the other party under this Article 6 shall be
entitled to receive from the recipient, upon the presentation of invoices
therefor, payments for such amounts, relating to supplies, disbursements and
other out-of-pocket expenses, as may be reasonably incurred in providing such
Information; provided, however, that no such reimbursements shall be required
-------- -------
for the salary or cost of fringe benefits or similar expenses pertaining to
employees or directors of the providing party.
6.5 Retention of Records. Except as otherwise required by law or
--------------------
agreed to in writing, each of Waban and BJI shall retain, and shall cause each
of its Subsidiaries to retain, in accordance with such party's record retention
program, all material Information within such party's possession or under its
control relating to the other and the other's Subsidiaries. Notwithstanding the
foregoing, in lieu of retaining any specific Information, Waban or BJI may offer
in writing to deliver such Information to the other and, if such offer is not
accepted within 45 days, the offered Information may be destroyed or otherwise
disposed of at any time. If a recipient of such offer shall request in writing
prior to the scheduled date for such destruction or disposal that any of the
information proposed to be destroyed or disposed of be delivered to such
requesting party, the party proposing the destruction or disposal shall promptly
arrange for the delivery of such of the information as was requested at the cost
of the requesting party.
6.6 Confidentiality. Each of Waban and BJI shall hold, and shall
---------------
use reasonable efforts to cause its Subsidiaries, Affiliates, consultants and
advisors to hold, in strict confidence all Information concerning the other
obtained by it prior to the Distribution Date or furnished by the other or the
other's representatives pursuant to this Agreement (except to the extent that
such Information has been (i) in the public domain through no fault of such
party, or (ii) later lawfully acquired from other sources by such party), and
each party shall not release or disclose such Information to any other Person,
except its auditors, attorneys, financial advisors, bankers and other
consultants and advisors, unless compelled to disclose by judicial or
administrative process or, as advised by its counsel, by other requirements of
law.
ARTICLE 7
-23-
<PAGE>
MISCELLANEOUS
7.1 Rules of Construction. Notwithstanding any other provisions in this
---------------------
Agreement, in the event and to the extent that there shall be a conflict between
the provisions of this Agreement (or any Conveyancing Instrument) and the
provisions of the Tax Sharing Agreement, the Services Agreement or the Employee
Benefits Agreement, the provisions of the Tax Sharing Agreement, the Services
Agreement or the Employee Benefits Agreement, as the case may be, shall control.
Waban and BJI have participated jointly in the negotiation and drafting of this
Agreement and the Ancillary Agreements. In the event an ambiguity or question
of intent or interpretation arises, this Agreement and the Ancillary Agreements
shall be construed as if drafted jointly by the parties and no presumption or
burden of proof shall arise favoring or disfavoring either party by virtue of
the authorship of any of the provisions of this Agreement or the Ancillary
Agreements.
7.2 Survival of Agreements. Except as otherwise contemplated by this
----------------------
Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Date.
7.3 Expenses. Except as otherwise set forth in this Agreement or any
--------
Ancillary Agreement, Waban and BJI shall bear 25% and 75%, respectively, of all
costs and expenses incurred in connection with the preparation, execution,
delivery and implementation of this Agreement, and with the consummation of the
transactions to effect the Distribution contemplated by this Agreement,
including, without limitation, registration fees, listing fees, printing costs
and legal and accounting fees, to the extent such fees have not been paid prior
to the Distribution Date.
7.4 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic substantive laws of The Commonwealth of
Massachusetts without regard to any choice or conflict of law rule or provision
that would result in the application of the domestic substantive laws of any
other jurisdiction.
7.5 Notices. Any notice, request, demand, claim, or other communication
-------
hereunder shall be in writing and shall be delivered by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below, and shall be deemed duly given on the date which
is three days after the date such notice, request, demand, claim, or other
communication is sent:
to Waban:
-24-
<PAGE>
Waban Inc.
3345 Michelson Drive
Irvine, California 02715
Attention: President
to BJI:
BJ's Wholesale Club, Inc.
One Mercer Road
Natick, Massachusetts 01760
Attn: President
Notwithstanding the foregoing, any party may send any notice, request, demand,
claim, or other communication hereunder to the intended recipient at the address
set forth above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it is actually received by the
intended recipient. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
7.6 Amendments. This Agreement may not be modified or amended except by
----------
an agreement in writing signed by the parties hereto.
7.7 Successors and Assigns. This Agreement and all of the provisions
----------------------
hereof shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns.
7.8 Termination. This Agreement may be terminated and the Distribution
-----------
abandoned at any time prior to the Distribution Date by and in the sole
discretion of the Waban Board without the approval of BJI or of Waban's
stockholders. In the event of such termination, no party shall have any
liability of any kind under this Agreement to any other party.
7.9 No Third Party Beneficiaries. Except for the provisions of Article 5
----------------------------
hereof relating to Indemnitees, this Agreement is solely for the benefit of the
parties hereto and their respective Subsidiaries and Affiliates and shall not be
deemed to confer upon third parties any remedy, claim, liability, reimbursement,
claim of action or other right in excess of those existing without reference to
this Agreement.
-25-
<PAGE>
7.10 Titles and Headings. Titles and headings to sections herein are
-------------------
inserted for the convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
7.11 Exhibits and Schedules. The Exhibits and Schedules shall be
----------------------
construed with and as an integral part of this Agreement to the same extent as
if the same had been set forth verbatim herein.
7.12 Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
7.13 Legal Enforceability. Any provision of this Agreement which is
--------------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision or remedies otherwise available to any party
hereto. Without prejudice to any rights or remedies otherwise available to any
party hereto, each party hereto acknowledges that damages would be an inadequate
remedy for any breach of the provisions of this Agreement and agrees that the
obligations of the parties hereunder shall be specifically enforceable.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
WABAN INC.
By
--------------------------------------
President
BJ'S WHOLESALE CLUB, INC.
By
--------------------------------------
President
-26-
<PAGE>
SCHEDULE A
BJI Assets
----------
1. All assets arising out of or in connection with or related principally to
the BJI Business, including, without limitation:
(a) all assets reflected on the pro forma condensed balance sheet of BJI as
at the fiscal month end coincident with or immediately preceding the
Distribution Date, as prepared and agreed to by Waban and BJI;
(b) all of the issued and outstanding stock of the BJI Subsidiaries held,
directly or indirectly, by Waban;
(c) the real property owned by Waban or a Waban Subsidiary and used
exclusively in the BJI Business, including all buildings, structures and
improvements thereon;
(d) all right, title and interest of Waban or any Waban Subsidiary in and
to all agreements, contracts and leases relating to the operations of the BJI
Business;
(e) all machinery, equipment and other items of tangible personal property
owned by Waban or a Waban Subsidiary which are used exclusively in the BJI
Business;
(f) all right, title and interest of Waban or any Waban Subsidiary in and
to intellectual property rights consisting of tradenames, trademarks and similar
intangible items relating solely to the BJI Business;
(g) all books and records of Waban or any Waban Subsidiary (including
computerized books and records) that relate principally to the BJI Business and
are necessary for BJI and its Subsidiaries to operate the BJI Business,
including without limitation, the corporate documents and records of corporate
proceedings of the BJI Business, all books and records relating to BJI
employees, the purchase of supplies and services by the BJI Business, and all
files relating to any Action being assumed by BJI as part of the BJI Assumed
Liabilities owned by Waban or any Waban Subsidiary (other than those required by
law to be maintained by Waban or any Waban Subsidiary); and
(h) cash (as calculated by Waban in accordance with past practices) in an
amount of $5,000,000.
-27-
<PAGE>
2. All of Waban's right, title and interest in and to the leases relating to
Waban's headquarters located in Natick, Massachusetts and all machinery,
equipment and other items of tangible personal property owned by Waban which are
located in Natick, Massachusetts.
-28-
<PAGE>
SCHEDULE B
BJI Assumed Liabilities
-----------------------
1. All Liabilities arising out of or in connection with or related principally
to the BJI Business, whether arising before or after the Distribution Date,
including without limitation:
(a) all Liabilities reflected on the pro forma condensed balance sheet of
BJI as at the fiscal month end coincident with or immediately preceding the
Distribution Date, as prepared and agreed to by Waban and BJI;
(b) all Liabilities of Waban under agreements, contracts and leases that
are BJI Assets; and
(c) all Liabilities relating to Actions arising out of or in connection
with the operations of the BJI Business.
2. The following liabilities of Waban:
(a) 75% of the principal amount of all bank indebtedness of Waban existing
as of the Distribution Date; and
(b) 75% of all other Liabilities of Waban not specifically allocable to the
BJI Business or the HomeBase Business relating to events occurring prior to the
Distribution and any Actions relating thereto.
-29-
<PAGE>
SCHEDULE C
BJI Subsidiaries
----------------
<TABLE>
<CAPTION>
Name of Subsidiary Jurisdiction of Incorporation
- ------------------ -----------------------------
<S> <C>
Natick Security Corp.................Massachusetts
Natick Corporation...................Delaware
Natick First Realty Corp.............Connecticut
Natick Second Realty Corp............Massachusetts
Natick NJ Flemington Realty Corp.....New Jersey
Natick Fourth Realty Corp............New Jersey
Natick Fifth Realty Corp.............Maryland
Natick Sixth Realty Corp.............Connecticut
Natick MA Realty Corp................Massachusetts
Natick NH Realty Corp................New Hampshire
Natick NY Realty Corp................New York
Natick NY 1992 Realty Corp...........New York
Natick PA Realty Corp................Pennsylvania
Natick VA Realty Corp................Virginia
Natick Portsmouth Realty Corp........New Hampshire
Natick NJ Realty Corp................New Jersey
Natick NJ 1993 Realty Corp...........New Jersey
BJ's PA Distribution Center, Inc.....Pennsylvania
BJ's MA Distribution Center, Inc.....Massachusetts
Natick CT Realty Corp................Connecticut
Natick ME 1995 Realty Corp...........Maine
Natick NY 1995 Realty Corp...........New York
Natick MA 1995 Realty Corp...........Massachusetts
Natick NH 1994 Realty Corp...........New Hampshire
Natick PA 1995 Realty Corp...........Pennsylvania
</TABLE>
-30-
<PAGE>
<TABLE>
<S> <C>
CWC Beverages Corp...................Connecticut
FWC Beverages Corp...................Florida
JWC Beverages Corp...................New Jersey
Mormax Beverages Corp................Delaware
Mormax Corporation...................Massachusetts
RWC Beverages Corp...................Rhode Island
YWC Beverages Corp...................New York
Natick Lancaster Realty Corp.........Pennsylvania
Natick Yorktown Realty Corp..........New York
Natick Waterford Realty Corp.........Connecticut
Natick Sennett Realty Corp...........New York
Natick Bowie Realty Corp.............Maryland
Natick Pembroke Realty Corp..........Florida
Natick PA Plymouth Realty Corp.......Pennsylvania
Natick Realty, Inc...................Maryland
Waban Export Inc.....................Barbados
</TABLE>
-31-
<PAGE>
SCHEDULE D
Waban Subsidiaries
------------------
<TABLE>
<CAPTION>
Name of Subsidiary Jurisdiction of Incorporation
- ------------------ -----------------------------
<S> <C>
HomeClub, Inc.............................Nevada
HomeClub, Inc. of Texas...................Delaware
Fullerton Corporation.....................Delaware
HCI Development Corp......................California
HomeClub First Realty Corp................Colorado
HCWA Realty Corp..........................Washington
HCCA Realty Corp..........................California
HBNM Realty Corp..........................New Mexico
HBCA 1993 Realty Corp.....................California
HBOR Realty Corp..........................Oregon
HBUT Realty Corp..........................Utah
HCWA 1993 Realty Corp.....................Washington
HBCO Realty Corp..........................Colorado
HBNM 1994 Realty Corp.....................New Mexico
HBCO 1994 Realty Corp.....................Colorado
HBCA Pomona Realty Corp...................California
HBCA Vacaville Realty Corp................California
</TABLE>
-32-
<PAGE>
SCHEDULE E
Intercompany Accounts
---------------------
Matters Relating to Natick Corporation
- --------------------------------------
On or prior to the Distribution Date, Waban will repay to Natick
Corporation all outstanding loans made by Natick Corporation to Waban, together
with all accrued interest thereon. Immediately after such repayment, Natick
Corporation shall declare and pay to Waban a dividend equal to all of the
retained earnings and surplus of Natick Corporation.
Cash
- ----
As contemplated by Item 1(h) of Schedule A, as of the Distribution Date,
Waban shall provide for BJI to have cash (as calculated by Waban in accordance
with past practices) in an amount of $5,000,000.
General
- -------
As contemplated by Item 2(a) of Schedule B, BJI shall assume 75% of the
principal amount of all bank indebtedness of Waban existing as of the
Distribution Date. Except as otherwise contemplated by this Agreement or any
Ancillary Agreement, effective as of the Distribution Date, all loans and
advances from Waban to BJI (or any corporation which will become a BJI
Subsidiary) outstanding immediately prior to the Distribution shall be deemed to
be a contribution to capital from Waban to BJI.
-33-
<PAGE>
EXHIBIT 10.2
------------
________________________________________________________________________________
________________________________________________________________________________
SERVICES AGREEMENT
BETWEEN
BJ'S WHOLESALE CLUB, INC.
AND
WABAN INC.
Dated as of _____________, 1997
________________________________________________________________________________
<PAGE>
SERVICES AGREEMENT
------------------
This SERVICES AGREEMENT (the "Agreement"), dated as of June __, 1997, is
entered into by and between Waban Inc., a Delaware corporation ("Waban"), and
BJ's Wholesale Club, Inc., a Delaware corporation and, as of the date hereof, a
wholly owned subsidiary of Waban ("BJI").
WITNESSETH:
----------
WHEREAS, Waban and BJI have entered into a Separation and Distribution
Agreement (the "Distribution Agreement") which contemplates the separation of
Waban's "BJ's Wholesale Club" and "HomeBase" businesses into two distinct
companies by transferring the BJ's Wholesale Club business to BJI (the
"Separation") and, then, distributing all of the outstanding shares of BJI
Common Stock on a pro rata basis to the holders of Waban Common Stock (the
"Distribution"); and
WHEREAS, each of BJI and Waban wishes to provide for an orderly and
efficient separation of their businesses; and
WHEREAS, the successful operation of Waban's business will require the
performance of certain administrative services which Waban has previously
provided itself and BJI is willing to provide to Waban; and
WHEREAS, the Distribution Agreement contemplates the execution and delivery
of this Agreement, the purpose of which is to set forth certain matters
regarding the provision of administrative services by BJI to Waban.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
1. SERVICES
1.1. Services to be Made Available. In accordance with the terms and
-----------------------------
provisions of this Agreement, BJI agrees to perform for Waban the services
described in the Annexes hereto (collectively, the "Services") in the amounts
and to the extent specified with respect to each such Service in the applicable
Annex as follows:
Service Applicable Annex
------- ----------------
Tax A
Other Professional Services B
<PAGE>
1.2. Fees for Services. Waban agrees to pay to BJI a fee for each of the
-----------------
Services as specified in the applicable Annex hereto.
Not more often than once per fiscal month, BJI shall forward to Waban
invoices for the Services listing the Services provided hereunder and listing
the fees for such Services, setting forth in reasonable detail the calculation
of the amounts charged. Invoices for Services provided for partial fiscal months
and relating to Services for which the fees are to be calculated on a monthly
basis shall be based upon (a) the number of business days during which services
were provided, divided by (b) the number of business days in such fiscal month.
Within fifteen days of receiving an invoice, Waban shall pay to BJI the amount
invoiced unless it shall in good faith dispute the types and/or amounts of
Services set forth on such invoice as having been provided during the period
covered by such invoice. In the event of such good faith dispute, Waban shall
pay the fees set forth on such invoice for all Services the amounts of which are
not in dispute and the parties hereto agree to use their respective best efforts
to resolve such dispute within ten days. If such dispute is not resolved within
ten days, either party hereto may seek binding arbitration of such dispute in
accordance with the provisions of Section 3.8 hereof. With respect to any task
that BJI agrees to perform hereunder, BJI shall, at Waban's request, inform
Waban of the person(s) who are expected to perform such tasks and such persons'
hourly rates applicable thereto.
1.3. Term of Agreement. This Agreement shall become effective as of the
-----------------
date of the Distribution (the "Distribution Date") and shall terminate with
respect to each Service on the date specified for such Service in the applicable
Annex hereto.
1.4. Timely Performance and Cooperation. BJI shall use all reasonable
----------------------------------
efforts in the timely performance of the Services and Waban shall use all
reasonable efforts to cooperate with BJI in connection with the provision of the
Services.
2. REPRESENTATIONS AND WARRANTIES.
As an inducement to enter into this Agreement, each party represents to and
agrees with the other that:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power to own, lease and operate its properties, to carry on its
business as presently conducted and to carry out the transactions
contemplated by this Agreement;
(b) it has duly and validly taken all corporate action necessary to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby;
-2-
<PAGE>
(c) this Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable against it
in accordance with its terms; and
(d) none of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or the compliance with
any of the provisions of this Agreement will (i) conflict with or result in
a breach of any provision of its corporate charter or by-laws, (ii) breach,
violate or result in a default under any of the terms of any agreement or
other instrument or obligation to which it is a party or by which it or any
of its properties or assets may be bound, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to it or
affecting any of its properties or assets.
3. OTHER TERMS AND PROVISIONS
3.1. Independent Contractor Status. BJI shall perform all services under
-----------------------------
this Agreement as an "independent contractor" and not as an agent of Waban. BJI
is not authorized to assume or create any obligation or responsibility, express
or implied, on behalf of, or in the name of Waban or to bind Waban in any
manner.
3.2. Limitation of Liability and Reimbursement. Neither BJI, nor any of
-----------------------------------------
its officers, employees, agents or affiliates (including its attorneys and
accountants), shall in any event be liable for any damages, including but not
limited to loss of profits or revenue, which arise out of BJI's (or any such
officer's, employee's, agent's or affiliate's) performance or failure to perform
any of its obligations under this Agreement, other than those damages caused by
BJI's (or such person's) willful misconduct or gross negligence. Waban hereby
agrees to indemnify BJI and hold BJI harmless for all costs (including
attorneys' fees) and damages incurred by BJI to third parties as a result of the
provision by BJI pursuant to this Agreement of the Services, other than costs or
damages incurred by BJI as a result of its willful misconduct or gross
negligence.
3.3. Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable, and the
parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction.
3.4. Assignment. Except by operation of law or in connection with the sale
----------
of all or substantially all the business or assets of a party hereto, this
Agreement shall not
-3-
<PAGE>
be assignable, in whole or in part, directly or indirectly, by either party
hereto without the prior written consent of the other, and any attempt to assign
any rights or obligations arising under this Agreement without such consent
shall be void; provided, however, that the provisions of this Agreement shall be
binding upon, inure to the benefit of and be enforceable by BJI and Waban and
their respective successors and permitted assigns.
3.5. Further Assurances. Subject to the provisions hereof, each of BJI and
------------------
Waban shall make, execute, acknowledge and deliver such other agreements,
documents or instruments and take or cause to be taken such other actions as may
be reasonably required in order to effectuate the purposes of this Agreement and
to consummate the transactions contemplated hereby. Subject to the provisions
hereof, each of BJI and Waban shall, in connection with entering into this
Agreement, performing its obligations hereunder and taking any and all actions
relating hereto, comply with all applicable laws, regulations, orders and
decrees, obtain all required consents and approvals and make all required
filings with any governmental agency, or other regulatory or administrative
agency, commission or similar authority and promptly provide the other with all
such information as the other may reasonably request in order to be able to
comply with the provisions of this sentence.
3.6. Parties in Interest. Nothing in this Agreement expressed or implied
-------------------
is intended or shall be construed to confer any right or benefit upon any person
or entity other than BJI and Waban and their respective successors and permitted
assigns.
3.7. Waivers, Etc. No failure or delay on the part of BJI or Waban in
-------------
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No modification or waiver of any provision of this Agreement
nor consent to any departure by BJI or Waban therefrom shall in any event be
effective unless the same shall be in writing and signed by the party against
whom such modification or waiver is asserted and then such modification or
waiver shall be effective only in the specific instance and for the purpose for
which given.
3.8. Arbitration. Each party hereto may refer any dispute arising under
-----------
this Agreement or the matters contemplated hereby (including without limitation
the fees for Services provided hereunder) to binding arbitration in the
Commonwealth of Massachusetts under the commercial arbitration rules of the
American Arbitration Association before a panel of three arbitrators, one
selected by each party and the third selected by the other two arbitrators or,
if they are unable to agree, by the American Arbitration Association. Any award
made in such arbitration may be enforced in any court of competent jurisdiction.
-4-
<PAGE>
3.9. Changes of Law. If, due to any change in applicable law or
--------------
regulations or the interpretation thereof by any court of law or other governing
body having jurisdiction subsequent to the date of this Agreement, performance
of any provision of this Agreement or any transaction contemplated thereby shall
become impracticable or impossible, the parties hereto shall use their best
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such provision.
3.10. Confidentiality. Subject to any contrary requirement of law and the
---------------
right of each party to enforce its rights hereunder in any legal action, each
party shall keep strictly confidential and shall cause its employees and agents
to keep strictly confidential any information which it or any of its agents or
employees may acquire pursuant to, or in the course of performing its
obligations under, any provision of this Agreement; provided, however, that such
obligation to maintain confidentiality shall not apply to information which (a)
at the time of disclosure was in the public domain not as a result of acts by
the receiving party, (b) was in the possession of the receiving party at the
time of disclosure, or (c) was received by the receiving party from a third
party that does not require the receiving party to maintain the confidentiality
of such information, and that is not in violation of any contractual, legal or
fiduciary obligation to the disclosing party with respect to such information.
3.11. Entire Agreement. Except as provided in the Separation and
----------------
Distribution Agreement of even date herewith between Waban and BJI, this
Agreement contains the entire understanding of the parties with respect to the
provisions of Services from BJI to Waban.
3.12. Titles and Headings. Titles and headings to sections herein are
-------------------
inserted for the convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
3.13. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
3.14. Notices. Any notice, request, demand, claim, or other communication
hereunder shall be in writing and shall be delivered by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below, and shall be deemed duly given on the date which
is three days after the date such notice, request, demand, claim, or other
communication is sent:
BJI at: One Mercer Road
------
Natick, MA 01760
Attn: Treasurer
-5-
<PAGE>
Waban at: 3345 Michelson Drive
--------
Irvine, CA 02715
Attn: Treasurer
Notwithstanding the foregoing, any party may send any notice, request, demand,
claim, or other communication hereunder to the intended recipient at the address
set forth above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic mail),
but no such notice, request, demand, claim, or other communication shall be
deemed to have been duly given unless and until it is actually received by the
intended recipient. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
3.15. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the domestic substantive laws of The Commonwealth of
Massachusetts without regard to any choice or conflict of law rule or provision
that would result in the application of the domestic substantive laws of any
other jurisdiction.
IN WITNESS WHEREOF, BJI and Waban have caused this Agreement to be duly
executed by their respective officers, each of whom is fully authorized, all as
of the day and year first above written.
BJ'S WHOLESALE CLUB, INC.
By:______________________________________
President
WABAN INC.
By:_______________________________________
President
-6-
<PAGE>
ANNEX A TO SERVICES AGREEMENT
-----------------------------
MEMORANDUM
----------
To: B. Langsdorf
From: C. Cody
Subject: SERVICES PROVIDED BY BJI TO WABAN/HOMEBASE
================================================================================
Below is a description of the services the BJI Tax Department will
provide Waban/HomeBase.
Federal & State Tax Returns
---------------------------
The BJI Tax Department will prepare and file, after review by
Waban/HomeBase, all federal and state income, net worth and franchise
tax returns for all filings through the taxable year ending January
31, 1998. The BJI Tax Department will maintain or prepare all tax
ledgers, tax credit programs, service fee calculations, accounting tax
provisions and timely file all tax extensions as needed for the above
period, and prepare all estimated tax payments required to be made
through October 31, 1998.
Annual Reports to the Secretaries of State
------------------------------------------
The BJI Tax Department will prepare and file, after review by
Waban/HomeBase, all annual reports to the Secretaries of State
required to be filed through October 31, 1998.
Employee Benefit Plan Filings
-----------------------------
The BJI Tax Department will prepare and file, after review by
Waban/HomeBase, all employee benefit plan filings which include the
Forms 5500, Form 990 and the PBGC filing for plan years ending on or
before January 31, 1998.
Audits
------
<PAGE>
The BJI Tax Department will handle the federal and state income tax
audits through any post-audit conference or protest for all audits of
returns related to taxable years in which BJI was part of the Waban
Inc. consolidated federal return.
Miscellaneous
-------------
The BJI Tax Department will prepare and file all payroll tax filings
related to the third quarter of 1997 and periods prior thereto.
The BJI Tax Department will provide tax research through
October 31, 1998.
COST TO WABAN INC.
------------------
The FYE 1/31/98 charge to Waban/HomeBase will be $_______. This
amount will be charged monthly as follows:
<TABLE>
<S> <C>
August $
September
October
November
December
January
_________
$
</TABLE>
<PAGE>
ANNEX B TO SERVICES AGREEMENT
-----------------------------
Other Professional Services
---------------------------
The following professional advisory services, as reasonably requested by
Waban and as may be agreed to by BJI from time to time, shall be provided by BJI
to Waban for a period of up to twelve months after the Distribution Date. This
Annex describes the terms on which any such services may be provided by BJI and
does not require BJI to provide such services.
Risk Management
Legal
Investor Relations
Treasury
Such services shall be billed to Waban on an hourly basis at 2.5 times the
providing employee's hourly rate (calculated as such person's annualized base
salary divided by 2,000).
In addition, Waban shall reimburse BJI for the out-of-pocket expenses
incurred by the providing employee in the performance of such services.
<PAGE>
EXHIBIT 10.3
TAX SHARING AGREEMENT
This TAX SHARING AGREEMENT (the "Agreement"), dated as of June __, 1997, is
between Waban Inc., a Delaware corporation ("Waban") and BJ's Wholesale Club,
Inc., a Delaware corporation and, as of the date hereof, a wholly owned
subsidiary of Waban ("BJI").
WHEREAS, Waban and BJI have entered into a Separation and Distribution
Agreement (the "Distribution Agreement") which contemplates the separation of
Waban's "BJ's Wholesale Club" and "HomeBase" businesses into two distinct
companies by transferring the BJ's Wholesale Club business to BJI (the
"Separation") and, then, distributing all of the outstanding shares of BJI
Common Stock on a pro rata basis to the holders of Waban Common Stock (the
"Distribution");
WHEREAS, following the Distribution, Waban will change its name to
HomeBase, Inc. ("HomeBase");
WHEREAS, beginning with its taxable year ended January 27, 1990, Waban has
filed consolidated federal income Tax Returns (as hereinafter defined) that have
included the operations of the BJ's Wholesale Club division, the HomeBase
division, certain direct and indirect Waban subsidiaries, and certain companies
that have become direct or indirect subsidiaries of Waban;
WHEREAS, the operations of such divisions and such subsidiaries also have
been included with one or more members of the Waban Group (as hereinafter
defined) in state and local unitary or combined income tax and franchise Tax
Returns; and
WHEREAS, the Distribution Agreement contemplates the execution and delivery
of this Agreement, the purpose of which is to provide for the allocation between
the HomeBase Group (as hereinafter defined) and the BJI Group (as hereinafter
defined) of all responsibilities, liabilities and benefits relating to or
affecting Taxes (as hereinafter defined) paid or payable by either of them for
all taxable periods, beginning on or before the Distribution Date, and to
provide for certain other matters.
NOW THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
-----------
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Separation and Distribution Agreement. As used
in this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable both to the singular and the plural forms of
the terms defined):
"Affiliated Group" means an affiliated group of corporations within the
meaning of Code section 1504(a) for the taxable period in question.
"BJI Affiliated Group" means, for each taxable period beginning after the
Distribution Date, the Affiliated Group of which BJI is the common parent.
"BJI Assets" means all of the assets held by the members of the BJI
Affiliated Group immediately after the Distribution.
"BJI Business" means the business, assets and operations of the "BJ's
Wholesale Club" division of Waban, including without limitation all businesses,
assets or operations managed or operated by, or operationally related to, such
business which have been sold or otherwise disposed of or discontinued on or
prior to the Distribution Date (provided, however, that warehouse clubs
initially operated by the BJ's Wholesale Club division and subsequently
transferred to the HomeBase division shall be considered part of the BJI
Business only for the period operated by the BJ's Wholesale Club division).
"BJI Group" means, with respect to any taxable period, the corporations
that were members of the Waban Affiliated Group and that are members of the BJI
Affiliated Group immediately after the Distribution Date. The BJI Group shall
include BJI and the BJI Subsidiaries.
"Code" means the Internal Revenue Code of 1986, as amended, and shall
include corresponding provisions of any subsequently enacted federal Tax laws.
"Distribution" has the meaning ascribed in the Preamble.
"Distribution Date" means the close of business on the date determined by
the Waban Board as of which the Distribution shall be effected.
"Final Determination" means the final resolution of any liability for Taxes
for a taxable period. A Final Determination shall result from the first to
occur of:
-2-
<PAGE>
(i) the expiration of 30 days after IRS acceptance of a Waiver of
Restrictions on Assessment and Collection of Deficiency in Tax and
Acceptance of Overassessment on IRS Form 870 or 870-AD (or any successor
comparable form or the expiration of a comparable period with respect to
any comparable agreement or form under the laws of other jurisdictions)
unless, within such period, the taxpayer gives notice to the other party of
the taxpayer's intention to attempt to recover all or part of any amount
paid pursuant to the Waiver by the filing of a timely claim for refund;
(ii) a decision, judgment, decree, or other order by a court of
competent jurisdiction that is not subject to further judicial review (by
appeal or otherwise) and has become final;
(iii) the execution of a closing agreement under Section 7121 of the
Code or the acceptance by the IRS or its counsel of an offer in compromise
under Section 7122 of the Code, or comparable agreements under the laws of
other jurisdictions;
(iv) the expiration of the time for filing a claim for refund or for
instituting suit in respect of a claim for refund disallowed in whole or
part by the IRS;
(v) any other final disposition of the Tax liability for such period
by reason of the expiration of the applicable statute of limitations; or
(vi) any other event that the parties agree in writing is a final and
irrevocable determination of the liability at issue.
"HomeBase Business" means the business, assets and operations of the
"HomeBase" division of Waban, including without limitation all businesses,
assets or operations managed or operated by, or operationally related to, such
business which have been sold or otherwise disposed of or discontinued on or
prior to the Distribution Date (provided, however, that warehouse clubs
initially operated by the BJ's Wholesale Club division and subsequently
transferred to the HomeBase division shall not be considered part of the
HomeBase Business for the period operated by the BJ's Wholesale Club division).
"HomeBase Group" means, with respect to any taxable period, the
corporations that were members of the Waban Affiliated Group during such period,
exclusive of the corporations that are included in the BJI Affiliated Group
immediately after the Distribution Date.
"IRS" means the United States Internal Revenue Service or any successor
thereto, including but not limited to its agents, representatives, and
attorneys.
-3-
<PAGE>
"Joint Tax Return" means any Tax Return that includes a member of the
HomeBase Group and a member of the BJI Group.
"Restructuring Taxes" means any Taxes, other than Transaction Taxes,
incurred by the Waban Affiliated Group as a result of (i) the Separation or (ii)
the Distribution.
"Short Period" means the period commencing on January 26, 1997 and ending
on the Distribution Date.
"Tax" means any federal, state, local or foreign income, profits,
alternative or add-on minimum, severance, sales, use, service, service use, ad
valorem, gross receipts, license, value added, franchise, transfer, recording,
real estate, withholding, payroll, employment, excise, occupation, unemployment
insurance, social security, business license, business organization, stamp,
environmental, premium or property tax, or any other tax, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
related interest, penalties and additions to any such tax, imposed by any
taxing authority upon Waban, the HomeBase Group, the BJI Group or any of their
respective members or divisions or branches.
"Tax Deficiency" means an assessment of Tax, as a result of a Final
Determination.
"Tax Detriment" means any item of income, gain, recapture of credit or any
other Tax Item which increases Taxes paid or payable.
"Tax Item" means any item of income, gain, loss, deduction, credit,
provisions for reserves, recapture of credit or any other item which increases
or decreases Taxes paid or payable, including an adjustment under Code Section
481 resulting from a change in accounting method.
"Tax Refund" means a refund of Tax as the result of a Final Determination.
"Tax Return" means any return, filing, questionnaire, information return or
other document required to be filed, including requests for extensions of time,
filings made with estimated tax payments, claims for refund and amended returns
that may be filed, for any period with any taxing authority (whether domestic or
foreign) in connection with any Tax (whether or not a payment is required to be
made with respect to such filing).
"Transaction Taxes" mean any sales, use, transfer, real estate transfer,
recording or other similar Taxes payable in connection with consummation of the
transactions contemplated by the Separation and Distribution Agreement.
-4-
<PAGE>
"Waban Affiliated Group" shall mean, for each taxable period, the
Affiliated Group of which Waban or any successor of Waban is the common parent.
ARTICLE II
FILING OF TAX RETURNS
---------------------
Section 2.01 Manner of Filing. All Tax Returns filed after the
----------------
Distribution Date shall be prepared on a basis which is consistent with the
consummation of the transactions as set forth in the Separation and Distribution
Agreement and shall be filed on a timely basis (including extensions) by the
party responsible for such filing under this Agreement. Unless otherwise
required by applicable law, all Tax Returns filed after the date of this
Agreement shall be prepared on a basis consistent with the elections, accounting
methods, conventions, and principles of taxation used for the most recent
taxable periods for which Tax Returns involving similar Tax Items have been
filed, to the extent that a failure to do so could result in a Tax Detriment to
the other party hereto or a member of its Affiliated Group. Subject to the
provisions of this Agreement, all decisions relating to the preparation of Tax
Returns shall be made in the sole discretion of the party responsible under this
Agreement for such preparation.
Section 2.02 Pre-Distribution Tax Returns.
----------------------------
(a) Consolidated Returns. The Waban and HomeBase consolidated
--------------------
federal income Tax Returns required to be filed for all periods beginning on or
before the Distribution Date shall be prepared and filed by HomeBase. HomeBase
and BJI will cooperate in good faith to determine the appropriate amount of Tax
Items attributable to the BJI Business to be reflected in the consolidated
federal income Tax Returns of Waban and HomeBase for periods beginning on or
before the Distribution Date.
(b) Combined, Consolidated and Unitary Returns. All state and
------------------------------------------
local combined, consolidated and unitary corporate income Joint Tax Returns
which are required to be filed for all periods beginning on or before the
Distribution Date, which have not been previously filed shall be prepared and
filed by HomeBase. HomeBase and BJI will cooperate in good faith to determine
the appropriate amount of Tax Items attributable to the BJI Business to be
reflected in such Returns of Waban and HomeBase for periods beginning on or
before the Distribution Date.
(c) Other Returns. All other Tax Returns not described elsewhere
-------------
in this Section 2.02 that are required to be filed for periods beginning on or
before the Distribution Date, including Tax Returns in respect of Transaction
Taxes, shall be
-5-
<PAGE>
prepared and filed by the party responsible under the appropriate law of the
taxing jurisdiction.
ARTICLE III
PAYMENT OF TAXES
----------------
Section 3.01 General. For purposes of determining a party's liability for
-------
Taxes or entitlement to Tax Refunds, Tax Items clearly attributable to the
HomeBase Business will be taken into account for the HomeBase Group, and Tax
Items clearly attributable to the BJI Business will be taken into account for
the BJI Group. Except as otherwise provided in this Agreement, Tax Items not
clearly attributable either to the HomeBase Business or the BJI Business will
be taken into account (i) for the HomeBase Group in the case of Section 3.02
(Allocation of Tax Liabilities With Respect to Unfiled Returns), and (ii) 25%
for the HomeBase Group and 75% for the BJI Group in the case of Section 3.03
(Redetermined Tax Liabilities).
Section 3.02 Allocation of Tax Liabilities With Respect to Unfiled
-----------------------------------------------------
Returns.
- -------
(a) Consolidated Federal Income Tax Liabilities. Except as
-------------------------------------------
otherwise provided in this Agreement, HomeBase shall pay, on a timely basis, all
Taxes due with respect to the consolidated federal income Tax liability for all
periods beginning on or before the Distribution Date (including the Short
Period) of the Waban Affiliated Group. BJI on behalf of the BJI Group hereby
assumes and agrees to pay (to the extent not previously paid by BJI) the BJI
Group's share of those Taxes for all periods beginning on or before the
Distribution Date (including the Short Period), which payments shall be made
directly to HomeBase which shall then forward any balance due to the IRS.
The allocable shares of the consolidated federal income Tax liability
for such periods for the BJI Group and the HomeBase Group shall be determined by
applying the effective tax rate with respect to the applicable Tax Return to the
positive taxable income, if any, determined in accordance with the principles
set forth in Section 3.01 for each of the BJI Group and the HomeBase Group.
With respect to the taxable year of the HomeBase Group that includes the
Distribution Date and the taxable year of the BJI Group that commences
immediately following the Distribution Date, the HomeBase Group shall claim on
its federal income Tax Returns the benefit of (i) the graduated tax rates of
Code Section 11, (ii) the $25,000 bracket amount in Code Section 38, (iii) the
$40,000 exemption amount and the $150,000 bracket amount in Code Section 55, and
(iv) the $2,000,000 bracket amount in Code Section 59A, and the BJI Group shall
claim none of such benefits.
-6-
<PAGE>
If the calculations made pursuant to this Section 3.02(a) indicate
that the BJI Group has either overpaid or underpaid its share of the
consolidated federal income Tax liability for the taxable year ended January 25,
1997, or for the Short Period, respectively, then not later than 90 days after
the filing of HomeBase's consolidated federal income Tax return for the taxable
year ended January 25, 1997, and the taxable year ending January 31, 1998,
respectively, HomeBase shall pay BJI the amount of any such overpayment or BJI
shall pay HomeBase the amount of any such underpayment.
HomeBase shall notify BJI not later than 5 business days prior to the due
date of any quarterly estimated Tax payments of the amount of BJI's share of
such quarterly payments, and BJI shall make such quarterly estimated Tax
payments to HomeBase not later than 3 business days prior to the date such
quarterly payments would be due if BJI were a separate company. HomeBase shall
notify BJI not later than 5 business days prior to the last day for filing any
request for extension of time to file the HomeBase Group's federal Tax Return of
the amount of BJI's share of any additional amount due upon the filing of such
extension request, and BJI shall pay to HomeBase such amount not later than 3
business days prior to the last day for filing such extension request.
All calculations and determinations required to be made pursuant to
this Section 3.02(a) shall be made by HomeBase in good faith.
(b) Combined, Consolidated and Unitary Corporate Income Taxes. Except
---------------------------------------------------------
as otherwise provided in this Agreement, HomeBase or a member of the HomeBase
Group shall pay, on a timely basis, all Taxes due with respect to any combined,
consolidated or unitary state, local and foreign corporate income Tax liability
for all periods beginning on or before the Distribution Date (including the
Short Period) with respect to Joint Tax Returns ("Combined Taxes"). BJI hereby
assumes and agrees to pay (to the extent not previously paid by BJI) the BJI
Group's share of Combined Taxes for all periods beginning on or before the
Distribution Date (including the Short Period), which payment shall be made by
BJI to HomeBase, which shall then pay any amount due to the appropriate taxing
authority.
The allocable shares of the Combined Tax liability for such periods
for the BJI Group and the HomeBase Group shall be determined by applying the
effective tax rate with respect to the applicable Tax Return to the positive
taxable income, if any, determined in accordance with the principles set forth
in Section 3.01 for each of the BJI Group and the HomeBase Group.
If the calculations made pursuant to this Section 3.02(b) indicate
that BJI has either overpaid or underpaid its share of the Combined Tax
liability, then at such time as HomeBase shall reasonably determine, but in any
event not later than 90 days
-7-
<PAGE>
after the filing of the relevant return, HomeBase shall pay BJI the amount of
any such overpayment or BJI shall pay HomeBase the amount of any such
underpayment.
HomeBase shall notify BJI not later than 5 business days prior to the due
date of any quarterly estimated Tax payments of the amount of BJI's share of
such quarterly payments, and BJI shall make quarterly estimated tax payments to
HomeBase not later than 3 business days prior to the date such quarterly
payments would be due if BJI were a separate company. HomeBase shall notify
BJI not later than 5 business days prior to the last day for filing any request
for extension of time to file the HomeBase Group's Combined Tax Return of the
amount of BJI's share of any additional amount due upon the filing of such
extension request, and BJI shall pay to HomeBase such amount not later than 3
business days prior to the last day for filing such extension request.
All calculations and determinations required to be made pursuant to
this Section 3.02(b) shall be made by HomeBase in good faith.
(c) Other Taxes. All other Taxes for periods beginning on or
-----------
before the Distribution Date shall be paid, on a timely basis, by the party
responsible under this Agreement for filing the Tax Return pursuant to which
such Taxes are due, or, if no Tax Return is required, by the party responsible
for payment of such Tax under the laws of the taxing jurisdiction. In the case
of Transaction Taxes, HomeBase shall be liable for 25% of such Taxes and BJI
shall be liable for 75% of such Taxes. The party not responsible under this
Agreement for paying such Taxes to the taxing authority shall pay the
responsible party for its share of such Taxes not later than 3 business days
prior to the due date for such Taxes.
Section 3.03 Redetermined Tax Liabilities.
----------------------------
(a) Joint Tax Returns. In the case of any Final Determination
-----------------
regarding a Joint Tax Return, any Tax Deficiency shall be paid to the
appropriate taxing authority by, and any Tax Refund received from the
appropriate taxing authority shall be paid to, HomeBase; provided, however, that
-------- -------
whether or not there is a Tax Deficiency or Tax Refund or whether or not a
payment is required to or from the appropriate taxing authority, BJI shall make
payments to HomeBase or receive payments from HomeBase based upon the following
principles:
(i) BJI shall make a payment to HomeBase in an amount equal
to any increase in the BJI Group's allocable share of Tax with respect to such
Joint Tax Return resulting from any adjustments to Tax Items attributable to the
BJI Business, less any payments therefor previously made by BJI to HomeBase (or
directly to the appropriate taxing authority). For the purpose of computing the
amount of any such increase in the BJI Group's allocable share of Tax, any
offsetting
-8-
<PAGE>
adjustments to Tax Items attributable to the HomeBase Business will not be taken
into account.
(ii) HomeBase shall pay to BJI, to the extent not previously paid to
BJI by the appropriate taxing authority or by HomeBase, the amount of any
decrease in the BJI Group's allocable share of Tax with respect to such Joint
Tax Return resulting from adjustments to Tax Items attributable to the BJI
Business. For the purpose of computing the amount of any such decrease in the
BJI Group's allocable share of Tax, any offsetting adjustments to Tax Items
attributable to the HomeBase Business will not be taken into account.
Any Tax Liability or Refund with respect to (i) a Tax Item not clearly
attributable either to the HomeBase Business or the BJI Business, (ii) a Joint
Tax Return not arising from an adjustment to, or change in, a Tax Item (e.g.,
change in applicable law), or (iii) Transaction Taxes, shall be allocated 25% to
HomeBase and 75% to BJI.
(b) Separate Returns. HomeBase shall be liable for and shall
----------------
indemnify, defend and hold harmless the BJI Group from and against all Taxes for
all periods with respect to Tax Returns that include only members of the
HomeBase Group, and BJI shall be liable for and shall indemnify, defend and hold
harmless the HomeBase Group from and against all Taxes for all periods with
respect to Tax Returns that include only members of the BJI Group. HomeBase
shall be entitled to receive and retain all Tax Refunds for all periods with
respect to Tax Returns that include only members of the HomeBase Group. BJI
shall be entitled to receive and retain all Tax Refunds for all periods with
respect to Tax Returns that include only members of the BJI Group.
(c) Calculation and Payment of Amounts. Except in the case of Tax
----------------------------------
Returns that include only members of the BJI Group, all calculations and
determinations required to be made pursuant to this Section 3.03 shall be made
by HomeBase in good faith and on a basis reasonably consistent with prior years.
Any payments made by the parties hereunder to each other shall be treated by
each of the parties as satisfaction of liabilities of such paying party and
shall not be subject to any gross-up or additional payment.
(d) Certain Penalties. Notwithstanding anything in this Agreement to
-----------------
the contrary, with respect to Joint Tax Returns, HomeBase shall be responsible
for the payment of 100% of any penalties which (i) would have been waived or not
imposed but for HomeBase's failure to adequately disclose on any Tax Return a
position which, prior to the filing of such Tax Return, BJI indicated in writing
to HomeBase should be disclosed, or (ii) are solely attributable to a position
taken by HomeBase on a Joint Tax Return without the prior written agreement of
BJI, which
-9-
<PAGE>
position is inconsistent with the information or Tax Returns provided by BJI to
HomeBase.
Section 3.04 Liability for Taxes with Respect to Post-Distribution
-----------------------------------------------------
Periods. Unless otherwise provided in this Agreement, the HomeBase Group shall
pay all Taxes and shall be entitled to receive and retain all Tax Refunds with
respect to periods beginning after the Distribution Date which are attributable
to the HomeBase Business. Unless otherwise provided in this Agreement, the BJI
Group shall pay all Taxes and shall be entitled to receive and retain all
refunds of Taxes with respect to periods beginning after the Distribution Date
which are attributable to the BJI Business.
Section 3.05 Carrybacks. BJI agrees that it will not carry back any Tax
----------
Item arising after the Distribution Date to a taxable period with respect to a
Tax Return which includes a member of the HomeBase Group, without the consent of
HomeBase. In the event that BJI does carry back any such Tax Item with
HomeBase's consent, any Tax Refund resulting therefrom shall be paid over to
BJI. To the extent that the carryback of any Tax Item does not result in a Tax
Refund (or would not result in a refund if a claim were filed) solely as the
result of an offsetting Tax Item attributable to the HomeBase Group, HomeBase
shall remit to BJI the amount of any decrease in the BJI Group's allocable share
of Tax with respect to such return as a result of such carryback as determined
under the principles contained in Section 3.03(a).
Section 3.06 Responsibility for Restructuring Taxes.
--------------------------------------
(a) Responsibility of BJI Group. BJI and any successor
---------------------------
corporation shall be responsible for, and shall indemnify and hold harmless
HomeBase and each member of the HomeBase Group from, all liability, loss, cost,
expense or damage in any way occasioned by any Restructuring Taxes which are
directly or indirectly attributable to one or more of the following described
events or transactions occurring after the Distribution Date with respect to BJI
or any successor corporation: a reorganization, consolidation or merger; the
sale or other disposition of BJI Assets other than in the ordinary course of
business; BJI ceasing to conduct an active trade or business; the acquisition or
disposition of shares of stock of BJI by any person or persons; the redemption
or repurchase of shares of its stock by BJI or any successor; the
recapitalization or other reclassification of the shares of BJI or any
successor; the complete or partial liquidation of BJI or any successor; the
exercisability, transferability or repurchase of rights distributed pursuant to
a stock purchase rights plan; or any other act or omission of BJI which results
in failure to comply with each representation and statement made to the IRS in
connection with the rulings received with respect to the Distribution.
(b) Responsibility of HomeBase Group. HomeBase and any successor
--------------------------------
corporation shall be responsible for, and shall indemnify and hold harmless
-10-
<PAGE>
BJI and each member of the BJI Group from, all liability, loss, cost, expense or
damage in any way occasioned by any Restructuring Taxes which are directly or
indirectly attributable to one or more of the following described events or
transactions occurring after the Distribution Date with respect to HomeBase or
any successor corporation: a reorganization, consolidation or merger; the sale
or other disposition of HomeBase Assets other than in the ordinary course of
business; HomeBase ceasing to conduct an active trade or business; the
acquisition or disposition of shares of stock of HomeBase by any person or
persons; the redemption or repurchase of shares of its stock by HomeBase or any
successor; the recapitalization or other reclassification of the shares of
HomeBase or any successor; the complete or partial liquidation of HomeBase or
any successor; the exercisability, transferability or repurchase of rights
distributed pursuant to a stock purchase rights plan or any other act or
omission of HomeBase which results in failure to comply with each representation
and statement made to the IRS in connection with the rulings received with
respect to the Distribution.
(c) Joint Responsibility of BJI Group and HomeBase Group. If any
----------------------------------------------------
Restructuring Taxes should arise for which neither BJI nor HomeBase is
responsible under Section 3.06(a) or Section 3.06(b), respectively, each of BJI
and HomeBase shall be responsible for 50 percent of such Restructuring Taxes,
and each party shall indemnify, defend and hold harmless the other party and
each member of their respective Groups from and against all liability, loss,
cost, expense or damage in any way occasioned by such Restructuring Taxes.
ARTICLE IV
INDEMNITY; COOPERATION AND EXCHANGE OF INFORMATION
--------------------------------------------------
Section 4.01 Breach. HomeBase shall be liable for and shall indemnify,
------
defend and hold harmless the BJI Group and its officers and directors, from and
against, and BJI shall be liable for and shall indemnify, defend and hold
harmless the HomeBase Group and its officers and directors, from and against,
any payment required to be made as a result of the breach by a member of the
HomeBase Group or the BJI Group, as the case may be, of any obligation under
this Agreement.
Section 4.02 Indemnity. Whenever a party hereto (hereinafter an
---------
"Indemnitee") becomes aware of the existence of an issue which could increase
the liability for any Tax of the other party hereto or any member of its Group
or require a payment hereunder (hereinafter an "Indemnity Issue"), the
Indemnitee shall promptly give notice to such other party (hereinafter the
"Indemnitor") of such Indemnity Issue. The failure of any Indemnitee to give
such notice shall not relieve any Indemnitor of its obligations under this
Agreement except to the extent such Indemnitor or its affiliate is actually
materially prejudiced by such failure to give
-11-
<PAGE>
notice. The Indemnitor and its representatives, at the Indemnitor's expense,
shall be entitled to participate (i) in all conferences, meetings or proceedings
with any taxing authority, the subject matter of which is or includes an
Indemnity Issue and (ii) in all appearances before any court, the subject matter
of which is or includes an Indemnity Issue. The party who has responsibility
for filing the Tax Return under this Agreement (the "Responsible Party") with
respect to which there is an increase in liability for any Tax or with respect
to which a payment is required hereunder shall have the right to decide as
between the parties hereto how such matter is to be dealt with and finally
resolved with the appropriate taxing authority and shall control all audits and
similar proceedings. The Responsible Party agrees to cooperate in the
settlement of any Indemnity Issue with the other party and to take such other
party's interests into account. If the Indemnitor is not the Responsible Party,
such cooperation shall include permitting the Indemnitor, at the Indemnitor's
sole expense, to litigate or otherwise resolve any Indemnity Issue.
Notwithstanding the foregoing, if the Responsible Party is not the Indemnitor,
the Responsible Party shall not enter into a final settlement with the relevant
taxing authority with respect to any matter involving an Indemnity Issue without
first presenting the proposed settlement to the Indemnitor, who shall provide
the Responsible Party with written consent to such settlement within ten days of
receipt, whereupon (or if the Indemnitor fails to respond to such settlement in
writing within such ten day period) the Responsible Party may enter into such
settlement with the relevant taxing authority, provided, however, that the
-------- -------
Indemnitor may withhold its consent to the proposed settlement by notifying the
Responsible Party in writing within such ten day period that the Indemnitor does
not consent to the proposed settlement, if the Indemnitor provides the
Responsible Party with an opinion, from tax counsel reasonably satisfactory to
the Responsible Party, to the effect that there is a reasonable possibility that
the Indemnitor will prevail on the merits with respect to one or more Indemnity
Issues with an aggregate value of not less than $100,000 (including Tax,
interest and/or penalties) in a tribunal with jurisdiction to adjudicate the
Indemnitor's defense of such Indemnity Issue. If the Indemnitor provides the
Responsible Party with written notification withholding consent in accordance
with the immediately preceding sentence, then:
(i) The Indemnitor shall fully indemnify and hold harmless the
Responsible Party from and against any and all liabilities (other than
liability for payments to the Indemnitor hereunder) for Taxes and other
costs and expenses (including, without limitation, attorneys' and
accountants' fees) over and above the payments that the Responsible Party
would have been liable for if the Responsibility Party had entered into the
proposed settlement; and
(ii) The Responsible Party shall select one of the following
alternatives:
-12-
<PAGE>
(1) enter into a closing agreement or other final resolution with the
relevant taxing authority with respect to all issues in accordance with the
proposed settlement other than Indemnity Issues, provided that such closing
agreement shall (i) allow the Indemnitor to continue to defend the
Indemnity Issues in proceedings with the relevant taxing authority, and
(ii) permit the Indemnitor, if successful, to obtain the full monetary
benefit of a successful defense or claim for a refund, taking into account
any payments to be made pursuant to Section 3.03; or
(2) settle all issues with the relevant taxing authority in
accordance with the proposed settlement and/or pay any additional liability
for Taxes as provided for in such proposed settlement, provided that such
settlement shall (i) permit the Indemnitor to file a claim for refund with
respect to the Indemnity Issues and (ii) permit the Indemnitor, if
successful, to obtain the full monetary benefit of such claim for refund,
taking into account any payments to be made under Section 3.03, which
payments shall be made by the Indemnitor to the Responsible Party not later
than 3 business days prior to the date payment is required under the
proposed settlement, notwithstanding the lack of a Final Determination at
such time; or
(3) pay to the Indemnitor any additional liability for Taxes as
provided for in such settlement to the extent that such liability relates
to issues other than Indemnity Issues, whereupon the Indemnitor shall
assume control over and responsibility for any proceeding related to such
matter and shall be fully liable for and shall fully indemnify and hold the
Responsible Party harmless from and against any and all liability for Taxes
with respect to such matter. The Indemnitor shall have no obligation or
duty to reimburse or refund to the Responsible Party any portion of any
refund or settlement payment regardless of the resolution of the matter.
An Indemnitor may, at its election, pay to or deposit with the
relevant taxing authority an amount of additional Tax liability for which the
Indemnitor would be liable hereunder if such payment or deposit would have the
effect of stopping the accrual of interest with respect to such Tax liability.
The Indemnitor shall have no further responsibility hereunder for interest with
respect to any amount so deposited or paid for so long as such deposit or
payment stops the accrual of interest; provided, however, that any such payment
or deposit does not affect any right of the Responsible Party or any other
liability of the Indemnitor hereunder.
Section 4.03 Cooperation and Exchange of Information.
----------------------------------------
-13-
<PAGE>
(a) BJI shall, and shall cause each appropriate member of the BJI
Group to, prepare and submit to HomeBase, at BJI's expense, no later than 90
days after the Distribution Date, all information as HomeBase shall reasonably
request to enable HomeBase to file the HomeBase consolidated federal income Tax
Return and any state and local combined or unitary corporate income Tax Returns
for the taxable year ending January 31, 1998. HomeBase shall be entitled to
require BJI to engage a certified public accounting firm reasonably acceptable
to HomeBase (it being agreed that BJI's outside auditors as of the Distribution
Date are acceptable to HomeBase) to review the information which BJI is required
to provide under this Section 4.03(a). The expenses of such accounting firm
shall be borne by HomeBase.
(b) HomeBase, on behalf of itself and each member of the HomeBase
Group, agrees to provide the BJI Group, and BJI, on behalf of itself and each
member of the BJI Group, agrees to provide the HomeBase Group, with such
cooperation and information as a party shall reasonably request of the other in
connection with the preparation or filing of any Tax Return or claim for refund
not inconsistent with this Agreement or in conducting any audit or other
proceeding in respect to Taxes. Such cooperation and information shall include
without limitation promptly forwarding copies of appropriate notices and forms
or other communications received from or sent to any taxing authority which
relate (i) to the HomeBase Group or the HomeBase Business, to HomeBase in the
case of the BJI Group, and (ii) to the BJI Group or the BJI Business to BJI in
the case of the HomeBase Group; and providing copies of all relevant Tax
Returns, together with accompanying schedules and related workpapers, documents
relating to rulings or other determinations by taxing authorities, including
without limitation, foreign taxing authorities, and records concerning the
ownership and Tax basis of property, which either party may possess. Each party
shall make its employees and facilities available on a mutually convenient basis
to provide explanations of any documents or information provided hereunder.
(c) BJI and HomeBase agree to retain all Tax Returns, related
schedules and workpapers, and all material records and other documents as
required under Section 6001 of the Code and the regulations promulgated
thereunder relating thereto existing on the date hereof or created through the
Distribution Date, until the expiration of the statute of limitations (including
extensions) of the taxable years to which such Tax Returns and other documents
relate and until the Final Determination of any payments which may be required
in respect of such years under this Agreement. HomeBase and BJI agree to advise
each other promptly of any such Final Determination. Any information obtained
under this Section 4.03 shall be kept confidential, except as may be otherwise
necessary in connection with the filing of Tax Returns or claims for refund or
in conducting any audit or other proceeding.
(d) If any member of the HomeBase Group or the BJI Group, as the case
may be, fails to provide any information requested pursuant to this Section 4.03
-14-
<PAGE>
by (i) the dates, specified in subsection (a) hereof or, (ii) with respect to
information not requested pursuant to subsection (a) hereof, within a reasonable
period, as determined in good faith by the party requesting information, then
the requesting party shall have the right to engage a certified public
accounting firm of its choice to gather such information. BJI and HomeBase, as
the case may be, agree upon 24 hours' notice, in the case of a failure to
provide information pursuant to subsection (a) hereof, and otherwise upon 30
days' notice after the expiration of such reasonable period, to permit any such
accounting firm full access to all appropriate records or other information in
the possession of any member of the HomeBase Group or the BJI Group, as the case
may be, during reasonable business hours, and to reimburse or pay directly all
costs and expenses in connection with the engagement of such public accountants.
(e) If any member of the HomeBase Group or the BJI Group, as the case
may be, supplies information to a member of the other Group pursuant to this
Section 4.03 and an officer of the requesting party signs a statement or other
document under penalties of perjury in reliance upon the accuracy of such
information, then a duly authorized officer of the party supplying such
information shall certify, under penalties of perjury, the accuracy and
completeness of the information so supplied. HomeBase agrees to indemnify and
hold harmless each member of the BJI Group and its directors, officers and
employees, from and against any cost, fine, penalty or other expense of any kind
attributable to the negligence or willful misconduct of a member of the HomeBase
Group, in supplying a member of the BJI Group with inaccurate or incomplete
information. BJI agrees to indemnify and hold harmless each member of the
HomeBase Group and its directors, officers and employees, from and against any
cost, fine, penalty or other expense of any kind attributable to the negligence
or willful misconduct of a member of the BJI Group in supplying a member of the
HomeBase Group with inaccurate or incomplete information.
Section 4.04 Injunction. The parties hereto agree that the payment of
----------
monetary compensation would not be an adequate remedy to a breach of the
obligations contained in Section 4.03 hereof, and each party consents to the
issuance and entry of an injunction against the taking of any action by it or a
member of its Group described in the preceding section.
ARTICLE V
MISCELLANEOUS
-------------
Section 5.01 Expenses. Unless otherwise expressly provided in this
--------
Agreement, each party shall bear any and all expenses that arise from its
obligations under this Agreement.
-15-
<PAGE>
Section 5.02 Entire Agreement; Termination of Prior Agreements. This
-------------------------------------------------
Agreement constitutes the entire agreement of the parties concerning the subject
matter hereof and supersedes all other agreements, whether or not written, in
respect of any Tax between or among any member or members of the HomeBase Group,
on the one hand, and any member or members of the BJI Group, on the other hand.
Except as otherwise provided herein, effective as of the Distribution Date, all
such agreements are hereby cancelled and any rights or obligations existing
thereunder are hereby fully and finally settled without any payment by any party
thereto. Anything in this Agreement or the Separation and Distribution
Agreement to the contrary notwithstanding, in the event and to the extent that
there shall be a conflict between the provisions of this Agreement and the
Separation and Distribution Agreement, the provisions of this Agreement shall
control.
Section 5.03 Notices. Any notice, request, demand, claim, or other
-------
communication hereunder shall be in writing and shall be delivered by registered
or certified mail, return receipt requested, postage prepaid, and addressed to
the intended recipient as set forth below, and shall be deemed duly given on the
date which is three days after the date such notice, request, demand, claim, or
other communication is sent:
To HomeBase or any member of the HomeBase Group:
HomeBase, Inc.
3345 Michelson Drive
Irvine, CA 92715
Attention: Treasurer
To BJI or any member of the BJI Group:
BJ's Wholesale Club, Inc.
One Mercer Road
Natick, Massachusetts 01760
Attention: Treasurer
Notwithstanding the foregoing, any party may send any notice, request,
demand, claim, or other communication hereunder to the intended recipient at the
address set forth above using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it is
actually received by the intended recipient. Any party may change the address
to which notices, requests,
-16-
<PAGE>
demands, claims, and other communications hereunder are to be delivered by
giving the other party notice in the manner herein set forth.
Section 5.04 Resolution of Disputes. Any disputes between the parties
----------------------
with respect to this Agreement shall be resolved by a certified public
accounting firm or a law firm satisfactory to HomeBase and BJI, whose fees and
expenses shall be shared equally by HomeBase and BJI.
Section 5.05 Application to Present and Future Subsidiaries. This
----------------------------------------------
Agreement is being entered into by each of HomeBase and BJI on behalf of itself
and each member of the HomeBase Group and the BJI Group, respectively. This
Agreement shall constitute a direct obligation of each such member and shall be
deemed to have been readopted and affirmed on behalf of any corporation which
becomes a member of the HomeBase Group or the BJI Group in the future. HomeBase
and BJI hereby guarantee the performance of all actions, agreements and
obligations provided for under this Agreement of each member of the HomeBase
Group and the BJI Group, respectively. Each of HomeBase and BJI shall, upon the
written request of the other, cause any of its respective group members formally
to execute this Agreement.
Section 5.06 Term. This Agreement shall commence on the date of
----
execution indicated below and shall continue in effect until otherwise agreed to
in writing by HomeBase and BJI, or their successors.
Section 5.07 Titles and Headings Titles and headings to sections herein
-------------------
are inserted for the convenience of reference only and are not intended to be a
part or to affect the meaning or interpretation of this Agreement.
Section 5.08 Legal Enforceability Any provision of this Agreement which
--------------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Without
prejudice to any rights or remedies otherwise available to any party hereto,
each party hereto acknowledges that damages would be an inadequate remedy for
any breach of the provisions of this Agreement and agrees that the obligations
of the parties hereunder shall be specifically enforceable.
Section 5.09 Successors and Assigns. This Agreement and all of the
-----------------------
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and assigns. Notwithstanding any other
provision of this Agreement, neither HomeBase nor BJI shall sell or otherwise
transfer all or substantially all of its business, operations or assets, whether
by merger, consolidation, stock sale, asset sale or otherwise, unless the
obligation of the transferor to pay Restructuring Taxes pursuant to the terms
hereof is assumed by or
-17-
<PAGE>
otherwise becomes the obligation of the transferee, either by operation of law
or by agreement among the parties.
Section 5.10 Amendments. This Agreement may not be modified or amended
----------
except by an agreement in writing, signed by the parties hereto.
Section 5.11 Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
Section 5.12 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the domestic substantive laws of the Commonwealth
of Massachusetts without regard to any choice or conflict of law rule or
provision that would result in the application of the domestic substantive laws
of any other jurisdiction.
IN WITNESS WHEREOF, the parties have executed this agreement as of the ____
day of June, 1997.
HOMEBASE, INC.
By
-----------------------------
Title:
-------------------------
BJ'S WHOLESALE CLUB, INC.
By
-----------------------------
Title:
-------------------------
-18-
<PAGE>
EXHIBIT 10.4
EMPLOYEE BENEFITS AGREEMENT
This EMPLOYEE BENEFITS AGREEMENT (the "Employee Benefits Agreement"), dated
as of June ___, 1997, is between Waban Inc., a Delaware Corporation ("Waban"),
and BJI Wholesale Club, Inc., a Delaware Corporation and, as of the date hereof,
a wholly owned subsidiary of Waban ("BJI").
WHEREAS, Waban and BJI have entered into a Separation and Distribution
Agreement (the "Distribution Agreement") which contemplates the separation of
Waban's "BJ's Wholesale Club" and "HomeBase" businesses into two distinct
companies by transferring the BJ's Wholesale Club business to BJI (the
"Separation") and, then, distributing all of the outstanding shares of BJI
Common Stock on a pro rata basis to the holders of Waban Common Stock (the
"Distribution"); and
WHEREAS, the Distribution Agreement contemplates the execution and delivery
of this Employee Benefits Agreement, the purpose of which is to set forth
certain matters regarding the treatment of employee benefit plans as a result
of, and in connection with, the Separation and the Distribution.
NOW, THEREFORE, in consideration of the mutual agreement, provisions and
covenants contained in this Employee Benefits Agreement, the parties hereby
agree as follows:
ARTICLE 1
Definitions
-----------
As used in this Employee Benefits Agreement, terms shall have the meaning
set forth in the Distribution Agreement, unless otherwise expressly provided
herein. In addition, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural form of the
terms defined):
BJI Employee: The term "BJI Employee" shall mean (a) any individual who,
------------
on or immediately prior to the Distribution Date, is employed by Waban or any
Waban Subsidiary or is on a leave of absence approved by Waban or any Waban
Subsidiary and who, immediately after the Distribution Date, is employed by BJI
or any BJI Subsidiary or who is continuing on a leave of absence approved by BJI
or any BJI Subsidiary, and (b) any individual whose employment is transferred
from Waban or any Waban Subsidiary to BJI or any BJI Subsidiary within three
months after the Distribution Date.
BJI Common Stock Value: The average of the closing prices of BJI Common
----------------------
Stock on the New York Stock Exchange during the ten trading days immediately
following the Distribution Date.
<PAGE>
Former BJI Employee: Any individual who was an employee of the BJ's
-------------------
Wholesale Club division of Waban but terminated such employment prior to the
Distribution Date.
Stock Value Ratio: The number determined by dividing the Waban Common
-----------------
Stock Value by the BJI Common Stock Value.
Transfer Date: The term "Transfer Date" means, (i) with respect to any BJI
-------------
Employee described in clause (a) of the definition of BJI Employee, the
Distribution Date, and (ii) with respect to any BJI Employee described in clause
(b) of the definition of BJI Employee, the date on which such BJI Employee's
employment is transferred from Waban or any Waban Subsidiary to BJI or any BJI
Subsidiary.
Waban Common Stock Value: The average of the closing prices of Waban
------------------------
Common Stock on the New York Stock Exchange during the ten trading days
immediately preceding the Distribution Date.
ARTICLE 2
CERTAIN BENEFIT PLAN MATTERS
2.1 Certain BJI Plans; Assumptions of Obligations by BJI. Except as
----------------------------------------------------
provided in Section 2.5, BJI hereby agrees to establish as of the Distribution
Date employee benefit plans (the "BJI Plans") having substantially the same
terms and provisions as the employee benefit plans currently maintained by Waban
which are listed on Schedule 2.1 hereto (the "Waban Plans"). Except for
Liabilities arising under such Waban Plans with respect to each BJI Employee or
Former BJI Employee for the period ending on (a) the BJI Employee's Transfer
Date or (b) Former BJI Employee's termination of employment with Waban (the
"Termination Date") which are assumed or retained by Waban pursuant to this
Article 2, BJI hereby agrees to assume or retain under the applicable BJI Plan
with respect to each BJI Employee or Former BJI Employee all Liabilities under
the corresponding Waban Plan accrued for the period ending on (a) the BJI
Employee's Transfer Date, and (b) the Former BJI Employee's Termination Date.
BJI acknowledges and agrees that Waban is making no representations or
warranties hereunder or otherwise that the costs to BJI of providing benefits
under the BJI Plans (including without limitation costs consisting of premiums
and other charges to third party service providers) will be the same as the
corresponding costs heretofore incurred by Waban. Nothing in this Employee
Benefits Agreement shall be construed to prevent BJI from altering or
discontinuing any BJI Plans established by it pursuant to this Section 2.
2.2 Certain Payments by Waban. Waban hereby agrees to pay all insurance
-------------------------
premiums or similar plan payments attributable to each participant who will
become
-2-
<PAGE>
a BJI Employee for the period ending on such participant's Transfer Date (or the
end of the month thereafter if insurance premiums or third party administration
deposits are paid on a monthly basis) under each Waban Plan listed on Schedule
2.2 hereto.
2.3 Certain Medical Claims. Waban hereby agrees to retain all medical
----------------------
costs, including insurance premiums or the payment and reimbursement of claims,
of each BJI Employee and his or her covered dependents for claims which are
submitted on or prior to the BJI Employee's Transfer Date with respect to
expenses for medical services rendered to such persons during the period ending
on such Transfer Date.
2.4 Employees on Certain Leave. If any individual who becomes a BJI
--------------------------
Employee is on a leave of absence approved by Waban or any Waban Subsidiary on
his or her Transfer Date, and continues on a leave approved by BJI or any BJI
Subsidiary after the Transfer Date, then such leave shall continue under BJI's
leave policies and BJI shall assume any liability for any benefits provided by
Waban prior to the Transfer Date or any benefits required to be provided by law;
provided that the maximum amount and duration of such benefits as well as the
duration of the leave shall not exceed such limits under the applicable Waban
policy.
2.5 Retirement Plan. The Waban Retirement Plan (the "Retirement Plan")
----------------
was frozen in 1992. Waban intends to terminate the Retirement Plan in the 1997
fiscal year. Benefits accrued by BJI Employees while they were employees of
Waban will be distributed in accordance with the terms of the Retirement Plan
(including any provisions applicable to the intended termination) and consistent
with applicable law. BJI will not assume the Retirement Plan nor any
liabilities thereunder; provided that if the Plan Administrator of the
Retirement Plan initiates a standard termination of the Retirement Plan under
Section 4041 of the Employee Retirement Income Security Act of 1974, as amended,
during fiscal year 1997 and no amendments to the Retirement Plan are made which
would increase the present value of the accrued benefits, then BJI will pay to
Waban 75% of any amount contributed or to be contributed to the Retirement Plan
after the Distribution Date by Waban, net of the income tax benefit to Waban of
such contribution, in order for the Retirement Plan to pay all accrued benefits.
2.6 Savings Plan. Pursuant to Section 2.1 hereof, BJI will establish one
------------
or more savings plans for BJI Employees (the "BJI Savings Plan"), effective
immediately after the Distribution Date, with terms and provisions similar to
those of the Waban 401(k) Savings Plan for Hourly Employees and the Waban 401(k)
Savings Plan for Salaried Employees (the "Waban Savings Plans"). BJI will cause
the BJI Savings Plan to credit, for all purposes under the BJI Savings Plan,
each BJI Employee's service with Waban or any Waban Subsidiaries as if it were
service with BJI.
2.6.1. Participation. Each BJI Employee who is participating in one
-------------
of the Waban Savings Plans immediately prior to his or her Transfer Date shall
cease to participate in such Waban Savings Plan as of such Transfer Date and
shall become a
-3-
<PAGE>
participant in the BJI Savings Plan. Each BJI Employee who makes salary
reduction contributions to a Waban Savings Plan during the calendar quarter in
which his or her Transfer Date occurs, with respect to compensation paid on or
before such Transfer Date, and who continues to be employed by BJI or a BJI
Subsidiary at the end of such calendar quarter, will have matching contributions
made to the BJI Savings Plan as the successor to the Waban Savings Plans, by
Waban, with respect to those contributions, as of the end of such calendar
quarter.
2.6.2. Transfer of Accounts. Waban will cause the Trustees of the
--------------------
trust established under the Waban Savings Plans (the "Waban Savings Trust") to
transfer to one or more trusts established under the BJI Savings Plan (the "BJI
Savings Trust"), as soon as practicable after the Transfer Date, any assets
allocable to the individual accounts maintained in the Waban Savings Trust for
any individual who becomes a BJI Employee on such Transfer Date other than any
assets held in the subtrusts established for certain Executive Life Insurance
Contracts. The Trustee of the Waban Savings Trust shall comply with any
reasonable requests by the Trustee of the BJI Savings Trust concerning the
manner and the timing of such transfers.
2.6.3. Closing Agreement. To the extent that amounts held in the
-----------------
suspense account maintained in accordance with the terms of the Closing
Agreement on Final Determination Covering Specific Matters entered into by Waban
Inc. and the Trustees of the Waban Savings Trusts and the Internal Revenue
Service (the "Closing Agreement") would have been distributed to BJI or
allocated to accounts which have been transferred to the BJI Savings Plan in
accordance with the terms of this Section 2.6 if they were still maintained in
the Waban Savings Trust, then an appropriate amount agreed to by Trustees of The
Waban Savings Trust and The BJI Savings Trust will be transferred to BJI or the
BJI Savings Trusts and allocated thereunder, to the extent consistent with the
Closing Agreement. Any loan by Waban to the Waban Savings Trusts made in
accordance with the Closing Agreement shall not be affected by the Distribution
and shall not be assumed, in whole or in part, by BJI.
2.7 Executive Retirement Plan and Executive Life Insurance Policies.
---------------------------------------------------------------
2.7.1. Executive Retirement Plan. BJI will establish an Executive
-------------------------
Retirement Plan (the "BJI Executive Retirement Plan") with substantially the
same terms and provisions as the Waban Inc. Executive Retirement Plan (the
"Waban Executive Retirement Plan"). Waban hereby agrees to transfer to BJI, as
of the Distribution Date, by executing instruments and taking such other action
as BJI may reasonably require, any interest Waban has in the investment or
insurance contracts or other arrangements used to provide benefits to BJI
Employees participating under the Waban Executive Retirement Plan, and which are
listed on Schedule 2.7A.
2.7.2. Executive Life Insurance. Waban hereby agrees to transfer to
------------------------
BJI as of the Distribution Date, by executing any instruments and taking such
other
-4-
<PAGE>
action BJI may reasonably require, the life insurance policies listed on
Schedule 2.7B, hereto.
2.8 Incentive Plans.
---------------
2.8.1. Replacement Stock Incentive Plan.
--------------------------------
(a) Replacement Options.
-------------------
(i) General. BJI has adopted the BJ's Wholesale
-------
Club, Inc. 1997 Replacement Stock Incentive Plan ("BJI Replacement Stock Plan")
pursuant to which BJI will grant to officers and key employees on or after the
Distribution Date options to purchase BJI Common Stock (the "BJI Replacement
Options") which have substantially the same terms and provisions as outstanding
Waban options granted under the Waban Inc. 1989 Stock Incentive Plan (the "Waban
Stock Plan"), to the extent then unexercised, (the "Waban Option") which are
surrendered by BJI Employees (the "Surrendered Waban Options").
(ii) For BJI Employees Who Will Not Be HomeBase
------------------------------------------
Employees. Each BJI Replacement Option shall provide for the
- ---------
purchase of a number of shares of BJI Common Stock equal to (a) the number of
shares of Waban Common Stock subject to the Surrendered Waban Option it replaces
multiplied by (b) the Stock Value Ratio, and then rounding down to the nearest
whole share. The per share exercise price of each BJI Replacement Option will
equal (a) the per share exercise price of the Surrendered Waban Option it
replaces divided by (b) the Stock Value Ratio; provided that the price per share
of each BJI Replacement Option will be rounded up to the next higher cent.
(iii) For BJI Employees Will Also Be HomeBase
---------------------------------------
Employees. Each Waban Option which is held by a person who is an
- ---------
employee of both BJI and HomeBase after the Distribution, will be treated as
follows: (i) a new option to purchase BJI Common Stock will be granted under the
BJI Replacement Stock Plan for the same aggregate number of shares covered by
the applicable Waban Option ("New BJI Option"), with an exercise price equal to
(a) the exercise price of the applicable Waban Option divided by (b) the Stock
Value Ratio, and (ii) the applicable Waban Option will remain outstanding for
the purchase of the same number of shares but the exercise price of such Waban
Option will equal (a) the exercise price of such Waban Option, minus (b) the
exercise price of the New BJI Option granted with respect to such Waban Option.
(b) Restricted Stock.
----------------
-5-
<PAGE>
(i) General. Holders of restricted Waban Common
-------
Stock granted under the Waban Stock Plan ("Restricted Waban Common Stock") will
receive the same dividends as those paid to holders of unrestricted shares,
including shares of BJI Common Stock to be issued in the Distribution. Shares of
BJI Common Stock received by such holders of Restricted Waban Common Stock will
be subject to the same restrictions and vesting schedule as the Restricted Waban
Common Stock on account of which the special dividend was made.
(ii) For BJI Employees Who Will Not Be HomeBase
------------------------------------------
Employees. After the Distribution, on the Transfer Date of each BJI Employee
- ---------
who is a holder of Restricted Waban Common Stock, the Restricted Waban Common
Stock and the BJI Common Stock received in the Distribution will be forfeited to
Waban. A replacement award of BJI Common Stock subject to the same restrictions
and vesting schedule as the forfeited shares will be made to such BJI Employee
under the BJI Replacement Stock Plan. The number of shares of restricted BJI
Common Stock awarded will equal (a) the number of shares of Restricted Waban
Common Stock forfeited multiplied by (b) the Stock Value Ratio (with any
fractional interest of 0.5 or more to be rounded up and any fractional interest
of less than 0.5 to be rounded down to the nearest whole number).
(iii) For BJI Employees Who Will Also Be HomeBase
-------------------------------------------
Employees. After the Distribution, any holders of Restricted Waban Common Stock
- ---------
who are employees of both BJI and HomeBase will be treated as follows: (a) their
shares of Restricted Waban Common Stock will continue to be subject to the same
restrictions and vesting schedule as they were prior to the Distribution and
(b) the shares of BJI Common Stock issued as a result of the Distribution will
be subject to the same restrictions and vesting schedule as the shares of
Restricted Waban Common Stock to which they related, provided that all
--------
references to a requirement of continued employment in connection with the BJI
Common Stock shall be deemed to refer exclusively to employment by BJI or a BJI
Subsidiary.
2.8.2. 1997 Stock Incentive Plan. BJI has adopted the BJ's Wholesale
-------------------------
Club, Inc. 1997 Stock Incentive Plan (the "New Stock Incentive Plan") which
contains substantially the same terms and conditions as the Waban Inc. 1997
Stock Incentive Plan. Under the New Stock Incentive Plan, BJI intends to grant
options and other equity based awards to BJI employees, and others, who make, or
are expected to make, important contributions to BJI.
2.8.3. Cash Incentive Plans. BJI has adopted a Management Incentive
--------------------
Plan and a Growth Incentive Plan containing substantially the same terms and
conditions as the comparable Waban Management Incentive and Growth Incentive
Plans (the "WMIP" and "WGIP"). Persons who become BJI Employees on the
Distribution Date and who were participants in the WMIP and/or WGIP will be
granted replacement awards under the BJI Management Incentive Plan and Growth
Incentive Plan on substantially the same terms as applied to their prior
unmatured
-6-
<PAGE>
awards, with modifications necessary to reflect the changes resulting from the
Distribution. BJI will pay all amounts due to BJI employees under the
replacement awards and Waban will have no liability to such BJI Employees with
respect to the awards under the WMIP and WGIP.
2.8.4. Director Stock Option Plan. BJI has adopted the BJ's
--------------------------
Wholesale Club, Inc. 1997 Director Stock Option Plan (the "BJI Director Plan")
with substantially the same terms and provisions as the Waban Inc. 1995 Director
Stock Option Plan (the "Waban Director Plan"). Options granted under the Waban
Director Plan to persons who will become directors of BJI following the
Distribution and cease to be directors of Waban will be replaced, to the extent
then unexercised, and upon their surrender, with options granted under the BJI
Director Plan, calculating the number and price of such replacement options in
the manner set forth under Section 2.8.1(a)(ii) with respect to the replacement
of Surrendered Waban Options for BJI Employees. Options granted under the Waban
Director Plan to directors of BJI who continue to be directors of Waban after
the Distribution Date will be retained by such directors. Directors of BJI who
also continue as directors of Waban will also be granted a new option to
purchase BJI Common Stock under the BJI Director Plan. The number of shares
which can be purchased under such new option and the exercise price for such
option, as well as the recalculated exercise price for the retained Waban
options, will be determined in the manner set forth in Section 2.8.1(a)(iii) for
BJI Employees who are also HomeBase Employees.
ARTICLE THREE
MISCELLANEOUS
-------------
3.1 Relationship of Parties. Nothing in this Agreement shall be deemed or
-----------------------
construed by the parties or any third party as creating the relationship of
principal and agent, partnership or joint venture between the parties, it being
understood and agreed that no provision contained herein, and no act of the
parties, shall be deemed to create any relationship between the parties other
than the relationship set forth herein.
3.2 No Third Party Beneficiaries. This Agreement is solely for the
----------------------------
parties hereto and their respective Subsidiaries and Affiliates and shall not be
deemed to confer upon third parties any remedy, claim, Liability, reimbursement,
claim of action or other right in excess of those existing without reference to
this Agreement.
3.3 Governing Law. To the extent not preempted by applicable federal law,
-------------
this Employee Benefits Agreement shall be governed by, construed and interpreted
in accordance with the laws of the Commonwealth of Massachusetts, irrespective
of the choice or conflict of law rules or provisions of the Commonwealth of
Massachusetts,
-7-
<PAGE>
as to all matters, including matters of validity, construction, effect,
performance and remedies.
3.4 Incorporation of Distribution Agreement Provisions. The following
--------------------------------------------------
provisions of the Distribution Agreement are hereby incorporated herein by
reference and, unless otherwise expressly specified herein, such provisions
shall apply as if set forth herein: Article 5 (relating to Indemnification);
Article 6 (relating to Access to Information and Service); and Article 7
(relating to Miscellaneous) other than Section 7.4 (relating to Governing Law)
and Section 7.9 (relating to No Third Party Beneficiaries).
3.5 Notices. Any notice, request, demand, claim, or other communication
-------
hereunder shall be in writing and shall be delivered by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below, and shall be deemed duly given on the date which
is three days after the date such notice, request, demand, claim, or other
communication is sent:
to Waban:
Waban Inc.
3345 Michelson Drive
Irvine, California 02715
Attention: President
to BJI:
BJ's Wholesale Club, Inc.
One Mercer Road
Natick, Massachusetts 01760
Attn: President
Notwithstanding the foregoing, any party may send any notice, request, demand,
claim, or other communication hereunder to the intended recipient at the address
set forth above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it is actually received by the
intended recipient. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
IN WITNESS WHEREOF, the parties have caused this Employee Benefits
Agreement to be duly executed as of the day and year first above written.
-8-
<PAGE>
WABAN INC.
By:
-------------------------------
President
BJ'S WHOLESALE CLUB, INC.
By:
-------------------------------
President
-9-
<PAGE>
SCHEDULE 2.1 -- WABAN PLANS
Waban Inc. 401(k) Saving Plan for Salaried Employees
Waban Inc. 401(k) Saving Plan for Hourly Employees
Waban Inc. 401(k) Master Trust
Waban Inc. Healthcare Plan
BJ's Wholesale Club Educational Assistance Plan of Waban Inc.
Waban Inc. Group Insurance Plan
Waban Inc. 1989 Stock Incentive Plan
Waban Inc. 1997 Stock Incentive Plan
Waban Inc. Management Incentive Plan
Waban Inc. Growth Incentive Plan
Waban Inc. 1995 Director Stock Option Plan
Waban Inc. Executive Retirement Plan
Waban Inc. General Deferred Compensation Plan
Waban Inc. Change of Control Severance Benefit Plan for Key Employees
Waban Inc. Change of Control Severance Benefit Plan for Key Senior Management
<PAGE>
SCHEDULE 2.2 -- WABAN PLANS
Waban Inc. Healthcare Plan
Waban Inc. Group Insurance Plan
<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, taking 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.
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
-2-
<PAGE>
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.
(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
-3-
<PAGE>
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 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-
<PAGE>
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.
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.
-5-
<PAGE>
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.
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
-6-
<PAGE>
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 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
-7-
<PAGE>
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 Section 20 below) 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 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
-8-
<PAGE>
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.
(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
-9-
<PAGE>
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. Replacement 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., the Committee may grant to any
Participant incentive awards which are intended to replace incentive awards
previously granted to such Participant under the Waban Inc. Management
Incentive Plan ("Replacement Incentive Awards"). Such Replacement Incentive
Awards will be based on the same Performance Periods and Performance
Criteria as the replaced incentive awards, as adjusted to reflect the
effects of the spin-off on the Company's structure (e.g., interest expense,
corporate overhead). Except as otherwise determined by the Committee, such
Replacement Incentive Awards shall be subject to all other terms of the
Plan. Payments shall be made with respect to such Replacement Incentive
Awards regardless of whether they constitute qualified, performance-based
compensation under Section 162(m) of the Code. Participants who are granted
such Replacement Incentive Awards will also be eligible for grants of new
incentive awards.
21. 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"); 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
-10-
<PAGE>
(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 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 stockholders 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 Section 21 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:
-11-
<PAGE>
(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
the Effective Date; 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 the Effective Date; or
(iii) of 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 the Effective Date) 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 the Effective Date.
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.
-12-
<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
-2-
<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
-3-
<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.
-4-
<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.
ARTICLE 5. EFFECT ON EMPLOYMENT RIGHTS
-5-
<PAGE>
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 the Change of Control
Severance Benefit Plan for Key Employees), 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.
ARTICLE 9. CONSTRUCTION
-6-
<PAGE>
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. REPLACEMENT 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., the Committee may grant to any
Participant Incentive Units which are intended to replace incentive units
previously granted to such Participant under the Waban Inc. Growth Incentive
Plan ("Replacement Incentive Units"). Such Replacement Incentive Units will be
based on the same Award Periods and Incentive Measurements as the replaced
incentive units, as adjusted to reflect the effects of the spin-off on the
Company's structure (e.g., interest expense, corporate overhead). Except as
otherwise determined by the Committee, such Replacement Incentive Units shall be
subject to all other terms of the Plan. Payments shall be made with respect to
such Replacement Incentive Units regardless of whether they constitute
qualified, performance-based compensation under Section 162(m) of the Code.
Participants who are granted such Replacement Incentive Units will also be
eligible for grants of new Incentive Units.
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.
-7-
<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
-2-
<PAGE>
is no longer serving as a director of Waban immediately after the Distribution
Date, upon the cancellation, forfeiture or other expiration of each unexercised
option under the Waban Plan held by such eligible director. Each such
replacement options 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
-3-
<PAGE>
one-third of the shares subject to the option on each of the first day of the
month of the 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
-4-
<PAGE>
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.
(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.
9. AMENDMENT OF THE PLAN
-5-
<PAGE>
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).
-6-
<PAGE>
EXHIBIT 10.8
------------
BJ'S WHOLESALE CLUB, INC.
EXECUTIVE RETIREMENT PLAN
BJ's Wholesale Club, Inc. hereby establishes the BJ's Wholesale Club, Inc.
Executive Retirement Plan.
W I T N E S S E T H:
WHEREAS, the Participants are in high-level management positions in the
Company and are key to the profitability and long-term success of the Company;
and
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 the Effective Date.
* * * * * *
ARTICLE 1. DEFINITIONS
The following terms as used in this Plan shall have the following meanings:
"Annual Retirement Contribution" shall mean that amount the Company
contributes on behalf of each Participant pursuant to Article 2 hereof.
"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.
"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 any wholly owned
subsidiaries.
"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.
<PAGE>
Notwithstanding anything to the contrary, Compensation shall not include any
base salary earned prior January 25, 1997.
"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.
"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 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.
"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.
"Plan Year" shall mean the Company's fiscal year.
"Years of Service" shall mean the total completed years and months of a
Participant's uninterrupted service with the Company, including service with
Waban Inc. and its subsidiaries. A non-compensated leave of absence shall be
excluded from Years of Service.
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
-2-
<PAGE>
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.
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 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
-3-
<PAGE>
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.
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 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
-4-
<PAGE>
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. 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.
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.
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.
* * * * * *
-5-
<PAGE>
IN WITNESS WHEREOF, BJ's Wholesale Club, Inc. has caused this
instrument to be duly executed in its name and on its behalf and to have its
seal affixed hereto this ___ day of ______________, 1997.
[Seal] BJ'S WHOLESALE CLUB, INC.
ATTEST: By: _________________________
Name:
Title:
__________________________
Name:
Title:
-6-
<PAGE>
EXHIBIT 10.9
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,
<PAGE>
printing and binding costs, telephone charges, postage, delivery service
fees and all other 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 4, it is the intention
of the
-2-
<PAGE>
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 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
-3-
<PAGE>
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.
(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,
-4-
<PAGE>
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 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.
-5-
<PAGE>
(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 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
-6-
<PAGE>
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, 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.
-7-
<PAGE>
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 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
-8-
<PAGE>
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:
--------------------------------------------
--------------------------------------------
--------------------------------------------
(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.
-9-
<PAGE>
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.
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
________________________________
-10-
<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 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-1
<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.
A-2
<PAGE>
EXHIBIT 10.10
-------------
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 leave
employment at Waban on the Distribution Date or within three months thereafter
and become employees of the Company. 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
misconduct or dishonesty, any of which is directly harmful to the business
or
<PAGE>
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 3,000,000, 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 500,000 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.
(d) Method of Exercise.
-6-
<PAGE>
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, 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.
(e) Non-transferability of Options.
-7-
<PAGE>
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.
-8-
<PAGE>
(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.
-9-
<PAGE>
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
-10-
<PAGE>
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 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.
-11-
<PAGE>
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 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.
-12-
<PAGE>
(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.
(e) Termination.
-13-
<PAGE>
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.
(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
-14-
<PAGE>
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.
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
-15-
<PAGE>
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, waive or, subject to Section 13, amend any or all of the limitations
or conditions imposed under any Other Stock-based Award.
-16-
<PAGE>
(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
-17-
<PAGE>
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.
-18-
<PAGE>
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.
-19-
<PAGE>
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 ______________, 1997
and approved by the stockholders of Waban Inc. on ____________, 1997 and by
Waban Inc. as the sole stockholder of the Company on _____________, 1997. The
effective date of the Plan is the Distribution Date.
-20-
<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
A-1
<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.
A-2
<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.
A-3
<PAGE>
EXHIBIT 10.11
-------------
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 3,000,000) 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 _______________, 1997 and
approved by the stockholders of Waban Inc. on ______________, 1997 and by Waban
Inc. as the sole stockholder of the Company on _______________, 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 the Plan, a "Change of Control Event" 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
-9-
<PAGE>
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 10.12
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.
-6-
<PAGE>
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.
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
---------------------
-7-
<PAGE>
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.
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
-----------------
-8-
<PAGE>
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 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) 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 E.C.C. shall otherwise
determine prior to such occurrence, if the Participant or a Participant
Related Party is the Person or a member of a group of Persons 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 E.C.C. 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
-10-
<PAGE>
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 E.C.C., no transaction
-------
shall constitute a Change of Control as to a Participant if, immediately
after such transaction, the Participant or a 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 stockholders 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
-11-
<PAGE>
Exchange Commission (the "Commission") under the Exchange Act, as in
effect on the Effective Date; 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 the Effective Date; 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 the Effective Date), 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 the Effective Date.
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).
-12-
<PAGE>
EXHIBIT 10.13
INDEMNIFICATION AGREEMENT
-------------------------
Indemnification Agreement dated as of April 18, 1997 by and between
The TJX Companies, Inc., a Delaware corporation (f/k/a Zayre Corp.) ("TJX"), and
BJ's Wholesale Club, Inc., a Delaware corporation ("BJ's"). TJX and BJ's are
referred to collectively herein as the "Parties."
WHEREAS, Waban Inc. ("Waban") and TJX are signatories to a
Distribution Agreement, dated as of May 1, 1989 (as amended on April 18, 1997,
the "Distribution Agreement"), pursuant to which, among other things, Waban
agreed to indemnify TJX for certain Waban Liabilities (as defined in the
Distribution Agreement).
WHEREAS, Waban has stated its intention of consummating a transaction
providing for (i) the transfer by Waban of the assets of its BJ's Wholesale Club
division to BJ's, a newly-formed subsidiary of Waban, and (ii) the subsequent
transfer, through the declaration and distribution of a special dividend (the
"Distribution"), of the stock of BJ's to the stockholders of Waban (the
"Spinoff").
WHEREAS, the Parties desire to enter into this indemnification
agreement to provide for BJ's indemnification of TJX for certain Waban
Liabilities (as defined in the Distribution Agreement), effective upon the date
on which the Distribution is made to Waban's stockholders (the "Effective
Date").
Now, therefore, in consideration of the premises and the mutual
promises and covenants contained herein, the Parties agree as follows.
1. Definitions. Capitalized terms not defined herein shall have the
-----------
meanings ascribed to them in the Distribution Agreement.
Any references on or after the Effective Date to Waban shall be
construed to include HomeBase, Inc.
1.01 "Applicable Credits" shall have the meaning set forth in section
------------------
7 hereof.
1.02 "BJ's" shall have the meaning set forth in the recitals hereof.
----
1.03 "BJ's Control Period" shall have the meaning set forth in
-------------------
section 4 hereof.
1.04 "BJ's Lease" shall mean any lease or sub-lease of property ever
----------
used in connection with the Waban Businesses for which TJX or any
Affiliate thereof may be liable as a tenant, surety, sub-lessee or
guarantor, other than (i) a HomeBase Lease and (ii) the One Mercer
Road, Natick,
<PAGE>
Massachusetts lease, to the extent (and only to the extent) provided
in the letter, dated April 18, 1997, from Mark G. Borden, counsel for
Waban, to Luc A. Despins, counsel for TJX.
1.05 "BJ's Lease Liability" shall mean (i) any Liability arising in
--------------------
connection with a BJ's Lease or a BJ's Third Party Claim and (ii) any
Liability arising in connection with a HomeBase Lease or a HomeBase
Third Party Claim, other than a HomeBase Lease Liability.
1.06 "BJ's Lease Liability Payment" shall mean an amount paid by BJ's
----------------------------
(or by TJX, if BJ's breaches its obligation, pursuant to sections 3
and 5.01 hereof, to make all payments on account of such Liabilities)
in satisfaction of a BJ's Lease Liability.
1.07 "BJ's Third Party Claim" shall mean a Third Party Claim arising
----------------------
out, or relating to, a BJ's Lease.
1.08 "Disabling Conduct" shall mean the conduct of a Person that
-----------------
constitutes fraud, self-dealing, willful violation of the law, bad
faith or gross negligence.
1.09 "Distribution" shall have the meaning set forth in the recitals
------------
hereof.
1.10 "Distribution Agreement" shall have the meaning set forth in the
----------------------
recitals hereof.
1.11 "Effective Date" shall have the meaning set forth in the
--------------
recitals hereof.
l.12 "First Amendment" shall mean the First Amendment to the
---------------
Distribution Agreement, dated as of April 18, 1997.
1.13 "HomeBase Lease" shall mean any of the leases or sub-leases of
--------------
property listed on the Schedule of Leases for which TJX or any
Affiliate thereof may be liable as a tenant, sub-lessee, surety or
guarantor.
1.14 "HomeBase Lease Liability" shall mean (i) any Liability arising
------------------------
under any HomeBase Lease, during the current term (without any
extension or renewals after the date hereof) of such HomeBase Lease as
set forth on the Schedule of Leases, for any of the Specified
Obligations in regard to such HomeBase Lease and (ii) any Liability
arising by reason of any HomeBase Third Party Claim with respect to
any Liability described in clause (i) of this section 1.14.
1.15 "HomeBase Lease Liability Payment" shall mean any amount paid by
--------------------------------
TJX or BJ's in satisfaction of any HomeBase Lease Liability.
-2-
<PAGE>
1.16 "HomeBase Third Party Claim" shall mean a Third Party Claim
--------------------------
arising out of, or relating to, a HomeBase Lease.
1.17 "Liability" shall mean any and all debts, liabilities and
---------
obligations, absolute or contingent, mature or unmatured, liquidated
or unliquidated, accrued or unaccrued, known or unknown, whenever
arising (unless otherwise specified in this Agreement), and all costs
and expenses related thereto, including, without limitation, (i) those
debts, liabilities and obligations arising under any law, rule,
regulation, action, threatened action, order or consent decree of any
governmental entity or any award of any arbitrator of any kind, and
those arising under any contract, commitment or undertaking, (ii)
reasonable attorneys' and accountants' fees, (iii) fees paid to real
estate consultants and brokers, and (iv) amounts paid or incurred in
investigating, preparing or defending against Third Party Claims or
settling or mitigating such claims (including, without limitation,
costs for repairs, remodeling or any other modification to premises
that are incurred in connection with the letting of the premises).
1.18 "Net HomeBase Lease Liability Payments" shall have the meaning
-------------------------------------
set forth in section 7 hereof.
1.19 "Parties" shall have the meaning set forth in the recitals
-------
hereof.
1.20 "Schedule of Leases" shall mean the schedule of leases initialed
------------------
by the parties, provided as of the date hereof and setting forth the
HomeBase Leases.
1.21 "Significant Subsidiary" shall have the meaning set forth in
----------------------
section 6.01(d)(i) hereof.
1.22 "Specified Obligations" shall mean, in regard to any HomeBase
---------------------
Lease, (i) the base rent in regard to such HomeBase Lease, provided,
--------
however, that any such base rent in excess of the annual base rent set
-------
forth with respect to such HomeBase Lease in the Schedule of Leases
shall not constitute Specified Obligations except to the extent, and
then only to the extent, that the amount of such excess results from
the fact that the actual rate of adjustment in minimum rent exceeds
that reflected in the Schedule of Leases because the actual rate of
increase in the CPI (or similar inflation index) used to calculate
such increase under the current terms of such HomeBase Lease exceeds
the 3% annual rate assumed in developing the Schedule of Leases; and
(ii) such amounts of common area maintenance charges and property
taxes and similar assessments as come due from time to time under the
terms of such HomeBase Lease as such terms are currently in effect.
1.23 "Spinoff" shall have the meaning set forth in the recitals
-------
hereof.
-3-
<PAGE>
1.24 "Third Party Claim" shall mean the assertion by a Person (other
-----------------
than Waban, TJX, BJ's or any of their Affiliates) of any claim or the
commencement by any such Person of any Action against any TJX
Indemnitee.
1.25 "TJX" shall have the meaning set forth in the recitals hereof.
---
1.26 "TJX Control Period" shall have the meaning set forth in section
------------------
5.04 hereof.
1.27 "TJX Indemnitees" shall mean TJX, its Affiliates and their
---------------
directors, officers, employees, representatives, attorneys,
accountants, and agents.
1.28 "Waban" shall have the meaning set forth in the recitals hereof.
-----
2. Indemnification for Breach of First Amendment. BJ's shall indemnify
---------------------------------------------
and hold harmless the TJX Indemnitees for any and all Liability paid or
satisfied by the TJX Indemnitees arising out of the non-performance by
Waban or any assignee, for any reason (including bankruptcy), of the
covenants contained in section 2 of the First Amendment, as such covenants
existed on the date hereof, or any agreement entered into in accordance
with said covenants.
3. Indemnification for BJ's Leases. BJ's shall indemnify and hold
-------------------------------
harmless the TJX Indemnitees for one hundred percent (100%) of any BJ's
Lease Liability Payment.
4. Indemnification for HomeBase Leases. BJ's shall indemnify and hold
-----------------------------------
harmless the TJX Indemnitees for fifty percent (50%) of any Net HomeBase
Lease Liability Payment. Notwithstanding anything to the contrary contained
in this Agreement, BJ's shall indemnify and hold harmless the TJX
Indemnitees for one hundred percent (100%) of any HomeBase Lease Liability
Payment that is made either during or with respect to the period up to and
including January 31, 2003 (the "BJ's Control Period"), net of an amount
equal to the fair market value of any benefit (such as by way of example,
any rental income received by TJX or any Affiliate thereof from a sublease
with respect to the HomeBase Lease that is the subject of the HomeBase
Lease Liability Payment in question) that has inured to TJX or any
Affiliate thereof during the BJ's Control Period (i) in regard to the
premises that are the subject of the HomeBase Lease as to which the
HomeBase Lease Liability Payment in question was made or (ii) by reason of
any claim made by TJX against any third party for reimbursement in whole or
in part of the HomeBase Lease Liability Payment in question.
5. Control of Third Party Claims and Payment Mechanism.
---------------------------------------------------
5.01 BJ's shall have control of the defense and settlement of
all BJ's Third Party Claims and shall be obligated to make all BJ's
Lease Liability
-4-
<PAGE>
Payments. TJX shall have the right, at its expense, to participate
with BJ's in the defense and settlement of such BJ's Third Party
Claims.
5.02 During the BJ's Control Period, BJ's shall have the right
to control the defense and settlement of all HomeBase Third Party
Claims, and shall be obligated to make all HomeBase Lease Liability
Payments with respect thereto. During the BJ's Control Period, TJX
shall have the right to participate, at its expense, with BJ's in the
defense and settlement of such HomeBase Third Party Claims.
5.03 During the BJ's Control Period (unless TJX has exercised
its right to control under section 6 hereof), BJ's may defend against,
and consent to the entry of any judgment or enter into any settlement
with respect to the HomeBase Third Party Claims in any manner it may
deem appropriate, and BJ's need not obtain any consent from TJX in
connection therewith, provided, however, that any claim of TJX based
-------- -------
on a Disabling Conduct on the part of BJ's in the handling of the
defense or settlement of such HomeBase Third Party Claims is hereby
expressly preserved.
5.04 From and after February 1, 2003 (the "TJX Control
Period"), TJX shall have the right to control the defense and
settlement of all pending and future HomeBase Third Party Claims.
During the TJX Control Period, BJ's shall have the right to
participate, at its expense, with TJX on the defense and settlement of
such HomeBase Third Party Claims. During the TJX Control Period, TJX
shall provide BJ's with monthly statements (with reasonable supporting
documentation) of any HomeBase Lease Liability Payments and any
Applicable Credits during the month in question. Except for any
HomeBase Lease Liability Payment as to which TJX is one hundred
percent (100%) indemnified pursuant to (and subject to the potential
netting called for by) the second sentence of section 4 hereof (all of
which such payments shall be 100% reimbursed by BJ's to TJX after
taking into account any netting called for by said sentence), BJ's
shall pay to TJX fifty percent (50%) of the Net HomeBase Lease
Liability Payments within fifteen (15) days of the receipt of such
statement.
5.05 During the TJX Control Period or, subject to section 6.03
hereof, after TJX has exercised its right to control pursuant to
section 6.01 hereof, TJX may defend against, and consent to the entry
of any judgment or enter into any settlement with respect to any Third
Party Claims as to which it has control in any manner it may deem
appropriate, and TJX need not obtain any consent from BJ's in
connection therewith, provided, however, that any claim of BJ's based
-------- -------
on a Disabling Conduct on the part of TJX in the handling of the
defense or settlement of such Third Party Claims is hereby expressly
preserved.
5.06 TJX shall provide BJ's with written notice within ten
(10) business days after the receipt of a written BJ's Third Party
Claim or
-5-
<PAGE>
HomeBase Third Party Claim, provided that the failure of TJX to give
such notice shall not relieve BJ's of its obligations under this
Agreement except to the extent BJ's is materially prejudiced by such
failure to give notice. Such notice shall describe the Third Party
Claim in reasonable detail. Thereafter, TJX shall deliver to BJ's
within five (5) business days after TJX's receipt thereof, copies of
all notices and documents (including court papers) received by TJX
relating to such Third Party Claim.
5.07 Both TJX and BJ's shall make available to the other any
personnel (to the extent that such tasks shall not unreasonably
interfere with the performance of such employee's responsibilities)
and any books, records or other documents within such Party's control
or which it otherwise has the ability to make available that are
reasonably necessary or appropriate for the defense, settlement or
compromise, and shall otherwise cooperate in the defense, settlement
or compromise of any BJ's Third Party Claim or HomeBase Third Party
Claim, including pursuing any appeals of any judgments relating
thereto.
5.08 During the BJ's Control Period, TJX shall assign, at BJ's
request, to the extent permitted to do so under the relevant lease or
guaranty, TJX's tenants' rights (if any) under the relevant lease or
guaranty (including such rights, if any, under TJX guaranties of
HomeBase Leases) that would enable BJ's, as sub-lessor, to enter into
sub-leases with respect to the premises covered by such HomeBase
Leases.
6. Right of TJX To Control Third Party Claims Upon
Occurrence of Control Event
-----------------------------------------------
6.01 TJX shall have the right at any time following the
occurrence of a Control Event which is not cured within 30 days
following written notice thereof to BJ's by TJX to elect to control
the defense and settlement of all pending and future BJ's Third Party
Claims or HomeBase Third Party Claims (or both). Control Event shall
mean the occurrence of any of the following events:
(a) BJ's shall have failed to perform in a material respect
any of its obligations hereunder;
(b) (i) BJ's shall have failed to maintain at the end of any
fiscal quarter an actual or implied senior debt rating of at
least B- by Standard & Poors or B3 by Moodys and (ii) at the end
of such quarter, BJ's shall have failed to maintain on a
consolidated basis as of the end of such fiscal quarter a Fixed
Charge Coverage Ratio (as such term is defined in the Agreement,
dated as of April 4, 1995, between Waban, The First National
Bank of Boston, and the other lenders party thereto, without
regard to any subsequent amendments, and interpreting such term
as if BJ's were the
-6-
<PAGE>
borrower rather than Waban) greater than 1.20 to 1.0; provided,
--------
however, that, in calculating the Fixed Charge Coverage Ratio,
-------
extraordinary items and HomeBase Lease Liability Payments shall
be excluded;
(c) BJ's or any of its subsidiaries shall have defaulted in
the payment of any obligation for borrowed money exceeding $10
million in principal amount which has been accelerated and is
beyond any grace period provided with respect thereto; or
(d) any of the following bankruptcy events shall have
occurred:
(i) any decree or order for relief in respect of BJ's
or any Significant Subsidiary (as defined in SEC
Regulation SX) or any other three subsidiaries is entered
under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law (collectively,
the "Bankruptcy Law"), of any jurisdiction; or
(ii) BJ's or any Significant Subsidiary or any other
three subsidiaries petitions or applies to any tribunal
for, or consents to, the appointment of, or the taking of
possession by, a trustee, receiver, custodian, liquidator
or similar official of BJ's or any Significant Subsidiary
or any other three subsidiaries, or of any substantial
part of the assets of BJ's or any Significant Subsidiary
or any other three subsidiaries, or commences a voluntary
case under the Bankruptcy Law of the United States or any
similar proceedings relating to BJ's or any Significant
Subsidiary or any other three subsidiaries under the
Bankruptcy Law of any other jurisdiction; or
(iii) any petition or application referred to in clause
(b) above is filed, or any such proceedings are
commenced, against BJ's, any Significant Subsidiary or
any other three subsidiaries and BJ's or such Significant
Subsidiary or such other three subsidiaries by any act
indicates its or their approval thereof or acquiescence
therein, or an order, judgment or decree is entered
appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition
in any such proceedings, and such order, judgment or
decree remains unstayed and in effect for more than 60
days.
6.02 From and after the end of the fourth fiscal quarter
beginning from the date hereof, BJ's shall promptly report in writing
to TJX any failure at any time of BJ's to comply with any of the tests
set forth in paragraphs (a) through (d) of section 6.01 hereof. From
and after the end
-7-
<PAGE>
of the fourth fiscal quarter beginning from the date hereof, BJ's also
shall furnish to TJX, within 45 days following the end of each fiscal
quarter and within 90 days following the end of each fiscal year, a
certificate signed by the President or Chief Financial Officer of BJ's
certifying BJ's compliance (and, with respect to paragraph (b) of
section 6.01, specifying the applicable credit rating or financial
ratio for such fiscal quarter or fiscal year) as of the end of such
fiscal quarter or fiscal year with each of the tests set forth in
paragraphs (a) through (d) of section 6.01.
6.03 From and after the end of the fourth fiscal quarter
beginning from the date hereof, TJX shall promptly report in writing
to BJ's any failure at any time of TJX to comply with any of the tests
set forth in paragraphs (a) through (d) of section 6.01 hereof (as if
such paragraphs applied to TJX). From and after the end of the fourth
fiscal quarter beginning from the date hereof, TJX also shall furnish
to BJ's, within 45 days following the end of each fiscal quarter and
within 90 days following the end of each fiscal year, a certificate
signed by the President or Chief Financial Officer of TJX certifying
TJX's compliance (and, with respect to paragraph (b) of section 6.01,
specifying the applicable credit rating or financial ratio for such
fiscal quarter or fiscal year) as of the end of such fiscal quarter or
fiscal year with each of the tests set forth in paragraphs (a) through
(d) of section 6.01 (as if such paragraphs applied to TJX).
6.04 After the exercise by TJX of its right to control the
HomeBase Third Party Claims pursuant to section 6.01 hereof, TJX shall
provide BJ's during the remainder of the BJ's Control Period with
prior written notice of any settlement agreement between TJX and the
holder of a HomeBase Third Party Claim pursuant to which more than
three (3) months of Liability of a HomeBase Lease is being
extinguished. TJX shall not enter into any such settlement agreement
without the consent of BJ's; provided, however, that such consent
-------- -------
shall not be unreasonably withheld. BJ's shall be deemed to have
consented to such settlement agreement unless it notifies TJX in
writing of its objection to such settlement agreement within 10 days
of receipt of such notice.
7. Calculation of Net HomeBase Lease Liability Payments. For purposes of
----------------------------------------------------
calculating the Net HomeBase Lease Liability Payments for which TJX is
entitled to partial reimbursement from BJ's pursuant to section 5.04
hereof, (a) the "Applicable Credits" shall be an amount equal to the fair
market value of any benefit (such as by way of example, any rental income
received by TJX or any Affiliate thereof from a sublease with respect to a
HomeBase Lease) that has inured to TJX or any Affiliate thereof during the
period covered by the monthly statement in question (i) in regard to the
premises that are the subject of the HomeBase Leases that are covered by
such monthly statement or (ii) by reason of any claim made by TJX against
any third party for reimbursement in whole or in part of any HomeBase Lease
Liability Payment; and (b) the "Net HomeBase Lease Liability Payments"
shall be the amount of the HomeBase Lease Liability
-8-
<PAGE>
Payments during the month in question less the amount of any Applicable
Credits during such month.
8. No Set Off or Recoupment. The obligations of BJ's to indemnify the
------------------------
TJX Indemnitees as provided for in this Agreement shall be absolute and not
subject to any set off or recoupment. Moreover, TJX shall have no
obligation to prosecute any claim or right of indemnification from Waban in
order to be entitled to indemnification from BJ's pursuant to the terms of
this Agreement.
9. No Third-Party Beneficiaries. This Agreement shall not confer any
----------------------------
rights or remedies upon any Person other than the Parties and their
respective successors and assigns.
10. Entire Agreement. This Agreement (including the documents referred to
----------------
herein) constitutes the entire agreement among the Parties and supersedes
any prior understandings and agreements (unless such agreements expressly
so provide), by or among the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof.
11. Succession and Assignment. This Agreement shall be binding upon and
-------------------------
inure to the benefit of the Parties and their respective successors and
assigns.
12. Counterparts. This Agreement is an agreement under seal and may be
------------
executed in one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and the same
instrument.
13. Headings. The section headings contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
14. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and
then two business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to TJX:
- ---------
The TJX Companies, Inc.
770 Cochituate Road
Framingham, Massachusetts 01701
Telecopy No.: (508) 390-2457
Attention: General Counsel
-9-
<PAGE>
Copy to:
- -------
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Telecopy No.: (212) 446-4900
Attention: Luc A. Despins, Esq.
If to BJ's:
- ----------
BJ's Wholesale Club, Inc.
One Mercer Road
Natick, Massachusetts 01760
Telecopy No.: (508) 651-6251
Attention: Treasurer
Copy to:
- -------
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telecopy No.: (617) 526-5000
Attention: Mark G. Borden, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
15. Governing Law. This Agreement shall be governed by and construed in
------------- ----------------------------------------------------
accordance with the domestic laws of the Commonwealth of Massachusetts
----------------------------------------------------------------------
without giving effect to any choice or conflict of law provision or rule
------------------------------------------------------------------------
(whether of the Commonwealth of Massachusetts or any other jurisdiction)
------------------------------------------------------------------------
that would cause the application of the laws of any jurisdiction other than
---------------------------------------------------------------------------
the Commonwealth of Massachusetts.
----------------------------------
16. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by
the Parties. No waiver by any Party of any default or breach of covenant
hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default or breach of covenant hereunder or affect in
any way any rights arising by virtue of any prior or subsequent such
occurrence.
-10-
<PAGE>
17. Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
18. Expenses. Each Party will bear his or its own costs and expenses
--------
(including legal fees and expenses) incurred in connection with this
Agreement.
19. Construction. The Parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.
20. Specific Performance. Each Party acknowledges and agrees that the
--------------------
other Party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms
or otherwise are breached. Accordingly, each Party agrees that the other
Party shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any State thereof having jurisdiction
over the Parties and the matter, in addition to any other remedy to which
they may be entitled, at law or in equity.
21. Further Assurances. Each Party to this Agreement shall execute such
-------------------
documents and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof.
22. Authority. The Parties hereto represent and warrant to each other
---------
that the signatories to this Agreement are authorized to execute this
Agreement; that each has full power and authority to enter into this
Agreement; that this Agreement is duly executed and delivered, and
constitutes a valid, binding agreement in accordance with its terms.
23. Effective Date. This Agreement, and all of the rights and obligations
--------------
of the parties hereunder, shall become effective upon the Effective Date,
and if the Effective Date does not occur by December 31, 1997, this
Agreement shall be null and void.
24. Waiver of Jury Trial. THE PARTIES HERETO EACH WAIVE THEIR RESPECTIVE
--------------------
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY
TYPE BROUGHT BY A PARTY AGAINST THE OTHER PARTY, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE PARTIES
-11-
<PAGE>
HERETO EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY
A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION 24 AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT.
25. TJX Representation. TJX hereby represents that it has no Knowledge of
------------------
the existence of a lease or sub-lease of property that is (i) currently
used by the HomeBase division for which TJX or any Affiliate thereof may be
liable as a tenant, sub-lessee, surety or guarantor and (ii) not listed on
the Schedule of Leases. For the purposes of this Agreement, "Knowledge"
shall mean the actual present knowledge of Donald G. Campbell, without
investigation; provided, however, that the fact that Mr. Campbell may have
-------- -------
executed a guaranty with respect to such lease shall not be deemed to be
actual knowledge of Mr. Campbell unless such guaranty was executed by Mr.
Campbell on or after January 18, 1997.
26. Subrogation. In the event of any payment by BJ's to a TJX Indemnitee
-----------
in connection with any Third Party Claim, BJ's shall be subrogated to and
shall stand in the place of such TJX Indemnitee as to any events or
circumstances for which such TJX Indemnitee may have any right or claim
relating to such Third Party Claim against any claimant or plaintiff
asserting such Third Party Claim or as against any other Person; provided,
--------
however, that BJ's shall have no such right of subrogation in regard to any
-------
HomeBase Lease Liability or any BJ's Lease Liability if the TJX Indemnitees
have not been fully discharged and exonerated from any and all Liability in
respect of the HomeBase Lease or BJ's Lease in question. If BJ's is
entitled to subrogation under this section 26, the TJX Indemnitees shall
cooperate with BJ's in a reasonable manner, at the cost and expense of
BJ's, in prosecuting any subrogated right or claim.
*****
-12-
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
THE TJX COMPANIES, INC.
By: Donald G. Campbell
---------------------------------
Title: Executive Vice President
---------------------------------
BJ'S WHOLESALE CLUB, INC.
By: Edward J. Weisberger
---------------------------------
Title: Senior Vice President
---------------------------------
-13-
<PAGE>
EXHIBIT 21
BJ'S WHOLESALE CLUB, INC.
Subsidiaries
------------
As of 5/12/97:
- -------------
BJ's Wholesale Club, Inc. does not currently have any subsidiaries.
Following the Distribution:
- --------------------------
Following the Distribution, the following subsidiaries of Waban Inc. are
expected to be subsidiaries of BJ's Wholesale Club, Inc.:
Name of Subsidiary Jurisdiction of Incorporation
- ------------------ -----------------------------
Natick Security Corp. ..................... Massachusetts
Natick Corporation......................... Delaware
Natick First Realty Corp. ................. Connecticut
Natick Second Realty Corp. ................ Massachusetts
Natick NJ Flemington Realty Corp. ......... New Jersey
Natick Fourth Realty Corp. ................ New Jersey
Natick Fifth Realty Corp. ................. Maryland
Natick Sixth Realty Corp. ................. Connecticut
Natick MA Realty Corp. .................... Massachusetts
Natick NH Realty Corp. .................... New Hampshire
Natick NY Realty Corp. .................... New York
Natick NY 1992 Realty Corp. ............... New York
Natick PA Realty Corp. .................... Pennsylvania
Natick VA Realty Corp. .................... Virginia
Natick Portsmouth Realty Corp. ............ New Hampshire
Natick NJ Realty Corp. .................... New Jersey
Natick NJ 1993 Realty Corp. ............... New Jersey
BJ's PA Distribution Center, Inc. ......... Pennsylvania
BJ's MA Distribution Center, Inc. ......... Massachusetts
<PAGE>
Natick CT Realty Corp. .................... Connecticut
Natick ME 1995 Realty Corp. ............... Maine
Natick NY 1995 Realty Corp. ............... New York
Natick MA 1995 Realty Corp. ............... Massachusetts
Natick NH 1994 Realty Corp. ............... New Hampshire
Natick PA 1995 Realty Corp. ............... Pennsylvania
CWC Beverages Corp. ....................... Connecticut
FWC Beverages Corp. ....................... Florida
JWC Beverages Corp. ....................... New Jersey
Mormax Beverages Corp. .................... Delaware
Mormax Corporation......................... Massachusetts
RWC Beverages Corp. ....................... Rhode Island
YWC Beverages Corp. ....................... New York
Natick Lancaster Realty Corp. ............. Pennsylvania
Natick Yorktown Realty Corp. .............. New York
Natick Waterford Realty Corp. ............. Connecticut
Natick Sennett Realty Corp. ............... New York
Natick Bowie Realty Corp. ................. Maryland
Natick Pembroke Realty Corp. .............. Florida
Natick PA Plymouth Realty Corp. ........... Pennsylvania
Natick Realty, Inc. ....................... Maryland
Waban Export Inc. ......................... Barbados
