EXHIBIT 10.19
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CHANGE OF CONTROL SEVERANCE AGREEMENT
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THIS AGREEMENT between BJ's Wholesale Club, Inc., a Delaware
corporation (the "Company"), and ________________ ("Executive"), dated as of
July 28, 1997.
Executive is a key executive of the Company or a Subsidiary and an
integral part of its management.
The Company recognizes that the possibility of a change of control of
the Company may result in the departure or distraction of management to the
detriment of the Company and its shareholders.
The Company wishes to assure Executive of fair severance should
Executive's employment terminate in specified circumstances following a change
of control of the Company and to assure Executive of certain other benefits upon
a change of control.
In consideration of Executive's continued employment with the Company
or a Subsidiary and other good and valuable consideration, the parties agree as
follows:
1. Benefits Upon Change of Control.
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1.1 In General. Within 30 days following a Change of Control, whether
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or not Executive's employment has been terminated, the Company shall pay to
Executive the following in a lump sum:
(a) an amount equal to the "Target Bonus" under the Company's
Management Incentive Plan or any other annual incentive plan which is
applicable to Executive for the fiscal year in which the Change of
Control occurs (or if the Target Bonus is reduced within 180 days
before the commencement of a Standstill Period, the "Target Bonus"
applicable to Executive for the fiscal year in which such reduction
occurred); and
(b) if Executive is a participant in a performance-based long-
range incentive plan at the Change of Control, such amount as is
required to be paid to Executive upon a Change of Control pursuant to
the provisions of such plan.
1.2 Benefits Following Qualified Termination of Employment. Executive
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shall be entitled to the following benefits upon a Qualified Termination:
(a) Within 30 days following the Date of Termination, the Company
shall pay to Executive the following in a lump sum:
(i) an amount equal to two times Executive's Base Salary for
one year at the rate in effect immediately prior to the Date
of Termination or the Change of Control (or if Executive's
Base Salary was reduced within 180 days before the
commencement of a Standstill Period, the rate in effect
immediately prior to such reduction), plus the accrued and
unpaid portion of Executive's Base Salary through the Date of
Termination. Any payments made to Executive under any long
term disability plan of the Company with respect to the two
years following termination of employment shall be offset
against such two times Base Salary payment. Executive shall
promptly make reimbursement payments to the Company to the
extent any such disability payments are received after the
Base Salary payment; and
(ii) an amount equal to two times Executive's automobile
allowance for one year at the rate in effect immediately prior
to the Date of Termination or the Change of Control, (or if
such automobile allowance was reduced within 180 days before
the commencement of a Standstill Period, the rate in effect
immediately prior to such reduction unless such reduction was
offset by an increase in Base Salary during such 180-day
period), whichever is highest, plus any portion of Executive's
automobile allowance payable but unpaid through the Date of
Termination; and
(iii) an amount equal to the Target Bonus amount, as defined
and determined under Section 1.1(a) above.
(b)(i) Until the second anniversary of the Date of Termination, the
Company shall maintain in full force and effect for the continued benefit of
Executive and Executive's family all life insurance and medical insurance (other
than long-term disability) plans and programs in which Executive was entitled to
participate immediately prior to the Change of Control (or if Executive's title
was changed to a level below that of Executive's Current Title within 180 days
before the commencement of a Standstill Period, all such plans and programs in
which Executive was entitled to participate immediately prior to such change, if
the benefits thereunder are greater), provided that Executive's continued
participation is possible under the general terms and provisions of such plans
and programs. In the event that participation in such plans or programs is not
available to
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Executive for any reason, including termination of the plan, the Company shall
arrange upon comparable terms to provide Executive with benefits substantially
similar to those which Executive is entitled to receive under such plans and
programs. Notwithstanding the foregoing, the Company's obligations hereunder
with respect to life insurance or medical insurance plans and programs shall be
deemed satisfied to the extent (but only to the extent) of any such insurance
coverage or benefits provided by another employer.
(b)(ii) If Qualified Termination occurs by reason of Disability, the
Company shall maintain in full force and effect for the continued benefit of
Executive, disability benefits and/or disability insurance at the same level to
which Executive was entitled immediately prior to the Qualified Termination.
1.3 Coordination With Certain Tax Rules. Payments under Sections 1.1
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and 1.2 shall be made without regard to whether the deductibility of such
payments (or any other payments to or for the benefit of Executive) would be
limited or precluded by Internal Revenue Code Section 280G and without regard to
whether such payments (or any other payments) would subject Executive to the
federal excise tax levied on certain "excess parachute payments" under Internal
Revenue Code Section 4999; provided, that if the total of all payments to or for
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the benefit of Executive, after reduction for all federal taxes (including the
tax described in Internal Revenue Code Section 4999, if applicable) with respect
to such payments ("Executive's total after-tax payments"), would be increased by
the limitation or elimination of any payment under Sections 1.1 or 1.2, amounts
payable under Sections 1.1 and 1.2 shall be reduced to the extent, and only to
the extent, necessary to maximize Executive's total after-tax payments. The
determination as to whether and to what extent payments under Sections 1.1 or
1.2 are required to be reduced in accordance with the preceding sentence shall
be made at the Company's expense by Coopers & Lybrand or by such other certified
public accounting firm as the Executive Compensation Committee of the Company's
Board of Directors may designate prior to a Change of Control. In the event of
any underpayment or overpayment under Sections 1.1 or 1.2, as determined by
Coopers & Lybrand (or such other firm as may have been designated in accordance
with the preceding sentence), the amount of such underpayment or overpayment
shall forthwith be paid to Executive or refunded to the Company, as the case may
be, with interest at the applicable Federal rate provided for in Section
7872(f)(2) of the Internal Revenue Code.
2. Noncompetition; No Mitigation of Damages; Other Severance Payments;
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Withholding.
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2.1 Noncompetition. Upon a Qualified Termination, any agreement by
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Executive not to engage in competition with the
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Company subsequent to the termination of Executive's employment, whether
contained in an employment contract or other agreement, shall no longer be
effective.
2.2 No Duty to Mitigate Damages. Executive's benefits under this
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Agreement shall be considered severance pay in consideration of Executive's past
service and Executive's continued service from the date of this Agreement, and
Executive's entitlement thereto shall neither be governed by any duty to
mitigate Executive's damages by seeking further employment nor offset by any
compensation which Executive may receive from future employment.
2.3 Other Severance Payments. In the event that Executive has an
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employment contract or any other agreement with the Company (or a Subsidiary)
which entitles Executive to severance payments upon the termination of
Executive's employment with the Company, the amount of any such severance
payments shall be deducted from the payments to be made under this Agreement.
2.4 Withholding. Anything to the contrary notwithstanding, all
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payments required to be made by the Company hereunder to Executive shall be
subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation.
3. Arbitration. Any controversy or claim arising out of or relating to
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this Agreement, or the breach thereof, shall be settled exclusively by
arbitration in Boston, Massachusetts in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
4. Legal Fees and Expenses. The Company shall pay all legal fees and
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expenses, including but not limited to counsel fees, stenographer fees, printing
costs, etc. reasonably incurred by Executive in contesting or disputing that the
termination of Executive's employment during a Standstill Period is for Cause or
other than for good reason (as defined in paragraph (j) of Exhibit A) or in
obtaining any right or benefit to which Executive is entitled under this
Agreement. Any amount payable under this Agreement that is not paid when due
shall accrue interest at the prime rate as from time to time in effect at
BankBoston, N.A., until paid in full.
5. Notice of Termination. During a Standstill Period, Executive's
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employment may be terminated by the Company (or a Subsidiary) only upon 30 days'
written notice to Executive.
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6. Notices. All notices shall be in writing and shall be deemed given
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five days after mailing in the continental United States by registered or
certified mail, or upon personal receipt after delivery, telex, telecopy or
telegram, to the party entitled thereto at the address stated below or to such
changed address as the addressee may have given by a similar notice:
To the Company: BJ's Wholesale Club, Inc.
One Mercer Road
Natick, MA 01760
Attention: President
To Executive: At Executive's home address, as last
shown on the records of the Company
7. Severability. In the event that any provision of this Agreement
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shall be determined to be invalid or unenforceable, such provision shall be
enforceable in any other jurisdiction in which valid and enforceable and in any
event the remaining provisions shall remain in full force and effect to the
fullest extent permitted by law.
8. General Provisions.
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8.1 Binding Agreement. This Agreement shall be binding upon and inure
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to the benefit of the parties and be enforceable by Executive's personal or
legal representatives or successors. If Executive dies while any amounts would
still be payable to Executive hereunder, benefits would still be provided to
Executive's family hereunder or rights would still be exercisable by Executive
hereunder as if Executive had continued to live, such amounts shall be paid to
Executive's estate, such benefits shall be provided to Executive's family and
such rights shall remain exercisable by Executive's estate in accordance with
the terms of this Agreement. This Agreement shall not otherwise be assignable by
Executive.
8.2 Successors. This Agreement shall inure to and be binding upon the
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Company's successors, including any successor to all or substantially all of the
Company's business and/or assets. The Company will require any successor to all
or substantially all of the business and/or assets of the Company by sale,
merger (where the Company is not the surviving corporation), lease or otherwise,
by agreement in form and substance satisfactory to Executive, to assume
expressly this Agreement. If the Company shall not obtain such agreement prior
to the effective date of any such succession, Executive shall have all rights
resulting
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from termination by Executive for good reason (as defined in paragraph (j) of
Exhibit A) under this Agreement. This Agreement shall not otherwise be
assignable by the Company.
8.3 Amendment or Modification; Waiver. This Agreement may not be
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amended unless agreed to in writing by Executive and the Company. No waiver by
either party of any breach of this Agreement shall be deemed a waiver of a
subsequent breach.
8.4 Titles. No provision of this Agreement is to be construed by
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reference to the title of any section.
8.5 Continued Employment. This Agreement shall not give Executive any
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right of continued employment or any right to compensation or benefits from the
Company or any Subsidiary except the right specifically stated herein to certain
severance and other benefits, and shall not limit the Company's (or a
Subsidiary's) right to change the terms of or to terminate Executive's
employment, with or without Cause, at any time other than during a Standstill
Period, except as may be otherwise provided in a written employment agreement
between the Company (or a Subsidiary) and Executive.
8.6 Termination of Agreement Outside of Standstill Period. This
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Agreement shall be automatically terminated upon the first to occur of (i) the
termination of Executive's employment for any reason, whether voluntary or
involuntary, at any time other than during a Standstill Period or (ii) the 180th
day after a change in Executive's title to a level below that of Executive's
Current Title unless a Standstill Period was in effect on the date of such
change or within 180 days thereafter or (iii) if Executive is employed by a
Subsidiary of the Company, the date on which the Subsidiary either ceases to be
a Subsidiary of the Company or sells or otherwise disposes of all or
substantially all of its assets, unless such event occurs during a Standstill
Period and Executive's employment shall have been terminated in a Qualified
Termination within 90 days of such event.
8.7 Prior Agreement. This Agreement amends and restates and shall
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supersede and replace any prior change of control severance agreement between
the Company or any of its subsidiaries, or any predecessor, and Executive.
8.8 Definitions. The terms defined in Exhibits A and B hereto are
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used herein as so defined.
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8.9 Governing Law. The validity, interpretation, performance and
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enforcement of this Agreement shall be governed by the laws of the Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
BJ'S WHOLESALE CLUB, INC.
By
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EXECUTIVE
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EXHIBIT A
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Definitions
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The following terms as used in this Agreement shall have the following
meanings:
(a) "Base Salary" shall mean Executive's annual base salary, exclusive
of any bonus or other benefits Executive may receive.
(b) "Cause" shall mean dishonesty, conviction of a felony, gross
neglect of duties (other than as a result of Incapacity, Disability or death),
or conflict of interest which conflict shall continue for 30 days after the
Company gives written notice to Executive requesting the cessation of such
conflict.
In respect of any termination during a Standstill Period, Executive
shall not be deemed to have been terminated for Cause until the later to occur
of (i) the 30th day after notice of termination is given and (ii) the delivery
to Executive of a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the Company's directors at a meeting called and held
for that purpose (after reasonable notice to Executive), and at which Executive
together with his counsel was given an opportunity to be heard, finding that
Executive was guilty of conduct described in the definition of "Cause" above,
and specifying the particulars thereof in detail; provided, however, that the
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Company may suspend Executive and withhold payment of Executive's Base Salary
from the date that notice of termination is given until the earliest to occur of
(a) termination of Executive for Cause effected in accordance with the foregoing
procedures (in which case Executive shall not be entitled to Executive's Base
Salary for such period), (b) a determination by a majority of the Company's
directors that Executive was not guilty of the conduct described in the
definition of "Cause" above (in which case Executive shall be reinstated and
paid any of Executive's previously unpaid Base Salary for such period), or (c)
the 90th day after notice of termination is given (in which case Executive shall
be reinstated and paid any of Executive's previously unpaid Base Salary for such
period).
(c) "Change of Control" shall have the meaning set forth in Exhibit B.
(d) "Company" shall mean BJ's Wholesale Club, Inc. or any successor.
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(e) "Current Title" shall mean Executive's title on the date 180 days
prior to the commencement of a Standstill Period.
(f) "Date of Termination" shall mean the date on which Executive's
employment is terminated.
(g) "Disability" shall have the meaning given it in the Company's
long-term disability plan. Executive's employment shall be deemed to be
terminated for Disability on the date on which Executive is entitled to receive
long-term disability compensation pursuant to such long-term disability plan.
(h) "Executive" shall have the meaning set forth in the first paragraph of
this Agreement.
(i) "Incapacity" shall mean a disability (other than Disability within
the meaning of the immediately preceding definition) or other impairment of
health that renders Executive unable to perform Executive's duties to the
reasonable satisfaction of the Board of Directors of the Company. If by reason
of Incapacity Executive is unable to perform Executive's duties for at least six
months in any 12- month period, upon written notice by the Company the
employment of Executive shall be deemed to have terminated by reason of
Incapacity.
(j) "Qualified Termination" shall mean the termination of Executive's
employment during a Standstill Period (1) by the Company other than for Cause,
or (2) by Executive for good reason, or (3) by reason of death, Incapacity or
Disability.
For purposes of this definition, termination for "good reason" shall
mean the voluntary termination by Executive of Executive's employment (A) within
120 days after the occurrence without Executive's express written consent of any
of the events described in clauses (I), (II), (III), (IV), (V) or (VI) below,
provided that Executive gives notice to the Company at least 30 days in advance
requesting that the situation described in those clauses be remedied, and the
situation remains unremedied upon expiration of such 30-day period; (B) within
120 days after the occurrence without Executive's express written consent (which
must expressly refer to such consent as being given under this Agreement) of the
events described in clauses (VII) or (VIII) below, provided that Executive gives
notice to the Company at least
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30 days in advance; or (C) upon occurrence of the events described in clause(IX)
below, provided that Executive gives notice to the Company at least 30 days in
advance:
(I) the assignment to Executive of any duties inconsistent with
Executive's positions, duties, responsibilities, reporting
requirements, and status with the Company (or a Subsidiary)
immediately prior to a Change of Control, or a substantive
change in Executive's titles or offices as in effect
immediately prior to a Change of Control, or any removal of
Executive from or any failure to reelect Executive to such
positions, except in connection with the termination of
Executive's employment by the Company (or a Subsidiary) for
Cause or by Executive other than for good reason; or any other
action by the Company (or a Subsidiary) which results in a
diminishment in such position, authority, duties or
responsibilities, other than an insubstantial and inadvertent
action which is remedied by the Company or the Subsidiary
promptly after receipt of notice thereof given by Executive;
or
(II) if Executive's rate of Base Salary for any fiscal year is less
than 100 percent of the rate of Base Salary paid to Executive
in the completed fiscal year immediately preceding the Change
of Control, or if Executive's total cash compensation
opportunities, including salary and incentives, for any fiscal
year are less than 100 percent of the total cash compensation
opportunities made available to Executive in the completed
fiscal year immediately preceding the Change of Control,
unless any such reduction represents an overall reduction in
the rate of Base Salary paid or cash compensation
opportunities made available, as the case may be, to
executives in the same organizational level (it being the
Company's burden to establish this fact); or
(III) the failure of the Company (or a Subsidiary) to continue in
effect any benefits or perquisites, or any pension, life
insurance, medical insurance or disability plan in which
Executive was participating immediately prior to a Change of
Control unless the Company (or a Subsidiary) provides
Executive with a plan or plans that provide substantially
similar benefits, or the taking of any action by the Company
(or a Subsidiary) that would adversely affect Executive's
participation in or materially reduce Executive's
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benefits under any of such plans or deprive Executive of any
material fringe benefit enjoyed by Executive immediately prior
to a Change of Control, unless the elimination or reduction of
any such benefit, perquisite or plan affects all other
executives in the same organizational level (it being the
Company's burden to establish this fact); or
(IV) any purported termination of Executive's employment by the
Company (or a Subsidiary) for Cause during a Standstill Period
which is not effected in compliance with paragraph (b) of this
Exhibit; or
(V) any relocation of Executive of more than 40 miles from the
place where Executive was located at the time of the Change of
Control; or
(VI) any other breach by the Company of any provision of this
Agreement; or
(VII) the Company sells or otherwise disposes of, in one transaction
or a series of related transactions, assets or earning power
aggregating more than 30 percent of the assets (taken at asset
value as stated on the books of the Company determined in
accordance with generally accepted accounting principles
consistently applied) or earning power of the Company (on an
individual basis) or the Company and its subsidiaries (on a
consolidated basis) to any other Person or Persons (as those
terms are defined in Exhibit B); or
(VIII) if Executive is employed by a Subsidiary of the Company, such
Subsidiary either ceases to be a Subsidiary of the Company or
sells or otherwise disposes of, in one transaction or a series
of related transactions, assets or earning power aggregating
more than 30 percent of the assets (taken at asset value as
stated on the books of the Subsidiary determined in accordance
with generally accepted accounting principles consistently
applied) or earning power of such Subsidiary (on an individual
basis) or such Subsidiary and its subsidiaries (on a
consolidated basis) to any other Person or Persons (as those
terms are defined in Exhibit B); or
(IX) the voluntary termination by Executive of Executive's
employment at any time during the period commencing eight
months plus one day after the Change of Control and ending 12
months after
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the Change of Control, provided, that in the event of any such
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voluntary termination pursuant to this clause (IX), the
Executive shall be entitled to receive only one-half (1/2) of
the lump sum amount provided for in Section 1.2(a) and the
benefits provided for in Section 1.2(b)(i) shall be provided
for one year rather than two years from the Date of
Termination.
(k) "Standstill Period" shall be the period commencing on the date of a
Change of Control and continuing until the close of business on the last
business day of the 24th calendar month following such Change of Control.
(l) "Subsidiary" shall mean any corporation in which the Company owns,
directly or indirectly, 50 percent or more of the total combined voting power of
all classes of stock.
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EXHIBIT B
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Definition of Change of Control
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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
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Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of directors, of
the corporation resulting from such Business Combination (which as used in
section (c) of this definition shall include, without limitation, a corporation
which as a result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately prior to
such Business Combination, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination, or the
combined voting power of the then-outstanding voting securities of such
corporation and (iii) at least half of the members of the board of directors of
the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
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