Exhibit 10.1
SEVERANCE AGREEMENT AND GENERAL RELEASE
THIS SEVERANCE AGREEMENT (the "Agreement") dated as of September 27, 2002
is entered into between Xxxx X. Xxxxxx, whose address is 00 Xxxxxxx Xxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000 (the "Executive"), and BJ's Wholesale Club, Inc., a
Delaware corporation, whose principal office is Xxx Xxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 (the "Company").
WHEREAS, the Executive has resigned from his office as President and Chief
Executive Officer of the Company on September 9, 2002, and remains a general
employee of the Company;
WHEREAS, the parties wish to resolve amicably the Executive's termination
from employment as a general employee of the Company and establish the terms of
the Executive's severance arrangement;
WHEREAS, the Executive is advised that he has at least 21 days to consider
this Agreement, that he is advised to consult with his own attorney prior to
signing this Agreement and that he may revoke the agreement for a period of
seven (7) days after signing and the Agreement shall not be effective or
enforceable until the expiration of the seven (7) day revocation period;
WHEREAS, the parties intend that this Agreement shall terminate (i) the
Employment Agreement dated as of July 28, 1997 (the "July 1997 Employment
Agreement") between the Executive and the Company pursuant to Section 8(a)
thereof and (ii) the Change of Control Severance Agreement dated as of February
4, 1999 (the "CIC Agreement") between the Executive and the Company;
NOW, THEREFORE, in consideration of the promises and conditions set forth
herein, the sufficiency of which is hereby acknowledged, the Company and the
Executive agree as follows:
1. Termination Date. The Executive's effective date of termination from
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all employment with the Company is September 28, 2002 (the "Termination Date").
Effective upon the Termination Date, the July 1997 Employment Agreement and the
CIC Agreement between the Executive and the Company will be terminated.
2. Severance Compensation and Benefits. In return for the execution of the
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instant Severance Agreement and General Release (this "Agreement"), the Company
agrees to provide the Executive with the following compensation and benefits:
a) Severance Pay. For a period of seventy-eight (78) weeks following the
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Termination Date, through March 27, 2004 (the "Severance Period"), the Company
shall continue to pay the Executive his base salary as of the Termination Date,
at the rate of $13,461.54 per week. The Severance Pay shall be less all
applicable withholding for income and employment taxes and insurance benefits,
and shall be payable in such manner and at such time as the Company shall pay
base salary to other executives, but in no event shall such severance pay
commence earlier than the eighth (8th) day after execution of this Agreement.
b) Insurance Benefits. During the Severance Period, the Company will
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provide only medical and hospital insurance and life insurance (but not
disability or other types
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of insurance) for the Executive and his family upon comparable terms and
conditions to those provided for the Company's executives generally. Following
the Severance Period, the Executive and his family may be eligible to receive
continuation coverage to the extent authorized and consistent with 29 U.S.C.
ss.1161, et seq., ("COBRA"), provided that he pays full cost for such coverage
in a timely manner.
c) Management Incentive Plan. Pursuant to the Company's Management
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Incentive Plan ("MIP"), the Company will pay to the Executive a prorated portion
of the amount that the Executive would have been entitled to receive under MIP
for services performed during the current fiscal year. The prorated portion
shall be determined by multiplying the amount he would have received under MIP
for the full Plan Year by a fraction, the numerator of which is 34, and the
denominator of which is 52. Such amount will be paid in its entirety in a lump
sum, less applicable withholdings, at the same time as other MIP awards for the
fiscal year ending February 1, 2003. The Executive shall not be entitled to
receive any other MIP awards.
d) Growth Incentive Plan. Pursuant to the Company's Growth Incentive
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Plan ("GIP"), awards will be payable as follows: (i) Award Period Ending in
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2003. The Company will pay to the Executive, pursuant to Section 2.4 (b) of GIP,
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the amount he would have been entitled to receive under GIP as of the
Termination Date for the Award Period in which the Executive is a Participant
ending in 2003. The amounts paid with respect to the Award Period ending in 2003
shall be determined by multiplying the amount the Executive would have received
for the complete term of the Award Period by a fraction, the numerator of which
is the number of weeks in the Award Period through September 28, 2002, and the
denominator of which is the total number of weeks from the beginning of the
Award Period until the end of the Award Period. All such amounts payable for the
Award Period ending in 2003 will be paid in a lump sum minus applicable
withholdings as soon as practicable following the end of the fiscal year; (ii)
Award Period Ending in 2005 And Other GIP Award Entitlement. The Executive
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agrees and recognizes that he shall not be entitled to any award with respect to
the Award Period ending in 2005, and that, effective September 28, 2002, he
shall not be entitled to receive future GIP awards.
e) Options.
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(i) Grants pursuant to the Company's 1997 Replacement Stock Incentive
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Plan (the "1997 Replacement Plan"). Pursuant to the 1997 Replacement Plan and
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the terms of the individual Non-Qualified Stock Option Certificates Granted
Under 1997 Replacement Stock Incentive Plan (the "Certificates"), and
recognizing that Section 6 (h) of the 1997 Replacement Plan does not apply, the
Executive's vested options shall be exercisable for a period of three (3) months
from the Termination Date. Such exercise rights shall be governed by the terms
and conditions of the 1997 Replacement Plan and respective Certificates.
(ii) Grants pursuant to the Company's 1997 Stock Incentive Plan (the
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"1997 Plan"). The Executive has six (6) Grants pursuant to the 1997 Plan: Option
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to purchase 200,000 shares (of which 50,000 shares have been acquired)
exercisable at $15.0625 with a Grant Date of September 18, 1997 ("Grant 1");
Option to purchase 200,000 shares (of which 25,000 shares have been acquired)
exercisable at $18.16 with a Grant Date of August 27, 1998 ("Grant 2"); Option
to purchase 100,000 shares exercisable at $29.75 with a Grant Date of
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September 17, 1999 ("Grant 3"); Option to purchase 100,000 shares exercisable at
$31.00 with a Grant Date of May 25, 2000 ("Grant 4"); Option to purchase 65,000
shares exercisable at $37.0625 with a Grant Date of September 14, 2000 ("Grant
5"); and Option to purchase 65,000 shares exercisable at $45.30 with a Grant
Date of September 25, 2001 ("Grant 6"), which will be treated as follows. Grants
1 and 2. Recognizing that the Executive is entitled to be treated as a retiree
under the terms of the 1997 Plan and applicable Nonstatutory Stock Option
Agreements Granted Under 1997 Stock Incentive Plan (the "Stock Option
Agreements"), vested options under Grants 1 and 2 shall be exercisable within
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one (1) year of the Termination Date, during which period he shall continue to
vest in such Grants under the terms of the 1997 Plan and respective Stock Option
Agreements. Grants 3, 4, 5, and 6. With respect to Grants 3, 4, 5, and 6,
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because the Executive will be treated as a retiree under the terms of the 1997
Plan and the applicable Stock Option Agreements, vested options under Xxxxxx 0,
0, 0, xxx 0 xxxxx xx exercisable within one (1) year of the Termination Date,
during which period he shall continue to vest in such Grants under the terms of
the 1997 Plan and the respective Stock Option Agreements. In addition, in
consideration for past services to the Company, the Company agrees that it shall
issue amended Stock Option Agreements for Grants 3, 4, 5, and 6 providing for an
additional two (2) year extension of the period in which options under Grants 3,
4, 5, and 6 shall continue to vest and shall be exercisable. As a result of the
Executive's treatment as a retiree, as well as the Company's issuance of amended
Stock Option Agreements, the Executive shall have until and including September
28, 2005 in which to continue to vest in options subject to Grants 3, 4, 5 and 6
and to exercise vested options under Grants 3, 4, 5, and 6.
f) Executive Retirement Plan. The Executive will receive a prorated
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Annual Retirement Contribution (as defined in the Company's Executive Retirement
Plan) solely as provided herein. Such Annual Retirement Contribution shall be
based on his compensation from the beginning of the Company's current fiscal
year until the Termination Date, multiplied by whatever rate of contribution is
approved for other senior executives of the Company participating in said plan
during the current fiscal year. Such Annual Retirement Contribution shall be
paid to the Executive in the same manner and at the same time as other payments
under said Plan.
g) Other Benefits. Except as expressly provided above, the Executive's
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eligibility to participate in any of the Company's employee benefits plans and
programs shall cease on or after the Termination Date in accordance with the
terms of such benefits and programs. As of the end of the current fiscal
quarter, the Executive will not be eligible for participation under any General
Deferred Compensation Plan. Any benefits previously accrued under said Plan will
be paid in accordance with its terms.
3. Agreement Not to Solicit or Compete.
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a) The Executive shall not during the Severance Period under any
circumstances employ, solicit the employment of, or accept unsolicited the
services of, any "protected person", or recommend the employment of any
"protected person" to any other business organization in which the Executive has
any direct or indirect interest (other than a less-than-one percent equity
interest in an entity), with which the Executive is affiliated or for which the
Executive renders any services. A "protected person" shall be a person known by
the Executive to be employed by the Company or its subsidiaries at or within six
months prior to the commencement of conversations with such person with respect
to employment.
As to (i) each "protected person" to whom the foregoing applies, (ii) each
limitation on (A) employment of, (B) solicitation of, and (C) unsolicited
acceptance of services
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from, each "protected person" and (iii) each month of the period during which
the provisions of this subsection (a) apply to each of the foregoing, the
provisions set forth in this subsection (a) are deemed to be separate and
independent agreements and in the event of unenforceability of any such
agreement, such unenforceable agreement shall be deemed automatically deleted
from the provisions hereof and such deletion shall not affect the enforceability
of any other provision of this subsection (a) or any other term of this
Agreement.
b) The Executive acknowledges that during the course of his employment
with the Company, he learned many trade secrets of the Company and had access to
confidential information and business plans of the Company. Therefore, during
the Severance Period, the Executive will not engage, either as a principal,
executive, partner, consultant or investor (other than a less-than-one percent
equity interest in an entity), in Wal-Mart Stores, Inc., or any affiliate of
Wal-Mart Stores, Inc. or any business, which is a competitor of the Company. A
business shall be deemed a competitor of the Company if it shall operate a chain
of membership warehouse clubs (such as Sam's Club or Costco), or warehouse
stores selling food and/or general merchandise, that includes a warehouse store
located within 10 miles of any "then existing" BJ's Wholesale Club warehouse
store. The term "then existing" in the previous sentence shall refer to any such
warehouse store that is, at any time during the Severance Period, operated by
the Company or any of its subsidiaries or divisions or under lease for operation
as aforesaid. Nothing herein shall restrict the right of the Executive to engage
in a business that operates exclusively a chain of home improvement stores,
conventional or full xxxx-up department stores, general merchandise discount
department stores, or apparel stores. The Executive agrees that if, at any time,
pursuant to action of any court or administrative or governmental body, the
operation of any part of this paragraph shall be determined to be unlawful or
otherwise unenforceable, then the coverage of this paragraph shall be deemed to
be restricted as to duration, geographical scope or otherwise, to the extent,
and only to the extent, necessary to make this paragraph lawful and enforceable
in the particular jurisdiction in which such determination is made.
c) The Executive acknowledges that the restrictions contained in this
Section 3 are necessary for the protection of the business and goodwill of the
Company and considers the restrictions to be reasonable for such purpose. The
Executive agrees that any breach of this Agreement is likely to cause the
Company substantial and irrevocable damage and that therefore, in the event of
any breach of this Agreement, the Executive agrees that the Company, in addition
to such other remedies that may be available, shall be entitled to specific
performance and other injunctive relief without posting a bond.
4. Release of Claims. In consideration of the Company entering into this
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Agreement and the promises and benefits provided herein, the Executive hereby
fully, forever, irrevocably and unconditionally releases, remises and discharges
the Company and its current and former officers, directors, stockholders,
corporate affiliates, subsidiaries, parent companies, predecessors, agents,
employees and attorneys (the "Released Parties") from any and all claims,
charges, complaints, demands, actions, causes of action, suits, rights, debts,
sums of money, costs, accounts, covenants, contracts, agreements, promises,
doings, omissions, damages, executions, obligations, liabilities, and expenses
(including attorneys' fees and costs), of every kind and nature which the
Executive ever had or now has as of the date the Executive executes this
Agreement against the Released Parties including, but not limited
to, all claims arising out of the Executive's employment with and/or separation
from the Company, including, but not
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limited to, all employment discrimination claims under Title VII of the Civil
Rights Act of 1964, 42 U.S.C.ss.2000e et seq., the Americans With Disabilities
Act of 1990, 42 U.S.C.,ss.12101 et seq., the Age Discrimination in Employment
Act, 29 U.S.C. ss.621 et seq., as amended by The Older Workers Benefit
Protection Act; the Family and Medical Leave Act of 1993, 29 U.S.C.ss.2601 et
seq., the Massachusetts Fair Employment Practices Act, M.G.L. c.151B,ss.1 et
seq.; and any and all other similar applicable federal and state statutes, all
as amended; all claims arising out of the Fair Credit Reporting Act, 15
U.S.C.ss.1681 et seq.; the Employee Retirement Income Security Act of 1974
("ERISA"), 29 U.S.C.ss.1001 et seq.; the Worker Adjustment and Retraining
Notification Act, 29 U.S.C.ss.2101 et seq.; the Massachusetts Civil Rights Act,
M.G.L. c.12,ss.ss.11H and 11I; the Massachusetts Equal Rights Act, M.G.L.
c.93,ss.102 and M.G.L. c.214,ss.1C; the Massachusetts Labor and Industries Act,
M.G.L. c.149,ss.1 et seq.; and the Massachusetts Privacy Act, M.G.L.
c.214,ss.1B, all as amended; all claims for benefits under the Company's
benefits plans and programs, including but not limited to, MIP, GIP, the 1997
Replacement Plan, the 1997 Plan, the Executive Retirement Plan, and the General
Deferred Compensation Plan, except as specifically provided for in this
Agreement; all common law claims including, but not limited to, actions in tort,
defamation and breach of contract; and any claim or damage arising out of the
Executive's employment with or change of employment status with the Company
(including a claim for retaliation) under any common law theory or any federal,
state or local statute or ordinance not expressly referenced above; provided,
however, that nothing in this Agreement prevents the Executive from filing,
cooperating with, or participating in any proceeding before the EEOC or a state
Fair Employment Practices Agency (except that the Executive acknowledges that he
may not be able to recover any monetary benefits in connection with any such
claim, charge or proceeding).
5. Notices. All notices and other communications required hereunder shall
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be in writing and shall be given either by personal delivery or by mailing the
same by certified or registered mail, return receipt requested, postage prepaid.
If sent to the Company, the same shall be mailed to the Company at Xxx Xxxxxx
Xxxx, Xxxxxx, XX 00000, Attention: Chairman of the Board, or such other address
as Company may hereafter designate by notice to the Executive; and if sent to
the Executive, the same shall be mailed to the Executive at his address set
forth above, or at such other address as the Executive may hereafter designate
by notice to the Company. Notices shall be effective upon receipt.
6. Return of Company Property. The Executive agrees to return within seven
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(7) days of the execution of this Agreement all Company property including, but
not limited to, keys, files, records (and copies thereof), equipment,
(including, but not limited to, computer hardware, software and printers,
wireless handheld devices, cellular phones, pagers, etc.), Company
identification, Company vehicles and any other Company-owned property in his
possession or control. The Executive further agrees to leave intact all
electronic Company documents, including those which he developed or helped
develop during his employment. The Executive also agrees to cancel within seven
(7) days, all accounts for his benefit, if any, in the Company's name, including
but not limited to, credit cards, telephone charge cards, cellular phone and/or
pager accounts and computer accounts.
7. Business Expenses and Compensation. The Executive agrees that he will
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submit within ten (10) days of the Termination Date any and all documentation
for any other reimbursements owed to him for authorized Company expenses.
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8. Non-Disparagement. The Executive understands and agrees that as a
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condition for payment to him of the consideration herein described, he shall not
make any false, disparaging or derogatory statements to any media outlet,
industry group, financial institution or current or former employee, consultant,
client or customer of the Company regarding the Company or any of its directors,
officers, employees, agents or representatives or about the Company's business
affairs and financial condition.
9. Amendment. This Agreement shall be binding upon the parties and may not
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be modified in any manner, except by an instrument in writing of concurrent or
subsequent date signed by duly authorized representatives of the parties hereto.
10. Assignment. The rights and obligations of the Company shall inure to
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the benefit of and shall be binding upon the successors and assigns of the
Company. The rights and obligations of the Executive are not assignable except
only that payments payable to the Executive after the Executive's death shall be
made to the Executive's estate.
11. Waiver of Rights. No delay or omission by the Company in exercising any
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right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
12. Validity. Should any provision of this Agreement be declared or be
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determined by any court of competent jurisdiction to be illegal or invalid, the
validity of the remaining parts, terms or provisions shall not be affected
thereby and said illegal or invalid part, term or provision shall be deemed not
to be a part of this Agreement.
13. Confidentiality. The Executive understands and agrees that as a
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condition for payment to him of the severance benefits herein described, the
terms and contents of this Agreement, and the contents of the negotiations and
discussions resulting in this Agreement, shall be maintained as confidential by
him and his agents and representatives and shall not be disclosed except to the
extent required by federal or state law or as otherwise agreed to in writing by
the Company.
14. Nature of Agreement. The Executive understands and agrees that this
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Agreement is a severance agreement and does not constitute an admission of
liability or wrongdoing on the part of the Company.
15. Acknowledgments. The Executive acknowledges that he has been given at
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least twenty-one (21) days to consider this Agreement, and that the Company
advised him to consult with an attorney of his own choosing prior to signing
this Agreement. He further understands that he may revoke this Agreement for a
period of seven (7) days after he signs it, and the Agreement shall not be
effective or enforceable until the expiration of this seven (7) day revocation
period. Finally, the Executive understands and agrees that by entering into this
Agreement he is waiving any and all rights or claims he might have under The Age
Discrimination in Employment Act, as amended by The Older Workers Benefit
Protection Act, and that he has received consideration beyond that to which he
was previously entitled.
16. Voluntary Assent. The Executive affirms that no other promises or
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agreements of any kind have been made to or with him by any person or entity
whatsoever to cause his to sign
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this Agreement, and that he fully understands the meaning and intent of this
Agreement. The Executive further represents that he has had an opportunity to
fully discuss and review the terms of this Agreement with an attorney, and
understand the contents herein.
17. Applicable Law. This Agreement shall be interpreted and construed by
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the laws of the Commonwealth of Massachusetts, without regard to conflict of
laws provisions. The Executive hereby irrevocably submits to and acknowledges
and recognizes the jurisdiction of the courts of the Commonwealth of
Massachusetts, or if appropriate, a federal court located in Massachusetts
(which courts, for purposes of this Agreement, are the only courts of competent
jurisdiction), over any suit, action or other proceeding arising out of, under
or in connection with this Agreement or the subject matter hereof.
18. Entire Agreement. This Agreement contains and constitutes the entire
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understanding and agreement between the parties hereto with respect to severance
benefits and the settlement of claims against the Company and cancels all
previous oral and written negotiations, agreements, commitments and writings in
connection therewith.
19. Captions. The captions of the sections of this Agreement are for
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convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
THE EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.
WITNESS the execution hereof the day and year first above written.
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
9/30/02
BJ'S WHOLESALE CLUB, INC.
By /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
Chairman of the Board
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