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Exhibit
10.28a
Thomas F.
Gallagher
CHANGE OF CONTROL
SEVERANCE AGREEMENT
THIS AGREEMENT between
BJ’s Wholesale Club, Inc., a Delaware corporation (the
“Company”), and Thomas F. Gallagher
(“Executive”), dated as of April 3,
2007.
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 or Potential Change of
Control of the Company may result in the departure or distraction
of management to the detriment of the Company and its shareholders
and wishes to modify and restate the agreement previously
applicable under such circumstances.
The Company wishes to assure
Executive of fair severance should Executive’s employment
terminate in specified circumstances following a Change of Control
or Potential Change of Control of the Company and to assure
Executive of certain other benefits upon such event.
In consideration of
Executive’s continued employment with the Company or a
Subsidiary and other good and valuable consideration, the parties
agree as follows:
1. Benefits Upon Change of
Control .
1.1 In General .
Within 30 days following the earlier of a Change of Control or
Potential Change of Control (such earlier event to be a
“Control Event”) as long as this Agreement had not been
terminated under Section 8.6 at the time of the Control Event,
then whether or not Executive’s employment has been
terminated following the Control Event, the Company shall pay to
Executive the following in a lump sum:
(a) an amount equal to the
product of (i) 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 Control Event 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 (ii) a
fraction, the numerator of which is the number of days in such
fiscal year prior to the Control Event and the denominator of which
is 365; and
(b) if Executive is a
participant in a performance-based long-range incentive plan at the
time of a Control Event, such amount as is required to be paid to
Executive upon a Control Event pursuant to the provisions of such
plan; provided, that if such incentive plan does not provide for an
automatic payment on the earlier of a Change of Control or a
Potential Change of
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Control, then any payment
under such incentive plan shall be made only as and when provided
for in such incentive plan even though the benefit under
Section 1.1(a) above has been paid previously.
1.2 Benefits Following
Qualified Termination of Employment . Executive 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 three
times Executive’s Base Salary for one year at the rate in
effect immediately prior to the Date of Termination or, if higher,
the Control Event (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 three
years following termination of employment shall be offset against
such three times Base Salary payment. Executive shall promptly make
reimbursement payments to the Company to the extent any such
disability payments are received by Executive after the Base Salary
payment; and
(ii) an amount equal to three
times Executive’s automobile allowance for one year at the
rate in effect immediately prior to the Date of Termination or, if
higher, the Control Event (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), plus any portion of Executive’s
automobile allowance payable but unpaid through the Date of
Termination; and
(iii) an amount equal to
three times the Target Bonus amount, as defined and determined
under Section 1.1(a) above without any fractional
adjustment.
(b) For a period of
thirty-six (36) months after 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 Control Event (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 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.
(c) 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 .
(a) Notwithstanding any other
provision of this Agreement, in the event that the Company
undergoes a Change in Ownership or Control (as defined below), the
Company shall not be obligated to provide to Executive a portion of
any “Contingent Compensation Payments” that Executive
would otherwise be entitled to receive to the extent necessary to
eliminate any “excess parachute payments” (as defined
in Section 280G(b)(1) of the Internal Revenue Code of 1986, as
amended (the “Code”)) for Executive. For purposes of
this Section 1.3, the Contingent Compensation Payments so
eliminated shall be referred to as the “Eliminated
Payments” and the aggregate amount (determined in accordance
with Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or
any successor provision) of the Contingent Compensation Payments so
eliminated shall be referred to as the “Eliminated
Amount.”
(b) For purposes of this
Section 1.3, the following terms shall have the following
respective meanings:
(i) “Change in
Ownership or Control” shall mean a change in the ownership or
effective control of the Company or in the ownership of a
substantial portion of the assets of the Company determined in
accordance with Section 280G(b)(2) of the Code.
(ii) “Contingent
Compensation Payments” shall mean any payment (or benefit) in
the nature of compensation that is made or made available (under
this Agreement or otherwise) to a “disqualified
individual” (as defined in Section 280G(c) of the Code)
and that is contingent (within the meaning of Section 280G
(b) (2) (A) (i) of the Code) on a Change in
Ownership or Control of the Company.
(c) Any payments or other
benefits otherwise due to the Executive following a Change in
Ownership or Control that could be characterized (as reasonably
determined by the Company) as Contingent Compensation Payments
shall not be made until the determination, pursuant to this
Section 1.3(c), of which Contingent Compensation Payments
shall be treated as Eliminated Payments. Within 30 days after each
date on which the Executive first becomes entitled to receive
(whether or not then due) a Contingent Compensation Payment
relating to such Change in Ownership or Control, the Company shall
determine and notify
Executive (with reasonable
detail regarding the basis for its determinations) (i) which
of such payments and benefits constitute Contingent Compensation
Payments and (ii) the Eliminated Amount. Within 30 days after
delivery of such notice to Executive, Executive shall notify the
Company which Contingent Compensation Payments, or portions thereof
(the aggregate amount of which, determined in accordance with
Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any
successor provision, shall be equal to the Eliminated Amount),
shall be treated as Eliminated Payments. In the event that
Executive fails to notify the Company pursuant to the preceding
sentence on or before the required date, the Contingent
Compensation Payments (or portions thereof) that shall be treated
as Eliminated Payments shall be determined by the Company in its
absolute discretion.
(d) The provisions of this
Section 1.3 are intended to apply to any and all payments or
benefits available to Executive under this Agreement or any other
agreement or plan of the Company under which Executive receives
Contingent Compensation Payments.
1.4 Definitions . The
terms defined in Exhibits A and B hereto are used herein as so
defined.
2. Noncompetition; No Mitigation of
Damages; Other Severance Payments; Withholding .
2.1 Noncompetition .
Upon a Qualified Termination, any agreement by Executive not to
engage in competition with the Company subsequent to the
termination of Executive’s employment, whether contained in
an employment contract or other agreement shall no longer be
effective.
2.2 No Duty to Mitigate
Damages . Executive’s benefits under this Agreement shall
be considered severance pay in consideration of Executive’s
past service and Executive’s continued service from the date
of this Agreement, and Executive’s entitlement thereto shall
neither be governed by any duty to mitigate Executive’s
damages by seeking further employment nor offset by any
compensation which Executive may receive from future
employment.
2.3 Other Severance
Payments . In the event that Executive has an employment
contract or any other agreement with the Company (or a Subsidiary)
which entitles Executive to severance payments upon the termination
of Executive’s employment with the Company, the amount of any
such severance payments shall be deducted from the payments to be
made under this Agreement.
2.4 Withholding .
Anything to the contrary notwithstanding, all payments required to
be made by the Company hereunder to Executive shall be subject to
the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Company may reasonably determine it
should withhold pursuant to any applicable law or
regulation.
3. Arbitration . Any controversy
or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled exclusively by arbitration in
Boston, Massachusetts in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect, and
judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
4. Legal Fees and Expenses . The
Company shall pay all legal fees and expenses, including, but not
limited to, counsel fees, stenographer fees, printing costs, etc.
reasonably incurred by Executive in contesting or disputing that
the termination of Executive’s employment during a Standstill
Period is for Cause or other than for good reason (as defined in
paragraph (k) 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., or its successor, until paid in full.
5. Notice of Termination . During
a Standstill Period, Executive’s employment may be terminated
by the Company (or a Subsidiary) only upon 30 days’ written
notice to Executive.
6. Notices . All notices shall be
in writing and shall be deemed given five days after mailing in the
continental United States by registered or certified mail, or upon
personal receipt after delivery, telex, telecopy or telegram, to
the party entitled thereto at the address stated below or to such
changed address as the addressee may have given by a similar
notice:
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| To the Company: |
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BJ’s Wholesale Club,
Inc.
One Mercer Road
Natick, MA 01760
Attention: President
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Executive: |
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At
Executive’s home address, as last shown on the records of the
Company. |
7. Severability . In the event
that any provision of this Agreement shall be determined to be
invalid or unenforceable, such provision shall be enforceable in
any other juri
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