Exhibit 10.18

 

EMPLOYMENT AGREEMENT

 

AGREEMENT dated as of July 6, 2004 between Karen Stout whose address is 15
Dickenson Way, Apartment #82B, Marlborough, MA 01752 (“Executive”), and BJ’ s
Wholesale Club, Inc., a Delaware corporation, whose principal office is One
Mercer Road, Natick, Massachusetts (“Employer” or “Company”).

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to employ the Executive, and the Executive desires
to be employed by the Company;

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties to this Agreement,
the Company and Executive, intending to be legally bound hereby, agree as
follows:

 

1. Employment and Duties.

 

1.1 Employment.

 

(a) Commencing on July 6, 2004 (the “Effective Date”), the Company agrees to
employ Executive and the Executive agrees to be employed by the Company for a
period of five (5) years, ending on July 6, 2009 (“Initial Term”).

 

(b) The Initial Term of this Agreement, and the employment of Executive
hereunder by the Company, may be renewed or extended for such period or periods
as may mutually be agreed upon by the Company and the Executive in writing. If
this Agreement is not renewed and extended prior to the expiration of the
Initial Term, this Agreement automatically shall terminate at the expiration of
the Initial Term.

 

1.2 Duties. As of the Effective Date, Executive shall serve the Company as its
Executive Vice President, Merchandising, to serve in such capacity or other
capacities as designated by the Chief Executive Officer (“CEO”) or his designee
from time to time. During the term of this Agreement, Executive shall serve the
Company faithfully, diligently and to the best of her ability and shall devote
substantially all of her business time, energy and skill to the affairs of the
Company as necessary to perform the duties of her position, and she shall not
assume a position in any other business without the express written permission
of the CEO; provided that the Executive may upon disclosure to the CEO (i) serve
in any capacity with charitable or not-for-profit enterprises so long as there
is no material interference with the Executive’s duties to the Company; and (ii)
make any passive investments where Executive is not obligated or required to,
and shall not in fact, devote any managerial efforts. The Company shall have the
right to limit Executive’s participation in any of the foregoing endeavors if
the CEO believes, in his sole and exclusive discretion, that the time being
spent on such activities infringes upon, or is incompatible with, the
Executive’s ability to perform the duties under this Agreement.

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2. Compensation and Benefits.

 

2.1 Base Salary. Executive shall receive a Base Salary at the rate of $375,000
per year. Such Base Salary shall be subject to periodic adjustment from time to
time as determined by the Board of Directors in its sole discretion. Base Salary
shall be payable in such manner and at such times as the Company shall pay base
salary to other similarly situated executive employees.

 

2.2 Policies and Fringe Benefits. The Executive agrees to abide by the rules,
regulations, instructions, personnel practices and policies of the Company and
any changes therein that may be adopted from time to time by the Company. The
Executive shall be eligible to participate in all benefit programs that the
Company establishes and makes available to all of its executives on such terms
as the Board of Directors shall determine, if any, to the extent that the
Executive meets the eligibility requirements to participate as set forth in the
applicable plan or policy. Nothing herein limits the Company’s right to modify,
change, limit eligibility or discontinue any plan or policy at any time, with or
without prior notice.

 

2.3 Reimbursement of Expenses. The Company shall reimburse the Executive for all
reasonable and appropriate travel, entertainment and other expenses incurred or
paid by the Executive in connection with, or related to, the performance of her
responsibilities or services under this Agreement, in accordance with policies
and procedures, and subject to limitations, adopted by the Company from time to
time.

 

2.4 Withholding. All salary and other compensation payable to the Executive
pursuant to this Agreement shall be subject to applicable taxes and
withholdings.

 

3. Termination of Employment and Benefits Upon Termination.

 

3.1 General. Executive’s employment pursuant to this Agreement shall terminate
upon the earliest to occur of (i) the Executive’s death, (ii) a termination by
reason of disability, (iii) a termination by the Company with or without Cause,
(iv) a termination by the Executive, or (v) expiration of the Initial Term and
any renewals or extensions thereof, unless at the expiration of such Initial
Term, renewals or extensions thereof the Company determines that Executive’s
employment will continue under separate terms and conditions. Whenever the
Executive’s employment shall terminate, and regardless of the reason for such
termination, effective that same date she shall resign all offices, appointments
and/or other positions Executive may hold with the Company including, but not
limited to, any parent corporation, subsidiaries or divisions of the Company or
any such parent.

 

3.2 Termination Due to Death. Executive’s employment shall automatically
terminate upon the date of Executive’s death. No compensation or other benefits
shall be payable to or accrue to Executive hereunder except as follows:

 

(a) (i) all amounts earned but unpaid hereunder through the date of termination
with respect to salary, automobile allowance and vested but unused vacation;
(ii) to the extent not already paid, any amounts to which Executive is entitled
under the Company’s annual incentive compensation plan for the fiscal year ended
immediately prior to the date of termination; (iii) her vested account balance
under the BJ’s Wholesale

 

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Club, Inc. 401(k) Savings Plan for Salaried Employees; and (iv) any unreimbursed
expenses incurred in accordance with Company policy (collectively, “Earned
Obligations”);

 

(b) any amounts the Executive would have been entitled to receive under the
Company’s annual incentive compensation plan had the Executive remained employed
by the Company until the end of the fiscal year during which the termination of
employment occurs (prorated for the period of active employment during such
fiscal year). All such amounts, if any, will be paid to the Executive’s estate
at the same time as other incentive compensation plan payments for the year in
which the termination occurs are paid; and

 

(c) any payments or benefits under other plans of the Company to the extent such
plans provide for benefits following Executive’s death.

 

3.3 Termination Due to Disability. Executive’s employment may be terminated by
reason of Executive’s disability, upon notice to Executive, in the event of the
inability of Executive to perform her duties hereunder by reason of disability,
whether by reason of injury (physical or mental), illness (physical or mental)
or otherwise, incapacitating Executive for a continuous period exceeding one
hundred twenty (120) days, as certified by a physician selected by Executive and
the Company in good faith. No compensation or other benefits shall be payable to
or accrue to Executive hereunder except as follows:

 

(a) all Earned Obligations;

 

(b) any amounts the Executive would have been entitled to receive under the
Company’s annual incentive compensation plan, had the Executive remained
employed by the Company until the end of the fiscal year during which the
termination of employment occurs (prorated for the period of active employment
during such fiscal year). All such amounts, if any, will be paid at the same
time as other incentive compensation plan payments for the year in which the
termination occurs are paid; and

 

(c) any payments or benefits under other plans of the Company to the extent such
plans provide for benefits following a termination of employment due to
disability.

 

3.4 Termination by the Company for Cause or by the Executive. The Company may
terminate the Executive’s employment at any time for Cause by providing
Executive notice of such termination. For the purpose of this Agreement,
termination by the Company for Cause shall refer to the Company’s termination of
the Executive’s employment because it has determined, in its sole and exclusive
discretion, that she has: (i) refused or failed to devote her full normal
working time, skills, knowledge, and abilities to the business of the Company
and in promotion of its interests or she has failed to fulfill directives of the
CEO, the CEO’s designee or the Board of Directors; (ii) engaged in activities
involving dishonesty, willful misconduct, willful violation of any law, rule,
regulation or policy of the Company or breach of fiduciary duty; (iii) committed
larceny, embezzlement, conversion or any other act involving the
misappropriation of the Company’s funds or property; (iv) been convicted of any
crime which reasonably could affect in an adverse manner the reputation of the
Company or Executive’s ability to perform her

 

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duties hereunder; (v) been grossly negligent in the performance of her duties;
or (vi) materially breached this Agreement including, but not limited to, her
obligations set forth in Sections 4 and 5 below. If Executive’s employment
terminates pursuant to this Section 3.4 by the Company for Cause or by reason of
the Executive’s resignation at any time, Executive shall only receive the Earned
Obligations, if any, through her termination date. Nothing herein waives any
rights the Company may have for damages or equitable relief.

 

3.5 Termination by the Company Without Cause. The Company may terminate
Executive’s employment without Cause at any time effective upon Executive’s
receipt of notice of such termination. No compensation or other benefits shall
be payable to or accrue to Executive in the event of her termination without
cause except as follows:

 

(a) all Earned Obligations;

 

(b) Subject to receipt by the Company of a binding and irrevocable release of
claims and separation agreement prepared by the Company (the “Release”),
executed by the Executive and delivered to the Company within thirty (30) days
of the date that the Company presents the Release to the Executive, the
Executive shall be eligible to receive:

 

(1) continuation of Base Salary for a period of eighteen (18) months (the
“Severance Period”), payable in such manner and at such times as Executive’s
Base Salary was being paid immediately prior to such termination;

 

(2) if the Executive elects to continue to participate in the Company’s medical
and/or dental plans for team members pursuant to a valid COBRA election (and if
and only if such participation is legally and contractually permissible), an
amount equal to the difference between the Executive’s actual COBRA premium
costs and the amount the Executive would have paid had Executive continued
coverage as an employee under the Company’s applicable health plans without
regard to the pre-tax benefits the Executive would have received under the BJ’s
Wholesale Club, Inc. Flexible Benefits Plan, provided, however, that the
Company’s obligations under this clause 3.5(b)(2) shall (A) not extend beyond
the Severance Period, (B) be eliminated if the Executive discontinues COBRA
benefits or (C) be reduced or eliminated to the extent that Executive receives
similar coverage and benefits under the plans and programs of a subsequent
employer or entity or becomes eligible for similar coverage under a spouse’s
employer;

 

(3) any amounts Executive would have been entitled to receive under the
Company’s annual incentive compensation plan had the Executive remained employed
by the Company until the end of the fiscal year during which the termination of
employment occurs (prorated for the period of active employment during such
fiscal year). All such amounts, if any, will be paid at the same time as other
incentive compensation plan payments for the year in which the termination
occurs are paid; and

 

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(c) payments or benefits under other plans of the Company to the extent that the
plans provide for benefits following a termination of employment.

 

Notwithstanding the foregoing, the payments and benefits described in Section
3.5(b) above shall immediately terminate, and the Company shall have no further
obligations to Executive with respect thereto, in the event that Executive (i)
becomes employed by Wal-Mart Stores, Inc., Costco Wholesale Corporation, Sam’s
Clubs, or any of their respective subsidiaries or affiliates; or (ii) breaches
any provision of Sections 4 or 5 of this Agreement.

 

4. Non-Competition and Non-Solicitation.

 

4.1 Restricted Activities. While Executive is employed by the Company and for a
period of eighteen (18) months after the termination or cessation of such
employment for any reason, the Executive will not directly or indirectly:

 

(a) Engage in any business or enterprise (whether as owner, partner, officer,
director, employee, consultant, investor, lender or otherwise, except as the
holder of not more than 1% of the outstanding stock of a publicly-held company)
that is competitive with the Company’s business. A business or enterprise shall
be deemed competitive if it shall operate a chain of membership warehouse clubs
(by way of example, but not limitation, Sam’s Club or Costco), 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, or
any other business that competes with the Company. Competitive business or
enterprise also includes any store or business operated or owned by Wal-Mart
Stores, Inc., Costco Wholesale Corporation, or any of the respective affiliates
thereof. The term “then existing” shall refer to any such warehouse store that
is, at the time of termination of the Executive’s employment, operated by the
Company or any of its subsidiaries or divisions or under lease for operation as
aforesaid; or

 

(b) Either alone or in association with others (i) solicit, or permit any
organization directly or indirectly controlled by the Executive to solicit, any
employee of the Company to leave the employ of the Company, or (ii) solicit for
employment, hire or engage as an independent contractor, or permit any
organization directly or indirectly controlled by the Executive to solicit for
employment, hire or engage as an independent contractor, any person who was
employed by the Company at the time of the termination or cessation of the
Executive’s employment with the Company; provided that this clause (ii) shall
not apply to the solicitation, hiring or engagement of any individual whose
employment with the Company has been terminated for a period of six months or
longer at the time of such solicitation, hiring or employment.

 

4.2 Extension of Restrictions. If the Executive violates the provisions of
Section 4.1, the eighteen (18) month period referred to in Section 4.1 shall
recommence and the Executive shall continue to be bound by the restrictions set
forth in Section 4.1 until a period of eighteen (18) months has expired without
any violation of such provisions.

 

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4.3 Interpretation. If any restriction set forth in Section 4.1 is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.

 

4.4 Equitable Remedies. The restrictions contained in this Section 4 are
necessary for the protection of the business and goodwill of the Company and are
considered by the Executive to be reasonable for such purpose. The Executive
agrees that any breach of this Section 4 is likely to cause the Company
substantial and irrevocable damage which is difficult to measure. Therefore, in
the event of any such breach or threatened breach, the Executive agrees that the
Company, in addition to such other remedies which may be available, shall have
the right to obtain an injunction from a court restraining such a breach or
threatened breach and the right to specific performance of the provisions of
this Section 4, and the Executive hereby waives the adequacy of a remedy at law
as a defense to such relief.

 

5. Proprietary Information.

 

5.1 Proprietary Information.

 

(a) The Executive agrees that all information, whether or not in writing, of a
private, secret or confidential nature concerning the Company’s business,
business relationships or financial affairs (collectively, “Proprietary
Information”) is and shall be the exclusive property of the Company. By way of
illustration, but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques, formulas, compositions,
compounds, projects, developments, plans, research data, financial data,
personnel data, computer programs, customer and supplier lists, and contacts at
or knowledge of customers or prospective customers of the Company. The Executive
will not disclose any Proprietary Information to any person or entity other than
employees of the Company or use the same for any purposes (other than in the
performance of her duties as an employee of the Company) without written
approval by an executive officer of the Company, either during or after her
employment with the Company, unless and until such Proprietary Information has
become public knowledge without fault by the Executive.

 

(b) The Executive agrees that all files, letters, memoranda, reports, records,
data, sketches, drawings, laboratory notebooks, program listings, or other
written, photographic, or other tangible material containing Proprietary
Information, whether created by the Executive or others, which shall come into
her custody or possession, shall be and are the exclusive property of the
Company to be used by the Executive only in the performance of her duties for
the Company. All such materials or copies thereof and all tangible property of
the Company in the custody or possession of the Executive shall be delivered to
the Company, upon the earlier of (i) a request by the Company or (ii)
termination of her employment. After such delivery, the Executive shall not
retain any such materials or copies thereof or any such tangible property.

 

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(c) The Executive agrees that her obligation not to disclose or to use
information and materials of the types set forth in paragraphs (a) and (b)
above, and her obligation to return materials and tangible property, set forth
in paragraph (b) above, also extends to such types of information, materials and
tangible property of customers of the Company or suppliers to the Company or
other third parties who may have disclosed or entrusted the same to the Company
or to the Executive.

 

5.2 Equitable Remedies. The restrictions contained in this Section 5 are
necessary for the protection of the business and goodwill of the Company and are
considered by the Executive to be reasonable for such purpose. The Executive
agrees that any breach of this Section 5 is likely to cause the Company
substantial and irrevocable damage which is difficult to measure. Therefore, in
the event of any such breach or threatened breach, the Executive agrees that the
Company, in addition to such other remedies which may be available, shall have
the right to obtain an injunction from a court restraining such a breach or
threatened breach and the right to specific performance of the provisions of
this Section 5, and the Executive hereby waives the adequacy of a remedy at law
as a defense to such relief.

 

6. Other Agreements. The Executive represents that her performance of all the
terms of this Agreement and the performance of her duties as an employee of the
Company do not and will not breach any agreement with any prior employer or
other party to which the Executive is a party (including without limitation any
nondisclosure or non-competition agreement). Any agreement to which the
Executive is a party relating to nondisclosure, non-competition or
non-solicitation of employees or customers is listed on Schedule A attached
hereto.

 

7. Miscellaneous.

 

7.1 Notices. Any notice delivered under this Agreement shall be deemed duly
delivered four business days after it is sent by registered or certified mail,
return receipt requested, postage prepaid, or one business day after it is sent
for next-business day delivery via a reputable nationwide overnight courier
service, in each case to the address of the recipient set forth in the
introductory paragraph hereto. Either party may change the address to which
notices are to be delivered by giving notice of such change to the other party
in the manner set forth in this Section 7.1.

 

7.2 Pronouns. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.

 

7.3 Entire Agreement. This Agreement constitutes the entire agreement between
the parties and supersedes all prior agreements and understandings, whether
written or oral, relating to the subject matter of this Agreement.

 

7.4 Amendment. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.

 

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7.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts (without reference
to the conflicts of laws provisions thereof), except as may be preempted by
ERISA. Any action, suit or other legal proceeding arising under or relating to
any provision of this Agreement shall be commenced only in a court of the
Commonwealth of Massachusetts (or, if appropriate, a federal court located
within Massachusetts), and the Company and the Executive each consents to the
jurisdiction of such a court. The Company and the Executive each hereby
irrevocably waives any right to a trial by jury in any action, suit or other
legal proceeding arising under or relating to any provision of this Agreement.

 

7.6 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of both parties and their respective successors and assigns,
including any corporation with which, or into which, the Company may be merged
or which may succeed to the Company’s assets or business; provided, however,
that the obligations of the Executive are personal and shall not be assigned by
her.

 

7.7 Waivers. No delay or omission by the Company in exercising any 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. Notwithstanding the foregoing, if the Company is merged with or into a
third party which is engaged in multiple lines of business, or if a third party
engaged in multiple lines of business succeeds to the Company’s assets or
business, then for purposes of Section 4.1(a), the term “Company” shall mean and
refer to the business of the Company as it existed immediately prior to such
event and as it subsequently develops and not to the third party’s other
businesses.

 

7.8 Captions. The captions of the sections of this Agreement are for convenience
of reference only and in no way define, limit or affect the scope or substance
of any section of this Agreement.

 

7.9 Severability. In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.

 

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THE EXECUTIVE ACKNOWLEDGES THAT SHE HAS CAREFULLY READ

THIS AGREEMENT AND UNDERSTANDS AND AGREES TO ALL OF THE

PROVISIONS IN THIS AGREEMENT.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above.

 

BJ’S WHOLESALE CLUB, INC.

            By:  

/s/    Michael T. Wedge        

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/s/    Karen Stout      

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    Michael T. Wedge, President       Karen Stout

Attest: /s/    Kellye L. Walker        

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      Witness:  

Jean K. Joyee

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SCHEDULE A

 

Agreements containing Restrictive Covenants

 

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