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Form Of Employee Benefits Agreement

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EXHIBIT 10.4


EMPLOYEE BENEFITS AGREEMENT


This EMPLOYEE BENEFITS AGREEMENT (the "Employee Benefits Agreement"), dated as of June ___, 1997, is between Waban Inc., a Delaware Corporation ("Waban"), and BJI Wholesale Club, Inc., a Delaware Corporation and, as of the date hereof, a wholly owned subsidiary of Waban ("BJI").


WHEREAS, Waban and BJI have entered into a Separation and Distribution Agreement (the "Distribution Agreement") which contemplates the separation of Waban's "BJ's Wholesale Club" and "HomeBase" businesses into two distinct companies by transferring the BJ's Wholesale Club business to BJI (the "Separation") and, then, distributing all of the outstanding shares of BJI Common Stock on a pro rata basis to the holders of Waban Common Stock (the "Distribution"); and


WHEREAS, the Distribution Agreement contemplates the execution and delivery of this Employee Benefits Agreement, the purpose of which is to set forth certain matters regarding the treatment of employee benefit plans as a result of, and in connection with, the Separation and the Distribution.


NOW, THEREFORE, in consideration of the mutual agreement, provisions and covenants contained in this Employee Benefits Agreement, the parties hereby agree as follows:


ARTICLE 1


Definitions
-----------


As used in this Employee Benefits Agreement, terms shall have the meaning set forth in the Distribution Agreement, unless otherwise expressly provided herein. In addition, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural form of the terms defined):


BJI Employee: The term "BJI Employee" shall mean (a) any individual who,
------------ on or immediately prior to the Distribution Date, is employed by Waban or any Waban Subsidiary or is on a leave of absence approved by Waban or any Waban Subsidiary and who, immediately after the Distribution Date, is employed by BJI or any BJI Subsidiary or who is continuing on a leave of absence approved by BJI or any BJI Subsidiary, and (b) any individual whose employment is transferred from Waban or any Waban Subsidiary to BJI or any BJI Subsidiary within three months after the Distribution Date.


BJI Common Stock Value: The average of the closing prices of BJI Common
---------------------- Stock on the New York Stock Exchange during the ten trading days immediately following the Distribution Date.


Former BJI Employee: Any individual who was an employee of the BJ's
------------------- Wholesale Club division of Waban but terminated such employment prior to the Distribution Date.


Stock Value Ratio: The number determined by dividing the Waban Common
----------------- Stock Value by the BJI Common Stock Value.


Transfer Date: The term "Transfer Date" means, (i) with respect to any BJI
------------- Employee described in clause (a) of the definition of BJI Employee, the Distribution Date, and (ii) with respect to any BJI Employee described in clause (b) of the definition of BJI Employee, the date on which such BJI Employee's employment is transferred from Waban or any Waban Subsidiary to BJI or any BJI Subsidiary.


Waban Common Stock Value: The average of the closing prices of Waban
------------------------ Common Stock on the New York Stock Exchange during the ten trading days immediately preceding the Distribution Date.


ARTICLE 2


CERTAIN BENEFIT PLAN MATTERS


2.1 Certain BJI Plans; Assumptions of Obligations by BJI. Except as
---------------------------------------------------- provided in Section 2.5, BJI hereby agrees to establish as of the Distribution Date employee benefit plans (the "BJI Plans") having substantially the same terms and provisions as the employee benefit plans currently maintained by Waban which are listed on Schedule 2.1 hereto (the "Waban Plans"). Except for Liabilities arising under such Waban Plans with respect to each BJI Employee or Former BJI Employee for the period ending on (a) the BJI Employee's Transfer Date or (b) Former BJI Employee's termination of employment with Waban (the "Termination Date") which are assumed or retained by Waban pursuant to this Article 2, BJI hereby agrees to assume or retain under the applicable BJI Plan with respect to each BJI Employee or Former BJI Employee all Liabilities under the corresponding Waban Plan accrued for the period ending on (a) the BJI Employee's Transfer Date, and (b) the Former BJI Employee's Termination Date. BJI acknowledges and agrees that Waban is making no representations or warranties hereunder or otherwise that the costs to BJI of providing benefits under the BJI Plans (including without limitation costs consisting of premiums and other charges to third party service providers) will be the same as the corresponding costs heretofore incurred by Waban. Nothing in this Employee Benefits Agreement shall be construed to prevent BJI from altering or discontinuing any BJI Plans established by it pursuant to this Section 2.


2.2 Certain Payments by Waban. Waban hereby agrees to pay all insurance
------------------------- premiums or similar plan payments attributable to each participant who will become


-2-


a BJI Employee for the period ending on such participant's Transfer Date (or the end of the month thereafter if insurance premiums or third party administration deposits are paid on a monthly basis) under each Waban Plan listed on Schedule 2.2 hereto.


2.3 Certain Medical Claims. Waban hereby agrees to retain all medical
---------------------- costs, including insurance premiums or the payment and reimbursement of claims, of each BJI Employee and his or her covered dependents for claims which are submitted on or prior to the BJI Employee's Transfer Date with respect to expenses for medical services rendered to such persons during the period ending on such Transfer Date.


2.4 Employees on Certain Leave. If any individual who becomes a BJI
-------------------------- Employee is on a leave of absence approved by Waban or any Waban Subsidiary on his or her Transfer Date, and continues on a leave approved by BJI or any BJI Subsidiary after the Transfer Date, then such leave shall continue under BJI's leave policies and BJI shall assume any liability for any benefits provided by Waban prior to the Transfer Date or any benefits required to be provided by law; provided that the maximum amount and duration of such benefits as well as the duration of the leave shall not exceed such limits under the applicable Waban policy.


2.5 Retirement Plan. The Waban Retirement Plan (the "Retirement Plan")
---------------- was frozen in 1992. Waban intends to terminate the Retirement Plan in the 1997 fiscal year. Benefits accrued by BJI Employees while they were employees of Waban will be distributed in accordance with the terms of the Retirement Plan (including any provisions applicable to the intended termination) and consistent with applicable law. BJI will not assume the Retirement Plan nor any liabilities thereunder; provided that if the Plan Administrator of the Retirement Plan initiates a standard termination of the Retirement Plan under Section 4041 of the Employee Retirement Income Security Act of 1974, as amended, during fiscal year 1997 and no amendments to the Retirement Plan are made which would increase the present value of the accrued benefits, then BJI will pay to Waban 75% of any amount contributed or to be contributed to the Retirement Plan after the Distribution Date by Waban, net of the income tax benefit to Waban of such contribution, in order for the Retirement Plan to pay all accrued benefits.


2.6 Savings Plan. Pursuant to Section 2.1 hereof, BJI will establish one
------------ or more savings plans for BJI Employees (the "BJI Savings Plan"), effective immediately after the Distribution Date, with terms and provisions similar to those of the Waban 401(k) Savings Plan for Hourly Employees and the Waban 401(k) Savings Plan for Sal
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