EXECUTIVE
EMPLOYMENT AGREEMENT
THIS EXECUTIVE
EMPLOYMENT AGREEMENT (this “
Agreement ”) is made effective April 1, 2009 ,
(the “ Effective Date ”) by and between Ross
Stores, Inc. (the “ Company ”), a Delaware
corporation, and Michael O’Sullivan (the “
Executive ”).
RECITALS
A.
The Company
wishes to employ the Executive, and the Executive is willing to
accept such employment, as Executive Vice President, Chief
Administrative Officer .
B.
It is now the
mutual desire of the Company and the Executive to enter into a
written employment agreement to govern the terms of the
Executive’s employment by the Company as of and following the
Effective Date on the terms and conditions set forth
below.
TERMS AND
CONDITIONS
In
consideration for the promises of the parties set forth below, the
Company and the Executive hereby agree as follows:
1.
Term
.
Subject to the provisions of Section 6 of this Agreement, the term
of employment of the Executive by the Company under this Agreement
(the “ Term of Employment ”) shall be as
follows:
(a)
Initial
Term . The initial
Term of Employment of the Executive by the Company under this
Agreement shall begin on the Effective Date and end on March 31,
2013 (the “ Initial Term ”), unless extended
or terminated earlier in accordance with this Agreement.
(b)
Renewal
Term . Upon the
timely written request of the Executive to extend the Term of
Employment, the Compensation Committee (the “
Committee ”) of the Board of Directors (the “
Board ”) of the Company shall consider extending the
Executive’s employment with the Company under this Agreement.
To be timely, such request must be delivered to the Company’s
Chief Executive Officer not earlier than twelve (12) months prior
to the end of the then effective Initial Term or Renewal Term and,
in any case, while the Executive remains an employee of the
Company. Such request must contain no proposed modification to the
provisions of this Agreement other than an extension of the Term of
Employment as then in effect for an additional two (2) years.
Within thirty (30) days following the receipt of such notice, the
Chief Executive Officer will discuss such request with the
Committee and advise the Executive, in writing, within thirty (30)
days following its consideration of the Executive’s written
request, of the approval or disapproval of such extension request.
The failure to provide such written advice shall constitute a
denial of the Executive’s request for extension. If the
Executive’s request for an extension is approved, the Term of
Employment shall be extended for two (2) additional years
commencing on the date immediately following the date of expiration
of the Term of Employment in effect at the time of the
Executive’s written request. Such additional two-year period
is referred to herein as a “ Renewal Term
.”
2.
Position and
Duties . During the
Term of Employment, the Executive shall serve as Executive Vice
President, Chief Administrative Officer . As used in this
Agreement, the term “Company” includes Ross Stores,
Inc. and each and any of its divisions, affiliates or subsidiaries
(except that, where the term relates to stock, stockholders, stock
options or other stock-based awards or the Board, it means Ross
Stores, Inc.). The Executive’s employment may be transferred,
assigned, or re-assigned to Ross Stores, Inc. or a division,
affiliate or subsidiary of Ross Stores, Inc., and such transfer,
assignment, or re-assignment will not constitute a termination of
employment or “Good Reason” for the Executive’s
termination of employment under this Agreement. During the Term of
Employment, the Executive may engage in outside activities provided
those activities (including but not limited to membership on boards
of directors of not-for-profit and for-profit organizations) do not
conflict with the Executive’s duties and responsibilities
hereunder, and provided further that the Executive gives written
notice to the Board of any significant outside business activity in
which the Executive plans to become involved, whether or not such
activity is pursued for profit.
3.
Principal
Place of Employment. The Executive
shall be employed at the Company’s offices in Pleasanton,
California , except for required travel on the Company’s
business to an extent substantially consistent with present
business travel obligations of the Executive’s
position.
4.
Compensation
and Related Matters.
(a)
Salary
.
During the Term of Employment, the Company shall pay to the
Executive a salary at a rate of not less than Six Hundred Ninety
Thousand Dollars ( $690,000 ) per annum. The
Executive’s salary shall be payable in substantially equal
installments in accordance with the Company’s normal payroll
practices applicable to senior executives. Subject to the first
sentence of this Section 4(a), the Executive’s salary may be
adjusted from time to time by the Committee in accordance with
normal business practices of the Company.
(b)
Bonus.
During the Term
of Employment, the Executive shall be eligible to receive an annual
bonus paid under the Company’s existing incentive bonus plan
under which the Executive is eligible (which is currently the
Incentive Compensation Plan) or any replacement plan that may
subsequently be established and in effect during the Term of
Employment. The current target annual bonus the Executive is
eligible to earn upon achievement of 100% of all applicable
performance targets under such incentive bonus plan is 65%
of the Executive’s then effective annual salary rate. The
Executive’s death, termination for Cause or Voluntary
Termination (as described in Sections 6(a), 6(c) and 6(f),
respectively) prior to the Company’s payment of the bonus for
a fiscal year of the Company will cause the Executive to be
ineligible for any annual bonus for that fiscal year or any
pro-rata portion of such bonus.
(c)
Expenses.
During the Term
of Employment, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive
in performing services hereunder, including all reasonable expenses
of travel and living while away from home, provided that such
expenses are incurred and accounted for in accordance with the
policies and procedures established by the Company.
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(d)
Benefits
.
During the Term of Employment, the Executive shall be entitled to
participate in all of the Company’s employee benefit plans
and arrangements in which senior executives of the Company are
eligible to participate. The Company shall not make any changes in
such plans or arrangements which would adversely affect the
Executive’s rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to all senior executives of
the Company and does not result in a proportionately greater
reduction in the rights or benefits of the Executive as compared
with any other similarly situated senior executive of the Company.
The Executive shall be entitled to participate in, or receive
benefits under, any employee benefit plan or arrangement made
available by the Company in the future to its senior executives,
subject to, and on a basis consistent with, the terms, conditions
and overall administration of such plans and arrangements. Except
as otherwise specifically provided herein, nothing paid to the
Executive under any plan or arrangement presently in effect or made
available in the future shall be in lieu of the salary or bonus
otherwise payable under this Agreement.
(e)
Vacations
.
During the Term of Employment, the Executive shall be entitled to
twenty ( 20 ) vacation days in each calendar year,
and to compensation in respect of earned but unused vacation days,
determined in accordance with the Company’s vacation plan.
The Executive shall also be entitled to all paid holidays given by
the Company to its senior executives. Unused vacation days shall
not be forfeited once they have been earned and, if still unused at
the time of the Executive’s termination of employment with
the Company, shall be promptly paid to the Executive at their
then-current value, based on the Executive’s daily salary
rate at the time of the Executive’s termination of
employment.
(f)
Services
Furnished . The Company
shall furnish the Executive with office space and such services as
are suitable to the Executive’s position and adequate for the
performance of the Executive’s duties during the Term of
Employment.
5.
Confidential
Information and Intellectual Property.
(a)
Other than in
the performance of the Executive’s duties hereunder, the
Executive agrees not to use in any manner or disclose, distribute,
publish, communicate or in any way cause to be used, disclosed,
distributed, published, or communicated in any way or at any time,
either while in the Company's employ or at any time thereafter, to
any person not employed by the Company, or not engaged to render
services to the Company, any Confidential Information (as defined
below) obtained while in the employ of the Company.
(b)
Confidential
Information includes any written or unwritten information which
relates to and/or is used by the Company or its subsidiaries,
affiliates or divisions, including, without limitation (i) the
names, addresses, buying habits and other special information
regarding past, present and potential customers, employees and
suppliers of the Company, (ii) customer and supplier contracts and
transactions or price lists of the Company and suppliers, (iii)
methods of distribution, (iv) all agreements, files, books, logs,
charts, records, studies, reports, processes, schedules and
statistical information, (v) data, figures, projections, estimates,
pricing data, customer lists, buying manuals or procedures,
distribution manuals or procedures, other policy and procedure
manuals or handbooks, (vi) supplier information, tax records,
personnel histories and records, sales information, and property
information, (vii) information regarding the present or future
phases of business, (viii) ideas, inventions,
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trademarks,
business information, know-how, processes, techniques,
improvements, designs, redesigns, creations, discoveries, trade
secrets, and developments, (ix) all computer software licensed or
developed by the Company or its subsidiaries, affiliates or
divisions, computer programs, computer-based and web-based training
programs, and systems, and (x) finances and financial information,
but Confidential Information will not include information of the
Company or its subsidiaries, affiliates or divisions that (1)
became or becomes a matter of public knowledge through sources
independent of the Executive, (2) has been or is disclosed by the
Company or its subsidiaries, affiliates or divisions without
restriction on its use, or (3) has been or is required or
specifically permitted to be disclosed by law or governmental order
or regulation. The Executive also agrees that, if there is any
reasonable doubt whether an item is public knowledge, to not regard
the item as public knowledge until and unless the Company’s
Chief Executive Officer confirms to the Executive that the
information is public knowledge.
(c)
The provisions
of this Section 5 shall not preclude the Executive from disclosing
such information to the Executive's professional tax advisor or
legal counsel solely to the extent necessary to the rendering of
their professional services to the Executive if such individuals
agree to keep such information confidential.
(d)
The Executive
agrees that upon leaving the Company’s employ the Executive
will remain reasonably available to answer questions from Company
officers regarding the Executive’s former duties and
responsibilities and the knowledge the Executive obtained in
connection therewith.
(e)
The Executive
agrees that upon leaving the Company's employ the Executive will
not communicate with, or give statements to, any member of the
media (including print, television, or radio media) relating to any
matter (including pending or threatening lawsuits or administrative
investigations) about which the Executive has knowledge or
information (other than knowledge or information that is not
Confidential Information) as a result of employment with the
Company. The Executive further agrees to notify the Chief Executive
Officer or his or her designee immediately after being contacted by
any member of the media with respect to any matter affected by this
section.
(f)
The Executive
agrees that all information, inventions, and discoveries, whether
or not patented or patentable, made or conceived by the Executive,
either alone or with others, at any time while employed by the
Company, which arises out of such employment or is pertinent to any
field of business or research in which, during such employment, the
Company, its subsidiaries, affiliates or divisions is engaged or
(if such is known to or ascertainable by the Executive) is
considering engaging (“ Intellectual Property ”)
shall (i) be and remain the sole property of the Company and the
Executive shall not seek a patent with respect to such Intellectual
Property without the prior consent of an authorized representative
of the Company and (ii) be disclosed promptly to an authorized
representative of the Company along with all information the
Executive possesses with regard to possible applications and uses.
Further, at the request of the Company, and without expense or
additional compensation to the Executive, the Executive agrees to
execute such documents and perform such other acts as the Company
deems necessary to obtain patents on such Intellectual Property in
a jurisdiction or jurisdictions
4
designated by
the Company, and to assign to the Company or its designee such
Intellectual Property and all patent applications and patents
relating thereto.
(g)
The Executive
and the Company agree that the Executive intends all original works
of authorship within the purview of the copyright laws of the
United States authored or created by the Executive in the course of
the Executive’s employment with the Company will be works for
hire within the meaning of such copyright law.
(h)
Upon
termination of the Executive’s employment, or at any time
upon request of the Company, the Executive will return to the
Company all Confidential Information and Intellectual Property, in
any form, including but not limited to letters, memoranda, reports,
notes, notebooks, books of account, drawings, prints,
specifications, formulae, data printouts, microfilms, magnetic
tapes, disks, recordings, documents, and all copies
thereof.
6.
Termination
.
The Executive’s employment may be terminated during the Term
of Employment only as follows:
(a)
Death
.
The Executive’s employment shall terminate upon the
Executive’s death.
(b)
Disability
.
If, as a result of the Executive’s Disability (as defined
below), the Executive shall have been absent from the
Executive’s duties hereunder on a full-time basis for the
entire period of six consecutive months, and, within thirty days
after written notice of termination is given by the Company (which
may occur before or after the end of such six-month period), the
Executive shall not have returned to the performance of the
Executive’s duties hereunder on full-time basis, the
Executive’s employment shall terminate. For purposes of this
Agreement, the term “ Disability ” shall mean a
physical or mental illness, impairment or condition reasonably
determined by the Board that prevents the Executive from performing
the duties of the Executive’s position under this
Agreement.
(c)
For
Cause . The Company
may terminate the Executive’s employment for Cause. For this
purpose, “ Cause ” means the occurrence of any
of the following (i) the Executive’s continuous failure to
substantially perform the Executive’s duties hereunder
(unless such failure is a result of a Disability as defined in
Section 6(b)), (ii) the Executive’s theft, dishonesty, breach
of fiduciary duty for personal profit or falsification of any
documents of the Company, (iii) the Executive’s material
failure to abide by the applicable code(s) of conduct or other
policies (including, without limitation, policies relating to
confidentiality and reasonable workplace conduct) of the Company,
(iv) knowing or intentional misconduct by the Executive as a result
of which the Company is required to prepare an accounting
restatement, (v) the Executive’s unauthorized use,
misappropriation, destruction or diversion of any tangible or
intangible asset or corporate opportunity of the Company
(including, without limitation, the Executive’s improper use
or disclosure of confidential or proprietary information of the
Company), (vi) any intentional misconduct or illegal or grossly
negligent conduct by the Executive which is materially injurious to
the Company monetarily or otherwise, (vii) any material breach by
the Executive of the provisions of Section 9 [Certain Employment
Obligations] of this Agreement, or (viii) the Executive’s
conviction (including any plea of guilty
5
or nolo
contendere) of any criminal act involving fraud, dishonesty,
misappropriation or moral turpitude, or which materially impairs
the Executive’s ability to perform his or her duties with the
Company. A termination for Cause shall not take effect unless: (1)
the Executive is given written notice by the Company of its
intention to terminate the Executive for Cause; (2) the notice
specifically identifies the particular act or acts or failure or
failures to act which are the basis for such termination; (3) where
practicable, the notice is given within sixty (60) days of the
Company’s learning of such act or acts or failure or failures
to act; and (4) only in the case of clause (i), (iii), (v), (vi) or
(vii) of the second sentence of this Section 6(c), the Executive
fails to substantially cure such breach, to the extent such cure is
possible, within sixty (60) days after the date that such written
notice is given to the Executive.
(d)
Without
Cause. The Company may
terminate the Executive’s employment at any time Without
Cause. A termination “ Without Cause ” is a
termination by the Company of the Executive’s employment with
the Company for any reasons other than the death or Disability of
the Executive or the termination by the Company of the Executive
for Cause as described in Section 6(c).
(e)
Termination by
the Executive for Good Reason . The
Executive may terminate the Executive’s employment with the
Company for “ Good Reason ,” which shall be
deemed to occur if the Executive terminates the Executive’s
employment with the Company within sixty (60) days after written
notice to the Company by the Executive of the occurrence of one or
more of the following conditions, which condition(s) have not been
cured within thirty ( 30 ) business days after the
Company’s receipt of such written notice: (1) a failure by
the Company to comply with any material provision of this Agreement
(including but not limited to the reduction of the
Executive’s salary or the target annual bonus opportunity set
forth in Section 4(b), (2) a significant diminishment in the nature
or scope of the authority, power, function or duty attached to the
position which the Executive currently maintains without the
express written consent of the Executive, or (3) the relocation of
the Executive’s Principal Place of Employment as described in
Section 3 to a location that increases the regular one-way commute
distance between the Executive’s residence and Principal
Place of Employment by more than 25 miles without the
Executive’s prior written consent. In order to constitute a
termination of employment for Good Reason, such termination must
occur within two (2) years following the initial existence of any
of the conditions set forth in this Section 6(e), the Executive
must provide written notice to the Company of the existence of the
condition giving rise to the Good Reason termination within sixty
(60) days of the initial existence of the condition, and the
Company shall have thirty (30) days during which it may remedy the
condition and in the event such condition is timely remedied, the
termination shall not constitute a termination for Good Reason
.
(f)
Voluntary
Termination . The Executive
may voluntarily resign from the Executive’s employment with
the Company at any time (a “ Voluntary Termination
”). A voluntary resignation from employment by the Executive
for Good Reason pursuant to Section 6(e) shall not be deemed a
Voluntary Termination.
(g)
Non-Renewal
Termination . If the
Executive fails to request an extension of the Term of Employment
in accordance with Section 1(b) or if the Committee fails to
approve
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such request,
this Agreement shall automatically expire at the end of the then
current Term of Employment (a “ Non-Renewal
Termination ”).
7.
Notice and
Effective Date of Termination
(a)
Notice
.
Any termination of the Executive’s employment by the Company
or by the Executive during the Term of Employment (other than as a
result of the death of the Executive or a Non-Renewal Termination
described in Section 6(g)) shall be communicated by written notice
of termination to the other party hereto. Such notice shall
indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment under that provision.
(b)
Date of
Termination . The date of
termination of the Executive’s employment shall
be:
(i)
if the
Executive’s employment is terminated by the Executive’s
death, the date of the Executive’s death;
(ii)
if the
Executive’s employment is terminated due to Disability
pursuant to Section 6(b), the date of termination shall be the last
to occur of the 31st day following delivery of the notice of
termination to the Executive by the Company or the end of the
consecutive six-month period referred to in Section
6(b).
(iii)
if the
Executive’s employment is terminated for any other reason by
either party, the date on which a notice of termination is
delivered to the other party; and
(iv)
if the
Agreement expires pursuant to a Non-Renewal Termination described
in Section 6(g), the parties’ employment relationship shall
terminate on the last day of the then current Term of Employment
without any notice.
8.
Compensation
and Benefits Upon Termination.
(a)
Termination Due
To Disability, Without Cause or For Good Reason
.
If the Executive’s employment terminates pursuant to Section
6(b) [Disability], Section 6(d) [Without Cause], or Section 6(e)
[Termination by Executive for Good Reason], then, subject to
Section 22 [Compliance with Section 409A], in addition to all
salary, annual bonuses, expense reimbursements, benefits and
accrued vacation days earned by the Executive pursuant to Section 4
through the date of the Executive’s termination of
employment, the Executive shall be entitled to the following,
provided that within sixty (60) days following the
Executive’s termination of employment the Executive executes
a general release of claims against the Company and its
subsidiaries, affiliates, stockholders, directors, officers,
employees, agents, successors and assigns in the current form
approved by the Company and attached as Exhibit A (subject to any
amendments required by law or regulation)(the “
Release ”) and the period for revocation, if any, of
such Release has expired without the Release having been
revoked:
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(i)
Salary
.
The Company shall continue to pay to the Executive the
Executive’s salary, at the rate in effect immediately prior
to such termination of employment, through the remainder of the
Term of Employment then in effect.
(ii)
Bonus
.
The Company shall continue to pay to the Executive an annual bonus
through the remainder of the Term of Employment then in effect;
provided, however, that the amount of the annual bonus determined
in accordance with this Section 8(a)(ii) for the fiscal year of the
Company in which such Term of Employment ends shall be prorated on
the basis of the number of days of such Term of Employment
occurring within such fiscal year. The amount of each annual bonus
payable pursuant to this Section 8(a)(ii), prior to any proration,
shall be equal to the annual bonus that the Executive would have
earned had no such termination under Section 8(a) occurred,
contingent on the relevant annual bonus plan performance goals for
the respective year having been obtained. However, in no case shall
any such post-termination annual bonus exceed 100% of the
Executive's target bonus for the fiscal year of the Company in
which the Executive's termination of employment occurs. Such
bonuses shall not be paid until due under the applicable Company
bonus plan.
(iii)
Stock
Options . Stock options
granted to the Executive by the Company and which remain
outstanding immediately prior to the date of termination of the
Executive’s employment, as provided in Section 7(b), shall
immediately become vested in full upon such termination of
employment.
(iv)
Restricted
Stock. Shares of
restricted stock granted to the Executive by the Company which have
not become vested as of the date of termination of the
Executive’s employment, as provided in Section 7(b), shall
immediately become vested on a pro rata basis. The number of such
additional shares of restricted stock that shall become vested as
of the date of the Executive’s termination of employment
shall be that number of additional shares that would have become
vested through the date of such termination of employment at the
rate(s) determined under the vesting schedule applicable to such
shares had such vesting schedule provided for the accrual of
vesting on a daily basis (based on a 365 day year). The pro rata
amount of shares vesting through the date of
termination/non-renewal shall be calculated by multiplying the
number of unvested shares scheduled to vest in each respective
vesting year by the ratio of the number of days from the date of
grant through the date of termination/non-renewal, and the number
of days from the date of grant through the original vesting date of
the respective vesting tranche. Any shares of restricted stock
remaining unvested after such pro rata acceleration of vesting
shall automatically be reacquired by the Company in accordance with
the provisions of the applicable restricted stock agreement, and
the Executive shall have no further rights in such unvested portion
of the restricted stock. In addition, the Company shall waive any
reacquisition or repayment rights for dividends paid on restricted
stock prior to Executive’s termination of
employment.
(v)
Other Equity
Awards. Except as set
forth in Sections 8(a)(iii) and 8(a)(iv), performance share awards
and all other equity awards granted to the Executive by the Company
which remain outstanding immediately prior to the date of
termination of the Executive’s employment, as provided in
Section 7(b), shall vest and be settled in accordance with their
terms.
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The Company
shall have no further obligations to the Executive as a result of
termination of employment described in this Section 8(a) except as
set forth in Section 12.
(b)
Death,
Termination for Cause or Voluntary Termination
.
If the Executive’s employment terminates pursuant to Section
6(a) [Death], Section 6(c) [For Cause] or Section 6(f) [Voluntary
Termination], the Executive (or the Executive’s designee or
the Executive’s estate) shall be entitled to receive only the
salary, annual bonuses, expense reimbursements, benefits and
accrued vacation days earned by the Executive pursuant to Section 4
through the date of the Executive’s termination of
employment. The Executive shall not be entitled to any bonus not
paid prior to the date of the Executive’s termination of
employment, and the Executive shall not be entitled to any prorated
bonus payment for the year in which the Executive’s
employment terminates. Any stock options granted to the Executive
by the Company shall continue to vest only through the date on
which the Executive’s employment terminates, and unless
otherwise provided by their terms, any restricted stock,
performance share awards or other equity awards that were granted
to the Executive by the Company that remain unvested as of the date
on which the Executive’s employment terminates shall
automatically be forfeited and the Executive shall have no further
rights with respect to such awards. The Company shall have no
further obligations to the Executive as a result of termination of
employment described in this Section 8(b) except as set forth in
Section 12. In addition, provided the Executive terminates pursuant
to Death, the Company shall waive any reacquisition or repayment
rights for dividends paid on restricted stock prior to
Executive’s termination of employment.
(c)
Non-Renewal
Termination . If the
Agreement expires as set forth in Section 6(g) [Non-Renewal
Termination], then, subject to Section 22 [Compliance with Section
409A], in addition to all salary, annual bonuses, expense
reimbursements, benefits and accrued vacation days earned by the
Executive pursuant to Section 4 through the date of the
Executive’s termination of employment, the Executive shall be
entitled to the following, provided that within sixty (60) days
following the Executive’s termination of employment the
Executive executes the Release and the period for revocation, if
any, of such Release has expired without the Release having been
revoked:
(i)
Bonus
.
The Company shall pay the Executive an annual bonus for the fiscal
year of the Company in which the date of the Executive’s
termination of employment occurs, which shall be prorated for the
portion of such fiscal year that the Executive is employed by the
Company. The amount of such annual bonus, prior to proration, shall
be equal to the annual bonus that the Executive would have earned
under the Company’s bonus plan for the fiscal year of the
Company in which the Executive’s termination of employment
occurs had the Executive remained in its employment, contingent on
the relevant annual bonus plan performance goals for the year in
which Executive terminates having been o
