CONFORMED COPY
EMPLOYMENT AGREEMENT
(As Amended through Amendment No. 2)
DATED: August 27, 1991
BETWEEN: ▇▇▇▇ ▇▇▇▇▇ STORES, INC.
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ "Company"
AND: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ # ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ "Employee"
The parties agree as follows:
1. General.
This Agreement sets forth the terms upon which Employee shall be
employed by the Company. Notwithstanding the foregoing, the Company may
terminate the Employee's employment at any time, and Employee's employment
hereunder will be considered "at will," subject to the Company's providing the
benefits hereinafter specified in accordance with the terms hereof.
2. Employment.
Employee shall be employed by Company on a full-time basis to perform
duties as Chief Executive Officer and Chairman of the Board of the Company.
3. Compensation and Disability Benefits.
3.1 Salary. For services performed during the term of Employee's
employment with the Company, the Company shall pay Employee an annual salary
(prorated for any portion of a year), payable in equal periodic installments not
less than monthly, of
1
$500,000, subject to annual review by the Compensation Committee of the Board of
Directors of the Company.
3.2 Bonus. Employee will be eligible to participate in the Company's
bonus plan on the same basis as other executives. Employee's bonuses for the
Company's 1994 fiscal year and for fiscal years thereafter will be up to 100
percent of his annual salary, to be determined upon the achievement of financial
objectives approved in advance by the Company's Board of Directors.
3.3 Insurance/Profit Sharing. Employee shall be entitled to
participate as an executive officer in all existing Company insurance, profit
sharing and other benefit plans in which executive officers may participate,
including the Company's Excess Deferral Plan, on the same basis as other
executive officers of the Company.
3.4 Long Term Disability Benefits. The Company will provide to
Employee the long term disability benefits described in Appendix A to this
Agreement. This benefit is in addition to benefits under any group plan
purchased by the Employee. In the event of Total Disability as defined in
Appendix A, Employee's salary provided for in Paragraph 3.1, above, will be
continued during the elimination period.
3.5 Retiree Medical Benefits. After termination of Employee's
employment for any reason after reaching age 55, the Company will pay Employee
or his present spouse if she survives him, as applicable, a medical supplement
to the extent determined as follows:
(a) The supplement shall compensate for the premium value to
Employee of medical coverage comparable to that provided under the
Company's program applicable to retirees
2
generally (the ▇▇▇▇ ▇▇▇▇▇ Plan) during any period in which the
following applies:
(1) Neither Employee nor his surviving spouse is eligible
for coverage under the ▇▇▇▇ ▇▇▇▇▇ Plan.
(2) Neither employee nor his surviving spouse is eligible
under a plan of a successor employer for medical benefits that
are reasonably comparable to benefits under the ▇▇▇▇ ▇▇▇▇▇ Plan.
(3) Employee is at least 55 years old.
(b) The supplement shall not exceed the smallest of the following
amounts, as applicable, reduced by the employee cost applicable at the
time under the ▇▇▇▇ ▇▇▇▇▇ Plan (references to Employee shall include
his present spouse):
(1) The cost of COBRA continuation coverage available from
the Company that Employee could have received by timely election.
(2) The cost to Employee for coverage if Employee had timely
exercised all available conversion rights under the Company's
medical program for active employees.
(3) The cost to Employee of the
3
coverage actually in effect for Employee from time to time to the
extent the coverage is reasonably comparable to coverage under
the ▇▇▇▇ ▇▇▇▇▇ Plan at the time.
(c) The supplement shall be paid only with respect to benefits
Employee would have received under the ▇▇▇▇ ▇▇▇▇▇ Plan if Employee had
terminated when eligible under that Plan.
(d) The supplement shall be paid in cash to Employee or his
surviving spouse or, at the Company's election, by direct payment of
the appropriate portion of the cost of coverage. The amount paid shall
constitute compensation income to Employee or his surviving spouse,
shall be reported on IRS form W-2 and any applicable state form, and
shall be subject to all applicable state and federal withholding as
non-qualified deferred compensation.
4. Severance.
4.1 In the event Employee is terminated by the Company for any reason
other than for "cause," death or permanent disability, employee shall be
entitled to payment of two years of compensation at Employees last determined
salary (payable on the Company's normal payroll dates and without interest).
4.2 "Cause" is defined for the purposes of this Agreement as (a)
embezzlement or fraud against the Company; (b) conviction of a felony which in
the judgment of the Board of Directors of the Company adversely affects the
business or
4
reputation of the Company; (c) conduct in wanton and knowing disregard of
corporate policy; or (d) willful and continuous failure, in the judgment of the
Board of Directors, to perform substantially the reasonably assigned duties with
the Company after written notice and reasonable opportunity to perform.
5. Pension and Benefits.
5.1 Normal Retirement Benefit. Employee's normal retirement benefit
shall be a pension starting at the end of the first month after age 62 and
continuing for Employee's life equal to $25,000 per month. The benefit shall be
reduced by 5 percent for each year by which Employee's total completed years of
employment is less than 14, as shown on the following Schedule:
Accrued Benefit
Completed Years Employment Pension Amount
of Employment Year End per month at 62
6 8/31/97 16,586
7 8/31/98 17,458
8 8/31/99 18,377
9 8/31/00 19,344
10 8/31/01 20,363
11 8/31/02 21,434
12 8/31/03 22,562
13 8/31/04 23,750
14 8/31/05 25,000
5.2 Early Retirement Benefit. If employment is terminated by Employee
or Company for any reason before normal retirement date, Employee may elect to
receive the accrued normal retirement benefit starting at the end of the month
after age 55. If benefits start before the end of the first month after age 62,
the amount from the Schedule in 5.1 shall be reduced 5/12 of one percent for
each month by which the benefit starts early.
5
5.3 Spouse's Death Benefit. If Employee dies leaving a surviving
spouse to whom he is now married, the spouse shall receive a monthly pension for
her life as follows:
(a) If Employee had retired and was receiving benefits or dies
during the first month for which benefits were to be paid, one half of
Employee's monthly benefit shall continue to the spouse.
(b) If (a) does not apply, the spouse may elect to start a
benefit as of the end of any month after the later of the date of
death or the date Employee would have reached age 55. The benefit
shall be one half of the amount Employee would have received if he had
terminated just before death and elected to start benefits at the date
benefits start to the spouse.
5.4 Additional Benefit. Retirement and Spouse's death benefit under
5.1 through 5.3 shall be in addition to and shall not reduce or be reduced by
any benefits under the Supplemental Income Plan, the Excess Deferral Plan, the
Profit Sharing Plan or any other plan maintained by the Company or an affiliate.
6. Miscellaneous Benefits.
6.1 Club Membership. The Company shall pay the cost of one club
membership for Employee during the terms of Employee's employment with the
Company.
6
6.2 Automobile. The Company will provide an automobile for Employee's
use while he is employed by the Company. The Company will also pay all operating
expenses associated with the automobile.
6.3 Vacation. Employee will be entitled to five weeks of vacation
annually.
6.4 Medical Expenses. Beginning on the date Employee commences
employment with the Company, the Company will provide reimbursement for medical
expenses of Employee and his dependents under the Company's medical
reimbursement plan, without any waiting or qualification period and without
exclusions for any existing conditions.
7. Successors and Assigns; Entire Agreement.
7.1 The rights and benefits of Employee under this Agreement are
personal to him and, except as may be set forth herein, may not be transferred
or assigned voluntarily or involuntarily.
7.2 This Agreement shall be binding on the Company, its successors and
assigns, including any person acquiring control of the Company's business and
operations.
7.3 This Agreement contains the entire agreement and understanding by
and between the Employee and the Company with respect to the employment of
Employee and the payments provided for in this Agreement shall be in lieu of any
other claims of Employee relating to his employment or benefits, including
claims relating to termination of employment.
7
8. Applicable Law.
This Agreement shall be construed in accordance with the laws of the
State of Oregon.
AGREEMENT DATED AUGUST 27, 1991 EXECUTED AS FOLLOWS:
----------------------------------------------------
▇▇▇▇ ▇▇▇▇▇, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. V.P.
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AMENDMENT NO. 1 DATED AUGUST 1, 1994 EXECUTED AS FOLLOWS:
---------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇, INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Executed: July 14, 1994
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executed: July 19, 1994
AMENDMENT NO. 2 DATED SEPTEMBER 9, 1997 EXECUTED AS FOLLOWS:
------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ STORES, INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Executed: December 5, 1997
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executed: December 5, 1997
8
APPENDIX A
TO EMPLOYMENT AGREEMENT
BETWEEN
▇▇▇▇ ▇▇▇▇▇ STORES, INC. (the "Company") and
▇▇▇▇▇▇ ▇▇▇▇▇ ("Employee")
LONG TERM DISABILITY BENEFITS
1. Definition of "Total Disability".
"Total Disability" means the complete inability of an employee to
perform any and every duty of his or her regular occupation for up to 24 months.
After 24 months, the term "Total Disability" means the complete inability of an
employee to perform any and every duty of any gainful occupation for which he or
she is reasonably fitted by training, education, or experience, or may
reasonably become qualified based on his or her training, education, or
experience.
2. Long Term Disability Benefits.
2.1 Upon receipt of proof that Employee has suffered a Total
Disability as a direct result, independent of all other causes, of an injury or
illness, monthly benefits will be effective after the expiration of the
elimination period, which is the period of six consecutive months of continuous
Total Disability.
2.2 The benefit in the event of Total Disability will be $4,500 per
month.
2.3 The monthly benefit will be reduced by the following:
1. The amount available under any Worker's Compensation law or
similar law.
2. The amount of disability provided under any plan to which the
Company makes contributions on behalf of the Employee.
3. Any disability income benefits provided under an act or law.
1
4. Disability income benefits provided or available from any
pension plan participated in by the Company.
5. Social Security Disability benefits provided or available.
6. Any salary, sick pay, or other income replacement benefits
provided by the employer.
7. Any retirement income provided or available from the
Employment Agreement between the Company and Employee, or from any Company
sponsored pension or retirement plan, including Social Security retirement
income.
8. Any retirement income provided or available from any prior
employer of Employee.
3. General Limitations.
3.1 No benefits shall be paid with respect to any injury or sickness:
1. Resulting from suicide, attempted suicide, or intentionally
self-inflicted injury, while sane or insane.
2. Resulting from war, whether declared or undeclared, or any act
or hazard of war.
3. Resulting from being engaged in an illegal occupation,
commission of, or attempted commission of an assault or other illegal act,
or resulting from injury caused by participation in a civil insurrection,
rebellion and/or riot.
4. Sustained while on full-time active duty in any branch of the
Armed Forces of any country, except for temporary active duty assignments
of note more than 90 days.
5. Sustained while learning to operate an aircraft, operating or
2
serving as a crew member of an aircraft, while traveling or flying in any
aircraft operated by or under the direction of any military authority, or
while in any aircraft being used for test or experimental purposes.
6. Resulting from or related to alcoholism, narcotism or the
abuse of other controlled substances.
3.2 Mental Illness Limitation - No benefits are provided with respect
to disabilities due to neuroses, psychoneuroses, psychopathies, psychoses, and
emotional diseases and disorders of any type.
4. Notice and Proof of Claim.
To make a claim for benefits proof of disability must be submitted to
and received by the Company within 20 days after Employee suffers a Total
Disability.
5. Termination of Coverage.
The Long Term Disability benefits provided above will only be provided
if Employee is employed by the Company at the time he suffers a Total
Disability.
3
