1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 29, 1994
Commission file number 1-8897
CONSOLIDATED STORES CORPORATION
A Delaware Corporation
IRS No. 06-1119097
1105 North Market Street, Suite 1300
P.O. Box 8985
Wilmington, Delaware 19899
(302) 478-4896
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of each class on which registered
------------------- -------------------
Common Stock $.01 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Indicate whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days. Yes [ X ] No [ ]
Indicate if the disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant's knowledge, in a definitive proxy or information statement
incorporated by reference in Part III of this FORM 10-K or any amendment to
this FORM 10-K [ ]
The aggregate market value (based on the closing price on the New York Stock
Exchange) of the Common Stock of the Registrant held by nonaffiliates of the
Registrant was $798,793,870 on March 31, 1994. For purposes of this response,
executive officers and directors are deemed to be the affiliates of the
Registrant and the holdings by nonaffiliates was computed as 46,306,891 shares.
The number of shares of Common Stock $.01 par value per share, outstanding as
of March 31, 1994, was 46,583,193 and there were no shares of Non-Voting
Common Stock, $.01 par value per share outstanding at that date.
Documents Incorporated By Reference
Portions of the Registrant's Proxy Statement are incorporated into Part III.
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FORM 10-K
ANNUAL REPORT
FOR THE FISCAL YEAR ENDED JANUARY 29, 1994
TABLE OF CONTENTS
PART I
Page
Item 1. Business 2
Item 2. Properties 4
Item 3. Legal Proceedings 5
Item 4. Submission of Matters to Vote of Security Holders 5
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters 6
Item 6. Selected Financial Data 6
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 26
PART III
Item 10. Directors and Executive Officers of the Registrant 26
Item 11. Executive Compensation 26
Item 12. Security Ownership of Certain Beneficial Owners and
Management 26
Item 13. Certain Relationships and Related Transactions 26
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 26
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PART I
ITEM 1 BUSINESS
GENERAL
At January 29, 1994, Consolidated Stores Corporation (Company) conducted retail
operations in 22 states and is the largest close-out retail company in the
world. Through its principal operating subsidiary the Company operates 432
close-out retail stores under the name "Odd Lots" and "Big Lots" in 18
midwestern, southeastern and eastern states, and 177 single price point stores
under the name "All for One" (AFO) in 15 states. The Company considers the
general economic conditions of all markets in which it has retail operations to
be good. Consumer goods are also sold on a wholesale basis throughout the
continental United States.
The Company purchases and sells large quantities of close-out merchandise. Such
merchandise consists of new, primarily brand name products, generally
manufacturers' excess inventories, discontinued merchandise or goods that have
not been sold successfully by traditional retailers and is obtained at a
fraction of initial wholesale prices.
As a result of the holiday selling season the fourth quarter generally reflects
higher net income and net sales than the other quarters. The first quarter of
the fiscal year is usually the least profitable representing a traditional
softness in retail sales following the holiday season.
Substantially all operations are conducted through subsidiaries, and references
to the "Company" in this Item 1 include the Company and its subsidiaries.
PURCHASING
Purchasing for the retail operations, Odd Lots, Big Lots and AFO, is conducted
by a single group of buyers. This buying group purchases merchandise from
sources throughout the world and continually seeks opportunities created by
manufacturers' overproduction and close-out circumstances, the overstocked
inventories of wholesalers and retailers, receiverships, bankruptcies and
financially distressed businesses, as well as other supply channels. The
primary sources of merchandise are manufacturers, distributors, and importers.
Many manufacturers and wholesalers offer some or all of their close-out
merchandise to the Company prior to attempting to dispose of it through other
channels. Historically, there have been various sources of supply available
for each category of merchandise sold.
In many cases, the Company has developed valuable sources from which it obtains
certain lines of merchandise on a continuing basis. The Company has purchase
commitments to acquire certain lines of paper products over the next five years
or as later may be extended. Utilization of purchase commitments in the future
will be evaluated based on the general availability of the line of merchandise
offered and other economic and operational factors. Long term purchase
commitments are not foreseen to be a major source of merchandise in the future.
RETAIL OPERATIONS - ODD LOTS AND BIG LOTS
Certain general categories of merchandise are offered on a continual basis,
although specific lines, products and manufacturers change frequently.
Inventories depend primarily on the types of merchandise available for
acquisition at any given time.
Historically, Odd Lots and Big Lots stores have offered substantial savings on
housewares, electronics, hardware, automotive supplies, food items, health and
beauty aids, sporting goods, toys, jewelry and softgoods. The stores also carry
on a regular basis consumer items such as paint, batteries, electrical wire and
accessories, trash bags, pet food, hand tools, greeting cards, and seasonal
goods, including Christmas items, which are purchased directly from
manufacturers, suppliers and importers on a recurring basis.
The stores advertise primarily in circulars. Odd Lots and Big Lots have also
engaged in a limited amount of advertising on television and radio. During the
fiscal year ended January 29, 1994, advertising expenditures were approximately
3.1 percent of net sales.
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All Odd Lots and Big Lots stores are located in leased facilities and range in
total size from 10,080 to 81,193 square feet. The average store is
approximately 27,700 square feet in size. Generally, locations of 20,000 to
40,000 square feet are solicited with emphasis on locations of 22,000 to 30,000
square feet. Approximately 71.4% of the area of each store represents selling
space.
Primary in selecting suitable store locations are existing structures which can
be refurbished in a manner consistent with the intended merchandising concept.
All of the stores are located in strip shopping centers or are free standing.
During the fiscal year ended January 29, 1994, 71 Odd Lots and Big Lots stores
were opened, 20 closed, and it is estimated that by the end of the current
fiscal year approximately 70 (55-60 net of store closings) new stores will be
opened. Generally, a new store is profitable in its first full year of
operation. Stores considered for closing are selectively evaluated by a Real
Estate Committee, comprised of management, to established profitability
standards. The cost of opening a new store in a leased facility is
approximately $550,000 to $650,000, including inventory.
AFO
During fiscal 1993, 21 AFO stores were opened and 4 were closed. The AFO stores
combine the value of quality merchandise, in a lively exciting environment, at
a single price point of one dollar. The stores are located in fully enclosed
malls or high traffic strip centers with major anchor stores. The AFO concept
draws on pedestrian traffic in these locations to attract the value shopper who
buys on impulse.
Each store carries a varied line of value-oriented general consumer
merchandise, similar to the categories available in Odd Lots and Big Lots
stores, which can be offered at the one dollar price point. During 1994, a
limited amount of floor space in selected AFO stores will be dedicated to
offering merchandise at a price point above one dollar. The area dedicated to
over one dollar merchandise in any particular store will be dependent on
available space, lease restrictions, if any, and the demographics of a
particular location.
In general the AFO operations do not independently advertise merchandise
available for sale. Advertising by participation in mall or strip center
sponsored programs are the only regularly scheduled advertising promotions.
All AFO stores are located in leased facilities and range in total size from
1,833 to 7,667 square feet and average approximately 3,652 square feet in size.
Approximately 74.5% of the area of each store represents selling space.
Generally, locations of 3,000 to 5,000 square feet are considered desirable for
lease.
The cost of opening a store in a leased facility averages approximately
$150,000 to $200,000, including inventory.
DISTRIBUTION
All merchandise distribution activities are conducted from central distribution
facilities located in Columbus, Ohio. A majority of the merchandise purchased
for the stores is shipped by common carrier directly to the distribution
facilities and from there is shipped by truck to the various stores utilizing
an outside transportation company.
OTHER OPERATIONS
The Company also sells goods wholesale from its corporate office in Columbus,
Ohio. The inventory consists almost entirely of merchandise obtained through
the same or shared opportunistic purchases of the retail operation.
Advertising of wholesale merchandise is conducted primarily at trade shows and
by mailings to past and potential customers. Wholesale customers include a wide
and varied range of major national and regional retailers, as well as smaller
retailers, manufacturers, distributors, and wholesalers.
ASSOCIATES
At January 29, 1994, the Company had 16,399 active associates. At any time
throughout fiscal 1993, approximately two-thirds of the associates were
employed on a part-time basis. Temporary associates hired during the Christmas
selling season increased the number of associates to a peak of 19,487 in fiscal
1993. The relationship with associates is considered to be good and the Company
is not a party to any labor agreements.
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COMPETITIVE CONDITIONS
The retail operations compete with discount department stores, deep discount
drugstore chains, and other value oriented specialty retailers. The Company
also competes with numerous distributors, jobbers, exporters, dealers, and
others which sell many of the items sold wholesale by the registrant.
Competition is often intense; however, by reason of the ability to make
purchase of close-out, bulk, and surplus items, the Company believes its prices
compare favorably with those of its competitors.
There is increasing competition for the purchase of such merchandise. The
Company believes that it has, and will continue to have, sufficient sources to
enable it to continue purchasing such merchandise in the future. Furthermore,
the wholesale capabilities and, as the number and sales volume of its stores
grow, the ability to take advantage of opportunistic purchases of large
quantities of merchandise at favorable prices will increase accordingly.
ITEM 2 PROPERTIES
CORPORATE, WAREHOUSE AND DISTRIBUTION
The Company owns a 2,500,000-square-foot office, warehouse and distribution
facility. Approximately 150,000 square feet of this facility represent office
space utilized for corporate offices. The balance represents warehouse and
distribution space. Warehousing and distribution is also conducted from a
leased 390,000-square-foot facility. Both facilities are located in Columbus,
Ohio.
The owned warehouse and distribution facility is fully mechanized for the
warehousing and distribution of retail merchandise. Approximately 1,850,000
square feet is utilized for retail operations and 500,000 square feet for
wholesale inventories. The leased facility is dedicated for AFO merchandise
distribution. All stores are serviced from these warehouse and distribution
facilities.
Early in 1994, completion of a 387,000-square-foot expansion of the owned
warehouse and distribution facility is planned. The additional space will be
utilized for the distribution and warehouse requirements of the retail
operations.
STORES
All stores are in leased facilities. Store leases generally provide for fixed
monthly rental payments plus the payment, in most cases, of real estate taxes,
utilities, liability insurance and maintenance. In some locations, the leases
provide formulas requiring the payment of a percentage of sales as additional
rent. Such payments are generally only required when sales reach a specified
level. The typical store lease is for an initial term of three to five years
with a five-year renewal option. The following tables set forth store lease
expiration information for existing and committed leases and a state location
summary at January 29, 1994.
Number of Store Leases Expiring
Number of Store Leases Expiring Without Renewal Options
------------------------------------------- ------------------------------------
Odd Lots Odd Lots
and and
Fiscal Year Big Lots AFO Big Lots AFO
------------------------ -------------- ----------------- --------------- -------------------
1994 54 3 16 1
1995 113 16 21 2
1996 88 21 20 9
1997 88 67 25 7
1998 23 12 7 -
1999 and thereafter 69 58 19 2
-------------- ----------------- --------------- -------------------
Total 435 177 108 21
Of the 177 AFO leases 109 are in enclosed malls and 68 are in strip centers.
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Number of Stores Open
-----------------------------------
Odd Lots
and
Big Lots AFO
----------------- --------------
Alabama 13 -
Colorado - 7
Florida 31 13
Georgia 27 -
Iowa - 7
Illinois 17 22
Indiana 36 12
Kentucky 28 8
Maryland 3 2
Michigan 30 23
Minnesota - 6
Missouri 9 -
North Carolina 18 -
Nebraska - 2
New York 4 -
Ohio 106 56
Pennsylvania 17 9
South Carolina 13 -
Tennessee 27 1
Virginia 22 3
Wisconsin 9 -
West Virginia 22 6
----------------- --------------
432 177
Number of states 18 15
ITEM 3 LEGAL PROCEEDINGS
The Company is party to various legal proceedings arising from its ordinary
course of operations and believes that the outcome of these proceedings,
individually and in aggregate, will be immaterial.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
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EXECUTIVE OFFICERS OF THE COMPANY
(Included pursuant to Instruction 3 to paragraph (b) of Item 401 of Regulation S-K.)
Officer
Name Age Offices Held Since
--------------------- ---------------- ----------------------------------------------------- ------------------
William G. Kelley 48 Chairman of the Board and Chief Executive Officer 1990
Brady J. Churches 35 President 1981
William B. Snow 62 Executive Vice President and Chief Financial 1985
Officer
Jerry D. Sommers 43 Executive Vice President, Merchandising 1987
Albert J. Bell 34 Sr. Vice President, Legal, Real Estate, Secretary 1988
and General Counsel
M. Steven Bromet 52 Sr. Vice President, Information Services and Human 1988
Resources
Donald A. Mierzwa 44 Sr. Vice President, Store Operations 1991
James A. McGrady 43 Vice President and Treasurer 1991
Michael J. Potter 32 Vice President and Controller 1991
James E. Eggenschwiler 35 Director - Legal, Assistant General Counsel and 1992
Assistant Secretary
Executive officers are appointed by the Board of Directors and serve at the pleasure of the Board.
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is listed on the New York Stock Exchange (NYSE)
under the symbol "CNS." The following table reflects the high and low sales
price per share of common stock as quoted from the NYSE composite transactions
for the fiscal periods indicated.
1993 1992
High Low High Low
------------- ------------- ------------- ------------
First Quarter 20 1/8 14 1/8 16 5/8 12 3/8
Second Quarter 19 1/2 14 3/4 15 3/4 10 3/4
Third Quarter 22 1/8 16 1/2 17 10
Fourth Quarter 22 1/4 17 1/4 18 3/4 15 3/4
The Company has followed a policy of reinvesting earnings in the business and
consequently has not paid any cash dividends. At the present time, no change in
this policy is under consideration by the Board of Directors. The payment of
cash dividends in the future will be determined by the Board of Directors in
consideration of business conditions then existing, including the Company's
earnings, financial requirements and condition, opportunities for reinvesting
earnings, and other factors.
ITEM 6 SELECTED FINANCIAL DATA
The statement of earnings data and the balance sheet data has been derived from
the Company's consolidated financial statements and should be read in
conjunction with Management's Discussion and Analysis of Financial Condition
and Results of Operations and the Consolidated Financial Statements and Notes
thereto included elsewhere herein.
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Five Year Fiscal Year Ended
Compound ---------------------------------------------------------------------------------------
Annual JANUARY 29, January 30, February 1, February 2, February 3, January 28,
Growth Rate 1994 1993 1992 1991 1990* 1989
====================================================================================================================================
($ In thousands, except per share and sales per sq. ft. amounts)
STATEMENT OF OPERATIONS DATA:
Net sales:
Odd Lots and Big Lots 9.4 % $ 941,471 $837,805 $744,896 $662,050 $593,519 $601,008
All for One ** 92,283 72,986 7,685 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total Retail 11.5 1,033,754 910,791 752,581 662,050 593,519 601,008
Other (3.4) 21,537 18,489 18,916 17,253 15,162 25,549
- ------------------------------------------------------------------------------------------------------------------------------------
11.0 1,055,291 929,280 771,497 679,303 608,681 626,557
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of sales:
Odd Lots and Big Lots 8.4 531,605 479,536 441,351 405,919 352,783 355,190
All for One ** 45,275 36,973 4,084 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total Retail 10.2 576,880 516,509 445,435 405,919 352,783 355,190
Other (2.3) 16,358 13,895 14,047 14,267 10,999 18,362
- ------------------------------------------------------------------------------------------------------------------------------------
9.7 593,238 530,404 459,482 420,186 363,782 373,552
- ------------------------------------------------------------------------------------------------------------------------------------
Gross profit 12.8 462,053 398,876 312,015 259,117 244,899 253,005
Selling and administrative 12.8 386,116 334,494 273,704 243,878 233,442 211,407
expenses
Unusual items ** - - - - 16,692 -
- ------------------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) 12.8 75,937 64,382 38,311 15,239 (5,235) 41,598
Other expense (1.4) (4,221) (4,116) (5,896) (8,608) (9,280) (4,536)
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 14.1 71,716 60,266 32,415 6,631 (14,515) 37,062
Income taxes (credit) 14.7 28,689 23,156 12,317 2,086 (7,561) 14,434
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) 13.7% $ 43,027 $ 37,110 $ 20,098 $ 4,545 $ (6,954) $ 22,628
====================================================================================================================================
Earnings (loss) per common and
common equivalent share of stock 12.5% $ 0.90 $ 0.78 $ .44 $ 0.10 $ (0.15) $ 0.50
====================================================================================================================================
Weighted average common and
common equivalent shares
outstanding (In thousands) 1.2% 47,976 47,676 45,797 45,615 45,456 45,238
====================================================================================================================================
BALANCE SHEET DATA:
Working capital $ 174,529 $142,305 $120,275 $100,033 $126,542 $108,757
Current ratio 2.3 2.2 2.2 2.3 3.0 2.4
Total assets $ 468,220 $390,942 $329,321 $288,119 $308,231 $286,156
Long-term obligations $ 50,000 $ 50,000 $ 50,000 $ 50,125 $ 91,087 $ 53,292
Stockholders' equity $ 258,535 $209,459 $170,520 $149,940 $144,776 $150,998
STORE OPERATING DATA:
Average sales per square foot*** $ 119.86 $ 115.64 $ 108.57 $ 100.68 $ 93.26 $ 103.14
New stores opened
Odd Lots and Big Lots 71 47 37 24 46 28
All for One 21 120 41 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
92 167 78 24 46 28
- ------------------------------------------------------------------------------------------------------------------------------------
Stores closed
Odd Lots and Big Lots 20 24 16 23 18 15
All for One 4 - 1 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
24 24 17 23 18 15
- ------------------------------------------------------------------------------------------------------------------------------------
Stores open at end of year
Odd Lots and Big Lots 432 381 358 337 336 308
All for One 177 160 40 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
609 541 398 337 336 308
- ------------------------------------------------------------------------------------------------------------------------------------
* Consists of 53 weeks.
** Not applicable.
*** Based on stores open the full period.
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ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW AND TRENDS
The Company's business operations are comprised of one primary segment - the
retail sales of "close-out" merchandise. At January 29, 1994, retail sales were
conducted through 432 Odd Lots and Big Lots specialty retail stores offering
merchandise at substantial discounts and 177 All for One single price point
retail stores. Operations of Odd Lots and Big Lots have annually comprised in
excess of 88% of the total sales and gross profit in each of the past three
fiscal years. The number of stores in operation has significantly expanded over
the past three years increasing from 337 at the start of fiscal 1991 to 609 in
fiscal 1993. Funding for this store expansion, in addition to other capital
requirements, have been provided by internally generated funds from operations
supplemented on an interim basis by utilization of available credit facilities.
The retail operation is somewhat seasonal due to the fourth quarter holiday
selling season. As such the fourth quarter generally reflects higher net sales
and income. In contrast the first quarter of the fiscal year is generally the
least profitable displaying the customary softness in retail sales following
the holiday season. Quarterly fluctuations of inventory balances reflect the
opportunistic purchases available at any given time and the increase in the
number of stores. On a per store basis, inventories have traditionally been
lower at the end of the fiscal year and build throughout the next three
quarters to a peak level in anticipation of the holiday season.
RESULTS OF OPERATIONS
A $1 billion sales volume milestone was reached in fiscal 1993 as record sales
of $1.055 billion, a 13.6% increase, were achieved. Resulting net income of
$43.0 million, a 15.9% increase, was also a record.
The following table compares components of the statements of earnings as a
percent to net sales and presents the percentage change to the prior year.
Percent of Net Sales Percent Change
------------------------------------------ -------------------------
1993 1992 1991 1993-92 1992-91
================================================================================= =========================
Increase(decrease)
Net sales 100.0% 100.0% 100.0% 13.6% 20.5%
--------------------------------------------------------------------------------- -------------------------
Costs and expenses:
Cost of sales 56.2 57.1 59.6 11.8 15.4
Selling and administrative 36.6 36.0 35.5 15.4 22.2
expenses
Interest expense 0.6 0.6 0.7 2.0 (9.1)
Other income -- net (0.2) (0.2) - 0.6 328.5
-------------------------------------------------------------------------------- -------------------------
93.2 93.5 95.8 13.2 17.6
-------------------------------------------------------------------------------- -------------------------
Income before income taxes 6.8 6.5 4.2 19.0 85.9
Provision for income taxes 2.7 2.5 1.6 23.9 88.0
-------------------------------------------------------------------------------- -------------------------
Net income 4.1% 4.0% 2.6% 15.9% 84.6%
===============================================================================================================
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NET SALES
Significant increases in net sales have been realized over the past three
fiscal years. These increases have resulted primarily from the expanded number
of retail stores in operation and increases in comparable store sales (stores
open more than two years at the beginning of the year).
Net sales increased 13.6% to a record $1.055 billion in 1993 compared to $929.3
million in 1992, which increased 20.5% above 1991. The sales from 92 new store
openings contributed $106.7 million, 84.6%, of the 1993 increase. The $114.8
million in sales from 167 new stores opened in 1992 accounted for 72.8% of that
year's sales gain. Comparable store sales increases of 1.8%, $11.2 million, in
1993 and 4.3%, $24.9 million, in 1992 contributed approximately 8.9% and 15.8%
of those respective years' overall sales increases. Sales in the first quarter
and fourth quarter of fiscal 1993 were negatively impacted by the unusual
winter weather patterns that occurred in many of the markets stores operated.
Components of net sales are presented below:
Fiscal Year
---------------------------------------------------------------------------------------
1993 1992 1991
-------------------------------- ------------------------- ------------------------
Pct. to No. of Pct. to No. of Pct. to No. of
($ in thousands) Sales Total Stores Sales Total Stores Sales Total Stores*
================================================================= ========================= ========================
Stores open two or more years at
the beginning of the fiscal year $ 635,423 60.2% 277 $604,681 65.1% 273 $535,018 69.3% 252
Stores open less than two years at
the beginning of the fiscal year 270,624 25.7 240 163,767 17.6 101 140,179 18.2 69
Stores opened in the fiscal period 106,661 10.1 92 114,825 12.3 167 61,682 8.0 77
---------------------------------------------------------------- ------------------------ ------------------------
Total retail sales for stores open at
end of fiscal year 1,012,708 96.0 609 883,273 95.0 541 736,879 95.5 398
Stores closed in the fiscal period 21,046 2.0 24 27,518 3.0 24 15,702 2.0 17
---------------------------------------------------------------- ------------------------ ------------------------
Total retail sales 1,033,754 98.0 633 910,791 98.0 565 752,581 97.5 415
====== ====== ======
Other 21,537 2.0 18,489 2.0 18,916 2.5
------------------------------------------------------- --------------- ---------------
Total sales $1,055,291 100.0% $929,280 100.0% $771,497 100.0%
================================================================ =============== ===============
* Stores opened and closed in the same period are reflected as closed stores.
Comparable store sales
percent increase 1.8% 4.3% 5.6%
Net sales of ODD LOTS and BIG LOTS increased 12.4%, $103.7 million, compared to
a 12.5%, $92.9 million, increase in 1992. AFO sales increased 26.4%, $19.3
million, in 1993. The increase in 1992 AFO sales of $65.3 million is
principally the result of the 120 new store openings and the full year sales
effect of stores opened in 1991.
GROSS PROFIT
Gross profit for 1993 was $462.1 million, 43.8% of sales, compared to $398.9
million, or 42.9% of sales 1992. The gross profit as a percent of sales has
increased over the past three years primarily from planned improvements in
initial markups and an improved merchandise mix placing an emphasis to
eliminate or demphasize low margin or high markdown items. Improved inventory
shrink results have also enhanced gross margins over the past three years.
Inventory valuation allowances, primarily for inventory aging and similar
items, are adjusted throughout the year. Increases and decreases in these
valuations are subject to evaluation of supporting data and other factors
management believes to be relevant in the circumstances.
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An analysis by division of the contribution to total gross profit follows:
Fiscal Year
--------------------------------------------------------------------------------
1993 1992 1991
---------------------- ----------------------- ---------------------
Gross Pct. to Gross Pct. to Gross Pct. to
($ in thousands) Profit Total Profit Total Profit Total
====================================================== ======================= =====================
ODD LOTS and BIG LOTS $409,866 88.7% $358,269 89.8% $303,545 97.3%
AFO 47,008 10.2 36,013 9.0 3,601 1.1
------------------------------------------------------ ----------------------- ---------------------
Total retail 456,874 98.9 394,282 98.8 307,146 98.4
Other 5,179 1.1 4,594 1.2 4,869 1.6
------------------------------------------------------ ----------------------- ---------------------
Total gross profit $462,053 100.0% $398,876 100.0% $312,015 100.0%
====================================================== ======================= =====================
Gross profit as a percent of each division's sales are summarized below:
Pct. by Pct. by Pct. by
Division Division Division
=================================================== ======================= ===================
ODD LOTS and BIG LOTS 43.5% 42.8% 40.7%
AFO 50.9 49.3 46.9
--------------------------------------------------- ----------------------- -------------------
Total retail 44.2 43.3 40.8
Other 24.0 24.8 25.7
--------------------------------------------------- ----------------------- -------------------
Total gross profit 43.8% 42.9% 40.4%
=================================================== ======================= ===================
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses as a percent to sales increased .6% to
36.6% in 1993 compared with 36.0% in 1992. The volume increase of 15.4% between
1993 and 1992 is slightly higher than the 14.4% comparative increase in net
sales reflecting the effect of fixed store operating expenses on a lower than
planned sales base as a result of the winter storms discussed above. The 1992
increase of .5% to 36.0% from the 1991 level of 35.5% is associated with
expenses incurred to implement the systems and procedures, and hire personnel
to accommodate the planned growth in AFO.
INTEREST EXPENSE
Interest expense as a percent to net sales was .6% for 1993 and 1992, and .7%
in 1991. The volume of interest expense increased 2.0% in 1993 compared to 1992
and declined 9.1% in the 1992-1991 period comparison. For 1993 the volume
increase is associated with greater weighted average seasonal borrowings
throughout the year. This increase primarily reflects the full year impact of
the inventory levels associated with the 1992 AFO expansion and other capital
expenditures. In 1992 the weighted average borrowing related to credit
agreements was reduced compared to 1991 levels. Both 1993 and 1992 realized
benefits from lower effective interest rates on short-term borrowings.
INCOME TAXES
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes," was adopted at the beginning of fiscal 1993. Adoption of the
accounting standard was not material to the financial position or results of
operations.
The effective tax rate increased to 40.0% in fiscal 1993 compared to 38.4% and
38.0% in the prior two fiscal periods. In 1993 the Omnibus Budget
Reconciliation Act of 1993 (Act) was signed into law. Major provisions of the
Act affecting the Company increased the Federal income tax rate from 34.0% to
35.0% and provided for the retroactive extension of the Targeted Jobs Tax
Credit (TJTC). Benefits recognized from TJTC as a reduction of the effective
tax rate in the prior three fiscal years have been .7%, 1.0%, and 2.9%,
respectively. Realization of any future TJTC benefits may be subject to Federal
legislation. Also, certain states in which operations are conducted have passed
legislation enacting future increased tax rates.
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CAPITAL RESOURCES AND LIQUIDITY
Sources of liquidity over the past three years have been derived from two
primary sources: operations and borrowings from available credit facilities.
Net cash provided from operating activities over the last three fiscal years,
as detailed in the consolidated statements of cash flows, have been $29.4
million, $34.9 million, and $53.8 million, respectively. As necessary the
Company utilized its available credit facilities to supplement cash provided
from operations, principally for store expansion, seasonal inventory purchases,
and capital expenditure programs. In 1993 long-term purchase commitments
provided a source of capital not previously utilized. Future use of such
long-term commitments are not anticipated to provide any significant capital
resources. The cash provided from operations over the past three fiscal years
has been sufficient whereby the Company has fully liquidated the balance of its
outstanding credit agreements prior to the fiscal year end. Total debt as a
percent of total capitalization, i.e., total debt and stockholders' equity, was
16.2% at January 29, 1994, compared with 19.3% and 22.7% at each of the
respective prior fiscal year ends. Working capital for each of the past three
fiscal years has increased to $174.5 million in 1993 from $142.3 million and
$120.3 million in 1992 and 1991, respectively. This data reflects the strength
of the Company's balance sheet and the capacity to absorb debt financing if
required.
Capital expenditures for 1993 were $46.0 million compared with $40.4 million
and $18.1 million in the previous two years. The capital expenditure program in
fiscal 1994 is anticipated to be approximately $50.0 million. Approximately
$8.5 million will be for completion of a 387,000-square-foot expansion of the
central distribution facility in the first quarter of 1994. New store expansion
of net 90-100 locations will utilize most of the balance of the 1994 capital
program.
At January 29, 1994, available credit facilities were $104.8 million under a
committed credit facility of $130.0 million plus an additional $45.0 million
under uncommitted facilities. The Company believes that capital resources from
currently available cash, cash generated from future operations, and the
availability of existing credit facilities will be sufficient to meet its
foreseeable capital and seasonal operating requirements.
NEW ACCOUNTING STANDARDS
In fiscal 1993 the Company adopted SFAS No. 106, "Employer's Accounting for
Postretirement Benefits Other Than Pensions," and SFAS No. 112 "Employer's
Accounting for Postemployment Benefits." SFAS No. 106 prescribes the
accounting for certain nonpension benefits provided to retired employees and
requires accrual of such benefits over the working life of the employee rather
than on a cash payment basis. SFAS No. 112 addresses the accounting for the
estimated cost of benefits provided to former or inactive employees prior to
retirement. Under the Company's present benefit structure, the effect of these
pronouncements was not material.
11
13
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of Consolidated Stores Corporation:
We have audited the accompanying consolidated balance sheets of
CONSOLIDATED STORES CORPORATION and subsidiaries as of January 29, 1994,
and January 30, 1993, and the related consolidated statements of earnings,
stockholders' equity and cash flows for each of the three fiscal years in
the period ended January 29, 1994. Our audits also included the financial
statement schedules listed in the Index at Item 14(a)2. These consolidated
financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of CONSOLIDATED
STORES CORPORATION and subsidiaries as of January 29, 1994, and January
30, 1993, and the consolidated results of their operations and their cash
flows for each of the three fiscal years in the period ended January 29,
1994, in conformity with generally accepted accounting principles. Also,
in our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
Deloitte & Touche
Dayton, Ohio
February 19, 1994
12
14
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
Fiscal Year
1993 1992 1991
===========================================================================================================
Net sales $1,055,291 $929,280 $771,497
-----------------------------------------------------------------------------------------------------------
Costs and expenses:
Cost of sales 593,238 530,404 459,482
Selling and administrative expenses 386,116 334,494 273,704
Interest expense 5,812 5,697 6,265
Other income - net (1,591) (1,581) (369)
-----------------------------------------------------------------------------------------------------------
983,575 869,014 739,082
-----------------------------------------------------------------------------------------------------------
Income before income taxes 71,716 60,266 32,415
Provision for income taxes 28,689 23,156 12,317
-----------------------------------------------------------------------------------------------------------
Net income $ 43,027 $ 7,110 $ 20,098
===========================================================================================================
Earnings per common and common
equivalent share of stock $ 0.90 $ 0.78 $ 0.44
===========================================================================================================
The accompanying notes are an integral part of these financial statements.
13
15
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
JANUARY 29, January 30,
1994 1993
=============================================================================================================
ASSETS
Current Assets:
Cash and cash equivalents $ 24,873 $ 35,254
Accounts receivable 4,865 1,614
Inventories 252,880 202,843
Prepaid expenses 11,670 9,892
Deferred income taxes 16,541 12,017
-------------------------------------------------------------------------------------------------------------
Total current assets 310,829 261,620
-------------------------------------------------------------------------------------------------------------
Property and equipment - net 147,848 126,831
Other assets 9,543 2,491
-------------------------------------------------------------------------------------------------------------
$468,220 $390,942
=============================================================================================================
LIABILITIES' AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 81,545 $ 77,644
Accrued liabilities 31,632 29,708
Income taxes 23,123 11,963
-------------------------------------------------------------------------------------------------------------
Total current liabilities 136,300 119,315
-------------------------------------------------------------------------------------------------------------
Long-term obligations 50,000 50,000
Deferred income taxes 16,305 12,168
Other noncurrent liabilities 7,080 -
Commitments and contingencies - -
Stockholders' equity:
Preferred stock - authorized 2,000,000 shares,
$.01 par value; none issued - -
Common stock - authorized 90,000,000 shares, $.01 par
value; issued 46,485,428 shares and 46,164,546 shares,
respectively 465 462
Non-voting common stock - authorized 8,000,000 shares,
$.01 par value; none issued - -
Additional paid-in capital 89,817 86,545
Retained earnings 165,479 122,452
Other adjustments 2,774 -
-------------------------------------------------------------------------------------------------------------
Total stockholders' equity 258,535 209,459
-------------------------------------------------------------------------------------------------------------
$468,220 $390,942
=============================================================================================================
The accompanying notes are an integral part of these financial statements.
14
16
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
Fiscal Year
1993 1992 1991
====================================================================================================
Common stock
Balance at beginning of year $ 462 $ 459 $ 436
Conversion of non-voting stock to voting - - 21
Exercise of stock options 3 3 2
----------------------------------------------------------------------------------------------------
Balance at end of year $ 465 $ 462 $ 459
====================================================================================================
Non-voting common stock
Balance at beginning of year $ - $ - $ 21
Conversion of non-voting stock to voting - - (21)
----------------------------------------------------------------------------------------------------
Balance at end of year $ - $ - $ -
====================================================================================================
Additional paid-in capital
Balance at beginning of year $ 86,545 $ 84,719 $ 84,239
Exercise of stock options 2,608 1,468 518
Cancellation of restricted stock - - (38)
Contribution to savings plan 664 358 -
----------------------------------------------------------------------------------------------------
Balance at end of year $ 89,817 $ 86,545 $ 84,719
====================================================================================================
Retained earnings
Balance at beginning of year $122,452 $ 85,342 $ 65,244
Net income for the year 43,027 37,110 20,098
----------------------------------------------------------------------------------------------------
Balance at end of year $165,479 $122,452 $ 85,342
====================================================================================================
Other adjustments
Balance at beginning of year $ - $ - $ -
Unrealized investment gain 4,188 - -
Minimum pension liability adjustment (1,414) - -
----------------------------------------------------------------------------------------------------
Balance at end of year $ 2,774 $ - $ -
====================================================================================================
The accompanying notes are an integral part of these financial statements.
15
17
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Fiscal Year
1993 1992 1991
=====================================================================================================
Cash flows from operating activities:
Net income $ 43,027 $ 37,110 $ 20,098
Adjustment for noncash items included
in net income:
Depreciation and amortization 23,685 19,542 16,149
Deferred income taxes (2,236) (319) (3,494)
Other 3,031 1,868 1,645
Change in assets and liabilities (38,081) (23,280) 19,435
-----------------------------------------------------------------------------------------------------
Net cash provided by operating activities 29,426 34,921 53,833
-----------------------------------------------------------------------------------------------------
Cash provided (used) by investment activities:
Capital expenditures (45,994) (40,401) (18,121)
Other 478 1,036 241
-----------------------------------------------------------------------------------------------------
Net cash used by investment activities (45,516) (39,365) (17,880)
-----------------------------------------------------------------------------------------------------
Cash provided (used) by financing activities:
Increase in deferred credits 4,723 - -
Principal payments of capital lease obligations - - (1,276)
Proceeds from exercise of stock options 986 566 520
-----------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 5,709 566 (756)
-----------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents $(10,381) $(3,878) $ 35,197
=====================================================================================================
The accompanying notes are an integral part of these financial statements.
16
18
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR
The Company follows the concept of a 52/53 week fiscal year which ends on the
Saturday nearest to January 31.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany transactions have
been eliminated.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of highly liquid investments which are
unrestricted as to withdrawal or use, and which have an original maturity of
three months or less. Cash equivalents are stated at cost which approximates
market value.
INVENTORIES
Retail inventories are stated at the lower of cost or market on the retail
method. Other inventories are stated at the lower of cost (first-in, first-out
method) or market.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization are provided on the straight line method for
financial reporting purposes. Service lives are principally forty years for
buildings and from four to ten years for other property and equipment.
INVESTMENTS
At January 29, 1994, the non-current investment in equity securities is
classified as Other Assets in the consolidated balance sheets and is stated at
fair value. Unrealized gains on equity securities classified as
available-for-sale are recorded as a separate component of stockholders' equity
net of applicable income taxes.
DEFERRED CREDITS
Deferred credits associated with purchase commitments are classified as other
noncurrent liabilities and are recognized when earned as a reduction of the
related inventory purchase cost.
PRE-OPENING COSTS
Non-capital expenditures associated with opening new stores are charged to
expense over the first twelve months of store operations.
INVENTORIES
Inventories are comprised of the following:
January 29, January 30,
(In thousands) 1994 1993
===================================================================================================
Retail $241,125 $192,244
Other 11,755 10,599
---------------------------------------------------------------------------------------------------
$252,880 $202,843
===================================================================================================
17
19
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INCOME TAXES
Effective January 31, 1993, the Company adopted SFAS No. 109 "Accounting for
Income Taxes." The statement requires the use of the asset and liability
approach for financial reporting for income taxes. Financial statements for
prior years have not been restated and the cumulative effect of the accounting
change was not material. The provision for income taxes is comprised of the
following:
Fiscal Year
(In thousands) 1993 1992 1991
====================================================================================================
LIABILITY Deferred Deferred
METHOD Method Method
Federal - Currently payable $22,733 $18,775 $12,375
Deferred 387 (319) (3,494)
State and Local 5,569 4,700 3,436
----------------------------------------------------------------------------------------------------
$28,689 $23,156 $12,317
====================================================================================================
A reconciliation between the statutory federal income tax rate and the
effective tax rate follows:
Fiscal Year
1993 1992 1991
====================================================================================================
LIABILITY Deferred Deferred
METHOD Method Method
Statutory Federal income tax rate 35.0% 34.0% 34.0%
Effect of:
State and local income taxes 5.1 5.1 7.0
Targeted jobs tax credit (0.7) (1.0) (2.9)
Other 0.6 0.3 (0.1)
----------------------------------------------------------------------------------------------------
Effective tax rate 40.0% 38.4% 38.0%
====================================================================================================
Deferred taxes reflect the effects of temporary differences between carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. For financial reporting purposes deferred
taxes are reflected without reduction for a valuation allowance. Components of
the Company's deferred tax assets and liabilities at January 29, 1994, are as
follows:
(In thousands)
===============================================================================
Deferred tax assets:
Uniform inventory capitalization $ 6,877
Inventory valuation allowance 2,831
Deferred credits 2,602
Other (each less than 5% of total assets) 4,231
-------------------------------------------------------------------------------
Total deferred tax assets 16,541
-------------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation 13,464
Unrealized gain 2,792
Other 49
-------------------------------------------------------------------------------
Total deferred tax liabilities 16,305
-------------------------------------------------------------------------------
Net deferred tax assets $ 236
===============================================================================
18
20
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INCOME TAXES - CONTINUED
The fiscal 1992 and 1991 provision for deferred income taxes is comprised of
the following:
Fiscal Year
(In thousands) 1992 1991
============================================================================================================
Deferred Deferred
Method Method
Depreciation $(2,625) $ (137)
Inventory valuation allowance (39) 2,748
Financial reporting expenses in excess of those allowable for tax 2,318 1,855
Alternative minimum tax - (1,468)
Other (each less than 5% of the computed "Expected" Federal tax amount) 665 496
------------------------------------------------------------------------------------------------------------
$ 319 $3,494
============================================================================================================
Net income taxes paid were $19,288,000, $19,170,000, and $8,082,000 in 1993,
1992, and 1991, respectively.
LONG-TERM OBLIGATIONS
SENIOR NOTES
The 10.5% senior notes are due in semi-annual principal payments commencing in
February 1995, until maturity in August 2002. Subject to the provisions of the
Note Purchase Agreement (Agreement) the Company may prepay all or part of the
outstanding principal balance subsequent to July 1993. The Agreement contains
provisions specifying certain limitations on the Company's operations including
the amount of future long-term obligations, investments, dividends and the
maintenance of specific operating ratios. At January 29, 1994, $91,551,000 of
retained earnings were available for dividends under provisions of the
Agreement.
The fair value of the senior notes is estimated based on the current rates
offered to the Company for debt with similar terms and remaining maturities.
The estimated fair value of the senior notes at January 29, 1994, was
$57,584,000 and the related carrying amount was $50,000,000. Maturities of
senior notes during the next five fiscal years are as follows:
(In thousands)
=======================================================================
1994 $ -
1995 15,000
1996 10,000
1997 5,000
1998 5,000
19
21
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
LONG-TERM OBLIGATIONS - CONTINUED
CREDIT AGREEMENTS
The Company has a $130,000,000 unsecured revolving credit agreement through
June 1, 1995, and a term loan for outstanding borrowings for one year
thereafter. The funds available under this agreement may be used for working
capital requirements and other general corporate purposes. The Company has the
option to borrow at various interest rates and is required to pay a 1/8 of 1%
commitment fee on the average daily undrawn funds. Provisions of the agreement
include the maintenance of certain standard financial ratios similar to those
described for senior notes. Additionally, $45,000,000 of uncommitted
short-term credit facilities were available at January 29, 1994. No borrowings
were outstanding under any such credit agreements.
The Company was contingently liable for outstanding letters of credit totaling
$25,171,000 at January 29, 1994.
Interest paid, including capitalized interest of $486,000 in 1993, totaled
$6,314,000, $5,775,000, and $6,017,000, for fiscal years 1993, 1992, and 1991,
respectively.
DEFERRED CREDITS
The Company received payments during fiscal 1993 related to commitments to
certain vendors for future inventory purchases. Open commitments at January 29,
1994 were approximately $103,000,000 to be purchased through fiscal 1998 or
later as may be extended. There are no annual minimum purchase requirements.
EMPLOYEE BENEFIT PLANS
PENSION PLAN
The Company has a defined benefit pension plan covering substantially all of
its employees. Benefits are based on credited years of service and the
employee's compensation during the last five years of employment. The
Company's funding policy is to contribute annually the amount required to
meet ERISA funding standards. Contributions are intended to provide not only
for benefits attributed to service to date but also for those anticipated to
be earned in the future. Subsequent to January 29, 1994, the Company amended
its pension plan to provide benefits only to employees hired on or before
March 31, 1994.
The components of net periodic pension cost are comprised of the following:
(In thousands) 1993 1992 1991
=======================================================================================================
Service cost - benefits earned in the period $ 944 $1,248 $1,182
Interest cost on projected benefit obligation 592 492 377
Investment return on plan assets (557) (373) (230)
Net amortization and deferral 96 175 206
-------------------------------------------------------------------------------------------------------
Net periodic pension cost $1,075 $1,542 $1,535
=======================================================================================================
Assumptions used in each year of the actuarial computations were:
Discount rate 7.2% 8.5% 8.5%
Rate of increase in compensation levels 5.0% 5.5% 5.0%
Expected long-term rate of return 9.0% 9.0% 9.0%
20
22
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
EMPLOYEE BENEFIT PLANS - CONTINUED
PENSION PLAN - CONTINUED
The following table sets forth the funded status of the Company's defined
benefit plan.
(In thousands) 1993 1992
====================================================================================================
Actuarial present value of:
Vested benefit obligation $ 6,097 $ 5,338
Non-vested benefits 1,943 1,214
----------------------------------------------------------------------------------------------------
Accumulated benefit obligation $ 8,040 $ 6,552
====================================================================================================
Actuarial present value of projected benefit obligation $10,325 $ 8,206
Plan assets at fair value, primarily cash equivalents, U.S. Government
securities and obligations, and publicly traded stocks and mutual funds 6,451 5,581
----------------------------------------------------------------------------------------------------
Projected benefit obligation in excess of plan assets (3,874) (2,625)
Unrecognized prior service cost (1,218) (1,354)
Unrecognized net obligation at transition 265 278
Unrecognized net loss 5,595 2,729
Recognition of minimum pension liability (2,357) -
----------------------------------------------------------------------------------------------------
Accrued pension cost $(1,589) $ (972)
====================================================================================================
Provisions of SFAS No. 87, "Employers' Accounting for Pensions," require
recognition of a minimum pension liability relating to certain unfunded pension
obligations. Principally as a result of the decrease in discount rate and
change in plan benefits in 1993, the Company recorded a minimum pension
liability of $2,357,000 with a corresponding reduction of stockholders' equity,
net of tax benefits.
SAVINGS PLAN
The Company has a savings plan with a 401(k) deferral feature for all eligible
employees. Provisions of $1,390,000, $920,000, and $733,000 have been charged
to operations in fiscal 1993, 1992, and 1991, respectively.
LEASES
Leased property consists of the Company's retail stores. Store leases generally
provide for fixed monthly rental payments plus the payments, in most cases, of
real estate taxes, utilities, liability insurance and maintenance. Certain
leases provide for contingent rents, in addition to the fixed monthly rent,
based on a percentage of store sales above a specified level. Additionally,
leases generally provide options to extend the original terms for an additional
two to twenty years.
21
23
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
LEASES - CONTINUED
Minimum operating lease commitments as of January 29, 1994, are as follows:
(In thousands)
=============================================================================
1994 $ 44,299
1995 39,488
1996 30,159
1997 20,464
1998 11,949
Subsequent to 1998 17,922
-----------------------------------------------------------------------------
Total minimum operating lease payments $164,281
=============================================================================
Total rental expense consisted of the following:
Fiscal Year
(In thousands) 1993 1992 1991
===============================================================================================
Buildings $51,105 $42,339 $32,720
Equipment 2,807 2,017 1,447
-----------------------------------------------------------------------------------------------
$53,912 $44,356 $34,167
===============================================================================================
STOCKHOLDERS' EQUITY
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Earnings per common and common equivalent share are based on the weighted
average number of shares outstanding during each period and, in 1993 and 1992,
on the additional number of shares which would have been issuable upon
exercise of stock options, assuming that the Company used the proceeds received
to purchase additional shares at market value. The average number of common and
common equivalent shares outstanding during fiscal 1993, 1992 and 1991 were
47,976,396, 47,676,377, and 45,797,325, respectively.
STOCKHOLDER RIGHTS PLAN
Each share of the Company's common stock has one Right attached. The Rights
trade with the common stock and only become exercisable, or transferable apart
from the common stock, ten business days after a person or group (Acquiring
Person) acquires beneficial ownership of, or commences a tender or exchange
offer for, 20% or more of the Company's common stock. Each Right, under certain
circumstances, entitles its holder to acquire one one-hundredth of a share of
Series A Junior Participating Preferred Stock at a price of $35, subject to
adjustment. If 20% of the Company's common stock is acquired, or a tender offer
to acquire 20% of the Company's common stock is made, each Right not owned by
an Acquiring Person will entitle the holder to purchase Company common stock
having a market value of twice the exercise price of the Rights. In addition,
if the Company is involved in a merger or other business combination at any
time there is a 20% or more stockholder of the Company, the Rights will entitle
a holder to buy a number of shares of common stock of the acquiring company
having a market value of twice the exercise price of each Right. The Rights may
be redeemed by the Company at $.01 per Right at any time until the tenth day
following public announcement that a 20% position has been acquired. The Rights
expire on April 18, 1999, and at no time have voting power.
22
24
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
STOCKHOLDERS' EQUITY - CONTINUED
PREFERRED STOCK
In conjunction with the Stockholder Rights Plan the Company has reserved
600,000 shares of preferred stock for issuance thereunder.
STOCK PLANS
STOCK OPTION PLANS
The Company has a Stock Option Plan (Plan) which provides
for the grant of options to executives for the purchase of up to 6,800,000
shares of the Company's common stock. The Plan requires that all options be
granted at an exercise price at least equal to the fair market value of the
common stock at the date of grant. The options generally become exercisable one
year following the original date of grant in five equal annual installments.
However, upon an effective change in control of the Company all options granted
become exercisable.
The Company has a Director Stock Option Plan (DSOP), for non-employee
directors, pursuant to which up to 200,000 shares of the Company's common stock
may be issued upon exercise of options granted thereunder. The DSOP is
administered by the Compensation Committee of the Board of Directors pursuant
to an established formula. Neither the Board of Directors, nor the Compensation
Committee, exercise any discretion in administration of the DSOP. Grants are
made annually, 90 days following the annual meeting of stockholders, at an
exercise price equal to 100% of the fair market value on the date of grant. The
present formula provides for an annual grant of 5,000 options to each
non-employee director which becomes fully exercisable over a three year period,
beginning one year subsequent to grant.
The following table reflects transactions for all plans:
Shares Price Range
=============================================================================================
Outstanding February 2, 1991 3,000,550 $ 2.12 - 4.88
Granted 1,151,452 $ 3.50 - 13.13
Canceled 158,780 $ 2.12 - 11.25
Exercised 234,060 $ 2.12 - 4.88
---------------------------------------------------------------------------------------------
Outstanding February 1, 1992 3,759,162 $ 2.12 - 13.13
Granted 653,180 $ 10.13 - 15.38
Canceled 176,840 $ 2.12 - 13.38
Exercised 207,790 $ 2.12 - 9.38
---------------------------------------------------------------------------------------------
Outstanding January 30, 1993 4,027,712 $ 2.12 - 15.38
Granted 708,600 $ 15.00 - 20.00
Canceled 107,160 $ 2.12 - 16.13
Exercised 283,945 $ 2.12 - 13.38
=============================================================================================
Outstanding January 29, 1994 4,345,207 $ 2.12 - 20.00
=============================================================================================
Exercisable January 29, 1994 2,008,176 $ 2.12 - 15.38
=============================================================================================
Available For Grant At January 29, 1994 1,522,738
==================================================================
23
25
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
STOCK PLANS - CONTINUED
RESTRICTED STOCK
The Company's Restricted Stock Plan (Plan) permits the granting of 500,000
shares of restricted stock awards to key employees, officers and directors. The
shares are restricted as to the right of sale and other disposition until
vested as determined by the Board of Directors. The Plan provides that on any
event that results in a change in effective control of the Company, all awards
of restricted stock would become vested as of the date of such change in
effective control. The Plan terminates in 1997 or when sooner terminated by the
Company's Board of Directors.
The cost of the awards, determined at the date of grant, is charged to income
over the period the restriction lapses. As of January 29, 1994, no restricted
shares were outstanding with respect to which restrictions had not lapsed and
shares available for grant totaled 391,822.
ADDITIONAL DATA
The following is a summary of certain additional financial data:
JANUARY 29, January 30,
(In thousands) 1994 1993
=========================================================================================================
Other assets:
Investment in equity securities* $ 7,428 $ 318
Net cash surrender value of life insurance policies 1,392 1,423
Other 723 750
---------------------------------------------------------------------------------------------------------
$ 9,543 $ 2,491
=========================================================================================================
* Stated at fair value in 1994 and at cost in 1993.
Property and equipment - at cost:
Land $ 5,260 $ 5,249
Buildings 52,062 50,400
Fixtures and equipment 165,764 144,839
Transportation equipment 7,203 3,391
---------------------------------------------------------------------------------------------------------
230,289 203,879
Construction--in-progress 14,393 _
---------------------------------------------------------------------------------------------------------
244,682 203,879
Less accumulated depreciation 96,834 77,048
---------------------------------------------------------------------------------------------------------
$147,848 $126,831
=========================================================================================================
Accrued liabilities:
Salaries and wages $ 8,771 $ 7,448
Property, payroll and other taxes 20,014 19,397
Other 2,847 2,863
---------------------------------------------------------------------------------------------------------
$ 31,632 $ 29,708
=========================================================================================================
24
26
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
ADDITIONAL DATA - CONTINUED
The following analysis supplements changes in assets and liabilities presented
in the consolidated statements of cash flows.
Fiscal Year
(In thousands) 1993 1992 1991
=========================================================================================
Accounts receivable $ (3,251) $ 151 $ 526
Inventories (50,037) (40,899) (1,389)
Prepaid expenses (1,778) (2,905) (1,765)
Accounts payable 3,901 14,414 6,782
Accrued liabilities 1,924 2,390 8,228
Income taxes 11,160 3,569 7,053
-----------------------------------------------------------------------------------------
$(38,081) $(23,280) $19,435
=========================================================================================
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for fiscal 1993 and 1992 is presented
below:
Quarter
------------------------------------------------------------
First Second Third Fourth Year
========================================================================================================
(In thousands except per share data)
Net sales
1993 $210,190 $234,430 $261,058 $349,613 $1,055,291
1992 192,032 203,169 228,677 305,402 929,280
Gross profit
1993 89,353 103,259 115,059 154,382 462,053
1992 80,870 86,561 99,736 131,709 398,876
Net income
1993 1,326 6,595 6,802 28,304 43,027
1992 3,368 5,135 5,156 23,451 37,110
Earnings per common
and common equivalent share
1993 0.03 0.14 0.14 0.59 0.90
1992 0.07 0.11 0.11 0.49 0.78
25
27
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
PART III
ITEMS 10 - 13
Pursuant to Instruction G(3) to Form 10-K, the information required in Items
10 - 13 is incorporated by reference from the Company's definitive proxy
statement which will be filed with the Commission pursuant to Regulation 14A on
or about May 8, 1994.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES
-------------------------------------------------------------------------
AND EXHIBITS
------------
1. Financial Statements
-------------------- Page
Independent Auditors' Report 12
Consolidated Statements of Earnings 13
Consolidated Balance Sheets 14
Consolidated Statements of Stockholders' Equity 15
Consolidated Statements of Cash Flows 16
Notes to Consolidated Financial Statements 17
2. Financial Statement Schedules
-----------------------------
Schedule Description
-------- -----------
II Amounts Receivable from Employees 30
V Property, Plant and Equipment 31
VI Accumulated Depreciation, Depletion, and
Amortization of Property, Plant and Equipment 32
VIII Valuation and Qualifying Accounts 33
X Supplementary Operations Statement Information 34
All other financial statements and schedules not listed in the preceding
indexes are omitted as the information is not applicable or the information is
presented in the consolidated financial statements or notes thereto.
(b) REPORTS ON FORM 8-K
-------------------
There were no reports on Form 8-K filed during the last quarter of the fiscal
year ended January 29, 1994.
26
28
(c) EXHIBITS
Exhibits marked with an asterisk (*) are filed herewith.
EXHIBIT NO. DOCUMENT
----------- ---------------------------------
3(a) Form of Restated Certificate of
Incorporation of the Company
(Exhibit 4(a) to the Company's
Registration Statement (No.
33-6086) on Form S-8 and
incorporated herein by reference)
3(b) Amended and Restated By-laws of
the Company (Exhibit 3(c) to the
Company's Annual Report on Form
10-K for the year ended February
3, 1990 and incorporated herein
by reference)
3(c) Amendment to By-laws dated April
14, 1992 (Exhibit 3(c) to the
Company's Annual Report on Form
10-K for the year ended February
1, 1992 and incorporated herein
by reference)
4(a) Specimen Stock Certificate
(Exhibit 4(a) to the Company's
Annual Report on Form 10-K for
the year ended February 1, 1992
and incorporated herein by
reference)
4(b) Summary of Rights to Purchase
Preferred Stock (Exhibit 4(b) to
the Company's Annual Report on
Form 10-K for the year ended
February 3, 1990 and incorporated
herein by reference)
4(c) Rights Agreement between the
Company and National City Bank
(Exhibit 4(c) to the Company's
Annual Report on Form 10-K for
the year ended February 3, 1990
and incorporated herein by
reference)
4(d) Form of Certificate of
Designation, Preferences and
Rights of Series A Junior
Participating Preferred Stock of
the Company (Exhibit 4(d) to the
Company's Annual Report on Form
10-K for the year ended February
3, 1990 and incorporated herein
by reference)
10(a) Executive Stock Option and Stock
Appreciation Rights Plan as
amended and restated October 9,
1990 (Exhibit 10(c) to the
Company's Annual Report on Form
10-K for the year ended February
1, 1992 and incorporated herein
by reference)
10(a)(i) Consolidated Stores Corporation
Directors Stock Option Plan
(Exhibit 10(q) to the Company's
Registration Statement (No.
33-42502) on Form S-8 and
incorporated herein by reference)
10(a)(ii) Consolidated Stores Corporation
Amended and Restated Directors
Stock Option Plan (Exhibit
10(c)(ii) to the Company's Annual
Report on Form 10-K for the year
ended February 1, 1992 and
incorporated herein by reference)
10(b) Consolidated Stores Corporation
Supplemental Savings Plan
(Exhibit 10(r) to the Company's
Registration Statement (No.
33-42692) on Form S-8 and
incorporated herein by reference)
10(c) CSIC Pension Plan and Trust dated
March 1, 1976 (Exhibit 10(h)(i)
to the Company's Registration
Statement (No. 2-97642) on Form
S-1 and incorporated herein by
reference)
10(c)(i) Amendment to CSIC Pension Plan
and Trust (Exhibit 10(h)(ii) to
the Company's Registration
Statement (No. 2-97642) on Form
S-1 and incorporated herein by
reference)
10(c)(ii) Amendment No. 2 to CSIC Pension
Plan and Trust (Filed as an
Exhibit to the Company's
Registration Statement (No.
33-6086) on Form S-8 and
incorporated herein by reference)
27
29
EXHIBIT NO. DOCUMENT
----------- ---------------------------------
10(c)(iii) Amendment No. 3 to CSIC Pension
Plan and Trust (Exhibit 10(h)(iv)
to the Company's Annual Report on
Form 10-K for the year ended
February 3, 1990 and incorporated
herein by reference)
10(d) Supplemental Pension Agreement
with William B. Snow (Exhibit
10(e) to the Company's Annual
Report on Form 10-K for the year
ended February 2, 1991 and
incorporated by reference)
10(e) Credit Agreement dated as of June
10, 1993, among Consolidated
Stores Corporation and C.S. Ross
Company, in favor of National
City Bank, Columbus, NBD Bank,
N.A., Bank One, Columbus, N.A.,
and The Bank of Tokyo Trust
Company (Exhibit 10 to the
Company's Quarterly Report on
Form 10-Q for the quarter ended
May 1, 1993 and incorporated
herein by reference)
10(f) Credit Guarantee dated as of June
10, 1993, among Consolidated
Stores Corporation and TRO, Inc.
in favor of National City Bank,
Columbus, NBD Bank, N.A., Bank
One, Columbus, N.A., and The Bank
of Tokyo Trust Company (Exhibit
10(a) to the Company's Quarterly
Report on Form 10-Q for the
quarter ended May 1, 1993 and
incorporated herein by reference)
10(f)(i) Credit Guarantee dated as of June
10, 1993, made by subsidiaries of
Consolidated Stores Corporation
in favor of National City Bank,
Columbus, NBD Bank, N.A., Bank
One, Columbus, N.A., and The Bank
of Tokyo Trust Company (Exhibit
10(b) to the Company's Quarterly
Report on Form 10-Q for the
quarter ended May 1, 1993 and
incorporated herein by reference)
10(g) Form of Note Purchase Agreement
dated as of August 1, 1987
relating to CSIC 10.50% Senior
Notes due August 1, 2002 (Exhibit
10(m) to the Company's Annual
Report on Form 10-K for the year
ended January 30, 1988 and
incorporated herein by reference)
10(h) Employment Agreement with William
G. Kelley (Exhibit 10(r) to the
Company's Annual Report on Form
10-K for the year ended February
3, 1990 and incorporated herein
by reference)
10(i)* Employment Agreement as of
February 21, 1994, with Brady J.
Churches
10(j)* Employment Agreement as of
February 21, 1994, with Jerry D.
Sommers
10(k)* Employment Agreement as of
February 21, 1994, with Mark N.
Hanners
10(l) Promissory Note dated July 12,
1991 between William G. Kelley
and Lois Ellen Kelley and
Consolidated Stores Corporation
(Exhibit 10(k) to the Company's
Annual Report on Form 10-K for
the year ended February 1, 1992
and incorporated herein by
reference)
10(m) Consolidated Stores Corporation
1987 Restricted Stock Plan as
amended and restated (Exhibit
10(p)(i) to the Company's Annual
Report on Form 10-K for the ended
February 3, 1990 and incorporated
by reference herein)
10(n) Consolidated Stores Corporation
Savings Plan and Trust, as
amended and restated (Exhibit
10(q)(i) to the Company's Annual
Report on Form 10-K for the year
ended February 3, 1990 and
incorporated by reference herein)
28
30
EXHIBIT NO. DOCUMENT
----------- ---------------------------------
10(o) Form of Executive Severance
Agreement of the Company (Exhibit
10(s)(i) to the Company's Annual
Report on Form 10-K for the year
ended February 3, 1990 and
incorporated herein by reference)
10(p) Form of Senior Executive
Severance Agreement of the
Company (Exhibit 10(s)(i) to the
Company's Annual Report on Form
10-K for the year ended
February 3, 1990 and
incorporated herein by reference)
10(q) Consolidated Stores Executive
Benefits Plan (Exhibit 10(t) to
the Company's Annual Report on
Form 10-K for the year ended
February 3, 1990 and incorporated
herein by reference)
21* List of subsidiaries of the
Company
23* Consent of Deloitte & Touche
24 Powers of Attorney (Exhibit 25 to
Company's Annual Report on Form
10-K for the year ended January ,
30, 1993 and incorporated herein
by reference)
29
31
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM EMPLOYEES
(In thousands)
Deductions Balance at End
Balance at ------------------------- of Period
Beginning Amounts Amounts -----------------------
Name of Debtor of Period Additions Collected Written Off Current Not Current
======================== =========== =========== =========== =========== ============ ===========
For the fiscal year ended
January 29, 1994:
William G. Kelley (1) $ 450 $ - $ - $ - $ - $ 450
========== ========= ========== ========= ========= ===========
For the fiscal year ended
January 30, 1993:
William G. Kelley (1) $ 450 $ - $ - $ - $ - $ 450
========== ========= ========== ========= ========= ===========
For the fiscal year ended
February 1, 1992:
William G. Kelley (1) $ - $ 450 $ - $ - $ - $ 450
========== ========= ========== ========= ========= ===========
(1) Note was issued on July 12, 1991, and is due July 11, 1996. The note is
interest free and is secured by an Open-End Mortgage and Security Agreement
(Agreement) on Mr. Kelley's personal residence. The Agreement is subordinate to
a prior mortgage on the residence.
30
32
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(In thousands)
Balance at Balance at
Beginning Additions End
Classification of Period at Cost Retirements Transfers of Period
================================================================================================================
For the fiscal year ended
January 29, 1994:
Land $ 5,249 $ 11 $ - $ - $ 5,260
Buildings 50,400 1,662 - - 52,062
Fixtures and equipment 144,839 25,248 (4,323) - 165,764
Transportation equipment 3,391 4,680 (868) - 7,203
Construction--in-progress - 14,393 - - 14,393
----------------------------------------------------------------------------------------------------------------
Total $203,879 $45,994 $(5,191) $ - $244,682
================================================================================================================
For the fiscal year ended
January 30, 1993:
Land $ 5,232 $ 17 $ - $ - $ 5,249
Buildings 48,624 1,494 - 282 50,400
Fixtures and equipment 112,523 37,381 (4,783) (282) 144,839
Transportation equipment 2,968 1,509 (1,086) - 3,391
----------------------------------------------------------------------------------------------------------------
Total $169,347 $40,401 $(5,869) $ - $203,879
================================================================================================================
For the fiscal year ended
February 1, 1992:
Land $ 5,232 $ - $ - $ - $ 5,232
Buildings 47,760 864 - - 48,624
Fixtures and equipment 93,746 16,626 (3,567) 5,718 112,523
Transportation equipment 2,730 631 (393) - 2,968
Capital leases 7,464 - (1,746) (5,718) -
----------------------------------------------------------------------------------------------------------------
Total $156,932 $18,121 $(5,706) $ - $169,347
================================================================================================================
Note: See Summary of Significant Accounting Policies of Notes to Consolidated
Financial Statements for depreciation methods.
31
33
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
(In thousands)
Additions
Balance at Charged to Balance at
Beginning Cost and End
Classification of Period Expenses Retirements Transfers of Period
=======================================================================================================
For the fiscal year ended
January 29, 1994:
Buildings $ 7,228 $ 1,481 $ - $ - $ 8,709
Fixtures and equipment 68,467 21,652 (3,543) - 86,576
Transportation equipment 1,353 552 (356) - 1,549
------------------------------------------------------------------------------------------------------
Total $77,048 $23,685 $(3,899) $ - $96,834
======================================================================================================
For the fiscal year ended
January 30, 1993:
Buildings $ 5,795 $ 1,288 $ - $ 145 $ 7,228
Fixtures and equipment 54,576 17,586 (3,550) (145) 68,467
Transportation equipment 1,484 668 (799) - 1,353
------------------------------------------------------------------------------------------------------
Total $61,855 $19,542 $(4,349) $ - $77,048
======================================================================================================
For the fiscal year ended
February 1, 1992:
Buildings $ 4,511 $ 1,284 $ - $ - $ 5,795
Fixtures and equipment 39,843 13,563 (2,000) 3,170 54,576
Transportation equipment 1,053 725 (294) - 1,484
Capital leases 4,150 577 (1,557) (3,170) -
------------------------------------------------------------------------------------------------------
Total $49,557 $16,149 $(3,851) $ - $61,855
======================================================================================================
Note: See Summary of Significant Accounting Policies of Notes to Consolidated
Financial Statements for depreciation methods.
32
34
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Additions
--------------------------
Balance at Charged Charged Balance
Beginning to Cost and to Other at End
Description of Period Expenses Accounts Deductions of Period
=================================== ========== =========== =========== =========== ==========
Fiscal year ended January 29, 1994:
Inventory valuation allowance (1) $ 10,258 $ 3,376 $ - $ 6,990 $ 6,644
========== ========== ========== ========== ==========
Fiscal year ended January 30, 1993:
Inventory valuation allowance (1) $ 10,515 $ 12,479 $ - $ 12,736 $ 10,258
========== ========== ========== ========== ==========
Fiscal year ended February 1, 1992:
Inventory valuation allowance (1) $ 3,831 $ 10,636 $ - $ 3,952 $ 10,515
========== ========== ========== ========== ==========
(1) Consists of reserves for markdowns of aged goods and similar inventory
reserves.
33
35
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY OPERATIONS
STATEMENT INFORMATION
(In thousands)
Fiscal Year Ended
-------------------------------------------------------------
January 29, January 30, February 1,
1994 1993 1992
=============== =============== ===============
Advertising costs $ 32,337 $ 28,132 $ 22,917
=============== =============== ===============
Repairs and maintenance $ 12,880 $ 10,826 $ 9,345
=============== =============== ===============
Note: All items omitted are less than 1% of total sales.
34
36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
By: /s/ William G. Kelley
-----------------------------
William G. Kelley
Chairman of the Board and
Chief Executive Officer
Dated: April 21, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Name and Signature Title Date
===============================================================================
__
/s/ William G. Kelley Chairman of the Board |
- ------------------------- and Chief Executive Officer |
William G. Kelley |
|
|
|
/s/ William B. Snow Director, Executive Vice |
- ------------------------- President, Chief Financial |
William B. Snow Officer, and Principal |
Accounting Officer |
|
|
/s/ Brady J. Churches |
- ------------------------- |
Brady J. Churches President and Director | April 21, 1994
|
Michael L. Glazer Director * |
David T. Kollat Director * |
Nathan Morton Director * |
John L. Sisk Director * |
Dennis B. Tishkoff Director * |
William A. Wickham Director * |
|
|
*By: /s/ William G. Kelley |
--------------------- |
(William G. Kelley, as |
Attorney-in-Fact for each of |
the persons indicated) __|
35
1
EXHIBIT 10(i)
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is entered into as of the 21st day of
February, 1994, between CONSOLIDATED STORES CORPORATION, a Delaware
corporation ("CSC"), and its wholly owned subsidiary, CONSOLIDATED STORES
CORPORATION, an Ohio corporation ("Consolidated") (CSC and Consolidated
are hereinafter jointly referred to as "Employer"), and BRADY J. CHURCHES
("Employee").
W I T N E S S E T H:
WHEREAS, CSC, Consolidated and Employee desire to enter into this
Employment Agreement to insure to Employer and Employer's direct and
indirect subsidiaries the services of Employee and to set forth the rights and
duties of the parties thereto; and
WHEREAS, Employee has been elected as a director of each of CSC and
Consolidated effective August 17, 1993; and
WHEREAS, the Board of Directors of CSC and Consolidated have,
effective August 17, 1993 elected Employee as the President of each of
CSC and Consolidated.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. EMPLOYMENT: DUTIES.
-------------------
(a) EMPLOYMENT. Employer currently employs Employee,
effective August 17, 1993, and appoints him as President of each of
CSC and Consolidated, with such duties as may from time to time be prescribed
by the Chief Executive Officer of CSC and Consolidated, and, as of August 17,
1993, elects him as a member of the Board of Directors of each of CSC
2
and Consolidated, and Employee hereby accepts such employment, on the terms and
conditions hereinafter set forth.
(b) DUTIES. During the term of this Employment Agreement,
Employee shall, effective as of August 17, 1993, devote his entire business
time and attention to his employment and perform diligently such duties as are
customarily performed by the President and a member of the Board of Directors
of a company the size and structure of CSC and its subsidiaries, together with,
as of the date hereof, such other duties as may be reasonably requested from
time to time by the Board of Directors of CSC or Consolidated, which duties
shall be consistent with his position as set forth above and in Paragraph 2 of
this Employment Agreement. Employee shall cooperate and work with all
committees formed by the Board of Directors of CSC or Consolidated including,
but not limited to, Nominating Committee, the Compensation Committee, and the
Audit Committee. As President, Employee shall have the authority to implement
the policies and decisions of the Board of Directors and Chief Executive
Officer and to assist Chief Executive Officer in directing Employer's business
strategy, development and operations. So long as Employee shall serve as
President, Employee shall report only to the Chief Executive Officer of each of
CSC and Consolidated and shall not be subject to the authority, direction or
discretion of any other officer, whether in a position now existing or
hereafter created or appointed.
Any material adverse modification or diminution of Employee's duties
or diminution in Employee's authority, title or office shall be considered
to be a Change in Control of Employer and shall entitle Employee, in addition
to any other rights he may have, to the rights and remedies provided in
Paragraph 7(d) hereof; provided, however, that Employee shall notify
2
3
Employer of any such alleged modification or diminution, specifying the same,
and Employer shall have a period of fifteen (15) days after such notice to cure
such alleged modification or diminution before Employee shall be entitled to
exercise any such rights and remedies. The right of Employer to cure any such
modification or diminution in Employee's authority, title or office set forth
in the immediately preceding sentence shall be applicable only in the event
that a "Change in Control" shall have occurred solely by reason of such
modification or diminution of duties or authority and shall not be applicable
following the occurrence of any Change in Control as defined in Paragraph 7(f)
below.
(c) FULL TIME AND ATTENTION. Except as expressly permitted
herein, Employee shall not, without the prior written consent of Employer,
directly or indirectly during the term of this Employment Agreement, render
services of a business, professional or commercial nature to any other person
or firm, whether for compensation or otherwise. So long as it does not
interfere with his full time employment hereunder, Employee may (i) attend to
outside investments and serve as a director, trustee or officer of or
otherwise participate in educational, welfare, social, religious and civic
organizations and (ii) serve as a director of not more than two (2) public
corporations that are not engaged in the Company Business (as defined in
Paragraph 9(a) hereof).
(d) BUSINESS DECISIONS. Employee shall have no liability to
Employer for any act or omission undertaken during the term of this Employment
Agreement in his good faith business judgment in furtherance of his duties as
prescribed in or under this Employment Agreement.
3
4
2. TERM AND POSITIONS.
-------------------
(a) TERM. Subject to the provisions for termination as
hereinafter provided, the term of this Employment Agreement shall
begin on August 17, 1993 and shall continue thereafter until Employee's
employment is terminated as provided in Paragraph 7.
(b) POSITIONS. Employee shall, without any compensation
in addition to that which is specifically provided in this Employment
Agreement, serve as an officer of CSC and of Consolidated and in such
substitute or further offices or positions with Employer or any subsidiary of
Employer as shall from time to time be reasonably requested by the Board of
Directors of CSC. Each office and position with Employer or any subsidiary of
Employer in which Employee may serve or to which he may be appointed shall be
consistent in title and duties with Employee's position as President of
Employer. For service as a director or officer of CSC, Consolidated or any
subsidiary of either of them, which service shall in each instance be deemed to
be at the request of CSC and its Board of Directors, Employee shall be entitled
to the protection of the applicable indemnification provisions of the charter
and by-laws of CSC, Consolidated and any such subsidiary and Employer agrees to
indemnify and hold harmless Employee from and against any claims, liabilities,
damages or expenses incurred by Employee in or arising out of the status,
capacities and activities as an officer or director of CSC, Consolidated and
any subsidiary of either to the maximum extent permitted by law and in
accordance with the terms of Exhibit A hereto. For purposes of this Employment
Agreement, all references herein to subsidiaries of CSC and/or Consolidated
shall be deemed to include references to subsidiaries now or hereafter
existing.
4
5
3. COMPENSATION.
------------
(a) SALARY. For all services he may render to CSC and
Consolidated (and any subsidiary of either of them) during the term of this
Employment Agreement, Employer shall pay to Employee, commencing on August 17,
1993, a salary at the rate (the "Salary Rate") of Three Hundred Fifty Thousand
Dollars ($350,000.00) per annum, subject to increase by the Board of Directors
of CSC, payable in those installments customarily used in payment of salaries
to Employer's executives (but in no event less frequently than monthly).
(b) BONUS. In addition to the salary compensation as
above stated, Employer shall pay to Employee bonus compensation during the
term of this Employment Agreement in amounts to be determined and paid as
follows:
(i) For the period ending January 29, 1994, and
all subsequent fiscal years of Employer,
Paragraph 3(b)(ii) shall replace Employees's
current bonus plan.
(ii) Retroactive to the fiscal year beginning
January 31, 1993 ("fiscal year 1993") and for
each subsequent fiscal year Employee
completed during the term of this Employment
Agreement Employee shall have the opportunity
to earn seventy-five percent (75%) of an
amount equal to the Salary Rate at the
end of such fiscal year. The Compensation
Committee of the Board of Directors shall
determine the bonus plan for each fiscal
year. The bonus plan for fiscal year 1993
is attached hereto as Exhibit B.
5
6
(iii) Any bonus paid for a fiscal year under
Paragraph 3(b)(ii) shall be paid
within forty-five (45) days after
Employer's independent auditor has delivered
its opinion with respect to the financial
statements of Employer for such fiscal year
(whether or not Employee is then in the
employ of Employer). Employer shall use all
reasonable efforts to cause such auditor to
deliver such opinion within ninety (90) days
after the close of such fiscal year.
(iv) For purposes of this Employment Agreement,
the term "fiscal year" shall mean with
respect to any year, the period commencing
on the Sunday next following the Saturday
closest to January 31 in a calendar year and
ending in the next following calendar year
on the Saturday closest to January 31.
4. DISABILITY IN THE EVENT OF DEATH OR PERMANENT DISABILITY. In
the event of a termination of employment as a consequence of Employee's death
or "permanent disability" (as defined below) during the term of this Employment
Agreement:
(a) Employee or his estate, as the case may be, shall be
entitled to receive a prorata portion of the bonus applicable to the fiscal
year in which such death or permanent disability occurs, as such bonus is
determined under Paragraph 3(b) of this Employment Agreement. Such prorata
portion shall be determined by multiplying a fraction, the numerator of which
shall be the number of days in the applicable fiscal year elapsed prior to the
date of death or permanent disability, as the case may be, and the denominator
of which shall be 365, by the amount of bonus that would have been payable, if
any, pursuant to such Paragraph 3(b),
6
7
if Employee had remained employed under this Employment Agreement for the
entire applicable fiscal year. The bonus shall be paid when and as
provided in Paragraph 3(b)(iii) of this Employment Agreement.
(b) Except as otherwise provided in Paragraphs 5, 6 and 8
of this Employment Agreement, Employee shall be entitled to no further
compensation or other benefits under this Employment Agreement, except as
to that portion of any unpaid salary and other benefits accrued and earned
by him hereunder up to and including the date of such death or permanent
disability, as the case may be.
(c) For the purposes of this Employment Agreement,
Employee's "permanent disability" shall be deemed to have occurred
after ninety (90) days in the aggregate during any consecutive twelve (12)
month period, or after sixty (60) consecutive days, during which ninety (90)
or sixty (60) days, as the case may be, Employee, by reason of his physical
or mental disability or illness, shall have been unable to discharge any
material portion of his duties under this Employment Agreement. The date
of permanent disability shall be the 90th or 60th day, as the case may be.
In the event Employee, after receipt of notice from Employer, shall
dispute that his permanent disability shall have occurred, he shall
promptly submit to a physical examination by the Chief of Medicine of
any major accredited hospital in the metropolitan Columbus, Ohio area and,
unless such physician shall issue his written statement to the effect that
in his opinion, based on his diagnosis, Employee is capable of resuming
his employment and devoting his full time and energy to discharging his
duties within ten (10) days after the date of such statement, such
permanent disability shall be deemed to have occurred without further
dispute by Employer.
7
8
5. STOCK OPTIONS. CSC and Employee have, on the date of
Employee's employment hereunder, executed a Non-Qualified Stock Option
Agreement in the form attached hereto as Exhibit C.
6. LIFE INSURANCE AND OTHER BENEFITS.
---------------------------------
(a) AUTOMOBILE. During the term of this Employment
Agreement, Employer shall provide Employee with a current model
automobile purchased or leased by Employer, in accordance with applicable
policies of Employer. Employer shall pay all maintenance and repair
expenses with respect to the automobile, procure and maintain in force at
Employer's expense collision, comprehensive, and liability insurance
coverage with respect to the automobile, and pay operating expenses with
respect to the automobile to the extent such operating expenses are
incurred in the conduct of Employer's business.
(b) VACATION AND SICK LEAVE. Employee shall be entitled
to such periods of vacation and sick leave allowance each year
which shall not be less than as provided under Employer's Vacation and Sick
Leave Policy for executive officers.
(c) GROUP PLANS, ETC. Employee shall be entitled to
participate in any group life, hospitalization, or disability
insurance plan, health program, or other employee benefit plan (other than
bonus compensation or performance plans to the extent that such
plans, in the case of Employee, are in lieu of the bonus plan set forth in
Paragraph 3(b) above) that is generally available to senior
executive officers, as distinguished from general management, of Employer.
Employee's participation in and benefits under any such plan shall
be on the terms and subject to the conditions specified in the governing
document of the particular plan, except that (with the exception of
Employer's pension plan) Employer will permit Employee's participation in
8
9
each such plan immediately upon the commencement of his employment hereunder
without any waiting period. To the extent not provided by the
foregoing, Employee shall be entitled to 100% reimbursement of his medical and
dental expenses incurred during the term of this Employment Agreement.
7. TERMINATION AND FURTHER COMPENSATION.
------------------------------------
(a) The employment of Employee under this Employment
Agreement and the term hereof may be terminated:
(i) by Employer or Employee at any time upon
thirty (30) days notice to the
other party of such termination, or
(ii) by Employer on death or permanent disability
of Employee, or
(iii) By Employer for cause at any time. For
purposes hereof, the term
"cause" shall mean:
(A) Employee's conviction of fraud or a
felony or any crime involving
moral turpitude or Employee's
commission of acts of embezzlement
or theft in connection with his
duties or in the course of his
employment with CSC or Consolidated;
(B) Employee's willful breach of any
material provision of this Employment
Agreement which failure has
not been cured in all substantial
respects within ten (10) days after
Employer gives notice thereof
to Employee; or
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(C) Employee's willful, wrongful engagement in any
Competitive Activity (as that term is hereinafter
defined).
Any termination of Employee for "cause" shall not be effective until
all the following shall have taken place:
(i) The Secretary of CSC pursuant to resolution of the Board of
Directors of CSC, shall have given written notice to Employee
that, in the opinion of the Board of Directors, Employee may
be terminated for cause, specifying the details;
(ii) Employee shall have been given a reasonable opportunity to
appear before the Board of Directors prior to the
determination of the Board evidenced by such resolution;
(iii) With respect to any matters other than Employee's conviction
of fraud or a felony or a crime involving moral turpitude,
Employee shall neither have ceased to engage in the activity
giving rise to the proposed determination for cause within
thirty (30) days after his receipt of such notice nor
diligently taken all reasonable steps to that end during such
thirty (30) day period and thereafter;
(iv) After complying with the procedures set forth in subparagraphs
(i) through (iii) above, Employee shall have been delivered a
certified copy of a resolution of the Board of Directors of
CSC adopted by the affirmative vote of not less than
three-fourths (3/4) of the entire membership of the Board of
Directors finding that Employee was guilty of the conduct
giving rise to the termination for cause.
Any termination by reason of the foregoing shall not be in limitation
of any other right or remedy Employer may have under this Employment
Agreement, at law, in equity or
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otherwise. On any termination of this Employment Agreement, Employee shall be
deemed to have resigned from all offices and directorships held
by Employee in Employer and any subsidiaries of Employer.
The term "Competitive Activity" shall mean Employee's participation,
without the written consent of the Board of Directors of CSC, in
the management of any business enterprise if such enterprise engages in
substantial and direct competition with CSC, Consolidated or any of
their respective subsidiaries and such enterprise's sales of any product or
service competitive with any product or service of CSC,
Consolidated or any of their respective subsidiaries amounted to more than ten
percent (10%) of such enterprise's net sales for its most
recently completed fiscal year and if the consolidated net sales of CSC of such
products or services amounted to more than ten percent (10%) of
the consolidated net sales of CSC for its most recently completed fiscal year.
"Competitive Activity" shall not include (i) the mere ownership
of securities in any publicly traded enterprise and the exercise of rights
appurtenant thereto or (ii) participation in management of any
publicly traded enterprise or business operation thereof other than in
connection with the competitive operation of such enterprise.
(b) In the event of termination for any of the reasons
set forth in subparagraph (a)(iii) of this Paragraph 7, except as
otherwise provided in Paragraph 8 of this Employment Agreement, Employee shall
be entitled to no further compensation or other benefits under
this Employment Agreement (other than as provided by law), except as to that
portion of any unpaid salary and other benefits accrued and earned
by him hereunder up to and including the effective date of such termination,
and Employee shall not be entitled to receive any bonus determined
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under Paragraph 3 of this Employment Agreement or otherwise, except for and in
respect of completed fiscal years for which Employee has not
then been paid.
(c) In the event of the termination of Employee's
employment by Employer pursuant to subparagraph (a)(i) above, Employee
shall be entitled to severance compensation as follows: (x) the continuation
of his compensation for a period of 730 days, including bonus
compensation (as provided below), (y) the stock options listed on the attached
Exhibit C - Non-Qualified Stock Option Agreement shall become
exercisable for an additional prorated number of shares (rounded to the nearest
share) equal to the product of the number of shares that would
vest during the calendar year in which Employee's employment is terminated and
a fraction, the numerator of which is the number of days between
August 17, 1993 (or the most recent anniversary of said date, as the case may
be) and the date of such event and the denominator of which is
365, and (z) all other benefits and perquisites to which he is entitled
hereunder for a period of 730 days following the date of such
termination of employment, except that (i) the benefits and perquisites
referred to in clause (z) shall be sooner reduced and/or terminated
(other than as provided by law) when and to the extent that the Employee is
entitled to receive the same from another employer during such
period (but no obligation of Employee to attempt to mitigate damages under this
subparagraph (c) shall be implied) and (ii) any bonus
compensation to be paid to Employee in respect of such period shall be limited
solely to the prorata portion thereof earned in the fiscal year
of Employer (determined in the manner provided in Paragraph 3) in which such
termination occurs, except for and in respect of completed fiscal
years for which Employee has not then been paid.
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(d) In the event of the termination of Employee's
employment by Employee pursuant to subparagraph (a)(i) above, Employer
may, in its sole discretion, elect to make Salary Payments to Employee pursuant
to paragraph 9(a)(B) below, however Employer shall have no
obligation to pay any compensation or benefits of any kind other than those
described in this subparagraph (d) to Employee other than salary
that has accrued but not been paid up to and including the date of termination,
and any bonus accrued but not paid for fiscal years that have
been completed as of the date of termination. The foregoing provisions of this
subparagraph (d) notwithstanding, and without limiting the
generality of the preceding provisions, Employee shall be entitled to continued
medical benefits coverage under the Employers medical plan
during any month for which Employer elects to make Salary Payments pursuant to
paragraph 9(a)(B) below.
(e) If there occurs any event that results in a Change
in Control (as defined in subparagraph (f) below) of Employer, and at any time
within one (1) year after such event, Employee gives notice to Employer (or
its successor) of termination of his employment under this Employment
Agreement or the employment of Employee is terminated by Employer (or its
successor) for any reason whatsoever, then any such termination shall be
deemed for purposes hereof to be a termination without cause by Employer
pursuant to subparagraph (a)(i) above and shall be governed by the provisions
of subparagraph (c) above, except that all of the shares covered by the
Exhibit C - Non-Qualified Stock Option Agreement shall be exercisable upon
such Change in Control and thereafter for the term of such Stock Option or on
the latest earlier
[Balance of Page Intentionally Blank]
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date as may be necessary to permit Employee, as the holder of the shares to be
acquired upon exercise of such Stock Option, to participate in
such event.
(f) As used herein, "Change in Control" means any of the
following events: (i) any person or group (as defined for
purposes of Section 13(d) of the Securities Exchange Act of 1934) becomes the
beneficial owner of, or has the right to acquire (by contract,
option, warrant, conversion of convertible securities or otherwise), twenty
percent (20%) or more of the outstanding equity securities of CSC
entitled to vote for the election of directors; (ii) a majority of the Board of
Directors of CSC is replaced within any period of two (2) years
or less by directors not nominated and approved by a majority of the directors
of CSC in office at the beginning of such period (or their
successors so nominated and approved), or a majority of the Board of Directors
of CSC at any date consists of persons not so nominated and
approved; or (iii) the stockholders of CSC approve an agreement to merge or
consolidate with another corporation or an agreement to sell or
otherwise dispose of all or substantially all of Employer's assets (including
without limitation, a plan of liquidation). The effective date
of any such Change in Control shall be the date upon which the last event
occurs or last action is taken such that the definition of such
Change in Control (as set forth above) has been met.
(g) If there is a Change in Control of Employer and
Employee's employment is terminated within one (1) year thereafter,
then to the extent that all or any portion of payments to Employee together
with any sums received by him upon or in connection with such
Change in Control may constitute excess parachute payments within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended,
that are subject to excise tax, then Employee shall receive from Employer, and
Employer shall pay, such amount as shall be necessary to place
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Employee in the same after tax position as Employee would have been in had no
such tax or assessment been imposed. The determination of the
amount of any such tax or assessment and of the payment required hereby shall
be made by the independent accounting firm then employed by
Employer within thirty (30) calendar days after such termination of employment,
and such payment shall be made within five (5) calendar days
after such determination has been made.
(h) If, after the date upon which the payment required by
subparagraph (g) above has been made, it is determined (pursuant
to final regulations or published rulings of the Internal Revenue Service,
final judgment of a court of competent jurisdiction or otherwise)
that the amount of excise or other similar taxes or assessments payable by
Employee is greater than the amount initially so determined, then
Employer shall pay Employee an amount equal to the sum of (i) such additional
excise or other taxes, plus (ii) any interest, fines and
penalties resulting from such underpayment, plus (iii) an amount necessary to
reimburse Employee for any income, excise or other tax or
assessment payable by Employee with respect to the amounts specified in (i) and
(ii) above, and the reimbursement provided by this clause
(iii). Payment thereof shall be made within five (5) calendar days after the
date upon which such subsequent determination is made.
8. EXPENSES. Employer shall reimburse Employee or provide him
with an expense allowance during the term of this Employment
Agreement for travel, entertainment and other expenses reasonably incurred by
Employee in the promotion of Employer's business. Employee shall
furnish such documentation with respect to reimbursement to be paid under this
Paragraph 8 as Employer shall reasonably request.
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9. COVENANTS OF EMPLOYEE.
----------------------
(a) COVENANT AGAINST COMPETITION. Employee acknowledges
that (i) the principal business of Employer is the operation of
its Retail Division's " Odd Lots", "Big Lots" and "All For One" discount
general merchandise consumer goods retail outlets, and other retail or
wholesale enterprises, as Employer may from time to time adopt, the inventories
of which are acquired primarily through special purchase
situations such as overstocks, closeouts, liquidations, bankruptcies, wholesale
distribution of overstock, distress, liquidation and other
volume inventories (the "Company Business", which term shall not include the
business of any general merchandise retail enterprise that from
time to time may acquire inventory through such special purchase situations but
that does not primarily acquire its inventories in such manner,
or any wholesale or specialty retail business); (ii) Employer is one of the
limited number of persons who has developed such business; (iii)
the Company Business is, in part, national in scope; (iv) Employee's work for
Employer will give him access to the confidential affairs of
Employer; and (v) the agreements and covenants of Employee contained in this
Paragraph 9 are essential to the business and goodwill of
Employer. Accordingly, Employee covenants and agrees that:
(A) During the term of Employee's employment with Employer and for
a period of two (2) years (the "Restricted Period") following the
termination of such employment by Employer for "cause" (as such term is
defined in Paragraph 7(a)(iii) above), Employee shall not in any
location where Employer's retail stores are located throughout the
United States of America and any foreign jurisdictions, directly or
indirectly, (1)
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engage in the Company Business for Employee's own account (other than
pursuant to this Employment Agreement), (2) render any services to any
person engaged in such activities (other than Employer), or (3) engage
in any Competitive Activity (as defined above), provided, however,
that in the event of a Change in Control the Restricted Period shall
be for a period of six (6) months.
(B) In the event that Employee terminates his employment with
Employer, the Restrictive Period, and all restrictive covenants
described in this Section 9, shall apply and be in force for a period
not to exceed two (2) years from the date of termination, if the
Employer continues to pay Employee his salary pursuant to Paragraph
3(a), in at least monthly installments and net of all tax and other
withholding obligations of Employer, at the level of salary paid to
employee immediately prior to the effective date of Employee's
termination ("Salary Payments"). Salary Payments shall be based upon
salary only, and shall not include or be based upon any other form of
compensation or benefit; provided however that Employee shall receive
the nonsalary benefits provided under Section 7(d) during the period
when Salary Payments are made. Within thirty (30) days after the
effective date of Employee's termination of his employment, Employer
shall notify Employee in writing as to whether or not Employer will
make Salary Payments. The Restrictive Period shall continue
uninterrupted for the first thirty (30) days following the effective
date of Employee's termination. [Balance of Line Intentionally Blank]
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If Employer elects not to make Salary Payments the provisions of
Section 9 shall not apply to Employee after the first thirty (30) day
restrictive period. If Employer elects to make Salary Payments,
payment shall be made retroactively for the first thirty (30) days
following the effective date of Employee's termination, unless such
payment has already been made. Then Salary Payments must continue for
the entire two (2) year period in which the restrictive covenants of
Section 9 shall apply to Employee. In the event that Employer
accidentally or erroneously makes Salary Payments to Employee,
Employee must immediately return or reimburse such Salary Payments to
Employer. It is the express understanding of Employer and Employee
that the provisions of this subparagraph (B) shall apply only in the
event of a termination of Employee's employment by Employee.
(C) During the Restricted Period, Employee shall keep secret and
retain in strictest confidence, and shall not use for his benefit or
the benefit of others, all confidential matters relating to the
Company Business hereafter learned by Employee, and shall not disclose
them to anyone except with Employer's express written consent and
except for information which (i) is at the time of receipt or
thereafter becomes publicly known
[Balance of Page Intentionally Blank]
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through no wrongful act of Employee, or (ii) is received from a third
party not under an obligation to keep such information confidential and
without breach of this Employment Agreement.
(D) So long as there has not occurred a Change in Control, Employee
shall not, during the Restricted Period, without Employer's prior
written consent, directly or indirectly, solicit or encourage to leave
the employment of Employer or any of its subsidiaries, any employee of
Employer or any of its subsidiaries.
(E) All memoranda, notes, lists, records and other documents (and
all copies thereof) made or compiled by Employee or made available to
Employee concerning the Company Business shall be Employer's property
and shall be delivered to Employer at any time on request.
(b) RIGHTS AND REMEDIES UPON BREACH. If Employee
breaches any of the provisions of Paragraph 9(a) (the "Restrictive
Covenants"), or a breach thereof is imminent, Employer shall have the following
rights and remedies, each of which rights and remedies shall be
independent of the other and severally enforceable, and all of which rights and
remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to Employer under law or in equity:
(i) The right and remedy to have the Restrictive
Covenants specifically enforced by any court having
equity jurisdiction, including, without limitation,
the right to an entry against Employee of restraining
orders and injunctions (preliminary,
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temporary or permanent)) against violations,
threatened or actual, and whether or not then
continuing, of such covenants, it being
acknowledged
and agreed that any such breach or threatened
breach will cause irreparable injury to
Employer and that money damage will not provide
adequate remedy to Employer; and
(ii) The right and remedy to require Employee to
account for and pay over to Employer all
compensation, profits, monies, accruals,
increments, or other benefits derived or received
by him as the result of any transactions
constituting a breach of the Restrictive
Covenants. Employer may set off any amounts
finally determined to be due it under this
Paragraph 9(b) against any amounts owed to
Employee.
(c) SEVERABILITY OF COVENANTS. Employee acknowledges and
agrees that the Restrictive Covenants are reasonable in geographical and
temporal scope, with respect to the activities restricted and in all other
respects. It if it determined that any of the Restrictive Covenants, or any
part thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect, without
regard to the invalid portions.
(d) BLUE-PENCILLING. If it is determined that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provision, the duration or scope of such
provision, as the case may be, shall be reduced so that
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such provision becomes enforceable and, in its reduced form, such provision
shall then be enforceable and shall be enforced.
10. WITHHOLDING TAXES. All payments to Employee, including the
bonus compensation under this Employment Agreement, shall be subject to
withholding on account of federal, state, and local taxes as required by law.
Any amounts remitted by Employer to the appropriate taxing authorities as taxes
withheld by Employer from Employee on income realized by Employee shall reduce
the amounts payable by Employer to Employee hereunder. If any particular
payment required hereunder is insufficient to provide the amount of such taxes
required to be withheld, Employer may withhold such taxes from any other
payment due Employee.
11. NO CONFLICTING AGREEMENTS. Employee represents and warrants
that he is not a party to any agreement, contract or understanding, whether
employment or otherwise, which would restrict or would prohibit him from
undertaking or performing employment in accordance with the terms and
conditions of this Employment Agreement.
12. SEVERABLE PROVISIONS. The provisions of this Employment
Agreement are severable, and if any one or more provisions may be determined to
be illegal or otherwise unenforceable, in whole or in part, the remaining
provisions and any partially unenforceable provision to the extent enforceable
in any jurisdiction shall, nevertheless, be binding and enforceable.
13. BINDING AGREEMENT. Each of Employer, CSC, and Consolidated
shall require any successor (whether direct or indirect), by purchase, merger,
consolidation, reorganization or otherwise, to all or substantially all of the
business and/or assets of any of them expressly to
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assume and to agree to perform this Agreement in the same manner and to the
same extent that each of them would be required to perform if no such
succession has taken place. This Agreement shall be binding upon and inure to
the benefit of each of Employer, CSC, and Consolidated and any successor of any
of them, including without limitation any persons acquiring directly or
indirectly all or substantially all of the business and/or assets of any of
them whether by sale, merger, consolidation, reorganization or otherwise (and
such successor shall thereafter be deemed the "Employer" for purposes of this
Agreement), but shall not otherwise be assignable or delegatable by Employer,
CSC, or Consolidated.
This Agreement shall inure to the benefit of and be enforceable by
Employee and each of Employee's personal or legal representatives, executive,
administrators, successor, heirs, distributees and/or legatees.
14. NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed, or sent by facsimile
transmission or, if mailed, five (5) days after the date of deposit in the
United States mails as follows:
(i) if to the Employer to: Consolidated Stores Corporation
300 Phillipi Road
Columbus, Ohio 43228-1310
Attention: Albert J. Bell, Esq.,
Senior Vice President,
General Counsel and
Secretary
with a copy to: Consolidated Stores Corporation
300 Phillipi Road
Columbus, Ohio 43228-1310
Attention: William G. Kelley,
Chairman and
Chief Executive Officer
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(ii) if to the Employee to: Mr. Brady J. Churches
1677 Taylor Corners Circle
Blacklick, Ohio 43004
with a copy to: James G. Ryan, Esq.
Scwartz, kelm, Warren & Rubenstein
The Huntington,Center
41 South High Street
Columbus, Ohio 43215-6188
Any such person may by notice given in accordance with this Paragraph to the
other parties hereto, designate another address or person for receipt by such
person of notices hereunder.
15. WAIVER. The failure of either party to enforce any provision
or provisions of this Employment Agreement shall not in any way be construed as
a waiver of any such provision or provisions as to any future violations
thereof, nor prevent that party thereafter from enforcing each and every other
provision of this Employment Agreement. The rights granted the parties herein
are cumulative and the waiver of any single remedy shall not constitute a
waiver of such party's rights to assert all other legal remedies available to
it under the circumstances.
16. MISCELLANEOUS. This Employment Agreement supersedes all prior
agreements and understandings between the parties and may not be modified or
terminated orally. No modification, termination or attempted waiver shall be
valid unless in writing and signed by the party against whom the same is sought
to be enforced. If Employee is successful in any proceeding against Employer
to collect amounts due Employee under this Employment Agreement, Employer shall
reimburse Employee for his court costs and reasonable attorneys' fees in
connection therewith. Employer hereby agrees to pay or reimburse Employee for
the reasonable fees and expenses of Employee's counsel in connection with the
negotiation, execution and delivery of this Employment Agreement and all
related agreements and documents.
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17. GOVERNING LAW. This Employment Agreement shall be governed by
and construed according to the laws of the State of Ohio.
18. CAPTIONS AND PARAGRAPHS HEADINGS. Captions and paragraph
headings used herein are for convenience and are not a part of this Employment
Agreement and shall not be used in construing it.
19. INTERPRETATION. Where necessary or appropriate to the meaning
hereof, the singular and plural shall be deemed to include each other, and
the masculine, feminine and neuter shall be deemed to include eachother.
20. AMENDMENTS. None of Employer, CSC, or Consolidated shall
amend, terminate, or suspend this Agreement or any provision hereof without
the prior written consent of Employee.
21. LEGAL FEES AND EXPENSES. It is the intent of Employer that
Employee not be required to incur the expenses associated with the enforcement
of his rights under this Agreement in the event of a Change in Control by
litigation or other legal action because the cost and expense thereof would
substantially detract from the benefits intended to be extended to Employee
hereunder. Accordingly, if it should appear to Employee that Employer has
failed to comply with any of its obligations under this Agreement, or in the
event that Employer or any other person takes any action to declare this
Agreement void and/or unenforceable, or institutes any litigation designed to
deny, and/or to recover from, Employee the benefits intended to be provided to
Employee hereunder, Employer hereby irrevocably authorizes Employee from
time to time to retain counsel of his choice at the expense of Employer to
represent Employee in connection with the initiation or defense of any
litigation and/or other legal action, whether by
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or against Employer or any director, officer, stockholder, or other person
affiliated with Employer in any jurisdiction. Notwithstanding any existing or
prior attorney-client relationship between Employer and such counsel, into an
attorney-client relationship with such counsel, and in that connection Employer
acknowledges that a confidential relationship shall exist between Employee and
such counsel. Employer shall pay and be solely responsible for any and all
attorneys' and related fees and expenses incurred by Employee as a result of
Employer or any person contesting the validity and/or enforceability of this
Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement on this 21st day of February, 1994.
CONSOLIDATED STORES CORPORATION,
a Delaware corporation
/S/ William G. Kelley
By:_____________________________________
William G. Kelley, Chairman
and Chief Executive Officer
CONSOLIDATED STORES CORPORATION,
an Ohio corporation
/S/ William G. Kelley
By:_____________________________________
William G. Kelley, Chairman
and Chief Executive Officer
EMPLOYEE:
/S/ Brady J. Churches
________________________________________
Brady J. Churches
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Exhibit A
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INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made this 17th day of August, 1993 between
CONSOLIDATED STORES CORPORATION, a Delaware corporation ("Corporation"), and
Brady J. Churches, a director or officer of Corporation ("Indemnitee").
WITNESSETH THAT:
WHEREAS, Indemnitee is a director or officer (or both) of Corporation
and in such capacity or capacities is performing a valuable service for
Corporation; and
WHEREAS, the By-Laws of Corporation provide for the indemnification of
the officers, directors, agents and employees of Corporation to the maximum
extent authorized by Section 145 of the General Corporation Law of the State of
Delaware, as amended to date (the "State Statute"); and
WHEREAS, the State Statute specifically provides that such
indemnification permitted thereby is not exclusive, and the State Statute
thereby contemplates that contracts may be entered into between Corporation and
directors or officers thereof with respect to indemnification; and
WHEREAS, in accordance with the authorization provided by the State
Statute, Corporation has purchased and presently maintains a policy or policies
of Directors and Officers Liability Insurance ("D & O Insurance"), covering
certain liabilities which may be incurred by its directors and officers in the
performance of their services for Corporation; and
WHEREAS, recent developments with respect to the terms and
availability of D & O Insurance and with respect to the application, amendment
and enforcement of statutory and corporate indemnification provisions generally
have raised questions concerning the adequacy and reliability of the protection
afforded to directors and officers thereby; and
WHEREAS, in order to resolve such questions and thereby induce
Indemnitee to continue to serve as a director or officer (or both), Corporation
has determined and agreed to enter into this contract with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's continued service as
a director or officer (or both) after the date hereof, the parties hereto agree
as follows:
1. INDEMNITY OF INDEMNITEE. Without limiting any other provision
herein, Corporation hereby agrees to hold harmless and indemnify Indemnitee to
the full extent authorized or permitted by the provisions of the State Statute,
or by any amendment thereof, or by any statutory provisions authorizing or
permitting such indemnification that are adopted after the date hereof.
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2. MAINTENANCE OF INSURANCE AND SELF-INSURANCE.
(a) Corporation represents that it presently has in full force and
effect the following D & O Insurance Policies (the "Insurance Policies"):
INSURER POLICY NO. AMOUNT DEDUCTIBLE
- ------- ---------- ------ ----------
CNA DOC 407 401 937 $15,000,000 $250,000 Corporation Retention
Subject only to the provisions of Section 2(b) hereof, Corporation hereby
agrees that, so long as Indemnitee shall continue to serve as a director or
officer of Corporation (or shall continue at the request of Corporation to
serve as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise), and thereafter so long
as Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of fact that the Indemnitee was a director or
officer of Corporation (or served in any of said other capacities), Corporation
will make reasonable efforts to purchase and maintain in effect for the benefit
of Indemnitee one or more valid, binding and enforceable policies of D & O
Insurance providing, in all material respects, coverage at least comparable to
that presently provided pursuant to the Insurance Policies.
(b) Corporation shall not be required to maintain said policy or
policies of D & O Insurance in effect if said insurance is not reasonably
available or if, in the reasonable business judgment of the then directors of
Corporation, either (i) the premium cost for such insurance is substantially
disproportionate to the amount of coverage or (ii) the coverage provided by
such insurance is so limited by exclusions that there is insufficient benefit
from such insurance.
(c) In the event Corporation does not purchase and maintain in
effect said policy or policies of D & O Insurance pursuant to the provisions of
Section 2(b) hereof, Corporation agrees to hold harmless and indemnify
Indemnitee to the full extent of the coverage which would otherwise have been
provided for the benefit of Indemnitee if the Insurance Policies were then in
effect.
(d) In the event of any material change in or termination of said
policy or policies of D & O Insurance, Corporation shall notify Indemnitee
within a reasonable time of such occurrence.
3. ADDITIONAL INDEMNITY. Subject only to the exclusions set
forth in Section 4 hereof, Corporation hereby further agrees to hold harmless
and indemnify Indemnitee:
(a) Against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of Corporation), to which
Indemnitee is, was or at any time becomes a party, or is threatened to be made
a party, by
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reason of the fact that Indemnitee is, was or at any time becomes a director,
officer, employee or agent of Corporation, or is or was serving or at any time
serves at the request of Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise;
and
(b) Otherwise to the fullest extent as may be provided to
Indemnitee by Corporation under the nonexclusivity provisions of the State
Statute.
4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by Corporation:
(a) except to the extent the aggregate of losses to be indemnified
thereunder exceeds the sum of $1,000 plus the amount of such losses for which
the Indemnitee is indemnified either pursuant to Sections 1 or 2 hereof or
pursuant to any D & O Insurance purchased and maintained by Corporation;
(b) in respect of remuneration paid to Indemnitee if and to the
extent it shall be determined by a final judgment or other final adjudication
that such remuneration was in violation of law;
(c) on account of any suit in which final judgment is rendered
against Indemnitee for an accounting of profits made from the purchase or sale
by Indemnitee of securities of Corporation pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto and
the regulations thereunder, or similar provisions of any federal, state or
local statutory law or regulation;
(d) on account of Indemnitee's conduct that is finally adjudged to
have been knowingly fraudulent, deliberately dishonest or willful misconduct;
or
(e) if a decision by a court having jurisdiction in the matter
shall finally determine that such indemnification is not lawful.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of
Corporation contained herein shall continue during the period Indemnitee is a
director, officer, employee or agent of Corporation (or is serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Indemnitee shall be subject to any possible
claim or threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
Indemnitee was a director or officer of Corporation or serving in any other
capacity referred to herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
Indemnitee of notice of the commencement of any action, suit or proceeding,
Indemnitee will, if a claim in respect thereof is to be made against
Corporation under this Agreement, notify Corporation of
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the commencement thereof; but the omission so to notify Corporation will not
relieve it from any liability which it may have to Indemnitee otherwise than
under this Agreement. With respect to any such action, suit or proceeding as
to which Indemnitee notifies Corporation of the commencement thereof:
(a) Corporation will be entitled to participate therein at its own
expense;
(b) Except as otherwise provided below, to the extent that it may
wish, Corporation will be entitled jointly with any other indemnifying party
similarly notified to assume the defense thereof, with counsel reasonably
satisfactory to Indemnitee. After notice from Corporation to Indemnitee of its
election so to assume the defense thereof, Corporation will not be liable to
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Indemnitee
shall have the right to employ his or her counsel in such action, suit or
proceeding, but the reasonable fees and expenses of such counsel incurred after
notice from Corporation of its assumption of the defense thereof shall be at
the expense of Indemnitee unless (i) the employment of counsel by Indemnitee
has been authorized by Corporation, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between Corporation and
Indemnitee in the conduct of the defense of such action, or (iii) Corporation
shall not in fact have employed counsel to assume the defense of such action,
in each of which cases the fees and expenses of counsel shall be at the expense
of Corporation. Corporation shall not be entitled to assume the defense of an
action, suit or proceeding brought by or on behalf of Corporation or as to
which Indemnitee shall have made the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without his or her written consent. Corporation shall not settle any
action or claim in any manner which would impose any penalty or limitation on
Indemnitee without Indemnitee's written consent. Neither Corporation nor
Indemnitee will unreasonably withhold consent to any proposed settlement.
7. REPAYMENT OF EXPENSES. Indemnitee agrees that Indemnitee will
reimburse Corporation for all reasonable expenses paid by Corporation in
defending any civil or criminal action, suit or proceeding against Indemnitee
in the event and only to the extent that it shall be ultimately determined that
Indemnitee is not entitled to be indemnified by Corporation for such expenses
under the provisions of the State Statute, the ByLaws of Corporation, this
Agreement or otherwise.
8. ENFORCEMENT. Corporation expressly confirms and agrees that
it has entered into this Agreement and assumed the obligations imposed on
Corporation hereby in order to induce Indemnitee to continue as a director or
officer (or both) of Corporation, and acknowledges that Indemnitee is relying
upon this Agreement in continuing in such capacity or capacities.
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If Indemnitee is required to bring any action to enforce rights or to
collect moneys due under this Agreement and is successful in such action,
Corporation shall reimburse Indemnitee for all of Indemnitee's reasonable fees
and expenses in bringing and pursuing such action.
9. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. GOVERNING LAW; BINDING EFFECT; AMENDMENT AND TERMINATION.
This Agreement shall be interpreted and enforced in accordance with the laws of
the State of Delaware.
This Agreement shall be binding upon Indemnitee and upon Corporation,
its successors and assigns, and shall inure to the benefit of Indemnitee, his
or her heirs, personal representatives and assigns, and to the benefit of
Corporation, its successors and assigns.
No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CONSOLIDATED STORES CORPORATION
/s/ Brady J. Churches /s/ William G. Kelley
- ----------------- -----------------
Brady J. Churches William G. Kelley, Chairman and
Chief Executive Officer
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Exhibit B
--------- January 31, 1993
1994 BONUS PROGRAM
PRESIDENT
PLAN YEAR
- ---------
The plan year for the 1994 Bonus Program will be consistent with the fiscal
accounting year for the Company; January 30, 1994 through January 29, 1995.
ELIGIBILITY
- -----------
The President is eligible to participate in the 1994 Bonus Program if hired or
promoted to position before November 1, 1994 and employed on the date that
bonus checks are distributed.
BONUS PROGRAM DESCRIPTION
- -------------------------
The 1994 Bonus Program is based upon the achievement of the Company financial
plan. The TARGET BONUS is 75% of your base salary, which you will earn in
bonus if the Company achieves its EPS plan (will be finalized at approximately
120% of 1993 EPS).
Bonus payouts will begin at 90% of planned EPS:
% OF PLAN EPS BONUS PAYOUT
------------- ------------
90% 20%
91% 28%
92% 36%
93% 44%
94% 52%
95% 60%
96% 68%
97% 76%
98% 84%
99% 92%
PLAN 100% 100% MAXIMUM BONUS POTENTIAL
The BONUS PAYOUT will be multiplied by the TARGET BONUS to determine the actual
percentage of salary that will be paid in bonus.
Any executive who is hired after November 1, 1994 will not be eligible to
participate in the 1994 Bonus Program.
Eligible executives who are hired, promoted, transferred, demoted or absent on
LOA for more than 60 days during the year, will have their bonus prorated for
the actual amount of time spent in each position during the year.
Executives who terminate and rehire will receive a bonus prorated to the rehire
date, unless the rehire date is less than 30 days from date of termination
(reinstatement),if the rehire is less than 30 days from termination, the
executive may be reinstated according to the policy in effect at that time with
no impact on the bonus calculation.
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Executives must be employed on the date that bonus checks are distributed to be
eligible to receive a 1994 bonus payout. Associates who terminate, voluntarily
or involuntarily, after the end of the fiscal year but prior to bonus check
distribution, are not eligible to receive the 1994 bonus payout. Associates on
LOA at the time of bonus payout will receive their 1994 earned bonus upon
return to work.
Bonus payouts will be calculated as a percentage of the executive's annualized
salary on January 29, 1995.
EFFECTIVE DATE
- --------------
The 1994 Bonus Program will be in effect for the 1994 fiscal year. The Company
reserves the right to alter this plan in subsequent years.
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Exhibit C
CONSOLIDATED STORES CORPORATION
NON-QUALIFIED STOCK OPTION GRANT AGREEMENT
CONSOLIDATED STORES CORPORATION, a Delaware Corporation (the "Company"),
hereby grants to the individual named below (the "Optionee"), subject to and
conditioned upon Optionee's acceptance of all the terms and conditions of the
Consolidated Stores Corporation Executive Stock Option and Stock Appreciation
Rights Plan (the "Plan"), the right to purchase (the "Option"), at the option
of the Optionee, an aggregate of the number of shares of Common Stock (the
"Number of Shares") listed below, par value $.01 per share, of the Company upon
the following terms and conditions:
(NOTE: THIS GRANT MUST BE SIGNED DATE OF GRANT: 08/17/93
AND RETURNED TO THE COMPANY AT
THE FOLLOWING ADDRESS:) NUMBER OF SHARES: 100,000.00
CONSOLIDATED STORES CORPORATION OPTION PRICE: $17.2500
DEPARTMENT 918
ATTN: STOCK OPTION ADMINISTRATOR
300 PHILLIPI ROAD
COLUMBUS, OHIO 43228
EXERCISABILITY OF OPTION: This option will become exercisable in increments
according to the schedule below, and the Option shall be exercisable only to
the extent that it is vested. Vesting is always subject to all other Plan
requirements being satisfied.
Shares Vesting Date Expiration Date
20,000.00 08/17/94 09/17/03
20,000.00 08/17/95 09/17/03
20,000.00 08/17/96 09/17/03
20,000.00 08/17/97 09/17/03
20,000.00 08/17/98 09/17/03
Optionee hereby accepts this Option subject to all the terms and provisions
of the Plan. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Committee upon any questions arising
under the Plan. Optionee acknowledges receipt of a copy of the Plan, as in
effect on the Date of Grant.
Accepted as of 8/18/93 CONSOLIDATED STORES CORPORATION
-------
"Optionee",
By: /s/ William G. Kelley
---------------------
William G. Kelley
/s/ Brady Churches Chairman
- ------------------
Brady Churches
Dept. 800602
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EXHIBIT 10(j)
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is entered into as of the 21st day of
February, 1994, between CONSOLIDATED STORES CORPORATION, a Delaware corporation
("CSC"), and its wholly owned subsidiary, CONSOLIDATED STORES CORPORATION, an
Ohio corporation ("Consolidated") (CSC and Consolidated are hereinafter jointly
referred to as "Employer"), and Jerry D. Sommers ("Employee").
W I T N E S S E T H:
WHEREAS, CSC, Consolidated and Employee desire to enter into this
Employment Agreement to insure to Employer and Employer's direct and indirect
subsidiaries the services of Employee and to set forth the rights and duties of
the parties thereto; and
WHEREAS, the Board of Directors of CSC and Consolidated have, effective
August 17, 1993 elected Employee as the Executive Vice President-Merchandising
of each of CSC and Consolidated.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. Employment; Duties.
-------------------
(a) EMPLOYMENT. Employer currently employs Employee, and effective
August 17, 1993 appoints him as Executive Vice President - Merchandising of
each CSC and Consolidated with such duties as may from time to time be
prescribed by the Chief Executive Officer or President of CSC and Consolidated,
as of August 17, 1993, and Employee hereby accepts such employment, on the
terms and conditions hereinafter set forth.
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(b) DUTIES. During the term of this Employment Agreement,
Employee shall, effective as of August 17, 1993, devote his entire business
time and attention to his employment and perform diligently such duties as are
customarily performed by the Executive Vice President - Merchandising of a
company the size and structure of CSC and its subsidiaries, together with, as
of the date hereof, such other duties as may be reasonably requested from time
to time by the Board of Directors of CSC or Consolidated, which duties shall be
consistent with his position as set forth above and in Paragraph 2 of this
Employment Agreement. As Executive Vice President - Merchandising, Employee
shall have the authority to implement the policies and decisions of the Board
of Directors, Chief Executive Officer, and President and to assist the
President in directing Employer's merchandising strategy, development and
operations. So long as Employee shall serve as Executive Vice President -
Merchandising, Employee shall report only to the President of each of CSC and
Consolidated.
Any material adverse modification or diminution of Employee's duties or
diminution in Employee's authority, title or office shall be considered to be a
Change in Control of Employer and shall entitle Employee, in addition to any
other rights he may have, to the rights and remedies provided in Paragraph 7(d)
hereof; provided, however, that Employee shall notify Employer of any such
alleged modification or diminution, specifying the same, and Employer shall
have a period of fifteen (15) days after such notice to cure such alleged
modification or diminution before Employee shall be entitled to exercise any
such rights and remedies. The right of Employer to cure any such modification
or diminution in Employee's authority, title or office set forth in the
immediately preceding sentence shall be applicable only in the event that a
"Change in Control" shall have occurred solely by reason of such modification
or diminution
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of duties or authority and shall not be applicable following the occurrence of
any Change in Control as defined in Paragraph 7(f) below.
(c) FULL TIME AND ATTENTION. Except as expressly permitted
herein, Employee shall not, without the prior written consent of Employer,
directly or indirectly during the term of this Employment Agreement, render
services of a business, professional or commercial nature to any other person
or firm, whether for compensation or otherwise. So long as it does not
interfere with his full time employment hereunder, Employee may (i) attend to
outside investments and serve as a director, trustee or officer of or otherwise
participate in educational, welfare, social, religious and civic organizations
and (ii) serve as a director of not more than two (2) public corporations that
are not engaged in the Company Business (as defined in Paragraph 9(a) hereof).
(d) BUSINESS DECISIONS. Employee shall have no liability to
Employer for any act or omission undertaken during the term of this Employment
Agreement in his good faith business judgment in furtherance of his duties as
prescribed in or under this Employment Agreement.
2. TERM AND POSITIONS.
-------------------
(a) TERM. Subject to the provisions for termination as
hereinafter provided, the term of this Employment Agreement shall begin on
August 17, 1993 and shall continue thereafter until Employee's employment is
terminated as provided in Paragraph 7.
(b) POSITIONS. Employee shall, without any compensation in
addition to that which is specifically provided in this Employment Agreement,
serve as an officer of CSC and of Consolidated and in such substitute or
further offices or positions with Employer or any
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subsidiary of Employer as shall from time to time be reasonably requested by
the Board of Directors of CSC. Each office and position with Employer or any
subsidiary of Employer in which Employee may serve or to which he may be
appointed shall be consistent in title and duties with Employee's position as
Executive Vice President - Merchandising of Employer. For service as an officer
of CSC, Consolidated or any subsidiary of either of them, which service shall
in each instance be deemed to be at the request of CSC and its Board of
Directors, Employee shall be entitled to the protection of the applicable
indemnification provisions of the charter and by-laws of CSC, Consolidated and
any such subsidiary and Employer agrees to indemnify and hold harmless Employee
from and against any claims, liabilities, damages or expenses incurred by
Employee in or arising out of the status, capacities and activities as an
officer or director of CSC, Consolidated and any subsidiary of either to the
maximum extent permitted by law and in accordance with the terms of Exhibit A
hereto. For purposes of this Employment Agreement, all references herein to
subsidiaries of CSC and/or Consolidated shall be deemed to include references
to subsidiaries now or hereafter existing.
3. COMPENSATION.
------------
(a) SALARY. For all services he may render to CSC and Consolidated
(and any subsidiary of either of them) during the term of this Employment
Agreement, Employer shall pay to Employee, commencing on August 17, 1993, a
salary at the rate (the "Salary Rate") of Two Hundred Thirty Thousand Dollars
($230,000.00) per annum, subject to increase by the Board of Directors of CSC,
payable in those installments customarily used in payment of salaries to
Employer's executives (but in no event less frequently than monthly).
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5
(b) BONUS. In addition to the salary compensation as above
stated, Employer shall pay to Employee bonus compensation during the term of
this Employment Agreement in amounts to be determined and paid as follows:
(i) For the period ending January 29, 1994, and all
subsequent fiscal years of Employer, Paragraph 3(b)(ii)
shall replace Employees's current bonus plan.
(ii) Retroactive to the fiscal year beginning January 31,
1993 ("fiscal year 1993") and for each subsequent
fiscal year Employee completed during the term of
this Employment Agreement Employee shall have the
opportunity to earn fifty percent (50%) of an amount
equal to the Salary Rate at the end of such fiscal
year. The Compensation Committee of the Board of
Directors shall determine the bonus plan for each
fiscal year. The bonus plan for fiscal year 1993 is
attached hereto as Exhibit B.
(iii) Any bonus paid for a fiscal year under Paragraph
3(b)(ii) shall be paid within forty-five (45) days
after Employer's independent auditor has delivered its
opinion with respect to the financial statements of
Employer for such fiscal year (whether or not Employee
is then in the employ of Employer). Employer shall use
all reasonable efforts to cause such auditor to deliver
such opinion within ninety (90) days after the close of
such fiscal year.
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(iv) For purposes of this Employment Agreement, the term
"fiscal year" shall mean with respect to any year, the
period commencing on the Sunday next following the
Saturday closest to January 31 in a calendar year and
ending in the next following calendar year on the
Saturday closest to January 31.
4. DISABILITY IN THE EVENT OF DEATH OR PERMANENT DISABILITY. In
the event of a termination of employment as a consequence of Employee's death
or "permanent disability" (as defined below) during the term of this Employment
Agreement:
(a) Employee or his estate, as the case may be, shall be
entitled to receive a prorata portion of the bonus applicable to the fiscal
year in which such death or permanent disability occurs, as such bonus is
determined under Paragraph 3(b) of this Employment Agreement. Such prorata
portion shall be determined by multiplying a fraction, the numerator of which
shall be the number of days in the applicable fiscal year elapsed prior to the
date of death or permanent disability, as the case may be, and the denominator
of which shall be 365, by the amount of bonus that would have been payable, if
any, pursuant to such Paragraph 3(b), if Employee had remained employed under
this Employment Agreement for the entire applicable fiscal year. The bonus
shall be paid when and as provided in Paragraph 3(b)(iii) of this Employment
Agreement.
(b) Except as otherwise provided in Paragraphs 5, 6 and 8
of this Employment Agreement, Employee shall be entitled to no further
compensation or other benefits under this Employment Agreement, except as to
that portion of any unpaid salary and other benefits
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accrued and earned by him hereunder up to and including the date of such death
or permanent disability, as the case may be.
(c) For the purposes of this Employment Agreement,
Employee's "permanent disability" shall be deemed to have occurred after
ninety (90) days in the aggregate during any consecutive twelve (12) month
period, or after sixty (60) consecutive days, during which ninety (90) or
sixty (60) days, as the case may be, Employee, by reason of his physical or
mental disability or illness, shall have been unable to discharge any material
portion of his duties under this Employment Agreement. The date of permanent
disability shall be the 90th or 60th day, as the case may be. In the event
Employee, after receipt of notice from Employer, shall dispute that his
permanent disability shall have occurred, he shall promptly submit to a
physical examination by the Chief of Medicine of any major accredited hospital
in the metropolitan Columbus, Ohio area and, unless such physician shall issue
his written statement to the effect that in his opinion, based on his
diagnosis, Employee is capable of resuming his employment and devoting his full
time and energy to discharging his duties within ten (10) days after the date
of such statement, such permanent disability shall be deemed to have occurred
without further dispute by Employer.
5. STOCK OPTIONS. CSC and Employee have, on the date of
Employee's employment hereunder, executed a Non-Qualified Stock Option
Agreement in the form attached hereto as Exhibit C.
6. LIFE INSURANCE AND OTHER BENEFITS.
----------------------------------
(a) AUTOMOBILE. During the term of this Employment
Agreement, Employer shall provide Employee with a current model automobile
purchased or leased by Employer, in accordance with applicable policies of
Employer. Employer shall pay all maintenance and repair
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8
expenses with respect to the automobile, procure and maintain in force at
Employer's expense collision, comprehensive, and liability insurance coverage
with respect to the automobile, and pay operating expenses with respect to the
automobile to the extent such operating expenses are incurred in the conduct of
Employer's business.
(b) VACATION AND SICK LEAVE. Employee shall be entitled
to such periods of vacation and sick leave allowance each year which shall not
be less than as provided under Employer's Vacation and Sick Leave Policy for
executive officers.
(c) GROUP PLANS, ETC. Employee shall be entitled to
participate in any group life, hospitalization, or disability insurance plan,
health program, or other employee benefit plan (other than bonus compensation
or performance plans to the extent that such plans, in the case of Employee,
are in lieu of the bonus plan set forth in Paragraph 3(b) above) that is
generally available to senior executive officers, as distinguished from general
management, of Employer. Employee's participation in and benefits under any
such plan shall be on the terms and subject to the conditions specified in the
governing document of the particular plan, except that (with the exception of
Employer's pension plan) Employer will permit Employee's participation in each
such plan immediately upon the commencement of his employment hereunder without
any waiting period. To the extent not provided by the foregoing, Employee
shall be entitled to 100% reimbursement of his medical and dental expenses
incurred during the term of this Employment Agreement.
7. Termination and Further Compensation.
-------------------------------------
(a) The employment of Employee under this Employment
Agreement and the term hereof may be terminated:
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(i) by Employer or Employee at any time upon thirty (30)
days notice to the other party of such termination, or
(ii) by Employer on death or permanent disability of
Employee, or
(iii) by Employer for cause at any time. For purposes hereof,
the term "cause" shall mean:
(A) Employee's conviction of fraud or a felony or any
crime involving moral turpitude or Employee's
commission of acts of embezzlement or theft in
connection with his duties or in the course of his
employment with CSC or Consolidated;
(B) Employee's willful breach of any material
provision of this Employment Agreement which
failure has not been cured in all substantial
respects within ten (10) days after Employer gives
notice thereof to Employee; or
(C) Employee's willful, wrongful engagement in any
Competitive Activity (as that term is hereinafter
defined).
Any termination of Employee for "cause" shall not be effective until
all the following shall have taken place:
(i) The Secretary of CSC pursuant to resolution of the Board of
Directors of CSC, shall have given written notice to Employee
that, in the opinion of the Board of Directors, Employee may
be terminated for cause, specifying the details;
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(ii) Employee shall have been given a reasonable opportunity to
appear before the Board of Directors prior to the determination
of the Board evidenced by such resolution;
(iii) With respect to any matters other than Employee's conviction of
fraud or a felony or a crime involving moral turpitude,
Employee shall neither have ceased to engage in the activity
giving rise to the proposed determination for cause within
thirty (30) days after his receipt of such notice nor diligently
taken all reasonable steps to that end during such thirty (30)
day period and thereafter;
(iv) After complying with the procedures set forth in subparagraphs
(i) through (iii) above, Employee shall have been delivered a
certified copy of a resolution of the Board of Directors of
CSC adopted by the affirmative vote of not less than three-
fourths (3/4) of the entire membership of the Board of Directors
finding that Employee was guilty of the conduct giving rise to
the termination for cause.
Any termination by reason of the foregoing shall not be in limitation
of any other right or remedy Employer may have under this Employment Agreement,
at law, in equity or otherwise. On any termination of this Employment
Agreement, Employee shall be deemed to have resigned from all offices and
directorships held by Employee in Employer and any subsidiaries of Employer.
The term "Competitive Activity" shall mean Employee's participation,
without the written consent of the Board of Directors of CSC, in the management
of any business enterprise if such enterprise engages in substantial and direct
competition with CSC, Consolidated or any of their respective subsidiaries and
such enterprise's sales of any product or service competitive with any
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product or service of CSC, Consolidated or any of their respective subsidiaries
amounted to more than ten percent (10%) of such enterprise's net sales for its
most recently completed fiscal year and if the consolidated net sales of CSC of
such products or services amounted to more than ten percent (10%) of the
consolidated net sales of CSC for its most recently completed fiscal year.
"Competitive Activity" shall not include (i) the mere ownership of securities
in any publicly traded enterprise and the exercise of rights appurtenant
thereto or (ii) participation in management of any publicly traded enterprise
or business operation thereof other than in connection with the competitive
operation of such enterprise.
(b) In the event of termination for any of the reasons set forth
in subparagraph (a)(iii) of this Paragraph 7, except as otherwise provided in
Paragraph 8 of this Employment Agreement, Employee shall be entitled to no
further compensation or other benefits under this Employment Agreement (other
than as provided by law), except as to that portion of any unpaid salary and
other benefits accrued and earned by him hereunder up to and including the
effective date of such termination, and Employee shall not be entitled to
receive any bonus determined under Paragraph 3 of this Employment Agreement or
otherwise, except for and in respect of completed fiscal years for which
Employee has not then been paid.
(c) In the event of the termination of Employee's employment by
Employer pursuant to subparagraph (a)(i) above, Employee shall be entitled to
severance compensation as follows: (x) the continuation of his compensation
for a period of 730 days, including bonus compensation (as provided below), (y)
the stock options listed on the attached Exhibit C - Non-Qualified Stock
Option Agreement shall become exercisable for an additional prorated number of
shares (rounded to the nearest share) equal to the product of the number of
shares that
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would vest during the calendar year in which Employee's employment is
terminated and a fraction, the numerator of which is the number of days between
August 17, 1993 (or the most recent anniversary of said date, as the case may
be) and the date of such event and the denominator of which is 365, and (z) all
other benefits and perquisites to which he is entitled hereunder for a period
of 730 days following the date of such termination of employment, except that
(i) the benefits and perquisites referred to in clause (z) shall be sooner
reduced and/or terminated (other than as provided by law) when and to the
extent that the Employee is entitled to receive the same from another employer
during such period (but no obligation of Employee to attempt to mitigate
damages under this subparagraph (c) shall be implied) and (ii) any bonus
compensation to be paid to Employee in respect of such period shall be limited
solely to the prorata portion thereof earned in the fiscal year of Employer
(determined in the manner provided in Paragraph 3) in which such termination
occurs, except for and in respect of completed fiscal years for which Employee
has not then been paid.
(d) In the event of the termination of Employee's employment by
Employee pursuant to subparagraph (a)(i) above, Employer may, in its sole
discretion, elect to make Salary Payments to Employee pursuant to paragraph
9(a)(B) below, however Employer shall have no obligation to pay any
compensation or benefits of any kind other than those described in this
subparagraph (d) to Employee other than salary that has accrued but not been
paid up to and including the date of termination, and any bonus accrued but not
paid for fiscal years that have been completed as of the date of termination.
The foregoing provisions of this subparagraph (d) notwithstanding, and without
limiting the generality of the preceding provisions, Employee shall be entitled
to continued medical benefits coverage under the Employers medical plan during
any
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month for which Employer elects to make Salary Payments pursuant to paragraph
9(a)(B) below; provided that any election by Employer to not make Salary
Payments shall automatically void any medical benefits coverage to Employee
thereafter.
(e) If there occurs any event that results in a Change in Control
(as defined in subparagraph (f) below) of Employer, and at any time within one
(1) year after such event, Employee gives notice to Employer (or its successor)
of termination of his employment under this Employment Agreement or the
employment of Employee is terminated by Employer (or its successor) for any
reason whatsoever, then any such termination shall be deemed for purposes
hereof to be a termination without cause by Employer pursuant to subparagraph
(a)(i) above and shall be governed by the provisions of subparagraph (c) above,
except that all of the shares covered by the Exhibit C - Non-Qualified Stock
Option Agreement shall be exercisable upon such Change in Control and
thereafter for the term of such Stock Option or on the latest earlier date as
may be necessary to permit Employee, as the holder of the shares to be acquired
upon exercise of such Stock Option, to participate in such event.
(f) As used herein, "Change in Control" means any of the following
events: (i) any person or group (as defined for purposes of Section 13(d) of
the Securities Exchange Act of 1934) becomes the beneficial owner of, or has
the right to acquire (by contract, option, warrant, conversion of convertible
securities or otherwise), twenty percent (20%) or more of the outstanding
equity securities of CSC entitled to vote for the election of directors; (ii) a
majority of the Board of Directors of CSC is replaced within any period of two
(2) years or less by directors not nominated and approved by a majority of the
directors of CSC in office at the beginning of such period (or their successors
so nominated and approved), or a majority of the
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Board of Directors of CSC at any date consists of persons not so nominated and
approved; or (iii) the stockholders of CSC approve an agreement to merge or
consolidate with another corporation or an agreement to sell or otherwise
dispose of all or substantially all of Employer's assets (including without
limitation, a plan of liquidation). The effective date of any such Change in
Control shall be the date upon which the last event occurs or last action is
taken such that the definition of such Change in Control (as set forth above)
has been met.
(g) If there is a Change in Control of Employer and Employee's
employment is terminated within one (1) year thereafter, then to the extent
that all or any portion of payments to Employee together with any sums received
by him upon or in connection with such Change in Control may constitute excess
parachute payments within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, that are subject to excise tax, then Employee shall
receive from Employer, and Employer shall pay, such amount as shall be
necessary to place Employee in the same after tax position as Employee would
have been in had no such tax or assessment been imposed. The determination of
the amount of any such tax or assessment and of the payment required hereby
shall be made by the independent accounting firm then employed by Employer
within thirty (30) calendar days after such termination of employment, and such
payment shall be made within five (5) calendar days after such determination
has been made.
(h) If, after the date upon which the payment required by
subparagraph (g) above has been made, it is determined (pursuant to final
regulations or published rulings of the Internal Revenue Service, final
judgment of a court of competent jurisdiction or otherwise) that the amount of
excise or other similar taxes or assessments payable by Employee is greater
than the amount initially so determined, then Employer shall pay Employee an
amount equal to the
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sum of (i) such additional excise or other taxes, plus (ii) any interest, fines
and penalties resulting from such underpayment, plus (iii) an amount necessary
to reimburse Employee for any income, excise or other tax or assessment
payable by Employee with respect to the amounts specified in (i) and (ii)
above, and the reimbursement provided by this clause (iii). Payment thereof
shall be made within five (5) calendar days after the date upon which such
subsequent determination is made.
8. EXPENSES. Employer shall reimburse Employee or provide him
with an expense allowance during the term of this Employment Agreement for
travel, entertainment and other expenses reasonably incurred by Employee in the
promotion of Employer's business. Employee shall furnish such documentation
with respect to reimbursement to be paid under this Paragraph 8 as Employer
shall reasonably request.
9. Covenants of Employee.
----------------------
(a) COVENANT AGAINST COMPETITION. Employee acknowledges
that (i) the principal business of Employer is the operation of its Retail
Division's " Odd Lots", "Big Lots" and "All For One" discount general
merchandise consumer goods retail outlets, and other retail or wholesale
enterprises, as Employer may from time to time adopt, the inventories of which
are acquired primarily through special purchase situations such as overstocks,
closeouts, liquidations, bankruptcies, wholesale distribution of overstock,
distress, liquidation and other volume inventories (the "Company Business",
which term shall not include the business of any general merchandise retail
enterprise that from time to time may acquire inventory through such special
purchase situations but that does not primarily acquire its inventories in such
manner, or any wholesale or specialty retail business); (ii) Employer is one of
the limited number of
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persons who has developed such business; (iii) the Company Business is, in
part, national in scope; (iv) Employee's work for Employer will give
him access to the confidential affairs of Employer; and (v) the agreements and
covenants of Employee contained in this Paragraph 9 are
essential to the business and goodwill of Employer. Accordingly, Employee
covenants and agrees that:
(A) During the term of Employee's employment with Employer
and for a period of two (2) years (the "Restricted Period")
following the termination of such employment by Employer for
"cause" (as such term is defined in Paragraph 7(a)(iii) above),
Employee shall not in any location where Employer's retail stores
are located throughout the Unite States of America and any
foreign jurisdictions, directly or indirectly, (1) engage in
the Company Business fo Employee's own account (other than
pursuant to this Employment Agreement), (2) render any services
to any perso engaged in such activities (other than Employer), or
(3) engage in any Competitive Activity (as defined above),
provided, however, that in the event of a Change in Control the
Restricted Period shall be for a period of six (6) months.
(B) In the event that Employee terminates his employment
with Employer, the Restrictive Period, and all restrictive
covenants described in this Section 9, shall apply and be in force
for a period not to exceed two (2) years from the date of
termination, if the Employer continues to pay Employee his salary
pursuant to Paragraph 3(a), in at least monthly
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installments and net of all tax and other withholding
obligations of Employer, at the level of salary paid to employee
immediately prior to the effective date of Employee's termination
("Salary Payments"). Salary Payments shall be based upon salary
only, and shall not include or be based upon any other form of
compensation or benefit; provided however that Employee shall
receive the nonsalary benefits provided under Section 7(d) when
Salary Payments are made. Within thirty (30) days after the
effective date of Employee's termination of his employment,
Employer shall notify Employee in writing as to whether or not
Employer will make Salary Payments. The Restrictive Period shall
continue uninterrupted for the first thirty (30) days following
the effective date of Employee's termination. If Employer elects
not to make Salary Payments the provisions of Section 9 shall not
apply to Employee after the first thirty (30) day restrictive
period. If Employer elects to make Salary Payments, payment
shall be made retroactively for the first thirty (30) days
following the effective date of Employee's termination, unless
such payment has already been made. Then Salary Payments must
continue for the entire two (2) year period in which the
restrictive covenants of Section 9 shall apply to Employee. In
the event that
[Balance of Page Intentionally Blank]
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Employer accidentally or erroneously makes Salary Payments to
Employee, Employee must immediately return or reimburse such
Salary Payments to Employer. It is the express understanding of
Employer and Employee that the provisions of this subparagraph (B)
shall apply only in the event of a termination of Employee's
employment by Employee.
(C) During the Restricted Period, Employee shall keep secret
and retain in strictest confidence, and shall not use for his
benefit or the benefit of others, all confidential matters
relating to the Company Business hereafte learned by Employee,
and shall not disclose them to anyone except with Employer's
express written consent and excep for information which (i) is at
the time of receipt or thereafter becomes publicly known through
no wrongful act o Employee, or (ii) is received from a third
party not under an obligation to keep such information
confidential an without breach of this Employment Agreement.
(D) So long as there has not occurred a Change in Control,
Employee shall not, during the Restricted Period, without
Employer's prior written consent, directly or indirectly, solicit
or encourage to leave the employment of Employer or any of its
subsidiaries, any employee of Employer or any of its subsidiaries.
(E) All memoranda, notes, lists, records and other documents
(and all copies thereof) made or compiled by Employee or made
available to
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Employee concerning the Company Business shall be Employer's
property and shall be delivered to Employer at any time on
request.
(b) RIGHTS AND REMEDIES UPON BREACH. If Employee
breaches any of the provisions of Paragraph 9(a) (the "Restrictive
Covenants"), or a breach thereof is imminent, Employer shall have the following
rights and remedies, each of which rights and remedies shall be
independent of the other and severally enforceable, and all of which rights and
remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to Employer under law or in equity:
(i) The right and remedy to have the Restrictive
Covenants specifically enforced by any court having equity
jurisdiction, including, without limitation, the right to an
entry against Employee of restraining orders an injunctions
(preliminary, temporary or permanent)) against violations,
threatened or actual, and whether o not then continuing, of
such covenants, it being acknowledged and agreed that any
such breach or threatene breach will cause irreparable injury
to Employer and that money damage will not provide adequate
remedy t Employer; and
(ii) The right and remedy to require Employee to
account for and pay over to Employer all compensation,
profits, monies, accruals, increments, or other benefits
derived or received by him as the result of any transactions
constituting a breach of the Restrictive Covenants. Employer
may set off any amounts finally determined
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to be due it under this Paragraph 9(b) against any
amounts owed to Employee.
(c) SEVERABILITY OF COVENANTS. Employee acknowledges and
geographical and temporal scope, with respect to the activities restricted and
in all other respects. It if it determined that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the remainder of
the Restrictive Covenants shall not thereby be affected and shall be given full
effect, without regard to the invalid portions.
(d) BLUE-PENCILLING. If it is determined that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provision, the duration or scope of such
provision, as the case may be, shall be reduced so that such provision becomes
enforceable and, in its reduced form, such provision shall then be enforceable
and shall be enforced.
10. WITHHOLDING TAXES. All payments to Employee, including the bonus
compensation under this Employment Agreement, shall be subject to withholding on
account of federal, state, and local taxes as required by law. Any amounts
remitted by Employer to the appropriate taxing authorities as taxes withheld
by Employer from Employee on income realized by Employee shall reduce the
amounts payable by Employer to Employee hereunder. If any particular payment
required hereunder is insufficient to provide the amount of such taxes required
to be withheld, Employer may withhold such taxes from any other payment due
Employee.
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11. NO CONFLICTING AGREEMENTS. Employee represents and
warrants that he is not a party to any agreement, contract or
understanding, whether employment or otherwise, which would restrict
or would prohibit him from undertaking or performing employment in
accordance with the terms and conditions of this Employment Agreement.
12. SEVERABLE PROVISIONS. The provisions of this
Employment Agreement are severable, and if any one or more provisions
may determined to be illegal or otherwise unenforceable, in whole or
in part, the remaining provisions and any partially unenforceable
provision to the extent enforceable in any jurisdiction shall,
nevertheless, be binding and enforceable.
13. BINDING AGREEMENT. Each of Employer, CSC, and
Consolidated shall require any successor (whether direct or indirect),
b purchase, merger, consolidation, reorganization or otherwise, to all
or substantially all of the business and/or assets of any of them
expressly to assume and to agree to perform this Agreement in the same
manner and to the same extent that each of them would be required to
perform if no such succession has taken place. This Agreement shall
be binding upon and inure to the benefit of each of Employer, CSC, and
Consolidated and any successor of any of them, including without
limitation any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of any of them whether
by sale, merger, consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the "Employer" for purposes of
this Agreement), but shall not otherwise be assignable or delegatable
by Employer, CSC, or Consolidated.
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This Agreement shall inure to the benefit of and be enforceable by
Employee and each of Employee's personal or legal representatives, executive,
administrators, successor, heirs, distributees and/or legatees.
14. NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deliv personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed, or sent by facsimile
transmission or, if mailed, five (5) days after the date of deposit in the
United States mails as follows:
(i) if to the Employer to: Consolidated Stores Corporation
300 Phillipi Road
Columbus, Ohio 43228-1310
Attention: Albert J. Bell, Esq., Senior
Vice President, General
Counsel and Secretary
with a copy to: Consolidated Stores Corporation
300 Phillipi Road
Columbus, Ohio 43228-1310
Attention: William G. Kelley, Chairman
and Chief Executive Officer
(ii) if to the Employee to: Mr. Jerry D. Sommers
8634 Pickering Road
Pickerington, OH 43147
with a copy to: James G. Ryan, Esq.
Schwartz, Kelm, Warren & Rubenstein
The Huntington Center
41 South High Street
Columbus, Ohio 43215-6188
Any such person may by notice given in accordance with this Paragraph to the
other parties hereto, designate another address or person for receipt by such
person of notices hereunder.
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15. WAIVER. The failure of either party to enforce any
provision or provisions of this Employment Agreement shall not in any
way be construed as a waiver of any such provision or provisions as to
any future violations thereof, nor prevent that party thereafter from
enforcing each and every other provision of this Employment Agreement.
The rights granted the parties herein are cumulative and the waiver of
any single remedy shall not constitute a waiver of such party's rights
to assert all other legal remedies available to it under the
circumstances.
16. MISCELLANEOUS. This Employment Agreement supersedes all
prior agreements and understandings between the parties and may not be
modified or terminated orally. No modification, termination or
attempted waiver shall be valid unless in writing and signed by the
party against whom the same is sought to be enforced. If Employee is
successful in any proceeding against Employer to collect amounts due
Employee under this Employment Agreement, Employer shall reimburse
Employee for his court costs and reasonable attorneys' fees in
connection therewith. Employer hereby agrees to pay or reimburse
Employee for the reasonable fees and expenses of Employee's counsel in
connection with the negotiation, execution and delivery of this
Employment Agreement and all related agreements and documents.
17. GOVERNING lAW. This Employment Agreement shall be
governed by and construed according to the laws of the State of Ohio.
18. CAPTIONS AND PARAGRAPHS HEADINGS. Captions and
paragraph headings used herein are for convenience and are not a part
of this Employment Agreement and shall not be used in construing it.
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19. INTERPRETATION. Where necessary or appropriate to the meaning
hereof, the singular and plural shall be deemed to include each other, and the
masculine, feminine and neuter shall be deemed to include each other.
20. AMENDMENTS. None of Employer, CSC, or Consolidated shall
amend, terminate, or suspend this Agreement or any provision hereof without
written consent of Employee.
21. LEGAL FEES AND EXPENSES. It is the intent of Employer that
Employee not be required to incur the expenses associated with enforcement of
his rights under this Agreement in the event of a Change in Control by
litigation or other legal action because the cost and expense thereof would
substantially detract from the benefits intended to be extended to Employee
hereunder. Accordingly, if it should appear to Employee that Employer has
failed to comply with any of its obligations under this Agreement, or in the
event that Employer or any other person takes any action to declare this
Agreement void and/or unenforceable, or institutes any litigation designed to
deny, and/or to recover from, Employee the benefits intended to be provided to
Employee hereunder, Employer hereby irrevocably authorizes Employee from time
to time to retain counsel of his choice at the expense of Employer to represent
Employee in connection with the initiation or defense of any litigation and/or
other legal action, whether by or against Employer or any director, officer,
stockholder, or other person affiliated with Employer in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between
Employer and such counsel, into an attorney-client relationship with such
counsel, and in that connection Employer acknowledges that a confidential
relationship shall exist between Employee and such counsel. Employer shall pay
and be solely responsible for any and all
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attorneys' and related fees and expenses incurred by Employee as a result of
Employer or any person contesting the validity and/or
enforceability of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement on this 21st day of February, 1994.
CONSOLIDATED STORES CORPORATION,
a Delaware corporation
By: /S/ William G. Kelley
----------------------------
William G. Kelley
G. Kelley, Chairman and Chief
Executive Officer
CONSOLIDATED STORES CORPORATION,
an Ohio corporation
By: /S/ William G. Kelley
----------------------------
William G. Kelley
G. Kelley, Chairman and Chief
Executive Officer
EMPLOYEE:
/S/ Jerry D. Sommers
--------------------------------
Jerry D. Sommers
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Exhibit A
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made this 17th day of August, 1993 between
CONSOLIDATED STORES CORPORATION, a Delaware corporation ("Corporation"), and
Jerry D. Sommers, a director or officer of Corporation ("Indemnitee").
WITNESSETH THAT:
WHEREAS, Indemnitee is a director or officer (or both) of Corporation
and in such capacity or capacities is performing a valuable service for
Corporation; and
WHEREAS, the By-Laws of Corporation provide for the indemnification of
the officers, directors, agents and employees of Corporation to the maximum
extent authorized by Section 145 of the General Corporation Law of the State of
Delaware, as amended to date (the "State Statute"); and
WHEREAS, the State Statute specifically provides that such
indemnification permitted thereby is not exclusive, and the State Statute
thereby contemplates that contracts may be entered into between Corporation and
directors or officers thereof with respect to indemnification; and
WHEREAS, in accordance with the authorization provided by the State
Statute, Corporation has purchased and presently maintains a policy or policies
of Directors and Officers Liability Insurance ("D & O Insurance"), covering
certain liabilities which may be incurred by its directors and officers in the
performance of their services for Corporation; and
WHEREAS, recent developments with respect to the terms and
availability of D & O Insurance and with respect to the application, amendment
and enforcement of statutory and corporate indemnification provisions generally
have raised questions concerning the adequacy and reliability of the protection
afforded to directors and officers thereby; and
WHEREAS, in order to resolve such questions and thereby induce
Indemnitee to continue to serve as a director or officer (or both), Corporation
has determined and agreed to enter into this contract with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's continued service as
a director or officer (or both) after the date hereof, the parties hereto agree
as follows:
1. INDEMNITY OF INDEMNITEE. Without limiting any other provision
herein, Corporation hereby agrees to hold harmless and indemnify Indemnitee to
the full extent authorized or permitted by the provisions of the State Statute,
or by any amendment thereof, or by any statutory provisions authorizing or
permitting such indemnification that are adopted after the date hereof.
27
2. MAINTENANCE OF INSURANCE AND SELF-INSURANCE.
(a) Corporation represents that it presently has in full force and
effect the following D & O Insurance Policies (the "Insurance Policies"):
INSURER POLICY NO. AMOUNT DEDUCTIBLE
- ------- ---------- ------ ----------
CNA DOC 407 401 937 $15,000,000 $250,000 Corporation Retention
Subject only to the provisions of Section 2(b) hereof, Corporation hereby
agrees that, so long as Indemnitee shall continue to serve as a director or
officer of Corporation (or shall continue at the request of Corporation to
serve as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise), and thereafter so long
as Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of fact that the Indemnitee was a director or
officer of Corporation (or served in any of said other capacities), Corporation
will make reasonable efforts to purchase and maintain in effect for the benefit
of Indemnitee one or more valid, binding and enforceable policies of D & O
Insurance providing, in all material respects, coverage at least comparable to
that presently provided pursuant to the Insurance Policies.
(b) Corporation shall not be required to maintain said policy or
policies of D & O Insurance in effect if said insurance is not reasonably
available or if, in the reasonable business judgment of the then directors of
Corporation, either (i) the premium cost for such insurance is substantially
disproportionate to the amount of coverage or (ii) the coverage provided by
such insurance is so limited by exclusions that there is insufficient benefit
from such insurance.
(c) In the event Corporation does not purchase and maintain in
effect said policy or policies of D & O Insurance pursuant to the provisions of
Section 2(b) hereof, Corporation agrees to hold harmless and indemnify
Indemnitee to the full extent of the coverage which would otherwise have been
provided for the benefit of Indemnitee if the Insurance Policies were then in
effect.
(d) In the event of any material change in or termination of said
policy or policies of D & O Insurance, Corporation shall notify Indemnitee
within a reasonable time of such occurrence.
3. ADDITIONAL INDEMNITY. Subject only to the exclusions set
forth in Section 4 hereof, Corporation hereby further agrees to hold harmless
and indemnify Indemnitee:
(a) Against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of Corporation), to which
Indemnitee is, was or at any time becomes a party, or is threatened to be made
a party, by reason of the fact that Indemnitee is, was or at any time becomes a
director, officer, employee or agent of Corporation, or is or was serving or at
any time serves at the request of Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise; and
(b) Otherwise to the fullest extent as may be provided to
Indemnitee by Corporation under the nonexclusivity provisions of the State
Statute.
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4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by Corporation:
(a) except to the extent the aggregate of losses to be indemnified
thereunder exceeds the sum of $1,000 plus the amount of such losses for which
the Indemnitee is indemnified either pursuant to Sections 1 or 2 hereof or
pursuant to any D & O Insurance purchased and maintained by Corporation;
(b) in respect of remuneration paid to Indemnitee if and to the
extent it shall be determined by a final judgment or other final adjudication
that such remuneration was in violation of law;
(c) on account of any suit in which final judgment is rendered
against Indemnitee for an accounting of profits made from the purchase or sale
by Indemnitee of securities of Corporation pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto and
the regulations thereunder, or similar provisions of any federal, state or
local statutory law or regulation;
(d) on account of Indemnitee's conduct that is finally adjudged to
have been knowingly fraudulent, deliberately dishonest or willful misconduct;
or
(e) if a decision by a court having jurisdiction in the matter
shall finally determine that such indemnification is not lawful.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of
Corporation contained herein shall continue during the period Indemnitee is a
director, officer, employee or agent of Corporation (or is serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Indemnitee shall be subject to any possible
claim or threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
Indemnitee was a director or officer of Corporation or serving in any other
capacity referred to herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
Indemnitee of notice of the commencement of any action, suit or proceeding,
Indemnitee will, if a claim in respect thereof is to be made against
Corporation under this Agreement, notify Corporation of the commencement
thereof; but the omission so to notify Corporation will not relieve it from any
liability which it may have to Indemnitee otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Indemnitee
notifies Corporation of the commencement thereof:
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(a) Corporation will be entitled to participate therein at its own
expense;
(b) Except as otherwise provided below, to the extent that it may
wish, Corporation will be entitled jointly with any other indemnifying party
similarly notified to assume the defense thereof, with counsel reasonably
satisfactory to Indemnitee. After notice from Corporation to Indemnitee of its
election so to assume the defense thereof, Corporation will not be liable to
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Indemnitee
shall have the right to employ his or her counsel in such action, suit or
proceeding, but the reasonable fees and expenses of such counsel incurred after
notice from Corporation of its assumption of the defense thereof shall be at
the expense of Indemnitee unless (i) the employment of counsel by Indemnitee
has been authorized by Corporation, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between Corporation and
Indemnitee in the conduct of the defense of such action, or (iii) Corporation
shall not in fact have employed counsel to assume the defense of such action,
in each of which cases the fees and expenses of counsel shall be at the expense
of Corporation. Corporation shall not be entitled to assume the defense of an
action, suit or proceeding brought by or on behalf of Corporation or as to
which Indemnitee shall have made the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without his or her written consent. Corporation shall not settle any
action or claim in any manner which would impose any penalty or limitation on
Indemnitee without Indemnitee's written consent. Neither Corporation nor
Indemnitee will unreasonably withhold consent to any proposed settlement.
7. REPAYMENT OF EXPENSES. Indemnitee agrees that Indemnitee will
reimburse Corporation for all reasonable expenses paid by Corporation in
defending any civil or criminal action, suit or proceeding against Indemnitee
in the event and only to the extent that it shall be ultimately determined that
Indemnitee is not entitled to be indemnified by Corporation for such expenses
under the provisions of the State Statute, the ByLaws of Corporation, this
Agreement or otherwise.
8. ENFORCEMENT. Corporation expressly confirms and agrees that
it has entered into this Agreement and assumed the obligations imposed on
Corporation hereby in order to induce Indemnitee to continue as a director or
officer (or both) of Corporation, and acknowledges that Indemnitee is relying
upon this Agreement in continuing in such capacity or capacities.
If Indemnitee is required to bring any action to enforce rights or to
collect moneys due under this Agreement and is successful in such action,
Corporation shall reimburse Indemnitee for all of Indemnitee's reasonable fees
and expenses in bringing and pursuing such action.
9. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be
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invalid or unenforceable for any reason, such invalidity or unenforceability
shall not affect the validity or enforceability of the other provisions hereof.
10. GOVERNING LAW; BINDING EFFECT; AMENDMENT AND TERMINATION.
This Agreement shall be interpreted and enforced in accordance with the laws of
the State of Delaware.
This Agreement shall be binding upon Indemnitee and upon Corporation,
its successors and assigns, and shall inure to the benefit of Indemnitee, his
or her heirs, personal representatives and assigns, and to the benefit of
Corporation, its successors and assigns.
No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CONSOLIDATED STORES CORPORATION
/s/ Jerry D. Sommers /s/ William G. Kelley
- ------------------------------ --------------------------------
Jerry D. Sommers William G. Kelley, Chairman and
Chief Executive Officer
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Exhibit B
January 31, 1994
1994 BONUS PROGRAM
EXECUTIVE VICE PRESIDENT
PLAN YEAR
- ---------
The plan year for the 1994 Bonus Program will be consistent with the fiscal
accounting year for the Company; January 30, 1994 through January 29, 1995.
ELIGIBILITY
- -----------
All Executive Vice Presidents are eligible to participate in the 1994 Bonus
Program if hired or promoted to position before November 1, 1994 and employed
on the date that bonus checks are distributed.
BONUS PROGRAM DESCRIPTION
- -------------------------
The 1994 Bonus Program is based upon the achievement of the Company financial
plan. The TARGET BONUS is 50% of your base salary, which you will earn in
bonus if the Company achieves its EPS plan (will be finalized at approximately
120% of 1993 EPS).
Bonus payout will begin at 90% of planned EPS:
% OF PLAN EPS BONUS PAYOUT
------------- ------------
90% 20%
91% 28%
92% 36%
93% 44%
94% 52%
95% 60%
96% 68%
97% 76%
98% 84%
99% 92%
PLAN 100% 100% MAXIMUM BONUS POTENTIAL
The BONUS PAYOUT will be multiplied by the TARGET BONUS to determine the actual
percentage of salary that will be paid in bonus.
Any executive who is hired after November 1, 1994 will not be eligible to
participate in the 1994 Bonus Program.
Eligible executives who are hired, promoted, transferred, demoted or absent on
LOA for more than 60 days during the year, will have their bonus prorated for
the actual amount of time spent in each position during the year.
Executives who terminate and rehire will receive a bonus prorated to the rehire
date, unless the rehire date is less than 30 days from date of termination
(reinstatement). If the rehire is less than 30 days from termination, the
executive may be reinstated according to the policy in effect at that time with
no impact on the bonus calculation.
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Executives must be employed on the date that bonus checks are distributed to be
eligible to receive a 1994 bonus payout. Associates who terminate, voluntarily
or involuntarily, after the end of the fiscal year but prior to bonus check
distribution, are not eligible to receive the 1994 bonus payout. Associates on
LOA at the time of bonus payout will receive their 1994 earned bonus upon
return to work.
Bonus payouts will be calculated as a percentage of the executive's annualized
salary on January 29, 1995.
EFFECTIVE DATE
- --------------
The 1994 Bonus Program will be in effect for the 1994 fiscal year. The Company
reserves the right to alter this plan in subsequent years.
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Exhibit C
CONSOLIDATED STORES CORPORATION
NON-QUALIFIED STOCK OPTION GRANT AGREEMENT
CONSOLIDATED STORES CORPORATION, a Delaware Corporation (the "Company"),
hereby grants to the individual named below (the "Optionee"), subject to and
conditioned upon Optionee's acceptance of all the terms and conditions of the
Consolidated Stores Corporation Executive Stock Option and Stock Appreciation
Rights Plan (the "Plan"), the right to purchase (the "Option"), at the option
of the Optionee, an aggregate of the number of shares of Common Stock (the
"Number of Shares") listed below, par value $.01 per share, of the Company upon
the following terms and conditions:
(NOTE: THIS GRANT MUST BE SIGNED DATE OF GRANT: 08/17/93
AND RETURNED TO THE COMPANY AT
THE FOLLOWING ADDRESS:) NUMBER OF SHARES: 50,000.00
CONSOLIDATED STORES CORPORATION OPTION PRICE: $17.2500
DEPARTMENT 918
ATTN: STOCK OPTION ADMINISTRATOR
300 PHILLIPI ROAD
COLUMBUS, OHIO 43228
EXERCISABILITY OF OPTION: This option will become exercisable in increments
according to the schedule below, and the Option shall be exercisable only to
the extent that it is vested. Vesting is always subject to all other Plan
requirements being satisfied.
Shares Vesting Date Expiration Date
10,000.00 08/17/94 09/17/03
10,000.00 08/17/95 09/17/03
10,000.00 08/17/96 09/17/03
10,000.00 08/17/97 09/17/03
10,000.00 08/17/98 09/17/03
Optionee hereby accepts this Option subject to all the terms and provisions
of the Plan. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Committee upon any questions arising
under the Plan. Optionee acknowledges receipt of a copy of the Plan, as in
effect on the Date of Grant.
Accepted as of 8/31/93 CONSOLIDATED STORES CORPORATION
--------
"Optionee", By: /s/ William G. Kelley
---------------------
William G. Kelley
/s/ Jerry Sommers Chairman
- -----------------
Jerry Sommers
Dept. 800602
1
EXHIBIT 10(K)
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is entered into as of the 21st day of
February, 1994, between CONSOLIDATED STORES CORPORATION, a Delaware corporation
("CSC"), and its wholly owned subsidiary, CONSOLIDATED STORES CORPORATION, an
Ohio corporation ("Consolidated") (CSC and Consolidated are hereinafter jointly
referred to as "Employer"), and Mark N. Hanners ("Employee").
W I T N E S S E T H:
WHEREAS, CSC, Consolidated and Employee desire to enter into this
Employment Agreement to insure to Employer and Employer's direct and
indirect subsidiaries the services of Employee and to set forth the rights and
duties of the parties thereto; and
WHEREAS, the Board of Directors of Consolidated have elected Employee
as the Vice President - Wholesale of and Consolidated.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. EMPLOYMENT; DUTIES.
(a) EMPLOYMENT. Employer currently employs Employee as
Vice President - Wholesale of Consolidated with such duties as may
from time to time be prescribed by the Chief Executive Officer or President of
CSC and Consolidated, as of February 15, 1994, and Employee
hereby accepts such employment, on the terms and conditions hereinafter set
forth.
(b) DUTIES. During the term of this Employment
Agreement, Employee shall, effective as of February 15, 1994, devote his
entire business time and attention to his
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employment and perform diligently such duties as are customarily performed by
the Vice President - Wholesale of a company the size and structure of
Consolidated and its subsidiaries, together with, as of the date hereof, such
other duties as may be reasonably requested from time to time by the Board of
Directors of CSC or Consolidated, which duties shall be consistent with his
position as set forth above and in Paragraph 2 of this Employment Agreement.
As Vice President - Wholesale, Employee shall have the authority to implement
the policies and decisions of the Board of Directors, Chief Executive Officer,
and President and to assist the President in directing Employer's wholesale
strategy, development and operations. So long as Employee shall serve as Vice
President - Wholesale, Employee shall report only to the President of each of
CSC and Consolidated.
Any material adverse modification or diminution of Employee's duties
or diminution in Employee's authority, title or office shall be considered to
be a Change in Control of Employer and shall entitle Employee, in addition to
any other rights he may have, to the rights and remedies provided in Paragraph
7(d) hereof; provided, however, that Employee shall notify Employer of any such
alleged modification or diminution, specifying the same, and Employer shall
have a period of fifteen (15) days after such notice to cure such alleged
modification or diminution before Employee shall be entitled to exercise any
such rights and remedies. The right of Employer to cure any such modification
or diminution in Employee's authority, title or office set forth in the
immediately preceding sentence shall be applicable only in the event that a
"Change in Control" shall have occurred solely by reason of such modification
or diminution of duties or authority and shall not be applicable following the
occurrence of any Change in Control as defined in Paragraph 7(f) below.
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(c) FULL TIME AND ATTENTION. Except as expressly
permitted herein, Employee shall not, without the prior written consent
of Employer, directly or indirectly during the term of this Employment
Agreement, render services of a business, professional or commercial
nature to any other person or firm, whether for compensation or otherwise. So
long as it does not interfere with his full time employment
hereunder, Employee may (i) attend to outside investments and serve as a
director, trustee or officer of or otherwise participate in
educational, welfare, social, religious and civic organizations and (ii) serve
as a director of not more than two (2) public corporations that
are not engaged in the Company Business (as defined in Paragraph 9(a) hereof).
(d) BUSINESS DECISIONS. Employee shall have no liability
to Employer for any act or omission undertaken during the term
of this Employment Agreement in his good faith business judgment in furtherance
of his duties as prescribed in or under this Employment
Agreement.
2. TERM AND POSITIONS.
(a) TERM. Subject to the provisions for termination as
hereinafter provided, the term of this Employment Agreement shall
begin on February 15, 1994 and shall continue thereafter until Employee's
employment is terminated as provided in Paragraph 7.
(b) POSITIONS. Employee shall, without any compensation
in addition to that which is specifically provided in this
Employment Agreement, serve as an officer of Consolidated and in such
substitute or further offices or positions with Employer or any
subsidiary of Employer as shall from time to time be reasonably requested by
the Board of Directors of CSC. Each office and position with
Employer or any subsidiary of Employer in
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which Employee may serve or to which he may be appointed shall be consistent in
title and duties with Employee's position as Vice President -
Wholesale of Employer. For service as an officer of Consolidated or any
subsidiary of either of them, which service shall in each instance be
deemed to be at the request of CSC and its Board of Directors, Employee shall
be entitled to the protection of the applicable indemnification
provisions of the charter and by-laws of CSC, Consolidated and any such
subsidiary and Employer agrees to indemnify and hold harmless Employee
from and against any claims, liabilities, damages or expenses incurred by
Employee in or arising out of the status, capacities and activities
as an officer or director of CSC, Consolidated and any subsidiary of either to
the maximum extent permitted by law and in accordance with the
terms of Exhibit A hereto. For purposes of this Employment Agreement, all
references herein to subsidiaries of CSC and/or Consolidated shall
be deemed to include references to subsidiaries now or hereafter existing.
3. COMPENSATION.
(a) SALARY. For all services he may render to CSC and
Consolidated (and any subsidiary of either of them) during the term
of this Employment Agreement, Employer shall pay to Employee, commencing on
January 30, 1994, a salary at the rate (the "Salary Rate") of Two
Hundred Thousand Dollars ($200,000.00) per annum, subject to increase by the
Board of Directors of CSC, payable in those installments
customarily used in payment of salaries to Employer's executives (but in no
event less frequently than monthly).
(b) BONUS. In addition to the salary compensation as
above stated, Employer shall pay to Employee bonus compensation
during the term of this Employment Agreement in amounts to be determined and
paid as follows:
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(i) For all fiscal years of Employer, Paragraph 3(b)(ii)
shall replace Employees's current bonus plan.
(ii) For each fiscal year Employee completed during the
term of this Employment Agreement Employee shall
have the opportunity to earn twenty percent (20%) of
an amount equal to the Salary Rate at the end of
such fiscal year. The Compensation Committee of the
Board of Directors shall determine the bonus plan
for each fiscal year. The bonus plan for fiscal
year 1994 is attached hereto as Exhibit B.
(iii) Any bonus paid for a fiscal year under Paragraph
3(b)(ii) shall be paid within forty-five (45) days
after Employer's independent auditor has delivered
its opinion with respect to the financial statements
of Employer for such fiscal year (whether or not
Employee is then in the employ of Employer).
Employer shall use all reasonable efforts to cause
such auditor to deliver such opinion within ninety
(90) days after the close of such fiscal year.
(iv) For purposes of this Employment Agreement, the term
"fiscal year" shall mean with respect to any year,
the period commencing on the Sunday next following
the Saturday closest to January 31 in a calendar
year and ending in the next following calendar year
on the Saturday closest to January 31.
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6
4. DISABILITY IN THE EVENT OF DEATH OR PERMANENT DISABILITY. In
the event of a termination of employment as a consequence of
Employee's death or "permanent disability" (as defined below) during the term
of this Employment Agreement:
(a) Employee or his estate, as the case may be, shall be
entitled to receive a prorata portion of the bonus applicable to
the fiscal year in which such death or permanent disability occurs, as such
bonus is determined under Paragraph 3(b) of this Employment
Agreement. Such prorata portion shall be determined by multiplying a fraction,
the numerator of which shall be the number of days in the
applicable fiscal year elapsed prior to the date of death or permanent
disability, as the case may be, and the denominator of which shall be
365, by the amount of bonus that would have been payable, if any, pursuant to
such Paragraph 3(b), if Employee had remained employed under this
Employment Agreement for the entire applicable fiscal year. The bonus shall be
paid when and as provided in Paragraph 3(b)(iii) of this
Employment Agreement.
(b) Except as otherwise provided in Paragraphs 5, 6 and 8
of this Employment Agreement, Employee shall be entitled to no
further compensation or other benefits under this Employment Agreement, except
as to that portion of any unpaid salary and other benefits
accrued and earned by him hereunder up to and including the date of such death
or permanent disability, as the case may be.
(c) For the purposes of this Employment Agreement,
Employee's "permanent disability" shall be deemed to have occurred
after ninety (90) days in the aggregate during any consecutive twelve (12)
month period, or after sixty (60) consecutive days, during which
ninety (90) or sixty (60) days, as the case may be, Employee, by reason of his
physical or mental
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disability or illness, shall have been unable to discharge any material portion
of his duties under this Employment Agreement. The date of
permanent disability shall be the 90th or 60th day, as the case may be. In the
event Employee, after receipt of notice from Employer, shall
dispute that his permanent disability shall have occurred, he shall promptly
submit to a physical examination by the Chief of Medicine of any
major accredited hospital in the metropolitan Columbus, Ohio area and, unless
such physician shall issue his written statement to the effect
that in his opinion, based on his diagnosis, Employee is capable of resuming
his employment and devoting his full time and energy to
discharging his duties within ten (10) days after the date of such statement,
such permanent disability shall be deemed to have occurred
without further dispute by Employer.
5. STOCK OPTIONS. CSC and Employee have, on the date of
Employee's employment hereunder, executed a Non-Qualified Stock Option
Agreement in the form attached hereto as Exhibit C.
6. LIFE INSURANCE AND OTHER BENEFITS.
(a) AUTOMOBILE. During the term of this Employment
Agreement, Employer shall provide Employee with a current model
automobile purchased or leased by Employer, in accordance with applicable
policies of Employer. Employer shall pay all maintenance and repair
expenses with respect to the automobile, procure and maintain in force at
Employer's expense collision, comprehensive, and liability insurance
coverage with respect to the automobile, and pay operating expenses with
respect to the automobile to the extent such operating expenses are
incurred in the conduct of Employer's business.
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(b) VACATION AND SICK LEAVE. Employee shall be entitled
to such periods of vacation and sick leave allowance each year
which shall not be less than as provided under Employer's Vacation and Sick
Leave Policy for executive officers.
(c) GROUP PLANS, ETC. Employee shall be entitled to
participate in any group life, hospitalization, or disability
insurance plan, health program, or other employee benefit plan (other than
bonus compensation or performance plans to the extent that such
plans, in the case of Employee, are in lieu of the bonus plan set forth in
Paragraph 3(b) above) that is generally available to senior
executive officers, as distinguished from general management, of Employer.
Employee's participation in and benefits under any such plan shall
be on the terms and subject to the conditions specified in the governing
document of the particular plan, except that (with the exception of
Employer's pension plan) Employer will permit Employee's participation in each
such plan immediately upon the commencement of his employment
hereunder without any waiting period. To the extent not provided by the
foregoing, Employee shall be entitled to 100% reimbursement of his
medical and dental expenses incurred during the term of this Employment
Agreement.
7. TERMINATION AND FURTHER COMPENSATION.
(a) The employment of Employee under this Employment
Agreement and the term hereof may be terminated:
(i) by Employer or Employee at any time upon
thirty (30) days notice to the other party
of such termination, or
(ii) by Employer on death or permanent disability
of Employee, or
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9
(iii) by Employer for cause at any time. For
purposes hereof, the term "cause" shall mean:
(A) Employee's conviction of fraud or a
felony or any crime involving
moral turpitude or Employee's
commission of acts of embezzlement
or theft in connection with his
duties or in the course of his
employment with CSC or Consolidated;
(B) Employee's willful breach of any
material provision of this Employment
Agreement which failure has
not been cured in all substantial
respects within ten (10) days after
Employer gives notice thereof
to Employee; or
(C) Employee's willful, wrongful
engagement in any Competitive
Activity (as that term is
hereinafter defined).
Any termination of Employee for "cause" shall not be effective until
all the following shall have taken place:
(i) The Secretary of CSC pursuant to resolution of the Board of
Directors of CSC, shall have given written notice to Employee
that, in the opinion of the Board of Directors, Employee may
be terminated for cause, specifying the details;
(ii) Employee shall have been given a reasonable opportunity to
appear before the Board of Directors prior to the determination of
the Board evidenced by such resolution;
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(iii) With respect to any matters other than Employee's conviction
of fraud or a felony or a crime involving moral turpitude,
Employee shall neither have ceased to engage in the activity
giving rise to the proposed determination for cause within
thirty (30) days after his receipt of such notice nor
diligently taken all reasonable steps to that end during such
thirty (30) day period and thereafter;
(iv) After complying with the procedures set forth in subparagraphs
(i) through (iii) above, Employee shall have been delivered a
certified copy of a resolution of the Board of Directors of
CSC adopted by the affirmative vote of not less than three-
fourths (3/4) of the entire membership of the Board of
Directors finding that Employee was guilty of the conduct
giving rise to the termination for cause.
Any termination by reason of the foregoing shall not be in limitation
of any other right or remedy Employer may have under this
Employment Agreement, at law, in equity or otherwise. On any termination of
this Employment Agreement, Employee shall be deemed to have
resigned from all offices and directorships held by Employee in Employer and
any subsidiaries of Employer.
The term "Competitive Activity" shall mean Employee's participation,
without the written consent of the Board of Directors of CSC, in
the management of any business enterprise if such enterprise engages in
substantial and direct competition with CSC, Consolidated or any of
their respective subsidiaries and such enterprise's sales of any product or
service competitive with any product or service of CSC,
Consolidated or any of their respective subsidiaries amounted to more than ten
percent (10%) of such enterprise's net sales for its most
recently completed fiscal year and if the consolidated net sales of CSC of such
products or services amounted to more
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than ten percent (10%) of the consolidated net sales of CSC for its most
recently completed fiscal year. "Competitive Activity" shall not
include (i) the mere ownership of securities in any publicly traded enterprise
and the exercise of rights appurtenant thereto or (ii)
participation in management of any publicly traded enterprise or business
operation thereof other than in connection with the competitive
operation of such enterprise.
(b) In the event of termination for any of the reasons
set forth in subparagraph (a)(iii) of this Paragraph 7, except as
otherwise provided in Paragraph 8 of this Employment Agreement, Employee shall
be entitled to no further compensation or other benefits under
this Employment Agreement (other than as provided by law), except as to that
portion of any unpaid salary and other benefits accrued and earned
by him hereunder up to and including the effective date of such termination,
and Employee shall not be entitled to receive any bonus determined
under Paragraph 3 of this Employment Agreement or otherwise, except for and in
respect of completed fiscal years for which Employee has not
then been paid.
(c) In the event of the termination of Employee's
employment by Employer pursuant to subparagraph (a)(i) above, Employee
shall be entitled to severance compensation as follows: (x) the continuation
of his compensation for a period of 730 days, including bonus
compensation (as provided below), (y) the stock options listed on the attached
Exhibit C - Non-Qualified Stock Option Agreement shall become
exercisable for an additional prorated number of shares (rounded to the nearest
share) equal to the product of the number of shares that would
vest during the calendar year in which Employee's employment is terminated and
a fraction, the numerator of which is the number of days between
February 15, 1994 (or the most recent anniversary of said date, as the case may
be) and the date of such event and the
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denominator of which is 365, and (z) all other benefits and perquisites to
which he is entitled hereunder for a period of 730 days following
the date of such termination of employment, except that (i) the benefits and
perquisites referred to in clause (z) shall be sooner reduced
and/or terminated (other than as provided by law) when and to the extent that
the Employee is entitled to receive the same from another
employer during such period (but no obligation of Employee to attempt to
mitigate damages under this subparagraph (c) shall be implied) and
(ii) any bonus compensation to be paid to Employee in respect of such period
shall be limited solely to the prorata portion thereof earned in
the fiscal year of Employer (determined in the manner provided in Paragraph 3)
in which such termination occurs, except for and in respect of
completed fiscal years for which Employee has not then been paid.
(d) In the event of the termination of Employee's
employment by Employee pursuant to subparagraph (a)(i) above, Employer
may, in its sole discretion, elect to make Salary Payments to Employee pursuant
to paragraph 9(a)(B) below, however Employer shall have no
obligation to pay any compensation or benefits of any kind other than those
described in this subparagraph (d) to Employee other than salary
that has accrued but not been paid up to and including the date of termination,
and any bonus accrued but not paid for fiscal years that have
been completed as of the date of termination. The foregoing provisions of this
subparagraph (d) notwithstanding, and without limiting the
generality of the preceding provisions, Employee shall be entitled to continued
medical benefits coverage under the Employers medical plan
during any month for which Employer elects to make Salary Payments pursuant to
paragraph 9(a)(B) below; provided that any election by Employer
to not make Salary Payments shall automatically void any medical benefits
coverage to Employee thereafter.
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(e) If there occurs any event that results in a Change in
Control (as defined in subparagraph (f) below) of Employer, and
at any time within one (1) year after such event, Employee gives notice to
Employer (or its successor) of termination of his employment under
this Employment Agreement or the employment of Employee is terminated by
Employer (or its successor) for any reason whatsoever, then any such
termination shall be deemed for purposes hereof to be a termination without
cause by Employer pursuant to subparagraph (a)(i) above and shall
be governed by the provisions of subparagraph (c) above, except that all of the
shares covered by the Exhibit C - Non-Qualified Stock Option
Agreement shall be exercisable upon such Change in Control and thereafter for
the term of such Stock Option or on the latest earlier date as
may be necessary to permit Employee, as the holder of the shares to be acquired
upon exercise of such Stock Option, to participate in such
event.
(f) As used herein, "Change in Control" means any of the
following events: (i) any person or group (as defined for
purposes of Section 13(d) of the Securities Exchange Act of 1934) becomes the
beneficial owner of, or has the right to acquire (by contract,
option, warrant, conversion of convertible securities or otherwise), twenty
percent (20%) or more of the outstanding equity securities of CSC
entitled to vote for the election of directors; (ii) a majority of the Board of
Directors of CSC is replaced within any period of two (2) years
or less by directors not nominated and approved by a majority of the directors
of CSC in office at the beginning of such period (or their
successors so nominated and approved), or a majority of the Board of Directors
of CSC at any date consists of persons not so nominated and
approved; or (iii) the stockholders of CSC approve an agreement to merge or
consolidate with another corporation or an agreement to sell or
otherwise dispose of all or substantially all of Employer's
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assets (including without limitation, a plan of liquidation). The effective
date of any such Change in Control shall be the date upon which
the last event occurs or last action is taken such that the definition of such
Change in Control (as set forth above) has been met.
(g) If there is a Change in Control of Employer and
Employee's employment is terminated within one (1) year thereafter,
then to the extent that all or any portion of payments to Employee together
with any sums received by him upon or in connection with such
Change in Control may constitute excess parachute payments within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended,
that are subject to excise tax, then Employee shall receive from Employer, and
Employer shall pay, such amount as shall be necessary to place
Employee in the same after tax position as Employee would have been in had no
such tax or assessment been imposed. The determination of the
amount of any such tax or assessment and of the payment required hereby shall
be made by the independent accounting firm then employed by
Employer within thirty (30) calendar days after such termination of employment,
and such payment shall be made within five (5) calendar days
after such determination has been made.
(h) If, after the date upon which the payment required by
subparagraph (g) above has been made, it is determined (pursuant
to final regulations or published rulings of the Internal Revenue Service,
final judgment of a court of competent jurisdiction or otherwise)
that the amount of excise or other similar taxes or assessments payable by
Employee is greater than the amount initially so determined, then
Employer shall pay Employee an amount equal to the sum of (i) such additional
excise or other taxes, plus (ii) any interest, fines and
penalties resulting from such underpayment, plus (iii) an amount necessary to
reimburse Employee for any income, excise or other tax or
assessment payable by Employee with respect to the amounts
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specified in (i) and (ii) above, and the reimbursement provided by this clause
(iii). Payment thereof shall be made within five (5) calendar
days after the date upon which such subsequent determination is made.
8. EXPENSES. Employer shall reimburse Employee or provide him
with an expense allowance during the term of this Employment Agreement for
travel, entertainment and other expenses reasonably incurred by Employee in the
promotion of Employer's business. Employee shall furnish such documentation
with respect to reimbursement to be paid under this Paragraph 8 as Employer
shall reasonably request.
9. COVENANTS OF EMPLOYEE.
(a) COVENANT AGAINST COMPETITION. Employee acknowledges
that (i) the principal business of Employer is the operation of
its Retail Division's " Odd Lots", "Big Lots" and "All For One" discount
general merchandise consumer goods retail outlets, and other retail or
wholesale enterprises, as Employer may from time to time adopt, the inventories
of which are acquired primarily through special purchase
situations such as overstocks, closeouts, liquidations, bankruptcies, wholesale
distribution of overstock, distress, liquidation and other
volume inventories (the "Company Business", which term shall not include the
business of any general merchandise retail enterprise that from
time to time may acquire inventory through such special purchase situations but
that does not primarily acquire its inventories in such manner,
or any wholesale or specialty retail business); (ii) Employer is one of the
limited number of persons who has developed such business; (iii)
the Company Business is, in part, national in scope; (iv) Employee's work for
Employer will give him access to the confidential affairs of
Employer; and (v) the agreements and covenants of Employee contained in this
Paragraph 9 are
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essential to the business and goodwill of Employer. Accordingly, Employee
covenants and agrees that:
(A) During the term of Employee's employment with Employer
and for a period of two (2) years (the "Restricted Period")
following the termination of such employment by Employer for
"cause" (as such term is defined in Paragraph 7(a)(iii) above),
Employee shall not in any location where Employer's retail stores
are located throughout the United States of America and any
foreign jurisdictions, directly or indirectly, (1) engage in the
Company Business for Employee's own account (other than pursuant
to this Employment Agreement), (2) render any services to any
person engaged in such activities (other than Employer), or (3)
engage in any Competitive Activity (as defined above), provided,
however, that in the event of a Change in Control the Restricted
Period shall be for a period of six (6) months.
(B) In the event that Employee terminates his employment with
Employer, the Restrictive Period, and all restrictive covenants
described in this Section 9, shall apply and be in force for a
period not to exceed two (2) years from the date of termination,
if the Employer continues to pay Employee his salary pursuant to
Paragraph 3(a), in at least monthly installments and net of all
tax and other withholding obligations of Employer, at the level
of salary paid to employee immediately prior to the effective
date of Employee's termination ("Salary Payments"). Salary
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Payments shall be based upon salary only, and shall not include
or be based upon any other form of compensation or benefit;
provided however that Employee shall receive the nonsalary
benefits provided under Section 7(d) when Salary Payments are
made. Within thirty (30) days after the effective date of
Employee's termination of his employment, Employer shall notify
Employee in writing as to whether or not Employer will make
Salary Payments. The Restrictive Period shall continue
uninterrupted for the first thirty (30) days following the
effective date of Employee's termination. If Employer elects not
to make Salary Payments the provisions of Section 9 shall not
apply to Employee after the first thirty (30) day restrictive
period. If Employer elects to make Salary Payments, payment
shall be made retroactively for the first thirty (30) days
following the effective date of Employee's termination, unless
such payment has already been made. Then Salary Payments must
continue for the entire two (2) year period in which the
restrictive covenants of Section 9 shall apply to Employee. In
the event that Employer accidentally or erroneously makes Salary
Payments to Employee, Employee must immediately return or
reimburse such Salary Payments to Employer. It is the express
understanding of Employer and Employee that the provisions of
this subparagraph (B) shall apply only in the event of a
termination of Employee's employment by Employee.
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(C) During the Restricted Period, Employee shall keep secret
and retain in strictest confidence, and shall not use for his
benefit or the benefit of others, all confidential matters
relating to the Company Business hereafter learned by Employee,
and shall not disclose them to anyone except with Employer's
express written consent and except for information which (i) is
at the time of receipt or thereafter becomes publicly known
through no wrongful act of Employee, or (ii) is received from a
third party not under an obligation to keep such information
confidential and without breach of this Employment Agreement.
(D) So long as there has not occurred a Change in Control,
Employee shall not, during the Restricted Period, without
Employer's prior written consent, directly or indirectly, solicit
or encourage to leave the employment of Employer or any of its
subsidiaries, any employee of Employer or any of its
subsidiaries.
(E) All memoranda, notes, lists, records and other documents
(and all copies thereof) made or compiled by Employee or made
available to Employee concerning the Company Business shall be
Employer's property and shall be delivered to Employer at any
time on request.
(b) RIGHTS AND REMEDIES UPON BREACH. If Employee
breaches any of the provisions of Paragraph 9(a) (the "Restrictive
Covenants"), or a breach thereof is imminent, Employer shall have the following
rights and remedies, each of which rights and remedies shall be
independent of the other and severally enforceable, and all of which rights and
remedies shall
18
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be in addition to, and not in lieu of, any other rights and remedies available
to Employer under law or in equity:
(i) The right and remedy to have the Restrictive Covenants
specifically enforced by any court having equity
jurisdiction, including, without limitation, the right to
an entry against Employee of restraining orders and
injunctions (preliminary, temporary or permanent))
against violations, threatened or actual, and whether or
not then continuing, of such covenants, it being
acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to
Employer and that money damage will not provide adequate
remedy to Employer; and
(ii) The right and remedy to require Employee to account for
and pay over to Employer all compensation, profits,
monies, accruals, increments, or other benefits derived
or received by him as the result of any transactions
constituting a breach of the Restrictive Covenants.
Employer may set off any amounts finally determined to
be due it under this Paragraph 9(b) against any amounts
owed to Employee.
(c) SEVERABILITY OF COVENANTS. Employee acknowledges and
agrees that the Restrictive Covenants are reasonable in
geographical and temporal scope, with respect to the activities restricted and
in all other respects. It if it determined that any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive
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Covenants shall not thereby be affected and shall be given full effect, without
regard to the invalid portions.
(d) BLUE-PENCILLING. If it is determined that any of the
Restrictive Covenants, or any part thereof, is unenforceable
because of the duration or geographical scope of such provision, the duration
or scope of such provision, as the case may be, shall be reduced
so that such provision becomes enforceable and, in its reduced form, such
provision shall then be enforceable and shall be enforced.
10. WITHHOLDING TAXES. All payments to Employee, including the
bonus compensation under this Employment Agreement, shall be
subject to withholding on account of federal, state, and local taxes as
required by law. Any amounts remitted by Employer to the appropriate
taxing authorities as taxes withheld by Employer from Employee on income
realized by Employee shall reduce the amounts payable by Employer to
Employee hereunder. If any particular payment required hereunder is
insufficient to provide the amount of such taxes required to be withheld,
Employer may withhold such taxes from any other payment due Employee.
11. NO CONFLICTING AGREEMENTS. Employee represents and warrants
that he is not a party to any agreement, contract or
understanding, whether employment or otherwise, which would restrict or would
prohibit him from undertaking or performing employment in
accordance with the terms and conditions of this Employment Agreement.
12. SEVERABLE PROVISIONS. The provisions of this Employment
Agreement are severable, and if any one or more provisions may be
determined to be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions and any partially unenforceable
20
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provision to the extent enforceable in any jurisdiction shall, nevertheless, be
binding and enforceable.
13. BINDING AGREEMENT. Each of Employer, CSC, and Consolidated
shall require any successor (whether direct or indirect), by
purchase, merger, consolidation, reorganization or otherwise, to all or
substantially all of the business and/or assets of any of them
expressly to assume and to agree to perform this Agreement in the same manner
and to the same extent that each of them would be required to
perform if no such succession has taken place. This Agreement shall be binding
upon and inure to the benefit of each of Employer, CSC, and
Consolidated and any successor of any of them, including without limitation any
persons acquiring directly or indirectly all or substantially
all of the business and/or assets of any of them whether by sale, merger,
consolidation, reorganization or otherwise (and such successor shall
thereafter be deemed the "Employer" for purposes of this Agreement), but shall
not otherwise be assignable or delegatable by Employer, CSC, or
Consolidated.
This Agreement shall inure to the benefit of and be enforceable by
Employee and each of Employee's personal or legal representatives,
executive, administrators, successor, heirs, distributees and/or legatees.
14. NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered
personally, telegraphed, telexed, sent by facsimile transmission or sent by
certified, registered or express mail, postage prepaid. Any such
notice shall be deemed given when so delivered personally, telegraphed,
telexed, or sent by facsimile transmission or, if mailed, five (5) days
after the date of deposit in the United States mails as follows:
21
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(i) if to the Employer to: Consolidated Stores Corporation
Columbus, Ohio 43228-1310
Attention: Albert J. Bell, Esq., Senior
Vice President, General
Counsel and Secretary
with a copy to: Consolidated Stores Corporation
300 Phillipi Roades Corporation
Columbus, Ohio 43228-1310
Attention: William G. Kelley, Chairman
and Chief Executive Officer
(ii) if to the Employee to: Mr. Mark N. Hanners
798 Black Gold Avenue
Gahanna, OH 43230
Any such person may by notice given in accordance with this Paragraph to the
other parties hereto, designate another address or person for
receipt by such person of notices hereunder.
15. WAIVER. The failure of either party to enforce any provision
or provisions of this Employment Agreement shall not in any way
violations thereof, nor prevent that party thereafter from
enforcing each and every other provision of this Employment Agreement. The
rights granted the parties herein are cumulative and the waiver of
any single remedy shall not constitute a waiver of such party's rights to
assert all other legal remedies available to it under the circumstances.
16. MISCELLANEOUS. This Employment Agreement supersedes all prior
agreements and understandings between the parties and may not
be modified or terminated orally. No modification, termination or attempted
waiver shall be valid unless in writing and signed by the party
against whom the same is sought to be enforced. If Employee is successful in
any proceeding against Employer to collect amounts due Employee
under this Employment Agreement, Employer shall reimburse Employee for his
court costs and reasonable attorneys' fees in connection therewith.
Employer hereby agrees to pay or reimburse Employee for the
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reasonable fees and expenses of Employee's counsel in connection with the
negotiation, execution and delivery of this Employment Agreement and
all related agreements and documents.
17. GOVERNING LAW. This Employment Agreement shall be governed by
and construed according to the laws of the State of Ohio.
18. CAPTIONS AND PARAGRAPHS HEADINGS. Captions and paragraph
headings used herein are for convenience and are not a part of
this Employment Agreement and shall not be used in construing it.
19. INTERPRETATION. Where necessary or appropriate to the meaning
hereof, the singular and plural shall be deemed to include each
other, and the masculine, feminine and neuter shall be deemed to include each
other.
20. AMENDMENTS. None of Employer, CSC, or Consolidated shall
amend, terminate, or suspend this Agreement or any provision hereof
without the prior written consent of Employee.
21. LEGAL FEES AND EXPENSES. It is the intent of Employer that
Employee not be required to incur the expenses associated with the
enforcement of his rights under this Agreement in the event of a Change in
Control by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to Employee hereunder. Accordingly, if it should appear
to Employee that Employer has failed to comply with any of its obligations
under this Agreement, or in the event that Employer or any other
person takes any action to declare this Agreement void and/or unenforceable, or
institutes any litigation designed to deny, and/or to recover
from, Employee the benefits intended to be
23
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provided to Employee hereunder, Employer hereby irrevocably authorizes
Employee from time to time to retain counsel of his choice at the
expense of Employer to represent Employee in connection with the initiation or
defense of any litigation and/or other legal action, whether by
or against Employer or any director, officer, stockholder, or other person
affiliated with Employer in any jurisdiction. Notwithstanding any
existing or prior attorney-client relationship between Employer and such
counsel, into an attorney-client relationship with such counsel, and
in that connection Employer acknowledges that a confidential relationship shall
exist between Employee and such counsel. Employer shall pay
and be solely responsible for any and all attorneys' and related fees and
expenses incurred by Employee as a result of Employer or any person
contesting the validity and/or enforceability of this Agreement or any
provision hereof.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement on this 21st day of February, 1994.
CONSOLIDATED STORES CORPORATION,
a Delaware corporation
By: /s/ WILLIAM G. KELLEY
_____________________________________
William G. Kelley, Chairman and Chief
Executive Officer
CONSOLIDATED STORES CORPORATION,
an Ohio corporation
By: /s/ WILLIAM G. KELLEY
_____________________________________
William G. Kelley, Chairman and Chief
Executive Officer
EMPLOYEE:
/s/ MARK N. HAMMERS
________________________________________
Mark N. Hammers
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Exhibit A
---------
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made this 15th day of February, 1994 between
CONSOLIDATED STORES CORPORATION, a Delaware corporation ("Corporation"), and
Mark N. Hanners, a director or officer of Corporation ("Indemnitee").
WITNESSETH THAT:
WHEREAS, Indemnitee is a director or officer (or both) of Corporation
and in such capacity or capacities is performing a valuable service for
Corporation; and
WHEREAS, the By-Laws of Corporation provide for the indemnification of
the officers, directors, agents and employees of Corporation to the maximum
extent authorized by Section 145 of the General Corporation Law of the State of
Delaware, as amended to date (the "State Statute"); and
WHEREAS, the State Statute specifically provides that such
indemnification permitted thereby is not exclusive, and the State Statute
thereby contemplates that contracts may be entered into between Corporation and
directors or officers thereof with respect to indemnification; and
WHEREAS, in accordance with the authorization provided by the State
Statute, Corporation has purchased and presently maintains a policy or policies
of Directors and Officers Liability Insurance ("D & O Insurance"), covering
certain liabilities which may be incurred by its directors and officers in the
performance of their services for Corporation; and
WHEREAS, recent developments with respect to the terms and
availability of D & O Insurance and with respect to the application, amendment
and enforcement of statutory and corporate indemnification provisions generally
have raised questions concerning the adequacy and reliability of the protection
afforded to directors and officers thereby; and
WHEREAS, in order to resolve such questions and thereby induce
Indemnitee to continue to serve as a director or officer (or both), Corporation
has determined and agreed to enter into this contract with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's continued service as
a director or officer (or both) after the date hereof, the parties hereto agree
as follows:
1. INDEMNITY OF INDEMNITEE. Without limiting any other provision
herein, Corporation hereby agrees to hold harmless and indemnify Indemnitee to
the full extent authorized or permitted by the provisions of the State Statute,
or by any amendment thereof, or by any statutory provisions authorizing or
permitting such indemnification that are adopted after the date hereof.
26
2. MAINTENANCE OF INSURANCE AND SELF-INSURANCE.
(a) Corporation represents that it presently has in full force and
effect the following D & O Insurance Policies (the "Insurance Policies"):
INSURER POLICY NO. AMOUNT DEDUCTIBLE
- ------- ---------- ------ ----------
CNA DOC 407 401 937 $15,000,000 $250,000 Corporation Retention
Subject only to the provisions of Section 2(b) hereof, Corporation hereby
agrees that, so long as Indemnitee shall continue to serve as a director or
officer of Corporation (or shall continue at the request of Corporation to
serve as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise), and thereafter so long
as Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of fact that the Indemnitee was a director or
officer of Corporation (or served in any of said other capacities), Corporation
will make reasonable efforts to purchase and maintain in effect for the benefit
of Indemnitee one or more valid, binding and enforceable policies of D & O
Insurance providing, in all material respects, coverage at least comparable to
that presently provided pursuant to the Insurance Policies.
(b) Corporation shall not be required to maintain said policy or
policies of D & O Insurance in effect if said insurance is not reasonably
available or if, in the reasonable business judgment of the then directors of
Corporation, either (i) the premium cost for such insurance is substantially
disproportionate to the amount of coverage or (ii) the coverage provided by
such insurance is so limited by exclusions that there is insufficient benefit
from such insurance.
(c) In the event Corporation does not purchase and maintain in
effect said policy or policies of D & O Insurance pursuant to the provisions of
Section 2(b) hereof, Corporation agrees to hold harmless and indemnify
Indemnitee to the full extent of the coverage which would otherwise have been
provided for the benefit of Indemnitee if the Insurance Policies were then in
effect.
(d) In the event of any material change in or termination of said
policy or policies of D & O Insurance, Corporation shall notify Indemnitee
within a reasonable time of such occurrence.
3. ADDITIONAL INDEMNITY. Subject only to the exclusions set
forth in Section 4 hereof, Corporation hereby further agrees to hold harmless
and indemnify Indemnitee:
(a) Against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of Corporation), to which
Indemnitee is, was or at any time becomes a party, or is threatened to be made
a party, by
2
27
reason of the fact that Indemnitee is, was or at any time becomes a director,
officer, employee or agent of Corporation, or is or was serving or at any time
serves at the request of Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise;
and
(b) Otherwise to the fullest extent as may be provided to
Indemnitee by Corporation under the nonexclusivity provisions of the State
Statute.
4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by Corporation:
(a) except to the extent the aggregate of losses to be indemnified
thereunder exceeds the sum of $1,000 plus the amount of such losses for which
the Indemnitee is indemnified either pursuant to Sections 1 or 2 hereof or
pursuant to any D & O Insurance purchased and maintained by Corporation;
(b) in respect of remuneration paid to Indemnitee if and to the
extent it shall be determined by a final judgment or other final adjudication
that such remuneration was in violation of law;
(c) on account of any suit in which final judgment is rendered
against Indemnitee for an accounting of profits made from the purchase or sale
by Indemnitee of securities of Corporation pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto and
the regulations thereunder, or similar provisions of any federal, state or
local statutory law or regulation;
(d) on account of Indemnitee's conduct that is finally adjudged to
have been knowingly fraudulent, deliberately dishonest or willful misconduct;
or
(e) if a decision by a court having jurisdiction in the matter
shall finally determine that such indemnification is not lawful.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of
Corporation contained herein shall continue during the period Indemnitee is a
director, officer, employee or agent of Corporation (or is serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Indemnitee shall be subject to any possible
claim or threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
Indemnitee was a director or officer of Corporation or serving in any other
capacity referred to herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
Indemnitee of notice of the commencement of any action, suit or proceeding,
Indemnitee will, if a claim in respect thereof is to be made against
Corporation under this Agreement, notify Corporation of
3
28
the commencement thereof; but the omission so to notify Corporation will not
relieve it from any liability which it may have to Indemnitee otherwise than
under this Agreement. With respect to any such action, suit or proceeding as
to which Indemnitee notifies Corporation of the commencement thereof:
(a) Corporation will be entitled to participate therein at its own
expense;
(b) Except as otherwise provided below, to the extent that it may
wish, Corporation will be entitled jointly with any other indemnifying party
similarly notified to assume the defense thereof, with counsel reasonably
satisfactory to Indemnitee. After notice from Corporation to Indemnitee of its
election so to assume the defense thereof, Corporation will not be liable to
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Indemnitee
shall have the right to employ his or her counsel in such action, suit or
proceeding, but the reasonable fees and expenses of such counsel incurred after
notice from Corporation of its assumption of the defense thereof shall be at
the expense of Indemnitee unless (i) the employment of counsel by Indemnitee
has been authorized by Corporation, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between Corporation and
Indemnitee in the conduct of the defense of such action, or (iii) Corporation
shall not in fact have employed counsel to assume the defense of such action,
in each of which cases the fees and expenses of counsel shall be at the expense
of Corporation. Corporation shall not be entitled to assume the defense of an
action, suit or proceeding brought by or on behalf of Corporation or as to
which Indemnitee shall have made the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without his or her written consent. Corporation shall not settle any
action or claim in any manner which would impose any penalty or limitation on
Indemnitee without Indemnitee's written consent. Neither Corporation nor
Indemnitee will unreasonably withhold consent to any proposed settlement.
7. REPAYMENT OF EXPENSES. Indemnitee agrees that Indemnitee will
reimburse Corporation for all reasonable expenses paid by Corporation in
defending any civil or criminal action, suit or proceeding against Indemnitee
in the event and only to the extent that it shall be ultimately determined that
Indemnitee is not entitled to be indemnified by Corporation for such expenses
under the provisions of the State Statute, the ByLaws of Corporation, this
Agreement or otherwise.
8. ENFORCEMENT. Corporation expressly confirms and agrees that
it has entered into this Agreement and assumed the obligations imposed on
Corporation hereby in order to induce Indemnitee to continue as a director or
officer (or both) of Corporation, and acknowledges that Indemnitee is relying
upon this Agreement in continuing in such capacity or capacities.
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29
If Indemnitee is required to bring any action to enforce rights or to
collect moneys due under this Agreement and is successful in such action,
Corporation shall reimburse Indemnitee for all of Indemnitee's reasonable fees
and expenses in bringing and pursuing such action.
9. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. GOVERNING LAW; BINDING EFFECT; AMENDMENT AND TERMINATION.
This Agreement shall be interpreted and enforced in accordance with the laws of
the State of Delaware.
This Agreement shall be binding upon Indemnitee and upon Corporation,
its successors and assigns, and shall inure to the benefit of Indemnitee, his
or her heirs, personal representatives and assigns, and to the benefit of
Corporation, its successors and assigns.
No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CONSOLIDATED STORES CORPORATION
/s/ Mark N. Hanners /s/ William G. Kelley
- -------------------------------------- ----------------------------------
Mark N. Hanners William G. Kelley, Chairman and
Chief Executive Officer
5
30
Exhibit B
February 17, 1994
1994 BONUS PROGRAM
VICE PRESIDENT WHOLESALE
PLAN YEAR
- ---------
The plan year for the 1994 Bonus Program will be consistent with the fiscal
accounting year for the Company; January 30, 1994 through January 29, 1995.
ELIGIBILITY
- -----------
The Vice President of the Wholesale Division is eligible to participate in the
1994 Bonus Program if hired or promoted to position before November 1, 1994 and
is employed on the date that bonus checks are distributed.
BONUS PROGRAM DESCRIPTION
- -------------------------
The 1994 Target Bonus is 20% of 1994 annualized salary based upon the
following objectives:
Objective Goal Bonus % Payout
--------- ---- --------------
Wholesale: 10%
Earnings $2,507,283
ROI 23%
Company EPS PLAN 10%
TOTAL 20%
The actual bonus payout FOR EPS will begin at 90% of planned EPS, and will be
maximized at 100% of plan. The payout schedule will be:
% OF PLAN EPS BONUS PAYOUT
------------- ------------
90% 20%
91% 28%
92% 36%
93% 44%
94% 52%
95% 60%
96% 68%
97% 76%
98% 84%
99% 92%
PLAN 100% 100% MAXIMUM BONUS POTENTIAL
The Company must achieve at least 90% of EPS plan before bonus based upon
individual objectives will be paid. Bonus based upon retail and wholesale
performance will be paid at 100% of achievement, regardless of overall Company
performance at 90% of EPS Plan and above.
31
These objectives may be revised according to any plan revisions that may be
deemed appropriate by the Chairman and Chief Executive Officer.
Any participant who is hired after November 1, 1994 will not be eligible to
participate in the 1994 Bonus Program.
Eligible participants who are hired, promoted, transferred, demoted or absent
on LOA for more than 60 days during the year, will have their bonus prorated
for the actual amount of time spent in each position during the year. The
evaluation of objectives met will be based upon the actual performance against
objectives at the end of the fiscal year.
Associates who terminate and rehire will receive a bonus prorated to the rehire
date, unless the rehire date is less than 30 days from date of termination. If
less than 30 days from termination, the associate may be reinstated (according
to the policy in effect at the time) with no impact on the bonus calculation.
Associates must be employed on the date that bonus checks are distributed to be
eligible to receive a 1994 bonus payout. Associates who terminate, voluntarily
or involuntarily, after the end of the fiscal year but prior to bonus check
distribution, are not eligible to receive the 1994 bonus payout. Associates on
LOA at the time of bonus payout will receive their 1994 bonus upon return to
work.
EFFECTIVE DATE
- --------------
The 1994 Bonus Program will be in effect for the 1994 fiscal year. The Company
reserves the right to alter this plan in subsequent years.
32
Exhibit C
---------
CONSOLIDATED STORES CORPORATION
NON-QUALIFIED STOCK OPTION GRANT AGREEMENT
CONSOLIDATED STORES CORPORATION, a Delaware Corporation (the "Company"),
hereby grants to the individual named below (the "Optionee"), subject to and
conditioned upon Optionee's acceptance of all the terms and conditions of the
Consolidated Stores Corporation Executive Stock Option and Stock Appreciation
Rights Plan (the "Plan"), the right to purchase (the "Option"), at the option
of the Optionee, an aggregate of the number of shares of Common Stock (the
"Number of Shares") listed below, par value $.01 per share, of the Company upon
the following terms and conditions:
(NOTE: THIS GRANT MUST BE SIGNED DATE OF GRANT: 02/15/94
AND RETURNED TO THE COMPANY AT
THE FOLLOWING ADDRESS:) NUMBER OF SHARES: 10,000.00
CONSOLIDATED STORES CORPORATION OPTION PRICE: $18.7500
DEPARTMENT 918
ATTN: STOCK OPTION ADMINISTRATOR
300 PHILLIPI ROAD
COLUMBUS, OHIO 43228
EXERCISABILITY OF OPTION: This option will become exercisable in increments
according to the schedule below, and the Option shall be exercisable only to
the extent that it is vested. Vesting is always subject to all other Plan
requirements being satisfied.
Shares Vesting Date Expiration Date
2,000.00 02/15/95 03/15/04
2,000.00 02/15/96 03/15/04
2,000.00 02/15/97 03/15/04
2,000.00 02/15/98 03/15/04
2,000.00 02/15/99 03/15/04
Optionee hereby accepts this Option subject to all the terms and provisions
of the Plan. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Committee upon any questions arising
under the Plan. Optionee acknowledges receipt of a copy of the Plan, as in
effect on the Date of Grant.
Accepted as of February 22, 1994 CONSOLIDATED STORES CORPORATION
-----------------
"Optionee", By: /s/ William G. Kelley
---------------------
William G. Kelley
/s/ Mark Hanners Chairman
- ----------------
Mark Hanners
Dept. 400012
7
1
EXHIBIT 21
PG. 1 OF 2
SUBSIDIARIES OF CONSOLIDATED STORES CORPORATION
-----------------------------------------------
Jurisdiction of
Name Organization
__________________________________ ________________
TRO, Inc. Illinois
Consolidated Stores Corporation Ohio
Midwestern Home Products, Inc. Delaware
C.S. Ross Company Ohio
CSIC Venture, Inc. Delaware
Consolidated International Export Barbados
Corporation
Tool and Supply of New England, Inc. Delaware
Industrial Products of New England, Inc. Maine
S.S. Investment Corporation Delaware
S.S. Acquisition Corp. Delaware
Barn Acquisition Corporation Delaware
Fashion Barn, Inc. (1) New York
(1) Subsidiaries of Fashion Barn, Inc. are listed on the following page.
2
PAGE 2 0F 2
SUBSIDIARIES OF FASHION BARN, INC.
----------------------------------
Jurisdiction of
Name Organization
___________________________________ _________________
Fashion Barn of New Jersey, Inc. New Jersey
Fashion Barn of Florida, Inc. Florida
Fashion Barn of Indiana, Inc. Indiana
Fashion Barn of Pennsylvania, Inc. Pennsylvania
Fashion Barn of Oklahoma, Inc. Oklahoma
Fashion Barn of California, Inc. California
Fashion Barn of Texas, Inc. Texas
Fashion Barn of Ohio, Inc. Ohio
Fashion Outlets Corp. New York
Fashion Barn of Vermont, Inc. Vermont
Fashion Barn of Virginia, Inc. Virginia
Fashion Barn of Sough Carolina, Inc. South Carolina
Fashion Barn of North Carolina, Inc. North Carolina
Fashion Barn of West Virginia, Inc. West Virginia
Fashion Barn of Missouri, Inc. Missouri
Fashion Bonanza, Inc. New York
Rodgers Fashion Industries, Inc. New York
Saddle Brook Distributors, Inc. New Jersey
DTS, Inc. Delaware
Fashion Barn, Inc. (Mass.) Massachusetts
Fashion Barn of Georgia Georgia
1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in (i) Registration Statement
(No. 33-42502) on Form S-8 pertaining to Consolidated Stores Corporation
Director Stock Option Plan (ii) Registration Statement (No. 33-42692) on Form
S-8 pertaining to Consolidated Stores Corporation Supplemental
Savings Plan (iii) Post Effective Amendment No. 2 to Registration Statement
(No. 33-6068) on Form S-8 pertaining to Consolidated Stores Corporation
Executive Stock Option and Stock Appreciation Rights Plan (iv) Post Effective
Amendment No.1 to Registration Statement (No. 33-19378) on Form S-8 pertaining
to Consolidated Stores Corporation 1987 Restricted Stock Plan and (v) Post
Effective Amendment No. 1 to Registration Statement (No. 33-19309) on Form S-8
pertaining to Consolidated Stores Corporation Savings Plan of our report, dated
February 19, 1994, appearing in the Annual Report on Form 10-K of Consolidated
Stores Corporation for the year ended January 29, 1994.
DELOITTE & TOUCHE
Dayton, Ohio
April 21, 1994
