-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VgMqxyCfU6vgGM4wbrwQxyC3hUNHCPZrTJhWQs9vD6wrIurH9VJXwqaXQmyN4GG+ 1DkdLZAyRHGSN32x8NzA+A== 0000950137-05-006926.txt : 20050611 0000950137-05-006926.hdr.sgml : 20050611 20050531172025 ACCESSION NUMBER: 0000950137-05-006926 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050129 FILED AS OF DATE: 20050531 DATE AS OF CHANGE: 20050531 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHOPKO STORES INC CENTRAL INDEX KEY: 0000878314 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 410985054 STATE OF INCORPORATION: WI FISCAL YEAR END: 0222 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10876 FILM NUMBER: 05868310 BUSINESS ADDRESS: STREET 1: 700 PILGRIM WAY CITY: GREEN BAY STATE: WI ZIP: 54304 BUSINESS PHONE: 9204972211 MAIL ADDRESS: STREET 1: PO BOX 19060 CITY: GREEN BAY STATE: WI ZIP: 54307-9060 10-K/A 1 c95602a1e10vkza.txt AMENDMENT TO ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (AMENDMENT NO. 1) [XX] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR (52 WEEKS) ENDED JANUARY 29, 2005 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to ____________________ Commission file number 1-10876 ------- SHOPKO STORES, INC. (Exact name of registrant as specified in its Charter) Wisconsin 41-0985054 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 700 Pilgrim Way, Green Bay, Wisconsin 54304 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (920) 429-2211 ------------------------- Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ---------------------------- --------------------- Common Stock, par value $0.01 per share New York Stock Exchange Series B Preferred Stock Purchase Rights New York Stock Exchange Securities registered pursuant to Section 12 (g) of the Act: None. ------ Indicate by check mark 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 (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- Indicate by check mark if 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 Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [X]. Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No ------- ------- The aggregate market value of the voting stock held by non-affiliates of the Registrant as of July 31, 2004 was approximately $454,598,652 (based upon the closing price of Registrant's common stock on the New York Stock Exchange on such date). Number of shares of $0.01 par value common stock outstanding as of April 30, 2005: 30,041,535. DOCUMENTS INCORPORATED BY REFERENCE None. 2 EXPLANATORY NOTES This Amendment No. 1 to the Annual Report on Form 10-K of ShopKo Stores, Inc. (the "Company") for the fiscal year ended January 29, 2005 is being filed to timely file required Part III information. We originally expected to incorporate this Part III information from our definitive proxy statement to be filed in connection with the Company's 2005 Annual Meeting of Shareholders. However, as previously announced, on April 7, 2005, the Company entered into a definitive merger agreement with Badger Retail Holding, Inc., a newly-formed Delaware corporation ("Badger Retail Holding"), and Badger Acquisition Corp., a newly formed Wisconsin corporation ("Badger Acquisition") and a wholly-owned subsidiary of Badger Retail Holding, pursuant to which Badger Acquisition will merge with and into ShopKo and the separate corporate existence of Badger Acquisition will end. We refer to this transaction as the "Pending Merger." Badger Retail Holding is owned by Marathon Limited Partnership Fund V ("Marathon"), a private equity firm sponsored by Goldner Hawn Johnson & Morrison Incorporated ("Goldner Hawn"), a Minneapolis, Minnesota-based private equity firm. ShopKo will be the surviving corporation in the Pending Merger and will continue to be a Wisconsin corporation after the Pending Merger. In connection with the Pending Merger, the Company has postponed its annual meeting indefinitely. Accordingly, the Part III information included herein is filed to amend and replace the originally filed Part III information in our Form 10-K for the fiscal year ended January 29, 2005, as originally filed on April 1, 2005. As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), new certifications of our principal executive officer and principal financial officer are being filed as exhibits to this Form 10-K/A. For purposes of this Amendment No. 1 to Form 10-K/A, and in accordance with Rule 12b-15 under the Exchange Act, each item of our Annual Report on Form 10-K for the fiscal year ended January 29, 2005, as originally filed on April 1, 2005, that was affected by this amendment, has been amended and restated in its entirety. No attempt has been made in this Amendment No. 1 to Form 10-K/A to modify or update other disclosures as presented in our original Form 10-K, except as may be required to reflect such amendments. NYSE Certification -- In 2004, the Company filed with the New York Stock Exchange ("NYSE") the certification of its Chief Executive Officer confirming that ShopKo Stores, Inc. was in compliance with the NYSE corporate governance listing standards. 3 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding executive officers is included in Part I of this Annual Report on Form 10-K above in the section entitled "Executive Officers of the Registrant". Set forth below is information regarding the Company's current directors, each of whom is a United States citizen: John G. Turner, 65 - Director and Co-Chairman of Board Mr. Turner has been a director of ShopKo since August 1999 and was named Co-Chairman of the ShopKo board of directors on April 7, 2005. Since May 2002, he has served as the Chairman of Hillcrest Capital Partners. Mr. Turner was Vice Chairman of ING Americas and General Manager and Chief Executive Officer of ING Mutual Funds and Institutional Asset Management-U.S. from the acquisition of ReliaStar Financial Corp. by the ING Group in September 2000 until his retirement in December 2001. Prior to that time, Mr. Turner held numerous executive offices within Reliastar, including Chairman and Chief Executive Officer from 1993 to September 2000. Mr. Turner is also a director of Hormel Foods Corporation and Conseco, Inc. Stephen E. Watson, 60 - Director and Co-Chairman of the Board Mr. Watson has been a director of ShopKo since July 1997 and was named Co-Chairman of the ShopKo board of directors on April 7, 2005. He served as the President and Chief Executive Officer of Gander Mountain, L.L.C., a private specialty retailer of outdoor recreational equipment and clothing, from November 1997 until his retirement in November 2002. Mr. Watson is also a director of Smart & Final Inc. Jack W. Eugster, 59 - Director Mr. Eugster has been a director of ShopKo since September 1991 and served as the Non-Executive Chairman of the Board from May 2001 until April 7, 2005. Mr. Eugster was the Chairman, President and Chief Executive Officer of Musicland Stores Corporation, a retail music and home video company, from 1986 until February 2001. Mr. Eugster is also a director of Donaldson Company, Inc., Graco, Inc. and Black Hills Corporation. Dale P. Kramer, 65 - Director Mr. Kramer has been a director of ShopKo since August 1991. He was the Chairman of the Board from July 1997 to March 2000 and served as the President and Chief Executive Officer of ShopKo from February 1991 to March 1999. Prior to that time, he served as ShopKo's Executive Vice President from April 1983 to February 1986 and as its Executive Vice President and Chief Operating Officer from February 1986 to February 1991. Mr. Kramer had been employed by ShopKo in various other positions since 1971. Martha A. McPhee, 49 - Director Ms. McPhee has been a director of ShopKo since March 2002. Since January 2005, she has served as the President of the Animal Humane Society. From 2000 to March 2003, she was Senior Vice President and Chief Operating Officer for American Public Media Group and its subsidiaries, Minnesota Public Radio, Southern California Public Radio and the Greenspring Companies. Ms. McPhee also served in various executive positions from 1989 to 2000 with 4 BRW, Inc./URS Corporation, an engineering consulting firm, most recently as Senior Vice President and Chief Operating Officer of the Transportation Division. Gregory H. Wolf, 48 - Director Mr. Wolf has been a director of ShopKo since November 1998. Since October 2002, he has served as the President of CIGNA Group Insurance as well as its subsidiaries, CIGNA Life Insurance Company of New York and Life Insurance Company of North America, entities manufacturing and distributing group life, accident and disability insurance for CIGNA Corp. Mr. Wolf joined CIGNA in September 2001 as a Division President to lead a new business development initiative. From January 2000 to June 2001, Mr. Wolf was Chairman and Chief Executive Officer of nextHR.com, an application service provider of human resource asset management services. Richard A. Zona, 60 - Director Mr. Zona has been a director of ShopKo since January 2003. Since 2000, he has served as the Chief Executive Officer of Zona Financial, LLC, a financial advisory firm. From 1989 to 2000, Mr. Zona held various executive positions with U.S. Bancorp, including Vice Chairman, Chief Financial Officer and Vice Chairman of Wholesale Banking and Wealth Management from 1970 to 1989. Mr. Zona is also a director of Polaris Industries Inc., New Century Financial Corp. and Piper Jaffray Companies and serves on an advisory board that Goldner Hawn Johnson & Morrison Incorporated established with respect to Marathon. As previously announced, Mr. Sam K. Duncan, who was Chief Executive Officer, President and a member of the Board of Directors, resigned effective April 14, 2005 to take a position with another company. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Based solely upon the Registrant's review of Forms 3, 4 and 5 received by it during the last fiscal year pursuant to Section 16 of the Securities Exchange Act of 1934, as amended, all of such forms were filed on a timely basis by reporting persons. AUDIT COMMITTEE The Audit Committee is currently comprised of Messrs. Turner (Chairman), Wolf and Zona. The Board of Directors has determined that each of the Audit Committee members is "financially literate" under the listing standards of the NYSE and that Mr. Zona qualifies as an "audit committee financial expert" within the meaning of the applicable rules and regulations of the Securities and Exchange Commission. CODE OF ETHICS The Company has adopted a Code of Business Ethics that applies to its directors, officers and employees, including the principal executive officer, principal financial officer, principal accounting officer and controller. The Code of Business Ethics is filed as an exhibit to this Annual Report on Form 10-K and is posted on the Company's internet website at www.shopko.com, and is available in print to any shareholder who requests it. The Company intends to satisfy the disclosure requirement under Item 10 of Form 8-K by posting such information on its internet website. 5 OTHER CORPORATE GOVERNANCE MATTERS The non-employee directors of the Company hold regular executive sessions, which are presided over by either Mr. Turner or Mr. Watson, as Co-Chairman. Shareholders or other interested parties wishing to communicate with the Co-Chairmen or other non-employee directors may direct correspondence to such individuals c/o Corporate Secretary, 700 Pilgrim Way, P.O. Box 19060, Green Bay, WI 54307-9060. The Corporate Secretary will regularly forward communications to the appropriate Board member(s). The Board has three standing committees: the Compensation and Stock Option Committee, the Audit Committee and the Nominating/Corporate Governance Committee. All Committee members have been determined by the Board to be "independent" as set forth in the ShopKo Stores, Inc. Corporate Governance Principles. These standards require a finding that the individual satisfies all of the "independence" standards of the New York Stock Exchange and also that the individual has no material relationships with the Company, either directly or as a partner, shareholder or executive officer of an organization, that would interfere with such individual's exercise of independent judgment. Each of the Committees is governed by a written charter that is available via the investor relations page of the Company's website at www.shopko.com and is available in print to any shareholder who requests it. 6 ITEM 11. EXECUTIVE COMPENSATION DIRECTOR COMPENSATION On January 19, 2005, the Board of Directors upon recommendation of the Board's Nominating/Corporate Governance Committee, revised the compensation paid to non-employee directors. Each director who is not an employee of the Company receives an annual retainer fee of $35,000, a portion of which is paid, and required to be held, in deferred stock units until retirement from the Board. Committee chairpersons receive an additional $5,000 annual retainer fee, except that the chairperson of the Audit Committee receives an additional $7,500 annual retainer fee. In addition, non-employee directors receive a fee of $1,500 for each Board or committee meeting attended in person or $750 if the director participates by teleconference. In addition, effective January 19, 2005, each non-employee member of the Board was granted 1,000 restricted shares of ShopKo Stores, Inc. Common Stock. The Company reimburses all non-employee directors for travel and related expenses incurred in connection with Board and committee meetings and educational seminars approved in advance by the Chairman of the Nominating/Corporate Governance Committee. Stock incentive awards are granted to non-employee directors from time to time. Typically option grants are made at the time a director joins the Board and annually to each director following the Annual Meeting of Shareholders. Messrs. Eugster, Kramer, Turner, Watson, Wolf, and Zona and Ms. McPhee were granted options to purchase 4,000 shares of Common Stock at $13.64 per share on May 26, 2004. In addition, as compensation for serving as Non-Executive Chairman, on January 19, 2005, Mr. Eugster was granted options to purchase 7,000 shares of Common Stock at $18.35 per share and began receiving an annual cash retainer of $75,000 (payable quarterly), aside from his other Board compensation. Effective April 7, 2005, however, Mr. Eugster resigned his position as Non-Executive Chairman in connection with the Pending Merger and he is no longer receiving such annual retainer. At such time, Messrs. Turner and Watson were elected as Co-Chairmen of the Board and are receiving a monthly retainer of $5,000 each as compensation for such service in addition to their other Board compensation. The Company has a deferred compensation plan for non-employee directors that allows non-employee directors to elect to defer the cash portion of their annual retainers and other fees. This Plan provides that (i) the participating director may defer up to 100 percent (minus applicable tax withholding and social security tax) of the director's fees under the Plan; (ii) amounts deferred under the Plan will, at the election of the participating director, earn interest either at a rate equal to 120 percent of the 120-month rolling average of 10-year U.S. Treasury Notes or at a rate equal to the rate earned under one or more equity portfolios described in the Plan; and (iii) amounts deferred under the Plan will be payable in a lump sum or annual installments over 3, 5, 10 or 15 years commencing upon the earlier of the participating director's termination as a director for any reason (including death) or the participating director's reaching age 70. Except with respect to the portion of the annual retainer mandatorily paid in the form of deferred stock units noted above, as of January 29, 2005, no current non-employee directors have elected to participate in this Plan. 7 EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table (the "Summary Compensation Table") sets forth the compensation paid by the Company for each of the last three fiscal years to the Company's Chief Executive Officer and the Company's other four most highly compensated executive officers as of January 29, 2005 and one former officer of the Company:
ANNUAL LONG TERM COMPENSATION COMPENSATION AWARDS ------------------------ ------------------------------ RESTRICTED SECURITIES STOCK UNDERLYING ALL OTHER NAME AND SALARY BONUS AWARDS OPTIONS/SARS COMPENSATION PRINCIPAL POSITION YEAR(1) ($) ($)(2) ($) (#) ($)(3) - ------------------------- -------- --------- ---------- ---------- ------------- ------------- Sam K. Duncan(4)......... 2004 725,000 400,566 -- 50,000 20,246(5) President 2003 725,000 275,000 -- 0 51,980 Chief Executive Officer 2002 164,519 329,975 651,000(6) 100,000 3,523 Michael J. Hopkins....... 2004 420,692 106,301(7) -- 15,000 24,728(8) President, Pamida 2003 405,823 72,775 -- 0 125,224 2002 410,700 257,876 -- 15,000 8,555 Michael J. Bettiga....... 2004 366,070 148,797(9) -- 10,000 24,442(10) Sr. Vice President, 2003 352,600 74,546 -- 0 71,356 Retail Health Operations 2002 358,500 138,688 -- 10,000 7,275 Brian W. Bender.......... 2004 357,308 166,947(11) -- 15,000 23,512(12) Sr. Vice President, 2003 341,385 70,710 -- 0 87,073 Chief Financial Officer 2002 331,500 237,148 -- 15,000 95,334 Paul G. White (13)....... 2004 326,346 86,235 171,000(14) 27,500 84,960(15) Sr. Vice President, 2003 72,500 37,156(16) 38,300 10,000 3,008 Chief Merch. Officer Jeffrey C. Girard(17).... 2004 527,818 294,210(18) -- 30,000 26,731(19) Vice Chairman 2003 511,806 126,206 -- 0 47,748 Finance & Administration 2002 403,462 689,286 980,000(20) 80,000 45,915
------------ (1) Refers to fiscal years ended on the following dates: 2002: February 1, 2003; 2003: January 31, 2004; and 2004: January 29, 2005. (2) Represents bonuses earned with respect to the indicated fiscal year pursuant to the Company's Executive Incentive Plan although all or a portion of such payments may have been paid during the subsequent fiscal year. In addition, with respect to fiscal 2002, eligible employees earned a cash profit sharing payment that is included in this column. (3) All Other Compensation for the listed individuals includes one or more of the following: Company-paid portion of individual life insurance policies; 401(k) Company match; profit sharing contributions attributable to the indicated fiscal year made to individual's 401(k) account; relocation expenses and tax adjustments in connection therewith; above market interest earned under the Company's deferred compensation plans; and a three year retention bonus paid to certain individuals during fiscal 2003. (4) Mr. Duncan's employment with the Company commenced October 30, 2002 and he resigned April 14, 2005. 8 (5) All Other Compensation for Mr. Duncan includes the following: Company paid portion of individual life insurance policy: $246; and profit sharing contribution: $20,000. (6) As of January 29, 2005, Mr. Duncan held 25,000 shares of restricted stock with an aggregate value of $446,750. This valuation does not take into account the diminution in value attributable to the restrictions applicable to the shares. Mr. Duncan was originally granted 50,000 shares of restricted stock vesting in four equal annual installments, which began October 30, 2003. Pursuant to the 1993 Restricted Stock Plan, dividends are paid on all shares of restricted stock at the same rate as on unrestricted stock. Upon his resignation effective April 14, 2005, Mr. Duncan forfeited the remaining 25,000 shares of restricted stock. (7) Includes the third of four installments of a deferred incentive award established in fiscal 2001 in the amount of $6,250, which was increased by $3,061 to $9,311 based on the Company exceeding certain financial performance goals in fiscal 2004 established by the Compensation and Stock Option Committee. (8) All Other Compensation for Mr. Hopkins includes the following: Company paid portion of individual life insurance policy: $246; 401(k) Company match: $12,253; profit sharing contribution: $11,845; and above market interest earned under the Company's deferred compensation plans: $384. (9) Includes the third of four installments of a deferred incentive award established in fiscal 2001 in the amount of $20,563, which was increased by $10,071 to $30,634 based on the Company exceeding certain financial performance goals in fiscal 2004 established by the Compensation and Stock Option Committee. (10) All Other Compensation for Mr. Bettiga includes the following: Company paid portion of individual life insurance policy: $246; 401(k) Company match: $14,406; and profit sharing contribution: $9,790. (11) Includes the third of four installments of a deferred incentive award established in fiscal 2001 in the amount of $23,625, which was increased by $11,571 to $35,196 based on the Company exceeding certain financial performance goals in fiscal 2004 established by the Compensation and Stock Option Committee. (12) All Other Compensation for Mr. Bender includes the following: Company paid portion of individual life insurance policy: $246; 401(k) Company match: $13,471; and profit sharing contribution: $9,795. (13) Mr. White's employment with the Company commenced October, 2003. (14) Mr. White holds 12,500 shares of restricted stock with an aggregate value as of January 29, 2005 of $223,375. This valuation does not take into account the diminution in value attributable to the restrictions applicable to the shares. Pursuant to the stock incentive plans under which the stock was granted, dividends are paid on all shares of restricted stock at the same rate as on unrestricted stock. (15) All Other Compensation for Mr. White includes the following: Company paid portion of individual life insurance policy: $246; and relocation expenses and tax adjustments in connection therewith: $84,714. (16) Includes a signing bonus of $30,000. 9 (17) Mr. Girard's employment with the Company commenced April 9, 2002. Pursuant to that certain Letter Agreement, dated July 30, 2004, between Mr. Girard and the Company, he resigned as Vice Chairman - Administration and Finance effective August 1, 2004, however, his employment with the Company continued until March 15, 2005. (18) Includes the second of four installments of a deferred incentive award established in fiscal 2002 in the amount of $37,500, which was increased by $13,393 to $50,893 based on the Company exceeding certain financial performance goals in fiscal 2003 established by the Compensation and Stock Option Committee. (19) All Other Compensation for Mr. Girard includes the following: Company paid portion of individual life insurance policy: $246; 401(k) Company match: $13,492; and profit sharing contribution: $12,993. (20) Mr. Girard's 50,000 shares of restricted stock fully vested on April 9, 2004 with an aggregate value of $755,000. ---------- OPTION GRANTS TABLE The following table sets forth information about stock option grants during the fiscal year ended January 29, 2005 to the six individuals named in the Summary Compensation Table: OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS ---------------------------------------------- NUMBER OF % OF TOTAL SECURITIES OPTIONS/SARS EXERCISE OR POTENTIAL REALIZABLE VALUE UNDERLYING GRANTED TO BASE PRICE AT ASSUMED ANNUAL RATES OF OPTIONS/SARS EMPLOYEES IN ($/SHARE) EXPIRATION STOCK PRICE APPRECIATION FOR NAME GRANTED (#) (1) FISCAL YEAR DATE OPTION TERM ---- -------------------------------------------------------------------------------------------------------- 5%($) 10%($) ----- ------ Sam K. Duncan(2)........ 50,000 9.4% 13.64 5/25/2014 0 0 Michael J. Hopkins...... 15,000 2.8% 13.64 5/25/2014 128,672 326,080 Michael J. Bettiga...... 10,000 1.9% 13.64 5/25/2014 85,781 217,386 Brian W. Bender......... 15,000 2.8% 13.64 5/25/2014 128,672 326,080 Paul G. White........... 7,500 1.4% 13.64 5/25/2014 64,336 163,040 20,000 3.8% 17.10 8/29/2014 215,082 545,060 Jeffrey C. Girard(3).... 30,000 5.7% 13.64 3/15/2007 64,500 135,445
(1) One-third (1/3) of Company stock options vest and become exercisable on each successive anniversary of the date of grant. All stock options vest immediately upon a "Change of Control," as defined in the Company's stock option award agreements. (2) Upon the termination of Mr. Duncan's employment with the Company, his unvested options terminated immediately. (3) Pursuant to that certain Letter Agreement, dated July 30, 2004 between Mr. Girard and the Company, Mr. Girard's options will terminate March 15, 2007. 10 OPTION EXERCISE AND FISCAL YEAR END VALUE TABLE The following table sets forth information with respect to the six individuals named in the Summary Compensation Table concerning stock options exercised during fiscal 2004 and the number and value of options outstanding on January 29, 2005: AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED SHARES UNDERLYING UNEXERCISED IN-THE-MONEY ACQUIRED ON VALUE OPTIONS/SARS AT FISCAL OPTIONS/SARS AT FISCAL EXERCISE REALIZED YEAR-END (#) YEAR-END ($) NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ---------------------- -------------------------------------------------------------------------------------------- Sam K. Duncan(1)....... 0 0 66,666 0 323,330 0 Michael J. Hopkins..... 20,000 195,327 75,000 25,000 40,900 146,685 Michael J. Bettiga..... 7,833 54,318 57,833 15,334 60,621 81,050 Brian W. Bender........ 20,500 214,851 10,000 28,000 40,900 184,356 Paul G. White.......... 0 0 3,333 34,167 8,499 64,126 Jeffrey C. Girard...... 14,000 90,075 67,000 40,000 40,900 167,800
(1) Upon termination of Mr. Duncan's employment, all unvested options terminated immediately. Pursuant to the terms of the Company's stock incentive plans, any vested options are required to be exercised within 90 days of termination of employment or such options are terminated. Mr. Duncan exercised his vested options within such period. LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR The following table sets forth information about long term incentive plan awards granted during fiscal 2004 to the six individuals named in the Summary Compensation Table pursuant to the Company's 2000 Executive Long-Term Incentive Plan (the "2000 LTIP"):
ESTIMATED FUTURE PAYOUTS PERFORMANCE -------------------------------------- OR OTHER PERIOD THRESHOLD TARGET MAXIMUM UNTIL MATURATION (% OF (% OF (% OF NAME OR PAYOUT (1) SALARY) SALARY) SALARY) - ---------------------- ------------------------------------------------------------ Sam K. Duncan......... 2/3/2007 25 50 100 Michael J. Hopkins.... 2/3/2007 20 40 80 Michael J. Bettiga.... 2/3/2007 15 30 60 Brian W. Bender....... 2/3/2007 17.5 35 70 Paul G. White......... 2/3/2007 17.5 35 70 Jeffrey C. Girard..... 2/3/2007 20 40 80
- ------------ (1) Upon attainment of performance criteria as set by the Compensation and Stock Option Committee during a performance period, an award in an amount equal to a percentage of the participant's then-current annual base salary will be paid in the form of the Company's Common Stock, cash, or a combination thereof, as determined by the Compensation and Stock Option Committee. During fiscal 2004, the Compensation and Stock Option Committee established performance criteria and award levels for the three-year fiscal period commencing February 1, 2004. For the three-year period, the 11 performance criteria is return on invested capital. The Company has determined not to disclose its performance targets on the basis that it is confidential business information. EMPLOYMENT AGREEMENTS In October 2002, the Company entered into an employment agreement with Mr. Duncan that was terminated in connection with his voluntary resignation from the Company on April 14, 2005. Under the terms of such employment agreement, for two years following his termination, Mr. Duncan must avoid disclosing confidential information about and competing with the Company. The Company does not have any continuing obligations under such agreement. In addition, in April 2002, the Company entered into an employment agreement with Mr. Girard, which was terminated and superseded by a Letter Agreement, dated July 30, 2004 between the Company and Mr. Girard, providing for Mr. Girard's resignation. Specifically, the Letter Agreement provides that Mr. Girard resigned as a member of the Company's Board of Directors and as the Company's Vice Chairman, Finance and Administration on August 1, 2004 but continued his employment through March 15, 2005 (the "Termination Date"). The Letter Agreement provides for certain salary and benefit continuation through the Termination Date. The Letter Agreement also sets forth certain vesting rights with respect to stock options held by Mr. Girard as of July 30, 2004. Finally, the Letter Agreement provides that Mr. Girard must not disclose confidential information about the Company or engage in competition with the Company for a period of one year following the Termination Date. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Company's Bylaws provide for the indemnification of directors and officers of the Company to the full extent permitted by the Wisconsin Statutes. The Company has entered into agreements to indemnify its directors and certain officers, and may enter into similar agreements to indemnify additional officers, in addition to the indemnification provided for in the By-laws. These agreements will, among other things, indemnify the Company's directors and certain of its officers to the full extent permitted by the Wisconsin Statutes for any claims, liabilities, damages, judgments, penalties, fines, settlements, disbursements or expenses (including attorneys' fees) incurred by such person in any action or proceeding, including any action by or in the right of the Company, on account of services as a director or officer of the Company. The Company believes that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers. SEVERANCE AGREEMENTS The Company has entered into change of control severance agreements (the "Severance Agreements") with certain officers of the Company, including those executives identified in the Summary Compensation Table above who are currently employed by the Company. The Severance Agreements provide that, if, within two years after a "Change of Control" the Company terminates the individual's employment other than for cause or disability, or the individual terminates the individual's employment for good reason then the individual will be entitled to a lump-sum cash payment equal to (1) a multiple of one, two or three times the individual's annual base salary, plus (2) a multiple of one, two or three times the individual's average annual bonus for the three fiscal years immediately preceding the date of termination. A "Change of Control" is defined in each of the relevant Severance Agreements to be, among other things, certain business combinations and significant acquisitions of Company Common Stock. The multiple referred to in this paragraph is two for Messrs. Hopkins, Bettiga, Bender, Bettiga and White. Each individual would also receive his salary through the date of termination and all other amounts owed to the individual at the date of termination under the Company's benefit plans. In addition, under such circumstances, the individual will be 12 entitled to continued health and dental coverage for the individual and the individual's family for a one, two or three year period after the date of termination. The Severance Agreements provide that if certain amounts to be paid thereunder constitute "parachute payments," as defined in Section 280G of the Internal Revenue Code of 1986, as amended, the severance benefits owed to the individual may be decreased, but only if the result is to give the individual a larger after-tax benefit than if the payments are not reduced. The individual is permitted to elect the payments to be reduced. RETIREMENT BENEFITS Key executives are eligible for participation in the Company's Supplemental Executive Retirement Plan, ("SERP") which was adopted by the Compensation and Stock Option Committee as of February 1, 1999. This unfunded, non-qualified plan is intended to supplement retirement benefits to eligible officers who retire after attaining age 55 with 10 or more years of service with the Company. The principal objective of the SERP is to provide a competitive level of retirement income in order to attract, retain and motivate key executives selected by the Compensation and Stock Option Committee. The executives named in the Summary Compensation Table above, who are presently employed by the Company, are currently eligible for participation in the SERP. The maximum retirement benefit provided by the SERP is 40% of the executive's final average total compensation, offset by the actuarial equivalent value of employer contributions to qualified and non-qualified plans and certain social security benefits. OTHER COMPENSATION The Company provides certain personal benefits and other noncash compensation to its executive officers. For fiscal 2004, the incremental cost of providing such compensation did not exceed the minimum amounts required to be disclosed under current Securities and Exchange Commission rules for each person named in the Summary Compensation Table. 13 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The table below contains information regarding the beneficial ownership of shares of the Company common stock by (i) each person or entity known by the Company to beneficially own 5% or more of the total number of outstanding shares of the common stock, (ii) each director of the Company, (iii) each of the individuals named in the Summary Compensation Table, and (iv) the directors and executive officers of the Company as a group (19 persons). Except as otherwise noted, information with respect to directors and executive officers is as of April 30, 2005.
AMOUNT AND NATURE OF BENEFICIAL DEFERRED STOCK NAME OF BENEFICIAL OWNER OWNERSHIP(1)(2)(3) PERCENT UNITS(4) - -------------------------------------------------------------------------------------------------------- Barclays Global Investors, N.A., et. al.(5) 3,786,25 12.6% -- 45 Fremont Street San Francisco, CA 94105 Dimensional Fund Advisors Inc.(6) 2,726,90 9.1% -- 1299 Ocean Avenue, 11th Floor Santa Monica, CA 90401 Goldman Sachs Asset Management, L.P.(7) 1,956,58 6.5% -- 32 Old Slip New York, NY 10005 State Street Bank and Trust Company, Trustee(8) 1,751,94 5.8% -- 225 Franklin Street Boston, MA 02110 Jack W. Eugster 151,997 * 720.9 Dale P. Kramer 260,000 * 720.9 Martha A. McPhee 17,200 * 720.9 John G. Turner 32,962 * 720.9 Stephen E. Watson 26,465 * 720.9 Gregory H. Wolf 29,000 * 720.9 Richard A. Zona 10,400 * 720.9 Michael J. Hopkins 83,700 * -- Michael J. Bettiga(9) 66,326 * -- Brian W. Bender 18,935 * -- Paul G. White 18,333 * -- Sam K. Duncan(10) 0 * -- Jeffrey C. Girard(11) 15,000 * -- All directors and executive officers as of April 30, 2005 as a group (19 persons)(12) 926,328 3.1% 5,046.3
- -------------------------------------------------------------------------------- * Less than 1% (1) Except as otherwise noted, the persons named in the above table have sole voting and dispositive power with respect to all shares shown as beneficially owned by them. (2) Includes shares which may be acquired within 60 days after April 30, 2005 pursuant to stock options as follows: Mr. Eugster 135,597 shares, Mr. Kramer 214,000 shares, Ms. McPhee 15,200 shares, Mr. Turner 22,762 shares, Mr. Watson 25,465 shares, Mr. Wolf 23,000 shares, Mr. Zona 10,400 shares, Mr. Bettiga 61,166 shares, Mr. Hopkins 80,000 shares, Mr. Bender 15,000 shares, Mr. White 5,833 shares, Mr. Girard 15,000 shares and all directors and executive officers as a group, 706,569 shares. 14 (3) Includes shares of restricted stock granted pursuant to ShopKo's stock incentive plans as follows: Mr. Eugster 1,000 shares, Mr. Kramer 1,000 shares, Ms. McPhee 1,000 shares, Mr. Turner 1,000 shares, Mr. Watson 1,000 shares, Mr. Wolf 1,000 shares, Mr. Zona 1,000 shares, Mr. White 12,500 shares and all directors and executive officers as a group, 47,250 shares. (4) The deferred stock units listed under the third column "Deferred Stock Units" are phantom stock units deferred pursuant to various deferral plans. Such units are not included in the beneficial ownership totals or the percent of ownership (columns 1 and 2) because there are no shares issued and there is no voting or investment power. The phantom stock units are payable in cash but track the performance of ShopKo's common stock. (5) On February 14, 2005, a joint Schedule 13G was filed with the SEC by Barclays Global Investors, N.A.; Barclays Global Fund Advisors (45 Fremont Street, San Francisco, CA 94105); Barclays Global Investors, Ltd. (Murray House, 1 Royal Mint Court, London, EC3N 4HH); Barclays Global Investors Japan Trust and Banking Company Limited (Ebisu Prime Square Tower, 8th Floor, 1-1-39 Hiroo Shibuya-Ku, Tokyo 150-0012, Japan); Barclays Life Assurance Company Limited (Unicorn House, 5th Floor, 252 Romford Road, Forest Gate, London 37 9JB, England); Barclays Bank PLC (54 Lombard Street, London, England EC3P 3AH); Barclays Capital Securities Limited (5 North Colonmade, Canary Wharf, London, England E14 4BB); Barclays Capital Inc. (200 Park Ave., New York, NY 10166); Barclays Private Bank & Trust (Isle of Man) Limited (4th Floor, Queen Victoria House, Isle of Man, IM99 IDF); Barclays Private Bank and Trust (Jersey) Limited (39/41 Broad Street, St. Helier, Jersey, Channel Islands JE4 8PU); Barclays Bank Trust Company Limited (54 Lombard Street, London, EC3P 3AH, England); Barclays Bank (Suisse) SA (10 rue d'Italie, CH-1204 Geneva, Switzerland); Barclays Private Bank Limited (59/60 Grosvenor Street, London, WIX 9DA England); Bronco (Barclays Cayman) Limited (Walker House Mary Street, P.O. Box 908 GT, George Town, Grand Cayman (Cayman Islands)); Palomino Limited (Walker House Mary Street, P.O. Box 908 GT, George Town, Grand Cayman (Cayman Islands); and HYMF Limited (Walker House Mary Street, P.O. Box 908 GT, George Town, Grand Cayman (Cayman Islands) (which we refer to in this proxy statement as the "Barclays entities"). According to the Schedule 13G, the Barclays entities in the aggregate beneficially own 3,786,259 shares of our common stock, with sole voting power as to 3,621,938 shares and sole dispositive power as to all 3,786,259 shares. According to the Schedule 13G, Barclays Global Investors, NA is the only Barclays entity that individually owns 5% or more of our common stock. (6) Based on Schedule 13G/A filed with the SEC on February 9, 2005. According to this filing, Dimensional Fund Advisors Inc. has sole voting and dispositive power as to all 2,726,900 shares. (7) Based on Schedule 13G/A filed with the SEC on February 9, 2005. According to this filing, Goldman Sachs Asset Management, L.P. has sole voting power as to 1,071,977 shares and sole dispositive power as to all 1,956,586 shares. (8) Based on Schedule 13G/A filed with the SEC February 18, 2005. According to this filing, State Street Bank and Trust Company has sole voting power as to 634,672 shares and sole dispositive power as to all 1,751,943 shares. (9) Includes 1,682 shares of common stock owned in the ShopKo Stores, Inc. Shared Savings Plan. (10) Mr. Duncan served as chief executive officer during fiscal year 2004 and until he resigned as a director and President and Chief Executive Officer of ShopKo on April 14, 2005. Following his termination of employment, Mr. Duncan exercised all exercisable options and sold all shares of Company stock. (11) Mr. Girard ceased being an executive officer on August 1, 2004 when he resigned as a director and as Vice Chairman, Finance and Administration of ShopKo. He remained an employee of ShopKo through March 15, 2005. (12) Includes 2,276 shares of common stock owned by executive officers in the ShopKo Stores, Inc. Shared Savings 401(k) Plan. Totals do not include ownership by individuals who were not directors or executive officers as of April 30, 2005. EQUITY COMPENSATION PLAN INFORMATION The following information is presented as of January 29, 2005:
(A) (C) NUMBER OF SECURITIES (B) NUMBER OF SECURITIES REMAINING TO BE ISSUED UPON WEIGHTED-AVERAGE AVAILABLE FOR FUTURE ISSUANCE EXERCISE OF EXERCISE PRICE OF UNDER EQUITY COMPENSATION OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, PLANS (EXCLUDING SECURITIES PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A)) - ---------------------------------------------------------------------------------------------------------------- Equity compensation plans 2,355,811 $ 16.63 1,895,570 approved by security holders.... Equity compensation plans not approved by security holders.... -0- -0- -0- ---------- -------- ---------- Total........................... 2,355,811 $ 16.63 1,895,570 ========== ======== ==========
15 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Pursuant to the Pending Merger, upon Badger Acquisition being merged with and into ShopKo, each outstanding share of common stock of ShopKo will be converted into the right to receive $24.00 per share in cash, without interest. A copy of the Agreement and Plan of Merger Agreement was filed as an exhibit to a Current Report on Form 8-K filed by ShopKo on April 8, 2005. Badger Retail Holding is a Delaware corporation that is currently wholly-owned by Marathon, a private equity fund sponsored by Goldner Hawn, a Minneapolis-based private equity firm. Badger Acquisition is a Wisconsin corporation and a wholly-owned subsidiary of Badger Retail Holding. Upon completion of the Pending Merger, Marathon has agreed to capitalize Badger Retail Holding with an equity investment of up to $27 million in cash, and Mr. Eugster has agreed to capitalize Badger Retail Holding with an equity investment of $3 million in cash. Mr. Eugster will have an indirect equity ownership interest in ShopKo as a result of providing equity financing to Badger Retail Holding and being granted options to purchase additional shares of Badger Retail Holding. He will be a party to an employment agreement with ShopKo effective upon completion of the Pending Merger. After the Pending Merger becomes effective, Mr. Eugster is expected to serve as Chairman of the Board of ShopKo as well as acting Chief Executive Officer until a new President and Chief Executive Officer is named. Mr. Zona has committed to invest an amount representing approximately 0.1% of the total funds committed by investors in Marathon. Accordingly, after the completion of the Pending Merger, Mr. Zona will have an indirect equity ownership interest in ShopKo through Marathon's investment in Badger Retail Holding. Mr. Zona serves on an advisory board that Goldner Hawn established with respect to Marathon. Further information regarding the Pending Merger and the interests of Mr. Eugster and Mr. Zona relating to the Pending Merger will be described in the proxy statement to be filed by ShopKo with the SEC in connection with ShopKo's solicitation of proxies with respect to the meeting of shareholders to be called with respect to the Pending Merger. In addition, the Company and its subsidiaries have transactions in the ordinary course of business with unaffiliated corporations for whom certain of the non-employee directors serve as directors. We do not consider the amounts involved in such transactions to be material in relation to our business and believe that such amounts are not material to the interests of the other corporations or the interests of the non-employee directors involved and the non-employee directors had no role in any such negotiations. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES During the fiscal years ended January 29, 2005 ("Fiscal 2004") and January 31, 2004 ("Fiscal 2003"), the aggregate fees billed for professional services rendered by the Company's independent auditors, Deloitte & Touche LLP, were as follows: Fiscal 2004 Fiscal 2003 ----------- ----------- Audit Fees(1) $ 836,000 $ 533,000 Audit-Related Fees(2) 82,000 35,000 16 Tax Fees(3) 239,000 139,000 All Other Fees --- --- Total Fees $1,157,000 $ 707,000 (1) Audit fees in Fiscal 2004 included fees with respect to (i) the audit of the Company's financial statements, (ii) the audit of internal control over financial reporting, (iii) the review of the financial statements included in the Company's Form 10-Q filings and (iv) other SEC review activities for the fiscal year. (2) Audit-related fees in Fiscal 2004 were for professional services reasonably related to the performance of the audit of the Company's financial statements and included employee benefit plan audits and Sarbanes-Oxley implementation assistance. (3) Tax fees in Fiscal 2004 were for professional services rendered for federal and state tax audit support, tax compliance, tax preparation software, and tax consultation and planning. The Audit Committee approves all audit and non-audit services. In the case of non-audit services, the Audit Committee must determine that such services will not compromise the independence or objectivity of the independent auditors. The Audit Committee considered whether, and has determined that, the provision of the types of non-audit services disclosed above is compatible with maintaining the independent auditors' independence. 17 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Documents filed as part of this report: 1. Consolidated Financial Statements - previously filed in Item 8 of the Annual Report on Form 10-K filed on April 1, 2005. 2. Financial Statement Schedule - previously filed in Item 8 of the Annual Report on Form 10-K filed on April 1, 2005. 3. Exhibits: Pursuant to Regulation S-K, Item 601(b) (4) (iii), the Registrant hereby agrees to furnish to the Commission, upon request, a copy of each instrument and agreement with respect to long-term debt of the Registrant and its consolidated subsidiaries which does not exceed 10 percent of the total assets of the Registrant and its subsidiaries on a consolidated basis. Sequential Page Exhibit Number In Manually Number Exhibit Signed Original - ------ ------- --------------- 2.1 Agreement and Plan of Merger, dated as of April 7, 2005, by and among ShopKo Stores, Inc., Badger Retail Holding, Inc. and Badger Acquisition Corp., incorporated by reference to the Registrant's Current Report on Form 8-K dated April 8, 2005. 3.1 Amended and restated Articles of Incorporation of the Company, incorporated by reference to the Registrant's Current Report on Form 8-K dated May 22, 1998 (the "May 1998 Form 8-K"). 3.2 Amended and Restated Bylaws of the Company, incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the 13 weeks ended July 29, 2000. 4.1.1 Indenture dated as of March 12, 1992 between the Company and First Trust National Association, as trustee, with respect to senior notes due March 15, 2022 ("2022 Indenture"), incorporated by reference from the Registrant's Form 10-K, Annual Report to the Securities and Exchange Commission for the 53 weeks ended February 29, 1992. 4.1.2 First Supplemental Indenture dated as of May 22, 1998, between the Company and U.S. Bank Trust, as Trustee, with respect to the 2022 Indenture, incorporated by reference to the May 1998 Form 8-K. 18 Sequential Page Exhibit Number In Manually Number Exhibit Signed Original - ------ ------- --------------- 4.2 Rights Agreement between the Company and Norwest Bank Minnesota, National Association, dated as of July 3, 1992, as amended and restated as of September 24, 1997 (including form of preferred stock designation), ("Rights Agreement") incorporated by reference from the Registrant's Amendment No. 1 to Registration Statement on Form 8-A/A dated September 29, 1997. 4.2.1 Rights Agreement Amendment, incorporated by reference to May 1998 Form 8-K. 4.2.2 Second Amendment to Rights Agreement, dated as of April 7, 2005, incorporated by reference to the Registrant's Current Report on Form 8-K dated April 8, 2005. 4.3 Loan Agreement between ShopKo Stores, Inc. and Kimco Select Investments, dated March 27, 2002, incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K dated March 27, 2002. 4.4 Amended and Restated Loan and Security Agreement dated as of August 19, 2003 ("Amended Secured Credit Facility"), incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the 13 weeks ended August 2, 2003. 10.1 ShopKo Stores, Inc. 1991 Stock Option Plan, incorporated by reference to the Registrant's Registration Statement on Form S-1 (Registration No. 33-42283). (1) 10.2 Amendment to Section 11 of ShopKo Stores, Inc. 1991 Stock Option Plan, incorporated by reference to the Registrant's definitive Proxy Statement dated May 9, 1995 filed in connection with the Registrant's 1995 Annual Meeting of Shareholders. (1) 10.3 Form of Stock Option Agreement and First Amendment thereto between the Company and certain Officers and Employees of the Company pursuant to the ShopKo Stores, Inc. 1991 Stock Option Plan, incorporated by reference from the Registrant's Form 10-K, Annual Report to the Securities and Exchange Commission for the 52 weeks ended February 25, 1995. (1) 10.4 Alternative Form of Stock Option Agreement between the Company and certain Officers and Employees of the Company pursuant to the ShopKo Stores, Inc. 1991 Stock Option Plan, incorporated by reference from the Registrant's Form 10-K, Annual Report to the Securities and Exchange Commission for the 52 weeks ended February 25, 1995. (1) 19 Sequential Page Exhibit Number In Manually Number Exhibit Signed Original - ------ ------- --------------- 10.5 ShopKo Stores, Inc. 1995 Stock Option Plan, incorporated by reference from the Registrant's Form 10-Q, Quarterly Report to the Securities and Exchange Commission for the12 weeks ended December 2, 1995. (1) 10.6 Form of Change of Control Severance Agreement between the Company and Certain Officers and Employees of the Company, incorporated by reference from the Registrant's Form 10-K, Annual Report to the Securities and Exchange Commission for the 52 weeks ended February 25, 1995. (1) 10.7 Form of Indemnification Agreement between the Company and directors and certain officers of the Company, incorporated by reference to the Registrant's Form 10-Q, Quarterly Report to the Securities and Exchange Commission for the 13 weeks ended August 1, 1998. 10.8 ShopKo Senior Officers Deferred Compensation Plan, amended and restated effective August 21, 2002, incorporated by reference from the Registrant's Form 10-Q, Quarterly Report to the Securities and Exchange Commission for the 13 weeks ended November 2, 2002. (1) 10.9 ShopKo Directors Deferred Compensation Plan, amended and restated effective August 21, 2002, incorporated by reference to the Registrant's Form 10-Q, Quarterly Report to the Securities and Exchange Commission for the 13 weeks ended November 2, 2002. (1) 10.10 ShopKo Stores, Inc. 1993 Restricted Stock Plan, as amended, incorporated by reference to the Registrant's definitive Proxy Statement dated May 19, 1994 filed in connection with the Registrant's 1994 Annual Meeting of Shareholders. (1) 10.11 ShopKo Stores, Inc. 1998 Stock Incentive Plan, incorporated by reference to the Registrant's definitive Proxy Statement dated April 10, 1998 filed in connection with the Registrant's 1998 Annual Meeting of Shareholders. (1) 10.12 ShopKo Stores, Inc. 2000 Executive Long-Term Incentive Plan, incorporated by reference from the Registrant's definitive Proxy Statement dated April 17, 2000 filed in connection with the Registrant's 2000 Annual Meeting of Shareholders. (1) 10.13 ShopKo Stores, Inc. Executive Retirement Plan, dated February 1999, incorporated by reference from the Registrant's Annual Report on Form 10-K for the 52 weeks ended January 29, 2000. (1) 20 Sequential Page Exhibit Number In Manually Number Exhibit Signed Original - ------ ------- --------------- 10.15 ShopKo Stores, Inc. 2001 Stock Incentive Plan, incorporated by reference to the Registrant's definitive Proxy Statement dated May 1, 2001 filed in conjunction with the Registrant's 2001 Annual Meeting of Shareholders. (1) 10.16 Form of Change of Control Severance Agreement between the Company and Certain Officers and Employees of the Company, incorporated by reference to the Registrant's Annual Report on Form 10-K for the 52 weeks ended February 2, 2002. (1) 10.17 ShopKo Stores, Inc. Shared Savings Plan (2002 Restatement), formerly known as ShopKo Stores, Inc. Profit Sharing and Super Saver Plan Trust Agreement, incorporated by reference to the Registrant's Annual Report on Form 10-K for the 52 weeks ended February 2, 2002. (1) 10.18 Employment Agreement, dated October 28, 2002 between ShopKo Stores, Inc. and Sam K. Duncan, incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the 13 weeks ended November 2, 2002. (1) 10.19 ShopKo Stores, Inc. 2004 Stock Incentive Plan, incorporated by reference to the Registrant's definitive Proxy Statement dated April 26, 2004 filed in conjunction with the Registrant's 2004 Annual Meeting of Shareholders. (1) 10.20 Letter Agreement, dated July 30, 2004 between ShopKo Stores, Inc. and Jeffrey C. Girard, incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the 13 weeks ended July 31, 2004. (1) 10.21 Form of Stock Option Agreement pursuant to ShopKo Stores, Inc. 2004 Stock Incentive Plan, incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the 13 weeks ended July 31, 2004. (1) 10.22 Form of Restricted Stock Agreement pursuant to ShopKo Stores, Inc. 2004 Stock Incentive Plan, incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the 13 weeks ended July 31, 2004. (1) 10.23 ShopKo Stores, Inc. 2004 Board of Directors Compensation Arrangements, incorporated by reference to the Registrant's Annual Report on Form 10-K for the 52 weeks ended January 29, 2005, filed April 1, 2005. (1) 21 Sequential Page Exhibit Number In Manually Number Exhibit Signed Original - ------ ------- --------------- 10.24* ShopKo Stores, Inc. 2005 Directors Deferred Compensation Plan, effective November 18, 2004. (1) 10.25* ShopKo Stores, Inc. 2005 Executives and Optometrists Deferred Compensation Plan, effective November 18, 2004. (1) 14. ShopKo Stores, Inc. Code of Business Ethics, incorporated by reference to the Registrant's Annual Report on Form 10-K for the 52 weeks ended January 31, 2004. 21.1 Subsidiaries of the Registrant, incorporated by reference to the Registrant's Annual Report on Form 10-K for the 52 weeks ended January 29, 2005, filed April 1, 2005. 23.1 Consent of Deloitte & Touche LLP,incorporated by reference to the Registrant's Annual Report on Form 10-K for the 52 weeks ended January 29, 2005, filed April 1, 2005. 24.1 Directors' Powers of Attorney, incorporated by reference to the Registrant's Annual Report on Form 10-K for the 52 weeks ended January 29, 2005, filed April 1, 2005. 31.1* Certifications of Brian W. Bender, Paul G. White and Michael J. Hopkins, Co-Chief Executive Officers, pursuant to Rule 13a -14(a) of the Securities Exchange Act of 1934, as amended. 31.2* Certification of Brian W. Bender, Senior Vice President, Chief Financial Officer, pursuant to Rule 13a -14(a) of the Securities Exchange Act of 1934, as amended. 32.1** Statements of Brian W. Bender, Paul G. White and Michael J. Hopkins, Co-Chief Executive Officers pursuant to 18 U.S.C. ss. 1350. 32.2** Statement of Brian W. Bender, Senior Vice President, Chief Financial Officer, pursuant to 18 U.S.C. ss. 1350. *Filed herewith **Furnished herewith (1) A management contract or compensatory plan or arrangement. 22 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. ShopKo Stores, Inc. (Registrant) Date: May 27, 2005 By: /s/ BRIAN W. BENDER -------------------------------- Brian W. Bender, Co-Chief Executive Officer (Duly Authorized Officer of Registrant) 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 DATES INDICATED:
SIGNATURE TITLE DATE ------------------------- ------------------------------- ------------- /s/ BRIAN W. BENDER Senior Vice President, Chief May 27, 2005 -------------------- Brian W. Bender Financial Officer /s/ PETER J. O'DONNELL Principal Accounting Officer May 27, 2005 ----------------------- Peter J. O'Donnell /s/ JACK W. EUGSTER* Director May 27, 2005 ---------------------- Jack W. Eugster /s/ DALE P. KRAMER* Director May 27, 2005 -------------------- Dale P. Kramer /s/ MARTHA A. MCPHEE* Director May 27, 2005 ----------------------- Martha A. McPhee /s/ JOHN G. TURNER* Co-Chairman of the Board May 27, 2005 --------------------- John G. Turner /s/ STEPHEN E. WATSON* Co-Chairman of the Board May 27, 2005 ------------------------ Stephen E. Watson /s/ GREGORY H. WOLF* Director May 27, 2005 ---------------------- Gregory H. Wolf /s/ RICHARD A. ZONA* Director May 27, 2005 ---------------------- Richard A. Zona
*By Steven R. Andrews pursuant to Powers of Attorney. EX-10.24 2 c95602a1exv10w24.txt 2005 DIRECTORS DEFERRED COMPENSATION PLAN EXHIBIT 10.24 SHOPKO STORES, INC. 2005 DIRECTORS DEFERRED COMPENSATION PLAN EFFECTIVE NOVEMBER 18, 2004 TABLE OF CONTENTS Section 1. Establishment and Purpose..................................... 1 1.1 Establishment................................................. 1 1.2 Purpose....................................................... 1 Section 2. Definitions................................................... 1 2.1 Definitions................................................... 1 2.2 Gender and Number............................................. 4 Section 3. Eligibility For Participation................................. 4 Section 4. Election to Defer............................................. 4 4.1 Deferrals..................................................... 4 4.2 Procedures.................................................... 4 4.3 Maximum and Minimum Deferrals................................. 5 4.4 Election to Defer Irrevocable................................. 5 4.5 Early Distribution Deferrals.................................. 5 Section 5. Accounts...................................................... 5 5.1 Establishment and Crediting of Account........................ 5 5.2 Compensation Deferrals........................................ 6 5.3 Investment Elections.......................................... 6 5.4 Crediting Rate................................................ 6 5.5 Contractual Obligation........................................ 6 5.6 Charges Against and Balance of Accounts....................... 7 5.7 Statement of Accounts......................................... 7 Section 6. Payment of Benefits........................................... 7 6.1 Termination Benefits.......................................... 7 6.2 Benefits Following a Change of Control........................ 7 6.3 Survivorship Benefits......................................... 8 6.3.1 Death Prior to Commencement of Benefits....................... 8 6.3.2 Death After Commencement of Benefits......................... 8 6.4 Small Account Exception....................................... 8 6.5. Recipients of Payments; Designation of Beneficiary............ 8 6.6 Financial Emergency........................................... 9 6.7 Pre-Retirement Benefits....................................... 9 Section 7. Forfeiture.................................................... 10 Section 8. Non-Transferability........................................... 10 Section 9. Administration................................................ 10 9.1 Administration................................................ 10 9.2 Finality of Determination..................................... 10 9.3 Claims Procedure.............................................. 10 9.3.1 Original Claim................................................ 11 9.3.2 Claim Review Procedure........................................ 11 9.3.3 General Rules................................................. 12 9.4 Expenses...................................................... 13 9.5 Tax Withholding............................................... 13
Section 10. Amendment and Termination..................................... 13 Section 11. Applicable Law................................................ 14 Section 12. Binding Agreement............................................. 14 Section 13. Notice........................................................ 14 Section 14. Errors in Benefit Statement or Distribution................... 14
SHOPKO STORES, INC. 2005 DIRECTORS DEFERRED COMPENSATION PLAN SECTION 1. ESTABLISHMENT AND PURPOSE 1.1 ESTABLISHMENT ShopKo Stores, Inc., a Wisconsin corporation (hereinafter called the "Company"), by action of its Board of Directors, hereby establishes this deferred compensation plan for certain of its directors known as the SHOPKO STORES, INC. 2005 DIRECTORS DEFERRED COMPENSATION PLAN (hereinafter called the "Plan"), effective November 18, 2004. 1.2 PURPOSE The purpose of the plan is (i) to attract high quality directors by providing a means whereby amounts payable by the Company to directors may be deferred to a future period, (ii) to motivate such directors to continue to make contributions to the growth and profits of the Company and (iii) to provide such directors certain benefits as hereinafter described upon termination as a Director. SECTION 2. DEFINITIONS 2.1 DEFINITIONS Whenever used hereinafter, the following terms shall have the meaning set forth below: (a) "Account" means the account or accounts established for a Particular Participant pursuant to Section 5 of the Plan. (b) "Administrator" means the person or persons appointed by the Retirement Committee of the Company to administer the Plan pursuant to Section 9 of the Plan. (c) "Beneficiary" means the person designated by a Participant pursuant to Section 6.6 hereof. (d) "Board" means the Board of Directors of the Company. (e) "Change of Control" means any of the following events: (1) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of Common Stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding 1 Company Voting Securities"); provided, however, that for purposes of this subsection (1), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i) and (ii) of subsection (3) below, or (v) any acquisition of 20% or more but less than a majority of either the Outstanding Company Common Stock or the Outstanding Company Voting Securities by any individual, entity or group if at least a majority of the members of the Board of Directors of the Company were members of the Incumbent Board, as defined below, at the time of such acquisition; or (2) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then constituting the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board; or (3) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company for which approval of the shareholders of the Company is required (a "Business Combination"), in each case, unless, immediately following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be and (ii) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (4) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. 2 (f) "Chief Executive Officer" means the chief executive officer of the Company or the person who regularly performs the duties normally associated with such office on behalf of the Company. (g) "Company" means SHOPKO STORES, INC., a Wisconsin corporation. (h) "Compensation" means the Participant's annual retainer and meeting fees for serving as a Director payable by the Company, before reductions for deferrals under the Plan. (i) "Code" means the Internal Revenue Code of 1986, as amended. (j) "Crediting Rate" means the notional gains and losses credited on a Participant's Account balance based on such Participant's choice among investment alternatives made available by the Administrator pursuant to Section 5.4 of the Plan. (k) "Deferred Compensation Election Form" means a written agreement between a Participant and the Company whereby the Participant agrees to defer a portion of his Compensation and the Company agrees to make benefit payments all in accordance with the terms and conditions of the Plan. The Deferred Compensation Election Form may take the form of an electronic communication followed by appropriate written confirmation as determined by the Administrator. (l) "Director" means an individual who is a member of the Board and who is not an employee of the Company. (m) "Effective Date" means November 18, 2004. (n) "Participant" means those eligible Directors who have elected to participate in the Plan by filing a Deferred Compensation Election from hereunder. (o) "Plan Year" means the calendar year. (p) "Retirement Committee" means the SHOPKO STORES, INC. Retirement Committee appointed by the Board for the purpose of performing certain administrative functions with respect to the employee benefit plans of the Company, including the Plan. (p) "Settlement Date" means the date by which a lump sum payment shall be made or the date by which installment payments shall commence pursuant to Section 6. Unless otherwise specified, the Settlement Date shall be the later of (i) the last day of January of the Plan Year following the year in which the event triggering distribution occurs or (ii) ninety (90) days following such event. In the case of death, the event triggering payout shall be deemed to occur upon the date the Administrator is provided with the documentation reasonably necessary to establish the fact of the Participant's death. 3 (q) "Valuation Date" means the date through which notional earnings and losses are credited and shall be the last day of the month preceding the month in which the distribution or other basis for valuation occurs. 2.2 GENDER AND NUMBER Except when otherwise indicated by the context, any masculine terminology, when used in the Plan, shall also include the feminine gender and the definition or use of any term herein in the singular shall also include the plural. SECTION 3. ELIGIBILITY FOR PARTICIPATION Participation in the Plan is limited to Directors. Directors eligible to become Participants shall be entitled to defer Compensation hereunder as of the first day of the Plan Year if they are directors as of the Effective Date, or the first day of the Plan Year following their becoming a Director; provided they submit a Deferred Compensation Election Form to the Administrator in accordance with Section 4.1 of the Plan. Notwithstanding the foregoing, the Retirement Committee may establish a special enrollment period for Directors joining the Board during a Plan Year. Such special enrollment period shall run for a maximum of thirty days following the person's appointment/election as a Director. A participant shall cease to be a Participant upon termination as a Director. SECTION 4. ELECTION TO DEFER 4.1 DEFERRALS Any Director eligible to become a Participant may elect to defer Compensation, otherwise payable in subsequent Plan Years, by submitting a Deferred Compensation Election Form to the Administrator during the enrollment period established by the Administrator, but in no event later than December 31 of the year prior to the Plan Year to which the election relates. The Retirement Committee may establish a special enrollment period for Directors joining the Board during a Plan Year to allow such Directors to defer Compensation payable for such Plan Year. The enrollment period shall be the thirty days following the person's appointment/election as a Director and shall relate to pay periods beginning after the date of the deferral election. 4.2 PROCEDURES A participant shall make the election provided for in Section 4.1 hereof by executing a Deferred Compensation Election Form in the form provided by the Administrator, subject to such terms and conditions as the Retirement Committee may impose, including, but not limited to, medical examinations, health screening, medical records reviews, etc. The Deferred Compensation Election Form shall set forth the Participant's election to defer any whole percentage of Compensation earned by the Participant during the Plan Year in accordance with Section 4.3. A Participant shall only be entitled to defer Compensation in the amounts and for the periods determined, from time to time, in the sole and absolute discretion of the Retirement Committee. A Deferred Compensation Election Form shall be effective if, and only if, it is timely accepted by the Administrator on behalf of the Company. If accepted by the Administrator, the 4 Compensation to be deferred, as specified in the Deferred Compensation Election Form, shall be deferred and the Participant's Compensation shall be correspondingly reduced. 4.3 MAXIMUM AND MINIMUM DEFERRALS The following maximum and minimum deferrals of Compensation shall apply to the amount to be deferred by any Participant, provided, however, that the Retirement Committee may from time to time, in its sole and absolute discretion, adjust the maximum and minimum deferrals permitted hereunder: (i) Minimum Deferral: one percent (1%) of Compensation; (ii) Maximum Deferral: one hundred percent (100%) of Compensation. 4.4 ELECTION TO DEFER IRREVOCABLE Except as provided in this Plan or by action of the Retirement Committee, a Participant's election to defer any amounts of any nature whatsoever pursuant to the Plan shall be irrevocable when made and accepted by the Administrator and shall not be subject to amendment or modification in any manner whatsoever thereafter. 4.5 EARLY DISTRIBUTION DEFERRALS At the time of submitting a Deferred Compensation Election Form, a Participant may make an irrevocable election to create a Scheduled Withdrawal Account as to the amounts deferred pursuant to that Form, including any earnings thereon, which will be paid out at an earlier time than termination as a Director as provided in Section 6 hereunder; provided, however, that the deferral period shall in no case be less than three (3) years from the first day of the Plan Year to which the Deferred Compensation Election Form applies; provided, further, that the payment of the Scheduled Withdrawal Account shall be in one lump sum, and, once paid, the Participant shall be entitled to no further benefits with respect to such Scheduled Withdrawal Account. A Participant may have multiple Scheduled Withdrawal Accounts. SECTION 5. ACCOUNTS 5.1 ESTABLISHMENT AND CREDITING OF ACCOUNT The Company shall establish a separate Account on its books with respect to each deferral election made by each Participant, and shall credit to such Account(s) certain amounts in accordance with the provisions of the Plan. Accounts shall be deemed to be credited with notional gains or losses as provided in Section 5.4 from the date deferral is credited to the Account through the Valuation Date. 5.2 COMPENSATION DEFERRALS The Compensation that is deferred pursuant to a Participant's Deferred Compensation Election Form shall be credited to a Participant's Account as of the date the Participant would have otherwise received the Compensation. The Company shall be entitled to deduct from the Participant's Compensation which is subject to a Deferred Compensation Election Form any amount it is required to withhold or collect under any federal, state or local law for taxes or other charges, including, without limitation, Social Security (FICA) and Medicare taxes. 5 5.3 INVESTMENT ELECTIONS The Administrator shall establish a procedure by which a Participant may elect among investment alternatives or rates made available by the Administrator and by which the Participant may change investment elections at least quarterly. The Administrator may allow a Participant to make a different election for each Account, or may provide that the investment election applies of all of a Participant's Accounts. The Participant's choice among investments shall be solely for purposes of calculating the Crediting Rate. If the Participant fails to elect an investment election, the Crediting Rate shall be based on the investment alternative which is a money market fund or alternative most similar to a money market fund. At no time shall the Company be obligated to set aside or invest funds as directed by the Participant and, if the Company elects to invest funds as directed by the Participant, the Participant shall have no more right to such investments than any other unsecured general creditor. 5.4 CREDITING RATE The Crediting Rate on amounts in a Participant's Account(s) shall be based on the Participant's investment election(s) pursuant to Section 5.3. A Participant's Account(s) shall reflect the investments selected by the Participant. If an investment on which the Crediting Rate is based sustains a loss, the Participant's Account(s) shall be reduced to reflect such loss. During installment distributions, a Participant's Account(s) shall continue to be credited at the Crediting Rate. 5.5 CONTRACTUAL OBLIGATION It is intended that the Company is under a contractual obligation to make payments in accordance with terms and conditions of the Plan. A Participant shall have no rights to such payments, other than as a general, unsecured creditor of the Company. Account balances shall not be financed through a trust fund or any other assets or properties in which a Participant has any interest whatsoever. Payments from such Accounts shall be made out of the general funds of the Company. All such Accounts shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant pursuant to the Plan. Such Accounts shall not constitute or be treated as a trust fund or an interest in any specific assets or properties of the Company of any sort. 5.6 CHARGES AGAINST AND BALANCE OF ACCOUNTS Each Participant's Account, as of each Valuation Date, shall consist of the balance of such Account as of the immediately preceding Valuation Date, plus deferrals credited to the Account since the immediately preceding Valuation Date, plus (or minus if the investment return is negative) the amount to be credited to such Account by the Company based on the Crediting Rate pursuant to Section 5.4 hereof, (taking into account the timing of any contribution or distribution), less the amount of all distributions, if any, made from such Account since the immediately preceding Valuation Date. 5.7 STATEMENT OF ACCOUNTS The Administrator, shall from time to time, at least quarterly, provide to each Participant a statement in such form as the Retirement Committee deems desirable setting forth the Participant's Accounts as of the end of the prior period. 6 SECTION 6. PAYMENT OF BENEFITS 6.1 TERMINATION BENEFITS Upon the Participant's termination as a Director, for any reason, including Death, the Participant shall be entitled to receive an amount equal to the total balance(s) of the Participant's Account(s) credited with notional earnings as provided in Section 5 through the Valuation Date. The Participant may elect, at the same time he makes a deferral election, to receive benefits from the Account credited with such deferrals, in a lump sum or in annual installments over 3, 5, 10 or 15 years. In other words, the Participant may have different benefit payout elections for each of his or her Accounts. If the Participant fails to make a timely election, the benefits shall be paid over fifteen (15) years. Payments shall begin on the Settlement Date following termination, unless the Participant has made a timely election to have payments begin on any one of the first five (5) anniversaries of such date but in no event later than the Settlement Date following the date the Participant attains age seventy (70). An election to change the form of benefit payout for any Account may be made at any time prior to termination by submitting to the Administrator the form provided for such purpose, but elections shall not be effective unless made no less than thirteen (13) calendar months prior to termination, and shall only be effective if they comply with Section 409A of the Code and any regulations promulgated thereunder. 6.2 BENEFITS FOLLOWING A CHANGE OF CONTROL A new Participant may make an irrevocable election with respect to all future deferral Accounts on the Participant's first Deferred Compensation Election Form, to receive the full amount in his Account(s), credited with notional earnings as provided in Section 5 through the Valuation Date, in the event of a Change of Control prior to Termination of Employment. Such benefit shall be payable in a lump sum no later than the last day of the month following the month in which such Change of Control occurs, unless the Participant has elected in the Deferred Compensation Election Form to have such benefit paid in five (5) annual installments beginning on such date. In no event will accelerated payments of Accounts be made by the Administrator under this Section 6.2 if doing so would violate Section 409A of the Code and any regulations promulgated thereunder. 6.3 SURVIVORSHIP BENEFITS 6.3.1 DEATH PRIOR TO COMMENCEMENT OF BENEFITS If a Participant dies prior to receiving any benefits due hereunder, the Company shall pay to the Participant's Beneficiary a benefit equal to the Participant's Account(s) at death credited with notional earnings as provided in Section 5, payable in one lump sum as soon as possible after the Retirement Committee receives a certified copy of the Participant's death certificate. Payment of the benefit under this Section 6.31 shall relieve the company of any further obligation to pay benefits under the Plan. 6.3.2 DEATH AFTER COMMENCEMENT OF BENEFITS If a participant dies after payments pursuant to this Section 6 have commenced hereunder, but prior to receiving all of the scheduled annual payments, the Company shall pay the remaining annual payments to the Participant's Beneficiary. 7 6.4 SMALL ACCOUNT EXCEPTION Notwithstanding any other provision of the Plan or a Participant's Deferred Compensation Election Form the Administrator, taking into account the expense and inconvenience of administering the Plan with respect to small Accounts as set forth herein, may, in its sole discretion, elect to distribute a Participant's benefits in a lump sum. This Section 6.4 shall only apply to small Accounts which shall mean all Accounts attributable to a Participant that have an aggregate balance of $25,000 or less at the time benefits payable pursuant to this Section 6 would otherwise commence. In addition, if the installments payable under this Section 6 would, in the aggregate, be less than $3,000 per year, the Administrator, in its sole discretion, may shorten the period over which the installment payments are made. In no event will accelerated payments of small Accounts be made by the Administrator if doing so would violate Section 409A of the Code and any regulations promulgated thereunder. 6.5 RECIPIENTS OF PAYMENTS; DESIGNATION OF BENEFICIARY All payments to be made by the Company shall be made to the Participant, if living. Except as otherwise provided herein, in the event of a Participant's death prior to the receipt of all benefit payments, all subsequent payments to be made under the Plan shall be to the Beneficiary of the Participant in accordance with a Participant's designation of Beneficiary. Unless otherwise specified in the Participant's Beneficiary designation, in the event a Beneficiary dies before receiving all payments due to such Beneficiary pursuant to this Plan, the then remaining payment shall be paid to the legal representatives of the Beneficiary's estate. The Participant shall designate a Beneficiary, or during his lifetime change such designation, by filing a written notice of such designation with the Administrator in such form and subject to such rules and regulations as the Administrator may prescribe. If the Participant's Compensation constitutes community property, then any Beneficiary designation made by the Participant other than a designation of such Participant's spouse shall not be effective if any such Beneficiary or beneficiaries are to receive more than fifty percent (50%) of the aggregate benefits payable hereunder, unless such spouse shall approve such designation in writing. If no designation shall be in effect at the time when any benefits payable under this Plan shall become due, the Beneficiary shall be the legal representatives of the Participant's estate. In the event a benefit is payable to a minor or person declared incompetent or to a person incapable of handling the disposition of his property, the Retirement Committee may determine to pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent or person. The Retirement Committee may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Retirement Committee and the Company from all liability with respect to such benefit. 6.6 FINANCIAL EMERGENCY In the event of a Participant's unforeseeable emergency, the Retirement Committee, in its sole and absolute discretion, may alter the timing or manner of payment of any benefits or deferred amounts to be paid pursuant to the Plan or release the Participant from the obligation of making deferrals. For purposes of this section, an unforeseeable emergency shall mean a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant's spouse, or a dependent (as defined in Section 152(a) of the Code) of the Participant, 8 loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Any early payment of benefits or withdrawal of deferred amounts due to an unforeseeable emergency shall be limited to the amount necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant's assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). The foregoing standard for distributions shall be modified so that it is consistent with any regulations promulgated under Section 409A of the Code. The Retirement Committee's decision in passing upon severe financial hardship of the Participant and the manner in which, if at all, the payment or deferral of any amounts pursuant to the Plan shall be altered or modified shall be final, conclusive and not subject to appeal. The Participant shall have no right to make up any amount distributed or transferred as a result of a determination of financial emergency by the Retirement Committee pursuant to this Section 6.6. 6.7 PRE-TERMINATION BENEFITS In the event that Participant has made the election(s) provided for in Section 4.5 to receive amounts prior to termination as a Director, such pre-termination benefits shall be paid in accordance with such election(s). The calculation of the amount of such pre-termination benefit shall be made in accordance with the terms and conditions of the Plan, including, without limitation, Section 5 hereof. SECTION 7. FORFEITURE In the event of a Participant's suicide during the first two (2) years after the filing of any Deferred Compensation Election Form the Retirement Committee, in its sole and absolute discretion, may terminate all or any part of a Participant's (or Beneficiary's) right to receive any benefits whatsoever hereunder, provided, however, that the Beneficiary of such a Participant shall be entitled to receive at least an amount equal to that portion of the Participant's Account which has in fact been deferred pursuant to the Plan, without increase, growth addition or any other amount, payable in such manner as the Retirement Committee, in its sole and absolute discretion shall determine. In the event a Participant (i) makes any material misstatement of information in connection with any Deferred Compensation Election Form (ii) fails to disclose to the Company or its agents any material item of his personal or medical history (including, but not limited to, habits of drug, chemical or tobacco use), (iii) takes any other action (or fails to take any action), which action (or failure to act) results in a loss to the Company under the Plan, then the Retirement Committee, in its sole and absolute discretion, may terminate all or any part of a Participant's (or Beneficiary's) right to receive any benefits whatsoever hereunder. 9 SECTION 8. NON-TRANSFERABILITY In no event shall the Company make any payment under the Plan to any assignee or creditor of a Participant or a Beneficiary. Prior to the time of payment hereunder, a Participant or Beneficiary shall have no rights by way of anticipation or otherwise to assign or otherwise dispose of any interest under the Plan nor shall such rights be assigned or transferred by operation of law. SECTION 9. ADMINISTRATION 9.1 ADMINISTRATION This Plan shall be administered by the Retirement Committee and the Administrator. The Retirement Committee may from time to time establish rules for the administration of the Plan that are not inconsistent with the provisions of the Plan. 9.2 FINALITY OF DETERMINATION Except as otherwise provided herein, any interpretation or determination by the Retirement Committee as to any disputed questions arising under the Plan, including questions of fact (or questions of construction and interpretation), shall be final, binding and conclusive upon all persons, subject only to a determination otherwise by the Board. 9.3 CLAIMS PROCEDURE If any Participant, Beneficiary or other properly interested party is in disagreement with any determination that has been made under the Plan, a claim may be presented, but only in accordance with the procedures set forth herein. 9.3.1 ORIGINAL CLAIM Any Participant, Beneficiary or other properly interested party may, if he so desires, file with the Retirement Committee a written claim for benefits or a determination under the Plan. Within ninety (90) days after the filing of such a claim, the Retirement Committee shall notify the claimant in writing whether his claim is upheld or denied in whole or in part or shall furnish the claimant a written notice describing specific special circumstances requiring a specified amount of additional time (but not more than one hundred eighty (180) days from the date the claim was filed) to reach a decision on the claim. If the claim is denied in whole or in part, the Retirement Committee shall state in writing: (i) the specific reason or reasons for the denial; (ii) the references to the pertinent provisions of this Plan on which the denial is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) an explanation of the claims review procedure set forth in this section, including a statement of the claimant's right, if any, to bring a civil action under ERISA Section 502(a) following a denial on review. 10 9.3.2 CLAIM REVIEW PROCEDURE Within sixty (60) days after receipt of notice that his claim has been denied in whole or in part, the claimant may file with the Retirement Committee a written request for a review and may, in conjunction therewith, submit written comments, documents, records and other information relating to the Claim. The claimant or his authorized representative, shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant's claim. For purposes of this section, a document, record or other information shall be considered "relevant" to a claimant's claim if such document, record or other information (i) was relied upon by the Retirement Committee in making its decision on the claim, (ii) was submitted, considered or generated in the course of the Retirement Committee's making its decision on the claim, without regard to whether the Retirement Committee relied upon such document, record or other information in making its decision, or (iii) complies with administrative processes and safeguards which are designed to insure and to verify that decisions on claims are made in accordance with governing Plan documents, whose provisions are applied consistently with respect to similarly situated claimants. The Retirement Committee's review of the claimant's claim and of the Retirement Committee's denial of such claim shall take into account all comments, documents, records, and other information submitted by the claimant or his authorized representative relating to the claim, without regard to whether such information was submitted or considered in the initial decision on the claim. Within sixty (60) days after the filing of such a request for review, the Retirement Committee shall notify the claimant in writing whether, upon review, the claim was upheld or denied in whole or in part or shall furnish the claimant a written notice describing specific circumstances requiring a specified amount of additional time (but not more than one hundred twenty (120) days from the date the request for review was filed) to reach a decision on the request for review. In the case of a decision on appeal upholding the Retirement Committee's initial denial of the claimant's claim, such notice shall set forth, in a manner calculated to be understood by the claimant, the following information: (i) the specific reason or reasons for the decisions on appeal; (ii) references to the pertinent provisions of this Plan on which the decision on appeal is based; (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant's claim for benefits; and (iv) a statement of the claimant's right to bring an action under ERISA Section 502(a). 9.3.3 GENERAL RULES (i) No inquiry or question shall be deemed to be a claim or a request for a review of a denied claim unless made in accordance with the foregoing claims procedure. The Retirement Committee may require that any claim for benefits and any request for a review of denied claim be filed on forms to be furnished by the Administrator upon request. 11 (ii) All decisions on claims and on requests for a review of denied claims shall be made by the Retirement Committee. In accordance with Section 9.2 hereof, decisions of the Retirement Committee shall be final, binding and conclusive upon all persons. (iii) The Retirement Committee may, in its discretion, hold one or more hearings on a claim or a request for a review of a denied claim. (iv) Claimants may be represented by a lawyer or other representative (at their own expense), but the Retirement Committee reserves the right to require the claimant to furnish written authorization. A claimant's representative shall be entitled to copies of all notices given to the claimant. (v) The decision of the Retirement Committee on a claim and on a request for a review of a denied claim shall be served on the claimant in writing. If a decision or notice is not received by a claimant within the time specified, the claim or request for a review of a denied claim shall be deemed to have been denied. (vi) Prior to filing a claim or a request for a review of a denied claim, the claimant or his representative shall have a reasonable opportunity to review a copy of this Plan and all other pertinent documents in the possession of the Company and the Retirement Committee. (vii) The Administrator and the individuals serving on the Retirement Committee shall, except as prohibited by law, be indemnified and held harmless by the employer from any and all liabilities, costs, and expenses (including legal fees), to the extent not covered by liability insurance arising out of any action taken by any individual of this Committee with respect to this plan, unless such liability arises from the individual's own claim for his or her own benefit, the proven gross negligence, bad faith, or (if the individual had reasonable cause to believe his or her conduct was unlawful) the criminal conduct of such individual. This indemnification shall continue as to an individual who has ceased to be a member of the Retirement Committee for the employer and shall enure to the benefit of the heirs, executors and administrators of such an individual. 9.4 EXPENSES The cost of payment from the Plan and the expense of administering the Plan shall be borne by the Company. 9.5 TAX WITHHOLDING The Company shall have the right to deduct from all payments to be made under the Plan, any federal, state or local taxes or other charges required by law to be withheld with respect to such payments, as determined in the sole discretion of the Retirement Committee. 12 SECTION 10. AMENDMENT AND TERMINATION The Board, or the Retirement Committee, in the circumstances provided below, may at any time amend, modify, terminate or suspend, this Plan and no Participant or any other person shall have any right, title, interest or claim against the Company, its directors, officers or employees for any amounts, except that (i) the Participant shall be fully vested in his Account hereunder as of the date on which the Plan is terminated or suspended, (ii) no amendment shall eliminate the crediting of an investment return on an Account prior to the complete distribution thereof or provide for a distribution method which accelerates the timing of distributions hereunder without the consent of a Participant and (iii) subsequent to a Change of Control, unless a majority of the holders of Account balances agree to the contrary, the Company or the Administrator may not alter (a) the choice of investments in the Investment Election as in effect immediately before the Change of Control and (b) the payout options as in effect immediately before the Change of Control. Any such amendment, modification or termination of the Plan may occur either (i) without limitation, by resolution of the Board or (ii) in any respect that does not materially increase the cost of the Plan to the Company, by action of the Retirement Committee (with the written concurrence of the Chief Executive Officer). Notwithstanding the foregoing, if any provision of this Plan or the accompanying election forms does not comply with the requirements of Section 409A of the Code, or any regulations or other guidance promulgated thereunder, such that, absent correction, any Participant would be subject to a 20% penalty under Section 409A(a)(1)(B)(i)(II) of the Code, the Retirement Committee may amend or modify this Plan or the election forms in a manner designed to avoid such penalty, without the consent of any affected Participant, even if such change is otherwise detrimental to any Participant in the Plan. SECTION 11. APPLICABLE LAW The Plan shall be governed and construed in accordance with the laws of the State of Wisconsin, without regard to its conflict of laws provisions, unless federal law supersedes Wisconsin law in which event the applicable federal law shall apply. The invalidity of any portion of the Plan shall not invalidate the remainder hereof and said remainder shall continue in full force. The captions and other titles herein are designed for convenience only and are not to be resorted to for the purposes interpreting any provision of the Plan. The waiver by the Company of any breach of any provision of the Plan shall not operate or be construed as a waiver of any subsequent breach by that Participant or any other Participant. SECTION 12. BINDING AGREEMENT The provisions of the Plan shall be binding upon the Participant, his or her heirs, personal representatives and beneficiaries, and subject to the rights granted to amend or terminate the Plan, the provisions of the Plan shall also be binding upon the Company, its successors and assigns. 13 SECTION 13. NOTICE Any notice or filing required or permitted to be given to the Company or a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, in the case of the Company, to the principal office of the Company, directed to the attention of the Administrator, and in the case of a Participant, to the last known address of such Participant indicated on the records of the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. SECTION 14. ERRORS IN BENEFIT STATEMENT OR DISTRIBUTION In the event an error is made in a benefit statement, such error shall be corrected on the next benefit statement following the date such error is discovered. In the event of an error in a distribution, the Participant's Account(s) shall, immediately upon discovery of such error, be adjusted to reflect such under or overpayment and, if possible, the next distribution shall be increased or decreased to correct such prior error. If the remaining balance of a Participant's Account(s) is insufficient to cover an erroneous overpayment, the Company, may, at its discretion, offset any amount payable to the Participant from the Company (including but not limited to subsequent annual retainer fees and meeting fees) to recoup the amount of such overpayment. Adopted by the Board of Directors: November 17, 2004 14 EX-10.25 3 c95602a1exv10w25.txt 2005 EXECUTIVES AND OPTOMETRISTS DEFERRED COMPENSATION PLAN EXHIBIT 10.25 SHOPKO STORES, INC. 2005 EXECUTIVES AND OPTOMETRISTS DEFERRED COMPENSATION PLAN EFFECTIVE NOVEMBER 18, 2004 TABLE OF CONTENTS Section 1. Establishment and Purpose............................................. 1 1.1 Establishment......................................................... 1 1.2 Purpose............................................................... 1 Section 2. Definitions........................................................... 1 2.1 Definitions........................................................... 1 2.2 Gender and Number..................................................... 5 Section 3. Eligibility for Participation......................................... 6 Section 4. Election to Defer..................................................... 6 4.1 Deferrals............................................................. 6 4.2 Procedures............................................................ 6 4.3 Maximum and Minimum Deferrals......................................... 7 4.4 Election to Defer Irrevocable......................................... 7 4.5 Retirement Benefit Plan Equivalents................................... 7 4.6 Early Distribution Deferrals.......................................... 7 Section 5. Accounts.............................................................. 8 5.1 Establishment and Crediting of Account................................ 8 5.2 Compensation Deferrals................................................ 8 5.3 Investment Elections.................................................. 8 5.4 Crediting Rate........................................................ 8 5.5 Contractual Obligation................................................ 8 5.6 Charges Against and Balance of Accounts............................... 9 5.7 Statement of Accounts................................................. 9 Section 6. Payment of Benefits................................................... 9 6.1 Retirement Benefits................................................... 9 6.2 Benefits for Participants Upon Other Terminations of Employment....... 9 6.3 Benefits Following a Change of Control................................ 10 6.4 Survivorship Benefits................................................. 10 6.4.1 Death Prior to Termination of Employment.............................. 10 6.4.2 Death After Commencement of Benefits.................................. 10 6.5 Small Account Exception............................................... 10 6.6 Recipients of Payments; Designation of Beneficiary.................... 11 6.7 Financial Emergency................................................... 11 6.8 Pre-Retirement Benefits............................................... 12 Section 7. Forfeiture............................................................ 12 Section 8. Non-Transferability................................................... 12 Section 9. Administration........................................................ 13 9.1 Administration........................................................ 13 9.2 Finality of Determination............................................. 13 9.3 Claims Procedure...................................................... 13 9.3.1 Original Claim........................................................ 13 9.3.2 Claim Review Procedure................................................ 14 9.3.3 General Rules......................................................... 14 9.4 Expenses.............................................................. 16 9.5 Tax Withholding....................................................... 16
Section 10. Amendment and Termination............................................. 16 Section 11. Applicable Law........................................................ 16 Section 12. No Vested Rights...................................................... 17 Section 13. Binding Agreement..................................................... 17 Section 14. Notice................................................................ 17 Section 15. Errors in Benefit Statement or Distribution........................... 17 Section 16. ERISA................................................................. 18
SHOPKO STORES, INC. 2005 EXECUTIVES AND OPTOMETRISTS DEFERRED COMPENSATION PLAN SECTION 1. ESTABLISHMENT AND PURPOSE 1.1 ESTABLISHMENT ShopKo Stores, Inc., a Wisconsin corporation (hereinafter called the "Company"), by action of its Board of Directors, hereby establishes this deferred compensation plan for certain of its executive employees and optometrists known as the SHOPKO STORES, INC. 2005 EXECUTIVES AND OPTOMETRISTS DEFERRED COMPENSATION PLAN (hereinafter called the "Plan"), effective November 18, 2004. 1.2 PURPOSE The purpose of the plan is (i) to attract high quality executives, managers and optometrists by providing a means whereby amounts payable by the Company to these persons may be deferred to a future period, (ii) to motivate such persons to continue to make contributions to the growth and profits of the Company and (iii) to provide such persons certain benefits as hereinafter described. SECTION 2. DEFINITIONS 2.1 DEFINITIONS Whenever used hereinafter, the following terms shall have the meaning set forth below: (a) "Account" means the account or accounts established for a Participant pursuant to Section 5 of the Plan. (b) "Administrator" means the person or persons appointed by the Retirement Committee of the Company to administer the Plan pursuant to Section 9 of the Plan. (c) "Age" means the age of the person as of his last birth date. (d) "Annual Bonus" means payments made from time to time by the Company pursuant to the Company's (i) Executive Incentive Plan, (ii) Long-Term Incentive Plan (cash portion only), (iii) any plan which supersedes any of the above-enumerated plans, and (iv) any other bonus plans of the Company or any Subsidiary designated by the Retirement Committee as an "Annual Bonus" for purposes of this Plan. (e) "Base Salary" means the salary, commissions, and other similar amounts payable by the Company (including amounts deferred hereunder), but excluding expense reimbursement, moving expense payments, third-party sick pay, imputed income (from excess life insurance premiums, automobile use payments or any other source), 1 non-qualified stock options, disqualifying dispositions of stock acquired pursuant to the exercise of incentive stock options, stock appreciation rights, severance settlements and similar items of remuneration. (f) "Beneficiary" means the person designated by a Participant pursuant to Section 6.6 hereof. (g) "Board" means the Board of Directors of the Company. (h) "Change of Control" means any of the following events: (1) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of Common Stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this subsection (1), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i) and (ii) of subsection (3) below, or (v) any acquisition of 20% or more but less than a majority of either the Outstanding Company Common Stock or the Outstanding Company Voting Securities by any individual, entity or group if at least a majority of the members of the Board of Directors of the Company were members of the Incumbent Board, as defined below, at the time of such acquisition; or (2) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then constituting the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board; or (3) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company for which approval of the shareholders of the Company is required (a "Business Combination"), in each case, unless, immediately following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, 2 more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be and (ii) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (4) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. (i) "Chief Executive Officer" means the chief executive officer of the Company or the person who regularly performs the duties normally associated with such office on behalf of the Company. (j) "Code" means the Internal Revenue Code of 1986, as amended. (k) "Company" means SHOPKO STORES, INC., a Wisconsin corporation, and any subsidiary thereof. (l) "Compensation" means Base Salary and Annual Bonus. (m) "Crediting Rate" means the notional gains and losses credited on a Participant's Account balance based on such Participant's choice among investment alternatives made available by the Administrator pursuant to Section 5.4 of the Plan. (n) "Deferred Compensation Election Form" means a written agreement between a Participant and the Company whereby the Participant agrees to defer a portion of his Compensation and the Company agrees to make benefit payments all in accordance with the terms and conditions of the Plan. The Deferred Compensation Election Form may take the form of an electronic communication followed by appropriate written confirmation as determined by the Administrator. (o) "Director" means an individual who is a member of the Board and who is not an employee of the Company. (p) "Early Retirement Date" means the first day of the month following the month in which the Employee reaches age 55 and has completed ten (10) or more years of service with the Company. (q) "Effective Date" means November 18, 2004. 3 (r) "Employee" means an employee of the Company, or any Subsidiary, branch or subdivision thereof, with a salary grade at or above the salary grade level established by the Retirement Committee from time to time. Employee also means an optometrist who is an employee of the Company or any Subsidiary, branch or subdivision thereof. (s) "ERISA" means the Employment Retirement Income Security Act of 1974, as amended. (t) "Normal Retirement Date" means the first day of the month following the month in which the Employee reaches age 62, has completed ten (10) or more years of service with the Company or if, earlier, the first day of the month following the month in which the Employee reaches age 65. (u) "Participant" means those Employees who have elected to participate in the Plan by filing a Deferred Compensation Election Form hereunder. (v) "Plan Year" means the calendar year. (w) "Qualified Plans" means any retirement plans sponsored by the Company in which Participants in this Plan also participate, which plans, and any trusts funding such plans, meet the qualification requirements of Sections 401(a) and 501 (a) of the Internal Revenue Code. (x) "Retirement" means Termination of Employment after reaching the Early Retirement Date or Normal Retirement Date. (y) "Retirement Benefit" means the retirement benefit described in Section 6.1 hereof. (z) "Retirement Committee" means the SHOPKO STORES, INC. Retirement Committee appointed by the Board for the purpose of performing certain administrative functions with respect to the employee benefit plans of the Company, including the Plan. (aa) "Settlement Date" means the date by which a lump sum payment shall be made or the date by which installment payments shall commence pursuant to Section 6. The Settlement Date shall be the later of (i) the last day of January of the Plan Year following the year in which the event triggering distribution occurs or (ii) six months following Termination of Employment. (bb) "Statutory Limitations" shall mean any statutory or regulatory limitations on salary reduction (other than applicable dollar limit under Section 402(g)(1) of the Code) or matching contributions to a Qualified Plan, or on compensation taken into account in calculating employer or employee contributions to a Qualified Plan. The impact of such limits on the Participant for purposes of this Plan shall be determined by the Administrator based upon reasonable estimates and shall be final and binding as of the date any credit is credited to a Participant's Account pursuant to Section 4.5. No subsequent adjustments shall be made to increase such a credit under this Plan as 4 a result of any adjustments ultimately required under any Qualified Plan due to actual employee contributions or other factors. (cc) "Subsidiary" means any corporation, limited liability company or other business entity, the majority of the voting interests of which is directly or indirectly owned by the Company. (dd) "Termination of Employment" means ceasing to be employed by the Company for any reason whatsoever, including, without limitation, terminations of employment which are voluntary or involuntary. (ee) "Valuation Date" means the date through which notional earnings and losses are credited and shall be the last day of the month preceding the month in which the distribution or other basis for valuation occurs. 2.2. GENDER AND NUMBER Except when otherwise indicated by the context, any masculine terminology, when used in the Plan, shall also include the feminine gender and the definition or use of any term herein in the singular shall also include the plural. SECTION 3. ELIGIBILITY FOR PARTICIPATION Employees and other persons designated by the Retirement Committee shall be eligible to participate in the Plan. Employees eligible to become Participants shall be entitled to defer Compensation hereunder as of the first day of the Plan Year if they are Employees or other persons designated by the Retirement Committee as of the Effective Date, or the first day of the Plan Year following their becoming an Employee or designated person; provided they timely submit a Deferred Compensation Election Form to the Administrator in accordance with Section 4.1 of the Plan. Notwithstanding the foregoing, the Retirement Committee may establish a special enrollment period for certain Employees hired or achieving Employee status during a Plan Year. Such special enrollment period shall run for a maximum of thirty days following such person becoming an Employee or achieving Employee status. A participant shall cease to be a Participant upon Termination of Employment. The Retirement Committee, in its sole and absolute discretion shall make such rules concerning leaves of absences, re-employment and other matters concerning eligibility for Participation hereunder as it deems to be in the best interests of the Company. SECTION 4. ELECTION TO DEFER 4.1 DEFERRALS Any Employee or designated person eligible to become a Participant may elect to defer Compensation, otherwise payable in subsequent Plan Years, by submitting a Deferred Compensation Election Form to the Administrator during the enrollment period established by the Administrator prior to the beginning of the period during which the Compensation is earned. The Retirement Committee may establish a special enrollment period for certain Employees hired during a Plan Year or persons achieving Employee status during the Plan year to allow 5 such Employees to defer Compensation payable during the Plan Year. The special enrollment period shall be the thirty days following the hiring of the Employee or the person achieving Employee status, and shall relate to pay attributable to periods beginning after the date of the deferral election. 4.2 PROCEDURES A participant shall make the election provided for in Section 4.1 hereof by executing a Deferred Compensation Election Form in the form provided by the Administrator, subject to such terms and conditions as the Retirement Committee may impose, including, but not limited to, medical examinations, health screening, medical records reviews, etc. The Deferred Compensation Election Form shall set forth the Participant's election to defer any whole percentage of Compensation earned by the Participant during the Plan Year in accordance with Section 4.3. A Participant shall only be entitled to defer Compensation in the amounts and for the periods determined, from time to time, in the sole and absolute discretion of the Retirement Committee. A Deferred Compensation Election Form shall be effective if, and only if, it is timely accepted by the Administrator on behalf of the Company. If accepted by the Administrator, the Compensation to be deferred, as specified in the Deferred Compensation Election Form, shall be deferred and the Participant's Compensation shall be correspondingly reduced. 4.3 MAXIMUM AND MINIMUM DEFERRALS The following maximum and minimum deferrals of Compensation shall apply to the amount to be deferred by any Participant, provided, however, that the Retirement Committee may from time to time, in its sole and absolute discretion, adjust the maximum and minimum deferrals permitted hereunder: (i) Minimum Deferral - one percent (1%) of Base Salary or one percent (1%) of Annual Bonus, whichever is less; (ii) Maximum Deferral- (a) forty percent (40%) of Base Salary, and (b) one hundred percent (100%) of any bonus paid under any Bonus Plan. 4.4 ELECTION TO DEFER IRREVOCABLE Except as provided in this Plan or by action of the Retirement Committee as provided herein, a Participant's election to defer any amounts of any nature whatsoever pursuant to the Plan shall be irrevocable when made and accepted by the Administrator and shall not be subject to amendment or modification in any manner whatsoever thereafter. 4.5 RETIREMENT BENEFIT PLAN EQUIVALENTS The Company, in its sole discretion, may choose to credit a Participant's Account for any Plan Year in which the Participant makes a deferral under this Plan to make up amounts that would have been provided to the Participant under the Qualified Plans had the Participant made no elective deferral under this Plan and without regard for Statutory Limitations. Such credit will be credited to the Participant's Account on the first day of the Plan Year following the Plan Year for which the contribution was or would have been made under the Qualified Plans. 4.6 EARLY DISTRIBUTION DEFERRALS At the time of submitting a Deferred Compensation Election Form, a Participant may make an irrevocable election to create a Scheduled Withdrawal Account as to the amounts deferred 6 pursuant to that Form, including any earnings thereon, which will be paid out at an earlier time than Retirement as provided in Section 6 hereunder; provided, however, that the deferral period shall in no case be less than three (3) years from the first day of the Plan Year to which the Deferred Compensation Election Form applies; provided, further, that the payment of the Scheduled Withdrawal Account shall be in one lump sum, and, once paid, the Participant shall be entitled to no further benefits with respect to such Scheduled Withdrawal Account. A Participant may have multiple Scheduled Withdrawal Accounts. SECTION 5. ACCOUNTS 5.1 ESTABLISHMENT AND CREDITING OF ACCOUNT The Company shall establish a separate Account on its books with respect to each deferral election made by each Participant and shall credit to such Account(s) certain amounts in accordance with the provisions of the Plan. Accounts shall be deemed to be credited with notional gains or losses as provided in Section 5.4 from the date deferral is credited to the Account through the Valuation Date. 5.2 COMPENSATION DEFERRALS The Compensation that is deferred pursuant to a Participant's Deferred Compensation Election Form shall be credited to a Participant's Account as of the date the Participant would have otherwise received the Compensation. The Company shall be entitled to deduct from the Participant's Compensation which is subject to a Deferred Compensation Election Form any amount it is required to withhold or collect under any federal, state or local law for taxes or other charges, including, without limitation, Social Security (FICA) and Medicare taxes. 5.3 INVESTMENT ELECTIONS The Administrator shall establish a procedure by which a Participant may elect among investment alternatives or rates made available by the Administrator and by which the Participant may change investment elections at least quarterly. The Administrator may allow a Participant to make a different election for each Account, or may provide that the investment election applies to all of a Participant's Accounts. The Participant's choice among investments shall be solely for purposes of calculating the Crediting Rate. If the Participant fails to elect an investment election, the Crediting Rate shall be based on the investment alternative which is a money market fund or alternative most similar to a money market fund. At no time shall the Company be obligated to set aside or invest funds as directed by the Participant and, if the Company elects to invest funds as directed by the Participant, the Participant shall have no more right to such investments than any other unsecured general creditor. 5.4 CREDITING RATE The Crediting Rate on amounts in a Participant's Account(s) shall be based on the Participant's investment election(s) pursuant to Section 5.3. A Participant's Account(s) shall reflect the investments selected by the Participant. If an investment on which the Crediting Rate is based sustains a loss, the Participant's Account(s) shall be reduced to reflect such loss. During installment distributions, a Participant's Account(s) shall continue to be credited at the Crediting Rate. 7 5.5 CONTRACTUAL OBLIGATION It is intended that the Company is under a contractual obligation to make payments in accordance with terms and conditions of the Plan. A Participant shall have no rights to such payments, other than as a general, unsecured creditor of the Company. Account balances shall not be financed through a trust fund or any other assets or properties in which a Participant has any interest whatsoever. Payments from such Accounts shall be made out of the general funds of the Company. All such Accounts shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant pursuant to the Plan. Such Accounts shall not constitute or be treated as a trust fund or an interest in any specific assets or properties of the Company of any sort. 5.6 CHARGES AGAINST AND BALANCE OF ACCOUNTS Each Participant's Account, as of each Valuation Date, shall consist of the balance of such Account as of the immediately preceding Valuation Date, plus deferrals credited to the Account since the immediately preceding Valuation Date, plus (or minus, if the investment return is negative) the amount to be credited to such Account by the Company based on the Crediting Rate pursuant to Section 5.4 hereof (taking into account the timing of any contribution or distribution), less the amount of all distributions, if any, made from such Account since the immediately preceding Valuation Date. 5.7 STATEMENT OF ACCOUNTS The Administrator, shall from time to time, at least quarterly, provide to each Participant a statement in such form as the Retirement Committee deems desirable setting forth the Participant's Accounts as of the end of the prior period. SECTION 6. PAYMENT OF BENEFITS 6.1 RETIREMENT BENEFITS In the event of the Participant's Retirement, the Participant shall be entitled to receive an amount equal to the total balance(s) of the Participant's Account(s) credited with notional earnings as provided in Section 5 through the Valuation Date. The Participant may elect, at the same time he makes a deferral election, to receive benefits from the Account credited with such deferrals, in a lump sum or in annual installments over 3, 5, 10 or 15 years. In other words, the Participant may have different benefit payout elections for each of his or her Accounts. If the Participant fails to make a timely election, the benefits shall be paid over fifteen (15) years. Payments shall begin on the Settlement Date following Retirement unless the Participant has made a timely election to have payments begin on any one of the first five (5) anniversaries of such date but in no event later than the Settlement Date following the date the Participant attains age seventy (70). An election to change the form of benefit payout for any Account may be made at any time prior to Retirement by submitting to the Administrator the form provided for such purpose but elections shall not be effective unless made no less than thirteen (13) calendar months prior to Retirement, and shall only be effective if they comply with Section 409A of the Code and any regulations promulgated thereunder. 6.2 BENEFITS FOR PARTICIPANTS UPON OTHER TERMINATIONS OF EMPLOYMENT In the event of the Participant's Termination of Employment, other than by reason of Retirement or death, the Participant shall be entitled to receive an amount equal to the total balance(s) of the 8 Participant's Account(s) credited with notional earnings as provided in Section 5 through the Valuation Date. The Participant may elect, at the same time he makes a deferral election, to receive benefits from the Account credited with such deferrals, in a lump sum or annual installments over 3, 5, 10, or 15 years. In other words, the Participant may have different benefit payout elections for each of his or her Accounts. If the Participant fails to make a timely election, the benefits shall be paid in a single lump sum. Payments shall begin on the Settlement Date following Termination of Employment unless the Participant has made a timely election to have the payments begin on the Settlement Date following the date when Participant would be eligible for Early Retirement or Normal Retirement. An election to change the form of benefit payout for any Account may be made at any time prior to Termination of Employment by submitting to the Administrator the form provided for such purpose but elections shall not be effective unless made no less than thirteen (13) calendar months prior to Termination of Employment, and shall only be effective if they comply with Section 409A of the Code and any regulations promulgated thereunder. 6.3 BENEFITS FOLLOWING A CHANGE OF CONTROL A new Participant may make an irrevocable election with respect to all future deferral Accounts on the Participant's first Deferred Compensation Election Form, to receive the full amount in his Account(s), credited with notional earnings as provided in Section 5 through the Valuation Date, in the event of a Change of Control prior to Termination of Employment. Such benefit shall be payable in a lump sum no later than the last day of the month following the month in which such Change of Control occurs, unless the Participant has elected in the Deferred Compensation Election Form to have such benefit paid in five (5) annual installments beginning on such date. In no event will accelerated payments of Accounts be made by the Administrator under this Section 6.2 if doing so would violate Section 409A of the Code and any regulations promulgated thereunder. 6.4 SURVIVORSHIP BENEFITS 6.4.1 DEATH PRIOR TO TERMINATION OF EMPLOYMENT If a Participant dies prior to receiving any benefits due hereunder, the Company shall pay to the Participant's Beneficiary a benefit equal to the Participant's Account(s) at death credited with notional earnings as provided in Section 5, payable in one lump sum as soon as possible after the Retirement Committee receives a certified copy of the Participant's death certificate. Payment of the benefit under this Section 6.4.1 shall relieve the company of any further obligation to pay benefits under the Plan. 6.4.2 DEATH AFTER COMMENCEMENT OF BENEFITS If a participant dies after payments pursuant to this Section 6 have commenced hereunder, but prior to receiving all of the scheduled annual payments, the Company shall pay the remaining annual payments to the Participant's Beneficiary. 6.5 SMALL ACCOUNT EXCEPTION Notwithstanding any other provision of the Plan or a Participant's Deferred Compensation Election Form, the Administrator, taking into account the expense and inconvenience of administering the Plan with respect to small Accounts as set forth herein, may, in its sole discretion, elect to distribute a Participant's benefits in a lump sum. This Section 6.5 shall only apply to small Accounts attributable to a Participant that have an aggregate balance of $25,000 or 9 less at the time benefits payable pursuant to this Section 6 would otherwise commence. In addition, if the installments payable under this Section 6 would, in the aggregate, be less than $3,000 per year, the Administrator, in its sole discretion, may shorten the period over which the installment payments are made. In no event will accelerated payments of small Accounts be made by the Administrator if doing so would violate Section 409A of the Code or any regulations promulgated thereunder. 6.6 RECIPIENTS OF PAYMENTS; DESIGNATION OF BENEFICIARY All payments to be made by the Company shall be made to the Participant, if living. Except as otherwise provided herein, in the event of a Participant's death prior to the receipt of all benefit payments, all subsequent payments to be made under the Plan shall be to the Beneficiary of the Participant in accordance with a Participant's designation of Beneficiary. Unless otherwise specified in the Participant's Beneficiary designation, in the event a Beneficiary dies before receiving all payments due to such Beneficiary pursuant to this Plan, the then remaining payment shall be paid to the legal representatives of the Beneficiary's estate. The Participant shall designate a Beneficiary, or during his lifetime change such designation, by filing a written notice of such designation with the Administrator in such form and subject to such rules and regulations as the Administrator may prescribe. If the Participant's Compensation constitutes community property, then any Beneficiary designation made by the Participant other than a designation of such Participant's spouse shall not be effective if any such Beneficiary or beneficiaries are to receive more than fifty percent (50%) of the aggregate benefits payable hereunder, unless such spouse shall approve such designation in writing. If no designation shall be in effect at the time when any benefits payable under this Plan shall become due, the Beneficiary shall be the legal representatives of the Participant's estate. In the event a benefit is payable to a minor or person declared incompetent or to a person incapable of handling the disposition of his property, the Retirement Committee may determine to pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent or person. The Retirement Committee may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Retirement Committee and the Company from all liability with respect to such benefit. 6.7 FINANCIAL EMERGENCY In the event of a Participant's unforeseeable emergency, the Retirement Committee, in its sole and absolute discretion, may alter the timing or manner of payment of any benefits or deferred amounts to be paid pursuant to the Plan or release the Participant from the obligation of making deferrals. For purposes of this section, an unforeseeable emergency shall mean a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant's spouse, or a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Any early payment of benefits or withdrawal of deferred amounts due to an unforeseeable emergency shall be limited to the amount necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant's assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). The foregoing standard for distributions shall be modified so that it is consistent with any regulations promulgated under Section 409A of the Code. The Retirement Committee's decision in passing 10 upon severe financial hardship of the Participant and the manner in which, if at all, the payment or deferral of any amounts pursuant to the Plan shall be altered or modified shall be final, conclusive and not subject to appeal. The Participant shall have no right to make up any amount distributed or transferred as a result of a determination of financial emergency by the Retirement Committee pursuant to this Section 6.7. 6.8 PRE-RETIREMENT BENEFITS In the event that Participant has made the election provided for in Section 4.6 to receive amounts prior to Retirement, such pre-retirement benefits shall be paid in accordance with such election. The calculation of the amount of such pre-retirement benefit shall be made in accordance with the terms and conditions of the Plan, including, without limitation, Section 5 hereof. SECTION 7. FORFEITURE In the event of a Participant's suicide during the first two (2) years after the filing of any Deferred Compensation Election Form the Retirement Committee, in its sole and absolute discretion, may terminate all or any part of a Participant's (or Beneficiary's) right to receive any benefits whatsoever hereunder, provided, however, that the Beneficiary of such a Participant shall be entitled to receive at least an amount equal to that portion of the Participant's Account which has in fact been deferred pursuant to the Plan, without increase, growth addition or any other amount, payable in such manner as the Retirement Committee, in its sole and absolute discretion shall determine. In the event a Participant (i) makes any material misstatement of information in connection with any Deferred Compensation Election Form (ii) fails to disclose to the Company or its agents any material item of his personal or medical history (including, but not limited to, habits of drug, chemical or tobacco use), (iii) takes any other action (or fails to take any action), which action (or failure to act) results in a loss to the Company under the Plan, then the Retirement Committee, in its sole and absolute discretion, may terminate all or any part of a Participant's (or Beneficiary's) right to receive any benefits whatsoever hereunder. SECTION 8. NON-TRANSFERABILITY In no event shall the Company make any payment under the Plan to any assignee or creditor of a Participant or a Beneficiary. Prior to the time of payment hereunder, a Participant or Beneficiary shall have no rights by way of anticipation or otherwise to assign or otherwise dispose of any interest under the Plan nor shall such rights be assigned or transferred by operation of law. SECTION 9. ADMINISTRATION 9.1 ADMINISTRATION This Plan shall be administered by the Retirement Committee and the Administrator. The Retirement Committee may from time to time establish rules for the administration of the Plan that are not inconsistent with the provisions of the Plan. 11 9.2 FINALITY OF DETERMINATION Except as otherwise provided herein, any interpretation or determination by the Retirement Committee as to any disputed questions arising under the Plan, including questions of fact (or questions of construction and interpretation), shall be final, binding and conclusive upon all persons, subject only to a determination otherwise by the Board. 9.3 CLAIMS PROCEDURE If any Participant, Beneficiary or other properly interested party is in disagreement with any determination that has been made under the Plan, a claim may be presented, but only in accordance with the procedures set forth herein. 9.3.1 ORIGINAL CLAIM Any Participant, Beneficiary or other properly interested party may, if he so desires, file with the Retirement Committee a written claim for benefits or a determination under the Plan. Within ninety (90) days after the filing of such a claim, the Retirement Committee shall notify the claimant in writing whether his claim is upheld or denied in whole or in part or shall furnish the claimant a written notice describing specific special circumstances requiring a specified amount of additional time (but not more than one hundred eighty (180) days from the date the claim was filed) to reach a decision on the claim. If the claim is denied in whole or in part, the Retirement Committee shall state in writing: (i) the specific reason or reasons for the denial; (ii) the references to the pertinent provisions of this Plan on which the denial is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) an explanation of the claims review procedure set forth in this section, including a statement of the claimant's right to bring a civil action under ERISA Section 502(a) following a denial on review. 9.3.2 CLAIM REVIEW PROCEDURE Within sixty (60) days after receipt of notice that his claim has been denied in whole or in part, the claimant may file with the Retirement Committee a written request for a review and may, in conjunction therewith, submit written comments, documents, records and other information relating to the Claim. The claimant or his authorized representative, shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant's claim. For purposes of this section, a document, record or other information shall be considered "relevant" to a claimant's claim if such document, record or other information (i) was relied upon by the Retirement Committee in making its decision on the claim, (ii) was submitted, considered or generated in the course of the Retirement Committee's making its decision on the claim, without regard to whether the Retirement Committee relied upon such document, record or other information in making its decision, or (iii) complies with administrative processes and safeguards which are designed to insure and to verify that decisions on claims are made in accordance with governing Plan documents, whose provisions are applied consistently with respect to similarly situated claimants. The Retirement Committee's review of the claimant's claim and of the Retirement Committee's denial of such claim shall take into account all comments, documents, records, and other information submitted 12 by the claimant or his authorized representative relating to the claim, without regard to whether such information was submitted or considered in the initial decision on the claim. Within sixty (60) days after the filing of such a request for review, the Retirement Committee shall notify the claimant in writing whether, upon review, the claim was upheld or denied in whole or in part or shall furnish the claimant a written notice describing specific circumstances requiring a specified amount of additional time (but not more than one hundred twenty (120) days from the date the request for review was filed) to reach a decision on the request for review. In the case of a decision on appeal upholding the Retirement Committee's initial denial of the claimant's claim, such notice shall set forth, in a manner calculated to be understood by the claimant, the following information: (i) the specific reason or reasons for the decisions on appeal; (ii) references to the pertinent provisions of this Plan on which the decision on appeal is based; (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant's claim for benefits; and (iv) a statement of the claimant's right to bring an action under ERISA Section 502(a). 9.3.3 GENERAL RULES (i) No inquiry or question shall be deemed to be a claim or a request for a review of a denied claim unless made in accordance with the foregoing claims procedure. The Retirement Committee may require that any claim for benefits and any request for a review of denied claim be filed on forms to be furnished by the Administrator upon request. (ii) All decisions on claims and on requests for a review of denied claims shall be made by the Retirement Committee. In accordance with Section 9.2 hereof, decisions of the Retirement Committee shall be final, binding and conclusive upon all persons. (iii) The Retirement Committee may, in its discretion, hold one or more hearings on a claim or a request for a review of a denied claim. (iv) Claimants may be represented by a lawyer or other representative (at their own expense), but the Retirement Committee reserves the right to require the claimant to furnish written authorization. A claimant's representative shall be entitled to copies of all notices given to the claimant. (v) The decision of the Retirement Committee on a claim and on a request for a review of a denied claim shall be served on the claimant in writing. If a decision or notice is not received by a claimant within the time specified, the claim or request for a review of a denied claim shall be deemed to have been denied. 13 (vi) Prior to filing a claim or a request for a review of a denied claim, the claimant or his representative shall have a reasonable opportunity to review a copy of this Plan and all other pertinent documents in the possession of the Company and the Retirement Committee. (vii) The Administrator and the individuals serving on the Retirement Committee shall, except as prohibited by law, be indemnified and held harmless by the employer from any and all liabilities, costs, and expenses (including legal fees), to the extent not covered by liability insurance arising out of any action taken by any individual of this Committee with respect to this plan, unless such liability arises from the individual's own claim for his or her own benefit, the proven gross negligence, bad faith, or (if the individual had reasonable cause to believe his or her conduct was unlawful) the criminal conduct of such individual. This indemnification shall continue as to an individual who has ceased to be a member of the Retirement Committee for the employer and shall inure to the benefit of the heirs, executors and administrators of such an individual. 9.4 EXPENSES The cost of payment from the Plan and the expense of administering the Plan shall be borne by the Company. 9.5 TAX WITHHOLDING The Company shall have the right to deduct from all payments to be made under the Plan, any federal, state or local taxes or other charges required by law to be withheld with respect to such payments, as determined in the sole discretion of the Retirement Committee. SECTION 10. AMENDMENT AND TERMINATION The Board, or the Retirement Committee, in the circumstances provided below, may at any time amend, modify, terminate or suspend, this Plan and no Participant or any other person shall have any right, title, interest or claim against the Company, its directors, officers or employees for any amounts, except that (i) the Participant shall be fully vested in his Account hereunder as of the date on which the Plan is terminated or suspended, (ii) no amendment shall eliminate the crediting of an investment return on an Account prior to the complete distribution thereof or provide for a distribution method which accelerates the timing of distributions hereunder without the consent of a Participant and (iii) subsequent to a Change of Control, unless a majority of the holders of Account balances agree to the contrary, the Company or the Administrator may not alter (a) the choice of investments in the Investment Election as in effect immediately before the Change of Control and (b) the payout options as in effect immediately before the Change of Control. Any such amendment, modification or termination of the Plan may occur either (i) without limitation, by resolution of the Board or (ii) in any respect that does not materially increase the cost of the Plan to the Company, by action of the Retirement Committee (with the written concurrence of the Chief Executive Officer). Notwithstanding the foregoing, if any provision of this Plan or the accompanying election forms does not comply with the requirements of Section 409A of the Code, or any regulations or other guidance promulgated thereunder, such that, absent correction, any Participant would be subject to a 20% penalty under 14 Section 409A(a)(1)(B)(i)(II) of the Code, the Retirement Committee may amend or modify this Plan or the election forms in a manner designed to avoid such penalty, without the consent of any affected Participant, even if such change is otherwise detrimental to any Participant in the Plan. SECTION 11. APPLICABLE LAW The Plan shall be governed and construed in accordance with the laws of the State of Wisconsin, without regard to its conflict of laws provisions, unless federal law supersedes Wisconsin law in which event the applicable federal law shall apply. The invalidity of any portion of the Plan shall not invalidate the remainder hereof and said remainder shall continue in full force. The captions and other titles herein are designed for convenience only and are not to be resorted to for the purposes interpreting any provision of the Plan. The waiver by the Company of any breach of any provision of the Plan shall not operate or be construed as a waiver of any subsequent breach by that Participant or any other Participant. SECTION 12. NO VESTED RIGHTS The Plan and elections hereto shall not be deemed or construed to be a written contract of employment between any Participant (or any person eligible to be a Participant) and the Company, nor shall any provision of the Plan (i) restrict the right of the Company to discharge any Participant (or any person eligible to be a Participant) or (ii) in any way whatsoever grant to any Participant (or any person eligible to be a Participant) the right to receive any guaranteed base compensation, Annual Bonus, incentive bonus awards, commissions, fees or any other payments of any nature whatsoever. SECTION 13. BINDING AGREEMENT The provisions of the Plan shall be binding upon the Participant, his or her heirs, personal representatives and beneficiaries, and subject to the rights granted to amend or terminate the Plan, the provisions of the Plan shall also be binding upon the Company, its successors and assigns. SECTION 14. NOTICE Any notice or filing required or permitted to be given to the Company or a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, in the case of the Company, to the principal office of the Company, directed to the attention of the Administrator, and in the case of a Participant, to the last known address of such Participant indicated on the employment records of the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. 15 SECTION 15. ERRORS IN BENEFIT STATEMENT OR DISTRIBUTION In the event an error is made in a benefit statement, such error shall be corrected on the next benefit statement following the date such error is discovered. In the event of an error in a distribution, the Participant's Account(s) shall, immediately upon discovery of such error, be adjusted to reflect such under or overpayment and, if possible, the next distribution shall be increased or decreased to correct such prior error. If the remaining balance of a Participant's Account(s) is insufficient to cover an erroneous overpayment, the Company, may, at its discretion, offset any amount payable to the Participant from the Company (including but not limited to salary, bonuses, expense reimbursements, severance benefits or other employee compensation benefit arrangements, as allowed by law) to recoup the amount of such overpayment. SECTION 16. ERISA The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of "management or highly compensated employees" within the meaning of Sections 201, 301, and 401 of ERISA and, therefore, exempt from Parts 2, 3 and 4 of Title I of ERISA. Adopted by the Board of Directors: November 17, 2004 16 EX-31.1 4 c95602a1exv31w1.txt SECTION 302 CERTIFICATIONS EXHIBIT 31.1 CERTIFICATIONS OF BRIAN W. BENDER, CO-CHIEF EXECUTIVE OFFICER, PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Brian W. Bender, certify that: 1. I have reviewed this annual report on Form 10-K of ShopKo Stores, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 27, 2005 /s/ Brian W. Bender ---------------------------------- By: Brian W. Bender Title: Co-Chief Executive Officer* * The office of Chief Executive Officer is comprised of three executive officers, each serving as Co-Chief Executive Officer. CERTIFICATIONS OF PAUL G. WHITE, CO-CHIEF EXECUTIVE OFFICER, PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Paul G. White, certify that: 1. I have reviewed this annual report on Form 10-K of ShopKo Stores, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 27, 2005 /s/ Paul G. White ---------------------------------- By: Paul G. White Title: Co-Chief Executive Officer* *The office of Chief Executive Officer is comprised of three executive officers, each serving as Co-Chief Executive Officer. CERTIFICATIONS OF MICHAEL J. HOPKINS, CO-CHIEF EXECUTIVE OFFICER, PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Michael J. Hopkins, certify that: 1. I have reviewed this annual report on Form 10-K of ShopKo Stores, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 27, 2005 /s/ Michael J. Hopkins ---------------------------------- By: Michael J. Hopkins Title: Co-Chief Executive Officer* *The office of Chief Executive Officer is comprised of three executive officers, each serving as Co-Chief Executive Officer. EX-31.2 5 c95602a1exv31w2.txt SECTION 302 CERTIFICATION EXHIBIT 31.2 CERTIFICATION OF BRIAN W. BENDER, SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER, PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Brian W. Bender, certify that: 1. I have reviewed this annual report on Form 10-K of ShopKo Stores, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 27, 2005 /s/ Brian W. Bender ----------------------------- By: Brian W. Bender Title: Senior Vice President, Chief Financial Officer EX-32.1 6 c95602a1exv32w1.txt SECTION 1350 STATEMENT EXHIBIT 32.1 SHOPKO STORES, INC. CERTIFICATION OF PERIODIC FINANCIAL REPORT PURSUANT TO 18 U.S.C. SECTION 1350 Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of ShopKo Stores, Inc. (the "Company") certify that, to their respective knowledge, the Annual Report on Form 10-K of the Company for the fiscal year ended January 29, 2005 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: May 27, 2005 SHOPKO STORES, INC. /s/ Brian W. Bender --------------------------- Brian W. Bender Co-Chief Executive Officer /s/ Paul G. White --------------------------- Paul G. White Co-Chief Executive Officer /s/ Michael J. Hopkins --------------------------- Michael J. Hopkins Co-Chief Executive Officer This certification accompanies this Annual Report on Form 10-K pursuant to Section 906 of the Sarbanes - Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of the Securities Exchange Act of 1934. EX-32.2 7 c95602a1exv32w2.txt SECTION 1350 STATEMENT EXHIBIT 32.2 SHOPKO STORES, INC. CERTIFICATION OF PERIODIC FINANCIAL REPORT PURSUANT TO 18 U.S.C. SECTION 1350 Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of ShopKo Stores, Inc. (the "Company") certifies that, to his knowledge, the Annual Report on Form 10-K of the Company for the fiscal year ended January 29, 2005 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: May 27, 2005 SHOPKO STORES, INC. /s/ Brian W. Bender --------------------------- Brian W. Bender Senior Vice President, Chief Financial Officer This certification accompanies this Annual Report on Form 10-K pursuant to Section 906 of the Sarbanes - Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of the Securities Exchange Act of 1934. -----END PRIVACY-ENHANCED MESSAGE-----