EXECUTIVE EMPLOYMENT
AGREEMENT

     THIS
EXECUTIVE EMPLOYMENT AGREEMENT (this
“Agreement”) is made effective March 22, 2007, (the “Effective Date”) by and between Ross
Stores, Inc. (the “Company”), a Delaware corporation, and Michael O’Sullivan (the
“Executive”).

RECITALS 

     A. The
Company wishes to employ the Executive, and the Executive is willing to accept
such employment, as Executive Vice President,
Chief Administrative Officer. 

     B. It
is now the mutual desire of the Company and the Executive to enter into a
written employment agreement to govern the terms of the Executive’s employment
by the Company as of and following the Effective Date on the terms and
conditions set forth below. 

TERMS AND CONDITIONS 

     In
consideration for the promises of the parties set forth below, the Company and
the Executive
hereby agree as follows: 

     1. Term. Subject to the provisions of
Section 6 of this Agreement, the term of employment of the Executive by the
Company under this Agreement (the “Term
of Employment”) shall be as
follows:

          (a) Initial
Term. The initial Term of Employment of the
Executive by the Company under this Agreement shall begin on the Effective Date
and end on March 31, 2011, (the “Initial
Term”), unless extended or terminated earlier
in accordance with this Agreement.

          (b) Renewal Term. Upon the
timely written request of the Executive to extend the Term of Employment, the
Compensation Committee (the “Committee”) of the Board of Directors
(the “Board”) of the Company shall consider extending the Executive’s employment
with the Company under this Agreement. To be timely, such request must be
delivered to the Company’s Chief Executive Officer not earlier than twelve (12)
months prior to the end of the then effective Initial Term or Renewal Term and,
in any case, while the Executive remains an employee of the Company. Such
request must contain no proposed modification to the provisions of this
Agreement other than an extension of the Term of Employment as then in effect
for an additional two (2) years. Within thirty (30) days following the receipt
of such notice, the Chief Executive Officer will discuss such request with the
Committee and advise the Executive, in writing, within thirty (30) days
following its consideration of the Executive’s written request, of the approval
or disapproval of such extension request. The failure to provide such written
advice shall constitute a denial of the Executive’s request for extension. If
the Executive’s request for an extension is approved, the Term of Employment
shall be extended for two (2) additional years commencing on the date
immediately following the date of expiration of the Term of Employment in effect
at the time of the Executive’s written request. Such additional two-year period
is referred to herein as a “Renewal
Term.”




     2. Position and Duties. During the Term
of Employment, the Executive shall serve as Executive Vice President, Chief Administrative Officer. As used in this Agreement, the term “Company” includes Ross
Stores, Inc. and each and any of its divisions, affiliates or subsidiaries
(except that, where the term relates to stock, stockholders, stock options or
other stock-based awards or the Board, it means Ross Stores, Inc.). The
Executive’s employment may be transferred, assigned, or re-assigned to Ross
Stores, Inc. or a division, affiliate or subsidiary of Ross Stores, Inc., and
such transfer, assignment, or re-assignment will not constitute a termination of
employment or “Good Reason” for the Executive’s termination of employment under
this Agreement. During the Term of Employment, the Executive may engage in
outside activities provided those activities (including but not limited to
membership on boards of directors of not-for-profit and for-profit
organizations) do not conflict with the Executive’s duties and responsibilities
hereunder, and provided further that the Executive gives written notice to the
Board of any significant outside business activity in which the Executive plans
to become involved, whether or not such activity is pursued for profit.


     3. Principal Place of
Employment. The Executive shall be employed
at the Company’s offices in Pleasanton, California,
except for required travel on the Company’s business to an extent substantially
consistent with present business travel obligations of the Executive’s
position.

     4. Compensation and Related Matters.


          (a) Salary. During the Term of
Employment, the Company shall pay to the Executive a salary at a rate of not
less than Five Hundred Ninety Five Thousand
Dollars ($595,000) per annum. The Executive’s
salary shall be payable in substantially equal installments in accordance with
the Company’s normal payroll practices applicable to senior executives. Subject
to the first sentence of this Section 4(a), the Executive’s salary may be
adjusted from time to time by the Committee in accordance with normal business
practices of the Company. 

          (b) Bonus. During the Term of
Employment, the Executive shall be eligible to receive an annual bonus paid
under the Company’s existing incentive bonus plan under which the Executive is
eligible (which is currently the Incentive Compensation Plan) or any replacement
plan that may subsequently be established and in effect during the Term of
Employment. The current target annual bonus the Executive is eligible to earn
upon achievement of 100% of all applicable performance targets under such
incentive bonus plan is 65% of the Executive’s then effective annual salary rate. The
Executive’s death, termination for Cause or Voluntary Termination (as described
in Sections 6(a), 6(c) and 6(f), respectively) prior to the Company’s payment of
the bonus for a fiscal year of the Company will cause the Executive to be
ineligible for any annual bonus for that fiscal year or any pro-rata portion of
such bonus.

          (c) Expenses. During the Term
of Employment, the Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by the Executive in performing services
hereunder, including all reasonable expenses of travel and living while away
from home, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company.


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          (d) Benefits. During the Term
of Employment, the Executive shall be entitled to participate in all of the
Company’s employee benefit plans and arrangements in which senior executives of
the Company are eligible to participate. The Company shall not make any changes
in such plans or arrangements which would adversely affect the Executive’s
rights or benefits thereunder, unless such change occurs pursuant to a program
applicable to all senior executives of the Company and does not result in a
proportionately greater reduction in the rights or benefits of the Executive as
compared with any other similarly situated senior executive of the Company. The
Executive shall be entitled to participate in, or receive benefits under, any
employee benefit plan or arrangement made available by the Company in the future
to its senior executives, subject to, and on a basis consistent with, the terms,
conditions and overall administration of such plans and arrangements. Except as
otherwise specifically provided herein, nothing paid to the Executive under any
plan or arrangement presently in effect or made available in the future shall be
in lieu of the salary or bonus otherwise payable under this Agreement.


          (e) Vacations. During the Term
of Employment, the Executive shall be entitled to twenty (20) vacation days in
each calendar year, and to compensation in respect of earned but unused vacation
days, determined in accordance with the Company’s vacation plan. The Executive
shall also be entitled to all paid holidays given by the Company to its senior
executives. Unused vacation days shall not be forfeited once they have been
earned and, if still unused at the time of the Executive’s termination of
employment with the Company, shall be promptly paid to the Executive at their
then-current value, based on the Executive’s daily salary rate at the time of
the Executive’s termination of employment.

          (f) Services Furnished. The
Company shall furnish the Executive with office space and such services as are
suitable to the Executive’s position and adequate for the performance of the
Executive’s duties during the Term of Employment. 

     5. Confidential Information and
Intellectual Property. 

          (a) Other than in the performance of the Executive’s duties
hereunder, the Executive agrees not to use in any manner or disclose,
distribute, publish, communicate or in any way cause to be used, disclosed,
distributed, published, or communicated in any way or at any time, either while
in the Company's employ or at any time thereafter, to any person not employed by
the Company, or not engaged to render services to the Company, any Confidential
Information (as defined below) obtained while in the employ of the Company.


          (b) Confidential Information includes any written or unwritten
information which relates to and/or is used by the Company or its subsidiaries,
affiliates or divisions, including, without limitation (i) the names, addresses,
buying habits and other special information regarding past, present and
potential customers, employees and suppliers of the Company, (ii) customer and
supplier contracts and transactions or price lists of the Company and suppliers,
(iii) methods of distribution, (iv) all agreements, files, books, logs, charts,
records, studies, reports, processes, schedules and statistical information, (v)
data, figures, projections, estimates, pricing data, customer lists, buying
manuals or procedures, distribution manuals or procedures, other policy and
procedure manuals or handbooks, (vi) supplier information, tax records,
personnel histories and records, sales information, and property information,
(vii) information regarding the present or future phases of business, (viii)
ideas, inventions, trademarks, business information, know-how, processes,
techniques, improvements, designs, redesigns, creations, discoveries, trade
secrets, and developments, (ix) all computer software licensed or developed by
the Company or its subsidiaries, affiliates or divisions, computer programs,
computer-based and web-based training programs, and systems, and (x) finances
and financial information, but Confidential Information will not include
information of the Company or its subsidiaries, affiliates or divisions that (1)
became or becomes a matter of public knowledge through sources independent of
the Executive, (2) has been or is disclosed by the Company or its subsidiaries,
affiliates or divisions without restriction on its use, or (3) has been or is
required or specifically permitted to be disclosed by law or governmental order
or regulation. The Executive also agrees that, if there is any reasonable doubt
whether an item is public knowledge, to not regard the item as public knowledge
until and unless the Company’s Chief Executive Officer confirms to the Executive
that the information is public knowledge.

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          (c) The provisions of this Section 5 shall not preclude the
Executive from disclosing such information to the Executive's professional tax
advisor or legal counsel solely to the extent necessary to the rendering of
their professional services to the Executive if such individuals agree to keep
such information confidential.

          (d) The Executive agrees that upon leaving the Company’s employ
the Executive will remain reasonably available to answer questions from Company
officers regarding the Executive’s former duties and responsibilities and the
knowledge the Executive obtained in connection therewith. 

          (e) The Executive agrees that upon leaving the Company's employ
the Executive will not communicate with, or give statements to, any member of
the media (including print, television, or radio media) relating to any matter
(including pending or threatening lawsuits or administrative investigations)
about which the Executive has knowledge or information (other than knowledge or
information that is not Confidential Information) as a result of employment with
the Company. The Executive further agrees to notify the Chief Executive Officer
or his or her designee immediately after being contacted by any member of the
media with respect to any matter affected by this section. 

          (f) The Executive agrees that all information, inventions, and
discoveries, whether or not patented or patentable, made or conceived by the
Executive, either alone or with others, at any time while employed by the
Company, which arises out of such employment or is pertinent to any field of
business or research in which, during such employment, the Company, its
subsidiaries, affiliates or divisions is engaged or (if such is known to or
ascertainable by the Executive) is considering engaging (“Intellectual Property”)
shall (i) be and remain the sole property of the Company and the Executive shall
not seek a patent with respect to such Intellectual Property without the prior
consent of an authorized representative of the Company and (ii) be disclosed
promptly to an authorized representative of the Company along with all
information the Executive possesses with regard to possible applications and
uses. Further, at the request of the Company, and without expense or additional
compensation to the Executive, the Executive agrees to execute such documents
and perform such other acts as the Company deems necessary to obtain patents on
such Intellectual Property in a jurisdiction or jurisdictions designated by the
Company, and to assign to the Company or its designee such Intellectual Property
and all patent applications and patents relating thereto.

4 




          (g) The Executive and the Company agree that the Executive intends
all original works of authorship within the purview of the copyright laws of the
United States authored or created by the Executive in the course of the
Executive’s employment with the Company will be works for hire within the
meaning of such copyright law. 

          (h) Upon termination of the Executive’s employment, or at any time
upon request of the Company, the Executive will return to the Company all
Confidential Information and Intellectual Property, in any form, including but
not limited to letters, memoranda, reports, notes, notebooks, books of account,
drawings, prints, specifications, formulae, data printouts, microfilms, magnetic
tapes, disks, recordings, documents, and all copies thereof.

     6. Termination. The Executive’s
employment may be terminated during the Term of Employment only as follows:


          (a) Death. The Executive’s
employment shall terminate upon the Executive’s death. 

          (b) Disability. If, as a result
of the Executive’s Disability (as defined below), the Executive shall have been
absent from the Executive’s duties hereunder on a full-time basis for the entire
period of six consecutive months, and, within thirty days after written notice
of termination is given by the Company (which may occur before or after the end
of such six-month period), the Executive shall not have returned to the
performance of the Executive’s duties hereunder on full-time basis, the
Executive’s employment shall terminate. For purposes of this Agreement, the term
“Disability” shall mean a physical or mental illness, impairment or condition
reasonably determined by the Board that prevents the Executive from performing
the duties of the Executive’s position under this Agreement. 

          (c) For Cause. The Company may
terminate the Executive’s employment for Cause. For this purpose,
“Cause”
means the occurrence of any of the following (i) the Executive’s continuous
failure to substantially perform the Executive’s duties hereunder (unless such
failure is a result of a Disability as defined in Section 6(b)), (ii) the
Executive’s theft, dishonesty, breach of fiduciary duty for personal profit or
falsification of any documents of the Company, (iii) the Executive’s material
failure to abide by the applicable code(s) of conduct or other policies
(including, without limitation, policies relating to confidentiality and
reasonable workplace conduct) of the Company, (iv) misconduct by the Executive
within the scope of Section 304 of the Sarbanes-Oxley Act of 2002 as a result of
which the Company is required to prepare an accounting restatement, (v) the
Executive’s unauthorized use, misappropriation, destruction or diversion of any
tangible or intangible asset or corporate opportunity of the Company (including,
without limitation, the Executive’s improper use or disclosure of confidential
or proprietary information of the Company), (vi) any intentional misconduct or
illegal or grossly negligent conduct by the Executive which is materially
injurious to the Company monetarily or otherwise, (vii) any material breach by
the Executive of the provisions of Section 9 [Certain Employment Obligations] of
this Agreement, or (viii) the Executive’s conviction (including any plea of
guilty or nolo contendere) of any criminal act involving fraud, dishonesty,
misappropriation or moral turpitude, or which materially impairs the Executive’s
ability to perform his or her duties with the Company. A termination for Cause
shall not take effect unless: (1) the Executive is given written notice by the
Company of its intention to terminate the Executive for Cause; (2) the notice
specifically identifies the particular act or acts or failure or failures to act
which are the basis for such termination; (3) the notice is given within sixty
(60) days of the Company’s learning of such act or acts or failure or failures
to act; and (4) only in the case of clause (i), (iii), (v), (vi) or (vii) of the
second sentence of this Section 6(c), the Executive fails to substantially cure
such breach, to the extent such cure is possible, within sixty (60) days after
the date that such written notice is given to the Executive.

5




          (d) Without Cause. The Company
may terminate the Executive’s employment at any time Without Cause. A
termination “Without Cause” is a termination by the Company of the Executive’s
employment with the Company for any reasons other than the death or Disability
of the Executive or the termination by the Company of the Executive for Cause as
described in Section 6(c).

          (e) Termination by the Executive for Good Reason. The Executive may terminate the Executive’s employment with
the Company for “Good Reason,” which shall be deemed to occur if the Executive terminates
the Executive’s employment with the Company within sixty (60) days after written
notice to the Company by the Executive of the occurrence of one or more of the
following conditions, which condition(s) have not been cured within ten (10)
business days after the Company’s receipt of such written notice: (1) a failure
by the Company to comply with any material provision of this Agreement
(including but not limited to the reduction of the Executive’s salary or the
target annual bonus opportunity set forth in Section 4(b), (2) a significant
diminishment in the nature or scope of the authority, power, function or duty
attached to the position which the Executive currently maintains without the
express written consent of the Executive, or (3) the relocation of the
Executive’s Principal Place of Employment as described in Section 3 to a
location that increases the regular one-way commute distance between the
Executive’s residence and Principal Place of Employment by more than 25 miles
without the Executive’s prior written consent. The Executive’s failure to give
reasonably prompt written notice to the Company of the occurrence of a condition
constituting Good Reason or to terminate employment for Good Reason within the
60-day period following the Executive’s written notice of the occurrence of such
condition shall waive the Executive’s right to terminate employment for Good
Reason based upon such occurrence of such condition.

          (f) Voluntary Termination. The
Executive may voluntarily resign from the Executive’s employment with the
Company at any time (a “Voluntary
Termination”). A voluntary resignation from
employment by the Executive for Good Reason pursuant to Section 6(e) shall not
be deemed a Voluntary Termination.

          (g) Non-Renewal Termination. If
the Executive fails to request an extension of the Term of Employment in
accordance with Section 1(b) or if the Committee fails to approve such request,
this Agreement shall automatically expire at the end of the then current Term of
Employment (a “Non-Renewal
Termination”). 

6




     7. Notice and Effective Date of
Termination 

          (a) Notice. Any termination of
the Executive’s employment by the Company or by the Executive during the Term of
Employment (other than as a result of the death of the Executive or a
Non-Renewal Termination described in Section 6(g)) shall be communicated by
written notice of termination to the other party hereto. Such notice shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under that
provision. 

          (b) Date of Termination. The
date of termination of the Executive’s employment shall be: 

               (i) if the Executive’s employment is terminated by the Executive’s
death, the date of the Executive’s death; 

               (ii) if the Executive’s employment is terminated due to Disability
pursuant to Section 6(b), the date of termination shall be the last to occur of
the 31st day following delivery of the notice of termination to the Executive by
the Company or the end of the consecutive six-month period referred to in
Section 6(b). 

               (iii) if the Executive’s employment is terminated for any other
reason by either party, the date on which a notice of termination is delivered
to the other party; and 

               (iv) if the Agreement expires pursuant to a Non-Renewal Termination
described in Section 6(g), the parties’ employment relationship shall terminate
on the last day of the then current Term of Employment without any notice.


     8. Compensation and Benefits Upon
Termination. 

          (a) Termination Due To Disability, Without Cause or For Good
Reason. If the Executive’s employment
terminates pursuant to Section 6(b) [Disability], Section 6(d) [Without Cause],
or Section 6(e) [Termination by Executive for Good Reason], then, subject to
Section 22 [Compliance with Section 409A], in addition to all salary, annual
bonuses, expense reimbursements, benefits and accrued vacation days earned by
the Executive pursuant to Section 4 through the date of the Executive’s
termination of employment, the Executive shall be entitled to the following,
provided that within sixty (60) days following the Executive’s termination of
employment the Executive executes a general release of claims against the
Company and its subsidiaries, affiliates, stockholders, directors, officers,
employees, agents, successors and assigns in a form approved by the Company (the
“Release”)
and the period for revocation, if any, of such Release has expired without the
Release having been revoked: 

               (i) Salary. The Company shall
continue to pay to the Executive the Executive’s salary, at the rate in effect
immediately prior to such termination of employment, through the remainder of
the Term of Employment then in effect. 

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               (ii) Bonus. The Company shall
continue to pay to the Executive an annual bonus through the remainder of the
Term of Employment then in effect; provided, however, that the amount of the
annual bonus determined in accordance with this Section 8(a)(ii) for the fiscal
year of the Company in which such Term of Employment ends shall be prorated on
the basis of the number of days of such Term of Employment occurring within such
fiscal year. The amount of each annual bonus payable pursuant to this Section
8(a)(ii), prior to any proration, shall be equal to the greater of (A) the
annual bonus earned by the Executive for the most recent fiscal year of the
Company ending prior to the date of the Executive’s termination of employment or
(B) the annual bonus that the Executive would have earned under the Company’s
bonus plan for the fiscal year of the Company in which the Executive’s
termination of employment occurs had the Executive remained in its employment.
However, in no case shall any such post-termination annual bonus exceed the
lesser of 100% of the Executive's target bonus for the most recent fiscal year
of the Company ending prior to the date of the Executive's termination of
employment or 100% of the Executive's target bonus for the fiscal year of the
Company in which the Executive's termination of employment occurs. Such bonuses
shall not be paid until due under the applicable Company bonus plan. 

               (iii) Stock Options. Stock
options granted to the Executive by the Company and which remain outstanding
immediately prior to the date of termination of the Executive’s employment, as
provided in Section 7(b), shall immediately become vested in full upon such
termination of employment. 

               (iv) Restricted Stock. Shares of
restricted stock granted to the Executive by the Company which have not become
vested as of the date of termination of the Executive’s employment, as provided
in Section 7(b), shall immediately become vested on a pro rata basis. The number
of such additional shares of restricted stock that shall become vested as of the
date of the Executive’s termination of employment shall be that number of
additional shares that would have become vested through the date of such
termination of employment at the rate(s) determined under the vesting schedule
applicable to such shares had such vesting schedule provided for the accrual of
vesting on a daily basis (based on a 365 day year). For example, if the vesting
schedule applicable to a restricted stock award provides for vesting of 20%, 30%
and 50% of the award on the first, second and third anniversaries, respectively,
of the date of grant of the award, then pro rata vesting under this Section
8(a)(iv) shall be accrued at daily rates of 0.05479%, 0.08219% and 0.13699%,
respectively, from the date of grant through the date of termination of
employment. Any shares of restricted stock remaining unvested after such pro
rata acceleration of vesting shall automatically be reacquired by the Company in
accordance with the provisions of the applicable restricted stock agreement, and
the Executive shall have no further rights in such unvested portion of the
restricted stock. 

               (v) Other Equity Awards. Except
as set forth in Sections 8(a)(iii) and 8(a)(iv), performance share awards and
all other equity awards granted to the Executive by the Company which remain
outstanding immediately prior to the date of termination of the Executive’s
employment, as provided in Section 7(b), shall vest and be settled in accordance
with their terms. 

8




     The
Company shall have no further obligations to the Executive as a result of
termination of employment described in this Section 8(a) except as set forth in
Section 12. 

          (b) Death, Termination for Cause or Voluntary
Termination. If the Executive’s employment
terminates pursuant to Section 6(a) [Death], Section 6(c) [For Cause] or Section
6(f) [Voluntary Termination], the Executive (or the Executive’s designee or the
Executive’s estate) shall be entitled to receive only the salary, annual
bonuses, expense reimbursements, benefits and accrued vacation days earned by
the Executive pursuant to Section 4 through the date of the Executive’s
termination of employment. The Executive shall not be entitled to any bonus not
paid prior to the date of the Executive’s termination of employment, and the
Executive shall not be entitled to any prorated bonus payment for the year in
which the Executive’s employment terminates. Any stock options granted to the
Executive by the Company shall continue to vest only through the date on which
the Executive’s employment terminates, and unless otherwise provided by their
terms, any restricted stock, performance share awards or other equity awards
that were granted to the Executive by the Company that remain unvested as of the
date on which the Executive’s employment terminates shall automatically be
forfeited and the Executive shall have no further rights with respect to such
awards. The Company shall have no further obligations to the Executive as a
result of termination of employment described in this Section 8(b ) except as
set forth in Section 12. 

          (c) Non-Renewal Termination. If
the Agreement expires as set forth in Section 6(g) [Non-Renewal Termination],
then, subject to Section 22 [Compliance with Section 409A], in addition to all
salary, annual bonuses, expense reimbursements, benefits and accrued vacation
days earned by the Executive pursuant to Section 4 through the date of the
Executive’s termination of employment, the Executive shall be entitled to the
following, provided that within sixty (60) days following the Executive’s
termination of employment the Executive executes the Release and the period for
revocation, if any, of such Release has expired without the Release having been
revoked: 

               (i) Bonus. The Company shall
pay the Executive an annual bonus for the fiscal year of the Company in which
the date of the Executive’s termination of employment occurs, which shall be
prorated for the portion of such fiscal year that the Executive is employed by
the Company. The amount of such annual bonus, prior to proration, shall be equal
to the greater of (A) the annual bonus earned by the Executive for the most
recent fiscal year of the Company ending prior to the date of the Executive’s
termination of employment or (B) the annual bonus that the Executive would have
earned under the Company’s bonus plan for the fiscal year of the Company in
which the Executive’s termination of employment occurs had the Executive
remained in its employment. However, in no case shall any such post-termination
annual bonus exceed the lesser of 100% of the Executive's target bonus for the
most recent fiscal year of the Company ending prior to the date of the
Executive's termination of employment or 100% of the Executive's target bonus
for the fiscal year of the Company in which the Executive's termination of
employment occurs. Such bonus shall not be paid until due under the applicable
Company bonus plan.

               (ii) Stock Options. Stock
options granted to the Executive by the Company and which remain outstanding
immediately prior to the date of termination of the Executive’s employment, as
provided in Section 7(b), shall be vested and exercisable in accordance with
their terms.

9




               (iii) Restricted Stock. Shares of
restricted stock granted to the Executive by the Company which have not become
vested as of the date of termination of the Executive’s employment, as provided
in Section 7(b), shall immediately become vested on a pro rata basis. The number
of such additional shares of restricted stock that shall become vested as of the
date of the Executive’s termination of employment shall be that number of
additional shares that would have become vested through the date of such
termination of employment at the rate(s) determined under the vesting schedule
applicable to such shares had such vesting schedule provided for the accrual of
vesting on a daily basis (based on a 365 day year). For example, if the vesting
schedule applicable to a restricted stock award provides for vesting of 20%, 30%
and 50% of the award on the first, second and third anniversaries, respectively,
of the date of grant of the award, then pro rata vesting under this Section
8(c)(iii) shall be accrued at daily rates of 0.05479%, 0.08219% and 0.13699%,
respectively, from the date of grant through the date of termination of
employment. Any shares of restricted stock remaining unvested after such pro
rata acceleration of vesting shall automatically be reacquired by the Company in
accordance with the provisions of the applicable restricted stock agreement, and
the Executive shall have no further rights in such unvested portion of the
restricted stock. 

               (iv) Other Equity Awards. Except
as set forth in Sections 8(c)(ii) and 8(c)(iii), performance share awards and
all other equity awards granted to the Executive by the Company which remain
outstanding immediately prior to the date of termination of the Executive’s
employment, as provided in Section 7(b), shall vest and be settled in accordance
with their terms. 

     The
Company shall have no further obligations to the Executive as a result of
termination of employment described in this Section 8(c) except as set forth in
Section 12. 

          (d) Special Change in
Control Provisions.

               (i) Change in Control Benefits.

                    (1) Without Regard to Termination of Employment. In the event of a Change in Control (as defined below), all
shares of restricted stock granted to the Executive by the Company shall become
vested in full immediately prior to the consummation of such Change in Control,
and, subject to Section 22 [Compliance with Section 409A], the Executive shall
be entitled to receive an additional salary equal to Sixty Two Thousand Five Hundred Dollars ($62,500) per month for a period of two (2) years following the Change
in Control unless and until the Voluntary Termination (as defined in Section
6(f)) of the Executive’s employment or the termination for Cause (as defined in
Section 6(c)) of the Executive’s employment. Except as set forth in this Section
8(d)(i)(1) or Section 8(d)(i)(2) below, the treatment of stock options,
performance share awards and all other equity awards granted to the Executive by
the Company which remain outstanding immediately prior to the date of such
Change in Control shall be determined in accordance with their terms.


10




                    (2) Upon Certain Termination of Employment. In addition to the payments and benefits provided by Section
8(d)(i)(1) above, if the Executive’s employment is terminated either by the
Company Without Cause (as defined in Section 6(d)) or by the Executive for Good
Reason (as defined in Section 6(e)), in either case within a period commencing
one (1) month prior to and ending twelve (12) months following a Change in
Control, then, subject to Section 22 [Compliance with Section 409A], the
Executive shall be entitled to the following (in addition to any other payments
or benefits provided under this Agreement), provided that within sixty (60) days
following the Executive’s termination of employment the Executive executes the
Release and the period for revocation, if any, of such Release has expired
without the Release having been revoked:

                         a. Salary. The salary that
shall be payable to the Executive under Section 8(a)(i) shall be paid for the
greater of (i) the remainder of the Term of Employment then in effect or (ii) a
period of two (2) years commencing on the date of the Executive’s termination of
employment. 

                         b. Bonus. The annual bonus
that shall be payable to the Executive under Section 8(a)(ii) shall be paid for
the greater of (i) the remainder of the Term of Employment then in effect or
(ii) a period of two (2) years commencing on the date of the Executive’s
termination of employment; provided, however, that the amount of the annual
bonus determined in accordance with Section 8(a)(ii) for the fiscal year of the
Company in which such Term of Employment or two-year period, as the case may be,
ends shall be prorated on the basis of the number of days of such Term of
Employment or two-year period occurring within such fiscal year. 

                         c. Health Care
Coverage. The Executive shall be entitled to
the continuation of the Executive’s health care coverage under the Company’s
employee benefit plans (including medical, dental, vision and mental coverage)
which the Executive had at the time of the termination of employment (including
coverage for the Executive’s dependents to the extent such dependents were
covered immediately prior to such termination of employment) at the Company’s
expense for the greater of (i) the remainder of the Term of Employment then in
effect or (ii) a period of two (2) years commencing on the date of the
Executive’s termination of employment. Such health care continuation rights will
be in addition to any rights the Executive may have under ERISA Sections 600 and
thereafter and Section 4980B of the Internal Revenue Code (“COBRA
coverage”).

                         d. Estate Planning.
The Executive shall be entitled to
reimbursement of the Executive’s estate planning expenses (including attorneys’
fees) on the same basis, if any, as to which the Executive was entitled to such
reimbursements immediately prior to such termination of employment for the
greater of (i) the remainder of the Term of Employment then in effect or (ii) a
period of two (2) years commencing on the date of termination of
employment.

               (ii) Change in Control Defined.
A “Change in Control” shall be deemed to have occurred if: (1) any person or group
(within the meaning of Rule 13d-3 of the rules and regulations promulgated under
the Securities Exchange Act of 1934, as amended) shall acquire during the
twelve-month period ending on the date of the most recent acquisition by such
person or group, in one or a series of transactions, whether through sale of
stock or merger, ownership of stock of the Company that constitutes 35% or more
of the total voting power of the stock of the Company or any successor to the
Company; (2) a merger in which the Company is a party pursuant to which any
person or such group acquires ownership of stock of the Company that, together
with stock held by such person or group, constitutes more than 50% of the total
fair market value or total voting power of the stock of the Company, or (3) the
sale, exchange, or transfer of all or substantially all of the Company’s assets
(other than a sale, exchange, or transfer to one or more corporations where the
stockholders of the Company before and after such sale, exchange, or transfer,
directly or indirectly, are the beneficial owners of at least a majority of the
voting stock of the corporation(s) to which the assets were
transferred).

11




               (iii) Excise Tax Gross-Up. If the
Executive becomes entitled to one or more payments (with a “payment” for this
purpose including the accelerated vesting of restricted stock, stock options or
other equity awards, or other non-cash benefits or property), whether pursuant
to the terms of this Agreement or any other plan or agreement with the Company
or any affiliated company (collectively, “Change in Control Payments”), which
are or become subject to the tax (the “Excise
Tax”) imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”), the Company shall pay to the
Executive at the time specified below such amount (the “Gross-up Payment”) as may
be necessary to place the Executive in the same after-tax position as if no
portion of the Change in Control Payments and any amounts paid to the Executive
pursuant to Section 8 had been subject to the Excise Tax. The Gross-up Payment
shall include, without limitation, reimbursement for any penalties and interest
that may accrue in respect of such Excise Tax. For purposes of determining the
amount of the Gross-up Payment, the Executive shall be deemed: (A) to pay
federal income taxes at the highest marginal rate of federal income taxation for
the year in which the Gross-up Payment is to be made; and (B) to pay any
applicable state and local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-up Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes if paid in such year. If the Excise Tax is
subsequently determined to be less than the amount taken into account hereunder
at the time the Gross-up Payment is made, the Executive shall repay to the
Company at the time that the amount such reduction in Excise Tax is finally
determined (but, if previously paid to the taxing authorities, not prior to the
time the amount of such reduction is refunded to the Executive or otherwise
realized as a benefit by the Executive) the portion of the Gross-up Payment that
would not have been paid if such Excise Tax had been used in initially
calculating the Gross-up payment, plus interest on the amount of such repayment
at the rate provided in Section 1274 (b)(2)(B) of the Code. In the event that
the Excise Tax is determined to exceed the amount taken into account hereunder
at the time the Gross-up Payment is made, the Company shall make an additional
Gross-up Payment in respect of such excess (plus any interest and penalties
payable with respect to such excess) at the time that the amount of such excess
is finally determined. 

               (iv) The Gross-up Payment provided for above shall be paid, subject
to Section 22 [Compliance with Section 409A], on the 30th day (or such earlier
date as the Excise Tax becomes due and payable to the taxing authorities) after
it has been determined that the Change in Control Payments (or any portion
thereof) are subject to the Excise Tax; provided, however, that if the amount of
such Gross-up Payment or portion thereof cannot be finally determined on or
before such day, the Company shall pay to the Executive on such day an estimate,
as determined by counsel or auditors selected by the Company and reasonably
acceptable to the Executive, of the minimum amount of such payments. The Company
shall pay to the Executive the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as
the amount thereof can be determined. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
the Executive shall repay such amount on the fifth day after demand by the
Company (together with interest at the rate provided in Section 1274(b)(2)(B) of
the Code). The Company shall have the right to control all proceedings with the
Internal Revenue Service that may arise in connection with the determination and
assessment of any Excise Tax and, at its sole option, the Company may pursue or
forego any and all administrative appeals, proceedings, hearings, and
conferences with any taxing authority in respect of such Excise Tax (including
any interest or penalties thereon); provided, however, that the Company’s
control over any such proceedings shall be limited to issues with respect to
which a Gross-up Payment would be payable hereunder, and the Executive shall be
entitled to settle or contest any other issue raised by the Internal Revenue
Service or any other taxing authority. The Executive shall cooperate with the
Company in any proceedings relating to the determination and assessment of any
Excise Tax and shall not take any position or action that would materially
increase the amount of any Gross-up Payment hereunder.

12




     9. Certain Employment
Obligations. 

          (a) Employee Acknowledgement.
The Company and the Executive acknowledge that (i) the Company has a special
interest in and derives significant benefit from the unique skills and
experience of the Executive; (ii) as a result of the Executive’s service with
the Company, the Executive will use and have access to some of the Company’s
proprietary and valuable Confidential Information during the course of
the Executive’s
employment; (iii) the Confidential Information has been developed and created by
the Company at substantial expense and constitutes valuable proprietary assets
of the Company, and the Company will suffer substantial damage and irreparable
harm which will be difficult to compute if, during the term of the Executive’s
employment or thereafter, the Executive should disclose or improperly use such
Confidential Information in violation of the provisions of this Agreement; (iv)
the Company will suffer substantial damage and irreparable harm which will be
difficult to compute if the Executive competes with the company in violation of
this Agreement; (v) the Company will suffer substantial damage which will be
difficult to compute if, the Executive solicits or interferes with the Company’s
employees, clients, or customers; (vi) the provisions of this Agreement are
reasonable and necessary for the protection of the business of the Company; and
(vii) the provisions of this Agreement will not preclude the Executive from
obtaining other gainful employment or service. 

          (b) Non-Compete.

               (i) During the Term of Employment and for a period of twenty-four
(24) months following the Executive's termination of employment with the
Company, the Executive shall not, directly or indirectly, own, manage, control,
be employed by, consult with, participate in, or be connected in any manner with
the ownership, management, operation, control of, or otherwise become involved
with, any Competing Business, nor shall the Executive undertake any planning to
engage in any such activity.

13




     For purposes of this Agreement, a
Competing Business shall mean any of the following: (1) any business that is in
whole or in substantial part competitive with the business of the Company then
being conducted or under consideration, (2) any off-price retailer or retailer
of discount merchandise, including without limitation, Burlington Coat Factory
Warehouse Corporation, Federated Department Stores, Inc., TJX Companies Inc.,
Retail Ventures Inc., Kohl’s Corporation, Stein Mart, Inc, and (3) any affiliates,
subsidiaries or successors of businesses identified above. 

               (ii) The foregoing restrictions in Section 9(b)(i) shall have no
force or effect in the event that: (i) the Executive’s employment with the
Company is terminated either by the Company pursuant to Section 6(d)[Without
Cause] or by the Executive pursuant to Section 6(e) [Termination by the
Executive for Good Reason]; or (ii) the Company fails to approve or grant an
extension of this Agreement in accordance with Section 1 hereof. 

               (iii) Section 9(b)(i) shall not prohibit the Executive from making
any investment of 1% or less of the equity securities of any publicly-traded
corporation which is considered to be a Competing Business. 

          (c) Non-Solicitation of Employees. During the Term of Employment and for a period of 24 months following the
Executive’s termination of that employment with the Company, the Executive shall
not, without the written permission of the Company or an affected affiliate,
directly or indirectly (i) solicit, employ or retain, or have or cause any other
person or entity to solicit, employ or retain, any person who is employed by the
Company or was employed by the Company during the 6-month period prior to such
solicitation, employment, or retainer, (ii) encourage any such person not to
devote his or her full business time to the Company, or (iii) agree to hire or
employ any such person. 

          (d) Non-Solicitation of Third Parties. During the Term of Employment and for a period of 24 months following the
Executive’s termination of employment with the Company, the Executive shall not
directly or indirectly solicit or otherwise influence any entity with a business
arrangement with the Company, including, without limitation, customers,
suppliers, sales representatives, lenders, lessors, and lessees, to discontinue,
reduce, or otherwise materially or adversely affect such relationship.


          (e) Non-Disparagement. The
Executive acknowledges and agrees that the Executive will not defame or
criticize the services, business, integrity, veracity, or personal or
professional reputation of the Company or any of its directors, officers,
employees, affiliates, or agents of any of the foregoing in either a
professional or personal manner either during the term of the Executive’s
employment or thereafter. 

14




     10. Company Remedies for Executive’s
Breach of Certain Obligations. 

          (a) The Executive acknowledges and agrees that in the event that
the Executive breaches or threatens to breach Sections 5 or 9 of this Agreement,
all compensation and benefits otherwise payable pursuant to this Agreement and
the vesting and/or exercisability of all stock options, restricted stock,
performance shares and other forms of equity compensation previously awarded to
the Executive, notwithstanding the provisions of any agreement evidencing any
such award to the contrary, shall immediately cease. 

          (b) The Company shall give prompt notice to the Executive of its
discovery of a breach by the Executive of Section 9 of this Agreement. If it is
determined by a vote of not less than two-thirds of the members of the Board
that the Executive has breached Section 9 of this Agreement and has not cured
such breach within ten (10) business days of such notice, then: 

               (i) the Executive shall forfeit to the Company (A) all stock
options, stock appreciation rights, performance shares and other equity
compensation awards (other than shares of restricted stock, restricted stock
units or similar awards) granted to the Executive by the Company which remain
outstanding and unexercised or unpaid as of the date of such determination by
the Board (the “Breach Determination
Date”) and (B) all shares of restricted
stock, restricted stock units and similar awards granted to the Executive by the
Company which continue to be held by the Executive as of the Breach
Determination Date to the extent that such awards vested during the Forfeiture
Period (as defined below); and 

               (ii) the Executive shall pay to the Company all gains realized by
the Executive upon (A) the exercise by or payment in settlement to the Executive
on and after the commencement of the Forfeiture Period of stock options, stock
appreciation rights, performance shares and other equity compensation awards
(other than shares of restricted stock, restricted stock units or similar
awards) granted to the Executive by the Company and (B) the sale on and after
the commencement of the Forfeiture Period of shares or other property received
by the Executive pursuant to awards of restricted stock, restricted stock units
or similar awards granted to the Executive by the Company and which vested
during the Forfeiture Period. 

          (c) For purposes of this Section, the gain realized by the
Executive upon the exercise or payment in settlement of stock options, stock
appreciation rights, performance shares and other equity compensation awards
shall be equal to (A) the closing sale price on the date of exercise or
settlement (as reported on the stock exchange or market system constituting the
principal market for the shares subject to the applicable award) of the number
of vested shares issued to the Executive upon such exercise or settlement,
reduced by the purchase price, if any, paid by the Executive to acquire such
shares, or (B) if any such award was settled by payment in cash to the
Executive, the gain realized by the Executive shall be equal to the amount of
cash paid to the Executive. Further, for purposes of this Section, the gain
realized by the Executive upon the sale of shares or other property received by
the Executive pursuant to awards of restricted stock, restricted stock units or
similar awards shall be equal to the gross proceeds of such sale realized by the
Executive. Gains determined for purposes of this Section shall be determined
without regard to any subsequent increase or decrease in the market price of the
Company’s stock or taxes paid by or withheld from the Executive with respect to
such transactions.

15




          (d) For the purposes of this Section, the “Forfeiture Period” shall be
the period ending on the Breach Determination Date and beginning on the earlier
of (A) the date six months prior to the Breach Determination Date or (B) the
business day immediately preceding the date of the Executive’s termination of
employment with the Company. 

          (e) The Company shall have the right (but not the obligation) to
deduct from any amounts payable from time to time to the Executive by the
Company pursuant to this Agreement or otherwise (including wages or other
compensation, vacation pay or other benefits, and any other amounts owed to the
Executive by the Company) any and all amounts the Executive is required to pay
to the Company pursuant to this Section. The Executive agrees to pay to the
Company immediately upon the Breach Determination Date the amount payable by the
Executive to the Company pursuant to this Section which the Company has not
recovered by means of such deductions. 

          (f) The Executive acknowledges that money will not adequately
compensate the Company for the substantial damages that will arise upon the
breach or threatened breach of Sections 5 or 9 of this Agreement and that the
Company will not have any adequate remedy at law. For this reason, such breach
or threatened breach will not be subject to the arbitration clause in Section
19; rather, the Company will be entitled, in addition to other rights and
remedies, to specific performance, injunctive relief, and other equitable relief
to prevent or restrain such breach or threatened breach. The Company may obtain
such relief from (1) any court of competent jurisdiction, (2) an arbitrator
pursuant to Section 19 hereof, or (3) a combination of the two (e.g., by
simultaneously seeking arbitration under Section 19 and a temporary injunction
from a court pending the outcome of the arbitration). It shall be the Company’s
sole and exclusive right to elect which approach to use to vindicate its rights.
The Executive further agrees that in the event of a breach or threatened breach,
the Company shall be entitled to obtain an immediate injunction and restraining
order to prevent such breach and/or threatened breach and/or continued breach,
without posting a bond or having to prove irreparable harm or damages, and to
obtain all costs and expenses, including reasonable attorneys’ fees and costs.
In addition, the existence of any claim or cause of action by the Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of the restrictive
covenants in this Agreement. 

     11. Exercise of Stock Options Following Termination. If the Executive's employment terminates, Executive (or the
Executive's estate) may exercise the Executive's right to purchase any vested
stock under the stock options granted to Executive by the Company as provided in
the applicable stock option agreement. All such purchases must be made by the
Executive in accordance with the applicable stock option plans and agreements
between the parties. 

     12. Successors; Binding Agreement. This
Agreement and all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would still be payable
to the Executive hereunder, all such amounts shall be paid in accordance with
the terms of this Agreement and applicable law to the Executive’s beneficiary
pursuant to a written designation of beneficiary, or, if there is no effective
written designation of beneficiary by the Executive, to the Executive’s
estate.

16




     13. Insurance and Indemnity. The Company
shall, to the extent permitted by law, include the Executive during the Term of
Employment under any directors and officers liability insurance policy
maintained for its directors and officers, with coverage at least as favorable
to the Executive in amount and each other material respect as the coverage of
other officers covered thereby. The Company’s obligation to provide insurance
and indemnify the Executive shall survive expiration or termination of this
Agreement with respect to proceedings or threatened proceedings based on acts or
omissions of the Executive occurring during the Executive’s employment with the
Company. Such obligations shall be binding upon the Company’s successors and
assigns and shall inure to the benefit of the Executive’s heirs and personal
representatives. 

     14. Notice. For the purposes of this
Agreement, notices, demands and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or (unless otherwise specified) mailed by United States registered
mail, return receipt requested, postage prepaid, addressed as follows:



	If to the
      Executive:       	Michael
      O’Sullivan
		Ross Stores,
      Inc.
		4440 Rosewood
      Drive
		Pleasanton, CA
      94588
	  
	  
	If to the
      Company:          	Ross Stores,
      Inc.
		4440 Rosewood
      Drive
		Pleasanton, CA
      94588
		Attention:
      General Counsel




or to such other address as any party
may have furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt. 

     15. Complete Agreement; Modification, Waiver; Entire
Agreement. This Agreement represents the
complete agreement of the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements, promises or representations
of the parties, except those relating to repayment of signing and related
bonuses, or relocation expense reimbursements. To the extent that the bonus
payment provisions (i.e., post-termination bonus payments) provided in this
Agreement differ from the provisions of the Company’s incentive bonus plans
(currently the Incentive Compensation Plan) or any replacement plans, such bonus
payments shall be paid pursuant to the provisions of this Agreement except to
the extent expressly prohibited by law. Except as provided by Section 22
[Compliance with Section 409A], no provision of this Agreement may be amended or
modified except in a document signed by the Executive and the chairman of the
Committee or such other person as may be designated by the Board. No waiver by
the Executive or the Company of any breach of, or lack of compliance with, any
condition or provision of this Agreement by the other party shall be considered
a waiver of any other condition or provision or the same condition or provision
at another time. This Agreement, along with any stock option, restricted stock,
performance share or other equity compensation award agreements between the
parties, constitute the entire agreement between the parties regarding their
employment relationship. To the extent that this Agreement is in any way
inconsistent with any prior or contemporaneous stock option, restricted stock,
performance share or other equity compensation award agreements between the
parties, this Agreement shall control. No agreements or representations, oral or
otherwise, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.

17




     16. Governing Law - Severability. The
validity, interpretation, construction, performance, and enforcement of this
Agreement shall be governed by the laws of the state in which the Executive’s
principle place of employment described in Section 3 is located without
reference to that state’s choice of law rules. If any provision of this
Agreement shall be held or deemed to be invalid, illegal, or unenforceable in
any jurisdiction, for any reason, the invalidity of that provision shall not
have the effect of rendering the provision in question unenforceable in any
other jurisdiction or in any other case or of rendering any other provisions
herein unenforceable, but the invalid provision shall be substituted with a
valid provision which most closely approximates the intent and the economic
effect of the invalid provision and which would be enforceable to the maximum
extent permitted in such jurisdiction or in such case. 

     17. Mitigation Not Required. In the event
the Executive’s employment with the Company terminates for any reason, the
Executive shall not be obligated to seek other employment following such
termination. However, any amounts due the Executive under Sections 8(a)(i);
8(a)(ii); 8(d)(i)(2)(a),(b),(c) or (d); and/or any additional salary provided
under Section 8(d)(i)(1) of this Agreement shall be offset by any cash
remuneration, health care coverage and/or estate planning reimbursements
attributable to any subsequent employment that the Executive may obtain during
the period of payment of compensation under this Agreement following the
termination of the Executive’s employment with the Company. 

     18. Withholding. All payments required to
be made by the Company hereunder to the Executive or the Executive’s estate or
beneficiaries shall be subject to the withholding of such amounts as the Company
may reasonably determine it should withhold pursuant to any applicable law. To
the extent permitted, the Executive may provide all or any part of any necessary
withholding by contributing Company stock with value, determined on the date
such withholding is due, equal to the number of shares contributed multiplied by
the closing price per share as reported on the securities exchange constituting
the primary market for the Company’s stock on the date preceding the date the
withholding is determined. 

     19. Arbitration. In the event of any
dispute or claim relating to or arising out of the parties’ employment
relationship or this Agreement (including, but not limited to, any claims of
breach of contract, wrongful termination, or age, race, sex, disability or other
discrimination), all such disputes shall be fully, finally and exclusively
resolved by binding arbitration conducted by the American Arbitration
Association in the city in which the Executive’s principal place of employment
is located by an arbitrator mutually agreed upon by the parties hereto or, in
the absence of such agreement, by an arbitrator selected in accordance with the
Employment Arbitration Rules of the American Arbitration Association, provided,
however, that this arbitration provision shall not apply, unless the Company
elects otherwise, to any disputes or claims relating to or arising out of the
Executive’s breach of Sections 5 or 9 of this Agreement. If either the Company
or the Executive shall request, arbitration shall be conducted by a panel of
three arbitrators, one selected by the Company, one selected by the Executive,
and the third selected by agreement of the first two, or, in the absence of such
agreement, in accordance with such Rules.

18




     If there
is termination of the Executive’s employment with the Company followed by a
dispute as to whether the Executive is entitled to the benefits provided under
this Agreement, then, during the period of that dispute the Company shall pay
the Executive fifty percent (50%) of the amount specified in Section 8 hereof
(except that the Company shall pay one hundred percent (100%) of any insurance
premiums provided for in Section 8), if, and only if, the Executive agrees in
writing that if the dispute is resolved against the Executive, the Executive
shall promptly refund to the Company all such payments received by, or made by
the Company on behalf of, the Executive. If the dispute is resolved in the
Executive’s favor, promptly after resolution of the dispute the Company shall
pay the Executive the sum that was withheld during the period of the dispute
plus interest at the rate provided in Section 1274(d) of the Code, compounded
quarterly.

     20. Attorney’s Fees. Each party shall bear
its own attorney’s fees and costs incurred in any action or dispute arising out
of this Agreement. 

     21. Miscellaneous. No right or interest
to, or in, any payments shall be assignable by the Executive; provided, however,
that the Executive shall not be precluded from designating in writing one or
more beneficiaries to receive any amount that may be payable after the
Executive’s death and the legal representative of the Executive’s estate shall
not be precluded from assigning any right hereunder to the person or persons
entitled thereto. This Agreement shall be binding upon and shall inure to the
benefit of the Executive, the Executive’s heirs and legal representatives and,
the Company and its successors. 

     22. Compliance with Section 409A.
Notwithstanding any other provision of this Agreement to the contrary, the
provision, time and manner of payment or distribution of all compensation and
benefits provided by this Agreement that constitute nonqualified deferred
compensation subject to and not exempted from the requirements of Code Section
409A (“Section
409A Deferred Compensation”) shall be subject
to, limited by and construed in accordance with the requirements of Code Section
409A and all regulations and other guidance promulgated by the Secretary of the
Treasury pursuant to such Section (such Section, regulations and other guidance
being referred to herein as “Section
409A”), including the following: 

          (a) Separation from Service.
Payments and benefits constituting Section 409A Deferred Compensation otherwise
payable or provided pursuant to Section 8 upon the Executive’s termination of
employment shall be paid or provided only at the time of a termination of the
Executive’s employment which constitutes a Separation from Service. For the
purposes of this Agreement, a “Separation from
Service” is a separation from service within
the meaning of Section 409A. 

19




          (b) Six-Month Delay Applicable to Specified Employees.
If, at the time of a Separation from Service
of the Executive, the Executive is a “specified employee” within the meaning of
Section 409A (a “Specified
Employee”), then any payments and benefits
constituting Section 409A Deferred Compensation to be paid or provided pursuant
to Section 8 upon the Separation from Service of the Executive shall be paid or
provided commencing on the later of (i) the date that is six (6) months after
the date of such Separation from Service or, if earlier, the date of death of
the Executive (in either case, the “Delayed
Payment Date”), or (ii) the date or dates on
which such Section 409A Deferred Compensation would otherwise be paid or
provided in accordance with Section 8. All such amounts that would, but for this
Section 22(b), become payable prior to the Delayed Payment Date shall be
accumulated and paid on the Delayed Payment Date. 

          (c) Heath Care and Estate Planning Benefits. In the event that all or any of the health care or estate
planning benefits to be provided pursuant to Sections 8(d)(i)(2)(c) or
8(d)(i)(2)(d) as a result of a Participant’s Separation from Service constitute
Section 409A Deferred Compensation, the Company shall provide for such benefits
constituting Section 409A Deferred Compensation in a manner that complies with
Section 409A. To the extent necessary to comply with Section 409A, the Company
shall determine the health care premium cost necessary to provide such benefits
constituting Section 409A Deferred Compensation for the applicable coverage
period and shall pay such premium cost which becomes due and payable during the
applicable coverage period on the applicable due date for such premiums;
provided, however, that if the Executive is a Specified Employee, the Company
shall not pay any such premium cost until the Delayed Payment Date. If the
Company’s payment pursuant to the previous sentence is subject to a Delayed
Payment Date, the Executive shall pay the premium cost otherwise payable by the
Company prior to the Delayed Payment Date, and on the Delayed Payment Date the
Company shall reimburse the Executive for such Company premium cost paid by the
Executive and shall pay the balance of the Company’s premium cost necessary to
provide such benefit coverage for the remainder of the applicable coverage
period as and when it becomes due and payable over the applicable period.


          (d) Stock-Based Awards. The
vesting of any stock-based compensation awards which constitute Section 409A
Deferred Compensation and are held by the Executive, if the Executive is a
Specified Employee, shall be accelerated in accordance with this Agreement to
the extent applicable; provided, however, that the payment in settlement of any
such awards shall occur on the Delayed Payment Date. Any stock-based
compensation which vests and becomes payable upon a Change in Control in
accordance with Section 8(d)(i)(1) shall not be subject to this Section 22(d).


20




          (e) Rights of the Company; Release of Liability. It is the mutual intention of the Executive and the Company
that the provision of all payments and benefits pursuant to this Agreement be
made in compliance with the requirements of Section 409A. To the extent that the
provision of any such payment or benefit pursuant to the terms and conditions of
this Agreement would fail to comply with the applicable requirements of Section
409A, the Company may, in its sole and absolute discretion and without the
consent of the Executive, make such modifications to the timing or manner of
providing such payment and/or benefit to the extent it determines necessary or
advisable to comply with the requirements of Section 409A; provided, however,
that the Company shall not be obligated to make any such modifications. Any such
modifications made by the Company shall, to the maximum extent permitted in
compliance with the requirements of Section 409A, preserve the aggregate
monetary face value of such payments and/or benefits provided by this Agreement
in the absence of such modification; provided, however, that the Company shall
in no event be obligated to pay any interest or other compensation in respect of
any delay in the provision of such payments or benefits in order to comply with
the requirements of Section 409A. The Executive acknowledges that (i) the
provisions of this Section 22 may result in a delay in the time at which
payments would otherwise be made pursuant to this Agreement and (ii) the Company
is authorized to amend the this Agreement, to void or amend any election made by
the Executive under this Agreement and/or to delay the payment of any monies
and/or provision of any benefits in such manner as may be determined by the
Company, in its discretion, to be necessary or appropriate to comply with
Section 409A (including any transition or grandfather rules thereunder) without
prior notice to or consent of the Executive. The Executive hereby releases and
holds harmless the Company, its directors, officers and stockholders from any
and all claims that may arise from or relate to any tax liability, penalties,
interest, costs, fees or other liability incurred by the Executive as a result
of the application of Code Section 409A. 

     23. Future Equity Compensation. The
Executive understands and acknowledges that all awards, if any, of stock
options, restricted stock, performance shares and other forms of equity
compensation by the Company are made at the sole discretion of the Board of
Directors of the Company or a committee thereof. The Executive further
understands and acknowledges, however, that unless the Executive has executed
this Agreement and each successive amendment extending the Initial Term or any
subsequent Renewal Term of the Agreement as may be agreed to by the Company and
the Executive, it is the intention of the Board of Directors and the Executive
that, notwithstanding any continued employment with the Company, (a) the Company
shall have no obligation to grant any award of stock options, restricted stock,
performance shares or any other form of equity compensation which might
otherwise have been granted to the Executive on or after the intended
commencement of the Initial Term or such successive Renewal Term for which the
Executive has failed to sign the Agreement or the applicable Term of Employment
extension amendment and (b) any such award which is nevertheless granted to the
Executive after the intended commencement of the Initial Term or Renewal Term
for which the Executive has failed to sign such Agreement or applicable
extension amendment shall not vest unless and until the Executive has executed
the Agreement or applicable extension amendment, notwithstanding the provisions
of any agreement evidencing such award to the contrary. 

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IN WITNESS WHEREOF, the parties have executed this Executive Employment
Agreement effective as of the date and year first above written. 

	ROSS STORES,
      INC.  	 	EXECUTIVE  
	  
	  
	 		 
	By: Michael
      Balmuth  		     Michael O’Sullivan  
	Vice Chairman,
      President and Chief  		  
	Executive
      Officer  		  



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