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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
K&G MEN'S CENTER, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
- - ----------
* Set forth the amount on which the filing is calculated and state how it was
determined.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
K&G MEN'S CENTER, INC.
1750-A Ellsworth Industrial Boulevard
Atlanta, Georgia 30318
Phone: (404) 351-7987
May 7, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 Annual Meeting of Shareholders
of K&G Men's Center, Inc. (the "Company"), which will be held at 10:00 a.m. on
Friday, June 7, 1996 at the Company's headquarters at 1750-A Ellsworth
Industrial Boulevard.
The principal business of the meeting will be (i) to elect the Company's
Class I director to serve a three-year term expiring in 1999 in accordance with
the Company's Articles of Incorporation, (ii) to consider approval of a Director
Stock Option Plan pursuant to which a total of 50,000 shares of Common Stock
will be reserved for future grants of options to non-management directors and
(iii) to ratify the appointment of Arthur Andersen LLP by the Board of Directors
of the Company as the independent auditors of the Company. During the meeting,
we will also review the results of the past fiscal year and report on
significant aspects of our operations during the first quarter of fiscal 1996.
Whether or not you plan to attend the Annual Meeting, please complete,
sign, date and return the enclosed proxy card in the postage prepaid envelope
provided so that your shares will be voted at the meeting. If you decide to
attend the meeting, you may, of course, revoke your proxy and personally cast
your votes.
Sincerely yours,
/s/ Stephen H. Greenspan
Stephen H. Greenspan
Chairman, President and Chief Executive Officer
<PAGE>
K&G MEN'S CENTER, INC.
1750-A Ellsworth Industrial Boulevard
Atlanta, Georgia 30318
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 1996 Annual Meeting of Shareholders of K&G Men's Center, Inc. (the
"Company") will be held at 10:00 a.m. on Friday, June 7, 1996 at the Company's
headquarters at 1750-A Ellsworth Industrial Boulevard. The meeting is called
for the following purposes:
(1) To elect the Company's Class I director to serve a three-year term
expiring in 1999 in accordance with the Company's Articles of
Incorporation;
(2) To consider approval of a Director Stock Option Plan pursuant to which
a total of 50,000 shares of Common Stock will be reserved for future
grants of options to non-management directors;
(3) To ratify the appointment of Arthur Andersen LLP by the Board of
Directors of the Company as the independent auditors of the Company;
and
(4) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on May 3, 1996 as
the record date for the purpose of determining the shareholders who are entitled
to notice of and to vote at the meeting and any adjournment or postponement
thereof.
By Order of the Board of Directors,
/s/ John C. Dancu
John C. Dancu
Assistant Secretary
May 7, 1996
Atlanta, Georgia
IF YOU ARE UNABLE TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD SO THAT YOUR SHARES WILL BE
REPRESENTED AT THE MEETING.
<PAGE>
K&G MEN'S CENTER, INC.
1750-A ELLSWORTH INDUSTRIAL BOULEVARD
ATLANTA, GEORGIA 30318
PROXY STATEMENT
This Proxy Statement is furnished by and on behalf of the Board of
Directors of K&G Men's Center, Inc. (the "Company") in connection with the
solicitation of proxies for use at the Annual Meeting of Shareholders of the
Company to be held at 10:00 a.m. on Friday, June 7, 1996, at the Company's
headquarters at 1750-A Ellsworth Industrial Boulevard and at any adjournments or
postponements thereof (the "Annual Meeting"). This Proxy Statement and the
enclosed proxy card will be first mailed on or about May 7, 1996 to the
Company's shareholders of record on the Record Date, as defined below.
THE BOARD OF DIRECTORS URGES YOU TO MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD IN THE POSTAGE PREPAID ENVELOPE PROVIDED.
SHARES ENTITLED TO VOTE
Proxies will be voted as specified by the shareholder or shareholders
granting the proxy. Unless contrary instructions are specified, if the enclosed
proxy card is executed and returned (and not revoked) prior to the Annual
Meeting, the shares of common stock, $.01 par value per share (the "Common
Stock"), of the Company represented thereby will be voted (i) FOR the election
as a Class I director of the nominee listed in this Proxy Statement and, (ii)
FOR the approval of a Director Stock Option Plan pursuant to which a total of
50,000 shares of Common Stock will be reserved for future grants of options to
non-management directors and (iii) FOR the ratification of the appointment of
Arthur Andersen LLP by the Board of Directors as the independent auditors of the
Company. The submission of a signed proxy will not affect a shareholder's right
to attend and to vote in person at the Annual Meeting. A shareholder who
executes a proxy may revoke it at any time before it is voted by filing with the
Secretary of the Company either a written revocation or an executed proxy
bearing a later date or by attending and voting in person at the Annual Meeting.
Only holders of record of Common Stock as of the close of business on May
3, 1996 (the "Record Date") will be entitled to vote at the Annual Meeting. As
of the close of business on the Record Date, there were 6,377,500 shares of
Common Stock (the "Shares") outstanding. Holders of Shares authorized to vote
are entitled to cast one vote per Share on all matters. The holders of a
majority of the Shares entitled to be voted must be present or represented by
proxy to constitute a quorum. Shares as to which authority to vote is withheld
and abstentions will be counted in determining whether a quorum exists.
<PAGE>
Under Georgia law, directors are elected by the affirmative vote, in person
or by proxy, of a plurality of the shares entitled to vote in the election at a
meeting at which a quorum is present. Only votes actually cast will be counted
for the purpose of determining whether a particular nominee received more votes
than the persons, if any, nominated for the same seat on the Board of Directors.
Accordingly, abstentions will not be included in these vote totals and will not
be considered in determining the outcome of this vote.
Approval of the Director Stock Option Plan and ratification of the
appointment of Arthur Andersen LLP as the independent auditors of the Company,
as well as any other matter that may properly come before the Annual Meeting,
requires the affirmative vote of a majority of the Shares represented in person
or by proxy at the Annual Meeting and entitled to vote on such matter.
Abstentions will be counted in determining the minimum number of votes required
for approval and will, therefore, have the effect of votes against such
proposal. Broker non-votes will not be counted as votes for or against approval
of such matters.
PROPOSAL I - ELECTION OF DIRECTOR
Pursuant to the Company's Articles of Incorporation, at the Annual Meeting,
the sole member of the first class of the Board of Directors will be elected for
a three-year term expiring upon the third following Annual Meeting of
Shareholders and upon the election and qualification of his successor. At each
succeeding Annual Meeting of Shareholders, successors to the class of directors
whose term expires at that Annual Meeting of Shareholders will be elected for a
three-year term.
All Shares represented by properly executed proxies received in response to
this solicitation will be voted for the election of the director as specified
therein by the shareholders. Unless otherwise specified in the proxy, it is the
intention of the persons named on the enclosed proxy card to vote FOR the
election of the nominee listed in this Proxy Statement to the Board of
Directors. The nominee has consented to serve as a director of the Company if
elected. If at the time of the Annual Meeting, the nominee is unable or
declines to serve as a director, the discretionary authority provided in the
enclosed proxy card will be exercised to vote for a substitute candidate
designated by the Board of Directors. The Board of Directors has no reason to
believe that the nominee will be unable or will decline to serve as a director.
Shareholders may withhold their votes from the nominee by so indicating in the
space provided on the enclosed proxy card.
Set forth below is certain information furnished to the Company by the
director nominee. The nominee currently serves as a director of the Company.
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<PAGE>
NOMINEE FOR ELECTION - TERM EXPIRING 1999 - CLASS I
CAMPBELL B. LANIER, III
Age: 45
CAMPBELL B. LANIER, III has been a Director of the Company since May 1995.
Mr. Lanier has served since 1989 as Chairman of the Board of Directors and Chief
Executive Officer of ITC Holding Company, a privately-held communications-based
holding company headquartered in West Point, Georgia. In this capacity, Mr.
Lanier serves as Chairman of the Board of many of the operating subsidiaries of
ITC Holding Company. Mr. Lanier has also served since April 1991 as Chairman of
the Board of Directors of InterCel, Inc. ("InterCel"), a publicly-held provider
of cellular telecommunication services in the southeastern United States, and
has served as an officer or director of InterCel (through its predecessors)
since its inception in 1989. Mr. Lanier also serves on the Board of Directors
of National Vision Associates, Ltd., a publicly-held full service optical
retailer, Mindspring Enterprises, Inc., a publicly-held Internet access
provider, and as a special limited partner of South Atlantic Venture Funds II
and III.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION
AS A DIRECTOR OF THE NOMINEE NAMED ABOVE.
ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
Set forth below is certain information furnished to the Company by the
current directors other than the director nominee.
STEPHEN H. GREENSPAN
Age: 55
STEPHEN H. GREENSPAN founded the Company in December 1989, and has served
as its Chairman of the Board, President and Chief Executive Officer since the
Company's incorporation. He has more than 30 years of experience in the apparel
industry. In addition to owning and operating K&G and other apparel retailers,
during his career as an entrepreneur in the apparel industry, Mr. Greenspan has
owned and operated companies that liquidated the remaining merchandise of
failing retail businesses, and he has also served as a manufacturer's
representative for various apparel lines.
W. SCOTT MILLER
Age: 32
W. SCOTT MILLER has been a Director of the Company since May 1995. Mr.
Miller has been a general partner of South Atlantic Venture Partners II, Limited
Partnership, since
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<PAGE>
March 1993, as well as a general partner of South Atlantic Venture Partners III,
Limited Partnership, since March 1994. Mr. Miller has been a Vice President of
South Atlantic Capital Corporation, a management service company to the South
Atlantic Venture Funds, since March 1991. Mr. Miller was associated with Bowles
Hollowell Conner & Co., a mergers and acquisition advisory firm, from June 1989
to March 1991. Mr. Miller also serves as a director of United Dental Care, Inc.
(a publicly-held provider of pre-paid dental plans), TowerCom, Inc. and Welcare
International, Inc.
W. PAUL RUBEN
Age: 55
W. PAUL RUBEN has been a Director and Secretary of the Company since its
incorporation in June 1990. Since 1982, Mr. Ruben has been President of K&G
Associates, Inc., a company owned by Messrs. Ruben and Greenspan. Mr. Ruben is
primarily a private investor.
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The Company's Board of Directors held five meetings during the fiscal year
ended January 28, 1996 ("fiscal 1995"). In contemplation of the Company's
initial public offering, which was completed in January 1996, the Board of
Directors formed an Audit Committee and a Compensation Committee. The Board has
not established a Nominating Committee. No director attended less than 75% of
the aggregate number of meetings of the Board and the committees of the Board on
which he served that were held during his term as a director of the Company.
The Audit Committee of the Board of Directors is responsible for reviewing
and making recommendations regarding the Company's employment of independent
auditors, the annual audit of the Company's financial statements and the
Company's internal accounting practices and policies. It presently consists of
Messrs. Lanier and Miller, with Mr. Miller serving as Chairman. The Audit
Committee met one time during fiscal 1995. It is presently intended that
Messrs. Lanier and Miller will continue to serve on the Audit Committee after
the Annual Meeting.
The Compensation Committee of the Board is responsible for making
recommendations to the Board of Directors regarding compensation arrangements
for executive officers and other members of management of the Company, and
approving and recommending for approval by the Board of Directors the annual
incentive compensation plans of the Company and the Company's awards to
executive officers under each incentive plan. It also consists of Messrs. Lanier
and Miller, with Mr. Lanier serving as Chairman. The Compensation Committee met
two times during fiscal 1995. It is presently intended that Messrs. Lanier and
Miller will continue to serve on the Compensation Committee after the Annual
Meeting.
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<PAGE>
The Company's Board of Directors is comprised of four members. The Company
currently does not pay director's fees, although it does reimburse directors for
expenses incurred in connection with attendance at meetings of the Board of
Directors or committees thereof. Effective May 2, 1996, the Board of Directors
adopted the proposed Director Stock Option Plan, and recommended that such plan
be submitted to the Company's shareholders for their approval. The Director
Stock Option Plan provides for automatic grants of options to purchase Common
Stock to be made on a periodic basis to non-management directors. See "Proposal
2 Approval of the Company's Director Stock Option Plan."
EXECUTIVE OFFICERS
The executive officers of the Company serve at the discretion of the Board
of Directors and presently include Mr. Greenspan, Martin Schwartz, John C. Dancu
and R. Scott Saban. Set forth below is certain information furnished by each of
Messrs. Schwartz, Dancu and Saban. For additional information concerning Mr.
Greenspan, see "Additional Information Concerning the Board of Directors."
MARTIN SCHWARTZ
Age: 54
MARTIN SCHWARTZ has served as K&G's General Merchandising Manager since he
joined the Company in February 1991. Effective January 1996, he assumed the
additional title of Senior Vice President. Prior to joining the Company, from
October 1986 to January 1991, Mr. Schwartz served as Senior Vice President,
General Merchandising Manager --Merchandising and Marketing for a division of
Woolworth & Co., and from May 1984 to September 1986, he served as Vice
President and General Merchandise Manager for the menswear and children's
departments of Montgomery Ward. Mr. Schwartz has over 30 years of experience in
the retail industry, and has also served in various merchandising capacities
with Dayton Hudson, Macy's, Federated and Rich's.
JOHN C. DANCU
Age: 36
JOHN C. DANCU has served as Chief Financial Officer of the Company since
March 1995. Effective January 1996, he assumed the additional title of Senior
Vice President and in March 1996 he became the Company's Assistant Secretary.
Prior to joining the Company, from May 1986 to March 1995, Mr. Dancu was an
investment banker in the corporate finance department of The Robinson-Humphrey
Company, Inc., ultimately serving as a First Vice President. In this capacity,
Mr. Dancu was involved in numerous public and private financings and merger and
acquisition transactions involving companies in the retail industry. Mr. Dancu
is also a certified public accountant.
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<PAGE>
R. SCOTT SABAN
Age: 30
R. SCOTT SABAN has served as the Vice President, Operations and Information
Systems, of the Company since January 1995, and prior to that served as the
Company's Management Information Systems Director and as an Assistant Store
Manager. Mr. Saban is the son-in-law of Mr. Greenspan.
EMPLOYMENT AGREEMENTS
In May 1995, the Company entered into a five-year employment agreement with
each of Messrs. Greenspan and Schwartz. Under his agreement, the Company agreed
to employ Mr. Greenspan as its Chairman of the Board and President at a salary
of $120,000 per year plus such other benefits as are made available to other
senior executives of the Company. The agreement provides that if Mr. Greenspan
is terminated by K&G other than for "cause," as defined in the agreement, he is
entitled to severance compensation equal to 100% of his then-current annual
salary. The agreement contains provisions that purport to restrict Mr.
Greenspan's ability to compete with the Company or solicit its employees for a
specified period following the termination of his employment. Mr. Schwartz'
employment agreement is similar in form except that it (i) provides for Mr.
Schwartz to be employed as the Company's General Merchandising Manager at a
salary of $118,000 per year plus such other benefits as are made available to
other senior executives of the Company and (ii) entitles Mr. Schwartz to
severance compensation equal to 200% of his then-current annual salary in the
event of termination of his employment other than for "cause."
In March 1995, the Company entered into a two-year employment agreement
with Mr. Dancu under which he is employed as K&G's Chief Financial Officer at a
salary of $120,000 per year plus such other benefits as are made available to
other senior executives of the Company. The agreement provides that if Mr.
Dancu is terminated by K&G other than for "cause," he is entitled to 50% of his
then-current annual salary plus amounts accrued to date to Mr. Dancu under any
bonus or incentive compensation programs then in effect. The agreement contains
provisions that purport to restrict Mr. Dancu's ability to compete with the
Company or solicit its employees for a specified period following the
termination of his employment. In connection with the execution of Mr. Dancu's
employment agreement, each of the Company's then-existing shareholders granted
Mr. Dancu an option to purchase a number of shares of Common Stock equal to 4.5%
of the respective stock holdings of each such shareholder. These options, which
relate to an aggregate of 236,250 shares and are exercisable at $3.81 per share,
vested upon consummation of the Company's initial public offering in January
1996.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers and persons who own
beneficially more than 10% of the Company's Common Stock to file reports of
ownership and changes in ownership of such
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<PAGE>
stock with the Securities and Exchange Commission (the "SEC") and the National
Association of Securities Dealers, Inc. Directors, executive officers and
greater than 10% shareholders are required by SEC regulations to furnish the
Company with copies of all such forms they file. To the Company's knowledge,
based solely on a review of the copies of such reports furnished to the Company
and written representations from such persons that no other reports were
required, its directors, executive officers and greater than 10% shareholders
complied during fiscal 1995 with all applicable Section 16(a) filing
requirements, except that (i) R. Scott Saban, an executive officer of the
Company, and Donald W. Burton, Sandra P. Barber and South Atlantic Venture
Partners III, Limited Partnership, who serve as general partners of a limited
partnership that owns more than 10% of the Company's Common Stock, did not file
Initial Statements of Beneficial Ownership on a timely basis, and (ii) Mr.
Burton did not file a Statement of Changes in Beneficial Ownership on a timely
basis. All such forms have now been filed.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information concerning (i) those persons
known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock, (ii) the directors of the Company, (iii) certain named
executive officers of the Company and (iv) all directors and executive officers
of the Company as a group. Except as otherwise indicated in the footnotes
below, such information is provided as of March 31, 1996. According to rules
adopted by the SEC, a person is the "beneficial owner" of securities if he or
she has or shares the power to vote them or to direct their investment or has
the right to acquire beneficial ownership of such securities within 60 days
through the exercise of an option, warrant or right, the conversion of a
security or otherwise. Except as otherwise noted, the indicated owners have
sole voting and investment power with respect to shares beneficially owned. An
asterisk in the percent of class column indicates beneficial ownership of less
than 1% of the outstanding Common Stock.
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership Percent of Class
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EXECUTIVE OFFICERS AND DIRECTORS
Stephen H. Greenspan /(1)/............ 1,504,499 23.6%
W. Paul Ruben /(2)/................... 884,494 13.9%
Martin Schwartz....................... 302,189 4.7%
John C. Dancu /(3)/................... 262,500 4.1%
Campbell B. Lanier, III /(4)/......... 157,223 2.5%
W. Scott Miller /(5)/................. 741,575 11.6%
All executive officers and directors
as a group (7 persons).............. 3,852,480 60.4%
OTHER SHAREHOLDERS
South Atlantic Venture Fund III,
Limited Partnership /(6)/............ 699,825 11.0%
Richard M. Vehon, Sr. /(7)/........... 377,723 5.9%
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(1) Includes 656,250 shares owned of record by a partnership established for
Mr. Greenspan's family. Mr. Greenspan's business address is that of the
Company.
(2) Includes 656,250 shares owned of record by a partnership established for
Mr. Ruben's family. Mr. Ruben's business address is that of the Company.
(3) Includes 26,250 shares owned directly by Mr. Dancu and 236,250 shares
subject to options held by him to purchase outstanding shares of Common
Stock. Mr. Dancu's options were granted to him prior to the Company's
initial public offering by the Company's shareholders at that time.
Accordingly, Mr. Dancu's share holdings relate to shares held by various
shareholders, including certain of the shareholders identified above.
(4) All of the indicated shares are owned of record by ITC Holding Company,
with which Mr. Lanier is affiliated. The business address of ITC Holding
Company ("ITC") is 1239 OG Skinner Drive, P.O. Box 510, West Point, Georgia
31833.
(5) Of the indicated shares, 699,825 shares are owned of record by South
Atlantic Venture Fund III, Limited Partnership, with which Mr. Miller is
affiliated. Of such amount, 31,750 shares are owned of record by The Burton
Partnership, Limited Partnership. Mr. Miller is a participant in a profit
sharing plan which is a limited partner of The Burton Partnership. Also,
10,000 shares are owned of record by a revocable trust established for Mr.
Miller's family.
(6) The business address of South Atlantic Venture Fund III, Limited
Partnership ("South Atlantic") is 614 West Bay Street, Suite 200, Tampa,
Florida 33606-2704.
(7) The business address of Mr. Vehon is 1050 N. Central Expressway,
Richardson, Texas 75080.
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<PAGE>
EXECUTIVE COMPENSATION
Pursuant to SEC rules for Proxy Statement disclosure of executive
compensation, the Compensation Committee of the Board of Directors of the
Company has prepared the following Report on Executive Compensation. The
Committee intends that this report clearly describe the current executive
compensation program of the Company, including the underlying philosophy of the
program and the specific performance criteria on which executive compensation is
based. This report also discusses in detail the compensation paid to the
Company's Chief Executive Officer, Mr. Stephen H. Greenspan, during fiscal 1995.
REPORT ON EXECUTIVE COMPENSATION
Until the establishment of the Compensation Committee in November 1995, the
Board of Directors made decisions involving executive compensation based
primarily upon the recommendations of the Chairman of the Board, President and
Chief Executive Officer, Mr. Stephen H. Greenspan. Upon the establishment of
the Compensation Committee, that Committee became primarily responsible for
establishing salaries, bonuses and other compensation for the Company's
executive officers for fiscal 1995 and thereafter, as well as administering the
Company's 1995 Stock Option Plan. Each member of the Compensation Committee is
a non-employee director.
Compensation Policy. The Company's executive compensation policy is
designed to provide levels of compensation that integrate compensation with the
Company's annual and long-term performance goals and reward above-average
corporate performance, thereby allowing the Company to attract and retain
qualified executives. Specifically, the Company's executive compensation policy
is intended to:
. Provide compensation levels that are consistent with the Company's
business plan, financial objectives and operating performance;
. Reward performance that facilitates the achievement of the Company's
business plan goals;
. Motivate executives to achieve strategic operating objectives; and
. Align the interests of executives with those of shareholders and the
long-term interests of the Company by providing long-term incentive
compensation in the form of stock options.
In light of the Company's compensation policy, the components of its
executive compensation program for fiscal 1995 were base salaries, cash bonuses
and stock options.
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Base Salary. Each executive officer's base salary (including the Chief
Executive Officer's base salary) is based upon a number of factors, including
the responsibilities borne by the executive officer and his or her length of
service to the Company. Each executive officer's base salary is reviewed
annually and occasionally adjusted to account for the Company's financial
performance, any change in the executive officer's responsibilities and the
executive officer's overall performance. Factors considered in evaluating
performance include financial results such as increases in sales, net income
before taxes and earnings per share, as well as non-financial measures such as
improvements in service and relationships with customers, suppliers and
employees, and leadership and management development. These non-financial
measures are subjective in nature. No particular weight is given by the
Compensation Committee to any particular factor.
Cash Bonuses. Each executive officer, including the Chief Executive
Officer, is eligible to receive a discretionary annual cash bonus. Cash bonuses
generally are paid pursuant to a bonus program which is discretionary. In
connection with determining the discretionary bonus for any particular executive
officer, the executive officer's performance during the preceding fiscal year
and the aggregate cash compensation (salary plus bonus) to be received by such
officer if the Company achieves its projected financial performance is
evaluated, as well as such other factors as are deemed relevant in calculating
the officer's bonus. Such other factors generally include the officer's level
of responsibility and length of service to the Company. No particular weight is
given by the Compensation Committee to any particular factor.
Stock Options. In November 1995, the Company adopted the 1995 Stock Option
Plan under which executive officers, including the Chief Executive Officer, are
eligible to receive stock options. In general, stock option awards are granted
as warranted by the Company's growth and profitability.
Under the 1995 Stock Option Plan, all stock options granted to date have
had exercise prices no less than the fair market value of the Company's Common
Stock on the date of grant, although that is not a requirement of the plan. All
options granted to date to employees become exercisable in varying increments
over a four-year period. The Compensation Committee believes that these
features serve to align the interests of executives with those of shareholders
and the long-term interests of the Company.
Options to purchase 27,000 shares of Common Stock were granted to a total
of two executive officers in fiscal 1995. The amount of each executive
officer's grant of stock options was based upon an evaluation of such executive
officer's responsibilities and performance, the desirability of long-term
service from the particular executive officer, the aggregate amount of stock or
stock options previously held by such executive officer and the Company's
overall financial performance. While the Compensation Committee has not
established a target level of stock ownership by the Company's executive
officers, it does encourage such ownership and intends to gradually increase the
ownership of the Company's Common Stock by executive officers and other key
employees.
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Compensation of Chief Executive Officer. As stated above, until the
establishment of the Compensation Committee in November 1995, the Board of
Directors made decisions involving executive compensation based primarily upon
the recommendations of the Chairman of the Board, President and Chief Executive
Officer, Mr. Stephen H. Greenspan.
Mr. Greenspan's compensation for fiscal 1995 consisted only of cash
compensation in the form of his salary. In the future, Mr. Greenspan's
compensation may be comprised of each of the three components of the Company's
executive compensation program described above. In making compensation
decisions concerning Mr. Greenspan, the Compensation Committee reviews the
compensation packages of other chief executive officers of comparable, publicly-
traded retailers. Based on that review, the Committee has determined that Mr.
Greenspan's compensation is relatively low compared to that of other such
officers. Mr. Greenspan owns a substantial amount of Common Stock, however, and
therefore benefits from increases in the value of that stock.
Limitations on Deductibility of Compensation. Under the 1993 Omnibus
Budget Reconciliation Act, a portion of annual compensation payable after 1993
to any of the Company's five highest paid executive officers would not be
deductible by the Company for federal income tax purposes to the extent such
officer's overall compensation exceeds $1,000,000. Qualifying performance-based
incentive compensation, however, would be both deductible and excluded for
purposes of calculating the $1,000,000 base. Although the Compensation
Committee does not presently intend to award compensation in excess of the
$1,000,000 cap, it will continue to address this issue when formulating
compensation arrangements for the Company's executive officers.
CAMPBELL B. LANIER, III
W. SCOTT MILLER
The Report on Executive Compensation of the Compensation Committee of the
Board of Directors shall not be deemed to be incorporated by reference as a
result of any general incorporation by reference of this Proxy Statement or any
part hereof in the Company's Annual Report to Shareholders or its Report on Form
10-K.
-11-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Interlocks. Until the establishment of the Compensation Committee in
November 1995, the Board of Directors made decisions involving executive
compensation based primarily upon the recommendations of the Chairman of the
Board, President and Chief Executive Officer, Mr. Stephen H. Greenspan. During
fiscal 1995, no executive officer of the Company except Mr. Greenspan served on
the Company's Board of Directors. (The Company does not consider Mr. W. Paul
Ruben, who holds the title of Secretary, to be an executive officer of the
Company). During fiscal 1995, the Compensation Committee did not include any
member of the Board of Directors who at that time served as an officer or
employee of the Company.
Certain Transactions. Prior to the Company's initial public offering in
January 1996, the Company was operated as a privately-held business and as such
entered into various transactions in the ordinary course of business with
certain entities affiliated with Messrs. Greenspan, Ruben and Richard M. Vehon,
Sr. Mr. Greenspan is the Chairman of the Board, President and Chief Executive
Officer of the Company, and also its principal shareholder. Mr. Ruben is a
director and Mr. Vehon is a former director of the Company, and both of Messrs.
Ruben and Vehon owned greater than 10% of the outstanding Common Stock of the
Company prior to its initial public offering. Management has recently sought to
reduce the number and dollar volume of related party transactions involving the
Company. The Audit Committee of the Board of Directors is responsible for
evaluating the appropriateness of any future related party transactions.
During fiscal 1995, the shoe departments of certain of the Company's stores
were operated on a "concessionaire" basis by a company called G&D Footwear, 25%
of which is owned by each of Messrs. Greenspan and Ruben. Pursuant to this
arrangement, G&D Footwear paid the Company 10% of the net sales of the shoe
department in each of the affected stores. This arrangement resulted in
ordinary course of business payments to the Company from G&D Footwear of
approximately $62,000 in fiscal 1995. At the beginning of fiscal 1995, the
Company discontinued the leased shoe department operation run by G&D Footwear
and subsequently purchased the shoe department inventory of G&D Footwear (which
had an estimated cost to G&D Footwear of approximately $387,000) for
approximately $391,000. As of the end of fiscal 1995, the Company no longer
operated leased shoe departments in any of the Company's stores.
The Company leases its Irving, Texas store from Messrs. Greenspan, Ruben
and Vehon. Pursuant to this arrangement, the Company made lease payments of
$61,250 in fiscal 1995. The lease for this store currently provides that the
Company pay rent of $5,250 per month.
Historically, the Company purchased a portion of its inventory from, and
sold inventory to, a company called K&G Associates, 50% of which is owned by
each of Messrs. Greenspan and Ruben. Pursuant to this arrangement, the Company
purchased inventory in the amount of approximately $511,000 in fiscal 1995.
-12-
<PAGE>
During fiscal 1993, Mr. Greenspan loaned the Company $200,000, the proceeds
of which provided working capital to the Company. This loan was repaid with
interest (calculated at an interest rate of 6.5% per annum) early in fiscal
1995. Through June 30, 1995, Messrs. Greenspan and Ruben personally guaranteed
the Company's obligations to its bank lender. On June 30, 1995, they were
released from these guaranties upon the renewal of the Company's bank line of
credit.
In May 1995, the Company raised gross proceeds of $6.5 million through the
sale of Redeemable Common Stock, Series B, primarily to institutional investors.
Of such amount, $3,999,000 and $1,999,500 were invested by South Atlantic
Venture Fund III, Limited Partnership ("South Atlantic"), and ITC Holding
Company ("ITC"), entities that are now principal shareholders of the Company.
Messrs. W. Scott Miller and B. Campbell Lanier, III, directors of the Company,
are principals of South Atlantic and ITC, respectively. In addition, Mr. John
C. Dancu, the Company's Chief Financial Officer, purchased $150,000 of
Redeemable Common Stock, Series B, in that transaction. The proceeds of the
transaction were used to redeem Common Stock, Series A, from K&G's existing
shareholders, including Messrs. Greenspan, Ruben and Vehon, in the amounts of
$3,000,000, $1,519,500 and $820,500, respectively. Upon consummation of the
Company's initial public offering, the holders of Redeemable Common Stock,
Series B, were paid a dividend in the aggregate amount of approximately
$237,000. The Redeemable Common Stock, Series B, automatically converted into
Common Stock and ceased to be outstanding upon consummation of the offering.
During fiscal 1995, the Company leased one of its Atlanta stores from a
company called G&R Inc., 50% of which is owned by each of Messrs. Greenspan and
Ruben. The lease for this store provided that the Company pay G&R monthly
minimum rent equal to a specified dollar amount plus 1% of the net sales of the
store above the minimum amount on an annual basis. Pursuant to this
arrangement, the Company paid or accrued to G&R approximately $155,000 in fiscal
1995. The lease for this store was terminated (without penalty) in February
1996.
In fiscal 1995, Ellsworth Realty, L.L.C. ("Ellsworth Realty"), a limited
liability company whose shareholders are Messrs. Greenspan, Ruben and Dancu,
acquired a building located across the street from the Company's original store
in Atlanta. In February 1996, the Company relocated its original Atlanta store
in this building. The lease for the building provides for the Company to pay
Ellsworth Realty a specified amount for the warehouse and office space and a
specified amount for the retail space plus 1% of the net sales of the store in
excess of a certain threshold amount.
Management believes that the principal terms of all of the transactions
described above were no less favorable to the Company as could have been
obtained from unaffiliated third parties.
-13-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Compensation Committee Interlocks and Insider Participation - Certain
Transactions" above for a description of certain transactions and relationships
between the Company (or its subsidiaries) and other entities affiliated with
certain of its executive officers.
EXECUTIVE OFFICER COMPENSATION
TABLE I - SUMMARY COMPENSATION TABLE
The following table presents certain information required by the SEC relating
to various forms of compensation awarded to, earned by or paid to the Company's
Chief Executive Officer and the most highly compensated officers other than the
Chief Executive Officer who earned more than $100,000 during fiscal 1995 and
were serving in such capacities at the end of fiscal 1995. Such executive
officers are hereinafter referred to as the Company's "Named Executive
Officers."
<TABLE>
<CAPTION>
Long-Term
Compensation
-------------
Securities
Underlying Other Annual
Annual Compensation Options Compensation
------------------------
Name and Principal Position Fiscal Year Salary Bonus (# of Shares) ------------
- - --------------------------- ----------- ------------------------ -------------
<S> <C> <C> <C> <C> <C>
Stephen H. Greenspan,
Chairman, President and 1995 $ 92,308 $ 0 0 $2,865
Chief Executive Officer........ 1994 $100,000/1/ $ 0 0 $ 0
Martin Schwartz, Senior Vice
President and General 1995 $ 112,862 $22,539 13,500 $4,904
Merchandising Manager.......... 1994 $ 114,000 $ 0 0 $5,437
John C. Dancu, Senior Vice
President and Chief Financial
Officer........................ 1995 $ 96,923 $ 0 236,250 $3,280
</TABLE>
/1/__________________
This figure represents a consulting fee paid to Mr. Greenspan for
consulting services rendered during fiscal 1994.
-14-
<PAGE>
TABLE II - OPTION GRANTS IN FISCAL 1995
This table presents information regarding options granted to the Company's
Named Executive Officers during fiscal 1995 to purchase shares of the Company's
Common Stock. The Company has no outstanding stock appreciation rights ("SARs")
and granted no SARs during fiscal 1995. In accordance with SEC rules, the table
shows the hypothetical "gains" or "option spreads" that would exist for the
respective options based on assumed rates of annual compound stock price of 5%
and 10% from the date the options were granted over the full option term. Mr.
Greenspan was not granted any options to purchase Common Stock in fiscal 1995.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Individual Grants Annual
------------------ Rates of Stock Price
<S> <C> <C> <C> <C> <C>
No. of % of Total Appreciation for the
Securities Options Exercise Option Term
Underlying Granted to or Base -------------------------
Options Employees Price Expiration 5% 10%
Name Granted During Year ($/Share) Date ($) ($)
- - -------------- ---------- ----------- -------- ---------- -------------------------
Mr. Schwartz.. 13,500 12.5% $10.00 Jan. 2006 $84,902 $215,155
Mr. Dancu..... 236,250 -- %/(1)/ 3.81 Mar. 2005 566,076 1,434,548
- - ------------------
</TABLE>
/(1)/ Options were issued to Mr. Dancu from certain individual shareholders in
March 1995. Had these options been issued by the Company rather than such
shareholders, they would have represented 68.6% of the total options
granted to employees during the year.
-15-
<PAGE>
TABLE III - OPTION EXERCISES IN FISCAL 1995 AND FISCAL 1995 YEAR-END OPTION
VALUES
None of the Company's Named Executive Officers exercised any stock options
during fiscal 1995. The following table shows the number of shares of Common
Stock subject to exercisable and unexercisable stock options held by each of the
Named Executive Officers as of January 28, 1996. The table also reflects the
values of such options based on the positive spread between the exercise price
of such options and $10.50, which was the closing sale price of a share of
Common Stock reported in the Nasdaq National Market on January 26, 1996 (the
last trading day prior to the end of the Company's fiscal year).
<TABLE>
<CAPTION>
Number of Value of Unexercised
Shares Unexercised In-the-Money Options
Acquired Options at at Year-End
on Exercise Value Realized Year-End (#) ($)
Name (#) ($) Exercisable Unexercisable --------------------------------
- - -------------- ----------------- --------------- ------------------------------- Exercisable Unexercisable
--------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Schwartz 0 0 0 13,500 0 6,750
Mr. Dancu 0 0 236,250 0 1,570,013 0
- - ------------------
</TABLE>
(1) The value of unexercised in-the-money options at January 26, 1996 is
calculated as follows: [(Per Share Closing Sale Price on January 26, 1996)
- (Per Share Exercise Price)] x Number of Shares Subject to Unexercised
Options. The closing sale price reported by the Nasdaq National Market of
the Company's Common Stock for January 26, 1996 was $10.50 per share.
-16-
<PAGE>
PERFORMANCE GRAPH
The following indexed line graph indicates the Company's total return to
shareholders from January 24, 1996, the date on which the Company's Common Stock
began trading on the Nasdaq National Market, to March 29, 1996/1/, as compared
to the total return for the Nasdaq Composite Index and an index comprised of the
Nasdaq Retail Trade Stocks for the same period. The calculations in the graph
assume that $100 was invested on January 24, 1996 in each of the Company's
Common Stock and each index and also assumes dividend reinvestment.
1/24/96 2/29/96 3/29/96
Nasdaq Comp. $ 100.00 $ 105.39 $ 105.68
Nasdaq Retail $ 100.00 $ 109.89 $ 117.00
K&G $ 100.00 $ 145.00 $ 190.00
=============================================
/1/ Due to the short period of time between the Company's initial public
offering on January 24, 1996, and the end of fiscal 1995, the Company has
voluntarily extended the Stock Performance Graph through March 29, 1996,
the most recent date for which market and index data was available at the
time of preparation of this Proxy Statement. On April 19, 1996, the
closing sale price of the Company's Common Stock was $18.75 per share.
[GRAPH APPEARS HERE]
COMPARISON OF 3-MONTH CUMULATIVE RETURN
AMONG K&G, NASDAQ COMP. INDEX AND NASDAQ RETAIL INDEX
--- ------------ -------------
Measurement period K&G NASDAQ COMP. NASDAQ RETAIL
(Fiscal year Covered) ------ --------------- ----------------
- - --------------------- ------ --------------- ----------------
Measurement PT -
1/23/96 $ 100 $ 100 $ 100
----- ------ ------
FME 2/29/96 $ 145 $ 105.39 $ 109.89
----- ------ ------
FME 3/29/96 $ 190 $ 105.68 $ 117
----- ------ ------
-17-
<PAGE>
PROPOSAL 2 - APPROVAL OF THE COMPANY'S
DIRECTOR STOCK OPTION PLAN
Effective May 2, 1996, the Board of Directors adopted and recommended for
submission to the Company's shareholders for their approval the K&G Men's
Center, Inc. Director Stock Option Plan (the "Director Stock Option Plan"). The
purpose of the Director Stock Option Plan is to attract and retain qualified
non-employee directors who can contribute meaningfully to the Company's success.
The primary features of the Director Stock Option Plan are summarized below.
This summary is qualified in its entirety by reference to the specific
provisions of the Director Stock Option Plan, the full text of which is set
forth as Appendix A to this Proxy Statement.
PLAN SUMMARY AND OTHER INFORMATION
Purpose of the Plan. The purpose of the Directors' Plan is to encourage stock
ownership by non-employee directors by providing them a means to acquire a
proprietary interest in the Company, thereby advancing the interests of the
Company by encouraging and enabling the acquisition of its stock by directors
whose judgment and ability are relied upon by the Company for the attainment of
its long term growth and development. Accordingly, the Directors' Plan is
intended to promote a close identity of interests among the Company, the
directors and its stockholders, as well as to provide a means to attract and
retain well-qualified directors.
Stock Subject to Directors' Plan. The Board has reserved 50,000 shares of
Common Stock for issuance pursuant to awards that may be made under the
Directors' Plan. On April 19, 1996, the closing sale price per share of Common
Stock was $18.75.
Eligibility. At the present time, Messrs. Campbell B. Lanier, III and W.
Scott Miller are the only directors eligible to participate in the Directors'
Plan. All future non-employee directors of the Company will also be eligible to
participate in the Directors' Plan. Employees of the Company, whether or not
directors, are not eligible to participate in the Directors' Plan.
"Formula" Stock Option Awards. Under the Directors' Plan, each future non-
employee director of the Company will automatically receive an initial grant of
a non-qualified stock option to purchase 4,000 shares of Common Stock on the
first business day following his election or appointment. Messrs. Lanier and
Miller, who are non-employee directors of the Company as of the date hereof,
will not be eligible to receive an initial grant. The option will be granted at
an exercise price equal to the Fair Market Value of the Common Stock on the date
of grant. "Fair Market Value" means the closing price at which a share of
Common Stock was sold as of the date of grant as reported by the Nasdaq National
Market and published in the Wall Street Journal.
Subsequent Grants During Tenure as a Director. Each non-employee director
will be granted, as of the first business day of each fiscal year of the Company
following the fiscal year
-18-
<PAGE>
during which initial grants were made, a non-qualified stock option to purchase
2,500 shares of Common Stock at an exercise price equal to the Fair Market Value
on the date of grant. The first such grants will be made on February 3, 1997,
the first day of the Company's next fiscal year.
Transfer of Options. Non-employee directors may not transfer any options
issued under the Directors' Plan other than by will or the laws of intestate
succession. Any option issued to a director and outstanding on the date of his
or her death may be exercised by the administrator of the director's estate, the
executor under his or her will or the persons to whom the options will have been
validly transferred by such executor or administrator pursuant to the will or
laws of intestate succession, but not beyond the first to occur of (i) the first
anniversary of the director's death, or (ii) the specified expiration date of
the option; provided, however, that an option that is not exercised prior to the
first anniversary of the director's death and which remains exercisable on the
first anniversary will be deemed exercised on the first anniversary to the
extent the then Fair Market Value of the shares subject to the option exceeds
the Option Exercise Price. Payment of such exercise price will be effected by
withholding a number of shares of Common Stock otherwise issuable pursuant to
the option, the Fair Market Value of which on such anniversary is equal to the
Option Exercise Price. If the Fair Market Value of the Common Stock on the
first anniversary of the director's death equals or is less than the Option
Exercise Price, then the option will be deemed to have expired unexercised.
Exercise of Option. Only a non-employee director, or in the event of
disability, his or her guardian, or in the event of death, his or her legal
representative or beneficiary, may exercise options and receive deliveries of
shares. An optionee may pay for shares purchased pursuant to exercise of any
option (i) in cash, (ii) by delivering to the Company a number of shares of
Common Stock the director has beneficially owned at least six months before the
date of exercise and having an aggregate Fair Market Value equal to at least the
product of the Option Exercise Price multiplied by the number of shares the
director intends to purchase upon exercise of the option on the date of
delivery, or (iii) in a cashless exercise through a broker. No option granted
under the Directors' Plan may be exercised before the expiration of the fiscal
year for which the option was granted; provided, however, that any option
issued under the Directors' Plan will become immediately exercisable upon the
retirement of the director because of age, death or disability. No option
granted under the Directors' Plan will be exercisable after the expiration of 10
years from the date on which it is granted.
Amendment, Modification and Termination. The Board may terminate and in any
respect amend or modify the Directors' Plan; provided, however, that no such
action by the Board without the approval of the stockholders may (i) increase
the total number of shares of Common Stock available under the Directors' Plan
in the aggregate (except as otherwise provided in the Directors' Plan), (ii)
extend the period during which any option may be exercised, (iii) extend the
term of the Directors' Plan, (iv) change the option price or (v) alter the class
of persons eligible to receive options.
-19-
<PAGE>
Restrictions on Delivery of Shares; Legends. Each option will be subject to
the condition that if at any time the Compensation Committee of the Board, in
its discretion, determines that the listing, registration or qualification of
the shares covered by such option upon any securities exchange or under any
state or federal law is necessary or desirable as a condition of or in
connection with the granting of such option or the purchase or delivery of
shares thereunder, the delivery of any or all shares pursuant to such option may
be withheld unless and until such listing, registration or qualification will
have been effected or until receipt of appropriate representations or an opinion
of counsel that such disposition is exempt from such requirement under the
Securities Act of 1933 and any applicable state securities laws. The Company
may include on certificates representing shares issued pursuant to an option
such legends referring to the foregoing representations or restrictions or any
other applicable restrictions on resale as the Company, in its discretion, shall
deem appropriate.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE IN FAVOR OF APPROVAL OF THE DIRECTOR STOCK OPTION PLAN.
PROPOSAL 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of Arthur
Andersen LLP to serve as independent auditors of the Company for the fiscal year
ending February 2, 1997, and has directed that such appointment be submitted to
shareholders of the Company for ratification at the Annual Meeting. Arthur
Andersen LLP has served as independent auditors of the Company since 1994 and is
considered by management of the Company to be well qualified. If the
shareholders do not ratify the appointment of Arthur Andersen LLP, the Board of
Directors will reconsider the appointment.
Representatives of Arthur Andersen LLP will be present at the Annual Meeting
and will have an opportunity to make a statement if they desire to do so. They
also will be available to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY
-20-
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting, the persons appointed in the accompanying proxy intend to vote
the Shares represented thereby in accordance with their best judgment.
Appendix B to this Proxy Statement, a summary of the Company's 1995 Stock
Option Plan, is provided for the information of the Company's shareholders and
in order to qualify such plan under Rule 16b-3 promulgated pursuant to the
Exchange Act.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies on behalf of the Company will be
borne by the Company. In addition, directors, officers and other employees of
the Company may, without additional compensation except reimbursement for actual
expenses, solicit proxies by mail, in person or by telecommunication. The
Company will reimburse brokers, fiduciaries, custodians and other nominees for
out-of-pocket expenses incurred in sending the Company's proxy materials to, and
obtaining instructions relating to such materials from, beneficial owners.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any proposal that a shareholder may desire to have included in the
Company's proxy material for presentation at the 1997 Annual Meeting must be
received by the Company at its executive offices at 1750-A Ellsworth Industrial
Boulevard, Atlanta, Georgia 30318, Attention: Mr. John C. Dancu, on or prior to
January 6, 1997.
ANNUAL REPORT
The Company's Annual Report to Shareholders for fiscal 1995 (which is not
part of the Company's proxy soliciting material) is being mailed to the
Company's shareholders with this proxy statement.
May 7, 1996
Atlanta, Georgia
-21-
<PAGE>
APPENDIX A
----------
K&G MEN'S CENTER, INC.
DIRECTOR STOCK OPTION PLAN
THIS DIRECTOR STOCK OPTION PLAN (this "Plan") is made as of the 2nd day of
May, 1996, by K&G Men's Center, Inc., a corporation organized and doing business
under the laws of the State of Georgia (the "Company").
1. Purpose.
-------
The Board of Directors of the Company is adopting the Plan to provide
additional compensation to certain nonemployee directors of the Company, to
attract, secure and retain their services and to promote their personal interest
in the welfare of the Company by giving them an opportunity to invest in the
future success of the Company.
2. Administration.
--------------
The Board of Directors of the Company shall appoint two or more of its members
to a committee (the "Committee"), who shall initially be the members of the
Compensation Committee, which will administer the Plan on behalf of the Company.
Except as may otherwise be provided in Rule 16b-3 promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), no person
shall be appointed as a member of the Committee who is, or within one year prior
to his becoming a member of the Committee was, granted or awarded stock options
or other equity securities pursuant to the Plan or any other plan of the Company
or any affiliate, except that participation in a formula plan or participation
that does not disqualify a director from being disinterested as provided in Rule
16b-3 shall not disqualify a person from becoming a member of the Committee.
Each member of the Committee shall serve at the pleasure of the Board of
Directors, which may fill any vacancy on the Committee. The Committee shall
select one of its members as a chairman and shall hold meetings at the times and
in the places as it may deem advisable. The Committee shall take all actions by
majority decision. Any action evidenced by a written instrument that all of the
members of the Committee sign shall be as fully effective as if the Committee
had taken the action by majority vote at a meeting duly called and held.
Subject to the express provisions of the Plan, the Committee shall have
complete and conclusive authority to (i) interpret the Plan, (ii) prescribe,
amend and rescind rules and regulations relating to it, (iii) determine the
terms and provisions of the stock option agreements that the Company makes with
Optionees (the "Agreement" or collectively the "Agreements"), the terms of which
need not be identical, and (iv) make all other determinations necessary or
advisable for the administration of the Plan.
Subject to the applicable indemnification provisions of the Georgia Business
Corporation Code and the Company's Articles of Incorporation and Bylaws, the
Company may indemnify members of the Committee against the reasonable expenses,
including attorneys' fees, such members actually and necessarily incur in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal thereof, to which they or any of them may be a party by reason
of action taken or not taken in connection with the Plan or any nonqualified
stock option to which Section 421(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), does not apply ("Nonqualified Stock Option" or "NQO")
granted thereunder, and against all amounts they or any of them pay in
settlement thereof or in satisfaction of a judgment in any action, suit or
proceeding.
A-1
<PAGE>
3. Eligibility.
-----------
The Committee shall grant NQOs only to nonemployee members of the Board of
Directors of the Company. Subject to the limits set forth in this Plan, the
Committee at any time may grant additional NQOs to directors to whom the
Committee previously had granted NQOs, so that an Optionee may hold more than
one NQO at the same time.
4. Stock Subject to Plan.
---------------------
The Company has authorized and reserved for issuance upon the exercise of NQOs
pursuant to the Plan an aggregate of 50,000 shares of the $.01 par value, voting
common stock ("Common Stock") of the Company (collectively, the "Shares"). If
any NQO is canceled, expires or terminates without the respective Optionee
exercising it in full, the Committee may grant NQOs with respect to those
unpurchased Shares to that same Optionee or to other eligible individuals.
The Committee shall adjust the total number of Shares reserved for the grant
of NQOs as well as any outstanding NQOs, both as to the number of Shares and the
exercise price, for any increase or decrease in the number of outstanding Shares
resulting from a stock split or a payment of a stock dividend on the Shares, a
subdivision or combination of the Shares, a reclassification of the Shares in
accordance with the provisions of the next paragraph, a merger or consolidation
affecting the Shares or any other like changes in the Shares. The Committee
may, in its discretion, decide not to issue fractional Shares as a result of any
of these changes and, in such event, may eliminate from outstanding NQOs any
fractional Shares that result from such changes. The Committee shall not adjust
outstanding NQOs for cash dividends or the issuance of rights to subscribe for
additional stock or securities of the Company.
Except as provided in the following paragraph, after any merger of one or more
corporations into the Company, any merger of the Company into another
corporation, any consolidation of the Company and one or more other
corporations, or any other corporate reorganization to which the Company is a
party that involves any exchange, conversion, adjustment or other modification
of the outstanding NQOs or the underlying Shares, each Optionee shall receive at
no additional cost upon the exercise of his NQO, subject to any required action
by shareholders and in lieu of the number of Shares which he would otherwise
receive upon exercise of the NQO, the number and class of Shares or other
securities or any other property to which the terms of the agreement of merger,
consolidation or other reorganization would entitle the Optionee to receive, if,
at the time of the merger, consolidation or other reorganization, the Optionee
had been a holder of record of the number of Shares which he could acquire upon
exercise of the NQO. Comparable rights shall accrue to each Optionee in the
event of successive mergers, consolidations or other reorganizations.
In the event of (i) a sale or exchange of all or substantially all of the
assets or stock of the Company; (ii) a merger or consolidation of the Company
with another corporation; (iii) the liquidation or dissolution of the Company;
or (iv) any other reorganization in which the Company is a party that does not
involve any exchange, conversion, adjustment or other modification of the
outstanding NQOs, any NQO granted hereunder shall become immediately exercisable
in full and shall remain exercisable for the remaining term of the NQO,
regardless of any provisions contained in the Agreement with respect thereto
limiting the exercisability of the NQO for any length of time, subject to all
the terms hereof and of the Agreement with respect thereto not inconsistent with
this paragraph.
The Committee shall determine in its sole discretion the foregoing adjustments
and the manner of application of the foregoing provisions. Any adjustment may
provide for the elimination of any fractional Share that might otherwise become
subject to an NQO. The Committee's grant of an NQO shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes in its capital or business structure, or to merge,
consolidate, liquidate, sell or transfer all or any part of its business or
assets.
A-2
<PAGE>
5. Formula Stock Options.
---------------------
The Committee pursuant to this Plan shall grant NQOs to each eligible
nonemployee director of the Company as follows:
(a) The Committee shall grant each eligible nonemployee director who is
first elected or appointed to serve as a nonemployee director of the Company
following the effective date of the Plan, as of the first business day
following the director's election or appointment, NQOs to purchase 4,000
Shares at an exercise price equal to the then Fair Market Value (as defined
below) of the Shares;
(b) The Committee shall grant each eligible nonemployee director of the
Company, as of the first business day of each fiscal year of the Company (i)
following the fiscal year during which the Committee granted NQOs to such
eligible nonemployee director pursuant to subsection (a) above or (ii) with
respect to each eligible nonemployee director of the Company who is serving as
a nonemployee director of the Company as of the effective date of the Plan,
following the fiscal year which includes the effective date of the Plan, NQOs
to purchase 2,500 Shares at an exercise price equal to the then Fair Market
Value (as defined below) of the Shares.
Any NQOs that the Committee grants pursuant to this Section 5 of the Plan
shall be subject to such additional terms and conditions as are set forth in the
Agreement that the Committee approves for such Optionee.
For purposes of the Plan, the term "Fair Market Value" with regard to any date
means the closing price at which a share of the Common Stock of the Company
shall have been sold on that date as reported by the NASDAQ national market (or,
if applicable, as reported by a national securities exchange selected by the
Committee on which the shares of the Company are then actively traded) and
published in the Wall Street Journal. If at the time of the determination of
the Fair Market Value, shares of the Common Stock of the Company are not
actively traded on any market described above, Fair Market Value means the fair
market value of a share of the Common Stock of the Company as the Committee
determines taking into account such facts and circumstances that the Committee
deems material to the value of such shares in the hands of the Optionee.
6. Terms and Conditions of All NQOs.
--------------------------------
Each NQO that the Committee grants shall be evidenced by an Agreement in the
form and containing such other terms and conditions as the Committee from time
to time may determine, provided that each Agreement shall:
(a) state the number of Shares to which it pertains;
(b) state the exercise price;
(c) state the terms and conditions for payment;
(d) state the term of the NQO, which shall not be greater than ten years
from the date of grant and, except as otherwise provided below, the period or
periods during the term of the NQO in which the Optionee may exercise the NQO
or any portions thereof;
(e) provide that the NQO is not transferable by the Optionee other than as
permitted by (i) the will of the Optionee or (ii) the applicable laws of
descent and distribution, and further provide that the NQO is exercisable
during the Optionee's lifetime only by the Optionee except as provided in
subsection (g) of this Section 5;
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<PAGE>
(f) provide that the NQO shall terminate no later than 30 days after the
date the Optionee ceases to be a director of the Company, other than by reason
of disability (as defined in Section 22(e)(3) of the Code) or death;
(g) provide that, if the Optionee becomes disabled (as defined in Section
22(e)(3) of the Code) or dies while he is a director of the Company, as
applicable, he, in the event of his disability, or his legatees or personal
representatives, in the event of his death, may exercise the NQO (to the
extent the Optionee would have been entitled to do so at the time of his
disability or death) until the expiration of one year after the Optionee's
disability or death, or if earlier, the expiration of the NQO term, at which
time the NQO shall terminate as to the Optionee, his legatees and his personal
representatives; provided, however, that with respect to an NQO that is not
exercised prior to the earlier of such dates and which remains exercisable
immediately before the earlier of such dates, the Company shall pay the
Optionee in cash or Shares the difference between the then Fair Market Value
of the Shares subject to the NQO and the exercise price upon termination of
the NQO.
(h) provide that the NQO may not be exercised if the issuance of Shares
upon such exercise would constitute a violation of any applicable federal or
state securities or other law or valid regulation;
(i) provide that any Optionee subject to Section 16(b) of the Exchange Act
must hold the NQO or any Shares issued upon the exercise thereof for a period
of at least six months following the date of grant;
(j) provide that the Optionee may not exercise the NQO before the
expiration of the fiscal year in which the Committee granted the NQO to the
Optionee, provided, however, that the Optionee can immediately exercise his
NQO (to the extent then entitled to do so) if the Optionee ceases to be a
director of the Company by reason of disability or death; and
(k) provide that, notwithstanding any other provision of the Plan, the NQO
may not be exercised in any event if the Optionee is not serving as a director
of the Company, other than by reason of disability (as defined in Section
22(e)(3) of the Code) or death, at any time from the grant of the NQO through
the end of the fiscal year in which the Committee granted the NQO. This
condition shall not impose on the Company any obligation to retain the
Optionee as a director for any period of time.
7. Term of Plan.
------------
The effective date of the Plan shall be the date set forth in the heading of
this Plan; provided, however, that all Options granted hereunder shall be void
and of no effect unless the approval of the shareholders of this Plan shall have
been granted within the period for approval stated in Section 14 hereof. The
Plan shall terminate ten years after that effective date. The Committee may
grant NQOs pursuant to the Plan at any time from the effective date to the
termination date, subject to Section 12 of the Plan.
8. Exercise of NQO by Optionee.
---------------------------
An Optionee may exercise his NQO and purchase Shares upon exercise of such NQO
only by giving the Company a notice in writing of his intent to exercise such
NQO with respect to a specific number of Shares. The notice shall contain such
representations and warranties regarding compliance with applicable federal and
state securities laws as the Committee may reasonably request. The Optionee
must pay the purchase price in full upon the exercise of an NQO and the Company
shall not issue or deliver Shares until full payment therefor has been made.
Payment of the purchase price shall be made in cash or, alternatively, if the
applicable Agreement so provides or if the Committee so permits at the time of
such exercise, by delivery to the Company of a number of shares of capital stock
of the same class as the Shares that are the subject of the NQO having a Fair
Market Value on the date of exercise equal to the exercise price or in
combination with cash equal to the exercise price; provided, however, that the
delivery of shares of capital stock in payment of all or a portion of the
exercise price by an
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<PAGE>
Optionee subject to Section 16(b) of the Exchange Act may only be made with
shares the Optionee has owned for at least six months prior to the date of the
exercise of the NQO.
Until the Company issues a stock certificate reflecting the Shares accruing to
the Optionee upon the exercise of the NQO, the Optionee shall have no rights as
a shareholder with respect to the Shares issuable pursuant to the NQO. The
Company shall make no adjustment to the Shares for any dividends or
distributions or other rights for which the record date is prior to the issuance
of that stock certificate, except as this Plan otherwise provides.
9. Assignability.
-------------
Except as Section 6(g) of the Plan permits, no NQO or any of the rights and
privileges thereof accruing to an Optionee shall be transferred, assigned,
pledged or hypothecated in any way, whether by operation of law or otherwise,
and no such NQO, right or privilege shall be subject to execution, attachment or
similar process.
10. Limitation of Rights.
--------------------
No provision in the Plan or any NQO shall confer upon any Optionee any right
to continue as a director of the Company or interfere in any way with the right
of the Company to remove the director from its Board of Directors at any time.
Additionally, a nonemployee director's right to participate in the Plan (but not
such person's previously-granted Options) shall automatically terminate if and
when the director becomes an employee of the Company or any of its subsidiaries.
11. Amendment and Termination.
-------------------------
The Board of Directors at any time may amend or terminate the Plan without
shareholder approval; provided, however, that no such action by the Board of
Directors, without approval of the Company's shareholders, may (i) increase the
total number of Shares of Common Stock available under the Plan in the aggregate
(except as otherwise provided in Section 4), (ii) extend the term of the Plan,
(iii) alter the class of persons eligible to receive NQOs, (iv) extend the
period during which any Option may be exercised, (v) change any exercise price
for any NQOs the Committee grants under the Plan (except as otherwise provided
in Section 4) or (vi) otherwise materially increase the benefits available under
the Plan if shareholder approval of the amendment providing for such benefits is
necessary or desirable under any tax, securities or other laws to which the
Company or the Plan are subject. No amendment or termination of the Plan shall
affect the rights of an Optionee with regard to his outstanding NQOs without his
consent.
12. General Restriction.
-------------------
Notwithstanding anything contained herein or in any of the Agreements to the
contrary, no purported exercise of any NQO granted pursuant to the Plan shall be
effective without the written approval of the Company, which it may withhold, to
the extent that the exercise, either individually or together with the exercise
of other previously-exercised stock options and/or offers and sales pursuant to
any prior or contemplated offering of securities, would, in the sole and
absolute judgment of the Company, require the filing of a registration statement
with the United States Securities and Exchange Commission or with the securities
commission of any state. The Company shall avail itself of any exemptions from
registration contained in applicable federal and state securities laws which are
reasonably available to the Company on terms which, in its sole and absolute
discretion, it deems reasonable and not unduly burdensome or costly. Each
Optionee shall, prior to the exercise of an NQO, deliver to the Company such
information, representations and warranties as the Company may reasonably
request in order for the Company to be able to satisfy itself that the Shares to
be acquired pursuant to the exercise of an NQO are being acquired in accordance
with the terms of an applicable exemption from the securities registration
requirements of applicable federal and state securities laws. The Company may
include on certificates representing Shares delivered pursuant to an NQO such
legend referring to the foregoing information, representations and warranties or
any other applicable restrictions on resale as the Company, in its discretion,
shall deem appropriate. Notwithstanding the
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<PAGE>
foregoing, the Company may, in its sole discretion, elect to file such a
registration statement if it determines that to do so would be in the Company's
best interests.
13. Unfunded Plan.
-------------
The Plan shall be unfunded. Any liability of the Company with respect to any
grant of an NQO under this Plan shall be based solely on the contractual
obligations, if any, that may be created hereunder. No such liability of the
Company shall be deemed to be secured by any property of the Company.
14. Approval of Shareholders.
------------------------
The Company shall submit the Plan to its shareholders for approval within 12
months of the adoption of the Plan by the Board of Directors. Unless the
shareholders approve the Plan within said 12-month period, the Plan and all
Options granted hereunder shall be rendered immediately void and have no effect.
15. Choice of Law.
-------------
The laws of the State of Georgia shall govern the Plan and any Agreements that
the Company enters into thereunder.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed in the
form and as of the date set forth above.
K&G MEN'S CENTER, INC.
By:----------------------------------
Title:-------------------------------
[CORPORATE SEAL]
Attest:_____________________________________
Title:______________________________________
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<PAGE>
APPENDIX B
----------
K&G MEN'S CENTER, INC.
1995 STOCK OPTION PLAN
Effective November 29, 1995, the Company adopted the K&G Men's Center, Inc.
1995 Stock Option Plan (the "1995 Stock Option Plan"). The purpose of the 1995
Stock Option Plan is to (i) provide incentives to selected employees,
consultants, officers and directors of the Company to stimulate their efforts
toward the continued success of the Company and to operate and manage the
business in a manner that will provide for the long-term growth and
profitability of the Company, (ii) encourage stock ownership by selected
employees, consultants, officers and directors by providing them with a means to
acquire a proprietary interest in the Company, acquire shares of Common Stock or
to receive compensation which is based upon appreciation in the value of Common
Stock and (iii) provide a means of obtaining, rewarding and retaining key
employees, consultants, officers and directors.
The primary features of the 1995 Stock Option Plan are summarized below.
PLAN SUMMARY AND OTHER INFORMATION
General. Under the 1995 Stock Option Plan, options may be granted only to
employees, consultants, officers and directors of the Company ("Participants"),
but incentive stock options may only be granted to employees. A stock option
entitles the optionee to purchase shares of Common Stock from the Company at the
option price. Two types of options - incentive stock options ("ISOs") and
nonqualified stock options - may be granted under the Plan. The two types of
options differ primarily in the tax consequences attending the exercise of an
option and the disposition of the shares received upon exercise of an option.
See "-- Certain Federal Income Tax Consequences." No Participant may be granted
options that relate to more than 300,000 shares of Common Stock during any one
year period.
Grants Under the Plan. The Compensation Committee of the Board of Directors
administers the Plan and in that capacity designates Participants to whom
options will be granted, determines whether the option is an ISO or a
nonqualified stock option and specifies the number of shares of Common Stock
subject to each grant. All options granted under the Plan are evidenced by
Option Agreements that are subject to the applicable provisions of the Plan and
to such other terms, conditions and restrictions as the Committee may determine
to be appropriate. At the time any ISO granted under the Plan is exercised, the
Company shall be entitled to legend the certificates representing the shares of
Common Stock purchased pursuant to the option to clearly identify them as
representing the shares purchased upon the exercise of an ISO. An ISO may only
be granted within 10 years from the earlier of the date of the Plan is adopted
or approved by the Company's shareholders.
In the case of ISOs, the aggregate fair market value (as defined in the Plan)
of Common Stock with respect to which stock options intended to meet the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), become exercisable for the first time by an individual during any
calendar year under all plans of the Company may not exceed $100,000; provided
further, that if the limitation is exceeded, the ISOs which cause the limitation
to be exceeded are treated as nonqualified stock options.
B-1
<PAGE>
Option Price. The price per share for Common Stock purchased upon the
exercise of an option granted under the 1995 Stock Option Plan (the option
price) will be determined by the Compensation Committee as of the date the
option is granted and set forth in the applicable Option Agreement. The option
price of an ISO generally may not be less than the fair market value of the
Common Stock as of the date the option is granted. With respect to each grant
of an ISO to a Participant who beneficially owns more than 10% of the combined
voting power of the Company (determined by applying certain attribution rules),
the option price may not be less than 110% of the fair market value of the
Common Stock on the date the option is granted. The preceding option price
requirements do not apply to nonqualified stock options.
Exercise and Payment. An option may be exercised in accordance with the 1995
Stock Option Plan and such other terms and conditions as the Compensation
Committee may prescribe. Each option is exercisable by whom, at such time or
times, or upon the occurrence of such event or events, and in such amounts, as
the Committee shall specify in the Option Agreement; provided, however, that
subsequent to the grant of an option, the Committee, at any time before complete
termination of such option, may accelerate the time or times at which such
option may be exercised in whole or in part, and may permit the Participant or
any other designated person to exercise the option, or any portion thereof, for
all or part of the remaining option term, notwithstanding any provision of the
Option Agreement to the contrary.
The maximum period in which an ISO may be exercised is determined by the
Compensation Committee on the date of grant, but may not be longer than ten
years, provided, that, any ISO granted to a Participant who beneficially owns
more than 10% of the combined voting power of the Company (determined by
applying certain attribution rules) may not be exercisable after the expiration
of five years after the date of grant. The term of any ISO or nonqualified
stock option then shall be as specified in the applicable Option Agreement. An
option is deemed to be exercised on the date that the option price is paid to
the Company.
Before exercising an option, Participants who are officers or directors of the
Company or who hold at least 10 percent of the Common Stock ("Insiders") should
consider carefully the provisions of Section 16 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and its corresponding rules. Section
16(b), as presently in effect, generally provides that forfeiture of profits is
not required if at least six months elapse from the date the option is granted
to the date the underlying Common Stock is sold, regardless of when the option
is exercised. An Insider generally will continue to be required to forfeit any
profits resulting from an unrelated purchase of Common Stock within six months
before or after the sale of the Common Stock obtained from the exercise of the
option.
The option price must be paid in cash or a cash equivalent authorized by the
Compensation Committee in the Option Agreement. If the Option Agreement so
provides, the payment of all or part of the option price may be made by
surrendering shares of Common Stock to the Company, provided that the shares
surrendered have a fair market value (determined as of the day preceding the
date of exercise) that is not less than the option price or part thereof. In
addition, only shares that have been held by the Participant for at least six
months may be surrendered as payment of the option price.
Administration. The Compensation Committee of the Board of Directors
administers the 1995 Stock Option Plan. The Committee has authority to grant
options upon such terms (not inconsistent with the provisions of the Plan) as it
may consider appropriate. The Committee has complete authority to interpret all
provisions of the Plan; to prescribe the form of Option Agreements; to adopt,
amend and rescind rules and regulations pertaining to the administration of the
Plan; and to make all other determinations necessary or advisable for the
administration of the Plan. The Committee's determinations under the Plan need
not be uniform and may be made by it selectively among persons who receive, or
are eligible to receive, grants under the Plan (whether or not such persons are
similarly situated).
B-2
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following discussion outlines generally the federal income tax
consequences of participation under the 1995 Stock Option Plan. Individual
circumstances may vary these results. The federal income tax law and
regulations are frequently amended, and each participant should rely on his or
her own tax counsel for advice regarding federal income tax treatment under the
Plan.
Non-Qualified Stock Options. The recipient of a non-qualified option under
the 1995 Stock Option Plan is not subject to any federal income tax upon the
grant of such option nor does the grant of the option result in an income tax
deduction for the Company. As a result of the exercise of an option, the
recipient generally will recognize ordinary income in an amount equal to the
excess, if any, of the fair market value of the shares transferred to the
recipient upon exercise over the exercise price. Such fair market value
generally will be determined on the date the shares of Common Stock are
transferred pursuant to the exercise. However, if the recipient is subject to
Section 16(b) of the Exchange Act, the date on which the fair market value of
the shares transferred will be the earlier of (i) the last day of the six-month
period beginning on the date the "property" is "purchased" or (ii) the first day
on which a sale of the "property purchased" will not subject the recipient to
suit under Section 16(b) of the Exchange Act. Alternatively, if such a
recipient makes a timely election under Section 83(b) of the Code, such fair
market value will be determined on the date the shares are transferred pursuant
to the exercise without regard to the effect of Section 16(b) of the Exchange
Act. The recipient will recognize ordinary income in the year in which the fair
market value of the shares transferred is determined. The Company generally
will be entitled to a federal income tax deduction equal to the amount of
ordinary income recognized by the recipient when such ordinary income is
recognized by the recipient, provided the Company satisfies applicable federal
income tax withholding requirements.
Depending on the period the shares of Common Stock are held after exercise,
the sale or other taxable disposition of shares acquired through the exercise of
a non-qualified option generally will result in a short- or long-term capital
gain or loss equal to the difference between the amount realized on such
disposition and the fair market value of such shares when the non-qualified
option was exercised. Special tax rules apply to a recipient who exercises a
non-qualified option by paying the exercise price, in whole or in part, by the
transfer of shares of Common Stock of the Company.
Incentive Stock Options. An employee is not subject to any federal income tax
upon the grant of an incentive stock option pursuant to the 1995 Stock Option
Plan, nor does the grant of an incentive stock option result in an income tax
deduction for the Company. Further, an employee will not recognize income for
federal income tax purposes and the Company normally will not be entitled to any
federal income tax deduction as a result of the exercise of an incentive stock
option and the related transfer of shares of Common Stock to the employee.
However, the excess of the fair market value of the shares transferred upon the
exercise of the incentive stock option over the exercise price for such shares
generally will constitute an item of alternative minimum tax adjustment to the
employee for the year in which the option is exercised. Thus, certain employees
may increase their federal income tax liability as a result of the exercise of
an incentive stock option under the alternative minimum tax rules of the Code.
If the shares of Common Stock transferred upon the exercise of any incentive
stock option are disposed of after the requisite holding periods have been
satisfied, such disposition generally will result in a long-term capital gain or
loss treatment with respect to the difference between the amount realized on the
disposition and the exercise price. The Company will not be entitled to a
federal income tax deduction as a result of a disposition of such shares after
these holding periods have been satisfied.
B-3
<PAGE>
LOGO
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF K & G MEN'S CENTER, INC.
The undersigned shareholder(s) of K & G Men's Center, Inc. a Georgia
corporation (the "Company"), hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders and Proxy Statement, each dated May 7, 1996, and
hereby appoints Stephen H. Greenspan and John C. Dancu, or either of them,
proxies and attorneys-in-fact, with full power of substitution, on behalf and
in the name of the undersigned, to represent the undersigned at the 1996 Annual
Meeting of Shareholders of the Company to be held at 10:00 a.m. local time on
Friday, June 7, 1996 at the Company's headquarters located at 1750-A Ellsworth
Industrial Boulevard, Atlanta, Georgia 30318, and at any adjournment(s)
thereof, and to vote all shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set forth
below:
1. To elect Campbell B. Lanier, III to serve as the Company's Class I director
to serve a three-year term expiring 1999
[_FOR]the nominee listed above
[_]WITHHOLD AUTHORITY to vote for nominee
INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, MARK "FOR"
ABOVE, AND WRITE THE NAME OF THE NOMINEE AS TO WHOM YOU WISH TO WITHHOLD
AUTHORITY IN THE SPACE BELOW:
- - --------------------------------------------------------------------------------
2. To approve the Company's Director Stock Option Plan pursuant to which
50,000 shares of Common Stock will be reserved for future grants of options
to non-employee directors.
[_]^FOR
[_]^AGAINST
[_]^ABSTAIN
3. To ratify the appointment of Arthur Andersen LLP by the Board of Directors
of the Company as the independent auditors of the Company.
[_]^FOR
[_]^AGAINST
[_]^ABSTAIN
4. In their discretion upon such other matter or matters which may properly
come before the meeting or any adjournment(s) thereof.
<PAGE>
LOGO
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. This Proxy, when
properly executed, will be voted in accordance with the directions given by the
undersigned shareholder(s). IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR THE
DIRECTOR NOMINEE NAMED IN ITEM (1) ABOVE, AND AS THE PROXIES DEEM ADVISABLE ON
SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
Dated: _____________________, 1996
----------------------------------
Signature
----------------------------------
(Signature if held jointly)
Title or authority (if
applicable)
NOTE: PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON. IF SHARES ARE
REGISTERED IN MORE THAN ONE NAME,
THE SIGNATURE OF ALL SUCH PERSONS
ARE REQUIRED. A CORPORATION
SHOULD SIGN IN ITS FULL CORPORATE
NAME BY A DULY AUTHORIZED OFFI-
CER, STATING HIS OR HER TITLE.
TRUSTEES, GUARDIANS, EXECUTORS
AND ADMINISTRATORS SHOULD SIGN IN
THEIR OFFICIAL CAPACITY, GIVING
THEIR FULL TITLE AS SUCH. IF A
PARTNERSHIP, PLEASE SIGN IN THE
PARTNERSHIP NAME BY AN AUTHORIZED
PERSON.
