SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number 1-6083
GREENMAN BROS. INC.
(Exact name of registrant as specified in its charter)
NEW YORK 11-1771705
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
105 Price Parkway, Farmingdale, N.Y. 11735
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 293-5300
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $.10 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of April 19, 1995 was $27,302,020 based on the closing price
of same stock on that date.
The number of shares of common stock outstanding as of April 19, 1995 was
5,263,040.
Documents Incorporated by reference: Certain portions of Registrant's
definitive proxy statement with respect to its 1995 Annual Meeting of
Stockholders to be filed, pursuant to Regulation 14A under the Securities
Exchange Act of 1934, with the Commission within 120 days of the close of
Registrant's fiscal year ended January 28, 1995 are incorporated by reference
into Part III of this report.
<PAGE>
TABLE OF CONTENTS
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote of Security Holders . . . 6
PART II
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . 7
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . 9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 10
Item 8. Financial Statements and Supplementary Data . . . . . . . . 17
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . 17
PART III
Item 10. Directors and Executive Officers of the Registrant. . . . . 17
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . 17
Item 12. Security Ownership of Certain Beneficial Owners and
Management. . . . . . . . . . . . . . . . . . . . . . . . 18
Item 13. Certain Relationships and Related Transactions. . . . . . . 18
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE>
PART I
ITEM 1. BUSINESS.
(a) General
Greenman Bros. Inc., a New York corporation organized in 1946
(herein together with its wholly-owned subsidiaries called "Registrant" or
"Company"), is engaged in the wholesale distribution of general merchandise
with emphasis on housewares, toys and stationery. The principal consumer
products distributed by Registrant are housewares products, consisting of
cookware, kitchen gadgets and utensils, cleaning aids, household chemicals,
plastics and glassware; toys, games, and related products; and stationery
products and school supplies. The Company is also engaged in the retail toy
business including a retail concept developed by Registrant that offers a
broad range of educationally oriented children's toys and other products such
as books, video and audio tapes, computer software, crafts and science.
(b) Financial Information About Industry Segments
Registrant's operations fall into two industry segments. The
larger segment includes the wholesale distribution of general merchandise.
The other segment includes the retail sales of childrens toys and other
products.
The sales, operating profit and the identifiable assets
attributable to each segment for the three years ended January 28, 1995 are
set forth in Note 9 (Industry Segments) of the Notes to Consolidated
Financial Statements, which Note is incorporated herein by reference.
(c) Narrative Description of Business
Wholesale Operations
Registrant's wholesale operations are conducted from
warehouses located in Farmingdale, New York; Phillipsburg, New Jersey and
West Haven, Connecticut. Registrant services virtually every class
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of retail trade from small independent stores to drug stores, supermarkets,
variety stores, discount stores, department stores, home improvement centers
and college bookstores. Registrant believes that its broad and diversified
customer base helps protect it against the peaks and valleys that occur in
any particular segment of the retail business.
There is a continuing trend of consolidation in manufacturing,
wholesaling and retailing in all commodities distributed by Registrant.
Registrant believes that its financial strength, buying power and market
share are significant benefits both in the current marketplace and for the
future.
Retail Operations
Registrant's current retail operations include the Noodle
Kidoodle TM (TM is purposely omitted everywhere else) and Playworld Toy store
divisions. The Company is shifting its emphasis towards development and
expansion of its Noodle Kidoodle concept.
The Company opened its first Noodle Kidoodle store in Nassau
County, New York in November 1993 and opened three more stores, located in
Nassau County, New York and Bergen and Passaic Counties in New Jersey, during
fiscal 1995. The Company opened its fifth store in Essex County, New Jersey
early in fiscal 1996, and plans to open fifteen more stores during the year.
Currently these openings are planned to include additional locations in Long
Island, New York, New Jersey and locations in new markets including
Connecticut, upstate New York and Chicago, Illinois.
Noodle Kidoodle stores have to date been located in strip
centers and their size is approximately 10,000 square feet. Several of the
stores expected to open in fiscal 1996 will be located in large regional
enclosed malls. These stores focus on educationally oriented products for
children, merchandised in an entertaining and interactive environment.
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Books, video and audio tapes, computer software, arts and crafts, science and
construction are major merchandise categories. The majority of their
merchandise is delivered from the Company's warehouses with the rest drop
shipped by manufacturers. The buying and merchandising management operates
independently from the wholesale toy business and the other retail businesses
of the Company.
The Playworld division currently consists of two stores
operating under the name of Playworld Toys which are located in Nassau
County, New York, one store operating under the name Toy Park which is
located in Manhattan, New York and one licensed store operating under the
name Toy Park, which is located in Huntington, New York. On August 10, 1994
the Company announced that it would be closing its retail stores operating
under the name Playworld Toys and one leased department operation by the end
of fiscal 1995. Due to leasing issues it is now expected that two of these
stores will remain open indefinitely and consideration is being given to
changes in their format. The Playworld Stores and leased department that
were closed represented 8.0% of consolidated sales for fiscal 1995 and 7.9%
for fiscal 1994.
The remaining Playworld Toy Stores are approximately 10,000
square feet. One store is located in a strip center while the second store
is situated in a neighborhood shopping district. Stores are primarily
serviced by Registrant's warehouses located in Farmingdale, New York and
Phillipsburg, New Jersey. A relatively small amount of merchandise is drop
shipped by manufacturers directly to the stores.
The Toy Park locations are situated in neighborhood shopping
districts and are 4,000 and 7,000 square feet for the Huntington and
Manhattan stores, respectively. Toy Park carries more upscale and
educationally oriented toys and related products than the Playworld stores.
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The majority of their merchandise is delivered from the Company's warehouses
with the rest drop shipped by manufacturers.
The merchandise management for both the Playworld and Toy
Park stores are independent of the wholesale toy and the Noodle Kidoodle
businesses. However, a significant portion of the Toy Park merchandise
assortment and virtually all of the Playworld assortment is purchased by the
wholesale toy business and transferred at cost to these retail stores.
General
Backlog is not considered relevant to an understanding of any
of Registrant's businesses. Registrant is required to carry substantial
amounts of inventory in the months of June through September of each year in
order to meet pre-Christmas delivery requirements, particularly in its toy
wholesale and retail businesses.
Registrant does not have any customers that represented more
than 10% of the Company's consolidated revenues for the year ended January
28, 1995 ("fiscal 1995").
The following chart sets forth, for Registrant's last three
fiscal years, the approximate percentage of Registrant's total revenues from
operations contributed by each class of similar products:
<TABLE>
Class 1995 1994 1993
<CAPTION>
<S> <C> <C> <C>
Toys, games, and related products 56% 53% 49%
Housewares products 32% 35% 38%
Stationery products 12% 12% 13%
</TABLE>
Registrant's wholesale and retail sales of toys, games and
related products are highly seasonal. During the 1995 fiscal year, 35% of
such sales were made in November and December.
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Competition
All phases of Registrant's business are highly competitive.
In its wholesale business, Registrant competes with other distributors and,
to some extent, with certain manufacturers (including some of Registrant's
own suppliers) which sell directly to retailers. Registrant believes that
it is one of the largest wholesale distributors of housewares, toys and
stationery products in the United States. Price, service and selling terms
are the key competitive factors in the wholesale operation.
At the retail level, Registrant is in competition with all
specialty retailers of toys, educationally oriented childrens' products,
video games, traditional games, books, computer software and related
products; discount chains, large department stores and small single unit
retail shops which do business in the areas where Registrant operates.
Certain of these competitors are customers of Registrant's wholesale
operation. In retail operations, price, service, environment, variety of
merchandise, location and convenience are all key competitive factors.
Employees
Registrant employed approximately 595 persons at the end of
the 1995 fiscal year, 124 of whom were in administrative and clerical
positions, 156 in sales positions, 248 in warehouse positions and the
balance in its retail units. A substantial number of additional personnel
are employed by Registrant on a temporary basis, particularly during the pre-
Christmas season. Approximately 152 of Registrant's employees (primarily
warehouse personnel) are covered by contracts with various unions.
ITEM 2. PROPERTIES.
Registrant operates three major distribution centers, located
in three states, containing a total of approximately 629,000 square feet.
Two of these distribution centers, located in Farmingdale, New York and
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Phillipsburg, New Jersey, containing a total of approximately 569,000 square
feet, are owned by Registrant and one distribution center located in West
Haven, Connecticut, containing approximately 60,000 square feet, is held
under lease. The lease expires March 31, 1996 with options to extend it for
up to eight additional years. Retail stores are leased in all cases. A
substantial number of leases for Noodle Kidoodle stores have been signed to
date.
Registrant also subleases one former distribution center (a
105,810 square foot warehouse in Birmingham, Alabama), and two former retail
stores to unaffiliated third parties.
Registrant's executive offices are located at its Farmingdale,
New York owned facility.
Registrant believes that each of the foregoing facilities is
adequate for its present operations and such facilities are maintained in a
good state of repair. Significant increases in Registrant's wholesale or
retail operations might require additions to existing facilities or new
facilities.
Reference is made in Note 4 (Commitments and Contingencies)
of the Notes to Consolidated Financial Statements for additional information
concerning the lease obligations of Registrant.
ITEM 3. LEGAL PROCEEDINGS.
Registrant is currently involved in only ordinary and routine
litigation incidental to the Company's business, none of which is material
with respect to the Company's operations taken as a whole.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders
during the fourth quarter of the fiscal year covered by this report.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock is traded on the American Stock
Exchange (Symbol GMN). The range of high and low sales prices for the common
stock for each quarterly period during the fiscal years ended January 28,
1995 and January 29, 1994 were:
<TABLE>
Fiscal Year Ended January 28, 1995
Quarter High Low
<CAPTION>
<S> <C> <C>
First . . . . . . . . . . . . . . . . $7.50 $5.88
Second . . . . . . . . . . . . . . . . 7.25 5.75
Third . . . . . . . . . . . . . . . . 7.13 6.38
Fourth . . . . . . . . . . . . . . . . 6.50 4.38
</TABLE>
<TABLE>
Fiscal Year Ended January 29, 1994
Quarter High Low
<CAPTION>
<S> <C> <C>
First . . . . . . . . . . . . . . . . $4.88 $4.00
Second . . . . . . . . . . . . . . . . 5.25 4.13
Third . . . . . . . . . . . . . . . . 5.50 4.25
Fourth . . . . . . . . . . . . . . . . 6.88 5.00
</TABLE>
As of January 28, 1995 there were 600 holders of record of the
Company's common stock. The Company has followed a policy of reinvesting
earnings in the business and consequently has not paid any cash dividends.
At the present time, no change in this policy is under consideration by the
Board of Directors. The payment of cash dividends in the future will be
determined by the Board of Directors based on conditions then existing,
including the Company's earnings, financial requirements and condition,
opportunities for reinvesting earnings, business conditions and other
factors. Such payment is also subject to certain restrictions on the payment
of dividends pursuant to certain covenants in its revolving credit agreement.
See Note 3 (Long-Term Debt) of the Notes to Consolidated Financial
Statements.
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<PAGE>
On February 4, 1993, Registrant's Board of Directors authorized
the repurchase by Registrant of up to 500,000 shares of its common stock in
the open market or in privately negotiated transactions from time to time
depending upon prices and market conditions. As of April 13, 1995 the
Company had repurchased 413,600 of the authorized shares. The Board, at that
time, decided to rescind its authorization for the remainder of the shares.
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ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
For the Years Ended
1/28/95 1/29/94 1/30/93 2/1/92 2/2/91
(52 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks)
(in thousands, except per share data)
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net sales $ 136,502 $ 142,850 $ 154,738 $ 164,568 $ 144,021
Net income (loss) from:
Continuing operations $ (3,394) $ 709 $ 1,801 $ 3,928 $ (1,034)
Discontinued operations - - - - (13,893)
Extraordinary item (bond repurchase) - - - (263) 325
Net income (loss) $ (3,394) $ 709 $ 1,801 $ 3,665 $ (14,602)
Net income (loss) per share from:
Continuing operations $ (.65) $ .13 $ .32 $ .71 $ (.17)
Discontinued operations - - - - (2.34)
Extraordinary item (bond repurchase) - - - (.05) .06
Net income (loss) per share $ (.65) $ .13 $ .32 $ .66 $ (2.45)
Total assets $ 59,819 $ 63,787 $ 68,386 $ 66,374 $ 78,390
Long term debt - - - - 14,877
Obligations under capital leases 572 636 696 752 804
Dividends declared per common share - - - - -
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
In the fiscal year ended January 28, 1995 ("fiscal 1995")
the Company reported a net loss of $3.4 million ($.65 per share) compared
to net income of $.7 million ($.13 per share) and $1.8 million ($.32 per
share) for fiscal 1994 and 1993, respectively. The net loss for fiscal 1995
versus net income for fiscal 1994 was primarily attributable to the net
charge for Playworld Toy Stores closings of $2.3 million ($.45 per share)
and lower wholesale earnings resulting from the decline in wholesale
revenues.
The decrease in fiscal 1994 versus fiscal 1993 was primarily
attributable to lower wholesale earnings resulting from decline in revenues
and slightly lower margins and a loss on retail operations versus income in
the 1993 fiscal year.
Revenues
Sales in fiscal 1995 were $136.5 million versus $142.9
million and $154.7 million in fiscal 1994 and 1993, respectively.
Wholesale sales decreased $8.9 million or 7.3% to $113.2
million in fiscal 1995 versus fiscal 1994. The decline reflects lower
volume to our existing customer base in all merchandise categories offset
by increased business and customer base in the chain drug, deep discount
drug and supermarket channels of distribution. Wholesale sales are expected
to continue to decline in fiscal 1996 at a similar rate.
Retail sales of our Playworld Toy Stores and Noodle Kidoodle
operation represented 17.1% of total sales in fiscal 1995 compared to 14.5%
in fiscal 1994. Overall retail sales increased 12.5% to $23.3 million in
fiscal 1995 versus fiscal 1994. Comparable store sales decreased 3.4% as a
result of the announcement on August 10, 1994 that the Company was closing
its retail stores operating under the name Playworld Toy Stores and one
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leased department operation. The improvement in overall sales resulted from
the opening of three Noodle Kidoodle stores during fiscal 1995 and full
year results for our first Noodle Kidoodle store opened in the latter part
of fiscal 1994. Retail sales are expected to be over 60% higher for fiscal
1996 due to the combination of expected openings of approximately sixteen
additional Noodle Kidoodle stores, a full year for the three new stores
opened in fiscal 1995 and increases in existing stores partially offset by
the closing of the Playworld Toy Stores and one leased department. Sales
for the closed Playworld stores were $10,923, $11,257 and $10,955 for
fiscal 1995, 1994 and 1993, respectively.
The decrease in the Company's sales of 7.7% in fiscal 1994
versus fiscal 1993 resulted from a 10.5% decline in our wholesale business
partially offset by higher retail sales. The decline in wholesale sales
resulted from a combination of factors, including weak retail sales in our
product lines, bankruptcies and more direct purchases from manufacturers by
certain of our customers. The improvement in overall retail sales resulted
from the opening of our first Noodle Kidoodle store, two additional
Playworld holiday stores and full year results for two Playworld and two
leased departments which were opened in the latter part of fiscal 1993.
Gross Profit
The Company's gross profit as a percentage of sales for
fiscal 1995 was 24.1% versus 23.8% and 24.3% for fiscal 1994 and fiscal
1993, respectively. The increase in the overall gross profit percentage of
.3% in fiscal 1995 versus fiscal 1994 was primarily attributable to higher
margins in the retail segment and an increase in the sales mix of higher
margin retail sales in relation to the total business partially offset by
lower margins in the wholesale segment.
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<PAGE>
Margins in the wholesale segment decreased to 21.7% in
fiscal 1995 from 21.9% in fiscal 1994. The decrease resulted primarily
from the decline in the wholesale business sales in product lines
(primarily housewares) that have traditionally carried higher margins
offset by a LIFO benefit of $.2 million or .2% in fiscal 1995 versus a LIFO
charge of $.2 million or .2% in fiscal 1994. Margins in the retail segment
increased .8% to 35.9% in fiscal 1995 versus 35.1% in fiscal 1994. The
improvement resulted primarily from increased sales in the Noodle Kidoodle
stores which operate with higher margins.
The decrease of .5% in the Company's gross profit in fiscal
1994 versus fiscal 1993 was primarily attributable to lower margins in the
wholesale segment partially offset by an increase in sales mix of higher
margin retail sales in relation to the total business. Margins in the
wholesale segment decreased .9% primarily from the decline in product lines
(primarily housewares) that have traditionally carried higher margins with
.2% of the decrease was attributable to the LIFO charge in fiscal 1994.
Retail segment margins remained flat at 35.1% in both fiscal 1994 and 1993,
respectively.
Operating Expenses
Expenses other than interest and provision for store
closings and restructured operations totalled $34.9 million in fiscal 1995
versus $33.1 million and $34.0 million in fiscal 1994 and 1993,
respectively. Operating expenses as a percent of sales were 25.5%, 23.2%
and 22.0% for fiscal 1995, 1994 and 1993, respectively.
Wholesale expenses as a percent of sales for fiscal 1995
were 20.2% versus 19.3% in fiscal 1994. The increase resulted primarily
from revenue decreases where selling and distribution expense reductions
did not keep pace with revenue reductions. The operating expenses for the
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retail segment increased 4.0% as a percent of sales in fiscal 1995 versus
fiscal 1994. The increase resulted from higher selling expenses due to
lower comparable store sales in the Playworld operation and costs
associated with the opening of Noodle Kidoodle stores that did not reach
maturity by the end of fiscal 1995.
The increase of .9% in the Company's operating expenses as a
percent of sales for fiscal 1994 versus fiscal 1993 resulted primarily from
higher selling expenses as percent of sales in the retail segment due to
lower comparable Playworld Toy Store sales and costs associated with the
development of the concept and the opening of the first Noodle Kidoodle
store. In the wholesale segment expenses remained virtually flat which is
substantially attributable to the steps that the Company took through the
first phases of the reorganization and consolidation of its wholesale
segment which was reported in fiscal 1993.
Provision for Store Closings and Restructured Operations
The Company recorded a pre-tax provision for closing the
stores operating under the name Playworld Toy Stores in the amount of $3.9
million ($2.3 million or $.45 per share net of income taxes) in fiscal 1995
of which $3.5 million was recorded during the second quarter and $.4
million was provided during the fourth quarter. The provision reflects a
one time charge to cover losses from store operations from the date of
announcement until closing, employee severance costs, estimated lease
liabilities, losses on liquidation of inventories and disposition of assets
and other related restructuring costs.
Due to leasing issues it is now expected that two of the
Playworld stores will remain open indefinitely and consideration is being
given to changes in their format.
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<PAGE>
The Company recorded a pre-tax provision for restructured
wholesale operations in the amount of $1.1 million in fiscal 1993 ($.6
million or $.12 per share net of income taxes). The provision included
anticipated severance and relocation costs, as well as costs resulting from
realigning the distribution of merchandise among the Company's warehouses.
The restructuring resulted in the consolidation of the three
divisional commodity-based organizations into a single general merchandise
distribution company in order to lower costs by streamlining the
administrative, sales and purchasing functions and by enhancing the ability
to market multiple commodities to the customer base that we expect to serve
in the future.
Interest Expense and Income
Pre-tax interest expense was $.08 million in fiscal 1995 and
$.1 million in both fiscal 1994 and 1993, respectively. The Company did
not require any seasonal borrowings in fiscal 1995 or 1994.
Pre-tax interest income was $.4 million in both fiscal 1995
and 1994 versus $.6 million for fiscal 1993. Interest income is derived
from the Company's investment of cash in high grade commercial paper, U.S.
Treasury bills and tax exempt money market funds as well as additional
vendor cash discounts for early payment of dated invoices. The decrease in
interest income for fiscal 1994 versus fiscal 1993 resulted primarily from
lower average rates of 2.7% versus 4.3% on the investments.
Income Taxes
The Company recorded a tax benefit based on an effective
income tax rate of 38.2% for fiscal 1995. In fiscal 1994 and 1993 the
Company recorded a tax provision based on an effective income tax rate of
40.4% and 38.7%, respectively. The Company adopted SFAS 109 in fiscal 1994
which resulted in no material impact on the Company's results of operations
or financial position.
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LIQUIDITY AND SOURCES OF CAPITAL
The Company's cash position (including cash equivalents) was
$10.9 million at January 28, 1995, $5.8 million at January 29, 1994 and
$10.5 million at January 30,1993.
Cash flows provided from operating activities for the year
ended January 28, 1995 were $7.6 million versus cash flows used of $3.0
million for the year ended January 29, 1994. Net loss before non-cash
expenditures of depreciation, provision for doubtful accounts,
restructuring charges and deferred income taxes used $1.3 million of cash
offset by changes in working capital components which contributed
$8.9 million of cash for fiscal 1995. The working capital contribution to
cash was primarily from decreases in inventory levels of $10.4 million. In
fiscal 1994, net earnings before non-cash expenditures contributed cash of
$1.9 million less cash required for working capital components of $4.9
million. The working capital requirements included a $1.6 million
prepayment of dated invoices to vendors, increased inventories of $1.5
million and a decrease in income tax liability of $1.2 million.
In fiscal 1995, a total of $2.5 million of cash was used
for investing activities. Approximately $4.0 million was utilized for
property additions offset by proceeds from the sale of marketable
securities of $1.0 million and proceeds from a life insurance policy of $.5
million. In fiscal 1994, investing activities provided cash of $.2 million
of which approximately $3.0 million was provided from the redemption of
certain U.S. Treasury securities offset by $1.0 million of cash used to
purchase a Treasury bill in the same year and $2.0 million was utilized for
property additions. The 1995 property additions resulted primarily from the
opening of three Noodle Kidoodle stores and construction in progress on a
fourth store, installation of a warehouse management system and an upgrade
to the data processing system.
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<PAGE>
The Company has budgeted approximately $10.0 million for various capital
additions in fiscal 1996, primarily relating to the opening of sixteen
additional Noodle Kidoodle stores. The balance of the additions are for
the distribution facilities and data processing.
Cash used in financing activities of $1.9 million in
fiscal 1994 was primarily due to the repurchase of 413,600 shares of the
Company's common stock at an average price of $4.52 per share. The Company
had no additional repurchases of stock in fiscal 1995 and expects none for
fiscal 1996.
The Company has an unsecured revolving credit facility from
a bank which currently provides for maximum borrowing of $10.0 million that
expires in June, 1995. There were no borrowings under this agreement in
fiscal 1995 and 1994. The Company is currently negotiating a new credit
agreement which is expected to be in place upon the expiration of the prior
agreement.
The Company anticipates capital expenditures of
approximately $10.0 million for fiscal 1996. These expenditures and the
working capital requirements for the expected new stores will result in the
need for capital in excess of existing cash and cash to be generated from
operations. We are reviewing various options at this time, however it is
likely that the Company will utilize bank borrowings for several months
during the second half of the year.
IMPACT OF INFLATION
Inflation has not been a significant factor to the Company
for many years. The Company attempts to pass on increased costs by
increasing product prices over time.
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<PAGE>
The Company utilizes the LIFO method of accounting for
certain of its inventories which results in a better matching of costs and
revenues by reporting the cost of products sold in the financial statements
at a level which approximates current costs.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Reference is made to Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
NONE.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to directors and executive officers
of the Company is incorporated herein by reference to the information set
forth under the captions "Election of Directors", "Executive Officers" and
"Compliance with Section 16(a) of the Exchange Act" in the Company's Proxy
Statement for its 1995 Annual Meeting of Stockholders (the "1995 Proxy
Statement").
ITEM 11. EXECUTIVE COMPENSATION.
Information with respect to executive compensation is
incorporated herein by reference to the information set forth under the
captions "Committees, Meetings and Director Compensation" and "Executive
Compensation", excluding the information under the captions "Executive
Compensation - Compensation Committee Report on Executive Compensation" and
"Executive Compensation - Performance Graph", in the Company's 1995 Proxy
Statement.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Information with respect to security ownership is
incorporated herein by reference to the information set forth under the
caption "Security Ownership" in the Company's 1995 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information with respect to certain relationships and
related transactions is incorporated herein by reference to the
information, if any, set forth under the caption "Certain Relationships and
Related Transactions" in the Company's 1995 Proxy Statement.
-18-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a) 1. Financial Statements Page
Report of independent certified public accountants . . . 23
Consolidated balance sheets at January 28, 1995 and
January 29, 1994 . . . . . . . . . . . . . . . . . . . 24
Consolidated statements of income for the years
ended January 28, 1995, January 29, 1994 and
January 30, 1993 . . . . . . . . . . . . . . . . . . . 25
Consolidated statements of stockholders' equity
for the years ended January 28, 1995, January 29, 1994
and January 30, 1993 . . . . . . . . . . . . . . . . . 26
Consolidated statements of cash flows for the years
ended January 28, 1995, January 29, 1994 and
January 30, 1993 . . . . . . . . . . . . . . . . . 27
Notes to consolidated financial statements . . . . . 28-35
2. Schedules
VIII Valuation and qualifying accounts. . . . . . . 36
All other schedules have been omitted because they are not applicable or
the required information is shown in the financial statements or the notes
thereto.
The individual financial statements and schedules of Registrant have been
omitted since consolidated financial statements have been filed and
Registrant is primarily an operating company and all subsidiaries included
in the consolidated financial statements filed are wholly-owned
subsidiaries.
Shareholders may obtain a copy of any exhibit not contained herein by
writing to William A. Johnson Jr., Vice President, Chief Financial Officer
and Secretary, Greenman Bros. Inc., 105 Price Parkway, Farmingdale, New
York 11735.
-19-
<PAGE>
3. Index to Exhibits Page
3.01 Restated Certificate of Incorporation of Registrant,
with all amendments (Incorporated by reference to
Exhibits 3.01,3.02, 3.03, 3.04 to Registrant's Annual
Report on Form 10-K for the fiscal year ended January 29,
1983 and Exhibit 3.01 to Registrant's Annual Report on
Form 10-K for the fiscal year ended January 28, 1989). . . **
3.02 By-Laws of Registrant, as amended through July 9, 1991
(Incorporated by reference to Registrant's Report on Form
10-K for the fiscal year ended January 29, 1994) . . . . . **
4.01 Rights Agreement, dated as of May 6, 1988, between
Registrant and Manufacturers Hanover Trust Company, as
Rights Agent (Incorporated by reference to Registrant's
Report on Form 8-K dated May 6, 1988 and the exhibits
filed therewith). . . . . . . . . . . . . . . . . . . . . **
4.02 First Amendment to Rights Agreement dated as of November
22, 1991 (Incorporated by reference to Registrant's
Report on Form 8-K, dated November 22, 1991, and the
exhibits filed therewith) . . . . . . . . . . . . . . . . **
4.03 Credit Agreement, dated as of April 16, 1992, between
Registrant and Chemical Bank as successor by merger to
Manufacturers Hanover Trust Company (the "Credit
Agreement")(Incorporated by reference to Item 6(a) to
Registrant's quarterly report on Form 10-Q for the period
ended May 2, 1992 and the exhibits filed therewith) . . . **
4.04 Amendment to the Credit Agreement dated August 13, 1992
(Incorporated by reference to Exhibit 4.04 to Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 30, 1993) . . . . . . . . . . . . . . . . . . . . **
4.05 Second Amendment and Waiver to the Credit Agreement dated
September 1, 1993 (Incorporated by reference to Item 6(a)
to Registrant's quarterly report on Form 10-Q for the period
ended October 3, 1993 and the exhibits filed therewith) . **
10.01 Stock Incentive Plan and Outside Directors Stock Option
Plan, dated April 26, 1994 (Incorporated by reference to
Registrant's Form S-8 Registration Statement (Commission
File No. 33-82104), effective July 26, 1994 and the
exhibits filed therewith)*. . . . . . . . . . . . . . . . **
10.02 Employment Agreement by and between Registrant and
Stanley Greenman dated as of February 1, 1995* . . . . . 37-51
10.03 Employment Agreement by and between Registrant and
Stewart Katz dated as of February 1, 1995*. . . . . . . . 52-66
10.04 Non-Contributory Insured Medical Reimbursement Plan
(Incorporated by reference to Exhibit 10.05 to Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 30, 1993)*. . . . . . . . . . . . . . . . . . . . **
-20-
<PAGE>
10.05 Short Term Executive Incentive Bonus Plan for the fiscal
year ended January 29, 1994 (Incorporated by reference to
Exhibit 10.06 to Registrant's Annual Report on Form 10-K
for fiscal year ended January 29, 1994)*. . . . . . . . . **
10.06 Long Term Executive Incentive Bonus Plan for the fiscal
year ended January 29, 1994 (Incorporated by reference to
Exhibit 10.07 to Registrant's Annual Report on Form 10-K
for fiscal year ended January 29, 1994)*. . . . . . . . . **
10.07 Agreement and Plan of Merger dated February 1, 1994 by
and between Registrant and certain wholly-owned
subsidiaries of the Registrant (Incorporated by reference
to Exhibit 10.08 to Registrant's Annual Report on Form 10-K
for fiscal year ended January 29, 1994) . . . . . . . . . **
11.01 Computation of Earnings Per Share . . . . . . . . . . . . 67
21 Subsidiaries of Registrant . . . . . . . . . . . . . . . 68
* Management Contract or Compensation Plan or Agreement
required to be filed as an Exhibit pursuant to Item 14(c)
of Form 10-K.
** Previously filed.
(b) Reports on Form 8-K
None
-21-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
GREENMAN BROS. INC.
(Registrant)
April 19, 1995 BY:Stanley Greenman
Stanley Greenman, Chairman
of the Board, Chief Executive
Officer, Director
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the Registrant in the capacities and on the date indicated.
Stanley Greenman Joshua Biblowitz
Stanley Greenman,Chairman of the Joshua Biblowitz, Director
Board, Chief Executive Officer,
Director (Principal Executive Officer)
Robin Farkas
Robin Farkas, Director
Stewart Katz
Stewart Katz, President, Chief Lester Greenman
Operating Officer, Director Lester Greenman, Director
Joseph Madenberg
William A. Johnson Jr. Joseph Madenberg, Director
William A. Johnson Jr., Vice-
President, Chief Financial Officer
and Secretary (Principal Financial Barry W. Ridings
and Accounting Officer) Barry W. Ridings, Director
Robert Stokvis
Robert Stokvis, Director
Benjamin Zdatny
Benjamin Zdatny, Director
-22-
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors
of Greenman Bros. Inc.:
We have audited the accompanying consolidated balance sheets of
Greenman Bros. Inc. and Subsidiaries as of January 28, 1995 and January 29,
1994 and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended
January 28, 1995. Our audits also include the financial statement schedules
listed in the index at Item 14 (a) 2. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Greenman Bros. Inc. and Subsidiaries as of January 28, 1995 and January 29,
1994, and the results of their operations and cash flows for each of the
years in the three year period ended January 28, 1995 in conformity with
generally accepted accounting principles. Further, in our opinion, such
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
Janover Rubinroit & Co.
Certified Public Accountants
New York, New York
April 18, 1995
-23-
<PAGE>
<TABLE>
GREENMAN BROS. INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 28, 1995 AND JANUARY 29, 1994
1995 1994
ASSETS (in thousands)
<CAPTION>
<S> <C> <C>
Current assets:
Cash and cash equivalents $10,908 $ 5,764
Short-term investments - 1,000
Trade receivables, less allowance for doubtful
accounts of $983 and $874, respectively 13,622 14,737
Merchandise inventories 20,264 30,667
Prepaid expenses and other current assets 1,926 1,952
Recoverable income taxes 1,429 -
Deferred income taxes 1,815 1,219
Total current assets 49,964 55,339
Property, plant and equipment at cost 17,363 14,991
Less accumulated depreciation 7,690 7,347
9,673 7,644
Other assets 182 804
$59,819 $63,787
</TABLE>
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
<S> <C> <C>
Current liabilities:
Trade accounts payable $12,109 $14,182
Obligations under capital leases 64 60
Accrued expenses and taxes 5,858 4,418
Income taxes 133 137
Total current liabilities 18,164 18,797
Obligations under capital leases 572 636
Deferred income taxes 213 290
Commitments and contingencies
Stockholders' equity:
Preferred stock - authorized 500 shares,
par value $1.00 (none issued)
Preferred stock - Series A Junior Participating -
authorized 440 shares, par value $1.00 (none issued)
Common stock - authorized 10,000 shares, par
value $.10; issued 6,185 and 6,119 shares, respectively 619 612
Capital in excess of par value 25,801 25,608
Retained earnings 18,242 21,636
44,662 47,856
Less treasury stock, at cost - 924 shares 3,792 3,792
40,870 44,064
$ 59,819 $ 63,787
The accompanying notes are an integral part of the financial statements
</TABLE>
- 24 -
<PAGE>
<TABLE>
GREENMAN BROS. INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE YEARS ENDED JANUARY 28, 1995,
JANUARY 29, 1994 AND JANUARY 30, 1993
1995 1994 1993
(in thousands,
except per share data)
<CAPTION>
<S> <C> <C> <C>
Net sales $136,502 $142,850 $154,738
Costs and expenses:
Cost of products sold 103,537 108,830 117,213
Selling and administrative expenses 33,507 31,936 33,179
Depreciation 1,101 896 795
Provision for doubtful accounts 250 275 42
Provision for store closings and
restructured operations 3,900 - 1,050
142,295 141,937 152,279
Operating income (loss) (5,793) 913 2,459
Interest income 372 392 624
Interest expense (75) (115) (143)
Income (loss) before income taxes (5,496) 1,190 2,940
Income taxes (benefit) (2,102) 481 1,139
Net income (loss) $ (3,394) $ 709 $ 1,801
Net income (loss) per share $ (.65) $ .13 $ .32
The accompanying notes are an integral part of the financial statements
</TABLE>
-25-
<PAGE>
<TABLE>
GREENMAN BROS. INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JANUARY 28, 1995
JANUARY 29, 1994 AND JANUARY 30, 1993
(in thousands)
Capital in Treasury Stock
Common Stock excess of Retained (at cost)
Shares Amount par value earnings Shares Amount
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Balance - February 1, 1992 6,051 $605 $25,281 $19,126 511 $1,920
Exercise of stock options
including related tax benefits 66 7 313 - - -
Net income for the year - - - 1,801 - -
Balance - January 30, 1993 6,117 $612 $25,594 $20,927 511 $1,920
Exercise of stock options
including related tax benefits 2 - 14 - - -
Purchase of treasury stock - - - - 413 1,872
Net income for the year - - - 709 - -
Balance - January 29,1994 6,119 $612 $25,608 $21,636 924 $3,792
Exercise of stock options
(net of stock tendered)
including related tax benefits 66 7 193 - - -
Net loss for the year - - - (3,394) - -
Balance - January 28,1995 6,185 $619 $25,801 $18,242 924 $3,792
The accompanying notes are an integral part of the financial statements.
</TABLE>
-26-
<PAGE>
<TABLE>
GREENMAN BROS. INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JANUARY 28, 1995,
JANUARY 29, 1994 AND JANUARY 30,1993
1995 1994 1993
(in thousands)
<CAPTION>
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $(3,394) $ 709 $ 1,801
Adjustments to reconcile to net cash provided (used):
Depreciation 1,101 896 795
Provision for doubtful accounts 250 275 42
Restructuring charges - non cash portion 834 - 1,050
Deferred income taxes - non-current (77) 25 265
Decrease (increase) in non-cash working
capital accounts:
Trade receivables, deferred income taxes, prepaid
expenses and other current assets (884) (71) 2,186
Merchandise inventories 10,403 (1,459) (1,523)
Trade accounts payable, accrued expenses
and taxes (629) (2,216) (1,542)
Income taxes ( 4) (1,199) 174
Net cash provided by (used in)
operating activities 7,600 (3,040) 3,248
Cash flows from investing activities:
Proceeds from sale of marketable securities 1,000 2,987 -
Purchase of short-term marketable securities - (1,000) (989)
Purchase of long-term marketable securities - - (1,998)
Property additions (3,964) (2,006) (1,166)
Other 492 206 234
Net cash provided by (used in)
investing activities (2,472) 187 (3,919)
Cash flows from financing activities:
Reduction in long-term debt and obligations
under capital leases (64) (60) (56)
Purchase of treasury stock - (1,872) -
Proceeds from exercise of employee stock options 80 14 290
Net cash provided by (used in)
financing activities 16 (1,918) 234
Net increase (decrease) in cash and cash equivalents 5,144 (4,771) (437)
Cash and cash equivalents - beginning of year 5,764 10,535 10,972
Cash and cash equivalents - end of year $10,908 $ 5,764 $ 10,535
Supplemental cash flow information:
Net cash paid during the year for:
Interest expense $ 75 $ 115 $ 143
Income taxes 328 1,068 1,633
The accompanying notes are an integral part of the financial statements.
</TABLE>
- 27 -
<PAGE>
GREENMAN BROS. INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:
The following summary of the Company's major accounting policies is
presented to assist in the interpretation of the financial statements.
Principles of consolidation
The consolidated financial statements include the accounts of the parent
company and all subsidiary companies. Intercompany balances and material
transactions are eliminated in consolidation. The Company and its consolidated
subsidiaries are on a 52-53 week accounting period ending on the Saturday
closest to January 31. Fiscal 1995, 1994 and 1993 each contained 52 weeks.
Cash equivalents and short-term investments
All highly liquid investments purchased with a maturity of three months or
less are considered to be cash equivalents; investments with maturities between
three and twelve months are considered to be short-term investments. These
investments are stated at cost which approximates market value.
Concentration of credit risk
The Company grants credit to its customers, who are primarily retailers
operating under numerous retail formats. Sales are made primarily in the
northeastern United States. The Company places its temporary cash investments
in high grade instruments with high credit quality financial institutions and,
by policy, limits the amount of credit exposure to any one financial
institution.
Inventories
Inventories are stated at the lower of cost or market. Inventory costs have
been determined by the last-in, first-out (LIFO) method for approximately 31%
and 40% of inventories in fiscal 1995 and 1994, respectively. Costs of other
inventories have been determined by the first-in, first-out (FIFO) method. The
accumulated LIFO provision amounted to $570 and $763 at January 28, 1995 and
January 29, 1994, respectively. The effect of LIFO upon income was to
(decrease) increase cost of products sold by $(193), $225 and $(51) in fiscal
1995, 1994 and 1993, respectively.
Earnings per share
The computation of earnings per share is based on the weighted average
number of outstanding common shares and equivalents (stock options) of 5,220,
5,338, and 5,575 for fiscal 1995, 1994 and 1993, respectively. The inclusion
of common stock equivalents had no significant dilutive effect or were
antidilutive and therefore were not utilized in the computations of net income
(loss) per share.
Property, plant and equipment
Plant and equipment is stated at cost and is depreciated on a straight-line
basis over estimated useful lives. Repairs and maintenance are charged to
expense as incurred; renewals and betterments, which significantly extend the
useful lives of existing plant and equipment, are capitalized.
- 28 -
<PAGE>
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Leasehold improvements are amortized over the terms of the respective leases
or over their useful lives, whichever is shorter. Useful lives vary among the
classifications, but generally fall within the following ranges:
Buildings and improvements 10-40 years
Fixtures and equipment 4-10 years
Pre-opening expenses
Costs incurred in the opening of new stores are amortized over the first
twelve months of operations. These costs were not material.
Income taxes
In fiscal 1994, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 109. Deferred taxes provided under SFAS No. 109 result
principally from temporary differences in depreciation, capitalized inventory
costs, restructuring charges and allowance for doubtful accounts. Upon
implementation of SFAS No. 109, there was no material impact on the Company's
results of operations or financial position. The Company previously accounted
for income taxes based upon SFAS No. 96.
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT:
<TABLE>
January 28, 1995 January 29, 1994
(in thousands)
Owned Leased Total Owned Leased Total
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Land $ 939 $ 129 $ 1,068 $ 939 $ 129 $ 1,068
Buildings and improvements 4,875 1,048 5,923 4,495 1,048 5,543
Fixtures and equipment 7,195 - 7,195 6,245 - 6,245
Leasehold improvements 3,177 - 3,177 2,135 - 2,135
16,186 1,177 17,363 13,814 1,177 14,991
Less accumulated
depreciation 7,258 432 7,690 6,941 406 7,347
$ 8,928 $ 745 $ 9,673 $ 6,873 $ 771 $ 7,644
</TABLE>
NOTE 3 - LONG-TERM DEBT:
The Company has an unsecured revolving credit agreement with a bank which
provides for maximum borrowings of $10 million until June 30, 1995. Interest
on borrowings is at the lesser of the bank's prime rate or at a rate of 3/4% in
excess of the Eurodollar Lending Office rate of the bank for U.S. dollar
deposits. The agreement provides for a commitment fee of 1/4% per annum on the
average daily amount of the unused portion of the commitment. The revolving
credit agreement contains various restrictive covenants which, among other
items, require the maintenance of minimum levels of working capital and net
worth. The payment of cash dividends is limited to 25% of the preceding year's
net income. The Company had no borrowings under this agreement during fiscal
1995 and 1994.
- 29 -
<PAGE>
NOTE 4 - COMMITMENTS AND CONTINGENCIES:
Operating leases
Minimum annual commitments under non-cancellable leases in effect at January
28, 1995 are as follows:
<TABLE>
Sublease
Capital Operating Rental
Leases Leases Income
(in thousands)
<CAPTION>
<C> <C> <C> <C>
1996 $107 $ 3,791 $ 897
1997 106 4,015 750
1998 105 3,435 254
1999 104 3,357 157
2000 103 3,326 161
Thereafter 309 17,067 690
Total minimum obligations 834 $34,991 $ 2,909
Less amount representing interest 198
Present value of net minimum obligations 636
Less current installments 64
Long-term obligation at January 28, 1995 $572
</TABLE>
At January 28, 1995, the Company and its subsidiaries were lessees of
stores, a warehouse, vehicles and warehouse equipment under various leases.
In addition to fixed rents and rentals based on sales, certain of the leases
require the payment of taxes and other costs. Some leases include renewal
options.
Rental expense (income) for operating leases was as follows:
<TABLE>
1995 1994 1993
(in thousands)
<CAPTION>
<S> <C> <C> <C>
Minimum rentals $1,850 $1,647 $1,320
Taxes and other costs 1,027 635 655
Sublease rentals (953) (837) (851)
$1,924 $1,445 $1,124
</TABLE>
Letters of credit
The Company and its subsidiaries are contingently liable for open letters
of credit in the aggregate amount of $.6 million. These letters of credit
relate to specific contracts for the purchase of merchandise.
Litigation
Several lawsuits are pending against the Company. In the opinion of
management, the Company has meritorious defenses or is covered by insurance and
the Company's liability, if any, when ultimately determined will not be
significant.
- 30 -
<PAGE>
NOTE 4 - COMMITMENTS AND CONTINGENCIES (Continued)
Employment and consulting agreements
The Company has employment and consulting agreements with certain
directors, officers and employees. Certain agreements provide for minimum
salary levels as well as for incentive bonuses which are payable if specified
management goals are attained.
NOTE 5 - CAPITAL STOCK:
Stockholders' Rights Plan
Each outstanding share of the Company's Common Stock carries a stock
purchase right. Under certain circumstances, as defined in a rights agreement,
each right may be exercised to purchase 1/100 of a share of Series A Junior
Participating Preferred Stock for $25, subject to certain anti-dilution
adjustments. The rights are redeemable by the Company or, under certain
circumstances, by a third party to whom the Company assigns its rights at $.01
each until a person or group acquires twenty percent of the Company's Common
Stock or until they expire on May 15, 1998.
Treasury Stock
On February 4, 1993, the Company's Board of Directors authorized the
repurchase from time to time of up to 500,000 shares of its common stock. As
of January 29, 1994, the Company purchased 413,600 shares of common stock at an
average price of $4.52 per share.
NOTE 6 - STOCK OPTIONS:
In 1994, the Company's shareholders adopted a Stock Incentive Plan for
key employees and consultants and a Stock Option Plan for eligible directors
who are not employees of the Company. The Stock Incentive Plan reserves
500,000 shares of common stock for the issuance of stock options, stock
appreciation rights (SARs), dividend equivalent rights, restricted stock,
unrestricted stock and performance shares and is administered by the Stock
Option Committee (the "Committee") of the board of directors of the Company.
The outside directors Stock Option Plan reserves 75,000 shares of common stock
for the issuance of stock options.
Under the terms of the Stock Incentive Plan (the Plan)options granted
may be either nonqualified or incentive stock options and the exercise price,
determined by the Committee, shall be at least 75% (100% in the case of an
incentive stock option) of the fair market value of a share on the date of
grant. SARs may be granted in connection with all or any part of, or
independently of, any option granted under the Plan. SARs granted in connection
with a nonqualified stock option may be granted at or after the time of grant
of such option. SARs granted in connection with an incentive stock option may
be granted only at the time of grant of such option. Other than restrictions
which limit the sale and transfer of restricted stock awards and performance
share awards, grantees are entitled to all the rights of a shareholder. No
SARs, dividend equivalent rights, restricted stock, unrestricted stock or
performance shares were granted during fiscal 1995. Options granted under the
Stock Incentive Plan are exercisable in installments; however, no options are
exercisable within one year or later than ten years from the date of grant.
- 31 -
<PAGE>
NOTE 6 - STOCK OPTIONS (Continued)
The outside directors Stock Option Plan provides that upon the initial
election to the Board, each eligible director is granted an option to purchase
5,000 shares of common stock and 1,000 shares each year thereafter at the fair
market value on the date of grant. The options have a term of five years and
become exercisable 50% on the first anniversary of the date of grant and 50% on
the second anniversary of the date of grant.
The Company's 1984 Stock Option Plan expired in April 1994 and the
remaining options available but not granted under the Plan were cancelled.
The following summary sets forth the activity under the Company's stock
incentive plans:
<TABLE>
Years Ended
January 28,1995 January 29, 1994
Shares Price Range Shares Price Range
<CAPTION>
<S> <C> <C> <C> <C>
Outstanding at
beginning of year 582,878 $3.50-$6.25 576,503 $3.50-$6.25
Granted 96,750 $5.50-$6.50 22,000 $4.13-$5.00
Exercised 168,544 $4.00-$4.50 2,100 $4.00-$4.50
Terminated 9,625 $4.00-$6.25 13,525 $3.75-$4.81
Outstanding at end
of year 501,459 $4.00-$6.50 582,878 $3.50-$6.25
Exercisable at end
of year 384,209 $3.50-$6.50 540,228 $3.50-$6.25
Available for grant
at end of year 484,250 - 115,886 -
</TABLE>
NOTE 7 - TAXES ON INCOME:
Income taxes consist of the following:
<TABLE>
1995 1994 1993
(in thousands)
<CAPTION>
<S> <C> <C> <C>
Current:
Federal $(1,429) $ 180 $ 951
State and local - 184 361
(1,429) 364 1,312
Deferred (673) 117 (173)
$(2,102) $ 481 $1,139
A reconciliation of the statutory federal income tax rate to the effective
income tax rate is as follows:
<CAPTION>
<S> <C> <C> <C>
Tax at statutory rates (34)% 34% 34%
State and local taxes, net of federal
tax benefits (4) 6 6
Other - - (1)
(38)% 40% 39%
</TABLE>
-32-
<PAGE>
NOTE - 7 TAXES ON INCOME: (Continued)
The components of deferred tax assets (liabilities) consist of the following:
<TABLE>
1995 1994
<CAPTION>
<S> <C> <C>
Capitalizable inventory costs $ 411 $ 529
Allowance for doubtful accounts 393 297
Restructured operations and other 1,011 393
Gross assets 1,815 1,219
Depreciation (213) (290)
Gross liabilities (213) (290)
Net deferred tax assets $ 1,602 $ 929
</TABLE>
Deferred income taxes result from temporary differences in the recognition of
revenue and expense for tax and financial statement purposes. Principal items
resulting in deferred income tax liabilities or assets are differences in
depreciation, inventory valuations, restructuring charges and allowance for
doubtful accounts. Management has determined, based on the Company's history
of prior operating earnings and its expectations for the future, that operating
income of the Company will more likely than not be sufficient to recognize
fully these net deferred tax assets. There can be no assurance, however, that
the Company will generate taxable income or any specific level of continuing
earnings in the future.
NOTE 8 - EMPLOYEE RETIREMENT PLANS:
The Company has a 401-k savings plan designed to provide additional
financial security during retirement by providing eligible employees with an
incentive to make regular savings. The Company matches 10% of the first 4% of
compensation contributed by the employee.
Certain employees are covered by union sponsored, multi-employer pension
plans. Contributions and costs are determined in accordance with the
provisions of negotiated labor contracts or terms of the plans. The Company
does not administer nor control the plans. One of the plans, to which the
Company and many other employers make contributions, is having financial
difficulties. The Employee Retirement Income Security Act ("ERISA") imposes
certain liabilities upon employers who are contributors to multi-employer
pension plans in the event of withdrawal or termination of such a plan. The
union has advised the Company that they will no longer accept contributions to
the plan. The Company has been advised that cessation of contributions will
result in a withdrawal liability. The Company provided for an estimated
settlement cost in the fourth quarter of fiscal 1995.
- 33 -
<PAGE>
NOTE 9 - INDUSTRY SEGMENTS:
The Company operates substantially in two industry segments which consist of
the wholesale distribution of housewares, toys, and stationery products and the
retail distribution of toys. Two customers in fiscal 1994 and 1993 represented
sales in excess of 10% of consolidated sales 1994-13.5% and 10.3%; 1993- 12.7%
and 10.1%.
Financial information by reportable business segments for fiscal 1995, 1994,
and 1993 is included in the following summary:
<TABLE>
1995 1994 1993
(in thousands)
<CAPTION>
<S> <C> <C> <C>
Sales to unaffiliated customers:
Wholesale (excluding $146, $385, and $425 of
inter-segment sales, respectively) $113,194 $122,138 $136,488
Retail 23,308 20,712 18,250
$136,502 $142,850 $154,738
Operating profit (loss):
Wholesale $ 1,781 $ 3,171 $ 3,633
Retail (5,293) (437) 367
$ (3,512) $ 2,734 $ 4,000
Identifiable assets:
Wholesale $ 37,289 $ 48,062 $ 47,216
Retail 10,005 9,422 8,509
Corporate 12,525 $ 6,303 12,661
$ 59,819 $ 63,787 $ 68,386
Depreciation:
Wholesale $ 694 $ 671 $ 657
Retail 407 225 138
$ 1,101 $ 896 $ 795
Additions to property and equipment:
Wholesale $ 1,362 $ 559 $ 448
Retail 2,602 1,447 718
$ 3,964 $ 2,006 $ 1,166
Reconciliation of operating profit (loss) to
net income (loss):
Operating profit (loss) $ (3,512) $ 2,734 $ 4,000
Interest expense (75) (115) (143)
Interest income 372 392 624
General corporate expense (2,281) (1,821) (1,541)
(Income) taxes/benefit 2,102 (481) (1,139)
Net income (loss) $ (3,394) $ 709 $ 1,801
</TABLE>
- 34 -
<PAGE>
NOTE 10 - PROVISION FOR STORE CLOSINGS AND RESTRUCTURING CHARGES:
On August 10, 1994 the Company announced the closing of stores operating
under the name Playworld Toy Stores and one leased department operation.
Provision of $3,900 was recorded for store closings represents losses from
store operations from the date of announcement until closing, employee
severance costs, estimated lease liabilities, losses on liquidation of
inventories and disposition of assets and other related restructuring costs.
This charge increased the net loss for fiscal 1995 by $2,340 ($.45 per share).
Revenues for these operations amounted to $10,923, $11,257, and $10,955 during
fiscal 1995, 1994 and 1993, respectively.
During fiscal 1993 the Company recorded a restructuring charge of $1,050 for
severance and relocation costs resulting from the realignment of its wholesale
distribution business. The effect of the restructuring enabled the Company to
reduce costs and improve operating efficiency. This charge resulted in a
decrease in fiscal 1993 net income of $644 ($.12 per share).
NOTE 11 - INTERIM FINANCIAL DATA (UNAUDITED):
<TABLE>
First Second Third Fourth
Quarter Quarter Quarter Quarter
(in thousands, except per share data)
<CAPTION>
<S> <C> <C> <C> <C>
Year ended January 28, 1995:
Sales $ 27,168 $ 30,229 $ 35,374 $ 43,731
Gross profit 6,315 7,296 8,153 11,201
Net income (loss) (886) (2,687) (224) 403
Net income (loss) per share $ (.17) $ (.52) $ (.04) $ .08
<CAPTION>
<S> <C> <C> <C> <C>
Year ended January 29, 1994:
Sales $ 30,954 $ 30,838 $ 38,175 $ 42,883
Gross profit 7,501 7,165 8,497 10,857
Net income (loss) (189) (342) 324 916
Net income (loss) per share $ (.03) $ (.06) $ .06 $ .17
</TABLE>
During the second quarter of fiscal 1995, the Company provided a pre-tax
charge of $3,500,000 ($2,100,000, $.40 per share after taxes) to cover the
unusual costs of the decision to close its Playworld Toy Stores. An additional
pre-tax charge of $400,000 ($240,000, $.05 per share after taxes) was provided
during the fourth quarter. The Company's wholesale and retail sales are highly
seasonal. During fiscal 1995 and 1994, 58% and 57%, respectively, of such
sales were made in the second half of the year.
Income (loss) per share calculations for each of the quarters are based on
the weighted average number of shares outstanding for each period and the sum
of the quarters may not necessarily be equal to the full year income (loss) per
share amount. The fourth quarter of fiscal 1994 includes the dilutive effect
of common stock equivalents. The inclusion of common stock equivalents were
either antidilutive or had no significant dilutive effect in the other quarters
and therefore were not utilized in the above computations of income (loss) per
share.
- 35 -
<PAGE>
<TABLE>
GREENMAN BROS. INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JANUARY 28, 1995
JANUARY 29, 1994 AND JANUARY 30, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
(1) (2)
Balance at Charged to Balance at
beginning costs Charged to end of
Description of period and expenses other accounts Deductions period
(in thousands)
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year ended January 28, 1995:
For estimated losses in collection $ 874 $ 250 $ - $ 141 (a) $ 983
Year ended January 29,1994:
For estimated losses in collection $1,229 $ 275 $ - $ 630 (a) $ 874
Year ended January 30, 1993:
For estimated losses in collection $2,000 $ 42 $ - $ 813 (a) $1,229
(a) Write-offs net of recoveries
</TABLE>
- 36 -
<PAGE>
<TABLE>
EXHIBIT 11.01
GREENMAN BROS. INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
For the Years Ended
Jan. 28, 1995 Jan. 29, 1994 Jan. 30, 1993 Feb. 1, 1992 Feb. 2, 1991
(52 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks)
<CAPTION>
<S> <C> <C> <C> <C> <C>
a) Net income (loss) $(3,394,364) $ 709,487 $ 1,801,120 $ 3,665,196 $(14,601,598)
b) Weighted average number of shares of
common stock outstanding during period 5,220,222 5,338,012 5,574,547 5,540,212 5,948,975
Income (loss) per share (a/b) $ (.65) $ .13 $ .32 $ .66 $ (2.45)
c) Incremental shares based on the treasury
stock method for stock options, using
the average market price 141,219 59,673 94,082 1,427 59,585
d) Incremental shares based on the treasury
stock method for stock options, using
the ending market price 153,038 82,310 94,082 28,047 71,088
Income (loss) per common and common
equivalent shares (primary) (a/(b+c)) $ (.65) $ .13 $ .32 $ .66 $ (2.43)
Income (loss) per common and common
equivalent shares assuming full
dilution (a/(b+d)) $ (.65) $ .13 $ .32 $ .66 $ (2.43)
NOTE: The inclusion of common stock equivalents were antidilutive in fiscal 1995 and 1991 and had no significant dilutive
effect in all other years presented and therefore were not utilized in the above computation of income (loss) per
share.
</TABLE>
- 67 -
<PAGE>
EXHIBIT 21
Subsidiaries of the Registrant
1. Martin Zippel Co. Inc., Incorporated in New Jersey, doing
business as same. (a)
2. Kleban Distribution Services, Inc., Incorporated In
Delaware, doing business as same. (a)
3. C.W.P.W. Inc., Incorporated in Michigan, doing business as
Playworld, Toy Park, Hudson Berlind Sales Associates, Martin
Zippel Sales Associates and Noodle Kidoodle.
4. M.Z. Catalogue Services, Inc., Incorporated in New Jersey,
doing business as same.
(a) As of April 1, 1994, Martin Zippel Co. Inc., and Kleban
Distribution Services, Inc., were merged into Greenman
Bros. Inc.
- 68 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-START> JAN-30-1994
<PERIOD-END> JAN-28-1995
<CASH> 10908
<SECURITIES> 0
<RECEIVABLES> 14605
<ALLOWANCES> 983
<INVENTORY> 20264
<CURRENT-ASSETS> 49964
<PP&E> 17363
<DEPRECIATION> 7690
<TOTAL-ASSETS> 59819
<CURRENT-LIABILITIES> 18164
<BONDS> 0
<COMMON> 619
0
0
<OTHER-SE> 40251
<TOTAL-LIABILITY-AND-EQUITY> 59819
<SALES> 136502
<TOTAL-REVENUES> 136502
<CGS> 103537
<TOTAL-COSTS> 103537
<OTHER-EXPENSES> 35508
<LOSS-PROVISION> 250
<INTEREST-EXPENSE> 75
<INCOME-PRETAX> (5496)
<INCOME-TAX> (2102)
<INCOME-CONTINUING> (3394)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3394)
<EPS-PRIMARY> (.65)
<EPS-DILUTED> (.65)
</TABLE>
EXHIBIT 10-02
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of February 1, 1995, between
GREENMAN BROS. INC., a New York corporation ("GMN" or the
"Company"), and Stanley Greenman (the "Executive").
It is hereby agreed as follows:
1. Nature of Employment. GMN hereby employs
Executive as its Chairman and Chief Executive Officer, and
confirms the election of Executive by GMN's Board of Directors as
its Chairman and Chief Executive Officer, and agrees to use its
best efforts to cause Executive to be reelected as Chairman and
Chief Executive officer during the term of this Agreement.
Executive accepts employment upon the terms and conditions
hereinafter set forth and agrees to serve GMN as its Chairman and
Chief Executive Officer, and as a member of its Board of
Directors so long as so elected during the term of this
Agreement. The Executive shall report to the Board of Directors
of GMN.
The Executive shall also serve without additional
compensation as an officer and director of all corporations from
time to time owned or controlled by GMN if so elected or
appointed. The Executive shall devote his full time, energies,
skills and attention to the performance of his duties and
responsibilities hereunder, and shall perform then faithfully and
diligently. The office of the Executive shall be located within
a 20 mile radius of the Executive's residence on the date of this
-37-
Agreement and the Executive shall not be required to locate his
office elsewhere without his prior written consent.
2. Term of Employment. The term of the Executive's
employment under this Agreement shall be for the period
commencing as of February 1, 1995 and terminating on January 31,
1998 unless sooner terminated by either party for cause or as
hereinafter provided.
(a) In the event of the death or "total disability"
(as defined below) of the Executive, the Executive's employment
shall terminate as of the date of his death or the date of his
certification of total disability, in either of which events,
Executive, his estate, legal representative or designee, as the
case may be, shall receive the full salary compensation provided
for the Executive in Section 3 below for a period of six (6)
months from the date of the Executive's death or total
disability.
(b) In the event the Board of Directors of GMN shall
determine, as confirmed by competent medical evidence (which
shall include a certificate from Executive's then personal
physician), that Executive has become "totally disabled" and, on
the same or subsequent occasion, shall determine that such
disability shall have continued for a period of three (3)
consecutive months, then Executive's employment shall terminate
thirty (30) days after the date upon which GMN shall have given
notice to the Executive of its election to terminate his employ-
ment because of such total disability, provided, however, that
-38-
prior to termination the Board of Directors shall have received
confirming competent medical evidence as to the existence of the
Executive's total disability at such time. Any controversy
arising in the determination of whether the Executive shall be
deemed to be "totally disabled" for purposes of his being
terminated as provided for herein shall be settled by an
independent physician licensed to practice medicine selected by
the Board of Directors of GMN and approved by the Executive.
Prior to any such termination, GMN's obligations with respect to
compensation and benefits shall continue during the period of
disability.
(c) In the event of a change in control (as defined
herein) of GMN, which results in an actual or constructive
termination of employment, the Executive shall have the right
within six (6) months after any such termination, to terminate
his employment hereunder and to receive an amount, payable in a
lump sum as severance pay within 10 days after he shall have
given notice of his election to terminate, equal to the amount by
which two hundred ninety-nine percent (299%) of the base amount
exceeds the present value of all other payments which would be
considered as contingent on a change of ownership or control
(other than payments which would not be treated as parachute
payments) under section 28OG of the Internal Revenue Code. The
"base amount" for purposes of this subsection (c) shall mean the
average annual compensation which was payable by GMN and was
includible in the Executive's gross income for tax purposes for
the most recent five (5) taxable years of the Executive ending
-39-
before the date on which a change in control occurs. A "change
in control" for purposes of this subsection (c) shall mean
(i) the acquisition (directly or indirectly) by any person,
entity or group of more than twenty-five percent (25%) of the
outstanding voting stock of GMN (acquisition shall include
accumulation in one or more transactions, including, without
limitation, any issuance, transfer or purchase of stock,
reclassification of securities, stock split, stock dividend or
distribution, reverse stock split, recapitalization, merger or
consolidation with subsidiaries, and any transaction which has
the direct or indirect effect of increasing the proportionate
share of the outstanding voting stock of GMN held by such person,
entity or group), or (ii) the individuals who currently con-
stitute the directors of GMN, or individuals elected by more than
two-thirds of such current directors to replace any of such
current directors, no longer constitute a majority of the direc-
tors of GMN. A "constructive termination of employment" for
purposes of this subsection (c) shall mean any of the following,
if done without the Executive's consent and having a material
adverse effect on his employment or the conditions under which he
works: (i) a change in the title, duties or responsibilities of
the Executive, including the person or body to whom the Executive
reports, (ii) a change in the location where the Executive's
services are rendered, (iii) a change in the office or
secretarial arrangements affecting the Executive, or (iv) any
reduction in compensation or fringe benefits or change of any
other term of this Agreement, or any other breach of this
-40-
Agreement by GMN. A constructive termination shall be determined
by the Executive in his sole, reasonable discretion.
3. Compensation. (a) Subject to the provisions of
Section 2, as compensation for his services hereunder GMN agrees
to pay the Executive a salary, payable at such times as may be
customary for the payment of compensation to other GMN employees,
or at such times as the Executive and GMN shall agree upon, at
the rate of $275,000 per annum or at such increased rate as the
Board, with the advice of the Compensation Committee, may from
time to time determine.
(b) In addition to the salary to be paid pursuant to
Section 3(a), the Executive shall be eligible for a bonus (the
"Performance Bonus") with respect to each of the three fiscal
years of the Company ending January 31, 1996 (Year 1), January
31, 1997 (Year 2), and January 31, 1998 (Year 3) (together, the
"Three-Year Period") based upon the net pre-tax profits or losses
of the Company ("Profits" or "Losses") in such years, as follows:
(i) Year 1: if Losses are greater than
$3,666,000, no Performance Bonus shall be payable; and if Losses
are less than $2,757,000, the Performance Bonus shall be payable
in the amount of 30% of the Executive's salary for such year (the
"Maximum Performance Bonus"). Between these two levels of
Losses, the Performance Bonus will increase pro rata from 0% to
30% of salary, depending upon Loss levels between $3,666,000 and
$2,757,000. In other words, for each $9,090 of decreasing losses
below ($3,666,000) until ($2,757,000) in Year 1, 1% of the
-41-
Maximum Performance Bonus in Year 1 (i.e., three-tenths of one
per cent (.3%) of the Executive's salary for Year 1 shall be
payable as the Performance Bonus for Year 1.
(ii) Year 2: if Profits are less than $798,000,
no Performance Bonus shall be payable; and if Profits equal or
exceed $1,064,000, the Performance Bonus shall be payable in the
amount of 30% of the Executive's salary for such year (the
"Maximum Performance Bonus"). Between these two levels of
Profits, the Performance Bonus will increase pro rata from 0% to
30% of salary, depending upon Profit levels between $798,000 and
$1,064,000. In other words, for each $2,660 of incremental
Profits above $798,000 (up to $1,064,000) 1% of the Maximum
Performance Bonus in Year 2 (i.e., three-tenths of one per cent
(.3%) of the Executive's salary for Year 2) shall be payable as
the Performance Bonus for Year 2.
(iii) Year 3: if Profits are less than
$4,943,250, no Performance Bonus shall be payable; and if
Profits equal or exceed $6,591,000, the Performance Bonus shall
be payable in the amount of 30% of the Executive's salary for
such year (the "Maximum Performance Bonus"). Between these two
levels of Profits, the Performance Bonus will increase pro rata
from 0% to 30% of salary, depending upon Profit levels between
$4,943,250 and $6,591,000. In other words, for each $16,480 of
incremental Profits above $4,943,000, 1% of the Maximum
Performance Bonus in Year 3 (i.e., three-tenths of one per cent
-42-
(.3%) of the Executive's salary for Year 3) shall be payable as
the Performance Bonus for Year 3.
(iv) Aggregate: if the Maximum Performance Bonus
shall not be payable for all of the years in the Three-Year
Period under the formulas contained in paragraphs (i), (ii) and
(iii) above, the Executive shall nevertheless be eligible to make
up the shortfall as follows: If the aggregate net Profits of the
Three-Year Period -- i.e., the total of Profits net of any Losses
incurred by the Company during such period ("Aggregate Profits")
exceed $2,075,000) a tentative calculation of a Performance Bonus
based upon Aggregate Profits ("Aggregate Performance Bonus")
shall be made, as follows: For each $2,823 of incremental
Aggregate Profits above $2,075,000 1% of the Maximum Aggregate
Performance Bonus shall be payable to the Executive. If the
Aggregate Performance Bonus calculated in this manner exceeds the
total of the Performance Bonuses paid or payable to the Executive
for Years 1, 2 and 3 pursuant to paragraphs (i), (ii) and (iii)
above, then the Executive shall be paid an amount equal to the
difference between the Aggregate Performance Bonus, and the
amounts of Performance Bonuses previously paid; provided,
however, the maximum Aggregate Performance Bonus shall be an
amount equal to 30% of the sum of the Executive's salary for
Years 1, 2 and 3. In addition, the maximum amount of the
Aggregate Performance Bonus shall be subject to the further
limitation that, together with the Aggregate Performance Bonus
payable to Stewart Katz pursuant to the Employment Agreement
between the Company and Mr. Katz dated the date hereof, it shall
-43-
not exceed 10% of the Company's Profits for Year 3 (calculated
without reference to the Aggregate Performance Bonus). In the
event that the sum of both such bonuses calculated as provided
herein and in Mr. Katz's Employment Agreement exceed this
limitation, both bonuses shall be reduced pro rata until, in the
aggregate, they amount to 10% of the Company's Profits for Year 3
(calculated without reference to the Aggregate Performance
Bonus).
(v) Performance Bonuses shall be paid promptly
following the determination of Profits or Losses at the end of
each of Years 1, 2 and 3. The Aggregate Performance Bonus, if
payable, shall be paid promptly following determination of
Aggregate Profits, following conclusion of the Three-Year Period.
(c) The Executive shall also be eligible for grants of
stock options to acquire shares of Common Stock of the Company
("Options") pursuant to the Company's 1994 Stock Incentive Plan
(the "Plan") depending upon the level of Profits or Losses
achieved in Year 1, Year 2 and during the Three-Year Period, in
the aggregate, as follows:
(i) Year 1: If Losses are greater than
$3,666,000, no Options shall be granted; and if Losses are less
than $2,757,000, 30,000 Options will be granted (the "Maximum
Option Grant"). Between these two levels of Profits, the Option
grant will increase pro rata from zero to 30,000 Options,
depending upon Loss levels between $3,666,000 and $2,757,000. In
other words, for each $9,090 of decreasing Losses below
-44-
$3,666,000 in Year 1, 300 Options shall be granted, up to a
maximum of 30,000 Options.
(ii) Year 2: If Profits are less than $798,000,
no Options shall be granted; and if Profits equal or exceed
$1,064,000, 30,000 Options will be awarded (the "Maximum Option
Grant"). Between these two levels of Profits, the Option grant
will increase pro rata from zero to 30,000 Options, depending
upon Profit levels between $798,000 and $1,064,000. In other
words, for each $2,660 of incremental Profits above $798,000 in
Year 2) 300 Options shall be granted, up to a maximum of 30,000
Options.
(iii) If the Maximum Option Grant shall not have
been awarded for both Year 1 and Year 2 under the formulas
contained in paragraphs (i) and (ii) above, the Executive shall
nevertheless be eligible to make up the shortfall as follows: If
the Aggregate Profits exceed $2,075,000, a tentative calculation
of the number of Options to be granted leased on the amount of
such Profits shall be made. Such number shall be 300 Options for
each $2,823 of such Incremental Profits, up to a maximum of
60,000 Options. If the number of Options which have been earned,
calculated in this manner ("Aggregate Option Award") exceeds the
total number of Options granted to Executive for Years 1 and 2
pursuant to paragraph (i) and (ii) above, then the Executive
shall be granted Options equal to the difference between the
Aggregate Option Award and the number of Options previously
granted.
-45-
(iv) Options with respect to Year 1 and Year 2
shall be granted promptly following the determination of Profits
for such fiscal years. An Aggregate Option Award shall be
granted promptly after determination of Aggregate Profits,
following conclusion of the Three-Year Period. Profits and
Losses shall be calculated by the independent accountants
regularly auditing the Company's financial statements, in
accordance with generally accepted accounting principles,
consistently applied, subject to review by the Board of Directors
of the Company, whose determinations shall be final and binding
on all parties. The exercise price shall be fair market value
determined in accordance with the Stock Option Plan. Options
shall provide for exercisability of 25% per year commencing one
year after grant and be subject to such other provisions as are
customarily contained in the Company's Stock Option Agreement
with its executives under the Plan.
4. Additional Compensation; Benefits. The Board of
Directors of GMN, in its sole and absolute discretion, may at any
time and from time to time pay to the Executive such additional
incentive payments, bonuses and/or profit sharing distributions,
in addition to the compensation provided in Section 3, as the
Board of Directors, with the advice of the Compensation
Committee, may determine. The stock option and compensation
committee of GMN in its sole and absolute discretion may at any
time and from time to time award to the executive such stock
options or other stock based pay under the Company's stock option
plan or otherwise, in addition to the compensation provided for
-46-
in Section 3, as such committee or board may from time to time
determine.
The Executive shall, in any event, be entitled to the
continuation of any employee benefits, including life, disability
or accident insurance coverage, currently being received by the
Executive, and shall be eligible to participate in any plan of
GMN available to the employees of GMN and any other plan which
may be adopted in the future with respect to employees or
executives of GMN or any of its operating divisions if he shall
be eligible under the terms of such plan without restriction or
limitation by reason of this Agreement.
The Executive shall also be entitled to paid vacation
for such periods and times as have been heretofore customary for
the Executive.
5. Expenses. GMN shall promptly reimburse the
Executive for all specified items of travel, entertainment and
miscellaneous expenses reasonably incurred by him in connection
with the performance of his duties hereunder upon presentation of
vouchers therefor in accordance with normal procedures and
standards established by GMN for such purposes. GMN shall also,
at its own expense, provide Executive with a new automobile of
GMN's choice and shall bear all expenses of maintaining and
insuring such automobile.
6. Nondisclosure; Noncompetition.
-47-
(a) Executive shall not, at any time during or
following expiration or termination of Executive's employment
(regardless of the reason therefor), directly or indirectly,
disclose to any person (except in the regular course of GMN's
business), or use in competition with GMN, any of GMN's trade
secrets or confidential information.
(b) For a period of one (1) year following expiration
of his employment or termination of employment for any reason
other than (i) termination by GMN without cause, or
(ii) termination by the Executive in accordance with Section 2(c)
hereof, the Executive shall not, without GMN's written consent,
(A) enter into the employ of or render any services to any
person, firm or corporation engaged in any "Competitive Business"
(as defined below); (B) engage in any Competitive Business for
his own account or (C) become interested in any Competitive
Business as an individual, partner, shareholder, creditor,
director, officer, principal, agent, employee, consultant,
advisor or in any other relationship or capacity. As used
herein, "Competitive Business" shall mean operating stores for
the retail sale of educationally oriented products for children,
including without limitation, toys, games, books, video and audio
tapes, computer software, crafts, and science and construction
merchandise. The geographic locations in which this covenant
shall be operative shall include a [50] mile radius of any Noodle
Kidoodle store then operated by the Company, or then planned by
the Company to be opened within a twelve month period.
-48-
7. Fees and Expenses. GMN shall pay all legal fees
and related expenses incurred by the Executive as a result of
(i) termination of his employment following a change in control
of GMN (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or incurred by the
Executive in seeking advice with respect to tax matters relating
thereto) or (ii) the Executive's seeking to obtain or enforce any
right or benefit provided by this Agreement, if GMN shall have
denied such right or withheld such benefit, and if the Executive
shall prevail in obtaining or enforcing it.
8. Miscellaneous.
(a) GMN will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of its business and/or assets, by agreement
in form and substance satisfactory to the Executive, to expressly
assume and agree to perform this Agreement in the same manner and
to the same extent that GMN would be required to perform it if no
such succession had taken place. This clause shall not apply
with respect to a purchase of GMN's wholesale business.
(b) This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would
still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid
-49-
in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there be no such
designee, to the Executive's estate.
(c) No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and
such officer as may be specifically designated by the Board of
Directors of GMN. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior
or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth
expressly in this Agreement.
(d) The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of New York.
(e) In the event that any provision of this Agreement
is held to be invalid or unenforceable in any jurisdiction for
any reason unless narrowed by construction, this Agreement shall,
as to such jurisdiction, be construed as if such invalid or
unenforceable provision had been more narrowly drawn so as not to
be invalid or unenforceable; and such provision, as to such
jurisdiction, shall be ineffective to the extent of such
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invalidity, prohibition or unenforceability, without invalidating
the remaining provisions of this Agreement or affecting the
validity or enforceability of such provisions in any other
jurisdiction.
(f) The invalidity or unenforcibility of any provision
or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
(g) Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by
arbitration in New York, New York in accordance with the rules of
the American Arbitration Association then in effect.
(h) The Executive or his estate or designee shall be
entitled to receive reasonable attorneys' fees, costs and
expenses incurred in enforcing the Executive's rights under this
Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.
GREENMAN BROS. INC.
By:
ATTEST: Name: Stewart Katz
Title: President
By:Anne P. Olsen
Executive
Stanley Greenman
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EXHIBIT 10-03
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of February 1, 1995, between
GREENMAN BROS. INC., a New York corporation ("GMN" or the
"Company"), and Stewart Katz (the "Executive").
It is hereby agreed as follows:
1. Nature of Employment. GMN hereby employs
Executive as its President and Chief Operating Officer, and
confirms the election of Executive by GMN's Board of Directors as
its President and Chief Operating Officer, and agrees to use its
best efforts to cause Executive to be reelected as President and
Chief Operating officer during the term of this Agreement.
Executive accepts employment upon the terms and conditions
hereinafter set forth and agrees to serve GMN as its President
and Chief Operating Officer, and as a member of its Board of
Directors so long as so elected during the term of this
Agreement. The Executive shall report to the Board of Directors
of GMN.
The Executive shall also serve without additional
compensation as an officer and director of all corporations from
time to time owned or controlled by GMN if so elected or
appointed. The Executive shall devote his full time, energies,
skills and attention to the performance of his duties and
responsibilities hereunder, and shall perform then faithfully and
diligently. The office of the Executive shall be located within
a 20 mile radius of the Executive's residence on the date of this
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Agreement and the Executive shall not be required to locate his
office elsewhere without his prior written consent.
2. Term of Employment. The term of the Executive's
employment under this Agreement shall be for the period
commencing as of February 1, 1995 and terminating on January 31,
1998 unless sooner terminated by either party for cause or as
hereinafter provided.
(a) In the event of the death or "total disability"
(as defined below) of the Executive, the Executive's employment
shall terminate as of the date of his death or the date of his
certification of total disability, in either of which events,
Executive, his estate, legal representative or designee, as the
case may be, shall receive the full salary compensation provided
for the Executive in Section 3 below for a period of six (6)
months from the date of the Executive's death or total
disability.
(b) In the event the Board of Directors of GMN shall
determine, as confirmed by competent medical evidence (which
shall include a certificate from Executive's then personal
physician), that Executive has become "totally disabled" and, on
the same or subsequent occasion, shall determine that such
disability shall have continued for a period of three (3)
consecutive months, then Executive's employment shall terminate
thirty (30) days after the date upon which GMN shall have given
notice to the Executive of its election to terminate his employ-
ment because of such total disability, provided, however, that
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prior to termination the Board of Directors shall have received
confirming competent medical evidence as to the existence of the
Executive's total disability at such time. Any controversy
arising in the determination of whether the Executive shall be
deemed to be "totally disabled" for purposes of his being
terminated as provided for herein shall be settled by an
independent physician licensed to practice medicine selected by
the Board of Directors of GMN and approved by the Executive.
Prior to any such termination, GMN's obligations with respect to
compensation and benefits shall continue during the period of
disability.
(c) In the event of a change in control (as defined
herein) of GMN, which results in an actual or constructive
termination of employment, the Executive shall have the right
within six (6) months after any such termination, to terminate
his employment hereunder and to receive an amount, payable in a
lump sum as severance pay within 10 days after he shall have
given notice of his election to terminate, equal to the amount by
which two hundred ninety-nine percent (299%) of the base amount
exceeds the present value of all other payments which would be
considered as contingent on a change of ownership or control
(other than payments which would not be treated as parachute
payments) under section 28OG of the Internal Revenue Code. The
"base amount" for purposes of this subsection (c) shall mean the
average annual compensation which was payable by GMN and was
includible in the Executive's gross income for tax purposes for
the most recent five (5) taxable years of the Executive ending
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before the date on which a change in control occurs. A "change
in control" for purposes of this subsection (c) shall mean
(i) the acquisition (directly or indirectly) by any person,
entity or group of more than twenty-five percent (25%) of the
outstanding voting stock of GMN (acquisition shall include
accumulation in one or more transactions, including, without
limitation, any issuance, transfer or purchase of stock,
reclassification of securities, stock split, stock dividend or
distribution, reverse stock split, recapitalization, merger or
consolidation with subsidiaries, and any transaction which has
the direct or indirect effect of increasing the proportionate
share of the outstanding voting stock of GMN held by such person,
entity or group), or (ii) the individuals who currently con-
stitute the directors of GMN, or individuals elected by more than
two-thirds of such current directors to replace any of such
current directors, no longer constitute a majority of the direc-
tors of GMN. A "constructive termination of employment" for
purposes of this subsection (c) shall mean any of the following,
if done without the Executive's consent and having a material
adverse effect on his employment or the conditions under which he
works: (i) a change in the title, duties or responsibilities of
the Executive, including the person or body to whom the Executive
reports, (ii) a change in the location where the Executive's
services are rendered, (iii) a change in the office or
secretarial arrangements affecting the Executive, or (iv) any
reduction in compensation or fringe benefits or change of any
other term of this Agreement, or any other breach of this
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Agreement by GMN. A constructive termination shall be determined
by the Executive in his sole, reasonable discretion.
3. Compensation. (a) Subject to the provisions of
Section 2, as compensation for his services hereunder GMN agrees
to pay the Executive a salary, payable at such times as may be
customary for the payment of compensation to other GMN employees,
or at such times as the Executive and GMN shall agree upon, at
the rate of $250,000 per annum or at such increased rate as the
Board, with the advice of the Compensation Committee, may from
time to time determine.
(b) In addition to the salary to be paid pursuant to
Section 3(a), the Executive shall be eligible for a bonus (the
"Performance Bonus") with respect to each of the three fiscal
years of the Company ending January 31, 1996 (Year 1), January
31, 1997 (Year 2), and January 31, 1998 (Year 3) (together, the
"Three-Year Period") based upon the net pre-tax profits or losses
of the Company ("Profits" or "Losses") in such years, as follows:
(i) Year 1: if Losses are greater than
$3,666,000, no Performance Bonus shall be payable; and if Losses
are less than $2,757,000, the Performance Bonus shall be payable
in the amount of 30% of the Executive's salary for such year (the
"Maximum Performance Bonus"). Between these two levels of
Losses, the Performance Bonus will increase pro rata from 0% to
30% of salary, depending upon Loss levels between $3,666,000 and
$2,757,000. In other words, for each $9,090 of decreasing losses
below ($3,666,000) until ($2,757,000) in Year 1, 1% of the
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Maximum Performance Bonus in Year 1 (i.e., three-tenths of one
per cent (.3%) of the Executive's salary for Year 1 shall be
payable as the Performance Bonus for Year 1.
(ii) Year 2: if Profits are less than $798,000,
no Performance Bonus shall be payable; and if Profits equal or
exceed $1,064,000, the Performance Bonus shall be payable in the
amount of 30% of the Executive's salary for such year (the
"Maximum Performance Bonus"). Between these two levels of
Profits, the Performance Bonus will increase pro rata from 0% to
30% of salary, depending upon Profit levels between $798,000 and
$1,064,000. In other words, for each $2,660 of incremental
Profits above $798,000 (up to $1,064,000) 1% of the Maximum
Performance Bonus in Year 2 (i.e., three-tenths of one per cent
(.3%) of the Executive's salary for Year 2) shall be payable as
the Performance Bonus for Year 2.
(iii) Year 3: if Profits are less than
$4,943,250, no Performance Bonus shall be payable; and if
Profits equal or exceed $6,591,000, the Performance Bonus shall
be payable in the amount of 30% of the Executive's salary for
such year (the "Maximum Performance Bonus"). Between these two
levels of Profits, the Performance Bonus will increase pro rata
from 0% to 30% of salary, depending upon Profit levels between
$4,943,250 and $6,591,000. In other words, for each $16,480 of
incremental Profits above $4,943,000, 1% of the Maximum
Performance Bonus in Year 3 (i.e., three-tenths of one per cent
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(.3%) of the Executive's salary for Year 3) shall be payable as
the Performance Bonus for Year 3.
(iv) Aggregate: if the Maximum Performance Bonus
shall not be payable for all of the years in the Three-Year
Period under the formulas contained in paragraphs (i), (ii) and
(iii) above, the Executive shall nevertheless be eligible to make
up the shortfall as follows: If the aggregate net Profits of the
Three-Year Period -- i.e., the total of Profits net of any Losses
incurred by the Company during such period ("Aggregate Profits")
exceed $2,075,000) a tentative calculation of a Performance Bonus
based upon Aggregate Profits ("Aggregate Performance Bonus")
shall be made, as follows: For each $2,823 of incremental
Aggregate Profits above $2,075,000, 1% of the Maximum Aggregate
Performance Bonus shall be payable to the Executive. If the
Aggregate Performance Bonus calculated in this manner exceeds the
total of the Performance Bonuses paid or payable to the Executive
for Years 1, 2 and 3 pursuant to paragraphs (i), (ii) and (iii)
above, then the Executive shall be paid an amount equal to the
difference between the Aggregate Performance Bonus, and the
amounts of Performance Bonuses previously paid; provided, how-
ever, the maximum Aggregate Performance Bonus shall be an amount
equal to 30% of the sum of the Executive's salary for Years 1, 2
and 3. In addition, the maximum amount of the Aggregate
Performance Bonus shall be subject to the further limitation
that, together with the Aggregate Performance Bonus payable to
Stanley Greenman pursuant to the Employment Agreement between the
Company and Mr. Greenman dated the date hereof, it shall not
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exceed 10% of the Company's Profits for Year 3 (calculated
without reference to the Aggregate Performance Bonus). In the
event that the sum of both such bonuses calculated as provided
herein and in Mr. Greenman's Employment Agreement exceed this
limitation, both bonuses shall be reduced pro rata until, in the
aggregate, they amount to 10% of the Company's Profits for Year 3
(calculated without reference to the Aggregate Performance
Bonus).
(v) Performance Bonuses shall be paid promptly
following the determination of Profits or Losses at the end of
each of Years 1, 2 and 3. The Aggregate Performance Bonus, if
payable, shall be paid promptly following determination of
Aggregate Profits, following conclusion of the Three-Year Period.
(c) The Executive shall also be eligible for grants of
stock options to acquire shares of Common Stock of the Company
("Options") pursuant to the Company's 1994 Stock Incentive Plan
(the "Plan") depending upon the level of Profits or Losses
achieved in Year 1, Year 2 and during the Three-Year Period, in
the aggregate, as follows:
(i) Year 1: If Losses are greater than
$3,666,000, no Options shall be granted; and if Losses are less
than $2,757,000, 30,000 Options will be granted (the "Maximum
Option Grant"). Between these two levels of Profits, the Option
grant will increase pro rata from zero to 30,000 Options,
depending upon Loss levels between $3,666,000 and $2,757,000. In
other words, for each $9,090 of decreasing Losses below
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$3,666,000 in Year 1, 300 Options shall be granted, up to a
maximum of 30,000 Options.
(ii) Year 2: If Profits are less than $798,000,
no Options shall be granted; and if Profits equal or exceed
$1,064,000, 30,000 Options will be awarded (the "Maximum Option
Grant"). Between these two levels of Profits, the Option grant
will increase pro rata from zero to 30,000 Options, depending
upon Profit levels between $798,000 and $1,064,000. In other
words, for each $2,660 of incremental Profits above $798,000 in
Year 2) 300 Options shall be granted, up to a maximum of 30,000
Options.
(iii) If the Maximum Option Grant shall not have
been awarded for both Year 1 and Year 2 under the formulas
contained in paragraphs (i) and (ii) above, the Executive shall
nevertheless be eligible to make up the shortfall as follows: If
the Aggregate Profits exceed $2,075,000, a tentative calculation
of the number of Options to be granted leased on the amount of
such Profits shall be made. Such number shall be 300 Options for
each $2,823 of such Incremental Profits, up to a maximum of
60,000 Options. If the number of Options which have been earned,
calculated in this manner ("Aggregate Option Award") exceeds the
total number of Options granted to Executive for Years 1 and 2
pursuant to paragraph (i) and (ii) above, then the Executive
shall be granted Options equal to the difference between the
Aggregate Option Award and the number of Options previously
granted.
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(iv) Options with respect to Year 1 and Year 2
shall be granted promptly following the determination of Profits
for such fiscal years. An Aggregate Option Award shall be
granted promptly after determination of Aggregate Profits,
following conclusion of the Three-Year Period. Profits and
Losses shall be calculated by the independent accountants
regularly auditing the Company's financial statements, in
accordance with generally accepted accounting principles,
consistently applied, subject to review by the Board of Directors
of the Company, whose determinations shall be final and binding
on all parties. The exercise price shall be fair market value
determined in accordance with the Stock Option Plan. Options
shall provide for exercisability of 25% per year commencing one
year after grant and be subject to such other provisions as are
customarily contained in the Company's Stock Option Agreement
with its executives under the Plan.
4. Additional Compensation; Benefits. The Board of
Directors of GMN, in its sole and absolute discretion, may at any
time and from time to time pay to the Executive such additional
incentive payments, bonuses and/or profit sharing distributions,
in addition to the compensation provided in Section 3, as the
Board of Directors, with the advice of the Compensation
Committee, may determine. The stock option and compensation
committee of GMN in its sole and absolute discretion may at any
time and from time to time award to the executive such stock
options or other stock based pay under the Company's stock option
plan or otherwise, in addition to the compensation provided for
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in Section 3, as such committee or board may from time to time
determine.
The Executive shall, in any event, be entitled to the
continuation of any employee benefits, including life, disability
or accident insurance coverage, currently being received by the
Executive, and shall be eligible to participate in any plan of
GMN available to the employees of GMN and any other plan which
may be adopted in the future with respect to employees or
executives of GMN or any of its operating divisions if he shall
be eligible under the terms of such plan without restriction or
limitation by reason of this Agreement.
The Executive shall also be entitled to paid vacation
for such periods and times as have been heretofore customary for
the Executive.
5. Expenses. GMN shall promptly reimburse the
Executive for all specified items of travel, entertainment and
miscellaneous expenses reasonably incurred by him in connection
with the performance of his duties hereunder upon presentation of
vouchers therefor in accordance with normal procedures and
standards established by GMN for such purposes. GMN shall also,
at its own expense, provide Executive with a new automobile of
GMN's choice and shall bear all expenses of maintaining and
insuring such automobile.
6. Nondisclosure; Noncompetition.
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(a) Executive shall not, at any time during or
following expiration or termination of Executive's employment
(regardless of the reason therefor), directly or indirectly,
disclose to any person (except in the regular course of GMN's
business), or use in competition with GMN, any of GMN's trade
secrets or confidential information.
(b) For a period of one (1) year following expiration
of his employment or termination of employment for any reason
other than (i) termination by GMN without cause, or (ii) termi-
nation by the Executive in accordance with Section 2(c) hereof,
the Executive shall not, without GMN's written consent, (A) enter
into the employ of or render any services to any person, firm or
corporation engaged in any "Competitive Business" (as defined
below); (B) engage in any Competitive Business for his own
account or (C) become interested in any Competitive Business as
an individual, partner, shareholder, creditor, director, officer,
principal, agent, employee, consultant, advisor or in any other
relationship or capacity. As used herein, "Competitive Business"
shall mean operating stores for the retail sale of educationally
oriented products for children, including without limitation,
toys, games, books, video and audio tapes, computer software,
crafts, and science and construction merchandise. The geographic
locations in which this covenant shall be operative shall include
a [50] mile radius of any Noodle Kidoodle store then operated by
the Company, or then planned by the Company to be opened within a
twelve month period.
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7. Fees and Expenses. GMN shall pay all legal fees
and related expenses incurred by the Executive as a result of
(i) termination of his employment following a change in control
of GMN (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or incurred by the
Executive in seeking advice with respect to tax matters relating
thereto) or (ii) the Executive's seeking to obtain or enforce any
right or benefit provided by this Agreement, if GMN shall have
denied such right or withheld such benefit, and if the Executive
shall prevail in obtaining or enforcing it.
8. Miscellaneous.
(a) GMN will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of its business and/or assets, by agreement
in form and substance satisfactory to the Executive, to expressly
assume and agree to perform this Agreement in the same manner and
to the same extent that GMN would be required to perform it if no
such succession had taken place. This clause shall not apply
with respect to a purchase of GMN's wholesale business.
(b) This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would
still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid
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in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there be no such
designee, to the Executive's estate.
(c) No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and
such officer as may be specifically designated by the Board of
Directors of GMN. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimi-
lar provisions or conditions at the same or at any prior or sub-
sequent time. No agreements or representations, oral or other-
wise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth
expressly in this Agreement.
(d) The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of New York.
(e) In the event that any provision of this Agreement
is held to be invalid or unenforceable in any jurisdiction for
any reason unless narrowed by construction, this Agreement shall,
as to such jurisdiction, be construed as if such invalid or
unenforceable provision had been more narrowly drawn so as not to
be invalid or unenforceable; and such provision, as to such
jurisdiction, shall be ineffective to the extent of such
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invalidity, prohibition or unenforceability, without invalidating
the remaining provisions of this Agreement or affecting the
validity or enforceability of such provisions in any other
jurisdiction.
(f) The invalidity or unenforcibility of any provision
or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
(g) Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by
arbitration in New York, New York in accordance with the rules of
the American Arbitration Association then in effect.
(h) The Executive or his estate or designee shall be
entitled to receive reasonable attorneys' fees, costs and
expenses incurred in enforcing the Executive's rights under this
Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.
GREENMAN BROS. INC.
By:
ATTEST: Name: Stanley Greenman
Title: C.E.O.
By:Anne P. Olsen
Executive
Stewart Katz
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