FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------- --------
Commission File Number 0-13283
REX Stores Corporation
(Exact name of registrant as specified in its charter)
Delaware 31-1095548
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2875 Needmore Road, Dayton, Ohio 45414
(Address of principal executive offices) (Zip Code)
(937)276-3931
(Registrant's telephone number, including area code)
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 ( )
At the close of business on December 14, 1998, the registrant had
7,176,222 shares of Common Stock, par value $.01 per share,
outstanding.
<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets......... 3
Consolidated Statements of Income............. 5
Consolidated Statements of Shareholders'
Equity...................................... 7
Consolidated Statements of Cash Flows......... 8
Notes to Consolidated Financial Statements.... 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 13
Item 3. Quantitative and Qualitative Disclosure About
Market Risk................................... 17
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................ 18
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION> A S S E T S
October 31 January 31 October 31
1998 1998 1997
(In Thousands)
<S> <C> <C>
<C>
ASSETS:
Cash and cash equivalents $ 7,362 $ 16,937 $ 1,836
Short-term investments 1,816 1,637 1,627
Accounts receivable, net 1,154 2,775 791
Merchandise inventory 177,207 126,498 169,345
Prepaid expenses and other 3,357 2,078 3,929
Future income tax benefits 7,899 7,899 6,624
--------- --------- --------
Total current assets 198,795 157,824 184,152
PROPERTY AND EQUIPMENT, NET 95,624 93,165 93,676
FUTURE INCOME TAX BENEFITS AND
OTHER NON-CURRENT ASSETS 12,500 9,541 10,219
--------- --------- --------
Total assets $ 306,919 $ 260,530 $288,047
========= ========= ========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C> <C>
CURRENT LIABILITIES:
Notes payable $ 36,797 $ - $29,861
Current portion of long-term debt 2,998 2,959 3,234
Accounts payable, trade 64,662 49,832 55,598
Accrued income taxes - 1,671 -
Current portion, deferred income
and deferred gain on sale and
leaseback 11,463 11,402 11,350
Accrued payroll 4,407 5,810 4,979
Other liabilities 10,740 7,263 5,868
--------- -------- --------
Total current liabilities 131,067 78,937 110,890
--------- -------- --------
<PAGE>
Liabilities and Shareholders' Equity (Continued)
LONG-TERM LIABILITIES:
Long-term debt 52,634 52,661 51,499
Deferred income 16,452 17,886 17,364
Deferred gain on sale and
leaseback 4,557 5,264 5,500
--------- --------- --------
Total long-term liabilities 73,643 75,811 74,363
--------- --------- --------
SHAREHOLDERS' EQUITY:
Common stock 97 97 97
Paid-in capital 58,403 57,896 57,836
Retained earnings 67,505 64,175 59,302
Treasury stock (23,796) (16,386) (14,441)
--------- --------- --------
Total shareholders' equity 102,209 105,782 102,794
--------- --------- --------
Total liabilities and
shareholders' equity $ 306,919 $ 260,530 $288,047
========= ========= ========
</TABLE>
[FN]
The accompanying notes are an integral part of
these unaudited consolidated statements.
<PAGE>
<TABLE>
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Nine Months
Ended
October 31 October 31
1998 1997 1998 1997
(In Thousands, Except Per Share
Amounts)
<S> <C> <C> <C> <C>
NET SALES $ 92,634 $87,967 $273,044 $266,130
COSTS AND EXPENSES:
Cost of merchandise sold 67,326 63,475 197,710 191,396
Selling, general and
administrative expenses 22,152 21,973 65,186 65,205
-------- ------- -------- --------
Total costs and expenses 89,478 85,448 262,896 256,601
-------- ------- -------- --------
INCOME FROM OPERATIONS 3,156 2,519 10,148 9,529
INVESTMENT INCOME 64 23 287 72
INTEREST EXPENSE 1,911 1,911 4,829 5,406
EQUITY IN EARNINGS OF
LIMITED PARTNERSHIP (270) - (270) -
-------- ------- -------- --------
Income before income taxes 1,039 631 5,336 4,195
PROVISION FOR INCOME TAXES 307 248 2,006 1,656
-------- ------- -------- --------
NET INCOME $ 732 $ 383 $ 3,330 $ 2,539
======== ======= ======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,202 7,917 7,512 7,933
======== ======= ======== ========
BASIC NET INCOME PER SHARE $ 0.10 $ 0.05 $ 0.44 $ 0.32
======== ======= ======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVA-
LENT SHARES OUTSTANDING 7,509 8,203 7,916 8,185
======== ======= ======== ========
<PAGE>
DILUTED NET INCOME PER SHARE $ 0.10 $ 0.05 $ 0.42 $ 0.31
======== ======= ======== ========
</TABLE>
[FN]
The accompanying notes are an integral part of
these unaudited consolidated statements.
<PAGE>
<TABLE>
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In Thousands)
<CAPTION>
Common Shares
-------------------------------
Issued Treasury Paid-in Retained
Shares Amount Shares Amount Capital Earnings
<S> <C> <C> <C> <C> <C> <C>
Balance at
October 31, 1997 9,685 $ 97 1,763 $14,441 $57,836 $59,302
Common stock
issued 3 - - - 60 -
Treasury stock
acquired - - 192 1,945 - -
Net income - - - - - 4,873
----- ------ ----- ------- ------- -------
Balance at
January 31, 1998 9,688 $ 97 1,955 $16,386 $57,896 $64,175
Common stock
issued 68 - - - 507 -
Treasury stock
acquired - - 627 7,410 - -
Net income - - - - - 3,330
----- ------ ----- ------- ------- -------
Balance at
October 31, 1998 9,756 $ 97 2,582 $23,796 $58,403 $67,505
===== ====== ===== ======= ======= =======
</TABLE>
[FN]
The accompanying notes are an integral part of
these unaudited consolidated statements.
<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
October 31
1998 1997
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,330 $2,539
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization, net 2,360 2,228
Deferred income (1,373) (409)
Future income tax benefits - (2,780)
Accounts receivable 1,621 686
Merchandise inventory (50,709) (34,312)
Other current assets (1,284) (1,715)
Accounts payable, trade 14,830 24,333
Other liabilities 403 (1,497)
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (30,822) (10,927)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments and
other assets (3,137) 18
Capital expenditures (7,926) (6,975)
Capital disposals 2,404 8
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (8,659) (6,949)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes payable 36,797 17,719
Payments of long-term debt (3,277) (2,030)
Long-term debt borrowings 3,289 2,530
Common stock issued 507 607
Treasury stock acquired (7,410) (3,073)
-------- --------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 29,906 15,753
-------- --------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (9,575) (2,123)
CASH AND CASH EQUIVALENTS,
beginning of period 16,937 3,959
-------- --------
CASH AND CASH EQUIVALENTS,
end of period $7,362 $1,836
<PAGE>
</TABLE> ======== ========
[FN]
The accompanying notes are an integral part of
these unaudited consolidated statements.
<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1998
Note 1. Consolidated Financial Statements
The consolidated financial statements included in this report
have been prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission and
include, in the opinion of management, all adjustments necessary to
state fairly the information set forth therein. Any such
adjustments were of a normal recurring nature. Certain information
and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and
regulations, although the Company believes that the disclosures
are adequate to make the information presented not misleading. It is
suggested that these unaudited consolidated financial statements
be read in conjunction with the consolidated financial statements
and the notes thereto included in the Company's Annual Report on Form
10-K for the year ended January 31, 1998.
Note 2. Accounting Policies
The interim consolidated financial statements have been
prepared in accordance with the accounting policies described in
the notes to the consolidated financial statements included in
the Company's 1998 Annual Report on Form 10-K. While management
believes that the procedures followed in the preparation of
interim financial information are reasonable, the accuracy of some
estimated amounts is dependent upon facts that will exist or
calculations that will be accomplished at fiscal year end.
Examples of such estimates include changes in the LIFO reserve
(based upon the Company's best estimate of inflation to date),
management bonuses and the provision for income taxes. Any
adjustments pursuant to such estimates during the quarter were of
a normal recurring nature.
Certain reclassifications have been made to prior year
amounts to conform with their fiscal 1999 presentation.
<PAGE>
Notes to Consolidated Financial Statements (Continued)
Note 3. Stock Option Plans
The following summarizes options granted, exercised and
canceled or expired during the nine months ended October 31,
1998:
<TABLE>
<CAPTION>
Shares Under Stock
Option Plans
<S> <C>
Outstanding at January 31, 1998
($3.375 to $18.975 per share) 2,287,464
Granted ($9.9375 to $12.50 per share) 996,625
Exercised ($6.875 to $10.375 per share) 68,145
Canceled or expired ($14.30 per share) 6,993
---------
Outstanding at October 31, 1998
($3.375 to $18.975 per share) 3,208,951
=========
</TABLE>
Note 4. Net Income Per Share
Effective February 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 128 (SFAS 128) "Earnings per
Share," which replaces the calculation of primary and fully
diluted earnings per share under previous accounting standards with basic
and diluted earnings per share. As a result, the Company's
reported net income per share amounts for the three and nine
month periods ended October 31, 1997 have been restated as follows:
<TABLE>
<CAPTION>
Per Share Amounts
Three Months Nine Months
Ended Ended
October 31, 1997 October 31,
1997
<S> <C> <C>
Primary net income per share,
as reported $0.05 $0.31
Effect of SFAS 128 - 0.01
----- -----
Basic net income per share,
as restated $0.05 $0.32
===== =====
<PAGE>
Fully diluted net income per
share, as reported $0.05 $0.31
Effect of SFAS 128 - -
----- -----
Diluted net income per share,
as restated $0.05 $0.31
===== =====
</TABLE>
<TABLE>
<CAPTION>
The following table reconciles the basic and diluted net
income per share computations for each period presented:
Three Months Ended
October 31, 1998 October 31, 1997
Per Per
Income Shares Share Income Shares Share
<S> <C> <C> <C> <C> <C> <C>
Basic net income
per share $ 732 7,202 $0.10 $ 383 7,917 $0.05
===== =====
Effect of stock
options - 307 - 286
------ ----- ------ -----
Diluted net income
per share $ 732 7,509 $0.10 $ 383 8,203 $0.05
====== ===== ===== ====== ===== =====
Nine Months Ended
October 31, 1998 October 31, 1997
Per Per
Income Shares Share Income Shares Share
<S> <C> <C> <C> <C> <C> <C>
Basic net income
per share $3,330 7,512 $0.44 $2,539 7,933 $0.32
===== =====
Effect of stock
options - 404 - 252
------ ----- ------ -----
Diluted net income
per share $3,330 7,916 $0.42 $2,539 8,185 $0.31
====== ===== ===== ====== ===== =====
For the three and nine months ended October 31, 1998, a
total of 1,463,967 and 1,163,967 shares, respectively, subject to
<PAGE>
outstanding options at exercise prices ranging from $11.50 to
$18.975 per share were not included in the common equivalent
shares outstanding calculation as the exercise prices were above the
average trading price of the Company's stock for those periods.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The Company is a leader in the consumer electronics/appliance
retailing industry with 223 stores in 35 states, operating
predominantly in small to medium sized markets under the trade
name "REX".
Results of Operations
The following table sets forth, for the periods indicated,
the relative percentages that certain income and expense items bear
to net sales:
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31 October 31
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of merchandise sold 72.7 72.2 72.4 71.9
----- ----- ----- -----
Gross profit 27.3 27.8 27.6 28.1
Selling, general and
administrative expense 23.9 25.0 23.9 24.5
----- ----- ----- -----
Income from operations 3.4 2.8 3.7 3.6
Interest, net 2.0 2.1 1.7 2.0
Equity in earnings of
limited partnership (0.3) - (0.1) -
----- ----- ----- -----
Income before income
taxes 1.1 0.7 1.9 1.6
Provision for income taxes 0.3 0.3 0.7 0.6
----- ----- ----- -----
Net income 0.8% 0.4% 1.2% 1.0%
===== ===== ===== =====
</TABLE>
<PAGE>
Comparison of Three and Nine Months Ended October 31, 1998 and 1997
Net sales for the three months ended October 31, 1998 were
$92.6 million compared to $88.0 million in the prior year's
comparable period, representing an increase of $4.6 million or
5.3%. This increase is primarily a result of an increase in
comparable store sales of 4.4% along with increased sales at
non-comparable stores. Net sales for the first nine months of
fiscal 1999 were $273.0 million compared to $266.1 million in the first
nine months of fiscal 1998, representing an increase of $6.9
million or 2.6%. Comparable store sales increased 1.4% for the
first nine months of fiscal 1999. The Company considers a store
to be comparable after it has been open six fiscal quarters.
As of October 31, 1998, the Company has 223 stores compared
to 218 stores one year earlier. There were six stores opened and
five closed in the first nine months of fiscal 1999. In the prior
year's comparable period there were three stores opened and seven
closed. The Company evaluates the performance of its stores on a
continuous basis and, based on an assessment of factors it deems
relevant, will close any store which is not adequately
contributing to Company profitability.
Gross profit of $25.3 million in the third quarter of fiscal
1999 (27.3% of net sales) was 3.3% higher than the $24.5 million
gross profit (27.8% of net sales) recorded in the third quarter
of fiscal 1998. In the first nine months of fiscal 1999 gross profit
was $75.3 million (27.6% of net sales), a 0.8% increase from
$74.7 million (28.1% of net sales) for the first nine months of fiscal
1998. The reduced gross profit margin, as a percent of net sales,
is primarily the result of a change in the merchandise mix,
partially offset by the recognition of a higher amount of
extended service contract revenues, which generally have a higher gross
profit margin.
Selling, general and administrative expenses for the third
quarter of fiscal 1999 were $22.2 million (23.9% of net sales), a
0.8% increase over the $22.0 million (25.0% of net sales) for the
third quarter of fiscal 1998. Selling, general and
administrative expenses for the first nine months of fiscal 1999 and 1998 were
$65.2 million (23.9% and 24.5% of net sales for the first nine
months of fiscal 1999 and 1998, respectively). The decrease in
expense, as a percent of net sales, is primarily attributable to
lower advertising expenditures in certain markets, partially
offset by an increase in incentive commissions for sales personnel.
Interest expense for the quarters ended October 31, 1998 and
1997 was $1.9 million (2.1% and 2.2% of net sales, respectively).
Interest expense for the first nine months of fiscal 1999 decreased
<PAGE>
to $4.8 million (1.8% of net sales) from $5.4 million (2.0% of
net sales) for the first nine months of fiscal 1998. The decrease in
interest expense is a result of lower average borrowings ($14.6
million during the first nine months of fiscal 1999 compared to
$22.9 million during the comparable period of fiscal 1998 )on the
line of credit primarily due to lower inventory levels during the
first half of fiscal 1999 compared to fiscal 1998.
Results for the third quarter of fiscal 1999 also reflect the
impact of the Company's recent investment in two limited
partnerships which produce synthetic fuels which totals
approximately $2.9 million at October 31, 1998. The Company
recorded a pre-tax charge of $270,000 to record its share of the
partnerships' operating results and, as a result of the
investment, the Company's effective tax rate was reduced from 39.5% to 29.5%
to reflect the Company's estimated share of Federal tax credits
earned by the partnerships under Section 29 of the Internal Revenue
Code. The Company's effective tax rate for the third quarter of fiscal
1999 is based upon an estimated annual effective tax rate of 33%.
As a result of the foregoing, net income for the third
quarter of fiscal 1999 was $732,000, a 91.1% increase from $383,000 for
the third quarter of fiscal 1998. Net income for the first nine
months of fiscal 1999 was $3.3 million, a 31.2% increase from $2.5
million for the first nine months of fiscal 1998.
Liquidity and Capital Resources
Net cash used in operating activities was $30.8 million for
the first nine months of fiscal 1999, compared to $10.9 million
for the prior year's first nine months. Cash was provided by net
income of $3.3 million, adjusted for non-cash charges of $1.0
million. The primary use of cash was an increase in inventory of
$50.7 million primarily due to seasonal fluctuations and
opportunistic inventory purchases. This was partially offset by
an increase in trade payables of $14.8 million. Changes in other
working capital items provided cash of approximately $0.8
million.
At October 31, 1998, working capital was $67.7 million
compared to $78.9 million at January 31, 1998. The ratio of
current assets to current liabilities was 1.5 to 1 at October 31,
1998 and 2.0 to 1 at January 31, 1998.
The Company had outstanding borrowings on its revolving line
of credit of $36.8 million at October 31, 1998 at an average
interest rate of approximately 7.42%. At October 31, 1998, the
Company had approximately $75.0 million borrowing availability on
the revolving line of credit.
<PAGE>
Year 2000
The statements in this section include "Year 2000 readiness
disclosure" within the meaning of the Year 2000 Information and
Readiness Disclosure Act.
Certain software and hardware systems are time sensitive.
Older time sensitive systems often use a two digit dating
convention ("00" rather than "2000") that could result in system
failure and disruption of operations as the Year 2000 approaches.
This is referred to as the Year 2000 issue. The Year 2000 issue
will impact the Company, its suppliers, customers and other third
parties that transact business with the Company.
The Company has dedicated a staff of internal resources (the
"Year 2000 Team") to address Year 2000 issues. This team
believes it has identified substantially all hardware and software systems
within the Company and significant suppliers and other third
parties that transact business with the Company which may be
susceptible to Year 2000 issues. Projects have been established
to address all significant Year 2000 issues. The Year 2000 Team
reports regularly to senior management on the progress of
significant Year 2000 projects.
Most Year 2000 activities are to test hardware and software
systems, including non-information technology systems such as
telephones and store security systems. The Company has
determined that it needs to modify some of its software. The Company
believes all hardware systems are Year 2000 compliant. The Company is
reprogramming all of the systems impacted by Year 2000 issues.
The Company is currently working with the outside vendors on the
compliance status of the telephones and store security systems.
The Company has initiated communications with significant
suppliers, customers and other relevant third parties to identify
and minimize disruptions to the Company's operations and to
assist in resolving Year 2000 issues. However, there can be no
certainty that the impacted systems and products of other parties on which
the Company relies will be Year 2000 compliant.
The Company generally believes that its vendors who supply
products to the Company for resale are responsible for Year 2000
functionality of those products. However, should product
failures occur, the Company may be required to address the administrative
aspects of those failures such as handling product returns or
repairs.
The estimated cost for resolving Year 2000 issues are
approximately $175,000. Most of these costs are labor related to
<PAGE>
reprogramming existing software. Estimates of Year 2000 costs
are based on numerous assumptions; actual costs could be greater than
estimates. Specific factors that might cause such differences
include, but are not limited to, the continuing availability of
personnel trained in this area and the ability to timely identify
and correct all relevant software and hardware systems.
While the Company believes it is diligently addressing the
Year 2000 issues to ensure Year 2000 readiness, there can be no
absolute assurance that the objective will be achieved either
internally or as it relates to third parties. The Company
anticipates completing substantially all of its Year 2000
projects by the end of the second quarter of 1999. In the event the
Company falls short of these milestones, additional internal resources
will be focused on completing these projects or implementing
contingency plans.
Forward-Looking Statements
This Form 10-Q contains or may contain forward-looking
statements as defined in the Private Securities Litigation Reform
Act of 1995. The words "believes", "estimates", "plans",
"expects", "intends", "anticipates" and similar expressions as they relate
to the Company or its management are intended to identify such
forward-looking statements. Forward-looking statements are
inherently subject to risks and uncertainties. Factors that could
cause actual results to differ materially from those in the
forward-looking statements are set forth in Exhibit 99 to the
Company's Form 10-Q for the quarter ended October 31, 1997 (File
No. 0-13283).
Item 3. Quantitative and Qualitative Disclosure About Market Risk
None.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibits are filed with this
report:
10.1 Employment Agreement dated October 14,
1998 between Rex Radio and Television, Inc.
and Stuart Rose............................
10.2 Employment Agreement dated October 14,
1998 between Rex Radio and Television, Inc.
and Lawrence Tomchin.......................
10.3 Executive Stock Option dated October 14,
1998 granting Stuart Rose an option to
purchase 500,000 shares of registrant's
Common Stock...............................
10.4 Executive Stock Option dated October 14,
1998 granting Lawrence Tomchin an
option to purchase 150,000 shares of
registrant's Common Stock..................
27 Financial Data Schedule....................
(b) Reports on Form 8-K. No reports on Form 8-K were filed
during the quarter ended October 31, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
REX STORES CORPORATION
Registrant
December 15, 1998 /s/Stuart A. Rose
Stuart A. Rose
Chairman of the Board
(Chief Executive Officer)
December 15, 1998 /s/Douglas L. Bruggeman
Douglas L. Bruggeman
Vice President, Finance and
Treasurer
(Principal Financial and
Chief Accounting Officer)
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of the 14th day of October,
1998 between Rex Radio and Television, Inc. (the "Corporation"),
and Stuart A. Rose (the "Employee").
Recitals
A. The Corporation and Employee entered into
Employment Agreements dated July 17, 1984, December 1,
1989, January 1, 1993, January 1, 1994 and September 1,
1995;
B. The Corporation and Employee now desire to
agree to substantially the same terms in order to
continue Employee's position with the Corporation;
C. Employee desires to accept such employment on
the basis of the mutual benefits and covenants contained
herein;
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties agree as follows:
ARTICLE I - DUTIES OF EMPLOYEE
1.1 Duties of Employee. Employee shall be employed as Chief
Executive Officer of the Corporation, for the period set forth in
Article II below. Employee shall be subject to the supervision of
the Board of Directors of the Corporation, and shall perform those
executive, operational and administrative duties normally performed
by the Chief Executive Officer of a corporation.
1.2 Engaging in Other Employment. Employee shall devote a
substantial portion of his business time, energies, attention and
abilities to the business of the Corporation; provided, however,
that Employee shall not be prohibited from: (i) making investments
in other businesses; and (ii) actively participating in the
operation of any business within which he has invested.
1.3 Additional Duties. In addition to the foregoing duties,
Employee shall perform such other work as may be assigned to him
from time to time subject to the instructions, directions and
control of the Board of Directors.
<PAGE>
ARTICLE II - TERM OF EMPLOYMENT
2.1 Term. The Corporation shall employ Employee commencing
as of the 1st day of January, 2000, and continuing for a period of
three (3) years through December 31, 2002 (the "Employment Period")
and any renewal period provided for in Section 2.2 below unless
earlier terminated by Employee's: (i) resignation; (ii) death;
(iii) total disability; or (iv) termination of employment, as
provided in Article VI. "Total disability" shall mean such
disability as shall render Employee incapable of performing
substantially all of his duties for the Corporation as determined
by any two qualified physicians chosen by the Corporation.
2.2 Renewal Term. The terms and conditions of this Employ-
ment Agreement shall automatically renew, without any further
action by either party required, upon the expiration of the
Employment Period and any period of renewal for subsequent one (1)
year periods unless (i) notice of termination is provided to the
other party at least 180 days prior to the expiration of the
Employment Period or any period of renewal or (ii) this Employment
Agreement is otherwise terminated pursuant to Article VI.
ARTICLE III - COMPENSATION AND EXPENSES
3.1 Compensation. Employee shall receive as compensation for
services rendered under this Agreement a base salary of One Hundred
Fifty Four Thousand Five Hundred Dollars ($154,500.00) per year,
payable in equal monthly installments of Twelve Thousand Eight
Hundred Seventy Five Dollars ($12,875.00) per month on the last
working day of each month (or such more frequent dates as the
Corporation may choose), and prorated for any partial monthly
period.
3.2 Expenses. Employee is authorized to incur reasonable
expenses in connection with the performance of his duties for the
Corporation, including expenses for entertainment of customers,
travel, and similar business purposes. The Corporation will
reimburse Employee for all such expenses upon the presentation of
an itemized account of such expenditures and approval of the
expenditures by a designated officer. In incurring reasonable
business expenses, Employee shall conform to the policies of the
Corporation as adopted by the Board of Directors from time to time.
<PAGE>
ARTICLE IV - EMPLOYEE BENEFITS AND BONUSES
4.1 Employee Benefit Plans. Employee shall be entitled to
participate in any qualified pension plan, qualified profit-sharing
plan, medical and dental reimbursement plan, group term life
insurance plan, and any other employee benefit plan which may be
established by the Corporation, such participation to be in
accordance with the terms of any such plan.
4.2 Bonus. In addition to Employee's salary as provided in
Section 3.1, Employee may be paid a cash bonus as determined in the
sole discretion of the Board of Directors of the Corporation, any
such bonus to be commensurate with the effort and achievement of
Employee on behalf of the Corporation.
4.3 Vacation. Employee shall be entitled to eight (8) weeks
of vacation during each 12-month period of the Employment Period or
any period of renewal at full pay; provided, however, that no
portion of a vacation not taken in any 12-month period may be taken
in any other 12-month period. The time for such vacation shall be
selected by Employee. Employee shall not be entitled to vacation
pay in lieu of vacation.
ARTICLE V - NONDISCLOSURE AND NONCOMPETITION
5.1 Confidential Information. Employee agrees to keep secret
and confidential the Confidential Information (as defined below)
and shall not use or disclose said information, either during or
after his employment with the Corporation, for any purpose not
authorized by the Corporation. Upon termination of his employment
with the Corporation, Employee shall leave with the Corporation all
records, including all copies thereof, containing any Confidential
Information, including, but not limited to, such documents as memo-
randa, notes, records, reports, customer lists, manuals, drawings,
blueprints and maps. "Confidential Information" means information
about the Corporation and any of its subsidiaries which is dis-
closed to Employee or known by him as a consequence of or through
his work with or on behalf of the Corporation (including informa-
tion conceived, originated, discovered, or developed by him) not
generally known about the Corporation, including, but not limited
to, matters of a technical nature, such as "know-how," innovations,
research projects, methods, and matters of a business nature, such
as information about costs, profits, markets, sales, lists of cus-
tomers, suppliers, business processes, computer programs, account-
ing methods, information systems, business or marketing, financial
plans and reports and any other information of a similar nature.
5.2 Restrictions on Competition. During the term of this
Agreement and for a period of two years after termination of
<PAGE>
Employee's employment with the Corporation, for any reason,
Employee shall not directly or indirectly, either as an employee,
employer, consultant, agent, principal, partner, stockholder,
corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that
is (i) in competition in any manner whatsoever with the business of
the Corporation within 100 miles of any store operated by the
Corporation or its affiliates at the time of Employee's
termination; or (ii) the owner or operator of a retail business
similar to that of the Corporation within 100 miles of any store
operated by the Corporation or its affiliates at the time of
Employee's termination.
5.3 Saving. In the event any provision of this Article V
shall be held invalid, illegal, or unenforceable, the remaining
provisions shall in no way be affected thereby, and shall continue
in full force and effect. If, moreover, any one or more of the
provisions contained in this Article V shall for any reason be held
to be excessively broad as to time, duration, geographical scope,
activity or subject, it shall be construed, by limiting and
reducing it, so as to be enforceable to the extent compatible with
the applicable law as it shall then appear.
ARTICLE VI - TERMINATION
6.1 Termination of Employment with Cause. The Corporation
may at any time terminate Employee's employment for cause. Such
termination of employment for cause shall not prejudice any other
remedy to which the Corporation may be entitled either at law, in
equity, or under this Agreement. "Termination of employment for
cause" shall mean termination upon: (i) Employee's repeated
failure or refusal to perform his duties hereunder faithfully,
diligently, competently and to the best of his ability for reasons
other than serious disability or other incapacity; (ii) Employee's
violation of any material provision of this Agreement; or (iii)
Employee's clear and intentional violation of a state or federal
law of which he is aware or should have been aware: (a) involving
the commission of a felonious crime against the Corporation which
has a materially adverse effect upon the Corporation; or (b)
involving a felony other than against the Corporation having a
materially adverse effect upon the Corporation, as determined in
either case in the reasonable judgment of the Board of Directors.
6.2 Termination by Either Party. This Agreement may be
terminated by either party with or without cause upon 180 days
notice.
6.3 Effect of Termination on Compensation. In the event this
Agreement is terminated prior to the completion of the Employment
<PAGE>
Period or any period of renewal, Employee shall be entitled to the
compensation earned by him prior to the date of termination as
provided for in this Agreement computed pro rata up to and
including that date. Employee shall be entitled to no further
compensation as of the date of termination.
6.4 Effect of Termination on Bonus Plans. In the event of
the termination of this Agreement prior to the completion of the
Employment Period or any period of renewal, Employee shall
automatically and completely forfeit any rights which he may have
under any bonus plan established by the Corporation.
ARTICLE VII - WAIVER OF BREACH
7.1 Effect of Waiver. Waiver by the Corporation of any
condition, or of the breach of Employee of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in
any one or more instances shall not be deemed to be or construed as
a further or continuing waiver of any such condition or to be a
waiver either of any other condition or of the breach of any other
term or covenant of this Agreement. The failure of the Corporation
at any time or times to require performance of any provision hereof
shall in no manner affect its rights at a later time to require the
same.
ARTICLE VIII - MISCELLANEOUS
8.2 Notices. All notices and other communications by any
party hereto shall be made in writing to the other party and shall
be deemed to have been duly given when mailed by United States
certified mail, with postage prepaid, addressed as the parties
hereto may designate from time to time in writing.
8.2 Entire Agreement. This Agreement supersedes any and all
other agreements, either oral or in writing, between the parties
hereto with respect to the employment of Employee by the
Corporation, and contains all of the covenants and agreements
between the parties with respect to such employment in any manner
whatsoever.
8.3 Assignability. Neither this Agreement, nor any duties or
obligations hereunder shall be assignable by Employee without the
prior written consent of the Board of Directors of the Corporation.
8.4 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
<PAGE>
8.5 Captions. The captions in this Agreement are inserted
for convenience only and shall not be considered part of or affect
the construction or interpretation of any provision of this
Agreement.
8.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.
REX RADIO AND TELEVISION, INC.
By:/s/EDWARD M. KRESS
Edward M. Kress, Secretary
EMPLOYEE:
/s/ STUART A. ROSE
Stuart A. Rose
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of the 14th day of October,
1998 between Rex Radio and Television, Inc. (the "Corporation"),
and Lawrence Tomchin (the "Employee").
Recitals
A. The Corporation and Employee entered into
Employment Agreements dated July 17, 1984, December 1,
1989, January 1, 1993 January 1, 1994 and September 1,
1995;
B. The Corporation and Employee now desire to
agree to substantially the same terms in order to
continue Employee's position with the Corporation;
C. Employee desires to accept such employment on
the basis of the mutual benefits and covenants contained
herein;
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties agree as follows:
ARTICLE I - DUTIES OF EMPLOYEE
1.1 Duties of Employee. Employee shall be employed as
President and Chief Operating Officer of the Corporation, for the
period set forth in Article II below. Employee shall be subject to
the supervision of the Board of Directors of the Corporation, and
shall perform those executive, operational and administrative
duties normally performed by the President and Chief Operating
Officer of a corporation.
1.2 Engaging in Other Employment. Employee shall devote a
substantial portion of his business time, energies, attention and
abilities to the business of the Corporation; provided, however,
that Employee shall not be prohibited from: (i) making investments
in other businesses; and (ii) actively participating in the
operation of any business within which he has invested.
1.3 Additional Duties. In addition to the foregoing duties,
Employee shall perform such other work as may be assigned to him
from time to time subject to the instructions, directions and
control of the Board of Directors.
<PAGE>
ARTICLE II - TERM OF EMPLOYMENT
2.1 Term. The Corporation shall employ Employee commencing
as of the 1st day of January, 2000, and continuing for a period of
three (3) years through December 31, 2002 (the "Employment Period")
and any renewal period provided for in Section 2.2 below unless
earlier terminated by Employee's: (i) resignation; (ii) death;
(iii) total disability; or (iv) termination of employment, as
provided in Article VI. "Total disability" shall mean such
disability as shall render Employee incapable of performing
substantially all of his duties for the Corporation as determined
by any two qualified physicians chosen by the Corporation.
2.2 Renewal Term. The terms and conditions of this Employ-
ment Agreement shall automatically renew, without any further
action by either party required, upon the expiration of the
Employment Period and any period of renewal for subsequent one (1)
year periods unless (i) notice of termination is provided to the
other party at least 180 days prior to the expiration of the
Employment Period or any period of renewal or (ii) this Employment
Agreement is otherwise terminated pursuant to Article VI.
ARTICLE III - COMPENSATION AND EXPENSES
3.1 Compensation. Employee shall receive as compensation for
services rendered under this Agreement a base salary of One Hundred
Fifty Four Thousand Five Hundred Dollars ($154,500.00) per year,
payable in equal monthly installments of Twelve Thousand Eight
Hundred Seventy Five Dollars ($12,875.00) per month on the last
working day of each month (or such more frequent dates as the
Corporation may choose), and prorated for any partial monthly
period.
3.2 Expenses. Employee is authorized to incur reasonable
expenses in connection with the performance of his duties for the
Corporation, including expenses for entertainment of customers,
travel, and similar business purposes. The Corporation will
reimburse Employee for all such expenses upon the presentation of
an itemized account of such expenditures and approval of the
expenditures by a designated officer. In incurring reasonable
business expenses, Employee shall conform to the policies of the
Corporation as adopted by the Board of Directors from time to time.
<PAGE>
ARTICLE IV - EMPLOYEE BENEFITS AND BONUSES
4.1 Employee Benefit Plans. Employee shall be entitled to
participate in any qualified pension plan, qualified profit-sharing
plan, medical and dental reimbursement plan, group term life
insurance plan, and any other employee benefit plan which may be
established by the Corporation, such participation to be in
accordance with the terms of any such plan.
4.2 Bonus. In addition to Employee's salary as provided in
Section 3.1, Employee may be paid a cash bonus as determined in the
sole discretion of the Board of Directors of the Corporation, any
such bonus to be commensurate with the effort and achievement of
Employee on behalf of the Corporation.
4.3 Vacation. Employee shall be entitled to eight (8) weeks
of vacation during each 12-month period of the Employment Period or
any period of renewal at full pay; provided, however, that no
portion of a vacation not taken in any 12-month period may be taken
in any other 12-month period. The time for such vacation shall be
selected by Employee. Employee shall not be entitled to vacation
pay in lieu of vacation.
ARTICLE V - NONDISCLOSURE AND NONCOMPETITION
5.1 Confidential Information. Employee agrees to keep secret
and confidential the Confidential Information (as defined below)
and shall not use or disclose said information, either during or
after his employment with the Corporation, for any purpose not
authorized by the Corporation. Upon termination of his employment
with the Corporation, Employee shall leave with the Corporation all
records, including all copies thereof, containing any Confidential
Information, including, but not limited to, such documents as memo-
randa, notes, records, reports, customer lists, manuals, drawings,
blueprints and maps. "Confidential Information" means information
about the Corporation and any of its subsidiaries which is dis-
closed to Employee or known by him as a consequence of or through
his work with or on behalf of the Corporation (including informa-
tion conceived, originated, discovered, or developed by him) not
generally known about the Corporation, including, but not limited
to, matters of a technical nature, such as "know-how," innovations,
research projects, methods, and matters of a business nature, such
as information about costs, profits, markets, sales, lists of cus-
tomers, suppliers, business processes, computer programs, account-
ing methods, information systems, business or marketing, financial
plans and reports and any other information of a similar nature.
5.2 Restrictions on Competition. During the term of this
Agreement and for a period of two years after termination of
<PAGE>
Employee's employment with the Corporation, for any reason,
Employee shall not directly or indirectly, either as an employee,
employer, consultant, agent, principal, partner, stockholder,
corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that
is (i) in competition in any manner whatsoever with the business of
the Corporation within 100 miles of any store operated by the
Corporation or its affiliates at the time of Employee's
termination; or (ii) the owner or operator of a retail business
similar to that of the Corporation within 100 miles of any store
operated by the Corporation or its affiliates at the time of
Employee's termination.
5.3 Saving. In the event any provision of this Article V
shall be held invalid, illegal, or unenforceable, the remaining
provisions shall in no way be affected thereby, and shall continue
in full force and effect. If, moreover, any one or more of the
provisions contained in this Article V shall for any reason be held
to be excessively broad as to time, duration, geographical scope,
activity or subject, it shall be construed, by limiting and
reducing it, so as to be enforceable to the extent compatible with
the applicable law as it shall then appear.
ARTICLE VI - TERMINATION
6.1 Termination of Employment with Cause. The Corporation
may at any time terminate Employee's employment for cause. Such
termination of employment for cause shall not prejudice any other
remedy to which the Corporation may be entitled either at law, in
equity, or under this Agreement. "Termination of employment for
cause" shall mean termination upon: (i) Employee's repeated
failure or refusal to perform his duties hereunder faithfully,
diligently, competently and to the best of his ability for reasons
other than serious disability or other incapacity; (ii) Employee's
violation of any material provision of this Agreement; or (iii)
Employee's clear and intentional violation of a state or federal
law of which he is aware or should have been aware: (a) involving
the commission of a felonious crime against the Corporation which
has a materially adverse effect upon the Corporation; or (b)
involving a felony other than against the Corporation having a
materially adverse effect upon the Corporation, as determined in
either case in the reasonable judgment of the Board of Directors.
6.2 Termination by Either Party. This Agreement may be
terminated by either party with or without cause upon 180 days
notice.
6.3 Effect of Termination on Compensation. In the event this
Agreement is terminated prior to the completion of the Employment
<PAGE>
Period or any period of renewal, Employee shall be entitled to the
compensation earned by him prior to the date of termination as
provided for in this Agreement computed pro rata up to and
including that date. Employee shall be entitled to no further
compensation as of the date of termination.
6.4 Effect of Termination on Bonus Plans. In the event of
the termination of this Agreement prior to the completion of the
Employment Period or any period of renewal, Employee shall
automatically and completely forfeit any rights which he may have
under any bonus plan established by the Corporation.
ARTICLE VII - WAIVER OF BREACH
7.1 Effect of Waiver. Waiver by the Corporation of any
condition, or of the breach of Employee of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in
any one or more instances shall not be deemed to be or construed as
a further or continuing waiver of any such condition or to be a
waiver either of any other condition or of the breach of any other
term or covenant of this Agreement. The failure of the Corporation
at any time or times to require performance of any provision hereof
shall in no manner affect its rights at a later time to require the
same.
ARTICLE VIII - MISCELLANEOUS
8.2 Notices. All notices and other communications by any
party hereto shall be made in writing to the other party and shall
be deemed to have been duly given when mailed by United States
certified mail, with postage prepaid, addressed as the parties
hereto may designate from time to time in writing.
8.2 Entire Agreement. This Agreement supersedes any and all
other agreements, either oral or in writing, between the parties
hereto with respect to the employment of Employee by the
Corporation, and contains all of the covenants and agreements
between the parties with respect to such employment in any manner
whatsoever.
8.3 Assignability. Neither this Agreement, nor any duties or
obligations hereunder shall be assignable by Employee without the
prior written consent of the Board of Directors of the Corporation.
<PAGE>
8.4 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
8.5 Captions. The captions in this Agreement are inserted
for convenience only and shall not be considered part of or affect
the construction or interpretation of any provision of this
Agreement.
8.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.
REX RADIO AND TELEVISION, INC.
By:/s/ EDWARD M. KRESS
Edward M. Kress, Secretary
EMPLOYEE:
/s/ LAWRENCE TOMCHIN
Lawrence Tomchin
NO. 98-70
REX Stores Corporation
NONQUALIFIED
EXECUTIVE STOCK OPTION
REX Stores Corporation (the "Company") hereby grants to
STUART A. ROSE (the "Optionee"), effective October 14, 1998 (the
"Effective Date"), as a matter of separate inducement and agreement
in connection with Optionee's employment by the Company, and not in
lieu of any salary or other compensation for his services, an
option to purchase a maximum of 500,000 shares of its Common Stock,
One Cent ($.01) par value (the "Shares"), at a price of $9.9375 per
share, subject to the following terms and conditions:
1. Time of Exercise. This option may not be exercised prior
to the first anniversary of the Effective Date. On or after
December 31, 2000, this option shall be exercisable only up to a
maximum of one-third (1/3) of the total number of Shares originally
subject to the option, or 166,666 shares. On or after December 31,
2001, this option shall be exercisable only up to a maximum of two-thirds (2/3)
of the total number of Shares originally subject to
the option, or 333,333 Shares. On or after December 31, 2002, the
option shall be exercisable in full.
Notwithstanding anything to the contrary herein contained, so
long as the Optionee shall be employed by the Company or any of its
subsidiaries, this option may not be exercised if, in the opinion
of counsel for the Company, the issuance of the Shares pursuant
thereto, either alone or in combination with the issuance of other
securities by the Company, would constitute a violation of
applicable federal or state securities laws or regulations or
orders thereunder. In the event this option may not otherwise be
exercised by reason of the foregoing sentence, the Company shall
use its best efforts to register said shares with the Securities
and Exchange Commission on Form S-8 (or successor form) as soon as
practicable after said form may be used by the Company and,
concurrently therewith, to take such steps as may be necessary to
comply with applicable state securities laws in connection with
such issuance.
<PAGE>
2. Term of Option. This option shall expire on the tenth
(10th) anniversary of the effective date of this Agreement.
3. Methods of Exercise. This option shall be exercisable by
a written notice in the form attached hereto as Exhibit "A", which
specifies the number of Shares to be purchased. Upon receipt of
payment acceptable to the Company for the Shares, the Company will
thereafter deliver or cause to be delivered to the Optionee (or any
other individual or individuals exercising this option if permitted
under the terms of this option) at the office of the Company, a
certificate or certificates for the number of Shares with respect
to which this option is being exercised, registered in the name of
the Optionee or other individual or individuals exercising the
option (if permitted under this option), provided, however, that if
any law or regulation or order of the Securities and Exchange
Commission or other body having jurisdiction in the premises shall
require the Company or Optionee (or other individual or individuals
exercising this option if permitted under the terms of this option)
to take any action in connection with the Shares then being
purchased, the delivery of the certificate or certificates for such
shares shall be delayed for the period necessary to take and
complete such action.
4. Purchase for Investment. This option is granted on the
condition that the purchase of Shares of stock hereunder shall be
for the account of the Optionee (or other individuals or individu-
als exercising this option) for investment purposes and not with a
view to resale or distribution, except that such condition shall be
inoperative if the offering of Shares subject to the option is
registered under the Securities Act of 1933, as amended, or if in
the opinion of counsel for the Company such shares may be resold
without registration. At the time of any exercise of the option,
the Optionee (or other individual or individuals exercising this
option) will execute such further agreements as the Company may
require to implement the foregoing condition and to acknowledge the
Optionee's (or such other individual's) familiarity with restric-
tions on the resale of the shares under applicable securities laws.
5. Non-Transferability. This option may not be sold,
pledged, hypothecated, or transferred by the Optionee, except as
otherwise provided in Paragraph 6(iii) herein.
6. Termination of Options. This Agreement, and the options
granted hereunder, shall terminate and may no longer be exercised
if the Optionee ceases for any reason to be an employee of the
Company, or any of its subsidiaries, except that:
(i) If the Optionee's employment shall have been
terminated for any reason other than cause, disability or death, he
<PAGE>
may at any time within a period of one hundred eighty (180) days
after such termination of employment exercise his option to the
extent permitted in Paragraph 1 of this Agreement on the date of
termination of his employment; and/or
(ii) If the Optionee's employment shall have been
terminated because of disability, he may at any time within a
period of one (1) year after such termination of employment
exercise his option to the extent permitted in Paragraph 1 of this
Agreement on the date of termination of his employment; and/or
(iii) If the Optionee dies at a time when the option
was exercisable by him, then his estate, personal representative or
beneficiary to whom it has been transferred may, within six (6)
months following the death, exercise the option to the extent
permitted in Paragraph 1 of this Agreement at the time of Op-
tionee's death, provided, however, that no option may be exercised
to any extent by anyone after the date of expiration of the option.
7. Rights as Shareholder. The Optionee shall have no rights
as a shareholder with respect to any Shares covered by this option
until the date of issuance of a stock certificate to him for such
Shares.
8. Stock Dividends; Splits; Stock Combination; Recapitaliza-
tion. Appropriate adjustment shall be made in the maximum number
of Shares of Common Stock subject to this option and in the number,
kind, and option price of Shares covered by outstanding options
granted hereunder to give effect to any stock dividends or other
distribution, stock splits, stock combinations, recapitalizations
and other similar changes in the capital structure of the Company
after the Effective Date.
9. Merger; Sale of Assets; Dissolution. In the event of a
change of the Common Stock resulting from a merger or similar
reorganization as to which the Company is the surviving corpora-
tion, the number and kind of Shares which thereafter may be subject
to options granted hereunder and the price per share thereof shall
be appropriately adjusted in such a manner as the Board of
Directors of the Company may deem equitable to prevent substantial
dilution or enlargement of the rights available or granted
hereunder. If the Company at any time should elect to dissolve,
sell all or substantially all of its assets, undergo a reorganiza-
tion, or merge or consolidate with any corporation and the Company
is not the surviving corporation, then (unless in the case of a
reorganization, merger, or consolidation, the surviving corporation
assumes the optionees' rights hereunder or issues substantially
equivalent substitute rights in place hereof) the Optionee shall be
notified by the Company of his right to exercise all outstanding
<PAGE>
options prior to any such dissolution, sale, reorganization, merger
or consolidation. The failure to exercise such outstanding options
within thirty (30) days of such notification shall cause the option
hereunder to be terminated.
10. Effect of the Option on Employment Relationship. This
option shall in no way, now or hereafter, reduce, enlarge or modify
the employment relationship between the Company and the Optionee.
Nothing contained herein shall be construed as conferring upon the
Optionee any right to continue in the employ of the Company.
11. General. This option shall be governed by and be
construed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the Company has caused this Stock Option
to be executed this 14th day of October, 1998.
REX Stores Corporation
By /s/ EDWARD M. KRESS
Edward M. Kress, Secretary
/s/ STUART A. ROSE
Stuart A. Rose
<PAGE>
EXHIBIT A
WRITTEN NOTICE OF EXERCISE OF
STOCK OPTION
REX Stores Corporation
The undersigned hereby exercises his option granted to him
pursuant to the 1998 Nonqualified Executive Stock Option No. 98-70,
subject to and in accordance with the terms and conditions thereof,
to purchase ________________ shares of the Common Stock of REX
Stores Corporation, at a price of $9.9375 per share, said number of
shares not to exceed the number permitted in Paragraph 1 of the
Option. The undersigned hereby makes payment to REX Stores
Corporation of the purchase price in full. Kindly issue all shares
to the undersigned and deliver to the undersigned at the address
stated below.
Name: Stuart A. Rose
Address: 2875 Needmore Road, Dayton, Ohio 45414
Social Security Number: ###-##-####
Signature: _________________________________
Purchase Price Attached: _______________________
Dated: _________________________
NO. 98-71
REX Stores Corporation
NONQUALIFIED
EXECUTIVE STOCK OPTION
REX Stores Corporation (the "Company") hereby grants to
LAWRENCE TOMCHIN (the "Optionee"), effective October 14, 1998 (the
"Effective Date"), as a matter of separate inducement and agreement
in connection with Optionee's employment by the Company, and not in
lieu of any salary or other compensation for his services, an
option to purchase a maximum of 150,000 shares of its Common Stock,
One Cent ($.01) par value (the "Shares"), at a price of $9.9375 per
share, subject to the following terms and conditions:
1. Time of Exercise. This option may not be exercised prior
to the first anniversary of the Effective Date. On or after
December 31, 2000, this option shall be exercisable only up to a
maximum of one-third (1/3) of the total number of Shares originally
subject to the option, or 50,000 shares. On or after December 31,
2001, this option shall be exercisable only up to a maximum of two-thirds (2/3)
of the total number of Shares originally subject to
the option, or 100,000 Shares. On or after December 31, 2002, the
option shall be exercisable in full.
Notwithstanding anything to the contrary herein contained, so
long as the Optionee shall be employed by the Company or any of its
subsidiaries, this option may not be exercised if, in the opinion
of counsel for the Company, the issuance of the Shares pursuant
thereto, either alone or in combination with the issuance of other
securities by the Company, would constitute a violation of
applicable federal or state securities laws or regulations or
orders thereunder. In the event this option may not otherwise be
exercised by reason of the foregoing sentence, the Company shall
use its best efforts to register said shares with the Securities
and Exchange Commission on Form S-8 (or successor form) as soon as
practicable after said form may be used by the Company and,
concurrently therewith, to take such steps as may be necessary to
comply with applicable state securities laws in connection with
such issuance.
<PAGE>
2. Term of Option. This option shall expire on the tenth
(10th) anniversary of the effective date of this Agreement.
3. Methods of Exercise. This option shall be exercisable by
a written notice in the form attached hereto as Exhibit "A", which
specifies the number of Shares to be purchased. Upon receipt of
payment acceptable to the Company for the Shares, the Company will
thereafter deliver or cause to be delivered to the Optionee (or any
other individual or individuals exercising this option if permitted
under the terms of this option) at the office of the Company, a
certificate or certificates for the number of Shares with respect
to which this option is being exercised, registered in the name of
the Optionee or other individual or individuals exercising the
option (if permitted under this option), provided, however, that if
any law or regulation or order of the Securities and Exchange
Commission or other body having jurisdiction in the premises shall
require the Company or Optionee (or other individual or individuals
exercising this option if permitted under the terms of this option)
to take any action in connection with the Shares then being
purchased, the delivery of the certificate or certificates for such
shares shall be delayed for the period necessary to take and
complete such action.
4. Purchase for Investment. This option is granted on the
condition that the purchase of Shares of stock hereunder shall be
for the account of the Optionee (or other individuals or individu-
als exercising this option) for investment purposes and not with a
view to resale or distribution, except that such condition shall be
inoperative if the offering of Shares subject to the option is
registered under the Securities Act of 1933, as amended, or if in
the opinion of counsel for the Company such shares may be resold
without registration. At the time of any exercise of the option,
the Optionee (or other individual or individuals exercising this
option) will execute such further agreements as the Company may
require to implement the foregoing condition and to acknowledge the
Optionee's (or such other individual's) familiarity with restric-
tions on the resale of the shares under applicable securities laws.
5. Non-Transferability. This option may not be sold,
pledged, hypothecated, or transferred by the Optionee, except as
otherwise provided in Paragraph 6(iii) herein.
6. Termination of Options. This Agreement, and the options
granted hereunder, shall terminate and may no longer be exercised
if the Optionee ceases for any reason to be an employee of the
Company, or any of its subsidiaries, except that:
(i) If the Optionee's employment shall have been
terminated for any reason other than cause, disability or death, he
<PAGE>
may at any time within a period of one hundred eighty (180) days
after such termination of employment exercise his option to the
extent permitted in Paragraph 1 of this Agreement on the date of
termination of his employment; and/or
(ii) If the Optionee's employment shall have been
terminated because of disability, he may at any time within a
period of one (1) year after such termination of employment
exercise his option to the extent permitted in Paragraph 1 of this
Agreement on the date of termination of his employment; and/or
(iii) If the Optionee dies at a time when the option
was exercisable by him, then his estate, personal representative or
beneficiary to whom it has been transferred may, within six (6)
months following the death, exercise the option to the extent
permitted in Paragraph 1 of this Agreement at the time of Op-
tionee's death, provided, however, that no option may be exercised
to any extent by anyone after the date of expiration of the option.
7. Rights as Shareholder. The Optionee shall have no rights
as a shareholder with respect to any Shares covered by this option
until the date of issuance of a stock certificate to him for such
Shares.
8. Stock Dividends; Splits; Stock Combination; Recapitaliza-
tion. Appropriate adjustment shall be made in the maximum number
of Shares of Common Stock subject to this option and in the number,
kind, and option price of Shares covered by outstanding options
granted hereunder to give effect to any stock dividends or other
distribution, stock splits, stock combinations, recapitalizations
and other similar changes in the capital structure of the Company
after the Effective Date.
9. Merger; Sale of Assets; Dissolution. In the event of a
change of the Common Stock resulting from a merger or similar
reorganization as to which the Company is the surviving corpora-
tion, the number and kind of Shares which thereafter may be subject
to options granted hereunder and the price per share thereof shall
be appropriately adjusted in such a manner as the Board of
Directors of the Company may deem equitable to prevent substantial
dilution or enlargement of the rights available or granted
hereunder. If the Company at any time should elect to dissolve,
sell all or substantially all of its assets, undergo a reorganiza-
tion, or merge or consolidate with any corporation and the Company
is not the surviving corporation, then (unless in the case of a
reorganization, merger, or consolidation, the surviving corporation
assumes the optionees' rights hereunder or issues substantially
equivalent substitute rights in place hereof) the Optionee shall be
notified by the Company of his right to exercise all outstanding
<PAGE>
options prior to any such dissolution, sale, reorganization, merger
or consolidation. The failure to exercise such outstanding options
within thirty (30) days of such notification shall cause the option
hereunder to be terminated.
10. Effect of the Option on Employment Relationship. This
option shall in no way, now or hereafter, reduce, enlarge or modify
the employment relationship between the Company and the Optionee.
Nothing contained herein shall be construed as conferring upon the
Optionee any right to continue in the employ of the Company.
11. General. This option shall be governed by and be
construed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the Company has caused this Stock Option
to be executed this 14th day of October, 1998.
REX Stores Corporation
By /s/ EDWARD M. KRESS
Edward M. Kress, Secretary
/s/ LAWRENCE TOMCHIN
Lawrence Tomchin
<PAGE>
EXHIBIT A
WRITTEN NOTICE OF EXERCISE OF
STOCK OPTION
REX Stores Corporation
The undersigned hereby exercises his option granted to him
pursuant to the 1998 Nonqualified Executive Stock Option No. 98-71,
subject to and in accordance with the terms and conditions thereof,
to purchase ________________ shares of the Common Stock of REX
Stores Corporation, at a price of $9.9375 per share, said number of
shares not to exceed the number permitted in Paragraph 1 of the
Option. The undersigned hereby makes payment to REX Stores
Corporation of the purchase price in full. Kindly issue all shares
to the undersigned and deliver to the undersigned at the address
stated below.
Name: Lawrence Tomchin
Address: 2875 Needmore Road, Dayton, Ohio 45414
Social Security Number: ###-##-####
Signature: ________________________________
Purchase Price Attached: _______________________
Dated: ________________________
<TABLE> <S> <C>
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<CIK> 0000744187
<NAME> REX STORES CORPORATION
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-1-1998
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1
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<SECURITIES> 1,816
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<CURRENT-LIABILITIES> 131,067
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0
0
<OTHER-SE> 102,112
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<SALES> 273,044
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<CGS> 197,710
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