<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to _____________
Commission File Number 1-8769
R. G. BARRY CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Ohio 31-4362899
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13405 Yarmouth Road, N.W., Pickerington, Ohio 43147
- --------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (614) 864-6400
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------------------ -----------------------
Common Shares, Par Value $1.00 New York Stock Exchange
(7,411,883 outstanding on March 18, 1996)
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. [ ]
Based upon the closing price reported on the New York Stock Exchange on March
18, 1996, the aggregate market value of the Common Shares of the Registrant
held by non-affiliates on that date was $110,013,255.
Documents Incorporated by Reference:
(1) Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended December 30, 1995, are incorporated by reference into Part II of
this Annual Report on Form 10-K.
(2) Portions of the Registrant's definitive Proxy Statement for its Annual
Meeting of Shareholders to be held on May 16, 1996, are incorporated by
reference into Part III of this Annual Report on Form 10-K.
Index to Exhibits begins on Page 62.
Page 1 of 278 Pages.
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PART I
Item 1. Business.
- ------------------
Principal Products
- ------------------
R. G. Barry Corporation (the "Registrant") is organized under the
laws of the State of Ohio. The Registrant and its subsidiaries (collectively,
the "Company") manufacture and market products which serve the comfort needs of
people. The Company believes that it is the world's largest manufacturer of
comfort footwear for at and around the home, and the dominant domestic supplier
of thermal comfort products. Comfort is the dominant influence in the
Company's brand lines.
The Company designs, manufactures and markets specialized comfort
footwear for men, women and children. The Company is in the business of
responding to consumer demand for comfortable footwear combined with attractive
appearance. The Company also designs, manufactures and markets thermal comfort
products in the food preservation, comfort therapy and cold weather categories.
Historically, the Company's primary products have been foam-soled,
soft washable slippers for men, women and children. The Company developed and
introduced women's Angel Treads*, the world's first foam-soled, washable
slipper, in 1947. Since that time, the Company has introduced additional
slipper-type brand lines for men, women and children based upon the concept of
comfort, softness and washability. These footwear products are sold, for the
most part, under various brand names including, but not limited to, Angel
Treads*, Dearfoams*, Dearfoams* for Kids, Dearfoams* for Men, Madye's*, Snug
Treds* and Soft Notes*. The Company has also marketed certain of its
slipper-type footwear under licensed trademarks. See "Trademarks and
Licenses".
The Company's foam-soled footwear lines have fabric uppers made of
terry cloths, velours, fleeces, satins, nylons and other washable materials.
Different brand lines are marketed for men, women and children with a variety
of styles, colors and ornamentation.
The marketing strategy for the Company's slipper-type brand lines
has been to expand counter space for its products by
__________________________________
* Hereinafter denotes a trademark of the Company registered in the United
States Department of Commerce Patent and Trademark Office.
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creating and marketing brand lines to different segments of the consumer
market. Retail prices for the Company's footwear range from approximately $4
to $30 per pair, depending on the style of footwear, type of retail outlet and
retailer mark-up.
Since 1988, the Company has manufactured and marketed the Soft
Notes* foam cushioned casual slipper line. The Company believes that this
brand line is a bridge between slippers and casual footwear. The marketing
strategy with respect to this product emphasizes the fashion, comfort and
versatility provided by the Soft Notes* foam cushioned casual slippers.
The Company believes that many consumers of its slippers are
loyal to the Company's brand lines, usually own more than one pair of slippers
and have a history of repeat purchases. Substantially all of the slipper brand
lines are displayed on a self-selection basis in see-through packaging at the
point of purchase and have appeal to the "impulse" buyer. The Company believes
that many of the slippers are purchased as gifts for others.
Many styles of slipper-type footwear have become standard in
the Company's brand lines and are in demand year after year. For many of these
styles, the most significant changes made in response to fashion changes are in
ornamentation, fabric and/or color. The Company also introduces new, updated
styles of slippers with a view toward enhancing the fashion appeal and
freshness of its products. The Company anticipates that it will continue to
introduce new styles in future years responsive to fashion changes.
It is possible to fit most consumers of the Company's
slipper-type footwear within a range of four or five sizes. This allows the
Company to carry lower levels of inventories in these lines in comparison with
other footwear styles.
In 1994, the Company introduced on a national basis its
thermal comfort products featuring MICROCORE(TM) microwave-activated technology
developed by the Company. On July 14, 1994, the Registrant also acquired all
of the outstanding stock of Vesture Corporation ("Vesture"), the originators of
microwave-heated comfort care products, in consideration of the issuance of
319,362 common shares of the Registrant which were valued by the Registrant at
$5 million.
The Company's thermal comfort products generally fall within
three categories: (1) food preservation products such as breadwarmer baskets
and portable food carriers; (2) comfort therapy products such as heating pads
and backwarmers; and (3) cold weather products such as heated seat cushions,
booties,
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scarves and ear muffs. Retail prices for substantially all of the Company's
thermal comfort products range from approximately $12 to $30, depending on the
product, type of retail outlet and retailer mark-up. The Company believes that
the food preservation and comfort therapy thermal products are not weather
sensitive and have a year-round sales appeal while the cold weather portion of
the thermal comfort product line is more seasonal and affected by weather
changes. The thermal comfort products are sold under the major brand lines of
Dearfoams*, Vesture* and Lava*. All carry MICROCORE(TM) energy packs.
The Company has seven manufacturing facilities. The Company
operates sewing plants in Nuevo Laredo, Ciudad Acuna, and Zacatecas, Mexico.
The Company also operates a cutting plant in Laredo, Texas and a sole molding
operation in San Angelo, Texas. The Company also has the exclusive rights to
the manufacturing output of a factory in Shenzhen, People's Republic of China.
The Company produces thermal comfort products at its manufacturing facilities
in Asheboro, North Carolina and Nuevo Laredo, Mexico. The Company operates
distribution centers in Asheboro and Goldsboro, North Carolina and San Angelo
and Laredo, Texas.
Marketing
- ---------
The Company's brand lines are sold to department, chain and
specialty stores; through mass merchandising channels of distribution such as
discount stores, drug and variety chain stores, and supermarkets; and to
independent retail establishments. The Company's brand lines are marketed
primarily through Company salespersons and, to a lesser extent, through
independent sales representatives. The Company does not finance its customers'
purchases.
Each spring and autumn, new designs and styles are presented
to buyers representing the Company's retail customers at regularly scheduled
showings. Company designers also produce new styles and experimental designs
throughout the year which are evaluated by the Company's sales and marketing
personnel. Buyers for department stores and other large retail customers
attend the spring and autumn showings and make periodic visits to the Company's
showroom in New York. Company salespersons regularly visit retail customers.
The Company also regularly makes catalogs available to its current and
potential customers and periodically follows up with such current and potential
customers by telephone. In addition, the Company participates in trade shows,
both regionally and nationally.
Sales during the last six months of each year have
historically been greater than during the first six months. The Company's
inventory is largest in early autumn in order to
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accommodate the retailers' fall selling seasons. See "Backlog of Orders".
The Company advertises principally in the print media. In
1995, the Company used television advertising for the thermal comfort products
sold through accessories departments in department stores. The Company
believes that the use of this television advertising was not cost-effective and
has discontinued it for 1996. The Company's promotional efforts are often
conducted in cooperation with customers. The Company's products are displayed
at the retail-store level on a self-selection and gift-purchase basis.
The Company operates an European sales and marketing
organization in London, England and markets its products in Canada, Mexico and
several other countries around the world. In 1995, the Company's foreign sales
compromised approximately 4% of its total sales.
Due to the more seasonal nature of the cold weather portion of
the thermal comfort product line, in 1995, the Company placed more emphasis in
the thermal comfort product mix on the comfort therapy and food preservation
categories.
The Company intends to develop and introduce a variety of new
products using thermal technology in 1996. On September 15, 1995, the
Registrant announced the formation by the Registrant and Battelle of ThermaStor
Technologies, Ltd., a limited liability company ("ThermaStor"), for the
development and licensing of thermal technology in medical, industrial,
commercial, military and other consumer areas. ThermaStor is owned 50% by the
Registrant and 50% by Battelle and was formed to develop and license the use of
thermal technologies for applications that are unrelated to those being used or
pursued by the Company. Although several companies have expressed an interest
in thermal technologies, none have entered into licenses with ThermaStor as of
the date of this Annual Report on Form 10-K. The Registrant and Battelle will
share any royalty income which may be generated by ThermaStor.
Research and Development
- ------------------------
Most of the Company's research efforts are undertaken in
connection with the design and consumer appeal of new styles of slipper-type
footwear and thermal comfort products. During fiscal years 1995, 1994 and
1993, the amounts spent by the Company in connection with the research and
design of new products and the improvement or redesign of existing products
were approximately $3.1 million, $3.3 million and $2.8 million, respectively.
Substantially all of the foregoing activities were
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Company-sponsored. Approximately 55 employees were engaged full time in
research and design during the 1995 fiscal year.
Materials
- ---------
The principal raw materials used by the Company in the
manufacture of its slipper and thermal comfort brand lines are textile fabrics,
threads, foams and other synthetic products. All are available domestically
from a wide range of suppliers. The Company has experienced no difficulty in
obtaining raw materials from suppliers and anticipates no future difficulty.
In addition, in the manufacture of its thermal comfort products, the Company
uses proprietary patent pending materials developed with Battelle.
Trademarks and Licenses
- -----------------------
Approximately 96% of the Company's sales are represented by
brand items sold under trademarks owned by the Company. The Company is the
holder of many trademarks which identify its products. The trademarks which
are most widely used by the Company include Angel Treads*, Dearfoams*,
Dearfoams* for Kids, Dearfoams* for Men, Madye's*, Snug Treds*, Soft Notes*,
Vesture*, Lava Pak*, Lava Buns*, Lava Booties* and MICROCORE(TM). The Company
believes that its products are identified by its trademarks and, thus, its
trademarks are of significant value. Each registered trademark has a duration
of 20 years and is subject to an indefinite number of renewals for a like
period upon appropriate application. The Company intends to continue the use
of each of its trademarks and to renew each of its registered trademarks.
The Company also has sold comfort footwear under various names
as licensee under license agreements with the owners of those names. In the
1995, 1994 and 1993 fiscal years, 4%, 5% and 6%, respectively, of the Company's
total footwear sales were represented by footwear sold under these names.
In 1989, the Company entered into a licensing agreement with
Fieldcrest Cannon, Inc., the largest marketer of bed and bath products in the
United States, which allows the Company to manufacture and sell a line of
mid-priced slippers under the Cannon** trademark in the mass merchandise
channels of the Company's business. The Company continued its distribution and
marketing of the Cannon** line of slippers in the 1995 fiscal year. The term
of the Company's license to use the Cannon** trademark expires in June, 1996;
however, the term may be
__________________________________
** Denotes a trademark of the licensor registered in the United States
Department of Commerce Patent and Trademark Office.
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extended for such period as may be mutually agreed upon by the Company and
Fieldcrest Cannon, Inc.
In 1992, the Company entered into a licensing agreement with
Jordache Enterprises, Inc. which allows the Company to manufacture and sell a
line of mid-priced slippers under the Jordache** trademark in the mass
merchandise channels of the Company's business. The Company's license to use
the Jordache** trademark expires on February 28, 1998; however, such license
may be renewed by the Company annually through February 28, 2003, provided the
Company meets certain levels of sales of the Jordache** slippers.
Customers
- ---------
The only customers of the Company which accounted for more
than 10% of the Company's consolidated revenues in fiscal year 1995 were Wal
Mart Stores, Inc. ("Wal Mart") and J.C. Penney Company, Inc. ("J.C. Penney"),
which accounted for approximately 16% and 11%, respectively. The only
customers of the Company which accounted for 10% or more of the Company's
consolidated revenues in fiscal year 1994 were Wal Mart and J.C. Penney, which
accounted for approximately 15% and 11%, respectively. The only customers of
the Company which accounted for 10% or more of the Company's consolidated
revenues in fiscal year 1993 were Hutcheson Shoe Co., a division of Wal Mart,
and J.C. Penney, which accounted for approximately 15% and 10%, respectively.
Backlog of Orders
- -----------------
The Company's backlog of orders at the close of each of fiscal
year 1995 and fiscal year 1994 was $12.2 million. It is anticipated that a
large percentage of the orders as of the end of the Company's last fiscal year
will be filled during the current fiscal year.
Generally, the Company's backlog of unfilled sales orders is
largest after the spring and autumn showings of the Company. For example, the
Company's backlog of unfilled sales orders following the conclusion of such
showings during the last two years were as follows: August, 1995 - $64.1
million; August, 1994 - $74.1 million; February, 1995 - $14.5 million; and
February, 1994 - $11.5 million. The Company's backlog of unfilled sales orders
reflects the seasonal nature of the Company's sales - approximately 80% of such
sales occur during the autumn as compared to approximately 20% during the
spring.
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Inventory
- ---------
While the styles of some of the Company's slipper brand lines
change little from year to year, the Company has also introduced, and intends
to continue to introduce, new, updated styles in an effort to enhance the
comfort and fashion appeal of its products. As a result, the Company
anticipates that some of its slipper styles will change from year to year,
particularly in response to fashion changes. The Company has introduced, and
intends to continue to introduce, a variety of new thermal comfort products to
compliment its existing products in response to consumer demand. The Company
believes that it will be able to control the level of its obsolete inventory.
The Company traditionally has had a limited exposure to obsolete inventory.
Competition
- -----------
The Company operates in the portion of the footwear industry
providing comfort footwear for at and around the home. The Company believes
that it is a small factor in the highly competitive footwear industry. The
Company also believes that it is the world's largest manufacturer of comfort
footwear for at and around the home. The Company also operates in an area
where it provides portable warmth through its line of thermal comfort products.
The Company believes that it is the dominant domestic supplier of thermal
comfort products. The Company competes primarily on the basis of the value,
quality and comfort of its products, service to its customers, and its
marketing expertise. The Company knows of no reliable published statistics
which indicate its current relative position in the footwear or any other
industry or in the portion of the footwear industry providing comfort footwear
for at and around the home.
Effect of Environmental Regulation
- ----------------------------------
Compliance with federal, state and local provisions regulating
the discharge of materials into the environment, or otherwise relating to the
protection of the environment, has not had a material effect upon the capital
expenditures, earnings or competitive position of the Company. The Company
believes that the nature of its operations has little, if any, environmental
impact. The Company, therefore, anticipates no material capital expenditures
for environmental control facilities for its current fiscal year or for the
foreseeable future.
Employees
- ---------
At the close of the 1995 fiscal year, the Company employed
approximately 3,000 persons.
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Item 2. Properties.
- --------------------
The Company owns a warehouse facility in Goldsboro, North
Carolina, containing approximately 120,000 square feet.
The Company leases one facility pursuant to a lease agreement
with the local government which issued industrial revenue bonds to construct
and equip the facility. The Company has the right to purchase the facility at
a nominal sum upon retirement of the bonds issued in respect thereof. This
transaction has been treated as a purchase for accounting and tax purposes.
See Note (6) to the Company's Consolidated Financial Statements set forth on
pages 22 and 23 of the Company's Annual Report to Shareholders for the fiscal
year ended December 30, 1995. The following table describes this facility:
<TABLE>
<CAPTION>
Average
Annual Lease
Location Use Square Feet Rental Expires
-------- --- ----------- ------- -------
<S> <C> <C> <C> <C>
Fairfield County, Administrative 55,000 $150,000 1999
Ohio (Leased from and Executive
County of Offices
Fairfield, Ohio)
</TABLE>
In addition to the leased property described above, the
Company leases space aggregating approximately 995,000 square feet at an
approximate aggregate annual rental of $2.3 million. The following table sets
forth certain information with respect to the Company's principal leased
properties which were not in the preceding table:
<TABLE>
<CAPTION>
Approximate Approximate
Square Annual Lease
Location Use Feet Rental Expires Renewals
-------- --- ---------- --------------- ------- --------
<S> <C> <C> <C> <C> <C>
Distribution Center Shipping, Warehouse, Office 48,400 $ 16,000(1) 1999 None
Goldsboro, N.C.
Empire State Building Sales Office 4,300 $117,000 1999 None
New York City, N.Y.
2800 Loop 306 Manufacturing, Office, 145,800 $166,000(1) 2000 5 years
San Angelo, Texas Warehouse
Distribution Center Shipping, Warehouse 172,800 $432,000(1) 2007 15 years
San Angelo, Texas
Cesar Lopez Manufacturing, Office 90,200 $168,000 1999 5 years
de Lara Ave.
Nuevo Laredo, Mexico
</TABLE>
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<TABLE>
<CAPTION>
Approximate Approximate
Square Annual Lease
Location Use Feet Rental Expires Renewals
-------- --- ---------- --------------- ------- --------
<S> <C> <C> <C> <C> <C>
Ciudad Acuna Manufacturing, Office 64,700 $254,000 1999 5 years
Industrial Park
Ciudad Acuna,
Mexico
Airport Road Manufacturing, Warehouse, 165,000 $386,000(1) 2000 2 terms of 5
Laredo, Texas Office years each
San Gabriel Street Warehouse 181,500 $345,000(1) 1997 6 years
Laredo, Texas
Zacatecas, Mexico Manufacturing 26,200 $ 58,000 1998 2 terms of 5
years each
Zacatecas, Mexico Manufacturing 25,800 $ 58,000 2005 3 terms of 5
years each
Asheboro, North Carolina Manufacturing, Office, 57,500 $ 84,000(1) 1999 None
Warehouse
________________
<FN>
(1) Net net lease.
</TABLE>
The Company believes that all of the buildings owned or leased
by it are well maintained, in good operating condition, and suitable for their
present uses.
Item 3. Legal Proceedings.
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The Registrant previously reported that the Registrant and
certain of its officers and directors were named as defendants in three related
putative class action lawsuits styled as GERBER, ET AL. V. R. G. BARRY
CORPORATION, ET AL., Case No. C2-94-1190 (filed December 8, 1994), CULVEYHOUSE
V. R. G. BARRY CORPORATION, ET AL., Case No. C2-94-1250 (filed December 27,
1994), and KNOPF, ET AL. V. R. G. BARRY CORPORATION, ET AL., Case No. C2-95-50
(filed January 17, 1995), in the United States District Court for the Southern
District of Ohio. On April 24, 1995, the United States District Court for the
Southern District of Ohio consolidated these three class actions into a single
case. The plaintiffs filed an Amended and Consolidated Class Action Complaint
in May, 1995. The Amended and Consolidated
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Complaint, which was generally identical in substance to the three original
complaints, alleged that the defendants violated federal securities laws by
making false and misleading statements, engaged in common law fraud and deceit
by making material misstatements and violated state law by making negligent
misrepresentations. Plaintiffs sought damages in favor of plaintiffs and all
other members of the purported class in such amounts as the court determined
had been sustained by them. On March 11, 1996, the District Court granted
defendants' motion to dismiss and entered judgment on that date dismissing with
prejudice the federal securities claims and dismissing without prejudice the
state law claims.
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
Not applicable.
Executive Officers of the Registrant.
- -------------------------------------
The following table lists the names and ages of the executive
officers of the Registrant as of the date of this Annual Report on Form 10-K,
the positions with the Registrant presently held by each such executive officer
and the business experience of each such executive officer during the past five
years. Unless otherwise indicated, each person has held his principal
occupation for more than five years. All executive officers serve at the
pleasure of the Board of Directors of the Registrant.
<TABLE>
<CAPTION>
Position(s) Held with the
Registrant and Principal
Name Age Occupation(s) for Past Five Years
---- --- ---------------------------------
<S> <C> <C>
Gordon Zacks 63 Chairman of the Board and Chief Executive Officer since
1979, President since 1992, and Director since 1959, of the
Registrant.
Richard L. Burrell 63 Senior Vice President-Finance since 1992, Treasurer and
Secretary since 1976, Vice President-Finance from 1976 to
1992, and Director since 1984, of the Registrant.
</TABLE>
11
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<TABLE>
<S> <C> <C>
Christian Galvis 54 Executive Vice President-Operations and Director since
1992, and Vice President-Operations from 1991 to 1992, of
the Registrant; Executive Vice President-Manufacturing of
Work Wear Corporation, Greensboro, North Carolina, apparel
manufacturers, from 1990 to 1991.
Charles E. Ostrander 47 Executive Vice President-Sales & Marketing and Director
since 1992, Vice President-Sales & Marketing from 1990 to
1992, and Vice President-Marketing from 1987 to 1990, of
the Registrant.
Daniel D. Viren 49 Senior Vice President-Administration since 1992, and Vice
President-Controller from 1988 to 1992, of the Registrant.
Harry Miller 53 Vice President-Human Resources of the Registrant since
1993; Director of Human Resources, Bassett-Walker, apparel
manufacturers, a division of VF Corporation, from 1986 to
1993.
</TABLE>
PART II
Item 5. Market for Registrant's Common Equity and Related
- ----------------------------------------------------------
Stockholder Matters.
--------------------
In accordance with General Instruction G(2), the information
called for in this Item 5 is incorporated herein by reference to page 12 of the
Registrant's Annual Report to Shareholders for the fiscal year ended December
30, 1995.
Item 6. Selected Financial Data.
- ---------------------------------
In accordance with General Instruction G(2), the information
called for in this Item 6 is incorporated herein by reference to pages 10 and
11 of the Registrant's Annual Report to Shareholders for the fiscal year ended
December 30, 1995.
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Item 7. Management's Discussion and Analysis of Financial
- ----------------------------------------------------------
Condition and Results of Operation.
-----------------------------------
In accordance with General Instruction G(2), the information
called for in this Item 7 is incorporated herein by reference to pages 13
through 16 of the Registrant's Annual Report to Shareholders for the fiscal
year ended December 30, 1995.
Item 8. Financial Statements and Supplementary Data.
- -----------------------------------------------------
The Consolidated Balance Sheets of the Registrant and its
subsidiaries as of December 30, 1995 and December 31, 1994, the related
Consolidated Statements of Earnings, Shareholders' Equity and Cash Flows for
each of the fiscal years in the three-year period ended December 30, 1995, the
related Notes to Consolidated Financial Statements and the Independent
Auditors' Report, appearing on pages 17 through 29 of the Registrant's Annual
Report to Shareholders for the fiscal year ended December 30, 1995, are
incorporated herein by reference. Quarterly Financial Data set forth on page
12 of the Registrant's Annual Report to Shareholders for the fiscal year ended
December 30, 1995, are also incorporated herein by reference.
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.
- -------------------------------------------------------------
In accordance with General Instruction G(3), the information
called for in this Item 10 is incorporated herein by reference to the
Registrant's definitive Proxy Statement, filed with the Securities and
Exchange Commission pursuant to Regulation 14A of the General Rules and
Regulations under the Securities Exchange Act of 1934, relating to the
Registrant's Annual Meeting of Shareholders to be held on May 16, 1996, under
the captions "SHARE OWNERSHIP," "ELECTION OF DIRECTORS" and "COMPENSATION OF
EXECUTIVE OFFICERS AND DIRECTORS--Employment Contracts and Termination of
Employment and Change-in-Control Arrangements." In addition, certain
information concerning the executive officers of the Registrant called for in
this Item 10 is set forth in the portion of Part I of this Annual Report on
Form 10-K entitled "Executive Officers of the Registrant" in accordance with
General Instruction G(3).
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Item 11. Executive Compensation.
- ---------------------------------
In accordance with General Instruction G(3), the information
called for in this Item 11 is incorporated herein by reference to the
Registrant's definitive Proxy Statement, filed with the Securities and
Exchange Commission pursuant to Regulation 14A of the General Rules and
Regulations under the Securities Exchange Act of 1934, relating to the
Registrant's Annual Meeting of Shareholders to be held on May 16, 1996, under
the caption "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS." Neither the
report of the Compensation Committee of the Registrant's Board of Directors on
executive compensation nor the performance graph included in the Registrant's
definitive Proxy Statement relating to the Registrant's Annual Meeting of
Shareholders to be held on May 16, 1996, shall be deemed to be incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
- -------------------------------------------------------------
Management.
-----------
In accordance with General Instruction G(3), the information
called for in this Item 12 is incorporated herein by reference to the
Registrant's definitive Proxy Statement, filed with the Securities and
Exchange Commission pursuant to Regulation 14A of the General Rules and
Regulations under the Securities Exchange Act of 1934, relating to the
Registrant's Annual Meeting of Shareholders to be held on May 16, 1996, under
the captions "SHARE OWNERSHIP" and "COMPENSATION OF EXECUTIVE OFFICERS AND
DIRECTORS -- Employment Contracts and Termination of Employment and
Change-in-Control Arrangements."
Item 13. Certain Relationships and Related Transactions.
- ---------------------------------------------------------
In accordance with General Instruction G(3), the information
called for in this Item 13 is incorporated herein by reference to the
Registrant's definitive Proxy Statement, filed with the Securities and
Exchange Commission pursuant to Regulation 14A of the General Rules and
Regulations under the Securities Exchange Act of 1934, relating to the
Registrant's Annual Meeting of Shareholders to be held on May 16, 1996, under
the captions "SHARE OWNERSHIP," "ELECTION OF DIRECTORS" and "COMPENSATION OF
EXECUTIVE OFFICERS AND DIRECTORS."
14
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
- -----------------------------------------------------------------
Form 8-K.
---------
(a)(1) Financial Statements.
---------------------
For a list of all financial statements incorporated by
reference in this Annual Report on Form 10-K, see "Index to Financial
Statements" at page 21.
(a)(2) Financial Statement Schedules.
------------------------------
For a list of all financial statement schedules included in
this Annual Report on Form 10-K, see "Index to Financial Statements"
at page 21.
(a)(3) Exhibits.
---------
Exhibits filed with this Annual Report on Form 10-K are
attached hereto. For list of such exhibits, see "Index to Exhibits" at
page 62. The following table provides certain information concerning
executive compensation plans and arrangements required to be filed as
exhibits to this Annual Report on Form 10-K.
Executive Compensation Plans and Arrangements
---------------------------------------------
<TABLE>
<CAPTION>
Exhibit
No. Description Location
------- ----------- --------
<S> <C> <C>
10(a) R. G. Barry Corporation Salaried Incorporated herein by reference to the
Employees' Pension Plan (as Amended and Registrant's Annual Report on Form 10-K for the
Restated Effective January 1, 1989) fiscal year ended December 31, 1994 (File No.
1-8769) [Exhibit 10(a)]
10(b) R. G. Barry Corporation Supplemental Incorporated herein by reference to the
Retirement Plan Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 (File
No. 0-12667) [Exhibit 10(b)]
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
Exhibit
No. Description Location
------- ----------- --------
<S> <C> <C>
10(c) R. G. Barry Corporation 1984 Incentive Incorporated herein by reference to the
Stock Option Plan for Key Employees Registrant's Current Report on Form 8-K dated
June 22, 1984, filed June 26, 1984 (File No. 1-
7231) [Exhibit 10(d)]
10(d) R. G. Barry Corporation Incentive Plan Incorporated herein by reference to the
for Key Employees Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1984 (File No.
0-12667) [Exhibit 10(e)]
10(e) Employment Agreement, dated July 1, 1994, Incorporated herein by reference to the
between the Registrant and Gordon Zacks Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (File No.
1-8769) [Exhibit 10(e)]
10(f) Agreement, dated September 27, 1989, Incorporated herein by reference to the
between the Registrant and Gordon Zacks Registrant's Current Report on Form 8-K dated
October 11, 1989, filed October 12, 1989 (File
No. 0-12667) [Exhibit 28.1]
10(g) Amendment No. 1, dated as of Incorporated herein by reference to Amendment
October 12, 1994, between the Registrant No. 14 to Schedule 13D, dated January 27, 1995,
and Gordon Zacks filed by Gordon Zacks on February 13, 1995
[Exhibit 5]
10(h) Amended Split-Dollar Insurance Agreement, Pages 200 through 204
dated March 23, 1995, between the
Registrant and Gordon B. Zacks
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
Exhibit
No. Description Location
------- ----------- --------
<S> <C> <C>
10(i) R. G. Barry Corporation Leveraged Incorporated herein by reference to the
Employee Stock Ownership Plan Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 (File No.
0-12667) [Exhibit 10(j)]
10(j) R. G. Barry Corporation 1988 Stock Option Incorporated herein by reference to the
Plan (Reflects amendments through May 11, Registrant's Registration Statement on Form S-
1993) 8, filed August 18, 1993 (Registration No. 33-
67594) [Exhibit 4(r)]
10(k) Form of Stock Option Agreement used in Pages 205 through 213
connection with the grant of incentive
stock options pursuant to the R. G. Barry
Corporation 1988 Stock Option Plan
10(l) Form of Stock Option Agreement used in Pages 214 through 222
connection with the grant of non-
qualified stock options pursuant to the
R. G. Barry Corporation 1988 Stock Option
Plan
10(m) Description of Incentive Bonus Program Incorporated herein by reference to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 28, 1991 (File No.
1-8769) [Exhibit 10(k)]
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
Exhibit
No. Description Location
------- ----------- --------
<S> <C> <C>
10(n) R. G. Barry Corporation Employee Stock Incorporated herein by reference to the
Purchase Plan (Reflects amendments and Registrant's Registration Statement on Form S-
revisions for stock dividends and stock 8, filed August 18, 1993 (Registration No. 33-
splits through May 11, 1993) 67596) [Exhibit 4(r)]
10(o) R. G. Barry Corporation 1994 Stock Option Incorporated herein by reference to the
Plan (Reflects stock splits through Registrant's Registration Statement on
June 22, 1994) Form S-8, filed August 24, 1994 (Registration
No. 33-83252) [Exhibit 4(q)]
10(p) Form of Stock Option Agreement used in Pages 223 through 231
connection with the grant of incentive
stock options pursuant to the R. G. Barry
Corporation 1994 Stock Option Plan
10(q) Form of Stock Option Agreement used in Pages 232 through 241
connection with the grant of non-
qualified stock options pursuant to the
R. G. Barry Corporation 1994 Stock Option
Plan
10(r) Executive Employment Agreement, dated Incorporated herein by reference to the
July 1, 1994, between the Registrant and Registrant's Annual Report on Form 10-K for the
Christian Galvis fiscal year ended December 31, 1994 (File No.
33-8769) [Exhibit 10(n)]
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
Exhibit
No. Description Location
------- ----------- --------
<S> <C> <C>
10(s) Agreement, dated July 1, 1994, between Incorporated herein by reference to the
the Registrant and Richard L. Burrell Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (File No.
1-8769) [Exhibit 10(o)]
10(t) Agreement, dated July 1, 1994, between Incorporated herein by reference to the
the Registrant and Daniel D. Viren Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (File No.
1-8769) [Exhibit 10(p)]
10(u) Agreement, dated July 1, 1994, between Incorporated herein by reference to the
the Registrant and Harry Miller Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (File No.
1-8769) [Exhibit 10(q)]
10(v) R. G. Barry Corporation Deferred Pages 242 through 281
Compensation Plan (Effective as of
September 1, 1995)
</TABLE>
(b) Reports on Form 8-K
-------------------
There were no Current Reports on Form 8-K filed during the fiscal
quarter ended December 30, 1995.
(c) Exhibits
--------
Exhibits filed with this Annual Report on Form 10-K are attached
hereto. For a list of such exhibits, see "Index to Exhibits" at
page 62.
(d) Financial Statement Schedules
-----------------------------
Financial Statement Schedules included with this Annual Report on Form
10-K are attached hereto. See "Index to Financial Statements" at
page 21.
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
R. G. BARRY CORPORATION
Date: March 28, 1996 By /s/ Richard L.Burrell
--------------------------------
Richard L. Burrell,
Senior Vice President-Finance,
Secretary and Treasurer
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Date Capacity
---- ---- --------
<S> <C> <C>
*Gordon Zacks * Chairman of the Board, President, Chief
Executive Officer and Director
*Richard L. Burrell * Senior Vice President-Finance, Secretary,
Treasurer, Principal Financial and Accounting
Officer and Director
*Christian Galvis * Executive Vice President-Operations and Director
*Charles E. Ostrander * Executive Vice President-Sales and Marketing and
Director
Leopold Abraham II Director
*Philip G. Barach * Director
William Giovanello Director
*Harvey M. Krueger * Director
*Edward M. Stan * Director
</TABLE>
*By /s/ Richard L. Burrell
-----------------------
Richard L. Burrell,
Attorney-in-Fact
Date: March 28, 1996
20
<PAGE> 21
R. G. BARRY CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 30, 1995
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DESCRIPTION OF FINANCIAL STATEMENTS
(ALL OF WHICH ARE INCORPORATED BY
REFERENCE IN THIS ANNUAL REPORT ON PAGE(S) IN 1995
FORM 10-K FOR THE FISCAL YEAR ANNUAL REPORT TO
ENDED DECEMBER 30, 1995) SHAREHOLDERS
- ----------------------------------- ----------------
<S> <C>
Consolidated Balance Sheets at December 30,
1995 and December 31, 1994.............................................................17
Consolidated Statements of Earnings for the
years ended December 30, 1995, December 31,
1994 and January 1, 1994...............................................................18
Consolidated Statements of Shareholders' Equity
for the years ended December 30, 1995,
December 31, 1994 and January 1, 1994..................................................18
Consolidated Statements of Cash Flows for the
years ended December 30, 1995, December 31,
1994 and January 1, 1994...............................................................19
Notes to Consolidated Financial Statements.....................................................20-28
Independent Auditors' Report....................................................................29
</TABLE>
ADDITIONAL FINANCIAL DATA
- -------------------------
The following additional financial data should be read in
conjunction with the Consolidated Financial Statements of R. G. Barry
Corporation and its subsidiaries included in the 1995 Annual Report to
Shareholders. Schedules not included with this additional financial data have
been omitted because they are not applicable or the required information is
shown in the Consolidated Financial Statements or Notes thereto.
Independent Auditor's Report on Financial Statement Schedules:
Included at page 58 of this Annual Report on Form 10-K
Schedules for the fiscal years ended December 30, 1995, December 31, 1994 and
January 1, 1994:
II - Reserves: Included at pages 59 through 61 of this
Annual Report on Form 10-K
21
<PAGE> 22
INDEPENDENT AUDITORS' REPORT ON
FINANCIAL STATEMENT SCHEDULES
The Board of Directors and Shareholders
R. G. Barry Corporation:
Under date of February 21, 1996, we reported on the consolidated balance sheets
of R. G. Barry Corporation and subsidiaries as of December 30, 1995 and December
31, 1994, and the related consolidated statements of earnings, shareholders'
equity and cash flows for each of the fiscal years in the three-year period
ended December 30, 1995, as contained in the fiscal 1995 annual report to
shareholders. These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the fiscal year
1995. In connection with our audits of the aforementioned consolidated financial
statements, we also audited the related consolidated financial statement
schedules as listed in the accompanying index. These financial statement
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statement schedules based on our
audits.
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.
KPMG Peat Marwick LLP
Columbus, Ohio
February 21, 1996
<PAGE> 23
Schedule II
R. G. BARRY CORPORATION AND SUBSIDIARIES
Reserves
Fiscal year ended December 30, 1995
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- ------------------------------------------------------ --------------- -------------- ---------------- --------------
Additions
Balance at charged to Balance at
beginning costs and end of
Description of period expenses Deductions period
----------- --------- -------- ---------- ------
<S> <C> <C> <C> <C>
Reserves deducted from accounts receivable:
Allowance for doubtful receivables $ 160,000 648,000 459,000(1) 349,000
Allowance for returns 1,537,000 3,021,000 1,537,000(2) 3,021,000
Allowance for promotions 2,403,000 4,300,000 2,403,000(3) 4,300,000
--------------- -------------- ---------------- --------------
$ 4,100,000 7,969,000 4,399,000 7,670,000
=============== ============== ================ ==============
<FN>
- ----------
1 Write-off of uncollectible accounts.
2 Represents the impact on fiscal 1995 operations of fiscal year 1994 sales
returns reserved for in 1994.
3 Represents the impact on fiscal 1995 operations of fiscal 1994 promotions
reserved for in 1994.
</TABLE>
<PAGE> 24
Schedule II
R. G. BARRY CORPORATION AND SUBSIDIARIES
Reserves
Fiscal year ended December 31, 1994
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- ------------------------------------------------------ --------------- -------------- ---------------- --------------
Additions
Balance at charged to Balance at
beginning costs and end of
Description of period expenses Deductions period
----------- --------- -------- ---------- ------
<S> <C> <C> <C> <C>
Reserves deducted from accounts receivable:
Allowance for doubtful receivables $ 253,000 239,000 332,000(1) 160,000
Allowance for returns 2,487,000 1,537,000 2,487,000(2) 1,537,000
Allowance for promotions 2,426,000 2,403,000 2,426,000(3) 2,403,000
--------------- -------------- ---------------- --------------
$ 5,166,000 4,179,000 5,245,000 4,100,000
=============== ============== ================ ==============
Reserve for costs of restructuring $ 58,000 -- 58,000(4) --
=============== ============== ================ ==============
<FN>
- ----------
1 Write-off of uncollectible accounts.
2 Represents the impact on fiscal 1994 operations of fiscal year 1993 sales
returns reserved for in 1993.
3 Represents the impact on fiscal 1994 operations of fiscal 1993 promotions
reserved for in 1993.
4 Represents reduction of reserve during fiscal 1994.
</TABLE>
<PAGE> 25
Schedule II
R. G. BARRY CORPORATION AND SUBSIDIARIES
Reserves
Fiscal year ended January 1, 1994
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- ------------------------------------------------------ --------------- -------------- ---------------- --------------
Additions
Balance at charged to Balance at
beginning costs and end of
Description of period expenses Deductions period
----------- --------- -------- ---------- ------
<S> <C> <C> <C> <C>
Reserves deducted from accounts receivable:
Allowance for doubtful receivables $ 239,000 265,000 251,000(1) 253,000
Allowance for returns 2,632,000 2,487,000 2,632,000(2) 2,487,000
Allowance for promotions 2,223,000 2,426,000 2,223,000(3) 2,426,000
--------------- -------------- ---------------- --------------
$ 5,094,000 5,178,000 5,106,000 5,166,000
=============== ============== ================ ==============
Reserve for costs of restructuring $ 121,000 -- 63,000(4) 58,000
=============== ============== ================ ==============
<FN>
- ----------
1 Write-off of uncollectible accounts.
2 Represents the impact on fiscal 1993 operations of fiscal year 1992 sales
returns reserved for in 1992.
3 Represents the impact on fiscal 1993 operations of fiscal 1992 promotions
reserved for in 1992.
4 Represents costs paid during fiscal 1993.
</TABLE>
<PAGE> 26
R. G. BARRY CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 30, 1995
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description Location
------- ----------- --------
<S> <C> <C>
3(a) Articles of Incorporation of Registrant, as Pages 69 through 94
amended
3(b) Certificate of Amendment to the Articles of Pages 95 through 97
Incorporation of Registrant, as filed with
the Ohio Secretary of State on May 22, 1995
3(c) Certificate of Amendment to Articles of Pages 98 and 99
Incorporation of Registrant, as filed with
the Ohio Secretary of State on September 1,
1995
3(d) Regulations of Registrant, as amended Incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1988 (File No.
0-12667) [Exhibit 3(b)]
4(a) Trust Indenture, dated as of July 1, 1972, Incorporated herein by reference to
by and between Registrant and The Huntington Registrant's Registration Statement on Form S-
National Bank of Columbus, as Trustee 1, filed June 27, 1972 (Registration No.
2-44432) [Exhibit 4(a)]
4(b) First Supplemental Trust Indenture, dated as Incorporated herein by reference to
of May 2, 1975, by and between Registrant Registrant's Registration Statement on Form S-
and The Huntington National Bank of 7, filed March 3, 1978 (Registration No.
Columbus, as Trustee 2-60888) [Exhibit 2(b)(ii)]
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
Exhibit
No. Description Location
------- ----------- --------
<S> <C> <C>
4(c) Second Supplemental Trust Indenture, dated Incorporated herein by reference to
as of April 1, 1978, by and between Registrant's Registration Statement on Form S-
Registrant and The Huntington National Bank 7, filed March 3, 1978 (Registration No.
of Columbus, as Trustee 2-60888) [Exhibit 2(b)(iii)]
4(d) Third Supplemental Indenture, dated as of Incorporated herein by reference to
June 22, 1984, between Registrant and The Registrant's Current Report on Form 8-K dated
Huntington National Bank, as Trustee June 22, 1984, filed June 26, 1984 (File No.
1-7231) [Exhibit 4(d)]
4(e) Fourth Supplemental Trust Indenture, dated Incorporated herein by reference to
as of February 27, 1985, between Registrant Registrant's Annual Report on Form 10-K for the
and The Huntington National Bank, as Trustee fiscal year ended December 29, 1984 (File No.
0-12667) [Exhibit 4(e)]
4(f) Revolving Credit Agreement, made to be Pages 100 through 195
effective on February 28, 1996, among
Registrant, The Bank of New York, The
Huntington National Bank and NBD Bank
4(g) Note Agreement, dated July 5, 1994, between Incorporated herein by reference to
Registrant and Metropolitan Life Insurance Registrant's Registration Statement on Form S-
Company 3, filed July 21, 1994 (Registration No. 33-
81820) [Exhibit 4(t)]
4(h) Rights Agreement, dated as of February 29, Incorporated herein by reference to
1988, between Registrant and The Huntington Registrant's Current Report on Form 8-K dated
National Bank March 14, 1988, filed March 15, 1988 (File No.
0-12667) [Exhibit 4]
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
Exhibit
No. Description Location
------- ----------- --------
<S> <C> <C>
9(a) Zacks-Streim Voting Trust and amendments Incorporated herein by reference to
thereto Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993 (File
No. 1-8769) [Exhibit 9]
9(b) Documentation related to extension of term Pages 196 through 199
of the Voting Trust Agreement for the Zacks-
Streim Voting Trust
10(a) R. G. Barry Corporation Salaried Employees' Incorporated herein by reference to the
Pension Plan (as Amended and Restated Registrant's Annual Report on Form 10-K for the
Effective January 1, 1989) fiscal year ended December 31, 1994 (File No.
1-8769) [Exhibit 10(a)]
10(b) R. G. Barry Corporation Supplemental Incorporated herein by reference to
Retirement Plan Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 (File
No. 0-12667) [Exhibit 10(b)]
10(c) R. G. Barry Corporation 1984 Incentive Stock Incorporated herein by reference to
Option Plan for Key Employees Registrant's Current Report on Form 8-K dated
June 22, 1984, filed June 26, 1984 (File No.
1-7231) [Exhibit 10(d)]
10(d) R. G. Barry Corporation Incentive Plan for Incorporated herein by reference to
Key Employees Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1984 (File No.
0-12667) [Exhibit 10(e)]
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
Exhibit
No. Description Location
------- ----------- --------
<S> <C> <C>
10(e) Employment Agreement, dated July 1, 1994, Incorporated herein by reference to the
between Registrant and Gordon Zacks Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (File No.
1-8769) [Exhibit 10(e)]
10(f) Agreement, dated September 27, 1989, between Incorporated herein by reference to
Registrant and Gordon Zacks Registrant's Current Report on Form 8-K dated
October 11, 1989, filed October 12, 1989 (File
No. 0-12667) [Exhibit 28.1]
10(g) Amendment No. 1, dated as of October 12, Incorporated herein by reference to Amendment
1994, between Registrant and Gordon Zacks No. 14 to Schedule 13D, dated January 27, 1995,
filed by Gordon Zacks on February 13, 1995
[Exhibit 5]
10(h) Amended Split-Dollar Insurance Agreement, Pages 200 through 204
dated March 23, 1995, between Registrant and
Gordon B. Zacks
10(i) R. G. Barry Corporation Leveraged Employee Incorporated herein by reference to
Stock Ownership Plan Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 (File No.
0-12667) [Exhibit 10(j)]
10(j) R. G. Barry Corporation 1988 Stock Option Incorporated herein by reference to
Plan (Reflects amendments through May 11, Registrant's Registration Statement on Form S-
1993) 8, filed August 18, 1993 (Registration No.
33-67594) [Exhibit 4(r)]
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
Exhibit
No. Description Location
------- ----------- --------
<S> <C> <C>
10(k) Form of Stock Option Agreement used in Pages 205 through 213
connection with the grant of incentive stock
options pursuant to the R. G. Barry
Corporation 1988 Stock Option Plan
10(l) Form of Stock Option Agreement used in Pages 214 through 222
connection with the grant of non-qualified
stock options pursuant to the R. G. Barry
Corporation 1988 Stock Option Plan
10(m) Description of Incentive Bonus Program Incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 28, 1991 (File No.
1-8769) [Exhibit 10(k)]
10(n) R. G. Barry Corporation Employee Stock Incorporated herein by reference to
Purchase Plan (Reflects amendments and Registrant's Registration Statement on Form S-
revisions for stock dividends and stock 8, filed August 18, 1993 (Registration No.
splits through May 11, 1993) 33-67596) [Exhibit 4(r)]
10(o) R. G. Barry Corporation 1994 Stock Option Incorporated herein by reference to
Plan (Reflects stock splits through June 22, Registrant's Registration Statement on Form S-
1994) 8, filed August 24, 1994 (Registration
No. 33-83252) [Exhibit 4(q)]
10(p) Form of Stock Option Agreement used in Pages 223 through 231
connection with the grant of incentive stock
options pursuant to the R. G. Barry
Corporation 1994 Stock Option Plan
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
Exhibit
No. Description Location
------- ----------- --------
<S> <C> <C>
10(q) Form of Stock Option Agreement used in Pages 232 through 241
connection with the grant of non-qualified
stock options pursuant to the R. G. Barry
Corporation 1994 Stock Option Plan
10(r) Executive Employment Agreement, dated July Incorporated herein by reference to the
1, 1994, between Registrant and Christian Registrant's Annual Report on Form 10-K for the
Galvis fiscal year ended December 31, 1994 (File No.
1-8769) [Exhibit 10(n)]
10(s) Agreement, dated July 1, 1994, between Incorporated herein by reference to the
Registrant and Richard L. Burrell Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (File No.
1-8769) [Exhibit 10(o)]
10(t) Agreement, dated July 1, 1994, between Incorporated herein by reference to the
Registrant and Daniel D. Viren Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (File No.
1-8769) [Exhibit 10(p)]
10(u) Agreement, dated July 1, 1994, between Incorporated herein by reference to the
Registrant and Harry Miller Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (File No.
1-8769) [Exhibit 10(q)]
10(v) R. G. Barry Corporation Deferred Pages 242 through 268
Compensation Plan (Effective as of
September 1, 1995)
</TABLE>
<PAGE> 32
<TABLE>
<CAPTION>
Exhibit
No. Description Location
------- ----------- --------
<S> <C> <C>
13 Registrant's Annual Report to Shareholders Incorporated herein by reference to the
for the fiscal year ended December 30, 1995 financial statements portion of this Annual
(Not deemed filed except for the portions Report on Form 10-K beginning at page 21
thereof which are specifically incorporated
by reference into this Annual Report on Form
10-K)
21 Subsidiaries of Registrant Incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (File No.
1-8769) [Exhibit 21]
23 Consent of Independent Auditors Page 269
24 Powers of Attorney Pages 270 through 277
27 Financial Data Schedule Page 278
</TABLE>
<PAGE> 1
Exhibit 3(a)
------------
ARTICLES OF INCORPORATION
OF
R. G. BARRY CORPORATION,
AS AMENDED
FIRST: The name of the corporation is R. G. Barry Corporation (the
"Corporation").
SECOND: The place in Ohio where the principal office of the
Corporation is to be located is the City of Pickerington, County of Fairfield.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be formed under the General Corporation
Law of Ohio as set forth in Sections 1701.01 to 1701.98 inclusive of the Ohio
Revised Code (the "OGCL").
FOURTH: I. The total number of shares which the Corporation
shall have authority to issue is 20,000,000 shares of which 15,000,000, par
value $1.00 per share, shall be of a class designated "Common Shares",
4,000,000, par value $1.00 per share, shall be of a class designated "Class A
Preferred Shares" and 1,000,000, par value $1.00 per share, shall be of a class
designated "Class B Preferred Shares". The Class A Preferred Shares and Class
B Preferred Shares are sometimes collectively referred to herein as the
"Preferred Shares".
II. The Board of Directors of the Corporation
is authorized to provide for the issuance from time to time in one or more
series of any number of authorized and unissued shares of Class A Preferred
Shares and Class B Preferred Shares. The Board of Directors of the Corporation
is further authorized, subject to limitations prescribed by law and the
provisions of this Article FOURTH, to establish the number of shares to be
included in each such series, and to fix the designation, relative rights,
preferences, qualifications and limitations of the shares of each such series.
The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:
A. The number of shares constituting that series and the
distinctive designation of that series;
B. The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and
whether they shall be payable in
1
<PAGE> 2
preference to, or in another relation to, the dividends payable on any
other class or classes or series of shares;
C. Whether that series shall have conversion or exchange
privileges, and, if so, the terms and conditions of such conversion or
exchange, including provision for adjustment of the conversion or
exchange rate in such events as the Board of Directors shall determine;
D. Whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the
manner of selecting shares for redemption if less than all shares are to
be redeemed, the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of redemption, which
amount may vary under different conditions and at different redemption
dates;
E. Whether that series shall be entitled to the benefit of a
sinking fund to be applied to the purchase or redemption of shares of that
series, and, if so, the terms and amounts of such sinking fund;
F. The right of the shares of that series to the benefit of
conditions and restrictions upon the creation of indebtedness of the
Corporation or any subsidiary, upon the issue of any additional shares
(including additional shares of such series or of any other series) and
upon the payment of dividends or the making of other distributions on, and
the purchase, redemption or other acquisition by the Corporation or any
subsidiary of any outstanding shares of the Corporation;
G. The right of the shares of that series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and whether such rights shall be in preference to, or in
another relation to, the comparable rights of any other class or classes
or series of shares; and
H. Any other relative, participating, optional or other special
rights, qualifications, limitations or restrictions of that series.
III. Subject to the provisions of any applicable
law, the holders of outstanding Class A Preferred Shares and the holders of
outstanding Class B Preferred Shares shall possess voting power for the
election of directors and for all other purposes, each holder of record of
Class A Preferred Shares being entitled to one-tenth of one vote for each Class
A Preferred
2
<PAGE> 3
Share standing in his name on the books of the Corporation and each holder of
record of Class B Preferred Shares being entitled to ten votes for each Class B
Preferred Share standing in his name on the books of the Corporation.
IV. The Board of Directors of the Corporation
is authorized, subject to limitations prescribed by law and the provisions of
this Article FOURTH, to provide for the issuance from time to time of any
number of authorized and unissued Common Shares, and shall determine the terms
under which and the consideration for which the Corporation shall issue its
Common Shares.
A. Subject to the provisions of any applicable law, each holder
of record of Common Shares shall be entitled to one vote for each Common
Share standing in his name on the books of the Corporation for the election
of directors and for all other purposes.
B. Except as otherwise provided by the resolution or resolutions
providing for the issue of any series of Preferred Shares, after payment
shall have been made to the holders of Preferred Shares of the full amount
of dividends to which they shall be entitled pursuant to the resolution or
resolutions providing for the issue of any series of Preferred Shares, the
holders of Common Shares shall be entitled, to the exclusion of the
holders of Preferred Shares of any and all series, to receive such
dividends as from time to time may be declared by the Board of Directors.
C. Except as otherwise provided by the resolution or resolutions
providing for the issue of any series of Preferred Shares, in the event of
any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, after payment shall have been made to the
holders of Preferred Shares of the full amount to which they shall be
entitled pursuant to the resolution or resolutions providing for the
issue of any series of Preferred Shares, the holders of Common Shares
shall be entitled, to the exclusion of the holders of Preferred Shares of
any and all series, to share, ratably according to the number of Common
Shares held by them, in all remaining assets of the Corporation available
for distribution to its shareholders.
V. The affirmative vote of the holders of at least a
majority of the votes entitled to be cast by the holders of all the then
outstanding shares of any class of Capital Stock (as defined in Article
SEVENTH), voting together as a single class, without regard to series, present
in person or represented
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by proxy and entitled to vote in respect thereof, given at an annual meeting or
at any special meeting duly called, shall be required to adopt any proposal
which (A) increases or decreases the par value of the issued shares of the
particular class of Capital Stock; (B) changes into a lesser number of shares
of the same class of Capital Stock or into the same or a different number of
shares of any other class of Capital Stock, with or without par value,
theretofore or then authorized shares of the particular class of Capital Stock;
(C) changes the express terms of, or adds express terms to, the shares of the
particular class of Capital Stock in any manner substantially prejudicial to
the holders thereof; (D) changes the express terms of issued shares of any
class of Capital Stock senior to the particular class of Capital Stock in any
manner substantially prejudicial to the holders of shares of the particular
class of Capital Stock; (E) authorizes shares of another class of Capital Stock
which are convertible into, or authorizes the conversion of shares of another
class of Capital Stock into, shares of the particular class of Capital Stock,
or authorizes the directors to fix or alter conversion rights of shares of
another class of Capital Stock which are convertible into shares of the
particular class of Capital Stock.
VI. No holder of any shares of the Corporation of any
class or series or of options, warrants or other rights to purchase shares of
the Corporation of any class or series or of other securities of the
Corporation shall have any preemptive or preferential right to purchase or
subscribe for any unissued shares of the Corporation of any class or series or
any additional shares of the Corporation, of any class or series, to be issued
by reason of any increase in the authorized shares of the Corporation of any
class or series, or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for shares of the Corporation of
any class or series, or carrying any right to purchase shares of the
Corporation of any class or series, but any such unissued shares, additional
authorized issue of shares of any class or series or securities convertible
into or exchangeable for shares, or carrying any right to purchase shares, may
be issued and disposed of pursuant to resolution of the Board of Directors to
such holders or to any other persons, firms, corporations or associations, and
upon such terms as may be deemed advisable by the Board of Directors in the
exercise of its sole discretion.
VII. The Board of Directors of the Corporation shall have
the power to cause the Corporation from time to time and at any time to
purchase, hold, sell, transfer or otherwise deal with (A) shares of any class
or series issued by it; (B) any security or other obligation of the Corporation
which may confer upon the holder thereof the right to convert the same into
shares
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<PAGE> 5
of any class or series authorized by these Articles of Incorporation; and (C)
any security or other obligation of the Corporation; which may confer upon the
holder thereof the right to purchase shares of any class or series authorized
by these Articles of Incorporation. The Corporation shall have the right to
repurchase, if and when any shareholder desires to sell, or on the happening of
any event is required to sell, shares of any class or series issued by the
Corporation. The authority granted in this Paragraph VII shall not limit the
plenary authority of the Board of Directors to purchase, hold, sell, transfer
or otherwise deal with shares of any class or series, securities, or other
obligations issued by the Corporation or authorized by these Articles of
Incorporation.
VIII. A. DESIGNATION OF SERIES. The series shall be
designated "Series I Junior Participating Class B Preferred Shares," par
value $1.00 per share (hereinafter called Series I Class B Preferred Shares").
B. NUMBER OF SHARES. The authorized number of shares of
Series I Class B Preferred Shares is 1,000,000, which number the Board of
Directors may increase or decrease to the extent appropriate in connection with
the Rights issued pursuant to the Rights Agreement between the Company
[Corporation] and The Huntington National Bank, as Rights Agent, dated as of
February 29, 1988; provided, that no decrease shall reduce the number of Series
I Class B Preferred Shares to a number less than that of the shares then
outstanding plus the number of shares issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding securities issued
by the Company.
C. DIVIDEND PAYMENT DATES. The dates on which dividends on
shares of the Series I Class B Preferred Shares shall be payable are the
fifteenth day of March, June, September and December of each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series I Class B Preferred
Shares.
D. DIVIDEND RATE. The dividend rate for the Series I Class B
Preferred Shares shall be, subject to the provision for adjustment hereinafter
set forth, 10 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions (other than a dividend payable in
Common Shares (by reclassification or otherwise)), declared on the Common
Shares, par value $1.00 per share, of the Company since the immediately
preceding Quarterly Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance
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of any share or fraction of a share of Series I Class B Preferred Shares. In
the event the Company shall at any time after February 29, 1988 (the "Rights
Declaration Date") (i) declare or pay any dividend on its Common Shares payable
in Common Shares, (ii) subdivide the outstanding Common Shares or (iii) combine
the outstanding Common Shares into a smaller number of shares, then in each
such case, the amount to which holders of shares of Series I Class B Preferred
Shares were entitled immediately prior to such event under this paragraph shall
be adjusted by multiplying such amount by a fraction the numerator of which is
the number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding
immediately prior to such event.
Subject to the prior and superior rights of the holders of any
preferred shares ranking prior and superior to the Series I Class B Preferred
Shares with respect to dividends, the Company shall declare a dividend or
distribution on the Series I Class B Preferred Shares as provided in the
immediately preceding subparagraph after it declares a dividend or distribution
on the Common Shares (other than a dividend payable in Common Shares); provided
that, in the event no dividend or distribution shall have been declared on the
Common Shares during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $.05 per
share on the Series I Class B Preferred Shares shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
E. CUMULATIVE DATES. Dividends shall begin to accrue and be
cumulative on outstanding shares of Series I Class B Preferred Shares from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series I Class B Preferred Shares, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of
holders of shares of Series I Class B Preferred Shares entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series I Class B Preferred
Shares in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series I Class B Preferred Shares entitled to receive payment of a dividend
or distribution declared
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thereon, which record date shall be no more than 45 days prior to the date
fixed for the payment thereof.
F. VOTING RIGHTS. The holders of shares of Series I Class B
Preferred Shares shall have the voting rights set forth in Article FOURTH of
the Articles of Incorporation and as may otherwise be required by law.
G. REACQUIRED SHARES. Any Series I Class B Preferred Shares
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued Series I
Class B Preferred Shares and may be reissued as part of a new series of Class B
Preferred Shares to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
H. LIQUIDATION, DISSOLUTION OR WINDING UP.
(1) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Company, no distribution shall be made to the
holders of shares ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series I Class B Preferred Shares unless,
prior thereto, the holders of shares of Series I Class B Preferred Shares shall
have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series I Class B Liquidation Preference"). Following the
payment of the full amount of the Series I Class B Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series I
Class B Preferred Shares unless, prior thereto, the holders of Common Shares
shall have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series I Class B Liquidation Preference
by (ii) l0 (as appropriately adjusted as set forth in subparagraph 3 below to
reflect such events as stock splits, stock dividends and recapitalizations with
respect to the Common Shares) (such number in clause (ii), the "Adjustment
Number"). Following the payment of the full amount of the Series I Class B
Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series I Class B Preferred Shares and Common Shares, respectively,
holders of the Series I Class B Preferred Shares and holders of Common Shares
shall receive their ratable and proportionate share of the remaining assets to
be distributed in the ratio of the Adjustment Number to l with respect to such
Series I Class B Preferred Shares and Common Shares, on a per share basis,
respectively.
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<PAGE> 8
(2) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series I Class B Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, which rank on a parity with the Series I Class B Preferred
Shares, then such remaining assets shall be distributed ratably to the holders
of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Shares.
(3) In the event the Company shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
Common Shares, (ii) subdivide the outstanding Common Shares, or (iii) combine
the outstanding Common Shares into a smaller number of shares, then in each
such case the Adjustment Number in effect immediately prior to such event shall
be adjusted by multiplying such Adjustment Number by a fraction the numerator
of which is the number of Common Shares outstanding immediately after such
event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
I. CONSOLIDATION, MERGER, ETC. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Shares are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series I Class B Preferred Shares shall at the same time be similarly exchanged
or changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 10 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each Common Share is changed or exchanged. In the
event the Company shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Shares payable in Common Shares, (ii) subdivide
the outstanding Common Shares, or (iii) combine the outstanding Common Shares
into a smaller number of shares, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of
Series I Class B Preferred Shares shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
J. NO REDEMPTION. The Series I Class B Preferred Shares
shall not be redeemable.
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K. RANKING. The Series I Class B Preferred Shares shall rank
junior to all other series of the Company's Class A or Class B Preferred Shares
as to the payment of dividends and the distribution of assets, unless the terms
of any such series shall provide otherwise.
L. AMENDMENT. So long as any Series I Class B Preferred
Shares are outstanding, the Articles of Incorporation of the Company shall not
be further amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series I Class B Preferred Shares
so as to affect them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series I Class B Preferred
Shares, voting separately as a class.
M. FRACTIONAL SHARES. Series I Class B Preferred Shares may
be issued in fractions of a share which shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series I Class B Preferred Shares.
FIFTH: The amount of stated capital with which the Corporation shall
begin business is $500.
SIXTH: The business and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors consisting of not less than
nine nor more than twelve directors, the exact number of directors to be
determined from time to time by resolution adopted by affirmative vote of a
majority of the entire Board of Directors. The directors shall be divided into
three classes, designated Class I, Class II, and Class III. The election of
each class of directors shall be a separate election. The total number of
directors constituting the entire Board of Directors shall be apportioned among
the classes, as nearly equal as possible. Each class shall consist of at least
three directors.
At the 1984 annual meeting of shareholders, Class I directors
shall be elected for a one-year term, Class II directors for a two-year term
and Class III directors for a three-year term. At each succeeding annual
meeting of shareholders beginning in 1985, successors to the class of directors
whose term expires at that annual meeting shall be elected for a three-year
term. If the number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in each
class at no less than three, as nearly equal as possible, and any additional
director of any class elected to fill a vacancy resulting from an increase in
such class shall hold office for a
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term that shall coincide with the remaining term of that class, but in no case
will a decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the year
in which his term expires and until his successor shall be elected and shall
qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Any vacancy on the Board of Directors
that results from an increase in the number of directors, and any other vacancy
occurring in the Board of Directors, may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. Any director elected to fill a vacancy not resulting from an
increase in the number of directors shall have the same remaining term as that
of his predecessor.
All the directors or all the directors of a particular class,
or any individual director, may be removed from office only for cause, by the
affirmative vote of the holders of at least 80 percent of the votes entitled to
be cast by the holders of all then outstanding shares of Voting Stock (as
defined in Article SEVENTH), voting together as a single class, present in
person or represented by proxy and entitled to vote in respect thereof, at an
annual meeting or at any special meeting duly called; provided that unless all
the directors, or all the directors of a particular class, are removed, no
individual director shall be removed if the votes of a sufficient number of
shares are cast against his removal which, if cumulatively voted at an election
of all the directors of a particular class, would be sufficient to elect at
least one director. In case of any such removal, a new director may be elected
at the same meeting for the unexpired term of each director removed. Failure
to elect a director to fill the unexpired term of any director removed shall be
deemed to create a vacancy in the Board of Directors.
Notwithstanding the foregoing, whenever the holders of any one
or more classes or series of Capital Stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an
annual or special meeting of shareholders, the election, term of office,
filling of vacancies and other features of such directorships shall be governed
by the terms of these Articles of Incorporation applicable thereto, and such
directors so elected shall not be divided into classes pursuant to this Article
SIXTH unless expressly provided by such terms.
Nomination for election to the Board of Directors of the
Corporation at a meeting of shareholders by any shareholder of the Corporation
shall be made by notice in writing delivered or mailed by first class United
States mail postage prepaid, to
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the Secretary of the Corporation, and received by him not less than 30 days nor
more than 60 days prior to any meeting of shareholders called for the election
of directors; provided, however, that if less than 35 days' notice of the
meeting is given to shareholders, such nomination shall have been mailed or
delivered to the Secretary of the Corporation not later than the close of
business on the seventh day following the day on which the notice of meeting
was mailed. Such notice shall set forth as to each proposed nominee who is not
an incumbent director (i) the name, age, business address and, if known, the
residence address of each nominee proposed in such notice; (ii) the principal
occupation or employment of each such nominee; (iii) the number of shares of
Capital Stock that are beneficially owned by each such nominee and by the
nominating shareholder; and (iv) any other information concerning the nominee
that must be disclosed of nominees in proxy solicitations pursuant to Rule
14(a) of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder (collectively, the
"Exchange Act"), (or any subsequent provisions replacing the Exchange Act), and
such notice shall be accompanied by the written consent of the proposed nominee
to serve as a director.
The chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so determine, he
shall so declare to the meeting and the defective nomination shall be
disregarded.
Notwithstanding any other provision of these Articles of
Incorporation or the Regulations of the Corporation (and notwithstanding the
fact that a lesser percentage may be specified by law or in any agreement with
any national securities exchange or any other provision of these Articles of
Incorporation or the Regulations of the Corporation), the affirmative vote of
the holders of at least 80 percent of the votes entitled to be cast by the
holders of all then outstanding shares of Voting Stock, voting together as a
single class, present in person or represented by proxy and entitled to vote in
respect thereof, given at an annual meeting or at any special meeting duly
called, shall be required to amend, alter, change or repeal, or adopt any
provisions inconsistent with, this Article SIXTH; provided that this Paragraph
shall not apply to, and such 80 percent vote shall not be required for, any
amendment, alteration, change, repeal or adoption unanimously recommended by
the Board of Directors of the Corporation if all of such directors are persons
who would be eligible to serve as Continuing Directors within the meaning of
Paragraph III of Article SEVENTH.
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SEVENTH: I. A. Notwithstanding any affirmative vote required by
law or in any agreement with any national securities exchange or any other
provision of these Articles of Incorporation or the Regulations of the
Corporation or otherwise, and except as otherwise expressly provided in
Paragraph II of this Article SEVENTH:
(i) any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with (a) any Interested
Shareholder (as hereinafter defined) or (b) any other corporation
(whether or not itself an Interested Shareholder) which is or after
such merger or consolidation would be an Affiliate or Associate (as
hereinafter defined) of an Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series of
transactions) with any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder involving any assets or
securities of the Corporation, any Subsidiary or any Interested
Shareholder or any Affiliate or Associate of any Interested
Shareholder which constitutes more than 20 percent of the Fair Market
Value (as hereinafter defined), as determined by a majority of the
Continuing Directors, of the total consolidated assets of the
Corporation and its Subsidiaries taken as a whole, as of the end of
its most recent fiscal year ended prior to the determination being
made; or
(iii) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on behalf
of an Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder; or
(iv) any reclassification of securities (including any
reverse share split), or recapitalization of the Corporation, or
any merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with or
otherwise involving an Interested Shareholder) which has the effect,
directly or indirectly, of increasing the proportionate share of any
class of equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly beneficially owned by any
Interested Shareholder or any Affiliate or Associate of any Interested
Shareholder; or
(v) any agreement, contract or other arrangement
providing for any one or more of the actions specified in Clauses (i)
to (iv) of this Subparagraph (A),
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shall require the affirmative vote of at least 80 percent of the votes
entitled to be cast by the holders of all then outstanding shares of
Voting Stock, voting together as a single class, present in person or
represented by proxy and entitled to vote in respect thereof, at an
annual meeting or at any special meeting duly called.
B. The term "Business Combination" as used in this
Article SEVENTH shall mean any transaction which is referred to in any
one or more of Clauses (i) through (v) of Subparagraph (A) of
Paragraph I.
C. As used in this Paragraph I of this Article SEVENTH,
a "series of transactions" shall be deemed to include not only a
series of transactions with the same Interested Shareholder but also a
series of separate transactions with an Interested Shareholder or any
Affiliate or Associate of such Interested Shareholder.
II. The provisions of Paragraph I of this
Article SEVENTH shall not be applicable to any particular Business Combination,
and such Business Combination shall require only such affirmative vote, if any,
as is required by law or in any agreement with any national securities exchange
or Article NINTH or any other provision of these Articles of Incorporation or
the Regulations of the Corporation, if all of the conditions specified in
either of the following Subparagraphs (A) or (B) are met:
A. The Business Combination shall have been approved by a
majority (whether such approval is made prior to or subsequent to the
acquisition of beneficial ownership of the Voting Stock which caused
the Interested Shareholder to become an Interested Shareholder) of the
Continuing Directors (as hereinafter defined)
B. All of the following conditions shall have been met:
(i) The aggregate amount of (x) cash and (y)
the Fair Market Value as of the date of the consummation of
the Business Combination of consideration other than cash to
be received per share by holders of Common Shares in such
Business Combination shall be at least equal to the highest
amount determined under Subclauses (a), (b), (c), (d) and (e)
below:
a. (if applicable) the highest per share price
(including any brokerage commissions,
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transfer taxes and soliciting dealers' fees) paid
by or on behalf of the Interested Shareholder for
any Common Share or any share (a "Delaware Share")
of Common Stock, par value $1.00 per share, of R.
G. Barry Corporation, a Delaware corporation ("RGB
Delaware"), in connection with the acquisition by
the Interested Shareholder of beneficial ownership
of such share (l) within the two-year period
immediately prior to the first public announcement
of the proposal of the Business Combination (the
"Announcement Date") or (2) in the transaction in
which it became an Interested Shareholder,
whichever is higher;
b. the Fair Market Value per Common
Share, or Delaware Share, as the case may be, on
the Announcement Date or on the date on which the
Interested Shareholder became an Interested
Shareholder (such latter date is referred to in
this Article SEVENTH as the "Determination Date"),
whichever is higher;
c. (if applicable) the price per
share equal to the Fair Market Value per Common
Share or Delaware Share determined pursuant to
Subclause (B)(i)(b) of this Paragraph II,
multiplied by the ratio of (l) the highest per
share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid
by or on behalf of the Interested Shareholder for
any Common Share or Delaware Share in connection
with the acquisition by the Interested Shareholder
of beneficial ownership of Common Shares or
Delaware Shares within the two-year period
immediately prior to the Announcement Date to (2)
the Fair Market Value per Common Share on the first
day in such two-year period on which the Interested
Shareholder acquired beneficial ownership of either
any Common Share or any Delaware Share;
d. the per share book value of the
Common Shares, or Delaware Shares, as the case may
be, as reported at the end of the fiscal quarter
immediately prior to the Announcement Date; and
e. the earnings per Common Share or
Delaware Share for the four full consecutive fiscal
quarters immediately preceding the record date for
solicitation of votes on such Business Combination,
multiplied by the then price/earnings
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multiple (if any) of such Interested
Shareholder as customarily computed and reported in
the financial community;
(ii) The aggregate amount of (x) cash and (y)
the Fair Market Value as of the date of the consummation of
the Business Combination of consideration other than cash to
be received per share by holders of shares of any class or, if
there be more than one series in a class, then, any series, of
outstanding Preferred Shares, shall be at least equal to the
highest amount determined under Subclauses (a), (b), (c) and
(d) below:
a. (if applicable) the highest per
share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid
by or on behalf of the Interested Shareholder for
any share of such class or, if there be more than
one series in a class, then, such series, of
Preferred Shares in connection with the acquisition
by the Interested Shareholder of beneficial
ownership of such share (1) within the two-year
period immediately prior to the Announcement Date
or (2) in the transaction in which it became an
Interested Shareholder, whichever is higher;
b. the highest preferential amount
per share to which the holders of shares of such
class or, if there be more than one series in a
class, then, such series, of Preferred Shares would
be entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up
of the affairs of the Corporation, regardless of
whether the Business Combination to be consummated
constitutes such an event;
c. the Fair Market Value per share of
such class or, if there be more than one series in
a class, then, such series, of Preferred Shares on
the Announcement Date or on the Determination Date,
whichever is higher; and
d. (if applicable) the price per
share equal to the Fair Market Value per share of
such class or, if there be more than one series in
a class, then, such series, of Preferred Shares
determined pursuant to Subclause (B)(ii)(c) of this
Paragraph II, multiplied by the ratio of
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(1) the highest per share price (including any
brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of
the Interested Shareholder for any share of such
class or, if there be more than one series in a
class, then, such series, of Preferred Shares in
connection with the acquisition by the Interested
Shareholder of beneficial ownership of shares of
such class or series of Preferred Shares within the
two-year period immediately prior to the
Announcement Date to (2) the Fair Market Value per
share of shares of such class or, if there be more
than one series in a class, then, such series, of
Preferred Shares on the first day in such two-year
period on which the Interested Shareholder acquired
beneficial ownership of any share of such class or
series of Preferred Shares;
The provisions of this Clause (B)(ii) shall be required to be
met with respect to every class or, if there be more than one
series in a class, then, every series, of outstanding
Preferred Shares, whether or not the Interested Shareholder
has previously acquired beneficial ownership of any shares of
a particular class or series of Preferred Shares;
(iii) The consideration to be received by holders
of a particular class or series of outstanding Capital Stock
shall be in cash or in the same form as previously has been
paid by or on behalf of the Interested Shareholder in
connection with its direct or indirect acquisition of
beneficial ownership of shares of such class or series of
Capital Stock. If the consideration so paid for shares of any
class or series of Capital Stock varied as to form, the form
of consideration for such class or series of Capital Stock
shall be either cash or the form used to acquire beneficial
ownership of the largest number of shares of such class or
series of Capital Stock previously acquired by the Interested
Shareholder;
(iv) After such Interested Shareholder has
become an Interested Shareholder and prior to the consummation
of such Business Combination: (a) except as approved by a
majority of the Continuing Directors, there shall have been no
failure to declare and pay at the regular date therefor any
full quarterly dividends (whether or not cumulative) on the
outstanding Preferred Shares; (b) there shall have been (1) no
16
<PAGE> 17
reduction in the annual rate of dividends paid on the Common
Shares (except as necessary to reflect any subdivision of the
Common Shares), except as approved by a majority of the
Continuing Directors, and (2) an increase in such annual rate
of dividends as necessary to reflect any reclassification
(including any reverse share split), recapitalization,
reorganization or any similar transaction which has the effect
of reducing the number of outstanding Common Shares, unless
the failure so to increase such annual rate is approved by a
majority of the Continuing Directors; and (c) such Interested
Shareholder shall not have become the beneficial owner of any
additional shares of Capital Stock except as part of the
transaction which results in such Interested Shareholder
becoming an Interested Shareholder and except in a transaction
which, after giving effect thereto, would not result in any
increase in the Interested Shareholder's percentage beneficial
ownership of any class of Capital Stock;
(v) After such Interested Shareholder has
become an Interested Shareholder, such Interested Shareholder
shall not have received the benefit, directly or indirectly
(except proportionately as a shareholder of the Corporation),
of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages provided
by the Corporation, whether in anticipation of or in
connection with such Business Combination or otherwise;
(vi) A proxy or information statement describing
the proposed Business Combination and complying with the
requirements of the Exchange Act (or any subsequent provisions
replacing the Exchange Act), shall be mailed to all
shareholders of the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed
pursuant to the Exchange Act or subsequent provisions). The
proxy statement shall contain on the first page thereof, in a
prominent place, any recommendation as to the advisability (or
inadvisability) of the Business Combination which the
Continuing Directors, or any of them, may choose to state and,
if deemed advisable by a majority of the Continuing Directors,
the opinion of an investment banking firm selected by a
majority of the Continuing Directors as to the fairness (or
not) of the terms of the Business Combination, from the point
of view of the holders of the outstanding shares of Capital
Stock
17
<PAGE> 18
other than the Interested Shareholder and its Affiliates and
Associates (such investment banking firm to be paid a
reasonable fee for its services by the Corporation); and
(vii) Such Interested Shareholder shall not have
made any major change in the Corporation's business or equity
capital structure without the approval of the majority of the
Continuing Directors.
III. For purposes of this Article SEVENTH:
A. The term "person shall mean any individual, firm,
corporation or other entity and shall include any group comprised of any person
and any other person with whom such person or any Affiliate or Associate (as
hereinafter defined) of such person has any agreement, arrangement or
understanding, directly or indirectly, for the purpose of acquiring, holding,
voting or disposing of Capital Stock of the Corporation.
B. The term "Interested Shareholder" shall mean any person
(other than (i) the Corporation or any Subsidiary, (ii) any profit-sharing,
employee share ownership or other employee benefit plan of the Corporation or
any Subsidiary or any trustee of or fiduciary with respect to any such plan
when acting in such capacity, or (iii) persons who, immediately after the
adoption of these Articles of Incorporation, are Affiliates of RGB Delaware,
and the respective successors, executors, administrators, legal
representatives, heirs and legal assigns (provided that any such assign is such
an Affiliate immediately prior to assignment, transfer or other disposition to
such assign) of such persons) who or which:
(i) is the beneficial owner (as hereinafter defined) of
more than 10 percent of the Voting Stock; or
(ii) is an Affiliate or Associate of the Corporation and
at any time within the two-year period immediately prior to the date
in question was the beneficial owner of 10 percent or more of the
Voting Stock.
C. A person shall be a "beneficial owner" of any Capital
Stock:
(i) which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such person or any of its Affiliates or
Associates has, directly or indirectly, (a) the right to acquire
(whether such right is exercisable immediately or
18
<PAGE> 19
only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (b) the
right to vote pursuant to any agreement, arrangement or understanding;
or
(iii) which are beneficially owned, directly or
indirectly, by any other person with which such person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock.
D. For the purposes of determining whether a person is an
Interested Shareholder pursuant to Subparagraph (B) of this Paragraph III, the
number of shares of Capital Stock deemed to be outstanding shall include shares
deemed beneficially owned through application of Subparagraph (C) of this
Paragraph III but shall not include any other shares of Capital Stock which may
be issuable pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
E. The terms "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the Exchange Act as
in effect on March 1, 1984.
F. The term "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly or indirectly, by
the Corporation; provided, however, that for the purposes of the definition of
Interested Shareholder set forth in Subparagraph (B) of this Paragraph III, the
term "Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the Corporation.
G. The term "Continuing Director" means any member of the
Board of Directors, while such person is a member of the Board of Directors of
the Corporation, who is not an Affiliate or Associate or representative of the
Interested Shareholder and was a member of the Board prior to the time that the
Interested Shareholder became an Interested Shareholder, and any successor of a
Continuing Director, while such successor is a member of the Board, who is not
an Affiliate or Associate or representative of the Interested Shareholder and
is recommended or elected to succeed a Continuing Director by a majority of
Continuing Directors.
H. The term "Capital Stock" shall mean all capital stock of
this Corporation authorized to be issued from time to time under Article FOURTH
of these Articles of Incorporation, and
19
<PAGE> 20
the term "Voting Stock" shall mean all Capital Stock which by its terms may be
voted on all matters submitted to shareholders of this Corporation generally.
I. The term "Fair Market Value" means (i) in the case of
shares, the highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the Composite Tape
for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on
the Composite Tape, on the New York Stock Exchange, or, if such stock is not
listed on such Exchange, on the principal United States securities exchange
registered under the Act on which such stock is listed, or, if such stock is
not listed on any such exchange, the highest closing bid quotation with respect
to a share of such stock during the 30-day period preceding the date in
question on the National Association of Securities Dealers, Inc. Automated
Quotations System or any successor system then in use, or if no such quotations
are available, the fair market value on the date in question of a share of such
stock as determined by a majority of the Continuing Directors in good faith;
and (ii) in the case of property other than cash or stock, the fair market
value of such property on the date in question as determined in good faith by a
majority of the Continuing Directors.
J. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be received"
as used in Clauses (B)(i) and (ii) of Paragraph II of this Article SEVENTH
shall include Common Shares and/or the shares of any other class of Preferred
Shares retained by the holders of such shares.
IV. The Board of Directors shall have the power
and duty to determine for the purposes of this Article SEVENTH, on the basis of
information known to them after reasonable inquiry, (A) whether a person is an
Interested Shareholder, (B) the number of shares of Capital Stock or other
securities beneficially owned by any person, and (C) whether a person is an
Affiliate or Associate of another. Any such determination made in good faith
shall be binding and conclusive on all parties.
V. Nothing contained in this Article SEVENTH
shall be construed to relieve any Interested Shareholder from any fiduciary
obligation imposed by law.
VI. The fact that any Business Combination
complies with the provisions of Paragraph II of this Article SEVENTH shall not
be construed to impose any fiduciary duty, obligation or responsibility on the
Board of Directors, or any member thereof, to approve such Business Combination
or recommend its adoption or approval to the shareholders of the Corporation,
20
<PAGE> 21
nor shall such compliance limit, prohibit or otherwise restrict in any manner
the Board of Directors, or any member thereof, with respect to evaluations of
or actions and responses taken with respect to such Business Combination.
VII. Notwithstanding any other provisions of
these Articles of Incorporation or the Regulations of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified by law or in
any agreement with any national securities exchange or any other provision of
these Articles of Incorporation or the Regulations of the Corporation), the
affirmative vote of the holders of at least 80 percent of the votes entitled to
be cast by the holders of all then outstanding shares of Voting Stock, voting
together as a single class, present in person or represented by proxy and
entitled to vote in respect thereof, at an annual meeting or any special
meeting duly called, shall be required to amend, alter, change or repeal, or
adopt any provisions inconsistent with, this Article SEVENTH; provided that
this Paragraph VII shall not apply to, and such 80 percent vote shall not be
required for, any amendment, alteration, change, repeal or adoption unanimously
recommended by the Board of Directors of the Corporation if all of such
directors are persons who would be eligible to serve as Continuing Directors
within the meaning of Paragraph III of this Article SEVENTH.
EIGHTH: I. MANDATORY INDEMNIFICATION. The Corporation shall
indemnify any officer or director of the Corporation who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including, without limitation, any action threatened or
instituted by or in the right of the Corporation), by reason of the fact that
he is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, trustee,
officer, employee or agent of another corporation (domestic or foreign,
nonprofit or for profit),partnership, joint venture, trust or other enterprise,
against expenses (including, without limitation, attorneys' fees, filing fees,
court reporters' fees and transcript costs), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and with respect to any criminal action or proceeding, he had no
reasonable cause to believe his conduct was unlawful. A person claiming
indemnification under this Paragraph I shall be presumed, in respect of any act
or omission giving rise to such claim for indemnification, to have acted in
good faith and in a manner he reasonably believed to be in or not
21
<PAGE> 22
opposed to the best interests of the Corporation, and with respect to any
criminal matter, to have had no reasonable cause to believe his conduct was
unlawful, and the termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, rebut such presumption.
II. COURT-APPROVED INDEMNIFICATION. Anything
contained in these Articles, the Regulations of the Corporation or elsewhere to
the contrary notwithstanding:
(A) the Corporation shall not indemnify any officer or
director of the Corporation who was a party to any completed action or
suit instituted by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, trustee,
officer, employee or agent of another corporation (domestic or
foreign, nonprofit or for profit), partnership, joint venture, trust
or other enterprise, in respect of any claim, issue or matter asserted
in such action or suit as to which he shall have been adjudged to be
liable for acting with reckless disregard for the best interests of
the corporation or misconduct (other than negligence) in the
performance of his duty to the Corporation or such other entity unless
and only to the extent that the Court of Common Pleas of Fairfield
County, Ohio or the court in which such action or suit was brought
shall determine upon application that, despite such adjudication of
liability, and in view of all the circumstances of the case, he is
fairly and reasonably entitled to such indemnity as such Court of
Common Pleas or such other court shall deem proper; and
(B) the Corporation shall promptly make any such unpaid
indemnification as is determined by a court to be proper as
contemplated by this Paragraph II.
III. INDEMNIFICATION FOR EXPENSES. Anything
contained in these Articles, the Regulations of the Corporation or elsewhere to
the contrary notwithstanding, to the extent that an officer or director of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Paragraph I of this Article EIGHTH,
or in defense of any claim, issue or matter therein, he shall be promptly
indemnified by the Corporation against expenses (including, without limitation,
attorneys' fees, filing fees, court reporters' fees and transcript costs)
actually and reasonably incurred by him in connection therewith.
22
<PAGE> 23
IV. DETERMINATION PERIOD. Any indemnification
required under Paragraph I of this Article EIGHTH and not precluded under
Paragraph II of this Article EIGHTH shall be made by the Corporation only upon
a determination that such indemnification of the officer or director is proper
in the circumstances because he has met the applicable standard of conduct set
forth in Paragraph I of this Article EIGHTH. Such determination may be made
only (A) by a majority vote of a quorum consisting of directors of the
Corporation who were not and are not parties to, or threatened with, any such
action, suit or proceeding, or (B) if such a quorum is not obtainable or if a
majority of a quorum of disinterested directors so directs, in a written
opinion by independent legal counsel other than an attorney, or a firm having
associated with it an attorney, who has been retained by or who has performed
services for the Corporation, or any person to be indemnified, within the past
five years, or (C) by the shareholders, or (D) by the Court of Common Pleas of
Fairfield County, Ohio or (if the Corporation is a party thereto) the court in
which such action, suit or proceeding was brought, if any; any such
determination may be made by a court under division (D) of this Paragraph IV at
any time [including, without limitation, any time before, during or after the
time when any such determination may be requested of, be under consideration by
or have been denied or disregarded by the disinterested directors under
division (A) or by independent legal counsel under division (B) or by the
shareholders under division (C) of this Paragraph IV]; and no failure for any
reason to make such determination, and no decision for any reason to deny any
such determination, by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by the shareholders under
division (C) of this Paragraph IV shall be evidence in rebuttal of the
presumption recited in Paragraph I of this Article EIGHTH. Any determination
made by the disinterested directors under division (A) or by independent legal
counsel under division (B) of this Paragraph IV to make indemnification in
respect of any claim, issue or matter asserted in an action or suit threatened
or brought by or in the right of the Corporation shall be promptly communicated
to the person who threatened or brought such action or suit, and within ten
(10) days after receipt of such notification such person shall have the right
to petition the Court of Common Pleas of Fairfield County, Ohio or the court in
which such action or suit was brought, if any, to review the reasonableness of
such determination.
V. ADVANCES FOR EXPENSES. Expenses
(including, without limitation, attorneys' fees, filing fees, court reporters'
fees and transcript costs) incurred in defending any action, suit or proceeding
referred to in Paragraph I of this Article EIGHTH shall be paid by the
Corporation in advance of the
23
<PAGE> 24
final disposition of such action, suit or proceeding to or on behalf of the
officer or director promptly as such expenses are incurred by him, but only if
such officer or director shall first agree, in writing, to repay all amounts so
paid in respect of any claim, issue or other matter asserted in such action,
suit or proceeding in defense of which he shall not have been successful on the
merits or otherwise:
(A) if it shall ultimately be determined as provided in
Paragraph IV of this Article EIGHTH that he is not entitled to be
indemnified by the Corporation as provided under Paragraph I of this
Article EIGHTH; or
(B) if, in respect of any claim, issue or other matter
asserted by or in the right of the Corporation in such action or suit,
he shall have been adjudged to be liable for acting with reckless
disregard for the best interests of the Corporation or misconduct
(other than negligence) in the performance of his duty to the
Corporation, unless and only to the extent that the Court of Common
Pleas of Fairfield County, Ohio or the court in which such action or
suit was brought shall determine upon application that, despite such
adjudication of liability, and in view of all the circumstances, he is
fairly and reasonably entitled to all or part of such indemnification.
VI. ARTICLE EIGHTH NOT EXCLUSIVE. The
indemnification provided by this Article EIGHTH shall not be exclusive of, and
shall be in addition to, any other rights to which any person seeking
indemnification may be entitled under the Articles or the Regulations or any
agreement, vote of shareholders or disinterested directors, or otherwise, both
as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be an officer or director of the Corporation and shall inure to the benefit of
the heirs, executors, and administrators of such a person.
VII. INSURANCE. The Corporation may purchase
and maintain insurance or furnish similar protection, including, but not
limited to, trust funds, letters of credit, or self-insurance, on behalf of any
person who is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, trustee,
officer, employee, or agent of another corporation (domestic or foreign,
nonprofit or for profit), partnership, joint venture, trust or other
enterprise, against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
Corporation would have the obligation or the power to indemnify him against
such liability
24
<PAGE> 25
under the provisions of this Article EIGHTH. Insurance may be purchased from
or maintained with a person in which the Corporation has a financial interest.
VIII. INDEMNITY AGREEMENTS. The Corporation may
from time to time enter into indemnity agreements with the persons who are
members of its Board of Directors and with such officers or other persons as
the Board may designate, such indemnity agreements to provide in substance that
the Corporation will indemnify such person to the fullest extent of the
provisions of this Article EIGHTH and/or to the fullest extent permitted under
Ohio law.
IX. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF
THE CORPORATION. The Corporation may, under procedures authorized from time to
time by the Board of Directors, grant rights to indemnification and to be paid
by the Corporation the expenses incurred in defending any proceeding in advance
of its final disposition, to any employee or agent of the Corporation to the
fullest extent of the provisions of this Article EIGHTH.
X. CERTAIN DEFINITIONS. For purposes of this
Article EIGHTH, and as examples and not by way of limitation:
(A) A person claiming indemnification under this Article
EIGHTH shall be deemed to have been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
Paragraph I of this Article EIGHTH, or in defense of any claim, issue
or other matter therein, if such action, suit or proceeding shall be
terminated as to such person, with or without prejudice, without the
entry of a judgment or order against him, without a conviction of him,
without the imposition of a fine upon him and without his payment or
agreement to pay any amount in settlement thereof (whether or not any
such termination is based upon a judicial or other determination of
the lack of merit of the claims made against him or otherwise results
in a vindication of him); and
(B) References to an "other enterprise" shall include
employee benefit plans; references to a "fine" shall include any
excise taxes assessed on a person with respect to an employee benefit
plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of
the Corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee
benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in
the best interests of the
25
<PAGE> 26
participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of
the Corporation" within the meaning of that phrase as used in this
Article EIGHTH.
XI. VENUE. Any action, suit or proceeding to
determine a claim for indemnification under this Article EIGHTH may be
maintained by the person claiming such indemnification, or by the Corporation
in the Court of Common Pleas of Fairfield County, Ohio. The Corporation and
(by claiming such indemnification) each such person consent to the exercise of
jurisdiction over its or his person by the Court of Common Pleas of Fairfield
County, Ohio in any such action, suit or proceeding.
NINTH: Except as otherwise provided in these Articles of
Incorporation, including without limitation Article SEVENTH hereof, the
shareholders of the Corporation, at a meeting held for such purpose or
purposes, may by the affirmative vote of the holders of at least a majority of
the votes entitled to be cast by the holders of all then outstanding shares of
Voting Stock, voting together as a single class, present in person or
represented by proxy and entitled to vote in respect thereof, at an annual
meeting or any special meeting duly called, (i) adopt an agreement of merger or
consolidation; (ii) authorize the lease, sale, exchange, transfer, or other
disposition of all or substantially all of the assets of the Corporation; or
(iii) adopt a resolution providing for the dissolution of the Corporation.
TENTH: Except as otherwise provided in these Articles of
Incorporation, including without limitation Article SIXTH and Article SEVENTH
hereof, the shareholders of the Corporation, at a meeting held for such
purpose, may by the affirmative vote of the holders of at least a majority of
the votes entitled to be cast by the holders of all then outstanding shares of
Voting Stock, voting together as a single class, present in person or
represented by proxy and entitled to vote in respect thereof, at an annual
meeting or any special meeting duly called, alter or repeal any provision
contained in these Articles of Incorporation.
ELEVENTH: Shareholders shall not have the right to vote cumulatively
in the election of directors.
26
<PAGE> 1
Exhibit 3(b)
------------
Certificate of Amendment to
Articles of Incorporation of
R. G. Barry Corporation, as
filed with the Ohio Secretary of
State on May 22, 1995
<PAGE> 2
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
R. G. BARRY CORPORATION
-----------------------
The undersigned hereby certify that they are the duly elected,
qualified and acting Chairman of the Board and Secretary, respectively, of R.
G. Barry Corporation, an Ohio corporation (the "Company"); that the Annual
Meeting of the Shareholders (the "Annual Meeting") of the Company was duly
called and held on May 10, 1995, at which Annual Meeting a quorum of
shareholders of the Company was at all times present in person or by proxy; and
that the resolution attached hereto approving an amendment to Paragraph I of
Article FOURTH of the Company's Articles of Incorporation increasing the
authorized number of common shares, $1.00 par value, of the Company from
7,500,000 to 15,000,000 common shares, which resolution is attached hereto as
Annex 1 and incorporated herein by this reference, was duly adopted by the
shareholders of the Company at the Annual Meeting by the affirmative vote of
the holders of common shares of the Company entitling them to exercise at least
a majority of the votes entitled to be cast to approve such amendment as
required by Article TENTH of the Company's Articles of Incorporation.
IN WITNESS WHEREOF, the undersigned Chairman of the Board and
Secretary of R. G. Barry Corporation, acting for and on behalf of said
corporation, have hereunto set their hands this 10th day of May, 1995.
/s/ Gordon Zacks
-----------------------------------
Gordon Zacks, Chairman of the Board
/s/ Richard L. Burrell
-----------------------------------
Richard L. Burrell, Secretary
<PAGE> 3
Annex 1
-------
RESOLVED, that the Articles of Incorporation of R. G. Barry
Corporation be, and the same hereby are, amended by deleting present Paragraph
I of Article FOURTH in its entirety and by substituting in its place new
Paragraph I of Article FOURTH in the following form:
Paragraph I
of
Article FOURTH
of
the Articles of Incorporation
of
R. G. Barry Corporation
-----------------------
FOURTH: I. The total number of shares which the
Corporation shall have the authority to issue is
20,000,000 shares of which 15,000,000, par value
$1.00 per share, shall be of a class designated
"Common Shares," 4,000,000, par value $1.00 per
share, shall be of a class designated "Class A
Preferred Shares" and 1,000,000, par value $1.00 per
share, shall be of a class designated "Class B
Preferred Shares." The Class A Preferred Shares and
Class B Preferred Shares are sometimes collectively
referred to herein as the "Preferred Shares.
<PAGE> 1
Exhibit 3(c)
------------
Certificate of Amendment to
Articles of Incorporation
of R. G. Barry Corporation,
as filed with the Ohio Secretary
of State on September 1, 1995
<PAGE> 2
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
R. G. BARRY CORPORATION
We, Gordon Zacks, Chairman of the Board, and Richard L.
Burrell, Secretary, of R. G. Barry Corporation, a corporation organized and
existing under the laws of the State of Ohio (the "Company"), in accordance
with Section 1701.73 of the Ohio Revised Code, do hereby certify:
That pursuant to the authority conferred upon the Board of
Directors pursuant to Article Fourth, Section II and Article Fourth, Section
VIII(B) of the Articles of Incorporation of R.G. Barry Corporation, on August
16, 1995, the Board of Directors adopted the following resolution increasing
the number of Class B shares designated as "Series I Junior Participating Class
B Preferred Shares" (the "Series I Class B Preferred Shares") from 500,000 to
1,000,000:
RESOLVED, that pursuant to the authority vested in the Board of
Directors pursuant to Article Fourth, Section II and Article Fourth,
Section VIII(B) of the Articles of Incorporation of the Company,
Article Fourth, Section VIII(B) of the Articles of Incorporation of
the Company be, and the same hereby is, amended by deleting the
existing Article Fourth, Section VIII(B) in its entirety and by
substituting in its place the following:
B. NUMBER OF SHARES. The authorized number of shares of
Series I Class B Preferred Shares is 1,000,000, which number the Board
of Directors may increase or decrease to the extent appropriate in
connection with the Rights issued pursuant to the Rights Agreement
between the Company and The Huntington National Bank, as Rights Agent,
dated as of February 29, 1988; provided, that no decrease shall reduce
the number of Series I Class B Preferred Shares to a number less than
that of the shares then outstanding plus the number of shares issuable
upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Company.
/s/ Gordon Zacks
-----------------------------
Gordon Zacks, Chairman
/s/ Richard L. Burrell
-----------------------------
Richard L. Burrell, Secretary
<PAGE> 1
Exhibit 4(f)
------------
Revolving Credit Agreement,
made to be effective on
February 28, 1996, among
R. G. Barry Corporation,
The Bank of New York,
The Huntington National Bank
and NBD Bank
<PAGE> 2
REVOLVING CREDIT AGREEMENT
R. G. BARRY CORPORATION
THE BANK OF NEW YORK
THE HUNTINGTON NATIONAL BANK
NBD BANK
FEBRUARY 28, 1996
<PAGE> 3
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
SECTION 1. COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Basic Commitment Terms. . . . . . . . . . . . . . . . . . . . . . 1
1.2 Commitment Limitations. . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 2
2.1 Organization, Corporate Power, etc. . . . . . . . . . . . . . . . 2
2.2 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Renegotiation of Government Contracts . . . . . . . . . . . . . . 3
2.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.11 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . 4
2.12 Government Consent . . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 Legal and Binding Obligation . . . . . . . . . . . . . . . . . . . 4
2.14 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 4
3.1 "Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 "Alternate Base Rate" . . . . . . . . . . . . . . . . . . . . . . 5
3.3 "Business Day" . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 "Capitalized Lease" . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 "Capitalized Lease Obligation" . . . . . . . . . . . . . . . . . . 5
3.6 "Consolidated Current Assets" . . . . . . . . . . . . . . . . . . 5
3.7 "Consolidated Current Liabilities" . . . . . . . . . . . . . . . . 5
3.8 "Consolidated Funded Debt" . . . . . . . . . . . . . . . . . . . . 5
3.9 "Consolidated Net Income" . . . . . . . . . . . . . . . . . . . . 5
3.11 "Consolidated Net Tangible Assets" . . . . . . . . . . . . . . . . 6
3.12 "Consolidated Net Worth" . . . . . . . . . . . . . . . . . . . . . 6
3.13 "Consolidated Tangible Net Worth" . . . . . . . . . . . . . . . . 6
3.14 "Consolidated Senior Funded Debt" . . . . . . . . . . . . . . . . 6
3.15 "Consolidated Total Assets" . . . . . . . . . . . . . . . . . . . 6
3.16 "Current Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.17 "Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.18 "Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.19 "Dollars" and "$" . . . . . . . . . . . . . . . . . . . . . . . . 6
3.20 "Domestic Loans" . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
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3.21 "Eurodollar Interest Rate" . . . . . . . . . . . . . . . . . 7
3.22 "Eurodollar Loans" . . . . . . . . . . . . . . . . . . . . . 7
3.23 "Event of Default" . . . . . . . . . . . . . . . . . . . . . 7
3.24 "Federal Funds Rate" . . . . . . . . . . . . . . . . . . . . 7
3.25 "Funded Debt" . . . . . . . . . . . . . . . . . . . . . . . 7
3.26 "GAAP" . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.27 "Guaranties" . . . . . . . . . . . . . . . . . . . . . . . . 7
3.28 "Interest Period" . . . . . . . . . . . . . . . . . . . . . 8
3.28.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.28.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.29 "Investment" . . . . . . . . . . . . . . . . . . . . . . . . 8
3.31 "LIBOR Business Day" . . . . . . . . . . . . . . . . . . . . 9
3.32 "Lien" . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.33 "Loan" or "Loans" . . . . . . . . . . . . . . . . . . . . . 9
3.34 "Metropolitan Agreement" . . . . . . . . . . . . . . . . . . 9
3.35 "Net Income" . . . . . . . . . . . . . . . . . . . . . . . . 9
3.36 "Note" or "Notes" . . . . . . . . . . . . . . . . . . . . . 9
3.37 "Permitted Investments" . . . . . . . . . . . . . . . . . . 9
3.37.1 . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.37.2 . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.37.3 . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.37.4 . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.37.5 . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.37.6 . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.37.7 . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.37.8 . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.38 "Person" . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.39 "Prime Rate" . . . . . . . . . . . . . . . . . . . . . . . . 10
3.40 "Senior Funded Debt" . . . . . . . . . . . . . . . . . . . . 10
3.41 "Subordinated Funded Debt" . . . . . . . . . . . . . . . . . 10
3.42 "Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . 11
3.43 "Termination Date" . . . . . . . . . . . . . . . . . . . . . 11
3.44 "Total Capitalization" . . . . . . . . . . . . . . . . . . . 11
SECTION 4. BORROWING PROVISION . . . . . . . . . . . . . . . . . . 11
4.1 Amount of Revolving Credit . . . . . . . . . . . . . . . . . 11
4.2 Evidence of Loans Made Under Revolving Credit . . . . . . . 11
4.3 Commitment Fees . . . . . . . . . . . . . . . . . . . . . . 12
4.4 Conversion of Loans . . . . . . . . . . . . . . . . . . . . 12
4.5 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6 Termination or Reduction Options . . . . . . . . . . . . . . 13
4.7 Interest Payment Dates . . . . . . . . . . . . . . . . . . . 13
4.8 Payment Method . . . . . . . . . . . . . . . . . . . . . . . 13
4.9 No Setoff or Deduction . . . . . . . . . . . . . . . . . . . 14
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4.10 Payment on Non-Business Day; Payment Computations . . . . . . . . . 14
4.11 Extension of Commitments . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5. PRO RATA TREATMENT . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . 15
6.1 Opinion of Counsel for Borrower . . . . . . . . . . . . . . . . . . 15
6.2 Supporting Documents . . . . . . . . . . . . . . . . . . . . . . . . 15
6.3 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.4 Delivery of Notes . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7. PROVISIONS RELATING TO EURODOLLAR LOANS . . . . . . . . . . . . 16
7.1 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2 Additional Eurocurrency Reserves . . . . . . . . . . . . . . . . . . 16
7.3 Limitations of Requests and Elections . . . . . . . . . . . . . . . 17
7.4 Illegality and Impossibility . . . . . . . . . . . . . . . . . . . . 18
7.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.6 Survival of Obligations . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 18
8.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 19
8.2 Out of Pocket Expenses . . . . . . . . . . . . . . . . . . . . . . . 19
8.3 Compliance with Statutes; Payment of Taxes . . . . . . . . . . . . . 19
8.4 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.5 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . 20
8.6 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.7 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.8 Inspection of Books and Records . . . . . . . . . . . . . . . . . . 20
8.9 Notification by Borrower . . . . . . . . . . . . . . . . . . . . . . 21
8.10 Amendments to Metropolitan Agreement . . . . . . . . . . . . . . . . 21
8.11 Notice of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 21
9.1 Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.2 Limitations on Debt . . . . . . . . . . . . . . . . . . . . . . . . 21
9.3 Additional Limitations on Debt . . . . . . . . . . . . . . . . . . . 22
9.3.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.3.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.4 Maintenance of Consolidated Tangible Net Worth 22
9.5 Interest Coverage . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.6 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . 22
9.6.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.6.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.7 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . 23
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9.8 Permits and Liens . . . . . . . . . . . . . . . . . . . . . . . . 23
9.8.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.8.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.8.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.8.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.8.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.8.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.9 Restrictions on Subsidiaries . . . . . . . . . . . . . . . . . . . 24
9.9.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.9.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.10 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . 24
9.10.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.10.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.10.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.10.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.11 Sale-Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.12 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 25
9.13 Restrictions on Borrower . . . . . . . . . . . . . . . . . . . . . 26
9.13.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.13.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.14 Permitted Investments . . . . . . . . . . . . . . . . . . . . . . 26
9.15 Limitation on Restrictive Covenants . . . . . . . . . . . . . . . 26
9.16 Loan, Advances and Purchases of Stock . . . . . . . . . . . . . . 26
SECTION 10. FURTHER ASSURANCE . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11. TAXES AND STAMPS . . . . . . . . . . . . . . . . . . . . . 27
SECTION 12. ARRANGEMENT BETWEEN BANKS . . . . . . . . . . . . . . . . . 27
SECTION 13. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 28
13.1.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.1.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.1.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.1.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.1.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.1.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.1.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.1.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.1.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.1.10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
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13.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.2.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.2.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.2.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 31
14.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . 31
14.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 31
14.3 Conduct No Waiver; Remedies Cumulative . . . . . . . . . . . 31
14.4 Reliance on and Survival of Various Provisions . . . . . . . 32
14.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.5.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.5.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . 32
14.7 Assignment to Federal Reserve Banks . . . . . . . . . . . . 33
14.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 33
14.9 Governing Law, Consent to Jurisdiction and Waiver of I . . . 33
14.10 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . 33
14.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 34
14.12 Construction of Certain Provisions . . . . . . . . . . . . . 34
14.13 Integration and Severability . . . . . . . . . . . . . . . . 34
14.14 Usury . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
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REVOLVING CREDIT AGREEMENT
THIS AGREEMENT, is made and entered into to be effective on February 28,
1996, by and among R. G. BARRY CORPORATION, an Ohio corporation (hereinafter
called the "Borrower"), THE BANK OF NEW YORK, a New York trust company, NBD
BANK, a Michigan banking corporation of Detroit, Michigan, and THE HUNTINGTON
NATIONAL BANK, a national banking association of Columbus, Ohio (hereinafter
collectively called the "Banks" and each individually a "Bank");
The Borrower and the Banks hereby agree as follows:
SECTION 1. COMMITMENTS.
------------
1.1 BASIC COMMITMENT TERMS. The Borrower has applied to the Banks for
revolving credit loans up to an aggregate principal amount of $51,000,000, the
proceeds of which are to be used by the Borrower for general corporate
purposes, including, without limitation, seasonal financing of inventory and
accounts receivable. Each of the Banks is willing to make such loans to the
Borrower upon the terms and subject to the conditions hereinafter set forth up
to a maximum aggregate principal amount not in excess of the amount set forth
opposite its name below and otherwise in accordance with the pro rata
requirements of Section 4 hereof (said amount being hereinafter called the
"Commitment" of such Bank and collectively called the "Commitments"):
BANK ADDRESS COMMITMENT
- ---- ------- ----------
The Bank of New York One Wall Street
New York,
New York, 10286 $17,000,000
The Huntington 41 South High Street
National Bank Columbus, OH 43287 $17,000,000
NBD Bank 611 Woodward Avenue
Detroit, MI 48226 $17,000,000
1.2 COMMITMENT LIMITATIONS. Notwithstanding the foregoing, during the
following periods in each year occurring during the term of this Agreement the
aggregate Commitments of the Banks (each Bank's individual Commitment being one
third (1/3) of the aggregate) shall be in an amount equal to the lesser of the
following amounts or the amount to which the Commitments have been reduced
pursuant to Section 4.6 hereof:
<PAGE> 9
Period Commitment
------ ----------
From 01/01 through 01/31 $ 6,000,000
From 02/01 through 03/31 $24,000,000
From 04/01 through 06/30 $37,500,000
From 07/01 through 11/29 $51,000,000
From 11/30 through 12/31 $37,500,000
SECTION 2. REPRESENTATIONS AND WARRANTIES.
-------------------------------
The Borrower represents and warrants to the Banks:
2.1 ORGANIZATION, CORPORATE POWER, ETC. Each of the Borrower and each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was incorporated, and
each has the corporate power and authority to own its property and to carry on
its business as now being conducted and each is duly qualified (or is in the
process of becoming qualified) and where qualified, is in good standing, to do
business in every jurisdiction where such qualification is necessary, except
where failure to qualify would not have a material adverse effect upon the
financial condition, business or operations of the Borrower and its
Subsidiaries, taken as a whole. The Borrower has the corporate power to
execute, deliver and perform this Agreement, to borrow hereunder and to execute
and deliver the Notes herein referred to and to do so will not violate any
laws, rules, regulations, orders or decrees, its Articles of Incorporation or
Code of Regulations or any other agreement or instrument to which it is a
party.
2.2 LITIGATION. Except as set forth in Exhibit "C", there is no
litigation or proceeding pending against the Borrower, or any Subsidiary of the
Borrower, nor to the knowledge of the officers of the Borrower or its
Subsidiaries threatened, which, if decided adversely to the Borrower or any
such Subsidiary, would have a material adverse effect upon the financial
condition, business or operations of the Borrower and its Subsidiaries, taken
as a whole.
2.3 FINANCIAL CONDITION. The audited financial statements of the Borrower
for the fiscal year ended December 31, 1994 certified by KPMG Peat Marwick,
independent certified public accountants, and the interim unaudited financial
statements for the thirty-eight (38) week period ended September 23, 1995,
fairly reflect the financial condition of the Borrower and each Subsidiary and
the results of their operations as of the dates and for the periods stated, and
no material adverse change in the financial condition, business or operations
of the Borrower and its Subsidiaries, taken as a whole, has occurred since the
dates of such financial statements and interim statements. Such financial
statements are consolidated statements and have been prepared in accordance
with generally accepted accounting principles.
2
<PAGE> 10
2.4 TITLE TO PROPERTIES. Each of the Borrower and each Subsidiary has
good and marketable title to its property and assets. Such property and assets
of the Borrower and its Subsidiaries are not subject to a mortgage or lien
except as shown on Exhibit F attached hereto except for properties leased by
the Borrower or its Subsidiaries under Industrial Revenue Bond financing and
except for current property taxes not yet due.
2.5 LIABILITIES. The Borrower and its Subsidiaries have no liabilities,
direct or contingent, except (i) those disclosed in the audited financial
statements and interim statements referred to in Section 2.3 above, and (ii)
those incurred in the ordinary course of business since the dates of such
reports and interim statements referred to in Section 2.3 above, having in the
aggregate no materially adverse effect on the financial condition, business or
operations of the Borrower and its Subsidiaries, taken as a whole.
2.6 INVESTMENTS. The Borrower and its Subsidiaries have made no material
investments in, advances to or Guaranties of the obligations of any
corporation, individual or other entity except those disclosed in the interim
statements referred to in Section 2.3 above and the Permitted Investments.
2.7 RENEGOTIATION OF GOVERNMENT CONTRACTS. The Borrower and its
Subsidiaries are not subject to the renegotiation of any government contract in
any material amount.
2.8 TAXES. The Borrower and its Subsidiaries have filed all required
federal, state and local tax returns and paid all required federal, state and
local taxes as they have become due. Federal income taxes have been audited
through 1987, and no material claims have been assessed and are unpaid with
respect to such taxes except as shown in the audited financial statements or
interim financial statements referred to in Section 2.3 above.
2.9 ERISA. The Borrower and its Subsidiaries (i) have made prompt payment
of all contributions required to meet the minimum funding standards set forth
in Sections 302 and 305 of the Employee Retirement Income Security Act of 1974
as amended from time to time ("ERISA") with respect to any employee benefit
plan ("plan"), and (ii) have not:
(a) engaged in any "Prohibited Transaction", as that term is defined in
Section 406 of ERISA for which there is no exemption under Section 408 of
ERISA, or
(b) terminated any such plan in a manner which would result in the
imposition of a lien on the property of the Borrower pursuant to Section
4068 of ERISA.
2.10 USE OF PROCEEDS. The proceeds of all borrowings hereunder will be
used for general corporate purposes, but not directly or indirectly to
purchase or to carry
3
<PAGE> 11
any margin stock as defined by Regulation U of the Board of Governors of the
Federal Reserve System, and the Borrower is not in the business of extending
credit to purchase or carry margin stock.
2.11 COMPLIANCE WITH LAW. The Borrower and its Subsidiaries are not in
violation of, whether foreign or domestic, any laws, ordinances, governmental
rules, regulations, judgments or agreements to which they are subject and have
not failed to obtain any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of their properties or to the conduct
of their businesses, which violation or failure to obtain might materially and
adversely affect the business, prospects, properties or condition (financial or
otherwise) of the Borrower.
2.12 GOVERNMENT CONSENT. Neither the nature of the Borrower or its
Subsidiaries, or of their businesses or properties, nor any relationship
between the Borrower or its Subsidiaries and any other entity or person, nor
any circumstance in connection with the execution of this Agreement, is such as
to require a consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of the Borrower or
its Subsidiaries as a condition to the execution, delivery, performance,
validity or enforceability of this Agreement (including as to each borrowing
hereunder), the Notes and documents contemplated herein.
2.13 LEGAL AND BINDING OBLIGATION. (i) The Board of Directors of the
Borrower has duly authorized the execution, delivery and performance of this
Agreement and the Notes and this Agreement and the Notes will constitute valid
and binding obligations of the Borrower enforceable in accordance with their
terms; and (ii) the execution of this Agreement, the Notes and related
documents and compliance by the Borrower with all the provisions of this
Agreement are within the corporate powers of the Borrower, are legal and will
not conflict with, result in any breach of any of the provisions of, constitute
a default under, or result in the creation of any lien or encumbrance upon any
property of the Borrower under the provisions of, any agreement, charter
instrument, bylaw or other instrument to which the Borrower is a party or by
which it is bound.
2.14 INVESTMENT COMPANY ACT. None of the Borrower or any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 3. CERTAIN DEFINITIONS.
--------------------
As used herein the following words and terms shall have the following
meanings, respectively:
3.1 "Affiliate" means any Person which, directly or indirectly, controls
or is controlled by or is under common control with the Borrower or a
Subsidiary or which beneficially owns or holds or has the power to direct the
voting power of 5% or more of the
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voting stock of the Borrower or a Subsidiary or which has 5% or more of its
voting stock (or, in the case of a Person which is not a corporation, 5% or
more of its equity interest) beneficially owned or held, directly or
indirectly, by the Borrower or a Subsidiary, and any director or officer of the
Borrower or its Subsidiaries. For purposes of this definition, "control" means
the power to direct the management and policies of a Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlled by" and "under common control with" have
meanings correlative to the foregoing. Subsidiaries are not included within
the definition of Affiliate.
3.2 "Alternate Base Rate" means, as to each Bank, for any day, a rate per
annum equal to the higher of (i) such Bank's Prime Rate in effect on such day
or (ii) the Federal Funds Rate in effect on such day plus 1/2 of 1%.
3.3 "Business Day" means a day other than a Saturday, Sunday or other day
on which a Bank is not open for the transaction of substantially all of its
banking functions.
3.4 "Capitalized Lease" means and includes at any time any lease of
property, real or personal, which in accordance with GAAP would at such time be
required to be capitalized on a balance sheet of the lessee.
3.5 "Capitalized Lease Obligation" means at any time the capitalized
amount of the rental commitment under a Capitalized Lease which in accordance
with GAAP would at such time be required to be shown on a balance sheet of the
lessee.
3.6 "Consolidated Current Assets" means the assets of the Borrower and its
Subsidiaries that would (determined on a consolidated basis in accordance with
GAAP consistently applied) be classified as "current assets" on its
consolidated balance sheet.
3.7 "Consolidated Current Liabilities" means (i) the liabilities of the
Borrower and its Subsidiaries that would (determined on a consolidated basis in
accordance with GAAP consistently applied) be classified as "current
liabilities" on its consolidated balance sheet, (ii) Guaranties by the Borrower
of Current Debt of other Persons, and (iii) debt owed to banks.
3.8 "Consolidated Funded Debt" means the aggregate amount of Funded Debt
of the Borrower and its Subsidiaries, as consolidated in accordance with GAAP
and after eliminating intercompany items.
3.9 "Consolidated Net Income" means the aggregate of the Net Income of the
Borrower and its Subsidiaries, after eliminating all intercompany items and
portions of earnings properly attributable to minority interests, if any, in
the capital stock of such Subsidiaries, all computed and consolidated in
accordance with GAAP.
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3.10 "Consolidated Net Interest Expense" means the aggregate of the
interest expense of the Borrower and its Subsidiaries less aggregate interest
income of the Borrower and its Subsidiaries, all computed and consolidated in
accordance with GAAP.
3.11 "Consolidated Net Tangible Assets" means as of the date of any
determination thereof, Consolidated Total Assets as of such date less the sum
of (i) Consolidated Current Liabilities and (ii) assets properly classified as
intangible assets in accordance with GAAP.
3.12 "Consolidated Net Worth" means as of the date of any determination
thereof the sum of all amounts which, in accordance with GAAP, would be
included under shareholders' equity plus (to the extent not included in
shareholders' equity) preferred stock, as determined on a consolidated basis,
on the balance sheet of the Borrower and its Subsidiaries.
3.13 "Consolidated Tangible Net Worth" means as of the date of any
determination thereof the sum of all amounts which, in accordance with GAAP,
would be included under shareholders' equity plus (to the extent not included
in shareholders' equity) preferred stock, as determined on a consolidated
basis, on the balance sheet of the Borrower and its Subsidiaries, MINUS assets
properly classified as intangible assets in accordance with GAAP.
3.14 "Consolidated Senior Funded Debt" means the aggregate amount of Senior
Funded Debt of the Borrower and its Subsidiaries, as consolidated in accordance
with GAAP and after eliminating intercompany items.
3.15 "Consolidated Total Assets" means, as of the date of any determination
thereof, the total amount of all assets of the Borrower and its Subsidiaries as
determined on a consolidated basis in accordance with GAAP.
3.16 "Current Debt" of any Person shall mean as of the date of any
determination thereof (i) all indebtedness of such Person for borrowed money
other than Funded Debt of such Person, including, without limitation, debt owed
to banks, and (ii) Guaranties by such Person of Current Debt of others.
3.17 "Debt" of any Person means all Current Debt of such Person and all
Funded Debt of such Person.
3.18 "Default" means any event which, with the lapse of time or the giving
of notice pursuant to the terms of this Agreement, or both, becomes an Event of
Default.
3.19 "Dollars" and "$" mean the lawful money of the United States of
America.
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3.20 "Domestic Loans" means the Loans carrying interest at rates based upon
the Alternate Base Rate.
3.21 "Eurodollar Interest Rate" means LIBOR plus one percent (1%).
3.22 "Eurodollar Loans" means the Loans carrying interest at rates based
upon the Eurodollar Interest Rate.
3.23 "Event of Default" has the meaning specified in Section 13 hereof.
3.24 "Federal Funds Rate" means, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by the Banks, or any of them, from three Federal funds
brokers of recognized standing selected by the Banks, or any of them.
3.25 "Funded Debt" of any Person means (i) indebtedness of such Person for
borrowed money or which has been incurred in connection with the acquisition of
assets or services, in each case having a final maturity of more than one year
from the date of creation thereof (or which is renewable or extendible at the
option of the obligor for a period or periods more than one year from the date
of creation), including all payments in respect thereof that are required to be
made within one year from the date of any determination of Funded Debt, whether
or not the obligation to make such payments shall constitute a current
liability of the obligor under GAAP, (ii) Capitalized Lease Obligations of such
Person, (iii) obligations secured by any Lien upon property or assets owned by
such Person, even though such Person has not assumed or become liable for the
payment of such obligations, (iv) obligations created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default
are limited to repossession or sale of property, and (v) all Guaranties by such
Person of Funded Debt of others. Funded Debt excludes debt owed to banks.
3.26 "GAAP" means generally accepted accounting principles as in effect at
the time of application to the provisions hereof.
3.27 "Guaranties" by any Person means all obligations of such Person
guaranteeing, or in effect guaranteeing, any Current Debt or Funded Debt of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through an
agreement, contingent or otherwise, by such Person (i) to purchase such Debt or
any property or assets constituting security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of such Debt, (y) to maintain
working capital or other balance sheet condition or otherwise to advance or
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make available funds for the purchase or payment of such Debt, (iii) to lease
property or to purchase securities or other property or services primarily for
the purpose of assuring the owner of such Debt of the ability of the primary
obligor to make payment of such Debt, or (iv) otherwise to assure the owner of
such Debt against loss in respect thereof. Guaranties does not included
endorsement of instruments for deposit or collection in the ordinary course of
business.
3.28 "Interest Period" means:
3.28.1 In the case of Eurodollar Loans, an initial period commencing, as
the case may be, on the day such a Loan shall be made by a Bank, or on the
day of conversion of any then outstanding Loan to a Loan of such type, and
ending on the date one, two, three or six months thereafter, as the Borrower
may elect, provided that (A) any Interest Period with respect to a
Eurodollar Loan, which shall commence on the last LIBOR Business Day of a
calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall end on
the last LIBOR Business Day of the appropriate subsequent calendar month;
and (B) each Interest Period with respect to a Eurodollar Loan which would
otherwise end on a day which is not a LIBOR Business Day shall end on the
next succeeding LIBOR Business Day or, if such next succeeding LIBOR
Business Day falls in the next succeeding calendar month, on the next
preceding LIBOR Business Day.
3.28.2 With respect to Domestic Loans, an initial period commencing, as
the case may be, on the day such a Loan shall be made by a Bank, or on the
day of conversion of any then outstanding Loan to a Loan of such type, and
ending on the last Business Day of the next March, June, September or
December, whichever is first to occur, and thereafter on the last Business
Day of each March, June, September or December.
Notwithstanding the provisions of 3.28.1 and 3.28.2 above, no Interest Period
may extend beyond the Termination Date.
3.29 "Investment" means any loan, advance, extension of credit or
contribution of capital or any investment in, or purchase or other acquisition
of, stock, notes, debentures or other securities.
3.30 "LIBOR" means, with respect to any Eurodollar Loan, the London
Interbank Offered Rate, which is the per annum rate of interest at which
deposits in Dollars for the related Interest Period and in an aggregate amount
comparable to the amount of such Eurodollar Loan are offered to the Bank making
such Eurodollar Loan by other prime banks in the London interbank market,
selected in such Bank's discretion, at approximately 11:00 a.m. London time, on
the second LIBOR Business Day prior to the first day of the
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related Interest Period; all as conclusively determined by such Bank, such sum
to be rounded up, if necessary, to the nearest whole multiple of 1/100 of 1%.
3.31 "LIBOR Business Day" means a day which is both a Business Day and a
day on which dealings in Dollar deposits are carried out in the London
interbank market.
3.32 "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other encumbrance of any kind in respect of such
asset. For the purposes hereof, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capitalized Lease or
other title retention agreement relating to such asset.
3.33 "Loan" or "Loans" means any borrowings by the Borrower from any Bank
under Section 3 hereof.
3.34 "Metropolitan Agreement" means that certain note agreement between the
Borrower and Metropolitan Life Insurance Company dated July 5, 1994 with
respect to a $15,000,000 extension of credit, a copy of which is attached
hereto as Exhibit B.
3.35 "Net Income" means for any period the net income (or the net deficit,
if expenses and charges exceed revenues and other proper income credits) of a
corporation or other Person for such period determined in accordance with GAAP.
3.36 "Note" or "Notes" means the Revolving Credit Notes as defined in
Section 3.2.
3.37 "Permitted Investments" means Investments consisting of:
3.37.1 loans or advances by the Borrower and its Subsidiaries to
Subsidiaries in the ordinary course of business;
3.37.2 Investments in corporate debt obligations maturing in one year or
less from the date of issuance which, at the time of acquisition by the
Borrower or any Subsidiary, are rated "A" or better (or the equivalent) by
Standard & Poor's Ratings Group (currently a division of McGraw-Hill, Inc.)
(hereinafter called "Standard and Poor's") or Moody's Investors Service,
Inc. (hereinafter called "Moody's");
3.37.3 Investments in direct obligations of the United States of
America or any agent or instrumentality of the United States of America,
the payment or guarantee of which constitutes a full faith and credit
obligation of the United States of America, in either case maturing in
twelve months or less from the date of acquisition thereof;
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3.37.4 Investments in certificates of deposit maturing within one year
from the date of issuance thereof, issued by a bank or trust company
organized under the laws of the United States or any state thereof, having
capital, surplus and undivided profits aggregating at least $200,000,000;
3.37.5 loans or advances in the ordinary course of business to
suppliers, officers, directors and employees for expenses (including moving
expenses related to a transfer) incidental to carrying on the business of
the Borrower or any Subsidiary not exceeding $2,000,000 in the aggregate;
3.37.6 receivables arising from the sale of goods and services in the
ordinary course of business of the Borrower and its Subsidiaries;
3.37.7 other debt Investments by the Borrower and its Subsidiaries not
exceeding $5,000,000, maturing in six months or less from the date of
issuance thereof; and
3.37.8 other Investments by the Borrower and its Subsidiaries not
exceeding $1,000,000.
For purposes of this definition, at any time when a corporation becomes a
Subsidiary, all Investments of such corporation at such time shall be deemed to
have been made by such corporation, as a Subsidiary, at such time.
3.38 "Person" means and includes an individual, a corporation, a
partnership, a firm, a joint venture, a limited liability company, a trust, an
unincorporated organization or a government or an agency or political
subdivision thereof.
3.39 "Prime Rate" means (x) as to borrowings from The Huntington National
Bank, the prime commercial lending rate of The Huntington National Bank, as
such rate is established and made available from time to time based on its
consideration of economic, money market, business and competitive factors, and
it is not necessarily such Bank's most favored rate, (y) as to borrowings from
The Bank of New York, the prime commercial lending rate of such Bank as
publicly announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such
rate, and (z) as to borrowings from NBD Bank, the prime commercial lending rate
of such Bank as publicly announced to be in effect from time to time, such rate
to be adjusted automatically, without notice, on the effective date of any
change in such rate.
3.40 "Senior Funded Debt" mean all Funded Debt other than Subordinated
Funded Debt.
3.41 "Subordinated Funded Debt" means any unsecured Funded Debt of the
Borrower which (x) is subordinated in right of payment to the Notes, (y) does
not provide
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for optional prepayments with respect thereto prior to the Termination Date in
effect at the time the particular unsecured Funded Debt is entered into and (z)
has a maturity extending beyond the Termination Date, PROVIDED that any sinking
fund or other mandatory payments or prepayments required to be made in
connection with any such Debt prior to the Termination Date shall be deemed to
be Senior Funded Debt.
3.42 "Subsidiary" means any corporation 50% or more of the outstanding
voting stock of which at the time is owned directly or indirectly by the
Borrower.
3.43 "Termination Date" means December 31, 1998 or such later date(s) to
which the Commitments may be extended from time to time pursuant to the
provisions of this Agreement.
3.44 "Total Capitalization" means, as of any date, the sum of (i)
Consolidated Funded Debt outstanding on such date, and (ii) Consolidated Net
Worth determined as of such date.
SECTION 4. BORROWING PROVISION.
--------------------
4.1 AMOUNT OF REVOLVING CREDIT. Relying on the foregoing
representations and warranties and subject to the agreements and covenants
hereinafter contained, each Bank agrees to make Loans (which may be either
Domestic Loans or Eurodollar Loans, or any combination) to the Borrower, from
time to time from the date hereof to the Termination Date, at such times and in
such amounts as the Borrower shall request, in the aggregate not in excess of
such Bank's Commitment. The Borrower shall give each Bank written or
telephonic notice by 12:00 Noon, such Bank's local time, three Business Days
prior to the date of intended borrowing with respect to any Eurodollar Loan
hereunder and written or telephonic notice by 12:00 Noon, such Bank's local
time, on the same Business Day with respect to any Domestic Loan, which notice
shall specify the proposed date of borrowing, the amount thereof, whether such
loan is to be a Domestic Loan or a Eurodollar Loan, and if a Eurodollar Loan,
the Interest Period selected. Each Bank shall notify the Borrower of the
relevant Eurodollar Interest Rate at approximately 11:00 a.m., New York time,
two Business Days prior to the date of intended borrowing. The Borrower shall
accept or reject such Eurodollar Rate upon such notification by such Bank, and
such acceptance or rejection shall be irrevocable. In the event of rejection
such Loan shall be a Domestic Loan. Each Loan shall be in the amount of
$100,000 or an integral multiple thereof in the case of a Domestic Loan or in
an amount of not less than $1,000,000 and increments of $250,000 thereafter in
the case of a Eurodollar Loan. Notwithstanding the foregoing, the Borrower
shall not have outstanding any more than seventeen (17) Eurodollar Loans per
Bank at any one time. The Loans shall be evidenced by Revolving Credit Notes
(as defined in Section 4.2 hereof).
4.2 EVIDENCE OF LOANS MADE UNDER REVOLVING CREDIT. All Loans made by each
Bank pursuant to such Bank's Commitment shall be evidenced by a promissory
note,
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substantially in the form attached hereto as Exhibit "A" (hereinafter
collectively called the "Revolving Credit Notes"), payable to the order of such
Bank, duly executed on behalf of the Borrower, dated the date of this
Agreement. Each Bank is hereby authorized by the Borrower to note on the
schedule attached to any Revolving Credit Note held by such Bank the date,
amount and type of each Loan made to the Borrower, the duration of the related
Interest Period if applicable, the amount of each payment or prepayment of
principal thereon, and the other information provided for on such schedule,
which schedule shall constitute PRIMA FACIE evidence of the information so
noted; provided, that failure of such Bank to make any such notation shall not
relieve the Borrower of its obligation to repay the outstanding principal
amount of any Loan or Loans made to it, all accrued interest thereon and all
other amounts payable in accordance with the terms of any Revolving Credit Note
or this Agreement. Interest on the Loans evidenced by such Revolving Credit
Notes shall be payable at the rates specified in Sections 3.2 and 3.21 hereof
and on each Interest Payment Date, as hereinafter defined. The terms and
conditions of this Agreement are incorporated in the Revolving Credit Notes by
reference as though the same were written therein.
4.3 COMMITMENT FEES. The Borrower agrees to pay to each Bank on or prior
to the execution of this Agreement a one-time commitment fee in the amount of
$25,000. The Borrower further agrees to pay each Bank an annual commitment fee
(hereinafter called the "Commitment Fee") of three-eighths of one percent (3/8
of 1%) per annum (computed on the basis of a 360-day year for the actual number
of days elapsed in each computation period) of the average daily unused amount
of the Commitment of such Bank available to Borrower pursuant to Section 1.1
above taking into consideration the seasonal adjustment. The Commitment Fee
shall commence to accrue on the date hereof through and including the
Termination Date, and shall be paid quarterly in arrears on the last day of
March, June, September and December in each year commencing March 31, 1996 and
on the termination of the Commitments.
4.4 CONVERSION OF LOANS. The Borrower may elect to continue a Loan as a
Eurodollar Loan or a Domestic Loan or convert a Loan of one type to a Loan of
another type by giving telephonic notice thereof to each Bank not later than
11:00 a.m., such Bank's local time, three LIBOR Business Days prior to the day
on which the continuation of a Eurodollar Loan or conversion to a Eurodollar
Loan is to be effective, and not later than 11:00 a.m., such Bank's local time,
three Business Days prior to the proposed day of conversion of a Eurodollar
Loan to a Domestic Loan, provided, that an outstanding Loan may only be
converted on the last day of the then current Interest Period with respect to
such Loan, and PROVIDED, FURTHER, that upon the continuation or conversion of a
Loan such notice shall also specify the Interest Period (if applicable) to be
applicable thereto upon such continuation or conversion. If the Borrower shall
fail to timely provide notice with respect to any outstanding Eurodollar Loan,
the Borrower shall be deemed to have elected to convert such Loan to a Domestic
Loan on the last day of the Interest Period with respect to such Loan.
Telephonic notice shall in each instance be followed within a reasonable period
of time by written notice substantially in the form of Exhibit "D" hereto. In
the event
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of any conflict between telephonic and written notice, the telephonic notice
shall control to the extent that such notice has been relied upon by the Bank
making the applicable Loan.
4.5 PREPAYMENT. The Borrower may at any time, upon three (3) Business
Days prior written notice to the Banks, repay any or all of the Loans without
penalty, except that Eurodollar Loans may only be paid at the end of the
applicable Interest Period and the Borrower may not prepay any portion of any
Loan as to which an election for a continuation of or a conversion to a
Eurodollar Loan is pending. Any prepayment shall be in the minimum amount of
$100,000 or multiples thereof. All partial prepayments under this Section 4.5
shall be accompanied by the payment of all accrued interest. The Borrower
shall make such prepayments as are necessary to keep the amounts outstanding to
the Banks hereunder within the Commitment limitations identified in Section 1.2
hereof.
4.6 TERMINATION OR REDUCTION OPTIONS. The Borrower shall have the right
at any time prior to the Termination Date, upon three (3) Business Days prior
written notice to the Banks, (i) to terminate or reduce permanently the
aggregate principal amount of the Commitments of the Banks to make Loans
hereunder by written notice to the Banks; provided that any such reduction
shall be made between the Banks pro rata in accordance with their respective
Commitments; provided further that any permanent reduction of the Commitments
of the Banks to make Loans must be accompanied by the repayment of any
outstanding principal amount in excess of the amount of each Bank's Commitment,
as thereby reduced together with interest accrued thereon; and provided further
that no such termination or reduction which would require prepayment of any
Eurodollar Loan shall be permitted except at the end of the applicable Interest
Period.
4.7 INTEREST PAYMENT DATES. "Interest Payment Date" shall mean (a) the
last day of each Interest Period in the case of each Eurodollar Loan, except
that in the case of any Interest Period that is longer than three (3) months
for any such Loan, "Interest Payment Date" shall also include the ninetieth
(90th) day of such Interest Period; and (b) in the case of each Domestic Loan,
the last Business Day of each March, June, September and December.
4.8 PAYMENT METHOD. All payments to be made by the Borrower hereunder
will be made in Dollars and in immediately available funds to the applicable
Bank at its address set forth in Section 14.2 hereof not later than 3:00 p.m.
such Bank's local time on the date on which such payment shall become due.
Payments received after 3:00 p.m. the applicable Bank's local time shall be
deemed to be payments made prior to 3:00 p.m. such Bank's local time on the
next succeeding Business Day. At the time of making each such payment, the
Borrower shall specify to such Bank that obligation of the Borrower to which
such payment is to be applied, or, in the event that the Borrower fails to so
specify or if an Event of Default shall have occurred and be continuing, such
Bank may apply such payments to indebtedness due hereunder as it may determine
in its sole discretion, subject to Section 12 hereof.
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4.9 NO SETOFF OR DEDUCTION. All payments of principal and interest on the
Loans and other amounts payable by the Borrower hereunder shall be made by the
Borrower without setoff or counterclaim, and free and clear of, and without
deduction or withholding for, or on account of, any present or future taxes,
levies, imposts, duties, fees, assessments, or other charges of whatever
nature, imposed by any governmental authority, or by any department, agency or
other political subdivision or taxing authority.
4.10 PAYMENT ON NON-BUSINESS DAY; PAYMENT COMPUTATIONS. Except as
otherwise provided in this Agreement to the contrary, whenever any installment
of principal of, or interest on, any Loan outstanding hereunder or any other
amount due hereunder, becomes due and payable on a day which is not a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day
and, in the case of any installment of principal, interest shall be payable
thereon at the rate per annum determined in accordance with this Agreement
during such extension. Computations of interest and other amounts due under
this Agreement shall be made on the basis of a year of 360 days for the actual
number of days elapsed, including the first day but excluding the last day of
the relevant period.
4.11 EXTENSION OF COMMITMENTS. The Borrower may request, once each year,
extension of the Termination Date and the Commitments for periods of one year
each by making such request following delivery of the Borrower's annual
financial statement and current year's operating plan. Upon receipt of any
request for extension, each Bank shall have 60 days to approve or reject such
request. Should less than all of the Banks agree to an extension, then the
Termination Date and the Commitments will be extended only to extent of the
Commitments of the Bank or Banks agreeing to the extension. Any Loans
outstanding hereunder to the Bank or Banks electing not to extend shall be paid
when due. The decision as to whether to grant such an extension shall be in
the absolute discretion of each of the Banks. The Borrower shall request any
extension not later than 60 days prior to the Termination Date of any existing
Commitment.
SECTION 5. PRO RATA TREATMENT.
------------------
Each borrowing hereunder and each payment and prepayment of principal of the
Notes and each payment of Commitment Fee payable hereunder shall be made
between the Banks pro rata in accordance with the Commitments to the extent
required to equalize the outstanding principal amount of their Loans and the
Commitment Fee payable. Each borrowing hereunder will be divided into three
equal parts and each of the Banks shall receive their respective shares of each
borrowing. Notwithstanding anything in Section 4.1 hereof to the contrary,
each borrowing must be divided into either three Domestic Loans or three
Eurodollar Loans, subject, however, to a deviation from this normal borrowing
pattern (e.g. two (2) Eurodollar Loans and one (1) Domestic Loan or vice
versa) due to impossibility of performance and other circumstances as provided
in Sections 7.3 and 7.4 hereof and the increment and time limitations in
Section 4.1 hereof. Any deviation from normal lending patterns caused by an
impossibility or other circumstance under Sections 7.3
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or 7.4 hereof shall be remedied as soon as the impossibility or other
circumstance is removed.
SECTION 6. CONDITIONS OF LENDING.
----------------------
The obligations of the Banks hereunder are subject to the following
conditions precedent:
6.1 OPINION OF COUNSEL FOR BORROWER. On or before the date of first
borrowing hereunder, the Banks shall have received the favorable written
opinion of counsel for the Borrower acceptable to the Banks, addressed to the
Banks, and satisfactory to counsel for the Banks (i) confirming the accuracy of
the representations and warranties set forth in Section 2.1 hereof (except such
confirmation may exclude Barry de Acuna, S.A., Barry de Mexico, S.A., Barry de
Zacatecas, S.A. and Barry Juarez, S.A. and any opinion as to the Borrower's
qualification to do business in states other than Ohio), and to the best
knowledge of such counsel, confirming the accuracy of the representations and
warranties set forth in Sections 2.2, 2.12 and 2.14 hereof and those portions
of Section 2.13 hereof not described in Section 6.1 (ii) hereof; (ii) stating
that (1) this Agreement has been duly executed and delivered by the Borrower
and constitutes the legal, valid and binding obligation of the Borrower
enforceable in accordance with its terms and (2) the Notes when duly executed
and delivered by the Borrower to the Banks in accordance with the provisions
hereof, will constitute the legal, valid, and binding obligations of the
Borrower enforceable in accordance with their terms (subject, as to enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency and similar
laws and to moratorium laws from time to time in effect and to such other
exceptions as the Banks may deem acceptable); and (iii) confirming that the
terms of this Agreement will not violate any of the terms or conditions of the
Metropolitan Agreement.
6.2 SUPPORTING DOCUMENTS. Each Bank shall have received on or before the
date of the first borrowing hereunder (i) a copy of the resolutions of the
Board of Directors of the Borrower authorizing the execution, delivery and
performance of this Agreement, the borrowings contemplated hereunder and the
execution and delivery of the notes provided for herein, (ii) a copy certified
by the Secretary of State of Ohio of the Articles of Incorporation of the
Borrower; (iii) a copy of the Bylaws or Code of Regulations of the Borrower,
certified as true and correct by its secretary or assistant secretary, (iv) a
certificate of the secretary or assistance secretary of the Borrower
identifying the officers authorized to sign this Agreement and the Notes
provided for herein and to borrow hereunder, together with samples of each of
their signatures, (v) a certificate of good standing as to the Borrower from
the Secretary of State of Ohio and of each state in which the Borrower is doing
business and required to qualify, and (vi) such additional documents as counsel
for any of the Banks may reasonably request.
6.3 NO DEFAULT. Each borrowing hereunder shall constitute a certification
by the Borrower that (i) the Borrower and each Subsidiary are in compliance
with all of the
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terms and provisions set forth herein on their part to be observed and
performed, (ii) no Default or Event of Default has occurred or is continuing at
the time of such borrowing and (iii) each of the representations and warranties
made in Section 2 hereof are true and correct with the same effect as though
such representations and warranties had been made at the time of such
borrowing, except that the representations and warranties made in Sections 2.3
and 2.5 hereof shall be deemed to refer to the last audited financial
statements or interim financial statement delivered to the Banks pursuant to
Section 8.1 hereof and further excepting that the occurrence of any material
adverse change or effect shall be determined by reference to the Borrower's
financial condition, business and operations on the date of this Agreement.
6.4 DELIVERY OF NOTES. The Borrower shall have executed and delivered the
Notes to the Banks.
SECTION 7. PROVISIONS RELATING TO EURODOLLAR LOANS.
----------------------------------------
7.1 ADDITIONAL COSTS. In the event that any applicable law, treaty, rule
or regulation (whether domestic or foreign) now or hereafter in effect, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any of the
Banks with any request or directive of any such authority (whether or not
having the force of law), shall (i) impose taxes on, or affect the basis of
taxation of, payments to any of the Banks of any amounts payable by the
Borrower under this Agreement (other than taxes imposed on the overall net
income of any of the Banks by the jurisdiction, or by any political subdivision
or taxing authority of any such jurisdiction, in which such Bank has its
principal office), or (ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, such Bank, or (iii) shall impose any
other condition, requirement or charge with respect to this Agreement, the
Notes or the Eurodollar Loans (including without limitation any capital
adequacy requirement, any requirement which affects the manner in which the
Banks allocate capital resources to their commitments or any similar
requirement), and the result of any of the foregoing is to increase the cost to
any of the Banks of making or maintaining any Loan, to reduce the amount of any
sum receivable by any of the Banks thereon, or to reduce the rate of return on
any of the Banks' capital, then the Borrower shall pay to such Bank, from time
to time, upon request of such Bank, additional amounts sufficient to compensate
such Bank for such increased cost, reduced sum receivable or reduced rate of
return to the extent such Bank is not compensated therefor in the computation
of the interest rates applicable to the Loans. A detailed statement as to the
amount of such increased cost, reduced sum receivable or reduced rate of
return, prepared in good faith and submitted by a Bank to the Borrower, shall
be conclusive and binding for all purposes relating to such Bank, absent
manifest error in computation.
7.2 ADDITIONAL EUROCURRENCY RESERVES. Without limiting the effect of the
provisions of Section 7.1 above, the Borrower shall, upon request by any of the
Banks,
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pay to such Bank on each Interest Payment Date with respect to each Eurodollar
Loan at any time outstanding with respect to such Bank, additional amounts for
each day upon which such Bank is required to maintain reserves against
"Eurocurrency liabilities" under Regulation D of the Board of Governors of the
Federal Reserve System, which additional amount shall be calculated by such
Bank with respect to its outstanding Eurodollar Loans as follows:
R 1
----- ---
Additional amount = P x (1-r) - R x 360
where
P = the principal amount of such Loan outstanding on such date;
R = LIBOR applicable to such Loan for such date (expressed as a decimal);
and
r = the stated rate (expressed as a decimal) at which such reserve
requirements are imposed on such Bank as determined by such Bank.
Upon making a request to the Borrower pursuant to this Section 7.2, the
requesting Bank shall notify the other Banks thereof. This provision is for
the benefit of the Banks and is not intended to increase the expected yield to
the Banks above the rates of interest provided for in this Agreement.
7.3 LIMITATIONS OF REQUESTS AND ELECTIONS. Notwithstanding any other
provision of this Agreement to the contrary, if, upon receiving a request for a
Eurodollar Loan pursuant to Section 4.1 hereof, or a request for a continuation
of a Eurodollar Loan as a Eurodollar Loan pursuant to Section 4.4 hereof, or
conversion of a Domestic Loan to a Eurodollar Loan pursuant to Section 4.4
hereof, (i) deposits in Dollars for periods comparable to the Interest Period
elected by the Borrower are not available to any Bank in the London interbank
market, or (ii) it is otherwise impossible for any reason to determine LIBOR,
or (iii) LIBOR will not adequately and fairly reflect the cost to any Bank of
making or maintaining the related Eurodollar Loan, or (iv) by reason of
national or international financial, political or economic conditions or by
reason of any applicable law, treaty, rule or regulation (whether domestic or
foreign) now or hereafter in effect, or the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any Bank with any request or directive
of such authority (whether or not having the force of law), including without
limitation exchange controls, it is impracticable, unlawful or impossible for
any Bank (x) to make the relevant Eurodollar Loan or (y) to continue such Loan
as a Eurodollar Loan or (z) to convert a Loan to a Eurodollar Loan, then the
Borrower shall not be entitled, so long as such circumstances continue, to
request or receive a Eurodollar Loan pursuant to Section 4.1 hereof or a
continuation of or conversion to such Loans pursuant to Section 4.4 hereof from
such Bank. In the event that such circumstances no longer exist, such Bank
shall again
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consider requests for Eurodollar Loans pursuant to Section 4.1 hereof, and
requests for continuations of and conversions to such Loans pursuant to Section
4.4 hereof.
7.4 ILLEGALITY AND IMPOSSIBILITY. In the event that any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect, or any interpretation or administration thereof by any governmental
authority charged with the interpretation or administration thereof, or
compliance by any of the Banks with any request or directive of such authority
(whether or not having the force of law), including without limitation exchange
controls, shall make it unlawful or impossible for any of the Banks to maintain
any Loan under this Agreement, the Borrower shall upon receipt of notice
thereof from any of the Banks, repay in full the then outstanding principal
amount of all Loans made by the Banks so affected together with all accrued
interest thereon to the date of payment and all amounts due to such Banks under
Sections 4 and 7.5 hereof, (i) on the last day of the then current Interest
Period, if any, applicable to such Loan if such Bank may lawfully continue to
maintain such Loan to such day, or (ii) immediately if such Bank may not
continue to maintain such Loan to such day. This provision is for the benefit
of the Banks and is not intended to increase the yield to the Banks above the
rates of interest provided for in this Agreement.
7.5 INDEMNIFICATION. If the Borrower makes any payment of principal with
respect to any Loan on any other date than the last day of an Interest Period
applicable thereto (whether pursuant to Sections 4.5, 7.4 or 13.2 hereof or
otherwise), or if the Borrower fails to borrow, continue or convert any Loan
after notice has been given to any Bank in accordance with Section 4.1 or 4.4
hereof, or fails to make any payment of principal or interest in respect of a
Loan when due, or fails to make any prepayment after notice of intention to
prepay has been given to the Banks, the Borrower shall reimburse each Bank on
demand for any resulting loss or expense incurred by such Bank, including
without limitation any loss incurred in obtaining, liquidating or employing
deposits from third parties. A detailed statement as to the amount of such
loss or expense, prepared in good faith and submitted by a Bank to the Borrower
shall be conclusive and binding for all purposes absent manifest error in
computation.
7.6 SURVIVAL OF OBLIGATIONS. The provisions of this Section 7 shall
survive the termination of the Commitments and the payment in full of all Notes
outstanding pursuant to this Agreement.
SECTION 8. AFFIRMATIVE COVENANTS.
----------------------
For as long as the Banks are obligated to lend hereunder and until payment
in full of the Notes and interest thereon, the Borrower covenants that it will
and will cause each Subsidiary, except in the case of Sections 8.1, 8.2, 8.9
and 8.10 hereof and unless the Banks shall otherwise consent in writing, to:
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8.1 FINANCIAL STATEMENTS. Furnish each Bank a copy of the report of the
certified audit of the Borrower and its Subsidiaries for each fiscal year
prepared by a certified public accountant of recognized standing and a balance
sheet and related statements of income and retained earnings and cash flow of
the Borrower and of the Subsidiaries as of the end of and for each quarter
certified as to fairness of presentation by an officer of the Borrower and/or
the respective Subsidiaries. All financial statements will be consolidated
financial statements, will be prepared in accordance with generally accepted
accounting principles, and will be in a form satisfactory to the Banks. The
annual audits and quarterly statements shall be in the format required for
filing with the Securities and Exchange Commission. The engagement of the
certified public accountant will require the reporting of any and all Defaults
and Events of Default as of the last day of the fiscal year of the Borrower
which have come to the attention of such accountant or that no Defaults or
Events of Default have come to its attention as of such date. Quarterly
financial statements will be accompanied by an officer's certificate, in the
form attached hereto as Exhibit G, indicating whether a Default or Event of
Default has occurred and, if so, stating the facts with respect thereto and
whether the same has been cured prior to the date of such certificate. In the
event that any certificate furnished under this paragraph shall state that a
Default or Event of Default has occurred and is continuing, such certificate
shall be accompanied by a statement executed by the chief financial officer of
the Borrower as to the action taken and proposed to be taken by the Borrower to
cure such Default or Event of Default. Quarterly financial statements shall
also be accompanied by an officer's compliance certificate in the form attached
hereto as Exhibit E. Such annual and quarterly statements shall be delivered
to the Banks within 120 days and 60 days respectively, after the close of the
fiscal period.
The Borrower will also furnish the Banks promptly after sending or filing
thereof, copies of all financial statements and reports which it sends to its
stockholders and copies of all regular and periodic reports and registration
statements which it files with the Securities and Exchange Commission. The
Borrower will furnish the Banks within a reasonable period of time such
additional information and financial statements as any of the Banks may from
time to time request.
8.2 OUT OF POCKET EXPENSES. Pay all out-of-pocket expenses of the Banks
arising in connection with the transactions contemplated by this Agreement,
whether or not consummated, including the reasonable fees and expenses of each
of the Banks' counsel for services rendered in connection with the transaction
contemplated hereby including the preparation of this Agreement and related
documents, and any amendments or modifications thereto.
8.3 COMPLIANCE WITH STATUTES; PAYMENT OF TAXES. Comply with all valid and
applicable statutes and governmental regulations and pay promptly when due all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
other obligations, which, if unpaid might become a lien against the property of
the Borrower or any Subsidiary, except liabilities being contested in good
faith by appropriate proceedings and
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<PAGE> 27
against which the Borrower or applicable Subsidiary has set up adequate
reserves in conformity with GAAP.
8.4 INSURANCE. Maintain insurance in such amounts as is customarily
maintained by companies of the same relative size in the same or similar
businesses.
8.5 CORPORATE EXISTENCE. Maintain its corporate existence in good
standing and comply with all valid and applicable statutes, rules and
regulations, and maintain its properties in good operating condition, except a
Subsidiary may be merged into the Borrower or consolidated with another
Subsidiary.
8.6 ERISA. The Borrower and its Subsidiaries shall with respect to any
employee benefit plan under ERISA in effect now or in the future:
(a) at all times make prompt payment of contributions required to meet
the minimum funding standards set forth in Sections 302 through 305 of
ERISA with respect to such plan,
(b) if requested by any of the Banks, promptly, after the filing thereof,
furnish to the Banks copies of each annual report required to be filed
pursuant to Section 103 of ERISA in connection with such plan for the plan
year most recently ended, including any certified financial statements or
actuarial statements required pursuant to said Section 103,
(c) notify the Banks immediately of any fact, including, but not limited
to, any "Reportable Event," as that term is defined in Section 4043 of
ERISA, arising in connection with such plan which might constitute grounds
for termination thereof by the Pension Benefit Guaranty Corporation, or
any successor thereto, or for the appointment by the appropriate United
States District Court of a trustee to administer such plan, and
(d) notify the Banks of any "Prohibited Transaction" as that term is
defined in Section 406 of ERISA for which there is no exemption under
Section 408 of ERISA.
8.7 BOOKS AND RECORDS. Maintain books and records in which full and
correct entries will be made of all its business transactions.
8.8 INSPECTION OF BOOKS AND RECORDS. Permit each of the Banks upon its
reasonable request to inspect the books and records of the Borrower, to make
copies and abstracts thereof and to discuss the affairs of the Borrower with
the Borrower's officers.
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8.9 NOTIFICATION BY BORROWER. Give the Banks prompt written notice of:
(a) the occurrence of any Default or Event of Default or any event or
condition which, with notice or lapse of time, or both, would constitute
an Event of Default, and
(b) any development in the business or affairs of the Borrower or any of
its Subsidiaries which has resulted in or which is likely in the
reasonable judgment of the Borrower to result in a material adverse change
in the business, properties, operations or condition, financial or
otherwise, of the Borrower or any of its Subsidiaries.
8.10 AMENDMENTS TO METROPOLITAN AGREEMENT. Furnish each Bank promptly with
a copy of every amendment of the Metropolitan Agreement.
8.11 NOTICE OF CLAIMS. Give the Banks prompt written notice of any claim in
excess of $1,000,000, or in which no monetary amount is specified, that is
asserted against the Borrower or any of its Subsidiaries in any litigation to
which the Borrower or such Subsidiary is a party.
8.12 RESTRICTION ON CONSOLIDATED ASSETS. Maintain sixty-seven percent
(67%) of consolidated tangible assets, excluding intercompany assets which are
eliminated when consolidated in accordance with GAAP, under the ownership of
and in the name of the Borrower. In the event the Borrower fails to maintain
sixty-seven percent (67%) of its consolidated tangible assets under its
ownership or in its own name, then the Borrower, within a reasonable time
thereafter, shall make all significant Subsidiaries, as determined in a
commercially reasonable manner by the Banks, obligors on all indebtedness owing
to the Banks under this Agreement, either by assumption of such indebtedness as
a co-maker with Borrower or the guaranty of such indebtedness, as the Borrower
may elect.
SECTION 9. NEGATIVE COVENANTS.
------------------
For as long as the Banks are obligated to lend hereunder and until payment
in full of the Notes and interest thereon, the Borrower covenants that it will
not, without the prior written consent of the Banks:
9.1 CURRENT RATIO. Permit the ratio of Consolidated Current Assets to
Consolidated Current Liabilities to be less than (i) 1.25 to 1 at the end of
the first and fourth fiscal quarters in each fiscal year of the Borrower, and
(ii) 1.0 to 1 at the end of the second and third fiscal quarters in each fiscal
year of the Borrower.
9.2 LIMITATIONS ON DEBT. Permit the ratio of (x) Consolidated Senior
Funded Debt to Total Capitalization to exceed 50%, or (y) Consolidated Funded
Debt to Total Capitalization to exceed 55%.
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9.3 ADDITIONAL LIMITATIONS ON DEBT. Incur any Current Debt except:
9.3.1 unsecured Current Debt owing to banks, insurance companies and
similar financial institutions, PROVIDED that during each period from
November 1 to March 31 of the following year, there shall be a period of at
least sixty (60) consecutive days during which on each and every day during
such sixty (60) day period, the aggregate amount of such Current Debt of the
Borrower outstanding at the close of business on each such day (or if such
day is not a Business Day, on the next preceding Business Day) during such
sixty (60) day period, if deemed to be unsecured Funded Debt of the
Borrower, could then be outstanding without a violation of Section 9.2
hereof, and
9.3.2 Current Debt secured by Liens permitted by Section 9.8.6 hereof.
9.4 MAINTENANCE OF CONSOLIDATED TANGIBLE NET WORTH. Permit
Consolidated Tangible Net Worth to be less than the sum of $34,000,000 PLUS 50%
of Consolidated Net Income computed on a cumulative basis for the period from
and after December 31, 1995 to and including the end of the fiscal year for
which the determination is being made, PROVIDED that if Consolidated Net Income
for any fiscal year in said period is a deficit figure, the amount added to
determine the required amount of Consolidated Tangible Net Worth for said
fiscal year shall be zero.
9.5 INTEREST COVERAGE. Permit the ratio of Consolidated Net Income PLUS
Consolidated Net Interest Expense, consolidated taxes, consolidated
amortization and consolidated depreciation to Consolidated Net Interest Expense
to be less than 1.3 to 1.0 on a four quarter rolling basis.
9.6 RESTRICTED PAYMENTS. Declare or pay any dividends (other than
dividends payable in capital stock of the Borrower) on any shares of any class
of its capital stock or apply any of its property or assets to the purchase,
redemption or other retirement of, or make any other distribution, by reduction
of capital or otherwise, in respect of, or permit any Subsidiary to purchase,
any shares of any class of stock of the Borrower (herein, collectively,
"Restricted Payments"), unless, immediately after giving effect to such action,
there exists no Event of Default or Default, and the sum of
9.6.1 the amounts declared and paid as dividends (other than dividends
paid in capital stock of the Borrower) on all shares of stock of all
classes of the Borrower or distributed in respect to such shares of stock
subsequent to December 31, 1995, and
9.6.2 the amounts applied to the purchase (including purchases by
Subsidiaries), redemption or retirement of shares of stock of all classes
of the Borrower subsequent to December 31, 1995,
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<PAGE> 30
will not be in excess of the sum of $1,000,000 PLUS 50% of cumulative
Consolidated Net Income (or, in the case of a negative cumulative Consolidated
Net Income, MINUS 100% of such deficit) for the period (taken as one accounting
period) from January 1, 1995 to the date of such action, MINUS any Restricted
Payments made after December 31, 1995.
9.7 CAPITAL EXPENDITURES. Permit total capital expenditures (including
expenditures in respect of capital lease obligations) of the Borrower and its
Subsidiaries in any one fiscal year to exceed $4,500,000.
9.8 PERMITS AND LIENS. Permit, and will not permit any of its
Subsidiaries to, incur, create, assume or permit to exist any Lien on any
property, whether owned on January 1, 1996 or thereafter acquired, except:
9.8.1 Liens on property of the Borrower or a Subsidiary existing on January
1, 1996, as identified on Exhibit F attached hereto;
9.8.2 Liens, pledges or deposits made or incurred by the Borrower or a
Subsidiary in connection with worker's compensation, social security or
unemployment insurance or to secure the performance of letters of credit,
bids, tenders, sales contracts, leases, statutory obligations, surety, appeal
and performance bonds and other similar obligations incurred in the ordinary
course of business and not in connection with the borrowing of money, the
obtaining of advances or the payment of the deferred purchase price of
property;
9.8.3 Liens incurred by the Borrower or a Subsidiary for taxes, assessments
or governmental charges or levies to the extent permitted to remain unpaid by
Section 8.3 hereof and materialmen's and warehousemen's Liens securing
obligations not overdue, or if overdue, being contested in good faith by
appropriate proceedings, PROVIDED that adequate reserves are established in
accordance with GAAP;
9.8.4 attachment, judgment and other similar Liens arising in connection
with judicial proceedings, PROVIDED that the execution or other enforcement
of such Lien is effectively stayed and the claims secured thereby are being
contested in good faith by appropriate proceedings in such manner that the
property subject to such Lien is not subject to forfeiture or sale and
PROVIDED FURTHER that adequate reserves are established in accordance with
GAAP;
9.8.5 encumbrances in the nature of zoning restrictions, easements,
restrictions of record on the use of real property, and landlords' and
lessors' Liens, in each case arising or existing in the ordinary course of
business of the Borrower or a Subsidiary and which do not materially impair
the Borrower's or a Subsidiary's use of the property subject thereto; and
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<PAGE> 31
9.8.6 other Liens on property of the Borrower securing Current Debt or
Funded Debt of the Borrower, PROVIDED that at the time of incurrence of any
such Lien and after giving effect to the Debt secured thereby, (A) the
aggregate principal amount of all such Debt secured by Liens permitted by
this Section 9.8.6 shall not exceed 15% of Consolidated Tangible Net Worth,
and (B) the Borrower shall be in compliance with Section 9.2 hereof.
Any corporation which becomes a Subsidiary on or after December 31, 1995
shall be deemed to have incurred, at the time it becomes a Subsidiary, any Debt
or Lien of such corporation existing immediately after it becomes a Subsidiary.
9.9 RESTRICTIONS ON SUBSIDIARIES. Permit any Subsidiary to:
9.9.1 issue or dispose of any shares of its capital stock to any Person
other than the Borrower or a Subsidiary, except to the extent, if any,
required to qualify directors under any applicable law or required to be
issued to other stockholders of such Subsidiary by virtue of their exercise
of preemptive rights or as their PRO RATA share of any stock dividend; or
9.9.2 except as permitted by the proviso in Section 9.13 hereof, sell,
assign, transfer, dispose of or in any way part with control of any share of
capital stock of any other Subsidiary owned by it, or any Debt owing to it
from another Subsidiary, except in either case to the Borrower or a
Subsidiary; or
9.9.3 except for Current Debt or Funded Debt of Subsidiaries (a) owing to
Borrower or another Subsidiary, or (b) owing at the time a business entity
becomes a Subsidiary of Borrower, incur any Current Debt or Funded Debt.
9.10 DISPOSITION OF ASSETS. Permit, and will not permit any Subsidiary to,
sell, lease, transfer or otherwise dispose of all or any substantial part of
its properties and assets, or consolidate with or merge into any other Person,
or permit another Person to merge into it, except that:
9.10.1 any Subsidiary may permit any corporation to merge into such
Subsidiary, or may consolidate with or merge into, or sell, lease or
otherwise dispose of its assets as an entirety or substantially as an
entirety to the Borrower, a Subsidiary or any corporation which thereupon
becomes a Subsidiary, PROVIDED that immediately after the consummation of any
such transaction and after giving effect thereto, (A) the Borrower shall be
in compliance with the provisions of Section 9.2 hereof, (B) the Borrower is
able to incur at least $1 of Debt secured by Liens permitted by Section 9.8.6
hereof, and (C) no Default or Event of Default shall exist;
9.10.2 the Borrower may permit any corporation to merge into it or may
consolidate with any solvent corporation organized in the United States of
America,
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<PAGE> 32
PROVIDED that immediately after the consummation of any such transaction and
after giving effect thereto, (A) the Borrower is the surviving corporation,
(B) the Borrower is in compliance with the provisions of Section 9.2 hereof,
(B) the Borrower is able to incur at least $1 of Debt secured by Liens
permitted by Section 9.8.6 hereof, and (C) no Default or Event of Default
shall exist;
9.10.3 the Borrower or any Subsidiary may sell or otherwise dispose of any
of its assets in the ordinary course of its business; and
9.10.4 in addition to transactions permitted by Sections 9.10.1, 9.10.2
and 9.10.3 above, the Borrower or any Subsidiary may sell or otherwise
dispose of any of its assets (including shares of stock and Debt of
Subsidiaries) at the fair market value thereof (as determined in good faith
by the Board of Directors of the Borrower) if the aggregate net proceeds
received by the Borrower and its Subsidiaries from all such sales and all
other sales and dispositions during the twelve (12) consecutive calendar
months immediately preceding any such sale or other disposition shall not
exceed 15% of Consolidated Net Tangible Assets as of the end of the fiscal
year of the Borrower immediately preceding such sale or disposition.
9.11 SALE-LEASEBACK. Permit, and will not permit any Subsidiary to, sell
or transfer any property to any Person and thereupon lease, as lessee, the same
or similar property unless (A) (i) such lease is a Capitalized Lease and the
Borrower is the lessee thereunder, (ii) immediately after giving effect
thereto, the Borrower is in compliance with the provisions of Section 9.2
hereof, (iii) immediately after giving effect thereto, the Borrower is able to
incur at least $1 of Debt secured by Liens permitted by Section 9.8.6 hereof,
and (iv) all of the provisions of Section 9.10.4 hereof are complied with in
connection with such sale or (B)(i) such lease is an operating lease and the
Borrower is the lessee thereunder, (ii) such property is acquired after January
1, 1996 and is sold and leased-back by the Borrower within 120 days after such
acquisition, (iii) all of the provisions of Section 9.10.4 hereof are complied
with in connection with such sale, and (iv) immediately after giving effect to
such sale and lease-back (x) the aggregate net proceeds received by the
Borrower from all such sales made in connection with transactions contemplated
by this Section 9.11 after December 31, 1995 (other than such sales with
respect to which the related lease-back has expired or otherwise terminated)
shall not exceed 5% of Consolidated Net Worth on the last day of the fiscal
quarter immediately preceding such sale, and (y) the present value of the
aggregate rent payable under all such operating leases then outstanding,
discounted at the rate of 12 1/2% per annum, shall not exceed 5% of
Consolidated Net Worth on the last day of the fiscal quarter immediately
preceding such sale, PROVIDED that this Section 9.11 shall not apply to (xx)
leases having a term (inclusive of renewal and extension terms) of less than
three years, and (yy) leases of motor vehicles, computers and office and data
processing equipment.
9.12 TRANSACTIONS WITH AFFILIATES. Permit, and will not permit any
Subsidiary to, engage in any material transaction with an Affiliate on terms
more favorable
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to such Affiliate than would have been obtainable in arm's length dealing in
the ordinary course of business with a Person not an Affiliate.
9.13 RESTRICTIONS ON BORROWER. The Borrower will not:
9.13.1 sell, assign, transfer, dispose of, or in any way part with control
of, any share of capital stock of any Subsidiary except (A) to the extent, if
any, required to qualify directors of such Subsidiary under any applicable
law, or (B) to any Subsidiary; or
9.13.2 sell, assign, transfer, dispose of, or in any way part with control
of, any Debt owing from any Subsidiary to the Borrower except to any
Subsidiary;
PROVIDED, HOWEVER, that all shares of capital stock of all classes, together
with all Debt, of any Subsidiary owned by the Borrower and/or its other
Subsidiaries may be sold for the fair market value thereof (as determined in
good faith by the Board of Directors of the Borrower), as an entirety, if the
Subsidiary whose shares of capital stock and Debt are so sold does not own any
shares of capital stock or Debt of any other Subsidiary not being
simultaneously disposed of as permitted by this proviso and if such sale is
permitted by Section 9.10.4 hereof.
9.14 PERMITTED INVESTMENTS. Permit, and will not permit any Subsidiary to,
make any Investment other than Permitted Investments.
9.15 LIMITATION ON RESTRICTIVE COVENANTS. Except for the covenants in the
Metropolitan Agreement as existing on the date of this Agreement, incur, or
suffer to exist, any Funded Debt or Current Debt with covenants more
restrictive than the covenants contained herein. In the event the Borrower
does enter into any Current Debt or Funded Debt with covenants more restrictive
than the covenants contained herein (the "Restricted Debt") then the more
restrictive covenants shall automatically and immediately be incorporated
herein without further action or amendment to this Agreement. Once the
Restricted Debt has been paid in full and all documents in connection therewith
terminated, the covenants in this Agreement shall automatically and immediately
revert back to the covenants which existed on the date of this Agreement, or as
subsequently modified by agreement of the Borrower and the Banks, without
further action or amendment to this Agreement.
9.16 LOAN, ADVANCES AND PURCHASES OF STOCK. Make or permit to remain
outstanding or permit any Subsidiary to make or permit to remain outstanding
any loan or advance to, or own, purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any person or entity, PROVIDED that this Section 9.16 shall not prohibit or
restrict the Borrower's ability to own, purchase or acquire any stock,
obligations or securities of, or any other interest in, any Subsidiary, and
PROVIDED FURTHER that the Borrower or any Subsidiary may:
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9.16.1 own, purchase or acquire stock, obligations or securities of a
Subsidiary or of a corporation which immediately after such purchase or
acquisition will be a Subsidiary; and
9.16.2 acquire and own stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Borrower or any Subsidiary.
SECTION 10. FURTHER ASSURANCE.
------------------
The Borrower shall furnish at the reasonable request of any of the Banks
opinions of legal counsel and certificates of its officers satisfactory to the
Banks regarding matters incident to this Agreement. The Borrower agrees to
provide such other documents and information and to take such further action as
any of the Banks may reasonably require in connection with the execution and
delivery of this Agreement and the Borrower's performance hereunder.
SECTION 11. TAXES AND STAMPS.
-----------------
If in connection with any borrowing hereunder any documentary or recording
tax should be assessed or the affixing of any stamps be required by state or
federal governments, the Borrower will pay the tax and the cost of the stamps.
SECTION 12. ARRANGEMENT BETWEEN BANKS.
-------------------------
Upon the written request of Borrower, any of the provisions of this
Agreement may be waived or amended by agreement of all of the Banks.
Should one Bank fail to make advancements hereunder under claim that an
Event of Default has occurred and is continuing, the other Banks shall not be
obligated to make advancements until such issue as to the existence of an Event
of Default has been settled.
The Banks agree between themselves that, in the event that any of the Banks
shall obtain payment of the principal of or interest on any Loan or Loans made
by it or of any Commitment Fees through the exercise of a right of set off,
banker's lien or counterclaim or otherwise, any such sum received shall be
shared by the Banks such that, following receipt by each Bank of its share of
such sum, the outstanding principal balance on each Banks' Notes will be equal,
all interest accrued on any principal sum reduced by the receipt of such share
will be paid and the payment of Commitment Fees will be made ratably. The Bank
initially obtaining such sum by the exercise of a right of set off, banker's
lien, counterclaim or otherwise shall promptly purchase from the other Banks
for cash such participation in the Notes held by the other Banks as shall be
equitable to the end that all of the Banks share such payment in the manner
provided in this paragraph. The Borrower
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agrees that the Bank so purchasing a participation in such Loans by the other
Banks may, to the fullest extent permitted by law, exercise all rights of
payment, including set off, banker's lien or counterclaim, with respect to such
participation as fully as if such Banks were a holder of such Loan made
hereunder in the amount of such participation. Should an Event of Default
occur and be continuing as a result of which the Banks commence proceedings to
enforce the agreements of the Borrower, all expenses thereof shall be shared by
the Banks pro rata in proportion to the outstanding principal balance of the
Notes held by each Bank and shall be paid by the Borrower pursuant to the
provisions of Section 13.5 hereof.
The Banks further agree between themselves that if payment to a Bank
obtained by such Bank through the exercise of a right of set off, banker's lien
or counterclaim or otherwise as aforesaid shall be rescinded or must otherwise
be restored, the Bank which shall as selling bank have shared the benefit of
such payment shall, by repurchase of participations theretofore sold, or
otherwise, return its share of benefit to the Bank whose payment shall have
been rescinded or otherwise restored.
Each Bank agrees and warrants that it will acquire the Notes hereunder only
to evidence the Borrower's indebtedness to it as heretofore or hereafter
incurred for funds loaned in accordance with the terms hereof and in the
ordinary conduct of such Bank's commercial banking business, and not with a
view to the public distribution of such Notes.
All covenants, agreements, undertakings, representations and warranties made
herein shall survive the closings hereunder unless and except as otherwise
indicated, and shall not be affected by any investigation made by any party.
SECTION 13. DEFAULT.
-------
13.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events will constitute an Event of Default, unless waived
collectively by the Banks pursuant to Section 13.2 hereof:
13.1.1 Default shall be made in the due and punctual payment of any
principal of any Note when and as the same shall become due and payable,
whether at maturity or by acceleration or otherwise;
13.1.2 Default shall be made in the due and punctual payment of any
installment of interest on any Note or Commitment Fees or other amounts
hereunder, when and as such payments shall become due and payable, and such
default shall have continued for a period of 10 days;
13.1.3 Default shall be made in the performance or observance of any
covenants, agreements or conditions contained in this Agreement or any Note,
other than
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as set forth in Sections 13.1.1 and 13.1.2 hereof, and such default shall have
continued for a period of 30 days after any officer of the Borrower becomes
aware thereof;
13.1.4 Default shall occur with respect to any indebtedness of the
Borrower or any Subsidiary (other than the Notes) for borrowed money,
including, but not limited to, failure to pay when due any payments required
pursuant to such indebtedness, or any other default shall occur with respect to
such indebtedness, and such other default shall continue for more than any
applicable grace period and the effect of such other default is to cause such
indebtedness to remain unpaid or to cause or permit the obligee to cause such
indebtedness to become immediately due;
13.1.5 The Borrower or any of its Subsidiaries shall (A) admit in
writing its inability to pay its debts or be unable to pay its debts generally
as they become due, (B) file a petition in bankruptcy or a petition to take
advantage of any insolvency act, (C) make an assignment for the benefit of its
creditors, (D) consent to the appointment of a receiver of itself or the whole
or any substantial part of its property, (E) file a petition or answer seeking
reorganization, arrangement or winding-up under the Federal bankruptcy laws or
any other applicable law or statute of the United States of America or any
State thereof or any other country or jurisdiction, (F) have a petition in
bankruptcy filed against it and such petition shall remain undismissed for a
period of 60 days, or (G) file any answer admitting or not contesting the
material allegations of a petition filed against the Borrower or any of its
Subsidiaries in any such case or proceeding, or the Borrower or any of its
Subsidiaries seeks, approves, consents to or acquiesces in any such case or
proceeding or in the appointment of any custodian, trustee, receiver,
liquidator or fiscal agent of the Borrower or any of its Subsidiaries for all
or a substantial part of the properties or assets of the Borrower or any of its
Subsidiaries;
13.1.6 A court of competent jurisdiction shall enter an order, judgment
or decree appointing, without the consent of the Borrower or the Subsidiary
involved, a receiver or custodian of the Borrower or any of its Subsidiaries or
of the whole or any substantial part of their properties, or approving a
petition filed against the Borrower and/or any Subsidiary seeking
reorganization, arrangement or winding-up of the Borrower and/or such
Subsidiary under the Federal bankruptcy laws or any other applicable law or
statute of the United States of America or any State thereof or any other
country or jurisdiction, and such order, judgment or decree shall not be
vacated or set aside or stayed within 15 days from the date of assumption of
such custody or control;
13.1.7 Under the provisions of any other law for the relief or aid of
debtors, any court of competent jurisdiction shall assume custody or control of
the Borrower or any of its Subsidiaries or of the whole or any substantial part
of their respective properties and such custody or control shall not be
terminated or stayed within 60 days from the date of assumption of such custody
or control;
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<PAGE> 37
13.1.8 Final judgment or judgments for the payment of money in the
aggregate in excess of $2,000,000 shall be rendered by a court of record
against the Borrower and/or any of its Subsidiaries, either individually or
some combination thereof, and the Borrower or such Subsidiary or Subsidiaries
shall not discharge the same or provide for its discharge in accordance with
its terms, or procure a stay of execution thereof within 30 days from the date
of entry thereof and within said period of 30 days, or such longer period
during which execution of such judgment shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal;
13.1.9 A representation or warranty by the Borrower in this Agreement or
in any financial statement, certificate, report or opinion delivered pursuant
to this Agreement proves to have been incorrect in any material respect when
made or deemed made or delivered; or
13.1.10 (A) either the Borrower or any of its Subsidiaries shall engage
in any "prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time)
involving any pension or profit-sharing plan ("Plan"); (B) any "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan; (C) a Reportable Event (as
defined in ERISA) shall occur with respect to, or proceedings shall commence to
have a trustee appointed (or a trustee shall be appointed) to administer, or to
terminate, any Single Employer Plan (as defined ERISA), which Reportable Event
or commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of any of the Banks, likely to result in the termination of
such Plan for purposes of Title IV of ERISA; (D) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA; (E) the Borrower or any Subsidiary
shall, or is, in the reasonable opinion of any of the Banks, likely to, incur
any liability in connection with a withdrawal from, or the insolvency or
reorganization of, a Multiemployer Plan (as defined in ERISA); or (F) any other
event or condition shall occur or exist with respect to a Plan; and in each
case in clauses (A) through (F) above, such event or conditions, if any, could
reasonably be expected to subject the Borrower or any of its Subsidiaries to
any tax, penalty or other liabilities in the aggregate material in relation to
the business, operations, property or financial condition of the Borrower.
13.2. Remedies.
--------
13.2.1 Upon the occurrence and during the continuance of any Event of
Default, any of the Banks may by notice to the Borrower terminate the
Commitments of all the Banks or declare to be immediately due and payable the
outstanding principal of, and accrued interest on, all Notes and all other
amounts due and payable hereunder, or both, whereupon the Commitments of the
Banks shall terminate forthwith or all such amounts shall become immediately
due and payable, or both, as the case may be, without further notice or demand,
provided that in the case of any event or condition described in Section 13.1.5
or 13.1.6 hereof with respect to the Borrower, all Commitments shall
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automatically terminate forthwith and all such amounts shall automatically
become immediately due and payable without notice or demand. The Borrower
hereby expressly waives presentment, notice of dishonor, protest, notice of
protest, diligence in bringing suit against any party and all other similar
formalities.
13.2.2 Upon the occurrence and during the continuance of any Event of
Default, each of the Banks may, in addition to the remedies provided in Section
13.2.1 hereof, enforce its rights either by suit in equity, or by action at
law, or by other appropriate proceedings, whether for the specific performance
(to the extent permitted by law) of any covenants or agreements contained in
this Agreement or the Notes or in aid of the exercise of any power granted in
this Agreement or the Notes and may enforce the payment of the Notes and any of
its rights available at law or in equity.
13.2.3 Upon the occurrence and during the continuance of any Event of
Default, each Bank, subject to the provisions of Section 12 of this Agreement,
is hereby authorized at any time and from time to time, without notice to the
Borrower (any requirement for such notice being expressly waived by the
Borrower) to set off and apply against any and all of the obligations of the
Borrower now or hereafter existing under this Agreement any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank to or for the credit or the
account of the Borrower and any property of the Borrower from time to time in
possession of such Bank, irrespective of whether or not such Bank shall have
made any demand hereunder and although such obligations may be contingent and
unmatured. The rights of each Bank under this Section 13.2.3 are in addition
to other rights and remedies (including, without limitation, other rights of
setoff) which such Bank may have.
SECTION 14. MISCELLANEOUS
-------------
14.1 AMENDMENTS, ETC. This Agreement may be amended from time to time and
any provision hereof may be waived by the parties hereto. No such amendment or
waiver of any provision of this Agreement nor consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be in
writing and signed by all of the Banks, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
14.2 NOTICES. Except as otherwise provided in this Agreement, all notices,
requests, consents and other communications hereunder shall be in writing and
shall be delivered or sent to the Borrower at 13405 Yarmouth Rd., N.W.,
Pickerington, Ohio 43147, Attention: Richard L. Burrell, Senior Vice
President/Finance; to The Bank of New York at One Wall Street, New York, New
York 10286, Attention: Paula DiPonzio; to The Huntington National Bank at 41
South High Street, Columbus, Ohio 43287, Attention: Christopher Spence; and to
NBD Bank at 611 Woodward Avenue, Detroit, Michigan 48226, Attention: Gary
Wilson, or to such other address as may be designated by the Borrower or any of
the Banks by notice to the other parties. All notices shall be deemed to have
been
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given at the time of actual delivery thereof to such address, or if sent by
certified or registered mail, postage prepaid, to such address, on the third
day after the date of mailing.
14.3 CONDUCT NO WAIVER; REMEDIES CUMULATIVE. No course of dealing on the
part of any of the Banks, nor any delay or failure on the part of any of the
Banks in exercising any rights, powers or privileges hereunder, shall operate
as a waiver of such rights, powers or privileges or otherwise prejudice any
Bank's rights and remedies hereunder; nor shall any single or partial exercise
thereof preclude any further exercise thereof or the exercise of any other
right, power or privilege by any of the Banks. No right or remedy conferred
upon or reserved to any of the Banks under this Agreement is intended to be
exclusive of any other right or remedy, and every right and remedy shall be
cumulative and in addition to every other right or remedy given hereunder or
now or hereafter existing under any applicable law. Every right and remedy
given by this Agreement or by applicable law to any of the Banks may be
exercised from time to time as often as may be deemed expedient by any of the
Banks.
14.4 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms, covenants,
agreements, representations and warranties of the Borrower made herein or in
any certificate or other document delivered pursuant hereto shall be deemed to
be material and to have been relied upon by the Banks, notwithstanding any
investigation heretofore or hereafter made by the Banks or on the Banks'
behalf, and those covenants and agreements of the Borrower set forth in Section
8 and Section 14.5 hereof shall survive the repayment in full of the Loans and
the termination of the Commitments.
14.5 Expenses.
---------
14.5.1 The Borrower agrees to pay and save the Banks harmless from
liability for the payment of the reasonable fees and expenses of counsel to
each of the Banks in connection with the preparation, execution and delivery of
this Agreement and the Notes and the consummation of the transactions
contemplated hereby, and in connection with any amendments, waivers or consents
in connection therewith, and all reasonable costs and expenses of all of the
Banks (including reasonable fees and expenses of counsel) in connection with
any Event of Default or the enforcement of this Agreement or any of the Notes.
14.5.2 The Borrower agrees to pay, and indemnify and hold harmless each
Bank from and against, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the use of proceeds of the Loans.
14.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties hereto and shall inure to the benefit of the Banks and their respective
successors and assigns. Each Bank may assign its entire interest in this
Agreement, its Commitment and the Loans to another financial institution,
including, but not limited to, one of the Banks'
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affiliates. With the prior written consent of the Borrower, which consent
shall not be unreasonably withheld, each Bank may sell participations in its
Commitment and Loans to any financial institution or institutions, provided
that, prior to a Default or an Event of Default, such Bank retains full power
to make all decisions with respect to any waiver relating to this Agreement,
and makes any interest rate quotations based on circumstances relating to it
and not to any participant. The Borrower shall not, without the prior consent
of all of the Banks, assign its rights or obligations hereunder or, as the case
may be, under the Notes and the Banks shall not be obligated to make any Loans
hereunder to any entity other than the Borrower.
14.7 ASSIGNMENT TO FEDERAL RESERVE BANKS. Any Bank may at any time assign
all or any portion of its rights under this Agreement and its Note to a Federal
Reserve Bank. No such assignment shall release the transferor Bank from its
obligations hereunder.
14.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
14.9 GOVERNING LAW, CONSENT TO JURISDICTION AND WAIVER OF IMMUNITY.This
Agreement is a contract made under, and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with, the
laws of the State of Ohio applicable to contracts made and to be performed
entirely within such State. The Borrower further agrees that any legal action
or proceeding with respect to this Agreement or the Notes or the transactions
contemplated hereby, may be brought in any court of the State of New York or
the State of Ohio or the State of Michigan, or in the United States courts for
the Southern District of New York, or the Southern District of Ohio or the
Southern District of Michigan, and the Borrower hereby irrevocably submits to
and accepts generally and unconditionally the jurisdiction of those courts with
respect to its person, property and revenues and irrevocably consents to
service of process in any such action or proceeding by the mailing thereof by
U.S. mail to the Borrower at the Borrower's address set forth in Section 14.2
hereof. To the extent permitted by applicable law, the Borrower hereby waives
and agrees not to assert in any such action or proceeding, by way of motion, as
a defense or otherwise, any claim that (i) it is not personally subject to the
jurisdiction of the aforesaid courts, (ii) except as required by applicable
law, its property is exempt or immune from attachment or execution, (iii) any
such action or proceeding brought in any one of the aforesaid courts is brought
in an inconvenient forum, (iv) the venue of any such action or proceeding
brought in any one of the aforesaid courts is improper, or (v) this Agreement
or any document contemplated herein or the subject matter hereof or thereof may
not be enforced in or by any such Court.
Nothing in this paragraph shall affect the right of any Bank to serve
process in any other manner permitted by law or limit the right of any Bank to
bring any such action or proceeding against the Borrower or to obtain execution
on any judgment, in any other
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jurisdiction or in any other manner permitted by law.
14.10 WAIVER OF JURY TRIAL. THE BORROWER WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (i) UNDER THIS
AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED
OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR (ii) ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
14.11 HEADINGS. The headings of the various subdivisions hereof are for the
convenience of reference only and shall in no way modify any of the terms and
provisions hereof.
14.12 CONSTRUCTION OF CERTAIN PROVISIONS. All computations required
hereunder and all financial terms used herein shall be made or construed in
accordance with generally accepted accounting principles. If any provision of
this Agreement refers to any action to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such Person, whether or not
expressly specified in such provision.
14.13 INTEGRATION AND SEVERABILITY. This Agreement embodies the entire
agreement and understanding between the Borrower and the Banks, and supersedes
all prior agreements and understandings, relating to the subject matter hereof.
In case any one or more of the provisions of this Agreement or the Notes shall
be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby, and such invalidity, illegality
or unenforceability in one jurisdiction shall not affect the validity, legality
or enforceability of the provisions of this Agreement or the Notes in any other
jurisdiction.
14.14 USURY. Notwithstanding any provisions of this Agreement or the
Notes, in no event shall the amount of interest paid or agreed to be paid by
the Borrower exceed an amount computed at the highest rate of interest
permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision of this Agreement or the Notes at the time
performance of such provision shall be due shall involve exceeding the interest
rate limitation validly prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, IPSO FACTO, the obligations to
be fulfilled shall be reduced to an amount computed at the highest rate of
interest permissible under applicable law, and if for any reason whatsoever any
of the Banks shall ever receive as interest an amount which would be deemed
unlawful under such applicable law such interest shall be automatically applied
by such Bank to the payment of principal of such Bank's Loans outstanding
hereunder (whether or not then due and payable) and not to the payment of
interest, or shall be refunded to the Borrower if such principal has been paid
in full.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in triplicate originals as of the year and day first above written.
ATTEST: R. G. BARRY CORPORATION
/s/ Joan Faulkner /s/ Michael S. Krasnoff
_______________________________ By:_____________________________
Michael S. Krasnoff, Vice President
THE BANK OF NEW YORK
/s/ Paula DiPonzio
By:____________________________
Paula DiPonzio, Vice President
THE HUNTINGTON NATIONAL BANK
/s/ Robert H. Friend
By:____________________________
Robert H. Friend, Vice President
NBD BANK
/s/ Gary Wilson
By:____________________________
Gary Wilson, Vice President
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<PAGE> 43
EXHIBIT A
REVOLVING CREDIT NOTE
____________________, 1996 $17,000,000
FOR VALUE RECEIVED, the undersigned, R.G. BARRY CORPORATION, an Ohio
corporation, promises to pay to ________________________________________
(hereinafter called the "Bank") or order, at its office at
_________________________, ____________________________, in lawful money of the
United States of America and in immediately available funds, the principal sum
of Seventeen Million Dollars ($17,000,000), or such lesser amount as is then
outstanding under this Note as indicated on the records of the Bank, for money
loaned with interest upon the unpaid principal balance hereof from time to time
outstanding, payable, in like money and funds, in arrears on each interest due
date after the date hereof.
This Note evidences Eurodollar Loans and/or Domestic Loans and shall
bear interest at the rates, respectively, as specified in the Credit Agreement
described below, which is incorporated herein by reference. Such interest
shall be payable on a Domestic Loan on the last Business Day of each March,
June, September and December beginning March 31, 1996, and on the date of
conversion thereof to a Eurodollar Loan. Interest shall be payable on a
Eurodollar Loan on each Interest Payment Date. Interest will be computed on
the basis of a 360-day year for the actual number of days in each Interest
Period. After an Event of Default or after maturity, whether by acceleration
or otherwise, this Note shall bear interest at the highest rate permitted by
applicable law not to exceed 150% of the Prime Rate.
This Note represents Loans made pursuant to the Bank's Commitment under
the Revolving Credit Agreement dated as of ___________________, 1996 as it may
be from time to time amended (the "Credit Agreement"), among the undersigned,
the Bank and certain other banks and the terms and conditions set forth in the
Credit Agreement shall be considered a part hereof to the same extent as if
written herein, and upon the occurrence of an Event of Default as defined in
the Credit Agreement then the entire principal sum and any accrued interest on
this Note shall, at the option of the holder of this Note except as to any
event or condition described in Section 13.1.5 or 13.1.6 of the Credit
Agreement, at once and without notice become due and payable. Capitalized
terms used but not defined in this Note shall have the respective meanings
assigned to them in the Credit Agreement. The entire unpaid principal and
interest on this Note shall be due and payable on the Termination Date.
The Bank is hereby authorized by the undersigned to note on the
schedule attached to this Note the date, amount and type of each Loan, the
interest rate and duration
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<PAGE> 44
of the related Interest Period (if applicable), the amount of each payment or
prepayment of principal thereon and the other information provided for on such
schedule, which schedule shall constitute PRIMA FACIE evidence of the
information so noted, provided, that any failure by the Bank to make any such
notation shall not relieve the undersigned of its obligation to repay the
outstanding principal amount of this Note, all accrued interest hereon and any
amount payable in accordance with the terms of this Note and the Credit
Agreement.
All parties to this Note, including endorsers, sureties and guarantors,
if any, hereby waive presentment for payment, demand, protest, notice of
non-payment or dishonor, and of protest, and any and all other notices and
demands whatsoever, and agree to remain bound until the interest and principal
are paid in full notwithstanding any extension or extensions of time for
payment which may be granted, even though the period of extension may be
indefinite, and notwithstanding any inaction by, or failure to assert any legal
right available to, the holder of this Note.
This Note shall be construed in accordance with and governed by the
laws of the State of Ohio.
The undersigned authorizes any attorney at law to appear in any Court
of Record in the State of Ohio or in any other state or territory of the United
States after the above indebtedness becomes due, whether by acceleration or
otherwise, to waive the issuing and service of process, and to confess judgment
against the undersigned in favor of the Banks for the amount then appearing due
together with costs of suit, and thereupon to waive all errors and all rights
of appeal and stays of execution.
- ----------------------------------------
WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE.
- ----------------------------------------
R.G. BARRY CORPORATION
By:___________________________________
Michael S. Krasnoff, Vice President
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EXHIBIT B
R.G. BARRY CORPORATION
July 5, 1994
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Attention: Treasurer
Dear Sirs:
R.G. Barry Corporation, an Ohio corporation (herein called the "Company"),
hereby agrees with you as follows:
1. THE LOAN. Subject to the terms and conditions hereof, you will lend to
the Company, and the Company will borrow from you, on July 5, 1994 (herein
called the "Closing Date"), the amount of $15,000,000. Said loan shall be
evidenced by, and be made against delivery to you on the Closing Date at your
Home Office, One Madison Avenue, New York, New York, of, the Company's 9.70%
senior promissory note due July 5, 2004 (the "Note"), substantially in the form
of Exhibit A hereto, made in the principal amount of $15,000,000, dated the
Closing Date, registered in your name and duly executed by the Company. Delivery
of the Note shall be made against the advance by you to the Company of
immediately available funds in the amount of $15,000,000.
2. THE NOTES. The term "Notes" as used herein shall include the Note
delivered to you on the Closing Date as provided in Section 1 hereof and any
promissory note delivered in substitution or exchange therefor or in lieu
thereof, and, where applicable, shall include the singular number as well as the
plural. The term "Note" shall mean one of the Notes. Each Note shall be
substantially in the form of Exhibit A hereto.
3. REPLACEMENT OF NOTES. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any Note and, in the
case of any such loss, theft or destruction, upon delivery of indemnity
reasonably satisfactory to the Company (except that if you or your nominee is
the holder of such Note, your own agreement of indemnity shall be deemed to be
satisfactory), or, in the case of any such mutilation, upon the surrender of
such Note to the Company at the office or agency maintained pursuant to Section
7.1 of the Notes for cancellation of such Note, the Company will make and
deliver a new Note, of like tenor, dated the date from which unpaid interest has
then accrued, in lieu of such lost, stolen, destroyed or mutilated Note.
<PAGE> 46
4. FINANCIAL STATEMENTS, COMPLIANCE CERTIFICATES AND OTHER DOCUMENTS AND
INFORMATION. So long as any Note shall be outstanding:
(a) The Company will deliver to you, in duplicate, so long as you
shall hold any Note
(i) within 60 days after the end of each of the first three
quarterly periods in each fiscal year of the Company, consolidated
statements of income, shareholders' equity and cash flows of the
Company and its Subsidiaries for that period and for the portion of
such fiscal year ended with that period and a consolidated balance
sheet of the Company and its Subsidiaries as at the end of that
period, setting forth in each case in comparative form the
corresponding figures for the corresponding period or periods of the
preceding fiscal year, all in reasonable detail and certified (subject
to year-end audit adjustments) by an authorized financial officer of
the Company;
(ii) within 120 days after the end of each fiscal year of the
Company, consolidated statements of income, shareholders' equity and
cash flows of the Company and its Subsidiaries for such year and a
consolidated balance sheet of the Company and its Subsidiaries as at
the end of such year, setting forth in each case in comparative form
the corresponding figures for the previous fiscal year, all in
reasonable detail and accompanied by a report of independent public
accountants of recognized national standing selected by the Company;
(iii) concurrently with the delivery of the financial statements
described in clauses (i) and (ii), a certificate signed on behalf of
the Company by an authorized financial officer of the Company (1)
stating that a review of the activities of the Company and its
Subsidiaries during the fiscal period covered by such financial
statements has been made with a view to determining whether the
Company has kept, observed, performed and fulfilled all its
obligations under this Agreement and the Notes, (2) stating that no
Default or Event of Default existed at the end of such fiscal period
or, if any such Default or Event of Default then existed, specifying
all such Defaults and Events of Default and the status thereof and the
action taken, being taken or proposed to be taken by the Company with
respect thereto, and (3) accompanied by reasonably detailed
calculations showing that the Company was in compliance, as of the
end of the relevant fiscal
-2-
<PAGE> 47
period, with the requirements of Sections 8.1, 8.2, 8.5, 8.6,
8.7, 8.9, 8.10 and 8.11 of the Notes;
(iv) concurrently with their being provided to the recipients
thereof,
(1) copies of all financial statements, proxy statements and
reports which the Company shall send to its stockholders or any
of its Subsidiaries shall send to its stockholders other than the
Company; and
(2) copies of all regular and periodic reports, if any,
which the Company or any of its Subsidiaries shall file with the
Securities and Exchange Commission, or any governmental agency or
agencies substituted therefor, or with any national securities
exchange;
(v) immediately upon a responsible officer of the Company's
becoming aware of the occurrence of any (1) "reportable event," as
defined in Section 4043 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or (2) nonexempted "prohibited
transaction," as defined in Sections 406 and 408 of - ERISA and
Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code"), in connection with any "employee pension benefit plan," as
defined in Section 3 of ERISA established or maintained by the Company
or any of its Subsidiaries for the benefit of its employees (a
"Plan"), or any trust created thereunder, a written notice specifying
the nature thereof, what action the Company is taking or proposes to
take with respect thereto and, when known, any action taken or
proposed to be taken by the Internal Revenue Service or the Pension
Benefit Guaranty Corporation with respect thereto;
(vi) immediately upon the Company's becoming aware of the
existence of any Event of Default or any Default, a written notice
specifying the nature and status thereof and what action the Company
is taking or proposes to take with respect thereto; and
(vii) immediately upon the Company's becoming aware that the
holder of any Note or of any other evidence of Debt of the Company or
any Subsidiary of the Company has demanded payment, given notice or
taken any other action with respect to a claimed Event of Default or a
claimed default in respect of or under such other evidence of Debt, a
written notice specifying the demand made, notice given or action
taken by such holder and the nature and status
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<PAGE> 48
of the claimed Event of Default or default and what action the Company
is taking with respect thereto.
(b) The Company will furnish to you such other information with
respect to the business, operations, properties or financial condition of
the Company or any of its Subsidiaries as you may, from time to time,
reasonably request (including, without limitation, such information as may
be required to be delivered by the Company to a holder of the Notes and/or
any prospective purchasers thereof in accordance with Rule 144A under the
Securities Act of 1933, as amended) and at your request will make available
for examination copies of any special or extraordinary reports or
statements (which the Company will promptly advise you of the existence of)
which the Company or any of its Subsidiaries may make to or file with any
governmental department, commission, board, bureau or agency, Federal or
state, which might be helpful to you in evaluating your investment in the
Notes.
5. INSPECTION. So long as you shall hold any Note, you may visit and
inspect any of the properties of the Company or its Subsidiaries, examine its
books of account and the books of account of its Subsidiaries, and discuss the
affairs, finances and accounts of the Company and its Subsidiaries with its and
their officers and independent accountants, all at such reasonable times and as
often as you may reasonably desire.
6. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
that:
(a) FINANCIAL STATEMENTS. The consolidated balance sheets of the
Company and its Subsidiaries as at December 30, 1989, December 29, 1990,
December 28, 1991, January 2, 1993 and January 1, 1994, and the related
consolidated statements of income, stockholders' equity and cash flows for
the fiscal years ended on said dates, including in each case the related
schedules and notes, if any, all certified by independent public
accountants and heretofore delivered to you, fairly present (i) the
financial condition of the Company and its Subsidiaries as at the
respective dates of said balance sheets and (ii) the results of operations
and cash flows of the Company and its Subsidiaries for such fiscal years.
Except as otherwise stated therein or in the notes thereto, all such
financial statements have been prepared in accordance with GAAP applied on
a consistent basis throughout the periods involved.
(b) NO MATERIAL CHANGES. There has been no material adverse change in
the business, operations, properties or condition, financial or other, of
the Company and its Subsidiaries taken as a whole since January 4, 1994.
-4-
<PAGE> 49
(c) DUE ORGANIZATION AND QUALIFICATION OF COMPANY. The Company is a
corporation duly organized and existing in good standing under the laws of
the State of Ohio and is duly qualified and in good standing as a foreign
corporation in every jurisdiction wherein the failure to so qualify would
have a material adverse effect upon the business, operations, properties or
financial condition of the Company and its Subsidiaries taken as a whole.
(d) BUSINESS AND SUBSIDIARIES. The annual report of the Company on
Form 10-K for the fiscal year ended January 1, 1994 (the "10-K") and the
quarterly report of the Company on Form l0-Q for the fiscal period ended
March 26, 1994 (the "10-Q"), each as filed with the Securities and Exchange
Commission and a copy of each of which has heretofore been furnished to
you, together correctly describe the general nature of the business
conducted during the fiscal year ended January 1, 1994, and presently
conducted and presently proposed to be conducted, by the Company and its
Subsidiaries and correctly sets forth the principal properties then owned
or leased by the Company and its Subsidiaries. Except for the contemplated
acquisition of Vesture Corporation and the agreement to lease a
distribution center in Laredo, Texas, since January 1, 1994, there has been
no material change in the general nature of the business conducted and
presently proposed to be conducted, or in the principal properties owned or
leased, by the Company and its Subsidiaries. The only present Subsidiaries
of the Company are those specifically referred to in the 10-K, each of
which is duly organized and existing in good standing under the laws of its
jurisdiction of incorporation and is duly qualified and in good standing as
a foreign corporation in every jurisdiction wherein the failure to so
qualify would have a material adverse effect upon the business, operations,
properties or financial condition of the Company and its Subsidiaries taken
as a whole. The Company owns all outstanding shares of capital stock of
each such Subsidiary except for directors' qualifying shares and all shares
of such stock have been validly issued and are fully paid and
non-assessable.
(e) TITLE TO PROPERTIES. Either the Company or one of its Subsidiaries
has good and marketable fee title to all the real properties and good title
to all other properties and assets reflected in the balance sheet as at
January 1, 1994, referred to in subsection (a) above, or purported to have
been acquired after said date, except, however, property subject to
Capitalized Leases or Properties and assets sold or otherwise disposed of
in the ordinary course of business subsequent to said date. Except as
permitted by Section 8.2 of the Notes, there are no Liens on any of the
present properties or assets of the
-5-
<PAGE> 50
Company or its Subsidiaries.
(f) TRADEMARKS, PATENTS, ETC. The Company and its Subsidiaries possess
all trademarks, trademark rights, trade names, trade name rights,
copyrights, patents, patent rights and licenses necessary to conduct their
respective businesses as now operated without known conflict with any valid
trademarks, trade names, copyrights, patents or licenses of others.
(g) LITIGATION. Other than as referred to in the 10-K and the 10-Q,
there are no actions, suits or proceedings (whether or not purportedly on
behalf of the Company or any of its Subsidiaries) pending or, to the
knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries, at law or in equity or before or by any Federal,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which is likely to
result in any material adverse change in the business, operations,
properties or condition, financial or other, of the Company and its
Subsidiaries taken as a whole; and neither the Company nor any of its
Subsidiaries is in default with respect to any order, writ, injunction or
decree of any court, arbitrator or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
(h) LEASES, ETC. None of the assets or property reflected in the
balance sheet as at January 1, 1994, referred to in subsection (a) above is
held by the Company or its Subsidiaries as lessee under any lease or land
purchase contract or as conditional vendee under any conditional sales
contract or other title retention agreement other than properties or assets
subject to Capitalized Leases reflected in said balance sheet as at January
1, 1994 and other than leasehold improvements not exceeding in the
aggregate $3,800,000 net book value.
(i) BURDENSOME PROVISIONS. Neither the Company nor any of its
Subsidiaries is a party to any agreement or instrument or subject to any
charter or other corporate or legislative restriction materially and
adversely affecting the business, operations, properties or condition,
financial or other, of the Company and its Subsidiaries, taken as a whole.
(j) COMPLIANCE WITH OTHER INSTRUMENTS. Neither the Company nor any of
its Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in
any bond, debenture, note or other evidence of Debt of the
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<PAGE> 51
Company or any of its Subsidiaries or contained in any instrument under or
pursuant to which any thereof has been issued or made and delivered and no
other event of default or default exists thereunder or with respect
thereto. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor compliance with
the terms and provisions hereof or of the Notes will conflict with, result
in a breach of or violate (x) any law, or any rule, regulation, order,
judgment or decree of any governmental department or agency or of any court
or arbitrator which is applicable to the Company or any of its property, or
(y) any of the terms, conditions or provisions of the Company's certificate
of incorporation or by-laws or of any agreement or instrument to which the
Company or any of its Subsidiaries is a party, or constitute a default
thereunder, or result in the creation or imposition of any Lien upon any of
the property or assets of the Company or any of its Subsidiaries pursuant
thereto.
(k) FORCE MAJEURE. Since January 1, 1994, the business, properties and
assets of the Company and its Subsidiaries have not been materially and
adversely affected in any way as the result of any fire, explosion,
earthquake, accident, strike, labor disturbance, requisition or taking of
property by governmental authority, flood, drought, embargo, riot, activity
of armed forces, or act of God or the public enemy.
(l) FOREIGN ASSETS CONTROL REGULATIONS, ETC. Neither the execution,
delivery or performance of this Agreement or the Notes by the Company nor
the consummation by the Company of the transactions contemplated hereby
will violate the Trading with the Enemy Act, as amended, the International
Emergency Economic Powers Act or the Executive Orders of the President of
the United States issued pursuant to such Acts, or any regulations or
orders issued under such Acts or Executive Orders, including, without
limitation, the foreign assets control regulations of the United States
Treasury Department (31 C.F.R. Subtitle B, Chapter V, as amended).
(m) TAX LIABILITY. The Company and its Subsidiaries have filed all tax
returns which, to the knowledge of their respective officers, are required
to be filed and have paid all taxes which have become due and payable
pursuant tp such returns or pursuant to any assessment received by the
Company or any Subsidiary other than those being contested in good faith by
the Company or such Subsidiary. The Federal income tax liability of the
Company has been finally determined by the Internal Revenue Service and
satisfied for all taxable years up to and including the taxable year ended
on or about
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<PAGE> 52
December 31, 1987. In the opinion of the Company all tax liabilities were,
as of January 1, 1994, and are now, adequately provided for on the books of
the Company and its Subsidiaries.
(n) USE OF PROCEEDS; REGULATION G. The proceeds of the loan to be made
by you hereunder will be used by the Company (i) to refinance indebtedness
originally incurred by the Company for working capital and (ii) for general
corporate purposes.
No part of the proceeds from such loan will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock
within the meaning of Regulation G (12 C.F.R., Chapter II, Part 207) of the
Board of Governors of the Federal Reserve System, and margin stock does not
constitute, and the Company does not intend or foresee that margin stock
will at any time constitute, more than 20% of the total assets of the
Company. Neither the Company nor any agent acting on its behalf has taken
or will take any action which might cause this Agreement or the Notes to
violate Regulation G, Regulation T, Regulation X or any other regulation of
the Board of Governors of the Federal Reserve System or to violate the
Securities Exchange Act of 1934, in each case as in effect on the date
hereof or as the same may hereafter be in effect.
(o) DISCLOSURE. Neither this Agreement, nor the financial statements
referred to in subsection (a) of this Section 6, nor the 10-K or the l0-Q
or any certificate or other data furnished to you in writing by or on
behalf of the Company in connection with the transactions contemplated by
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading. There is no fact peculiar to the Company which
materially and adversely affects or in the future may (so far as the
Company can now reasonably foresee) materially and adversely affect the
business, operations, properties, prospects, assets or condition, financial
or other, of the Company and its Subsidiaries, taken as a whole, which has
not been disclosed to you in writing.
(p) ERISA. No accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists
with respect to any Plan. No liability to the Pension Benefit Guaranty
Corporation has been or is expected by the Company or any ERISA Affiliate
to be incurred with respect to any Plan by the Company or any ERISA
Affiliate which is or would be material and adverse to the business,
operations,
-8-
<PAGE> 53
-8-
properties, assets, or condition, financial or other, of the Company and
its Subsidiaries taken as a whole. Neither the Company nor any ERISA
Affiliate has incurred or presently expects to incur any withdrawal
liability under Title IV of ERISA which is or would be material and adverse
to the business, operations, properties, assets or condition, financial or
other, of the Company and its Subsidiaries taken as a whole. The execution
and delivery of this Agreement and the making of the loan by you hereunder
will be exempt from, or will not involve any transaction which is subject
to, the prohibitions of Section 406 of ERISA and will not involve any
transaction in connection with which a penalty could be imposed under
Section 502(i) of ERISA or a tax could be imposed pursuant to Section 4975
of the Code. The representation by the Company in the preceding sentence is
made in reliance upon and subject to the accuracy of your representation in
Section 7(b) hereof as to the source of the funds to be used by you to make
the loan hereunder.
7. (a) ACQUISITION FOR INVESTMENT; PRIVATE OFFERING. You represent that you
are acquiring the Note specified in Section 1 hereof for your own account for
investment and not with a view to, or for sale in connection with, the
distribution of such Note, nor with any present intention of distributing or
selling such Note, PROVIDED that the disposition of your property shall at all
times be within your control. The Company represents that it has not, either
directly or through any agent, offered any of the Notes or other similar
securities of the Company to, or solicited offers to acquire any thereof from,
or otherwise approached or negotiated or communicated in respect of any thereof
with, any Person or Persons other than you and not more than 34 other Persons,
all of whom are institutional investors and were offered the Notes (or a portion
thereof) at private sale for investment. Neither the Company nor any agent on
its behalf will offer any of the Notes or other similar securities of the
Company to, or solicit any offers to acquire any thereof from, or otherwise
approach or negotiate in respect of any thereof with, any Person or Persons so
as thereby to bring the offering and issuance of the Notes within the provisions
of Section 5 of the Securities Act of 1933, as amended.
(b) SOURCE OF FUNDS. You represent that the source of funds to be used by
you to make the loan hereunder and to acquire the Notes will not consist of
assets of any separate account (as defined in ERISA) maintained by you.
8. CONDITIONS OF LOAN. Your obligation to advance the loan on the Closing
Date, as provided in Section 1 hereof, shall be subject to the performance by
the Company of all its agreements theretofore to be performed hereunder and to
the accuracy of its representations and warranties herein contained
-9-
<PAGE> 54
and to the satisfaction, prior to or concurrently with the making of said loan,
of the following further conditions:
(a) OPINION OF COMPANY'S COUNSEL. You shall have received from Vorys,
Sater, Seymour and Pease, counsel for the Company, an opinion dated the
Closing Date, in form and substance satisfactory to you, to the effect that
(i) the Company is a duly organized and existing corporation in
good standing under the laws of the State of Ohio and has the
corporate power and authority to own its properties and to carry on
its business as now conducted and to enter into this Agreement and to
issue the Notes;
(ii) this Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its terms;
(iii) the Note delivered to you on the Closing Date has been duly
authorized, executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company enforceable in
accordance with its terms;
(iv) it is not necessary in connection with the offering and
delivery of the Notes under the circumstances contemplated by this
Agreement, to register the Notes under the Securities Act of 1933, as
amended and as then in effect, or to qualify an indenture in respect
thereof under the Trust Indenture Act of 1939, as amended and as then
in effect;
(v) no authorization, consent, approval or exemption from, or
filing with, any governmental or public body is required in connection
with the execution and delivery of this Agreement and the Notes;
and as to such other matters incident to the transactions contemplated by
this Agreement as you may desire.
(b) NO EVENT OF DEFAULT. No Default or Event of Default shall exist on
the Closing Date; and the Company shall have delivered to you on the
Closing Date a certificate signed by an authorized officer of the Company
to such effect.
(c) CORRECTNESS OF REPRESENTATIONS, ETC. The representations and
warranties by the Company in Sections 6 and 7(a) hereof shall be true on
and as of the Closing
- 10 -
<PAGE> 55
Date with the same effect as though such representations and warranties had
been made on and as of the Closing Date; and the Company shall have
delivered to you on the Closing Date a certificate signed by an authorized
officer of the Company to such effect.
(d) LEGALITY. The Note being acquired by you on the Closing Date shall
qualify on the Closing Date as a legal investment for mutual life insurance
companies under the New York Insurance Law (without resort to any provision
of such Law, such as Section 1405 (a) (8) thereof, permitting limited
investments by you without restriction as to the character of the
particular investment) and such acquisition shall not subject you to any
penalty or other onerous condition under or pursuant to any applicable law
or governmental regulation.
(e) PROCEEDINGS, DOCUMENTS, ETC. All proceedings to be taken in
connection with the transactions contemplated by this Agreement, and all
documents incident thereto, shall be satisfactory in form and substance to
you; and you shall have received copies of all documents which you may
reasonably request in connection with said transactions and copies of the
records of all corporate proceedings in connection therewith in form and
substance satisfactory to you.
9. HOME OFFICE PAYMENT. Notwithstanding any provision to the contrary
contained in the Notes, the Company will promptly and punctually pay to you by
wire transfer of immediately available funds, not later than 12:00 noon, New
York time, on the date payment is due, to Account No. 002-2-410591, Account
Name: Metropolitan Life-Corporate Investments, Reference: PPN 068798A*8, at The
Chase Manhattan Bank, N.A., Metropolitan Branch, 33 East 23rd Street, New York,
New York 10010, ABA No. 021000021, or such other account or address as may be
designated in writing by you, all amounts payable in respect of the principal
of, premium, if any, and interest on, any Notes then held by you or your
nominee, without any presentment thereof and without any notation of such
payment being made thereon.
In the event you shall sell any Note you will, prior to the delivery
thereof, make a notation thereon of the date to which interest has been paid
thereon and, if not theretofore made, a notation thereon of the extent to which
any payment has been made on account of the principal thereof.
10. EXPENSES. Whether or not the loan herein contemplated shall be
consummated, the Company shall pay you $15,000 as a transaction fee to cover
your expenses in preparing for and documenting the transaction contemplated by
this Agreement, You agree that, upon payment of said
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<PAGE> 56
transaction fee, the Company will not otherwise be liable for the payment of any
expenses incurred by you in connection with preparing for, documenting and
closing the transaction contemplated by this Agreement, including, without
limitation, any legal fees and expenses, travel expenses, and word processing
costs. The Corporation will, however, pay all of your out-of-pocket expenses,
including the reasonable fees and disbursements of your special counsel, if any,
in connection with any waiver, modification or consent under or in respect of
this Agreement or the Notes, whether or not the same become effective. The
Company will save you harmless against any and all liability with respect to, or
resulting from any delay in paying, stamp or other documentary taxes, if any,
which may be payable or determined to be payable in connection with the
execution and delivery of the Notes or of any modification of any thereof. The
Company's obligations under this Section 10 shall survive the payment or
prepayment of the Notes.
11. DEFINITIONS. Any terms used herein shall have, unless otherwise herein
defined or the context otherwise requires, the respective meanings assigned to
them in Exhibit A hereto.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SUCCESSORS AND ASSIGNS. All
covenants, agreements, representations and warranties made herein and in
certificates delivered pursuant hereto shall survive the making by you of the
loan herein contemplated and the execution and delivery to you of the Notes
evidencing such loan and shall continue in full force and effect so long as any
Note is outstanding and unpaid and as provided in Section 10 hereof. Whenever in
this Agreement either of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party (including, in the
case of you, any subsequent holder of any of the Notes); and all covenants,
promises and agreements in this Agreement contained by or on behalf of the
Company, or by or on behalf of you, shall bind and inure to the benefit of the
respective successors and assigns of such party hereto (including, in the case
of you, any subsequent holder of any of the Notes); PROVIDED, HOWEVER, that you
shall not be required to advance the loan as provided in Section 1 hereof to any
Person other than the presently existing R.G. Barry Corporation, an Ohio
corporation.
13. NOTICES. All communications provided for hereunder or under the Notes
(other than payments in respect thereof which shall be made in accordance with
Section 9 hereof) shall be in writing and, if to you, mailed by registered or
certified mail or delivered Personally or by reputable overnight courier service
to Metropolitan Life Insurance Company, One Madison Avenue, New York, New York
10010, Attention: Treasurer, with a copy to Metropolitan Life Insurance Company,
Capital Markets Group-Central Territory, One Lincoln Centre, Suite 800,
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<PAGE> 57
Oakbrook Terrace, Illinois 60181, Attention: Vice-President, or, if to the
Company, mail by registered or certified mail or delivered personally or by
reputable overnight courier service to the Company's office at 13405 Yarmouth
Road, N.W., Pickerington, Ohio 43147, Attention: Treasurer, or at any other
office that the Company or you may hereafter designate by written notice to the
other.
14. LAW GOVERNING: No Oral Change. This Agreement shall be construed in
accordance with the laws of the State of Ohio and cannot be waived, changed,
terminated or discharged orally but only by an agreement in writing and signed
by the party against whom enforcement of any waiver, change, termination or
discharge is sought.
15. HEADINGS. The headings of the Sections and subsections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
Upon your signing the form of acceptance on the enclosed counterpart of
this Agreement and returning such counterpart to the Company, this Agreement
shall become a binding agreement between you and the Company
Very truly yours,
R.G. BARRY CORPORATION
By /s/ Gordon Zacks
--------------------
The foregoing agreement is hereby accepted.
METROPOLITAN LIFE INSURANCE COMPANY
By /s/ Michael J. Kroeger
---------------------------------
Vice-President
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<PAGE> 58
EXHIBIT A
R.G. BARRY CORPORATION
9.70% Senior Promissory Note
Due July 5, 2004
Reg. No. New York, New York
$ , 19
R.G. BARRY CORPORATION (herein called the "Company"), a corporation duly
organized and existing under the laws of the State of Ohio, for value received,
hereby promises to pay to , or registered assigns, on the fifth
day of July, 2004, the principal sum of
Dollars ($ ) (or
so much thereof as shall not have been prepaid) in such coin or currency of the
United States of America as at the time of payment shall be legal tender for
public and private debts, at the principal office of The Chase Manhattan Bank,
N.A. in the Borough of Manhattan, The City of New York, State of New York, and
to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the unpaid balance of said principal sum from the date hereof at said
office, in like coin or currency, semi-annually on the fifth day of July and the
fifth day of January in each year, commencing on the first such day after the
date hereof, at the rate of nine and seventy one-hundredths per centum (9.70%)
per annum until the principal hereof shall have become due and payable. Any
payment of principal of, premium, if any, or, to the extent lawful, interest on
this Note which is not paid when due shall bear interest at the greater
(determined on a daily basis) of eleven and seventy one-hundredths per centum
(11.70%) per annum or the rate per annum which The Chase Manhattan Bank, N.A.
announces publicly from time to time as its corporate base rate of interest (or
such lesser rate, if any, which is the maximum rate permitted by applicable law)
(the "Overdue Interest Rate") for the period that the same is overdue.
1. NOTES. This Note is one of the 9.70% senior promissory notes due July 5,
2004 of the Company (the "Notes") issued pursuant to a loan agreement dated July
5, 1994 between the Company and Metropolitan Life Insurance Company (the
"Agreement"), in the aggregate principal amount of $15,000,000, each in the
denomination of $100,000 or a multiple thereof, and bearing interest payable at
the same rate and on the same semi-annual dates as the interest on the principal
amount of this Note.
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2. REGISTER. The Notes are issuable only as registered notes. The Company
shall keep at the office or agency maintained Pursuant to Section 7.1 hereof a
register in which the Company shall register the names and addresses of the
holders of the Notes and shall register the transfer of Notes as provided
herein.
Upon due presentment for registration of transfer of any Note at such
office or agency, the Company will execute, register and deliver in exchange
therefor a new Note or Notes, each in a minimum denomination of $100,000
principal amount, or any multiple of $1,000 in excess thereof, equal in
aggregate principal amount to the unpaid principal amount of the Note so
presented for registration of transfer, dated the date from which unpaid
interest has then accrued thereon and registered in the name or names of the
transferee or transferees. At any time at the request of the holder of any Note
and upon surrender of such Note for such purpose to the Company at such office
or agency, the Company will execute, register and deliver in exchange therefor a
new Note or Notes, each in a minimum denomination of $100,000 principal amount,
or any multiple of $1,000 in excess thereof, equal in aggregate principal amount
to the unpaid principal amount of the Note so surrendered, dated the date from
which unpaid interest has then accrued thereon and registered in such name or
names as such holder may request. Each Note presented or surrendered for
registration of transfer shall be duly endorsed by, or accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company duly
executed by, the holder thereof or his attorney duly authorized in writing.
All exchanges and registrations of transfer of Notes shall be at the
expense of the Company other than any taxes incurred by reason of a transfer of
title.
The Company may deem and treat the registered holder hereof as the absolute
owner hereof (whether or not this Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon by anyone other than the Company)
for the purpose of receiving payment of or on account of the principal of,
premium, if any, or interest on this Note and for all other purposes, and the
Company shall not be affected by any notice to the contrary. All payments made
to the registered holder hereof shall be valid and effectual to satisfy and
discharge the liability upon this Note to the extent of the sum or sums so paid.
3. PREPAYMENTS.
3.1. MANDATORY PREPAYMENTS. The Company covenants and agrees that it shall
prepay $2,143,000 principal amount of Notes on July 5 in each of the years 1998
through 2003, inclusive; PROVIDED, HOWEVER, that, upon any partial prepayment
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of the Notes pursuant to Section 3.2 hereof, the principal amount of each
mandatory prepayment of Notes becoming due under this Section 3.1 on or after
the date of such prepayment pursuant to Section 3.2 shall be reduced in the same
proportion as the aggregate unpaid principal amount of the Notes is reduced as a
result of such prepayment pursuant to Section 3.2.
Each prepayment pursuant to this Section 3.1 shall be in the principal
amount thereof plus accrued interest to the date of such prepayment, but without
premium.
3.2. OPTIONAL PREPAYMENTS. Upon notice given as provided in Section 3.3
hereof, the Company at its option may prepay the Notes as a whole at any time or
in part from time to time (in multiples of $100,000 principal amount) at the
Yield Maintenance Price. Each such notice shall specify the date on which such
prepayment is to be made (an "Optional Prepayment Date"), the principal amount
of the Notes of each holder so to be prepaid and the interest accrued thereon to
the Optional Prepayment Date.
On the Calculation Date, the Computing Holder shall give written notice to
the Company of the amount of the Yield Maintenance Price so to be prepaid, which
notice shall set forth in reasonable detail the computation thereof; PROVIDED,
HOWEVER, that the failure of the Computing Holder to make such determination
shall not affect the obligation of the Company to pay such Yield Maintenance
Price when due in accordance with the terms of the Notes and the Computing
Holder shall have no liability to the Company or any other holder of the Notes
for its failure to make such determination. The Yield Maintenance Price set
forth in such notice shall be binding on the Company and all of the holders of
the Notes, absent demonstrable error. If the Computing Holder shall not have
given the notice contemplated by this Section 3.2 by the end of the third
Business Day after the Calculation Date, the Company shall be entitled to
determine the Yield Maintenance Price in accordance with the terms hereof and
such calculation shall be binding on the Computing Holder and all other holders,
absent demonstrable error.
Promptly after the Calculation Date, the Company shall deliver to each
holder on or before the Optional Prepayment Date a certificate signed by a
senior financial officer of the Company setting forth the Yield Maintenance
Price of the Notes held by such holder so to be prepaid, accompanied by a copy
of the written notice by the Computing Holder referred to above.
Upon notice of any prepayment pursuant to this Section 3.2 being given as
provided in Section 3.3 hereof, the Company covenants and agrees that it will
prepay on the Optional Prepayment Date the principal amount of the Notes so to
be prepaid as specified in such notice at the Yield Maintenance
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Price thereof, together with interest accrued thereon to such date fixed for
prepayment.
3.3. NOTICE OF PREPAYMENT AND OTHER NOTICES. The Company shall give written
notice of any prepayment of this Note or any portion hereof pursuant to Section
3.2 not less than 30 nor more than 60 days prior to the date fixed for such
prepayment in such notice, which notice shall specify the amount so to be
prepaid, together with the interest to be paid thereon and the date fixed for
such prepayment. Any notice of prepayment and all other notices to be given to
any holder of this Note shall be given by registered or certified mail or by
personal delivery or delivery by reputable overnight courier service to such
holder at its address designated on the date of such notice on the register
maintained by the Company.
4. ALLOCATION OF PREPAYMENTS. If less than the entire principal amount of
all the Notes at the time outstanding shall be prepaid at any time pursuant to
Section 3.1 or 3.2 hereof, the Company will allocate the principal amount so
prepaid (but only in units of $1,000) among the registered holders of Notes in
proportion, as nearly as may be, to the respective principal amount of Notes,
not theretofore called for prepayment, of which they shall be registered
holders.
5. SURRENDER OF NOTES; NOTATION THEREON. Upon any prepayment of a portion
of the principal amount of this Note, the registered holder hereof, at its
option, may require the Company to execute and deliver at the expense of the
Company a new Note dated the date from which unpaid interest has then accrued
thereon and payable to such Person or Persons as may be designated by such
holder for the aggregate principal amount of this Note then remaining unpaid,
upon surrender of this Note, or may present this Note to the Company for
notation hereon of the payment of the portion of the principal of this Note so
prepaid.
6. INTEREST AFTER DATE FIXED FOR PREPAYMENT. If this Note or a portion
hereof is called for prepayment as herein provided, this Note or such portion,
as the case may be, shall cease to bear interest from and after the date fixed
for such prepayment; PROVIDED, HOWEVER, that if, upon presentation for the
purpose, the Company shall fail to pay this Note or such portion, as the case
may be, this Note or such portion, as the case may be, shall bear, so far as may
be lawful, interest at the Overdue Interest Rate until paid and, so far as may
be lawful, any overdue installment of interest shall also bear interest at such
Overdue Interest Rate.
7. AFFIRMATIVE COVENANTS. The Company covenants and
agrees that so long as this Note shall be outstanding:
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7.1. MAINTENANCE OF OFFICE. The Company will maintain an office or agency
in the United States where the Notes may be presented for payment, registration
of transfer, replacement or exchange as provided herein and in the Agreement and
where notices, presentations and demands to or upon the Company in respect of
the Notes may be given or made. Unless another office or agency is designated by
the Company, the office of the Company for the purpose of this Section 7.1 shall
be 13405 Yarmouth Road, N.W., Pickerington, Ohio 43147.
7.2. PAYMENT OF TAXES AND CLAIMS. The Company will promptly pay and
discharge, and will cause its Subsidiaries to promptly pay and discharge, when
due all taxes, assessments and governmental charges or levies imposed upon the
Company or any Subsidiary or upon the income and profits of the Company or any
Subsidiary, or upon any property, real, personal or mixed, belonging to the
Company or any Subsidiary, or upon any part thereof, before the same shall
become in default, as well as all claims for labor, materials and supplies
which, if unpaid, might become a Lien upon such properties or any part thereof;
PROVIDED; HOWEVER, that the Company shall not be required to pay and discharge,
or to cause to be paid and discharged, any such tax, assessment, charge, levy or
claim so long as the validity or amount thereof shall be contested in good faith
by appropriate proceedings which will prevent the sale or forfeiture of any
property of the Company or such Subsidiary and the Company or such Subsidiary,
as the case may be, shall set aside on its books reserves with respect to any
such tax, assessment, charge, levy or claim so contested in amounts deemed
adequate by the Company.
7.3. CORPORATE EXISTENCE. Except as provided in Section 8.6 hereof, the
Company will do, and will cause each of its Subsidiaries to do, all things
necessary to preserve and keep in full force and effect its corporate existence,
rights and franchises, PROVIDED that this Section 7.3 shall not prevent the
termination of the corporate existence of a Subsidiary if such termination is
desirable in the conduct of the business of the Company and not disadvantageous
in any material respect to the holders of the Notes.
7.4. MAINTENANCE OF PROPERTIES. The Company will at all times maintain,
preserve, protect and keep, and will cause its Subsidiaries to maintain,
preserve, protect and keep, its property in good repair, working order and
condition, and from time to time make, or cause to be made, all necessary
repairs, renewals, replacements, betterments and improvements thereto, so that
the business carried on in connection therewith may be properly and
advantageously conducted at all times, provided that the Company or any
Subsidiary may discontinue the maintenance of any property if such
discontinuance is desirable in the conduct of its business and not
disadvantageous in any material respect to the holders of the Notes.
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7.5. INSURANCE. The Company will keep adequately insured, and will cause
each of its Subsidiaries to keep adequately insured, by financially sound and
reputable insurers, all property of a character usually insured by corporations
engaged in the same or a similar business similarly situated against loss or
damage of the kinds customarily insured against by such corporations, and will
carry, and will cause each of its Subsidiaries to carry, such other insurance as
is usually carried by corporations engaged in the same or a similar business
similarly situated, PROVIDED that the Company shall be permitted to self-insure,
if adequate reserves are maintained in connection therewith, against (i) loss or
damage to motor vehicles at any time owned or leased by the Company and its
Subsidiaries, and (ii) flood loss or damage to the Company's facility in
Goldsboro, North Carolina. The Company shall furnish to the holders of the
Notes, upon request made by any holder not more frequently than annually, a
certificate of an authorized officer describing in reasonable detail all
insurance and self-insurance maintained pursuant to this Section 7.5.
7.6. BOOKS AND RECORDS. The Company will keep, and will cause each of its
Subsidiaries to keep, true and complete books of record and account in
accordance with GAAP.
8. NEGATIVE COVENANTS. The Company covenants and agrees that so long as
this Note shall be outstanding:
8.1. LIMITATIONS ON DEBT.
(i) The Company will not any time permit the ratio of (x) Consolidated
Senior Funded Debt to Total Capitalization to exceed 50%, or (y)
Consolidated Funded Debt to Total Capitalization to exceed 55%.
(ii) The Company will not incur any Current Debt except:
(A) unsecured Current Debt owing to banks, insurance companies
and similar financial institutions, PROVIDED that during each period
of twelve (12) consecutive calendar months (such a period being deemed
to commence on the first day of every month after May, 1994) , there
shall be a period of at least sixty (60) consecutive days during which
on each and every day during such sixty (60) day period, the aggregate
amount of such Current Debt of the Company outstanding at the close of
business on each such day (or if such day is not a Business Day, on
the next preceding Business Day) during such sixty (60) day period, if
deemed to be unsecured Funded Debt of the Company, could then be
outstanding without a violation of clause (i) of this Section
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8.1, and
(B) Current Debt secured by Liens permitted by clause (vi) of
Section 8.2 hereof.
(iii) The Company will not permit any Subsidiary to incur or be liable
in respect of any Current Debt or Funded Debt except (A) unsecured and (to
the extent permitted by clause (vi) of Section 8.2 hereof) secured Current
Debt or Funded Debt owing to the Company or to a Wholly-Owned Subsidiary
and (B) in the case of Vesture Corporation, Debt secured by Liens on its
accounts receivable, PROVIDED that at the time of incurrence of such Debt
by Vesture Corporation and immediately after giving effect thereto, (x) the
aggregate outstanding principal amount of such Debt shall not exceed $1
million, (y) the Company shall be in compliance with Section 8.1(i) and (z)
the Company could incur at least $1 of Debt secured by Liens permitted by
Section 8.2(vi), and PROVIDED, FURTHER, that no such Debt shall be incurred
or exist after January 5, 1996.
8.2. LIMITATIONS ON LIENS. The Company will not, and will not permit any of
its Subsidiaries to, incur, create, assume or permit to exist any Lien on any
property, whether owned on July 5, 1994 or thereafter acquired, except
(i) Liens on property of the Company or a Subsidiary existing on July
5, 1994 and, if securing Current Debt or Funded Debt, described in Exhibit
B to the Agreement;
(ii) Liens, pledges or deposits made or incurred by the Company or a
Subsidiary in connection with worker's compensation, social security or
unemployment insurance or to secure the performance of letters of credit,
bids, tenders, sales contracts, leases, statutory obligations, surety,
appeal and performance bonds and other similar obligations incurred in the
ordinary course of business and not in connection with the borrowing of
money, the obtaining of advances or the payment of the deferred purchase
price of property;
(iii) Liens incurred by the Company or a Subsidiary for taxes,
assessments or governmental charges or levies to the extent permitted to
remain unpaid by Section 7.2 hereof and materialmen's and warehousemen's
Liens securing obligations not overdue, or if overdue, being contested in
good faith by appropriate proceedings, PROVIDED that adequate reserves are
established in accordance with GAAP;
(iv) attachment, judgment and other similar Liens arising in
connection with judicial proceedings, PROVIDED that the execution or other
enforcement of such Lien is
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effectively stayed and the claims secured thereby are being contested in
good faith in such manner that the property subject to such Lien is not
subject to forfeiture or sale and PROVIDED FURTHER that adequate reserves
are established in accordance with GAAP;
(v) encumbrances in the nature of zoning restrictions, easements,
restrictions of record on the use of real property, and landlords' and
lessors' Liens, in each case arising or existing in the ordinary course of
business of the Company or a Subsidiary and which do not materially impair
the Company's or a Subsidiary's use of the property subject thereto; and
(vi) other Liens on property of the Company or any Subsidiary securing
Current Debt or Funded Debt of the Company or such Subsidiary, PROVIDED
that at the time of incurrence of any such Lien and after giving effect to
the Debt secured thereby, (A) the aggregate principal amount of all such
Debt secured by Liens permitted by this clause (vi) shall not exceed 15% of
Consolidated Net Tangible Assets, and (B) the Company shall be in
compliance with clause (i) of Section 8.1 hereof.
Any corporation which becomes a Subsidiary on or after July 5, 1994 shall
be deemed to have incurred, at the time it becomes a Subsidiary, any Debt or
Lien of such corporation existing immediately after it becomes a Subsidiary.
8.3. RESTRICTIONS ON SUBSIDIARIES. The Company will not permit any
Subsidiary to
(i) issue or dispose of any shares of its capital stock to any Person
other than the Company or a Wholly-Owned Subsidiary, except to the extent,
if any, required to qualify directors under any applicable law or required
to be issued to other stockholders of such Subsidiary by virtue of their
exercise of preemptive rights or as their PRO RATA share of any stock
dividend; or
(ii) except as permitted by the proviso in Section 8.4 hereof, sell,
assign, transfer, dispose of or in any way part with control of any share
of capital stock of any other Subsidiary owned by it, or any Debt owing to
it from another Subsidiary, except in either case to the Company or a
Wholly-Owned Subsidiary.
8.4. DISPOSITION OF SECURITIES BY COMPANY. The Company will not
(i) sell, assign, transfer, dispose of, or in any way part with
control of, any share of capital stock of any
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Subsidiary except (A) to the extent, if any, required to qualify directors
of such Subsidiary under any applicable law, or (B) to any Wholly-Owned
Subsidiary; or
(ii) sell, assign, transfer, dispose of, or in any way part with
control of, any Debt owing from any Subsidiary to the Company except to any
Wholly-Owned Subsidiary;
PROVIDED, HOWEVER, that all shares of capital stock of all classes, together
with all Debt, of any Subsidiary owned by the Company and/or its other
Subsidiaries may be sold for the fair market value thereof (as determined in
good faith by the Board of Directors of the Company), as an entirety, if the
Subsidiary whose shares of capital stock and Debt are so sold does not own any
shares of capital stock or Debt of any other Subsidiary not being simultaneously
disposed of as permitted by this proviso and if such sale is permitted by
Section 8.6(iv) hereof.
8.5. RESTRICTED PAYMENTS. The Company will not declare or pay any dividends
(other than dividends payable in capital stock of the Company) on any shares of
any class of its capital stock or apply any of its property or assets to the
purchase, redemption or other retirement of, or make any other distribution, by
reduction of capital or otherwise, in respect of, or permit any Subsidiary to
purchase, any shares of any class of stock of the Company, unless, immediately
after giving effect to such action, there exists no Event of Default or Default,
and the sum of
(i) the amounts declared and paid as dividends (other than dividends
paid in capital stock of the Company) on all shares of stock of all classes
of the Company or distributed in respect of such shares of stock subsequent
to January 1, 1994, and
(ii) the amounts applied to the purchase (including purchases by
Subsidiaries), redemption or retirement of shares of stock of all classes
of the Company subsequent to January 1, 1994,
will not be in excess of the sum of $4,000,000 PLUS 50% of cumulative
Consolidated Net Income (or, in the case of a negative cumulative Consolidated
Net Income, MINUS 100% of such deficit) for the period (taken as one accounting
period) from January 2, 1994 to the date of such action, PLUS the aggregate
amount of the net consideration received by the Company (other than from
Subsidiaries) from the issuance or sale after January 1, 1994 of shares of
capital stock of the Company, including treasury stock.
The amount of any consideration from the issuance or sale
after January 1, 1994 of shares of stock received by the
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Company in the form of property other than cash shall be deemed to be the fair
market value of such property (as determined in good faith by the Board of
Directors of the Company) at the time of the receipt of such property by the
Company.
8.6. DISPOSITIONS OF ASSETS; MERGER; CONSOLIDATION. The Company will not,
and will not permit any Subsidiary to, sell, lease, transfer or otherwise
dispose of all or any substantial part of its properties and assets, or
consolidate with or merge into any other Person, or permit another Person to
merge into it, except that
(i) any Subsidiary may permit any corporation to merge into such
Subsidiary, or may consolidate with or merge into, or sell, lease or
otherwise dispose of its assets as an entirety or substantially as an
entirety to, the Company, a Wholly-Owned Subsidiary or any corporation
which thereupon becomes a Wholly-Owned Subsidiary, PROVIDED that
immediately after the consummation of any such transaction and after giving
effect thereto, (A) the Company shall be in compliance with the provisions
of Section 8.1(i), (B) the Company is able to incur at least $1 of Debt
secured by Liens permitted by Section 8.2(vi), and (C) no Default or Event
of Default shall exist;
(ii) the Company may permit any corporation to merge into it or may
consolidate with or merge into, or sell or otherwise dispose of (except by
lease) its assets as an entirety or substantially as an entirety to, any
solvent corporation organized in the United States of America which
expressly assumes in writing the due and punctual payment of the principal
of, and interest and premium on, the Notes and the due and punctual
performance of the obligations of the Company under the Agreement and the
Notes, PROVIDED that immediately after the consummation of any such
transaction and after giving effect thereto, (A) the Company (or such
successor or transferee corporation, as the case may be) shall be in
compliance with the provisions of Section 8.1(i), (B) the Company (or such
successor or transferee corporation, as the case may be) is able to incur
at least $1 of Debt secured by Liens permitted by Section 8.2(vi), and (C)
no Default or Event of Default shall exist;
(iii) the Company or any Subsidiary may sell or otherwise dispose of
any of its assets in the ordinary course of its business; and
(iv) in addition to transactions permitted by subsections (i), (ii),
and (iii) above, the Company or any Subsidiary may sell or otherwise
dispose of any of its assets (including shares of stock and Debt of
Subsidiaries) at the fair market value thereof (as
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determined in good faith by the Board of Directors of the Company) if the
aggregate net proceeds received by the Company and its Subsidiaries from
all such sales and other dispositions during the twelve (12) consecutive
calendar months immediately preceding any such sale or other disposition
shall not exceed 15% of Consolidated Net Tangible Assets as of the end of
the fiscal year of the Company immediately preceding such sale or
disposition.
8.7. SALE-LEASEBACK TRANSACTIONS. The Company will not, and will not permit
any Subsidiary to, sell or transfer any property to any Person and thereupon
lease, as lessee, the same or similar property unless (A) (i) such lease is a
Capitalized Lease and the Company is the lessee thereunder, (ii) immediately
after giving effect thereto, the Company is in compliance with the provisions of
Section 8.1(i), (iii) immediately after giving effect thereto, the Company is
able to incur at least $1 of Debt secured by Liens permitted by Section 8.2(vi),
and (iv) all of the provisions of Section 8.6(iv) are complied with in
connection with such sale or (B) (i) such lease is an operating lease and the
Company is the lessee thereunder, (ii) such property is acquired after July 5,
1994 and is sold and leased-back by the Company within 120 days after such
acquisition, (iii) all of the provisions of Section 8.6(iv) hereof are complied
with in connection with such sale, and (iv) immediately after giving effect to
such sale and lease-back, (x) the aggregate net proceeds received by the Company
from all such sales made in connection with transactions contemplated by this
Section 8.7(B) after July 5, 1994 (other than such sales with respect to which
the related lease-back has expired or otherwise terminated) shall not exceed 5%
of Consolidated Net Worth on the last day of the fiscal quarter immediately
preceding such sale, and (y) the present value of the aggregate rent payable
under all such operating leases then outstanding, discounted at the rate of
12 1/2% per annum, shall not exceed 5% of Consolidated Net Worth on the last
day of the fiscal quarter immediately preceding such sale, PROVIDED that this
Section 8.7 shall not apply to (xx) leases having a term (inclusive of renewal
and extension terms) of less than three years, and (yy) leases of motor
vehicles, computers and office and data processing equipment.
8.8. TRANSACTIONS WITH AFFILIATES. The Company will not, and will not
permit any Subsidiary to, engage in any transaction with an Affiliate on terms
more favorable to the Affiliate than would have been obtainable in arm's length
dealing in the ordinary course of business with a Person not an Affiliate.
8.9. MAINTENANCE OF CONSOLIDATED NET WORTH. The Company will not, on the
last day of any fiscal quarter of the Company, permit Consolidated Net Worth to
be less than the sum of (i) $25,000,000, PLUS (ii) 50% of Consolidated Net
Income computed
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on a cumulative basis for the period from and after January 2, 1994 to and
including the end of the fiscal quarter for which the determination is being
made, PROVIDED that if Consolidated Net Income for any fiscal quarter in said
period is a deficit figure, the amount added pursuant to clause (ii) for said
fiscal quarter shall be zero.
8.10. MAINTENANCE OF CURRENT RATIO. The Company will not permit the ratio
of Consolidated Current Assets to Consolidated Current Liabilities to be less
than (i) 1.25 to 1 at the end of the first and fourth fiscal quarters in each
fiscal year of the Company, and (ii) 1.0 to 1 at the end of the second and
third fiscal quarters in each fiscal year of the Company.
8.11. INVESTMENTS. The Company will not, and will not permit any Subsidiary
to, make any Investment other than Permitted Investments.
9. AMENDMENT AND WAIVER. (A) Any provision of the Agreement or of the Notes
may, with the consent of the Company, be amended or waived (either generally or
in a particular instance and either retroactively or prospectively), by one or
more substantially concurrent written instruments signed by the holders of
66 2/3% of the aggregate unpaid principal amount of the Notes; PROVIDED that:
(i) no such amendment or waiver shall, without the consent of the
holders of all the Notes then outstanding, change the rate or time of
payment of interest on any of the Notes, or modify any of the provisions of
the Notes with respect to the payment or prepayment thereof or with respect
to the payment of premium in respect thereof, or change the percentage of
the principal amount of the Notes the holders of which are required to
effectuate or rescind any acceleration of the Notes, or modify any
provision of this Section 9, and
(ii) no such waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon.
Each holder of any Note at the time or thereafter outstanding shall be bound by
any such amendment or waiver, whether or not a notation thereof shall have been
placed on the Note.
(B) The Company shall not, and shall not permit any of its Affiliates to,
solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of the Agreement or the Notes unless each
holder of a Note (irrespective of the principal amount of Notes then held by it)
shall be informed thereof by the Company and shall be afforded the opportunity
of considering the same and shall be supplied by the Company with sufficient
information to enable
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it to make an informed decision with respect thereto and any information
delivered to any other holder of a Note. The Company shall not, and shall not
permit any of its Affiliates to, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any holder of a Note as consideration for or as an inducement to
the entering into by such holder of any such amendment or waiver, unless such
remuneration is concurrently paid, on the same terms, ratably to all holders of
all of the Notes then outstanding, whether or not such holders shall have
consented to such waiver or amendment.
10. DEFINITIONS. For the purpose of this Note, unless otherwise defined or
the context otherwise requires:
"AFFILIATE" means any Person which, directly or indirectly, controls or is
controlled by or is under common control with the Company or a Subsidiary or
which beneficially owns or holds or has the power to direct the voting power of
5% or more of the Voting Stock of the Company or a Subsidiary or which has 5% or
more of its Voting Stock (or, in the case of a Person which is not a
corporation, 5% or more of its equity interest) beneficially owned or held,
directly or indirectly, by the Company or a Subsidiary, and any/director or
officer of the Company or its Subsidiaries. For purposes of this definition,
"control" means the power to direct the management and policies of a Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlled by" and "under common control
with" have meanings correlative to the foregoing.
"AGREEMENT" shall have the meaning specified in Section 1 hereof.
"BUSINESS DAY" means and includes any day on which banks are required to be
open to carry on their normal business in the States of New York and Ohio.
"CALCULATION DATE" means the date on which the Yield Maintenance Price on
the Notes being prepaid pursuant to Section 3.2 hereof or accelerated pursuant
to Section 11 hereof, as the case may be, is to be determined by the Computing
Holder with respect to such Notes. If the Notes are being prepaid pursuant to
Section 3.2 hereof, the Calculation Date shall be the fifth Business Day prior
to the Optional Prepayment Date established pursuant to Section 3.2. If the
Notes are being accelerated pursuant to Section 11 hereof, the Calculation Date
shall be the date of acceleration of such Notes.
"CAPITAL ASSETS" means all of the assets of the Company and its
Subsidiaries other than (i) licenses, patents,
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copyrights, tradenames or trademarks, goodwill, experimental or organizational
expense, unamortized debt discount and expense and all other assets which in
accordance with GAAP are deemed intangible, and (ii) inventories, accounts
receivable or securities of, or other Investments in, any Person.
"CAPITALIZED LEASE" means and includes at any time any lease of property,
real or personal, which in accordance with GAAP would at such time be required
to be capitalized on a balance sheet of the lessee.
"CAPITALIZED LEASE OBLIGATION" means at any time the capitalized amount of
the rental commitment under a Capitalized Lease which in accordance with GAAP
would at such time be required to be shown on a balance sheet of the lessee.
"COMPUTING HOLDER" means as of a Calculation Date with respect to (a) the
prepayment of Notes pursuant to Section 3.2 hereof or acceleration of the Notes
pursuant to clause (3) of the first paragraph of Section 11 hereof, as the case
may be, the holder at such date of the largest aggregate principal amount of the
outstanding Notes or (b) acceleration pursuant to clause (2) of the first
paragraph of Section 11 hereof, the holder of the Notes at such date so being
accelerated. For purposes of such determination, the holder of any Note and any
of its affiliates or subsidiaries that are holders of any Notes shall be treated
as one holder.
"CONSOLIDATED CURRENT ASSETS" means the assets of the Company and its
Subsidiaries that would (determined on a consolidated basis in accordance with
GAAP consistently applied) be classified as "current assets" on its consolidated
balance sheet.
"CONSOLIDATED CURRENT LIABILITIES" means (i) the liabilities of the Company
and its Subsidiaries that would (determined on a consolidated basis in
accordance with GAAP consistently applied) be classified as "current
liabilities" on its consolidated balance sheet, and (ii) Guaranties by the
Company of Current Debt of other Persons.
"CONSOLIDATED FUNDED DEBT" means the aggregate amount of Funded Debt of the
Company and its Subsidiaries, as consolidated in accordance with GAAP and after
eliminating intercompany items .
"CONSOLIDATED NET INCOME" means the aggregate of the Net Income of the
Company and its Subsidiaries, after eliminating all intercompany items and
portions of earnings properly attributable to minority interests, if any, in
the capital stock of such Subsidiaries, all computed and consolidated in
accordance with GAAP; PROVIDED, HOWEVER, that Consolidated Net Income shall not
include:
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(1) the Net Income of any Person (other than a Subsidiary) in which
the Company or any Subsidiary has an ownership interest unless such Net
Income shall have been actually received by the Company or any Subsidiary
in the form of cash dividends or similar cash distributions;
(2) the Net Income of any Subsidiary prior to the date it became a
Subsidiary; and
(3) any gains or losses on the sale or other disposition of Capital
Assets, and any taxes on such gains and any tax deductions or credits on
account of such losses.
"CONSOLIDATED NET TANGIBLE ASSETS" means as of the date of any
determination thereof, Consolidated Total Assets as of such date less the sum of
(i) Consolidated Current Liabilities and (ii) assets properly classified as
intangible assets in accordance with GAAP.
"CONSOLIDATED NET WORTH" means as of the date of any determination thereof
the sum of all amounts which, in accordance with GAAP, would be included under
shareholders' equity plus (to the extent not included in shareholders' equity)
preferred stock, as determined on a consolidated basis, on the balance sheet of
the Company and its Subsidiaries.
"CONSOLIDATED SENIOR FUNDED DEBT" means the aggregate amount of Senior
Funded Debt of the Company and its Subsidiaries, as consolidated in accordance
with GAAP and after eliminating intercompany items.
"CONSOLIDATED TOTAL ASSETS" means, as of the date of any determination
thereof, the total amount of all assets of the Company and its Subsidiaries as
determined on a consolidated basis in accordance with GAAP.
"CURRENT DEBT" of any Person shall mean as of the date of any determination
thereof (i) all indebtedness of such Person for borrowed money other than Funded
Debt of such Person, and (ii) Guaranties by such Person of Current Debt of
others.
"DEBT" of any Person means all Current Debt of such Person and all Funded
Debt of such Person.
"DEFAULT" means any event or condition the occurrence of which would, with
the lapse of time or the giving of notice or both, constitute an Event of
Default.
"EVENT OF DEFAULT " has the meaning specified in Section 11 hereof.
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"FUNDED DEBT" of any Person means (i) indebtedness of such Person for
borrowed money or which has been incurred in connection with the acquisition of
assets or services, in each case having a final maturity of more than one year
from the date of creation thereof (or which is renewable or extendible at the
option of the obligor for a period or periods more than one year from the date
of creation), including all payments in respect thereof that are required to be
made within one year from the date of any determination of Funded Debt, whether
or not the obligation to make such payments shall constitute a current liability
of the obligor under GAAP, (ii) Capitalized Lease Obligations of such Person,
(iii) obligations secured by any Lien upon property or assets owned by such
Person, even though such Person has not assumed or become liable for the payment
of such obligations, (iv) obligations created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person, notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property, and (v) all Guaranties by such
Person of Funded Debt of others.
"GAAP" means generally accepted accounting principles as in effect at the
time of application to the provisions hereof.
"GUARANTIES" by any Person shall mean all obligations of such Person
guaranteeing, or in effect guaranteeing, any Current Debt or Funded Debt of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through an
agreement, contingent or otherwise, by such Person (i) to purchase such Debt or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Debt, (y) to maintain working
capital or other balance sheet condition or otherwise to advance or make
available funds for the purchase or payment of such Debt, (iii) to lease
property or to purchase securities or other property or services primarily for
the purpose of assuring the owner of such Debt of the ability of the primary
obligor to make payment of such Debt, or (iv) otherwise to assure the owner of
such Debt against loss in respect thereof.
"INVESTMENT" means any loan, advance, extension of credit or contribution
of capital or any investment in, or Purchase or other acquisition of, stock,
notes, debentures or other securities.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other encumbrance of any kind in respect of such
asset. For the purposes hereof, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale
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<PAGE> 74
agreement, Capitalized Lease or other title retention agreement relating to such
asset.
"NET INCOME" means for any period the net income (or the net deficit, if
expenses and charges exceed revenues and other proper income credits) of a
corporation or other Person for such period determined in accordance with GAAP.
"PERMITTED INVESTMENTS" means Investments consisting of:
(a) loans or advances by the Company and its Subsidiaries to
Subsidiaries in the ordinary course of business;
(b) Investments in corporate debt obligations maturing in one year or
less from the date of issuance which, at the time of acquisition by the
Company or any Subsidiary, are rated "A" or better (or the equivalent) by
Standard & Poor's Rating Group (currently a division of McGraw-Hill, Inc.)
or Moody's Investors Service, Inc.;
(c) Investments in direct obligations of the United States of America
or any agency or instrumentality of the United States of America, the
payment or guarantee of which constitutes a full faith and credit
obligation of the United States of America, in either case maturing in
twelve months or less from the date of acquisition thereof;
(d) Investments in certificates of deposit maturing within one year
from the date of issuance thereof, issued by a bank or trust company
organized under the laws of the United States or any state thereof, having
capital, surplus and undivided profits aggregating at least $200,000,000;
(e) loans or advances in the ordinary course of business to suppliers,
officers, directors and employees for expenses (including moving expenses
related to a transfer) incidental to carrying on the business of the
Company or any Subsidiary;
(f) receivables arising from the sale of goods and services in the
ordinary course of business of the Company and its Subsidiaries;
(g) other debt Investments by the Company and its Subsidiaries not
exceeding $5,000,000, maturing in six months or less from the date of
issuance thereof; and
(h) other Investments by the Company and its
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Subsidiaries not exceeding $1,000,000.
For purposes of this definition, at any time when a corporation becomes a
Subsidiary, all Investments of such corporation at such time shall be deemed to
have been made by such corporation, as a Subsidiary, at such time.
"PERSON" means and includes an individual, a corporation, a partnership, a
firm, a joint venture, a trust, an unincorporated organization or a government
or an agency or political subdivision thereof.
"SENIOR FUNDED DEBT" mean all Funded Debt other than Subordinated Funded
Debt.
"SUBORDINATED FUNDED DEBT" means any unsecured Funded Debt of the Company
which (x) is subordinated in right of payment to the Notes by provisions
substantially identical to those set forth in Schedule I hereto, (y) does not
provide for optional prepayments with respect thereto prior to July 5, 2004 and
(z) has a maturity extending beyond July 5, 2004, PROVIDED that any sinking fund
or other mandatory payments or prepayments required to be made in connection
with any such Debt prior to July 5, 2004 shall be deemed to be Senior Funded
Debt for purposes of all calculations pursuant to Section 8 of the Notes.
"SUBSIDIARY" means any corporation more than 50% of the outstanding Voting
Stock of which at the time is owned directly or indirectly by the Company and/or
by one or more Subsidiaries.
"TOTAL CAPITALIZATION" means, as of any date, the sum of (i) Consolidated
Funded Debt outstanding on such date, (ii) deferred Federal income tax
liabilities appearing on a consolidated balance sheet of the Company and its
Subsidiaries prepared as of such date in accordance with GAAP, and (iii)
Consolidated Net Worth determined as of such date.
"VOTING STOCK" of a corporation means the capital stock of such corporation
of the class or classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the board of directors (or
Persons performing similar functions) of such corporation.
"WEIGHTED AVERAGE LIFE TO FINAL MATURITY" of any indebtedness (including
the Notes) as of the time of determination thereof means the number of years
(rounded to the nearest one-twelfth) obtained by dividing the then Remaining
Dollar-Years of such indebtedness by the then outstanding principal amount of
such indebtedness. For the purposes of this definition, "REMAINING DOLLAR-YEARS"
means the sum of the amounts obtained by multiplying the amount of each then
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remaining sinking fund, serial maturity or other required repayment, including
repayment at final maturity, by the number of years (calculated to the nearest
one-twelfth) which will elapse between the time of such determination and the
date such repayment is scheduled to be made.
"WHOLLY-OWNED SUBSIDIARY" means any Subsidiary all of whose outstanding
stock (other than directors' qualifying shares) shall at the time be owned by
the Company and/or by one or more Wholly-owned Subsidiaries.
"YIELD MAINTENANCE PRICE" means, with respect to any Notes being prepaid
pursuant to Section 3.2 hereof or accelerated pursuant to Section 11 hereof, as
the case may be, the greater of (1) the sum of the respective Payment Values of
each prospective interest payment (excluding from the first Prospective interest
payment any amount of interest accrued to the applicable date of prepayment or
acceleration), prospective mandatory principal prepayment and the principal
payment at maturity in respect of such Notes (the amount of each such payment
being herein referred to as a "PAYMENT"), or (2) the unpaid principal amount of
such Notes. The Payment Value of each Payment shall be determined by discounting
such Payment at the Reinvestment Rate for the period from the scheduled date of
such Payment to the applicable date of prepayment or acceleration, as the case
may be. The "REINVESTMENT RATE" is a rate per annum equal to the sum of (a) .50%
and (b) the yield imputed from the yields of those actively traded "On The Run"
United States Treasury securities having maturities as close as practicable to
the Weighted Average Life to Final Maturity of the Notes so to be prepaid or
accelerated, as the case may be. The yields of such United States Treasury
securities shall be determined as of 10:00 a.m., Eastern Time, on the
Calculation Date by reference to Telerate Access Service (page 500 or the
relevant page at the date of determination indicating such yields, or if such
data ceases to be available, any publicly available source of similar market
data).
11. EVENTS OF DEFAULT. If one or more of the following events, herein
called "Events of Default", shall happen (for any reason whatsoever and whether
such happening shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):
(a) default shall be made in payment of the principal of any Note,
with the premium thereon, if any, when and as the same shall become due and
payable, whether at maturity or at a date fixed for prepayment or by
acceleration or otherwise; or
(b) default shall be made in the payment of any
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installment of interest on any Note when and as the same shall become due
and payable and such default shall continue for a period of five Business
Days; or
(c) default shall be made in the due observance or performance of any
covenant, condition or agreement on the part of the Company contained in
Sections 8.1, 8.2, 8.5, 8.6, 8.7, 8.9, 8.10 or 8.11 hereof or in Section
4(a) (vi) of the Agreement; or
(d) default shall be made in the due observance or performance of any
other covenant, condition, or agreement on the part of the Company to be
observed or performed pursuant to the terms hereof or of the Agreement and
such default shall continue for thirty days after the earlier of (i)
written notice thereof, specifying such default and requiring the same to
be remedied, shall have been given to the Company by the registered holder
of any Note, or (ii) actual knowledge thereof by the chief executive
officer, the chief financial officer or the treasurer of the Company; or
(e) the Company or any Subsidiary shall be adjudicated a bankrupt or
insolvent, or shall consent to the appointment of a receiver, trustee or
liquidator of itself or of any substantial part of its property, or shall
admit in writing its inability, or shall fail, to pay its debts generally
as they come due, or shall make a general assignment for the benefit of
creditors, or shall file a voluntary petition in bankruptcy, or a voluntary
petition or an answer seeking reorganization in a proceeding, under any
bankruptcy law (as now or hereafter in effect), or an answer admitting the
material allegations of a petition filed against the Company or any
Subsidiary in any such proceeding, or shall, by voluntary petition, answer
or consent, seek relief under the provisions of any now existing or future
bankruptcy or other similar law providing for the reorganization or winding
up of corporations, or the Company or its directors or stockholders shall
take action looking to the dissolution or liquidation of the Company
(except in connection with a consolidation with, or a merger of the Company
with or into, another corporation pursuant to Section 8.6 hereof); or
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Company or a
Subsidiary, a receiver, trustee or liquidator of the Company or such
Subsidiary or of any of its property, and such receiver, trustee or
liquidator shall not have been removed or discharged within sixty days
thereafter, or any of the property of the Company or a Subsidiary shall be
sequestered and shall
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<PAGE> 78
not be returned to the possession of the Company or such Subsidiary within
sixty days thereafter; or
(g) a petition against the Company or any Subsidiary in a proceeding
under any bankruptcy law (as now or hereafter in effect) shall be filed and
shall not be dismissed within sixty days after such filing, or, in case the
approval of such petition by a court of competent jurisdiction is required,
shall be filed and approved by such a court as properly filed and such
approval shall not be withdrawn or the proceeding dismissed within sixty
days thereafter, or if, under the provisions of any other similar law
providing for reorganization or winding up of corporations and which may
apply to the Company or any Subsidiary, any court of competent jurisdiction
shall assume jurisdiction, custody or control of the Company or such
Subsidiary or of any of its property and such jurisdiction, custody or
control shall not be relinquished or terminated within sixty days
thereafter; or
(h) (i) default shall be made in the payment of any principal,
interest or premium on any bond, debenture, note or other evidence of Debt
(other than the Notes) of, or assumed by, the Company or any Subsidiary,
when the same shall become due and payable, whether at maturity, by
declaration, by call for prepayment or redemption, or otherwise, and such
default shall continue for any period of grace provided therein with
respect thereto, or (ii) any other default or event of default shall occur
with respect to any such evidence of Debt of the Company or any Subsidiary,
and the holders of such Debt (or a trustee therefor) shall be permitted by
the terms thereof or of any agreement or instrument relating thereto to
accelerate the same; PROVIDED, HOWEVER, that the aggregate outstanding
principal amount of all such bonds, debentures, notes or other evidences of
Debt with respect to which a payment or other default or event of default
shall have occurred is in excess of $500,000; or
(i) any final judgment or judgments for the payment of money
aggregating in excess of $2,000,000 shall be rendered against the Company
and/or its Subsidiaries and any one of such judgments shall remain
undischarged for a period of thirty days during which execution shall not
be effectively stayed; or
(j) any representation or warranty made by the Company in the
Agreement or in any certificate or other instrument delivered thereunder or
under the Notes shall prove to be false, incorrect or breached in any
material respect on the date as of which made;
then (1) upon the occurrence of any Event of Default described
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<PAGE> 79
in Sections 11(e) or (g) hereof with respect to the Company (each a "Bankruptcy
Default"), all of the Notes shall automatically become immediately due and
payable, (2) upon the occurrence of any Event of Default described in Sections
11(a) or (b) hereof, the holder of any Note may at any time during its
continuance, by written notice to the Company, declare such Note to be due and
payable, whereupon such Note shall forthwith mature and become due and payable
or (3) upon the occurrence of any Event of Default other than a Bankruptcy
Default, the holder or holders of at least a majority in principal amount of the
Notes then outstanding (exclusive of any Notes held by the Company or any
Affiliate) may at any time during its continuance, by written notice to the
Company, declare all of the Notes to be due and payable, whereupon in each case
all of the Notes shall forthwith mature and become due and payable.
The amount payable upon the occurrence of a Bankruptcy Default shall be the
entire unpaid principal amount of the Notes, together with interest accrued
thereon, to the extent permitted by law, to the date of payment, and such amount
shall be payable without presentment, demand, protest or other requirement of
any kind, all of which are expressly waived by the Company. The amount payable
upon an acceleration based on any other Event of Default shall be, to the extent
permitted by law, the Yield Maintenance Price of the Notes so accelerated,
together with interest accrued on the unpaid principal amount of the Notes so
accelerated to the date of payment, and such amount shall be payable without
presentment, demand, protest or further notice, all of which are expressly
waived by the Company.
On the Calculation Date, the Computing Holder shall give written notice to
the Company (and the Company shall promptly send a copy of such notice to all
the other holders of the Notes of the amount of the Yield Maintenance Price of
the Notes so accelerated, which notice shall set forth in reasonable detail the
computation thereof; PROVIDED, HOWEVER, that the failure of the Computing Holder
to make such determination shall not affect the obligation of the Company to pay
such Yield Maintenance Price when due in accordance with the terms of the Notes
and the Computing Holder shall have no liability to the Company or any other
holder of the Notes for its failure to make such determination. The Yield
Maintenance Price set forth in such notice shall be binding on the Company and
all the holders of the Notes, absent demonstrable error.
12. SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be
continuing, the registered holder of this Note may proceed to protect and
enforce its rights by suit in equity, action at law and/or by other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Note or in aid of the exercise of any power granted in this
Note, or may proceed to enforce the
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<PAGE> 80
payment of this Note or to enforce any other legal or equitable right of the
holder of this Note. If any registered holder of a Note shall demand payment
thereof or take any action in respect of a Default or an Event of Default, the
Company will forthwith give written notice, as Provided in Section 3.3 hereof,
to the other registered holders of Notes, specifying such action and the nature
of such Default or Event of Default. The notice to the Computing Holder shall
also set forth the respective names and addresses of, and principal amounts of
the Notes held by, the other holders of the Notes.
13. REMEDIES NOT WAIVED. No course of dealing between the holder hereof and
the Company or any delay on the part of the holder hereof in exercising any
rights hereunder shall operate as a waiver of any rights of any holder hereof.
14. REMEDIES CUMULATIVE. No remedy herein conferred upon the holder hereof
is intended to be exclusive of any other remedy and each and every remedy shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise.
15. COSTS AND EXPENSES. If any Eyent of Default shall occur, the Company
shall pay to each registered holder hereof, to the extent permitted under
applicable law, all out-of-pocket expenses incurred by such holder in connection
with such Event of Default and such further amount as shall be sufficient to
cover the costs and expenses of collection, including (without limitation)
reasonable attorneys' fees.
16. LAW GOVERNING. This Note shall be governed by the laws of the State of
Ohio.
17. SUCCESSORS AND ASSIGNS. All the covenants, stipulations, promises and
agreements in this Note contained by or on behalf of the Company shall bind its
successors and assigns, whether so expressed or not.
18. HEADINGS. The headings of the Sections and subsections of this Note are
inserted for convenience only and do not constitute a part of this Note.
IN WITNESS WHEREOF, R.G. Barry Corporation has caused this Note to be
signed in its corporate name by one of its officers thereunto duly authorized
and this Note to be dated as of the day and year first above written.
R.G. BARRY CORPORATION
By__________________________
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SCHEDULE I
9.70% Senior Promissory Note due July 5, 2004
------------------------
SUBORDINATION PROVISIONS
------------------------
"SUBORDINATION. Anything in this Subordinated Note to the contrary
notwithstanding, the indebtedness evidenced by this Subordinated Note shall be
subordinate and junior in right of payment, to the extent and in the manner
hereinafter set forth, to all obligations of the Company in respect of
principal, interest, premium and any other amount payable with respect to Senior
Funded Debt (as defined in the Company's 9.70% Senior Promissory Note due 2004)
(including interest accruing on such Senior Funded Debt after commencement of
any bankruptcy, insolvency, reorganization or similar proceeding relative to the
Company or its creditors in their capacity as creditors of the Company, whether
or not such interest constitutes an allowed claim in such proceeding), whether
such Senior Funded Debt is outstanding on July 5, 1994 or is thereafter created
or incurred (all such principal, interest, premium and any other amount payable
with respect thereto to which this Subordinated Note is subordinate as aforesaid
being sometimes hereinafter referred to as 'Superior Indebtedness'):
(a) NO SUBORDINATED NOTE PAYMENTS IN CERTAIN CIRCUMSTANCES.
(i) WHEN SUPERIOR INDEBTEDNESS IS DUE IN WHOLE OR IN PART. Upon the
due date of all or any part of the Superior Indebtedness, whether on a
regularly scheduled principal or interest payment date, at maturity, by
lapse of time, acceleration or otherwise, such Superior Indebtedness then
due shall first be paid in full, or such payment shall be fully provided
for in cash or in a manner satisfactory to the holders of such Superior
Indebtedness, before any payment by the Company is made on account of the
principal of or premium, if any, or interest on, or any other amount
payable with respect to, this Subordinated Note.
(ii) UPON SUPERIOR INDEBTEDNESS DEFAULT. In the event and during the
continuation of (x) a default in any payment with respect to any Superior
Indebtedness or (y) an event of default (as defined in such Superior
Indebtedness or in the instrument under which the same is outstanding,
other than a
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default in the payment of amounts due thereon) with respect to any Superior
Indebtedness permitting the holders thereof to accelerate the maturity
thereof (PROVIDED that any event that would become such an event of default
only upon the giving of notice of such event to the Company and the lapse
of time shall constitute such an event of default for purposes of this
Subordinated Note if such notice has been given to the Company) (such
default and event of default being referred to in this Subordinated Note as
a 'Superior Indebtedness Default'), no payment shall be made by the Company
on or with respect to the principal of, or premium, if any, or interest on,
or any other amount payable with respect to, this Subordinated Note unless
and until such Superior Indebtedness Default shall have been remedied, nor
shall any such payment be made if after giving effect, as if paid, to such
payment, any Superior Indebtedness Default would exist. In any such event,
the holder of this Subordinated Note shall not demand, accept or receive
any direct or indirect payment (in cash or property or by setoff, exercise
of contractual or statutory rights or otherwise) of or on account of this
Subordinated Note, notwithstanding the terms of this Subordinated Note or
of any agreement or instrument which governs this Subordinated Note, and no
such payment shall be due.
(iii) PRIOR TO DUE DATE OR DATE PAYMENT PERMITTED HEREBY. Unless and
until all principal of, premium, if any, and interest on, and all other
obligations of the Company with respect to, the Superior Indebtedness shall
have been paid in full, the Company shall not make, and the holder of this
Subordinated Note shall not demand, accept or receive (in cash or property
or by setoff, exercise of contractual or statutory rights or otherwise), or
attempt to collect or commence any legal proceedings to collect, any direct
or indirect payment on account of this Subordinated Note prior to the date
such payment becomes due and payable pursuant to the terms thereof or, if
later, prior to the first date such amount is not prohibited from
being paid pursuant to this Subordinated Note.
(b) NO COMMENCEMENT OF OR JOINDER IN BRINGING INVOLUNTARV BANKRUPTCY
PROCEEDING. Unless and until all principal of, premium, if any, and
interest on, and all other obligations of the Company in respect of, the
Superior Indebtedness shall have been paid in full, the holder of this
Subordinated Note will not commence or maintain any action, suit or any
other legal or equitable proceeding against the Company, or join with any
creditor in bringing any such proceeding, under any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar law, unless the
holders of Superior Indebtedness shall also join in bringing such
proceeding, provided that this clause
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(b) shall not prohibit the holder of this Subordinated Note from filing a
proof of claim or otherwise Participating in any such proceeding not
commenced by it.
(c) SUBORDINATED NOTE SUBORDINATED TO PRIOR PAYMENT OF ALL SUPERIOR
INDEBTEDNESS ON DISSOLUTION, LIQUIDATION OR REORGANIZATION OF THE COMPANY.
In the event of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceedings relative to the Company or to
its creditors, in their capacity as creditors of the Company, or to
substantially all of the Company's property, or in the event of any
proceedings for liquidation, dissolution or other winding up of the
Company, whether or not involving insolvency or bankruptcy, then
(i) the holders of all Superior Indebtedness shall first be entitled
to receive payment in full of the principal of, premium, if any, interest
and all amounts payable on or with respect to, such Superior Indebtedness
(whether accruing before or after the commencement of any proceedings
described above) before the holder of this Subordinated Note is entitled to
receive any payment on account of the principal of, premium, if any, or
interest on, or any other amount payable with respect to, this Subordinated
Note;
(ii) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities to which the holder
of this Subordinated Note would be entitled, but for the provisions of this
Subordinated Note, shall be paid or distributed by the liquidating trustee
or agent or other Person making such payment or distribution, directly to
the holders of Superior Indebtedness (pro rata to such holders on the basis
of the respective amounts of Superior Indebtedness held by such holders) or
their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Superior
Indebtedness may have been issued, as their respective interests may appear
(such representatives or trustees being referred to in this Subordinated
Note as "Representative" or "Representatives"), to the extent necessary to
make payment in full of all principal, premium, if any, interest on, arid
all other amounts payable with respect to, Superior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution to
the holders of Superior Indebtedness;
(iii) the holder of this Subordinated Note irrevocably authorizes and
empowers (without imposing any obligation on) each holder of Superior
Indebtedness to demand, sue for, collect and receive all payments and
distributions in
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respect of this Subordinated Note, and to file and prove all claims
therefor and take all such other action not inconsistent with the foregoing
(including the right to vote with respect to this Subordinated Note) in the
name of the holder or otherwise, as such holder of Superior Indebtedness or
any Representative on behalf of holders of Superior Indebtedness may
determine to be necessary or appropriate for the enforcement of this
Subordinated Note; and
(iv) the holder of this Subordinated Note shall execute and deliver to
each holder of Superior Indebtedness or any Representative all such further
instruments confirming the above authorization, and all such powers of
attorney, proofs of claim, assignments of claim and other instruments, and
shall take all such other action as may be reasonably requested by any
holder of Superior Indebtedness or any Representative, in order to enable
such holder of Superior Indebtedness or any Representative to enforce all
claims upon or in respect of this Subordinated Note.
(d) TREATMENT OF PAYMENTS RECEIVED ON THIS SUBORDINATED NOTE;
SUBROGATION RIGHTS. (i) Should any payment or distribution or security or
the proceeds of any thereof be collected or received by the holder in
respect of this Subordinated Note, and such collection or receipt is
prohibited hereunder prior to the payment in full of the Superior
Indebtedness, such holder will forthwith deliver the same to the holders of
Superior Indebtedness (pro rata to such holders on the basis of the
respective amounts of Superior Indebtedness held by such holders) or their
Representatives in precisely the form received (except for the endorsement
or the assignment of such payment or distribution by the holder of this
Subordinated Note where necessary) for application to payment in full of
all Superior Indebtedness, after giving effect to any concurrent payment or
distribution to the holders of the Superior Indebtedness and, until so
delivered, the same shall be held in trust by the holder of this
Subordinated Note as the property of the holders of the Superior
Indebtedness;
(ii) all payments and distributions received by any holder of Superior
Indebtedness or by any Representative of holders of Superior Indebtedness
on behalf of such holders of Superior Indebtedness in respect of this
Subordinated Note, to the extent received in or converted into cash, may be
applied by such holder or such Representative first to the payment of any
and all reasonable out-of-pocket expenses (including attorney's fees and
legal expenses) paid or incurred by such holder or such Representative in
enforcing the provisions hereof or in endeavoring to collect or receive
upon this Subordinated Note or any security therefor, and any balance
thereof shall, solely as between
4
<PAGE> 85
the holder of this Subordinated Note, on the one hand, and the holders of
Superior Indebtedness, on the other hand, be applied by such holder or such
Representative, in such order of application as such holder or such
Representative may from time to time select, toward the payment of Superior
Indebtedness remaining unpaid;
(iii) the holder of this Subordinated Note shall not be subrogated to
the rights of the holders of Superior Indebtedness to receive payments or
distributions of assets of the Company until all amounts payable with
respect to all Superior Indebtedness shall be paid in full; and, for the
purposes of such subrogation, no payments or distributions to the holders
of Superior Indebtedness of any cash, property or securities to which the
holder of this Subordinated Note would be entitled except for these
provisions shall, as among the Company, its creditors other than the
holders of Superior Indebtedness, and the holder of this Subordinated Note,
be deemed to be a payment by the Company to or on account of the Superior
Indebtedness. The provisions of this Subordinated Note are intended solely
for the purpose of defining the relative rights of the holder of this
Subordinated Note, on the one hand, and the holders of the Superior
Indebtedness, on the other hand; and
(iv) subject to the payment in full of all Superior Indebtedness, the
holder of this Subordinated Note shall be subrogated to the rights of the
holders of Superior Indebtedness to receive payments or distributions of
cash, property or securities of the Company applicable to the Superior
Indebtedness until all amounts owing on this Subordinated Note shall be
paid in full. For purposes of such subrogation, no payments or
distributions to the holder of this Subordinated Note of cash, property,
securities or other assets by virtue of the subrogation herein provided
which otherwise would have been made to the holders of Superior
Indebtedness shall, as among the Company, its creditors other than the
holders of Superior Indebtedness, and the holder of this Subordinated Note,
be deemed to be a payment to or on account of this Subordinated Note. The
holder of this Subordinated Note agrees that, in the event that all or any
part of any payment made on account of the Superior Indebtedness is
recovered from the holders of Superior Indebtedness as a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law, any payment or distribution received by the holder of this
Subordinated Note on account of this Subordinated Note at any time after
the date of the payment so recovered, whether pursuant to the right of
subrogation provided for in this clause (iv) or otherwise, shall be deemed
to have been received by the holder of this Subordinated Note in trust as
the property of the holders of
5
<PAGE> 86
Superior Indebtedness and the holder of this Subordinated Note shall
forthwith deliver the same to the holders of Superior Indebtedness for the
equal and ratable benefit of the holders of Superior Indebtedness for
application to payment of all Superior Indebtedness in full.
(e) WAIVERS AND AGREEMENTS OF HOLDER OF SUBORDINATED NOTE. The holder
of this Subordinated Note by its acceptance hereof waives any and all
notice of renewal, extension, accrual or increase in the amount of any of
the Superior Indebtedness, present or future, and agrees and consents that
without notice to or assent by the holder hereof:
(i) the obligations and liabilities of the Company or any other party
for or upon the Superior Indebtedness (or any promissory note, security
document or guaranty evidencing or securing the same) may, from time to
time, in whole or in part, be renewed, extended, increased, modified,
amended, accelerated, compromised, supplemented, terminated, sold,
exchanged, waived or released;
(ii) any Representative acting on behalf of the holders of Superior
Indebtedness and any holder of Superior Indebtedness may exercise or
refrain from exercising any right, remedy or power granted by or in
connection with any agreements relating to the Superior Indebtedness; and
(iii) any balance or balances of funds with any holders of the
Superior Indebtedness at any time outstanding to the credit of the Company
may, from time to time, in whole or in part, be surrendered or released;
all as any Representative acting on behalf of the holders of Superior
Indebtedness and any holder of Superior Indebtedness may deem advisable and
all without impairing, abridging, diminishing, releasing or affecting the
subordination of this Subordinated Note to the Superior Indebtedness
provided for herein.
(f) COMPANY'S OBLIGATIONS WITH RESPECT TO SUBORDINATED NOTE ABSOLUTE.
Nothing contained in this Subordinated Note is intended to or shall impair,
as among the Company, its creditors other than the holders of Superior
Indebtedness, and the holder of this Subordinated Note, the obligation of
the Company, which is absolute and unconditional, to pay to the holder of
this Subordinated Note the principal of, premium, if any, and interest on,
and all other amounts payable with respect to, this Subordinated Note, as
and when the same shall become due and payable (except as otherwise
provided above), by lapse of time, acceleration or otherwise, in accordance
with its terms, or is intended to
6
<PAGE> 87
or shall affect the relative rights of the holder of this Subordinated Note
and other creditors of the Company other than the holders of Superior
Indebtedness, nor shall anything herein prevent the holder of this
Subordinated Note (i) from taking all appropriate actions to preserve its
rights under this Subordinated Note in a manner not inconsistent with the
rights of the holders of Superior Indebtedness under this Subordinated
Note, or (ii) from exercising all remedies otherwise permitted by
applicable law upon default under this Subordinated Note, subject to the
rights, if any, under this Subordinated Note of the holders of Superior
Indebtedness in respect of cash, property or securities of the Company
otherwise payable or deliverable to such holders upon the exercise of any
such remedy.
(g) (i) MISCELLANEOUS No present or future holder of the Superior
Indebtedness shall be prejudiced in its right to enforce the subordination
contained herein in accordance with the terms hereof by any act or failure
to act on the part of the Company or the holder of this Subordinated Note.
The subordination provisions contained herein are for the benefit of the
holders of Superior Indebtedness and, so long as Superior Indebtedness is
outstanding, may not be rescinded, cancelled or modified in any way adverse
to the holders of Superior Indebtedness without the prior written consent
of each holder of Superior Indebtedness affected thereby.
(ii) This Subordinated Note shall be binding upon the Company and the
holder of this Subordinated Note, and their respective successors and
assigned, and shall inure to the benefit of the holders of Superior
Indebtedness and their respective successors and assigns."
7
<PAGE> 88
EXIHIBIT C
LITIGATION AND ASSESSMENTS
1. IN RE: R.G. BARRY CORPORATION SECURITIES LITIGATION, Case No.
C2-94-1190, in the United States District Court for the Southern District of
Ohio. This case is a consolidation of three separate shareholders' suits.
Plaintiffs seek to recover on behalf of a class of purchasers of stock of the
Borrower who purchased between April and early December, 1994. The plaintiffs
seek monetary damages in an as yet unspecified amount, equitable
relief (including the imposition of a constructive trust on assets), and the
costs of suit. On July 11, 1995, the Borrower and individual defendants filed a
Motion to Dismiss the Amended and Consolidated Class Action Complaint. In
October, 1995, briefs were filed, and the parties are awaiting the District
Court's decision. The matter is presently pending.
2. GEORGETTA A. WICKLINE V. R.G. BARRY CORPORATION ET AL., Case No.
94CV-420, in the Court of Common Pleas of Fairfield County, Ohio. Plaintiff, a
former employee of the Borrower alleges wrongful termination and serious
emotional distress and is seeking damages in an unspecified amount. The matter
is presently pending.
3. The Pension Benefit Guaranty Corporation ("PBGC") has made an initial
assessment of interest and penalties against the Borrower in the amount of
$33,154.45 with respect to the non-salaried plan and $733.04 with respect to the
salaried plan as a result of the Borrower's late filings of premiums to PBGC for
the Borrower's defined benefit pension plan for salaried employees and the
Borrower's defined benefit pension plan for non-salaried employees. The Borrower
intends to seek a waiver of penalties in the amount of$27,701.44 with respect to
the non-salaried plan. The matter is presently pending.
4. The Borrower is a party to several products liabilities cases. The
Borrower maintains product liability insurance to cover product liability
claims.
The disclosure of this Exhibit to the Banks is given with the Banks'
understanding and agreement that the Borrower is not waiving the
attorney-client privilege with respect to the information contained in this
Exhibit.
<PAGE> 89
EXHIBIT D
NOTICE
FROM: R. G. BARRY CORPORATION
TO: THE HUNTINGTON NATIONAL BANK/
THE BANK OF NEW YORK/
NBD BANK
ATTENTION: ------------------------
FAX: -------------------
TELE:-------------------
FROM: MICHAEL KRASNOFF
FAX: 614-866-9787
TELE: 614-864-6400
DATE: ------------------------
SUBJECT: REVOLVING CREDIT LOANS
EFFECTIVE DATE OF REQUEST:---------------
REQUEST:
APPROVED AND AUTHORIZED BY:
R. G. BARRY CORPORATION
By-------------------------
Michael S. Krasnoff, Vice President
<PAGE> 90
<TABLE>
<CAPTION>
EXHIBIT E
R. G. BARRY CORPORATION
Compliance Calculations for the Period Ending ----------------
<S> <C> <C> <C>
9.1 Current Ratio
-------------
Current Assets -------------(A)
Current Liabilities -------------(B)
Ratio (A/B) -------------
Requirement (1.25:1 in first and fourth quarter, -------------
1.00:1 in second and third quarter)
9.2 Limitation on Debt
------------------
Funded Debt:
Indebtedness greater than 1 year* ------
Plus: Capitalized Leases ------
Obligations secured by liens ------
Guarantees of Other's Funded Debt ------
Total Funded Debt -------------(A)
Senior Funded Debt:
Funded Debt ------
Less: Subordinated Debt ------
Total Senior Funded Debt -------------(B)
Total Capitalization:
Funded Debt ------
Plus: Deferred Income Tax ------
Consolidated Net Worth ------
Total Capitalization -------------(C)
Ratio of Senior Funded Debt to Total
Capitalization (B/C) -------------
Requirement Less than 50%
OR
Ratio of Funded Debt to Total
Capitalization (A/C) -------------
Requirement Less than 55%
*Excludes Bank debt except during a 60 day period between November 1 and March 31.
</TABLE>
<PAGE> 91
<TABLE>
<S> <C> <C> <C>
9.4 Maintenance on Consolidated Tangible Net Worth
----------------------------------------------
Consolidated Net Worth ------
Less: Intangibles ------
Consolidated Tangible Net Worth -------------
Requirement: Base $34,000,000
Plus: 50% of Cumulative Net Income
after 12/31/95 (If cumulative total
is less than $0, then $0) ------
Total -------------
9.5 Interest Coverage (for the twelve month period)
----------------------------------------------
Consolidated Net Income ------
Plus: Interest Expense ------(A)
Income Tax Expense ------
Depreciation Expense ------
Amortization Expense ------
Less: Interest Income ------(B)
Total -------------(C)
Net Interest Expense (A-B) -------------(D)
Interest Coverage Ratio (C/D) -------------
Requirement 1.30:1
9.6 Restricted Payments
-------------------
Restricted Payment Basket:
Base $1,000,000
Plus: 50% of Consolidated Net Income
since 1/1/95 ------
Less: 100% of Consolidated Net Losses
since 1/1/95 ------
Restricted Payments since 12/31/95 ------
Total -------------
9.7 Capital Expenditures
--------------------
Capital Expenditures during fiscal year -------------
Requirement (per annum) $4,500,000
</TABLE>
<PAGE> 92
EXHIBIT F
---------
LIENS
-----
1. Lien on the Company's headquarters at 13405 Yarmouth Road, N.W.,
Pickerington, Ohio pursuant to a Lease, dated June 1, 1974, between the County
of Fairfield, Ohio, as lessor, and the Company, as lessee, relating to
$1,800,000 County of Fairfield, Ohio Industrial Development First Mortgage
Revenue Bonds.
<PAGE> 93
EXHIBIT G
OFFICER'S CERTIFICATE
The undersigned certifies pursuant to Section 8.1 of the Revolving
Credit Agreement between R. G. Barry Corporation ("Borrower"), The Bank of New
York, The Huntington National Bank, and NBD Bank dated February 28, 1996, that
there has been no material adverse change in the financial condition or
results of operations of the Borrower since execution of the Revolving Credit
Agreement; that Borrower is in compliance with all terms and provisions set
forth in the Revolving Credit Agreement on its part to be observed and
performed; that the quarterly financial statements attached hereto, including a
balance sheet, related statements of income and retained earnings and cash flow
of the Borrower and each of its Subsidiaries, are a fair presentation of
Borrower's finances as of the last day of such quarter; and that no Default or
Event of Default has occurred.
Certified this _____ day of _______________ 199-.
R G BARRY CORPORATION
BY: -----------------------
ITS: -----------------------
<PAGE> 1
Exhibit 9(b)
------------
DOCUMENTATION RELATED TO EXTENSION
OF TERM OF THE VOTING TRUST AGREEMENT
FOR THE ZACKS-STREIM VOTING TRUST
<PAGE> 2
CONSENT TO EXTEND THE TERM OF THE
VOTING TRUST AGREEMENT FOR THE
ZACKS-STREIM VOTING TRUST
I, Florence Zacks Melton, am currently the trustee of a
certain trust established under the Last Will and Testament of my late husband,
Aaron Zacks (the "Trust").
The Trust is a party to the Voting Trust Agreement for the
Zacks-Streim Voting Trust dated October 29, 1974 (the "Voting Trust
Agreement"), and is currently a holder of Voting Trust Certificates.
Section 7 of the Voting Trust Agreement allows this Agreement
to be extended beyond its original term by the Voting Trustees with the written
consent of (i) the holders of the Voting Trust Certificates representing the
majority of shares of stock subject to the Voting Trust Agreement, and (ii) the
holders of Voting Trust Certificates representing the majority of shares of
stock held for each of the two families (the Streim family is no longer a party
to the Voting Trust Agreement) who are the parties to the Voting Trust
Agreement.
I hereby consent to the extension of the term of the Voting
Trust Agreement for an additional period of 10 years as proposed by the trustee
of the Voting Trust Agreement.
Dated: August 11, 1994
/s/ Florence Melton, Trustee
---------------------------------
Florence Zacks Melton, Trustee of
the trust established under the
Last Will and Testament of Aaron
Zacks
<PAGE> 3
PROPOSAL TO EXTEND THE TERM OF THE
VOTING TRUST AGREEMENT FOR THE
ZACKS-STREIM VOTING TRUST
I, Gordon Zacks, am currently the trustee of the Voting Trust
Agreement for the Zacks-Streim Voting Trust dated October 29, 1974 (the "Voting
Trust Agreement").
Section 7 of the Voting Trust Agreement allows this Agreement
to be extended beyond its original term by the Voting Trustees with the written
consent of (i) the holders of the Voting Trust Certificates representing the
majority of shares of stock subject to the Voting Trust Agreement, and (ii) the
holders of Voting Trust Certificates representing the majority of shares of
stock held for each of the two families (the Streim family is no longer a party
to the Voting Trust) who are the parties to the Voting Trust Agreement.
A certain trust established under the Last Will and Testament
of Aaron Zacks (the "Trust") is a party to the Voting Trust Agreement, and is
currently a holder of Voting Trust Certificates.
I hereby propose the extension of the term of the Voting Trust
Agreement for an additional term of 10 years.
Dated: August 11, 1994
/s/ Gordon Zacks
-----------------------------------
Gordon Zacks, Trustee of the Voting
Trust Agreement
<PAGE> 4
ACTION OF THE TRUSTEE OF THE TRUST ESTABLISHED
UNDER THE LAST WILL AND TESTAMENT OF
AARON ZACKS
I, Florence Zacks Melton, am currently the trustee of a
certain trust established under the Last Will and Testament of my late husband,
Aaron Zacks (the "Trust").
The Trust is a party to the Voting Trust Agreement for the
Zacks-Streim Voting Trust dated October 29, 1974 (the "Voting Trust
Agreement"), and is currently a holder of Voting Trust Certificates. My
execution of the Voting Trust Agreement in behalf of the Trust was approved by
the Probate Court of Franklin County, Ohio, by entry dated March 13, 1975.
Section 7 of the Voting Trust Agreement allows this Agreement
to be extended beyond its original term by the Voting Trustees with the written
consent of (i) the holders of the Voting Trust Certificates representing the
majority of shares of stock subject to the Voting Trust Agreement, and (ii) the
holders of Voting Trust Certificates representing the majority of shares of
stock held for each of the two families (the Streim family is no longer a party
to the Voting Trust Agreement) who are the parties to the Voting Trust
Agreement.
The Voting Trust Agreement was entered into to help secure
continuity and stability of policy and management of R. G. Barry Corporation.
I believe that these purposes are as valid today as they were when the Voting
Trust Agreement was entered into, and that it is in the best interests of the
Trust and its beneficiaries to have the Voting Trust Agreement extended. In
reaching this decision, I also considered the fact that all beneficiaries who
have any interest in the shares of R. G. Barry Corporation held by the Trust
wish to extend the term of the Voting Trust Agreement.
Based on the above, I, as trustee of the Trust and in its
behalf, intend to consent to extend the term of the Voting Trust Agreement for
such additional time as the trustee of the Voting Trust Agreement may propose.
Dated: August 11, 1994
/s/ Florence Melton, Trustee
-----------------------------------
Florence Zacks Melton, Trustee of
the trust established under the Last
Will and Testament of Aaron Zacks
<PAGE> 1
Exhibit 10(h)
-------------
AMENDED SPLIT-DOLLAR INSURANCE AGREEMENT,
DATED MARCH 23, 1995, BETWEEN
R. G. BARRY CORPORATION AND GORDON B. ZACKS
<PAGE> 2
AMENDED SPLIT-DOLLAR INSURANCE AGREEMENT
----------------------------------------
THIS AMENDED SPLIT-DOLLAR INSURANCE AGREEMENT is executed this
23rd day of March, 1995, by and between R. G. Barry Corporation, an Ohio
corporation (hereinafter called "Corporation"), and Gordon B. Zacks, an
individual residing in Franklin County, Ohio (hereinafter called "Employee").
W I T N E S S E T H:
--------------------
WHEREAS, Corporation and Employee entered into a certain
Split-Dollar Insurance Agreement dated September 29, 1989; and
WHEREAS, Corporation and Employee wish to amend and restate
said Split-Dollar Insurance Agreement in its entirety pursuant to the
provisions of paragraph 8 of said Agreement; and
WHEREAS, Corporation is willing, through said Split-Dollar
Insurance Agreement, to continue to assist Employee in the maintenance of life
insurance on the life of Employee by making certain premium payments to
Minnesota Mutual Life Insurance Company ("Insurer") for a certain life
insurance policy owned by Corporation on the life of Employee; and
WHEREAS, the life insurance policy with which this Agreement
deals is Policy Number 1819519 (hereinafter called "the Policy") issued by
Insurer on the life of Employee and is in the original face amount of One
Million Three Hundred Ten Thousand Dollars ($1,310,000).
NOW, THEREFORE, Corporation and Employee agree as follows:
1. Corporation shall be the sole Owner of the Policy and shall
exercise all ownership rights granted to such owner by the terms of the Policy
except as hereinafter provided. Any indebtedness on the Policy shall first be
deducted from the proceeds payable to Corporation. Corporation's right to
borrow against the cash value of the life insurance policy shall be limited to
the amount of premiums paid by Corporation to Insurer which have not been
repaid to Corporation. Also, any collateral assignment made by Corporation
shall be deducted from the proceeds payable to Corporation.
2. The total amount of the annual premium due on the Policy
shall be paid by Corporation to Insurer. Employee shall reimburse Corporation
for a portion of each such premium in an
<PAGE> 3
amount equal to the one (l) year term cost of the life insurance protection
under the Policy on the life of Employee. For purposes of this Paragraph 2,
the one-year term cost of the life insurance protection under the Policy on the
life of Employee shall be measured by the lower of (a) the PS-58 rate set forth
in Revenue Ruling 55-747 (or the corresponding applicable provision of any
future Revenue Ruling), or (b) the Insurer's current published premium rate for
annually renewable term insurance for standard risks.
3. Policy dividends shall be applied to purchase paid-up
additional insurance protection.
4. In the event that the Policy shall mature as a death
claim while this Agreement remains in force, Employee's designated beneficiary
or beneficiaries shall be entitled to claim from the proceeds payable
thereunder, an amount equal to $1,277,170. If Employee fails to designate a
beneficiary, such amount of the death proceeds shall be paid to Employee's
estate. If Employee assigns his rights hereunder, such amount of the death
proceeds shall be paid to said assignee's designated beneficiary or
beneficiaries. The balance of the death proceeds shall be paid to the
Corporation.
5. This Agreement shall terminate upon the happening of
any of the following events:
(a) By written notice by either party hereto sent by registered
mail to the last known address of the other party; provided,
however, this Agreement may not be terminated by either party
hereto pursuant to this subparagraph (a) while any premium
under the Policy is overdue, and it may not be terminated by
the Corporation without Employee's consent if the Corporation
is obligated to maintain the life insurance contemplated by
this Agreement for the benefit of Employee under any
employment agreement between Corporation and Employee. The
effective date of such termination shall be the date of
mailing; or
(b) By mutual written consent of the parties hereto.
6. In the event of the termination of this Agreement as a
result of the occurrence of any of the events set forth in Paragraph 5,
Employee shall have the option to (a) purchase the Policy from Corporation (or
a representative of Corporation) for an amount equal to the greater of (i) the
cash value of the Policy or (ii) the total premiums paid on the Policy by
Corporation less all amounts of Employee's reimbursement and
2
<PAGE> 4
further reduced by the total amount of any existing indebtedness of Corporation
on the cash value of the Policy as of the date of termination; or (b)
relinquish all interest in the Policy.
7. Insurer shall be bound only by the provisions of and
endorsements on the Policy, and any payments made or action taken by it in
accordance therewith shall fully discharge it from all claims, suits and
demands of all persons whatsoever. Insurer shall in no way be bound by or be
deemed to have notice of the provisions of this Agreement.
8. Employee shall have the right to assign any part or all
of Employee's interest in the Policy and this Agreement to any person, entity
or trust by execution of a written assignment delivered to Corporation and
Insurer.
9. Corporation and Employee can mutually agree to amend
this Agreement and such amendment shall be in writing and signed by Corporation
and Employee.
10. This Agreement shall bind and inure to the benefit of
Corporation and its successors and assigns; Employee and his heirs, executors,
administrators and assigns; and any Policy beneficiary.
11. The following provisions are part of this Agreement and
are intended to meet the requirements of the Employee Retirement Income
Security Act of 1974:
a. The named fiduciary: Corporation.
b. The funding policy under this Plan is that all
premiums on the Policy shall be remitted to Insurer when due.
c. Direct payment by Insurer is the basis of
payment of benefits under this Plan, with those benefits in turn being
based on the payment of premiums as provided in the Plan.
d. For claims procedure purposes, the "Claims
Manager" shall be Corporation.
(1) If for any reason a claim for benefits under
this Plan is denied by Corporation, the Claims Manager shall
deliver to the claimant a written explanation setting forth
the specific reasons for the denial, pertinent references to
the Plan section on which the denial is based, such other data
as may be pertinent and information on the procedures to be
3
<PAGE> 5
followed by the claimant in obtaining a review of his claim,
all written in a manner calculated to be understood by the
claimant. For this purpose:
(A) The claimant's claim shall be deemed
filed when presented orally or in writing to the
Claims Manager.
(B) The Claims Manager's explanation shall
be in writing delivered to the claimant within 90
days of the date the claim is filed.
(2) The claimant shall have 6O days following his
receipt of the denial of the claim to file with the Claims
Manager a written request for review of the denial. For such
review, the claimant or his representative may submit
pertinent documents and written issues and comments.
(3) The Claims Manager shall decide the issue on
review and furnish the claimant with a copy within 60 days of
receipt of the claimant's request for review of his claim.
The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner
calculated to be understood by the claimant, as well as
specific references to the pertinent Plan provisions on which
the decision is based. If a copy of the decision is not so
furnished to the claimant within such 60 days, the claim shall
be deemed denied on review.
IN WITNESS WHEREOF, the parties have signed this Amended
Agreement as of the date set forth above.
In the presence of: R. G. BARRY CORPORATION
/s/ David A. Swift By: /s/ Richard L. Burrell
- ------------------ -----------------------
/s/ Mary N. Potts Its: V. P. Finance
- ------------------ -----------------------
/s/ David A. Swift /s/ Gordon B. Zacks
- ------------------ ---------------------------
Gordon B. Zacks
/s/ Mary N. Potts
- ------------------
4
<PAGE> 1
Exhibit 10(k)
-------------
Form of Stock Option Agreement
Used in Connection with the
Grant of Incentive Stock Options
Pursuant to the R. G. Barry
Corporation 1988 Stock Option Plan
<PAGE> 2
STOCK OPTION AGREEMENT
(Incentive Stock Options)
-------------------------
THIS AGREEMENT is made to be effective as of ___________,
199_, by and between R. G. Barry Corporation, an Ohio corporation (the
"COMPANY"), and _____________________________ (the "OPTIONEE").
WITNESSETH:
-----------
WHEREAS, the Board of Directors and the shareholders of the
COMPANY have adopted the R. G. Barry Corporation 1988 Stock Option Plan (the
"PLAN"); and
WHEREAS, pursuant to the provisions of the PLAN, the Board of
Directors of the COMPANY has appointed a Compensation Committee (the
"COMMITTEE") to administer the PLAN and the COMMITTEE has determined that an
option to acquire common shares, $1.00 par value (the "COMMON SHARES"), of the
COMPANY should be granted to the OPTIONEE upon the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the parties
hereto make the following agreement, intending to be legally bound thereby:
(1) GRANT OF OPTION. The COMPANY hereby grants to the
OPTIONEE an option (the "OPTION") to purchase _____ COMMON SHARES of the
COMPANY. The OPTION is intended to qualify as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the "CODE").
(2) TERMS AND CONDITIONS OF THE OPTION.
(A) OPTION PRICE. The purchase price (the
"OPTION PRICE") to be paid by the OPTIONEE to the COMPANY upon the exercise of
the OPTION shall be $____________ per share, being 100% of the closing sale
price for the COMMON SHARES of the COMPANY as shown on the New York Stock
Exchange - Composite Transactions on ___________, 199_, subject to adjustment
as provided in Section 3.
(B) EXERCISE OF THE OPTION. The OPTION may not
be exercised until the OPTIONEE shall have completed twelve months of
continuous employment with the COMPANY and/or its subsidiaries immediately
following the date hereof. Thereafter, the OPTION may be exercised as follows:
(i) at any time after such
twelve-month period as to twenty percent (20%) of the COMMON SHARES subject to
the OPTION;
<PAGE> 3
(ii) at any time after twenty-four
months from the date of this Agreement as to an additional twenty percent (20%)
of the COMMON SHARES subject to the OPTION;
(iii) at any time after thirty-six
months from the date of this Agreement as to an additional twenty percent (20%)
of the COMMON SHARES subject to the OPTION;
(iv) at any time after forty-eight
months from the date of this Agreement as to an additional twenty percent (20%)
of the COMMON SHARES subject to the OPTION; and
(v) at any time after sixty months
from the date of this Agreement as to the remaining twenty percent (20%) of the
COMMON SHARES subject to the OPTION.
Subject to the other provisions of this Agreement, if the
OPTION becomes exercisable as to certain COMMON SHARES, it shall remain
exercisable as to those COMMON SHARES until the date of expiration of the
OPTION term. The COMMITTEE may, but shall not be required to (unless otherwise
provided in this Agreement), accelerate the schedule of the time or times when
the OPTION may be exercised.
The grant of the OPTION shall not confer upon the OPTIONEE any
right to continue in the employment of the COMPANY nor limit in any way the
right of the COMPANY to terminate the employment of the OPTIONEE at any time in
accordance with law or the COMPANY's governing corporate documents.
(C) OPTION TERM. The OPTION shall in no event
be exercisable after the expiration of ten (10) years from the date of this
Agreement.
(D) METHOD OF EXERCISE. The OPTION may be
exercised by giving written notice of exercise to the COMMITTEE in care of the
Treasurer of the COMPANY stating the number of COMMON SHARES subject to the
OPTION in respect of which it is being exercised. Payment for all such COMMON
SHARES shall be made to the COMPANY at the time the OPTION is exercised in
United States dollars in cash (including check, bank draft or money order). If
permitted by the COMMITTEE, payment for such COMMON SHARES may be made (i) by
delivery of COMMON SHARES of the COMPANY already owned by the OPTIONEE and
having a Fair Market Value (as that term is defined in the PLAN) on the date of
delivery equal to the OPTION PRICE, or (ii) by delivery of a combination of
cash and already owned COMMON SHARES. After payment in full for the COMMON
SHARES purchased under the OPTION has been made, the COMPANY shall take all
such action as is necessary to deliver appropriate share certificates
evidencing the COMMON SHARES purchased upon the exercise of the OPTION as
promptly thereafter as is reasonably practicable.
(E) SATISFACTION OF TAXES AND TAX WITHHOLDING
REQUIREMENTS. The COMMITTEE shall determine the appropriate
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<PAGE> 4
arrangements for the satisfaction by the COMPANY and the OPTIONEE of all
federal, state, local or other income, excise or employment taxes or tax
withholding requirements applicable to the exercise of the OPTION or the later
disposition of the COMMON SHARES or other property thereby acquired.
(3) ADJUSTMENTS AND CHANGES IN THE COMMON SHARES.
(A) In the event that the outstanding COMMON
SHARES of the COMPANY shall be changed into or exchanged for a different kind
of shares or other securities of the COMPANY or of another corporation (whether
by reason of merger, consolidation, recapitalization, reclassification,
split-up, combination of shares or otherwise) or if the number of such COMMON
SHARES shall be increased through the payment of a stock dividend, then unless
such change results in the termination of all outstanding options granted
pursuant to the PLAN, there shall be substituted for or added to each COMMON
SHARE of the COMPANY subject to the OPTION, the number and kind of shares or
other securities into which each outstanding COMMON SHARE of the COMPANY shall
be changed, or for which each such COMMON SHARE shall be exchanged, or to which
the holder of each such COMMON SHARE shall be entitled, as the case may be.
The OPTION shall also be appropriately amended as to the OPTION PRICE and other
terms as may be necessary to reflect the foregoing events. In the event there
shall be any other change in the number or kind of the outstanding shares of
the COMPANY, or of any shares or other securities into which such shares shall
have been changed, or for which they shall have been exchanged, then if the
COMMITTEE shall, in its sole discretion, determine that such change equitably
requires an adjustment in the OPTION, such adjustment shall be made by the
COMMITTEE in accordance with such determination. Fractional shares resulting
from any adjustment in the OPTION pursuant to this Section 3(A) shall be
rounded down to the nearest whole number of shares.
(B) Notwithstanding the foregoing, any and all
adjustments in connection with the OPTION shall comply in all respects with
Section 422 of the CODE, and the regulations promulgated thereunder.
(C) Notice of any adjustment pursuant to this
Section 3 shall be given by the COMPANY to the OPTIONEE.
(4) ACCELERATION OF OPTIONS.
(A) In the event that the COMPANY or its
shareholders enter into one or more agreements to dispose of all or
substantially all of the assets or fifty percent (50%) or more of the
outstanding capital stock of the COMPANY by means of sale (whether as a result
of a tender offer or otherwise), merger, reorganization or liquidation in one
or a series of related transactions (each, an "ACCELERATION EVENT"), then the
OPTION shall become exercisable during the fifteen (15) days immediately prior
to the scheduled consummation of the ACCELERATION EVENT with
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<PAGE> 5
respect to the full number of COMMON SHARES subject to the OPTION; provided,
however, that no such ACCELERATION EVENT will occur in the event that (i) the
primary purpose of the transaction is to change the COMPANY's domicile solely
within the United States, (ii) the terms of the agreement(s) require as a
prerequisite for the consummation of the transaction that each option granted
by the COMPANY pursuant to the PLAN either be assumed by the successor
corporation or parent thereof or be replaced with a comparable option to
purchase shares of capital stock of the successor corporation or parent
thereof, or (iii) the transaction is approved by a majority of the members of
the Board of Directors of the COMPANY who had either been in office for more
than twelve (12) months prior to such transaction or had been elected, or
nominated for election by the COMPANY's shareholders, by the vote of
three-fourths of the directors then still in office who were directors at the
beginning of such twelve-month period; and provided further that any exercise
of the OPTION during such fifteen (15) day period shall be conditioned upon the
consummation of such transaction and shall be effective only immediately before
such consummation, except to the extent that the OPTIONEE may indicate, in
writing, that such exercise is unconditional with regard to all or part of the
unaccelerated portion of the OPTION. Upon consummation of the ACCELERATION
EVENT, the OPTION, whether or not accelerated, will terminate and cease to be
exercisable, unless assumed by the successor corporation or parent thereof.
(B) The grant of this OPTION shall not affect
in any way the right of the COMPANY to adjust, reclassify, reorganize, or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
(5) NON-ASSIGNABILITY OF OPTION. The OPTION shall not
be assignable or otherwise transferable by the OPTIONEE except by will or by
the laws of descent and distribution. The OPTION may not be exercised during
the lifetime of the OPTIONEE except by him, his guardian or legal
representative.
(6) SUBSTITUTION FOR OPTION. The COMMITTEE shall have
the authority to effect, at any time and from time to time, with the consent of
the OPTIONEE, the cancellation of the OPTION and the grant in substitution
therefor of one or more new options under the PLAN covering the same or a
different number of COMMON SHARES at an option price per share in all events
not less than 100% of the closing sale price for the COMMON SHARES of the
COMPANY as shown on the New York Stock Exchange - Composite Transactions on the
new grant date.
(7) EXERCISE AFTER TERMINATION OF EMPLOYMENT.
(A) Except as otherwise provided in this
Agreement, the OPTION shall be exercisable only by the OPTIONEE, shall be
exercisable only while the OPTIONEE is in the employment of the COMPANY and
then only if the OPTION has become exercisable by its terms, and if not
exercisable
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<PAGE> 6
by its terms at the time the OPTIONEE ceases to be in the employment of the
COMPANY, shall immediately expire on the date of termination of employment.
(B) If the OPTION is exercisable by its terms
at the time the OPTIONEE ceases to be in the employment of the COMPANY other
than by reason of the death, permanent disability or normal retirement of the
OPTIONEE, it must be exercised on or before the earlier of three (3) months
after the date of the termination of employment of the OPTIONEE or the fixed
expiration date of the OPTION after which period the OPTION shall expire.
Notwithstanding the foregoing, if the OPTIONEE's employment is terminated for
willful, deliberate or gross misconduct (such as, for example, dishonesty), the
OPTION shall, to the extent not previously exercised, expire immediately upon
such termination.
(C) In the event of the death of the OPTIONEE
(i) while in the employment of the COMPANY or (ii) within three (3) months
after his termination of employment other than for willful, deliberate or gross
misconduct, the unexercised portion of the OPTION (whether or not then
exercisable by its terms) shall become immediately exercisable by his estate
for a period ending on the earlier of the fixed expiration date of the OPTION
or twelve (12) months after the date of death, after which period the OPTION
shall expire. For purposes hereof, the estate of an OPTIONEE shall be defined
to include the legal representatives thereof or any person who has acquired the
right to exercise the OPTION by reason of the death of the OPTIONEE.
(D) In the event of the termination of
employment of the OPTIONEE by reason of the "permanent disability" or "normal
retirement" of the OPTIONEE, the OPTION shall become exercisable and terminate
on the earlier of the period ending three (3) months after the termination of
employment or the fixed expiration date of the OPTION; provided, however, that
if such termination of employment occurs by reason of "disability" within the
meaning of Section 22(e)(3) of the CODE, said three-month period shall be
extended to twelve months. For purposes hereof, "permanent disability" shall
be deemed to be the inability of the OPTIONEE to perform the duties of his job
with the COMPANY because of a physical or mental disability as evidenced by the
opinion of a COMPANY-approved doctor of medicine licensed to practice medicine
in the United States of America and "retirement" shall be deemed to be "normal
retirement" if the OPTIONEE is at least 65 years of age and has completed at
least five (5) consecutive years of employment with the COMPANY at the date of
retirement.
(8) RESTRICTIONS ON TRANSFERS OF COMMON SHARES.
Anything contained in this Agreement or elsewhere to the contrary
notwithstanding, the COMPANY may postpone the issuance and delivery of COMMON
SHARES upon any exercise of the OPTION until completion of any stock exchange
listing or registration or other qualification of such COMMON SHARES under any
state or federal law, rule or regulation as the COMPANY may consider
appropriate; and may require
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<PAGE> 7
the OPTIONEE when exercising the OPTION to make such representations and
furnish such information as the COMPANY may consider appropriate in connection
with the issuance of the COMMON SHARES in compliance with applicable law.
COMMON SHARES issued and delivered upon exercise of the OPTION
shall be subject to such restrictions on trading, including appropriate
legending of certificates to that effect, as the COMPANY, in its discretion,
shall determine are necessary to satisfy applicable legal requirements and
obligations.
(9) RIGHTS OF OPTIONEE. The OPTIONEE shall have no
rights as a shareholder of the COMPANY with respect to any COMMON SHARES of the
COMPANY covered by the OPTION until the date of issuance of a certificate to
him evidencing such COMMON SHARES.
(10) PLAN AS CONTROLLING. All terms and conditions of
the PLAN applicable to the OPTION which are not set forth in this Agreement
shall be deemed incorporated herein by reference. In the event that any term
or condition of this Agreement is inconsistent with the terms and conditions of
the PLAN, the PLAN shall be deemed controlling.
(11) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio.
(12) RIGHTS AND REMEDIES CUMULATIVE. All rights and
remedies of the COMPANY and of the OPTIONEE enumerated in this Agreement shall
be cumulative and, except as expressly provided otherwise in this Agreement,
none shall exclude any other rights or remedies allowed by law or in equity,
and each of said rights or remedies may be exercised and enforced concurrently.
(13) CAPTIONS. The captions contained in this Agreement
are included only for convenience of reference and do not define, limit,
explain or modify this Agreement or its interpretation, construction or meaning
and are in no way to be construed as a part of this Agreement.
(14) SEVERABILITY. If any provision of this Agreement or
the application of any provision hereof to any person or any circumstance shall
be determined to be invalid or unenforceable, then such determination shall not
affect any other provision of this Agreement or the application of said
provision to any other person or circumstance, all of which other provisions
shall remain in full force and effect, and it is the intention of each party to
this Agreement that if any provision of this Agreement is susceptible of two or
more constructions, one of which would render the provision enforceable and the
other or others of which would render the provision unenforceable, then the
provision shall have the meaning which renders it enforceable.
(15) NUMBER AND GENDER. When used in this Agreement, the
number and gender of each pronoun shall be construed to be such
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<PAGE> 8
number and gender as the context, circumstances or its antecedent may required.
(16) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the COMPANY and the OPTIONEE in respect of the subject
matter of this Agreement, and this Agreement supersedes all prior and
contemporaneous agreements between the parties hereto in connection with the
subject matter of this Agreement. No officer, employee or other servant or
agent of the COMPANY, and no servant or agent of the OPTIONEE is authorized to
make any representation, warranty or other promise not contained in this
Agreement. No change, termination or attempted waiver of any of the provisions
of this Agreement shall be binding upon any party hereto unless contained in a
writing signed by the party to be charged.
(17) SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns (including
successive, as well as immediate, successors and assigns) of the COMPANY.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the date first above written.
COMPANY:
--------
R. G. BARRY CORPORATION
By:______________________________
Its:__________________________
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<PAGE> 9
OPTIONEE:
_________________________________
Signature of Optionee
_________________________________
Street Address
_________________________________
City State Zip Code
_________________________________
Telephone Number
_________________________________
Social Security Number
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<PAGE> 1
Exhibit 10(l)
-------------
Form of Stock Option Agreement
Used in Connection with the
Grant of Non-Qualified Stock
Options Pursuant to the
R. G. Barry Corporation
1998 Stock Option Plan
<PAGE> 2
STOCK OPTION AGREEMENT
(Non-Qualified Stock Options)
-----------------------------
THIS AGREEMENT is made to be effective as of ___________ 199_,
by and between R. G. Barry Corporation, an Ohio corporation (the "COMPANY"),
and ___________________________ (the "OPTIONEE").
WITNESSETH:
-----------
WHEREAS, the Board of Directors and the shareholders of the
COMPANY have adopted the R. G. Barry Corporation 1988 Stock Option Plan (the
"PLAN"); and
WHEREAS, pursuant to the provisions of the PLAN, the Board of
Directors of the COMPANY has appointed a Compensation Committee (the
"COMMITTEE") to administer the PLAN and the COMMITTEE has determined that an
option to acquire common shares, $1.00 par value (the "COMMON SHARES"), of the
COMPANY should be granted to the OPTIONEE upon the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the parties
hereto make the following agreement, intending to be legally bound thereby:
(1) GRANT OF OPTION. The COMPANY hereby grants to the
OPTIONEE an option (the "OPTION") to purchase _____ COMMON SHARES of the
COMPANY. The OPTION is not intended to qualify as an incentive stock option
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"CODE").
(2) TERMS AND CONDITIONS OF THE OPTION.
(A) OPTION PRICE. The purchase price (the
"OPTION PRICE") to be paid by the OPTIONEE to the COMPANY upon the exercise of
the OPTION shall be $___________ per share, subject to adjustment as provided
in Section 3.
(B) EXERCISE OF THE OPTION. The OPTION may not
be exercised until the OPTIONEE shall have completed twelve months of
continuous employment with the COMPANY and/or its subsidiaries immediately
following the date hereof. Thereafter, the OPTION may be exercised as follows:
(i) at any time after such twelve-month
period as to twenty percent (20%) of the COMMON SHARES subject to the OPTION;
<PAGE> 3
(ii) at any time after twenty-four months
from the date of this Agreement as to an additional twenty percent (20%) of the
COMMON SHARES subject to the OPTION;
(iii) at any time after thirty-six months
from the date of this Agreement as to an additional twenty percent (20%) of the
COMMON SHARES subject to the OPTION;
(iv) at any time after forty-eight months
from the date of this Agreement as to an additional twenty percent (20%) of the
COMMON SHARES subject to the OPTION; and
(v) at any time after sixty months from
the date of this Agreement as to the remaining twenty percent (20%) of the
COMMON SHARES subject to the OPTION.
Subject to the other provisions of this Agreement, if the
OPTION becomes exercisable as to certain COMMON SHARES, it shall remain
exercisable as to those COMMON SHARES until the date of expiration of the
OPTION term. The COMMITTEE may, but shall not be required to (unless otherwise
provided in this Agreement), accelerate the schedule of the time or times when
the OPTION may be exercised.
The grant of the OPTION shall not confer upon the OPTIONEE any
right to continue in the employment of the COMPANY nor limit in any way the
right of the COMPANY to terminate the employment of the OPTIONEE at any time in
accordance with law or the COMPANY's governing corporate documents.
(C) OPTION TERM. The OPTION shall in no event be
exercisable after the expiration of ten (10) years from the date of this
Agreement.
(D) METHOD OF EXERCISE. The OPTION may be
exercised by giving written notice of exercise to the COMMITTEE in care of the
Treasurer of the COMPANY stating the number of COMMON SHARES subject to the
OPTION in respect of which it is being exercised. Payment for all such COMMON
SHARES shall be made to the COMPANY at the time the OPTION is exercised in
United States dollars in cash (including check, bank draft or money order). If
permitted by the COMMITTEE, payment for such COMMON SHARES may be made (i) by
delivery of COMMON SHARES of the COMPANY already owned by the OPTIONEE and
having a Fair Market Value (as that term is defined in the PLAN) on the date of
delivery equal to the OPTION PRICE, or (ii) by delivery of a combination of
cash and already owned COMMON SHARES. After payment in full for the COMMON
SHARES purchased under the OPTION has been made, the COMPANY shall take all
such action as is necessary to deliver appropriate share certificates
evidencing
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<PAGE> 4
the COMMON SHARES purchased upon the exercise of the OPTION as promptly
thereafter as is reasonably practicable.
(E) SATISFACTION OF TAXES AND TAX WITHHOLDING
REQUIREMENTS. The COMMITTEE shall determine the appropriate arrangements for
the satisfaction by the COMPANY and the OPTIONEE of all federal, state, local
or other income, excise or employment taxes or tax withholding requirements
applicable to the exercise of the OPTION or the later disposition of the COMMON
SHARES or other property thereby acquired.
(3) ADJUSTMENTS AND CHANCES IN THE COMMON SHARES.
(A) In the event that the outstanding COMMON
SHARES of the COMPANY shall be changed into or exchanged for a different kind
of shares or other securities of the COMPANY or of another corporation (whether
by reason of merger, consolidation, recapitalization, reclassification,
split-up, combination of shares or otherwise) or if the number of such COMMON
SHARES shall be increased through the payment of a stock dividend, then unless
such change results in the termination of all outstanding options granted
pursuant to the PLAN, there shall be substituted for or added to each COMMON
SHARE of the COMPANY subject to the OPTION, the number and kind of shares or
other securities into which each outstanding COMMON SHARE of the COMPANY shall
be changed, or for which each such COMMON SHARE shall be exchanged, or to which
the holder of each such COMMON SHARE shall be entitled, as the case may be.
The OPTION shall also be appropriately amended as to the OPTION PRICE and other
terms as may be necessary to reflect the foregoing events. In the event there
shall be any other change in the number or kind of the outstanding shares of
the COMPANY, or of any shares or other securities into which such shares shall
have been changed, or for which they shall have been exchanged, then if the
COMMITTEE shall, in its sole discretion, determine that such change equitably
requires an adjustment in the OPTION, such adjustment shall be made by the
COMMITTEE in accordance with such determination. Fractional shares resulting
from any adjustment in the OPTION pursuant to this Section 3(A) shall be
rounded down to the nearest whole number of shares.
(B) Notice of any adjustment pursuant to this
Section 3 shall be given by the COMPANY to the OPTIONEE.
(4) ACCELERATION OF OPTIONS.
(A) In the event that the COMPANY or its
shareholders enter into one or more agreements to dispose of all or
substantially all of the assets or fifty percent (50%) or more of the
outstanding capital stock of the COMPANY by means of sale (whether as a result
of a tender offer or otherwise), merger,
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<PAGE> 5
reorganization or liquidation in one or a series of related transactions (each,
an "ACCELERATION EVENT"), then the OPTION shall become exercisable during the
fifteen (15) days immediately prior to the scheduled consummation of the
ACCELERATION EVENT with respect to the full number of COMMON SHARES subject to
the OPTION; provided, however, that no such ACCELERATION EVENT will occur in
the event that (i) the primary purpose of the transaction is to change the
COMPANY's domicile solely within the United States, (ii) the terms of the
agreement(s) require as a prerequisite for the consummation of the transaction
that each option granted by the COMPANY pursuant to the PLAN either be assumed
by the successor corporation or parent thereof or be replaced with a comparable
option to purchase shares of capital stock of the successor corporation or
parent thereof, or (iii) the transaction is approved by a majority of the
members of the Board of Directors of the COMPANY who had either been in office
for more than twelve (12) months prior to such transaction or had been elected,
or nominated for election by the COMPANY's shareholders, by the vote of
three-fourths of the directors then still in office who were directors at the
beginning of such twelve- month period; and provided further that any exercise
of the OPTION during such fifteen (15) day period shall be conditioned upon the
consummation of such transaction and shall be effective only immediately before
such consummation, except to the extent that the OPTIONEE may indicate, in
writing, that such exercise is unconditional with regard to all or part of the
unaccelerated portion of the OPTION. Upon consummation of the ACCELERATION
EVENT, the OPTION, whether or not accelerated, will terminate and cease to be
exercisable, unless assumed by the successor corporation or parent thereof.
(B) In the event of the occurrence of an
ACCELERATION EVENT, if the OPTIONEE is subject to the filing requirements
imposed under Section 16(a) of the Securities Exchange Act of 1934 with respect
to the COMPANY, the OPTIONEE shall receive a payment of cash equal to the
difference between the aggregate "Fair Value" of the COMMON SHARES subject to
such accelerated OPTION and the aggregate OPTION PRICE of such COMMON SHARES.
For this purpose, "Fair Value" shall mean the highest aggregate fair market
value of the subject COMMON SHARES during the 60-day period immediately
preceding the date of the consummation of the ACCELERATION EVENT. Payment of
said cash shall be made within ten (10) days after said consummation of the
ACCELERATION EVENT. The foregoing payments under this Section 4(B) shall be
made in lieu of and in full discharge of any and all obligations of the COMPANY
in respect of the OPTION.
(C) The grant of this OPTION shall not affect in
any way the right of the COMPANY to adjust, reclassify, reorganize, or
otherwise change its capital or business structure
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<PAGE> 6
or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.
(5) NON-ASSIGNABILITY OF OPTION. The OPTION shall not be
assignable or otherwise transferable by the OPTIONEE except by will or by the
laws of descent and distribution. The OPTION may not be exercised during the
lifetime of the OPTIONEE except by him, his guardian or legal representative.
(6) SUBSTITUTION FOR OPTION. The COMMITTEE shall have
the authority to effect, at any time and from time to time, with the consent of
the OPTIONEE, the cancellation of the OPTION and the grant in substitution
therefor of one or more new options under the PLAN covering the same or a
different number of COMMON SHARES.
(7) EXERCISE AFTER TERMINATION OF EMPLOYMENT.
(A) Except as otherwise provided in this
Agreement, the OPTION shall be exercisable only by the OPTIONEE, shall be
exercisable only while the OPTIONEE is in the employment of the COMPANY and
then only if the OPTION has become exercisable by its terms, and if not
exercisable by its terms at the time the OPTIONEE ceases to be in the
employment of the COMPANY, shall immediately expire on the date of termination
of employment.
(B) If the OPTION is exercisable by its terms at
the time the OPTIONEE ceases to be in the employment of the COMPANY other than
by reason of the death, permanent disability or normal retirement of the
OPTIONEE, the OPTION must be exercised on or before the earlier of three (3)
months after the date of termination of employment or the fixed expiration date
of the OPTION after which period the OPTION shall expire. Notwithstanding the
foregoing, if the OPTIONEE's employment is terminated for willful, deliberate
or gross misconduct (such as, for example, dishonesty), the OPTION shall, to
the extent not previously exercised, expire immediately upon such termination.
(C) In the event of the death of the OPTIONEE (i)
while in the employment of the COMPANY or (ii) within three (3) months after
his termination of employment other than for willful, deliberate or gross
misconduct, the unexercised portion of the OPTION (whether or not then
exercisable by its terms) shall become immediately exercisable by his estate
for a period ending on the earlier of the fixed expiration date of the OPTION
or twelve months after the date of death, after which period the OPTION shall
expire. For purposes hereof, the estate of an OPTIONEE shall be defined to
include the legal representatives thereof or any person who has acquired the
right to exercise the OPTION by reason of the death of the OPTIONEE.
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<PAGE> 7
(D) In the event of the termination of employment
of the OPTIONEE by reason of the "permanent disability" of the OPTIONEE, the
unexercised portion of the OPTION (whether or not then exercisable by its
terms) shall become exercisable for a period ending on the earlier of the fixed
expiration date of the OPTION or twelve (12) months from the date of
termination, after which period the OPTION shall expire. For purposes hereof,
"permanent disability" shall be deemed to be the inability of the OPTIONEE to
perform the duties of his job with the COMPANY because of a physical or mental
disability as evidenced by the opinion of a COMPANY-approved doctor of medicine
licensed to practice medicine in the United States of America.
(E) In the event of the termination of employment
of the OPTIONEE by reason of the "normal retirement" of the OPTIONEE, the
unexercised portion of the OPTION (whether or not then exercisable by its
terms) granted to the OPTIONEE on or before his 65th birthday shall become
immediately exercisable for a period ending on the earlier of the fixed
expiration date of the OPTION or twelve (12) months after the date of death,
after which period the OPTION shall expire. Also, in the event of the "normal
retirement" of the OPTIONEE, the unexercised portion of the OPTION (whether or
not then exercisable by its terms) granted to the OPTIONEE after his 65th
birthday and held for a period of at least twelve (12) consecutive months of
active employment with the COMPANY after the date of grant shall become
immediately exercisable for a period ending on the earlier of the fixed
expiration date of the OPTION or twelve (12) months after the date of death,
after which period the OPTION shall expire. For purposes hereof, "retirement"
shall be deemed to be "normal retirement" if the OPTIONEE is at least 65 years
of age and has completed at least five (5) consecutive years of employment with
the COMPANY at the date of retirement.
(8) RESTRICTIONS ON TRANSFERS OF COMMON SHARES. Anything
contained in this Agreement or elsewhere to the contrary notwithstanding, the
COMPANY may postpone the issuance and delivery of COMMON SHARES upon any
exercise of the OPTION until completion of any stock exchange listing or
registration or other qualification of such COMMON SHARES under any state or
federal law, rule or regulation as the COMPANY may consider appropriate; and
may require the OPTIONEE when exercising the OPTION to make such
representations and furnish such information as the COMPANY may consider
appropriate in connection with the issuance of the COMMON SHARES in compliance
with applicable law.
COMMON SHARES issued and delivered upon exercise of the OPTION
shall be subject to such restrictions on trading, including appropriate
legending of certificates to that effect,
-6-
<PAGE> 8
as the COMPANY, in its discretion, shall determine are necessary to satisfy
applicable legal requirements and obligations.
(9) RIGHTS OF OPTIONEE. The OPTIONEE shall have no
rights as a shareholder of the COMPANY with respect to any COMMON SHARES of the
COMPANY covered by the OPTION until the date of issuance of a certificate to
him evidencing such COMMON SHARES.
(10) PLAN AS CONTROLLING. All terms and conditions of the
PLAN applicable to the OPTION which are not set forth in this Agreement shall
be deemed incorporated herein by reference. In the event that any term or
condition of this Agreement is inconsistent with the terms and conditions of
the PLAN, the PLAN shall be deemed controlling.
(11) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio.
(12) RIGHTS AND REMEDIES CUMULATIVE. All rights and
remedies of the COMPANY and of the OPTIONEE enumerated in this Agreement shall
be cumulative and, except as expressly provided otherwise in this Agreement,
none shall exclude any other rights or remedies allowed by law or in equity,
and each of said rights or remedies may be exercised and enforced concurrently.
(13) CAPTIONS. The captions contained in this Agreement
are included only for convenience of reference and do not define, limit,
explain or modify this Agreement or its interpretation, construction or meaning
and are in no way to be constructed as a part of this Agreement.
(14) SEVERABILITY. If any provision of this Agreement or
the application of any provision hereof to any person or any circumstances
shall be determined to be invalid or unenforceable, then such determination
shall not affect any other provision of this Agreement or the application of
said provision to any other person or circumstance, all of which other
provisions shall remain in full force and effect, and it is the intention of
each party to this Agreement that if any provision of this Agreement is
susceptible of two or more constructions, one of which would render the
provision unenforceable, then the provision shall have the meaning which
renders it enforceable.
(15) NUMBER AND GENDER. When used in this Agreement, the
number and gender of each pronoun shall be construed to be such number and
gender as the context, circumstances or its antecedent may required.
-7-
<PAGE> 9
(16) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the COMPANY and the OPTIONEE in respect of the subject
matter of this Agreement, and this Agreement supersedes all prior and
contemporaneous agreements between the parties hereto in connection with the
subject matter of this Agreement. No officer, employee or other servant or
agent of the COMPANY, and no servant or agent of the OPTIONEE is authorized to
make any representation, warranty or other promise not contained in this
Agreement. No change, termination or attempted waiver of any of the provisions
of this Agreement shall be binding upon any party hereto unless contained in a
writing signed by the party to be charged.
(17) SUCCESSORS AND ASSIGNS. This Agreement shall insure
to the benefit of and be binding upon the successors and assigns (including
successive, as well as immediate, successors and assigns) of the COMPANY.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the date first above written.
COMPANY:
--------
R. G. BARRY CORPORATION
By:______________________________
Its:__________________________
OPTIONEE:
---------
_________________________________
Signature of Optionee
_________________________________
Street Address
_________________________________
City State Zip Code
_________________________________
Telephone Number
_________________________________
Social Security Number
-8-
<PAGE> 1
Exhibit 10(p)
-------------
Form of Stock Option Agreement
Used in Connection with the
Grant of Incentive Stock Options
Pursuant to the
R. G. Barry Corportion
1994 Stock Option Agreement
<PAGE> 2
STOCK OPTION AGREEMENT
(Incentive Stock Options)
-------------------------
THIS AGREEMENT is made to be effective as of ___________,
199_, by and between R. G. Barry Corporation, an Ohio corporation (the
"COMPANY"), and _____________________________ (the "OPTIONEE").
WITNESSETH:
-----------
WHEREAS, the Board of Directors of the COMPANY has adopted and
the shareholders of the COMPANY have approved the R. G. Barry Corporation 1994
Stock Option Plan (the "PLAN"); and
WHEREAS, pursuant to the provisions of the PLAN, the Board of
Directors of the COMPANY has appointed a Compensation Committee (the
"COMMITTEE") to administer the PLAN and the COMMITTEE has determined that an
option to acquire common shares, $1.00 par value (the "COMMON SHARES"), of the
COMPANY should be granted to the OPTIONEE upon the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the parties
hereto make the following agreement, intending to be legally bound thereby:
(1) GRANT OF OPTION. The COMPANY hereby grants
to the OPTIONEE an option (the "OPTION") to purchase _____ COMMON SHARES of the
COMPANY. The OPTION is intended to qualify as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the "CODE").
(2) TERMS AND CONDITIONS OF THE OPTION.
(A) OPTION PRICE. The purchase
price (the "OPTION PRICE") to be paid by the OPTIONEE to the COMPANY upon the
exercise of the OPTION shall be $____________ per share, being 100% of the
closing sale price for the COMMON SHARES of the COMPANY as shown on the New
York Stock Exchange - Composite Transactions on ___________, 199_, subject to
adjustment as provided in Section 3.
(B) EXERCISE OF THE OPTION. The
OPTION may not be exercised until the OPTIONEE shall have completed twelve
months of continuous employment with the COMPANY and/or its subsidiaries
immediately following the date hereof. Thereafter, the OPTION may be exercised
as follows:
<PAGE> 3
(i) at any time after such twelve-month period as
to twenty percent (20%) of the COMMON SHARES subject to the OPTION;
(ii) at any time after twenty-four months from the
date of this Agreement as to an additional twenty percent (20%) of the COMMON
SHARES subject to the OPTION;
(iii) at any time after thirty-six months from the
date of this Agreement as to an additional twenty percent (20%) of the COMMON
SHARES subject to the OPTION;
(iv) at any time after forty-eight months from the
date of this Agreement as to an additional twenty percent (20%) of the COMMON
SHARES subject to the OPTION; and
(v) at any time after sixty months from the date
of this Agreement as to the remaining twenty percent (20%) of the COMMON SHARES
subject to the OPTION.
Subject to the other provisions of this Agreement, if the OPTION
becomes exercisable as to certain COMMON SHARES, it shall remain exercisable as
to those COMMON SHARES until the date of expiration of the OPTION term. The
COMMITTEE may, but shall not be required to (unless otherwise provided in this
Agreement), accelerate the schedule of the time or times when the OPTION may be
exercised.
The grant of the OPTION shall not confer upon the OPTIONEE any right to
continue in the employment of the COMPANY nor limit in any way the right of the
COMPANY to terminate the employment of the OPTIONEE at any time in accordance
with law or the COMPANY's governing corporate documents.
(C) OPTION TERM. The OPTION shall in no event be
exercisable after the expiration of ten (10) years from the date of this
Agreement.
(D) METHOD OF EXERCISE. The OPTION may be
exercised by giving written notice of exercise to the COMMITTEE in care of the
Treasurer of the COMPANY stating the number of full COMMON SHARES subject to
the OPTION in respect of which it is being exercised. Payment for all such
COMMON SHARES shall be made to the COMPANY at the time the OPTION is exercised
in United States dollars in cash (including check, bank draft or money order).
If permitted by the COMMITTEE, payment for such COMMON SHARES may be made (i)
by delivery of COMMON SHARES of the COMPANY already owned by the OPTIONEE and
having a Fair Market Value (as that term is defined in the PLAN) on the date of
delivery equal to the OPTION
-2-
<PAGE> 4
PRICE, or (ii) by delivery of a combination of cash and already owned COMMON
SHARES. After payment in full for the COMMON SHARES purchased under the OPTION
has been made, the COMPANY shall take all such action as is necessary to
deliver appropriate share certificates evidencing the COMMON SHARES purchased
upon the exercise of the OPTION as promptly thereafter as is reasonably
practicable.
(E) SATISFACTION OF TAXES AND TAX WITHHOLDING
REQUIREMENTS. The COMMITTEE shall determine the appropriate arrangements for
the satisfaction by the COMPANY and the OPTIONEE of all federal, state, local
or other income, excise or employment taxes or tax withholding requirements
applicable to the exercise of the OPTION or the later disposition of the COMMON
SHARES or other property thereby acquired.
(3) ADJUSTMENTS AND CHANGES IN THE COMMON SHARES.
(A) In the event that the outstanding COMMON
SHARES of the COMPANY shall be changed into or exchanged for a different kind
of shares or other securities of the COMPANY or of another corporation (whether
by reason of merger, consolidation, recapitalization, reclassification,
split-up, combination of shares or otherwise) or if the number of such COMMON
SHARES shall be increased through the payment of a stock dividend, then unless
such change results in the termination of all outstanding options granted
pursuant to the PLAN, there shall be substituted for or added to each COMMON
SHARE of the COMPANY subject to the OPTION, the number and kind of shares or
other securities into which each outstanding COMMON SHARE of the COMPANY shall
be changed, or for which each such COMMON SHARE shall be exchanged, or to which
the holder of each such COMMON SHARE shall be entitled, as the case may be. The
OPTION shall also be appropriately amended as to the OPTION PRICE and other
terms as may be necessary to reflect the foregoing events. In the event there
shall be any other change in the number or kind of the outstanding shares of
the COMPANY, or of any shares or other securities into which such shares shall
have been changed, or for which they shall have been exchanged, then if the
COMMITTEE shall, in its sole discretion, determine that such change equitably
requires an adjustment in the OPTION, such adjustment shall be made by the
COMMITTEE in accordance with such determination. Fractional shares resulting
from any adjustment in the OPTION pursuant to this Section 3(A) shall be
rounded down to the nearest whole number of shares.
(B) Notwithstanding the foregoing, any and all
adjustments in connection with the OPTION shall comply in all respects with
Section 422 of the CODE, and the regulations promulgated thereunder.
-3-
<PAGE> 5
(C) Notice of any adjustment pursuant
to this Section 3 shall be given by the COMPANY to the OPTIONEE.
(4) ACCELERATION OF OPTIONS.
(A) In the event that the COMPANY or its
shareholders enter into one or more agreements to dispose of all or
substantially all of the assets or fifty percent (50%) or more of the
outstanding capital stock of the COMPANY by means of sale (whether as a result
of a tender offer or otherwise), merger, reorganization or liquidation in one
or a series of related transactions (each, an "ACCELERATION EVENT"), then the
OPTION shall become exercisable during the fifteen (15) days immediately prior
to the scheduled consummation of the ACCELERATION EVENT with respect to the
full number of COMMON SHARES subject to the OPTION; provided, however, that no
such ACCELERATION EVENT will occur in the event that (i) the primary purpose of
the transaction is to change the COMPANY's domicile solely within the United
States, (ii) the terms of the agreement(s) require as a prerequisite for the
consummation of the transaction that each option granted by the COMPANY
pursuant to the PLAN either be assumed by the successor corporation or parent
thereof or be replaced with a comparable option to purchase shares of capital
stock of the successor corporation or parent thereof, or (iii) the transaction
is approved by a majority of the members of the Board of Directors of the
COMPANY who had either been in office for more than twelve (12) months prior to
such transaction or had been elected, or nominated for election by the
COMPANY's shareholders, by the vote of three-fourths of the directors then
still in office who were directors at the beginning of such twelve-month
period; and provided further that any exercise of the OPTION during such
fifteen (15) day period shall be conditioned upon the consummation of such
transaction and shall be effective only immediately before such consummation,
except to the extent that the OPTIONEE may indicate, in writing, that such
exercise is unconditional with regard to all or part of the unaccelerated
portion of the OPTION. Upon consummation of the ACCELERATION EVENT, the
OPTION, whether or not accelerated, shall terminate and cease to be
exercisable, unless assumed by the successor corporation or parent thereof.
(B) The grant of this OPTION shall not affect
in any way the right of the COMPANY to adjust, reclassify, reorganize, or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
(5) NON-ASSIGNABILITY OF OPTION. The OPTION shall not be
assignable or otherwise transferable by the OPTIONEE except by will or by the
laws of descent and distribution. The OPTION may
-4-
<PAGE> 6
not be exercised during the lifetime of the OPTIONEE except by him, his
guardian or legal representative.
(6) SUBSTITUTION FOR OPTION. The COMMITTEE shall have the
authority to effect, at any time and from time to time, with the consent of the
OPTIONEE, the cancellation of the OPTION and the grant in substitution therefor
of one or more new options under the PLAN covering the same or a different
number of COMMON SHARES at an option price per share in all events not less
than 100% of the closing sale price for the COMMON SHARES of the COMPANY as
shown on the New York Stock Exchange - Composite Transactions on the new grant
date.
(7) EXERCISE AFTER TERMINATION OF EMPLOYMENT.
(A) Except as otherwise provided in this
Agreement, the OPTION shall be exercisable only by the OPTIONEE, shall be
exercisable only while the OPTIONEE is in the employment of the COMPANY and
then only if the OPTION has become exercisable by its terms, and if not
exercisable by its terms at the time the OPTIONEE ceases to be in the
employment of the COMPANY, shall immediately expire on the date of termination
of employment.
(B) If the OPTION is exercisable by its terms at
the time the OPTIONEE ceases to be in the employment of the COMPANY other than
by reason of the death, permanent disability or normal retirement of the
OPTIONEE, it must be exercised on or before the earlier of three (3) months
after the date of the termination of employment of the OPTIONEE or the fixed
expiration date of the OPTION after which period the OPTION shall expire.
Notwithstanding the foregoing, if the OPTIONEE's employment is terminated for
willful, deliberate or gross misconduct (such as, for example, dishonesty), the
OPTION shall, to the extent not previously exercised, expire immediately upon
such termination.
(C) In the event of the death of the OPTIONEE (i)
while in the employment of the COMPANY or (ii) within three (3) months after
his termination of employment other than for willful, deliberate or gross
misconduct, the unexercised portion of the OPTION (whether or not then
exercisable by its terms) shall become immediately exercisable by his estate
for a period ending on the earlier of the fixed expiration date of the OPTION
or twelve (12) months after the date of death, after which period the OPTION
shall expire. For purposes hereof, the estate of an OPTIONEE shall be defined
to include the legal representatives thereof or any person who has acquired the
right to exercise the OPTION by reason of the death of the OPTIONEE.
-5-
<PAGE> 7
(D) In the event of the termination of employment
of the OPTIONEE by reason of the "permanent disability" or "normal retirement"
of the OPTIONEE, the OPTION shall become fully exercisable for a period ending
on the earlier of three (3) months after the termination of employment or the
fixed expiration date of the OPTION; provided, however, that if such
termination of employment occurs by reason of "disability" within the meaning
of Section 22(e)(3) of the CODE, said three-month period shall be extended to
twelve months. For purposes hereof, "permanent disability" shall be deemed to
be the inability of the OPTIONEE to perform the duties of his job with the
COMPANY because of a physical or mental disability as evidenced by the opinion
of a COMPANY-approved doctor of medicine licensed to practice medicine in the
United States of America and "retirement" shall be deemed to be "normal
retirement" if the OPTIONEE is at least 65 years of age and has completed at
least five (5) consecutive years of employment with the COMPANY at the date of
retirement.
(4) RESTRICTIONS ON TRANSFERS OF COMMON SHARES.
Anything contained in this Agreement or elsewhere to the contrary
notwithstanding, the COMPANY may postpone the issuance and delivery of COMMON
SHARES upon any exercise of the OPTION until completion of any stock exchange
listing or registration or other qualification of such COMMON SHARES under any
state or federal law, rule or regulation as the COMPANY may consider
appropriate; and may require the OPTIONEE when exercising the OPTION to make
such representations and furnish such information as the COMPANY may consider
appropriate in connection with the issuance of the COMMON SHARES in compliance
with applicable law.
COMMON SHARES issued and delivered upon exercise of the OPTION
shall be subject to such restrictions on trading, including appropriate
legending of certificates to that effect, as the COMPANY, in its discretion,
shall determine are necessary to satisfy applicable legal requirements and
obligations.
(1) RIGHTS OF OPTIONEE AS SHAREHOLDER. The OPTIONEE shall
have no rights as a shareholder of the COMPANY with respect to any COMMON
SHARES of the COMPANY covered by the OPTION until the date of issuance of a
certificate to him evidencing such COMMON SHARES.
(2) PLAN AS CONTROLLING. All terms and conditions of the
PLAN applicable to the OPTION which are not set forth in this Agreement shall
be deemed incorporated herein by reference. In the event that any term or
condition of this Agreement is inconsistent with the terms and conditions of
the PLAN, the PLAN shall be deemed controlling.
-6-
<PAGE> 8
(3) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio.
(4) RIGHTS AND REMEDIES CUMULATIVE. All rights and
remedies of the COMPANY and of the OPTIONEE enumerated in this Agreement shall
be cumulative and, except as expressly provided otherwise in this Agreement,
none shall exclude any other rights or remedies allowed by law or in equity,
and each of said rights or remedies may be exercised and enforced concurrently.
(5) CAPTIONS. The captions contained in this Agreement are
included only for convenience of reference and do not define, limit, explain or
modify this Agreement or its interpretation, construction or meaning and are in
no way to be construed as a part of this Agreement.
(6) SEVERABILITY. If any provision of this Agreement or
the application of any provision hereof to any person or any circumstance shall
be determined to be invalid or unenforceable, then such determination shall not
affect any other provision of this Agreement or the application of said
provision to any other person or circumstance, all of which other provisions
shall remain in full force and effect, and it is the intention of each party to
this Agreement that if any provision of this Agreement is susceptible of two or
more constructions, one of which would render the provision enforceable and the
other or others of which would render the provision unenforceable, then the
provision shall have the meaning which renders it enforceable.
(7) NUMBER AND GENDER. When used in this Agreement, the
number and gender of each pronoun shall be construed to be such number and
gender as the context, circumstances or its antecedent may required.
(8) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the COMPANY and the OPTIONEE in respect of the subject
matter of this Agreement, and this Agreement supersedes all prior and
contemporaneous agreements between the parties hereto in connection with the
subject matter of this Agreement. No officer, employee or other servant or
agent of the COMPANY, and no servant or agent of the OPTIONEE, is authorized to
make any representation, warranty or other promise not contained in this
Agreement. No change, termination or attempted waiver of any of the provisions
of this Agreement shall be binding upon any party hereto unless contained in a
writing signed by the party to be charged.
(9) SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of and be binding upon the successors and
-7-
<PAGE> 9
assigns (including successive, as well as immediate, successors and assigns) of
the COMPANY.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the date first above written.
COMPANY:
--------
R. G. BARRY CORPORATION
By:______________________________
Its:__________________________
OPTIONEES:
_________________________________
Signature of Optionee
_________________________________
Street Address
_________________________________
City State Zip Code
_________________________________
Telephone Number
_________________________________
Social Security Number
-8-
<PAGE> 1
Exhibit 10(q)
-------------
Form of Stock Option Agreement
Used in Connection with the Grant
of Non-Qualified Stock Options
Pursuant to the
R. G. Barry Corporation
1994 Stock Option Plan
<PAGE> 2
STOCK OPTION AGREEMENT
(Non-Qualified Stock Options)
-----------------------------
THIS AGREEMENT is made to be effective as of ___________, 199_, by and
between R. G. Barry Corporation, an Ohio corporation (the "COMPANY"), and
_____________________________ (the "OPTIONEE").
WITNESSETH:
-----------
WHEREAS, the Board of Directors of the COMPANY has adopted and the
shareholders of the COMPANY have approved the R. G. Barry Corporation 1994
Stock Option Plan (the "PLAN"); and
WHEREAS, pursuant to the provisions of the PLAN, the Board of Directors
of the COMPANY has appointed a Compensation Committee (the "COMMITTEE") to
administer the PLAN and the COMMITTEE has determined that an option to acquire
common shares, $1.00 par value (the "COMMON SHARES"), of the COMPANY should be
granted to the OPTIONEE upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises, the parties hereto
make the following agreement, intending to be legally bound thereby:
(1) GRANT OF OPTION. The COMPANY hereby grants to the
OPTIONEE an option (the "OPTION") to purchase _____ COMMON SHARES of the
COMPANY. The OPTION is not intended to qualify as an incentive stock option
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"CODE").
(2) TERMS AND CONDITIONS OF THE OPTION.
(A) OPTION PRICE. The purchase price (the "OPTION
PRICE") to be paid by the OPTIONEE to the COMPANY upon the exercise of the
OPTION shall be $____________ per share, subject to adjustment as provided in
Section 3.
(B) EXERCISE OF THE OPTION. The OPTION may not be
exercised until the OPTIONEE shall have completed twelve months of continuous
employment with the COMPANY and/or its subsidiaries immediately following the
date hereof. Thereafter, the OPTION may be exercised as follows:
(i) at any time after such twelve-month
period as to twenty percent (20%) of the COMMON SHARES subject to the OPTION;
<PAGE> 3
(ii) at any time after twenty-four months
from the date of this Agreement as to an additional twenty percent (20%) of the
COMMON SHARES subject to the OPTION;
(iii) at any time after thirty-six months
from the date of this Agreement as to an additional twenty percent (20%) of the
COMMON SHARES subject to the OPTION;
(iv) at any time after forty-eight months
from the date of this Agreement as to an additional twenty percent (20%) of the
COMMON SHARES subject to the OPTION; and
(v) at any time after sixty months from
the date of this Agreement as to the remaining twenty percent (20%) of the
COMMON SHARES subject to the OPTION.
Subject to the other provisions of this Agreement, if the OPTION
becomes exercisable as to certain COMMON SHARES, it shall remain exercisable as
to those COMMON SHARES until the date of expiration of the OPTION term. The
COMMITTEE may, but shall not be required to (unless otherwise provided in this
Agreement), accelerate the schedule of the time or times when the OPTION may be
exercised.
The grant of the OPTION shall not confer upon the OPTIONEE any right to
continue in the employment of the COMPANY nor limit in any way the right of the
COMPANY to terminate the employment of the OPTIONEE at any time in accordance
with law or the COMPANY's governing corporate documents.
(A) OPTION TERM. The OPTION shall in no event be
exercisable after the expiration of ten (10) years from the date of this
Agreement.
(B) METHOD OF EXERCISE. The OPTION may be exercised
by giving written notice of exercise to the COMMITTEE in care of the
Treasurer of the COMPANY stating the number of full COMMON SHARES subject to
the OPTION in respect of which it is being exercised. Payment for all such
COMMON SHARES shall be made to the COMPANY at the time the OPTION is exercised
in United States dollars in cash (including check, bank draft or money order).
If permitted by the COMMITTEE, payment for such COMMON SHARES may be made (i)
by delivery of COMMON SHARES of the COMPANY already owned by the OPTIONEE and
having a Fair Market Value (as that term is defined in the PLAN) on the date of
delivery equal to the OPTION PRICE, or (ii) by delivery of a combination of
cash and already owned COMMON SHARES. After payment in full for the COMMON
SHARES purchased under the OPTION has been made, the COMPANY shall take all
such action as is necessary to deliver appropriate share
-2-
<PAGE> 4
certificates evidencing the COMMON SHARES purchased upon the exercise of the
OPTION as promptly thereafter as is reasonably practicable.
(E) SATISFACTION OF TAXES AND TAX WITHHOLDING
REQUIREMENTS. The COMMITTEE shall determine the appropriate arrangements for
the satisfaction by the COMPANY and the OPTIONEE of all federal, state, local
or other income, excise or employment taxes or tax withholding requirements
applicable to the exercise of the OPTION or the later disposition of the COMMON
SHARES or other property thereby acquired.
(3) ADJUSTMENTS AND CHANGES IN THE COMMON SHARES.
(A) In the event that the outstanding COMMON SHARES
of the COMPANY shall be changed into or exchanged for a different kind
of shares or other securities of the COMPANY or of another corporation (whether
by reason of merger, consolidation, recapitalization, reclassification,
split-up, combination of shares or otherwise) or if the number of such COMMON
SHARES shall be increased through the payment of a stock dividend, then unless
such change results in the termination of all outstanding options granted
pursuant to the PLAN, there shall be substituted for or added to each COMMON
SHARE of the COMPANY subject to the OPTION, the number and kind of shares or
other securities into which each outstanding COMMON SHARE of the COMPANY shall
be changed, or for which each such COMMON SHARE shall be exchanged, or to which
the holder of each such COMMON SHARE shall be entitled, as the case may be. The
OPTION shall also be appropriately amended as to the OPTION PRICE and other
terms as may be necessary to reflect the foregoing events. In the event there
shall be any other change in the number or kind of the outstanding shares of
the COMPANY, or of any shares or other securities into which such shares shall
have been changed, or for which they shall have been exchanged, then if the
COMMITTEE shall, in its sole discretion, determine that such change equitably
requires an adjustment in the OPTION, such adjustment shall be made by the
COMMITTEE in accordance with such determination. Fractional shares resulting
from any adjustment in the OPTION pursuant to this Section 3(A) shall be
rounded down to the nearest whole number of shares.
(B) Notice of any adjustment pursuant to this
Section 3 shall be given by the COMPANY to the OPTIONEE.
(4) ACCELERATION OF OPTIONS.
(A) In the event that the COMPANY or its shareholders
enter into one or more agreements to dispose of all or substantially all of the
assets or fifty percent (50%) or more of
-3-
<PAGE> 5
the outstanding capital stock of the COMPANY by means of sale (whether as a
result of a tender offer or otherwise), merger, reorganization or liquidation
in one or a series of related transactions (each, an "ACCELERATION EVENT"),
then the OPTION shall become exercisable during the fifteen (15) days
immediately prior to the scheduled consummation of the ACCELERATION EVENT with
respect to the full number of COMMON SHARES subject to the OPTION; provided,
however, that no such ACCELERATION EVENT will occur in the event that (i) the
primary purpose of the transaction is to change the COMPANY's domicile solely
within the United States, (ii) the terms of the agreement(s) require as a
prerequisite for the consummation of the transaction that each option granted
by the COMPANY pursuant to the PLAN either be assumed by the successor
corporation or parent thereof or be replaced with a comparable option to
purchase shares of capital stock of the successor corporation or parent
thereof, or (iii) the transaction is approved by a majority of the members of
the Board of Directors of the COMPANY who had either been in office for more
than twelve (12) months prior to such transaction or had been elected, or
nominated for election by the COMPANY's shareholders, by the vote of
three-fourths of the directors then still in office who were directors at the
beginning of such twelve-month period; and provided further that any exercise
of the OPTION during such fifteen (15) day period shall be conditioned upon the
consummation of such transaction and shall be effective only immediately before
such consummation, except to the extent that the OPTIONEE may indicate, in
writing, that such exercise is unconditional with regard to all or part of the
unaccelerated portion of the OPTION. Upon consummation of the ACCELERATION
EVENT, the OPTION, whether or not accelerated, shall terminate and cease to be
exercisable, unless assumed by the successor corporation or parent thereof.
(B) In the event of the occurrence of an
ACCELERATION EVENT, if the OPTIONEE is subject to the filing requirements
imposed under Section 16(a) of the Securities Exchange Act of 1934 with respect
to the COMPANY, the OPTIONEE shall receive a payment of cash equal to the
difference between the aggregate "Fair Value" of the COMMON SHARES subject to
such accelerated OPTION and the aggregate OPTION PRICE of such COMMON SHARES.
Notwithstanding the provisions of the foregoing sentence, no payment of cash
shall be made in respect of the accelerated OPTION unless a period of at least
six (6) months has elapsed from the date of grant of the OPTION. For purposes
of this Section 4(B), "Fair Value" shall mean the highest aggregate fair market
value of the subject COMMON SHARES during the 60-day period immediately
preceding the date of the consummation of the ACCELERATION EVENT. Payment of
said cash shall be made within ten (10) days after said consummation of the
ACCELERATION EVENT. The foregoing payments under this Section 4(B) shall be
made in lieu of and in full
-4-
<PAGE> 6
discharge of any and all obligations of the COMPANY in respect of the OPTION.
(C) The grant of this OPTION shall not affect
in any way the right of the COMPANY to adjust, reclassify, reorganize, or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
(1) NON-ASSIGNABILITY OF OPTION. The OPTION shall not be
assignable or otherwise transferable by the OPTIONEE except by will or by the
laws of descent and distribution. The OPTION may not be exercised during the
lifetime of the OPTIONEE except by him, his guardian or legal representative.
(2) SUBSTITUTION FOR OPTION. The COMMITTEE shall have the
authority to effect, at any time and from time to time, with the consent of the
OPTIONEE, the cancellation of the OPTION and the grant in substitution therefor
of one or more new options under the PLAN covering the same or a different
number of COMMON SHARES.
(3) EXERCISE AFTER TERMINATION OF EMPLOYMENT.
(A) Except as otherwise provided in this
Agreement, the OPTION shall be exercisable only by the OPTIONEE, shall be
exercisable only while the OPTIONEE is in the employment of the COMPANY and
then only if the OPTION has become exercisable by its terms, and if not
exercisable by its terms at the time the OPTIONEE ceases to be in the
employment of the COMPANY, shall immediately expire on the date of termination
of employment.
(B) If the OPTION is exercisable by its
terms at the time the OPTIONEE ceases to be in the employment of the
COMPANY other than by reason of the death, permanent disability or normal
retirement of the OPTIONEE, the OPTION must be exercised on or before the
earlier of three (3) months after the date of termination of employment or the
fixed expiration date of the OPTION after which period the OPTION shall expire.
Notwithstanding the foregoing, if the OPTIONEE's employment is terminated for
willful, deliberate or gross misconduct (such as, for example, dishonesty), the
OPTION shall, to the extent not previously exercised, expire immediately upon
such termination.
(C) In the event of the death of the
OPTIONEE (i) while in the employment of the COMPANY or (ii) within three (3)
months after his termination of employment other than for willful, deliberate
or gross misconduct, the unexercised portion of the OPTION (whether or not then
exercisable by its terms) shall become immediately exercisable by his estate
for a period ending on the
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<PAGE> 7
earlier of the fixed expiration date of the OPTION or twelve months after
the date of death, after which period the OPTION shall expire. For purposes
hereof, the estate of an OPTIONEE shall be defined to include the legal
representatives thereof or any person who has acquired the right to exercise
the OPTION by reason of the death of the OPTIONEE.
(D) In the event of the termination of
employment of the OPTIONEE by reason of the "permanent disability" of the
OPTIONEE, the unexercised portion of the OPTION (whether or not then
exercisable by its terms) shall become exercisable for a period ending on the
earlier of the fixed expiration date of the OPTION or twelve (12) months from
the date of termination, after which period the OPTION shall expire. For
purposes hereof, "permanent disability" shall be deemed to be the inability of
the OPTIONEE to perform the duties of his job with the COMPANY because of a
physical or mental disability as evidenced by the opinion of a COMPANY-approved
doctor of medicine licensed to practice medicine in the United States of
America.
(E) In the event of the termination of
employment of the OPTIONEE by reason of the "normal retirement" of the
OPTIONEE, the unexercised portion of the OPTION (whether or not then
exercisable by its terms) granted to the OPTIONEE on or before his 65th
birthday shall become immediately exercisable for a period ending on the
earlier of the fixed expiration date of the OPTION or twelve (12) months after
the date of death, after which period the OPTION shall expire. Also, in the
event of the "normal retirement" of the OPTIONEE, the unexercised portion of
the OPTION (whether or not then exercisable by its terms) granted to the
OPTIONEE after his 65th birthday and held for a period of at least twelve (12)
consecutive months of active employment with the COMPANY after the date of
grant shall become immediately exercisable for a period ending on the earlier
of the fixed expiration date of the OPTION or twelve (12) months after the date
of death, after which period the OPTION shall expire. For purposes hereof,
"retirement" shall be deemed to be "normal retirement" if the OPTIONEE is at
least 65 years of age and has completed at least five (5) consecutive years of
employment with the COMPANY at the date of retirement.
(8) RESTRICTIONS ON TRANSFERS OF COMMON SHARES. Anything
contained in this Agreement or elsewhere to the contrary notwithstanding, the
COMPANY may postpone the issuance and delivery of COMMON SHARES upon any
exercise of the OPTION until completion of any stock exchange listing or
registration or other qualification of such COMMON SHARES under any state or
federal law, rule or regulation as the COMPANY may consider appropriate; and
may require the OPTIONEE when exercising the OPTION to make such
representations and furnish such information as the COMPANY may consider
-6-
<PAGE> 8
appropriate in connection with the issuance of the COMMON SHARES in compliance
with applicable law.
COMMON SHARES issued and delivered upon exercise of the OPTION shall be
subject to such restrictions on trading, including appropriate legending of
certificates to that effect, as the COMPANY, in its discretion, shall determine
are necessary to satisfy applicable legal requirements and obligations.
(9) RIGHTS OF OPTIONEE AS SHAREHOLDER. The OPTIONEE shall
have no rights as a shareholder of the COMPANY with respect to any COMMON
SHARES of the COMPANY covered by the OPTION until the date of issuance of a
certificate to him evidencing such COMMON SHARES.
(10) PLAN AS CONTROLLING. All terms and conditions of the
PLAN applicable to the OPTION which are not set forth in this Agreement shall
be deemed incorporated herein by reference. In the event that any term or
condition of this Agreement is inconsistent with the terms and conditions of
the PLAN, the PLAN shall be deemed controlling.
(11) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio.
(12) RIGHTS AND REMEDIES CUMULATIVE. All rights and remedies
of the COMPANY and of the OPTIONEE enumerated in this Agreement shall be
cumulative and, except as expressly provided otherwise in this Agreement,
none shall exclude any other rights or remedies allowed by law or in equity,
and each of said rights or remedies may be exercised and enforced concurrently.
(13) CAPTIONS. The captions contained in this Agreement are
included only for convenience of reference and do not define, limit, explain
or modify this Agreement or its interpretation, construction or meaning
and are in no way to be construed as a part of this Agreement.
(14) SEVERABILITY. If any provision of this Agreement or the
application of any provision hereof to any person or any circumstance shall
be determined to be invalid or unenforceable, then such determination shall not
affect any other provision of this Agreement or the application of said
provision to any other person or circumstance, all of which other provisions
shall remain in full force and effect, and it is the intention of each party to
this Agreement that if any provision of this Agreement is susceptible of two or
more constructions, one of which would render
-7-
<PAGE> 9
the provision enforceable and the other or others of which would render the
provision unenforceable, then the provision shall have the meaning which
renders it enforceable.
(15) NUMBER AND GENDER. When used in this Agreement, the
number and gender of each pronoun shall be construed to be such number and
gender as the context, circumstances or its antecedent may required.
(16) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the COMPANY and the OPTIONEE in respect of the subject
matter of this Agreement, and this Agreement supersedes all prior and
contemporaneous agreements between the parties hereto in connection with the
subject matter of this Agreement. No officer, employee or other servant or
agent of the COMPANY, and no servant or agent of the OPTIONEE, is authorized to
make any representation, warranty or other promise not contained in this
Agreement. No change, termination or attempted waiver of any of the provisions
of this Agreement shall be binding upon any party hereto unless contained in a
writing signed by the party to be charged.
(17) SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns (including
successive, as well as immediate, successors and assigns) of the COMPANY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first above written.
COMPANY:
--------
R. G. BARRY CORPORATION
By:______________________________
Its:__________________________
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<PAGE> 10
OPTIONEE:
_________________________________
Signature of Optionee
_________________________________
Street Address
_________________________________
City State Zip Code
_________________________________
Telephone Number
_________________________________
Social Security Number
-9-
<PAGE> 1
Exhibit 10(v)
-------------
R. G. BARRY CORPORATION
DEFERRED COMPENSATION PLAN
(Effective as of September 1, 1995)
<PAGE> 2
R. G. BARRY CORPORATION DEFERRED COMPENSATION PLAN
(Effective as of September 1, 1995)
<TABLE>
<CAPTION>
CONTENTS
- ----------------------------------------------------------------------------------
Section Page
<S> <C> <C>
ARTICLE I. ESTABLISHMENT AND PURPOSE
1.1 Establishment 1
1.2 Purpose 1
1.3 Application of Plan 1
ARTICLE II. DEFINITIONS AND CONSTRUCTION
2.1 Definitions 2
2.2 Gender and Number; Headings 3
ARTICLE III. ELIGIBILITY AND PARTICIPATION
3.1 Eligibility 4
3.2 Participation; Classification of Participants 4
ARTICLE IV. DEFERRAL AMOUNTS; DEFERRAL ELECTIONS
4.1 Types of Deferral Amounts 6
4.2 Salary Deferral Amount Election 6
4.3 Bonus Deferral Amount Election 6
4.4 Matching Amount 7
4.5 Deferral Elections; Deferral Year Amounts 8
4.6 Special Provisions Relating to Change of Employment Status 8
ARTICLE V. PAYMENT OF BENEFITS
5.1 Time of Payment 10
5.2 Forms of Payment 10
5.3 Death Benefit 10
5.4 Disability Benefit 11
5.5 Forfeiture for Misconduct 11
5.6 Tax Liability 11
</TABLE>
i
<PAGE> 3
R. G. BARRY CORPORATION DEFERRED COMPENSATION PLAN
(Effective as of September 1, 1995)
<TABLE>
<CAPTION>
CONTENTS
- ----------------------------------------------------------------------------------
Section Page
<S> <C> <C>
ARTICLE VI. ACCOUNTS; CREDITED EARNINGS
6.1 Participant Accounts 12
6.2 Adjustment of Accounts; Account Balances 12
6.3 Credited Earnings 13
6.4 Vesting 13
6.5 Account Statements 13
ARTICLE VII. ADMINISTRATION
7.1 Administration 15
7.2 Rules 15
7.3 Finality of Determination 15
7.4 Expenses 15
7.5 Indemnification and Exculpation 15
7.6 Appeals from Denial of Claims 16
ARTICLE VIII. FUNDING
8.1 Funding 17
8.2 Grantor Trust 17
ARTICLE IX. AMENDMENT; TERMINATION; MERGER
9.1 Amendment and Termination 18
9.2 Merger, Consolidation, or Sale of Assets 18
ARTICLE X. PARTICIPATION IN AND WITHDRAWAL
FROM THE PLAN BY AN EMPLOYER
10.1 Adoption Procedure 19
10.2 Withdrawal from the Plan 19
</TABLE>
ii
<PAGE> 4
R. G. BARRY CORPORATION DEFERRED COMPENSATION PLAN
(Effective as of September 1, 1995)
<TABLE>
<CAPTION>
CONTENTS
- ----------------------------------------------------------------------------------
Section Page
<S> <C> <C>
ARTICLE XI. GENERAL PROVISIONS
11.1 Beneficiary Designation 21
11.2 Nonalienation 21
11.3 Employer-Employee Relationship 22
11.4 Incompetence 22
11.5 Binding on Employer, Employee, and Their Successors 22
11.6 Severability 22
11.7 Applicable Law 23
</TABLE>
iii
<PAGE> 5
ARTICLE I. ESTABLISHMENT AND PURPOSE
1.1 ESTABLISHMENT
R. G. Barry Corporation ("Company") hereby establishes, effective as of
September 1, 1995, an unfunded deferred compensation plan for eligible
employees, as described herein, which plan shall be known as the "R. G. Barry
Corporation Deferred Compensation Plan" ("Plan").
1.2 PURPOSE
The purpose of the Plan is to provide eligible employees of the employer a
means of deferring amounts payable to them by the employer to a future payment
date. The Plan is intended to provide such eligible employees with a degree of
flexibility in their total compensation financial planning. This Plan is
unfunded and is maintained by the employer primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees within the meaning of Section 201(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and as such it is
intended that the Plan be exempt from the relevant requirements of Title I of
ERISA. The Plan is not intended to satisfy the qualification requirements of
Code Section 401.
1.3 APPLICATION OF PLAN
The Plan shall be applicable only with respect to the eligible employees of the
employer who are actively employed by the employer on or after August 31, 1995.
1
<PAGE> 6
ARTICLE II. DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS
Whenever used in the Plan, the following terms shall have the meaning set forth
below unless otherwise expressly provided:
(a) "ACCOUNT" means the recordkeeping account which is maintained in
the name of a Participant to account for any Salary Deferral Amounts,
Bonus Deferral Amounts, Matching Amounts, and Credited Earnings which
may be credited or debited to his Account from time to time, as
provided in Article VI.
(b) "AFFILIATE" means a corporation or noncorporate entity which the
Committee determines to be an affiliated entity of the Company.
(c) "BENEFICIARY" means the person, persons or trust designated by a
Participant, as provided in Section 11.1.
(d) "BONUS" means any bonus award which an Eligible Employee may
become eligible to receive under the Company's Short Term Incentive
Plan.
(e) "BONUS DEFERRAL AMOUNT" means that portion of an Eligible
Employee's Bonus which he has elected to defer, as provided in
Section 4.3.
(f) "CODE" means the Internal Revenue Code of 1986 and the
regulations issued thereunder, as amended from time to time.
(g) "COMMITTEE" means the Committee which is responsible for
administering the Plan, as provided in Section 7.1.
(h) "COMPANY" means R. G. Barry Corporation and any successors
thereto, as provided in Section 9.2.
(i) "CREDITED EARNINGS" means the earnings or loss amounts credited
or debited to a Participant's Account, as provided in Section 6.3.
(j) "DEFERRAL AMOUNTS" means Salary Deferral Amounts and Bonus
Deferral Amounts, as more fully described in Article IV.
(k) "DEFERRAL YEAR" means a Plan Year for which an Eligible Employee
is making a deferral election, as provided in Article IV.
(l) "DEFERRAL YEAR AMOUNT" means the amount as described in Section
4.5(b). As indicated in such Section, Deferral Year Amounts shall be
known by their Deferral Year (such as a Participant's 1995 Deferral
Year Amount).
(m) "ELIGIBLE EMPLOYEE" means, for any Plan Year, an Employee who
received an annual base salary of $95,000 in the preceding Plan Year;
provided, however, that solely with respect to the initial Plan Year
beginning September 1, 1995, any Employee whose annual base salary for
1995 is projected to be $95,000 or more shall be an Eligible
2
<PAGE> 7
Employee. Section 3.1 provides additional information about Eligible Employees.
(n) "EMPLOYEE" means an individual who is a common law employee of
the Company or an Affiliate.
(o) "EMPLOYER" means the Company and any Affiliate which has adopted
the Plan in accordance with Section 10.1.
(p) "ENTRY DATE" means January 1, April 1, July 1 and October 1 of
each Plan Year and, solely with respect to the initial Plan Year,
September 1, 1995.
(q) "MATCHING AMOUNT" means the allocations made by an Employer
conditioned on Salary Deferral Amounts and/or Bonus Deferral Amounts, as
provided in Section 4.4.
(r) "PARTICIPANT" means an Eligible Employee who has become a
Participant under the Plan, as described in Section 3.2.
(s) "PLAN" means the R. G. Barry Corporation Deferred Compensation
Plan as set forth herein, and as it may be amended from time to time.
(t) "PLAN YEAR" means each 12-month period beginning January 1 of
each calendar year and ending on December 31 of the same calendar
year. The initial Plan Year shall be the short year beginning
September 1, 1995 and ending December 31, 1995.
(u) "SALARY DEFERRAL AMOUNT" means that portion of an Eligible Employee's
salary which he has elected to defer, as provided in Section 4.2.
2.2 GENDER AND NUMBER; HEADINGS
Except when otherwise indicated by the context, any masculine terminology when
used in the Plan shall also include the feminine gender, and the definition of
any term in the singular shall also include the plural. Headings of Articles
and Sections herein are included solely for convenience, and if there is any
conflict between such headings and the text of the Plan, the text shall
control.
3
<PAGE> 8
ARTICLE III. ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY
Each Employee shall become an "Active Participant" under the Plan on the Entry
Date on which his election to make Deferral Amounts under the Plan becomes
effective, as provided in Article IV, coincident with or next following the
latest to occur of--
(a) the date he is employed as an Eligible Employee,
(b) the date he is credited with at least one year of Eligibility
Service (defined below),
(c) the date on which he attains the age of at least 21 years, or
(d) the date, on or after September 1, 1995, that the Plan was made
applicable to the Employer of the individual.
One year of "Eligibility Service" shall mean the first 12-consecutive-month
period, beginning on the Employee's employment commencement date, during which
the Employee completes 1,000 or more hours of service determined in accordance
with Labor Reg. Section 2530.200b-2 on the basis of an assumed 45 hours of
service per week for each week for which the Employee would have received at
least one hour of service. If the Employee does not actually have 1,000 or more
hours of service during the 12-month period beginning with his employment
commencement date, then one year of "Eligibility Service" shall mean the first
Plan Year (beginning with the Plan Year in which such initial 12-month period
ends) during which he actually has 1,000 or more hours of service as defined
above.
The Committee shall provide each Eligible Employee who is eligible to become a
Participant with notice of his status, so as to permit such Eligible Employee
the opportunity to make the deferral elections provided for under Article IV.
Such notice may be given at such time and in such manner as the Committee may
determine from time to time.
3.2 PARTICIPATION; CLASSIFICATION OF PARTICIPANTS
Each Eligible Employee who has had a Deferral Amount credited to his Account
under the Plan shall be a Participant under the Plan. Such Eligible Employee
shall continue as a Participant under the Plan so long as there is a balance
credited to his Account under the Plan. There shall be two classifications of
Participants under the Plan, as follows:
(a) "Active" Participant--A Participant shall be an "active"
Participant under the Plan at all times when he is both an
Eligible Employee and he is a Participant with a balance
credited to his Account.
4
<PAGE> 9
(b) "Inactive" Participant--A Participant shall be an "inactive"
Participant under the Plan during all periods when he has a
balance credited to his Account and he is not an Eligible
Employee. This classification shall include, without limitation,
a former Employee or an Employee other than an Eligible Employee
who has a balance credited to his Account.
The term "Participant" shall refer to both active and inactive Participants,
unless a Participant is separately identified by participation classification.
5
<PAGE> 10
ARTICLE IV. DEFERRAL AMOUNTS; DEFERRAL ELECTIONS
4.1 TYPES OF DEFERRAL AMOUNTS
There are two types of Deferral Amounts which may be applicable to a
Participant under the Plan: the Salary Deferral Amounts as described in
Section 4.2 and the Bonus Deferral Amounts as described in Section 4.3. The
Matching Amounts as described in Section 4.4 are dependent upon Deferral
Amounts. Section 4.5 describes certain deferral election provisions which are
applicable to Deferral Amounts.
4.2 SALARY DEFERRAL AMOUNT ELECTION
(a) SALARY DEFERRAL AMOUNT. An Eligible Employee may elect to defer
up to 25 percent of the base salary he may be entitled to receive
from the Employer. The amount to be so deferred shall be
specified as a whole percentage of his base salary with respect
to each payroll period.
(b) ELECTION OF SALARY DEFERRAL AMOUNT. To make an election of a
Salary Deferral Amount, the Eligible Employee must file a
deferral election form with the Committee, as described in this
Article IV. Each such election shall be made with respect to a
Deferral Year and all payroll periods applicable to the Eligible
Employee which begin within such Deferral Year. For example, an
election of a Salary Deferral Amount for the 1996 Deferral Year
shall apply to all payroll periods of the Eligible Employee which
begin on any date after December 31, 1995 and before December 31,
1996. An election filed for a Deferral Year shall only be
applicable for such Deferral Year, and the election therein shall
not be effective for any payroll period beginning after the close
of the Deferral Year. For an election of a Salary Deferral Amount
to become effective for a Deferral Year, the Eligible Employee
must file the appropriate deferral election form by no later than
the day before the subject Deferral Year begins. The first
Deferral Year for which a Salary Deferral Amount election may be
made is the 1995 Deferral Year and the payroll periods beginning
within such Deferral Year. The additional provisions in Section
4.5 shall apply to elections under this Section 4.2.
4.3 BONUS DEFERRAL AMOUNT ELECTION
(a) BONUS DEFERRAL AMOUNT. An Eligible Employee may elect to defer
all or any portion of any Bonus he may be awarded by the
Employer. The amount to be so deferred shall be specified as a
whole percentage of the Bonus with respect to a Deferral Year.
Notwithstanding any Plan provisions to the contrary, the maximum
Bonus Deferral Amount
6
<PAGE> 11
for any Deferral Year shall not exceed the difference between (1)
25 percent of the Eligible Employee's base salary for the
Deferral Year and (2) the Salary Deferral Amount allocated under
Section 4.2 with respect to such Deferral Year.
(b) ELECTION OF BONUS DEFERRAL AMOUNT. To make an election of a Bonus
Deferral Amount, the Eligible Employee must file a deferral
election form with the Committee, as described in this Article
IV. Each such election shall be made with respect to a Deferral
Year and the Bonus from the Employer which is made with respect
to such Deferral Year and which is payable after the last day of
the Deferral Year. For purposes of the Plan, for a Bonus to be
made with respect to a Deferral Year, it must be awarded by the
Employer during or after such Deferral Year and be designated as
having been made for such Deferral Year. For example, an election
of a Bonus Deferral Amount for the 1996 Deferral Year shall apply
to the Bonus to the Eligible Employee which is made by the
Employer after such Deferral Year and which is designated as
having been made for such Deferral Year. An election filed for a
Deferral Year shall only be applicable for such Deferral Year,
and the election therein shall not be effective for any
subsequent Deferral Year. For an election of a Bonus Deferral
Amount to become effective for a Deferral Year, the Eligible
Employee must file the appropriate deferral election form by no
later than the day before the Deferral Year begins. The first
Deferral Year for which a Bonus Deferral Amount election may be
made is the 1996 Deferral Year and the Bonus earned with respect
to such Deferral Year. The additional provisions in Section 4.5
shall apply to elections under this Section 4.3.
4.4 MATCHING AMOUNT
For each Plan Year, each Employer shall allocate a Matching Amount on behalf of
each Participant who has elected to defer a Salary Deferral Amount or Bonus
Deferral Amount for the Plan Year. The Matching Amount shall equal 50 percent
of the Salary Deferral Amount deferred by a Participant for each payroll
period; provided, however, that the maximum Matching Amount shall not exceed
one percent of the Participant's base salary for each payroll period. In
addition, the Matching Amount shall equal 50 percent of the Bonus Deferral
Amount deferred by a Participant; provided, however, that the maximum Matching
Amount for a Plan Year, including the Matching Amount attributable to the
Salary Deferral Amount, shall not exceed one percent of the Participant's
annual base salary. Matching Amounts to be allocated on behalf of a Participant
for any Plan Year shall be determined in reference to each payroll period
within such
7
<PAGE> 12
Plan Year and to the date when the Bonus earned during the Plan Year would be
paid if no deferral election applied.
4.5 DEFERRAL ELECTIONS; DEFERRAL YEAR AMOUNTS
(a) DEFERRAL ELECTIONS. All deferral elections as provided for under
Sections 4.2 and 4.3, respectively, shall be made on a deferral
election form(s) as prescribed by the Committee. In addition to
specifying the Deferral Amount on the deferral election form, the
Eligible Employee shall specify the form of payment which shall
be applicable with respect to any Deferral Year Amount for the
Deferral Year, as provided for in Article V. All such deferral
elections shall become irrevocable for the subject Deferral Year
once the Deferral Year has commenced or, if later, the date the
election is filed pursuant to Section 4.6. Only Eligible
Employees are eligible to file deferral election forms as
provided for in this Section 4.5 and Sections 4.2 and 4.3, and
inactive Participants are not eligible to file such forms.
(b) DEFERRAL YEAR AMOUNT. In each case where a Participant has filed
a deferral election under Section 4.2 or 4.3, the Deferral Amount
which is the subject of each such election together with the
related Matching Amount and any Credited Earnings attributable
thereto, as the same may be adjusted from time to time, shall be
known as his Deferral Year Amount. For example, an Eligible
Employee's Salary Deferral Amount and/or Bonus Deferral Amount
for the 1996 Deferral Year together with the related Matching
Amount and the Credited Earnings attributable thereto, as
adjusted from time to time, shall be his 1995 Deferral Year
Amount. All deferral elections filed by a Participant with
respect to a particular Deferral Year shall designate the same
form of payment with respect to the entire Deferral Amount. If a
Participant files multiple conflicting elections, the terms of
the election regarding a Salary Deferral Amount will govern.
4.6 SPECIAL PROVISIONS RELATING TO CHANGE OF EMPLOYMENT STATUS
As provided in Sections 4.2, 4.3 and 4.5, only Eligible Employees are eligible
to make deferral elections. The provisions of this Section 4.6 shall apply
where an Eligible Employee has a change of employment status during a Deferral
Year, as described below:
(a) NEW ELIGIBLE EMPLOYEE. If an individual first satisfies all of
the eligibility requirements described in Section 3.1 during a
Deferral Year, he shall be permitted to make a Salary Deferral
Amount election for the remaining payroll periods of such
Deferral Year. To make such election, the Eligible Employee must
file the appropriate deferral
8
<PAGE> 13
election form with the Committee no later than the day before the
Entry Date next following the date on which he satisfied all of
the eligibility requirements, and such election shall remain in
effect for each payroll period beginning on or after such Entry
Date and beginning within the subject Deferral Year. Such
Eligible Employee shall not be permitted to make a Bonus Deferral
Amount election for such initial Deferral Year unless his
participation commencement coincides with the beginning of a Plan
Year. Any deferral election as described in this Section 4.6
shall become irrevocable when the appropriate form is filed with
the Committee. Except where specifically provided in this Section
4.6(a), the remaining provisions of this Article IV relating to
deferral elections shall apply to elections under this Section
4.6(a).
(b) CESSATION OF STATUS AS AN EMPLOYEE. In any case where an Eligible
Employee has any deferral election in effect for a Deferral Year,
and he terminates employment as an Employee during such Deferral
Year, any Salary Deferral Amount election in effect for such
Deferral Year shall cease with the close of the payroll period in
which he terminates employment, and any Bonus Deferral Amount
election in effect for such Deferral Year shall be void with
respect to any Bonus payable after his termination of employment.
Amounts deferred under any such election prior to its
discontinuance shall be payable as provided in Article V.
9
<PAGE> 14
ARTICLE V. PAYMENT OF BENEFITS
5.1 TIME OF PAYMENT
A Participant (or his Beneficiary) shall become eligible to receive a
distribution of his Account under the Plan upon the earliest to occur of the
following events:
(a) the Participant's termination of employment as an Employee of
the Company and any Affiliate,
(b) the Participant becomes totally and permanently disabled, and
(c) the Participant dies.
5.2 FORMS OF PAYMENT
On each deferral election form filed by an Eligible Employee pursuant to
Section 4.5, such Eligible Employee shall specify the form of payment for the
Deferral Year Amount; provided, however, that his Deferral Year Amounts for a
particular Plan Year must be payable in the exact same form. In making such
designation, the Eligible Employee may designate payment in the form of a
single lump sum payment or payment in the form of annual installment payments
payable for five or ten years. Annual installment payments will commence as
soon as administratively practicable after a Participant's termination of
employment and will continue on each anniversary of the initial payment. If for
any reason the Eligible Employee fails to make an effective designation under
this Section 5.2, payment of the Deferral Year Amount the subject of the
deferral election shall be made in the form of a single lump sum payment.
Except as otherwise provided in Sections 5.3 and 5.4, all benefit payments
under the Plan with respect to a Participant shall be made to the Participant
in the payment forms as specified in his applicable deferral election forms or
as provided in the next preceding sentence.
5.3 DEATH BENEFIT
If a Participant shall die with a balance credited to his Account, such balance
shall be paid to his applicable designated Beneficiary or Beneficiaries as
provided herein. With respect to all Deferral Year Amounts which are credited
to his Account and have not been paid as of the Participant's death, the then
current balance of each such Deferral Year Amount payable to a designated
Beneficiary shall be paid to the designated Beneficiary in the form of a lump
sum payment as soon as administratively practicable after proof of death is
provided to the Committee.
10
<PAGE> 15
5.4 DISABILITY BENEFIT
If a Participant shall become totally and permanently disabled, as determined
by the Committee in its absolute discretion, with a balance credited to his
Account, such balance shall be paid to the Participant in the form of a single
lump sum payment as soon as administratively practicable after the Committee
determines that the Participant has become disabled.
5.5 FORFEITURE FOR MISCONDUCT
Notwithstanding any Plan provisions to the contrary, a Participant (or his
Beneficiary) shall have no right to the Matching Amounts and related earnings
portion of his Account under this Plan if the Committee or the Company
determines that the Participant engaged in a willful, deliberate, or gross act
of commission or omission which is injurious to the finances or reputation of
the Company or any of its Affiliates.
5.6 TAX LIABILITY
An Employer may withhold from any payment of benefits hereunder any taxes
required to be withheld and such sum as the Employer may reasonably estimate to
be necessary to cover any taxes for which the Employer may be liable and which
may be assessed with regard to such payment.
11
<PAGE> 16
ARTICLE VI. ACCOUNTS; CREDITED EARNINGS
6.1 PARTICIPANT ACCOUNTS
The Committee shall maintain, or cause to be maintained, a bookkeeping Account
for each Participant for the purpose of accounting for the Participant's
beneficial interest under the Plan, which interest is attributable to Deferral
Amounts, Matching Amounts, and any Credited Earnings credited to such
Participant under the Plan, as adjusted to reflect charges against such
Account.
Since Participants make deferral elections with respect to specified Deferral
Years, the Committee shall also maintain within each Participant's Account
subaccounts, as the case may be, such Deferral Year Amount subaccounts as may
be necessary to identify specific Deferral Year Amounts (such as, the 1995
Deferral Year Amount, 1996 Deferral Year Amount, etc. subaccounts). In addition
to the foregoing bookkeeping subaccounts maintained for such Participant, the
Committee shall maintain, or cause to be maintained, such other accounts,
subaccounts, records or books as it deems necessary to properly provide for the
maintenance of Accounts under the Plan, and to carry out the intent and
purposes of the Plan.
6.2 ADJUSTMENT OF ACCOUNTS; ACCOUNT BALANCES
Each Participant's Account shall be adjusted to reflect all Deferral Amounts
credited to his Account, all Matching Contributions credited to his Account,
all Credited Earnings credited or debited to his Account and all benefit
payments charged to his Account. A Participant's elected Salary Deferral
Amounts and Bonus Deferral Amounts, as provided for in Sections 4.2 and 4.3,
respectively, shall be credited to the Participant's Account as of the date on
which the amount which is being deferred would have become payable to the
Participant in the absence of the subject deferral election, and shall be
credited to the applicable subaccount within such Account by reference to the
applicable Deferral Year. The Matching Amounts related to such Deferral Amounts
shall be credited to the Participant's Account as of the date on which the
related Salary Deferral Amount and/or Bonus Deferral Amount are credited to the
applicable subaccount within such Account by reference to the applicable
Deferral Year. Credited Earnings on the balances in a Participant's Account
shall be credited or debited as provided in Section 6.3. Charges to a
Participant's Account to reflect benefit payments under the Plan shall be made
as of the date of any such payment, and shall be charged to the applicable
subaccount within such Account. As of any relevant date, the balance standing
to the credit of a
12
<PAGE> 17
Participant's Account, and each separate subaccount comprising such Account,
shall be the respective balance in such Account and the component subaccounts
as of the close of business on such date, and after all applicable credits and
charges have been posted through such date.
6.3 CREDITED EARNINGS
Each Participant shall be credited or debited with Credited Earnings on the
balances in his Account, and the crediting or debiting thereof shall be made to
and by reference to the subaccount balances in such Account. Such Credited
Earnings shall be credited or debited to such Account as of the last day of
each quarter of the Plan Year and at such other date or dates as necessary when
distributions are being made. In crediting or debiting such Credited Earnings,
all Salary Deferral Amounts and related Matching Amounts credited to a
Participant's Account during the applicable Plan Year shall be deemed to have
been credited to his Account as of the date on which the salary was otherwise
payable absent a deferral election, and Bonus Deferral Amounts and related
Matching Amounts shall be deemed to have been credited to his Account as of the
day such Bonus otherwise would have been actually paid to the Participant. The
Credited Earnings rate for the applicable quarter of the Plan Year shall be
equal to the prime rate of interest as of the first business day of each
quarter as published in the Wall Street Journal. Distributions which are
triggered by events occurring during the Plan Year shall include Credited
Earnings determined until the distribution is completed based on the applicable
rate in effect and prorated using completed days.
The Committee shall make all determinations with respect to the applicable
Credited Earnings rate in effect from time to time and with respect to the
crediting or debiting of such Credited Earnings to Accounts, and such
determinations shall be final and binding on all interested parties.
6.4 VESTING
A Participant shall have a fully vested and nonforfeitable beneficial interest
in the balance standing to the credit of his Account as of any relevant date,
subject to the provisions of Section 5.5 and to the conditions and limitations
on the payment of amounts from such Account as provided in the Plan.
6.5 ACCOUNT STATEMENTS
The Committee shall provide each Participant with a statement of the status of
his Account under the Plan. The Committee shall provide such statement annually
or at such other times as the Committee may determine
13
<PAGE> 18
from time to time, and such statement shall be in the format as prescribed by
the Committee.
14
<PAGE> 19
ARTICLE VII. ADMINISTRATION
7.1 ADMINISTRATION
This Plan shall be administered by the Committee appointed pursuant to the
terms of the R. G. Barry Corporation Salaried Employees' Pension Plan ("Pension
Plan"), as amended and restated effective as of January 1, 1989, and as the
same is amended from time to time. The Committee shall administer this Plan in
a manner consistent with the administration of the Pension Plan, except that
this Plan shall be administered as an unfunded plan which is not intended to
meet the qualification requirements of Code Section 401. The Committee shall
have the same rights and authority granted to it under the Pension Plan, which
shall include the full discretionary power and authority to determine all
questions relating to eligibility and amount of benefits and to interpret,
construe and administer this Plan. The Committee shall establish and maintain
such accounts or records as the Committee may from time to time consider
necessary. Members of the Committee shall not participate in any action or
determination regarding their own benefits under the Plan.
7.2 RULES
The Committee shall adopt and establish such rules and regulations with respect
to the administration of the Plan as it deems necessary and appropriate. The
Committee shall also prescribe such deferral election forms and other
administrative forms as it deems necessary to carry out the provisions of the
Plan.
7.3 FINALITY OF DETERMINATION
The determination of the Committee as to any disputed questions arising under
this Plan, including questions of construction and interpretation, shall be
final, binding, and conclusive upon all persons.
7.4 EXPENSES
The expenses of administering this Plan shall be borne by the Employers in the
proportions determined by the Committee.
7.5 INDEMNIFICATION AND EXCULPATION
The members of the Committee, its agents, and officers, directors, and
employees of the Company or any other Employer shall be indemnified and held
harmless by the Employer against and from any and all loss, cost, liability, or
expense (including any attorneys' fees and court costs) that may
15
<PAGE> 20
be imposed upon or reasonably incurred by them in connection with or resulting
from any claim, action, suit, or proceeding to which they may be a party or in
which they may be involved by reason of any action taken or failure to act
under this Plan and against and from any and all amounts paid by them in
settlement (with the Company's written approval) or paid by them in
satisfaction of a judgment in any such action, suit, or proceeding. The
foregoing provision shall not be applicable to any person if the loss, cost,
liability, or expense is due to such person's willful misconduct.
7.6 APPEALS FROM DENIAL OF CLAIMS
If any claim for benefits under the Plan is wholly or partially denied, the
claimant shall be given notice in writing of such denial within a reasonable
period of time (not to exceed 90 days after receipt of the claim, or if special
circumstances require an extension of time, written notice of the extension
shall be furnished to the claimant and an additional 90 days will be considered
reasonable) setting forth the following information:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent Plan provisions on which the
denial is based;
(c) A description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why
such material or information is necessary;
(d) An explanation that a full and fair review by the Committee of
the decision denying the claim may be requested by the claimant
or his authorized representative by filing with the Committee,
within 60 days after such notice has been received, a written
request for such review; and
(e) If such request is so filed, the claimant or his authorized
representative may review pertinent documents and submit issues
and comments in writing within the same 60-day period specified
in Section 7.6(d).
The decision of the Committee shall be made promptly, and not later than 60
days after the Committee's receipt of the request for review, unless special
circumstances require an extension of time for processing, in which case the
claimant shall be so notified and a decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the request for review.
The claimant shall be given a copy of the decision promptly. The decision shall
be in writing and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, and specific references to
the pertinent Plan provisions on which the decision is based.
16
<PAGE> 21
ARTICLE VIII. FUNDING
8.1 FUNDING
It is intended that the Employer is under a contractual obligation to make the
payments from a Participant's Account when due. All amounts paid under the Plan
shall be paid in cash or cash equivalents from the general assets of the
participating Employers. Deferral Amounts, Matching Amounts, and Credited
Earnings shall be reflected on the accounting records of the Employer, as
provided for under the Plan, but such records shall not be construed to create,
or require the creation of, a trust, custodial or escrow account with respect
to any Participant. No Participant shall have any right, title or interest
whatsoever in or to any investment reserves, accounts or funds that the
Employers may purchase, establish or accumulate to aid in providing the benefit
payments described in the Plan. Nothing contained in the Plan, and no action
taken pursuant to its provisions, shall create or be construed to create a
trust or a fiduciary relationship of any kind between an Employer or the
Committee and a Participant or any other person. Participants and Beneficiaries
shall not acquire any interest under the Plan greater than that of an unsecured
general creditor of the Employer.
8.2 GRANTOR TRUST
In accordance with and consistent with Section 8.1, the Employers may from time
to time establish a grantor trust arrangement to create a fund of assets to be
available to pay benefits when they become due under this Plan. The creation of
any grantor trust shall not create any greater rights with respect to
Participants than as provided in such Section 8.1 and the grantor trust
agreement. Also, the creation of such a grantor trust shall in no way be
applied or be construed so that the Plan is anything other than an unfunded
plan as described in Section 1.2.
17
<PAGE> 22
ARTICLE IX. AMENDMENT; TERMINATION; MERGER
9.1 AMENDMENT AND TERMINATION
The board of directors of the Company, in its absolute discretion, without
notice, at any time and from time to time, may modify and amend, in whole or in
part, any or all of the provisions of this Plan, or suspend or terminate it
entirely; provided, that no such modification, amendment, suspension, or
termination may, without the consent of a Participant (or his Beneficiary in
the case of the death of a Participant), reduce the right of a Participant (or
his Beneficiary as the case may be) to a distribution to which he is otherwise
entitled in accordance with the provisions of the Plan prior to such change.
Such action of the board of directors of the Company shall be binding upon all
other Employers. In the event of a termination of the Plan, no further deferral
elections may be made under the Plan, and amounts which are then payable, or
which become payable under the terms of the Plan, shall be paid as scheduled in
accordance with the provisions of the Plan; provided, however, that the Company
reserves the right, in its sole discretion, to accelerate payments to the
affected Participants in the event of a complete or partial termination of the
Plan.
9.2 MERGER, CONSOLIDATION, OR SALE OF ASSETS
In the event that an Employer should be liquidated, dissolved, or become a
party to a merger or consolidation where the Employer is not the surviving
corporation, the Plan with respect to such Employer shall terminate at the time
of such event, unless the successor or acquiring corporation shall elect to
continue and carry on the Plan. In the event such Plan termination occurs, the
provisions of Section 9.1 relating to Plan terminations shall become
applicable, provided that any successor or acquiring corporation may elect to
accelerate payments with respect to its Employees under the Plan.
18
<PAGE> 23
ARTICLE X. PARTICIPATION IN AND WITHDRAWAL FROM THE PLAN BY AN EMPLOYER
10.1 ADOPTION PROCEDURE
With the consent of the Company, any Affiliate which is providing Bonuses
and/or salary to its Employees may adopt this Plan for a select group of
management or highly compensated persons in its employment on express condition
that the Company assumes no liability as a result of any such adoption of this
Plan by any other organization and its employees. Such other organization may
adopt this Plan by--
(a) executing an adoption instrument adopting the Plan with respect
to all or any particular classification or classifications of
persons in its employment, and agreeing to be bound as a
participating Affiliate by all the terms, provisions, conditions,
and limitations of the Plan; and
(b) compiling and submitting all information required by the Company
with reference to persons in its employment eligible for
membership in the Plan.
The adoption instrument executed by any such organization may contain such
changes and variations in Plan terms as may be acceptable to the Company. The
adoption instrument shall specify the effective date of such adoption of the
Plan and the name of the Plan as it pertains to such adopting organization and
its Employees and shall become, as to such organization and persons in its
employment, a part of this Plan. However, the sole, exclusive right to amend or
terminate the Plan is reserved by the board of directors of the Company. It
shall not be necessary for the adopting Affiliate to sign or execute the
original or then amended Plan document. The participating Affiliate shall
assume all the rights, obligations, and liabilities of an Employer under the
Plan. The administrative powers and control of the Company, as provided in the
Plan, including the sole right to administer, amend, or terminate the Plan,
shall not be diminished by reason of the participation of any such adopting
Affiliate.
10.2 WITHDRAWAL FROM THE PLAN
Any participating Employer other than the Company, by action of its board of
directors or other governing body, may elect to withdraw from the Plan by
giving 90 days' advance written notice of its election to the board of
directors of the Company, unless the board of directors of the Company waives
such advance notice or agrees to a shorter advance notice period. Such
Employer's election to withdraw from the Plan shall be subject to the
19
<PAGE> 24
consent of the board of directors of the Company. The board of directors of the
Company may in its absolute discretion terminate the participation of any
Employer at any time.
20
<PAGE> 25
ARTICLE XI. GENERAL PROVISIONS
11.1 BENEFICIARY DESIGNATION
A Participant shall designate a Beneficiary or Beneficiaries who, upon his
death, are to receive payments that otherwise would have been paid to him under
the Plan. All Beneficiary designations shall be in writing and on a form
prescribed by the Committee for such purpose, and any such designation shall
only be effective if and when delivered to the Committee during the lifetime of
the Participant. A Participant may from time to time during his lifetime change
a designated Beneficiary or Beneficiaries by filing a new Beneficiary
designation form with the Committee. If a designated Beneficiary dies after the
Participant, but before all death benefit payments relating to such Beneficiary
have been paid, the remainder of such death benefit payments shall be continued
to such Beneficiary's estate. In the event a Participant shall fail to
designate a Beneficiary or Beneficiaries with respect to any death benefit
payments, or if for any reason such designation shall be ineffective, in whole
or in part, or if no designated Beneficiary survives the Participant, any
payment that otherwise would have been paid to such Participant shall be paid
to his estate, and in such event, his estate shall be his Beneficiary with
respect to such payments.
11.2 NONALIENATION
No benefit payable at any time under the Plan shall be subject in any manner to
alienation, sale, transfer, assignment, pledge, attachment, garnishment, or
encumbrance of any kind, and shall not be subject to or reached by any legal or
equitable process (including execution, garnishment, attachment, pledge, or
bankruptcy) in satisfaction of any debt, liability, or obligation, prior to
receipt. Any attempt to alienate, sell, transfer, assign, pledge, or otherwise
encumber any such benefit, whether presently or thereafter payable, shall be
void. Notwithstanding the foregoing provisions of this Section 11.2, no
benefit amount payable under the Plan shall be payable until and unless any and
all amounts representing debts or other obligations owed to the Company or
other Affiliate by the Participant with respect to whom such amount would
otherwise be payable shall have been fully paid. At the time of any payment,
the Company has the right to offset the payment by any such debts or
obligations.
21
<PAGE> 26
11.3 EMPLOYER-EMPLOYEE RELATIONSHIP
The establishment of this Plan shall not be construed as conferring any legal
or other rights upon any Employee or any person for a continuation of
employment, nor shall it interfere with the rights of an Employer to discharge
any Employee or otherwise act with relation to the Employee. An Employer may
take any action (including discharge) with respect to any Employee or other
person and may treat such person without regard to the effect which such action
or treatment might have upon such person as a Participant under this Plan. No
provision in this Plan shall entitle an Employee to participate in or receive a
Bonus.
11.4 INCOMPETENCE
Every person receiving or claiming benefits under the Plan shall be
conclusively presumed to be mentally competent until the date on which the
Committee receives a written notice, in a form and manner acceptable to the
Committee, that such person is incompetent, and that a guardian, conservator,
or other person legally vested with the care of such person's person or estate
has been appointed; provided, however, that if the Committee shall find that
any person to whom a benefit is payable under the Plan is unable to care for
such person's affairs because of incompetency, any payment due (unless a prior
claim therefor shall have been made by a duly appointed legal representative)
may be paid to the spouse, a child, a parent, or a brother or sister, or to any
person deemed by the Committee to have incurred expense for such person
otherwise entitled to payment. Any such payment so made shall be a complete
discharge of liability therefor under the Plan.
11.5 BINDING ON EMPLOYER, EMPLOYEE, AND THEIR SUCCESSORS
This Plan shall be binding upon and inure to the benefit of the Employer, its
successors and assigns, and the Employee, his heirs, executors, administrators,
and legal representatives. The provisions of this Plan shall be applicable with
respect to each Employer separately, and amounts payable hereunder shall be
paid by the Employer of the particular Employee with respect to the relevant
Deferral Amounts, Matching Amount, and Credited Earnings.
11.6 SEVERABILITY
In the event any provision of the Plan shall be held invalid or illegal for any
reason, any illegality or invalidity shall not affect the remaining parts of
the Plan, but the Plan shall be construed and enforced as if the illegal or
invalid provision had never been inserted, and the Company shall have the
22
<PAGE> 27
privilege and opportunity to correct and remedy such questions of illegality or
invalidity by amendment as provided in the Plan.
11.7 APPLICABLE LAW
The Plan shall be governed and construed in accordance with the laws of the
State of Ohio, except to the extent such laws are preempted by any applicable
Federal law.
* * * * * * * * * *
IN WITNESS WHEREOF, R. G. Barry Corporation has caused this instrument to be
executed by its duly authorized officers on this _______________ day of
_____________________________, 1995, effective as of September 1, 1995.
R. G. BARRY CORPORATION
By: ___________________________________
Vice President of Human Resources
By: ___________________________________
Senior Vice President of
Finance and Treasurer
By: ___________________________________
Vice President of Finance
and Assistant Treasurer
23
<PAGE> 1
EXHIBIT 13
----------
Pages Incorporated
by Reference
Five Year Review of Selected Financial Data
R.G. Barry Corporation and Subsidiaries
- --------------------------------------------------------------------------------
SUMMARY OF OPERATIONS (THOUSANDS)
Net Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Interest expense, net
Other income
Earnings (loss) before income taxes and extraordinary credit
Income tax expense (benefit)
Earnings (loss) before extraordinary credit
Extraordinary credit -- utilization of net operating loss carryforward
Net earnings (loss)
ADDITIONAL DATA
Primary earnings (loss) per share before extraordinary credit*
Earnings (loss) per share after extraordinary credit*
Fully diluted earnings (loss) per share*
Book value per share*
Annual % change in net sales
Annual % change in net earnings (loss)
Net earnings (loss) as a percentage of beginning shareholders' equity
Primary average number of shares outstanding (in thousands)*
FINANCIAL SUMMARY (THOUSANDS)
Current assets
Current liabilities
Working capital
Long-term debt and capital leases
Net shareholders' equity
Net property, plant and equipment
Total assets
Capital expenditures
Depreciation and amortization of property, plant and equipment
See also Management's Discussion & Analysis of Financial Condition & Results of
Operations.
- ----------------
*Retroactively restated to reflect 4-for-3 share splits distributed
September 15, 1995 and June 22, 1994.
**Fiscal year includes fifty-three weeks.
<PAGE> 2
<TABLE>
<CAPTION>
1995 1994 1993 1992** 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$136,561 $116,720 $101,172 $101,823 $102,791
76,065 69,975 59,795 60,890 69,093
60,496 46,745 41,377 40,933 33,698
48,557 39,375 34,322 34,453 32,978
(2,962) (1,701) (1,474) (2,128) (2,408)
1,060 333 400 400 400
10,037 6,002 5,981 4,752 (1,288)
3,738 2,191 2,183 1,711 (24)
6,299 3,811 3,798 3,041 (1,264)
- - - 300 -
$ 6,299 $ 3,811 $ 3,798 $ 3,341 $ (1,264)
$ 0.81 $ 0.54 $ 0.57 $ 0.45 $ (0.19)
$ 0.81 $ 0.54 $ 0.57 $ 0.50 $ (0.19)
$ 0.80 $ 0.54 $ 0.57 $ 0.50 $ (0.19)
$ 6.42 $ 5.56 $ 4.64 $ 4.05 $ 3.52
17.0% 15.4% (0.6%) (0.9%) (5.6%)
65.3% 0.3% 13.7% 364.3% 82.1%
15.3% 12.1% 13.9% 14.2% (5.1%)
7,752 7,058 6,700 6,699 6,799
$ 62,721 $ 56,683 $ 39,974 $ 35,786 $ 34,105
18,793 17,332 12,119 10,607 11,462
43,928 39,351 27,855 25,179 22,643
15,390 16,445 9,745 11,625 12,990
47,611 41,054 31,483 27,232 23,562
14,156 13,785 13,410 14,050 14,733
84,340 76,961 55,635 51,132 49,732
3,363 2,234 1,034 1,195 2,668
2,158 1,905 1,607 1,857 2,171
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Market and Dividend Information
R.G. Barry Corporation and Subsidiaries
MARKET VALUE (Restated to reflect share split of September 15, 1995 and June 22, 1994)
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
QUARTER HIGH LOW
1995 FIRST $ 9.94 $ 7.13
SECOND 13.88 8.25
THIRD 18.00 13.41
FOURTH 23.00 15.63
1994 First $ 10.97 $ 7.95
Second 12.80 7.80
Third 16.78 11.25
Fourth 18.47 7.50
Stock Exchange: New York Stock Exchange (Since July, 1995)
Stock Ticker Symbol: RGB
Wall Street Journal Listing: BarryRG
Approximate Number of Registered Shareholders: 1,300
A four-for-three share split was distributed on September 15, 1995 to shareholders
of record on September 1, 1995 and on June 22,1994 to shareholders of record on June 1, 1994.
No cash dividends were paid during the periods noted. While the Company has no current intention to
pay cash dividends, it is currently able to pay cash dividends, and is subject to the
restrictions contained in the various loan agreements. See also Note 5 to Consolidated Financial Statements,
and Management's Discussion & Analysis of Financial Condition & Results of Operations.
</TABLE>
<TABLE>
<CAPTION>
Quarterly Financial Data
R.G. Barry Corporation and Subsidiaries
1995 FISCAL QUARTERS in thousands, except net earnings (loss) per share
-------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
<S> <C> <C> <C> <C>
NET SALES $ 14,979 $ 10,806 $ 44,442 $ 66,334
GROSS PROFIT 7,368 6,072 19,669 27,387
NET EARNINGS (LOSS) (2,004) (2,479) 4,465 6,317
NET PRIMARY EARNINGS (LOSS) PER SHARE $ (0.27) $ (0.34) $ 0.61 $ 0.81
</TABLE>
<TABLE>
<CAPTION>
1994 Fiscal Quarters
-------------------------------------------------------------------------------------
First Second Third Fourth
<S> <C> <C> <C> <C>
Net sales $13,456 $ 9,406 $ 37,115 $56,743
Gross profit 5,818 4,457 14,406 22,064
Net earnings (loss) (942) (2,010) 2,586 4,177
Net primary earnings (loss) per share $(0.14) $ (0.29) $ 0.36 $ 0.57
See also Management's Discussion & Analysis of Financial Condition & Results of
Operations.
</TABLE>
<PAGE> 4
Management's Discussion & Analysis of
Financial Condition & Results of Operations
- --------------------------------------------------------------------------------
FOUR-FOR-THREE SHARE SPLIT
On August 16, 1995, the Company declared a four-for-three share split.
The share split was distributed on September 15, 1995 to shareholders of record
as of September 1, 1995. Last year, on May 13, 1994, the Company also declared
a four-for-three share split. That share split was distributed on June 22, 1994,
to shareholders of record as of June 1,1994. All share and per share amounts
have been retroactively restated to give effect to both four-for-three splits.
THERMASTOR TECHNOLOGIES, LTD.
During 1995, the Company formed a limited liability company jointly
owned with Battelle, to develop and license the use of thermal technologies to
companies that operate in unrelated and non-competitive industries. To date,
several companies have expressed interest in the technologies. Thus far, no
companies have been licensed to use this jointly developed technology. The
results of operations of ThermaStor, which are not material to the Company, are
included in the Company's operating results.
LISTING ON THE NEW YORK STOCK EXCHANGE
In July 1995, the Company listed its common shares on the New York Stock
Exchange, after many years of having its common shares traded on the American
Stock Exchange. This move to the premier prestige exchange in the world, gives
the Company and its shareholders access to greater visibility in the investment
community.
LIQUIDITY AND CAPITAL RESOURCES
The assets used by the Company in the development, production,
marketing, warehousing and distribution, and sale of its products consist
mainly of current assets such as cash, receivables, inventory, and prepaid
expenses; and net property, plant and equipment. Most of the Company's assets
are current assets. At the end of 1995, 74.4 percent of the Company's assets
were current, compared with 73.7 percent at year end 1994. A substantial
portion of the remaining assets of the Company are net property, plant and
equipment.
At year end 1995, the Company had $43.9 million in net working capital,
comprised of $62.7 million in current assets, less $18.8 million in current
liabilities. At year end 1994, the Company had $39.4 million in net working
capital. In many recent years, most of the increase in net working capital has
been generated from net earnings. During 1995, substantially all of the $4.6
million increase in net working capital was generated through net earnings.
During 1994, net working capital increased by $11.5 million. About $7.4
million of the increase was derived from additional long-term debt that the
Company borrowed in July, 1994 (see also the discussion that follows regarding
long-term borrowings), with the balance of the increase generated from 1994
operations.
The Company ended 1995, with $6.3 million in cash, $15.2 million in net
trade receivables and $31.7 million in inventories. This compares with $2.4
million in cash at year end 1994, $21.0 million in net trade receivables and
$26.1 million in inventories. The increase in cash from 1994 to 1995, as
detailed in the accompanying Consolidated Statements of Cash Flows, largely
reflected the profitable operations of the Company.
The decrease in net trade receivables was due to two principle factors: a)
about $2.2 million of the decrease reflected improved collection of accounts
and the earlier shipment of products in 1995 versus in 1994, and b) about $3.6
million of the decrease resulted from an increase in allowances provided by the
Company at year end 1995 compared with 1994. At year end 1995, the Company
provided about $7.7 million in estimated allowances for products anticipated to
be returned by customers, and for customer promotional activities, plus a
nominal amount for doubtful accounts. This compares with an allowance at year
end 1994 of $4.1 million. The increase in allowances in 1995 compared with
1994, is mainly related to estimated returns and promotions. Inventories at
year end 1995 were $5.6 million greater than at year end 1994, an increase of
about 21.7 percent from year to year. The increase in inventory is slightly
greater than the growth in net sales from 1994 to 1995 of 17.0 percent. The
Company ended 1995 with greater inventory than anticipated as a result of sales
for the year being slightly lower than expected. The Company expects to utilize
substantially all of its inventory to satisfy anticipated 1996 customer demand.
The Company historically has not had a significant exposure to inventory
obsolescence or markdown.
Other receivables at year end 1995 amounted to $3.0 million, compared with
$2.4 million at year end 1994. In both years, other receivables were comprised
primarily of recoverable customs duties, and balances that the Company expects
to recoup from its supplier in the Orient.
The Company traditionally leases most of its facilities. During 1995, the
Company opened a second leased manufacturing facility in Zacatecas, Mexico,
adjacent to its other leased manufacturing plant in Zacatecas, first occupied
in 1993. During 1995, there were no other significant facilities newly leased
by the Company.
<PAGE> 5
Management's Discussion & Analysis of
Financial Condition & Results of Operations
continued
- --------------------------------------------------------------------------------
During 1994, the Company leased a warehouse in Laredo, Texas, for the storage
and distribution of its thermal comfort product line. Also, late in 1994, the
Company leased a facility in Asheboro, North Carolina to combine the operating
facilities of Vesture Corporation into one location. The Company periodically
evaluates its operating capacity and believes that its current facilities will
satisfy its operational needs for the immediately foreseeable future.
Most of the capital expenditures in 1995 and 1994 were for
production machinery and equipment, and computer-related equipment. In December
1995, the Company sold two properties that had not been used in its operations
for many years. These properties had been leased to other companies; the lease
on one property had expired and the lease on the other was about to expire. The
Company received, in the aggregate, about $700 thousand in cash as well as a
note from one of the buyers. Included in other income for 1995, is a gain of
$966 thousand that the Company recognized upon the sale of both properties. For
tax purposes, the gain on the sale of one of the properties has been deferred
and will be recognized on the installment sale method.
The operations of the Company have historically been funded by
internally generated capital. In recent years, the Company has also relied on
its Revolving Credit Agreement ("Revolver") to satisfy any additional capital
requirements, including seasonal working capital needs.
During 1995, the maximum that the Company borrowed under the
Revolver was $38 million compared with a maximum of $26 million in 1994. At the
end of 1994, $2 million in notes were outstanding and classified as short-term
notes in the accompanying Consolidated Financial Statements. There were no such
notes outstanding at the end of 1995.
The Company and its lending banks have modified certain covenants of
the Revolver several times in the last few years in order to meet the
Company's needs. The amendments have typically been to extend the terms of
the Revolver and to modify certain covenants.
On February 28, 1996, the Company and its banks agreed to a
new multiyear Revolver, that extends through 1998, with provisions for
extensions beyond 1998 under certain conditions. The new Revolver contains
covenants typical of agreements of its type and duration. The new Revolver
provides the Company with a seasonally adjusted available line of credit
ranging from $6.0 million to $51.0 million.
In 1994, the Company issued a $15 million, 9.7% Note, due in
2004. The Note contains covenants which the Company believes are normally found
in agreements of this type. The Note and Revolver place restrictions on the
amount of future borrowings the Company may incur, and contain certain other
financial covenants. The Note requires semi-annual interest payments, with
principal repayments commencing in 1998. A portion of the proceeds of the Note
was used to prepay $2.8 million, 10 3/8% Notes due in 1997. The balance of the
proceeds were used to repay long-term borrowings under the Revolver of $5.5
million, outstanding at that time, and to add about $7.4 million to the net
working capital of the Company. The Company is in compliance with all covenants
of the Note, Revolver, and all other debt agreements.
In September, 1995 and in June, 1994, the Company distributed
four-for-three share splits, as discussed above. The Company last paid cash
dividends in 1981. While the Company's various loan agreements, at year end
1995, permitted the payment of dividends and the repurchase of common shares
for treasury, the Company has no current plans to resume the payment of cash
dividends. Subject to certain limitations contained in various loan agreements,
the Company may borrow additional long-term debt, should that be necessary. See
Note 5 to the Consolidated Financial Statements for additional information.
The Company believes that it has a strong balance sheet, with
good financial ratios. At year end 1995, the Company's total capitalization
amounted to $63.0 million. It was comprised of 24.4 percent long-term debt and
capital lease obligations and 75.6 percent shareholders' equity. This compares
with total capitalization of $57.5 million at year end 1994, with a ratio of
28.6 percent long-term and capital lease obligations and 71.4 percent
shareholders' equity. The Company's current ratio, a relationship of current
assets to current liabilities, was 3.34 to 1 at year end 1995, compared with
3.27 to 1 at year end 1994.
ACQUISITION OF VESTURE CORPORATION
In July 1994, the Company purchased all the outstanding stock
of Vesture Corporation, which manufactures and markets thermal comfort
products. The purchase was paid entirely by the issuance of treasury shares of
the Company valued at $5 million. As a result of the purchase, the Company
recognized approximately $4.6 million in goodwill which is being amortized over
a forty-year period. The operating results of Vesture are included in the
Consolidated Financial Statements for the period following the acquisition by
the Company.
<PAGE> 6
Management's Discussion & Analysis of
Financial Condition & Results of Operations
continued
- --------------------------------------------------------------------------------
IMPACT OF MEXICAN PESO DEVALUATION
In late December 1994, the Mexican peso suffered increasing
devaluation pressure on world currency markets. When compared with its value
throughout most of 1994, by early March 1995, the peso had declined in value
versus the US Dollar by approximately 50 percent.
During 1995, the devaluation of the peso had a positive impact
on the Company's manufacturing labor costs by an estimated net amount of $1.5
million, after appropriate offset of wage increases in Mexico. An insignificant
portion of the Company's sales are made in Mexico and those sales are conducted
in dollars. The Company estimates that the devaluation had a negative impact on
sales to its Mexican customers by about $250 thousand, during 1995. The Company
leases its facilities in Mexico, and only a minor portion of its assets are
denominated in pesos. The Company believes that it does not have a sizable
exposure to the loss of value of its assets as a result of any potential
future currency devaluation.
EFFECT OF NEW ACCOUNTING STANDARDS
FINANCIAL ACCOUNTING STANDARDS NO. 121 - "ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF"
During 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
The Statement establishes standards for the impairment of long-lived assets,
and requires that certain assets be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. The Company believes that the adoption of this pronouncement
will not have a significant impact on its financial position or results of
operations.
FINANCIAL ACCOUNTING STANDARDS NO. 123 - "ACCOUNTING FOR STOCK BASE
COMPENSATION"
During 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation." The standard provides that beginning in 1996, companies must
either recognize as compensation expense in the financial statements the cost
of certain stock option plans or disclose in the footnotes to the related
financial statements the proforma impact of such stock based compensation. The
Company believes that the adoption of this pronouncement will not have a
significant impact on its financial position or results of operations.
RESULTS OF OPERATIONS
1995 SALES AND OPERATIONS COMPARED WITH 1994
Net sales for 1995 grew by 17 percent to $136.6 million from $1
16.7 million in 1994. During the same period, net earnings increased by 65
percent to $6.3 million from $3.8 million in 1994. The increase in net sales
came from nearly all the Company's product lines. Most of the increase in net
sales represents growth in volume, with only modest increases in unit pricing.
Gross profit for 1995 also increased. Gross profit amounted to
$60.5 million in 1995, compared with $46.7 million in 1994, an increase of 29.4
percent. The largest portion of the increase in gross profit dollars was
directly related to the 17 percent increase in net sales. As a percent of net
sales, gross profit also increased to 44.3 percent in 1995 from 40.0 percent in
1994. The principle factors accounting for the increase in gross profit percent
were: a) during 1995, the Company's manufacturing operated very efficiently,
without any significant problems similar to those that occurred in 1994, and b)
the devaluation of the Mexican peso in December 1994, helped to lower the costs
of operating the Company's Mexican manufacturing facilities. The Company
estimates that the devaluation of the peso resulted in a net $1.5 million in
reduced manufacturing labor costs, during 1995 when compared with 1994.
Selling, general and administrative expenses also increased in
1995 to $48.6 million, a 23.3 percent increase over the $39.4 million expense
incurred in 1994. Most of the increase related to marketing and sales programs
implemented to support the additional net sales realized during the year.
Included in the marketing program was the use of television advertising for
some channels of distribution. In 1995, the Company utilized television
advertising for the thermal items sold through accessories departments in
department stores. The Company believes that this use of television
advertising was not cost-effective.
As noted in the previous discussion about Liquidity and Capital
Resources, the Company sold two facilities that it had previously leased to
other companies. Included in other income, is a gain of $966 thousand,
recognized in 1995, as a result of the sales.
<PAGE> 7
Management's Discussion & Analysis of
Financial Condition & Results of Operations
continued
- --------------------------------------------------------------------------------
Net interest expense increased also in 1995, to $3.0 million
from $1.7 million in 1994. During 1995, the Company's average short-term
seasonal borrowings amounted to $19.2 million compared with $12.5 million in
1994. The average rate incurred on those borrowings in 1995 was 7.1 percent
compared with an average rate in 1994 of 5.7 percent. In addition, the Company
issued a $15 million 9.7% Note in mid year 1994, that was outstanding for only
half of 1994, but for the entire year of 1995.
For the year, earnings before income taxes amounted to $10.0
million compared with $6.0 million in 1994, a 67.2 percent increase. Net
earnings after taxes increased 65.3 percent in 1995 to $6.3 million from $3.8
million in 1994. After restatement for the four-for-three share split
distributed on September 15, 1995, primary earnings per share in 1995 amounted
to $0.81, a fifty percent increase over 1994 earnings per share of $0.54. For
1995, fully diluted earnings per share amounted to $0.80.
1994 SALES AND OPERATIONS COMPARED WITH 1993
During 1994, net sales grew 15.4 percent to $116.7 million
from $101.2 million during 1993. Substantially all the growth in net sales
occurred in the thermal comfort product line. As a result of unseasonably warm
fall and early winter weather throughout much of the United States, the Company
received order cancellations of approximately $3.5 million of these products
from department store cold weather departments.
Gross profit for the year increased to $46.7 million from $41.4
million in 1993. Gross profit as a percent of net sales declined slightly in
1994 to 40.0 percent, having been 40.9 percent in 1993. The reasons for the
slight decline included the added costs the Company incurred following the
implementation of a fully integrated manufacturing control software system. As
a result of the implementation of this system, which occurred during the second
quarter, the Company experienced delays in production, resulting in lost
slipper production and adverse manufacturing variances, during the final nine
months of the year. Manufacturing variances were also incurred as the Company
increased head-counts to catch up on production. This increased spending
lowered efficiencies and adversely affected gross profit for the year. The lost
production also adversely affected footwear deliveries in 1994.
Selling, general and administrative expenses increased by 14.7
percent during 1994, to $39.4 million from $34.3 million in 1993. Much of the
increase was in the area of marketing, selling and promotional support programs
put into place to support increases in net sales.
Other income in 1994, declined from 1993. A royalty agreement
in place for many years, was terminated at the request of the licensee. After
year end 1994, the Company executed a new agreement, at a reduced royalty,
which replaced the previous agreement.
Net interest expense in 1994, increased to $1.7 million from
$1.5 million in 1993. The primary cause of the increased interest expense was
the increase in the amount of long-term debt that the Company carried since
borrowing $15 million in July 1994. During 1994, the average short-term bank
borrowings amounted to $12.5 million, compared with $14.2 million during 1993.
Interest rates on short-term seasonal borrowings in 1994 averaged 5.7 percent,
compared with 4.9 percent in 1993.
For 1994, earnings before income taxes amounted to $6.0 million, up
slightly from the prior year's pretax earnings of $5.98 million. Net earnings
after taxes amounted to $3.81 million up slightly from the prior year's net
earnings of $3.80 million. Earnings per common share amounted to $0.54 in 1994
compared with $0.57 in 1993. The principle cause of the decline in earnings per
share was the additional shares outstanding following the purchase of Vesture
Corporation. All per share calculations have been retroactively restated to
give effect to the four-for-three share splits distributed to shareholders on
June 22, 1994, and on September 15, 1995.
<PAGE> 8
Consolidated Balance Sheets
R.G. Barry Corporation and Subsidiaries
<TABLE>
<CAPTION>
December 30, 1995 December 31, 1994
(in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (note 5) $ 6,267 $ 2,360
Accounts and note receivable:
Trade (less allowance for doubtful receivables, returns and
promotions of $7,670,000 and $4,100,000, respectively) 15,222 20,972
Other 3,030 2,440
Inventory (note 3) 31,708 26,062
Deferred income taxes (note 8) 4,406 2,919
Prepaid expenses 2,088 1,930
------ ------
Total current assets 62,721 56,683
------ ------
Property, plant and equipment, at cost (notes 4 and 6) 36,964 35,663
Less accumulated depreciation and amortization 22,808 21,878
------ ------
Net property, plant and equipment 14,156 13,785
------ -----
Deferred income taxes (note 8) -- 40
Goodwill (less accumulated amortization of $164,000 and $48,000,
respectively) 4,462 4,578
Note receivable (note 4) 1,079 --
Other assets 1,922 1,875
------ ------
$84,340 $76,961
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current installments of long-term debt and capital lease
obligations (notes 5 and 6) 815 $ 677
Short-term note payable (note 5) -- 2,000
Accounts payable 8,961 8,174
Accrued expenses (note 9) 9,017 6,481
------ ------
Total current liabilities 18,793 17,332
------ ------
Accrued retirement cost, net (note 10) 2,484 2,130
Deferred income taxes (note 8) 62 --
Long-term debt and capital lease obligations, excluding current installments:
Long-term debt (note 5) 15,000 15,700
Capital lease obligations (note 6) 390 745
------ ------
Long-term debt and capital lease obligations 15,390 16,445
------ ------
Total liabilities 36,729 35,907
------ ------
SHAREHOLDERS' EQUITY (NOTES 5, 11 AND 12):
Preferred shares, $1 par value. Authorized 4,000,000 Class A
and 1,000,000 Series I Junior Participating Class B shares;
none issued -- --
Common shares, $1 par value. Authorized 15,000,000 shares;
issued 7,410,000 and 7,389,000 shares (excluding treasury
shares of 557,000 and 537,000, respectively) 7,410 5,543
Additional capital in excess of par value 15,161 16,770
Retained earnings 25,040 18,741
------ ------
Net shareholders' equity 47,611 41,054
------ ------
Commitments and contingencies (notes 6, 13 and 14) $84,340 $76,961
-------
</TABLE>
<PAGE> 9
Consolidated Statements of Earnings
R.G. Barry Corporation and Subsidiaries
<TABLE>
<CAPTION>
December 30, 1995 December 31, 1994 January 1, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C>
Net sales $ 136,561 $ 116,720 $ 101,172
Cost of sales 76,065 69,975 59,795
--------- --------- ---------
Gross profit 60,496 46,745 41,377
Selling, general and administrative expenses 48,557 39,375 34,322
--------- --------- ---------
Operating income 11,939 7,370 7,055
Other income (note 4) 1,060 333 400
Interest expense, net of interest income of $67,000,
$152,000 and $19,000, respectively (2,962) (1,701) (1,474)
--------- --------- ---------
Earnings before income taxes 10,037 6,002 5,981
Income tax expense (note 8) 3,738 2,191 2,183
--------- --------- ---------
Net earnings $ 6,299 $ 3,811 $ 3,798
========= ========= =========
Earnings per common share:
Primary .81 .54 .57
========= ========= =========
Fully diluted .80 .54 .57
========= ========= =========
</TABLE>
Consolidated Statements of Shareholders' Equity
R.G. Barry Corporation and Subsidiaries
<TABLE>
<CAPTION>
Additional
capital in
Common excess of Deferred Retained
shares par value compensation earnings
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Balance at January 2, 1993 $ 3,782 $ 12,652 $ (334) $ 11,132
Net earnings -- -- -- 3,798
Stock options exercised 63 331 -- --
Amortization of deferred compensation (note 11) -- -- 167 --
Purchase of shares (note 11) (30) (199) -- --
Tax benefit associated with the activity
under various stock plans (note 11) -- 121 -- --
----- ----- ----- -----
Balance at January 1, 1994 3,815 12,905 (167) 14,930
Net earnings -- -- -- 3,811
Stock options exercised 84 367 -- --
Amortization of deferred compensation (note 11) -- -- 167 --
Four-for-three stock split (including $8,000 paid
for fractional shares) 1,275 (1,283) -- --
Issuance of shares in the Vesture
Corporation acquisition (note 2) 319 4,681 -- --
Issuance of shares in connection with
the employee stock purchase plan 86 245 -- --
Purchase of shares (note 11) (30) (488) -- --
Tender of shares (note 11) (6) (98) -- --
Tax benefit associated with the activity
under various stock plans (note 11) -- 441 -- --
----- ----- ----- -----
Balance at December 31, 1994 5,543 16,770 -- 18,741
Net earnings -- -- -- 6,299
Stock options exercised 39 155 -- --
Purchase of shares (note 11) (20) (220) -- --
Four-for-three stock split (including $11,000 paid
for fractional shares) 1,848 (1,859) -- --
Tender of shares (note 11) -- (5) -- --
Tax benefit associated with the activity
under various stock plans (note 11) -- 320 -- --
------ ------ ----- -----
</TABLE>
<PAGE> 10
Consolidated Statements of Cash Flows
R.G. Barry Corporation and Subsidiaries
<TABLE>
<CAPTION>
December 30, 1995 December 31, 1994 January 1,1994
- -------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 6,299 $ 3,811 $ 3,798
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Tax benefit associated with the activity under
various stock plans 320 441 121
Depreciation and amortization of property,
plant and equipment 2,158 1,905 1,607
Amortization of goodwill 116 48 --
Deferred income tax provision (credit) (1,385) (178) 105
Loss (gain) on disposal of property, plant and equipment (966) (15) 57
Amortization of deferred compensation -- 167 167
Net (increase) decrease in:
Accounts and note receivable 5,160 (6,157) (5,275)
Inventory (5,646) (7,552) (1,612)
Prepaid expenses (158) (688) (247)
Other assets (47) 58 (939)
Net increase (decrease) in:
Accounts payable 787 2,903 1,677
Accrued expenses 2,536 348 (206)
Accrued retirement cost, net 354 (158) 620
-------- -------- --------
Net cash provided by (used in) operating activities 9,528 (5,067) (127)
-------- -------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (3,363) (2,234) (1,034)
Proceeds from disposal of property, plant and equipment 721 14 10
-------- -------- --------
Net cash used in investing activities (2,642) (2,220) (1,024)
-------- -------- --------
Cash flows from financing activities:
Repayment of long-term debt, capital lease obligations
and short-term note payable (2,917) (6,996) (1,839)
Proceeds from borrowing debt -- 15,000 --
Proceeds from stock options exercised 194 782 394
Purchase of common shares for treasury (256) (622) (229)
-------- -------- --------
Net cash provided by (used in) financing activities (2,979) 8,164 (1,674)
-------- -------- --------
Net increase (decrease) in cash 3,907 877 (2,825)
Cash at beginning of year 2,360 1,483 4,308
-------- -------- --------
Cash at end of year $ 6,267 $ 2,360 $ 1,483
======== ======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 2,930 $ 1,351 $ 1,633
======== ======== ========
Income taxes paid $ 1,740 $ 1,770 $ 1,853
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 11
Notes to Consolidated Financial Statements
R. G. Barry Corporation and Subsidiaries
- --------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Operations
R.G. Barry Corporation is a United States-based multinational
corporation. R.G. Barry's principal line of business is comfort
products for at and around the home. The predominant market for the
Company's products is North America. Products are sold primarily to
department and discount stores. In 1995, two customers accounted for
approximately 16% and 11% of the Company's net sales. In 1994, two
customers accounted for approximately 15% and 11% of the Company's
net sales. In 1993, two customers accounted for approximately 15%
and 10% of the Company's net sales.
(b) Principles of Consolidation and Industry Information
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.
(c) Cash Equivalents
Investments with maturities of three months or less at the date of
issuance are considered cash equivalents.
(d) Inventory
Inventory is valued at the lower of cost or market. Substantially
all ending inventory costs in 1993 are determined on the last in,
first out (LIFO) basis and the remainder are determined on the first
in, first out (FIFO) basis. Approximately 69% and 76% of the 1995
and 1994, respectively, ending inventory costs are determined on the
LIFO basis.
(e) Depreciation and Amortization
Depreciation and amortization have been provided substantially
on the double declining-balance method over the estimated useful
lives of the assets prior to September 30, 1991. On or after October
1, 1991, the Company adopted the straight-line method of
depreciation on its machinery and equipment for all property
acquired after October 1, 1991. Similar equipment placed in service
prior to October 1, 1991 continues to be depreciated by the double
declining-balance method.
(f) Revenue Recognition
The Company recognizes revenue when the goods are shipped to
customers. The Company has established programs which, in certain
circumstances, enable its customers to return product. The effect
of these programs is estimated and a returns allowance is provided.
(g) Income Taxes
Effective January 3, 1993, the Company adopted the Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. Statement 109
requires deferred tax assets and liabilities be recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the effect
on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
The cumulative effect of that change was immaterial to the 1993
consolidated statement of earnings.
(h) Preferred Shares
Each Class A Preferred share is entitled to one-tenth of one vote,
while the Class B Series I Junior Participating shares are entitled
to ten votes. The preferred shares are entitled to a preference in
liquidation. The Series I Junior Participating Class B Preferred
shares are entitled to cumulative dividends at a quarterly rate of
five cents per share. None of these shares have been issued.
(i) Employee Retirement Plans
Retirement plan expense is determined in accordance with Statement of
Financial Accounting Standards No. 87, Employers' Accounting for
Pensions (FAS 87).
(j) Per-Share Information
The computation of earnings for common and dilutive common equivalent
shares (primary) for 1995 is based on the weighted average number of
outstanding common shares during the period plus, when their effect
is dilutive, common stock equivalents consisting of certain shares
subject to stock options and the stock purchase plan. Earnings per
common share assuming full dilution (fully diluted) is based on the
market price of the Company's common stock as of the end of the
fiscal year.
The primary weighted average number (in thousands) of common and
equivalent shares outstanding was 7,752 in 1995. The fully diluted
weighted average number of common and equivalent shares outstanding
(in thousands) was 7,889.
<PAGE> 12
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
- --------------------------------------------------------------------------------
Earnings per share, both primary and fully diluted, for 1994 and 1993
are based on the averaged number of outstanding common shares as
the dilutive effect of equivalent common shares was not material.
Average outstanding common shares were 7,058 and 6,700 for 1994 and
1993, respectively.
Effective September 15, 1995, the Board of Directors of the Company
approved a four-for-three share split, distributed in the form of a
share dividend, to shareholders of record on September 1,1995. In
addition, on June 22, 1994, the Board of Directors of the Company
approved a four-for-three share split, distributed in the form of a
share dividend, to shareholders of record on June 1, 1994. The stock
splits both specifically excluded treasury shares. All references to
the number of shares and per-share amounts in the financial
statements have been restated to reflect the four-for-three splits.
(k) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Significant estimates made
by management include accounts receivable and inventory valuation
reserves, realizability of the deferred tax assets, and the
evaluation of certain contingent liabilities.
(l) Fair Value of Financial Instruments
Cash, accounts receivable, accounts payable, accrued liabilities, and
the subordinated debentures are reflected in the financial statements
at fair value because of the short-term maturity of those
instruments. The fair value of the Company's long-term debt is
disclosed in note 7.
(m) Goodwill
The cost in excess of the fair value of net assets acquired
(goodwill) is amortized on a straight-line basis over 40 years.
(n) New Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, and Statement 123, Accounting for
Stock-Based Compensation. Both statements will become effective in
1996. The Company believes that the adoption of these pronouncements
will not have a significant impact on financial position or results
of operations.
(o) Advertising
The Company expenses the costs of advertising as incurred. For the
years ended December 30, 1995, December 31, 1994 and January 1, 1994,
advertising expenses approximated $6,056,000, $4,517,000, and
$4,024,000, respectively.
(p) Reclassification
Certain amounts in the 1994 financial statements have been
reclassified to conform to the 1995 presentation.
(2) ACQUISITION
Effective July 14, 1994, the Company acquired all of the outstanding
stock of Vesture Corporation, formerly of Randleman, North Carolina. The
acquisition has been accounted for by the purchase method of accounting.
The purchase price was paid by the issuance of approximately 425,000
common shares of the Company held in treasury, valued at $5,000,000.
(3) INVENTORY
If the FIFO method had been used to value inventory, inventory would
have been $3,050,000, $2,669,000, and $2,915,000 higher than that reported
at the end of 1995, 1994 and 1993, respectively. Because LIFO inventory is
valued using the dollar value method, it is impracticable to separate
inventory values between raw materials, work-in-process and finished
goods.
(4) PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
December 30, December 31, Estimated
1995 1994 life in years
- -----------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Land and improvements $ 490 $ 572 8-15
Buildings and improvements 4,308 5,943 40-50
Machinery and equipment 24,580 22,456 3-10
Leasehold improvements 6,780 6,221 5-20
=====
Construction in progress 806 471
------- -------
$36,964 $35,663
======= =======
</TABLE>
<PAGE> 13
Notes to Consolidated Financial Statements
R. G. Barry Corporation and Subsidiaries
continued
In December 1995, the Company sold two properties that it had previously
leased to other companies. The properties, located in Arkansas and Texas
were sold at a gain of $966,000. For tax purposes the gain on one property,
where the Company carries a mortgage note receivable from the purchaser,
has been deferred and accounted for as an installment sale.
See note 6 for a summary of property and equipment, included above,
representing capitalized leases.
(5) LONG-TERM DEBT AND RESTRICTIONS
<TABLE>
<CAPTION>
December 30, December 31,
1995 1994
---------------------------
(in thousands)
<S> <C> <C>
9.7% note, due July 2004 $15,000 $15,000
9 3/4% Subordinated Sinking Fund Debentures due April 1996 700 1,197
------- -------
Total long-term debt 15,700 16,197
Less current installments 700 497
------- -------
Long-term debt, excluding current installments $15,000 $15,700
======= =======
</TABLE>
In July 1994, the Company issued an unsecured $15 million 9.7% note, due
July 2004. The note requires semi-annual interest payments, with annual
principal repayments commencing in 1998.
In December 1995, the Company amended the unsecured revolving credit
agreement with its banks. The new agreement provides the Company with a
seasonally adjusted amount of credit that has a minimum availability of
$5.5 million and a peak availability of $45 million, with interest at
variable rates (8.5% at the end of 1994). At December 30, 1995 and December
31, 1994, $0 and $2 million was outstanding.
The indentures related to the unsecured Subordinated Sinking Fund
Debentures require an annual payment to the trustee sufficient to redeem a
principal amount of $700,000 in 1996. The 9 3/4% debentures are redeemable
in whole or in part without premium.
Under the most restrictive covenants of the various loan agreements, the
Company is (1) required to maintain a seasonally adjusted minimum working
capital, as defined; (2) required to maintain a minimum seasonally adjusted
tangible net worth, as defined; (3) required to restrict the annual
acquisition of fixed assets; and (4) restricted with regard to the amount
of additional borrowings, purchase of treasury shares and payment of
dividends. At December 30,1995, approximately $12 million of retained
earnings was available for the payment of cash dividends and the purchase
of treasury shares (see also note 11). In management's opinion, there were
no covenant violations during fiscal 1995 and 1994.
The Company maintains compensating cash balances, which are not legally
restricted, to defray the costs of other banking services provided.
(6) LEASED ASSETS AND LEASE COMMITMENTS
The Company has a lease agreement with a local government which issued
Industrial Development Revenue Bonds to construct and purchase office and
plant facilities. The lease expires in 1999, at which time the Company has
the right to acquire (at a nominal amount) the property under this lease
agreement. The Company also has the option to acquire the leased assets
prior to the expiration of the lease for an amount approximating the
outstanding bonds, plus accrued interest. The outstanding bonds bear
interest at 6.5%.
At December 30, 1995, minimum lease payments due under this capital lease
are:
<TABLE>
<CAPTION>
Fiscal year AMOUNT
- ----------------------------------------------
(in thousands)
<S> <C>
1996 $148
1997 150
1998 147
1999 144
====
Total minimum lease payments 589
Less amount representing interest 84
----
Present value of minimum lease payments $505
====
</TABLE>
<PAGE> 14
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
The present value of minimum capital lease payments are reflected in the
balance sheets:
<TABLE>
<CAPTION>
DECEMBER 30, 1995 December 31, 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
(in thousands)
Current $115 $180
Noncurrent 390 745
---- ----
$505 $925
==== ====
</TABLE>
These leased assets are capitalized in property, plant and equipment:
<TABLE>
<CAPTION>
DECEMBER 30, 1995 December 31, 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
(in thousands)
Land and improvements $ 392 $ 424
Buildings and improvements 2,478 3,067
Machinery and equipment -- 287
------ ------
2,870 3,778
Less accumulated amortization 1,602 2,324
------ ------
Net book value $1,268 $1,454
====== ======
</TABLE>
The Company occupies certain manufacturing, warehousing, operating and sales
facilities and uses certain equipment under other cancelable and noncancelable
operating lease arrangements. A summary of the noncancelable operating lease
commitments at December 30, 1995 follows:
<TABLE>
<CAPTION>
Fiscal year AMOUNT
(in thousands)
- ----------------------------------------------------------------------------
<S> <C>
1996 $ 3,278
1997 2,698
1998 2,101
1999 1,805
2000 1,038
2001-2005 2,551
2006-2007 949
-------
$14,420
=======
</TABLE>
Substantially all of these operating lease agreements are renewable for periods
of 3 to 15 years and require the Company to pay insurance, taxes and
maintenance expenses. Rent expense under cancelable and noncancelable operating
lease arrangements in 1995, 1994 and 1993 amounted to $4,569,000, $3,480,000,
and $2,619,000, respectively.
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has determined the fair value of its long-term debt as follows:
9.7% Note
---------
The fair value of the note was determined based upon the present value of
expected cash flows considering expected maturities and using current
interest rates available to the Company for borrowings with similar terms.
The carrying amounts and estimated fair value of the Company's long-term debt
at December 30, 1995, and December 31, 1994 are:
<TABLE>
<CAPTION>
DECEMBER 1995 CARRYING AMOUNTS FAIR VALUE
------------- ---------------- ----------
<S> <C> <C>
9.7% note $15,000,000 $15,900,000
DECEMBER 1994
-------------
9.7% note $15,000,000 $14,400,000
</TABLE>
<PAGE> 15
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
- -------------------------------------------------------------------------------
(8) INCOME TAXES
------------
Effective January 3, 1993, the first day of fiscal 1993, the Company
adopted Financial Accounting Standards Board Statement 109, Accounting
for Income Taxes (FASB 109). The cumulative effect of this change
determined as of January 3, 1993, had no material impact on the
consolidated statement of earnings.
<TABLE>
<CAPTION>
Income tax expense (benefit) consists of:
1995 1994 1993
--------------------------------
(in thousands)
<S> <C> <C> <C>
Current expense:
Federal $ 4,483 $ 2,083 $ 1,714
Foreign 60 50 129
State 580 236 235
------- ------- -------
5,123 2,369 2,078
Deferred federal expense (benefit) (1,385) (178) 105
------- ------- -------
$ 3,738 $ 2,191 $ 2,183
======= ======= =======
</TABLE>
The differences between income taxes computed by applying the statutory federal
income tax rate (34%) and income tax expense in the consolidated financial
statements are:
<TABLE>
<CAPTION>
1995 1994 1993
----------------------------
(in thousands)
<S> <C> <C> <C>
Computed "expected" tax expense $3,280 $ 2,041 $ 2,034
State income taxes, net of federal income taxes 383 156 155
Foreign income tax expense 60 50 129
Adjustment of estimated income tax liabilities
for prior years -- (181) (252)
Other, net 15 125 117
------- ------- -------
$ 3,738 $ 2,191 $ 2,183
======= ======= =======
</TABLE>
The tax effect of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities as of December 30, 1995
and December 31,1994 are presented below:
<TABLE>
<CAPTION>
December 30, 1995 December 31, 1994
----------------------------------------
(in thousands)
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowances for returns,
promotions and doubtful accounts $2,915 $1,555
Inventories, principally due to additional costs inventoried for
tax purposes 840 599
Package design costs not currently deductible for tax purposes 367 284
Certain accounting accruals, including such items as
self-insurance costs, vacation costs, and others, not currently
deductible for tax purposes 284 481
Pension costs not currently deductible for tax purposes 849 742
------ ------
Total deferred tax assets 5,255 3,661
Deferred tax liabilities --
Basis differences and differing methods of depreciation
for book and tax purposes 521 702
Difference in gain recognition on sale of property, plant,
and equipment 390 --
------ ------
Total deferred tax liabilities 911 702
------ ------
Net deferred tax assets $4,344 $2,959
====== ======
</TABLE>
<PAGE> 16
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
- --------------------------------------------------------------------------------
(9) ACCRUED EXPENSES
<TABLE>
<CAPTION>
December 30, 1995 December 31, 1994
-------------------------------------
(in thousands)
<S> <C> <C>
Salaries and wages $ 774 $ 893
Income taxes 5,283 2,222
Other 2,960 3,366
------ ------
$9,017 $6,481
====== ======
</TABLE>
(10) EMPLOYEE RETIREMENT PLANS
The Company and its domestic subsidiaries have noncontributory
retirement plans for the benefit of salaried and nonsalaried employees
(the Plans).
The employees covered under the Plans are eligible to participate upon
the completion of one year of service. Salaried retirement plan benefits
are based upon a formula applied to a participant's final average salary
and years of service, which is reduced by a certain percentage of the
participant's social security benefits. Nonsalaried retirement plan
benefits are based on a fixed amount for each year of service. The Plans
provide reduced benefits for early retirement. The Company intends to fund
the minimum amounts required under the Employee Retirement Income Security
Act of 1974.
The funded status of the salaried retirement plan and the prepaid
retirement cost recognized at December 30, 1995 and December 31, 1994 are:
<TABLE>
<CAPTION>
December 30, 1995 December 31, 1994
--------------------------------------
(in thousands) (in thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefit of
$7,353,000 and $6,550,000, respectively $ 7,620 $ 6,744
Projected effect of increase in compensation levels 1,411 1,178
-------- --------
Projected benefit obligation (PBO) 9,031 7,922
Plan assets at fair value 11,025 9,520
-------- --------
Plan assets in excess of PBO 1,994 1,598
Unrecognized net loss from past experience different from that
assumed and effects of changes in actuarial assumptions 351 1,076
Unamortized net asset existing at the date of adoption of
FAS No. 87, which is being amortized over approximately 12 years (538) (688)
Unrecognized prior service cost (741) (853)
-------- --------
Prepaid retirement cost recognized in the accompanying
consolidated balance sheets $ 1,066 $ 1,133
======== ========
</TABLE>
The funded status of the nonsalaried retirement plan and the accrued retirement
cost recognized at December 30, 1995 and December 31, 1994 are:
<TABLE>
<CAPTION>
December 30, 1995 December 31, 1994
-----------------------------------------
(in thousands)
<S> <C> <C>
Actuarial present value of benefit obligations--
Accumulated benefit obligation, including vested benefit of
$9,065,000 and $8,291,000, respectively $ 9,262 $ 8,442
Plan assets at fair value 8,386 7,442
------- -------
Accumulated benefit obligation greater than plan assets (876) (1,000)
Unrecognized net gain from past experience different from that assumed and
effects of changes in actuarial assumptions (592) (387)
Unamortized net asset existing at the date of adoption of
FAS No.87, which is being amortized over approximately 12 years (167) (266)
Unrecognized prior service cost 394 488
------- -------
Accrued retirement cost recognized in the accompanying
consolidated balance sheets $(1,241) $(1,165)
======= =======
</TABLE>
<PAGE> 17
Notes to Consolidated Financial Statements
R. G. Barry Corporation and Subsidiaries
continued
- -------------------------------------------------------------------------------
The Company also has a Supplemental Retirement Plan (SRP) for certain officers
and other key employees of the Company as designated by the Board of Directors.
The SRP is unfunded, noncontributory, and provides for the payment of monthly
retirement benefits. Benefits are based on a formula applied to the recipients'
final average monthly compensation, reduced by a certain percentage of their
social security benefits.
The funded status of the SRP and the accrued retirement cost recognized at
December 30, 1995 and December 31, 1994 are:
<TABLE>
<CAPTION>
December 30, 1995 December 31, 1994
----------------------------------------
(in thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefit of
$2,633,712 and $2,172,000, respectively $ 2,676 $ 2,212
Projected effect of increase in compensation levels 482 526
------- -------
Projected benefit obligation (PBO) 3,158 2,738
Plan assets at fair value -- --
------- -------
PBO in excess of plan assets (3,158) (2,738)
Unrecognized net loss (gain) from past experience different from
that assumed and effects of changes in actuarial assumptions 69 (194)
Unamortized net obligation existing at the date of adoption of
FAS No. 87, which is being amortized over approximately 12 years 266 315
Unrecognized prior service cost 371 414
Adjustment required to recognize minimum liability (249) (34)
------- -------
Accrued retirement cost recognized in the accompanying
consolidated balance sheets $(2,701) $(2,237)
======= =======
</TABLE>
The weighted-average discount rate and the rate of increase in future
compensation levels (salaried and SRP plans only) used in determining the
actuarial present value of the PBO for the Plans was 7.50% in 1995 and
8.0% in 1994, and 5% in 1995 and 1994, respectively. The expected
long-term rate of return on assets for the Plans was 9.25% and 9% in 1995
and 1994, respectively. The Plans' assets consist primarily of stocks and
corporate bonds listed on national exchanges, and U.S. government
obligations. The components of net pension cost for the salaried,
nonsalaried and supplemental retirement plans were:
<TABLE>
<CAPTION>
1993 1994 1993
----------------------------
(in thousands)
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 572 $ 643 $ 509
Interest cost on PBO 1,498 1,397 1,262
Actual return on plan assets (1,384) (1,355) (1,253)
Net amortization and deferral (63) (166) (200)
------- ------- -------
$ 623 $ 519 $ 318
======= ======= =======
</TABLE>
The Company adopted an Employee Stock Ownership Plan (ESOP) in 1986. The
rate of contribution to the ESOP is discretionary with the Company's Board
of Directors. There was no charge to earnings for the ESOP in 1995, 1994
and 1993.
The Company adopted a 401(k) plan effective September 1, 1995. Salaried
and nonsalaried employees contribute a percentage, as defined, of their
compensation per pay period and the Company contributes up to 50% of the
first 2% of each participant's compensation contributed to this plan. The
Company's contribution to the 401(k) plan for the year ended December 30,
1995 was $57,000.
(11) SHAREHOLDERS' EQUITY
The Company has various stock option plans, which have granted incentive
stock options (ISO's) and nonqualified stock options exercisable for
periods of up to 10 years from date of grant at prices not less than 100%
of the fair market value at date of grant. Stock appreciation rights may be
issued on certain options subject to certain limitations. There were no
rights outstanding at December 30, 1995, December 31, 1994 or January 1,
1994. Information with respect to options under these plans is:
<PAGE> 18
Notes to Consolidated Financial Statements
R. G. Barry Corporation and Subsidiaries
continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
ISO Nonqualified
number number Option price
Qualified plans of shares of shares per share
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at January 2, 1993 501,400 -- $ 1.97 - 4.92
Granted 218,600 -- 4.01 - 4.41
Exercised (112,500) -- 1.97 - 4.92
Canceled (56,500) -- 2.32 - 4.92
------- ------ --------------
Outstanding at January 1, 1994 551,000 -- 1.97 - 4.92
Granted 323,300 68,100 8.72 - 17.54
Exercised (131,900) -- 2.12 - 4.92
Canceled (18,800) -- 2.32 - 10.54
------- ------ --------------
Outstanding at December 31, 1994 723,600 68,100 1.97 - 17.54
Granted 59,900 6,200 8.16 - 17.88
Exercised (46,700) -- 1.97 - 10.55
Canceled (13,800) -- 2.32 - 15.75
------- ------ --------------
Balance outstanding at December 30, 1995 723,000 74,300 $ 1.97 - 17.88
======= ====== ==============
Options exercisable at December 30, 1995 253,300 18,000
======= ======
Remaining shares available for grant at
December 30, 1995 238,000
=======
</TABLE>
At December 30, 1995, December 31, 1994 and January 1, 1994, the options
outstanding under these plans were held by 84, 81, and 69 employees,
respectively, and had expiration dates ranging from 1996 to 2005.
Pursuant to the terms of the various stock option plans, optionees may tender
shares previously owned for a minimum period in exchange for the exercise of
options under the plans. The 250 and 10,000 treasury shares acquired by the
Company in 1995 and 1994 were acquired in conjunction with the exercise of
options.
The Company has an employee stock purchase plan in which approximately
600 employees are eligible to participate. Under the terms of the Plan,
employees receive options to acquire common shares at the lower of 85% of the
fair market value on their enrollment date or the termination date of the plan
term.
<TABLE>
<CAPTION>
Shares
subscribed
----------
<S> <C>
Balance at January 2, 1993 134,500
Subscriptions 4,900
Purchases --
Cancellations (22,100)
-------
Balance at January 1, 1994 117,300
Subscriptions 55,200
Purchases (113,100)
Cancellations (4,800)
-------
Balance at December 31, 1994 54,600
Subscriptions 2,500
Purchases --
Cancellations (8,200)
-------
Balance at December 30, 1995 48,900
=======
</TABLE>
At December 30, 1995 the option to purchase the 48,900 shares is held at 258
employees at $13.86 to $14.66 per share.
The Company previously issued 533,000 restricted common shares pursuant to an
employment agreement with a key executive. Prior to the lapse of restrictions,
these shares could not be disposed of or transferred by the holder, however,
the shares were entitled to full voting and dividend rights. The restrictions
lapsed, with certain exemptions, at the rate of 10% per year. Without regard to
any debt covenant limitations, the Company was obligated under the agreement to
purchase up to 50% of the unrestricted shares presented by the executive within
90 days of the date the restrictions lapsed. In March 1995, March 1994, and
January 1993, the Company purchased 27,000 shares, 53,000 shares, and 53,000
shares, respectively, presented by the executive at a price of $12.00 per
share, $17.25 per share, and $7.63 per share, respectively, which represented
the market value of the shares on the date of purchase. During 1995, the final
restrictions lapsed,
<PAGE> 19
Notes to Consolidated Financial Statement
R.G. Barry Corporation and Subsidiaries
continued
- -------------------------------------------------------------------------------
and the Company fulfilled its final obligation, under the agreement, to
purchase any such shares. Charges to earnings relating to this plan were
zero in 1995, $167,000 in 1994, and $167,000 in 1993. The agreement also
provides for separation compensation in the certain circumstances and in
the event of early termination.
In the event that shares received through the various stock plans are sold
within one year of exercise, the Company is entitled to a tax deduction.
The deduction is not reflected in the consolidated statement of earnings
but is reflected as an increase in additional capital in excess of par
value.
(12)PREFERRED SHARE PURCHASE RIGHTS
The Company's Board of Directors previously declared a dividend of one
Preferred Share Purchase Right (Right) on each outstanding common share of
the Company. Under certain conditions, each Right may be exercised to
purchase a fractional share of Series I Junior Participating Class B
Preferred Shares, par value $1 per share, at an initial exercise price of
$20. The Rights may not be exercised until the earlier of 15 days after a
public announcement that a person or group has acquired, or obtained the
right to acquire, 25% or more of the Company's outstanding common shares
(Share Acquisition Date) or 10 business days after the commencement of a
tender or exchange offer that would result in a person or group owning 30%
or more of the Company's outstanding common shares.
In the event that, at any time following the Share Acquisition Date, the
Company is acquired in a merger or other business combination transaction
in which the Company is not the surviving corporation or 50% or more of the
Company's assets or earning power is sold or transferred, each holder of a
Right will be entitled to buy the number of shares of common stock of the
acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right.
If, after the Share Acquisition Date, the Company is the surviving
corporation in a merger with the acquiring person or group, or if a person
or group acquires 30% or more of the Company's common shares under certain
circumstances, then each holder of a Right will be entitled to buy common
shares of the Company having a market value of two times the exercise
price of the Right.
The Rights, which do not have any voting rights, expire on March 16,1998,
and may be redeemed by the Company at a price of $0.01 per Right at any
time until 15 days following the Share Acquisition Date.
(13)RELATED PARTY OBLIGATION
The Company and a key executive have entered into an agreement pursuant to
which the Company is obligated for up to two years after the death of the
key executive to purchase, if the estate elects to sell, up to $4 million
of the Company's common shares, at their fair market value on the date of
purchase, held by the key executive. To fund its potential obligation to
purchase such shares, the Company has purchased a $5-million life insurance
policy on the key executive, the cash surrender value of which is included
in other assets in the accompanying balance sheet. In addition, for a
period of 24 months following the key executive's death, the Company will
have a right of first refusal to purchase any shares of the Company owned
by the key executive at the time of his death if his estate elects to sell
such shares. The Company would have the right to purchase such shares on
the same terms and conditions as the estate proposes to sell such shares.
(14)CONTINGENT LIABILITIES
In 1994, the Company and several of its officers and directors were named
as defendants in three related purported class action lawsuits, pending in
the United States District Court for the Southern District of Ohio, Eastern
Division. The District Court subsequently consolidated these three class
actions into a single case. The complaint alleges that the defendants
violated federal securities laws by making false and misleading statements,
engaged in common law fraud and deceit by making material misstatements and
violated state law by making negligent misrepresentations. Plaintiffs seek
damages in favor of plaintiffs and all other members of the purported class
in such amounts (which are not quantified in their complaint) as the court
determines have been sustained by them. The Company believes that these
actions are without merit and that it has meritorious defenses. The Company
intends to defend itself vigorously against these actions. Management does
not expect the resolution of this matter to have a material adverse effect
on the Company's financial position or results or operations.
The Company has been named as defendant in various lawsuits arising from
the ordinary course of business. In the opinion of management, the
resolution of such matters is not expected to have a material adverse
effect on the Company's financial position or results of operations.
<PAGE> 20
Independent Auditors' Report
R. G. Barry Corporation and Subsidiaries
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
R.G. Barry Corporation:
We have audited the accompanying consolidated balance sheets of R.G. Barry
Corporation and subsidiaries (the Company) as of December 30, 1995, and
December 31, 1994, and the related consolidated statements of earnings,
shareholders' equity, and cash flows for each of the fiscal years in the
three-year period ended December 30, 1995. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of R.G. Barry
Corporation and subsidiaries as of December 30, 1995 and December 31, 1994, and
the results of their operations and their cash flows for each of the fiscal
years in the three-year period ended December 30, 1995, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 21, 1996
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
R. G. Barry Corporation:
We consent to incorporation by reference in Registration Statement Nos. 2-63741,
2-92577, 2-92578, 33-3586, 33-23567, 33-23568, 33-28343, 33-38495, 33-46904,
33-67594, 33-67596, 33-77640, 33-81820 and 33-83252 on Forms S-8 and S-3 of R.
G. Barry Corporation of our reports dated February 21, 1996, relating to the
consolidated balance sheets of R. G. Barry Corporation and subsidiaries as of
December 30, 1995 and December 31, 1994, and the related consolidated statements
of earnings, shareholders' equity and cash flows and related financial statement
schedules for each of the fiscal years in the three-year period ended December
30, 1995, which reports appear in the 1995 annual report on Form 10-K of R. G.
Barry Corporation.
KPMG Peat Marwick LLP
Columbus, Ohio
March 28, 1996
<PAGE> 1
EXHIBIT 24
----------
POWERS OF ATTORNEY
<PAGE> 2
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of R. G. Barry Corporation, an Ohio corporation (the "Company"), which
is about to file with the Securities and Exchange Commission, Washington, D.C.,
under the provisions of the Securities Exchange Act of 1934, as amended, the
Annual Report on Form 10-K for the fiscal year ended December 30, 1995, hereby
constitutes and appoints Richard L. Burrell and Michael S. Krasnoff as his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign both the Annual Report on Form 10-K and any and all
amendments and documents related thereto, and to file the same, and any and all
exhibits, financial statements and schedules relating thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
and the New York Stock Exchange, and grants unto each of said attorneys-in-fact
and agents, and substitute or substitutes, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, and hereby ratifies and confirms all things that each of said
attorneys-in-fact and agents, or any of them or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
11th day of March, 1996.
/s/ Gordon Zacks
----------------------
Gordon Zacks
<PAGE> 3
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of R. G. Barry Corporation, an Ohio corporation (the "Company"), which
is about to file with the Securities and Exchange Commission, Washington, D.C.,
under the provisions of the Securities Exchange Act of 1934, as amended, the
Annual Report on Form 10-K for the fiscal year ended December 30, 1995, hereby
constitutes and appoints Richard L. Burrell and Michael S. Krasnoff as his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign both the Annual Report on Form 10-K and any and all
amendments and documents related thereto, and to file the same, and any and all
exhibits, financial statements and schedules relating thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
and the New York Stock Exchange, and grants unto each of said attorneys-in-fact
and agents, and substitute or substitutes, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, and hereby ratifies and confirms all things that each of said
attorneys-in-fact and agents, or any of them or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
11th day of March, 1996.
/s/ Richard L. Burrell
-----------------------------
Richard L. Burrell
<PAGE> 4
POWER OF ATTORNEY
------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of R. G. Barry Corporation, an Ohio corporation (the "Company"), which
is about to file with the Securities and Exchange Commission, Washington, D.C.,
under the provisions of the Securities Exchange Act of 1934, as amended, the
Annual Report on Form 10-K for the fiscal year ended December 30, 1995, hereby
constitutes and appoints Richard L. Burrell and Michael S. Krasnoff as his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign both the Annual Report on Form 10-K and any and all
amendments and documents related thereto, and to file the same, and any and all
exhibits, financial statements and schedules relating thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
and the New York Stock Exchange, and grants unto each of said attorneys-in-fact
and agents, and substitute or substitutes, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, and hereby ratifies and confirms all things that each of said
attorneys-in-fact and agents, or any of them or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
18th day of March, 1996.
/s/ Christian Galvis
---------------------------
Christian Galvis
<PAGE> 5
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of R. G. Barry Corporation, an Ohio corporation (the "Company"), which
is about to file with the Securities and Exchange Commission, Washington, D.C.,
under the provisions of the Securities Exchange Act of 1934, as amended, the
Annual Report on Form 10-K for the fiscal year ended December 30, 1995, hereby
constitutes and appoints Richard L. Burrell and Michael S. Krasnoff as his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign both the Annual Report on Form 10-K and any and all
amendments and documents related thereto, and to file the same, and any and all
exhibits, financial statements and schedules relating thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
and the New York Stock Exchange, and grants unto each of said attorneys-in-fact
and agents, and substitute or substitutes, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, and hereby ratifies and confirms all things that each of said
attorneys-in-fact and agents, or any of them or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
11th day of March, 1996.
/s/ Charles E. Ostrander
--------------------------
Charles E. Ostrander
<PAGE> 6
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of R. G. Barry Corporation, an Ohio corporation (the "Company"), which
is about to file with the Securities and Exchange Commission, Washington, D.C.,
under the provisions of the Securities Exchange Act of 1934, as amended, the
Annual Report on Form 10-K for the fiscal year ended December 30, 1995, hereby
constitutes and appoints Richard L. Burrell and Michael S. Krasnoff as his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign both the Annual Report on Form 10-K and any and all
amendments and documents related thereto, and to file the same, and any and all
exhibits, financial statements and schedules relating thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
and the New York Stock Exchange, and grants unto each of said attorneys-in-fact
and agents, and substitute or substitutes, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, and hereby ratifies and confirms all things that each of said
attorneys-in-fact and agents, or any of them or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
12th day of March, 1996.
/s/ Philip G. Barach
------------------------------
Philip G. Barach
<PAGE> 7
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of R. G. Barry Corporation, an Ohio corporation (the "Company"), which
is about to file with the Securities and Exchange Commission, Washington, D.C.,
under the provisions of the Securities Exchange Act of 1934, as amended, the
Annual Report on Form 10-K for the fiscal year ended December 30, 1995, hereby
constitutes and appoints Richard L. Burrell and Michael S. Krasnoff as his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign both the Annual Report on Form 10-K and any and all
amendments and documents related thereto, and to file the same, and any and all
exhibits, financial statements and schedules relating thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
and the New York Stock Exchange, and grants unto each of said attorneys-in-fact
and agents, and substitute or substitutes, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, and hereby ratifies and confirms all things that each of said
attorneys-in-fact and agents, or any of them or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
12th day of March, 1996.
/s/ Harvey M. Krueger
------------------------------
Harvey M. Krueger
<PAGE> 8
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of R. G. Barry Corporation, an Ohio corporation (the "Company"), which
is about to file with the Securities and Exchange Commission, Washington, D.C.,
under the provisions of the Securities Exchange Act of 1934, as amended, the
Annual Report on Form 10-K for the fiscal year ended December 30, 1995, hereby
constitutes and appoints Richard L. Burrell and Michael S. Krasnoff as his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign both the Annual Report on Form 10-K and any and all
amendments and documents related thereto, and to file the same, and any and all
exhibits, financial statements and schedules relating thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
and the New York Stock Exchange, and grants unto each of said attorneys-in-fact
and agents, and substitute or substitutes, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, and hereby ratifies and confirms all things that each of said
attorneys-in-fact and agents, or any of them or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
12th day of March, 1996.
/s/ Edward M. Stan
----------------------------
Edward M. Stan
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0
0
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