<PAGE> 1
UNITED STATES
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
For the fiscal year ended January 3, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 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
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(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:
<TABLE>
<S> <C>
Title of each class Name of each exchange on which registered
- -------------------------------------------- -----------------------------------------
Common Shares, Par Value $1.00 New York Stock Exchange
(9,593,488 outstanding as of March 16, 1998)
Series I Junior Participating New York Stock Exchange
Class A Preferred Share Purchase Rights
</TABLE>
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
16, 1998, the aggregate market value of the Common Shares of the Registrant held
by non-affiliates on that date was $115,686,219.
Documents Incorporated by Reference:
(1) Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended January 3, 1998, 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 13, 1998, are
incorporated by reference into Part III of this Annual Report on Form
10-K.
Index to Exhibits begins on Page 63.
<PAGE> 2
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, Barry de Mexico, S.A.
de C.V., Barry de Acuna, S.A. de C.V., Barry de Zacatecas, S.A. de C.V., R. G.
Barry International, Inc., R.G.B., Inc. and Vesture Corporation (Registrant and
such subsidiaries are referred to collectively as 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 retention
technology 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 retention
consumer products in the food preservation; portable, personal comfort; and
comfort therapy categories. As discussed further below, the Company also
designs, manufactures and markets commercial products which use thermal
retention technology to preserve and/or transport temperature-sensitive,
perishable commodities.
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*, Barry(TM)Comfort, Dearfoams*, Dearfoams* for Kids, Dearfoams* for Men,
Madye's*, Snug Treds*, Soft Notes* and EZ feet*. 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 creating and marketing brand
lines to different portions 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.
The Company also manufactures and markets 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.
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* Hereinafter denotes a trademark of the Company registered in the United
States Department of Commerce Patent and Trademark Office.
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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 often 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 to six 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
retention products for consumers featuring MICROCORE* microwave-activated
technology developed by the Company. During that year, the Registrant also
acquired all of the outstanding stock of Vesture Corporation ("Vesture"), the
originators of microwave-heated comfort care products.
The Company's MICROCORE* thermal retention technology consists of a
family of patented or proprietary technologies which, when energized with heat
or cold, act as reservoirs that release heat or cold at a constant temperature
for extended periods of time. The MICROCORE* thermal retention products have
application as: (1) commercial products which use the Company's MICROCORE*
patented thermal retention technology, either hot or cold, which could be used
to preserve and/or transport temperature-sensitive, perishable commodities such
as food, medicine, pharmaceuticals and flowers; and (2) thermal retention
consumer products that the Company creates, designs, sells and distributes under
its brand names.
The Company's thermal retention products for consumers 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) portable, personal comfort products such as heated
seat cushions, booties, scarves and ear muffs. Retail prices for substantially
all of the Company's thermal retention consumer products range from
approximately $12 to $40, depending on the product, type of retail outlet and
retailer mark-up. The Company believes that the food preservation and comfort
therapy thermal retention products are not weather sensitive and have a
year-round sales appeal while the cold weather portion of the personal, portable
comfort product line is more seasonal and affected by weather changes. The
thermal retention consumer products are sold under the major brand lines of
Dearfoams*, Vesture*, Lava*, LavaPac*, LavaBuns* and LavaBooties*. All carry
MICROCORE* energy packs.
PYREX(R) Portables(TM) with MICROCORE*, which the Company created and
are sold through Corning Consumer Products Company ("Corning"), are
transportable food carriers designed to keep hot dishes warm and cold dishes
chilled using the Company's patented MICROCORE* thermal retention technology.
During 1997, Corning began to directly outsource the PYREX(R) Portables(TM)
fabric carrier component which the Company had previously outsourced as an
accommodation to Corning. The fabric carrier was a low margin commodity
component for the Company. The Company's 1997 sales to Corning declined by about
$9 million as a result of Corning acquiring the fabric carriers from other
suppliers. The Company continues to manufacture and supply to Corning the
Company's patented MICROCORE* hot and cold
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thermal retention elements, where the Company has significant margin and
proprietary, competitive value-added advantages. Corning continues to feature
the MICROCORE* brand name on the product packaging.
In the commercial product area, the Company has made a strategic
decision to focus on the commercial application of MICROCORE* patented thermal
retention technology, either hot or cold, to preserve and/or transport
temperature-sensitive, perishable commodities. The Company's POWERTECH(TM) with
MICROCORE* is a new, advanced portable heat storage technology (patent pending)
which permits portable, electrically energized heat storage from either A.C. or
D.C. power sources and at specific temperatures through the use of a thermostat.
Underwriters Laboratories Inc. has granted a UL listing mark to the Company's
POWERTECH(TM) with MICROCORE* Pizza Delivery System which is designed to keep
pizza hot at oven temperatures for two hours so that a pizza is delivered to a
home oven-hot, dry and crisp. The Company is actively marketing the
POWERTECH(TM) with MICROCORE* Pizza Delivery System to pizza chains nationwide
who have expressed interest in the technology. In January of 1998, Domino's
Pizza, Inc. ("Domino's") announced that it planned to use thermal technology for
the home delivery of pizza. This delivery system concept was developed and
pioneered by the Company working with Domino's largest franchisee. Although
Domino's chose an alternative system, the Company believes that Domino's
decision and accompanying industry reaction bodes well for the future of the
Company's POWERTECH(TM) with MICROCORE* Pizza Delivery System. The Company has
initiated tests of the POWERTECH(TM) with MICROCORE* Pizza Delivery System with
most other national and many large regional pizza chains.
In 1996, the Company announced the launch of the new PortaFreeze(TM)
with MICROCORE* portable frozen storage system which incorporates the MICROCORE*
thermal retention technology. The PortaFreeze(TM) with MICROCORE* system has
been thermally engineered to hold refrigerated and frozen materials at sub-zero
temperatures for a period of at least 24 hours without the need for an external
power source or dry ice. The Company believes that PortaFreeze(TM) with
MICROCORE* has a wide range of storage and delivery application potentials in
the food, medical and scientific industries, among others. PortaFreeze(TM)
(patent pending) is a rechargeable thermal energy cell configuration with an
insulated carrier which can be designed and manufactured to meet specific
storage and delivery needs of different industries in terms of size, temperature
parameters and desired length of temperature retention. The Company intends to
continue testing PortaFreeze(TM) with MICROCORE.*
Marketing
The Company's brand lines are sold to department, chain and specialty
stores; through mass merchandising channels of distribution such as discount
stores, warehouse clubs, 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.
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During the 1997 Christmas selling season, the Company provided
approximately 350 to 400 temporary merchandisers to service the retail selling
floor of department stores and chain stores nationally. The Company believes
that this point-of-sale management of the retail selling floor, combined with
computerized automatic replenishment systems that the Company installed with the
stores, put the Company in a position to optimize its comfort footwear business
during the fourth quarter.
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 accommodate the retailers' fall selling seasons. See
"Backlog of Orders".
The Company advertises principally in the print media. 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.
In September of 1996, the Company announced the establishment of the
Barry/Europe division to support what the Company believes will be a major
expansion opportunity in the United Kingdom and Europe for its at and around the
home comfort footwear. The Company has made a strategic commitment to building
its business in Europe with France as the first target market outside of the
United Kingdom. The Company has been market testing its products in hypermarket
stores in France and introduced its comfort footwear products in France in the
fall of 1997 with national network television advertising.
Prior to the formation of the Barry/Europe division, the Company's
international sales were focused on the department store channels in the United
Kingdom and Europe. This operation is now part of the Barry/Europe division. The
Company also markets its products in Canada, Mexico and several other countries
around the world. In 1997, the Company's foreign sales comprised approximately
6% of its total sales.
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 retention products. During fiscal years 1997, 1996 and 1995, 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 $3.5
million, $3.0 million and $3.1 million, respectively. Substantially all of the
foregoing activities were Company-sponsored. Approximately 50 employees are
engaged full time in research and design.
Materials
The principal raw materials used by the Company in the manufacture of
its slipper and thermal retention product 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.
Trademarks and Licenses
Approximately 97% 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: (a) Angel Treads*, Dearfoams*, Dearfoams* for Kids,
Dearfoams* for Men, Madye's*, Snug Treds*, Soft Notes* and EZ feet*, in the
Company's comfort footwear products; and (b) Dearfoams*, Vesture*, Lava*,
LavaPac*, LavaBuns*,
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LavaBooties*, MICROCORE*, POWERTECH(TM) and PortaFreeze(TM), in the Company's
thermal retention products. 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 1997,
1996 and 1995 fiscal years, 1%, 3% and 4%, 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 1997 fiscal year. The term of the Company's
license to use the Cannon** trademark expires in December, 1998; however, the
term may be extended for such period as may be mutually agreed upon by the
Company and Fieldcrest Cannon, Inc.
Customers
The customers of the Company which accounted for more than 10% of the
Company's consolidated revenues in fiscal year 1997 were Wal-Mart Stores, Inc.
("Wal-Mart"), J. C. Penney Company, Inc. ("J.C. Penney") and Sears, Roebuck &
Company ("Sears"), which accounted for 20%, 11% and 10%, respectively. The
customers of the Company which accounted for more than 10% of the Company's
consolidated revenues in fiscal year 1996 were Wal-Mart, J.C. Penney, Corning
and Sears, which accounted for 15%, 12%, 11% and 10%, respectively. The
customers of the Company which accounted for 10% or more of the Company's
consolidated revenues in fiscal year 1995 were Wal-Mart and J.C. Penney, which
accounted for approximately 16% and 11%, respectively.
Backlog of Orders
The Company's backlog of orders at the close of each of fiscal year
1997 and fiscal year 1996 was $15 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, 1997 - $79 million; August,
1996 - $80 million; February, 1997 - $13 million; and February, 1996 - $15
million. The Company's backlog of unfilled sales orders reflects the seasonal
nature of the Company's sales - approximately 75% of such sales occur during the
second half of the year as compared to approximately 25% during the first half
of the year.
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** Denotes a trademark of the licensor registered in the United States
Department of Commerce Patent and Trademark Office.
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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 retention products to compliment its
existing products in response to consumer and commercial demand. The Company
believes that it will be able to control the level of its obsolete inventory.
The Company traditionally has had only 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 and cold through its line of thermal retention products. The
Company believes that it is the dominant domestic supplier of thermal retention
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.
Manufacturing, Sales and Distribution Facilities
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 retention products at its manufacturing facilities in
Asheboro, North Carolina.
The Company maintains sales offices in New York, New York; London,
England; and Paris, France. The Company also operates distribution centers in
Asheboro and Goldsboro, North Carolina; San Angelo, Texas; and Mid-Glamorgan,
Wales.
The Company's principal manufacturing, sales and distribution
facilities are described more fully in Item 2. Properties below.
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 1997 fiscal year, the Company employed
approximately 3,300 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 (5) to the
Company's Consolidated Financial Statements set forth on pages 26 and 27 of the
Company's Annual Report to Shareholders for the fiscal year ended January 3,
1998. The following table describes this facility:
<TABLE>
<CAPTION>
Average
Location Use Square Feet Annual Rental Lease Expires
-------- --- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Fairfield County, Ohio Administrative and 55,000 $150,000 1999
(Leased from County of Executive Offices
Fairfield, Ohio)
</TABLE>
In addition to the leased property described above, the Company leases
space aggregating approximately 900,000 square feet at an approximate aggregate
annual rental of $2.2 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 Lease
Location Use Square Feet Annual 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 de Lara Ave. Manufacturing, Office 90,200 $168,000 1999 5 years
Nuevo Laredo, Mexico
Ciudad Acuna Manufacturing, Office 64,700 $254,000 1999 5 years
Industrial Park
Ciudad Acuna, Mexico
</TABLE>
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<TABLE>
<CAPTION>
Approximate Approximate Lease
Location Use Square Feet Annual Rental Expires Renewals
- -------- --- ----------- ------------- ------- --------
<S> <C> <C> <C> <C> <C>
Corridor Road Manufacturing, Warehouse, 165,000 $386,000 (1) 2001 2 terms of
Laredo, Texas Office 5 years each
Corridor Road Manufacturing, Warehouse, 76,000 $190,000 (1) 2006 5 years
Laredo, Texas Storage
Industrial Zone Manufacturing 26,200 $ 58,000 1998 2 terms of
Zacatecas, Mexico 5 years each
Industrial Zone Manufacturing 25,800 $ 58,000 2005 3 terms of
Zacatecas, Mexico 5 years each
120 E. Pritchard St. Manufacturing, Office, 57,500 $ 96,000 (1) 2001 None
Asheboro, North Carolina Warehouse
8000 Interstate Administrative Office 9,600 $161,000 2003 None
Highway 10 West
San Antonio, Texas
Chelsea Harbour Sales & Administrative 2,500 $ 87,000 2002 None
London, England Office
Mid-Glamorgan, Wales Warehouse 8,000 $ 21,000 Month-
to-Month N/A
</TABLE>
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(1) Net lease.
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.
There are no pending legal proceedings to which the Company or any of
its subsidiaries is a party or to which any of their respective properties are
subject, except routine legal proceedings to which they are parties incident to
their respective businesses. None of such proceedings are considered by the
Company to be material.
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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
Name Age Principal Occupation(s) for Past Five Years
---- --- -------------------------------------------
<S> <C> <C>
Gordon Zacks 65 Chairman of the Board and Chief Executive Officer since 1979,
President since 1992, and Director since 1959, of the Registrant.
Richard L. Burrell 65 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.
Christian Galvis 56 Co-President and Co-Chief Operating Officer of the Barry Comfort
Group since January 1998, Executive Vice President-Operations and
Director since 1992, Vice President-Operations from 1991 to 1992,
of the Registrant.
Charles E. Ostrander 49 Co-President and Co-Chief Operating Officer of the Barry Comfort
Group since January 1998, Executive Vice President-Sales &
Marketing and Director since 1992, Vice President-Sales &
Marketing from 1990 to 1992, Vice President-Marketing from 1987
to 1990, of the Registrant.
Daniel D. Viren 51 Senior Vice President-Administration since 1992, and Vice
President-Controller from 1988 to 1992, of the Registrant.
Harry Miller 55 Vice President-Human Resources of the Registrant since 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 16 of the
Registrant's Annual Report to Shareholders for the fiscal year ended January 3,
1998.
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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 14 and 15 of the
Registrant's Annual Report to Shareholders for the fiscal year ended January 3,
1998.
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 17 through 20 of the
Registrant's Annual Report to Shareholders for the fiscal year ended January 3,
1998.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 8. Financial Statements and Supplementary Data.
The Consolidated Balance Sheets of the Registrant and its subsidiaries
as of January 3, 1998 and December 28, 1996, the related Consolidated Statements
of Earnings, Shareholders' Equity and Cash Flows for each of the fiscal years in
the three-year period ended January 3, 1998, the related Notes to Consolidated
Financial Statements and the Independent Auditors' Report, appearing on pages 21
through 34 of the Registrant's Annual Report to Shareholders for the fiscal year
ended January 3, 1998, are incorporated herein by reference. Quarterly Financial
Data set forth on page 16 of the Registrant's Annual Report to Shareholders for
the fiscal year ended January 3, 1998, 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 13, 1998, under the captions "SHARE
OWNERSHIP--Section 16(a) Beneficial Ownership Reporting Compliance," "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
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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).
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 13, 1998, 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
13, 1998, 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 13, 1998, 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 13, 1998, under the captions "SHARE OWNERSHIP,"
"ELECTION OF DIRECTORS" and "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS."
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
and Financial Statement Schedules" at page 18.
-12-
<PAGE> 13
(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 and
Financial Statement Schedules" at page 18.
(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
63. 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 Associates' *
Retirement Plan (As Amended and Restated
Effective January 1, 1996)
10(b) R. G. Barry Corporation Supplemental Incorporated herein by reference to Plan
Retirement 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 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)]
10(d) Employment Agreement, dated July 1, 1994, Incorporated herein by reference to
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(e) Agreement, dated September 27, 1989, between Incorporated herein by reference to
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]
</TABLE>
-13-
<PAGE> 14
<TABLE>
<CAPTION>
Exhibit No. Description Location
- ----------- ----------- --------
<S> <C> <C>
10(f) Amendment No. 1, dated as of Incorporated herein by reference to
October 12, 1994, between the Registrant and Amendment No. 14 to Schedule 13D, dated
Gordon Zacks January 27, 1995, filed by Gordon Zacks on
February 13, 1995 [Exhibit 5]
10(g) Amended Split-Dollar Insurance Agreement, Incorporated herein by reference to
dated March 23, 1995, between the Registrant Registrant's Annual Report on Form 10-K for
and Gordon B. Zacks the fiscal year ended December 30, 1995
(File No. 1-8769) ("Registrant's 1995 Form
10-K") [Exhibit 10(h)]
10(h) R. G. Barry Corporation 1988 Stock Option Incorporated herein by reference to
Plan (Reflects amendments through May 11, Registrant's Registration Statement on Form
1993) S-8, filed August 18, 1993 (Registration
No. 33-67594) [Exhibit 4(r)]
10(i) Form of Stock Option Agreement used in Incorporated herein by reference to
connection with the grant of incentive stock Registrant's 1995 Form 10-K [Exhibit 10(k)]
options pursuant to the R. G. Barry
Corporation 1988 Stock Option Plan
10(j) Form of Stock Option Agreement used in Incorporated herein by reference to
connection with the grant of non-qualified Registrant's 1995 Form 10-K [Exhibit 10(l)]
stock options pursuant to the R. G. Barry
Corporation 1988 Stock Option Plan
10(k) 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(l) R. G. Barry Corporation Employee Stock Incorporated herein by reference to
Purchase Plan (Reflects amendments and Registrant's Registration Statement on Form
revisions for stock dividends and stock S-8, filed August 18, 1993 (Registration
splits through May 11, 1993) No. 33-67596) [Exhibit 4(r)]
</TABLE>
-14-
<PAGE> 15
<TABLE>
<CAPTION>
Exhibit No. Description Location
- ----------- ----------- --------
<S> <C> <C>
10(m) R. G. Barry Corporation 1994 Stock Option Incorporated herein by reference to
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(n) Form of Stock Option Agreement used in Incorporated herein by reference to
connection with the grant of incentive stock Registrant's 1995 Form 10-K [Exhibit 10(p)]
options pursuant to the R. G. Barry
Corporation 1994 Stock Option Plan
10(o) Form of Stock Option Agreement used in Incorporated herein by reference to
connection with the grant of non-qualified Registrant's 1995 Form 10-K [Exhibit 10(q)]
stock options pursuant to the R. G. Barry
Corporation 1994 Stock Option Plan
10(p) Executive Employment Agreement, effective as *
of January 4, 1998, between Registrant and
Charles E. Ostrander
10(q) Executive Employment Agreement, effective as *
of January 4, 1998, between Registrant and
Christian Galvis
10(r) Restricted Stock Agreement, effective as of *
January 4, 1998, between Registrant and
Charles E. Ostrander
10(s) Restricted Stock Agreement, effective as of *
January 4, 1998, between Registrant and
Christian Galvis
10(t) Agreement, effective as of January 4, 1998, *
between Registrant and Richard L. Burrell
10(u) Agreement, effective as of January 4, 1998, *
between Registrant and Daniel D. Viren
10(v) Agreement, effective as of January 4, 1998, *
between Registrant and Harry Miller
</TABLE>
-15-
<PAGE> 16
<TABLE>
<CAPTION>
Exhibit No. Description Location
- ----------- ----------- --------
<S> <C> <C>
10(w) R. G. Barry Corporation Deferred Compensation Incorporated herein by reference to
Plan As Amended and Restated (Effective as of Registrant's 1995 Form 10-K [Exhibit 10(v)]
September 1, 1995)
10(x) R. G. Barry Corporation Stock Option Plan for *
Non-Employee Directors (Reflects share splits
and amendments through February 19, 1998)
10(y) R. G. Barry Corporation 1997 Incentive Stock Incorporated herein by reference to
Plan Registrant's Registration Statement on Form
S-8, filed June 6, 1997 (Registration No.
333-28671) [Exhibit 4(k)]
10(z) Form of Stock Option Agreement used in *
connection with the grant of incentive stock
options pursuant to the R. G. Barry
Corporation 1997 Incentive Stock Plan
10(aa) Form of Stock Option Agreement used in *
connection with the grant of non-qualified
stock options pursuant to the R. G. Barry
Corporation 1997 Incentive Stock Plan
</TABLE>
- -------------------
* Filed herewith.
(b) Reports on Form 8-K
There were no Current Reports on Form 8-K filed during the fiscal quarter
ended January 3, 1998.
(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 63.
(d) Financial Statement Schedules
Financial Statement Schedules included with this Annual Report on Form 10-K
are attached hereto. See "Index to Financial Statements and Financial
Statement Schedules" at page 18.
-16-
<PAGE> 17
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 30, 1998
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,
Co-President and Co-Chief Operating Officer of
Barry Comfort Group and Director
*Charles E. Ostrander * Executive Vice President-Sales & Marketing,
Co-President and Co-Chief Operating Officer of
Barry Comfort Group 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 30, 1998
-17-
<PAGE> 18
R. G. BARRY CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED JANUARY 3, 1998
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE(S) IN ANNUAL REPORT
DESCRIPTION OF FINANCIAL STATEMENTS (ALL OF WHICH ARE TO SHAREHOLDERS FOR THE
INCORPORATED BY REFERENCE IN THIS ANNUAL REPORT ON FISCAL YEAR ENDED
FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 3, 1998) JANUARY 3, 1998
- ---------------------------------------------------- ---------------
<S> <C>
Consolidated Balance Sheets at January 3, 1998 and
December 28, 1996...................................................... 21
Consolidated Statements of Earnings for the years ended
January 3, 1998, December 28, 1996, and December 30, 1995.............. 22
Consolidated Statements of Shareholders' Equity for the years
ended January 3, 1998, December 28, 1996, and December 30, 1995........ 22
Consolidated Statements of Cash Flows for the years ended
January 3, 1998, December 28, 1996 and December 30, 1995............... 23
Notes to Consolidated Financial Statements...................................... 24-34
Independent Auditors' Report.................................................... 34
</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 Annual Report to Shareholders for the fiscal year
ended January 3, 1998. 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 59 of this
Annual Report on
Form 10-K
Schedules for the fiscal years ended January 3, 1998, December 28, 1996, and
December 30, 1995:
II - Reserves: Included at pages 60 through 62 of this Annual Report on
Form 10-K
-18-
<PAGE> 19
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 (expense)
Earnings before income taxes
Income tax expense
Net earnings
ADDITIONAL DATA
Basic earnings per share*
Diluted earnings per share*
Book value per share*
Annual % change in net sales
Annual % change in net earnings
Net earnings as a percentage of beginning shareholders' equity
Basic average number of shares outstanding (in thousands)*
Diluted 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 5-for-4 share split distributed June 17,
1996 and 4-for-3 share splits distributed September 15, 1995 and June 22,
1994.
** Fiscal year includes fifty-three weeks.
<PAGE> 20
<TABLE>
<CAPTION>
1997** 1996 1995 1994 1993
<S> <C> <C> <C> <C>
$148,775 $148,626 $136,561 $116,720 $101,172
77,438 83,202 76,065 69,975 59,795
71,337 65,424 60,496 46,745 41,377
53,137 49,008 48,557 39,375 34,322
(1,817) (2,483) (2,962) (1,701) (1,474)
415 (211) 1,060 333 400
16,798 13,722 10,037 6,002 5,981
6,680 5,465 3,738 2,191 2,183
$ 10,118 $ 8,257 $ 6,299 $ 3,811 $ 3,798
$ 1.06 $ 0.89 $ 0.68 $ 0.43 $ 0.45
$ 1.03 $ 0.84 $ 0.65 $ 0.43 $ 0.45
$ 7.07 $ 6.05 $ 5.14 $ 4.44 $ 3.71
0.1% 8.8% 17.0% 15.4% (0.6%)
22.5% 31.1% 65.3% 0.3% 13.7%
17.8% 17.3% 15.3% 12.1% 13.9%
9,504 9,308 9,234 8,823 8,374
9,820 9,827 9,690 8,823 8,374
$ 82,554 $ 67,679 $ 62,721 $ 56,683 $ 39,974
20,017 13,956 18,793 17,332 12,119
62,537 53,723 43,928 39,351 27,855
12,992 15,265 15,390 16,445 9,745
67,608 56,743 47,611 41,054 31,483
14,231 13,929 14,156 13,785 13,410
104,674 89,067 84,340 76,961 55,635
2,944 2,404 3,363 2,234 1,034
2,531 2,571 2,158 1,905 1,607
</TABLE>
<PAGE> 21
MARKET AND DIVIDEND INFORMATION
R.G. Barry Corporation and Subsidiaries
Market Value (Restated to reflect share split of June 17, 1996)
QUARTER HIGH LOW
- ---------------------------------------------------------------------------
1997 FIRST $11.50 $9.63
SECOND 12.25 9.50
THIRD 14.38 11.38
FOURTH 14.63 10.50
1996 First $15.70 $11.50
Second 15.80 13.60
Third 15.88 12.75
Fourth 13.75 10.25
Stock Exchange: New York Stock Exchange
Stock Ticker Symbol: RGB
Wall Street Journal Listing: BarryRG
Approximate Number of Registered Shareholders: 1,300
A five-for-four share split was distributed on June 17, 1996 to shareholders of
record on June 3, 1996.
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, subject to the restrictions contained in the various loan agreements.
See also Note 4 to Consolidated Financial Statements, and Management's
Discussion & Analysis of Financial Condition & Results of Operations.
QUARTERLY FINANCIAL DATA
R.G. Barry Corporation and Subsidiaries
<TABLE>
<CAPTION>
1997 FISCAL QUARTERS in thousands, except net earnings (loss) per share
FIRST (1) SECOND (1) THIRD (1) FOURTH (2)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $14,963 $14,511 $46,361 $72,940
GROSS PROFIT 8,359 6,888 21,750 34,340
NET EARNINGS (LOSS) (1,073) (1,806) 5,024 7,973
BASIC EARNINGS (LOSS) PER SHARE $(0.11) $(0.19) $0.52 $0.84
DILUTED EARNINGS (LOSS) PER SHARE $(0.11) $(0.19) $0.52 $0.81
1996 Fiscal Quarters
First (1) Second (1) Third (1) Fourth (1)
- -----------------------------------------------------------------------------------------------------------
Net sales $16,074 $19,961 $45,161 $67,430
Gross profit 8,712 8,297 19,854 28,561
Net earnings (loss) (893) (1,234) 4,820 5,564
Basic earnings (loss) per share $(0.09) $(0.14) $0.52 $0.59
Diluted earnings (loss) per share $(0.09) $(0.14) $0.50 $0.57
</TABLE>
(1) Quarter contains thirteen weeks
(2) Quarter contains fourteen weeks
See also Management's Discussion & Analysis of Financial Condition & Results of
Operations.
<PAGE> 22
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
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; plus net
property, plant and equipment, and to a lesser extent other non-current assets.
Most of the Company's assets are current assets: at the end of 1997, 79 percent
of its total assets were made up of current assets, compared with 76 percent at
the end of 1996. A substantial portion of the Company's non-current assets are
net property, plant and equipment.
As of the end of 1997, the Company had $62.5 million in net working capital,
made up of $82.6 million in current assets, less $20.0 million in current
liabilities. At the end of 1996, the Company had $53.7 million in net working
capital. Substantially all of the increase in net working capital has been
generated as a result of the Company's net earnings.
The Company ended 1997 with $22.5 million in cash and cash equivalents, $16.0
million in net trade receivables, and $35.6 million in inventory. At the end of
1996, by comparison, the Company had $13.2 million in cash and cash equivalents,
$17.4 million in net trade receivables, and $28.9 million in inventory. The
increase in cash from 1996 to 1997, is largely the result of the profits
generated by the Company in 1997--see also the accompanying Consolidated
Statements of Cash Flows. The decrease in net trade receivables is mainly due to
improved collection of accounts during late 1997, as the receivables turnover
improved slightly in 1997 to 6.6 times from 6.5 times in 1996. The increase in
inventory from $28.9 million in 1996 to $35.6 million in 1997, which the Company
believes is manageable, is spread among varying elements of the Company's
inventory: raw materials, work in-process, and finished goods, and among both
slippers and thermal products.
Traditionally, the Company has leased most of its operating facilities. There
were no significant changes in the Company's facilities in 1997 or 1996. The
Company periodically reviews its facilities to determine whether its current
facilities will satisfy its anticipated operating needs for the foreseeable
future. During 1998 or 1999, the Company anticipates leasing additional
facilities to support anticipated growth in the Company's production and storage
needs. Substantially all of the capital expenditures in 1997 and 1996 were for
routine additions to production machinery and equipment.
The Company has typically relied on its Revolving Credit Agreement ("Revolver")
to satisfy additional capital requirements, including seasonal working capital
needs. In June 1997, the Company and its three main banks agreed to extend the
existing multi-year Revolver through 1999; the Revolver provides for periodic
further extensions beyond 1999, under certain conditions. The Revolver furnishes
the Company with a seasonally adjusted available line of credit ranging from $6
million to $51 million. During 1997, the Company's peak borrowing amounted to
$24 million compared with $33 million in 1996. The daily average borrowing under
the Revolver during 1997 decreased to $8.2 million as compared with $16.9
million in 1996. The Company has met the conditions for extension of the
Revolver, and intends to seek and expects to receive such an extension of the
Revolver through 2000. The Revolver contains covenants that the Company believes
are typically found in agreements of similar type and duration.
At times, the Company has borrowed additional long-term capital from lenders to
provide long-term financing to the Company. The last time the Company incurred
additional long-term debt was in 1994, when the Company issued a $15 million,
9.7 percent note, due in 2004 ("Note"). The Note contains covenants that the
Company believes are normally found in similar agreements of this type. The Note
and the Revolver place restrictions on the amount of future borrowing the
Company may incur, and contain certain other financial covenants--see also Note
4 to the Consolidated Financial Statements for additional information. The Note
requires semi-annual interest payments, with annual principal repayments of $2.1
million commencing in July, 1998. The Company is in compliance with all
covenants of the Note, Revolver and all other debt agreements.
17
<PAGE> 23
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
The Company last paid cash dividends in 1981. While the Company's various loan
agreements, at year end 1997, permitted the payment of cash dividends and the
repurchase of common shares for treasury, the Company has no current plans to
resume payment of cash dividends. The Company anticipates continuing to use its
cash resources to finance operations and to fund future growth. Subject to the
covenants in the various loan agreements, the Company currently may incur
additional long-term debt, should that become necessary. See also Note 4 to the
Consolidated Financial Statements for additional information.
The Company believes that it has a strong balance sheet, with strong financial
ratios. At the end of 1997, the Company's total capitalization amounted to $80.6
million, which was composed of 16.1 percent long-term debt and capital leases
and 83.9 percent shareholders' equity. This compares with $72.0 million in total
capitalization at year end 1996, composed of 21.2 percent long-term debt and
capital leases and 78.8 percent shareholders' equity. The Company's current
ratio, a measure of the relationship of current assets to current liabilities,
was 4.12 to 1 at year end 1997, compared with 4.85 to 1 at year end 1996.
YEAR 2000 CONSIDERATIONS
The Company has conducted a review of its key financial, information and
operating systems to determine the extent to which it is exposed to year 2000
computer date problems. The Company believes that all of its critical
application systems have been converted to correct for potential problems.
Electronic trading partners have been contacted to obtain their commitments to
conversion, so as to minimize problems relating to the exchange of electronic
data. During 1998, the Company will be conducting further tests to assure the
efficacy of the conversion. The Company estimates that the costs incurred to
date in this conversion have not been significant, and does not anticipate the
future impact on its financial condition, results of operations or cash flows
will be material.
FOREIGN CURRENCY RISK
Late in 1997 and early in 1998, the value of a number of foreign currencies,
principally those in the Far East, were subject to fluctuations in value in
world currency markets, and in some cases currencies suffered significant
devaluation. The Company's operations currently are conducted primarily in U.S.
Dollars and to a lesser degree in British Pound Sterling, Swiss Francs and
French Francs--all currencies that historically have not been subject to
significant volatility. The Company, in accordance with established policy
guidelines, at times, hedges some of these currencies, using foreign exchange
contracts as a means to protect itself from currency fluctuations. The amount of
foreign exchange contracts that the Company has maintained has not been material
to the Company's operations.
In addition, a portion of the Company's labor costs are incurred in Mexican
Pesos and to a lesser degree in Chinese Renminbi. As of February, 1998, these
two currencies had not been subject to significant volatility in recent months.
If either of these two currencies were to suffer a devaluation, the Company
believes that the impact of any devaluation would likely have the effect of
reducing the Company's effective costs of manufacturing in those countries,
although any such reduction is not expected to have a significant impact upon
the Company's results of operations.
RESULTS OF OPERATIONS
1997 SALES AND OPERATIONS COMPARED WITH 1996
Net sales for 1997 of $148.8 million were essentially equal to net sales in 1996
of $148.6 million. During the same period, net earnings increased by 22.5
percent to $10.1 million from $8.3 million in 1995. In last year's Annual Report
to Shareholders, the Company discussed that a major customer of the Company's
food preservation thermal products would be sourcing certain low-margin
non-MICROCORE(R) components directly during 1997, lowering the Company's net
sales during 1997. As a result, the Company's sales to that customer declined by
about $9 million during 1997. The Company continued to sell its MICROCORE(R)
thermal elements to that customer during 1997, and expects this relationship to
continue. Net sales of food preservation thermal products, thus, decreased
during 1997. The Company replaced the loss of low-margin non-MICROCORE(R)
component sales with increased volume of higher margin sales of at and around
the home comfort footwear.
18
<PAGE> 24
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
In 1997, the Company opened an office in Paris, France. The Company believes
that there is great growth potential for the Company's footwear products in
Europe, and in 1991, opened its initial European office in London, England. The
Paris office is an outgrowth of that strategy and represents the Company's
initial penetration of the French marketplace.
Gross profit increased during 1997, despite flat overall net sales for the year.
Gross profit amounted to $71.3 million, compared with $65.4 million in 1996, an
increase of 9.0 percent. The Company's gross profit margin, as a percent of net
sales, increased during 1997 to 47.9 percent, compared with 44.0 percent in
1996, mainly due to: a) an increase in sales of higher margin at and around the
home comfort footwear; b) a decrease in sales of lower margin non-MICROCORE(R)
components; c) improved materials utilization from increased usage of
computerized cutting; and d) expanded use of modular manufacturing in the
company's production facilities. With the expanded use of modular manufacturing,
the Company realized improved efficiencies and lowered the per product cost of
manufacturing without making a sizable investment in infrastructure. The Company
expects to conclude converting its production lines at existing plants, to
modular manufacturing during the spring of 1998.
Selling, general and administrative expenses increased during 1997 to $53.1
million, an 8.4 percent increase over the $49.0 million expense incurred in
1996. Most of the increase related to marketing and sales programs implemented
to support the net sales, with the predominate portion of the increase going
toward the advertising and marketing costs necessary to seed the startup of the
Company's Paris, France, sales office. All expenses relating to the startup in
France were expensed during the year.
Net interest expense in 1997 declined to $1.8 million from $2.5 million in 1996.
The Company's improved profitability in 1996 and 1997 has resulted in improved
liquidity as well. In 1997, the Company's daily average borrowings under the
Revolver amounted to $8.2 million, with a weighted average interest rate of 6.7
percent. This compares with average borrowing in 1996 of $16.9 million, and a
weighted average interest rate of 6.5 percent.
For the year, earnings before income taxes amounted to $16.8 million compared
with $13.7 million in 1996, an increase of 22.4 percent. Net earnings after
taxes increased by 22.5 percent in 1997 to $10.1 million from $8.3 million in
1996. For 1997, basic earnings per share (a measure of earnings per average
common share issued and outstanding) amounted to $1.06 per share, while diluted
earnings per share (a measure that includes a computation of common shares
attributable to certain outstanding but unissued options) amounted to $1.03 per
share. The comparable per share calculations for 1996 are: basic earnings per
share of $0.89 per share, and diluted earnings per share of $0.84 per share.
1996 SALES AND OPERATIONS COMPARED WITH 1995
Total net sales during 1996 increased by 8.8 percent to $148.6 million from
$136.6 million during 1995. A substantial portion of the growth in net sales
occurred in the Company's at and around the home comfort footwear, and mostly
represents growth in volume with only modest unit price increases. As a result
of the Company's determination, in 1995, that the use of television was not
cost-effective for advertising thermal products sold through accessories
departments of department stores, sales of those products declined in 1996. The
Company's net sales of food preservation products increased to 10.2 percent of
total net sales in 1996 compared with 6.7 percent in 1995. Net sales of these
products were expected to be below 10 percent in 1997, because certain
components of the principal food preservation product were sourced directly by a
major customer.
Gross profit in 1996 increased by 8.1 percent, which is consistent with the 8.8
percent increase in sales. Gross profit as a percent of net sales remained
nearly constant at 44.0 percent in 1996, compared with 44.3 percent in 1995. The
Company's manufacturing operations continued to function very efficiently in
1996, as they had in 1995.
19
<PAGE> 25
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
Selling, general and administrative expenses, at $49.0 million in 1996,
increased by less than one percent from 1995.
Net interest expense in 1996, declined to $2.5 million from $3.0 million in
1995. The Company's improved profitability in 1996 resulted in improved
liquidity. In 1996, the Company's borrowings under the Revolver averaged $16.9
million, with a weighted average interest rate of 6.5 percent. This compares
with an average borrowing in 1995 of $19.2 million with a weighted average
interest rate of 7.1 percent.
For the entire year, the Company earned $13.7 million before income taxes,
compared with $10.0 million in 1995; an increase of 36.7 percent. After income
taxes, net earnings increased 31.1 percent to $8.3 million, compared with $6.3
million in 1995. Basic earning per share for 1996 amounted to $0.89 per share
compared with basic earnings per share for 1995 of $0.68 per share. Diluted
earnings per share amounted to $0.84 in 1996 compared with $0.65 per share in
1995. All share calculations have been retroactively restated for all previous
share splits.
FORWARD LOOKING STATEMENTS
"SAFEHARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995:
The statements in this Annual Report to Shareholders, which are not
historical fact are forward looking statements based upon the Company's
current plans and strategies, and reflect the Company's current
assessment of the risks and uncertainties related to its business,
including such things as product demand and market acceptance; the
economic and business environment and the impact of governmental
regulations, both in the United States and abroad; the effects of
competitive products and pricing pressures; currency risks; capacity;
efficiency and supply constraints; weather conditions; and other risks
detailed in the Company's press releases, shareholder communications, and
Securities and Exchange Commission filings. Actual events affecting the
Company and the impact of such events on the Company's operations may
vary from those currently anticipated.
20
<PAGE> 26
CONSOLIDATED BALANCE SHEETS
R.G. Barry Corporation and Subsidiaries
<TABLE>
<CAPTION>
January 3, 1998 December 28, 1996
- ------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (note 4) $ 22,495 $13,187
Accounts receivable:
Trade (less allowance for doubtful receivables, returns and
promotions of $8,493,000 and $8,972,000, respectively) 15,957 17,372
Other 1,004 1,184
Inventory (note 2) 35,602 28,854
Deferred income taxes (note 6) 4,827 5,055
Prepaid expenses 2,669 2,027
-------- -------
Total current assets 82,554 67,679
-------- -------
Property, plant and equipment, at cost (notes 3 and 5) 40,840 39,088
Less accumulated depreciation and amortization 26,609 25,159
-------- -------
Net property, plant and equipment 14,231 13,929
-------- -------
Deferred income taxes (note 6) 752 470
Goodwill (less accumulated amortization of $396,000 and $280,000,
respectively) 4,230 4,346
Other assets 2,907 2,643
-------- -------
$104,674 $89,067
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current installments of long-term debt and capital lease
obligations (notes 4 and 5) $ 2,273 $125
Accounts payable 6,389 4,170
Accrued expenses (note 7) 11,355 9,661
-------- -------
Total current liabilities 20,017 13,956
-------- -------
Accrued retirement cost, net (note 8) 3,520 2,889
Long-term debt, excluding current installments (note 4) 12,857 15,000
Capital lease obligations, excluding current installments (note 5) 135 265
Other 537 214
-------- -------
Total liabilities 37,066 32,324
-------- -------
Shareholders' equity (notes 4, 9, 10 and 11):
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 22,500,000
and 15,000,000 shares; issued 9,564,000 and 9,375,000 shares
(excluding treasury shares of 561,000 and 557,000) 9,564 9,375
Additional capital in excess of par value 14,629 14,071
Retained earnings 43,415 33,297
-------- -------
Net shareholders' equity 67,608 56,743
-------- -------
Commitments and contingencies (notes 5, 12 and 13)
$104,674 $89,067
======== =======
See accompanying notes to consolidated financial statements.
</TABLE>
21
<PAGE> 27
CONSOLIDATED STATEMENTS OF EARNINGS
R.G. Barry Corporation and Subsidiaries
<TABLE>
<CAPTION>
January 3, 1998 December 28, 1996 December 30, 1995
(in thousands, except per share data)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $148,775 $148,626 $136,561
Cost of sales 77,438 83,202 76,065
-------- -------- --------
Gross profit 71,337 65,424 60,496
Selling, general and administrative expenses 53,137 49,008 48,557
-------- -------- --------
Operating income 18,200 16,416 11,939
Other (expense) income (note 3) 415 (211) 1,060
Interest expense, net of interest income of $322,000,
$172,000, and $67,000, respectively (1,817) (2,483) (2,962)
-------- -------- --------
Earnings before income taxes 16,798 13,722 10,037
Income tax expense (note 6) 6,680 5,465 3,738
-------- -------- --------
Net earnings $ 10,118 $ 8,257 $ 6,299
======== ======== ========
Earnings per common share (note 10):
Basic 1.06 .89 .68
======== ======== ========
Diluted 1.03 .84 .65
======== ======== ========
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
R.G. Barry Corporation and Subsidiaries
<CAPTION>
Additional
capital in
Common excess of Retained
shares par value earnings
(in thousands)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1994 $ 5,543 $ 16,770 $ 18,741
Net earnings -- -- 6,299
Stock options exercised 39 155 --
Purchase of shares (20) (220) --
Four-for-three stock split (including $11,000 paid
for fractional shares) 1,848 (1,859) --
Tender of shares -- (5) --
Tax benefit associated with the activity
under various stock plans -- 320 --
-------- -------- --------
Balance at December 30, 1995 7,410 15,161 25,040
Net earnings -- -- 8,257
Five-for-four stock split (including $7,000 paid
for fractional shares) 1,855 (1,862) --
Issuance of shares in connection with
the employee stock purchase plan 25 252 --
Stock options exercised 85 335 --
Tax benefit associated with the activity
under various stock plans -- 174 --
Other -- 11 --
-------- -------- --------
Balance at December 28, 1996 9,375 14,071 33,297
Net earnings -- -- 10,118
Stock options exercised 193 452 --
Tender of shares (4) (37) --
Tax benefit associated with the activity
under various stock plans -- 143 --
Balance at January 3, 1998 $ 9,564 $ 14,629 $ 43,415
======== ======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
22
<PAGE> 28
CONSOLIDATED STATEMENTS OF CASH FLOWS
R.G. Barry Corporation and Subsidiaries
<TABLE>
<CAPTION>
January 3, 1998 December 28, 1996 December 30, 1995
(in thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 10,118 $ 8,257 $ 6,299
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Tax benefit associated with the activity under
various stock plans 143 174 320
Depreciation and amortization of property,
plant, and equipment 2,531 2,571 2,158
Amortization of goodwill 116 116 116
Deferred income tax benefit (54) (1,181) (1,385)
Loss (gain) on disposal of property, plant, and equipment 97 25 (966)
Net (increase) decrease in:
Accounts receivable 1,595 (304) 5,160
Inventory (6,748) 2,854 (5,646)
Prepaid expenses (642) 61 (158)
Other assets (264) 358 (1,126)
Net increase (decrease) in:
Accounts payable 2,219 (4,791) 787
Accrued expenses 1,694 644 2,536
Accrued retirement cost, net 631 405 354
Other liabilities 323 214 --
-------- -------- --------
Net cash provided by operating activities 11,759 9,403 8,449
-------- -------- --------
Cash flows from investing activities:
Additions to property, plant, and equipment (2,944) (2,404) (3,363)
Proceeds from disposal of property, plant, and equipment 14 35 1,800
-------- -------- --------
Net cash used in investing activities (2,930) (2,369) (1,563)
-------- -------- --------
Cash flows from financing activities:
Repayment of long-term debt, capital lease obligations,
and short-term note payable (125) (815) (2,917)
Proceeds from stock issued 645 701 194
Purchase of common shares for treasury (41) -- (256)
-------- -------- --------
Net cash provided by (used in) financing activities 479 (114) (2,979)
-------- -------- --------
Net increase in cash 9,308 6,920 3,907
Cash and cash equivalents at beginning of year 13,187 6,267 2,360
-------- -------- --------
Cash and cash equivalents at end of year $ 22,495 $ 13,187 $ 6,267
======== ======== ========
Supplemental cash flow disclosures:
Interest paid $ 2,035 $ 2,624 $ 2,930
======== ======== ========
Income taxes paid $ 3,937 $ 8,713 $ 1,740
======== ======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
23
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Operations
R.G. Barry Corporation (the Company) is a United States based
multinational corporation. Its 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 1997, three customers accounted for approximately 20%, 11%, and 10%
of the Company's net sales. In 1996, four customers accounted for
approximately 15%, 12%, 11%, and 10% of the Company's net sales. In
1995, two customers accounted for approximately 16% and 11% of the
Company's net sales.
(b) Principles of Consolidation
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. Approximately 77%
and 72% of the 1997 and 1996, respectively, ending inventory costs are
determined on the last in, first out (LIFO) basis. The remainder are
determined on the first in, first out (FIFO) basis.
(e) Depreciation and Amortization
Depreciation and amortization have been provided substantially using
the double declining-balance method over the estimated useful lives of
the assets acquired prior to September 30, 1991. The Company adopted
the straight-line method of depreciation on its machinery and equipment
acquired after September 30, 1991.
(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
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are 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 and operating loss and tax credit carryforwards.
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. 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.
(h) Per-Share Information
In 1997, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 128, Earnings per Share. Statement 128 replaced
the calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of
options, warrants, and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings
per share. All earnings per share amounts for all periods have been
presented, and where appropriate, restated to conform to the Statement
128 requirements.
The computation of basic earnings per common share for 1997, 1996, and
1995 is based on the weighted average number of outstanding common
shares during the period. Diluted earnings per common share is based on
the weighted average number of outstanding common shares during the
period, plus, when their effect is dilutive, potential common shares
consisting of certain shares subject to stock options and the stock
purchase plan.
Effective June 17, 1996, the Board of Directors of the Company approved
a five-for-four share split to shareholders of record on June 3, 1996.
On September 15, 1995, the Board of Directors of the Company approved a
four-for-three share split to shareholders of record on September 1,
1995. All share splits have been distributed in the form of a share
dividend. The stock splits specifically excluded treasury shares. All
references to the number of shares and per-share amounts in the
footnotes to the financial statements have been restated to reflect the
stock splits.
24
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued
(i) 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 the adequacy of
accounts receivable and inventory valuation allowances, and the
realizability of the deferred tax assets.
(j) Fair Value of Financial Instruments
Cash and cash equivalents, accounts receivable, accounts payable, and
accrued expenses as reported in the financial statements approximate
their 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 4.
(k) Goodwill
Goodwill, which represents the excess of purchase price over fair value
of net assets acquired, is amortized on the straight-line method over
40 years. The Company assesses the recoverability of this intangible
asset by determining whether the amortization of the goodwill balance
over its remaining life can be recovered through undiscounted future
operating cash flows of the acquired operation. The amount of goodwill
impairment, if any, is measured based on projected discounted future
operating cash flows using a discount rate reflecting the Company's
average cost of funds. The assessment of the recoverability of goodwill
will be impacted if estimated future operating cash flows are not
achieved.
(l) Stock Option Plans
Effective for fiscal 1996, the Company adopted SFAS No. 123, Accounting
for Stock-Based Compensation, which permits entities to recognize as
expense over the vesting period the fair value of all stock-based
awards on the date of grant. Alternatively, SFAS No. 123 allows
entities to continue to apply the provisions of APB Opinion No. 25,
Accounting for Stock Issued to Employees, and provide certain pro forma
information. APB Opinion No. 25 requires that compensation expense be
recorded on the date of grant only if the current market price of the
underlying stock exceeds the exercise price. The Company has elected to
continue to apply the provisions of APB Opinion No. 25 and provide the
pro forma disclosure provisions of SFAS No. 123 (see note 9).
(m) New Accounting Pronouncements
The FASB has issued Statement 130, Reporting Comprehensive Income and
Statement 131, Disclosures About Segments of an Enterprise and Related
Information. Both statements will become effective in 1998. The Company
believes that the adoption of these pronouncements will not have a
significant impact on financial position or results of operations.
(n) Advertising
The Company expenses the costs of advertising as incurred. For the
years ended January 3, 1998, December 28, 1996, and December 30, 1995,
advertising expenses were $6,471,000, $5,314,000, and $6,056,000,
respectively.
(2) INVENTORY
If the FIFO method had been used to value inventory, inventory would have
been $2,409,000, $3,113,000, and $3,050,000 higher than that reported at
the end of 1997, 1996, and 1995, 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.
(3) PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consists of the following:
<TABLE>
<CAPTION>
January 3, December 28, Estimated
1998 1996 life in years
------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Land and improvements $ 490 $ 490 8-15
Buildings and improvements 4,858 4,315 40-50
Machinery and equipment 27,361 27,039 3-10
Leasehold improvements 7,443 6,980 5-20
Construction in progress 688 264
------- -------
$40,840 $39,088
======= =======
</TABLE>
25
<PAGE> 31
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.
See note 5 for a summary of property and equipment, included above,
representing capitalized leases.
(4) LONG-TERM DEBT AND RESTRICTIONS
Long-term debt consists of the following:
<TABLE>
<CAPTION>
January 3, December 28,
1998 1996
--------------------------------
(in thousands)
<S> <C> <C>
9.7% note, due July 2004 $15,000 $15,000
Less current installments 2,143 --
------- -------
Long-term debt, excluding current installments $12,857 $15,000
======= =======
</TABLE>
The 9.7% note, issued in July 1994, requires semiannual interest payments,
and annual principal repayments of $2,143,000 commencing in 1998 and
ending in 2004.
The Company has determined the fair value of its long-term debt 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 fair value of the 9.7% note payable was
$15,700,000 and $15,400,000 at January 3, 1998 and December 28, 1996,
respectively.
In February 1996, the Company negotiated a new 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 $6
million and a peak availability of $51 million, with interest at variable
rates. At January 3, 1998 and December 28, 1996, no amounts were
outstanding. This agreement expires on December 31, 1999.
Under the most restrictive covenants of the various loan agreements, the
Company is (1) required to maintain a seasonally adjusted current ratio,
as defined; (2) required to maintain a minimum seasonally adjusted
tangible net worth, as defined; (3) restricted as to 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
January 3, 1998, approximately $13 million of retained earnings was
available for the payment of cash dividends and the purchase of treasury
shares (see also note 9). There were no covenant violations during 1997
and 1996.
The Company maintains compensating cash balances, which are not legally
restricted, to defray the costs of other banking services provided.
(5) 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 an office
facility. 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 January 3, 1998, minimum lease payments due under this capital lease
are:
<TABLE>
<CAPTION>
Fiscal year Amount
-----------------------------------------------------------------
(in thousands)
<S> <C>
1998 $ 147
1999 144
-----
Total minimum lease payments 291
Less amount representing interest 26
-----
Present value of minimum lease payments $ 265
=====
</TABLE>
26
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued
<TABLE>
The present value of minimum capital lease payments are reflected in the
balance sheets:
January 3, 1998 December 28, 1996
-------------------------------------
(in thousands)
<S> <C> <C>
Current $ 130 $ 125
Noncurrent 135 265
----- -----
$ 265 $ 390
===== =====
These leased assets are capitalized in property, plant, and equipment:
<CAPTION>
January 3, 1998 December 28, 1996
-------------------------------------
(in thousands)
<S> <C> <C>
Land and improvements $ 392 $ 392
Buildings and improvements 2,583 2,482
------ ------
2,975 2,874
Less accumulated amortization 1,732 1,666
------ ------
Net book value $1,243 $1,208
====== ======
</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 January 3, 1998 follows:
<TABLE>
<CAPTION>
Fiscal year Amount
-----------------------------------------------------------------
(in thousands)
<S> <C>
1998 $ 2,992
1999 2,568
2000 1,909
2001 1,429
2002 983
Later fiscal years, through 2008 3,316
-------
$13,197
=======
</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 1997, 1996 and 1995 amounted to
$4,986,000, $4,956,000, and $4,569,000, respectively.
(6) INCOME TAXES
<TABLE>
<CAPTION>
Income tax expense (benefit) consists of:
1997 1996 1995
------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Current expense:
Federal $5,607 $5,682 $4,483
Foreign 108 137 60
State 1,019 827 580
------ ------ ------
6,734 6,646 5,123
Deferred benefit (54) (1,181) (1,385)
------ ------ ------
$6,680 $5,465 $3,738
====== ====== ======
</TABLE>
The differences between income taxes computed by applying the statutory
federal income tax rate (35% in 1997 and 1996, and 34% in 1995) and income
tax expense in the consolidated financial statements are:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Computed "expected" tax expense $5,879 $4,803 $3,413
State income taxes, net of federal income taxes 662 538 383
Foreign income tax expense 108 137 60
Other, net 31 (13) (118)
------ ------ ------
$6,680 $5,465 $3,738
====== ====== ======
</TABLE>
27
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued
<TABLE>
<CAPTION>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are
presented below:
January 3, 1998 December 28, 1996
-------------------------------------
(in thousands)
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowances for returns,
promotions, and doubtful accounts $3,139 $3,232
Inventories, principally due to additional costs inventoried for
tax purposes and valuation allowances 1,145 1,284
Package design costs 327 318
Certain accounting accruals, including such items as
self-insurance costs, vacation costs, and others 216 221
Pension costs 1,478 1,173
------ ------
Total deferred tax assets 6,305 6,228
Deferred tax liabilities:
Basis differences and differing methods of depreciation
for book and tax purposes 553 530
Difference in gain recognition on sale of property, plant,
and equipment 173 173
------ ------
Total deferred tax liabilities 726 703
------ ------
Net deferred tax assets $5,579 $5,525
------ ======
</TABLE>
In order to realize the deferred tax asset, the Company will need to
generate future taxable earnings or be able to carryback to 1997 or 1996.
The Company's taxable earnings history is as follows (in thousands):
<TABLE>
1997 1996
--------------------------------------------------------------
<S> <C> <C>
Taxable earnings $16,300 $16,744
</TABLE>
The Company believes the existing net deductible temporary differences
will reverse during periods in which the Company generates net taxable
earnings, or in periods in which a carryback to 1997 or 1996 is available.
Further, the Company believes it has available certain tax planning
strategies that could be implemented, if necessary, to supplement taxable
earnings from operations. The Company has considered the above factors in
concluding that it is more likely than not that the Company will realize
the benefits of existing deferred tax assets. There can be no assurance,
however, that the Company will generate any specific level of continuing
earnings.
(7) ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
January 3, 1998 December 28, 1996
-------------------------------------
(in thousands)
<S> <C> <C>
Salaries and wages $ 1,933 $3,287
Income taxes 6,665 3,650
Other 2,757 2,724
------- ------
$11,355 $9,661
======= ======
</TABLE>
28
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued
(8) Employee Retirement Plans
The Company and its domestic subsidiaries have a noncontributory
retirement plan for the benefit of salaried and nonsalaried employees, the
Associates' Retirement Plan (ARP).
The employees covered under the ARP are eligible to participate upon the
completion of one year of service. Salaried participant 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 participant benefits
are based on a fixed amount for each year of service. The Plan provides
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 ARP and the accrued retirement costs recognized
at January 3, 1998 and December 28, 1996 were:
<TABLE>
<CAPTION>
1997 1996
--------------------------
(in thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefit of
$17,578,000 and $17,292,000, respectively $18,147 $17,873
Projected effect of increase in compensation levels 1,645 1,422
------- -------
Projected benefit obligation (PBO) 19,792 19,295
Plan assets at fair value 24,323 20,641
------- -------
Plan assets in excess of PBO 4,531 1,346
Unrecognized net gain (4,999) (1,374)
Unamortized net asset (209) (458)
Unrecognized prior service cost 197 226
------- -------
Accrued retirement cost $ (480) $ (260)
======= =======
</TABLE>
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
January 3, 1998 and December 28, 1996 are:
<TABLE>
<CAPTION>
1997 1996
--------------------------
(in thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefit of
$3,096,000 and $2,710,000, respectively $ 3,109 $ 2,718
Projected effect of increase in compensation levels 357 370
------- -------
Projected benefit obligation (PBO) 3,466 3,088
Plan assets at fair value -- --
------- -------
PBO in excess of plan assets (3,466) (3,088)
Unrecognized net loss from past experience different from that
assumed and effects of changes in actuarial assumptions 211 9
Unamortized net asset existing at the date of adoption of
FAS No. 87, which is being amortized over approximately 12 years 167 217
Unrecognized prior service cost 117 149
Adjustment required to recognize minimum liability (167) (15)
------- -------
Accrued retirement cost $(3,138) $(2,728)
======= =======
</TABLE>
29
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued
The components of net pension cost for the retirement plans were:
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 721 $ 662 $ 572
Interest cost on PBO 1,700 1,604 1,498
Actual return on plan assets (1,702) (1,582) (1,384)
Net amortization and deferral (142) (133) (63)
------ ------ -----
$ 577 $ 551 $ 623
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Assumptions used in accounting for the pension plans as of January 3, 1998
and December 28, 1996 were:
1997 1996
---------------------------
<S> <C> <C>
Discount rates 7.25% 7.75%
Rates of increase in compensation levels 5.00% 5.00%
Expected long-term rate of return on assets 9.25% 9.25%
</TABLE>
The Company adopted a 401(k) plan effective September 1, 1995. Salaried
and nonsalaried employees may contribute a percentage, as defined, of
their compensation per pay period and the Company contributes 50% of the
first 3% of each participant's compensation contributed to this plan. The
Company's contribution to the 401(k) plan for the year ended January 3,
1998 and December 28, 1996 was $185,000 and $150,000, respectively.
(9) 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 fair
market value at date of grant. Information with respect to options under
these plans follows:
<TABLE>
<CAPTION>
ISO Nonqualified
number number Weighted-average
Qualified plans of shares of shares exercise price
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at December 31, 1994 904,500 85,200 $ 5.67
Granted 82,600 -- 8.64
Exercised (58,400) -- 3.31
Canceled (17,200) -- 8.75
--------- ------- -------
Outstanding at December 30, 1995 911,500 85,200 6.00
Granted 207,600 54,600 12.62
Exercised (85,400) (2,700) 4.77
Canceled (14,600) -- 8.59
--------- ------- -------
Outstanding at December 28, 1996 1,019,100 137,100 7.57
Granted 127,200 55,300 11.16
Exercised (191,100) (1,400) 3.34
Canceled (26,000) -- 9.76
--------- ------- -------
Balance outstanding at January 3, 1998 929,200 191,000 $ 8.83
========= ======= =======
Options exercisable at January 3, 1998 414,200 106,100
========= =======
</TABLE>
30
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued
<TABLE>
<CAPTION>
Options outstanding Options exercisable
-------------------------------------------------- -------------------------------
Number Weighted-average Number
Range of outstanding remaining Weighted-average exercisable Weighted-average
exercise prices at 1/3/98 contractual life exercise price at 1/3/98 exercise price
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 5.00 and under 221,700 3.49 $ 3.15 182,800 $ 3.14
5.01 - 10.00 454,000 6.18 $ 8.44 253,000 $ 8.45
10.01 - 15.00 439,500 8.35 $ 12.01 83,500 $ 13.04
15.01 and over 5,000 8.60 $ 15.13 1,000 $ 15.13
--------- -------
1,120,200 520,300
========= =======
</TABLE>
At January 3, 1998, the remaining number of ISO and nonqualified shares
available for grant was 406,000.
At January 3, 1998, December 28, 1996, and December 30, 1995, the options
outstanding under these plans were held by 109, 105, and 84 employees,
respectively, and had expiration dates ranging from 1998 to 2007.
Stock appreciation rights may be issued subject to certain limitations.
There were no rights outstanding at January 3, 1998, December 28, 1996,
or December 30, 1995.
Had the Company elected to determine compensation cost based on the fair
value at the grant date, as alternatively permitted under SFAS No. 123,
the Company's net earnings would have been reduced to the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
1997 1996 1995
---------------------------------------------------
<S> <C> <C> <C>
Net earnings:
As reported $10,118 $8,257 $6,299
Pro forma 9,395 7,517 6,189
Earnings per share (diluted):
As reported 1.03 .84 .65
Pro forma .96 .76 .64
</TABLE>
Using the Black Scholes option-pricing model, the per-share,
weighted-average fair value of stock options granted during 1997, 1996 and
1995 was $4.93, $5.97, and $4.21, respectively, on the date of grant. The
assumptions used in estimating the fair value of the options as of January
3, 1998 and December 28, 1996 were:
<TABLE>
<CAPTION>
1997 1996
--------------------------------
<S> <C> <C>
Expected dividend yield 0% 0%
Expected volatility 45% 47%
Risk-free interest rate 5.5% 5.5%
Expected life-- ISO grants 5.5 years 5.5 years
Nonqualified grants 7.5 years 8 years
</TABLE>
Pro forma net earnings reflects only options granted in 1997, 1996, and
1995. Therefore, the full impact of calculating compensation cost for
stock options under SFAS No. 123 is not reflected in the pro forma net
earnings amounts presented above because compensation cost is reflected
over the options' vesting period of 5 years and compensation cost for
options granted prior to January 1, 1995 is not considered.
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 at the end of each
2 year plan term.
31
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued
<TABLE>
<CAPTION>
Shares
subscribed
----------
<S> <C>
Balance at December 31, 1994 68,200
Subscriptions 3,100
Purchases --
Cancellations (10,200)
--------
Balance at December 30, 1995 61,100
Subscriptions --
Purchases (24,900)
Cancellations (36,200)
--------
Balance at December 28, 1996 --
Subscriptions 70,100
Purchases --
Cancellations (200)
--------
Balance at January 3, 1998 69,900
========
</TABLE>
The Company previously issued 666,000 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. During 1995, the final restrictions lapsed, and
the Company fulfilled its final obligation, under the agreement, to
purchase any such shares. Charges to earnings relating to this plan were
$0 in 1995. The agreement also provides for separation compensation in the
certain circumstances and in the event of early termination.
(10) EARNINGS PER SHARE
For the years ended:
<TABLE>
<CAPTION>
1997
-------------------------------------------------------
Earnings Shares Per-share
(Numerator) (Denominator) amount
-------------------------------------------------------
<S> <C> <C> <C>
BASIC EPS --
Net earnings available to
common shareholders $10,118 9,504 $1.06
EFFECT OF DILUTIVE SECURITIES--
Stock options -- 316 (.03)
DILUTED EPS--
Net earnings available to common
shareholders plus assumed conversions 10,118 9,820 1.03
<CAPTION>
1996
-------------------------------------------------------
Earnings Shares Per-share
(Numerator) (Denominator) amount
-------------------------------------------------------
<S> <C> <C> <C>
BASIC EPS --
Net earnings available to
common shareholders $ 8,257 9,308 $ .89
EFFECT OF DILUTIVE SECURITIES--
Stock options -- 519 (.05)
DILUTED EPS--
Net earnings available to common
shareholders plus assumed conversions 8,257 9,827 .84
</TABLE>
32
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued
<TABLE>
<CAPTION>
1995
-------------------------------------------------------
Earnings Shares Per-share
(Numerator) (Denominator) amount
-------------------------------------------------------
<S> <C> <C> <C>
BASIC EPS --
Net earnings available to
common shareholders $ 6,299 9,234 $ .68
EFFECT OF DILUTIVE SECURITIES--
Stock options -- 456 (.03)
DILUTED EPS--
Net earnings available to common
shareholders plus assumed conversions 6,299 9,690 .65
</TABLE>
Options to purchase 321,000 shares of common stock at prices up to $15.13
were outstanding in 1997 but were not included in the computation of
diluted earnings per share because the options' exercise price was greater
than the average market price of the common shares and, therefore, the
effect would be anti-dilutive.
(11) PREFERRED SHARE PURCHASE RIGHTS
In February, 1998, the Company's Board of Directors declared a
distribution of one Preferred Share Purchase Right (Right) for each
outstanding common share of the Company to shareholders of record on March
16, 1998. The new Rights will replace similar Rights issued in 1988 which
will expire on March 16, 1998. Under certain conditions, each new Right
may be exercised to purchase one one-hundredth of a share of Series I
Junior Participating Class A Preferred Shares, par value $1 per share, at
an initial exercise price of $40. The Rights initially will be attached to
the Common Shares. The Rights will separate from the Common Shares and a
Distribution Date will occur upon the earlier of 10 business days after a
public announcement that a person or group has acquired, or obtained the
right to acquire 20% or more of the Company's outstanding common shares
(Share Acquisition Date) or 10 business days (or such later date as the
Board shall determine) after the commencement of a tender or exchange
offer that would result in a person or group owning 20% or more of the
Company's outstanding common shares. The Rights are not exercisable until
the Distribution Date.
In the event that any Person becomes the beneficial owner of more than
20% of the then outstanding common shares, each holder of a Right will
be entitled to purchase, upon exercise of the Right, common shares
having a market value two times the exercise price of the Right. 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, the 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.
The Rights, which do not have any voting rights, expire on March 16,
2008, and may be redeemed by the Company at a price of $0.01 per Right
at any time until 10 business days following the Share Acquisition
Date.
Each Class A Preferred share is entitled to one-tenth of one vote,
while the Class B Preferred shares are entitled to ten votes. The
preferred shares are entitled to a preference in liquidation. None of
these shares have been issued.
(12) 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. 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
sheets. 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.
33
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued
(13) CONTINGENT LIABILITIES
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.
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 January 3, 1998 and December
28, 1996, and the related consolidated statements of earnings, shareholders'
equity, and cash flows for each of the fiscal years in the three-year period
ended January 3, 1998. 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 January 3, 1998 and December 28, 1996, and
the results of their operations and their cash flows for each of the fiscal
years in the three-year period ended January 3, 1998, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 19, 1998
34
<PAGE> 40
INDEPENDENT AUDITORS' REPORT ON
FINANCIAL STATEMENT SCHEDULES
The Board of Directors and Shareholders
R. G. Barry Corporation:
Under date of February 19, 1998, we reported on the consolidated balance sheets
of R. G. Barry Corporation and subsidiaries as of January 3, 1998 and December
28, 1996, and the related consolidated statements of earnings, shareholders'
equity and cash flows for each of the fiscal years in the three-year period
ended January 3, 1998, as contained in the fiscal 1997 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
1997. 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 19, 1998
<PAGE> 41
Schedule II
R. G. BARRY CORPORATION AND SUBSIDIARIES
Reserves
Fiscal year ended January 3, 1998
<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 $ 235,000 80,000 111,000(1) 204,000
Allowance for returns 4,052,000 4,300,000 4,052,000(2) 4,300,000
Allowance for promotions 4,685,000 3,989,000 4,685,000(3) 3,989,000
---------- --------- --------- ---------
$8,972,000 8,369,000 8,848,000 8,493,000
========== ========= ========= =========
</TABLE>
- --------------------
(1) Write-off of uncollectible accounts.
(2) Represents 1997 sales returns reserved for in fiscal 1996.
(3) Represents 1997 promotions expenditures committed to and reserved for in
fiscal 1996.
<PAGE> 42
Schedule II
R. G. BARRY CORPORATION AND SUBSIDIARIES
Reserves
Fiscal year ended December 28, 1996
<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 $ 349,000 140,000 254,000(1) 235,000
Allowance for returns 3,021,000 4,052,000 3,021,000(2) 4,052,000
Allowance for promotions 4,300,000 4,685,000 4,300,000(3) 4,685,000
---------- --------- --------- ---------
$7,670,000 8,877,000 7,575,000 8,972,000
========== ========= ========= =========
</TABLE>
- --------------------
(1) Write-off of uncollectible accounts.
(2) Represents 1996 sales returns reserved for in fiscal 1995.
(3) Represents 1996 promotions expenditures committed to and reserved for in
fiscal 1995.
<PAGE> 43
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
========== ========= ========= =========
</TABLE>
- --------------------
(1) Write-off of uncollectible accounts.
(2) Represents 1995 sales returns reserved for in fiscal 1994.
(3) Represents 1995 promotions expenditures committed to and reserved for in
fiscal 1994.
<PAGE> 44
R. G. BARRY CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED JANUARY 3, 1998
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
3(a)(1) Articles of Incorporation of Registrant (as Incorporated herein by reference to
filed with Ohio Secretary of State on March Registrant's Annual Report on
26, 1984) Form 10-K for the fiscal year ended
December 31, 1988 (File No. 0-12667)
("Registrant's 1988 Form 10-K")
[Exhibit 3(a)(i)]
3(a)(2) Certificate of Amendment to the Articles of Incorporated herein by reference to
Incorporation of Registrant Authorizing the Registrant's 1988 Form 10-K [Exhibit
Series I Junior Participating Class B 3(a)(i)]
Preferred Shares (as filed with the Ohio
Secretary of State on March 1, 1988)
3(a)(3) Certificate of Amendment to the Articles of Incorporated herein by reference to
Registrant (as filed with the Ohio Secretary Registrant's 1988 Form 10-K [Exhibit
of State on May 9, 1988) 3(a)(i)]
3(a)(4) Certificate of Amendment to the Articles of Incorporated herein by reference to
Incorporation of Registrant (as filed with the Registrant's Annual Report on Form 10-K for
Ohio Secretary of State on May 22, 1995) the fiscal year ended December 30, 1995
(File No. 1-8769) ("Registrant's 1995 Form
10-K") [Exhibit 3(b)]
3(a)(5) Certificate of Amendment to Articles of Incorporated herein by reference to
Incorporation of Registrant (as filed with Registrant's 1995 Form 10-K [Exhibit 3(c)]
the Ohio Secretary of State on September
1, 1995)
3(a)(6) Certificate of Amendment to Articles of Incorporated herein by reference to
Incorporation of Registrant (as filed with Registrant's Registration Statement on Form
the Ohio Secretary of State on May 30, 1997) S-8, filed June 6, 1997 (Registration No.
333-28671) [Exhibit 4(h)(6)]
</TABLE>
<PAGE> 45
<TABLE>
<CAPTION>
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
3(a)(7) Certificate of Amendment to the Articles of *
Incorporation of Registrant Authorizing
Series I Junior Participating Class A Preferred
Shares (as filed with the Ohio Secretary of
State on March 10, 1998)
3(a)(8) Articles of Incorporation of Registrant *
(reflecting amendments through March 10, 1998)
[for purposes of SEC reporting compliance
only -- not filed with the Ohio Secretary
of State]
3(b) 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, by Incorporated herein by reference to
and between Registrant and The Registrant's Registration Statement on Form
Huntington National Bank of Columbus, S-1, filed June 27, 1972 (Registration No.
as Trustee 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 and Registrant's Registration Statement on Form
The Huntington National Bank of Columbus, as S-7, filed March 3, 1978 (Registration No.
Trustee 2-60888) [Exhibit 2(b)(ii)]
4(c) Second Supplemental Trust Indenture, dated as Incorporated herein by reference to
of April 1, 1978, by and between Registrant Registrant's Registration Statement on Form
and The Huntington National Bank of Columbus, S-7, filed March 3, 1978 (Registration No.
as Trustee 2-60888) [Exhibit 2(b)(iii)]
4(d) Third Supplemental Indenture, dated as of June Incorporated herein by reference to
22, 1984, between Registrant and The Registrant's Current Report on Form 8-K
Huntington National Bank, as Trustee dated June 22, 1984, filed June 26, 1984
(File No. 1-7231) [Exhibit 4(d)]
</TABLE>
<PAGE> 46
<TABLE>
<CAPTION>
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
4(e) Fourth Supplemental Trust Indenture, dated as Incorporated herein by reference to
of February 27, 1985, between Registrant and Registrant's Annual Report on Form 10-K for
The Huntington National Bank, as Trustee the fiscal year ended December 29, 1984
(File No. 0-12667) [Exhibit 4(e)]
4(f) Revolving Credit Agreement, made to be Incorporated herein by reference to
effective on February 28, 1996, among Registrant's 1995 Form 10-K [Exhibit 4(f)]
Registrant, The Bank of New York, The
Huntington National Bank and NBD Bank
4(g) Agreement to Extend Revolving Credit Incorporated herein by reference to
Agreement, dated May 1, 1997, among Registrant's Quarterly Report on Form 10-Q
Registrant, The Bank of New York, The for the fiscal quarter ended June 28, 1997
Huntington National Bank and NBD Bank (File No. 1-8769) [Exhibit 4]
4(h) Note Agreement, dated July 5, 1994, between Incorporated herein by reference to
Registrant and Metropolitan Life Insurance Registrant's Registration Statement on Form
Company S-3, filed July 21, 1994 (Registration
No. 33-81820) [Exhibit 4(t)]
4(i) Rights Agreement, dated as of February 19, Incorporated herein by reference to
1998, between Registrant and The Bank of New Registrant's Current Report on Form 8-K,
York, as Rights Agent dated March 13, 1998 and filed March 16,
1998 (File No. 1-8769) [Exhibit 4]
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 of Incorporated herein by reference to
the Voting Trust Agreement for the Registrant's 1995 Form 10-K [Exhibit 9(b)]
Zacks-Streim Voting Trust
10(a) R. G. Barry Corporation Associates' Retirement *
Plan (As Amended and Restated Effective
January 1, 1996)
</TABLE>
<PAGE> 47
<TABLE>
<CAPTION>
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
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 Incentive Plan for Key Incorporated herein by reference to
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(d) Employment Agreement, dated July 1, 1994, Incorporated herein by reference to
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(e) 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(f) Amendment No. 1, dated as of October 12, 1994, Incorporated herein by reference to
between Registrant and Gordon Zacks Amendment No. 14 to Schedule 13D, dated
January 27, 1995, filed by Gordon Zacks on
February 13, 1995 [Exhibit 5]
10(g) Amended Split-Dollar Insurance Agreement, Incorporated herein by reference to
dated March 23, 1995, between Registrant and Registrant's 1995 Form 10-K [Exhibit 10(h)]
Gordon B. Zacks
10(h) R. G. Barry Corporation 1988 Stock Option Plan Incorporated herein by reference to
(Reflects amendments through May 11, 1993) Registrant's Registration Statement on Form
S-8, filed August 18, 1993 (Registration No.
33-67594) [Exhibit 4(r)]
10(i) Form of Stock Option Agreement used in Incorporated herein by reference to
connection with the grant of incentive stock Registrant's 1995 Form 10-K [Exhibit 10(k)]
options pursuant to the R. G. Barry
Corporation 1988 Stock Option Plan
</TABLE>
<PAGE> 48
<TABLE>
<CAPTION>
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
10(j) Form of Stock Option Agreement used in Incorporated herein by reference to
connection with the grant of non-qualified Registrant's 1995 Form 10-K [Exhibit 10(l)]
stock options pursuant to the R. G. Barry
Corporation 1988 Stock Option Plan
10(k) 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(l) R. G. Barry Corporation Employee Stock Incorporated herein by reference to
Purchase Plan (Reflects amendments and Registrant's Registration Statement on Form
revisions for stock dividends and stock splits S-8, filed August 18, 1993 (Registration No.
through May 11, 1993) 33-67596) [Exhibit 4(r)]
10(m) R. G. Barry Corporation 1994 Stock Option Plan Incorporated herein by reference to
(Reflects stock splits through June 22, 1994) Registrant's Registration Statement on Form
S-8, filed August 24, 1994 (Registration
No. 33-83252) [Exhibit 4(q)]
10(n) Form of Stock Option Agreement used in Incorporated herein by reference to
connection with the grant of incentive stock Registrant's 1995 Form 10-K [Exhibit 10(p)]
options pursuant to the R. G. Barry
Corporation 1994 Stock Option Plan
10(o) Form of Stock Option Agreement used in Incorporated herein by reference to
connection with the grant of non-qualified Registrant's 1995 Form 10-K [Exhibit 10(q)]
stock options pursuant to the R. G. Barry
Corporation 1994 Stock Option Plan
10(p) Executive Employment Agreement, effective as *
of January 4, 1998, between Registrant and
Charles E. Ostrander
10(q) Executive Employment Agreement, effective as *
of January 4, 1998, between Registrant and
Christian Galvis
10(r) Restricted Stock Agreement, effective as of *
January 4, 1998, between Registrant and
Charles E. Ostrander
</TABLE>
<PAGE> 49
<TABLE>
<CAPTION>
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
10(s) Restricted Stock Agreement, effective as of *
January 4, 1998, between Registrant and
Christian Galvis
10(t) Agreement, effective as of January 4, 1998, *
between Registrant and Richard L. Burrell
10(u) Agreement, effective as of January 4, 1998, *
between Registrant and Daniel D. Viren
10(v) Agreement, effective as of January 4, 1998, *
between Registrant and Harry Miller
10(w) R. G. Barry Corporation Deferred Compensation Incorporated herein by reference to
Plan As Amended and Restated (Effective as of Registrant's 1995 Form 10-K [Exhibit 10(v)]
September 1, 1995)
10(x) R. G. Barry Corporation Stock Option Plan for *
Non-Employee Directors (Reflects share splits
and amendments through February 19, 1998)
10(y) R. G. Barry Corporation 1997 Incentive Stock Incorporated herein by reference to
Plan Registrant's Registration Statement on Form
S-8, filed June 6, 1997 (Registration No.
333-28671) [Exhibit 4(k)]
10(z) Form of Stock Option Agreement used in *
connection with the grant of incentive stock
options pursuant to the R. G. Barry
Corporation 1997 Incentive Stock Plan
10(aa) Form of Stock Option Agreement used in *
connection with the grant of non-qualified
stock options pursuant to the R. G. Barry
Corporation 1997 Incentive Stock Plan
</TABLE>
<PAGE> 50
<TABLE>
<CAPTION>
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
13 Registrant's Annual Report to Shareholders for Incorporated herein by reference to the
the fiscal year ended January 3, 1998 (Not financial statements portion of this Annual
deemed filed except for the portions thereof Report on Form 10-K beginning at page 18
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 *
24 Powers of Attorney *
27.1 Financial Data Schedule (Fiscal Year Ended *
January 3, 1998)
27.2 Financial Data Schedule (Fiscal Year Ended *
December 28, 1996 Restated)
27.3 Financial Data Schedule (Fiscal Year Ended *
December 30, 1995 Restated)
</TABLE>
- ----------
* Filed herewith
<PAGE> 1
Exhibit 3(a)(7)
---------------
Certificate of Amendment to the Articles of
Incorporation of R. G. Barry Corporation Authorizing
Series I Junior Participating Class A Preferred Shares
(as filed with the Ohio Secretary of State on
March 10, 1998)
<PAGE> 2
[SECRETARY OF STATE OF OHIO SEAL]
Prescribed by
BOB TAFT, Secretary of State
30 East Broad Street, 14th Floor
Columbus, Ohio 43266-0418
Form C-107 (January 1991)
- --------------------------------------------------------------------------------
Charter No. ___________________
Approved _____________________
Date __________________________
Fee
- --------------------------------------------------------------------------------
CERTIFICATE OF AMENDMENT
BY DIRECTORS OF
R. G. Barry Corporation
- --------------------------------------------------------------------------------
(Name of Corporation)
Gordon Zacks , who is:
- --------------------
[ ] Chairman of the Board [X] President [ ] Vice President (check one)
and
Richard L. Burrell , who is: [X] Secretary [ ] Assistant Secretary (Check One)
- --------------------
of the above named Ohio corporation for profit do hereby certify that:
[X] a meeting of the Board of Directors was called and held on the 19th day
----
of February, 1998,
-------- --
[ ] in a writing signed by all the Directors pursuant to Section 1701.54 of the
Ohio Revised Code;
the following resolution was adopted pursuant to Section 1701.70(B)(1)(insert
the proper paragraph number) of the Ohio Revised Code:
SEE THE RESOLUTION WHICH IS SET FORTH IN EXHIBIT A, WHICH
ACCOMPANIES THIS CERTIFICATE AND IS INCORPORATED HEREIN BY
THIS REFERENCE.
IN WITNESS WHEREOF, the above named officers, acting for and on behalf
of the corporation, have hereto subscribed their names this 10th day of March,
---- -----
1998.
--
By /s/ Gordon Zacks
----------------------------------
Gordon Zacks (Chairman, President)
By /s/ Richard L. Burrell
----------------------------------
Richard L. Burrell, (Secretary)
NOTE: Ohio law does not permit one officer to sign in two capacities. Two
separate signatures are required, even if this necessitates the election of a
second officer before the filing can be made.
<PAGE> 3
EXHIBIT A
RESOLVED, that pursuant to the authority vested in the Board of
Directors by Article FOURTH, Section II of the Articles of Incorporation of R.
G. Barry Corporation (the "Company"), Article FOURTH of the Articles of
Incorporation of the Company be, and the same hereby is, amended to add a new
Article FOURTH, Section IX to fix the division of 225,000 shares of unissued
Class A Preferred Shares, par value $1.00 per share, into a series designated as
"Series I Junior Participating Class A Preferred Shares" the express terms of
which are as follows:
A. Designation of Series. The series shall be designated "Series I
Junior Participating Class A Preferred Shares," par value $1.00 per share
(hereinafter called "Series I Class A Preferred Shares").
B. Number of Shares. The authorized number of shares of Series I Class
A Preferred Shares is 225,000, 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 Bank of New York,
as Rights Agent, dated as of February 19, 1998; provided, that no decrease shall
reduce the number of Series I Class A 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 A 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 A Preferred Shares.
D. Dividend Rate. The dividend rate for the Series I Class A Preferred
Shares shall be, subject to the provision for adjustment hereinafter set forth,
100 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
<PAGE> 4
$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 of any share or fraction of a share of Series I
Class A Preferred Shares. In the event the Company shall at any time after
February 19, 1998 (the "Rights Dividend 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
smallest number of shares, then in each such case, the amount to which holders
of shares of Series I Class A 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 A Preferred
Shares with respect to dividends, the Company shall declare a dividend or
distribution on the Series I Class A 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 $0.50 per
share on the Series I Class A 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 A Preferred Shares from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
I Class A 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 A 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.
2
<PAGE> 5
Dividends paid on the shares of Series I Class A 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 A Preferred Shares
entitled to receive payment of a dividend or distribution declared 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 A 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 A Preferred Shares purchased
or otherwise acquired by the Company in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued Class A Preferred Shares and
may be reissued as part of a new series of Class A 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 A Preferred Shares unless, prior thereto,
the holders of shares of Series I Class A 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 A Liquidation Preference"). Following the payment of the full
amount of the Series I Class A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series I Class A
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 A Liquidation Preference by (ii) 100
(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
3
<PAGE> 6
full amount of the Series I Class A Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series I Class A Preferred
Shares and Common Shares, respectively, holders of Series I Class A 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 1 with respect to such Series I Class A Preferred
Shares and Common Shares, on a per share basis, respectively.
(2) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series I Class A 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 A 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 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 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 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 A
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 100 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)
4
<PAGE> 7
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 A 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 A Preferred Shares shall not be
redeemable.
K. Ranking. The Series I Class A 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 A 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 A 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 A Preferred Shares, voting
separately as a class.
M. Fractional Shares. Series I Class A 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 A Preferred Shares.
5
<PAGE> 1
EXHIBIT 3(a)(8)
Articles of Incorporation of R. G. Barry Corporation
(reflecting amendments through March 10, 1998) [for
purposes of SEC reporting compliance only -- not filed
with the Ohio Secretary of State]
<PAGE> 2
ARTICLES OF INCORPORATION
OF
R. G. BARRY CORPORATION
(reflecting amendments
through March 10, 1998)
[For purposes of SEC
reporting compliance only -- not filed
with the Ohio Secretary of State]
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 27,500,000 shares of which 22,500,000, 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;
<PAGE> 3
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 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
-2-
<PAGE> 4
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 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
-3-
<PAGE> 5
(as defined in Article SEVENTH), voting together as a single class, without
regard to series, 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 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 Stocksenior 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
onds, 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
-4-
<PAGE> 6
security or other obligation of the Corporation which may confer upon the holder
thereof the right to convert the same into shares 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
-5-
<PAGE> 7
preceding Quarterly Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance 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
-6-
<PAGE> 8
holders of shares of Series I Class B Preferred Shares entitled to receive
payment of a dividend or distribution declared 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 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.
(l) 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
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<PAGE> 9
Series I Class B Preferred Shares and Common Shares, on a per share basis,
respectively.
(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.
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<PAGE> 10
J. No Redemption. The Series I Class B Preferred Shares shall not be
redeemable.
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.
IX. A. Designation of Series. The series shall be designated
"Series I Junior Participating Class A Preferred Shares," par value $1.00 per
share (hereinafter called "Series I Class A Preferred Shares").
B. Number of Shares. The authorized number of shares of Series I Class
A Preferred Shares is 225,000, 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 Bank of New York,
as Rights Agent, dated as of February 19, 1998; provided, that no decrease shall
reduce the number of Series I Class A 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 A 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 A Preferred Shares.
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<PAGE> 11
D. Dividend Rate. The dividend rate for the Series I Class A Preferred
Shares shall be, subject to the provision for adjustment hereinafter set forth,
100 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 of any share or fraction of a share of Series I
Class A Preferred Shares. In the event the Company shall at any time after
February 19, 1998 (the "Rights Dividend 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
smallest number of shares, then in each such case, the amount to which holders
of shares of Series I Class A 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 A Preferred
Shares with respect to dividends, the Company shall declare a dividend or
distribution on the Series I Class A 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 $0.50 per
share on the Series I Class A 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 A Preferred Shares from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
I Class A 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 A Preferred Shares entitled to receive a quarterly
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<PAGE> 12
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 A 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 A
Preferred Shares entitled to receive payment of a dividend or distribution
declared 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 A 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 A Preferred Shares purchased
or otherwise acquired by the Company in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued Class A Preferred Shares and
may be reissued as part of a new series of Class A 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 A Preferred Shares unless,
prior thereto, the holders of shares of Series I Class A 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 A Liquidation Preference"). Following the
payment of the full amount of the Series I Class A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series I
Class A 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 A Liquidation Preference
by (ii) 100 (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
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<PAGE> 13
in clause (ii), the "Adjustment Number"). Following the payment of the full
amount of the Series I Class A Liquidation Preference and the Common Adjustment
in respect of all outstanding shares of Series I Class A Preferred Shares and
Common Shares, respectively, holders of Series I Class A 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
1 with respect to such Series I Class A Preferred Shares and Common Shares, on a
per share basis, respectively.
(2) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series I Class A 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 A 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 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 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 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 A
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 100 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,
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<PAGE> 14
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 A 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 A Preferred Shares shall not be
redeemable.
K. Ranking. The Series I Class A 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 A 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 A 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 A Preferred Shares, voting
separately as a class.
M. Fractional Shares. Series I Class A 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 A 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.
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<PAGE> 15
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 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
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<PAGE> 16
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 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
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<PAGE> 17
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.
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
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<PAGE> 18
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),
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:
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(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, 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;
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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 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 (l)
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
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<PAGE> 21
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 (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 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
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<PAGE> 22
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 (l) no
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
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<PAGE> 23
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 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.
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<PAGE> 24
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 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 l2b-2 of the Exchange Act as
in effect on March l, 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
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<PAGE> 25
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 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.
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<PAGE> 26
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, 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
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<PAGE> 27
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 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
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<PAGE> 28
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.
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
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<PAGE> 29
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 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,
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<PAGE> 30
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 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
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<PAGE> 31
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 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.
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<PAGE> 1
EXHIBIT 10(a)
R. G. Barry Corporation
Associates' Retirement Plan
(As Amended and Restated
Effective January 1, 1996)
<PAGE> 2
R. G. BARRY CORPORATION
ASSOCIATES' RETIREMENT PLAN
(As Amended and Restated
Effective January 1, 1996)
<PAGE> 3
R. G. BARRY CORPORATION
ASSOCIATES' RETIREMENT PLAN
(As Amended and Restated Effective January 1, 1996)
CONTENTS
- ----------------------------------------------------------------------------
SECTION PAGE
ARTICLE I. THE PLAN
1.1 Establishment and Amendment of the Plan 1
1.2 Applicability of Plan 1
ARTICLE II. DEFINITIONS
2.1 Definitions 2
2.2 Construction 10
ARTICLE III. PARTICIPATION AND SERVICE
3.1 Active Participation 11
3.2 Participation Status; Membership; Reemployment 11
3.3 Transferred Employees 12
3.4 Vesting Service 13
3.5 Benefit Service 16
3.6 Prior Service 17
3.7 Hours of Service 18
3.8 Special Provisions Relating to Acquired Businesses 19
3.9 Leased Employees 19
3.10 Special Provisions for Participants
Who Enter the Armed Forces 19
3.11 Special Provisions for Class A
Commissioned Sales Representatives 19
ARTICLE IV. BENEFITS
4.1 Normal Retirement Benefits 21
4.2 Late Retirement Benefits 22
4.3 Early Retirement Benefits 23
4.4 Disability Retirement Benefits 24
4.5 Vested Retirement Benefits 25
4.6 Death Benefit 28
4.7 Preretirement Surviving Spouse's Benefit 28
i
<PAGE> 4
R. G. BARRY CORPORATION
ASSOCIATES' RETIREMENT PLAN
(As Amended and Restated Effective January 1, 1996)
CONTENTS
- ------------------------------------------------------------------------------
SECTION PAGE
4.8 Automatic Joint and Surviving Spouse Annuity 29
4.9 Normal and Optional Methods of Benefit Payments 31
4.10 Adjustment for In-Service Payments 33
4.11 Maximum Annual Benefits 33
4.12 Plan in Effect at Termination of Employment Controls 37
4.13 Optional Direct Rollovers of Eligible Rollover Distributions 37
4.14 Payment of Small Amounts 39
4.15 Special Commencement Rule For Certain Former Participants 40
ARTICLE V. COMMENCEMENT OF BENEFIT PAYMENTS AND DURATION
5.1 Commencement and Duration 42
5.2 Required and Minimum Distribution Rules 44
5.3 Reemployment After Benefit Commencement but Prior to
Normal Retirement Age 46
5.4 Reemployment After Benefit Commencement and After
Attaining Normal Retirement Age 46
5.5 Suspension of Benefits Notice and Procedures 47
ARTICLE VI. PLAN ADMINISTRATION
6.1 Appointment of Committee 49
6.2 Compensation and Expenses 49
6.3 Manner of Action 50
6.4 Chairman, Secretary, and Employment of Specialists 50
6.5 Delegation of Responsibilities 50
6.6 Records 51
6.7 Rules 51
6.8 Administration 51
6.9 Appeals from Denial of Claims 52
6.10 Notice of Address and Missing Persons 52
6.11 Application for Benefits and Data 53
6.12 Indemnity for Liability 53
ii
<PAGE> 5
R. G. BARRY CORPORATION
ASSOCIATES' RETIREMENT PLAN
(As Amended and Restated Effective January 1, 1996)
CONTENTS
- ----------------------------------------------------------------------------
SECTION PAGE
ARTICLE VII. FINANCING
7.1 Funding 54
7.2 Contributions 54
ARTICLE VIII. AMENDMENT AND TERMINATION
8.1 Amendment and Termination 55
8.2 Limitations on Amendments 56
8.3 Distribution on Termination 57
8.4 Effect of Contingencies Affecting the Employer 58
8.5 Restrictions on Benefits and
Distributions to Certain Members 58
ARTICLE IX. PARTICIPATION IN AND WITHDRAWAL
FROM THE PLAN BY AN EMPLOYER
9.1 Participation in the Plan 60
9.2 Withdrawal from the Plan 60
ARTICLE X. MISCELLANEOUS
10.1 Nonalienation 62
10.2 Incompetency 62
10.3 Merger, Consolidation, or Transfer 62
10.4 Litigation 63
10.5 Effect of Mistake 63
10.6 No Enlargement of Employee Rights 63
10.7 No Guarantee 63
10.8 Internal Revenue Service Approval 64
10.9 Exclusive Benefit; Nonreversion 64
10.10 Applicable Law 65
10.11 Severability 65
iii
<PAGE> 6
R. G. BARRY CORPORATION
ASSOCIATES' RETIREMENT PLAN
(As Amended and Restated Effective January 1, 1996)
CONTENTS
- -----------------------------------------------------------------------------
SECTION PAGE
ARTICLE XI. TOP-HEAVY PROVISIONS
11.1 Application of Top-Heavy Provisions 66
11.2 Definitions 66
11.3 Vesting Requirements 69
11.4 Minimum Benefit 69
11.5 Limit on Annual Additions; Combined Plan Limit 70
11.6 Collective Bargaining Agreements 70
iv
<PAGE> 7
ARTICLE I. THE PLAN
1.1 ESTABLISHMENT AND AMENDMENT OF THE PLAN
R. G. Barry Corporation ("Sponsor") presently maintains the R. G. Barry
Corporation Salaried Employees' Pension Plan for the benefit of its salaried
employees, which plan was previously established effective January 1, 1973, and
was last restated effective as of January 1, 1989. In addition, the Sponsor
presently maintains the Retirement Income Plan for Non-Salaried Employees of R.
G. Barry Corporation for the benefit of its nonsalaried, noncommissioned
employees, which plan was previously established effective January 1, 1964, and
was last restated effective as of January 1, 1989. Effective as of January 1,
1996, the Retirement Income Plan for NonSalaried Employees of R. G. Barry
Corporation was merged into the R. G. Barry Corporation Salaried Employees'
Pension Plan. Said merged plan is hereby amended and restated as set forth
herein, effective as of January 1, 1996 (except to the extent otherwise provided
herein), and shall be known as the "R. G. Barry Corporation Associates'
Retirement Plan".
1.2 APPLICABILITY OF PLAN
The provisions of this Plan as set forth herein are applicable only to the
Eligible Employees and their surviving Spouses or Beneficiaries of the Employer
in current employment on or after January 1, 1996. The restated Plan shall
preserve all benefits accrued and not forfeited by Members under the terms of
the Plan prior to this restatement.
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ARTICLE II. DEFINITIONS
2.1 DEFINITIONS
Whenever used in the Plan, the following terms shall have the respective
meanings set forth below unless otherwise expressly provided herein, and when
the defined meaning is intended the term is capitalized.
(a) "ACTUARIAL EQUIVALENT" means a benefit having the same value as the
benefit which it replaces, computed on the basis of the 1971 Group
Annuity Mortality Table for Males projected to 1990 by Scale D with an
age setback of four years for the Participant and two years for any
Spouse or Beneficiary and a 7 percent annual interest rate assumption,
except as otherwise specified in the document. For purposes of
determining the Actuarial Equivalent present value and single sum
amount of a Member's monthly Retirement Benefit (and for purposes of
Section 5.1(b)), subject to the limitations of Sections 4.9 and 8.2,
such determination shall be made using:
(1) the annual interest rate on 30-year Treasury securities as
published in the Internal Bulletin for the second full month
preceding the first day of the Plan Year which rate shall
remain constant for the Plan Year and
(2) the mortality projections taken from the 1983 Group Annuity
Mortality Table with a 50 percent male and 50 percent female
weighting of the mortality rates as described in Revenue
Ruling 95-6 or the successor mortality tables as prescribed by
the Secretary of the Treasury;
provided, however, that prior to January 1, 1997, such determination
shall be made on the basis of the 1971 Group Annuity Mortality Table
for Males projected to 1990 by Scale D with an age setback of four
years for the Participant and two years for any Spouse or Beneficiary
and using an interest rate not greater than--
(A) The "applicable interest rate" if the present value of such
Benefit (using such rate) is not in excess of $25,000; or
(B) 120 percent of the "applicable interest rate" if the present
value of such Benefit exceeds $25,000 (as determined under (A)
above). In no event shall the present value determined under
this Section 2.1(a)(B) be less than $25,000.
For purposes of this Section 2.1(a)(A) and (B), "applicable interest
rate" shall mean the interest rate or rates which would be used by the
Pension Benefit Guaranty Corporation for purposes of determining the
present value of a Member's lump sum benefit under the Plan if the Plan
had terminated on the date distribution commences with insufficient
assets to provide benefits guaranteed
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<PAGE> 9
by the Pension Benefit Guaranty Corporation on such date, provided,
that the "applicable interest rate" shall be determined as of the
second calendar month preceding the month in which the single sum is
payable rather than as of the date distribution commences.
Notwithstanding the preceding provisions of this Section 2.1(a), for
distributions beginning on any date in 1997, the annual rate of 30-
year Treasury securities under Section 2.1(a)(1) shall be determined as
of the second full month preceding the first day of the Plan Year in
which the distribution commences or as of the second calendar month
preceding the month in which the single sum is payable, whichever
results in the larger Actuarial Equivalent.
The foregoing assumptions shall be used for benefit calculations but
shall not restrict the right of the Sponsor and the Actuary to use
different assumptions for determining the appropriate funding of the
Plan. In the event of a termination of the Plan, this Section 2.1(a)
shall be subject to the regulations of the PBGC.
(b) "ACTUARY" means the actuary for the Plan who is appointed or selected
by the Committee but is independent of the Sponsor. The Actuary
designated shall serve for so long as shall be mutually agreeable to
the Committee and the Actuary. The Actuary shall be a person who is an
"enrolled actuary" under ERISA, or shall be an actuarial consulting
firm or corporation which employs or has on its staff such an enrolled
actuary.
(c) "AFFILIATE" means--
(1) Any corporation other than the Sponsor, i.e., either a
subsidiary corporation or an affiliated or associated
corporation of the Sponsor, which together with the Sponsor is a
member of a "controlled group" of corporations (as defined in
Code Section 414(b));
(2) Any organization which together with the Sponsor is under
"common control" (as defined in Code Section 414(c));
(3) Any organization which together with the Sponsor is an
"affiliated service group" (as defined in Code Section 414(m));
(4) Any organization required to be aggregated with an Employer
pursuant to Code Section 414(o); or
(5) Any other corporation or entity designated as an Affiliate by
resolution of the Board of Directors of the Sponsor.
(d) "ANNUITY STARTING DATE" means, in the case of benefits payable in the
form of an annuity, the earlier of the first day of the first period
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<PAGE> 10
for which a benefit is payable under the Plan, or the date on which a
Member, surviving Spouse, or Beneficiary begins to receive benefits
under the Plan. In the case of a benefit payable in the form of a
single sum payment, Annuity Starting Date means the date on which all
events have occurred which entitle the Member to receive such benefit.
(e) "AUTOMATIC JOINT AND SURVIVING SPOUSE ANNUITY" means the annuity form
of benefit payments described in Section 4.8.
(f) "BENEFICIARY" means the person or persons designated under Section
4.9(c).
(g) "BOARD OF DIRECTORS" means the Board of Directors of the Sponsor.
(h) "CODE" means the Internal Revenue Code of 1986 and the
regulations issued thereunder, as amended from time to time.
(i) "COMMITTEE" means the committee which is responsible for the
administration of the Plan, as provided in Article VI.
(j) "COMPENSATION" means a Participant's pay, determined as follows:
(1) For all purposes under the Plan, except as otherwise specified,
Compensation means:
(A) For Plan Years beginning on or after January 1, 1991, the
Participant's salary and excludes overtime, cash bonuses,
and sales incentive payments.
(B) For Plan Years beginning before January 1, 1991, the
Participant's salary and commissions, but shall exclude
overtime and cash bonuses as well as commissions while a
Class A salesman.
(2) For purposes of applying the limitations described in Section
4.11 and the provisions of Article XI, Compensation means the
Member's "compensation" as defined in Code Section 415(c)(3), as
determined by the Committee.
Notwithstanding the foregoing provisions of this Section 2.1(j), the
Compensation of each Employee that may be taken into account under the
Plan shall not exceed the first "applicable dollar amount" of an
Employee's annual Compensation; provided, however, that such annual
dollar limitation shall not apply to Compensation for purposes of
Section 4.11. For purposes of this Section 2.1(j), the term "applicable
dollar amount" means the maximum annual compensation limit which is
$150,000 as adjusted for the cost of living in accordance with Code
Section 401(a)(17)(B) for Plan Years beginning on or after January 1,
1994; provided, however, such limit shall be $200,000 as adjusted
annually for increases in the cost of living in accordance with Code
Section 415(d) for Plan Years beginning on or after January 1, 1989 and
before January 1, 1994.
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<PAGE> 11
For purposes of applying the limitation in the two preceding sentences,
the rules of Code Section 414(q)(6) shall apply to the determination of
an Employee's annual Compensation; provided, however, that in applying
such rules (which relate to the Compensation paid to certain family
members of certain Highly Compensated Employees), the term "family"
shall only include the Spouse of the Employee and any lineal
descendants of the Employee who have not attained age 19 before the
close of the annual measurement period. If, as a result of applying
such family rules, the applicable dollar limit is exceeded, then the
limit shall be prorated among the affected individuals in proportion to
each affected individual's Compensation as determined prior to the
application of this limitation.
(k) "EFFECTIVE DATE" means January 1, 1996.
(l) "ELIGIBILITY SERVICE" means the service of an Employee, as
determined under Section 3.1.
(m) "ELIGIBLE EMPLOYEE" means any Salaried Employee or Nonsalaried
Employee of an Employer.
(n) "EMPLOYEE" means an employee who is employed by the Sponsor or an
Affiliate; excluding, however, any person who is an independent
contractor or leased employee as defined in Section 3.9.
(o) "EMPLOYER" means the Sponsor or any Affiliate which has elected to
become a participating Employer under the Plan in accordance with
Article IX.
(p) "EMPLOYMENT COMMENCEMENT DATE" means the first day on which an Employee
is credited with an Hour of Service with the Employer or an Affiliate
or, if applicable, the first day following a Break in Service on which
an Employee is credited with an Hour of Service with the Employer or an
Affiliate.
(q) "ERISA" means the Employee Retirement Income Security Act of 1974 and
the regulations issued thereunder, as amended from time to time.
(r) "FINAL AVERAGE COMPENSATION" means one-sixtieth of the
Participant's total Compensation for the highest five consecutive
Plan Years out of the last 10 consecutive Plan Years of employment
as a Salaried Employee with an Employer; provided that if he has
fewer than five Plan Years of employment as a Salaried Employee
with an Employer, then his Final Average Compensation shall be
determined using such Participant's total period of employment as a
Salaried Employee with the Employer and the actual number of
months worked. With respect to a reemployed Participant, the
period during which he is not employed as a Salaried Employee by
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<PAGE> 12
an Employer shall not be considered an interruption for purposes of
the meaning of "consecutive".
(s) "HIGHLY COMPENSATED EMPLOYEE" means, with respect to any Plan Year, any
Employee who at any time during the preceding Plan Year--
(1) was a 5-percent owner (as determined under Code Section
416(i)(1)),
(2) received Compensation from the Employers and Affiliates in
excess of $75,000,
(3) received Compensation from the Employers and Affiliates in
excess of $50,000 and was in the top-paid 20 percent of
Employees, or
(4) was an officer who received Compensation in excess of 50 percent
of the amount in effect under Code Section 415(b)(1)(A) for such
Plan Year.
Highly Compensated Employee also means, with respect to any Plan Year,
any Employee who, at any time during such Plan Year, met the
descriptions contained in (2), (3) or (4) above and was among the
top-paid 100 Employees or any Employee who was a 5-percent owner. In
applying the provisions of (2), (3) and (4) above, the dollar amounts
described therein shall automatically be adjusted annually pursuant to
Code Section 415(d). If an Employee is a family member of either a
5-percent owner who is an active or former Employee or a Highly
Compensated Employee who is one of the 10 most Highly Compensated
Employees ranked on the basis of Compensation, then the family member
and the 5-percent owner or top-ten Highly Compensated Employee shall be
aggregated to the extent required by the Code. The term "family member"
includes the spouse, lineal ascendants and descendants of the Employee
or former Employee, and the spouses of such lineal ascendants and
descendants. In determining the Highly Compensated Employees of the
Employer, the provisions of this Section 2.1(s) shall be applied in
accordance with the provisions of Code Section 414(q) and related
guidance, including in the discretion of the Committee (and pursuant to
the appropriate election) any simplified method or the calendar year
calculation election.
(t) "HOUR OF SERVICE" means the hours for which an Employee shall receive
credit for various purposes under the Plan, as described in Section
3.7.
(u) "LEAVE OF ABSENCE" means any absence without pay, authorized on a
nondiscriminatory basis by an Employer or nonparticipating Affiliate
under its standard personnel practices (which may be
6
<PAGE> 13
granted for reasons other than termination of employment, discharge,
retirement, or death), such as illness, accident, emergency or other
unusual condition affecting the Employee or persons dependent upon him
or for any reason sufficient in the discretion of the Sponsor;
provided, however, that in granting leaves of absence, all Employees
shall be treated alike.
(v) "MEMBER" means an Active Participant, an Inactive Participant or a
Former Participant who is entitled to receive a Retirement Benefit
under the Plan, as provided in Section 3.2.
(w) "NONSALARIED BENEFIT SERVICE" means the service of a Nonsalaried
Participant, as determined under Section 3.5.
(x) "NONSALARIED EMPLOYEE" or "NONSALARIED PARTICIPANT" means an Employee
or Participant, respectively, who is not compensated by a salary paid
on a biweekly basis and who is not compensated by commissions.
(y) "PARTICIPANT" means an "Active Participant" or "Inactive Participant",
as such terms are defined in Section 3.2. The term "Former Participant"
shall have the meaning provided for in Section 3.2.
(z) "PLAN" means the R. G. BARRY CORPORATION ASSOCIATES' RETIREMENT PLAN,
as amended and restated effective as of January 1, 1996, and as may be
subsequently amended from time to time.
(aa) "PLAN YEAR" means the 12-consecutive-month period beginning January 1
of a year and ending on December 31 of the same year.
(bb) "PRERETIREMENT SURVIVING SPOUSE'S BENEFIT" means the monthly benefit
payable to a Member's surviving Spouse, as described in Section 4.7.
(cc) "PRIMARY SOCIAL SECURITY BENEFIT" means the estimated monthly primary
insurance amount to which a Participant would be entitled at age 65 if
not otherwise disqualified under the Federal Social Security Act as
amended, whether or not he applies for or actually receives such
benefit. For purposes of the Plan, such estimated amount prior to his
Normal Retirement Date shall be determined based upon the method of
calculations described below.
In determining the Primary Social Security Benefit under this Plan, the
Social Security Act as in effect on January 1 of the then current
calendar year shall be applied. Wage history prior to employment with
the Employer shall be estimated by applying a salary scale with the
salary scale to be the actual change in the average national wages as
determined by the Social Security Administration. For any year in which
the Social Security Administration has not published
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<PAGE> 14
the increase in national average wages, a 6 percent increase shall be
assumed. Wages for future years shall be assumed to be the same as the
wages received in the last full calendar year of employment.
Provided, however, that any Participant shall be permitted to have his
actual salary history used as of the date of the calculation if the
Participant supplies documentation of that history. Such documentation
must be provided no later than a reasonable period of time (as
established by the Committee) following the later of the date of
separation from service (by retirement or otherwise) and the time when
the Participant is notified of the benefit to which he is entitled. To
the extent required by applicable law, the Committee shall furnish each
Member with a written notice of his right to supply actual past wages
and the financial effect of his failure to supply such actual wage
information.
Post-separation increases in a Member's Social Security benefit shall
not affect the Retirement Benefits determined under this Plan.
(dd) "PRIOR PLANS" means the R. G. Barry Corporation Salaried
Employees' Pension Plan and the Retirement Income Plan for Non-
Salaried Employees of R. G. Barry Corporation.
(ee) "RETIREMENT AGE" means a Member's Normal Retirement Age, Early
Retirement Age or Vested Retirement Age, whichever is applicable,
as follows:
(1) "NORMAL RETIREMENT AGE" means the sixty-fifth birthday of a
Participant.
(2) "EARLY RETIREMENT AGE" means a Member's age when he has attained
his fifty-fifth birthday (but not his sixty-fifth birthday) and
he is credited with at least 10 years of Vesting Service.
(3) "VESTED RETIREMENT AGE" means a Member's age when he is credited
with at least five years of Vesting Service but has not attained
his Early Retirement Age.
(ff) "RETIREMENT BENEFIT" means the monthly benefit payment to which
a Member is entitled under whichever of the following is applicable
to the Member:
(1) "NORMAL RETIREMENT BENEFIT" means the monthly benefit
described in Section 4.1.
(2) "LATE RETIREMENT BENEFIT" means the monthly benefit described in
Section 4.2.
(3) "EARLY RETIREMENT BENEFIT" means the monthly benefit described
in Section 4.3.
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<PAGE> 15
(4) "DISABILITY RETIREMENT BENEFIT" means the monthly benefit
described in Section 4.4.
(5) "VESTED RETIREMENT BENEFIT" means the monthly benefit described
in Section 4.5.
(gg) "RETIREMENT DATE" means a Member's Normal Retirement Date,
Late Retirement Date, or Early Retirement Date, whichever is
applicable, as follows:
(1) "NORMAL RETIREMENT DATE" means the first day of the calendar
month coincident with or next following the date on which a
Member attains his Normal Retirement Age.
(2) "LATE RETIREMENT DATE" means the first day of the calendar month
coincident with or next following the date a Participant
terminates his employment as an Employee after his Normal
Retirement Date.
(3) "EARLY RETIREMENT DATE" means the first day of the calendar
month coincident with or next following the date a Participant
terminates his employment as an Employee on or after attaining
his Early Retirement Age but before his Normal Retirement Age.
An Early Retirement Date may also be such later date as provided
in Section 5.1(a)(2).
(4) "DISABILITY RETIREMENT DATE" means the first day of the calendar
month coincident with or next following the date on which the
Committee determines that a Nonsalaried Participant has a
Disability, as described in Section 4.4(a).
(5) "VESTED RETIREMENT DATE" means for a Participant who terminates
his employment as an Employee on or after he attains his Vested
Retirement Age, and who is not eligible for a Normal Retirement
Benefit, Early Retirement Benefit or Disability Retirement
Benefit as a result of such termination of employment, the
Participant's Normal Retirement Date; provided, however, if such
Participant was credited with at least 10 years of Vesting
Service prior to the termination of his employment as an
Employee, his Vested Retirement Date shall be the first day of
any calendar month coincident with or next following his
fifty-fifth birthday for which he makes application for his
Vested Retirement Benefit to begin, but in no event later than
his Normal Retirement Date.
(hh) "SALARIED BENEFIT SERVICE" means the service of a Salaried
Participant, as determined under Section 3.5.
(ii) "SALARIED EMPLOYEE" or "SALARIED PARTICIPANT" means an Employee or
Participant, respectively, who is compensated by a salary paid on a
biweekly basis.
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<PAGE> 16
(jj) "SOCIAL SECURITY RETIREMENT AGE" means the "social security retirement
age" of a Member, as determined under Code Section 415(b)(8).
(kk) "SPONSOR" means R. G. BARRY CORPORATION, or any successor thereto.
(ll) "SPOUSE" means the person to whom a Member is legally married
on any relevant date or who is treated as if married to the Member
pursuant to a qualified domestic relations order as defined in Code
Section 414(p).
(mm) "TRUST AGREEMENT" means any agreement in the nature of a trust, or in
the nature of a custodial or funding agreement (including any group
annuity contract and/or funding investment contract issued pursuant
thereto) between the Sponsor and the Trustee and/or insurer, that is
established to form a part of the Plan to receive, hold, invest, and
dispose of the Trust Fund.
(nn) "TRUSTEE" means the Trustee or Trustees named in the Trust Agreement
and/or the insurer named in any other funding agreement, and any
additional or successor Trustee or Trustees from time to time acting as
Trustee or Trustees of the trust assets under the Plan, or the insurer
acting in the capacity of a custodian or funding agent of such trust
assets.
(oo) "TRUST FUND" or "Trust" means the funds or assets which are held and
administered by the Trustee pursuant to the Trust Agreement and the
Plan.
(pp) "VESTING SERVICE" means the service of an Employee, as determined
under Section 3.4.
2.2 CONSTRUCTION
Unless the context clearly requires otherwise, (a) the masculine pronoun
whenever used shall include the feminine and neuter pronoun, and the singular
shall include the plural, and (b) 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.
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<PAGE> 17
ARTICLE III. PARTICIPATION AND SERVICE
3.1 ACTIVE PARTICIPATION
Each individual who was a Participant in the Prior Plans on December 31, 1995,
in accordance with the terms of such Prior Plans as in effect on said date shall
become a Salaried Participant or Nonsalaried Participant, respectively, subject
to the provisions of this Plan. Each other Employee shall become an Active
Participant under the Plan on the January 1 nearest to the latest to occur
of--
(a) The date he is employed as an Eligible Employee,
(b) The date on which he is credited with at least one year of Eligibility
Service (defined below), or
(c) The date, on or after the Effective Date, that the Plan was made
applicable to the Employer of the individual;
provided he is employed as an Eligible Employee on such January 1. For the
purpose of determining eligibility to participate, 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. If he does not actually have 1,000 or more Hours
of Service during the 12-month period beginning with his Employment Commencement
Date, but he actually has 1,000 or more Hours of Service during any Plan Year
(beginning with the Plan Year in which such initial 12-month period ends), then
he shall become an active Participant on the first day of the Plan Year
immediately following such Plan Year.
An Employee who satisfies the eligibility requirements of Section 3.1(a), (b),
and (c) but who is not employed as an Eligible Employee on the applicable entry
date shall become an Active Participant under the Plan upon his reemployment as
an Eligible Employee following such entry date; provided, however, that if he is
not credited with at least one year of Vesting Service at the time of such
reemployment, he shall become an Active Participant in accordance with the
second sentence of this Section 3.1.
3.2 PARTICIPATION STATUS; MEMBERSHIP; REEMPLOYMENT
A Participant shall either be an "Active Participant" or an "Inactive
Participant" under the Plan. An Eligible Employee who has become an Active
Participant, as provided in Section 3.1, shall continue his status as an "Active
Participant" so long as he remains employed as an Eligible Employee. An Employee
who has become an Active Participant under the
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<PAGE> 18
Plan, as provided in Section 3.1, shall be an "Inactive Participant" during any
period when he is employed as an Employee but not as an Eligible Employee. Such
an Inactive Participant shall resume the status of an "Active Participant" at
the time he resumes employment as an Eligible Employee. An Active Participant or
Inactive Participant who ceases employment as an Employee shall become a "Former
Participant". A Former Participant shall become an "Inactive Participant" upon
his reemployment as an Employee or shall become an "Active Participant" upon his
reemployment as an Eligible Employee; provided, however, that if such Eligible
Employee is not credited with at least one year of Vesting Service at the time
of his reemployment as an Eligible Employee, he shall become an Active
Participant in accordance with the provisions of Section 3.1. As provided in
Section 2.1(v), an individual shall be classified as a "Member" under the Plan
so long as he is an Active Participant, an Inactive Participant or a Former
Participant who is entitled to receive a Retirement Benefit under the Plan. A
Participant who terminates his employment as an Employee and who is not entitled
to receive a Retirement Benefit under the Plan shall cease to be a Member
covered under the Plan.
3.3 TRANSFERRED EMPLOYEES
(a) TRANSFER TO NONPARTICIPATING AFFILIATE. Should a Participant cease to
be an Eligible Employee as defined in Section 2.1(m), but remain an
Employee of the Sponsor or an Affiliate, the following provisions will
apply:
(1) No Salaried or Nonsalaried Benefit Service shall be credited
during such period, and any benefit he may become entitled to
under the Plan shall be determined using the benefit formula
under the Plan in effect at the time of transfer and his Final
Average Compensation, Primary Social Security Benefit,
Compensation, and Salaried and/or Nonsalaried Benefit Service,
whichever are applicable, while he was an Active Participant in
the Plan;
(2) A Participant shall continue to accrue Vesting Service during
such period;
(3) If such person again becomes an Eligible Employee, he shall
become an Active Participant in the Plan the first of the
calendar month coinciding with or next following his
reclassification;
(4) Should the status of an Affiliate change so that it is
disassociated with the Sponsor, the Participant will then be
considered to have terminated his or her employment and shall
12
<PAGE> 19
be entitled to receive his Retirement Benefit as provided in
Article IV of the Plan.
(b) TRANSFER TO ANOTHER PARTICIPATING EMPLOYER. It is anticipated that
an Employee may be transferred between participating Employers,
and in the event of any such transfer, the Employee involved shall
carry with him his accumulated Salaried and/or Nonsalaried Benefit
Service and Vesting Service. No such transfer shall effect a
termination of employment hereunder, and the Employer to which
the Employee is transferred shall thereupon become obligated
hereunder with respect to such Employee in the same manner as
was the Employer from whom the Employee was transferred. For
the Plan Year of the transfer, both Employers shall pay their
proportionate share of the cost, if any, of the Plan with respect to
the transferring Employee for that Plan Year. Appropriate
adjustments shall be made between participating Employers to
reflect the transfers of employment.
(c) MULTIPLE BENEFITS. The benefits under this Plan for the period
during which an individual is a Nonsalaried Employee and a
Salaried Employee shall be determined independently; provided,
however, that no more than 30 years of combined Salaried and
Nonsalaried Benefit Service shall be considered in determining total
benefits under the Plan. Salaried and Nonsalaried Benefit Service are
each limited to 30 years. Notwithstanding any Plan provisions to the
contrary, if the sum of a Participant's years of Salaried and
Nonsalaried Benefit Service exceeds 30, then the benefit with the
more generous accrual (generally, the benefit earned as a Salaried
Participant) shall be offset by a fraction of the amount of the other
benefit. The numerator of said fraction shall equal the difference
between (1) total years of Salaried and Nonsalaried Benefit Service
and (2) 30, and the denominator shall be the years of Salaried or
Nonsalaried Benefit Service, whichever provides the less generous
benefit. The benefit with the less generous accrual (generally, the
benefit earned as a Nonsalaried Participant) shall be provided
without adjustment.
3.4 VESTING SERVICE
A Member's eligibility for benefits under the Plan shall be determined by his
period of Vesting Service. Vesting Service means a Member's period or periods of
employment by the Employers and Affiliates determined in accordance with
reasonable and uniform standards and policies adopted by the Committee from time
to time, which standards and policies shall be
13
<PAGE> 20
consistently observed. A Member will be credited with years of Vesting
Service in accordance with the following provisions:
(a) Vesting Service prior to the Effective Date: For a Member as of the
Effective Date, who had been covered under the prior provisions of the
Plan, the Member's period of employment with the Employer prior to the
Effective Date shall be counted as Vesting Service in accordance with
Section 3.6.
(b) Vesting Service from and after the Effective Date: Subject to the Break
in Service provisions, a year of Vesting Service means any Plan Year
during which the Member has at least 1,000 Hours of Service. A Member
shall be credited with Vesting Service in whole and fractional years of
such Member's period(s) of employment (whether or not such period(s) of
employment were consecutive) which are not disregarded as a result of
the application of the break rules of Section 3.4(d). Nonsuccessive
periods of employment must be aggregated, and less than whole year
periods of employment (whether or not consecutive) shall be aggregated
on the basis that each fractional year of Vesting Service is rounded to
the nearest one hundredth. Hours of Service for this purpose shall also
include periods of vacation, regular holidays, illness, incapacity,
layoff, jury duty, military duty, or Leave of Absence. An Employee
shall receive credit for Vesting Service from his Employment
Commencement Date until his Break in Service. No more than one year of
Vesting Service shall be credited to a Member under this Plan in any
Plan Year.
(c) Vesting Service shall not be deemed to have been broken--
(1) By any transfer of employment of an Employee between Affiliates
regardless of whether the Affiliate is an Employer hereunder; or
(2) During such period as an Employee is receiving credit for Hours
of Service under Section 3.7.
(d) If an Employee who has had a Break in Service is subsequently
reemployed as an Employee--
(1) If he is reemployed before a One-Year Break in Service occurs
after such Break in Service, the Vesting Service he had at such
Break in Service shall be reinstated from such Employee's most
recent Employment Commencement Date after the Employee completes
a year of Vesting Service following the Break in Service.
(2) If he is reemployed after a One-Year Break in Service occurs
after such Break in Service, he shall be considered a new
Employee for purposes of the Plan, except--
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<PAGE> 21
(A) If at such Break in Service he had a vested interest in
any portion of his accrued benefit, Vesting Service he had
at such Break in Service shall be reinstated from such
Employee's most recent Employment Commencement Date after
the Employee completes a year of Vesting Service following
the One-Year Break in Service.
(B) If Section 3.4(d)(2)(A) as provided above is not
applicable, and if the number of consecutive One-Year
Breaks in Service does not equal or exceed the greater of
five or the number of years of Vesting Service he had
before such Break in Service, the years of Vesting Service
he had at such Break in Service shall be reinstated from
such Employee's most recent Employment Commencement Date
after the Employee completes a year of Vesting Service
following the One-Year Break in Service.
(e) In determining an Employee's Vesting Service pursuant to this Section
3.4, the following terms shall apply:
(1) "BREAK IN SERVICE" shall mean the earlier of (A) or (B) below:
(A) The date the Employee quits, retires, is discharged or
dies; or
(B) The first anniversary of the first day of an Employee's
absence from employment as an Employee (with or without
pay) for any reason other than in (A) above, such as
vacation, sickness, Leave of Absence, layoff or military
service, or special leave of absence as provided in
Section 3.10. An Employee who fails to return to
employment as an Employee at the expiration of such
absence shall be deemed to have had a Break in Service on
the first to occur of the expiration of his absence or the
first anniversary of the first day of his absence.
(2) A "ONE-YEAR BREAK IN SERVICE" shall mean each Plan Year
beginning with the Plan Year which includes the date an Employee
incurs a Break in Service, provided that the Employee is
credited with 500 or fewer Hours of Service during such period.
Solely for purposes of determining whether a One-Year Break in
Service has occurred, in the case of an Employee who is absent
from work beyond the first anniversary of the first date of an
absence and the absence is for one of the following reasons, the
date the Employee incurs a Break in Service shall be the second
anniversary of the Employee's absence from employment:
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<PAGE> 22
(A) The pregnancy of the Employee;
(B) The birth of a child of the Employee;
(C) The adoption of a child by the Employee; or
(D) Caring for such child for a period immediately following
birth or adoption.
The period between the first and second anniversary of the first
date of absence shall not constitute Vesting Service.
3.5 BENEFIT SERVICE
The amount of the benefit payable to or on behalf of a Member shall be
determined on the basis of his Salaried and/or Nonsalaried Benefit Service,
in accordance with the following:
(a) SALARIED AND/OR NONSALARIED BENEFIT SERVICE PRIOR TO THE EFFECTIVE
DATE. For a Member as of the Effective Date, who had been covered under
the prior provisions of either of the Prior Plans, the amount of
Salaried and/or Nonsalaried Benefit Service to be credited for
employment prior to the Effective Date shall be determined in
accordance with Section 3.6.
(b) SALARIED BENEFIT SERVICE FROM AND AFTER THE EFFECTIVE DATE. The
Member's Salaried Benefit Service shall be equal to his Vesting
Service reduced by--
(1) any period of Vesting Service prior to the date on which the
Member first became a Salaried Participant under the Plan (or
the R. G. Barry Corporation Salaried Employees' Pension Plan as
in effect prior to January 1, 1996) during which the Member was
not a Salaried Employee of the Employer,
(2) any period of Vesting Service from and after the date on which
the Member first became a Salaried Participant under the Plan
(or the R. G. Barry Corporation Salaried Employees' Pension Plan
as in effect prior to January 1, 1996) during which the Member
was not a Salaried Employee of the Employer, including but not
limited to any period between a Break in Service, as defined in
Section 3.4(e)(1), and reemployment as an Eligible Employee and
any period during which he was an Inactive Participant, and
(3) any period of Vesting Service reinstated pursuant to the
provisions of Section 3.4(d) if the Member was entitled, upon
such termination, to a monthly Retirement Benefit under the
Plan, and the full Actuarial Equivalent value of such Retirement
Benefit had been paid on behalf of such Member under the
provisions of Section 4.9(c)(3) or 5.1(a)(6).
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<PAGE> 23
(c) NONSALARIED BENEFIT SERVICE FROM AND AFTER THE EFFECTIVE DATE. The
Member's Nonsalaried Benefit Service shall be equal to his Vesting
Service reduced by--
(1) any period of Vesting Service prior to the date on which the
Member first became a Nonsalaried Participant under the Plan (or
the Retirement Income Plan for Non-Salaried Employees of R. G.
Barry Corporation as in effect prior to January 1, 1996) during
which the Member was not a Nonsalaried Employee of the Employer,
(2) any period of Vesting Service from and after the date on which
the Member first became a Nonsalaried Participant under the Plan
(or the Retirement Income Plan for Non-Salaried Employees of R.
G. Barry Corporation as in effect prior to January 1, 1996)
during which the Member was not a Nonsalaried Employee of the
Employer, including but not limited to any period between a
Break in Service, as defined in Section 3.4(e)(1), and
reemployment as an Eligible Employee and any period during which
he was an Inactive Participant, and
(3) any period of Vesting Service reinstated pursuant to the
provisions of Section 3.4(d) if the Member was entitled, upon
such termination, to a monthly Retirement Benefit under the
Plan, and the full Actuarial Equivalent value of such Retirement
Benefit had been paid on behalf of such Member under the
provisions of Section 4.9(c)(3) or 5.1(a)(6).
No more than one year of Salaried or Nonsalaried Benefit Service shall be
credited to a Member under this Plan in any Plan Year.
3.6 PRIOR SERVICE
For periods prior to January 1, 1996, an Employee's service shall consist of his
years and fractions of a year of Vesting Service, Salaried Benefit Service under
the R. G. Barry Corporation Salaried Employees' Pension Plan, and Nonsalaried
Benefit Service under the Retirement Income Plan for NonSalaried Employees of R.
G. Barry Corporation as reflected in the Employer's records for such Prior
Plans. Such service shall be subject to the effect of any Break in Service
incurred under provisions of the Prior Plans in effect prior to January 1, 1996,
and shall be determined in accordance with the prior provisions of the Prior
Plans including rules which relate to required minimum hours or other length of
service.
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<PAGE> 24
3.7 HOURS OF SERVICE
Hours of Service shall be determined by including the following:
(a) Each Hour of Service for which the Employer or Affiliate, either
directly or indirectly, pays an Employee, or for which the Employee is
entitled to payment, for the performance of duties. The Committee
credits Hours of Service under this paragraph (a) to the Employee for
the computation period in which the Employee performs the duties,
irrespective of when paid;
(b) Each Hour of Service for back pay, irrespective of mitigation of
damages, to which the Employer or Affiliate has agreed or for which the
Employee has received an award. The Committee credits Hours of Service
under this paragraph (b) to the Employee for the computation period(s)
to which the award or the agreement pertains rather than for the
computation period in which the award, agreement or payment is made;
(c) Each Hour of Service for which the Employer or Affiliate, either
directly or indirectly, pays an Employee, or for which the Employee
is entitled to payment (irrespective of whether the employment
relationship is terminated), for reasons other than for the
performance of duties during a computation period, such as Leave
of Absence, vacation, holiday, sick leave, illness, incapacity, layoff,
jury duty or military duty. The Committee will credit no more than
501 Hours of Service under this paragraph (c) to an Employee on
account of any single continuous period during which the Employee
does not perform any duties (whether or not such period occurs
during a single Plan Year). The Committee credits Hours of Service
under this paragraph (c) in accordance with the rules of paragraphs
(b) and (c) of Labor Reg. Section 2530.200b-2, which the Plan, by this
reference, specifically incorporates in full within this paragraph (c).
The Committee will not credit an Hour of Service under more than
one of the above paragraphs. A computation period for purposes of
this Section 3.7 is the calendar year. The Committee will resolve any
ambiguity with respect to the crediting of an Hour of Service in
favor of the Employee; and
(d) Each Employee shall be credited with Hours of Service 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 in accordance
with this definition to the extent it does not result in crediting
Hours of Service more than once with respect to any period.
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<PAGE> 25
3.8 SPECIAL PROVISIONS RELATING TO ACQUIRED BUSINESSES
In any case in which an individual becomes an Employee upon the acquisition of
all or a portion of the business of his former employer by an Employer or an
Affiliate, whether by merger, acquisition of assets or stock, or otherwise, his
service and compensation with such acquired employer prior to the date on which
such employer became an Affiliate (or part of an Affiliate) shall not be taken
into account under the Plan for purposes of calculating his Vesting Service,
Salaried or Nonsalaried Benefit Service, and Compensation under the Plan, except
to the extent that such service is required to be recognized under Code Section
414(a).
3.9 LEASED EMPLOYEES
A person who is not an Employee and who performs services for an Employer or an
Affiliate pursuant to an agreement between the Employer or Affiliate and a
leasing organization shall be considered a "leased employee" if such person
performed the services on a substantially full-time basis for at least one year
and the services are of a type historically performed by employees. A person who
is considered a "leased employee" of an Employer shall not be considered an
Employee for purposes of the Plan. If such a person becomes a Participant under
the Plan as a result of subsequent employment as an Employee with an Employer,
he shall receive credit for his service as a leased employee in calculating his
Vesting Service under the Plan but not for calculating his Salaried or
Nonsalaried Benefit Service.
3.10 SPECIAL PROVISIONS FOR PARTICIPANTS WHO ENTER THE ARMED FORCES
Notwithstanding any provision in this Plan to the contrary, contributions,
benefits, and service credit with respect to qualified military service will be
provided in accordance with Code Section 414(u). If a Participant is absent from
employment for voluntary or involuntary qualified military service with the
armed forces of the United States, does not receive a dishonorable discharge,
and returns to employment as an Employee within the period required under the
law pertaining to veterans' reemployment rights, he shall receive Vesting
Service and Salaried or Nonsalaried Benefit Service (based on his employment
status when the absence began) for the period of his absence from employment.
3.11 SPECIAL PROVISIONS FOR CLASS A COMMISSIONED SALES REPRESENTATIVES
If a Class A commissioned sales representative of the Employer becomes a
Participant under the Plan as a result of subsequent employment as an Eligible
Employee with an Employer, he shall receive credit for his service
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<PAGE> 26
as a Class A commissioned sales representative in calculating his Vesting
Service under the Plan, but such service shall be considered Salaried Benefit
Service only with respect to Plan Years beginning on or after January 1, 1991;
provided, however, that despite the provisions of Section 2.1(j), commissions
earned while a person is a Class A commissioned sales representative of the
Employer shall not be considered to be Compensation for purposes of this Plan.
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ARTICLE IV. BENEFITS
4.1 NORMAL RETIREMENT BENEFITS
(a) ELIGIBILITY. A Participant who attains his Normal Retirement Age while
employed as an Employee and retires on or before his Normal Retirement
Date shall be eligible to receive a Normal Retirement Benefit commencing
on his Normal Retirement Date. Upon attaining his Normal Retirement Age,
such Participant shall have a nonforfeitable right to his Normal
Retirement Benefit.
(b) AMOUNT FOR SALARIED PARTICIPANT. A Salaried Participant who terminates
his employment as an Employee and who is eligible for a Normal Retirement
Benefit under Section 4.1(a) shall be entitled to a Normal Retirement
Benefit commencing on his Normal Retirement Date. Such Normal Retirement
Benefit shall be calculated based on his years of Salaried Benefit
Service, Final Average Compensation, and his Primary Social Security
Benefit as a Salaried Employee as of his Normal Retirement Date. The
monthly amount of a Salaried Participant's Normal Retirement Benefit
payable for the lifetime of the Participant shall be equal to 48 percent
of the Salaried Participant's Final Average Compensation reduced by 50
percent of his Primary Social Security Benefit if the Salaried
Participant has accrued at least 30 years of Salaried Benefit Service. If
the Salaried Participant has less than 30 years of Salaried Benefit
Service at his Normal Retirement Date, then the resulting amount shall be
multiplied by a fraction, the denominator of which is 30 and the
numerator of which is the Salaried Participant's years, including partial
years, of Salaried Benefit Service.
Notwithstanding any Plan provision to the contrary, a Retirement Benefit
shall not be reduced below the value of the benefit determined as of
December 31, 1993 (or, if greater, December 31, 1988) due to the effects
of any changes in the limits of recognizable Compensation under Code
Section 401(a)(17).
(c) AMOUNT FOR NONSALARIED PARTICIPANT. A Nonsalaried Participant who
terminates his employment as an Employee and who is eligible for a
Normal Retirement Benefit under Section 4.1(a) shall be entitled to a
Normal Retirement Benefit commencing on his Normal Retirement
Date. Such Normal Retirement Benefit shall be a monthly amount
payable during the life of the Member, determined by multiplying (1)
the Participant's years, including fractional years, of Nonsalaried
Benefit Service (up to a maximum of 30 years) by (2) the benefit factor
in effect on the date of his termination of employment as an Eligible
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Employee (regardless of when he ceased to be a Nonsalaried Employee) in
accordance with the following table:
TERMINATION DATE
-----------------------------------------------------
On or After But Before Amount
-----------------------------------------------------
1/1/64 1/1/87 $ 5.00
1/1/87 1/1/89 $ 7.00
1/1/89 1/1/90 $ 8.00
1/1/90 6/30/91 $ 9.00
7/1/91 1/1/96 $10.00
1/1/96 -- $11.00
-----------------------------------------------------
Notwithstanding the provisions of the previous paragraph, certain Members
whose employment as Nonsalaried Employees with the Employer was
terminated prior to July 1, 1991 shall nevertheless be eligible to
receive a Normal Retirement Benefit determined by multiplying their
respective years of Nonsalaried Benefit Service, up to a maximum of 30
years, by $10. These individuals shall include Members (a) employed in
the Goldsboro, North Carolina sewing plant on the final day of such
facility's operation; (b) employed in cutting and laminating operations
at the San Angelo, Texas facility on the final day of those operations,
and (c) employed in Columbus, Ohio whose employment with the Employer was
terminated by layoff on December 3, 1990 and who had at least 15 years of
Nonsalaried Benefit Service at the time of layoff.
(d) NONDUPLICATION OF BENEFITS. There shall be no duplication of benefits.
The Normal Retirement Benefits under Section 4.1(b) and (c) shall in no
event be less than the largest respective Early Retirement Benefit which
the Participant would have been entitled to receive under Section 4.3 by
retiring at any time after meeting early retirement eligibility
requirements for an Early Retirement Benefit.
4.2 LATE RETIREMENT BENEFITS
(a) ELIGIBILITY. A Participant who attains his Normal Retirement Age while
employed as an Employee shall be eligible to receive a Late Retirement
Benefit under the Plan, commencing on his Late Retirement Date.
(b) AMOUNT. A Participant who terminates his employment as an Employee and
who is eligible for a Late Retirement Benefit under Section 4.2(a) shall
be entitled to a monthly Late Retirement Benefit
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<PAGE> 29
commencing on his Late Retirement Date. Such Late Retirement Benefit
shall be computed in the same manner as a Normal Retirement Benefit under
Section 4.1(b) and/or (c), whichever applies, except that it shall be
based on his years of Salaried or Nonsalaried Benefit Service, his Final
Average Compensation, his Primary Social Security Benefit, and the
applicable provisions of the Plan as in effect at his Late Retirement
Date.
The benefits of a Participant shall not be determined based on a formula
which became effective after his separation from service. If a Member
continues in employment beyond his Normal Retirement Age at a rate such
that his Normal Retirement Benefits are suspended pursuant to Section
5.1(a), his benefit upon retirement shall be calculated using the Plan
formula in effect when he actually terminates employment. If a Member
continues in employment beyond his Normal Retirement Age at a rate such
that his Normal Retirement Benefits are payable during such employment
pursuant to Section 5.1(a), his benefit shall be calculated using the
Plan formula in effect when his benefit payments begin.
4.3 EARLY RETIREMENT BENEFITS
(a) ELIGIBILITY. A Participant who attains his Early Retirement Age while
employed as an Employee shall be eligible to receive an Early Retirement
Benefit under the Plan, commencing on his Early Retirement Date.
(b) AMOUNT. A Participant who terminates his employment as an
Employee and who is eligible for an Early Retirement Benefit under
Section 4.3(a) shall be entitled to a monthly Early Retirement Benefit
under the Plan. Application for commencement prior to his Normal
Retirement Date must be made in writing to the Committee at least 30
days but not more than 90 days prior to the date he elects to have
distributions commence. Such Early Retirement Benefit shall be
computed in the same manner as a Normal Retirement Benefit under
Section 4.1(b) and/or (c), except that it shall be based on his years of
Salaried or Nonsalaried Benefit Service, his Final Average
Compensation, his Primary Social Security Benefit, and the applicable
provisions of the Plan as in effect at his termination of employment as
an Eligible Employee. The benefits of a Participant shall not be
determined based on a formula which became effective after his
separation from service as an Eligible Employee. If the Retirement
Benefit thus determined commences prior to the Member's Normal
Retirement Age, it shall be reduced as of the date the first Early
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Retirement Benefit payment commences by 5/9 of one percent for each of
the first 60 months and 5/18 of one percent for each of the next 60
months, as applicable, by which his Early Retirement Benefit payment
precedes his Normal Retirement Age.
The Early Retirement Benefit under this Section 4.3(b) will in no event
be less than the largest Early Retirement Benefit which the Member would
have been entitled to receive under this Section 4.3 by retiring at any
time after meeting Early Retirement eligibility requirements.
4.4 DISABILITY RETIREMENT BENEFITS
(a) ELIGIBILITY. A Participant who is actively employed as an Employee,
who has completed at least 15 years of Vesting Service, who has
attained at least age 50 but not his Normal Retirement Age, who
incurs a Disability, as defined below, while so employed, and who
terminates his employment as an Employee as a result of such
Disability shall be eligible to receive a Disability Retirement Benefit
under the Plan, commencing on his Normal Retirement Date with
respect to benefits earned as a Salaried Employee and commencing on
his Disability Retirement Date with respect to benefits earned as a
Nonsalaried Employee. For purposes of this Section 4.4, "Disability"
means that the Employee is so totally and permanently incapacitated
as established by a licensed physician selected by the Committee that
he is not able to perform his job or any job for the Employer for which
he is reasonably suited as a result of his education, training, and
experience and that the Employee qualifies for Social Security
disability benefits. A Member who commences Disability Retirement
Benefit payments under the Plan shall not be eligible to receive any
other Retirement Benefit under the Plan while he is receiving
Disability Retirement Benefit payments. Disability Retirement Benefits
payable to Nonsalaried Employees prior to Normal Retirement Age
shall terminate with the last payment made prior to the date on which
the earliest of the following events occurs:
(1) the Member engages in any regular gainful employment or
occupation for remuneration or profit;
(2) the Committee determines on the basis of a medical examination that
the Member is no longer permanently or totally disabled;
(3) the Member refuses to undergo a medical ordered by the Committee
not more frequently than semi-annually; or
(4) the date of the Member's death.
(b) AMOUNT FOR A SALARIED PARTICIPANT. A Member who has terminated employment
as an Employee and who is eligible for a Disability
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<PAGE> 31
Retirement Benefit under Section 4.4(a) shall be entitled to a monthly
Disability Retirement Benefit commencing on his Normal Retirement Date.
Such Disability Retirement Benefit shall be an amount equal to the
product of: (1) the Normal Retirement Benefit as described in Section
4.1(b) to which the Member would have been entitled on his Normal
Retirement Date if his employment as a Salaried Employee had continued
without change until he attained Normal Retirement Age, and using his
Final Average Compensation, his Primary Social Security Benefit, and the
provisions of the Plan in effect at his termination of employment as a
Salaried Employee due to Disability in lieu of the corresponding amounts
determined as of this Normal Retirement Date multiplied by (2) a fraction
the numerator of which is the Member's Salaried Benefit Service as of
such termination date and the denominator of which is the Salaried
Benefit Service which he would accrue as of his Normal Retirement Date.
(c) AMOUNT FOR NONSALARIED PARTICIPANT. A Member who has terminated
employment as an Employee and who is eligible for a Disability
Retirement Benefit under Section 4.4(a) shall be entitled to a monthly
Disability Retirement Benefit commencing on his Disability Retirement
Date. Such Disability Retirement Benefit shall be computed in the
same manner as a Normal Retirement Benefit under Section 4.1(c),
except that it shall be based on his years of Nonsalaried Benefit
Service and the provisions of the Plan as in effect at his Disability
Retirement Date and that it shall be reduced by workers'
compensation benefits (except awards or fixed statutory payments for
loss or loss of use of any bodily member) payable to him with respect
to his Disability. In the case of lump sum settlements under workers'
compensation, the lump sum shall be divided by the weekly workers'
compensation benefit which would otherwise have been payable to
determine the period over which the reduction should be made and
the amount of the reduction. Benefits shall not be payable to a
Member under more than one provision hereof for the same period of
time.
4.5 VESTED RETIREMENT BENEFITS
(a) ELIGIBILITY. A Member who attains his Vested Retirement Age shall be
eligible to receive a Vested Retirement Benefit under the Plan,
commencing on his Vested Retirement Date. If the terminated Member dies
before the date he would have been eligible to receive a Vested
Retirement Benefit, no benefit shall be paid to or for him except under
the terms of Sections 4.6, 4.7 and 4.8.
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<PAGE> 32
(b) AMOUNT. A Member who has terminated his employment as an
Employee, who is eligible for a Vested Retirement Benefit under
Section 4.5(a) and who is not eligible for another Retirement Benefit
under the Plan at the time of such termination of employment shall be
entitled to a monthly Vested Retirement Benefit commencing on his
Vested Retirement Date. Application for commencement prior to his
Normal Retirement Date must be made in writing to the Committee at
least 30 days but not more than 90 days prior to the date he elects to
have distributions commence. For a Salaried Participant, such Vested
Retirement Benefit shall be an amount equal to the product of: (1) the
Normal Retirement Benefit as described in Section 4.1(b) to which the
Member would have been entitled on his Normal Retirement Date if
his employment as a Salaried Employee had continued without change
until he attained Normal Retirement Age, and using his Final Average
Compensation, his Primary Social Security Benefit, and the provisions
of the Plan in effect at his termination of employment as an Eligible
Employee in lieu of the corresponding amounts determined as of this
Normal Retirement Date multiplied by (2) a fraction the numerator of
which is the Member's Salaried Benefit Service as of such termination
date and the denominator of which is the Salaried Benefit Service
which he would accrue as of his Normal Retirement Date. For a
Nonsalaried Participant, such Vested Retirement Benefit shall be
computed in the same manner as a Normal Retirement Benefit under
Section 4.1(c), except that it shall be based on his years of Nonsalaried
Benefit Service and the provisions of the Plan as in effect on the date
he ceases to be a Nonsalaried Employee. If the Vested Retirement
Benefit thus determined commences prior to the Member's Normal
Retirement Age, it shall be reduced as of the date the first Vested
Retirement Benefit payment commences by 5/9 of one percent for
each of the first 60 months and 5/18 of one percent for each of the
next 60 months, as applicable, by which his Vested Retirement Benefit
payment precedes his Normal Retirement Age.
(c) IMMEDIATE DISTRIBUTION OPTION. Notwithstanding any provisions of
the Plan to the contrary, effective as of January 1, 1997, if the Member
is not eligible for an immediate distribution under Section 4.5(b) above
on the date of his termination of employment as an Employee and
elects to have his distribution commence as soon as practicable
following his termination of employment as an Employee in
accordance with Section 5.4(a)(4), then his Vested Retirement Benefit
shall be equal to an immediate reduced Vested Retirement Benefit
commencing as soon as administratively practicable following his
termination of employment as an Employee computed as provided in
26
<PAGE> 33
Section 4.5(b) payable at Normal Retirement Age and adjusted as provided
below. Notwithstanding any provisions of the Plan to the contrary, an
immediate distribution option shall not be available if the lump sum
value of the total benefits earned as a Salaried Employee and as a
Nonsalaried Employee as determined below exceeds $7,500.
Notwithstanding any provisions of the Plan to the contrary, the immediate
reduced Vested Retirement Benefit described in this Section 4.5(c) shall
be payable only in the following forms:
(1) Subject to the consent requirements referenced in Section 4.8(a) or
(b), a lump sum distribution equal to the Actuarial Equivalent of
the amount determined in Section 4.5(b) payable at Normal
Retirement Age. Any Member who receives such a distribution shall
have no further interest in the Plan; or
(2) An immediate annuity payable in the Member's normal form of benefit
payment as described in Section 4.8(a) or (b), whichever is
applicable. Such immediate annuity shall be the Actuarial
Equivalent of the lump sum distribution as calculated above in
Section 4.5(c)(1).
The other optional forms of benefit described in Section 4.8(c) shall not
be available for any distribution made under this Section 4.5(c).
The Committee shall notify each Member who is eligible to elect to
receive a distribution under this Section 4.5(c). An application for
commencement must be made within the election period determined in
accordance with the administrative procedures established by the
Committee. The distribution shall commence as soon as administratively
practicable following the receipt of the Member's completed consent form.
If the Member does not file a timely consent to a current distribution in
accordance with this Section 4.5(c), then distribution of his Retirement
Benefit shall not commence prior to the date otherwise provided in this
Plan or the Prior Plans, whichever is applicable.
Should a Member who receives a benefit under this Section 4.5 be
reemployed by an Employer, any Retirement Benefits payable after his
reemployment shall be reduced by the Actuarial Equivalent of the benefit
he previously received under this Section 4.5.
(d) FORFEITURES. To the extent that the present lump sum value of a Member's
vested accrued benefit derived from Employer contributions is zero at the
time he ceases to be an Employee, the Member shall be deemed to have
received a distribution of such vested accrued benefit,
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<PAGE> 34
and such Member's Salaried and Nonsalaried Benefit Service shall be
disregarded for purposes of accrual of benefits under the Plan unless
such Member resumes covered employment with the Employer before the
Member accrued a period of five (5) or more consecutive One-Year Breaks
in Service (as defined in Section 3.4(e)(2)), in which event the Member's
accrued benefit derived from Employer contributions shall be restored to
the amount of such accrued benefit on the date of the deemed
distribution.
4.6 DEATH BENEFIT
Except as provided under Section 4.7, 4.8, or 4.9, no benefit shall be payable
to any person after the death of a Member. Sections 4.7 and 4.8 will not apply
with respect to Participants who terminated employment prior to September 2,
1974.
4.7 PRERETIREMENT SURVIVING SPOUSE'S BENEFIT
(a) ELIGIBILITY. In the case of a Member who (1) is eligible for a Vested
Retirement Benefit; (2) has a surviving Spouse; and (3) dies prior to his
Annuity Starting Date for his Retirement Benefit (whether or not such
Member is employed as an Employee), there shall be payable to his
surviving Spouse a Preretirement Surviving Spouse's Benefit as
described in Section 4.7(b) and (c).
(b) AMOUNT. The deceased Member's surviving Spouse who is eligible to receive
a Preretirement Surviving Spouse's Benefit shall receive a monthly
benefit payable for the life of such Spouse equal to--
(1) If the Member died on or before the earliest date upon which he
could have received Retirement Benefit payments under the Plan
("Earliest Commencement Date"), 50 percent of the monthly
Retirement Benefit amount the Member would have received had he
terminated employment as an Employee on the date of his death (if
he had not already terminated such employment), survived to his
Earliest Commencement Date, elected to begin receiving Retirement
Benefit payments on his Earliest Commencement Date with the
automatic form of payment under Section 4.8 in effect, and died on
the day after his Earliest Commencement Date; or
(2) If the Member died after his Earliest Commencement Date, 50 percent
of the monthly Retirement Benefit amount the Member would have
received had he retired on the day before his death, with his
Retirement Benefit payable in the automatic form of
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payment under Section 4.8 on the date preceding the day on
which he died.
(c) COMMENCEMENT. Payment of the Preretirement Surviving Spouse's
Benefit to a Member's surviving Spouse shall, unless otherwise elected
by such Spouse, commence on the later of the Member's Earliest
Commencement Date or the first day of the month following the
Member's death. In no event shall the payment of such Benefit
commence later than the later of the date the Member would have
attained his Normal Retirement Date or the first day of the month
following the Member's death.
4.8 AUTOMATIC JOINT AND SURVIVING SPOUSE ANNUITY
(a) ELIGIBILITY AND CONDITIONS. In lieu of the monthly Retirement Benefit
otherwise payable under Section 4.1, 4.2, 4.3, 4.4, or 4.5, a married
Member who has terminated employment as an Employee and who is
eligible for a Retirement Benefit payable under said Sections shall be
deemed to have automatically elected a reduced amount of such
monthly Retirement Benefit payable to him for his life with the
provision that if his surviving Spouse shall be living on his Annuity
Starting Date and also at his death after such automatic election shall
have become effective, a surviving Spouse benefit (as described in
Section 4.8(b)(2)) shall be payable to his surviving Spouse. Such auto-
matic election is subject to the following conditions:
(1) The automatic election provided in this Section 4.8 shall become
effective as of his Annuity Starting Date for the payment of the
Member's reduced monthly Retirement Benefit under the automatic
election in the form of an immediate annuity.
(2) A Member may prevent the automatic election provided in this
Section 4.8 from becoming effective only by executing a specific
written rejection of such election on a form approved by the
Committee and filing it with the Committee. This written rejection
of the automatic election shall not be effective unless (A) the
Spouse of the Member consents in writing to such rejection, (B)
such rejection designates a form of benefit payment which may not
be changed without written spousal consent (or the consent of the
Spouse expressly permits designations by the Member without any
requirement of further consent by the Spouse), and (C) the Spouse's
consent acknowledges the financial consequences of such consent and
designation and is witnessed by a Plan representative or a notary
public. Such spousal consent shall not be required if the Member
establishes to the satisfaction of the Committee that such consent
may not be obtained because
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there is no Spouse, because the Spouse cannot be located, or
because of such other circumstances as the Secretary of the
Treasury may prescribe by regulation. Such rejection must be filed
during the "election period" described in Section 4.8(a)(3). If the
Member has filed a specific written rejection of such automatic
election, he may revoke such rejection at any time during the
"election period" described in Section 4.8(a)(3) by executing a
specific revocation thereof on a form approved by the Committee and
filing it with the Committee. Further, a subsequent specific
written rejection of the automatic election may then be made in
accordance with the preceding provisions of this Section 4.8(a)(2).
(3) For purposes of this Section 4.8(a), the Member's "election period"
shall be the 90-day period ending on his Annuity Starting Date. The
Committee shall provide (or cause to be provided) to each Member a
written explanation regarding the election and rejection of the
Automatic Joint and Surviving Spouse Annuity. Such written
explanation shall include the information as required by Code
Section 417 relating to qualified joint and survivor annuities, and
shall be provided no less than 30 days and no more than 90 days
prior to the Annuity Starting Date or at such times as required by
such regulations as currently in effect.
(4) For purposes of this Section 4.8, a Member shall be considered to
be a "married Member" if he has a Spouse on the Member's Annuity
Starting Date. If the Spouse becomes divorced from the Member after
his benefits commence, the Automatic Joint and Surviving Spouse
Annuity shall still be payable to the divorced former Spouse,
except as otherwise provided in the divorce decree.
(b) AMOUNT OF BENEFITS.
(1) For a Member who is deemed to have made the automatic election
pursuant to this Section 4.8 (and who does not reject it as
provided in Section 4.8(a)(2)), the reduced amount of his monthly
Retirement Benefit referred to in Section 4.8(a) shall be the
Actuarial Equivalent of the Retirement Benefit otherwise payable to
such Member under Section 4.1, 4.2, 4.3, 4.4 or 4.5, based on the
Member's age and his Spouse's age as of the Member's and Spouse's
nearest birthday prior to the Annuity Starting Date of his
Retirement Benefit, after giving effect to the increased costs of
the automatic election under this Section 4.8.
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(2) The surviving Spouse benefit payable to the surviving Spouse of a
Member who is deemed to have made an automatic election pursuant to
this Section 4.8 and who dies after such election becomes
effective, shall be a monthly benefit of 50 percent of the reduced
amount of such Member's monthly Retirement Benefit as determined in
Section 4.8(b)(1).
(c) COMMENCEMENT AND DURATION. The monthly surviving Spouse benefit shall be
payable to the surviving Spouse for life, beginning as of the first day
of the calendar month coincident with or next following the Member's
death.
4.9 NORMAL AND OPTIONAL METHODS OF BENEFIT PAYMENTS
(a) NORMAL FORM FOR UNMARRIED MEMBERS. In the case of an unmarried
Member who is not subject to the automatic election under Section 4.8,
the normal form of benefit payment of the monthly Retirement Benefit
payable under Section 4.1, 4.2, 4.3, 4.4, or 4.5 shall be a single life
annuity option, so the Member would receive a monthly payment for the
remainder of his lifetime or until payment is suspended pursuant to
Section 5.3. Such unmarried Member may elect to receive payment of the
monthly Retirement Benefit payable to him in one of the optional forms of
benefit payment described in Section 4.9(c). To make such election, such
unmarried Member must file a specific written rejection with the
Committee (on a form approved by the Committee) of the normal form of
benefit payment applicable to him and elect such optional form of benefit
payment within the 90-day period ending on his Annuity Starting Date
("election period"). If the unmarried Member has filed a specific written
rejection of such normal form of benefit payment, he may revoke such
rejection at any time during such election period by executing a specific
revocation thereof on a form approved by the Committee. Further, a
subsequent specific written rejection of the normal form of benefit
payment applicable to the unmarried Member may then be made in accordance
with the preceding provisions of this Section 4.9(a).
(b) NORMAL FORM FOR MARRIED MEMBERS. In the case of a married Member
who is subject to the automatic election under Section 4.8, the normal
form of benefit payment of the monthly Retirement Benefit payable
under Section 4.1, 4.2, 4.3, 4.4, or 4.5 shall be the automatic form of
benefit payment described in Section 4.8. A married Member who has
rejected the automatic election of the Automatic Joint and Surviving
Spouse Annuity as provided in Section 4.8 may elect to receive
payment of the monthly Retirement Benefit payable to him in one of
the optional forms of benefit payment described in Section 4.9(c). The
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rejection of the Automatic Joint and Surviving Spouse Annuity and the
election of such optional form of benefit payment shall be made in
accordance with the provisions of Section 4.8 and the applicable
provisions of this Section 4.9.
(c) OPTIONAL FORMS OF BENEFIT. The election of an optional form of benefit
payment shall be made in writing on a form approved by the
Committee and, to the extent required, with spousal consent in the
manner provided in Section 4.8. Such election shall be considered
made as of the date on which the application is received by the
Committee. The option shall not become effective until the Annuity
Starting Date for the payment of the Member's monthly Retirement
Benefit under the option. After the election has been made by such
Member, and prior to the effective date of the option, it may be
canceled by the Member at any time. A new option may be elected to
replace the canceled option, subject to the option becoming effective
on the Annuity Starting Date and subject to Section 4.8. After the
effective date of the option it may not be canceled by such Member,
but it shall be automatically canceled if such Member (or his
contingent annuitant under option 2) dies before the effective date of
the option. If the contingent annuitant dies before the effective date,
then the Member shall be permitted to select another contingent
annuitant or optional form of benefit, subject to applicable spousal
consent requirements. Any optional form of benefit must be the
Actuarial Equivalent of the benefit payable to the Member as a single
life annuity.
The optional forms of benefit payment provided under this Section 4.9
are as follows:
(1) SINGLE LIFE ANNUITY OPTION. A Member may elect a monthly
Retirement Benefit payable for the life of the Member, with no
further payments made after his death.
(2) JOINT AND SURVIVOR BENEFIT OPTION. A Member may elect an
actuarially reduced monthly Retirement Benefit payable for his
lifetime with all, two-thirds, or one-half of the reduced amount of
monthly benefit continued after his death to his designated
Beneficiary as a contingent annuitant. A Member electing this
option must designate one person individually as Beneficiary to
whom the survivor's benefit under this option is to be paid upon
the Member's death. Such designation shall be made in accordance
with Section 4.8, if applicable. Each such designation shall be
made on a form provided by the Committee, shall be effective only
when filed in writing with the Committee prior to
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the death of the Member, and shall revoke all prior designations of
a Beneficiary. Upon the death of the designated Beneficiary, no
alternate Beneficiary can be substituted unless the Member executes
a new election prior to his Annuity Starting Date. All benefit
payments shall cease under this option upon the death of the Member
and his surviving Spouse or other designated Beneficiary.
(3) LUMP SUM OPTION. A Member may elect to receive a single sum in the
amount of the Actuarial Equivalent value of his total accrued
Retirement Benefit earned as a Salaried Employee and/or as a
Nonsalaried Employee if such total value is less than or equal to
$7,500 ($3,500 prior to January 1, 1997). Such lump sum payment(s)
shall be in complete satisfaction of the Retirement Benefit earned
as a Salaried Employee and/or as a Nonsalaried Employee, whichever
is applicable.
In no event shall any optional method of benefit payment reduce the value
of the Retirement Benefit otherwise payable to the Member by an amount
greater than the amount permitted under Section 5.2(h). In addition,
benefit payments with respect to a Member's Retirement Benefit shall be
subject to the provisions of Section 5.2.
4.10 ADJUSTMENT FOR IN-SERVICE PAYMENTS
In the case of a Participant whose benefit payments commence prior to the date
of his termination of employment as an Employee pursuant to Section 5.2, amounts
payable after the date of his termination of employment as an Employee shall be
reduced to reflect the Actuarial Equivalent value of amounts paid prior to such
termination of employment.
4.11 MAXIMUM ANNUAL BENEFITS
(a) Notwithstanding any other provisions of the Plan to the contrary, in no
event may the annual benefit provided under the Plan (together with that
provided by all other defined benefit plans of the Employers or any
Affiliate) for any Member for a "Limitation Year", which shall be the
Plan Year, exceed the lesser of--
(1) $90,000 or
(2) 100 percent of the Member's average annual Compensation over the
three consecutive years of active participation during which he had
the greatest aggregate Compensation from the Employers and all
Affiliates.
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If the Member has completed less than ten years of participation, the
limitation in Section 4.11(a)(1) shall be multiplied by a fraction, the
numerator of which is the Member's number of years (or part thereof) of
participation in the Plan, and the denominator of which is 10. If the
Member has completed less than ten years of Vesting Service, the
limitation in Section 4.11(a)(2), Code Section 415(b)(4) and Section
4.11(d) shall be adjusted by multiplying such amounts by a fraction, the
numerator of which is the Member's number of years of Vesting Service (or
part thereof), and the denominator of which is 10. In no event shall the
adjustments in the two preceding sentences reduce the limitations in
Section 4.11(a)(1) and (2), Code Section 415(b)(4) and Section 4.11(d) to
an amount less than one-tenth of the applicable limitation (determined
without regard to such adjustments).
(b) The provisions of this Section 4.11(b) are effective beginning January 1,
1997.
The maximum benefit permitted under Section 4.11(a) shall be in the form
of a single life annuity (with no ancillary benefits) under a plan to
which Employees do not contribute and under which no rollover
contributions are made. If the form of retirement benefits payable to a
Member is other than a single life annuity or a joint and survivor
annuity in which the contingent annuitant is the Member's Spouse, the
retirement benefit for that form of payment shall be adjusted to an
actuarially equivalent straight life annuity before the application of
the maximum limitation, and, so modified, shall be subject to the
limitation. The actuarial equivalent shall be the greater of (a) the
equivalent amount computed using the factors used in determining the
Actuarial Equivalent for early retirement benefits under the Plan as
described in Section 4.3, or (b) the equivalent amount computed using 5
percent interest and the mortality assumptions described in Section
2.1(a)(2). However, for purposes of adjusting any retirement benefit
amount that is subject to Section 417(e)(3) of the Code, the interest
rate described in Section 2.1(a)(1) shall be substituted for the 5
percent interest rate in the preceding sentence.
If the retirement benefit of a Member begins before a Member's Social
Security Retirement Age, but on or after his sixty-second birthday, the
dollar limitation shall be determined as follows: (a) If a Member's
Social Security Retirement Age is 65, the dollar limitation for the
retirement benefit commencing on or after age 62 is determined by
reducing the dollar limitation by 5/9 of one percent for each month in
which benefits commence before the month in which the Member
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attains age 65; (b) if a Member's Social Security Retirement Age is
greater than 65, the dollar limitation for benefits commencing on or
after age 62 is determined by reducing the dollar limitation by 5/9 of
one percent for each of the first 36 months and 5/12 of one percent for
each of the additional months (up to 24 months) in which the retirement
benefit commences before the month of the Member's Social Security
Retirement Age.
If the retirement benefit of a Member begins before a Member's
sixty-second birthday, the dollar limitation shall be the actuarial
equivalent of the retirement benefit beginning at age 62, as determined
above, reduced for each month in which benefits commence before the month
in which the Member attains age 62. The actuarial equivalent shall be the
lesser of (a) the equivalent amount computed using the factors used in
determining the Actuarial Equivalent for early retirement benefits under
the Plan as described in Section 4.3 and (b) the equivalent amount
computed using 5 percent interest and the mortality assumptions described
in Section 2.1(a)(2). Any decrease in the dollar limitation determined in
accordance with this provision shall not reflect the mortality decrement
to the extent that benefits will not be forfeited upon the death of the
Member.
If the retirement benefit of a Member begins after the Member's Social
Security Retirement Age, the dollar limitation shall be adjusted so that
it is the actuarial equivalent of an annual benefit of such dollar
limitation beginning at the Member's Social Security Retirement Age. The
actuarial equivalent shall be the lesser of (a) the equivalent amount
computed using the factors used in determining the Actuarial Equivalent
as described in Section 2.1(a)(1) and (2) and (b) the equivalent amount
computed using 5 percent interest and the mortality assumptions described
in Section 2.1(a)(2).
(c) The provisions of this Section 4.11(c) are effective prior to January 1,
1997, and shall be replaced by Section 4.11(b) as of January 1, 1997.
The maximum benefit permitted under Section 4.11(a) shall be in the form
of a single life annuity (with no ancillary benefits) under a plan to
which Employees do not contribute and under which no rollover
contributions are made. If the form of retirement benefits payable to a
Member is other than a single life annuity or a joint and survivor
annuity in which the contingent annuitant is the Member's Spouse, the
Member's annual retirement benefit shall not exceed the Actuarial
Equivalent (using an interest rate not less than 5 percent) of the
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maximum benefit permitted under Section 4.11(a) payable in the form of a
single life annuity.
If the retirement benefit of a Member commences before the Member's
Social Security Retirement Age, the amount in Section 4.11(a)(1) shall be
adjusted so that it is the Actuarial Equivalent (using an interest rate
not less than 5 percent) of an annual benefit in such amount, beginning
at the Social Security Retirement Age. The adjustment provided for in the
preceding sentence shall be made in the following manner:
(1) The dollar limitation for benefits commencing on or after age 62 is
determined by reducing the defined benefit dollar limitation by 5/9
of 1 percent for each of the first 36 months and 5/12 of 1 percent
for any additional months (up to 24 months) by which the benefits
commence before the month in which the Member attains his Social
Security Retirement Age, and
(2) If the annual benefit of a Member commences before age 62, the
defined benefit dollar limitation shall be the Actuarial Equivalent
of an annual benefit beginning at age 62 as determined above,
reduced for each month by which benefits commence before the month
in which the Member attains age 62; provided, however, that the
mortality decrement shall not be applied to the extent that
benefits will not be forfeited upon the death of the Member.
If the retirement benefit of a Member commences after the Member's Social
Security Retirement Age, the amount in Section 4.11(a)(1) shall be
adjusted so that it is the Actuarial Equivalent (using an interest rate
no greater than 5 percent) of an annual benefit in such amount, beginning
at the Social Security Retirement Age.
(d) If a Member's annual benefit does not exceed $10,000 and if he did not
participate in any defined contribution plan maintained by the Employers
or any Affiliate, the limitation described in Section 4.11(a) shall not
apply.
(e) The amount in Section 4.11(a)(1), and the amount in Section 4.11(a)(2)
for a Member who has terminated his employment with the Employers and
Affiliates, shall be automatically adjusted annually for increases in the
cost of living as provided in Code Section 415(d).
(f) In applying the limitations on benefits under this Section 4.11, the
qualified plans of any employer that is an Affiliate shall be aggregated
with the Plan or any other plan of the Employers or an Affiliate if the
employer would be an Affiliate if the phrase "at least 80 percent" in
Code Section 1563(a)(1), in applying such Section to Code Sections 414(b)
or 414(c), were replaced with "more than 50 percent".
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(g) In the event that any Member is a participant in a defined contribution
plan or plans of the Employers or any Affiliate, the sum of the
"defined benefit plan fraction" and the "defined contribution plan
fraction" (as such terms are defined in Code Section 415(e)) for any
Limitation Year with respect to such Member shall not exceed one. If
such sum would otherwise exceed one, then the Member's Retirement
Benefit under the Plan shall be reduced to comply with the
requirements of this Section 4.11(g), unless such reduction is provided
for under the terms of such defined contribution plan or plans. It is
intended to reduce the benefits payable under any defined benefit
plan to the extent possible, if necessary, to prevent the sum of the
defined benefit plan fraction and the defined contribution plan fraction
from exceeding 1.0 before reducing contributions to any defined
contribution plan. In applying the foregoing provisions, the transition
rules of Section 1106(i)(3), (4) and (6) of the Tax Reform Act of 1986
shall be applicable.
4.12 PLAN IN EFFECT AT TERMINATION OF EMPLOYMENT CONTROLS
The terms and provisions of the Plan shall not apply in determining the benefits
payable to any Employee whose employment relationship as an Employee was severed
(for any reason) prior to January 1, 1996. In such event, the terms and
provisions of the Prior Plan in effect on the date when his employment
relationship as an Employee was terminated shall apply.
4.13 OPTIONAL DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS
(a) IN GENERAL. Notwithstanding any provision of the Plan to the
contrary, a "Distributee" may elect to have any portion of an "Eligible
Rollover Distribution" paid directly to an "Eligible Retirement Plan"
specified by the "Distributee" in a "Direct Rollover" to the extent
permitted by Code Section 401(a)(31). Terms in quotation marks are
defined in Section 4.13(b) below.
(b) DEFINITIONS.
(1) "DIRECT ROLLOVER" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
(2) "DISTRIBUTEE" means each of the following persons who may elect a
Direct Rollover of an Eligible Rollover Distribution of the
Member's Retirement Benefit:
(A) The Member;
(B) The Member's Beneficiary, if the Beneficiary was married to
the Member on the date of his death; and
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(C) An alternate payee under a qualified domestic relations
order, as defined in Code Section 414(p), if that person is
the Spouse or former Spouse of the Member.
(3) "ELIGIBLE RETIREMENT PLAN" means an individual retirement account
described in Code Section 408(a), an individual retirement annuity
described in Code Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in Code Section
401(a), that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover
Distribution to the surviving Spouse, an "Eligible Retirement Plan"
is an individual retirement account or an individual retirement
annuity, as such terms are defined in the preceding sentence.
(4) "ELIGIBLE ROLLOVER DISTRIBUTION" means any distribution of all or
any portion of the Retirement Benefit payable to the Distributee,
except that an "Eligible Rollover Distribution" does not include:
(A) any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the Distributee or
the joint lives (or joint life expectancies) of the
Distributee or the Distributee's designated Beneficiary, or
for a specified period of 10 years or more;
(B) any distribution to the extent such distribution is required
under Code Section 401(a)(9);
(C) the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer
securities); and
(D) any other amounts which are not considered "Eligible
Rollover Distributions" under Code Section 401(a)(31).
(c) No amount shall be directly rolled over pursuant to this Section 4.13
unless and until it would otherwise be distributed to the Distributee and
all consents and written elections required to make the distribution have
been obtained. Nothing in this Section 4.13 shall be construed to permit
a Distributee to select more than one of the optional forms of benefit
described in Section 4.9 or elsewhere in the Plan.
(d) The Committee shall provide notice to each Distributee who will receive
an Eligible Rollover Distribution of the Distributee's right to elect a
Direct Rollover in accordance with Code Section 401(a)(31). The Committee
shall provide such notice at the time and in the manner required by
regulations.
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(e) The Distributee shall notify the Committee in writing by such deadline as
the Committee shall prescribe whether or not he wishes to have any part
of the Eligible Rollover Distribution directly rolled over. If the
Distributee fails to elect a Direct Rollover by the deadline established
by the Committee, then the entire amount of the Eligible Rollover
Distribution shall be distributed directly to the Distributee.
(f) A Distributee may elect that either of the following amounts shall be
directly rolled over:
(1) The entire amount of the Eligible Rollover Distribution; or
(2) Such portion of the Eligible Rollover Distribution as the
Distributee specifies (in accordance with rules established by the
Committee).
(g) The Distributee may only request a Direct Rollover to one Eligible
Retirement Plan.
(h) No amount will be directly rolled over pursuant to this Section 4.13
unless the Distributee provides the Committee, by such deadline as the
Committee shall prescribe, such information as it shall require--
(1) To determine that the amount directly rolled over will be received
by an Eligible Retirement Plan that will accept the Direct
Rollover; and
(2) To make the Direct Rollover and make such reports and keep such
records as are required under applicable law. The Committee may
rely on all such information provided by the Distributee and shall
not be required to verify any such information.
(i) The Committee shall select the manner in which to make the Direct
Rollover.
(j) Any amount directly rolled over in accordance with this Section 4.13
shall be a distribution from this Plan and shall discharge any liability
to the Distributee under this Plan to the same extent as a payment
directly to the Distributee.
(k) This Plan shall not accept Eligible Rollover Distributions from any plan.
4.14 PAYMENT OF SMALL AMOUNTS
Notwithstanding the foregoing provisions of this Article IV, effective as of
January 1, 1997, if the Actuarial Equivalent value of all benefits earned as a
Salaried Employee and a Nonsalaried Employee payable under the Plan (including a
benefit payable in a form as described in Sections 4.7 or 4.8) is less than or
equal to $3,500, such benefit shall be paid in a single sum payment as soon as
administratively practicable following the Member's termination of service. For
purposes of this Section 4.14, the lump sum
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present value shall be computed according to the interest rate and mortality
assumptions used to calculate the Actuarial Equivalent.
4.15 SPECIAL COMMENCEMENT RULE FOR CERTAIN FORMER PARTICIPANTS
(a) ELIGIBILITY. Notwithstanding any Plan provisions to the contrary, any
Former Participant who is not in current employment on or after January
1, 1997; who is entitled to receive a Retirement Benefit under the Plan
or Prior Plans as in effect on his date of termination of employment as
an Employee; and who is not otherwise eligible to commence distribution
of his Retirement Benefits under such plan before January 1, 1997, shall
be eligible to receive an immediate reduced Vested Retirement Benefit as
described in this Section 4.15.
(b) AMOUNT. A Former Participant who has terminated his employment as an
Employee and satisfies the other eligibility requirements described in
Section 4.15(a) shall be entitled to elect to receive a Vested Retirement
Benefit commencing as provided in Section 4.15(c).
Notwithstanding any provisions of the Plan to the contrary, such Vested
Retirement Benefit shall be equal to an immediate reduced Vested
Retirement Benefit commencing as provided in Section 4.15(c) computed as
of the first day of the month coincident with or next following
attainment of his Normal Retirement Age in the manner set forth in this
Plan or the Prior Plans, whichever is applicable, based on the factors
and the provisions of said plan, provided that he has a vested interest
as determined under the terms of said plan and further adjusted as
provided below.
Notwithstanding any provisions of the Plan to the contrary, the immediate
reduced Vested Retirement Benefit described in this Section 4.15 shall be
payable only in the following forms:
(1) Subject to the consent requirements referenced in Section 4.8(a) or
(b), a lump sum distribution equal to the Actuarial Equivalent as
of the Annuity Starting Date of the amount determined in the
preceding paragraph of this Section 4.15(b). Any Former Participant
who receives such a distribution shall have no further interest in
the Plan; or
(2) An immediate annuity payable in the Former Participant's normal
form of benefit payment as described in Section 4.8(a) or (b),
whichever is applicable. Such immediate annuity shall be
actuarially equivalent to the lump sum distribution as calculated
above in Section 4.15(b)(1).
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The other optional forms of benefit described in Section 4.8(c) shall not
be available for any distribution under this Section 4.15.
(c) COMMENCEMENT. The Committee shall notify each Former Participant who is
eligible to elect to receive a distribution under this Section 4.15 by
sending a notice to his last known address. An application for
commencement must be made within the election period determined in
accordance with the administrative procedures established by the
Committee. The distribution shall commence as soon as administratively
practicable following the receipt of his completed consent form, but in
no event prior to January 1, 1997.
If the Former Participant does not file a timely consent to a current
distribution in accordance with this Section 4.15, then distribution of
his Retirement Benefit shall not commence prior to the date otherwise
provided in the Prior Plan.
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ARTICLE V. COMMENCEMENT OF BENEFIT PAYMENTS AND DURATION
5.1 COMMENCEMENT AND DURATION
(a) The monthly Retirement Benefit payments to which an eligible Member is
entitled under Section 4.1, 4.2, 4.3, 4.4, or 4.5 shall begin as
described below:
(1) NORMAL AND LATE RETIREMENT BENEFITS. A Member entitled to a
Retirement Benefit under Section 4.1 or 4.2 shall start receiving
such Benefit as of the retired Member's Normal Retirement Date (in
the case of a Normal Retirement Benefit), the retired Member's Late
Retirement Date (in the case of a Late Retirement Benefit) or on
the first day of the month following the month that he is employed
at a rate at which he will work fewer than eight days during any
calendar month. A Member who continues in employment as an Employee
after attaining his Normal Retirement Age at a greater rate shall
have his Normal Retirement Benefit or his Late Retirement Benefit
(as the case may be) suspended in the manner described in Section
5.4, and he shall receive the notice described in Section 5.5.
(2) EARLY RETIREMENT BENEFITS. A Member entitled to a Retirement
Benefit under Section 4.3 shall start receiving such Retirement
Benefit as of the retired Member's Early Retirement Date if he has
given the Committee not less than 30 days' written notice of his
intention to take early retirement. If the Member does not elect
immediate distribution, then he may elect to defer commencement
until a later date which is not later than his Normal Retirement
Date provided that he gives the Committee not less than 30 nor more
than 90 days' notice of such later commencement date.
(3) DISABILITY RETIREMENT BENEFITS. A Member entitled to a Retirement
Benefit under Section 4.4 shall start receiving such Retirement
Benefit as of the terminated Member's Normal Retirement Date with
respect to such benefit earned as a Salaried Participant and as of
the terminated Member's Disability Retirement Date with respect to
such benefit earned as a Nonsalaried Participant.
(4) VESTED RETIREMENT BENEFITS. A Member entitled to a Retirement
Benefit under Section 4.5 shall start receiving such Retirement
Benefit as of the terminated Member's Vested Retirement Date.
Application for commencement prior to his Normal Retirement Date
must be made at least 30 days but not more than 90 days prior to
the date he elects to have distribution commence.
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Notwithstanding any provisions to the contrary, if the Member is
under age fifty-five on the date of his termination of employment
as an Employee and wants to receive an immediate reduced Vested
Retirement Benefit, his application for commencement must be made
within the election period determined in accordance with the
administrative procedures established by the Committee and the
distribution shall commence as soon as administratively practicable
following his termination of employment as an Employee. If the
Member does not file a timely consent to distribution, then
distribution shall not commence prior to his Normal Retirement Date
unless he elects to receive a reduced benefit following his
fifty-fifth birthday.
(5) SALARIED AND NONSALARIED BENEFITS. If a Member is entitled to
benefits as a Salaried Employee and as a Nonsalaried Employee,
then the form of benefit payment, commencement date, and the
duration of each such Retirement Benefit shall be determined
independently, except as otherwise expressly provided. No
Retirement Benefit can begin until the Participant ceases to be an
Employee.
(6) PAYMENT OF SMALL AMOUNTS. Notwithstanding any Plan provisions to
the contrary, if the Actuarial Equivalent value of a Member's total
benefit earned as a Salaried Employee and as a Nonsalaried Employee
payable under the Plan (including a benefit payable in a form as
described in Sections 4.8 or 4.9) is less than or equal to $3,500,
such benefit shall automatically be distributed as provided under
Section 4.14; provided, however, that, prior to January 1, 1997,
the distribution shall not be automatic but the Member may elect to
have such benefit paid to him in a single lump sum payment as soon
as administratively practicable following such Member's termination
of employment as an Employee. For purposes of this Section 5.1(a),
the lump sum present value shall be computed according to the
interest rate and mortality assumptions used to calculate the
Actuarial Equivalent.
(b) Notwithstanding the provisions of Section 5.1(a), if the value of a
Member's total nonforfeitable Retirement Benefit earned as a Salaried
Employee and as a Nonsalaried Employee exceeds $3,500 (or at the
time of any prior distribution exceeded $3,500), then payment of the
Member's Retirement Benefit shall not commence at any time before
the Member attains his Normal Retirement Age without his written
consent (or where the Member has died and a Spouse's benefit is to be
paid to his surviving Spouse, the written consent of such Spouse).
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(c) Unless the Member otherwise elects, the commencement of a Member's
Retirement Benefit payments shall begin not later than the sixtieth day
after the latest to close of the Plan Year in which--
(1) the Member attains or would have attained his Normal Retirement
Age,
(2) the tenth anniversary of the year in which the Member commenced
participation in the Plan occurs, or
(3) the Member's termination of employment as an Employee occurs.
5.2 REQUIRED AND MINIMUM DISTRIBUTION RULES
Notwithstanding any of the preceding provisions of this Article V, the following
provisions shall apply to the payment of Retirement Benefits:
(a) In no event may the payment of a Member's Retirement Benefit commence
later than the April 1 of the calendar year following the calendar year
in which the Member attains age 70-1/2; provided, however, that in the
case of a Member who attained age 70-1/2 prior to January 1, 1988, and
who is not a "5-percent owner" (as defined in Code Section 416(i)(1)(B)
and as further described under the regulations under Code Section
401(a)(9)) such payment shall be required to be commenced on or before
the April 1 of the calendar year following the calendar year in which the
Member terminates employment as an Employee or, if earlier, April 1 of
the calendar year following the calendar year in which the Member becomes
such a "5-percent owner"; and, provided further, that in the case of a
Member who attained age 70-1/2 during the 1988 calendar year and who is
not such a "5-percent owner", such payment shall be required to commence
by no later than April 1, 1990. For purposes of this Section 5.2(a), a
"5-percent owner" means any Employee who was a "5-percent owner" at any
time during the five Plan Year period ending in the calendar year in
which the Employee attains age 70-1/2 or in any subsequent Plan Year.
(b) A Member's Retirement Benefit shall be distributed by a method of benefit
payment beginning not later than the date required pursuant to Section
5.2(a), over the life of the Member or over the lives of such Member and
a designated Beneficiary or surviving Spouse, or within or over a period
not extending beyond the life expectancy of such Member or the life
expectancy of such Member and a designated Beneficiary or surviving
Spouse.
(c) If the payment of a Member's Retirement Benefit has begun in accordance
with Section 5.2(a) and the Member dies before his entire interest has
been paid to him, the remaining portion of the Member's Retirement
Benefit shall be paid at least as rapidly as under the
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method of benefit payment being used under Section 5.2(b) as of the date
of his death.
(d) If a Member dies prior to the commencement of the payment of his
Retirement Benefit, any survivor benefit paid with respect to the
Member's Retirement Benefit shall be paid within five years after the
death of such Member, except as permitted under Sections 5.2(e) and (f).
(e) If--
(1) any portion of the Member's Retirement Benefit is payable to his
surviving Spouse,
(2) such portion is to be paid over the life of such surviving Spouse
or within or over a period not extending beyond the life expectancy
of the surviving Spouse, and
(3) such payments begin not later than one year after the date of the
Member's death, or such later date as the Secretary of the Treasury
may by regulations prescribe,
the portion referred to in Section 5.2(e)(1) shall be treated as
distributed within the time required under Section 5.2(d).
(f) The date on which payments are required to begin under Section 5.2(e)(3)
shall not be earlier than the date on which the Member would have
attained age 70-1/2.
(g) In addition to the foregoing provisions of this Section 5.2, all
distributions of or with respect to any Retirement Benefit shall be
made in accordance with Code Section 401(a)(9) (including the
regulations thereunder), and the provisions of the Plan relating to the
payment of such distributions shall be interpreted and applied in
accordance with Code Section 401(a)(9). The provisions of such Code
Section 401(a)(9) shall control over any distribution option or other
provision of the Plan which is inconsistent with the provisions of
Code Section 401(a)(9).
(h) In any case where the payment of a Member's Retirement Benefit is
payable in a joint and survivor annuity form, the periodic survivor
annuity payment payable to the Member's contingent annuitant shall
not exceed the "applicable percentage" of the annuity payments
payable to the Member. In addition, if the payment of a Member's
Retirement Benefit is payable in either a life annuity or joint and
survivor annuity form with an associated period certain guaranteed
payment feature, the period certain shall not exceed the "applicable
divisor" period determined by reference to the Member's age at the
time his benefit payments commence. The foregoing limitations of this
Section 5.2(h) shall not apply if the contingent annuitant or designated
Beneficiary of the Member is the Member's surviving Spouse. The
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"applicable percentage" and "applicable divisor" shall be the "applicable
percentage" and "applicable divisor" determined pursuant to regulations
issued by the Secretary of the Treasury under Code Section 401(a)(9).
5.3 REEMPLOYMENT AFTER BENEFIT COMMENCEMENT BUT PRIOR TO NORMAL RETIREMENT AGE
If a Member whose Retirement Benefit has commenced is reemployed as an Eligible
Employee before attaining his Normal Retirement Age, his Retirement Benefit
payments shall be suspended and shall not be paid or accrue during the period of
such reemployment, his previous election of form of benefit payment shall be
canceled, and he shall have the Vesting Service and Salaried and/or Nonsalaried
Benefit Service he had at the time of his retirement reinstated. Upon his
subsequent termination of employment as an Employee, his eligibility for a
Retirement Benefit and the amount of such Retirement Benefit shall be
determined, calculated, and paid as if he were then first retired based upon
such reinstated Vesting Service and Salaried and/or Nonsalaried Benefit Service,
plus Vesting Service and Salaried and/or Nonsalaried Benefit Service earned
following the date of reemployment, but such Retirement Benefit shall be
actuarially reduced to account for any Retirement Benefit payments he may have
received prior to his reemployment. In no event shall a Member's Retirement
Benefit at his subsequent termination of employment as an Employee be less than
his Retirement Benefit at his prior termination of employment. The foregoing
notwithstanding, if a Member reemployed as described above subsequently reaches
his Normal Retirement Age and is employed at a rate at which he will work fewer
than eight days during any calendar month, the Member may continue to receive
any benefits which he is receiving at the time of reemployment. Such payments
shall continue every month thereafter until his employment is at a rate at which
he would work eight or more days per calendar month, at which time his benefits
shall be suspended under the terms and conditions described in Section 5.4. The
foregoing notwithstanding, if an Employee is rehired on a "temporary" basis
(i.e., expected duration of employment is three months or less), his Retirement
Benefit payments shall continue to be paid during such period of temporary
employment.
5.4 REEMPLOYMENT AFTER BENEFIT COMMENCEMENT AND AFTER ATTAINING NORMAL
RETIREMENT AGE
If a Member is reemployed as an Eligible Employee after attaining his Normal
Retirement Age at a rate at which he would work eight or more
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days in a calendar month, his Retirement Benefit payments shall be suspended and
shall not be paid or accrue during the period of such reemployment, his previous
election of form of benefit payment shall be canceled, and he shall have the
Vesting Service and Salaried and/or Nonsalaried Benefit Service he had at the
time of his retirement reinstated. Such suspension of benefits shall be done in
accordance with Department of Labor Regulation Section 2530.203-3 and shall
include the notice described in Section 5.5. Upon his subsequent termination of
employment as an Employee, his eligibility for a Retirement Benefit and the
amount of such Retirement Benefit shall be determined, calculated, and paid as
if he were then first retired based upon such reinstated Vesting Service and
Salaried and/or Nonsalaried Benefit Service, plus Vesting Service and Salaried
and/or Nonsalaried Benefit Service earned following the date of reemployment,
but such Retirement Benefit shall be actuarially reduced to account for any
Retirement Benefit payments he may have received prior to his reemployment. In
no event shall a Member's Retirement Benefit at subsequent termination of
employment as an Employee be less than his Retirement Benefit at his prior
termination of employment. If a Member is reemployed as an Employee after
attaining his Normal Retirement Age at a rate at which he would not work at
least eight days during a calendar month, he shall receive the same type and
amount of Retirement Benefit payment he was entitled to receive preceding his
reemployment during such period of reemployment. Such payments shall continue
every month thereafter until his employment is at a rate at which he would work
eight days during a calendar month, at which time his Retirement Benefit shall
be suspended as described above. The foregoing notwithstanding, if an Employee
is rehired on a "temporary" basis (i.e., expected duration of employment is
three months or less), his Retirement Benefit payments shall continue to be paid
during such period of temporary employment.
5.5 SUSPENSION OF BENEFITS NOTICE AND PROCEDURES
If an Employee's Retirement Benefit payments are to be suspended as a result of
his continued employment or reemployment, the Plan shall notify the Employee, by
personal delivery or first class mail during the first calendar month in which
the Plan withholds payments, that his Retirement Benefit payments are suspended.
The notice shall contain--
(a) a general description of the reasons why payments are suspended;
(b) a general description of the Plan provisions relating to the suspension
of benefits;
(c) a copy of such Plan provisions;
(d) a statement that a review of the suspension may be requested under the
claims procedure found in the Plan;
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(e) if the Plan requires a benefit resumption notice, the procedure and
forms; and
(f) if the Plan requires verification by the Employee that his benefits
should not be suspended, the procedure and forms for such verification.
The Plan shall adopt a procedure whereby an individual may request a
determination of whether specific contemplated employment will result in a
suspension of benefits.
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ARTICLE VI. PLAN ADMINISTRATION
6.1 APPOINTMENT OF COMMITTEE
The Sponsor shall be the "plan administrator" with respect to the Plan and a
"named fiduciary" with respect to the Plan and Trust Fund, as such terms are
defined under ERISA. The Board of Directors of the Sponsor shall appoint a plan
administration committee ("Committee") to administer the Plan and to handle the
day-to-day administrative responsibilities with respect to the Plan. The
Committee shall have all powers necessary to accomplish such purposes. The
Committee shall be composed of three or more members as the Board of Directors
may appoint from time to time, and such members shall hold office at the
pleasure of the Board of Directors. Each member or successor must signify
acceptance of this position in writing. Any member of the Committee may resign
at any time by delivering his written resignation to the Sponsor and to the
Chairman of the Committee to take effect on a date specified therein, or upon
delivery to the Sponsor, if no date is specified. Termination of employment of
an Employee who is a member of the Committee shall automatically constitute a
resignation. The Board of Directors may remove any member of the Committee with
or without cause by so notifying the member and the Chairman of the Committee in
writing to take effect not less than 30 days after delivery thereof, unless such
notice shall be waived. Vacancies on the Committee shall be filled by action of
the Sponsor. In the event no successor member is appointed, the remaining
member(s) or if none remain the Sponsor shall function as the Committee until a
new Committee has been appointed and has accepted such appointment.
6.2 COMPENSATION AND EXPENSES
(a) A member of the Committee shall serve without compensation for services
as such if he is receiving full-time pay as an Employee. Any other member
of the Committee may receive compensation for services as a member. Any
member of the Committee may receive reimbursement of expenses properly
and actually incurred. Any such compensation or reimbursement shall be
paid in accordance with the provisions of Section 6.2(b).
(b) All expenses incident to the administration, termination, or protection
of the Plan and Trust including, but not limited to, fees of actuaries,
accountants, premiums payable to the PBGC, counsel, and other
specialists, and other costs of administering the Plan shall be paid by,
and constitute a charge upon, the Trust Fund, except to the extent that
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such expenses, or any portion thereof, may have been paid by the Employer
in its sole and absolute discretion.
6.3 MANNER OF ACTION
A majority of the members of the Committee at that time in office shall
constitute a quorum for the transaction of business. All resolutions adopted,
and other actions taken by the Committee at any meeting, shall be by the vote of
a majority of those present at any such meeting. Upon concurrence in writing of
a majority of the members at that time in office, action of the Committee may be
taken otherwise than at a meeting.
6.4 CHAIRMAN, SECRETARY, AND EMPLOYMENT OF SPECIALISTS The members of the
Committee shall elect one of their number as Chairman and shall elect a
Secretary who is an employee of the Employer and may, but need not, be a member
of the Committee. They may authorize one or more of their number or any agent to
execute or deliver any instrument or instruments on their behalf, and may employ
such counsel, auditors, and other specialists, and such clerical, medical,
actuarial, and other services as they may require in carrying out the provisions
of the Plan. Such expenses shall be paid in accordance with the provisions of
Section 6.2(b).
The Committee and the Employer shall be entitled to rely conclusively upon the
tables, valuations, certificates, and reports furnished by an actuary or
accountant employed by the Committee or an insurer issuing life insurance
contracts under this Plan and/or upon opinions of counsel or other experts; and
such members, and each of them, shall be fully protected as to any action taken
or allowed by them in good faith and reliance upon any such tables, valuations,
certificates, reports or opinions; and all actions taken or allowed by them
shall be conclusive upon all persons having or claiming any interest under the
Plan.
6.5 DELEGATION OF RESPONSIBILITIES
The Committee may appoint one or more individuals and delegate such of its power
and duties as it deems desirable to any such individual, in which case every
reference herein made to the Committee shall be deemed to mean or include the
individuals as to matters within their jurisdiction. Such individuals shall be
such officers or other Employees of the Employers and such other persons as the
Committee may appoint.
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6.6 RECORDS
All resolutions, proceedings, acts, and determinations of the Committee shall be
recorded by the Secretary thereof or under his supervision, and all such records
together with such documents and instruments as may be necessary for the
administration of the Plan, shall be preserved in the custody of the Secretary
or his delegate(s).
6.7 RULES
Subject to the limitations contained in the Plan, the Committee shall be
empowered from time to time in its discretion to adopt bylaws and establish
rules for the conduct of its affairs and the exercise of the duties imposed upon
it under the Plan.
6.8 ADMINISTRATION
The Committee shall be responsible for the administration of the Plan. The
Committee shall have all such powers as may be necessary to carry out the
provisions of the Plan and may from time to time establish rules for the
administration of the Plan and the transaction of the Plan's business. In making
any such determination or rule, the Committee shall pursue uniform policies as
from time to time established by the Committee and shall not discriminate in
favor of or against any Member. The Committee shall have the exclusive right to
make any finding of fact necessary or appropriate for any purpose under the Plan
including, but not limited to, the determination of the eligibility for and the
amount of any benefit payable under the Plan. The Committee shall have sole and
absolute discretion to interpret the terms and provisions of the Plan and to
determine any and all questions arising under the Plan or in connection with the
administration thereof, including, without limitation, the right to remedy or
resolve possible ambiguities, inconsistencies, or omissions, by general rule or
particular decision. The Committee shall make, or cause to be made, such reports
as are required by law. To the extent permitted by law, all findings of fact,
determinations, interpretations, and decisions of the Committee in respect of
any matter or question arising under the Plan shall be final, conclusive and
binding upon all persons having or claiming to have any interest or right under
the Plan and shall be given the maximum possible deference allowed by law. If
challenged in court, any decision of the Committee shall not be subject to DE
NOVO review and shall not be overturned unless proven to be arbitrary and
capricious under the evidence considered at the time of such decision.
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6.9 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
6.9(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.
6.10 NOTICE OF ADDRESS AND MISSING PERSONS
Each person entitled to benefits under the Plan must file with the Committee, in
writing, his post office address and each change of post office address. Any
communication, statement, or notice addressed to such a person at his latest
reported post office address will be binding upon him for all purposes of the
Plan and neither the Committee nor the Employers or Trustee shall be obliged to
search for or ascertain his whereabouts. In the event that such person cannot be
located, after reasonable efforts to locate such person have been made, the
Committee may direct that such
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benefits and all further benefits with respect to such person shall be
discontinued, all liability for the payment thereof shall terminate and such
person's remaining accrued benefit under the Plan shall be deemed a forfeiture;
provided, however, that in the event of the subsequent reappearance of such
person prior to the termination of the Plan, the benefits which were due and
payable and which such person missed shall be paid in a single sum without
interest and the future benefits due such person shall be reinstated in full.
6.11 APPLICATION FOR BENEFITS AND DATA
All persons claiming benefits under the Plan must make application and furnish
to the Committee or its designated agent, such documents, evidence, or
information as the Committee or its designated agent considers necessary or
desirable for the purpose of administering the Plan; and each such person must
furnish such information promptly and sign such documents as the Committee or
its designated agent may require before any benefits become payable under the
Plan.
6.12 INDEMNITY FOR LIABILITY
The Sponsor or any Employer may indemnify and hold harmless the members of the
Committee, members of the Board of Directors, any administrator, and any other
person who is deemed to be a "fiduciary" under either statutory or common law
and who is also an Employee, officer, or director of the Employer from and
against any damages, judgments, settlements, costs, charges or expenses incurred
in connection with the defense of any action, suit or proceeding to which any
such person may be a party or which may be threatened against any such person or
in connection with any appeal therefrom by virtue of any wrongful act or
omission in their respective capacities for the Plan; provided, however, that
notwithstanding anything to the contrary herein, the foregoing indemnification
shall extend and be effective only to the extent that the same shall be valid
and enforceable under all applicable laws. The extent of such indemnification
shall be expressed in a resolution by the Board of Directors.
When making a determination or calculation, the Committee shall be entitled to
rely conclusively upon, and shall be fully protected by the Employer in any
action it may suffer in reliance upon, information furnished by the Employer.
The Employer and the Committee shall be entitled to rely upon all certificates
and reports furnished by any consultant and actuary and upon all opinions given
by legal counsel selected by the Employer and Committee.
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ARTICLE VII. FINANCING
7.1 FUNDING
A Trustee shall be designated by the Sponsor, and a Trust Agreement maintained
between the Sponsor and the Trustee, under the terms of which a Trust Fund shall
be established to receive and hold contributions payable by the Employer,
interest and other income, and to pay the benefits provided by the Plan. The
Sponsor may, by appropriate action and in accordance with any terms of the Trust
Agreement, employ an investment manager to invest and manage all or any
specified portion of the Trust Fund. Said investment manager shall designate in
writing that he is a fiduciary with respect to Trust assets under his control,
and the Trustee shall not be liable for nor have any responsibility in
connection with acts or omissions of the investment manager with regard to any
assets subject to his management. Any Trust Agreement entered into shall be
deemed to form a part of the Plan, and any and all rights and benefits which may
accrue to any person under the Plan shall be subject to all the terms and
provisions of such Trust Agreement. The Sponsor may modify the Trust Agreement
from time to time to accomplish the purpose of the Plan and may replace any
Trustee and appoint a successor Trustee or Trustees.
7.2 CONTRIBUTIONS
The Employer shall make such contributions to the Trust Fund as shall be
determined by the Actuary to be required under accepted actuarial principles to
at least be sufficient to maintain the Plan as a qualified employee defined
benefit pension plan meeting the plan qualification requirements of the Code and
the minimum funding standard requirements of the Code and ERISA for the Employer
contributions for any Plan Year. In no event shall an Employer make a
contribution to the Plan on behalf of any Member which is not otherwise
deductible by the Employer under Code Section 404. Forfeitures arising under the
Plan for any reason shall be used as soon as possible to reduce Employer
contributions under the Plan. Employee contributions under the Plan shall
neither be required nor permitted. All benefits under the Plan shall payable
only from the Trust Fund and no liability for the payment of benefits under the
Plan shall be imposed upon the Employer, the Committee, officers, directors, or
shareholders of the Employer.
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ARTICLE VIII. AMENDMENT AND TERMINATION
8.1 AMENDMENT AND TERMINATION
(a) The Sponsor does hereby expressly and specifically reserve the sole
and exclusive right at any time, and from time to time, by action of
the Board of Directors to amend, modify, or terminate the Plan to the
extent that it may deem advisable; provided, however, the Board of
Directors may delegate to the Committee or any other party it deems
appropriate the authority to amend, modify, or terminate the Plan in
all respects or with regard to specified limited powers. Any
amendment, modification, or termination as aforesaid shall not require
the assent, concurrence, or any other action by any Employer or the
Trustee notwithstanding that such action by the Sponsor may relate in
whole or in part to persons in the employ of any Employer. The
amendments or modifications made to the Plan by the Sponsor shall
apply to the Plan as a whole, except to the extent any such
amendment or modification is made to the Plan as it relates to any
particular Employer and is made on the basis of information
communicated to the Sponsor by the Employer and approved by the
Sponsor.
(b) While each Employer contemplates carrying out the provisions of the Plan
indefinitely with respect to its Employees, no Employer shall be under
any obligation or liability whatsoever to maintain the Plan for any
minimum or other period of time.
(c) Any action taken to amend, modify or terminate the Plan shall be
evidenced by a written instrument duly executed and/or certified by an
officer of the Sponsor. Any such instrument evidencing an amendment to
the Plan shall be delivered by the Sponsor to the Committee, the Trustee,
and any Employer involved.
(d) Upon any termination of the Plan (full or partial), the Sponsor shall
give written notice thereof to the Committee, the Trustee, and any
Employer involved. Each of the affected Members shall have a fully vested
and nonforfeitable interest in his accrued benefit to the extent funded.
(e) Upon a complete or partial termination of the Plan (within the
meaning of Code Section 411(d)(3)), the right of each affected Member
to benefits accrued to the date of such termination or partial
termination shall become nonforfeitable to the extent such benefits are
funded as of such date; provided, however, a Member's recourse
towards satisfaction of his nonforfeitable benefits shall be limited to
the assets of the Trust Fund and the benefits of certain Members shall
be further restricted as provided in Sections 4.11 and 8.5.
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(f) Upon any termination of the Plan, no Employer with respect to whom the
Plan is terminated (including the Sponsor) shall thereafter be under any
obligation, liability, or responsibility whatsoever to make any
contribution or payment to the Trust Fund, the Plan, any Member, any
Beneficiary, or any other person or trust or fund whatsoever, for any
purpose whatsoever under or in connection with the Plan.
8.2 LIMITATIONS ON AMENDMENTS
The provisions of this Article VIII relating to amendments to the Plan shall be
subject to and limited by the following restrictions:
(a) No amendment shall operate either directly or indirectly to give any
Employer any interest whatsoever in any funds or property held by the
Trustee under the terms the Plan, or to permit the corpus or income of
the Trust Fund to be used for or diverted to purposes other than the
exclusive benefit of Members, their surviving Spouses or Beneficiaries or
the payment of the reasonable expenses of administering the Plan.
(b) No such amendment shall operate either directly or indirectly to
deprive any Member, surviving Spouse or Beneficiary of his vested
and nonforfeitable interest as of the time of such amendment. Any
amendment which modifies the vesting provisions under the Plan
shall either provide for a rate of vesting which is more rapid than the
vesting schedule previously in effect, or provide that any Participant
with at least three years of Vesting Service may elect, in writing, to
remain under the vesting schedule in effect prior to the amendment.
Such election must be made within 60 days after the latest of (1) the
day the amendment is adopted, (2) the day the amendment becomes
effective, or (3) the day the Participant has received notice of the
amendment.
(c) No amendment shall decrease the accrued benefit of any Member within the
meaning of Code Section 411(d)(6), except as may be permitted under Code
Section 411(d)(6).
(d) No amendment shall change the rights, duties or responsibilities of the
Trustee under the Plan without its written consent.
Subject to the foregoing limitations, any amendment which, in the judgment of
the Committee is necessary or advisable, may be made retroactively, provided
that such retroactive amendment does not deprive a Member, surviving Spouse or
Beneficiary, without his consent, of a right to receive benefits under the Plan
which have already vested and matured, except as such modification or amendment
shall be necessary in order to comply with any laws or regulations of the United
States or of any state to qualify this as a tax exempt Plan and Trust, or
otherwise.
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8.3 DISTRIBUTION ON TERMINATION
(a) Upon any termination (full or partial), all unallocated amounts shall be
allocated in accordance with the provisions hereof. Upon termination of
the Plan, the Employer with the consent of the Sponsor, by written notice
to the Trustee, may direct either--
(1) continuation of the Trust and the distribution of benefits at such
time and in such manner as though the Plan had not been terminated,
or
(2) subject to Section 8.3(b), complete distribution of the assets in
the Trust Fund to the Members and their surviving Spouses or
Beneficiaries, in one lump-sum cash payment, or in the form of a
deferred annuity payable at Normal Retirement Date, as soon as the
Committee deems it in the best interest of the Members and their
surviving Spouses or Beneficiaries (no later than three years after
such termination).
(b) Upon the termination of the Plan, that portion of any assets then held in
the Trust Fund which remain after payment of all expenses of
administration or liquidation shall be allocated for the purpose of
paying benefits under the Plan in the order of precedence and in the
amounts indicated for plans covered under Section 4044 of ERISA,
according to the principles set forth in said Section 4044. Following the
termination of the Plan, benefit distributions to Members and their
surviving Spouses or Beneficiaries shall be made through the con-
tinuation of the Plan and Trust Fund, as such benefits become due and
payable under the Plan; provided, however, that if the assets of the
Trust Fund are sufficient to provide the Members' current accrued
benefits, the Committee shall direct the Trustee to liquidate the Trust
Fund and make benefit distributions to Members and their surviving
Spouses or Beneficiaries. In such case such distributions shall be made
in accordance with applicable amendments to the Plan relating to the
termination of the Plan. In any case where there are assets in the Trust
Fund remaining after the satisfaction of all accrued benefit liabilities
to Members and their surviving Spouses or Beneficiaries following the
termination of the Plan, such assets shall revert to and be distributed
to the Employers.
(c) Notwithstanding any of the above provisions of this Section 8.3,
distributions to married Members shall be subject to the provisions of
Section 4.8.
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8.4 EFFECT OF CONTINGENCIES AFFECTING THE EMPLOYER
In the event an Employer terminates its connection with the Plan, or in the
event an Employer is dissolved or liquidated, or in the event judicial
proceedings of any kind result in the involuntary dissolution of an Employer,
the Plan shall be terminated as respects such Employer. The merger,
consolidation, or reorganization of an Employer, or the sale by it of all or
substantially all of its assets, shall not terminate the Plan if there is
delivery to such Employer by the successor to such Employer or by the purchaser
of all or substantially all of its assets, a written instrument requesting that
it be substituted for the Employer and agreeing to perform all the provisions
which such Employer is required to perform, a copy of which shall be delivered
to the Trustee. Upon receipt of said instrument, with the approval of the
Sponsor, the successor, or the purchaser shall be substituted for such Employer
herein, and such Employer shall be relieved and released from any obligations of
any kind, character, or description herein or in any Trust Agreement imposed
upon it.
8.5 RESTRICTIONS ON BENEFITS AND DISTRIBUTIONS TO CERTAIN MEMBERS
(a) RESTRICTION OF BENEFITS. Notwithstanding any other provisions in the
Plan to the contrary, in the event of the termination of the Plan, the
benefit of any Highly Compensated Employee (and any Highly Compensated
Former Employee) is limited to a benefit that is nondiscriminatory under
Code Section 401(a)(4). For purposes of this Section 8.5, the term
"Highly Compensated Former Employee" shall mean any Member who has
terminated employment as an Employee in a prior Plan Year and who was a
Highly Compensated Employee either when he terminated employment as an
Employee or any Plan Year ending on or after his fifty-fifth birthday.
(b) RESTRICTIONS ON DISTRIBUTIONS. Notwithstanding any other provisions to
the contrary, the annual benefits provided under the Plan for
participating Highly Compensated Employees and Highly Compensated Former
Employees who are among the 25 most highly paid Employees of the Employer
are restricted to an amount equal to the annual payments that would be
made on behalf of the Participant under a single life annuity that is the
Actuarial Equivalent of the sum of such Participant's accrued benefit and
other benefits under the Plan. In any one year, the total number of
Members whose benefits are subject to the restriction under this Section
8.5(b) shall be limited to the group of the 25 Highly Compensated
Employees and Highly Compensated Former Employees who received the
greatest
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<PAGE> 65
compensation. The restrictions of this Section 8.5(b) shall not apply,
however, if--
(1) after payment to such Member of all benefits under the Plan, the
value of Plan assets equals or exceeds 110 percent of the value of
the current liabilities (defined in Code Section 412(l)(7)) of the
Plan, or
(2) the value of the benefits payable to such Member is less than 1
percent of the value of the current liabilities (as defined in Code
Section 412(l)(7)) of the Plan.
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ARTICLE IX. PARTICIPATION IN AND WITHDRAWAL FROM THE PLAN BY
AN EMPLOYER
9.1 PARTICIPATION IN THE PLAN
Any Affiliate of the Sponsor which desires to become an Employer under the Plan
may elect, with the consent of the Board of Directors of the Sponsor, to become
a party to the Plan and Trust Fund by adopting the Plan for the benefit of its
Eligible Employees, effective as of the date specified in such adoption--
(a) By filing with the Sponsor a certified copy of a resolution of its board
of directors (or equivalent governing authority) to that effect, and such
other instruments as the Sponsor may require; and
(b) By the Sponsor's filing with the Committee and the Trustee a copy of such
resolution, together with a certified copy of resolutions of the Board of
Directors of the Sponsor approving such adoption.
The adoption resolution, supplement or instrument may contain such specific
changes and variations in Plan or Trust Agreement terms and provisions
applicable to such adopting Employer and its Eligible Employees as may be
acceptable to such Employer, the Sponsor and the Trustee. However, the sole,
exclusive right to make any amendment of whatever kind or extent to the Plan or
Trust Agreement is reserved by the Sponsor, subject to its right of delegation
under Section 8.1(a). It shall not be necessary for the adopting Employer to
sign or execute the original or then amended Plan and Trust Agreement documents.
The effective date of the Plan for any such adopting Employer shall be that
stated in the adoption resolution or instrument, and from and after such
effective date, such adopting Employer shall assume all the rights, obligations,
and liabilities of an Employer under the Plan and Trust Agreement.
The administrative powers and control of the Sponsor, as provided in the Plan
and Trust Agreement, including the sole right of appointment and removal of the
members of the Committee, the Trustee, and their successors, shall not be
diminished by reason of the participation of any such adopting Employer in the
Plan and Trust Agreement.
9.2 WITHDRAWAL FROM THE PLAN
Any Employer other than the Sponsor, by actions of its board of directors or
other governing body, may elect to withdraw from the Plan and Trust Agreement by
giving 90 days' advance written notice of its election to the Board of Directors
of the Sponsor, unless the Board of Directors of the Sponsor waives such advance
notice or agrees to a shorter advance notice
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<PAGE> 67
period. Such Employer's election to withdraw from the Plan and Trust Agreement
shall be subject to the consent of the Board of Directors of the Sponsor.
Distributions following such withdrawal may be implemented through continuation
of the Trust Fund, or transfer to another trust fund exempt from tax under Code
Section 501, or to a group annuity contract qualified under Code Section 403,
or, subject to Section 8.3, distributions may be made as immediate distributions
in accordance with the directions of the Committee; provided, however, that no
such action shall direct any part of the Trust Fund relating to the Members of
such Employer to any purpose other than the exclusive benefit of the Members of
such Employer, or the surviving Spouses or Beneficiaries of such Members, prior
to the satisfaction of all benefit liabilities under the Plan with respect to
the Members of such Employer.
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ARTICLE X. MISCELLANEOUS
10.1 NONALIENATION
Except as provided herein, 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. Any attempt to alienate,
sell, transfer, assign, pledge, or otherwise encumber any such benefit, whether
presently or hereafter payable, shall be void. No benefit nor the Trust Fund
shall in any manner be liable for or subject to the debts or liabilities of any
Member, surviving Spouse or Beneficiary entitled to any benefit, except as may
be provided in a "qualified domestic relations order" under Code Section 414(p).
The Committee shall establish procedures to determine whether domestic relations
orders are "qualified domestic relations orders" and to administer distributions
under such qualified domestic relations orders.
10.2 INCOMPETENCY
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 it, that such person is
incompetent, for whom a guardian or other person legally vested with the care of
his 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 his affairs because of any disability or infirmity, any payment due
(unless a prior claim therefor shall have been made by a duly appointed legal
representative of his estate) 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 any liability therefor under the Plan. In the
event a guardian of the estate of any person receiving or claiming benefits
under the Plan shall be appointed by a court of competent jurisdiction, benefit
payments may be made to such guardian provided that proper proof of appointment
and continuing qualification is furnished in a form and manner acceptable to the
Committee. Any such payment so made shall be a complete discharge of any
liability therefor under the Plan.
10.3 MERGER, CONSOLIDATION, OR TRANSFER
In the case of any merger or consolidation of the Plan with, or in the case of
any transfer of assets or liabilities of the Plan to or from, any other plan,
each Member in the Plan shall (if the Plan then terminated) receive a
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benefit immediately after the merger, consolidation, or transfer which is equal
to or greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer (if the Plan had then
terminated).
10.4 LITIGATION
In order to protect the Trust Fund against depletion as a result of litigation,
in the event that any Member or other person may bring any legal or equitable
action arising under the Plan against the Trustee or an Employer or the
Committee, or in the event that an Employer or the Trustee or the Committee may
find it necessary to bring any legal or equitable action arising under the Plan
against any Member or any person claiming any interest by or through such
Member, the Committee shall have the right to join the Trustee as a party
defendant or party plaintiff in any such action, and all expenses of defending
or bringing such action shall be paid by the Trustee from the Trust Fund, to the
extent permitted by ERISA.
10.5 EFFECT OF MISTAKE
In the event of a mistake or misstatement as to the eligibility or participation
of a Member, or the amount of benefit payments made or to be made to or with
respect to a Member, the Committee shall, if possible, cause an adjustment to be
made so as to correct such mistake and provide for the correct amount of benefit
payments with respect to such Member.
10.6 NO ENLARGEMENT OF EMPLOYEE RIGHTS
Nothing contained in the Plan shall be deemed to give any Employee the right to
be retained in the service of an Employer or Affiliate or to interfere with the
right of an Employer or Affiliate to discipline, discharge or retire any
Employee at any time.
10.7 NO GUARANTEE
Neither the Committee, the Sponsor, the Employers, nor the Trustee in any way
guarantees the Trust Fund from loss or depreciation nor the payment of any money
which may be or become due to any person from the Trust Fund. Nothing herein
contained shall be deemed to give any Member, surviving Spouse or Beneficiary an
interest in any specific part of the Trust Fund or any other interest except the
right to receive benefits out of the Trust Fund in accordance with the
provisions of the Plan.
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10.8 INTERNAL REVENUE SERVICE APPROVAL
It is the intention of the Sponsor to obtain a ruling or rulings by the District
Director of the Internal Revenue Service that--
(a) The Plan, as in effect from time to time, with respect to the Employer,
meets the requirements of Code Section 401(a); and
(b) Any and all contributions made by the Employer under the Plan are
deductible for income tax purposes under Code Section 404(a) or any other
applicable provisions of the Code.
10.9 EXCLUSIVE BENEFIT; NONREVERSION
The Trust Fund shall be used and applied only in accordance with the provisions
of the Plan and Trust Agreement to provide the benefits provided under the Plan,
and the Employers shall not have any right, title or interest in the assets of
the Trust Fund, and no part of the corpus or income of the Trust Fund shall be
used for or diverted to purposes other than for the exclusive benefit of
Members, surviving Spouses and Beneficiaries and for the payment of the
reasonable expenses of administering the Plan and Trust Fund, except that--
(a) Upon termination of the Plan with respect to any Employer and the
allocation and distribution of the Trust Fund as provided herein, any
funds remaining in the Trust Fund with respect to the Employer because of
an erroneous actuarial computation after the satisfaction of all fixed
and contingent benefit liabilities under the Plan with respect to that
Employer shall revert to such Employer.
(b) If contributions under the Plan are made to the Trust Fund by an Em-
ployer by a mistake of fact, then such contributions shall be returned
to such Employer within one year after the payment of such
contributions; and if any part or all of the contributions are disallowed
as a deduction under Code Section 404, then to the extent such
contributions are disallowed as a deduction they shall be returned to
such Employer within one year after the disallowance. All
contributions are conditioned upon the deductibility of the
contributions under Code Section 404 as provided in Section 7.2 of the
Plan.
(c) In the case of a contribution which would otherwise be an excess
contribution (as defined in Code Section 4979(c)), a correcting
distribution with respect to such contribution from the Plan to the
Employer shall be made to the extent permitted in the Code to avoid
payment of an excise tax on excess contributions under Code Section
4979(c).
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<PAGE> 71
(d) If the Internal Revenue Service determines that the Plan does not
initially meet the requirements of Code Section 401 with respect to an
Employer, the Plan shall be null and void from the effective date of
the Plan applicable to such Employer, and any contributions shall be
returned to the Employer within one year following the determination
that the Plan does not initially meet such requirements, unless the
Sponsor elects to make the changes to the Plan necessary to receive a
determination from the Internal Revenue Service that the requirements
of Code Section 401 are met. Contributions may be returned pursuant
to this Section 10.9(d) only if the application for the determination of
Plan qualification is made by the time prescribed by law for filing the
Employer's return for the taxable year in which the Plan was adopted
or such later date as the Secretary of Treasury may prescribe.
10.10 APPLICABLE LAW
The Plan and all rights hereunder shall be governed by and construed in
accordance with the laws of the State of Ohio to the extent such laws have not
been preempted by applicable Federal law.
10.11 SEVERABILITY
If a provision of the Plan shall be held illegal or invalid, the illegality or
invalidity shall not affect the remaining parts of the Plan and the Plan shall
be construed and enforced as if the illegal or invalid provision had not been
included in the Plan.
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ARTICLE XI. TOP-HEAVY PROVISIONS
11.1 APPLICATION OF TOP-HEAVY PROVISIONS
(a) SINGLE PLAN DETERMINATION. Except as provided in Section 11.1(b)(2), if
as of a Determination Date, the sum of the amount of the Code
Section 416 Benefit of Key Employees and the surviving Spouses and
Beneficiaries of deceased Key Employees exceeds 60 percent of the
amount of the Code Section 416 Benefits of all Members and their
surviving Spouses or Beneficiaries (excluding former Key Employees),
the Plan is top-heavy and the provisions of this Article XI shall
become applicable.
(b) AGGREGATION GROUP DETERMINATION.
(1) If as of a Determination Date the Plan is part of an Aggregation
Group which is top-heavy, the provisions of this Article XI shall
become applicable. Top-heaviness for the purpose of this Section
11.1(b)(1) shall be determined with respect to the Aggregation
Group in the same manner as described in Section 11.1(a).
(2) If the Plan is top-heavy under Section 11.1(a), but the Aggregation
Group is not top-heavy, the Plan shall not be top-heavy and this
Article XI shall not be applicable.
(3) In determining whether the Plan, or any other plan included in a
required aggregation group (within the meaning of Code Section
416(g)) is top-heavy, the accrued benefit of any Employee (other
than a Key Employee) shall be determined under (A) the accrual
method which is used for accrual purposes under all such plans, or
(B) if there is no such method, as if such benefit accrued not more
rapidly than the slowest rate permitted under Code Section
411(b)(1)(C).
(c) COMMITTEE. The Committee shall have responsibility to make all
calculations to determine whether the Plan is top-heavy.
11.2 DEFINITIONS
(a) "AGGREGATION GROUP" means the Plan and all other plans maintained
by the Employers and Affiliates which cover a Key Employee and any
other plan which enables a plan covering a Key Employee to meet the
requirements of Code Section 401(a)(4) or 410. In addition, at the
election of the Committee, the Aggregation Group may be expanded
to include any other qualified plan maintained by an Employer or
Affiliate if such expanded Aggregation Group meets the requirements
of Code Sections 401(a)(4) and 410.
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The Aggregation Group shall include any terminated plan if it was
maintained within the last five years ending on the Determination Date
for the Plan Year in question and would, but for the fact that it
terminated, be described in the preceding sentence for such Plan Year.
(b) "DETERMINATION DATE" means the last day of the Plan Year immediately
preceding the Plan Year for which top-heaviness is to be determined or,
in the case of the first Plan Year of a new plan, the last day of such
Plan Year.
(c) "KEY EMPLOYEE" means a Member who for the Plan Year containing the
Determination Date or any of the four preceding Plan Years is--
(1) An officer of an Employer or Affiliate who has annual Compensation
greater than 50 percent of the amount in effect under Code Section
415(b)(1)(A) for such Plan Year; provided, however, that no more
than the lesser of--
(A) 50 Employees, or
(B) the greater of (i) three Employees or (ii) 10 percent of all
Employees, shall be treated as officers, and such officers
shall be those with the highest annual Compensation in the
five-year period;
(2) One of the 10 Employees having annual Compensation from all
Employers and Affiliates for such Plan Year greater than the dollar
limit specified in Code Section 415(c)(1)(A) and owning both more
than a one-half of 1 percent interest and the largest interests in
an Employer or Affiliate;
(3) A 5 percent owner of an Employer or Affiliate; or
(4) A 1 percent owner of an Employer or Affiliate having annual
Compensation of more than $150,000.
For purposes of this Section 11.2(c), "Compensation" shall mean
compensation as defined in Section 2.1(j)(2), plus amounts that would
otherwise be excluded from the Participant's compensation thereunder by
reason of the application of Code Sections 125, 402(e)(3), 402(h)(1)(B),
and amounts that would otherwise be excluded by reason of the application
of Code Section 403(b) pursuant to a salary reduction agreement;
provided, however, that Compensation for purposes of this Section 11.2(c)
shall not exceed the maximum annual compensation limit as provided for in
Code Section 401(a)(17), as such amount may be adjusted or changed from
year to year in accordance with the adjustment provisions or changes to
Code Section 401(a)(17). Ownership shall be determined in accordance with
Code Section 416(i)(1)(B) and (C). For purposes of Section 11.2(c)(2), if
two Employees have the same ownership interest in an Employer or
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Affiliate, the Employee having the greater annual Compensation from the
Employers and Affiliates shall be treated as having a larger interest.
(d) "SECTION 416 BENEFIT" means the sum of--
(1) The amount credited as of a Determination Date to a Member's,
surviving Spouse's or Beneficiary's account under any qualified
defined contribution plan which is part of an Aggregation Group
(including amounts to be credited as of the Determination Date but
which have not yet been contributed);
(2) The present value of the accrued benefit credited as of a
Determination Date to a Member, surviving Spouse or Beneficiary
under the Plan and any other qualified defined benefit plan which
is part of an Aggregation Group; and
(3) The amount of distributions to the Member, surviving Spouse or
Beneficiary during the five-year period ending on the Determination
Date other than a distribution which is a tax-free rollover
contribution (or similar transfer) that is not initiated by the
Member or that is contributed to a plan which is maintained by an
Employer or Affiliate;
reduced by--
(4) The amount of rollover contributions (or similar transfers) and
earnings thereon credited as of a Determination Date under a plan
forming part of an Aggregation Group which is attributable to a
rollover contribution (or similar transfer) accepted after December
31, 1983, initiated by the Member and derived from a plan not
maintained by an Employer or Affiliate.
The account or accrued benefit of a Member who was a Key Employee and who
subsequently meets none of the conditions of Section 11.2(c) for the Plan
Year containing the Determination Date is not a Section 416 Benefit and
shall be excluded from all computations under this Article XI.
Furthermore, if a Member has not performed any service for an Employer or
Affiliate during the five-year period ending on the Determination Date,
any accrued benefit of such Member (and any account for such Member)
shall not be taken into account in computing top-heaviness under this
Article XI. The present value of the accrued benefits shall be determined
as of the most recent valuation date used for the purposes of Code
Section 412 which is within the 12-month period ending on the
Determination Date. The accrued benefit of a current Member shall be
determined as if the Member terminated service as of such valuation date.
For purposes of this Article XI, the actuarial assumptions used for
determining an
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Actuarial Equivalent benefit shall be used to compute the present value
of the accrued benefits.
11.3 VESTING REQUIREMENTS
Notwithstanding the vesting formula in Section 4.5(a), if the Plan is determined
to be top-heavy with respect to a Plan Year under the provisions of Section
11.1, then a Member's interest in his accrued benefit shall vest by substituting
"three years of Vesting Service" for "five years of Vesting Service" in
determining a Member's Vested Retirement Age under the Plan.
The vesting provisions described in this Section 11.3 shall not apply to a
Member who does not have an Hour of Service after the Plan becomes top-heavy. If
in a subsequent Plan Year the Plan is no longer top-heavy, the vesting
provisions that were in effect prior to the time the Plan became top-heavy shall
be reinstated; provided, however, that the vesting provisions of this Section
11.3 shall continue to apply in the case of a Member who has at least three
years of Vesting Service at the time of such reinstatement.
11.4 MINIMUM BENEFIT
(a) MINIMUM ACCRUAL FORMULA. If the Plan is determined to be top-heavy
under the provisions of Section 11.1 with respect to a Plan Year, the
accrued benefit, when expressed as an Annual Retirement Benefit (as
defined below), of a Member who is not a Key Employee and who has
completed at least 1,000 Hours of Service (or the equivalent) during
the Plan Year regardless of his level of compensation or whether he is
employed on a specified date shall not be less than the difference
between (1) and (2) where--
(1) is the product of--
(A) the number of years of Top-Heavy Service (as defined
below); and
(B) 2 percent of the Member's average Compensation during the
period of the five consecutive years of Top-Heavy Service
during which the Member had the greatest aggregate
Compensation;
but such product shall not exceed 20 percent of the average
Compensation; and
(2) is the amount of the Annual Retirement Benefit that would be
provided by the Member's account balance attributable to Employer
contributions under a defined contribution plan which is included
in an Aggregation Group.
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11.5 LIMIT ON ANNUAL ADDITIONS; COMBINED PLAN LIMIT
(a) GENERAL. If the Plan is determined to be top-heavy under Section 11.1,
Section 4.11(g) shall be applied by substituting "1.0" for "1.25" in
applying the provisions of Code Section 415(e)(2) and (e)(3).
(b) EXCEPTION. Section 11.5(a) above shall not be applicable if--
(1) Section 11.4 is applied by substituting "3 percent" for "2
percent";
(2) Section 11.4 is applied by increasing (but not by more than 10
percentage points) "20 percent" by 1 percentage point for each year
for which the Plan was taken into account under this Section 11.5;
and
(3) the Plan would not be top-heavy if "90 percent" is substituted for
"60 percent" in Section 11.1.
(c) TRANSITION RULE. If, but for this Section 11.5, Section 11.5(a) would
begin to apply with respect to the Plan, the application of Section
11.5(a) shall be suspended with respect to a Member so long as there
are--
(1) no Employer contributions or forfeitures allocated to such Member;
and
(2) no accruals under a qualified defined benefit plan for such Member.
11.6 COLLECTIVE BARGAINING AGREEMENTS
The requirements of Sections 11.3 and 11.4 shall not apply with respect to any
Employee included in a unit of employees covered by a collective bargaining
agreement between employee representatives and an Employer or Affiliate if
retirement benefits were the subject of good faith bargaining between such
employee representatives and such Employer or Affiliate.
* * * * * * * * * *
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IN WITNESS WHEREOF, R. G. Barry Corporation has caused this document to be
executed by its duly authorized officers on this 30th day of December, 1996,
effective as of the 1st day of January, 1996, unless otherwise stated herein.
R. G. Barry Corporation
By: /s/ HARRY A. MILLER
---------------------------
Harry A. Miller
Vice-President of Human Resources
By: /s/ RICHARD L. BURRELL
---------------------------
Richard L. Burrell
Senior Vice-President of
Finance and Treasurer
By: /s/ MICHAEL KRASNOFF
----------------------------
Michael Krasnoff
Vice-President of Finance
and Assistant Treasurer
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<PAGE> 1
EXHIBIT 10(p)
Executive Employment Agreement, effective as of
January 4, 1998, between R. G. Barry Corporation
and Charles E. Ostrander
<PAGE> 2
OSTRANDER
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT is made to be effective
as of the 4th day of January, 1998, between R. G. Barry Corporation, an Ohio
corporation (the "Company"), and Charles E. Ostrander (the "Executive") under
the following circumstances:
A. Executive is presently employed by the Company in an
executive capacity;
B. The Company desires by this Agreement to provide for the
continued employment of Executive by the Company; and
C. Executive desires to continue his employment with the
Company upon the terms and conditions stated herein.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND THE
MUTUAL COVENANTS CONTAINED HEREIN, THE COMPANY AND EXECUTIVE AGREE AS FOLLOWS:
Section 1. Employment. The Company hereby agrees to continue
to employ Executive, and Executive hereby agrees to continue in the employ of
the Company, on the terms and conditions set forth herein.
Section 2. Term of Employment. The term of employment of
Executive by the Company under this Agreement shall commence on the effective
date of this Agreement (the "Agreement Date") and end on the date which is the
fifth anniversary date of the Agreement Date (the "Term of Employment").
Section 3. Position and Duties.
(a) Position. During the Term of Employment, the Company
shall employ Executive as, and Executive shall serve as, a co-president of the
Company's "Barry Division" and as a senior executive officer of the Company with
his duties, authority and responsibilities to be of the same character as those
assigned to him as of the date of this Agreement or in such other capacity or
capacities of at least equal standing and dignity connected with the business of
the Company as the Company shall from time to time determine, provided that any
change of capacity shall be subject to Executive's reasonable approval.
<PAGE> 3
(b) Duties. Executive shall devote his full-time efforts to
the business and affairs of the Company and shall perform his duties faithfully,
diligently, and to the best of his ability and in conformity with the policies
of the Company and under and subject to such reasonable directions and
instructions as the Board of Directors and the Chief Executive Officer of the
Company may issue from time to time.
Section 4. Compensation and Related Matters.
(a) Salary. The Company shall pay Executive a base salary of
not less than $258,000 per year payable in approximately equal installments in
accordance with the Company's normal pay schedule. In the event the Company
shall at any time or times after the Agreement Date increase Executive's base
salary, then Executive's base salary under this Agreement for any period after
any such increase shall be not less than the last amount to which the Company
increased the base salary of Executive (such base salary including increases
granted after the Agreement Date is hereinafter referred to as "Basic Salary").
Compensation of Executive by Basic Salary payments shall not be deemed exclusive
and shall not prevent Executive from participating in any other compensation or
benefit plan of the Company. The Basic Salary payments hereunder shall not in
any way limit or reduce any other obligation of the Company hereunder, and no
other compensation, benefit or payment hereunder shall in any way limit or
reduce the obligation of the Company to pay Executive's Basic Salary hereunder.
(b) Expenses. During the Term of Employment, Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by Executive in performing services hereunder, including all reasonable expenses
of travel and living expenses while away from home on business or at the request
of and in the service of the Company, provided that such expenses are incurred
and accounted for in accordance with the policies and procedures established by
the Company.
(c) Other Benefits. During the term of Employment:
(1) The Company, at its expense, shall provide and maintain
a policy of insurance on Executive's life providing for a death benefit payable
to Executive's beneficiaries or estate in an amount that is not less than the
amount of coverage provided by the life insurance policy on Executive's life
maintained by the Company for Executive's benefit on the Agreement Date;
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<PAGE> 4
(2) Executive shall be entitled to receive such perquisites
and fringe benefits historically provided by the Company to its senior
executives, including, without limitation, the exclusive use of an automobile;
(3) Executive shall be entitled to participate in the
Company's Salaried Employees' Pension Plan (the "Pension Plan") and Supplemental
Retirement Plan (the "Supplemental Plan"), as any of the same may be amended
from time to time, or any substitute or successor plans;
(4) Executive shall be entitled to participate in the
Company's Short-Term Incentive Plan (STIPS), as the same may be amended from
time to time, or any substitute or successor plan, at a maximum annual level
equal to 60% of his Basic Salary; and
(5) Executive shall be entitled to receive all other
employee benefits, including, without limitation, medical, dental, group life
and accidental death insurance benefits as are or in the future may be provided
by the Company to its senior executives.
Section 5. Termination.
(a) Termination of Employment Other Than by Executive.
Executive's employment hereunder may be terminated without any breach of this
Agreement only under the following circumstances:
(1) Death. Executive's employment hereunder shall
terminate upon his death.
(2) Disability. If, as a result of Executive's
incapacity due to physical or mental illness, Executive
shall have been absent from his duties hereunder on a
full-time basis for the entire period of four consecutive
months, and within thirty days after written notice of
termination is given (which may occur before or after the
end of such four month period) shall not have returned to
the performance of his duties hereunder on a full-time
basis, the Company may terminate Executive's employment
hereunder for Disability.
(3) Cause. The Company may terminate Executive's
employment hereunder for Cause. For purposes of this
Agreement, the Company
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shall have "Cause" to terminate Executive's employment
hereunder only upon:
(i) The willful and continued refusal by the Executive
to perform his duties with the Company (other than any such
refusal resulting from his incapacity due to physical or
mental illness), after a demand for substantial performance
is delivered to Executive by the Company which specifically
identifies the manner in which it is believed that Executive
has refused substantially to perform his duties;
(ii) Conviction of Executive of any felony; or
(iii) Willful and gross misconduct materially and
demonstrably injurious to the Company.
(b) Termination of Employment by Executive. Executive may
terminate his employment hereunder for Good Reason. As used herein, "Good
Reason" means any of the following:
(1) The assignment to Executive, without his consent,
of any duties materially inconsistent with his position,
duties, responsibilities and status with the Company on the
Agreement Date, or a change in Executive's responsibilities,
as in effect on the Agreement Date, which materially
diminishes Executive's responsibilities with the Company
when considered as a whole; provided, however, that the
foregoing shall not constitute Good Reason if done in
connection with the termination of Executive's employment
because of Disability or for Cause.
(2) A reduction by the Company in Executive's Basic
Salary.
(3) Failure by the Company to comply with the
provisions of Section 4(c).
(4) The Company's requiring Executive, without his
consent, to be based anywhere other than the location where
Executive is based on the Agreement Date, if the same
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<PAGE> 6
requires Executive to relocate his principal residence; or,
in the event Executive consents to being based anywhere
other than such location, the failure by the Company to pay
(or reimburse Executive for) all reasonable moving expenses
incurred by Executive relating to a change of Executive's
principal residence in connection with such relocation.
(5) The failure of the Company to obtain the assumption
of this agreement by any successor as provided in Section 9.
(c) Notice of Termination. Any termination of Executive's
employment by the Company or by Executive other than termination pursuant to
Section 5(a)(1) shall be communicated by written Notice of Termination to the
other party. For purposes of this Agreement, a Notice of Termination shall mean
a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(d) Date of Termination. "Date of Termination" shall mean
(i) if Executive's employment is terminated by his death, the date of his death,
(ii) if Executive's employment is terminated pursuant to Section 5(a)(2), thirty
days after Notice of Termination is given (provided that the Executive shall not
have returned to the performance of his duties on a full-time basis during such
thirty (30) day period), or (iii) if Executive's employment is terminated for
any other reason, the date on which the Notice of Termination is given.
Section 6. Compensation Upon Termination or During
Disability.
(a) Disability. During any period that Executive fails to
perform his duties hereunder as a result of incapacity due to physical or mental
illness ("Disability Period"), Executive shall continue to receive his Basic
Salary at the rate then in effect for such period until his employment is
terminated pursuant to Section 5(a)(2), provided that payments of Basic Salary
so made to Executive shall be reduced by the sum of the amounts, if any, payable
to Executive at or prior to the time of any such salary payment under disability
benefit plans of the Company and which were not previously applied to reduce any
payment of Basic Salary.
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<PAGE> 7
(b) Death. If Executive's employment is terminated by his
death, the Company shall pay to Executive's estate his full Basic Salary through
the Date of Termination at the rate in effect on the date of death and shall
thereafter have no further obligations to Executive under this Agreement.
(c) Termination for Cause. If Executive's employment shall
be terminated for Cause, the Company shall pay Executive his full Basic Salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Company shall have no further obligations to
Executive under this Agreement.
(d) Termination For Good Reason or Without Cause. In the
event Executive terminates his employment with the Company for Good Reason or
the Company terminates Executive's Employment for any reason other than for
Cause or Disability, in either case at any time prior to the expiration of the
Term of Employment, Executive shall be entitled to the following payments and
benefits:
(1) The Company shall pay to the Executive, not later than
30 days following the Date of Termination, the Executive's accrued but unpaid
Basic Salary through the Date of Termination plus compensation for current and
carried-over unused vacation and compensation days in accordance with the
applicable personnel policy.
(2) In lieu of any further payments of salary or bonus to
the Executive after the Date of Termination, the Company shall pay to the
Executive, not later than ten (10) days following the Date of Termination, a
lump sum cash severance payment (the "Severance Payment") equal to the total
compensation (including bonus) paid to or accrued for the benefit of the
Executive by the Company for services rendered during the twelve-month period
immediately preceding the Date of Termination.
(e) After payment of the sums described in subparagraphs
(d)(1) and (d)(2) above, the Company shall have no further obligations to
Executive under this Agreement; provided that the Executive's right to receive
payments under this Agreement shall not decrease the amount of, or otherwise
adversely affect, any other benefits payable to the Executive under any other
plan, agreement or arrangement relating to employee benefits provided by the
Company.
(f) Voluntary Termination by Executive Without Good Reason.
In the event Executive terminates his employment with
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<PAGE> 8
the Company without Good Reason, the Company shall pay to Executive his full
Basic Salary through the Date of Termination at the rate then in effect and the
Company shall have no further obligations to Executive under this Agreement.
(g) Executive shall not be required to mitigate the amount
of any payment provided for in this Section 6 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for him in
this Section 6 be reduced by any compensation earned by Executive as the result
of employment by another employer or by reason of Executive's receipt of or
right to receive any retirement or other benefits after the date of termination
of employment or otherwise.
Section 7. Non-Competition; Confidentiality
(a) Period. During Executive's employment with the Company
and for a period of one (1) year following any termination of Executive's
employment with the Company (other than following a Hostile Change of Control
(as defined below)), Executive shall not, as a shareholder, employee, officer,
director, partner, consultant or otherwise, engage directly or indirectly in any
business or enterprise which is in Competition with the Company (as defined
below).
(b) Competition with the Company. For purposes of this
Agreement, (i) the words "Competition with the Company" shall be deemed to
include competition with the Company or any entity controlling, controlled by or
under common control with the Company (an "Affiliate"), or their respective
successors or assigns, or the business of any of them, and (ii) a business or
enterprise shall be deemed to be in Competition with the Company if it is
engaged in any business activity which is the same or comparable to any business
activity of the Company or any Affiliate from time to time during the Term of
Employment in any geographic area (whether within or outside the United States)
in which the Company or any Affiliate conducted such business. Notwithstanding
the foregoing, nothing herein contained shall prevent Executive from purchasing
and holding for investment less than 3% of the shares of any corporation the
shares of which are regularly traded either on a national securities exchange or
in the over-the-counter market.
(c) Interpretation of Covenant. The parties hereto agree
that the duration and area for which the covenant not to compete set forth in
this Section 7 is to be effective are reasonable. In the event that any court
determines that the time period or the area, or both of them, are unreasonable
and that such covenant is to that extent unenforceable, the parties
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<PAGE> 9
hereto agree that the covenant shall remain in full force and effect for the
greatest time period and in the greatest area that would not render it
unenforceable. The parties intend that this covenant shall be deemed to be a
series of separate covenants, one for each and ever county of each and every
state of the United States of America where the covenant not to compete is
intended to be effective. The provisions of this Section 7 shall survive any
termination of this Agreement.
(d) Prohibition on Disclosure or Use. Executive shall at all
times keep and maintain Confidential Information (as defined below)
confidential, and Executive shall not, at any time, either during or subsequent
to the Term of Employment, either directly or indirectly, use any Confidential
Information for Executive's own benefit or divulge, disclose, or communicate any
Confidential Information to any person or entity in any manner whatsoever other
than employees or agents of the Company having a need to know such Confidential
Information, and only to the extent necessary to perform their responsibilities
on behalf of the Company and other than in the performance of Executive's duties
hereunder.
(e) Definition of Confidential Information. "Confidential
Information" shall mean any and all information (excluding information in the
public domain) related to the business of the Company or any Affiliate,
including without limitation all processes; inventions; trade secrets; computer
programs; engineering or technical data, drawings, or designs; manufacturing
techniques; information concerning pricing and pricing policies; marketing
techniques; plans and forecasts; new product information; information concerning
suppliers; methods and manner of operations; and information relating to the
identity and location of all past, present, and prospective customers.
(f) Equitable Relief.Executive's obligations contained in
this Section 7 are of special and unique character which gives them a peculiar
value to the Company, and the Company cannot be reasonably or adequately
compensated in damages in an action at law in the event Executive breaches such
obligations. Executive therefore expressly agrees that, in addition to any other
rights or remedies which Company may possess, the Company shall be entitled to
injunctive and other equitable relief in the form of preliminary and permanent
injunctions without bond or other security in the event of any actual or
threatened breach of said obligations by Executive.
(g) Definition of Change of Control. A "Hostile Change of
Control" shall be deemed to have occurred if (i) any
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<PAGE> 10
"person" (as that term is used in Section 13(d) and Section 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") on the
Agreement Date), including any "group" as such term is used in Section 13(d)(3)
of the Exchange Act on the Agreement Date (an "Acquiring Person"), shall
hereafter acquire (or disclose the previous acquisition of) beneficial ownership
(as that term is defined in Section 13(d) of the Exchange Act and the rules
thereunder on the Agreement Date) of shares of the outstanding stock of any
class or classes of the Company which results in such person or group possessing
more than 50.1% of the total voting power of the Company's outstanding voting
securities ordinarily having the right to vote for the election of directors of
the Company (a "Control Acquisition"); or (ii) as the result of, or in
connection with, any tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions ("Transaction"), the persons who were directors of the
Company immediately before the completion of the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any successor
to the Company. Anything contained in this paragraph (g) to the contrary
notwithstanding, a "Hostile Change of Control" shall not be deemed to have
occurred if the Control Acquisition or the Transaction is approved by a majority
of the directors of the Company who were directors of the Company before the
completion of the Control Acquisition or the Transaction.
Section 8. Waiver. The failure of either party to this
Agreement to insist, in any one or more instances, upon the performance of any
of the terms, covenants or conditions of this Agreement by the other party
hereto, shall not be construed as a waiver or as a relinquishment of any right
granted hereunder to the party failing to insist on such performance, or as a
waiver of the future performance of any such term, covenant or condition, but
the obligations hereunder of both parties hereto shall remain unimpaired and
shall continue in full force and effect.
Section 9. Successors; Binding Agreement.
(a) The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and its
subsidiaries to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle Executive to compensation in the same amount
and on the same terms as he
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<PAGE> 11
would be entitled hereunder if he terminated his employment for Good Reason,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as defined above and
any successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 9 or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there by no such designee, to his estate.
Section 10. Arbitration. Any dispute or controversy arising
out of or relating to this Agreement, or any breach thereof, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. The award of the arbitrator shall be final, conclusive, and
nonappealable and judgment upon such award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitrator shall be an
arbitrator qualified to serve in accordance with the rules of the American
Arbitration Association and one who is approved by both the Company and
Executive. In the absence of such approval, each party shall designate a person
qualified to serve as an arbitrator in accordance with the rules of the American
Arbitration Association and the two persons so designated shall select the
arbitrator from among those persons qualified to serve in accordance with the
rules of the American Arbitration Association. The arbitration shall be held in
Columbus, Ohio or such other place as may be agreed upon at the time by the
parties to the arbitration.
Section 11. Notices. For the purpose of this Agreement,
notices and all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed in the case of Executive, to
Charles E. Ostrander
505 Parkview S., Apt. 207
Columbus, Ohio 43209
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and in the case of the Company, to the principal executive offices of the
Company, provided that all notices to the Company shall be directed to the
attention of the Company's Chief Executive Officer with copies to the Secretary
of the Corporation and to its Board of Directors, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
Section 12. Miscellaneous. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Executive and a duly authorized
officer of the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws (but not the law of conflicts of laws) of the State of Ohio.
Section 13. Validity. The invalidity or unenforceability of
any provisions of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement to be effective as of the date and year above written.
R. G. BARRY CORPORATION
By: /s/ GORDON ZACKS 12/10/97
-------------------------------
Title: CEO
----------------------------
/s/ CHARLES E. OSTRANDER 12/10/97
----------------------------------
Charles E. Ostrander
11
<PAGE> 1
EXHIBIT 10(q)
Executive Employment Agreement,
effective as of January 4, 1998, between
R. G. Barry Corporation and Christian Galvis.
<PAGE> 2
GALVIS
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT is made to be effective
as of January 4, 1998, between R. G. Barry Corporation, an Ohio corporation (the
"Company"), and Christian Galvis (the "Executive") under the following
circumstances:
A. Executive is presently employed by the Company in an
executive capacity;
B. The Company desires by this Agreement to provide for the
continued employment of Executive by the Company; and
C. Executive desires to continue his employment with the
Company upon the terms and conditions stated herein.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND THE
MUTUAL COVENANTS CONTAINED HEREIN, THE COMPANY AND EXECUTIVE AGREE AS FOLLOWS:
Section 1. Employment. The Company hereby agrees to continue
to employ Executive, and Executive hereby agrees to continue in the employ of
the Company, on the terms and conditions set forth herein.
Section 2. Term of Employment. The term of employment of
Executive by the Company under this Agreement shall commence on the effective
date of this Agreement (the "Agreement Date") and end on the date which is the
fifth anniversary date of the Agreement Date (the "Term of Employment").
Section 3. Position and Duties.
(a) Position. During the Term of Employment, the Company
shall employ Executive as, and Executive shall serve as, a co-president of the
Company's "Barry Division" and as a senior executive officer of the Company with
his duties, authority and responsibilities to be of the same character as those
assigned to him as of the date of this Agreement or in such other capacity or
capacities of at least equal standing and dignity connected with the business of
the Company as the Company shall from time to time determine, provided that any
change of capacity shall be subject to Executive's reasonable approval.
(b) Duties. Executive shall devote his full-time efforts to
the business and affairs of the Company and shall
<PAGE> 3
perform his duties faithfully, diligently, and to the best of his ability and in
conformity with the policies of the Company and under and subject to such
reasonable directions and instructions as the Board of Directors and the Chief
Executive Officer of the Company may issue from time to time.
Section 4. Compensation and Related Matters.
(a) Salary. The Company shall pay Executive a base salary of
not less than $258,000 per year payable in approximately equal installments in
accordance with the Company's normal pay schedule. In the event the Company
shall at any time or times after the Agreement Date increase Executive's base
salary, then Executive's base salary under this Agreement for any period after
any such increase shall be not less than the last amount to which the Company
increased the base salary of Executive (such base salary including increases
granted after the Agreement Date is hereinafter referred to as "Basic Salary").
Compensation of Executive by Basic Salary payments shall not be deemed exclusive
and shall not prevent Executive from participating in any other compensation or
benefit plan of the Company. The Basic Salary payments hereunder shall not in
any way limit or reduce any other obligation of the Company hereunder, and no
other compensation, benefit or payment hereunder shall in any way limit or
reduce the obligation of the Company to pay Executive's Basic Salary hereunder.
(b) Expenses. During the Term of Employment, Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by Executive in performing services hereunder, including all reasonable expenses
of travel and living expenses while away from home on business or at the request
of and in the service of the Company, provided that such expenses are incurred
and accounted for in accordance with the policies and procedures established by
the Company.
(c) Other Benefits. During the term of Employment:
(1) The Company, at its expense, shall provide and maintain
a policy of insurance on Executive's life providing for a death benefit payable
to Executive's beneficiaries or estate in an amount that is not less than the
amount of coverage provided by the life insurance policy on Executive's life
maintained by the Company for Executive's benefit on the Agreement Date;
(2) Executive shall be entitled to receive such perquisites
and fringe benefits historically provided by the
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Company to its senior executives, including, without limitation, the exclusive
use of an automobile;
(3) Executive shall be entitled to participate in the
Company's Salaried Employees' Pension Plan (the "Pension Plan") and Supplemental
Retirement Plan (the "Supplemental Plan"), as any of the same may be amended
from time to time, or any substitute or successor plans;
(4) Executive shall be entitled to participate in the
Company's Short-Term Incentive Plan (STIPS), as the same may be amended from
time to time, or any substitute or successor plan, at a maximum annual level
equal to 60% of his Basic Salary; and
(5) Executive shall be entitled to receive all other
employee benefits, including, without limitation, medical, dental, group life
and accidental death insurance benefits as are or in the future may be provided
by the Company to its senior executives.
Section 5. Termination.
(a) Termination of Employment Other Than by Executive.
Executive's employment hereunder may be terminated without any breach of this
Agreement only under the following circumstances:
(1) Death. Executive's employment hereunder shall
terminate upon his death.
(2) Disability. If, as a result of Executive's
incapacity due to physical or mental illness, Executive
shall have been absent from his duties hereunder on a
full-time basis for the entire period of four consecutive
months, and within thirty days after written notice of
termination is given (which may occur before or after the
end of such four month period) shall not have returned to
the performance of his duties hereunder on a full-time
basis, the Company may terminate Executive's employment
hereunder for Disability.
(3) Cause. The Company may terminate Executive's
employment hereunder for Cause. For purposes of this
Agreement, the Company shall have "Cause" to terminate
Executive's employment hereunder only upon:
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<PAGE> 5
(i) The willful and continued refusal by the Executive
to perform his duties with the Company (other than any such
refusal resulting from his incapacity due to physical or
mental illness), after a demand for substantial performance
is delivered to Executive by the Company which specifically
identifies the manner in which it is believed that Executive
has refused substantially to perform his duties;
(ii) Conviction of Executive of any felony; or
(iii) Willful and gross misconduct materially and
demonstrably injurious to the Company.
(b) Termination of Employment by Executive. Executive may
terminate his employment hereunder for Good Reason. As used herein, "Good
Reason" means any of the following:
(1) The assignment to Executive, without his consent,
of any duties materially inconsistent with his position,
duties, responsibilities and status with the Company on the
Agreement Date, or a change in Executive's responsibilities,
as in effect on the Agreement Date, which materially
diminishes Executive's responsibilities with the Company
when considered as a whole; provided, however, that the
foregoing shall not constitute Good Reason if done in
connection with the termination of Executive's employment
because of Disability or for Cause.
(2) A reduction by the Company in Executive's Basic
Salary.
(3) Failure by the Company to comply with the
provisions of Section 4(c).
(4) The Company's requiring Executive, without his
consent, to be based anywhere other than the location where
Executive is based on the Agreement Date, if the same
requires Executive to relocate his principal residence; or,
in the event Executive
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<PAGE> 6
consents to being based anywhere other than such location,
the failure by the Company to pay (or reimburse Executive
for) all reasonable moving expenses incurred by Executive
relating to a change of Executive's principal residence in
connection with such relocation.
(5) The failure of the Company to obtain the assumption
of this agreement by any successor as provided in Section 9.
(c) Notice of Termination. Any termination of Executive's
employment by the Company or by Executive other than termination pursuant to
Section 5(a)(1) shall be communicated by written Notice of Termination to the
other party. For purposes of this Agreement, a Notice of Termination shall mean
a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(d) Date of Termination. "Date of Termination" shall mean
(i) if Executive's employment is terminated by his death, the date of his death,
(ii) if Executive's employment is terminated pursuant to Section 5(a)(2), thirty
days after Notice of Termination is given (provided that the Executive shall not
have returned to the performance of his duties on a full-time basis during such
thirty (30) day period), or (iii) if Executive's employment is terminated for
any other reason, the date on which the Notice of Termination is given.
Section 6. Compensation Upon Termination or During
Disability.
(a) Disability. During any period that Executive fails to
perform his duties hereunder as a result of incapacity due to physical or mental
illness ("Disability Period"), Executive shall continue to receive his Basic
Salary at the rate then in effect for such period until his employment is
terminated pursuant to Section 5(a)(2), provided that payments of Basic Salary
so made to Executive shall be reduced by the sum of the amounts, if any, payable
to Executive at or prior to the time of any such salary payment under disability
benefit plans of the Company and which were not previously applied to reduce any
payment of Basic Salary.
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<PAGE> 7
(b) Death. If Executive's employment is terminated by his
death, the Company shall pay to Executive's estate his full Basic Salary through
the Date of Termination at the rate in effect on the date of death and shall
thereafter have no further obligations to Executive under this Agreement.
(c) Termination for Cause. If Executive's employment shall
be terminated for Cause, the Company shall pay Executive his full Basic Salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Company shall have no further obligations to
Executive under this Agreement.
(d) Termination For Good Reason or Without Cause. In the
event Executive terminates his employment with the Company for Good Reason or
the Company terminates Executive's Employment for any reason other than for
Cause or Disability, in either case at any time prior to the expiration of the
Term of Employment, Executive shall be entitled to the following payments and
benefits:
(1) The Company shall pay to the Executive, not later than
30 days following the Date of Termination, the Executive's accrued but unpaid
Basic Salary through the Date of Termination plus compensation for current and
carried-over unused vacation and compensation days in accordance with the
applicable personnel policy.
(2) In lieu of any further payments of salary or bonus to
the Executive after the Date of Termination, the Company shall pay to the
Executive, not later than ten (10) days following the Date of Termination, a
lump sum cash severance payment (the "Severance Payment") equal to the total
compensation (including bonus) paid to or accrued for the benefit of the
Executive by the Company for services rendered during the twelve-month period
immediately preceding the Date of Termination.
(e) After payment of the sums described in subparagraphs
(d)(1) and (d)(2) above, the Company shall have no further obligations to
Executive under this Agreement; provided that the Executive's right to receive
payments under this Agreement shall not decrease the amount of, or otherwise
adversely affect, any other benefits payable to the Executive under any other
plan, agreement or arrangement relating to employee benefits provided by the
Company.
(f) Voluntary Termination by Executive Without Good Reason.
In the event Executive terminates his employment with the Company without Good
Reason, the Company shall pay to
-6-
<PAGE> 8
Executive his full Basic Salary through the Date of Termination at the rate then
in effect and the Company shall have no further obligations to Executive under
this Agreement.
(g) Executive shall not be required to mitigate the amount
of any payment provided for in this Section 6 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for him in
this Section 6 be reduced by any compensation earned by Executive as the result
of employment by another employer or by reason of Executive's receipt of or
right to receive any retirement or other benefits after the date of termination
of employment or otherwise.
Section 7. Non-Competition; Confidentiality
(a) Period. During Executive's employment with the Company
and for a period of one (1) year following any termination of Executive's
employment with the Company (other than following a Hostile Change of Control
(as defined below)), Executive shall not, as a shareholder, employee, officer,
director, partner, consultant or otherwise, engage directly or indirectly in any
business or enterprise which is in Competition with the Company (as defined
below).
(b) Competition with the Company. For purposes of this
Agreement, (i) the words "Competition with the Company" shall be deemed to
include competition with the Company or any entity controlling, controlled by or
under common control with the Company (an "Affiliate"), or their respective
successors or assigns, or the business of any of them, and (ii) a business or
enterprise shall be deemed to be in Competition with the Company if it is
engaged in any business activity which is the same or comparable to any business
activity of the Company or any Affiliate from time to time during the Term of
Employment in any geographic area (whether within or outside the United States)
in which the Company or any Affiliate conducted such business. Notwithstanding
the foregoing, nothing herein contained shall prevent Executive from purchasing
and holding for investment less than 3% of the shares of any corporation the
shares of which are regularly traded either on a national securities exchange or
in the over-the-counter market.
(c) Interpretation of Covenant. The parties hereto agree
that the duration and area for which the covenant not to compete set forth in
this Section 7 is to be effective are reasonable. In the event that any court
determines that the time period or the area, or both of them, are unreasonable
and that such covenant is to that extent unenforceable, the parties hereto agree
that the covenant shall remain in full force and
-7-
<PAGE> 9
effect for the greatest time period and in the greatest area that would not
render it unenforceable. The parties intend that this covenant shall be deemed
to be a series of separate covenants, one for each and ever county of each and
every state of the United States of America where the covenant not to compete is
intended to be effective. The provisions of this Section 7 shall survive any
termination of this Agreement.
(d) Prohibition on Disclosure or Use. Executive shall at all
times keep and maintain Confidential Information (as defined below)
confidential, and Executive shall not, at any time, either during or subsequent
to the Term of Employment, either directly or indirectly, use any Confidential
Information for Executive's own benefit or divulge, disclose, or communicate any
Confidential Information to any person or entity in any manner whatsoever other
than employees or agents of the Company having a need to know such Confidential
Information, and only to the extent necessary to perform their responsibilities
on behalf of the Company and other than in the performance of Executive's duties
hereunder.
(e) Definition of Confidential Information. "Confidential
Information" shall mean any and all information (excluding information in the
public domain) related to the business of the Company or any Affiliate,
including without limitation all processes; inventions; trade secrets; computer
programs; engineering or technical data, drawings, or designs; manufacturing
techniques; information concerning pricing and pricing policies; marketing
techniques; plans and forecasts; new product information; information concerning
suppliers; methods and manner of operations; and information relating to the
identity and location of all past, present, and prospective customers.
(f) Equitable Relief.Executive's obligations contained in
this Section 7 are of special and unique character which gives them a peculiar
value to the Company, and the Company cannot be reasonably or adequately
compensated in damages in an action at law in the event Executive breaches such
obligations. Executive therefore expressly agrees that, in addition to any other
rights or remedies which Company may possess, the Company shall be entitled to
injunctive and other equitable relief in the form of preliminary and permanent
injunctions without bond or other security in the event of any actual or
threatened breach of said obligations by Executive.
(g) Definition of Change of Control. A "Hostile Change of
Control" shall be deemed to have occurred if (i) any "person" (as that term is
used in Section 13(d) and Section 14(d) of the
-8-
<PAGE> 10
Securities Exchange Act of 1934, as amended (the "Exchange Act") on the
Agreement Date), including any "group" as such term is used in Section 13(d)(3)
of the Exchange Act on the Agreement Date (an "Acquiring Person"), shall
hereafter acquire (or disclose the previous acquisition of) beneficial ownership
(as that term is defined in Section 13(d) of the Exchange Act and the rules
thereunder on the Agreement Date) of shares of the outstanding stock of any
class or classes of the Company which results in such person or group possessing
more than 50.1% of the total voting power of the Company's outstanding voting
securities ordinarily having the right to vote for the election of directors of
the Company (a "Control Acquisition"); or (ii) as the result of, or in
connection with, any tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions ("Transaction"), the persons who were directors of the
Company immediately before the completion of the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any successor
to the Company. Anything contained in this paragraph (g) to the contrary
notwithstanding, a "Hostile Change of Control" shall not be deemed to have
occurred if the Control Acquisition or the Transaction is approved by a majority
of the directors of the Company who were directors of the Company before the
completion of the Control Acquisition or the Transaction.
Section 8. Waiver. The failure of either party to this
Agreement to insist, in any one or more instances, upon the performance of any
of the terms, covenants or conditions of this Agreement by the other party
hereto, shall not be construed as a waiver or as a relinquishment of any right
granted hereunder to the party failing to insist on such performance, or as a
waiver of the future performance of any such term, covenant or condition, but
the obligations hereunder of both parties hereto shall remain unimpaired and
shall continue in full force and effect.
Section 9. Successors; Binding Agreement.
(a) The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and its
subsidiaries to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle Executive to compensation in the same amount
and on the same terms as he would be entitled hereunder if he terminated his
employment for
-9-
<PAGE> 11
Good Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
defined above and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 9 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there by no such designee, to his estate.
Section 10. Arbitration. Any dispute or controversy arising
out of or relating to this Agreement, or any breach thereof, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. The award of the arbitrator shall be final, conclusive, and
nonappealable and judgment upon such award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitrator shall be an
arbitrator qualified to serve in accordance with the rules of the American
Arbitration Association and one who is approved by both the Company and
Executive. In the absence of such approval, each party shall designate a person
qualified to serve as an arbitrator in accordance with the rules of the American
Arbitration Association and the two persons so designated shall select the
arbitrator from among those persons qualified to serve in accordance with the
rules of the American Arbitration Association. The arbitration shall be held in
Columbus, Ohio or such other place as may be agreed upon at the time by the
parties to the arbitration.
Section 11. Notices. For the purpose of this Agreement,
notices and all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed in the case of Executive, to
Christian Galvis
3910 Iron Mill Lane
San Antonio, Texas 78230
-10-
<PAGE> 12
and in the case of the Company, to the principal executive offices of the
Company, provided that all notices to the Company shall be directed to the
attention of the Company's Chief Executive Officer with copies to the Secretary
of the Corporation and to its Board of Directors, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
Section 12. Miscellaneous. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Executive and a duly authorized
officer of the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws (but not the law of conflicts of laws) of the State of Ohio.
Section 13. Validity. The invalidity or unenforceability of
any provisions of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year above written.
R. G. BARRY CORPORATION
By /s/ GORDON ZACKS
------------------------
Title CEO
----------------------
/s/ CHRISTIAN GALVIS
---------------------------
Christian Galvis
11
<PAGE> 1
EXHIBIT 10(r)
Restricted Stock Agreement,
effective as of January 4, 1998, between
R. G. Barry Corporation and Charles E. Ostrander.
<PAGE> 2
OSTRANDER
RESTRICTED
STOCK
AGREEMENT
This AGREEMENT is made to be effective as of January 4, 1998,
by and between R. G. Barry Corporation, an Ohio corporation (the "Company"), and
Charles E. Ostrander ("Ostrander").
RECITALS:
1. Ostrander possesses unique skills, knowledge and experience
related to the business of the Company which he has developed in his many years
of service to the Company, including his extended service as an executive
officer of the Company.
2. The Company desires to reward Ostrander for his significant
contributions to the Company in the past and to encourage Ostrander to remain in
the employment of the Company and put forth maximum efforts for the success of
the Company in the future.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants expressed in this Agreement, the Company and Ostrander make the
following agreements, intending to be legally bound thereby:
Section 1.
(A) Award and Issuance of Restricted Shares. In consideration
of and conditioned upon Ostrander's continued service in a key management
position with the Company, and subject to the terms and conditions hereinafter
set forth, the Company shall issue an aggregate of 10,000 common shares, $1.00
par value, of the Company (the "Restricted Shares") to Ostrander over a period
of up to eight fiscal years of the Company. Ostrander shall be entitled to
receive 1,250 Restricted Shares on the last business day of each fiscal year of
the Company, beginning with the 1998 fiscal year so long as he is employed by
the Company on such date, until the earlier of the following events to occur:
(i) Ostrander has received or has become entitled to receive all of the
Restricted Shares covered by this Agreement, or (ii) Ostrander's right to
receive Restricted Shares has been terminated under the terms of this Agreement.
Ostrander shall be entitled to receive an additional 1,250 Restricted Shares in
respect of any and each fiscal year of the Company in which the Company achieves
120% of the "target profit goal" established by the Company's Board of Directors
for that fiscal year in a manner consistent with past practices (the "Target
Profit Goal"). The Target Profit Goal shall be computed before deducting any
amounts expensed for taxes, payments under the Company's annual profit-sharing
incentive bonus program and charitable contributions. In the event that
Ostrander is to be issued Restricted Shares in respect of the achievement by the
Company of the Target Profit Goal in respect of any fiscal year, unless such
issuance is deferred as permitted under Subsection 1(D) of this Agreement, such
Restricted Shares shall be issued to Ostrander not later than 60 days after the
end of such fiscal year.
<PAGE> 3
(B) Rights of Ostrander in Respect of Restricted Shares.
Ostrander shall have no rights as a shareholder of the Company or any other
rights with respect to any of the Restricted Shares covered by this Agreement
unless and until a share certificate is issued to him evidencing his ownership
of such Restricted Shares.
(C) Effect of Termination of Employment Upon Right to Receive
Restricted Shares.
(1) General. If Ostrander's employment with the Company
terminates for any reason [other than within two years following a Change in
Control (as provided in Subsection 1(C)(2) below) or as a result of his death],
Ostrander shall forfeit the right to receive any additional Restricted Shares
under this Agreement following such termination of employment other than (i)
Restricted Shares issuable in respect of the achievement of the Target Profit
Goal for a completed fiscal year provided that Ostrander was employed by the
Company on the last day of such fiscal year; and (ii) Restricted Shares, the
receipt of which has been deferred as permitted under Subsection 1(D) of this
Agreement. Any Restricted Shares issuable at the time of such termination of
employment as a result of the achievement of the Target Profit Goal for a
completed fiscal year shall be issued to Ostrander as contemplated by Subsection
1(A) above. Any Restricted Shares with respect to which receipt has been
deferred shall be issued to Ostrander as contemplated by Subsection 1(D), below.
(2) Within Three Years Following a Change in Control. If,
within two years following a Change in Control of the Company, Ostrander's
employment is terminated by the Company without Cause or by Ostrander for Good
Reason, Ostrander shall be entitled to immediately be issued all of the
Restricted Shares subject to this Agreement which have not previously been
issued.
(i) For purposes of this Agreement, the Company shall be deemed
to have terminated Ostrander's employment for "Cause" only
if upon the occurrence of one of the following
circumstances: (a) the willful and continued refusal by
Ostrander to perform his duties with the Company (other than
any such refusal resulting from his incapacity due to
physical or mental illness), after a demand for substantial
performance is delivered to Ostrander by the Company which
specifically identifies the manner in which it is believed
that Ostrander has refused substantially to perform his
duties; (b) Conviction of Ostrander of any felony; or (c)
Willful or gross misconduct by Ostrander which is materially
and demonstrably injurious to the Company.
(ii) For purposes of this Agreement, Ostrander shall be deemed to
have terminated his employment for "Good Reason" under any
of the following circumstances: (a) the assignment to
Ostrander, without his consent, of any duties
2
<PAGE> 4
materially inconsistent with his position, duties,
responsibilities and status with the Company as of the date
of this Agreement, or a change in Ostrander's
responsibilities, as in effect on the date of this
Agreement, which materially diminishes Ostrander's
responsibilities with the Company when considered as a
whole; provided, however that the foregoing shall not
constitute Good Reason if done in connection with the
termination of Ostrander's employment because of disability
or for Cause; (b) any material reduction in the compensation
and benefits provided to Ostrander at the time of the Change
in Control; (c) any material breach by the Company of any
employment agreement with Ostrander; or (d) the Company's
requiring Ostrander, without his consent, to be based
anywhere other than the location where Ostrander is based on
the date of this Agreement, if the same requires Ostrander
to relocate his principal residence; or in the event
Ostrander consents to be based anywhere other than such
location, the failure by the Company to pay (or reimburse
Ostrander for) all reasonable living expenses incurred by
Ostrander relating to a change of Ostrander's principal
residence in connection with such relocation.
(iii) A "Change in Control" shall be deemed to have occurred if
(a) any "person" (as that term is used in Section 13(d) and
Section 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on the date of this
Agreement), including any "group" as such term is used in
Section 13(d)(3) of the Exchange Act on the date of this
Agreement (an "Acquiring Person"), shall hereafter acquire
(or disclose the previous acquisition of) beneficial
ownership (as that term is defined in Section 13(d) of the
Exchange Act and the rules promulgated thereunder on the
date of this Agreement) of shares of the outstanding stock
of any class or classes of the Company which results in such
person or group possessing more than 50.1% of the total
voting power of the Company's outstanding voting securities
ordinarily having the right to vote for the election of
directors of the Company; or (b) as the result of, or in
connection with, any tender or exchange offer, merger or
other business combination, sale of assets or contested
election, or any combination of the foregoing transactions
(each, a "Transaction"), the persons who were directors of
the Company immediately before the completion of the
Transaction shall cease to constitute a majority of the
Board
3
<PAGE> 5
of Directors of the Company or any successor to the Company.
(3) Upon Death. If Ostrander dies while an employee of the
Company, his estate shall be entitled to immediately be issued all of the
Restricted Shares subject to this Agreement, which have not previously been
issued.
(D) Deferral of Receipt of Restricted Shares. To the extent
permitted by applicable law, Ostrander shall be permitted to defer, in
accordance with the terms of the Company's Deferred Compensation Plan (the
"Deferred Compensation Plan"), the receipt of any Restricted Shares which he
would otherwise be entitled to receive under the terms of this Agreement, until
such time as he is entitled to receive a distribution of his "Account" under the
Deferred Compensation Plan.
(E) Satisfaction of Tax Withholding Obligations. Each issuance
of Restricted Shares under this Agreement shall be subject to withholding of all
federal, state and local taxes of any kind required to be withheld with respect
to such issuance. At the election of Ostrander, such withholding obligations may
be satisfied through the surrender of common shares of the Company which
Ostrander already owns, or the withholding of Restricted Shares which Ostrander
would otherwise be entitled to be issued under the terms of this Agreement. Any
common shares delivered to the Company, or Restricted Shares withheld from
issuance, in order to satisfy tax withholding obligations shall be valued based
upon the Fair Market Value of the Company's common shares when the tax
withholding is required to be made. For purposes of this Agreement, the "Fair
Market Value" of the Company's common shares on a particular date shall be the
closing sale price for the Company's common shares as reported on any securities
exchange on which the Company's common shares may be listed on such date, or if
no such sale occurred on that date, then for the next preceding date on which a
sale was made. If the common shares should no longer be listed on a securities
exchange, the Fair Market Value shall be determined by the Compensation
Committee of the Company's Board of Directors or any committee performing
similar functions.
Section 2. Adjustments upon Changes in Capitalization or
Otherwise Affecting the Company's Common Shares. In the event of any change in
capitalization affecting the common shares of the Company, such as a stock
dividend, stock split, recapitalization, merger, consolidation, split-up,
combination or exchange of shares or other form of reorganization, or any other
change affecting the common shares, such proportionate adjustments to reflect
such change shall be made in the maximum number of Restricted Shares which may
be issued to Ostrander pursuant to this Agreement and the number of Restricted
Shares which may be issued in respect of any fiscal year of the Company as shall
be necessary to preserve the benefits or potential benefits to be received by
Ostrander under the terms of this Agreement.
Section 3. Securities Law Matters.
(A) No Restricted Shares shall be issued under the terms of
this Agreement unless counsel for the Company shall be satisfied that such
issuance will be in compliance with all
4
<PAGE> 6
applicable federal and state securities laws and the rules of any national
securities exchange upon which the Company's common shares are then listed.
(B) Ostrander understands that the Restricted Shares to be
issued to him pursuant to this Agreement may be issued without registration
under the Securities Act of 1933, as amended (the "1933 Act"), or the securities
laws of any state in reliance upon specific exemptions therefrom. Ostrander
understands that the Restricted Shares to be issued pursuant to this Agreement
may not then be sold or transferred unless they are registered under the 1933
Act and any applicable state or other securities laws, or unless exemptions from
registration under such laws are available.
(C) Ostrander acknowledges that any share certificate
evidencing Restricted Shares which have been issued without registration under
the 1933 Act shall be imprinted with a legend in substantially the following
form:
THESE COMMON SHARES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ASSIGNED
EXCEPT (i) PURSUANT TO REGISTRATIONS UNDER APPLICABLE
SECURITIES LAWS OR (ii) IF, IN THE OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY, THE PROPOSED OFFER,
SALE, TRANSFER OR ASSIGNMENT MAY BE EFFECTED IN COMPLIANCE
WITH APPLICABLE SECURITIES LAWS WITHOUT REGISTRATION.
(D) In the event that any of the Restricted Shares covered by
this Agreement shall be issued without registration under the 1933 Act,
Ostrander shall have the right to request that the Company cause such Restricted
Shares to be registered under the 1933 Act. The Company shall cause the
registration statement for the Restricted Shares owned by Ostrander to become
effective under the 1933 Act as soon as reasonably practicable after receipt of
Ostrander's request; provided, however, that the Company may register the
Restricted Shares with any other securities for which registration may be sought
and may delay the registration of the Restricted Shares for a reasonable period
of time (but not longer than three months) to coincide with any anticipated
securities registration. Ostrander shall cooperate with all reasonable requests
of the Company in connection with the registration of the Restricted Shares. The
expenses of registering the Restricted Shares as provided above shall be borne
by the Company. The Company shall be obligated to keep the registration
statement effective under the 1933 Act until the earlier of: (i) the time when
Ostrander no longer owns the Restricted Shares, (ii) the time when Ostrander may
sell the Restricted Shares in reliance upon Rule 144(k) under the 1933 Act or
any successor provision or (iii) the first anniversary of the registration
statement effective date. Ostrander shall have the right to require the Company
to file one registration statement.
Section 4. Waiver. The failure of either party to this
Agreement to insist, in any one or more instances, upon the performance of any
of the terms, covenants or conditions of this
5
<PAGE> 7
Agreement by the other party hereto, shall not be construed as a waiver or as a
relinquishment of any right granted hereunder to the party failing to insist on
such performance, or as a waiver of the future performance of any such term,
covenant or condition, but the obligations hereunder of both parties hereto
shall remain unimpaired and shall continue in full force and effect.
Section 5. Successors; Binding Agreement.
(A) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and its
subsidiaries to expressly assume and agree to perform the obligations under this
Agreement in the same manner and to the same extent that the Company would be
required to perform them if no succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Ostrander to
receive all of the Restricted Shares subject to this Agreement which he has not
been issued. As used in this Agreement, "Company" shall mean the Company as
defined above and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 5 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(B) This Agreement shall inure to the benefit of and be
enforceable by Ostrander's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
Section 6. Notices. For the purpose of this Agreement, notices
and all other communications provided for this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed in
the case of Ostrander, to
Charles E. Ostrander
505 South Parkview, Apt. 207
Columbus, OH 43209
and in the case of the Company, to the principal executive offices of the
Company, provided that all notices to the Company shall be directed to the
attention of the Company's Chief Executive Officer with copies to the Secretary
of the Corporation and to its Board of Directors, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
Section 7. Miscellaneous. No provisions of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in a writing signed by Ostrander and a duly authorized officer of
the Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject
6
<PAGE> 8
matter hereof have been made by either party which are not set forth expressly
in this Agreement. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws (but not the law of conflicts of
laws) of the State of Ohio.
Section 8. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed, or
caused to be executed, this Agreement as of the date and year first above
written.
COMPANY:
R. G. BARRY CORPORATION
By: /s/ GORDON ZACKS 12/10/97
----------------------------------------
Gordon Zacks, its Chairman and Chief
Executive Officer
OSTRANDER:
/s/ CHARLES E. OSTRANDER 12/10/97
---------------------------------------------
Charles E. Ostrander
7
<PAGE> 1
EXHIBIT 10(s)
Restricted Stock Agreement,
effective as of January 4, 1998, between
R. G. Barry Corporation and Christian Galvis
<PAGE> 2
GALVIS
RESTRICTED
STOCK
AGREEMENT
This AGREEMENT is made to be effective as of January 4, 1998,
by and between R. G. Barry Corporation, an Ohio corporation (the "Company"), and
Christian Galvis ("Galvis").
RECITALS:
1. Galvis possesses unique skills, knowledge and experience
related to the business of the Company which he has developed in his many years
of service to the Company, including his extended service as an executive
officer of the Company.
2. The Company desires to reward Galvis for his significant
contributions to the Company in the past and to encourage Galvis to remain in
the employment of the Company and put forth maximum efforts for the success of
the Company in the future.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants expressed in this Agreement, the Company and Galvis make the
following agreements, intending to be legally bound thereby:
Section 1.
(A) Award and Issuance of Restricted Shares. In consideration
of and conditioned upon Galvis's continued service in a key management position
with the Company, and subject to the terms and conditions hereinafter set forth,
the Company shall issue an aggregate of 10,000 common shares, $1.00 par value,
of the Company (the "Restricted Shares") to Galvis over a period of up to eight
fiscal years of the Company. Galvis shall be entitled to receive 1,250
Restricted Shares on the last business day of each fiscal year of the Company,
beginning with the 1998 fiscal year so long as he is employed by the Company on
such date, until the earlier of the following events to occur: (i) Galvis has
received or has become entitled to receive all of the Restricted Shares covered
by this Agreement, or (ii) Galvis's right to receive Restricted Shares has been
terminated under the terms of this Agreement. Galvis shall be entitled to
receive an additional 1,250 Restricted Shares in respect of any and each fiscal
year of the Company in which the Company achieves 120% of the "target profit
goal" established by the Company's Board of Directors for that fiscal year in a
manner consistent with past practices (the "Target Profit Goal"). The Target
Profit Goal shall be computed before deducting any amounts expensed for taxes,
payments under the Company's annual profit-sharing incentive bonus program and
charitable contributions. In the event that Galvis is to be issued Restricted
Shares in respect of the achievement by the Company of the Target Profit Goal in
respect of any fiscal year, unless such issuance is deferred as permitted under
Subsection 1(D) of this Agreement, such Restricted Shares shall be issued to
Galvis not later than 60 days after the end of such fiscal year.
<PAGE> 3
(B) Rights of Galvis in Respect of Restricted Shares. Galvis
shall have no rights as a shareholder of the Company or any other rights with
respect to any of the Restricted Shares covered by this Agreement unless and
until a share certificate is issued to him evidencing his ownership of such
Restricted Shares.
(C) Effect of Termination of Employment Upon Right to Receive
Restricted Shares.
(1) General. If Galvis's employment with the Company
terminates for any reason [other than within two years following a Change in
Control (as provided in Subsection 1(C)(2) below) or as a result of his death],
Galvis shall forfeit the right to receive any additional Restricted Shares under
this Agreement following such termination of employment other than (i)
Restricted Shares issuable in respect of the achievement of the Target Profit
Goal for a completed fiscal year provided that Galvis was employed by the
Company on the last day of such fiscal year; and (ii) Restricted Shares, the
receipt of which has been deferred as permitted under Subsection 1(D) of this
Agreement. Any Restricted Shares issuable at the time of such termination of
employment as a result of the achievement of the Target Profit Goal for a
completed fiscal year shall be issued to Galvis as contemplated by Subsection
1(A) above. Any Restricted Shares with respect to which receipt has been
deferred shall be issued to Galvis as contemplated by Subsection 1(D), below.
(2) Within Three Years Following a Change in Control. If,
within two years following a Change in Control of the Company, Galvis's
employment is terminated by the Company without Cause or by Galvis for Good
Reason, Galvis shall be entitled to immediately be issued all of the Restricted
Shares subject to this Agreement which have not previously been issued.
(i) For purposes of this Agreement, the Company shall be deemed
to have terminated Galvis's employment for "Cause" only if
upon the occurrence of one of the following circumstances:
(a) The willful and continued refusal by Galvis to perform
his duties with the Company (other than any such refusal
resulting from his incapacity due to physical or mental
illness), after a demand for substantial performance is
delivered to Galvis by the Company which specifically
identifies the manner in which it is believed that Galvis
has refused substantially to perform his duties; (b)
Conviction of Galvis of any felony; or (c) Willful or gross
misconduct by Galvis which is materially and demonstrably
injurious to the Company.
(ii) For purposes of this Agreement, Galvis shall be deemed to
have terminated his employment for "Good Reason" under any
of the following circumstances: (a) the assignment to
Galvis, without his consent, of any duties materially
inconsistent with his position, duties, responsibilities and
2
<PAGE> 4
status with the Company as of the date of this Agreement, or
a change in Galvis's responsibilities, as in effect on the
date of this Agreement, which materially diminishes Galvis's
responsibilities with the Company when considered as a
whole; provided, however that the foregoing shall not
constitute Good Reason if done in connection with the
termination of Galvis's employment because of disability or
for Cause; (b) any material reduction in the compensation
and benefits provided to Galvis at the time of the Change in
Control; (c) any material breach by the Company of any
employment agreement with Galvis; or (d) the Company's
requiring Galvis, without his consent, to be based anywhere
other than the location where Galvis is based on the date of
this Agreement, if the same requires Galvis to relocate his
principal residence; or in the event Galvis consents to be
based anywhere other than such location, the failure by the
Company to pay (or reimburse Galvis for) all reasonable
living expenses incurred by Galvis relating to a change of
Galvis's principal residence in connection with such
relocation.
(iii) A "Change in Control" shall be deemed to have occurred if
(a) any "person" (as that term is used in Section 13(d) and
Section 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on the date of this
Agreement), including any "group" as such term is used in
Section 13(d)(3) of the Exchange Act on the date of this
Agreement (an "Acquiring Person"), shall hereafter acquire
(or disclose the previous acquisition of) beneficial
ownership (as that term is defined in Section 13(d) of the
Exchange Act and the rules promulgated thereunder on the
date of this Agreement) of shares of the outstanding stock
of any class or classes of the Company which results in such
person or group possessing more than 50.1% of the total
voting power of the Company's outstanding voting securities
ordinarily having the right to vote for the election of
directors of the Company; or (b) as the result of, or in
connection with, any tender or exchange offer, merger or
other business combination, sale of assets or contested
election, or any combination of the foregoing transactions
(each, a "Transaction"), the persons who were directors of
the Company immediately before the completion of the
Transaction shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the
Company.
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<PAGE> 5
(3) Upon Death. If Galvis dies while an employee of the
Company, his estate shall be entitled to immediately be issued all of the
Restricted Shares subject to this Agreement, which have not previously been
issued.
(D) Deferral of Receipt of Restricted Shares. To the extent
permitted by applicable law, Galvis shall be permitted to defer, in accordance
with the terms of the Company's Deferred Compensation Plan (the "Deferred
Compensation Plan"), the receipt of any Restricted Shares which he would
otherwise be entitled to receive under the terms of this Agreement, until such
time as he is entitled to receive a distribution of his "Account" under the
Deferred Compensation Plan.
(E) Satisfaction of Tax Withholding Obligations. Each issuance
of Restricted Shares under this Agreement shall be subject to withholding of all
federal, state and local taxes of any kind required to be withheld with respect
to such issuance. At the election of Galvis, such withholding obligations may be
satisfied through the surrender of common shares of the Company which Galvis
already owns, or the withholding of Restricted Shares which Galvis would
otherwise be entitled to be issued under the terms of this Agreement. Any common
shares delivered to the Company, or Restricted Shares withheld from issuance, in
order to satisfy tax withholding obligations shall be valued based upon the Fair
Market Value of the Company's common shares when the tax withholding is required
to be made. For purposes of this Agreement, the "Fair Market Value" of the
Company's common shares on a particular date shall be the closing sale price for
the Company's common shares as reported on any securities exchange on which the
Company's common shares may be listed on such date, or if no such sale occurred
on that date, then for the next preceding date on which a sale was made. If the
common shares should no longer be listed on a securities exchange, the Fair
Market Value shall be determined by the Compensation Committee of the Company's
Board of Directors or any committee performing similar functions.
Section 2. Adjustments upon Changes in Capitalization or
Otherwise Affecting the Company's Common Shares. In the event of any change in
capitalization affecting the common shares of the Company, such as a stock
dividend, stock split, recapitalization, merger, consolidation, split-up,
combination or exchange of shares or other form of reorganization, or any other
change affecting the common shares, such proportionate adjustments to reflect
such change shall be made in the maximum number of Restricted Shares which may
be issued to Galvis pursuant to this Agreement and the number of Restricted
Shares which may be issued in respect of any fiscal year of the Company as shall
be necessary to preserve the benefits or potential benefits to be received by
Galvis under the terms of this Agreement.
Section 3. Securities Law Matters.
(A) No Restricted Shares shall be issued under the terms of
this Agreement unless counsel for the Company shall be satisfied that such
issuance will be in compliance with all applicable federal and state securities
laws and the rules of any national securities exchange upon which the Company's
common shares are then listed.
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<PAGE> 6
(B) Galvis understands that the Restricted Shares to be issued
to him pursuant to this Agreement may be issued without registration under the
Securities Act of 1933, as amended (the "1933 Act"), or the securities laws of
any state in reliance upon specific exemptions therefrom. Galvis understands
that the Restricted Shares to be issued pursuant to this Agreement may not then
be sold or transferred unless they are registered under the 1933 Act and any
applicable state or other securities laws, or unless exemptions from
registration under such laws are available.
(C) Galvis acknowledges that any share certificate evidencing
Restricted Shares which have been issued without registration under the 1933 Act
shall be imprinted with a legend in substantially the following form:
THESE COMMON SHARES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ASSIGNED
EXCEPT (i) PURSUANT TO REGISTRATIONS UNDER APPLICABLE
SECURITIES LAWS OR (ii) IF, IN THE OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY, THE PROPOSED OFFER,
SALE, TRANSFER OR ASSIGNMENT MAY BE EFFECTED IN COMPLIANCE
WITH APPLICABLE SECURITIES LAWS WITHOUT REGISTRATION.
(D) In the event that any of the Restricted Shares covered by
this Agreement shall be issued without registration under the 1933 Act, Galvis
shall have the right to request that the Company cause such Restricted Shares to
be registered under the 1933 Act. The Company shall cause the registration
statement for the Restricted Shares owned by Galvis to become effective under
the 1933 Act as soon as reasonably practicable after receipt of Galvis's
request; provided, however, that the Company may register the Restricted Shares
with any other securities for which registration may be sought and may delay the
registration of the Restricted Shares for a reasonable period of time (but not
longer than three months) to coincide with any anticipated securities
registration. Galvis shall cooperate with all reasonable requests of the Company
in connection with the registration of the Restricted Shares. The expenses of
registering the Restricted Shares as provided above shall be borne by the
Company. The Company shall be obligated to keep the registration statement
effective under the 1933 Act until the earlier of: (i) the time when Galvis no
longer owns the Restricted Shares, (ii) the time when Galvis may sell the
Restricted Shares in reliance upon Rule 144(k) under the 1933 Act or any
successor provision, or (iii) the first anniversary of the registration
statement effective date. Galvis shall only have the right to require the
Company to file one registration statement.
Section 4. Waiver. The failure of either party to this
Agreement to insist, in any one or more instances, upon the performance of any
of the terms, covenants or conditions of this Agreement by the other party
hereto, shall not be construed as a waiver or as a relinquishment of any right
granted hereunder to the party failing to insist on such performance, or as a
waiver of
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<PAGE> 7
the future performance of any such term, covenant or condition, but the
obligations hereunder of both parties hereto shall remain unimpaired and shall
continue in full force and effect.
Section 5. Successors; Binding Agreement.
(A) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and its
subsidiaries to expressly assume and agree to perform the obligations under this
Agreement in the same manner and to the same extent that the Company would be
required to perform them if no succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Galvis to
receive all of the Restricted Shares subject to this Agreement which he has not
been issued. As used in this Agreement, "Company" shall mean the Company as
defined above and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 5 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(B) This Agreement shall inure to the benefit of and be
enforceable by Galvis's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
Section 6. Notices. For the purpose of this Agreement, notices
and all other communications provided for this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed in
the case of Galvis, to
Christian Galvis
3910 Iron Mill Lane
San Antonio, TX 78230
and in the case of the Company, to the principal executive offices of the
Company, provided that all notices to the Company shall be directed to the
attention of the Company's Chief Executive Officer with copies to the Secretary
of the Corporation and to its Board of Directors, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
Section 7. Miscellaneous. No provisions of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in a writing signed by Galvis and a duly authorized officer of the
Company. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
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<PAGE> 8
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws (but not the law of conflicts of laws) of the
State of Ohio.
Section 8. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed, or
caused to be executed, this Agreement as of the date and year first above
written.
COMPANY:
R. G. BARRY CORPORATION
By: /s/ GORDON ZACKS
-----------------------------------------
Gordon Zacks, its Chairman and Chief
Executive Officer
GALVIS:
/s/ CHRISTIAN GALVIS
--------------------------------------------
Christian Galvis
7
<PAGE> 1
EXHIBIT 10(t)
Agreement,
effective as of January 4, 1998,
between R. G. Barry Corporation
and Richard L. Burrell
<PAGE> 2
BURRELL
AGREEMENT
THIS AGREEMENT is made to be effective as of January 4, 1998,
by and between RICHARD L. BURRELL (the "Executive") and R. G. Barry Corporation,
an Ohio corporation (the "Corporation").
BACKGROUND
In order to induce the Executive to remain in the employ of
the Corporation, the Corporation wishes to provide the Executive with certain
severance benefits in the event his employment with the Corporation terminates
subsequent to a change in control of the Corporation under the circumstances
described herein.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings unless otherwise expressly provided in
this Agreement:
(i) Change in Control. A "Change in Control" shall be deemed
to have occurred if (i) any "person" (as that term is used in ss.13(d) and
ss.14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) on the date hereof, including any "group" as such term is used in Section
13(d)(3) of the Exchange Act on the date hereof (an "Acquiring Person"), shall
hereafter acquire (or disclose the previous acquisition of) beneficial ownership
(as that term is defined in Section 13(d) of the Exchange Act and the rules
thereunder on the date hereof) of shares of the outstanding stock of any class
or class of the Corporation which results in such person or group possessing
more than 50.1% of the total voting power of the Corporation's outstanding
voting securities ordinarily having the right to vote for the election of
directors of the Corporation (a "Control Acquisition"); or (ii) as the result
of, or in connection with, any tender or exchange offer, merger or other
business combination, sale of assets or contested election, or any combination
of the foregoing transactions (a "Transaction"), the persons who were directors
of the Corporation immediately before the completion of the Transaction shall
cease to constitute a majority of the Board of Directors of the Corporation or
any successor to the Corporation. Anything contained in this paragraph 1(i) to
the contrary notwithstanding, a "Change in Control" shall not be deemed to have
occurred if the Control Acquisition or the Transaction is approved by a majority
of the directors of the Corporation who were directors of the
<PAGE> 3
Corporation before the completion of the Control Acquisition or the Transaction,
as the case may be.
(ii) Disability. The Executive's employment shall be deemed to
have been terminated for "Disability" if, as a result of his incapacity due to
physical or mental illness, he shall have been absent from his duties with the
Corporation on a full-time basis for the entire period of four consecutive
months, and within 30 days after written notice of termination is given (which
may occur before or after the end of such four-month period) he shall not have
returned to the full-time performance of his duties.
(iii) Effective Period. The "Effective Period" means the
36-month period following any Change in Control (even if such 36-month period
shall extend beyond the term of this Agreement or any extension thereof).
(iv) Termination for Cause. The Corporation shall have "Cause"
to terminate the Executive's employment hereunder upon (A) the willful and
continued refusal by the Executive substantially to perform his duties with the
Corporation (other than any such refusal resulting from his incapacity due to
physical or mental illness), after a demand for substantial performance is
delivered to the Executive by the Corporation which specifically identifies the
manner in which it is believed that the Executive has refused substantially to
perform his duties, (B) failure of Executive to comply with any applicable law
or regulation affecting the Corporation's business, (C) the commission by
Executive of an act of fraud upon or an act evidencing bad faith or dishonesty
toward the Corporation, (D) conviction of Executive of any felony or misdemeanor
involving moral turpitude, (E) the misappropriation by Executive of any funds,
property, or rights of the Corporation, or (F) Executive's breach of any of the
provisions of this Agreement.
(v) Termination For Good Reason. "Good Reason" shall mean,
unless the Executive shall have consented in writing thereto, termination by the
Executive of his employment because of any of the following:
(A) a reduction in the Executive's title, duties,
responsibilities or status, as compared to such title, duties, responsibilities
or status immediately prior to the Change in Control or as the same may be
increased after the Change in Control;
(B) the assignment to the Executive of duties inconsistent
with the Executive's office on the date of
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<PAGE> 4
the Change in Control or as the same may be increased after the Change in
Control;
(C) a reduction by the Corporation in the Executive's base
salary as in effect immediately prior to the Change in Control or as the same
may be increased after the Change in Control or a reduction by the Corporation
after a Change in Control in the Executive's total compensation (including
bonus) so that the Executive's total cash compensation in a given calendar year
is less than 90% of Executive's total compensation for the prior calendar year;
(D) a requirement that the Executive relocate anywhere not
mutually acceptable to the Executive and the Corporation or the imposition on
the Executive of business travel obligations substantially greater than his
business travel obligations during the year prior to the Change in Control;
(E) the relocation of the Corporation's principal
executive offices to a location outside the greater Columbus, Ohio area;
(F) the failure by the Corporation to continue in effect
any material fringe benefit or compensation plan, retirement plan, life
insurance plan, health and accident plan or disability plan in which the
Executive is participating at the time of a Change in Control (or plans
providing the Executive with substantially similar benefits), the taking of any
action by the Corporation which would adversely affect the Executive's
participation in or materially reduce his benefits under any of such plans or
deprive him of any material fringe benefit enjoyed by him at the time of the
Change in Control, or the failure by the Corporation to provide him with the
number of paid vacation days to which he is then entitled on the basis of years
of service with the Corporation in accordance with the normal vacation policy in
effect immediately prior to the Change in Control; or
(G) any breach of this Agreement on the part of the
Corporation.
(vi) Notice of Termination. A "Notice of Termination" shall
mean a notice which shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment.
(vii) Date of Termination. "Date of Termination" shall mean
(A) if this Agreement is terminated for Disability, 30 days after a Notice of
Termination is given (provided that the Executive shall not have returned to the
performance of his
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<PAGE> 5
duties on a full-time basis during such 30-day period), (B) if the Executive's
employment is terminated for Cause, the date specified in the Notice of
Termination, (C) if the Executive's employment is terminated by death, the date
of death, and (D) if the Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given, or, if the
Corporation terminates the Executive's employment without giving a Notice of
Termination, the date on which such termination is effective.
2. TERM. Unless sooner terminated as herein provided, the term
of this Agreement shall commence on the date hereof and shall continue until
January 4, 2001 (the "Termination Date"). It is understood that no amounts or
benefits shall be payable under this Agreement unless (i) there shall have been
a Change in Control during the term of this Agreement and (ii) the Executive's
employment is terminated at any time during the Effective Period as provided in
Section 5 hereof. It is further understood that the Corporation may terminate
the Executive's employment at any time before or after a Change in Control,
subject to the Corporation providing, if required to do so in accordance with
the terms hereof, the severance payments and benefits hereinafter specified,
which payments and benefits shall only be available if a Change in Control has
occurred prior to such termination. Prior to a Change in Control, this Agreement
shall terminate immediately if Executive's employment with the Corporation is
terminated for any reason.
3. SERVICES DURING CERTAIN EVENTS. In the event any person (as
that term is used in Section 1(i) above) commences a tender or exchange offer,
distributes proxy materials to the Corporation's shareholders or takes other
steps to effect a Change in Control, the Executive agrees he will not
voluntarily terminate his employment with the Corporation other than by reason
of his retirement at normal retirement age, and will continue to serve as a
full-time employee of the Corporation until such efforts to effect a Change in
Control are abandoned or terminated or until a Change in Control has occurred.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL. Any termination
of Executive's employment by the Corporation for Cause, Disability or otherwise
or by the Executive for Good Reason, which, in any case, occurs at any time
during the Effective Period, shall be communicated by written Notice of
Termination to the other party.
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<PAGE> 6
5. COMPENSATION UPON TERMINATION FOLLOWING A CHANGE IN
CONTROL.
(i) For Cause. If, at any time during the Effective Period,
the Executive's employment shall be terminated for Cause, the Corporation shall
pay the Executive his full base salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given and the Corporation
shall not have any further obligations to the Executive under this Agreement.
(ii) Death or Disability. If, at any time during the Effective
Period, the Executive's employment is terminated by reason of the Executive's
death or Disability, the Corporation shall pay to the Executive or his legal
representative his full base salary through the Date of Termination, and the
Corporation shall have no further obligation to the Executive or his legal
representative under this Agreement after the Date of Termination.
(iii) For Good Reason or Without Cause. If the Executive's
employment is terminated by the Corporation for any reason other than for Cause,
Disability, or death, or by the Executive for Good Reason, in either case at any
time during the Effective Period, then:
(A) The Corporation shall pay to the Executive, not later than
30 days following the Date of Termination, the Executive's accrued but unpaid
base salary through the Date of Termination plus compensation for current and
carried-over unused vacation and compensation days in accordance with the
applicable personnel policy.
(B) In lieu of any further payments of salary to the Executive
after the Date of Termination, the Corporation shall pay to the Executive, not
later than thirty (30) days following the Date of Termination and
notwithstanding any dispute between the Executive and the Corporation as to the
payment to the Executive of any other amounts under this Agreement or otherwise,
a lump sum cash severance payment (the "Severance Payment") equal to the greater
of (i) the total compensation (including bonus) paid to or accrued for the
benefit of the Executive by the Corporation for services rendered during the
calendar year ending prior to the date on which a Change in Control of the
Corporation occurred or (ii) the total compensation (including bonus) paid to or
accrued for the benefit of the Executive by the Corporation for services
rendered during the twelve-month period immediately preceding the Date of
Termination.
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<PAGE> 7
(iv) The Executive's right to receive payments under this
Agreement shall not decrease the amount of, or otherwise adversely affect, any
other benefits payable to the Executive under any plan, agreement or arrangement
relating to employee benefits provided by the Corporation.
(v) The Executive shall not be required to mitigate the amount
of any payment provided for in this section 5 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Section 5 be reduced by any compensation earned by the Executive as the result
of employment by another employer or by reason of the Executive's receipt of or
right to receive any retirement or other benefits after the date of termination
of employment or otherwise.
6. Non-Competition; Confidentiality
(i) Period. For a period of two years following the
termination of Executive's employment with the Corporation (other than following
a Change of Control), Executive shall not, as a shareholder, employee, officer,
director, partner, consultant or otherwise, engage directly or indirectly in any
business or enterprise which is in Competition with the Corporation.
(ii) Competition with the Corporation. For purposes of this
Agreement, (A) the words "Competition with the Corporation" shall be deemed to
include competition with the Corporation or any entity controlling, controlled
by or under common control with the Corporation (an "Affiliate"), or their
respective successors or assigns, or the business of any of them, and (B) a
business or enterprise shall be deemed to be in Competition with the Corporation
if it is engaged in any business activity which is the same or comparable to any
business activity of the Corporation or any Affiliate from time to time during
the Executive's employment with the Corporation in any geographic area of the
United States in which the Corporation or any Affiliate conducted such business.
Notwithstanding the foregoing, nothing herein contained shall prevent Executive
from purchasing and holding for investment less than 5% of the shares of any
corporation the shares of which are regularly traded either on a national
securities exchange or in the over-the-counter market.
(iii) Interpretation of Covenant. The parties hereto agree
that the duration and area for which the covenant not to compete set forth in
this Section 6 is to be effective are reasonable. In the event that any court
determines that the time period or the area, or both of them, are unreasonable
and that such covenant is to that extent unenforceable, the parties hereto
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<PAGE> 8
agree that the covenant shall remain in full force and effect for the greatest
time period and in the greatest area that would not render it unenforceable. The
parties intend that this covenant shall be deemed to be a series of separate
covenants, one for each and ever county of each and every state of the United
States of America where the covenant not to compete is intended to be effective.
The provisions of this Section 6 shall survive any termination of this
Agreement.
(iv) Prohibition on Disclosure or Use. Executive shall at all
times keep and maintain Confidential Information (as defined below)
confidential, and Executive shall not, at any time, either during or subsequent
to his employment with the Corporation, either directly or indirectly, use any
Confidential Information for Executive's own benefit or divulge, disclose, or
communicate any Confidential Information to any person or entity in any manner
whatsoever other than employees or agents of the Company having a need to know
such Confidential Information, and only to the extent necessary to perform their
responsibilities on behalf of the Company and other than in the performance of
Executive's employment duties to the Corporation.
(v) Definition of Confidential Information. "Confidential
Information" shall mean any and all information (excluding information in the
public domain) related to the business of the Corporation or any Affiliate,
including without limitation all processes; inventions; trade secrets; computer
programs; engineering or technical data, drawings, or designs; manufacturing
techniques; information concerning pricing and pricing policies; marketing
techniques; plans and forecasts; new product information; information concerning
suppliers; methods and manner of operations; and information relating to the
identity and location of all past, present, and prospective customers.
(vi) Equitable Relief. Executive's obligations contained in
this Section 6 are of special and unique character which gives them a peculiar
value to the Corporation, and the Corporation cannot be reasonably or adequately
compensated in damages in an action at law in the event Executive breaches such
obligations. Executive therefore expressly agrees that, in addition to any other
rights or remedies which Corporation may possess, the Corporation shall be
entitled to injunctive and other equitable relief in the form of preliminary and
permanent injunctions without bond or other security in the event of any actual
or threatened breach of said obligations by Executive.
7
<PAGE> 9
7. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation and its
subsidiaries to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no succession had taken place. Failure of the Corporation to obtain such
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to compensation in the same
amount and on the same terms as he would be entitled hereunder if he terminated
his employment for Good Reason during the Effective Period, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "Corporation" shall mean the Corporation as defined above and any
successor to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this Section 7 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law. Nothing
contained in this Section 7 shall be construed to modify or affect the
definition of a "Change in Control" contained in Section 1 hereof.
(ii) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
8. ARBITRATION. Any dispute or controversy arising out of or
relating to this Agreement, or any breach thereof, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. The award of the arbitrator shall be final, conclusive and
nonappealable and judgment upon such award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitrator shall be an
arbitrator qualified to serve in accordance with the rules of the American
Arbitration Association and one who is approved by both the Corporation and the
Executive. In the absence of such approval, each party shall designate a person
qualified to serve as an arbitrator in accordance with the rules of the American
Arbitration Association and the two persons so designated shall select the
arbitrator from among those persons qualified to serve in accordance with the
rules of the American Arbitration Association. The arbitration shall be held in
Columbus, Ohio or such other place as may be agreed upon at the time by the
parties to the arbitration.
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<PAGE> 10
9. NOTICES. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed in the
case of the Executive, to
Richard L. Burrell
__________________________________
__________________________________
and in the case of the Corporation, to the principal executive offices of the
Corporation, provided that all notices to the Corporation shall be directed to
the attention of the Corporation's Chief Executive Officer with copies to the
Secretary of the Corporation and to its Board of Directors, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.
10. MISCELLANEOUS. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and a duly authorized officer of
the Corporation. No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws (but not the law of conflicts of laws) of the State of Ohio.
11. VALIDITY. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
9
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement to be effective as of the date and year first above written.
R. G. BARRY CORPORATION
By: /s/ GORDON ZACKS
---------------------------------
Title: CEO
-----------------------------
/s/ RICHARD L. BURRELL
------------------------------------
Richard L. Burrell
10
<PAGE> 1
EXHIBIT 10(U)
Agreement,
effective as of January 4, 1998,
between R. G. Barry Corporation
and Daniel D. Viren
<PAGE> 2
VIREN
AGREEMENT
THIS AGREEMENT is made to be effective as of January 4, 1998,
by and between DANIEL D. VIREN (the "Executive") and R. G. Barry Corporation, an
Ohio corporation (the "Corporation").
BACKGROUND
In order to induce the Executive to remain in the employ of
the Corporation, the Corporation wishes to provide the Executive with certain
severance benefits in the event his employment with the Corporation terminates
subsequent to a change in control of the Corporation under the circumstances
described herein.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings unless otherwise expressly provided in
this Agreement:
(i) Change in Control. A "Change in Control" shall be deemed
to have occurred if (i) any "person" (as that term is used in ss.13(d) and
ss.14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) on the date hereof, including any "group" as such term is used in Section
13(d)(3) of the Exchange Act on the date hereof (an "Acquiring Person"),
shall hereafter acquire (or disclose the previous acquisition of) beneficial
ownership (as that term is defined in Section 13(d) of the Exchange Act and the
rules thereunder on the date hereof) of shares of the outstanding stock of any
class or class of the Corporation which results in such person or group
possessing more than 50.1% of the total voting power of the Corporation's
outstanding voting securities ordinarily having the right to vote for the
election of directors of the Corporation (a "Control Acquisition"); or (ii) as
the result of, or in connection with, any tender or exchange offer, merger or
other business combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction"), the persons who
were directors of the Corporation immediately before the completion of the
Transaction shall cease to constitute a majority of the Board of Directors of
the Corporation or any successor to the Corporation. Anything contained in this
paragraph 1(i) to the contrary notwithstanding, a "Change in Control" shall
not be deemed to have occurred if the Control Acquisition or the Transaction is
approved by a majority of the directors of the Corporation who were directors of
the
<PAGE> 3
Corporation before the completion of the Control Acquisition or the Transaction,
as the case may be.
(ii) Disability. The Executive's employment shall be deemed to
have been terminated for "Disability" if, as a result of his incapacity due to
physical or mental illness, he shall have been absent from his duties with the
Corporation on a full-time basis for the entire period of four consecutive
months, and within 30 days after written notice of termination is given (which
may occur before or after the end of such four-month period) he shall not have
returned to the full-time performance of his duties.
(iii) Effective Period. The "Effective Period" means the
36-month period following any Change in Control (even if such 36-month period
shall extend beyond the term of this Agreement or any extension thereof).
(iv) Termination for Cause. The Corporation shall have "Cause"
to terminate the Executive's employment hereunder upon (A) the willful and
continued refusal by the Executive substantially to perform his duties with the
Corporation (other than any such refusal resulting from his incapacity due to
physical or mental illness), after a demand for substantial performance is
delivered to the Executive by the Corporation which specifically identifies the
manner in which it is believed that the Executive has refused substantially to
perform his duties, (B) failure of Executive to comply with any applicable law
or regulation affecting the Corporation's business, (C) the commission by
Executive of an act of fraud upon or an act evidencing bad faith or dishonesty
toward the Corporation, (D) conviction of Executive of any felony or misdemeanor
involving moral turpitude, (E) the misappropriation by Executive of any funds,
property, or rights of the Corporation, or (F) Executive's breach of any of the
provisions of this Agreement.
(v) Termination For Good Reason. "Good Reason" shall mean,
unless the Executive shall have consented in writing thereto, termination by the
Executive of his employment because of any of the following:
(A) a reduction in the Executive's title, duties,
responsibilities or status, as compared to such title, duties, responsibilities
or status immediately prior to the Change in Control or as the same may be
increased after the Change in Control;
(B) the assignment to the Executive of duties inconsistent
with the Executive's office on the date of
2
<PAGE> 4
the Change in Control or as the same may be increased after the Change in
Control;
(C) a reduction by the Corporation in the Executive's base
salary as in effect immediately prior to the Change in Control or as the same
may be increased after the Change in Control or a reduction by the Corporation
after a Change in Control in the Executive's total compensation (including
bonus) so that the Executive's total cash compensation in a given calendar year
is less than 90% of Executive's total compensation for the prior calendar year;
(D) a requirement that the Executive relocate anywhere not
mutually acceptable to the Executive and the Corporation or the imposition on
the Executive of business travel obligations substantially greater than his
business travel obligations during the year prior to the Change in Control;
(E) the relocation of the Corporation's principal executive
offices to a location outside the greater Columbus, Ohio area;
(F) the failure by the Corporation to continue in effect
any material fringe benefit or compensation plan, retirement plan, life
insurance plan, health and accident plan or disability plan in which the
Executive is participating at the time of a Change in Control (or plans
providing the Executive with substantially similar benefits), the taking of any
action by the Corporation which would adversely affect the Executive's
participation in or materially reduce his benefits under any of such plans or
deprive him of any material fringe benefit enjoyed by him at the time of the
Change in Control, or the failure by the Corporation to provide him with the
number of paid vacation days to which he is then entitled on the basis of years
of service with the Corporation in accordance with the normal vacation policy in
effect immediately prior to the Change in Control; or
(G) any breach of this Agreement on the part of the
Corporation.
(vi) Notice of Termination. A "Notice of Termination" shall mean a
notice which shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment.
(vii) Date of Termination. "Date of Termination" shall mean (A) if this
Agreement is terminated for Disability, 30 days after a Notice of Termination is
given (provided that the Executive shall not have returned to the performance of
his
3
<PAGE> 5
duties on a full-time basis during such 30-day period), (B) if the Executive's
employment is terminated for Cause, the date specified in the Notice of
Termination, (C) if the Executive's employment is terminated by death, the date
of death, and (D) if the Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given, or, if the
Corporation terminates the Executive's employment without giving a Notice of
Termination, the date on which such termination is effective.
2. TERM. Unless sooner terminated as herein provided, the term of this
Agreement shall commence on the date hereof and shall continue until January 4,
2001 (the "Termination Date"). It is understood that no amounts or benefits
shall be payable under this Agreement unless (i) there shall have been a Change
in Control during the term of this Agreement and (ii) the Executive's employment
is terminated at any time during the Effective Period as provided in Section 5
hereof. It is further understood that the Corporation may terminate the
Executive's employment at any time before or after a Change in Control, subject
to the Corporation providing, if required to do so in accordance with the terms
hereof, the severance payments and benefits hereinafter specified, which
payments and benefits shall only be available if a Change in Control has
occurred prior to such termination. Prior to a Change in Control, this Agreement
shall terminate immediately if Executive's employment with the Corporation is
terminated for any reason.
3. SERVICES DURING CERTAIN EVENTS. In the event any person (as that
term is used in Section 1(i) above) commences a tender or exchange offer,
distributes proxy materials to the Corporation's shareholders or takes other
steps to effect a Change in Control, the Executive agrees he will not
voluntarily terminate his employment with the Corporation other than by reason
of his retirement at normal retirement age, and will continue to serve as a
full-time employee of the Corporation until such efforts to effect a Change in
Control are abandoned or terminated or until a Change in Control has occurred.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL. Any termination of
Executive's employment by the Corporation for Cause, Disability or otherwise or
by the Executive for Good Reason, which, in any case, occurs at any time during
the Effective Period, shall be communicated by written Notice of Termination to
the other party.
4
<PAGE> 6
5. COMPENSATION UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.
(i) For Cause. If, at any time during the Effective Period, the
Executive's employment shall be terminated for Cause, the Corporation shall pay
the Executive his full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given and the Corporation shall
not have any further obligations to the Executive under this Agreement.
(ii) Death or Disability. If, at any time during the Effective Period,
the Executive's employment is terminated by reason of the Executive's death or
Disability, the Corporation shall pay to the Executive or his legal
representative his full base salary through the Date of Termination, and the
Corporation shall have no further obligation to the Executive or his legal
representative under this Agreement after the Date of Termination.
(iii) For Good Reason or Without Cause. If the Executive's employment
is terminated by the Corporation for any reason other than for Cause,
Disability, or death, or by the Executive for Good Reason, in either case at any
time during the Effective Period, then:
(A) The Corporation shall pay to the Executive, not later than 30
days following the Date of Termination, the Executive's accrued but unpaid base
salary through the Date of Termination plus compensation for current and
carried-over unused vacation and compensation days in accordance with the
applicable personnel policy.
(B) In lieu of any further payments of salary to the Executive
after the Date of Termination, the Corporation shall pay to the Executive, not
later than thirty (30) days following the Date of Termination and
notwithstanding any dispute between the Executive and the Corporation as to the
payment to the Executive of any other amounts under this Agreement or otherwise,
a lump sum cash severance payment (the "Severance Payment") equal to the greater
of (i) the total compensation (including bonus) paid to or accrued for the
benefit of the Executive by the Corporation for services rendered during the
calendar year ending prior to the date on which a Change in Control of the
Corporation occurred or (ii) the total compensation (including bonus) paid to or
accrued for the benefit of the Executive by the Corporation for services
rendered during the twelve-month period immediately preceding the Date of
Termination.
5
<PAGE> 7
(iv) The Executive's right to receive payments under this Agreement
shall not decrease the amount of, or otherwise adversely affect, any other
benefits payable to the Executive under any plan, agreement or arrangement
relating to employee benefits provided by the Corporation.
(v) The Executive shall not be required to mitigate the amount of any
payment provided for in this section 5 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this Section 5 be
reduced by any compensation earned by the Executive as the result of employment
by another employer or by reason of the Executive's receipt of or right to
receive any retirement or other benefits after the date of termination of
employment or otherwise.
6. Non-Competition; Confidentiality
(i) Period. For a period of two years following the termination of
Executive's employment with the Corporation (other than following a Change in
Control), Executive shall not, as a shareholder, employee, officer, director,
partner, consultant or otherwise, engage directly or indirectly in any business
or enterprise which is in Competition with the Corporation.
(ii) Competition with the Corporation. For purposes of this Agreement,
(A) the words "Competition with the Corporation" shall be deemed to include
competition with the Corporation or any entity controlling, controlled by or
under common control with the Corporation (an "Affiliate"), or their respective
successors or assigns, or the business of any of them, and (B) a business or
enterprise shall be deemed to be in Competition with the Corporation if it is
engaged in any business activity which is the same or comparable to any business
activity of the Corporation or any Affiliate from time to time during
Executive's employment with the Corporation in any geographic area of the United
States in which the Corporation or any Affiliate conducted such business.
Notwithstanding the foregoing, nothing herein contained shall prevent Executive
from purchasing and holding for investment less than 5% of the shares of any
corporation the shares of which are regularly traded either on a national
securities exchange or in the over-the-counter market.
(iii) Interpretation of Covenant. The parties hereto agree that the
duration and area for which the covenant not to compete set forth in this
Section 6 is to be effective are reasonable. In the event that any court
determines that the time period or the area, or both of them, are unreasonable
and that such covenant is to that extent unenforceable, the parties hereto agree
that the covenant shall remain in full force and
6
<PAGE> 8
effect for the greatest time period and in the greatest area that would not
render it unenforceable. The parties intend that this covenant shall be deemed
to be a series of separate covenants, one for each and ever county of each and
every state of the United States of America where the covenant not to compete is
intended to be effective. The provisions of this Section 6 shall survive any
termination of this Agreement.
(iv) Prohibition on Disclosure or Use. Executive shall at all times
keep and maintain Confidential Information (as defined below) confidential, and
Executive shall not, at any time, either during or subsequent to his employment
with the Corporation, either directly or indirectly, use any Confidential
Information for Executive's own benefit or divulge, disclose, or communicate any
Confidential Information to any person or entity in any manner whatsoever other
than employees or agents of the Company having a need to know such Confidential
Information, and only to the extent necessary to perform their responsibilities
on behalf of the Company and other than in the performance of Executive's
employment duties to the Corporation.
(v) Definition of Confidential Information. "Confidential Information"
shall mean any and all information (excluding information in the public domain)
related to the business of the Corporation or any Affiliate, including without
limitation all processes; inventions; trade secrets; computer programs;
engineering or technical data, drawings, or designs; manufacturing techniques;
information concerning pricing and pricing policies; marketing techniques; plans
and forecasts; new product information; information concerning suppliers;
methods and manner of operations; and information relating to the identity and
location of all past, present, and prospective customers.
(vi) Equitable Relief. Executive's obligations contained in this
Section 6 are of special and unique character which gives them a peculiar value
to the Corporation, and the Corporation cannot be reasonably or adequately
compensated in damages in an action at law in the event Executive breaches such
obligations. Executive therefore expressly agrees that, in addition to any other
rights or remedies which Corporation may possess, the Corporation shall be
entitled to injunctive and other equitable relief in the form of preliminary and
permanent injunctions without bond or other security in the event of any actual
or threatened breach of said obligations by Executive.
7. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation
7
<PAGE> 9
or otherwise) to all or substantially all of the business and/or assets of the
Corporation and its subsidiaries to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Corporation would
be required to perform it if no succession had taken place. Failure of the
Corporation to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive
to compensation in the same amount and on the same terms as he would be entitled
hereunder if he terminated his employment for Good Reason during the Effective
Period, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Corporation" shall mean the Corporation
as defined above and any successor to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section 7 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law. Nothing contained in this Section 7 shall be construed to
modify or affect the definition of a "Change in Control" contained in Section 1
hereof.
(ii) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
8. ARBITRATION. Any dispute or controversy arising out of or relating
to this Agreement, or any breach thereof, shall be settled by arbitration in
accordance with the rules of the American Arbitration Association. The award of
the arbitrator shall be final, conclusive and nonappealable and judgment upon
such award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitrator shall be an arbitrator qualified to serve
in accordance with the rules of the American Arbitration Association and one who
is approved by both the Corporation and the Executive. In the absence of such
approval, each party shall designate a person qualified to serve as an
arbitrator in accordance with the rules of the American Arbitration Association
and the two persons so designated shall select the arbitrator from among those
persons qualified to serve in accordance with the rules of the American
Arbitration Association. The arbitration shall be held in Columbus, Ohio or such
other place as may be agreed upon at the time by the parties to the arbitration.
9. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered
8
<PAGE> 10
mail, return receipt requested, postage prepaid, addressed in the case of the
Executive, to
Daniel D. Viren
__________________________
__________________________
and in the case of the Corporation, to the principal executive offices of the
Corporation, provided that all notices to the Corporation shall be directed to
the attention of the Corporation's Chief Executive Officer with copies to the
Secretary of the Corporation and to its Board of Directors, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.
10. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and a duly authorized officer of the
Corporation. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws (but not the law of conflicts of laws) of the State of Ohio.
11. VALIDITY. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
9
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date and year first above written.
R. G. BARRY CORPORATION
By: /s/ GORDON ZACKS
-------------------------------------------
Title: CEO
-------------------------------------
/s/ DANIEL D. VIREN 12/22/97
-------------------------------------------
Daniel D. Viren
10
<PAGE> 1
EXHIBIT 10(v)
Agreement,
effective as of January 4, 1998,
between R. G. Barry Corporation
and Harry Miller
<PAGE> 2
MILLER
AGREEMENT
THIS AGREEMENT is made to be effective as of January 4, 1998,
by and between HARRY MILLER (the "Executive") and R. G. Barry Corporation, an
Ohio corporation (the "Corporation").
BACKGROUND
In order to induce the Executive to remain in the employ of
the Corporation, the Corporation wishes to provide the Executive with certain
severance benefits in the event his employment with the Corporation terminates
subsequent to a change in control of the Corporation under the circumstances
described herein.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings unless otherwise expressly provided in
this Agreement:
(i) Change in Control. A "Change in Control" shall be
deemed to have occurred if (i) any "person" (as that term is used in Section
13(d) and Section 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) on the date hereof, including any "group" as such term is used
in Section 13(d)(3) of the Exchange Act on the date hereof (an "Acquiring
Person"), shall hereafter acquire (or disclose the previous acquisition of)
beneficial ownership (as that term is defined in Section 13(d) of the Exchange
Act and the rules thereunder on the date hereof) of shares of the outstanding
stock of any class or class of the Corporation which results in such person or
group possessing more than 50.1% of the total voting power of the Corporation's
outstanding voting securities ordinarily having the right to vote for the
election of directors of the Corporation (a "Control Acquisition"); or (ii) as
the result of, or in connection with, any tender or exchange offer, merger or
other business combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction"), the persons who
were directors of the Corporation immediately before the completion of the
Transaction shall cease to constitute a majority of the Board of Directors of
the Corporation or any successor to the Corporation. Anything contained in this
paragraph 1(i) to the contrary notwithstanding, a "Change in Control" shall not
be deemed to have occurred if the Control Acquisition or the Transaction is
approved by a majority of the directors of the Corporation who were directors of
the
<PAGE> 3
Corporation before the completion of the Control Acquisition or the Transaction,
as the case may be.
(ii) Disability. The Executive's employment shall be deemed to
have been terminated for "Disability" if, as a result of his incapacity due to
physical or mental illness, he shall have been absent from his duties with the
Corporation on a full-time basis for the entire period of four consecutive
months, and within 30 days after written notice of termination is given (which
may occur before or after the end of such four-month period) he shall not have
returned to the full-time performance of his duties.
(iii) Effective Period. The "Effective Period" means the
36-month period following any Change in Control (even if such 36-month period
shall extend beyond the term of this Agreement or any extension thereof).
(iv) Termination for Cause. The Corporation shall have "Cause"
to terminate the Executive's employment hereunder upon (A) the willful and
continued refusal by the Executive substantially to perform his duties with the
Corporation (other than any such refusal resulting from his incapacity due to
physical or mental illness), after a demand for substantial performance is
delivered to the Executive by the Corporation which specifically identifies the
manner in which it is believed that the Executive has refused substantially to
perform his duties, (B) failure of Executive to comply with any applicable law
or regulation affecting the Corporation's business, (C) the commission by
Executive of an act of fraud upon or an act evidencing bad faith or dishonesty
toward the Corporation, (D) conviction of Executive of any felony or misdemeanor
involving moral turpitude, (E) the misappropriation by Executive of any funds,
property, or rights of the Corporation, or (F) Executive's breach of any of the
provisions of this Agreement.
(v) Termination For Good Reason. "Good Reason" shall mean,
unless the Executive shall have consented in writing thereto, termination by the
Executive of his employment because of any of the following:
(A) a reduction in the Executive's title, duties,
responsibilities or status, as compared to such title, duties, responsibilities
or status immediately prior to the Change in Control or as the same may be
increased after the Change in Control;
2
<PAGE> 4
(B) the assignment to the Executive of duties inconsistent
with the Executive's office on the date of the Change in Control or as the same
may be increased after the Change in Control;
(C) a reduction by the Corporation in the Executive's base
salary as in effect immediately prior to the Change in Control or as the same
may be increased after the Change in Control or a reduction by the Corporation
after a Change in Control in the Executive's total compensation (including
bonus) so that the Executive's total cash compensation in a given calendar year
is less than 90% of Executive's total compensation for the prior calendar year;
(D) a requirement that the Executive relocate anywhere not
mutually acceptable to the Executive and the Corporation or the imposition on
the Executive of business travel obligations substantially greater than his
business travel obligations during the year prior to the Change in Control;
(E) the relocation of the Corporation's principal executive
offices to a location outside the greater Columbus, Ohio area;
(F) the failure by the Corporation to continue in effect any
material fringe benefit or compensation plan, retirement plan, life insurance
plan, health and accident plan or disability plan in which the Executive is
participating at the time of a Change in Control (or plans providing the
Executive with substantially similar benefits), the taking of any action by the
Corporation which would adversely affect the Executive's participation in or
materially reduce his benefits under any of such plans or deprive him of any
material fringe benefit enjoyed by him at the time of the Change in Control, or
the failure by the Corporation to provide him with the number of paid vacation
days to which he is then entitled on the basis of years of service with the
Corporation in accordance with the normal vacation policy in effect immediately
prior to the Change in Control; or
(G) any breach of this Agreement on the part of the
Corporation.
(vi) Notice of Termination. A "Notice of Termination" shall
mean a notice which shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment.
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<PAGE> 5
(vii) Date of Termination. "Date of Termination" shall mean
(A) if this Agreement is terminated for Disability, 30 days after a Notice of
Termination is given (provided that the Executive shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), (B)
if the Executive's employment is terminated for Cause, the date specified in the
Notice of Termination, (C) if the Executive's employment is terminated by death,
the date of death, and (D) if the Executive's employment is terminated for any
other reason, the date on which a Notice of Termination is given, or, if the
Corporation terminates the Executive's employment without giving a Notice of
Termination, the date on which such termination is effective.
2. TERM. Unless sooner terminated as herein provided, the term
of this Agreement shall commence on the date hereof and shall continue until
January 4, 2001 (the "Termination Date"). It is understood that no amounts or
benefits shall be payable under this Agreement unless (i) there shall have been
a Change in Control during the term of this Agreement and (ii) the Executive's
employment is terminated at any time during the Effective Period as provided in
Section 5 hereof. It is further understood that the Corporation may terminate
the Executive's employment at any time before or after a Change in Control,
subject to the Corporation providing, if required to do so in accordance with
the terms hereof, the severance payments and benefits hereinafter specified,
which payments and benefits shall only be available if a Change in Control has
occurred prior to such termination. Prior to a Change in Control, this Agreement
shall terminate immediately if Executive's employment with the Corporation is
terminated for any reason.
3. SERVICES DURING CERTAIN EVENTS. In the event any person (as
that term is used in Section 1(i) above) commences a tender or exchange offer,
distributes proxy materials to the Corporation's shareholders or takes other
steps to effect a Change in Control, the Executive agrees he will not
voluntarily terminate his employment with the Corporation other than by reason
of his retirement at normal retirement age, and will continue to serve as a
full-time employee of the Corporation until such efforts to effect a Change in
Control are abandoned or terminated or until a Change in Control has occurred.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL. Any termination
of Executive's employment by the Corporation for Cause, Disability or otherwise
or by the Executive for Good Reason, which, in any case, occurs at any time
during the Effective Period, shall be communicated by written Notice of
Termination to the other party.
4
<PAGE> 6
5. COMPENSATION UPON TERMINATION FOLLOWING A CHANGE IN
CONTROL.
(i) For Cause. If, at any time during the Effective Period,
the Executive's employment shall be terminated for Cause, the Corporation shall
pay the Executive his full base salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given and the Corporation
shall not have any further obligations to the Executive under this Agreement.
(ii) Death or Disability. If, at any time during the Effective
Period, the Executive's employment is terminated by reason of the Executive's
death or Disability, the Corporation shall pay to the Executive or his legal
representative his full base salary through the Date of Termination, and the
Corporation shall have no further obligation to the Executive or his legal
representative under this Agreement after the Date of Termination.
(iii) For Good Reason or Without Cause. If the Executive's
employment is terminated by the Corporation for any reason other than for Cause,
Disability, or death, or by the Executive for Good Reason, in either case at any
time during the Effective Period, then:
(A) The Corporation shall pay to the Executive, not later than
30 days following the Date of Termination, the Executive's accrued but unpaid
base salary through the Date of Termination plus compensation for current and
carried-over unused vacation and compensation days in accordance with the
applicable personnel policy.
(B) In lieu of any further payments of salary to the Executive
after the Date of Termination, the Corporation shall pay to the Executive, not
later than thirty (30) days following the Date of Termination and
notwithstanding any dispute between the Executive and the Corporation as to the
payment to the Executive of any other amounts under this Agreement or otherwise,
a lump sum cash severance payment (the "Severance Payment") equal to the greater
of (i) the total compensation (including bonus) paid to or accrued for the
benefit of the Executive by the Corporation for services rendered during the
calendar year ending prior to the date on which a Change in Control of the
Corporation occurred or (ii) the total compensation (including bonus) paid to or
accrued for the benefit of the Executive by the Corporation for services
rendered during the
5
<PAGE> 7
twelve-month period immediately preceding the Date of Termination.
(iv) The Executive's right to receive payments under this
Agreement shall not decrease the amount of, or otherwise adversely affect, any
other benefits payable to the Executive under any plan, agreement or arrangement
relating to employee benefits provided by the Corporation.
(v) The Executive shall not be required to mitigate the amount
of any payment provided for in this section 5 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Section 5 be reduced by any compensation earned by the Executive as the result
of employment by another employer or by reason of the Executive's receipt of or
right to receive any retirement or other benefits after the date of termination
of employment or otherwise.
6. Non-Competition; Confidentiality
(i) Period. For a period of two years following the
termination of Executive's employment with the Corporation (other than following
a Change in Control), Executive shall not, as a shareholder, employee, officer,
director, partner, consultant or otherwise, engage directly or indirectly in any
business or enterprise which is in Competition with the Corporation.
(ii) Competition with the Corporation. For purposes of this
Agreement, (a) the words "Competition with the Corporation" shall be deemed to
include competition with the Corporation or any entity controlling, controlled
by or under common control with the Corporation (an "Affiliate"), or their
respective successors or assigns, or the business of any of them, and (b) a
business or enterprise shall be deemed to be in Competition with the Corporation
if it is engaged in any business activity which is the same or comparable to any
business activity of the Corporation or any Affiliate from time to time during
Executive's employment with the Corporation in any geographic area of the United
States in which the Corporation or any Affiliate conducted such business.
Notwithstanding the foregoing, nothing herein contained shall prevent Executive
from purchasing and holding for investment less than 5% of the shares of any
corporation the shares of which are regularly traded either on a national
securities exchange or in the over-the-counter market.
(iii) Interpretation of Covenant. The parties hereto agree
that the duration and area for which the covenant
6
<PAGE> 8
not to compete set forth in this Section 6 is to be effective are reasonable. In
the event that any court determines that the time period or the area, or both of
them, are unreasonable and that such covenant is to that extent unenforceable,
the parties hereto agree that the covenant shall remain in full force and effect
for the greatest time period and in the greatest area that would not render it
unenforceable. The parties intend that this covenant shall be deemed to be a
series of separate covenants, one for each and ever county of each and every
state of the United States of America where the covenant not to compete is
intended to be effective.
(iv) Prohibition on Disclosure or Use. Executive shall at all
times keep and maintain Confidential Information (as defined below)
confidential, and Executive shall not, at any time, either during or subsequent
to his employment with the Corporation, either directly or indirectly, use any
Confidential Information for Executive's own benefit or divulge, disclose, or
communicate any Confidential Information to any person or entity in any manner
whatsoever other than employees or agents of the Corporation having a need to
know such Confidential Information, and only to the extent necessary to perform
their responsibilities on behalf of the Corporation and other than in the
performance of Executive's employment duties to the Corporation.
(v) Definition of Confidential Information. "Confidential
Information" shall mean any and all information (excluding information in the
public domain) related to the business of the Corporation or any Affiliate,
including without limitation all processes; inventions; trade secrets; computer
programs; engineering or technical data, drawings, or designs; manufacturing
techniques; information concerning pricing and pricing policies; marketing
techniques; plans and forecasts; new product information; information concerning
suppliers; methods and manner of operations; and information relating to the
identity and location of all past, present, and prospective customers.
(iv) Equitable Relief. Executive's obligations contained in
this Section 6 are of special and unique character which gives them a peculiar
value to the Corporation, and the Corporation cannot be reasonably or adequately
compensated in damages in an action at law in the event Executive breaches such
obligations. Executive therefore expressly agrees that, in addition to any other
rights or remedies which Corporation may possess, the Corporation shall be
entitled to injunctive and other equitable relief in the form of preliminary and
permanent injunctions without bond or other security in the event of any
7
<PAGE> 9
actual or threatened breach of said obligations by Executive. The provisions of
this Section 6 shall survive any termination of this Agreement.
7. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Corporation and its subsidiaries to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no succession had
taken place. Failure of the Corporation to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation in the same amount and on the same
terms as he would be entitled hereunder if he terminated his employment for Good
Reason during the Effective Period, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Corporation" shall
mean the Corporation as defined above and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for in
this Section 7 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law. Nothing contained in this Section 7 shall
be construed to modify or affect the definition of a "Change in Control"
contained in Section 1 hereof.
(ii) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
8. ARBITRATION. Any dispute or controversy arising out of or
relating to this Agreement, or any breach thereof, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. The award of the arbitrator shall be final, conclusive and
nonappealable and judgment upon such award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitrator shall be an
arbitrator qualified to serve in accordance with the rules of the American
Arbitration Association and one who is approved by both the Corporation and the
Executive. In the absence of such approval, each party shall designate a person
qualified to serve as an arbitrator in accordance with the rules of the American
Arbitration Association and the two persons so designated shall select the
arbitrator from among those persons
8
<PAGE> 10
qualified to serve in accordance with the rules of the American Arbitration
Association. The arbitration shall be held in Columbus, Ohio or such other place
as may be agreed upon at the time by the parties to the arbitration.
9. NOTICES. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed in the
case of the Executive, to
Harry Miller
____________________________
____________________________
and in the case of the Corporation, to the principal executive offices of the
Corporation, provided that all notices to the Corporation shall be directed to
the attention of the Corporation's Chief Executive Officer with copies to the
Secretary of the Corporation and to its Board of Directors, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.
10. MISCELLANEOUS. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and a duly authorized officer of
the Corporation. No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws (but not the law of conflicts of laws) of the State of Ohio.
11. VALIDITY. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement to be effective as of the date and year first above written.
R. G. BARRY CORPORATION
By: /s/ GORDON ZACKS
----------------------------------
Title: CEO
--------------------------------
/s/ HARRY MILLER
--------------------------------------
Harry Miller
<PAGE> 1
EXHIBIT 10(x)
R. G. BARRY CORPORATION
STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
(reflects share splits and amendments
through February 19, 1998)
<PAGE> 2
R. G. BARRY CORPORATION STOCK OPTION
PLAN FOR NON-EMPLOYEE DIRECTORS
(REFLECTS SHARE SPLITS AND AMENDMENTS
THROUGH FEBRUARY 19, 1998)
1. PURPOSE AND ELIGIBILITY. The purpose of this R. G. Barry Corporation
Stock Option Plan for Non-Employee Directors (the "Directors Plan") is to
enhance the value of the shareholders' investment in R. G. Barry Corporation
(the "Company") by encouraging those directors of the Company who are not
full-time employees of the Company or any of its subsidiaries (collectively, the
"Outside Directors" and individually, an "Outside Director") to acquire or
increase and retain a financial interest in the Company and thereby encouraging
the Outside Directors to remain as directors of the Company and to put further
maximum efforts for the success of the Company.
It is intended that stock options ("Nonqualified Stock Options"), other
than incentive stock options ("ISOs") (as defined by Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code")), may be granted to Outside
Directors under the Directors Plan.
2. ADMINISTRATION OF THE DIRECTORS PLAN.
(a) General. The Directors Plan shall be administered by the Board of
Directors of the Company (the "Board").
(b) Authority of the Board. The Board shall have full power and
authority in its discretion, subject to and not inconsistent with the express
provisions of this Directors Plan, to administer the Directors Plan and to
exercise all the power and authority specifically granted to it under the
Directors Plan or necessary or advisable, in the sole and absolute discretion of
the Board, in the administration of the Directors Plan including, without
limitation, the authority to: interpret and construe any provision of the
Directors Plan or any option granted hereunder; make all required or appropriate
determinations under the Directors Plan or any option granted hereunder; adopt,
amend and rescind such rules and regulations relating to the Directors Plan as
the Board shall determine in its discretion subject to the express provisions of
the Directors Plan; and make all other determinations deemed by it necessary or
advisable for the administration of the Directors Plan. Notwithstanding the
preceding sentence, the Board shall have no discretion to determine who will be
eligible for the grant of options under the Directors Plan, to set the number of
options granted to any Outside Director, to set the number of shares subject to
options granted to any Outside Director, or to set the date and circumstances of
grants of options, the term of such options, the
<PAGE> 3
period within which such options may be exercised or the exercise price of such
options.
(c) Interpretation. The interpretation and construction of any
provision of the Directors Plan or any option granted hereunder and all
determinations by the Board in each case shall be final, binding and conclusive
with respect to all interested parties, unless otherwise determined by the
Board. No member of the Board shall be personally liable for any action, failure
to act, determination, interpretation or construction made in good faith with
respect to the Directors Plan or any option or transaction thereunder.
(d) No Other Rights. Nothing contained in the Directors Plan, nor any
option granted pursuant to the Directors Plan, shall confer upon any Outside
Director covered by the Directors Plan any right to continue as a director of
the Company nor limit in any way the right of the Company to terminate his
status as a director at any time.
3. THE STOCK. The common shares available for issuance pursuant to the
grant of options under the Directors Plan shall consist of a maximum of 62,500
common shares, par value $1.00 per share (the "Common Stock"), of the Company,
subject to adjustment as provided in Section 6 hereof. All shares acquired upon
the exercise of options will be, in whole or in part, either Common Stock
purchased by the Company in the open market and held in the treasury of the
Company or authorized and unissued shares of Common Stock of the Company. Should
an option (or a portion thereof) expire for any reason without being exercised,
the shares subject to the portion of such option not so exercised shall be
available for subsequent grants under the Directors Plan.
4. EFFECTIVE DATE AND TERMINATION OF PLAN. The Directors Plan was
adopted by the affirmative vote of the Board of Directors of the Company on
December 14, 1995; provided, however, that, if the Directors Plan is not
approved by the shareholders of the Company within twelve months following such
date of adoption, the Directors Plan shall be deemed null and void and shall be
of no effect. The Directors Plan shall terminate upon the earlier of (i) the
fifth anniversary of the date on which this Directors Plan is approved by the
shareholders of the Company; or (ii) the date on which all shares available for
issuance under the Directors Plan have been issued pursuant to the exercise of
options granted hereunder; or (iii) the determination of the Board that the
Directors Plan shall terminate; or (iv) December 14, 1996, if the Directors Plan
has not been approved by the shareholders prior to such date. No options may be
granted under the Directors Plan after the
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<PAGE> 4
termination date, provided that the options granted and outstanding on such date
shall continue to have force and effect in accordance with the provisions of the
instruments evidencing such options. The date on which this Directors Plan is
approved by the shareholders of the Company is herein referred to as the
"Effective Date."
5. GRANT, TERMS AND CONDITIONS OF OPTIONS.
(a) Grant of Options. Each person who is an Outside Director on the
Effective Date shall be granted an option to purchase 6,250 shares of Common
Stock effective on the Effective Date. Any individual who is a newly elected or
appointed Outside Director after the Effective Date shall be granted an option
to purchase 6,250 shares of Common Stock (subject to adjustment pursuant to
Section 6 hereof) effective on the third business day following the date of his
appointment or election to the Board.
(b) When Exercisable. An option shall vest and become nonforfeitable
when, and only if, the Outside Director who has received the option continues to
serve as a director of the Company for a period of six months following the date
on which the option was granted. An option shall thereafter be fully vested and
exercisable for the total number of shares subject to the option.
(c) Price. The option exercise price per share of each option shall be
equal to the fair market value of a share of Common Stock on the date of grant
(as defined by subsection (i) hereof), provided that, the option exercise price
shall be subject to adjustment only as provided in Section 6 hereof.
(d) Term of Options. Options shall be effective on and shall be of a
term of ten (10) years from the date of grant. Each such option shall be subject
to earlier termination as provided in subsection (f) hereof.
(e) Notice of Exercise and Payment. To the extent that it is
exercisable, an option shall be exercised by oral or written notice to the
Company, stating the number of shares with respect to which the option is being
exercised and the intended manner of payment. The date of the notice shall be
the exercise date. Any oral notice of exercise shall be confirmed in writing in
all cases to the Company no later than concurrently with payment for the shares
as required herein. Payment for the shares purchased shall be made in full to
the Company within ten (10) business days after the exercise date in cash or
check payable to the order of the Company in an amount equal to the option price
for the shares being purchased, in whole shares of Common Stock of the Company
owned by the optionee having a fair market value on
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<PAGE> 5
the exercise date (as defined by subsection (i) hereof) equal to the option
price for the shares being purchased, or a combination of Common Stock and cash
or check payable to the order of the Company, equal in the aggregate to the
option price for the shares being purchased. Payments of Common Stock shall be
made by delivery of stock certificates properly endorsed for transfer in
negotiable form. The person or persons exercising the option on behalf of an
optionee shall be required to furnish to the Company appropriate documentation
that such person or persons have the full legal right and power to exercise the
option on behalf of and for the optionee.
(f) Termination of Service.
(i) Any option which is exercisable by its terms at the time an
optionee ceases to be a director of the Company (other than as a
result of death or disability) shall be exercised on or before the
earlier of three (3) months after the date of termination of service
on the Board of Directors or the fixed expiration date of such option
after which period such option shall expire.
(ii) In the event of the death of the optionee while a
director of the Company, any unexercised option of such optionee
granted under the Directors Plan (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 such
option or twelve months after the date of death, after which period
such 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 an option by
reason of the death of the optionee.
(iii) In the case of any option granted under this Directors
Plan, in the event the optionee ceases to be a director of the Company
by reason of a permanent disability (as defined below), any such
unexercised option of such optionee (whether or not then exercisable by
its terms) shall become exercisable for a period ending on the earlier
of the fixed expiration date of such option or twelve months from the
date the optionee ceases to be a director after which period such
option shall expire. For purposes hereof, "permanent disability" shall
be deemed to be the inability of the optionee to perform the duties of
a director of the Company because of a physical or mental disability as
evidenced by the opinion of a Company-approved doctor of medicine.
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<PAGE> 6
(g) Transferability of Options. Any option granted hereunder shall be
transferable only by will or the laws of descent and distribution and shall be
exercisable during the lifetime of the optionee only by the optionee or by his
guardian or legal representative.
(h) Tax Withholding. Any option granted hereunder shall provide for
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 shares of Common Stock or other property thereby acquired and
all such additional taxes or amounts as determined by the Board in its
discretion. "Appropriate arrangements" shall not include the right to withhold
Common Stock upon exercise of an option to satisfy withholding obligations.
(i) Fair Market Value. The "fair market value" of a share of Common
Stock on any relevant date for purposes of any provision of the Directors Plan
shall be the last reported sales price of a share of Common Stock as shown on
the national stock exchange on which the Company's Common Stock is then traded
or, if there are no reported sales on such date, then the last reported sales
price on the next preceding day on which such a sale was transacted.
(j) Option Agreement. Each option granted under the Directors Plan
shall be evidenced by an option agreement (an "Agreement") duly executed on
behalf of the Company and by the Outside Director to whom such option is granted
and dated as of the applicable date of grant. Each Agreement shall be signed on
behalf of the Company by an officer or officers delegated such authority by the
Board. Each Agreement shall comply with and be subject to the terms and
conditions of the Directors Plan. Any Agreement may contain such other terms,
provisions and conditions not inconsistent with the Directors Plan or Rule 16b-3
under Section 16 of the Securities Exchange Act of 1934, as amended ("Section
16b-3"), as may be determined by the Board.
6. ADJUSTMENT AND CHANGES IN THE COMMON STOCK.
(a) Adjustments. In the event that the outstanding shares of Common
Stock of the Company shall be changed into or exchanged for a different kind of
shares of stock 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 shares of
Common Stock shall be increased through the payment of a stock dividend or the
declaration of a stock split, then there
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<PAGE> 7
shall be substituted for or added to each share of Common Stock of the Company
theretofore appropriated or thereafter subject or which may become subject to an
option under the Directors Plan, the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock of the Company
shall be so changed, or for which each such share shall be exchanged, or to
which each such share shall be entitled, as the case may be. Outstanding options
shall also be appropriately amended as to price and other terms as may be
necessary to reflect the foregoing events. Fractional shares resulting from any
adjustment in options pursuant to this Section 6 shall be rounded to the nearest
whole number of shares.
(b) Notice of Adjustment. Notice of any adjustment shall be given by
the Company to each holder of an option which shall have been so adjusted,
provided that such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of the Directors Plan and any instrument
issued thereunder.
(c) Other Provisions. The grant of options under the Directors Plan
shall in no way affect 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.
7. REGULATORY REQUIREMENTS.
(a) Registration of Shares. No option granted pursuant to the Directors
Plan shall be exercisable in whole or in part if at any time the Board shall
determine in its discretion that the registration or qualification of the shares
of Common Stock subject to such option on any securities exchange or under any
applicable law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection with, the granting
of such option or the issue of shares thereunder, unless such registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board. Any option issued under the
Directors Plan in a transaction that is subject to Chapter 1707 of the Ohio
Revised Code shall not be exercisable except for shares of Common Stock which at
the time of exercise are exempt, are the subject of an exempt transaction or are
registered, under said Chapter 1707.
(b) Transfer of Shares. If shares of Common Stock subject to an option
are sold and transferred upon the exercise of thereof to a person who (at time
of such exercise or thereafter) controls, is controlled by or is under common
control with the Company, or are sold and transferred in reliance upon
exemptions
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<PAGE> 8
under the Securities Act of 1933, as amended (the "Act"), or the securities laws
of any state, then upon such sale and transfer:
(i) Such shares shall not be transferable by the holder
thereof, and neither the Company nor its transfer agent or registrar,
if any, shall be required to register or otherwise to give effect to
any transfer thereof and may prevent any such transfer, unless the
Company shall have received an opinion from its counsel to the effect
that any such transfer would not violate the Act or the applicable laws
of any state; and
(ii) The Company shall cause each stock certificate evidencing
such shares to bear a legend reflecting applicable restrictions on the
transfer thereof and may use the following or any appropriate legend
for that purpose:
SHARES EVIDENCED BY THIS CERTIFICATE ARE OWNED BY A PERSON WHO
MAY BE DEEMED AN AFFILIATE OF THE COMPANY WITHIN THE MEANING OF RULE
144 PROMULGATED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY
NOT BE SOLD, TRANSFERRED OR DISTRIBUTED EXCEPT PURSUANT TO (1) AN
EFFECTIVE REGISTRATION STATEMENT REGISTERING THE SHARES UNDER THE ACT
OR (2) UNTIL THE COMPANY HAS RECEIVED AN OPINION FROM ITS COUNSEL TO
THE EFFECT THAT SUCH TRANSFER DOES NOT VIOLATE THE ACT OR THE
APPLICABLE LAWS OF ANY STATE.
(c) No Obligation. Nothing contained in the Directors Plan or elsewhere
shall be construed to require the Company to take any action whatsoever to make
exercisable any option granted under the Directors Plan or to make transferable
any shares of Common Stock issued upon the exercise of any such option.
8. AMENDMENT OF THE DIRECTORS PLAN. The Board may amend,
terminate or suspend the Directors Plan at any time, in its sole and absolute
discretion; provided, however, that if required to qualify the Directors Plan
under Rule 16b-3, no amendment shall be made more than once every six months
other than to comport with changes in the Internal Revenue Code of 1986, as
amended, or the rules and regulations promulgated thereunder or the Employment
Retirement Income Security Act; and provided, further, that if required to
qualify the Directors Plan under Rule 16b-3, no amendment that would (a)
materially increase the number of shares of Common Stock that may be issued
under the Directors Plan, (b) materially modify the requirements as to
eligibility for participation in the Directors Plan, or (c) otherwise materially
increase the benefits accruing to participants under the Directors Plan, shall
be made without the approval of the Company's shareholders.
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<PAGE> 9
9. SHAREHOLDER RIGHTS. An optionee shall have none of the rights of a
shareholder of the Company with respect to any shares subject to any option
granted hereunder until such individual shall have exercised the option and been
issued shares therefor.
10. SEVERABILITY. If any provision of the Directors Plan shall cause
the Directors Plan to violate any provision of any applicable law, rule or
government regulation or to be considered null and void, such provision shall be
severed from the Directors Plan and shall be null and void or shall be deemed
null and void ab initio, as shall be appropriate or necessary, and the Directors
Plan shall continue in full force and effect as if such provision were not part
of the Directors Plan.
11. USE OF PROCEEDS. The proceeds received by the Company from the sale
of shares pursuant to the options granted under the Directors Plans shall be
used for general corporate purposes.
12. EXPENSES. The expenses of the Directors Plan shall be borne by the
Company.
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<PAGE> 1
EXHIBIT 10(z)
Form of Stock Option Agreement
used in connection with the grant of
incentive stock options pursuant to the
R. G. Barry Corporation
1997 Incentive Stock Plan
<PAGE> 2
STOCK OPTION AGREEMENT
(Incentive Stock Option)
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 1997 Incentive Stock 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
(subject to adjustment as provided in Section (3)). 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, except as otherwise provided in this Agreement, the OPTION may be
exercised as follows:
<PAGE> 3
(i) at any time after such twelve-month period as to
________ of the COMMON SHARES subject to the OPTION (subject to adjustment as
provided in Section (3));
(ii) at any time after twenty-four months from the
date of this Agreement as to an additional ________ of the COMMON SHARES subject
to the OPTION (subject to adjustment as provided in Section (3));
(iii) at any time after thirty-six-months as to an
additional ________ of the COMMON SHARES subject to the OPTION (subject to
adjustment as provided in Section (3));
(iv) at any time after forty-eight months from the
date of this Agreement as to an additional ________ of the COMMON SHARES subject
to the OPTION (subject to adjustment as provided in Section (3)) and
(v) at any time after sixty months from the date of
this Agreement as to the remaining ________ of the COMMON SHARES subject to the
OPTION (subject to adjustment as provided in Section (3)).
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 COMPANY 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). Payment for such COMMON SHARES
also may be made (i) by delivery of COMMON SHARES of the COMPANY already owned
by the OPTIONEE and
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<PAGE> 4
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.
(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. The number of COMMON SHARES that will
vest on the dates set forth in Section (2)(B) shall also be appropriately
adjusted to reflect any such change in the outstanding COMMON SHARES. 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.
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<PAGE> 5
(D) 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.
(4) Acceleration of OPTION. 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,
will terminate and cease to be exercisable, unless assumed by the successor
corporation or parent thereof.
(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
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<PAGE> 6
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 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
OPTIONEE's death, permanent disability or normal retirement (as defined in
Section 7(D) below), 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 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 unexercised portion of the OPTION (whether or not then exercisable
by its terms) shall become immediately exercisable in full for a period ending
on the earlier of three (3) months after the termination of employment or the
fixed expiration date of the OPTION, after which period the OPTION
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<PAGE> 7
shall expire; 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 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
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<PAGE> 8
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 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.
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<PAGE> 9
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:
---------
_________________________________
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<PAGE> 1
EXHIBIT 10(aa)
Form of Stock Option Agreement
used in connection with the grant of
non-qualified stock options
pursuant to the
R. G. Barry Corporation
1997 Incentive Stock Plan
<PAGE> 2
STOCK OPTION AGREEMENT
(Non-Qualified Stock Option)
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 1997 Incentive Stock 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, except as otherwise provided in this Agreement, the
OPTION may be exercised as follows:
(i) at any time after such twelve-month period as
to ________ of the COMMON SHARES subject to the OPTION (subject to adjustment as
provided in Section (3)); and
<PAGE> 3
(ii) at any time after twenty-four months from the
date of this Agreement as to the remaining ____ of the COMMON SHARES subject to
the OPTION (subject to adjustment as provided in Section (3)).
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.
(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 COMPANY 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). Payment for such COMMON SHARES
also 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) Tax Withholding. OPTIONEE will pay to the COMPANY the
amount of any taxes the COMPANY is required by law to withhold with respect to
the exercise of the OPTION. Unless otherwise instructed by OPTIONEE, the COMPANY
will withhold from the COMMON SHARES issuable upon exercise of the OPTION that
number of COMMON SHARES having a fair market value on the date of exercise
(based upon the closing price of the COMMON SHARES as reported on The New York
Stock Exchange) equal to the amount of any taxes the COMPANY is required by law
to withhold with respect to the exercise of the OPTION.
(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
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<PAGE> 4
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. The number of COMMON SHARES that will vest on the dates set forth in
Section (2)(B) shall be appropriately adjusted to reflect any such change in the
outstanding COMMON SHARES. 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.
(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.
(4) Acceleration of OPTIONS. 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,
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<PAGE> 5
(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.
(5) Non-Assignability of OPTION. Unless otherwise permitted
by the COMMITTEE, 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. If the COMMITTEE permits the assignment of
the OPTION, it shall be assignable only to the extent permitted by Section 19 of
the PLAN.
(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 not less than the fair
market value of the COMMON SHARES 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 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.
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<PAGE> 6
(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 in full 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.
(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) 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 at the date of retirement and has completed at least five (5) consecutive
years of employment with the COMPANY at the date of retirement.
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<PAGE> 7
(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, 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
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<PAGE> 8
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 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:__________________________
OPTIONEE:
---------
_________________________________
-7-
<PAGE> 1
EXHIBIT 23
Consent of Independent Auditors
<PAGE> 2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
R. G. Barry Corporation:
We consent to incorporation by reference in Registration Statement Nos.
33-23567, 33-23568, 33-67594, 33-67596, 33-81820, 33-83252, 333-06875 and
333-28671 on Forms S-8 and S-3 of R. G. Barry Corporation of our reports dated
February 19, 1998, relating to the consolidated balance sheets of R. G. Barry
Corporation and subsidiaries as of January 3, 1998 and December 28, 1996, 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 January 3, 1998, which reports appear in the 1997
annual report on Form 10-K of R. G. Barry Corporation.
KPMG Peat Marwick LLP
Columbus, Ohio
March 31, 1998
<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 January 3, 1998, 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 19th
day of March, 1998.
/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 January 3, 1998, 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 19th
day of March, 1998.
/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 January 3, 1998, 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 21st
day of March, 1998.
/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 January 3, 1998, 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 17th
day of March, 1998.
/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 January 3, 1998, 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, 1998.
/s/ Leopold Abraham II
-------------------------
Leopold Abraham II
<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 January 3, 1998, 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 13th
day of March, 1998.
/s/ Philip G. Barach
-------------------------
Philip G. Barach
<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 January 3, 1998, 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, 1998.
/s/ William Giovanello
-------------------------
William Giovanello
<PAGE> 9
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 January 3, 1998, 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 24th
day of March, 1998.
/s/ Harvey M. Krueger
-------------------------
Harvey M. Krueger
<PAGE> 10
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 January 3, 1998, 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, 1998.
/s/ Edward M. Stan
-------------------------
Edward M. Stan
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> JAN-03-1998
<CASH> 22,495
<SECURITIES> 0
<RECEIVABLES> 24,450
<ALLOWANCES> 8,493
<INVENTORY> 35,602
<CURRENT-ASSETS> 82,554
<PP&E> 40,840
<DEPRECIATION> 26,609
<TOTAL-ASSETS> 104,674
<CURRENT-LIABILITIES> 20,017
<BONDS> 12,992
0
0
<COMMON> 9,564
<OTHER-SE> 58,044
<TOTAL-LIABILITY-AND-EQUITY> 104,674
<SALES> 148,775
<TOTAL-REVENUES> 148,775
<CGS> 77,438
<TOTAL-COSTS> 77,438
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,139
<INCOME-PRETAX> 16,798
<INCOME-TAX> 6,680
<INCOME-CONTINUING> 10,118
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,118
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> DEC-28-1996
<CASH> 13,187
<SECURITIES> 0
<RECEIVABLES> 26,344
<ALLOWANCES> 8,972
<INVENTORY> 28,854
<CURRENT-ASSETS> 67,679
<PP&E> 39,088
<DEPRECIATION> 25,159
<TOTAL-ASSETS> 89,067
<CURRENT-LIABILITIES> 13,956
<BONDS> 15,265
0
0
<COMMON> 9,375
<OTHER-SE> 47,368
<TOTAL-LIABILITY-AND-EQUITY> 89,067
<SALES> 148,626
<TOTAL-REVENUES> 148,626
<CGS> 83,202
<TOTAL-COSTS> 83,202
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,655
<INCOME-PRETAX> 13,722
<INCOME-TAX> 5,465
<INCOME-CONTINUING> 8,257
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,257
<EPS-PRIMARY> 0.89
<EPS-DILUTED> 0.84
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
NOTE: On June 17, 1996, the Registrant distributed a 5 for 4 share split. The
calculations for "EPS-BASIC" and "EPS-DILUTED" noted above, have been
retroactively restated to give effect of the share split. Items noted as
"COMMON" and "OTHER-SE" have not been restated to give effect of the share
split.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> DEC-30-1995
<CASH> 6,267
<SECURITIES> 0
<RECEIVABLES> 22,892
<ALLOWANCES> 7,670
<INVENTORY> 31,708
<CURRENT-ASSETS> 62,721
<PP&E> 36,964
<DEPRECIATION> 22,808
<TOTAL-ASSETS> 84,340
<CURRENT-LIABILITIES> 18,793
<BONDS> 15,390
0
0
<COMMON> 7,410
<OTHER-SE> 40,201
<TOTAL-LIABILITY-AND-EQUITY> 84,340
<SALES> 136,561
<TOTAL-REVENUES> 136,561
<CGS> 76,065
<TOTAL-COSTS> 76,065
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,029
<INCOME-PRETAX> 10,037
<INCOME-TAX> 3,738
<INCOME-CONTINUING> 6,299
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,299
<EPS-PRIMARY> 0.68
<EPS-DILUTED> 0.65
</TABLE>
