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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-22702
ROBERDS, INC.
An Ohio Corporation 31-0801335
(IRS Employer Identification Number)
1100 East Central Avenue
Dayton, Ohio 45449-1888
(937) 859-5127
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, without par value
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 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. [ X ]
At the close of trading on January 31, 1997, 5,964,830 common shares, without
par value, were outstanding. Of these, 1,812,789 common shares, having an
aggregate market value (based upon the average of the high and low trading
prices on that date) of approximately $14,955,509, were held by non-affiliates
of the Registrant. Common shares held by each executive officer and director,
and by each person who owned five percent or more of the outstanding common
shares, were excluded, in that such persons may be deemed to be affiliates.
However, such calculation does not constitute an admission or determination that
any such officer or director or holder of more than five percent of the
outstanding common shares is in fact an affiliate of the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for its 1997 annual meeting of
shareholders are incorporated into Part III herein by reference.
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PART I
ITEM 1. BUSINESS
GENERAL
Roberds, Inc.1 is a leading retailer of a broad range of home furnishing
products, including furniture, bedding, major appliances, and consumer
electronics, in the greater Dayton, Ohio, Atlanta, Georgia, Tampa, Florida, and
Cincinnati, Ohio markets. At December 31, 1996, the Company operated 25
large-format stores, with six stores in the Dayton market, ten in the Atlanta
market, eight in the Tampa market, and one megastore in the Cincinnati, Ohio
market. The Company offers a product mix that includes high quality, name-brand
furniture, bedding, major appliances, and consumer electronics products, at
prices guaranteed to be lower than those of its competitors.
In November 1993, the Company completed an initial public offering of 2.7
million of its common shares, without par value. The Company's common shares
trade on the Nasdaq National Market tier of The Nasdaq Stock Market, under the
symbol "RBDS."
The Company was incorporated in 1971 under the laws of the State of Ohio. Its
executive offices are located at 1100 East Central Avenue, Dayton, Ohio
45449-1888, and its telephone number is (937) 859-5127.
FORWARD-LOOKING STATEMENTS
In the interest of providing the Company's shareholders and potential investors
with information concerning management's assessment of the outlook for the
Company, this report contains certain "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Readers should bear in
mind that statements relating to the Company's business prospects, as distinct
from historical facts, are forward-looking statements which, by their very
nature, involve numerous risks and uncertainties. For discussion of certain of
such risks and uncertainties, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Forward-Looking Statements."
OPERATING STRATEGY
The Company's objective is to be the leading retailer of furniture, bedding,
major appliances, and consumer electronics products in each of its markets. Key
elements of the Company's operating strategy include the following:
DISTINCTIVE PRODUCT MIX The Company's product mix is a key element of its
operating strategy. Roberds' product mix is distinctive within the retailing
industry, and management believes it provides Roberds with several competitive
advantages over retailers offering only one or two of the Company's product
categories. The Company's major appliance and consumer electronics product lines
generate significant store traffic, sales volume, and gross profit dollars,
enabling Roberds(R) to price its furniture products more aggressively than
competing furniture retailers. The Company's higher-margin furniture and bedding
products enable it to offer its appliance and consumer electronics products at
prices generally below retailers of those products. The Company believes that
its mix of products provides a significant strategic advantage over its
competitors, particularly those selling only electronics and appliance products.
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1 Roberds, Inc. is also referred to herein as "the Company," "Registrant,"
and "Roberds."
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Management believes that the Company's product mix generates significant
operating efficiencies. Such efficiencies result from the higher level of sales
per store generated by the Company's diverse product mix, providing Roberds with
significant leverage of its fixed costs, including distribution, warehousing,
store facilities, advertising, and general and administrative expenses. The
Company's product mix enables Roberds to offer complementary products in a
single package in a way in which many of its competitors cannot, and offers
cross-selling opportunities that do not exist for many of the Company's
competitors.
GUARANTEED LOWEST PRICES. The Company's pricing strategy is to offer its
merchandise at prices guaranteed to be lower than those of its competitors
throughout the year. Roberds shops its competition regularly and believes that
it sets its prices below those of its competitors. To reinforce its reputation
for value, it is the Company's advertised policy to offer the lowest competing
price in the market. The policy is backed up by the Company's DOUBLE THE
DIFFERENCETM price guarantee, which is prominently featured in its advertising.
At the time of sale, and for 30 days thereafter, the Company guarantees to its
customers that its prices are lower than those of its competitors. If a customer
demonstrates prior to a purchase that the same product can be purchased within
the market area for a price below that offered by the Company, it will offer
that item to the customer at a price lower than that of the competitor. If a
customer has purchased a product from the Company and within 30 days thereafter
(seven days on computer products) demonstrates that the same product can be
purchased within the market area at a lower price, the Company will refund
double the difference to the consumer.
BROAD SELECTION OF NAME-BRAND MERCHANDISE. The Company sells only name-brand
products generally recognized by consumers, including many higher quality
brands. The Company's stores, which average approximately 60,000 square feet in
size (excluding the Cincinnati megastore), are larger than the stores of many of
its competitors. This enables the Company to attractively display a wide variety
of products that appeal to a broad range of consumer tastes, incomes, and age
groups. As a result, Roberds can offer its customers "one-stop" shopping for
almost every home furnishing product, thereby facilitating the purchasing
process and reducing the need for comparison shopping. In 1996, the Company
opened Roberds GrandTM, in Cincinnati, Ohio. Roberds Grand features a single
250,000 square foot showroom, with an even larger selection than is offered in
the Company's other stores.
STORE CONCENTRATION AND EFFICIENCIES. Roberds operates in metropolitan areas of
at least one million people. In its Dayton, Atlanta, and Tampa markets, the
Company has concentrated multiple stores in each geographic market in order to
enhance name recognition, achieve market penetration, and gain economies of
scale in distribution, advertising, and management costs. The Company advertises
in newspapers, on television, and through direct mail, and is able to benefit
from the advertising efficiencies of locating multiple stores within those three
marketing areas. The Company's "hub and spoke" warehouse and delivery functions
also create operating leverage by serving multiple stores from a regional
facility. For its entry into the Cincinnati market, which is discussed more
fully below, the Company utilized a single 250,000 square foot "megastore"
concept.
CORPORATE COMMITMENT TO CUSTOMER SERVICE. The Company operates under the
philosophy that it will do "whatever it takes" to satisfy the customer. The
Company gives managers and sales associates full authority to respond to
customer issues. Unlike many of its competitors, Roberds employs full-time,
commissioned, trained, professional, sales associates, who are knowledgeable
about the products they sell. On in-stock merchandise, the Company offers
delivery within two days, for a reasonable charge, seven days per week. Roberds
guarantees next-day delivery service on selected merchandise. Roberds offers
delivery on all merchandise sold, and has a competitive policy on replacements
and returns. Roberds also removes the customer's old merchandise free of charge.
In addition, Roberds offers service contracts that provide additional warranty
coverage beyond that which is provided by the manufacturer.
EXPANSION STRATEGY
As part of the initial public offering of its common shares in November 1993,
the Company embarked on a plan to add stores in its existing market areas,
particularly in Atlanta and Tampa; to remodel two of its highest volume stores;
to
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relocate its flagship store in the Tampa market; and to develop a fourth market
area. The Company developed this strategy in order to attempt to gain market
share in the large and growing Atlanta and Tampa markets, which the Company
believed offered significant expansion opportunities. Since the initial public
offering, the Company has increased its store count in Dayton from five to six,
in Atlanta from five to ten, in Tampa from five to eight, and in total from 15
to 24 in its three original market areas. The store renovation and relocation
projects launched in 1993 have been completed.
ENTRY INTO NEW MARKETS. In July 1996, the Company entered the Cincinnati, Ohio
market with a single 250,000 square foot megastore known as Roberds Grand. With
the development of the Roberds GrandTM format, the Company has two formats with
which it can enter new markets--multiple 60,000 square foot stores within a
market or a single 250,000 square foot megastore. It is the Company's plan to
utilize the single 250,000 square foot model in all new markets; however, it can
utilize the multiple-store model where the Company believes it is appropriate.
The determination of whether to utilize a single store or multiples stores in
new markets depends on a variety of factors, including but not limited to retail
shopping patterns, traffic patterns, accessibility, and the availability of
sites.
Going forward, the Company will focus the majority of its resources on new
market areas. Criteria for expansion into new markets include the potential for
achieving a significant share of the market in each of the Company's product
categories, and the opportunity to achieve operating efficiencies in regional
advertising, warehousing, and administrative costs.
The Company has identified Columbus, Ohio as its next market area, utilizing the
Roberds Grand megastore approach. However, the Company does not intend to enter
the Columbus market, or any other new market, and take on the additional debt
obligations required to enter a new market, without additional equity. Thus, the
Company's further expansion into new markets is dependent on its ability to
raise additional equity capital prior to, or as part of, such new market
expansions. Although the Company currently expects to continue its expansion
beyond the Columbus, Ohio market, there can be no assurance that it will be able
to do so.
ADDITIONAL STORES IN EXISTING MARKETS. During 1996, the Company purchased a
former retail facility in the Buckhead area of Atlanta, Georgia, renovated the
facility into a Roberds store, and opened the store in November 1996.
The Company had previously announced plans to enter the Lakeland, Florida
market, which is part of the greater Tampa, Florida market. However, in June
1996, the Company terminated its contract to purchase the site in Lakeland due
to issues that arose in the due diligence process. The Company continues to have
an interest in the Lakeland, Florida market, but is not actively pursuing a site
in that market.
NEW DISTRIBUTION CENTER. As part of the plan to enter the Cincinnati, Ohio
market, the Company opened a 480,000 square foot warehouse facility in the
Dayton suburb of Fairborn, Ohio, in January 1996. The Fairborn warehouse will
also service the Company's announced expansion into the Columbus, Ohio market.
STORE RENOVATIONS. In August 1996, the Company expanded its Vandalia, Ohio store
into former warehouse space in that facility that was abandoned following the
opening of the new warehouse in Fairborn, Ohio. The expanded Vandalia facility
includes a 69,000 square-foot traditional Roberds store, and an area that serves
as a clearance center for the Dayton market.
The Company is expanding its West Carrollton, Ohio store into former warehouse
space that was abandoned following the opening of the new warehouse in Fairborn,
Ohio, in order to expand its product offerings in the West Carrollton store. The
expansion will enable the Company to sell some of the products it currently
displays and inventories for the Cincinnati market, in Dayton. As part of the
expansion, there will be some minor renovation of the existing West Carrollton
store. The project is expected to be completed in March 1997.
GENERAL. The Company's planned growth depends, in part, on its ability to expand
into new markets and, to a lesser extent, its ability to open new stores within
its existing market areas. There is no assurance that the Company will be
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able to locate favorable store sites and arrange favorable leases for new
stores; open new stores in a timely manner; or hire, train, and integrate
employees and managers in those new stores; or that the Company will have access
to sufficient financial resources to permit further expansion. Similarly, there
can be no assurance that the Company can enter new markets successfully.
MERCHANDISING AND PRODUCT LINES
DISTINCTIVE FORMAT. Roberds' merchandising format, combining furniture, bedding,
major appliances, and consumer electronics products in the same store, is an
important aspect of the Company's operations and a point of significant
differentiation from its competitors. The Company's traditional stores are
larger than the stores of most of its competitors, averaging approximately
60,000 square feet in size. These larger stores allow the Company to
attractively display a wide selection of products and allow flexibility in
expanding and contracting merchandise categories to meet changing consumer
tastes and to introduce new products. The Company's Roberds Grand facility, in
Cincinnati, Ohio, is one of the largest home furnishings stores in North
America. Roberds' stores are organized into specialized departments, each
offering a wide selection of merchandise. The breadth of merchandise within each
product line is designed to provide customers with a varied selection and to
reduce the need for customers to comparison shop.
Roberds' furniture merchandise is priced to achieve gross margins that are
attractive for the Company, but below those of other furniture retailers.
Because it sells higher-margin furniture products, the Company can offer its
appliance and consumer electronics products at prices lower than can many of its
competitors in those categories. The Company's appliance and consumer
electronics businesses have lower margins, higher turnover, and tend to be
somewhat more seasonal and cyclical than furniture sales. However, the
competitively priced appliance and consumer electronics products generate
customer traffic for the higher margin furniture items and allow the Company to
spread its operating expenses over a larger base of sales. In addition,
management believes the Company's major appliance and consumer electronics
product offerings increase the frequency of customer visits and create consumer
loyalty, which leads customers to shop for furniture at Roberds.
FURNITURE PRODUCTS. Roberds carries a broad selection of name-brand furniture
products. In addition, the Company offers a broad range of special-order
products. Unlike many other retailers, Roberds uses the same pricing formula for
special-order merchandise as it does for in-stock merchandise. As a result,
Roberds enjoys a significant special-order business. Furniture sold by the
Company includes traditional, American country, eighteenth century, and
contemporary styles, and includes living room, dining room, and bedroom
furniture, tables, lamps, dinettes, reclining furniture, sleep sofas, desks, and
chairs. The Company offers extensive selections of both upholstered and leather
furniture, as well as casegoods. Roberds also sells furniture accessory items
including pictures, mirrors, vases, mantle pieces, wall hangings, figurines, and
related goods. Furniture brands carried by Roberds represent the middle to
upper-middle range of price, and include Action by Lane, Broyhill, Chromcraft,
Flexsteel, Kincaid, Natuzzi, and Pennsylvania House, among others. In the
Roberds Grand format, the Company offers an even broader and deeper selection of
furniture products, including many higher-end products such as Henredon, and the
Arnold Palmer and Alexander Julian Collections.
BEDDING PRODUCTS. The Company offers products from Sealy, Serta, and Simmons,
the three largest manufacturers of bedding sold in the United States, as well as
Stearns & Foster. Bedding products include wooden and brass bed frames,
mattresses, box springs, and water beds. The brand names sold by the Company
cover the full range of bedding quality, except that the Company does not
compete at the very lowest end of the bedding quality range or in the
private-label segment.
MAJOR APPLIANCE PRODUCTS. Roberds' major appliance products include
refrigerators, freezers, ranges, washers, dryers, dishwashers, trash compactors,
disposals, room air conditioners, microwave ovens, dehumidifiers, and vacuum
cleaners. The Company also sells some specialty appliance products such as
under-counter refrigerators, built-in appliances, and cooktops. Roberds carries
the major appliance brands sold in the United States, ranging in price from
moderately low to very high. In its Roberds Grand facility, Roberds sells
small-dollar appliances such as coffee makers, toasters, and
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food processors. Major appliance brands carried by the Company include Amana,
Frigidaire, General Electric, JennAir, KitchenAid, Maytag, SubZero, and
Whirlpool, among others.
CONSUMER ELECTRONICS PRODUCTS. Consumer electronics products sold by the Company
include portable, console, and big screen televisions; VCRs; camcorders; stereo
systems and audio components; and satellite systems. The Company offers personal
computers and related home-office products in its Dayton and Cincinnati markets,
but withdrew those products from its Atlanta and Tampa markets during 1996, due
to low volumes and profitability. The Company offers products from most of the
major consumer electronics manufacturers, ranging in price from lower-middle to
high. Consumer electronics brands carried by the Company include Bose, Canon,
Compaq, Hitachi, IBM, JVC, Mitsubishi, Packard Bell, Pioneer, RCA, Sony,
Toshiba, and Zenith, among others.
Roberds has dedicated "home theater" departments in its stores. This
merchandising concept blends stereo televisions with supplemental audio
equipment, to give the consumer a movie viewing experience comparable to that
enjoyed in theaters. Because of its ability to offer these products together
with complementary furniture products, particularly recliners and other "motion"
furniture, Roberds believes that it is well positioned to capitalize on the home
theater merchandising concept.
OTHER. Selected floor-covering products are offered in the Dayton and Cincinnati
stores. The Company does not sell draperies, wallpaper, or tabletop merchandise.
ADVERTISING AND PROMOTION
Roberds uses a mixed media approach in its advertising programs, employing a
combination of newspaper, broadcast, and direct mail advertisements. Roberds is
reimbursed by its suppliers for a significant portion of the costs associated
with advertising their products.
Newspaper advertisements typically account for the majority of gross advertising
expenditures, with broadcast, direct mail, and other forms of advertising
constituting the balance. The Company uses a combination of newspaper "run of
press" advertising, contained in the body of the newspaper, and "preprint"
advertising, which is "stuffed" into the newspaper. The Company advertises
continuously during the year, but most heavily during peak retailing seasons
such as Thanksgiving and Christmas and for other special promotional programs.
Roberds utilizes broadcast advertising primarily Thursday through Sunday, in
newspapers primarily Friday through Sunday, and runs direct mail programs
periodically. Roberds runs a variety of promotional programs that range in
duration from one to fourteen days. A sales promotion is in progress virtually
every day of the year.
The Company has an in-house advertising department for the planning,
preparation, and production of advertising, and for coordinating advertising
with the Company's merchandising policies and programs. The Company employs an
advertising agency for the production of broadcast advertising and for
assistance in developing its overall advertising strategy. Advertising for all
market areas is developed around common themes and promotions, but product
prices are varied by market to meet each market's needs and to maintain Roberds'
guaranteed-lowest-price commitment.
CUSTOMER PROFILE
Roberds targets consumers who are 25 to 54 years of age, have annual household
incomes greater than $30,000, are married, and have owned their own homes for
less than five years. The Company believes such customers are typically
interested in purchasing high-quality merchandise at prices that provide good
value. Management also believes that Roberds has a high proportion of repeat
shoppers.
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CUSTOMER SERVICE AND CONVENIENCE
The Company stresses superior customer service and encourages every employee to
do "whatever it takes" to satisfy a customer. Store managers and assistant
managers have broad discretion to meet customers' needs. Roberds' stores are
open 362 days each year. The stores are open from 10:00 a.m. to 9:00 p.m.,
Monday through Saturday, and 11:00 a.m. to 7:00 p.m., Sundays, providing ample
opportunity for customers, including two-income families, to shop. Store hours
are extended during peak selling seasons. Roberds employs full-time,
commissioned, trained, professional sales associates who are knowledgeable about
the products they sell.
When a customer is interested in an item of merchandise that is carried in
stock, sales associates determine the item's availability from real-time
computer terminals located throughout the selling area. Similarly, if a customer
special-orders merchandise, the Company's computer system allows the customer to
know at any time the status of the order and the expected delivery date.
Customer inquiries after the sale are generally referred first to the
salesperson who made the sale, so as to maintain a friendly customer
relationship and encourage customer satisfaction and loyalty.
For furniture, major appliances, and consumer electronics products, Roberds
offers its own service contracts that provide additional warranty coverage
beyond that which is provided by the manufacturer. The terms of the extended
warranty contracts range from nine months to ten years. Roberds provides service
for everything it sells. Roberds performs its own furniture and bedding repair
service in all four markets. Appliance and electronics repair services are
provided with a combination of in-house staff and outside providers with whom
Roberds has working relationships.
HOME DELIVERY SYSTEM
Roberds believes that its system for delivery of merchandise to its customers is
convenient for the customer and a significant strategic advantage. At the time
of purchase, customers can elect to take in-stock merchandise with them or
schedule it for delivery. Over 80 percent of the merchandise sold is delivered.
If the customer wants to arrange a delivery, it is scheduled at the time of
sale, on the sales floor, when the customer specifies a date for delivery. Full
delivery service is available 362 days during the year, including Sundays, to
provide maximum convenience for the customer. Typically, the customer can
schedule deliveries of in-stock merchandise within two days after the sale;
however, the Company guarantees next-day delivery on in-stock refrigeration
equipment, big-screen televisions, and bedding products.
Roberds operates a delivery fleet with distinctive trucks displaying the Roberds
logo. All delivery crews are Roberds employees wearing Company uniforms.
Delivery teams operate on a commissioned pay system. Management believes that,
as a result of the commission system, the Company's delivery personnel are
highly motivated to complete the delivery successfully on the first attempt and
to satisfy the customer.
PURCHASING AND VENDOR RELATIONS
Roberds' buying operations are organized along its four major merchandise lines.
The Company has a Vice President of merchandising over each of its four major
product lines. Each Vice President is assisted by buyers in each of the
Company's geographic market areas; however, the Company's Dayton buyers also
serve the Cincinnati market. The buyers review inventory and sales reports on a
daily basis and place orders based on analysis of past sales and existing
inventory levels in their geographic market areas. The buyers also adjust
product pricing and advertising to meet competitive needs in their respective
market areas.
Virtually all furniture and major appliances are purchased from North American
manufacturers. Consumer electronics products are purchased either from domestic
manufacturers or domestic suppliers representing European or Asian
manufacturers. Roberds is a member of NATM Buying Corp., the largest national
buying group in the United States, organized to purchase consumer electronics
and major appliances. Roberds believes its membership in NATM enables
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it to obtain better product pricing, larger volume discounts, and more
advertising rebates than it could obtain independently.
Vendors provide the Company with substantial incentives in the form of cash
discounts, volume rebates, and cooperative advertising funds. The aggregate
amount of these incentives was approximately $18.5 million in 1996, $15.3
million in 1995, and $11.7 million in 1994. The increase in such incentives in
1996 over 1995 was primarily due to increased purchases of products in order to
support higher levels of sales and the entry into the Cincinnati market and, to
a lesser extent, increased purchases from manufacturers providing incentives.
The increase in such incentives in 1995 over 1994 was principally due to
increases in volume and, to a lesser extent, increased purchases from
manufacturers providing incentives. There can be no assurance that such vendor
incentives will continue at such levels. A reduction in, discontinuance of, or
delay in receiving these vendor incentives could have a material adverse effect
on the Company.
Access to certain vendors and brand names is important to the Company's
continued success. The loss of a significant or well-known vendor, such as
General Electric or Broyhill, could have a material adverse effect on the
Company.
DISTRIBUTION
In January 1996, the Company consolidated its two Dayton warehouses into a new
480,000 square foot facility, which it constructed in the Dayton suburb of
Fairborn, Ohio. The new Fairborn facility services the Dayton and Cincinnati
markets, and will also service the Company's intended entry into the Columbus,
Ohio market. The Atlanta and Tampa markets each operate from single warehouse
facilities.
All merchandise is initially received into, and controlled in, a central
warehouse in each market. Smaller merchandise items, such as small televisions
and VCRs, which can be picked up by the customer, are then redistributed to the
stores for customer pick-up. Each store maintains warehouse space to facilitate
such customer pick-ups. Management believes this "hub and spoke" arrangement
allows for prompt product delivery and efficient distribution.
The Company tags and barcodes all merchandise at the time of arrival in its
warehouse centers. The movement of merchandise through the warehouse is tracked
by the Company's barcode process. The Company cycle-counts inventory on a
scheduled basis and performs physical inventories periodically.
MANAGEMENT INFORMATION SYSTEMS
Roberds utilizes a fully integrated management information system for inventory,
merchandising, and certain accounting functions. The system was purchased from,
and is maintained by, the largest software provider to the furniture retailing
industry. The Company believes that the current system is adequate to support
its growth plans, by making hardware and software upgrades to accommodate
additional volume.
Each store is equipped with a system allowing Company sales personnel and buyers
to track merchandise inventories on a real-time basis. In addition, the
merchandising systems are designed to integrate fully the key retailing
functions of merchandise planning, purchase order management, merchandise
distribution, receiving, order entry, and inventory control.
Sales data is captured at the time of sale by the Company's sales personnel,
using point-of-sale terminals on the showroom floor, and is transmitted to the
Company's regional processing centers, where it is compiled to produce daily and
weekly management reports. The data is organized by department class, item,
style, and store, and enables management to regularly monitor the sales
performance of all products within each store and market. The system also
captures data regarding the customer, and maintains an on-line customer data
base with addresses and purchasing history for each customer.
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CUSTOMER CREDIT PROGRAMS
The Company offers qualified customers a private-label charge card administered
by Banc One Private Label Credit Services ("Banc One"). According to Banc One,
at December 31, 1996, the Company had over 328,000 private-label charge card
accounts that generated sales of approximately $156 million in 1996. Such sales
represent approximately 46 percent of the Company's net sales and service
revenues for 1996. The credit approval and servicing process is administered by
Banc One, which issues customer account cards embossed with the Roberds logo.
Roberds receives income from such accounts, based on the difference between: (i)
the interest rate charged to the customer, and (ii) Banc One's cost of funds
plus an administrative charge. As part of its arrangement with Banc One, Roberds
funds a reserve account designed to cover a portion of the bad debt losses
incurred by Banc One. All credit losses in excess of the reserve account are the
responsibility of Banc One. As a result of this arrangement, Roberds holds no
significant consumer receivables and bears no credit risk beyond the fixed
amount contributed to Banc One's bad debt reserve. Because a significant portion
of the Company's sales are financed by consumers, the lack of availability of
consumer credit programs, or a significant increase in the cost of such
programs, could have a material adverse effect on the Company.
The Company also arranges financing through several other sources for customers
not qualifying for credit under the Banc One program. Under some of these
programs, the Company pays a fee to the providers for the use of the program;
under others, it earns a participation fee. However, under all of these other
programs, there is no recourse to Roberds for bad debts.
The Company utilizes several sources for extended financing programs; however,
the majority of such financing is provided by Banc One. The Company generally
pays a fee to the financing source for these programs. To the extent the Company
utilizes Banc One for programs other than its standard "90-days same-as-cash"
program, the Company pays a fee to Banc One for such programs. All extended
financing programs are without recourse to the Company.
Roberd Insurance Agency, Inc., a wholly owned subsidiary of the Company, is
qualified as an insurance agency under Ohio law. It earns a commission on credit
insurance sold by the Company to its customers.
COMPETITION
The retail sale of furniture, bedding, major appliances, and consumer
electronics products in the United States is highly competitive and highly
fragmented. There are large numbers of local, regional, and national chains of
department stores, specialty retailers, and mass and catalog merchandisers, as
well as mail-order merchandisers, competing in each of the Company's product
categories and within its geographic markets. Many of these competitors are
publicly held and have financial and other resources substantially greater than
those of the Company. Further, many of the Company's competitors, particularly
in the appliance and electronics product categories, have suffered severe
financial problems. From time to time, this has caused the Company to have to
compete against retailers that are liquidating merchandise or operating under
the protection of the bankruptcy laws. In the major appliance and consumer
electronics categories, there has been significant expansion into the Company's
markets by publicly held national "superstore" chains, which has greatly
increased the competitive environment in those product categories. In general,
these competitive conditions have led to heavy advertising, severe price
competition, and extensive use of "same-as-cash" programs. The Company expects
such competition to continue. As a result of these highly competitive
conditions, during 1996, the Company withdrew from the personal computer and
home-office categories in its Atlanta and Tampa markets.
One national retailer of appliance and electronics products is entering the
Dayton market in 1997, and another is entering the Tampa market in 1997. A major
furniture retailer located in the Tampa market entered the Atlanta market late
in 1995, and has announced plans for further expansion in greater Atlanta.
Several national department store chains are experimenting with freestanding
furniture, appliance, and electronics formats, and some of those retailers have
entered the Company's markets. These competitors may generate additional
competition in the furniture segment.
9
<PAGE> 10
The industry competes on the basis of price, merchandise selection and
availability, and service. The Company competes on price by constantly shopping
its competition within its geographic markets and maintaining a guaranteed-
lowest-price approach. Because of its distinctive product mix, Roberds can price
its merchandise on the sales floor below the competition every day of the year.
The Company believes it competes favorably on merchandise selection because, at
an average of 60,000 square feet of showroom size in its traditional stores, its
stores are larger than those of many of its competitors, thus enabling Roberds
to attractively display a broader range of merchandise in each of its four
product categories. Management believes Roberds' product availability is good
because of its strong vendor relations and its regional distribution facilities,
which are located near its stores. The Company believes that it provides
superior customer service through its full-time, commissioned sales staff,
effective delivery of merchandise, and effective handling of special orders.
SEASONALITY
The Company typically experiences an increase in its overall sales and
profitability in the fourth quarter. This increase is driven by an increase in
the sales of consumer electronics and furniture products associated with the
holiday season. At the same time, major appliance sales typically decline in the
fourth quarter. Operating results for the full year are highly dependent upon
the success of the Company's operations in the fourth quarter.
CYCLICALITY
The market for furniture, bedding, major appliances, and consumer electronics
products has historically been cyclical, fluctuating significantly with general
economic cycles. During economic downturns, these product lines tend to
experience longer periods of recession and greater declines than the general
economy. The Company believes that the industry is significantly influenced by
economic conditions generally and particularly by the level of housing activity,
interest rates, consumer confidence, personal discretionary spending, and credit
availability. There can be no assurance that a prolonged economic downturn would
not have a material adverse effect on the Company.
BACKLOG
The Company's backlog of sales (sales orders written but not yet delivered) was
approximately $8.3 million at December 31, 1996 as compared to $9.9 million at
December 31, 1995.
EMPLOYEES
At January 31, 1997, the Company had approximately 2,300 employees,
substantially all of whom were full time, including approximately 830 in sales
and sales management, 830 in office and administrative capacities, and 640 in
warehouse and delivery functions. The Company has never experienced a work
stoppage due to labor difficulties and is not a party to any collective
bargaining arrangements. The Company considers its relations with its employees
to be good.
10
<PAGE> 11
MERGERS; SUBSIDIARIES
As part of the Company's initial public offering in November 1993, two of the
Company's Initial Shareholders2 contributed all of their shares in Roberd
Insurance Agency, Inc. and Roberds Service Company to the Company. In August
1994, Roberds Service Company was merged into Roberds, Inc. Roberd Insurance
Agency, Inc. is a licensed insurance agency under Ohio law and earns a
commission on credit insurance sold by the Company.
TRADEMARKS AND LICENSES
The trademarks ROBERDS(R), AMERICA'S NAME BRAND HEADQUARTERS(R), THE BIG ONE(R),
EMPLOYEE PRICE SALE(R), and BACK DOOR SALE(R) are registered by the Company with
the United States Patent and Trademark Office. Roberds has applications pending
with the United States Patent and Trademark Office for the trademarks ROBERDS
GRAND FURNITURE APPLIANCES ELECTRONICSTM, BOTTOM LINE . . . IT COSTS LESS AT
ROBERDSTM, and DOUBLE THE DIFFERENCETM. Roberds does not license any
intellectual property to other parties. Roberds does not license any
intellectual property from others, except for computer software, principally for
use in the Company's management information system described elsewhere in this
Report, and the trademarks of certain of its vendors that permit Roberds to
utilize their trademarks in connection with the promotion and sale of the
vendors' products.
- --------
2The Company's Initial Shareholders are Messrs. Kenneth W. Fletcher, Donald
C. Wright, and Howard W. Smith, who held all of the Company's outstanding common
shares immediately prior to the initial public offering in November 1993. See
also Item 12 of this Report, Security Ownership of Certain Beneficial Owners and
Management.
11
<PAGE> 12
ITEM 2. PROPERTIES
Roberds' facilities are all located on major thoroughfares and many are near
interstate highways. Many stores are free-standing facilities, and all have
ample parking. The stores are of modern construction, resulting in relatively
low maintenance costs. The following table sets forth information regarding the
Company's stores and warehouses in each of its markets, at December 31, 1996:
<TABLE>
<CAPTION>
SHOWROOM WAREHOUSE
SIZE IN SIZE IN OWNED/
REGION/LOCATION DATE OPENED SQ. FT. SQ. FT. LEASED
DAYTON, OHIO
<S> <C> <C> <C> <C> <C>
West Carrollton, Ohio(1) June 1971 80,000 10,000 Leased(2)
West Carrollton, Ohio(1)(6) June 1974 20,000 Leased(2)
Piqua, Ohio(3) March 1983 56,000 4,000 Leased(2)
Springfield, Ohio May 1985 50,000 16,000 Leased(2)
Richmond, Indiana March 1988 55,000 4,000 Leased(2)
Vandalia, Ohio(7) July 1989 139,000 20,000 Owned
Beavercreek, Ohio April 1995 63,000 5,000 Owned
Fairborn, Ohio January 1996 480,000 Owned
ATLANTA, GEORGIA
Norcross, Georgia(4) March 1979 60,000 28,000 Leased
Marietta, Georgia (8) July 1984 59,000 4,000 Leased(2)
Forest Park, Georgia(8) October 1987 57,000 4,000 Leased(2)
Decatur, Georgia(9) October 1989 67,000 16,000 Leased
Roswell, Georgia September 1990 56,000 4,000 Leased
Doraville, Georgia January 1994 217,000 Leased
Gainesville, Georgia September 1994 71,000 10,000 Leased
Douglasville, Georgia(10) November 1994 59,000 10,000 Owned
Athens, Georgia August 1995 62,000 4,000 Owned
Fayetteville, Georgia September 1995 62,000 4,000 Owned
Atlanta (Buckhead), Georgia November 1996 70,000 6,000 Owned
TAMPA, FLORIDA
Tampa, Florida(5) March 1985 73,000 9,000 Owned
Bradenton, Florida June 1986 53,000 4,000 Leased
Clearwater, Florida September 1986 52,000 4,000 Leased
North Tampa, Florida March 1990 50,000 5,000 Owned
Brandon, Florida November 1990 49,000 5,000 Leased
Seminole, Florida November 1993 81,000 6,000 Leased
Brandon, Florida May 1994 159,000 Leased
Sarasota, Florida July 1994 50,000 5,000 Leased
Port Richey, Florida March 1995 60,000 6,000 Owned
CINCINNATI, OHIO
Springdale, Ohio July 1996 250,000 64,000 Leased
Total 1,784,000 1,133,000
</TABLE>
12
<PAGE> 13
(1) Original store was relocated to a 60,000 square foot showroom/warehouse in
1974 and was relocated again to the current facility in 1978, which was
remodeled and expanded in 1994.
(2) Facilities leased from entities controlled by one or more of the Initial
Shareholders. See Item 13 of this Report, Certain Relationships and Related
Transactions.
(3) Original 18,000 square foot store opened in 1983, and was relocated and
expanded to the present facility in 1988.
(4) Remodeled and expanded in 1994.
(5) Relocated and expanded in February 1995.
(6) Approximately 20,000 square feet in the former West Carrollton, Ohio
showroom/warehouse is used as a warehouse for the carpet division, and the
remaining 40,000 square feet for general corporate offices.
(7) Expanded in August 1996.
(8) The Marietta and Forest Park, Georgia facilities include approximately
14,000 and 60,000 square feet, respectively, not included in the table
above, portions of which are currently leased to third party commercial and
retail tenants, and other portions of which are available for lease to
third parties.
(9) The Decatur, Georgia facility includes approximately 25,000 square feet not
included in the table above and subleased to a national retail chain. Such
retailer has closed the store that is sub-leased from the Company and,
although the Company continues to receive rent from the retailer under the
sub-lease, the Company expects the retailer to abandon the space and the
sub-lease when it expires in November 1997.
(10) The Douglasville, Georgia store includes approximately 17,000 square feet
not included in the table above, which is leased to third parties.
In February 1995, the Company's original store on Gandy Boulevard, Tampa,
Florida, was relocated to a new, larger facility across the street, which is
owned by the Company. The Company's lease on the former store location expired
March 31, 1996.
In January 1996, the Company opened a 480,000 square foot warehouse in the
Dayton, Ohio suburb of Fairborn, and consolidated its two Dayton-area warehouses
into the new Fairborn facility, which it owns.
In July 1996, the Company entered the Cincinnati, Ohio market with a 250,000
square foot showroom known as Roberds GrandTM.
In August 1996, the Company expanded its Vandalia, Ohio showroom into the former
warehouse space that was abandoned following the opening of the new Fairborn,
Ohio warehouse facility. The expanded Vandalia showroom space serves as the
clearance center for the Dayton, Ohio market area.
In November 1996, the Company opened a new showroom in the Buckhead area of
Atlanta, Georgia.
The stores leased from unaffiliated third parties generally involve a base lease
term of ten to fifteen years, followed by a series of options to extend. While
most of these leased stores have rent escalation clauses, the majority have no
percentage-rent clauses.
As indicated in the table above, the Company leases seven of its properties from
the Initial Shareholders or entities controlled by one or more of them. These
properties include many of the Company's highest volume stores. The leases on
these properties expire in the years 2004 through 2017. Upon the expiration of
these leases, there can be no assurance that the Company can reach agreement
with the Initial Shareholders on the terms for the renewal of the leases or that
the Initial Shareholders will be willing to renew the leases.
13
<PAGE> 14
ITEM 3. LEGAL PROCEEDINGS
GENERAL
On February 28, 1994, the Company announced its earnings for the fourth quarter
and year ended December 31, 1993. Following that announcement, the Company's
stock price declined substantially. In March and April 1994, four lawsuits were
filed against the Company, certain of its directors, certain of its officers,
and its co-managing underwriters, in U.S. District Court for the Southern
District of Ohio, case numbers C-3-94-86, 99, 100, and 127. The suits were
consolidated into a single suit, In re Roberds Securities Litigation.
In December 1996, the Company reached an agreement in principle to settle the
class-action securities litigation. Based on such agreement, the Company entered
into a settlement stipulation with the named plaintiffs and filed such
stipulation with the court in February 1997. The settlement involves the payment
of $1.6 million into an escrow account to be used to satisfy the plaintiffs'
legal expenses and claims for damages to the class. In February 1997, Roberds
paid $342,500 into escrow as its share of the settlement, and the insurance
carrier for its officers and directors paid $1,257,500. Subject to approval by
the court, the Company expects the plaintiffs to give notice to the class,
validate claims, and then begin disbursement of funds in the latter part of
1997. No portion of the funds paid into escrow can revert to the Company.
The Ohio Bureau of Workers' Compensation Fund has issued an assessment against
the Company for approximately $871,000 in connection with an audit of the
Company's workers' compensation tax returns. In the fourth quarter of 1996, the
Company accrued $2.6 million to cover its estimated liability resulting from the
State's assessment. Such assessment is discussed more fully in the Notes to the
Consolidated Financial Statements, which are included elsewhere in this Report.
In August 1995, a former employee of the Company brought suit against the
Company and one of its managers alleging, among other things, wrongful
termination of the employee and sexual harassment of the employee's wife. The
suit, Laudermilk et al. vs. Roberds, Inc. et al., was filed in the Court of
Common Pleas, Montgomery County, Ohio, case number 95-2766, and sought $100,000
in compensatory damages and $1.0 million in punitive damages. Without admitting
liability, the Company settled the suit in June 1996 by paying the plaintiff an
amount which the parties have agreed not to disclose, but which management of
the Company believes is not material to the Company.
In April 1996, a former employee of the Company filed suit in the Court of
Commons Pleas for Montgomery County, Ohio, Rouch, et. al. vs. Roberds Furniture
& Appliances, et. al., case number 96-1512. The complaint alleged that the
Company permitted certain unsafe conditions to exist in one of its Ohio
warehouses, which allegedly led to certain personal injuries sustained by the
plaintiff. The suit sought $825,000 in compensatory damages and $800,000 in
punitive damages from the Company. The Company referred the matter to its
insurance carriers. In January 1997, the plaintiffs voluntarily dismissed the
complaint, without explanation. Although the plaintiffs have the right to
re-file the complaint, they have not done so.
In the ordinary course of its business, the Company is from time to time a party
in certain legal proceedings. In the opinion of management, the Company is not
party to any litigation, other than those described in this Item 3, that would
have a material adverse effect on its operations or financial condition if the
proceeding was determined adversely to the Company.
ENVIRONMENTAL
In 1985, a partnership consisting of Kenneth W. Fletcher and Donald C. Wright
(two of the Company's Initial Shareholders), acquired a 21-acre parcel of land
in Springfield, Ohio (the "Parcel") from an unaffiliated party. The
14
<PAGE> 15
Parcel included a building and parking area previously operated by an
unaffiliated party as a retail store. In 1985, the Company remodeled the
building and leased the Parcel from the partnership as the location of its
Springfield, Ohio store.
In 1990, the partnership was informed by the United States Environmental
Protection Agency ("EPA") that the Parcel had been operated by a previous owner
as an industrial landfill and that the EPA intended to investigate the Parcel.
In 1990, a contractor for the EPA examined the Parcel and took surface and
shallow soil samples but, contrary to the work plan that had been prepared by
EPA, did not take groundwater samples. Testing of the soil samples revealed
elevated concentrations of certain semi-volatile organic compounds. The Ohio EPA
subsequently criticized the contractor's soil testing methods and its failure to
take groundwater samples.
In October 1993, the Company and the partnership engaged an environmental
consultant to conduct certain tests of the Parcel to attempt to determine the
location of the landfill, its proximity to the Company's store, and certain
other information. The consultant issued its report in April 1994. Among other
things, it concluded that the building in which the store operates is not
located on, or immediately adjacent to, the site of the former landfill.
In November 1994, Messrs. Fletcher and Wright withdrew the Springfield property
from the Fletcher-Wright partnership and contributed it to Springfield
Properties, Inc., an Ohio corporation owned by Messrs. Fletcher and Wright. The
lease between Roberds, Inc. and Fletcher-Wright was assigned to, and assumed by,
Springfield Properties, Inc.
In February 1995, Springfield Properties, Inc. was contacted by a consultant to
the EPA and informed that the consultant had been engaged by the EPA to
"re-score" the Parcel for purposes of determining its priority for potential
clean-up. In February 1996, the Company obtained a copy of the consultant's
report. That report summarized the history of the Parcel and the work of the
various environmental consultants to date. It concluded that the Parcel poses
certain risks of contamination, but did not recommend any further action with
respect to the Parcel. The Company has not yet obtained the new "score" for the
Parcel.
It is not possible to predict whether the EPA will take further action, whether
remediation will be required, or the costs of remediation if required. The EPA
takes the position that a tenant can be liable for remediation costs, even if
the tenant did not contribute to the contamination of a site. However, the
Company is not aware of any circumstances in which a court has found a tenant
liable for remediation costs when the tenant did not contribute to the
contamination or fail to report contamination known to the tenant. At this
point, neither the Company, the partnership, nor Springfield Properties, Inc.
plans to take any further action with respect to the environmental issues
associated with the Parcel, unless the EPA initiates additional activity.
Certain other properties leased by the Company may contain, or have contained,
asbestos materials or petroleum underground storage tanks, but the Company does
not believe that any such circumstances are likely to have a material adverse
effect on the Company, and there are no active EPA investigations of these
facilities. The Company has removed asbestos and underground storage tanks in
connection with its acquisition and renovation of certain of its properties. To
the best of the Company's knowledge, such work has been done in compliance with
applicable environmental regulations and protocols.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 1996.
15
<PAGE> 16
EXECUTIVE OFFICERS OF REGISTRANT
The following information concerning executive officers of the Company is
provided pursuant to Instruction 3(b) of item 401 of Regulation S-K. The
following table sets forth certain information regarding the Company's executive
officers at January 31, 1997. The Company is not aware of any family
relationship between any executive officers or directors of the Company.
Executive officers serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C>
Kenneth W. Fletcher 64 Chairman of the Board, Chief Executive Officer, and President
Donald C. Wright 60 Vice Chairman of the Board and Assistant Secretary
Brent D. Scharff 53 President-Dayton Market
Robert M. (Mickey) James 39 President-Atlanta Market
Michael E. Ray 36 President-Tampa Market
James H. Scott 37 President-Cincinnati Market
Arthur C. Lanciers 42 Vice President-Furniture
Michael Van Autreve 49 Vice President-Bedding
Charles H. Palko 45 Vice President-Appliances
William A. Webber 38 Vice President-Electronics
Dean P. Marcarelli 35 Vice President-Advertising
Robert M. Wilson 44 Executive Vice President, Chief Financial Officer, General
Counsel, Assistant Treasurer, Secretary, and Director
Michael A. Bruns 34 Vice President, Controller, and Chief Accounting Officer
Wayne B. Hawkins 43 Treasurer
</TABLE>
KENNETH W. FLETCHER is co-founder of the Company. In June 1993, he was elected
to the offices of Chairman of the Board and Chief Executive Officer. He has
served as President and a director of the Company since its founding in 1971.
DONALD C. WRIGHT is co-founder of the Company. He was elected Vice Chairman of
the Board and Assistant Secretary in June 1993, prior to which time he had
served as Treasurer and Secretary since 1971. He has served as a director of the
Company since 1971. He owns and operates Don Wright Realty, Dayton, Ohio, a firm
providing real estate brokerage services to the public.
16
<PAGE> 17
BRENT D. SCHARFF was elected President-Dayton Market in April 1996. Prior
thereto, he managed the Company's Beavercreek, Ohio store from April 1995
through April 1996. Prior thereto, he managed the Company's Richmond, Indiana
store from 1989 through April 1995. Prior thereto, he served in sales and
management positions since joining the Company in 1987.
ROBERT M. (MICKEY) JAMES has served as President-Atlanta Market since July 1995,
except for a period of approximately two weeks in November 1996, when he served
as Vice President-Operations, Atlanta Market. From April 1995 through March
1996, Mr. James was Vice President-Appliances. From September 1992 through April
1995, he was the appliance buyer for the Atlanta Market. From April through
September 1992, he was the electronics buyer for the Atlanta Market. From 1990
through April 1992, he managed the Company's Forest Park, Georgia store. Mr.
James joined the Company in 1988.
MICHAEL E. RAY joined the Company and was elected President-Tampa Market in
August 1996. Prior thereto, from 1991 through August 1996, he was Vice
President, Director of Stores, Kane's Furniture, Pinellas Park, Florida.
JAMES H. SCOTT was elected President-Cincinnati Market in February 1996. From
February 1995 through February 1996, he was General Sales Manager in the
Company's Atlanta Market. From February 1992 through February 1995, he was the
furniture buyer in the Company's Atlanta market. From 1991 through February
1992, he was the furniture buyer in the Company's Tampa market. Prior thereto,
Mr. Scott held a number of warehouse, sales, and management positions since
joining the Company in 1980.
ARTHUR C. LANCIERS joined Roberds in March 1993 as Vice President-Furniture.
From 1990 through March 1993, he was Corporate Buyer, Rhodes, Inc., Atlanta,
Georgia.
MICHAEL VAN AUTREVE was named Vice President-Bedding in 1988. From 1977 to 1988,
he was a furniture and bedding buyer for the Company.
CHARLES H. PALKO joined the Company and was elected Vice President-Appliances in
March 1996. From December 1993 through March 1996, Mr. Palko was Vice
President-Merchandising, Fretter, Inc., Brighton, Michigan. Fretter, Inc. filed
for protection under the United States Bankruptcy laws in October 1996. From
1989 through December 1993, Mr. Palko was General Manager of Luskins, Inc.,
Columbia, Maryland.
WILLIAM A. WEBBER was named Vice President-Electronics in August 1995. From July
1994 to August 1995, he was General Sales Manager for the Tampa Market. From
1984 through July 1994, he served as electronics buyer for the Tampa Market. He
joined the Company in 1979, and served in various warehouse and sales positions
through 1984.
DEAN P. MARCARELLI joined Roberds in July 1993 as Director of Advertising, and
in May 1994 was elected Vice President-Advertising. From September 1992 until
July 1993, he was Marketing Manager, Rhodes Furniture, Atlanta, Georgia. From
1990 through September 1992 he was Director of Advertising, Kane's Furniture,
Tampa, Florida.
ROBERT M. WILSON was elected General Counsel, Secretary, and a director in June
1993. He has also served as Executive Vice President and Chief Financial Officer
of Roberds and its affiliated companies since 1988. He served as Treasurer from
June 1993 through May 1995, when he was elected Assistant Treasurer.
MICHAEL A. BRUNS joined Roberds in April 1994 as Manager of Financial Reporting
and Analysis, and was elected Vice President, Controller, and Chief Accounting
Officer in August 1994. From 1984 through April 1994, he was associated with
Deloitte & Touche (now Deloitte & Touche LLP) in various capacities, most
recently as Audit Senior Manager in the Dayton, Ohio office.
WAYNE B. HAWKINS was elected Treasurer in May 1995. Prior thereto, he was
Assistant Treasurer since February 1994. Prior thereto, he was Vice President,
PNC Bank, Ohio, NA, since January 1992. Prior thereto, he was associated with
Maryland National Bank.
17
<PAGE> 18
The Company's future performance will depend to a significant extent upon the
efforts and abilities of certain members of senior management, particularly
those of Mr. Fletcher, who has served as President of the Company since its
founding in 1971. The loss of the services of any member of senior management,
and in particular those of Mr. Fletcher, could have a material adverse effect on
the Company.
At January 31, 1997, the Initial Shareholders, and their spouses, owned
approximately 53 percent of the Company's outstanding shares. They are therefore
in a position to control the election of the entire Board of Directors of the
Company and to control the outcome of all actions requiring shareholder
approval, thereby insuring their ability to control the future direction and
management of the Company.
The Company's Amended Articles of Incorporation and Regulations contain certain
provisions that may discourage acquisition bids for the Company and could limit
the price that certain investors might be willing to pay for the Company's
common shares. Among others, these provisions include the classification of the
Board of Directors, certain restrictions on shareholders' ability to remove
directors, certain "fair price" provisions adopted by the Company under Ohio
law, and the Company's adoption of certain restrictions on shareholders' ability
to bring matters before meetings of shareholders. In addition, the Company has
the ability to issue preferred shares, which could serve to discourage
acquisition bids for the Company's common shares.
The common shares held by the Initial Shareholders are not registered for sale
under the Securities Act of 1933; however, such shares can be sold under SEC
Rule 144 and other provisions of the securities laws. In addition, shares that
may be acquired by directors and executive officers of the Company through
certain benefit plans are registered for resale by such directors and executive
officers. Sales of substantial numbers of shares by the Company, the Initial
Shareholders, or other officers or directors, or the perception that such sales
could occur, could adversely affect the market price of the Company's stock.
18
<PAGE> 19
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Trading in the common shares of Roberds, Inc. commenced in November 1993,
following an initial public offering at $13.00 per share. The shares trade on
the Nasdaq National Market tier of The Nasdaq Stock Market, under the symbol
"RBDS." The following table sets forth the high, low, and closing prices for
trading in the Company's common shares, as reported on The Nasdaq Stock Market
for each quarter in fiscal 1996 and 1995.
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1996
High $11.375 $11.25 $11.75 $10.375
Low 8.00 9.75 7.75 8.00
Close 10.75 10.625 8.50 8.25
1995
High $11.00 $10.50 $13.00 $13.00
Low 7.25 8.75 9.00 8.25
Close 9.75 9.50 12.50 9.00
</TABLE>
Such quotations include inter-dealer prices, without retail mark-up, mark-down,
or commission, and may not necessarily reflect actual transactions. At the close
of trading on January 31, 1997, the Company had approximately 196 shareholders
of record. Based upon the quantity of shareholder materials provided to
brokerage houses and individual shareholders requesting such materials, the
Company estimates that the total number of record and beneficial shareholders at
January 31, 1997 was approximately 2,200.
Prior to the initial public offering of its common shares, the Company paid
dividends from time to time. As part of the initial public offering in 1993, the
Company paid an $11.3 million dividend to the Initial Shareholders. In the
fourth quarter of 1994, the Company reimbursed the Initial Shareholders for
$193,000, pursuant to the Tax Indemnification Agreement entered into by the
Company and the Initial Shareholders at the time of the initial public offering.
Such reimbursement has been reflected in the Company's financial statements as a
distribution of retained earnings. Other than the distributions and
reimbursement described above, the Company has declared no dividends since the
initial public offering of its common shares and none are being contemplated by
the Board of Directors.
The Company's revolving bank line of credit contains certain covenants and
restrictions which limit its ability to pay dividends. See Notes to the
Consolidated Financial Statements, which are included elsewhere in this Report,
for additional information concerning restrictions on the Company's ability to
pay dividends. Under the most restrictive debt covenants, no retained earnings
were available for dividends at December 31, 1996.
19
<PAGE> 20
ITEM 6. SELECTED FINANCIAL DATA
(All amounts in thousands, except per share data, percentages, and inventory
turnover)
The earnings statement data and the balance sheet data presented below have been
derived from the Company's consolidated financial statements and should be read
in conjunction with Management's Discussion and Analysis of Financial Condition
and Results of Operations and the Consolidated Financial Statements and Notes
thereto, included elsewhere herein. Certain reclassifications have been made in
the prior years' selected financial data to conform to the classifications used
in 1996. These reclassifications had no effect on the net earnings or
shareholders' equity as previously reported.
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994 1993 1992
EARNINGS STATEMENT DATA:
<S> <C> <C> <C> <C> <C>
Net revenues $342,102 $301,324 $259,159 $217,673 $191,716
Cost of sales 238,645 209,320 180,947 152,104 132,834
Gross profit 103,457 92,004 78,212 65,569 58,882
Selling, delivery, and
administrative expenses 102,043 81,187 71,089 61,549 53,228
Interest expense (net) 5,681 3,500 1,636 1,261 1,062
Litigation 3,314
Finance participation income (2,451) (2,489) (2,908) (3,330) (2,813)
Other income, net (3,690) (3,440) (2,123) (328) (30)
Earnings (loss) before
income taxes (benefit) (1) (1,440) 13,246 10,518 6,417 7,435
Income taxes (benefit) (1) (530) 5,225 3,925 (1,478)
Net earnings (loss) (1) $ (910) $8,021 $6,593 $7,895 $7,435
Earnings (loss) per share $(0.15) $1.36 $1.12
Weighted average
shares outstanding 5,934 5,898 5,871
PRO FORMA DATA:
Pro forma net earnings (1) $3,850 $4,462
Pro forma net earnings per share $0.91 $1.10
Pro forma weighted average shares outstanding 4,245 4,051
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
BALANCE SHEET DATA (AT PERIOD END):
Year Ended December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Working capital (deficiency) ............... $ 34,952 $ 23,060 $ 15,764 $ 22,338 $ (1,908)
Merchandise inventories .................... $ 62,998 $ 41,377 $ 37,247 $ 31,061 $ 26,932
Property and equipment, net ................ $ 104,953 $ 81,310 $ 55,791 $ 29,188 $ 16,480
Total assets ............................... $ 192,208 $ 142,049 $ 105,556 $ 99,607 $ 55,406
Long-term debt,
including capital leases,
less current maturities .................. $ 90,365 $ 54,448 $ 29,168 $ 18,454 $ 8,809
Deferred warranty revenue .................. $ 11,627 $ 9,546 $ 6,925 $ 4,199 $ 2,937
Total shareholders'
equity ................................... $ 46,570 $ 47,199 $ 38,965 $ 32,470 $ 4,270
SELECTED OPERATING DATA:
Stores open at end
of period ................................. 25 23 19 16 15
Total selling square
footage at end
of period (2) ............................ 1,784 1,394 1,133 931 853
Percentage increase
(decrease) in comparable
store net sales (3) ...................... (8.1) (0.9) 10.0 12.3 10.5
Inventory turnover (4) ..................... 4.6 5.3 5.3 5.2 5.0
</TABLE>
(1) Prior to the initial public offering of common shares, the entities that
made up the Company had either elected S Corporation status or were a
partnership. Accordingly, federal income taxes were the responsibility of
the shareholders and partners. The pro forma information has been computed
as if the Company had been subject to corporate income taxes for all
periods presented, based on the tax laws in effect during the period.
Concurrently with the initial public offering, the Company became taxable
as a corporation under the Internal Revenue Code. Accordingly, the Company
adopted Financial Accounting Standards No. 109 (SFAS 109), Accounting for
Income Taxes.
(2) Total selling square footage includes selling and office space within each
store, but excludes warehouse space.
(3) Comparable store sales are computed monthly for each period presented by
comparing the sales results in a month (for those stores that were open for
the entire month in the current year and the entire comparable month in the
prior year) with the sales results for the comparable month in the prior
year.
(4) Inventory turnover is calculated by dividing cost of sales for the period
by the average of the beginning and ending inventory balances for the
period.
21
<PAGE> 22
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (All dollar amounts in thousands, except per share data)
RESULTS OF OPERATIONS
The following table sets forth the results of operations as a percentage of
sales for the last three years:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995 1994
<S> <C> <C> <C>
Net sales and service revenues .......... 100.0% 100.0% 100.0%
Cost of sales ........................... 69.8 69.5 69.8
Gross profit ............................ 30.2 30.5 30.2
Selling, delivery and
administrative expenses ............... 29.8 26.9 27.4
Interest expense, net ................... 1.6 1.2 0.6
Litigation .............................. 1.0
Finance participation income ............ (0.7) (0.8) (1.1)
Other income, net ....................... (1.1) (1.2) (0.8)
(Loss) earnings before income
taxes (benefit) ....................... (0.4) 4.4 4.1
Income taxes (benefit) .................. (0.1) 1.7 1.5
Net (loss) earnings ..................... (0.3)% 2.7% 2.6%
</TABLE>
Sales by major product category as a percentage of total sales for each of the
last three years follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995 1994
<S> <C> <C> <C>
Furniture ........................................ 39% 37% 36%
Bedding .......................................... 12 12 11
Major appliances ................................. 25 26 28
Consumer electronics ............................. 21 21 22
Extended warranty contracts and other ............ 3 4 3
100% 100% 100%
</TABLE>
1996 COMPARED TO 1995. Sales in 1996 increased to $342,102 from $301,324 in
1995, a 13.5% increase. Sales in 1996 were positively affected by the opening of
the new Cincinnati megastore in July 1996 and, to a lesser extent, the opening
of the Buckhead, Georgia store in November 1996. Additional volume from four new
showrooms opened during 1995 also contributed to the increase in sales for 1996.
Comparable store sales in 1996 decreased by 8.1%. A highly promotional and
competitive retail environment for big ticket goods that began in the fourth
quarter of 1995 and continued throughout 1996 contributed to the decrease in
comparable store sales.
22
<PAGE> 23
For 1996, the percentage decreases in sales in the Company's three established
market areas (excluding Cincinnati) were as follows:
<TABLE>
<CAPTION>
Total Comparable
Stores Stores
<S> <C> <C>
Dayton ................................. (4)% (8)%
Atlanta ................................ (1) (11)
Tampa .................................. (1) (4)
</TABLE>
Sales in the Dayton and Atlanta market areas were adversely affected by the
severe winter weather experienced during the early part of 1996. The
Beavercreek, Ohio store, which opened in April 1995, and the Fayetteville,
Georgia store, which opened in September 1995, appear to have taken some sales
from the other Dayton and Atlanta area stores, and adversely affected the
comparable store sales during 1996. In addition to the highly competitive retail
environment for big ticket goods mentioned above, comparable store sales in the
Atlanta market appear to have been disrupted by the Olympics during 1996.
Comparable store sales in Atlanta and Tampa were affected by the Company's
withdrawal from the sale of home-office products in those markets in the second
half of 1996. Comparable store sales in the Tampa market area were better than
the Company's comparable store sales in its other established markets; however,
the average store sales in Tampa remained below the Company's average and the
Tampa market was not profitable during 1996.
Gross profit for 1996 was $103,457, or 30.2% of sales, compared to $92,004, or
30.5% of sales, for 1995. The gross margin percentage for 1996 held relatively
steady despite a highly promotional and competitive retail environment. Gross
margin was affected favorably by a larger portion of total sales from the
furniture and bedding categories, primarily as a result of a higher percentage
of such sales in the new Cincinnati megastore. There was downward pressure on
gross profit margins from the Company's emphasis on a heavily price-promotional
merchandising strategy, in an attempt to attract additional store traffic during
the first half of 1996, and the Company's response to competitive conditions,
particularly in the consumer electronics and appliance categories.
Gross margin percentages for 1996 by category were approximately 38 percent for
furniture, 44 percent for bedding, 22 percent for major appliances, and 15
percent for consumer electronics. Gross margins for 1996, as compared to 1995,
increased slightly for bedding, remained relatively constant for appliances, and
decreased for furniture and electronics. The decrease in the furniture gross
margin percentage reflects more aggressive product prices in this category,
particularly in the Cincinnati market, while the decrease in the electronics
gross margin percentage reflects the highly competitive and promotional market
conditions experienced in this category.
Selling, delivery, and administrative expenses increased to $102,043, or 29.8%
of sales, in 1996 compared to $81,187, or 26.9% of sales, in 1995. The increase
in selling, delivery, and administrative expenses as a percentage of sales in
1996 was primarily attributable to: (i) an increase in finance charges for
extended financing programs offered to customers; (ii) increased expenses
associated with advertising and promotion; (iii) pre-opening costs associated
with the entry into the Cincinnati market; (iv) additional wages and operating
expenses incurred in the warehouse and delivery functions to support the
start-up of the Cincinnati market; (v) costs associated with the new warehouse
in Fairborn, Ohio, that were absorbed by the Dayton market until additional
volume was generated by the entry into the Cincinnati market during the second
half of 1996; and (vi) expenses related to the consolidation of warehouse
operations in the Dayton market during the first quarter of 1996.
Interest expense, net of interest income, increased to $5,681 for 1996, as
compared to $3,500 in 1995. Interest expense increased in 1996 primarily as the
result of additional indebtedness incurred to finance new stores, including the
23
<PAGE> 24
Cincinnati megastore, and the new regional warehouse located in Fairborn, Ohio,
and the increase in merchandise inventory levels, primarily related to the
Cincinnati market entry. The increase in net expense was partially offset by the
capitalization of $685 of interest during 1996, compared to $994 in 1995.
Litigation for 1996 includes the Company's portion of the payment to settle the
class action shareholders' suit of $343; related legal expenses of $371; and a
$2,600 accrual for a dispute with the Ohio Bureau of Workers' Compensation.
Details regarding litigation are discussed more fully in the Notes to the
Consolidated Financial Statements, which are included elsewhere in this Report.
Finance participation income, which consists of income from the Company's
private-label credit card program, decreased to $2,451, or 0.7% of sales, in
1996, compared to $2,489, or 0.8% of sales, in 1995. The reduction in
participation resulted from the initial influx of non-interest-bearing accounts
into the private-label credit card program generated from the Cincinnati market
entry, coupled with continued increases in the use of extended-payment financing
programs offered to customers, which do not yield income during the extended
period. The balances on the accounts related to the Cincinnati entry result in
costs to the Company but do not yield participation to the Company during an
initial interest-free period, resulting in a decrease in the Company's
participation during the second half of 1996.
Other income, net, which consists primarily of cash discounts and rental income
from tenants, was $3,690, or 1.1% of sales, in 1996, compared to $3,440, or 1.2%
of sales, for 1995. Other income, net in 1996 included losses on the disposal of
fixed assets of approximately $97. Other income, net in 1995 included gains from
the sales of assets of $142, primarily related to the sale of excess land
surrounding the Beavercreek, Ohio and Tampa, Florida locations.
(Loss) earnings before income taxes decreased to a loss of $(1,440) in 1996,
from earnings of $13,246 in 1995. Income tax benefit for 1996 was $530, or
approximately 37% of the loss before taxes, as compared to an income tax expense
of $5,225, or 39% of earnings before taxes, in 1995. The lower effective tax
rate in 1996 reflects minimum taxes imposed by certain jurisdictions and the
effect of items which are not deductible for income tax purposes.
1995 COMPARED TO 1994. Sales in 1995 increased to $301,324 from $259,159 in
1994, a 16.3% increase. Sales in 1995 included additional volume from three new
showrooms opened during the second half of 1994, that were open for a full year
in 1995, and four new showrooms opened in 1995. Comparable store sales in 1995
decreased by 0.9%. Contributing to the decrease in comparable store sales was a
highly competitive retail environment, combined with a generally flat United
States economy, particularly in the fourth quarter of 1995. Additionally,
comparable store sales were adversely affected by the April 1995 opening of the
Beavercreek, Ohio store, which is part of the Dayton market. That store has
performed well, but took some sales from the other Dayton-area stores.
Sales in the Company's three market areas (Dayton, Atlanta, and Tampa) increased
6%, 24%, and 23%, respectively, during 1995 as compared to 1994. Comparable
store sales in Dayton decreased by 6%, while Atlanta and Tampa increased 1%, and
5%, respectively, during 1995 as compared to 1994. Sales in the Tampa market
grew faster than overall Company sales; however, the average store sales in
Tampa remained below the Company's average and the Tampa market was not
profitable in 1995.
Gross profit for 1995 was $92,004, or 30.5% of sales, compared to $78,212, or
30.2% of sales, for 1994. The increase from 1995 to 1994 in gross margin as a
percentage of sales occurred despite highly competitive market conditions. The
increase in gross profit margin percentage resulted from increased furniture and
bedding sales in relation to increases in sales of appliances and electronics,
which generate lower margins. Gross margins for 1995 by product category were
approximately 39% for furniture, 42% for bedding, 22% for major appliances, and
16% for consumer electronics. The gross margins by category remained relatively
constant from 1995 to 1994.
Selling, delivery, and administrative expenses increased to $81,187, or 26.9% of
sales, in 1995 compared to $71,089, or 27.4% of sales, in 1994. The decrease as
a percentage of sales is primarily attributable to the leveraging of fixed
expenses against increased sales and a reduction in the provisions for payments
under the management incentive and
24
<PAGE> 25
profit-sharing plans. These decreases as an overall percentage of sales were
partially offset by an increase in depreciation related to new and remodeled
showrooms placed in service in 1994 and 1995, and an increase in finance charges
for extended financing programs offered to customers.
Interest expense, net of interest income, increased to $3,500 for 1995, as
compared to $1,636 in 1994. Interest expense increased in 1995 primarily as the
result of additional indebtedness incurred to finance new stores. The increase
in net expense was partially offset by the capitalization of $994 of interest
during 1995, compared to $524 in 1994.
Finance participation income, which consists of income from the Company's
private-label credit card program, decreased to $2,489, or 0.8% of sales, in
1995 compared to $2,908, or 1.1% of sales, in 1994. The reduction in
participation resulted from an increase in the cost of funds for the program,
which has decreased the net return to the Company, coupled with continued
increases in the use of extended financing programs offered to customers which
do not yield income during the extended period.
Other income, net, which consists primarily of cash discounts and rental income
from tenants, was $3,440 or 1.2% of sales in 1995, compared to $2,123, or 0.8%
of sales, for 1994. Other income, net in 1995 includes gains from the sales of
assets of $142, primarily related to the sale of excess land surrounding the
Beavercreek, Ohio and Tampa, Florida locations. Other income, net in 1994
included losses on the disposal of fixed assets of approximately $478, primarily
related to the remodeling of the Company's flagship stores in Dayton and Atlanta
and the relocation of the Company's original store in Tampa. The increase in
other income as a percentage of sales in 1995 as compared to 1994 also resulted
from the Company entering into agreements during the first quarter of 1994 with
substantially all of its vendors to provide direct payment terms for purchases
previously financed by finance companies. As a result of these agreements, the
Company generally receives discounts for early payment, which have been included
in other income. These programs were in effect for all of 1995 but for only a
portion of 1994.
Earnings before income taxes increased to $13,246 in 1995 from $10,518 in 1994.
Income tax expense for 1995 was $5,225 or approximately 39% of earnings before
taxes, as compared to $3,925 or 37% in 1994. During the fourth quarter of 1994,
the Company settled an examination of its 1991 and 1992 federal income tax
returns. This resulted in an additional tax benefit to the Company of $205 which
was recorded as a reduction of income tax expense in 1994. Excluding the
additional tax benefit, the effective tax rate for 1994 was approximately 39%.
LIQUIDITY AND CAPITAL RESOURCES
Cash increased to $2,794 at December 31, 1996 as compared to $2,410 at December
31, 1995. The Company utilized $4,518 of cash for operating activities during
1996. During 1996, inventories increased $21,621 primarily related to the entry
into the Cincinnati market area. Cash of $2,433 was generated from increased
customer deposits, primarily related to products that have been sold but were
not yet delivered. The Company borrowed $39,700 during 1996, including $26,700
under its revolving line of credit and $13,000 through long-term mortgage
financing. Borrowings under the line of credit were utilized to finance a
portion of the Company's capital expenditures and the increase in merchandise
inventories.
During the three year period ended December 31, 1996, the Company's capital
expenditures totaled $91,698, of which $32,179 was expended during 1996. The
1996 expenditures primarily related to: (i) the renovation of a former warehouse
facility in Cincinnati, Ohio into a 314,000 square foot megastore, (ii) the
purchase and renovation of an existing retail facility in the Buckhead area of
Atlanta, Georgia which opened in November 1996, (iii) the completion of
construction of a new warehouse facility in Fairborn, Ohio which is designed to
support the Company's planned growth in the Ohio area, (iv) the renovation of
former warehouse space at the Vandalia, Ohio store into a clearance center which
opened in the third quarter of 1996; and (v) the expansion of the West
Carrollton, Ohio store into space formerly used for warehousing. The West
Carrollton expansion, which is expected to be completed in the first quarter of
1997, will broaden the furniture offerings in the Dayton market and permit the
display of some of the higher-end merchandise that is already in stock to
support the Cincinnati market. In connection with the West Carrollton expansion
25
<PAGE> 26
plan, the Company expects to incur approximately $1,400 in capital expenditures
during the first quarter of 1997. Capital expenditures for 1997 are expected to
be significantly less than the Company's expenditures in each of the last three
years.
A significant portion of the Company's capital expenditures during 1996 have
been financed under the Company's revolving bank line of credit agreement which
expires in January 2000. The amount available under the line is limited to the
lesser of: (i) $45,000, or (ii) an amount based upon a percentage of eligible
accounts receivable, inventory and previously incurred leasehold improvements.
The agreement also provides that an additional amount is available for any
expenditures for leasehold improvements and store expansion for which the
Company has commitments for permanent financing. At December 31, 1996, $42,939
was available under the line, of which $37,000 was outstanding. The line
includes certain restrictive covenants including, among others, limitations on
capital expenditures and the payment of dividends, maintenance of minimum
current, fixed-charge-coverage, funded-debt-to-earnings, and debt-to-
tangible-net-worth ratios. During 1996, the Company's revolving bank line of
credit was amended to increase the line from $40,000 to $45,000, and to relax
certain covenants under the agreement to permit the Company to remain in
compliance with those covenants.
The Company expects to fund its working capital requirements and the balance of
the West Carrollton expansion through a combination of cash flow from
operations, normal trade credit, and utilization of its revolving line of
credit. The Company is pursuing commitments for long-term mortgage financing for
the Buckhead facility of approximately $8 million. Approval is required from the
Company's primary lender prior to the funding of any long-term financing;
however, based on the Company's past working relationship with its primary
lender, the Company expects that such approvals will be obtained. Certain of the
covenants contained in the Company's revolving credit agreement become
increasingly restrictive through 1997 and into 1998. In order to remain in
compliance with those covenants, the Company's profitability and cash flow will
have to improve over the actual results experienced in 1996.
The Company has announced plans to enter the Columbus, Ohio market with a
facility similar in size and design to the Cincinnati store. The Columbus
market, which would represent the Company's fifth marketing area, would enable
the further utilization of the Fairborn, Ohio warehouse facility. The Company
has identified a number of suitable sites in Columbus; however, it has not made
any formal commitments for a site. Management does not believe that the Company
should take on the additional debt obligations necessary to enter the Columbus
market without additional equity. As a result, the Company does not plan to move
forward with the Columbus entry until it has identified a source for that
additional equity.
OUTLOOK
The Company intends to focus the majority of its resources over the next two
quarters on the expansion of the West Carrollton showroom. Additionally, it
plans to continue to refine its product mix and the staffing and systems in the
Cincinnati megastore, in order to serve the customer more effectively. The
Company also intends to refine its overall operations in preparation for future
expansion.
The Company's financial performance is influenced by consumer confidence,
interest rates, the general level of housing activity, and the general level of
economic activity in the United States. Since the fourth quarter of 1995
consumers have been buying big ticket goods very cautiously, and then only when
there have been very attractive prices and financing packages offered to them.
This has led to a very sharp competitive situation, as the major retailers have
struggled to build volume in a difficult retailing environment. This situation
will continue to put pressure on comparable store sales and product prices and
margins, particularly in the electronics and appliance categories.
INFLATION
The Company does not believe that inflation had any significant impact on its
operations in 1996, 1995, or 1994.
26
<PAGE> 27
SEASONALITY
The Company typically experiences an increase in its overall sales in the fourth
quarter. This increase is driven by an increase in the sales of consumer
electronics and furniture products associated with the holiday season. At the
same time, major appliance sales typically decline in the fourth quarter. As a
result, operating results for the full year are highly dependent upon the
success of the Company's operations in the fourth quarter.
The following tables show the Company's quarterly sales, gross profit, net
(loss) earnings, and (loss) earnings per common share.
<TABLE>
<CAPTION>
1996
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Net sales and
service revenues ....... $ 70,664 $ 73,205 $ 94,471 $ 103,762
Gross profit ............. 20,914 22,082 29,099 31,362
Net (loss) earnings ...... (207) (719) 885 (1,399)(1)
(Loss) earnings
per share ............... (.03) (.12) .15 (.15)(1)
(1) Net loss for the fourth quarter of 1996 includes a total of $3,154
($.32 per share) of litigation expenses, including the Company's share
of the payment to settle the class action shareholders' suit of $343;
the related legal expenses of $211; and a $2,600 accrual for a dispute
with the Ohio Bureau of Workers' Compensation. Details regarding the
litigation expense are discussed more fully in the Notes to the
Consolidated Financial Statements, which are included elsewhere in this
Report.
<CAPTION>
1995
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Net sales and
service revenues $68,133 $71,405 $76,238 $85,548
Gross profit 21,233 21,858 23,458 25,455
Net earnings 1,625 1,650 2,080 2,666
Earnings per share .28 .28 .35 .45
</TABLE>
FORWARD-LOOKING STATEMENTS
In the interest of providing the Company's shareholders and potential investors
with information concerning management's assessment of the outlook for the
Company, this report contains certain "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities
27
<PAGE> 28
Exchange Act of 1934, as amended. Readers should bear in mind that statements
relating to the Company's business prospects, as distinct from historical facts,
are forward-looking statements which, by their very nature, involve numerous
risks and uncertainties. Factors that could cause the Company's actual results
to differ materially from management's expectations include, but are not limited
to:
A. Changes in economic conditions in the United States, including but not
limited to the general level of economic activity, levels of housing activity,
interest rates, the availability of consumer credit, consumer confidence, and
inflation.
B. Changes in the economic conditions in the market areas in which the Company
operates, such as a strike or shutdown of a major employer or industry.
C. Unusual weather patterns, such as unusually hot or cool summers, which can
affect the sale of refrigeration products, or unusually cold winters, which can
affect consumers' desire and ability to shop for the Company's products. Acts of
God, such as floods, hurricanes, or tornados, that interrupt the Company's
ability to sell or deliver merchandise, interrupt consumers' ability to shop, or
destroy a major Company facility, in particular a warehouse or computer
facility.
D. Changes in the competitive environment in the Company's market areas,
including the bankruptcy or liquidation of existing competitors.
E. The entry into the Company's lines of business and market areas by new,
larger, well-financed competitors, which may have the ability to withstand
intense price competition over extended periods of time.
F. The availability and cost of adequate, appropriate newspaper, television, and
pre-printed advertising. A strike or work stoppage affecting the Company's media
outlets.
G. Adverse results in litigation matters.
H. Difficulties in hiring, training, and retaining a capable work force at
reasonable levels of compensation, in both existing market areas and in
expansion locations. Difficulties in hiring and retaining an effective senior
management group, particularly as the Company expands. An attempt to organize a
significant portion of the Company's work force.
I. The availability of appropriate sites for expansion, on favorable terms, and
the long-term receptivity of consumers to new store formats and locations.
J. Access to bank lines of credit and real estate mortgage financing sources at
favorable rates of interest, terms, and conditions.
K. Access to additional equity capital to fund the Company's long-term
expansion.
L. Access to extended-payment financing sources (e.g., "twelve months same as
cash") at a favorable cost to the Company and with favorable rates of approval
by the financing source. Access to private-label financing sources (e.g.,
"Roberds charge card") that provide favorable rates of interest to the customer,
favorable rates of return to the Company, and favorable rates of approval by the
financing source.
M. Rapid changes in products, particularly electronics products, such that the
Company bears the risk of obsolescence or the consumer withdraws from the market
until such time as the product category has stabilized.
N. Shifts in the mix of the Company's sales between its higher-margin products
(bedding and furniture) and its lower-margin products (electronics and
appliances), which may result from changes in consumer priorities, competitive
factors, or other factors.
28
<PAGE> 29
O. The absence of new products in the Company's product categories that would
drive additional consumer interest and purchases.
P. Adverse changes in the cost or availability of the products the Company
sells. Rapid increases in the price of the Company's products, which cannot be
passed on to consumers as the result of competitive pressures.
Q. The loss, or significant reduction in the availability, of certain key
name-brand products. Decisions by vendors to curtail the availability of certain
product presently sold by the Company, or to make products that are presently
sold by the Company available to certain competitors that do not presently have
access to such products. Changes in import duties or restrictions affecting the
Company's ability to import certain products.
R. Changes in income tax rates or structures that may affect the Company's tax
burden or consumers' ability to purchase or finance big-ticket goods or new
housing. Significant increases in real estate tax rates affecting the Company's
properties.
S. Changes in government regulations affecting the Company, its products, its
advertising, or its work force, including changes in the minimum wage. Changes
in government regulations affecting the Company's employee benefit plans.
T. New competition from alternative sales media and channels of distribution,
such as catalog mail order, telemarketing, television shopping services, and
online media.
U. Changes in highway or street configurations such that the Company's stores
become less accessible to consumers. Changes in consumer use or ownership of
"second homes," particularly in the Tampa, Florida market.
V. Changes in the cost or availability of liability, property, and health
insurance.
ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1995, the Company adopted Statement of Position 93-7,
"Reporting on Advertising Costs." Under this statement, production costs,
primarily those associated with the production of television advertising, have
been expensed the first time the related advertising is utilized. Adoption of
this statement did not have a material effect on the financial statements of the
Company.
The Company measures cost for stock options issued to employees using the method
of accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees." In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for
Stock Based Compensation," which was adopted by the Company in 1996. Pursuant to
the new standard, companies are encouraged, but not required, to adopt the fair
value method of accounting for stock options and similar equity instruments. The
Company has elected to continue measuring compensation cost in accordance with
APB Opinion No. 25.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Consolidated Financial Statements for the three years ended
December 31, 1996, the Notes thereto, and the Independent Auditors' Report
thereon are as follows:
29
<PAGE> 30
INDEPENDENT AUDITORS' REPORT
Board of Directors
Roberds, Inc.
West Carrollton, Ohio
We have audited the accompanying consolidated balance sheets of Roberds, Inc.
and subsidiary as of December 31, 1996 and 1995 and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Roberds, Inc. and subsidiary at
December 31, 1996 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Dayton, Ohio
February 27, 1997
30
<PAGE> 31
<TABLE>
<CAPTION>
ROBERDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31
1996 1995 1994
<S> <C> <C> <C>
NET SALES AND SERVICE REVENUES $ 342,102 $ 301,324 $ 259,159
COST OF SALES 238,645 209,320 180,947
--------- --------- ---------
Gross profit 103,457 92,004 78,212
SELLING, DELIVERY AND ADMINISTRATIVE EXPENSES 102,043 81,187 71,089
INTEREST EXPENSE, NET 5,681 3,500 1,636
LITIGATION (NOTE I) 3,314
FINANCE PARTICIPATION INCOME (NOTE F) (2,451) (2,489) (2,908)
OTHER INCOME, NET (3,690) (3,440) (2,123)
--------- --------- ---------
(LOSS) EARNINGS BEFORE INCOME TAXES (BENEFIT) (1,440) 13,246 10,518
INCOME TAXES (BENEFIT) (NOTE G) (530) 5,225 3,925
--------- --------- ---------
NET (LOSS) EARNINGS ($ 910) $ 8,021 $ 6,593
========= ========= =========
NET (LOSS) EARNINGS PER COMMON SHARE ($ 0.15) $ 1.36 $ 1.12
========= ========= =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,934 5,898 5,871
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
31
<PAGE> 32
<TABLE>
<CAPTION>
ROBERDS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31
ASSETS (NOTE C) 1996 1995
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,794 $ 2,410
Receivables:
Customers (less allowance of $80 2,364 2,591
in 1996 and $50 in 1995)
Vendors and other (Note B) 4,028 2,865
Merchandise inventories (Note A) 62,998 41,377
Prepaid expenses and other 1,857 1,632
Deferred tax assets (Note G) 2,916 1,200
-------- --------
Total current assets 76,957 52,075
PROPERTY AND EQUIPMENT - AT COST (NOTES A AND D):
Land 15,534 8,986
Buildings and improvements 63,032 41,765
Leasehold improvements 34,542 22,871
Furniture, fixtures and office equipment 5,257 3,343
Computer equipment 5,671 3,965
Warehouse equipment and vehicles 3,065 2,674
Construction in progress 1,089 14,319
-------- --------
128,190 97,923
Less accumulated depreciation and amortization 23,237 16,613
-------- --------
104,953 81,310
DEFERRED TAX ASSETS (NOTE G) 6,350 4,540
CERTIFICATES OF DEPOSIT - RESTRICTED (NOTE A) 2,293 2,566
OTHER ASSETS 1,655 1,558
-------- --------
$192,208 $142,049
======== ========
</TABLE>
See notes to consolidated financial statements.
32
<PAGE> 33
<TABLE>
<CAPTION>
ROBERDS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 17,640 $ 13,246
Accrued payroll and payroll taxes 3,658 2,568
Accrued sales taxes 2,265 1,932
Other accrued expenses 1,653 1,011
Customer deposits 8,787 6,354
Accrued income taxes 543 112
Litigation (Note I) 2,943
Accrued self-insured workers' compensation 1,125 1,045
Current maturities of long-term debt (Note C) 3,391 2,747
-------- --------
Total current liabilities 42,005 29,015
LONG-TERM LIABILITIES:
Construction payables (Note C) 860
Long-term debt including capital leases (Notes C and D) 90,365 54,448
Deferred rent (Note D) 1,641 981
Deferred warranty revenue (Note A) 11,627 9,546
-------- --------
Total long-term liabilities 103,633 65,835
SHAREHOLDERS' EQUITY (NOTE E)
Preferred stock - authorized 5,000 shares,
none issued or outstanding
Common stock - authorized 15,000 shares,
no par value; issued and outstanding, 5,946
and 5,909 respectively, stated at $.10 per share 595 591
Additional paid-in capital 31,797 31,520
Retained earnings 14,178 15,088
-------- --------
Total shareholders' equity 46,570 47,199
-------- --------
$192,208 $142,049
======== ========
</TABLE>
See notes to consolidated financial statements.
33
<PAGE> 34
<TABLE>
<CAPTION>
ROBERDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
ADDITIONAL
COMMON STOCK PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
<S> <C> <C> <C> <C>
BALANCE - December 31, 1993 5,867 $ 587 $31,216 $ 667
Issuance of common shares (Note E) 10 1 94
Net earnings 6,593
Cash distributions to initial
shareholders pursuant to Tax
Indemnification Agreement (Note G) (193)
------- ------- ------- -------
BALANCE - December 31, 1994 5,877 588 31,310 7,067
Issuance of common shares (Note E) 32 3 210
Net earnings 8,021
------- ------- ------- -------
BALANCE - December 31, 1995 5,909 591 31,520 15,088
Issuance of common shares (Note E) 37 4 277
Net loss (910)
------- ------- ------- -------
BALANCE - December 31, 1996 5,946 $ 595 $31,797 $14,178
======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
34
<PAGE> 35
<TABLE>
<CAPTION>
ROBERDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS YEAR ENDED DECEMBER 31
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) earnings ($ 910) $ 8,021 $ 6,593
Adjustments to reconcile net (loss) earnings to net
cash (used in) provided by operating activities:
Depreciation and amortization 7,516 5,622 3,795
(Gain) loss on sales of fixed assets 97 (142) 478
Deferred income taxes (3,526) (1,840) (1,820)
Changes in assets and liabilities:
Receivables (936) (1,781) 1,417
Merchandise inventories (21,621) (4,130) (6,186)
Prepaid expenses and other (225) (461) 415
Accounts payable 4,394 (702) 3,930
Customer deposits 2,433 711 715
Accrued payroll and payroll taxes 1,170 594 1,171
Accrued expenses 975 230 302
Accrued income taxes 431 (134) (356)
Litigation 2,943
Deferred rent 660 46 406
Deferred warranty revenue 2,081 2,621 2,726
-------- -------- --------
Net cash (used in) provided by operating activities (4,518) 8,655 13,586
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (32,179) (33,042) (26,477)
Proceeds from sales of fixed assets 163 1,088 190
Decrease (increase) in certificates of deposit - restricted 273 (1) (531)
Other assets (131) 52 (276)
-------- -------- --------
Net cash (used in) investing activities (31,874) (31,903) (27,094)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 39,700 28,325 10,900
Payments on long-term debt (3,139) (2,228) (1,401)
Net proceeds from issuance of common shares 281 213 95
Debt issuance costs (66) (762) (70)
Line of credit with finance companies (21,944)
Distributions to initial shareholders (1,777)
-------- -------- --------
Net cash (used in) provided by financing activities 36,776 25,548 (14,197)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 384 2,300 (27,705)
CASH AND CASH EQUIVALENTS - Beginning of year 2,410 110 27,815
-------- -------- --------
CASH AND CASH EQUIVALENTS - End of year $ 2,794 $ 2,410 $ 110
======== ======== ========
CASH PAID FOR:
Interest, net of capitalized amounts of $685, $994
and $524 in 1996, 1995 and 1994, respectively $ 5,600 $ 3,624 $ 1,899
======== ======== ========
Income taxes $ 2,566 $ 7,229 $ 6,094
======== ======== ========
NON-CASH TRANSACTIONS - Capital leases $ 2,525
======== ======== ========
</TABLE>
35
<PAGE> 36
ROBERDS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1996, 1995
AND 1994 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Roberds, Inc. and its wholly-owned subsidiary, Roberd Insurance Agency, Inc.
(the Company). All significant intercompany transactions and balances have been
eliminated. In August 1994, the Company merged its wholly-owned subsidiary,
Roberds Service Company, into Roberds, Inc., which is the surviving entity.
Operations
The Company operates retail stores selling furniture, bedding, appliances and
electronics. At December 31, 1996, the Company operated 25 large-format stores,
with six in the Dayton, Ohio market, ten in the Atlanta, Georgia market, eight
in the Tampa, Florida market, and one megastore in the Cincinnati, Ohio market.
Cash and Cash Equivalents
Cash equivalents include all highly liquid investments with a maturity of three
months or less when purchased.
The State of Florida requires the Company to maintain deposits to partially fund
its extended warranty and product maintenance contracts and its self insured
liability for workers' compensation. Such deposits are included in certificates
of deposit - restricted.
Merchandise Inventories
Merchandise inventories are valued at the lower of cost or market. Cost is
determined by the last-in, first-out (LIFO) method, except for electronics
(approximately 30% and 29% of merchandise inventories at December 31, 1996 and
1995, respectively) which are valued using the first-in, first-out (FIFO)
method. If the FIFO method had been used for all inventory, inventory values
would have been approximately $2,345 and $2,429 higher at December 31, 1996 and
1995, respectively.
Pre-Opening Costs
Costs incurred in the opening of new stores are expensed as incurred.
Property and Equipment
Property, equipment and improvements, including capital leases, are depreciated
or amortized over their estimated useful lives or the lease term using the
straight-line method. The lives, by category, generally are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Buildings and improvements 10 to 40 years
Leasehold improvements 10 years
Furniture, fixtures and office equipment 3 to 5 years
Computer equipment 3 to 8 years
Warehouse equipment and vehicles 3 to 10 years
</TABLE>
36
<PAGE> 37
Extended Warranty and Product Maintenance Contracts
Contracts with terms from nine months to ten years are sold to supplement or
extend manufacturers' warranties on appliances, electronics and furniture.
Revenues derived from the sales of such contracts are deferred and recognized
over the lives of the contracts. Service costs related to the contracts are
expensed as incurred.
Revenue Recognition
Merchandise inventory sales are recognized when the goods are delivered to the
customer.
Advertising
Effective January 1, 1995, the Company adopted Statement of Position 93-7,
"Reporting on Advertising Costs." Under this statement, production costs,
primarily those associated with the production of television advertising, are
expensed the first time the related advertising is utilized. Adoption of this
statement did not have a material effect on the financial statements.
Early Payment Discounts
Discounts received from vendors for early payment have been classified as other
income in the consolidated statements of earnings.
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.
Stock Options
The Company measures cost for stock options issued to employees using the method
of accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees." In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for
Stock-Based Compensation," which was adopted by the Company in 1996. Pursuant to
the new standard, companies are encouraged, but not required, to adopt the fair
value method of accounting for stock options and similar equity instruments. The
Company has elected to continue measuring compensation cost in accordance with
APB Opinion No. 25.
Reclassifications
Certain reclassifications have been made in the 1995 and 1994 financial
statements to conform to the classifications used in 1996. These
reclassifications had no effect on the results of operations or shareholders'
equity as previously reported.
B. ACCOUNTS RECEIVABLE FROM VENDORS AND OTHER
Accounts receivable from vendors and other consist primarily of amounts due from
vendors for various rebate and cooperative advertising programs and for
merchandise inventory returns.
37
<PAGE> 38
<TABLE>
<CAPTION>
C. LONG-TERM DEBT
DECEMBER 31
1996 1995
<S> <C> <C>
Revolving line of credit $37,000 $10,300
Mortgage note payable, due in monthly payments of $123,
including interest at 7.875%, to February 2011 12,609
Mortgage notes payable, due in monthly payments of $77,
including interest at 9.675%, to June 2010 6,976 7,219
Mortgage notes payable, due in monthly payments of $62,
including interest at 8.00%, to December 2010 6,294 6,531
Term loan agreement, due in monthly installments of $117,
plus interest at 9.34%, to December 1999 4,200 5,600
Mortgage note payable, due in monthly payments of $49,
including interest at 9.00%, to July 2010 4,642 4,809
Mortgage note payable, due in monthly payments of $35,
including interest at 10.375%, to September 2000 3,420 3,478
Mortgage note payable, due in monthly payments of $35,
including interest at 10.125%, to November 1998 3,222 3,311
Mortgage note payable, due in monthly payments of $33
including interest at 9.59%, to February 2010 2,961 3,068
Capital lease obligations 12,432 12,879
------- -------
93,756 57,195
Less current maturities 3,391 2,747
------- -------
$90,365 $54,448
======= =======
</TABLE>
The revolving bank line of credit expires in January 2000. The amount available
under the line is limited to the lesser of (i) $45,000 or (ii) an amount based
upon a percentage of eligible accounts receivable, inventory and previously
incurred leasehold improvements. The agreement also provides that an additional
amount is available for any expenditures for leasehold improvements and store
expansion for which the Company has commitments for permanent financing. At
December 31, 1996, $42,926 was available under the line of which $37,000 was
outstanding. The interest rate under the line is set monthly at the option of
the Company at either the prime rate (8.25% at December 31, 1996) or one of
various LIBOR rates plus 1.55% (7.113% at December 31, 1996).
The line and term loan agreements include certain restrictive covenants
including, among others, limitations on capital expenditures and the payment of
dividends, maintenance of minimum current, fixed charge coverage, funded debt to
earnings, and debt to tangible net worth ratios. Under the most restrictive debt
covenants, no retained earnings were available for dividends at December 31,
1996.
Excluding land and construction in process, essentially all of the Company's
assets are pledged as collateral for the above indebtedness. Mortgage notes
payable totaling $6,642 are guaranteed by two of the Company's principal
shareholders.
38
<PAGE> 39
<TABLE>
<CAPTION>
Maturities of long-term debt are:
<S> <C>
1997 $3,391
1998 6,602
1999 3,683
2000 42,631
2001 2,661
Thereafter 34,788
----------
$93,756
==========
</TABLE>
The fair value of the Company's long-term debt based on current rates offered to
the Company for debt of similar maturities, excluding capital leases, was
$82,397 at December 31, 1996, and the related carrying value was $81,324.
Construction payables at December 31, 1995 were included in long-term
liabilities because the amounts were subsequently financed under a mortgage
loan.
D. LEASING ACTIVITIES
The Company leases the majority of its retail locations, including some from
entities controlled by one or more of the initial shareholders. Most leases
include renewal options. In addition, the Company leases the majority of its
vehicles from third parties under operating leases. These vehicle leases
generally include contingent rentals based upon mileage.
Rent expense for all operating leases was approximately $7,921, $6,687, and
$6,220 for the years ended December 31, 1996, 1995 and 1994, respectively, which
included approximately $731, $1,271, and $1,463 for the years ended December 31,
1996, 1995 and 1994, respectively, to related parties. Rent expense also
included $246, $200, and $166 of contingent rentals based upon mileage for the
years ended December 31, 1996, 1995 and 1994, respectively.
Minimum lease commitments for leases with remaining lease terms in excess of one
year are as follows:
<TABLE>
<CAPTION>
CAPITAL
OPERATING LEASES LEASES-
RELATED RELATED
YEAR ENDING DECEMBER 31, PARTIES OTHER PARTIES
<C> <C> <C> <C>
1997 $721 $6,943 $1,919
1998 721 6,882 1,919
1999 721 6,689 1,919
2000 721 6,144 1,919
2001 721 5,950 1,919
2002 and later 7,469 26,303 16,001
---------- ---------- ----------
Total $11,074 $58,911 25,596
========== ==========
Less amount representing interest 13,164
----------
Capital lease obligations $12,432
==========
</TABLE>
Included in buildings and improvements at December 31, 1996 and 1995 are capital
leases totaling $13,641. Accumulated amortization related to the capitalized
leases is $2,713 and $1,833 at December 31, 1996 and 1995, respectively.
39
<PAGE> 40
Certain leases include scheduled rent increases that have been recognized on a
straight-line basis over the term of the leases. The accumulated difference
between rent expense and cash payments is included in liabilities as deferred
rent.
E. SHAREHOLDERS' EQUITY
The Company's stock-based compensation plans are described below. The Company
applies APB Opinion 25 and related Interpretations in accounting for its plans.
Accordingly, no compensation cost has been recognized for its stock option plans
and its employee stock purchase plan. Had compensation cost for the Company's
stock-based compensation plans been determined based on the fair value at the
grant dates for the awards under those plans consistent with the method of FASB
Statement 123, the effect on the Company's net income (loss) and earnings (loss)
per share for 1996 and 1995 would have been insignificant.
Employee Stock Purchase Plan.
The Company's employee stock purchase plan is qualified under the Internal
Revenue Code and permits employees to purchase shares at a price equal to 85% of
the lower of: (i) the fair market value of the shares at the commencement date
of each six-month option period or (ii) the fair market value of the shares at
the close of the option period. A maximum of 150,000 shares may be issued under
the plan. With certain exceptions, all employees of the Company may participate
in the plan and pay for their options through payroll deductions.
The Company issued 37,110 shares at $7.44 under the plan during 1996, 32,374
shares at $6.59 per share during 1995, and 9,958 shares at $9.61 per share
during 1994. In January 1997, the Company issued 18,221 shares at $7.23 per
share under the plan.
1993 Outside Director Stock Option Plan.
The Company has established a directors stock option plan which has reserved up
to 10,000 common shares to be offered to outside directors of the Company.
Grants are made at the market price of the stock at the date of grant. During
1993, the Company granted options on 6,000 common shares, at $13.00 per share.
During 1995, the Company granted an option on 2,000 common shares, at $9.25 per
share. All of the outstanding options were exercisable at December 31, 1996. At
December 31, 1996, 2,000 options were available under this plan for future
grants.
1993 Stock Incentive Plan.
The Company's stock incentive plan provides that options on up to 1,300,000
shares may be granted to employees of the Company. Grants are made at the market
price of the stock at the date of grant. One-fourth of the options are
exercisable on each anniversary of the grant. Any options which are not
exercisable by an employee at the termination of employment are canceled.
40
<PAGE> 41
<TABLE>
<CAPTION>
A summary of option transactions under the stock incentive plan is as follows:
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
<S> <C> <C>
Outstanding December 31, 1993 137,500 $ 13.00
Granted 173,500 8.59
Canceled (14,500) 12.69
--------
Outstanding December 31, 1994 296,500 10.43
Canceled (47,000) 9.86
--------
Outstanding December 31, 1995 249,500 10.54
Granted 35,000 9.64
Exercised (500) 8.88
Canceled (44,500) 10.29
--------
Outstanding December 31, 1996 239,500 10.46
========
</TABLE>
The following table shows various information about stock options outstanding at
December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------- ------------------------------
WEIGHTED-
AVERAGE
NUMBER REMAINING WEIGHTED- NUMBER WEIGHTED
OUTSTANDING AT CONTRACTUAL AVERAGE EXERCISABLE AT AVERAGE
RANGE OF DECEMBER 31, LIFE (IN EXERCISE DECEMBER 31, EXERCISE
EXERCISE PRICES 1996 YEARS) PRICE 1996 PRICE
<S> <C> <C> <C> <C> <C> <C>
$8.50 118,500 8.0 $ 8.50 59,250 $ 8.50
9.50 - 11.75 25,000 9.0 10.03 2,500 10.63
13.00 96,000 6.9 13.00 72,000 13.00
----------- ---------
$8.50 - $13.00 239,500 7.7 $ 10.46 133,750 $ 10.96
=========== =========
</TABLE>
At December 31, 1996, 1,060,500 shares were available for future grants.
F. FINANCE PARTICIPATION
The Company earns a finance participation fee on credit sales placed through a
private-label revolving credit plan with a bank. Receivables from this plan are
held by the bank without recourse to the Company. Sales under the private label
plan represented approximately 46, 43, and 39 percent of consolidated net sales
for the years ended December 31, 1996, 1995, and 1994, respectively. Because a
significant portion of the Company's sales are financed by consumers, the lack
of availability of consumer credit programs, or a significant increase in the
cost of such programs, could have a material adverse effect on the Company.
41
<PAGE> 42
G. INCOME TAXES
Deferred taxes reflect the effects of temporary differences between carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. The principal current and non-current
deferred income tax assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1996 1995
<S> <C> <C>
Deferred tax assets:
Deferred warranty revenue $4,534 $3,720
Merchandise inventories 1,094 552
Capital lease obligations 587 418
Depreciation 1,057 415
Workers' compensation accrual 1,453 408
Vacation accrual 290 221
Other 251 6
------ ------
Net deferred tax asset $9,266 $5,740
====== ======
Included in the balance sheet:
Current $2,916 $1,200
Long-term 6,350 4,540
------ ------
$9,266 $5,740
====== ======
Income taxes (benefit) consist of the following:
<CAPTION>
YEAR ENDED
DECEMBER 31
1996 1995 1994
<S> <C> <C> <C>
Currently payable:
Federal $ 2,461 $ 5,810 $ 4,685
State and local 535 1,255 1,060
------- ------- -------
2,996 7,065 5,745
Deferred:
Federal and state (3,526) (1,840) (1,615)
Tax settlement (205)
------- ------- -------
(3,526) (1,840) (1,820)
------- ------- -------
($ 530) $ 5,225 $ 3,925
======= ======= =======
</TABLE>
In connection with the initial public offering of stock in 1993, the initial
shareholders of the Company entered into a Tax Indemnification Agreement that
requires the Company to reimburse them for certain additional taxes that they
may have to pay for any adjustments in prior years' taxable income. In addition,
the agreement requires the initial shareholders to reimburse the Company for
certain decreases in taxes that are refunded to them for adjustments in prior
years' taxable income. The Company also agreed to conduct, at its expense, the
defense of, or the negotiations in settlement with respect to, any challenge to
the S Corporation status in prior years.
42
<PAGE> 43
During the fourth quarter of 1994, the Company settled an examination of its
1991 and 1992 federal income tax returns. This resulted in an additional tax
benefit to the Company of $205 ($.03 per share). The Company was required under
the Tax Indemnification Agreement to reimburse the initial shareholders $193 for
additional taxes they were required to pay as part of the settlement. The
additional tax benefit was recorded as a reduction of income taxes for the year
ended December 31, 1994 and the payments were recorded as cash distributions to
the initial shareholders.
A reconciliation between the statutory federal income tax rate and the effective
tax rate follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
1996 1995 1994
<S> <C> <C> <C>
Statutory Federal income tax rate (34)% 34% 34%
State and local income taxes,
net of federal benefit (3) 5 5
Tax settlement (2)
--------- ----------- ----------
(37)% 39% 37%
========== ========== ==========
</TABLE>
H. EMPLOYEE BENEFIT PLANS
The Company has a profit sharing plan for all eligible employees. Contributions
to the plan are made under guidelines established in the Roberds, Inc. Executive
Compensation Plan. Profit sharing plan expense was $97 for the year ended
December 31, 1996 and $120 for the year ended December 31, 1994. No contribution
was made to the profit sharing plan for the year ended December 31, 1995.
The Company has a self-insured group health and welfare benefit plan. This plan
operates through an independent trust and offers major medical, dental and
disability insurance coverage to all eligible employees. The Company provides
life insurance for all employees and their dependents at no cost to the
employees. The Company's expense under the health and welfare benefit plan was
approximately $281, $200, and $140 for the years ended December 31, 1996, 1995
and 1994, respectively. At December 31, 1996 and 1995, the Company had advances
receivable from the health and welfare benefit of $250 and $50, respectively.
The Company does not provide post-employment or post-retirement benefits for its
employees.
I. LITIGATION AND OTHER PROCEEDINGS
On February 28, 1994, the Company announced its earnings for the fourth quarter
and year ended December 31, 1993. Following that announcement, the Company's
stock price declined substantially. In March and April 1994, four lawsuits were
filed against the Company, certain of its directors, certain of its officers,
and its co-managing underwriters, in U.S. District Court for the Southern
District of Ohio, case numbers C-3-94-86, 99, 100, and 127. The suits were
consolidated into a single suit, In re Roberds Securities Litigation.
In December 1996, the Company reached an agreement in principle to settle the
class-action securities litigation. Based on such agreement, the Company entered
into a settlement stipulation with the named plaintiffs and filed such
stipulation with the court in February 1997. The settlement involves the payment
of $1.6 million into an escrow account to be used to satisfy the plaintiffs'
legal expenses and claims for damages to the class. In February 1997, Roberds
paid $342,500 into escrow as its share of the settlement, and the insurance
carrier for its officers and directors paid $1,257,500. Subject to approval by
the court, the Company expects the plaintiffs to give notice to the class,
validate claims, and then begin disbursement of funds in the latter part of
1997. No portion of the funds paid into escrow can revert to the Company.
43
<PAGE> 44
During 1994, the Ohio Bureau of Workers' Compensation ("the Bureau") completed
an examination of the Company's 1992 and 1993 Ohio workers' compensation tax
returns. As a result of that audit, the Bureau issued an assessment against the
Company for approximately $1,000. As a result of the Company's appeals and an
adjustment received in 1995, the assessment has been reduced to $871. The
assessment is based on the Bureau's reclassification of the majority of the
Company's Ohio employees into higher rate classifications.
In January 1997, the Company lost its appeal of the assessment in the Ohio Court
of Appeals. The Company has filed another appeal of right with the Ohio Supreme
Court. If the Company is unsuccessful in this final appeal, the Company would
likely be liable not only for the $871 assessment but also for a similar
adjustment for the years subsequent to 1993. As a result of the Company being
unsuccessful in its appeals to date, $2,600 was accrued in the fourth quarter of
1996 for the estimated amount of the exposure for the entire 1992-1996 time
period. The Company continues to believe it has meritorious defenses against the
assessment and is defending the assessment vigorously.
The amount of the Company's payment to settle the shareholders' suit, and the
related legal expenses, and the $2,600 accrual for the workers' compensation
exposure are contained in Litigation in the consolidated statements of
operations.
In August 1995, a former employee of the Company brought suit against the
Company and one of its managers alleging, among other things, wrongful
termination of the employee and sexual harassment of the employee's wife. The
suit sought $100 in compensatory damages and $1,000 in punitive damages. Without
admitting liability, the Company settled the suit in June 1996 by paying the
plaintiff an amount which the parties have agreed not to disclose, but which
management of the Company believes is not material to the Company.
The Company is involved in various legal proceedings, incidental to normal
operations. At this time, it is not possible to determine the ultimate
liability, if any, in these matters. In the opinion of management, after
consultation with legal counsel, such proceedings will not have a material
effect on the financial position or results of operations.
J. COMMITMENTS
In connection with the renovation of former warehouse space into an expanded
showroom, the Company had outstanding construction commitments of approximately
$1,400 at December 31, 1996.
44
<PAGE> 45
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Certain information required by Part III of this Report is omitted because the
Company will file a definitive proxy statement, pursuant to Regulation 14A, for
its 1997 annual meeting of shareholders ("1997 Proxy Statement"), not later than
120 days after the end of the fiscal year covered by this Report, and certain
information included in the 1997 Proxy Statement is incorporated herein by
reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Information concerning the Company's directors is contained in the "Election of
Directors" section of the Company's 1997 Proxy Statement and is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to the
"Executive Compensation" section of the Company's 1997 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by reference to the
"Security Ownership of Certain Beneficial Owners and Management" section of the
Company's 1997 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by reference to the
"Certain Relationships and Related Transactions" section of the Company's 1997
Proxy Statement.
45
<PAGE> 46
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A)(1) FINANCIAL STATEMENTS
The following financial statements are filed as part of this Report
and are attached hereto:
Independent Auditors' Report.
Consolidated Balance Sheets at December 31, 1996 and 1995.
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995, and 1994.
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1996, 1995, and 1994.
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995, and 1994.
Notes to Consolidated Financial Statements for the years
ended December 31, 1996, 1995 and 1994.
46
<PAGE> 47
(A)(2) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedule of the Company, for the three years
ended December 31, 1996, is filed as part of this Report and should be read in
conjunction with the consolidated financial statements of Roberds, Inc. for the
periods then ended:
Independent Auditors' Report
Schedule II, Valuation and qualifying accounts
Schedules not listed above are omitted because they are not applicable, are not
required, or the information required to be set forth therein is included in the
Consolidated Financial Statements or the notes thereto.
INDEPENDENT AUDITORS' REPORT
Board of Directors
Roberds, Inc.
West Carrollton, Ohio
We have audited the consolidated financial statements of Roberds, Inc. and
subsidiary as of December 31, 1996 and 1995 and for each of the three years in
the period ended December 31, 1996, and have issued our report thereon dated
February 27, 1997, such financial statements and report are included elsewhere
in this Annual Report on Form 10-K. Our audits also included the financial
statement schedule of Roberds, Inc. and subsidiary, listed in Item 14(a)(2) of
this Annual Report on Form 10-K. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such financial statement schedule,
when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly in all material respects, the information set forth
therein.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Dayton, Ohio
February 27, 1997
47
<PAGE> 48
ROBERDS, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ----------------------------------------- -------------- ------------- ------------- -------------
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
- ----------------------------------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Allowance for doubtful accounts $50 $619 $589 $80
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful accounts $50 $246 $246 $50
YEAR ENDED DECEMBER 31, 1994:
Allowance for doubtful accounts $50 $249 $249 $50
</TABLE>
48
<PAGE> 49
(a)(3) EXHIBITS
2.1 Certificate and Agreement of Merger between Dayton Factory Service,
Inc. and Registrant, filed October 1, 1993 as Exhibit 2.1 to
Registrant's Form S-1, Registration File No. 33-69876, and incorpo
rated herein by reference.
2.2 Certificate and Agreement of Merger between Roberds of Atlanta, Inc.
and Registrant, filed October 1, 1993 as Exhibit 2.2 to Registrant's
Form S-1, Registration File No. 33-69876, and incorporated herein by
reference.
2.3 Stock Purchase Agreement among Registrant, Kenneth W. Fletcher and
Donald C. Wright trans ferring all of the outstanding shares of
Roberds Service Company to Registrant, filed October 1, 1993 as
Exhibit 2.3 to Registrant's Form S-1, Registration File No. 33-69876,
and incorporated herein by reference.
2.4 Stock Purchase Agreement among Registrant, Kenneth W. Fletcher and
Donald C. Wright trans ferring all of the outstanding shares of Roberd
Insurance Agency, Inc. to Registrant, filed October 1, 1993 as Exhibit
2.4 to Registrant's Form S-1, Registration File No. 33-69876, and
incorporated herein by reference.
2.5 Certificate of merger of Roberds Service Company into Roberds, Inc.,
effective August 31, 1994, filed as Exhibit 2.5 to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 and
incorporated herein by reference.
3.1 Amended Articles of Incorporation of Registrant, filed January 10,
1994, as Exhibit 4.1 to Registrant's Form S-8, Registration File No.
33-73900, and incorporated herein by reference.
3.2 Amended Code of Regulations of Registrant, filed January 10, 1994, as
Exhibit 4.2 to Registrant's Form S-8, Registration File No. 33-73900,
and incorporated herein by reference.
4.1 Amended Articles of Incorporation of Registrant (filed as Exhibit
3.1).
4.2 Amended Code of Regulations of Registrant (filed as Exhibit 3.2).
4.3 Specimen certificate for Registrant's Common Shares, filed October 1,
1993 as Exhibit 4.3 to Registrant's Form S-1, Registration File No.
33-69876, and incorporated herein by reference.
4.3.1 Amended specimen certificate for Registrant's Common Shares,
reflecting the change in stock transfer agent to National City Bank,
Cleveland, Ohio, effective November 1, 1995, filed as Exhibit 4.3.1 to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, and incorporated herein by reference.
4.4 Excluded from the exhibits are certain agreements relating to long
term debt which, individually, do not exceed 10% of the total assets
of Registrant. Registrant hereby undertakes to furnish a copy of such
agreements upon request by the Commission.
10.1# Roberds, Inc. 1993 Stock Incentive Plan, filed October 1, 1993 as
Exhibit 10.1 to Registrant's Form S-1, Registration File No. 33-69876,
and incorporated herein by reference.
10.1.1# Amendment to Roberds, Inc. 1993 Stock Incentive Plan, filed as Exhibit
99.1 to Registrant's Form S-1, File No. 33-97262, filed September 25,
1995, and incorporated herein by reference.
49
<PAGE> 50
*10.1.2# Amendment to Roberds, Inc. 1993 Stock Incentive Plan, referred to in
Exhibit 10.1, effective as of November 1, 1996, and filed herewith.
10.2# Roberds, Inc. Employee Stock Purchase Plan, filed October 1, 1993 as
Exhibit 10.2 to Registrant's Form S-1, Registration File No.
33-69876, and incorporated herein by reference.
*10.2.1# Amendment to Roberds, Inc. Employee Stock Purchase Plan, referred to
in Exhibit 10.2, effective as of November 1, 1996, and filed
herewith.
10.3# Roberds, Inc. 1993 Outside Director Stock Option Plan, filed October
1, 1993 as Exhibit 10.3 to Registrant's Form S-1, Registration File
No. 33-69876, and incorporated herein by reference.
*10.3.1# Amendment to Roberds, Inc. 1993 Outside Director Stock Option Plan,
referred to in Exhibit 10.3, effective as of November 1, 1996, and
filed herewith.
10.3.2# Roberds, Inc. Profit Sharing and Employee Retirement Savings Plan,
as amended, filed as Exhibit 99 to Registrant's Form S-8,
Registration File No. 33-81086, and incorporated herein by
reference.
10.3.3# Roberds, Inc. Amended and Restated Deferred Compensation Plan for
Outside Directors, effective 1996, filed as Exhibit 10.3.2 to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, and incorporated herein by reference.
*10.3.3.1# Amendment to Roberds, Inc. Amended and Restated Deferred
Compensation Plan for Outside Directors, referred to in Exhibit
10.3.3, effective as of February 27, 1996, and filed herewith.
**10.3.3.2# Amendment to Roberds, Inc. Amended and Restated Deferred
Compensation Plan for Outside Directors, referred to in Exhibit
10.3.3, effective as of November 1, 1996, and filed as Exhibit 99.1
to Registrant's Form S-8, Registration File No. 333-19903, and
incorporated herein by reference.
10.4.1 Lease Agreement dated April 1, 1990 among Registrant, Kenneth W.
Fletcher and Donald C. Wright, relating to Registrant's facility
located at 1000 East Central Avenue, West Carrollton, Ohio, and
amendments thereto, filed October 1, 1993 as Exhibit 10.4.1 to
Registrant's Form S-1, Registration File No. 33-69876, and
incorporated herein by reference.
10.4.1.1 Assignment and Assumption Agreement in connection with the transfer
of ownership of Registrant's facility located at 1000 East Central
Avenue, West Carrollton, Ohio from Kenneth W. Fletcher and Donald C.
Wright, an Ohio general partnership, to Kenneth W. Fletcher,
individually, and assigning Registrant's related lease of the
property to Mr. Fletcher, all effective January 1, 1995, and filed
as Exhibit 10.4.1.1 to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 and incorporated herein by
reference.
10.4.1.2 Assignment and Assumption Agreement in connection with the transfer
of ownership of Registrant's facility located at 1000 East Central
Avenue, West Carrollton, Ohio from Kenneth W. Fletcher,
individually, to DAF Investments LTD., an Ohio limited liability
company controlled by Mr. Fletcher, and assigning Registrant's
related lease of the property to DAF Investments LTD., all effective
January 1, 1995, and filed as Exhibit 10.4.1.2 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994 and incorporated herein by reference.
*10.4.1.3 Assignment and Assumption of Lease in connection with the transfer
of ownership of Registrant's facility located at 1000 East Central
Avenue, West Carrollton, Ohio from DAF Investments LTD., an Ohio
limited liability company controlled by Mr. Kenneth W. Fletcher, to
DAF West Carrollton Plaza, LTD., an Ohio limited liability company
controlled by Mr. Fletcher, and assigning Registrant's
50
<PAGE> 51
related lease of the property to DAF West Carrollton Plaza, LTD.,
effective January 14, 1997, and incorporated herein by reference and
filed herewith.
10.4.2 Lease Agreement dated April 1, 1990 among Registrant, Kenneth W.
Fletcher and Donald C. Wright, relating to Registrant's facility
located at 1100 East Central Avenue, West Carrollton, Ohio, and
amendments thereto, filed October 1, 1993 as Exhibit 10.4.2 to
Registrant's Form S-1, Registration File No. 33-69876, and
incorporated herein by reference.
10.4.2.1 Assignment and Assumption Agreement in connection with the transfer
of ownership of Registrant's facility located at 1100 East Central
Avenue, West Carrollton, Ohio from Kenneth W. Fletcher and Donald C.
Wright, an Ohio general partnership, to Kenneth W. Fletcher,
individually, and assigning Registrant's related lease of the
property to Mr. Fletcher, all effective January 1, 1995, and filed
as Exhibit 10.4.2.1 to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 and incorporated herein by
reference.
10.4.2.2 Assignment and Assumption Agreement in connection with the transfer
of ownership of Registrant's facility located at 1100 East Central
Avenue, West Carrollton, Ohio from Kenneth W. Fletcher,
individually, to DAF Investments LTD., an Ohio limited liability
company controlled by Mr. Fletcher, and assigning Registrant's
related lease of the property to DAF Investments LTD., all effective
January 1, 1995, and filed as Exhibit 10.4.2.2 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994 and incorporated herein by reference.
*10.4.2.3 Assignment and Assumption of Lease in connection with the transfer
of ownership of Registrant's facility located at 1100 East Central
Avenue, West Carrollton, Ohio from DAF Investments LTD., an Ohio
limited liability company controlled by Mr. Kenneth W. Fletcher, to
DAF West Carrollton Plaza, LTD., an Ohio limited liability company
controlled by Mr. Fletcher, and assigning Registrant's related lease
of the property to DAF West Carrollton Plaza, LTD., effective
January 14, 1997, and incorporated herein by reference and filed
herewith.
10.4.3 Lease Agreement dated June 1, 1988 among Registrant, Kenneth W.
Fletcher and Donald C. Wright, relating to Registrant's Piqua, Ohio
facility, and amendments thereto, filed October 1, 1993 as Exhibit
10.4.3 to Registrant's Form S-1, Registration File No. 33-69876, and
incorporated herein by reference.
10.4.3.1 Assignment and Assumption Agreement in connection with the transfer
of ownership of Registrant's Piqua, Ohio facility from Kenneth W.
Fletcher and Donald C. Wright, an Ohio general partnership, to
Donald C. Wright, individually, and assigning Registrant's related
lease of the property to Mr. Wright, all effective January 1, 1995
and filed as Exhibit 10.4.3.1 to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 and incorporated
herein by reference.
10.4.4 Lease Agreement dated April 1, 1988 among Registrant, Kenneth W.
Fletcher and Donald C. Wright, relating to Registrant's Richmond,
Indiana facility, and amendments thereto, filed October 1, 1993 as
Exhibit 10.4.4 to Registrant's Form S-1, Registration File No.
33-69876, incorporated herein by reference.
10.4.4.1 Assignment and Assumption Agreement in connection with the transfer
of ownership of Registrant's Richmond, Indiana facility from Kenneth
W. Fletcher and Donald C. Wright, an Ohio general partnership, to
Donald C. Wright, individually, and assigning Registrant's related
lease of the property to Mr. Wright, all effective January 1, 1995,
and filed as Exhibit 10.4.4.1 to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 and incorporated
herein by reference.
51
<PAGE> 52
10.4.5 Lease Agreement dated March 1, 1992 among Registrant, Kenneth W.
Fletcher and Donald C. Wright, relating to Registrant's
Springfield, Ohio facility, and amendments thereto, filed October 1,
1993 as Exhibit 10.4.5 to Registrant's Form S-1, Registration File
No. 33-69876, and incorporated herein by reference.
10.4.5.1 Assignment and Assumption of Leases transferring ownership of
Registrant's Springfield, Ohio facility from Kenneth W. Fletcher and
Donald C. Wright, an Ohio general partnership, to Springfield
Properties, Inc., an Ohio corporation owned by Messrs. Fletcher and
Wright, and assigning Registrant's related lease of the property to
Springfield Properties, Inc., all effective November 16, 1994, and
filed as Exhibit 10.4.5.1 to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 and incorporated herein
by reference.
10.4.6 Lease Agreement dated March 1, 1987 between Registrant and Howard
Investments, a partnership owned by the Initial Shareholders,
relating to Registrant's Norcross, Georgia facility, filed October
1, 1993 as Exhibit 10.4.6 to Registrant's Form S-1, Registration
File No. 33-69876, and incorporated herein by reference.
10.4.6.1 Amendments to Lease Agreement between Registrant and Howard
Investments, referred to in Exhibit 10.4.6, effective December 20,
1995, pursuant to a sale of the property by Howard Investments to
800 Broadway and Ponce de Leon Stores, which are unrelated to the
Company and the Initial Shareholders, filed as Exhibit 10.4.6.1 to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, and incorporated herein by reference.
10.4.7 Lease Agreement dated March 1, 1987 between Registrant and Howard
Investments, a partnership owned by the Initial Shareholders,
relating to Registrant's Marietta, Georgia facility, filed October
1, 1993 as Exhibit 10.4.7 to Registrant's Form S-1, Registration
File No. 33-69876, and incorporated herein by reference.
10.4.8 Lease Agreement dated November 1, 1987 between Registrant and Howard
Investments, a partnership owned by the Principal Shareholders,
relating to Registrant's Forest Park, Georgia facility, and
amendments thereto, filed October 1, 1993 as Exhibit 10.4.8 to
Registrant's Form S-1, Registration File No. 33-69876, and
incorporated herein by reference.
10.4.9 Rent-Up Guarantee Agreement, filed October 1, 1993 as Exhibit 10.4.9
to Registrant's Form S-1, Registration File No. 33-69876, and
incorporated herein by reference.
10.5 Tax Indemnification Agreement among Kenneth W. Fletcher, Donald C.
Wright, Howard W. Smith, and Registrant, filed October 1, 1993 as
Exhibit 10.5 to Registrant's Form S-1, Registration File No.
33-69876, and incorporated herein by reference.
10.6.1 Amended and Restated Security Agreement between Registrant and
Chrysler First Commercial Corporation, filed October 1, 1993 as
Exhibit 10.6.1 to Registrant's Form S-1, Registration File No.
33-69876, and incorporated herein by reference.
10.6.2 Inventory Financing and Security Agreement between Whirlpool
Financial Corporation and Registrant, filed October 1, 1993 as
Exhibit 10.6.2 to Registrant's Form S-1, Registration File No. 33-
69876, and incorporated herein by reference.
10.6.3 Business Loan Agreement between Bank One, Dayton, NA and Registrant,
dated November 23, 1993, for up to $30 million. Filed as Exhibit
10.6.3 to Registrant's Form 10-K for the fiscal year ended December
31, 1993, and incorporated herein by reference.
52
<PAGE> 53
10.6.3.1 Amendment to Business Loan Agreement between Bank One, Dayton, NA
and Registrant, dated April 20, 1994, amending the agreement
referred to in Exhibit 10.6.3, and filed as Exhibit 10.6.3.1 to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and incorporated herein by reference.
10.6.3.2 Amendment to Amended and Restated Business Loan Agreement between
Bank One, Dayton, NA and Registrant, dated December 7, 1994,
amending the agreement referred to in Exhibit 10.6.3, and filed as
Exhibit 10.6.3.2 to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and incorporated herein by
reference.
10.6.3.3 Amendment to Amended and Restated Business Loan Agreement between
Bank One, Dayton, NA and Registrant, dated October 13, 1995,
amending the agreement referred to in Exhibit 10.6.3, filed as
Exhibit 10.6.3.3 to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, and incorporated herein by
reference.
*10.6.3.4 Amendment to Amended and Restated Business Loan Agreement between
Bank One, Dayton, NA and Registrant, dated as of June 29, 1996,
amending the agreement referred to in Exhibit 10.6.3, and filed
herewith.
*10.6.3.5 Second Amendment to Amended and Restated Business Loan Agreement
between Bank One, Dayton, NA and Registrant, dated December 31,
1996, amending the agreement referred to in Exhibit 10.6.3.4, and
filed herewith.
*10.6.3.6 Amendment to Second Amended and Restated Business Loan Agreement
between Bank One, Dayton, NA and Registrant, dated February 27,
1997, amending the agreement referred to in Exhibit 10.6.3, and
filed herewith.
10.6.4 Term loan agreement between Bank One, Dayton, NA and Registrant,
dated November 8, 1994, for up to $7 million, and filed as Exhibit
10.6.4 to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, and incorporated herein by reference.
10.7 Amended and Restated Private Label Revolving Plan Agreement between
Registrant and Bank One, Dayton, N.A., filed October 1, 1993 as
Exhibit 10.7 to Registrant's Form S-1, Registration File No.
33-69876, and incorporated herein by reference. Portions of the
Exhibit have been omitted pursuant to a request by Registrant for
confidential treatment.
10.8.1 Termination of Stock Redemption Agreement dated September 24, 1993
between Roberds Service Company and shareholders of Roberds Service
Company, filed October 1, 1993 as Exhibit 10.8.1 to Registrant's
Form S-1, Registration File No. 33-69876, and incorporated herein by
reference.
10.8.2 Termination of Stock Redemption Agreement dated September 24, 1993
between Roberds, Inc. and shareholders of Roberds, Inc., filed
October 1, 1993 as Exhibit 10.8.2 to Registrant's Form S-1, Regis-
tration File No. 33-69876, and incorporated herein by reference.
10.9# Letter Agreements Limiting Salary and Bonus of Messrs. Fletcher,
Wright and Smith, filed November 12, 1993 as Exhibit 10.9 to
Registrant's Amendment No. 3 to Form S-1, Registration File No. 33-
69876, and incorporated herein by reference.
10.10# Registrant's Executive Compensation Plan, adopted in 1994, effective
for the 1995 calendar year, filed as Exhibit 10.10 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994 and incorporated herein by reference.
53
<PAGE> 54
10.10.1# Registrant's Amended and Restated Executive Compensation Plan, as
amended for the 1996 calendar year, amending the Plan referred to in
Exhibit 10.10 above, and filed as Exhibit 10.10.1 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995, and filed herewith.
*10.10.2# Registrant's Seconded Amended and Restated Executive Compensation
Plan, as amended for the 1997 calendar year, amending the Plan
referred to in Exhibit 10.10.1 above, and filed herewith.
*10.11.1# Employment Agreement, dated as of March 1, 1996, between Registrant
and Charles H. Palko, Vice President-Appliances, and filed herewith.
*10.11.2# Employment Agreement, dated as of July 10, 1996, between Registrant
and Michael E. Ray, President-Tampa Market, and filed herewith.
11 Calculation of pro forma net earnings for the years ended December
31, 1993 and 1992, filed on March 25, 1994, as Exhibit 11 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1993, Commission File Number 0-22702, and incorporated herein by
reference.
21 Subsidiary of Registrant, filed as Exhibit 21 to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 and
incorporated herein by reference.
*23 Independent Auditors' Consent.
*24 Powers of attorney.
*27 Financial Data Schedules
* Exhibits electronically filed herewith.
** Exhibits incorporated by reference for the first time.
# Constitutes a "management contract or compensatory plan or
arrangement," pursuant to Item 14(a)(3),(c).
(b) REPORTS ON FORM 8-K
On December 4, 1996, the Company filed a Report on Form 8-K, announcing the
settlement of the class-action shareholders suit discussed elsewhere herein.
(c) EXHIBITS
The response to this portion of Item 14 is submitted as a separate section of
this Report.
(d) FINANCIAL STATEMENT SCHEDULES
The response to this portion of Item 14 is submitted as a separate section of
this Report.
54
<PAGE> 55
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ROBERDS, INC., by
/s/ Kenneth W. Fletcher*
- ------------------------------------
Kenneth W. Fletcher, its
Chief Executive Officer
and President
/s/ Robert M. Wilson
- ------------------------------------
Robert M. Wilson, its
Executive Vice President and
Chief Financial Officer
/s/ Michael A. Bruns
- ------------------------------------
Michael A. Bruns, its
Vice President and
Chief Accounting Officer
*By: /s/ Robert M. Wilson
----------------------------
Robert M. Wilson
Attorney in Fact
February 27, 1996
55
<PAGE> 56
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Registrant and in
the capacities indicated on February 27, 1996.
/s/ Kenneth W. Fletcher*
- ------------------------------------
Kenneth W. Fletcher
Director
/s/ Carl E. Gunter*
- ------------------------------------
Carl E. Gunter
Director
/s/ Jerry L. Kirby*
- ------------------------------------
Jerry L. Kirby
Director
/s/ James F. Robeson*
- ------------------------------------
James F. Robeson
Director
/s/ Howard W. Smith*
- ------------------------------------
Howard W. Smith
Director
/s/ Gilbert P. Williamson*
- ------------------------------------
Gilbert P. Williamson
Director
/s/ Robert M. Wilson
- ------------------------------------
Robert M. Wilson
Director
/s/ Donald C. Wright*
- ------------------------------------
Donald C. Wright
Director
*By: /s/ Robert M. Wilson
---------------------------------
Robert M. Wilson
Attorney in Fact
10k96.per
56
<PAGE> 57
EXHIBIT INDEX
2.1 Certificate and Agreement of Merger between Dayton Factory Service,
Inc. and Registrant, filed October 1, 1993 as Exhibit 2.1 to
Registrant's Form S-1, Registration File No. 33-69876, and incorpo-
rated herein by reference.
2.2 Certificate and Agreement of Merger between Roberds of Atlanta, Inc.
and Registrant, filed October 1, 1993 as Exhibit 2.2 to Registrant's
Form S-1, Registration File No. 33-69876, and incorporated herein by
reference.
2.3 Stock Purchase Agreement among Registrant, Kenneth W. Fletcher and
Donald C. Wright transferring all of the outstanding shares of
Roberds Service Company to Registrant, filed October 1, 1993 as
Exhibit 2.3 to Registrant's Form S-1, Registration File No.
33-69876, and incorporated herein by reference.
2.4 Stock Purchase Agreement among Registrant, Kenneth W. Fletcher and
Donald C. Wright transferring all of the outstanding shares of
Roberd Insurance Agency, Inc. to Registrant, filed October 1, 1993
as Exhibit 2.4 to Registrant's Form S-1, Registration File No.
33-69876, and incorporated herein by reference.
2.5 Certificate of merger of Roberds Service Company into Roberds, Inc.,
effective August 31, 1994, filed as Exhibit 2.5 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994 and incorporated herein by reference.
3.1 Amended Articles of Incorporation of Registrant, filed January 10,
1994, as Exhibit 4.1 to Registrant's Form S-8, Registration File No.
33-73900, and incorporated herein by reference.
3.2 Amended Code of Regulations of Registrant, filed January 10, 1994,
as Exhibit 4.2 to Registrant's Form S-8, Registration File No.
33-73900, and incorporated herein by reference.
4.1 Amended Articles of Incorporation of Registrant (filed as Exhibit
3.1).
4.2 Amended Code of Regulations of Registrant (filed as Exhibit 3.2).
4.3 Specimen certificate for Registrant's Common Shares, filed October
1, 1993 as Exhibit 4.3 to Registrant's Form S-1, Registration File
No. 33-69876, and incorporated herein by reference.
4.3.1 Amended specimen certificate for Registrant's Common Shares,
reflecting the change in stock transfer agent to National City Bank,
Cleveland, Ohio, effective November 1, 1995, filed as Exhibit 4.3.1
to Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, and incorporated herein by reference.
4.4 Excluded from the exhibits are certain agreements relating to long
term debt which, individually, do not exceed 10% of the total assets
of Registrant. Registrant hereby undertakes to furnish a copy of
such agreements upon request by the Commission.
10.1# Roberds, Inc. 1993 Stock Incentive Plan, filed October 1, 1993 as
Exhibit 10.1 to Registrant's Form S-1, Registration File No.
33-69876, and incorporated herein by reference.
57
<PAGE> 58
10.1.1# Amendment to Roberds, Inc. 1993 Stock Incentive Plan, filed as
Exhibit 99.1 to Registrant's Form S-1, File No. 33-97262, filed
September 25, 1995, and incorporated herein by reference.
*10.1.2# Amendment to Roberds, Inc. 1993 Stock Incentive Plan, referred to in
Exhibit 10.1, effective as of November 1, 1996, and filed herewith.
10.2# Roberds, Inc. Employee Stock Purchase Plan, filed October 1, 1993 as
Exhibit 10.2 to Registrant's Form S-1, Registration File No.
33-69876, and incorporated herein by reference.
*10.2.1# Amendment to Roberds, Inc. Employee Stock Purchase Plan, referred to
in Exhibit 10.2, effective as of November 1, 1996, and filed
herewith.
10.3# Roberds, Inc. 1993 Outside Director Stock Option Plan, filed October
1, 1993 as Exhibit 10.3 to Registrant's Form S-1, Registration File
No. 33-69876, and incorporated herein by reference.
*10.3.1# Amendment to Roberds, Inc. 1993 Outside Director Stock Option Plan,
referred to in Exhibit 10.3, effective as of November 1, 1996, and
filed herewith.
10.3.2# Roberds, Inc. Profit Sharing and Employee Retirement Savings Plan,
as amended, filed as Exhibit 99 to Registrant's Form S-8,
Registration File No. 33-81086, and incorporated herein by
reference.
10.3.3# Roberds, Inc. Amended and Restated Deferred Compensation Plan for
Outside Directors, effective 1996, filed as Exhibit 10.3.2 to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, and incorporated herein by reference.
*10.3.3.1# Amendment to Roberds, Inc. Amended and Restated Deferred
Compensation Plan for Outside Directors, referred to in Exhibit
10.3.3, effective as of February 27, 1996, and filed herewith.
**10.3.3.2# Amendment to Roberds, Inc. Amended and Restated Deferred
Compensation Plan for Outside Directors, referred to in Exhibit
10.3.3, effective as of November 1, 1996, and filed as Exhibit 99.1
to Registrant's Form S-8, Registration File No. 333-19903, and
incorporated herein by reference.
10.4.1 Lease Agreement dated April 1, 1990 among Registrant, Kenneth W.
Fletcher and Donald C. Wright, relating to Registrant's facility
located at 1000 East Central Avenue, West Carrollton, Ohio, and
amendments thereto, filed October 1, 1993 as Exhibit 10.4.1 to
Registrant's Form S-1, Registration File No. 33-69876, and
incorporated herein by reference.
10.4.1.1 Assignment and Assumption Agreement in connection with the transfer
of ownership of Registrant's facility located at 1000 East Central
Avenue, West Carrollton, Ohio from Kenneth W. Fletcher and Donald C.
Wright, an Ohio general partnership, to Kenneth W. Fletcher,
individually, and assigning Registrant's related lease of the
property to Mr. Fletcher, all effective January 1, 1995, and filed
as Exhibit 10.4.1.1 to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 and incorporated herein by
reference.
10.4.1.2 Assignment and Assumption Agreement in connection with the transfer
of ownership of Registrant's facility located at 1000 East Central
Avenue, West Carrollton, Ohio from Kenneth W. Fletcher,
individually, to DAF Investments LTD., an Ohio limited liability
company controlled by Mr. Fletcher, and assigning Registrant's
related lease of the property to DAF Investments LTD., all effective
January 1, 1995, and filed as Exhibit 10.4.1.2 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994 and incorporated herein by reference.
*10.4.1.3 Assignment and Assumption of Lease in connection with the transfer
of ownership of Registrant's facility located at 1000 East Central
Avenue, West Carrollton, Ohio from DAF Investments LTD.,
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an Ohio limited liability company controlled by Mr. Kenneth W.
Fletcher, to DAF West Carrollton Plaza, LTD., an Ohio limited
liability company controlled by Mr. Fletcher, and assigning
Registrant's related lease of the property to DAF West Carrollton
Plaza, LTD., effective January 14, 1997, and incorporated herein by
reference and filed herewith.
10.4.2 Lease Agreement dated April 1, 1990 among Registrant, Kenneth W.
Fletcher and Donald C. Wright, relating to Registrant's facility
located at 1100 East Central Avenue, West Carrollton, Ohio, and
amendments thereto, filed October 1, 1993 as Exhibit 10.4.2 to
Registrant's Form S-1, Registration File No. 33-69876, and
incorporated herein by reference.
10.4.2.1 Assignment and Assumption Agreement in connection with the transfer
of ownership of Registrant's facility located at 1100 East Central
Avenue, West Carrollton, Ohio from Kenneth W. Fletcher and Donald C.
Wright, an Ohio general partnership, to Kenneth W. Fletcher,
individually, and assigning Registrant's related lease of the
property to Mr. Fletcher, all effective January 1, 1995, and filed
as Exhibit 10.4.2.1 to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 and incorporated herein by
reference.
10.4.2.2 Assignment and Assumption Agreement in connection with the transfer
of ownership of Registrant's facility located at 1100 East Central
Avenue, West Carrollton, Ohio from Kenneth W. Fletcher,
individually, to DAF Investments LTD., an Ohio limited liability
company controlled by Mr. Fletcher, and assigning Registrant's
related lease of the property to DAF Investments LTD., all effective
January 1, 1995, and filed as Exhibit 10.4.2.2 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994 and incorporated herein by reference.
*10.4.2.3 Assignment and Assumption of Lease in connection with the transfer
of ownership of Registrant's facility located at 1100 East Central
Avenue, West Carrollton, Ohio from DAF Investments LTD., an Ohio
limited liability company controlled by Mr. Kenneth W. Fletcher, to
DAF West Carrollton Plaza, LTD., an Ohio limited liability company
controlled by Mr. Fletcher, and assigning Registrant's related lease
of the property to DAF West Carrollton Plaza, LTD., effective
January 14, 1997, and incorporated herein by reference and filed
herewith.
10.4.3 Lease Agreement dated June 1, 1988 among Registrant, Kenneth W.
Fletcher and Donald C. Wright, relating to Registrant's Piqua, Ohio
facility, and amendments thereto, filed October 1, 1993 as Exhibit
10.4.3 to Registrant's Form S-1, Registration File No. 33-69876, and
incorporated herein by reference.
10.4.3.1 Assignment and Assumption Agreement in connection with the transfer
of ownership of Registrant's Piqua, Ohio facility from Kenneth W.
Fletcher and Donald C. Wright, an Ohio general partnership, to
Donald C. Wright, individually, and assigning Registrant's related
lease of the property to Mr. Wright, all effective January 1, 1995
and filed as Exhibit 10.4.3.1 to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 and incorporated
herein by reference.
10.4.4 Lease Agreement dated April 1, 1988 among Registrant, Kenneth W.
Fletcher and Donald C. Wright, relating to Registrant's Richmond,
Indiana facility, and amendments thereto, filed October 1, 1993 as
Exhibit 10.4.4 to Registrant's Form S-1, Registration File No.
33-69876, incorporated herein by reference.
10.4.4.1 Assignment and Assumption Agreement in connection with the transfer
of ownership of Registrant's Richmond, Indiana facility from Kenneth
W. Fletcher and Donald C. Wright, an Ohio general partnership, to
Donald C. Wright, individually, and assigning Registrant's related
lease of the property to Mr. Wright, all effective January 1, 1995,
and filed as Exhibit 10.4.4.1 to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 and incorporated
herein by reference.
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<PAGE> 60
10.4.5 Lease Agreement dated March 1, 1992 among Registrant, Kenneth W.
Fletcher and Donald C. Wright, relating to Registrant's
Springfield, Ohio facility, and amendments thereto, filed October 1,
1993 as Exhibit 10.4.5 to Registrant's Form S-1, Registration File
No. 33-69876, and incorporated herein by reference.
10.4.5.1 Assignment and Assumption of Leases transferring ownership of
Registrant's Springfield, Ohio facility from Kenneth W. Fletcher and
Donald C. Wright, an Ohio general partnership, to Springfield
Properties, Inc., an Ohio corporation owned by Messrs. Fletcher and
Wright, and assigning Registrant's related lease of the property to
Springfield Properties, Inc., all effective November 16, 1994, and
filed as Exhibit 10.4.5.1 to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 and incorporated herein
by reference.
10.4.6 Lease Agreement dated March 1, 1987 between Registrant and Howard
Investments, a partnership owned by the Initial Shareholders,
relating to Registrant's Norcross, Georgia facility, filed October
1, 1993 as Exhibit 10.4.6 to Registrant's Form S-1, Registration
File No. 33-69876, and incorporated herein by reference.
10.4.6.1 Amendments to Lease Agreement between Registrant and Howard
Investments, referred to in Exhibit 10.4.6, effective December 20,
1995, pursuant to a sale of the property by Howard Investments to
800 Broadway and Ponce de Leon Stores, which are unrelated to the
Company and the Initial Shareholders, filed as Exhibit 10.4.6.1 to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, and incorporated herein by reference.
10.4.7 Lease Agreement dated March 1, 1987 between Registrant and Howard
Investments, a partnership owned by the Initial Shareholders,
relating to Registrant's Marietta, Georgia facility, filed October
1, 1993 as Exhibit 10.4.7 to Registrant's Form S-1, Registration
File No. 33-69876, and incorporated herein by reference.
10.4.8 Lease Agreement dated November 1, 1987 between Registrant and Howard
Investments, a partnership owned by the Principal Shareholders,
relating to Registrant's Forest Park, Georgia facility, and
amendments thereto, filed October 1, 1993 as Exhibit 10.4.8 to
Registrant's Form S-1, Registration File No. 33-69876, and
incorporated herein by reference.
10.4.9 Rent-Up Guarantee Agreement, filed October 1, 1993 as Exhibit 10.4.9
to Registrant's Form S-1, Registration File No. 33-69876, and
incorporated herein by reference.
10.5 Tax Indemnification Agreement among Kenneth W. Fletcher, Donald C.
Wright, Howard W. Smith, and Registrant, filed October 1, 1993 as
Exhibit 10.5 to Registrant's Form S-1, Registration File No.
33-69876, and incorporated herein by reference.
10.6.1 Amended and Restated Security Agreement between Registrant and
Chrysler First Commercial Corporation, filed October 1, 1993 as
Exhibit 10.6.1 to Registrant's Form S-1, Registration File No.
33-69876, and incorporated herein by reference.
10.6.2 Inventory Financing and Security Agreement between Whirlpool
Financial Corporation and Registrant, filed October 1, 1993 as
Exhibit 10.6.2 to Registrant's Form S-1, Registration File No. 33-
69876, and incorporated herein by reference.
10.6.3 Business Loan Agreement between Bank One, Dayton, NA and Registrant,
dated November 23, 1993, for up to $30 million. Filed as Exhibit
10.6.3 to Registrant's Form 10-K for the fiscal year ended December
31, 1993, and incorporated herein by reference.
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<PAGE> 61
10.6.3.1 Amendment to Business Loan Agreement between Bank One, Dayton, NA
and Registrant, dated April 20, 1994, amending the agreement
referred to in Exhibit 10.6.3, and filed as Exhibit 10.6.3.1 to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and incorporated herein by reference.
10.6.3.2 Amendment to Amended and Restated Business Loan Agreement between
Bank One, Dayton, NA and Registrant, dated December 7, 1994,
amending the agreement referred to in Exhibit 10.6.3, and filed as
Exhibit 10.6.3.2 to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and incorporated herein by
reference.
10.6.3.3 Amendment to Amended and Restated Business Loan Agreement between
Bank One, Dayton, NA and Registrant, dated October 13, 1995,
amending the agreement referred to in Exhibit 10.6.3, filed as
Exhibit 10.6.3.3 to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, and incorporated herein by
reference.
*10.6.3.4 Amendment to Amended and Restated Business Loan Agreement between
Bank One, Dayton, NA and Registrant, dated as of June 29, 1996,
amending the agreement referred to in Exhibit 10.6.3, and filed
herewith.
*10.6.3.5 Second Amendment to Amended and Restated Business Loan Agreement
between Bank One, Dayton, NA and Registrant, dated December 31,
1996, amending the agreement referred to in Exhibit 10.6.3.4, and
filed herewith.
*10.6.3.6 Amendment to Second Amended and Restated Business Loan Agreement
between Bank One, Dayton, NA and Registrant, dated February 27,
1997, amending the agreement referred to in Exhibit 10.6.3, and
filed herewith.
10.6.4 Term loan agreement between Bank One, Dayton, NA and Registrant,
dated November 8, 1994, for up to $7 million, and filed as Exhibit
10.6.4 to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, and incorporated herein by reference.
10.7 Amended and Restated Private Label Revolving Plan Agreement between
Registrant and Bank One, Dayton, N.A., filed October 1, 1993 as
Exhibit 10.7 to Registrant's Form S-1, Registration File No.
33-69876, and incorporated herein by reference. Portions of the
Exhibit have been omitted pursuant to a request by Registrant for
confidential treatment.
10.8.1 Termination of Stock Redemption Agreement dated September 24, 1993
between Roberds Service Company and shareholders of Roberds Service
Company, filed October 1, 1993 as Exhibit 10.8.1 to Registrant's
Form S-1, Registration File No. 33-69876, and incorporated herein by
reference.
10.8.2 Termination of Stock Redemption Agreement dated September 24, 1993
between Roberds, Inc. and shareholders of Roberds, Inc., filed
October 1, 1993 as Exhibit 10.8.2 to Registrant's Form S-1, Regis-
tration File No. 33-69876, and incorporated herein by reference.
10.9# Letter Agreements Limiting Salary and Bonus of Messrs. Fletcher,
Wright and Smith, filed November 12, 1993 as Exhibit 10.9 to
Registrant's Amendment No. 3 to Form S-1, Registration File No. 33-
69876, and incorporated herein by reference.
10.10# Registrant's Executive Compensation Plan, adopted in 1994, effective
for the 1995 calendar year, filed as Exhibit 10.10 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994 and incorporated herein by reference.
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<PAGE> 62
10.10.1# Registrant's Amended and Restated Executive Compensation Plan, as
amended for the 1996 calendar year, amending the Plan referred to in
Exhibit 10.10 above, and filed as Exhibit 10.10.1 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995, and filed herewith.
*10.10.2# Registrant's Seconded Amended and Restated Executive Compensation
Plan, as amended for the 1997 calendar year, amending the Plan
referred to in Exhibit 10.10.1 above, and filed herewith.
*10.11.1# Employment Agreement, dated as of March 1, 1996, between Registrant
and Charles H. Palko, Vice President-Appliances, and filed herewith.
*10.11.2# Employment Agreement, dated as of July 10, 1996, between Registrant
and Michael E. Ray, President-Tampa Market, and filed herewith.
11 Calculation of pro forma net earnings for the years ended December
31, 1993 and 1992, filed on March 25, 1994, as Exhibit 11 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1993, Commission File Number 0-22702, and incorporated herein by
reference.
21 Subsidiary of Registrant, filed as Exhibit 21 to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 and
incorporated herein by reference.
*23 Independent Auditors' Consent.
*24 Powers of attorney.
*27 Financial Data Schedules
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<PAGE> 1
EXHIBIT 10.1.2
ROBERDS, INC.
AMENDED 1993 STOCK INCENTIVE PLAN
NOVEMBER 1, 1996
1. Purpose. The purpose of this 1993 Stock Incentive Plan (the "Plan") is
to advance the interests of Roberds, Inc. ("the Company") and its shareholders
by offering to those employees of the Company and its subsidiaries who will be
responsible for the long-term growth of the Company's earnings the opportunity
to acquire or increase their equity interests in the Company or to enjoy
performance-based stock and/or cash incentives, thereby achieving a greater
commonality of interest between shareholders and employees, enhancing the
Company's ability to retain and attract highly qualified employees and providing
an additional incentive to such employees to achieve the Company's long-term
business plans and objectives.
2. Award Opportunities. Awards under the Plan may be granted in the form
of (a) incentive stock options as provided in Section 412 of the Internal
Revenue Code of 1986, as amended (the "Code"), (b) nonqualified stock options,
(c) shares of common stock of the Company which are restricted and must be
purchased by the employee ("Restricted Stock"), (d) stock appreciation rights
("SARs"), (e) limited stock appreciation rights ("LSARs"), (f) performance
units, or (g) stock units (all of which shall hereinafter be collectively
referred to as "Awards").
Incentive and non-qualified stock options shall hereinafter be referred
to individually as an "option" and collectively as "Options" in this Plan.
3. Administration.
(A) Committee. The Plan shall be administered by the Company's Board of
Directors (the "Board") or by a committee (the "Committee") of the
Board, as determined from time to time by the Board. The Committee
shall consist of no fewer than three directors of the Company who shall
be appointed, from time to time, by the Board. At any time that the
Company has a class of equity securities registered under Section 12 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
only directors who, at the time of service, qualify as "non-employee
directors" within the meaning of Rule 16b-3 or its successor under the
Exchange Act shall be members of the Committee. All references in this
Plan to the Board shall be understood to refer either to the full Board
or to the Committee, to the extent administration of the Plan has been
delegated by the Board to the Committee.
(B) Authority. The Board, or the Committee, to the extent the Board has
delegated such authority to the Committee, shall have full and final
authority with respect to the Plan (i) to interpret all provisions of
the Plan consistent with law; (ii) to determine the employees who will
receive Awards; (iii) to determine the frequency of grant of Awards;
(iv) to determine the number and type of Options to be granted to each
employee and the price at which they may be exercised; (v) to determine
the number of shares of Restricted Stock to be granted to each employee
and the purchase price of such shares; (vi) to specify the number of
shares subject to each Option; (vii) to prescribe the form and terms of
instruments evidencing any Award granted under the Plan; (viii) to
determine when Options or SARs may be exercised or; (ix) to determine
the term of the restricted period and other conditions applicable to
Restricted Stock; (x) to adopt, amend and rescind general and special
rules and regulations for the Plan's administration; and (xi) to make
all other determinations necessary or advisable for the administration
of the Plan. The Board may, with the consent of
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<PAGE> 2
the person or persons who has been granted an Award under the Plan,
amend the instrument regarding such Award consistent with the
provisions of the Plan.
(C) Indemnification. No member of the Board or the Committee shall be
liable for any action taken or determination made in good faith. The
members of the Board and the Committee shall be indemnified by the
Company for any acts or omissions in connection with the Plan to the
full extent permitted by Ohio and Federal law.
4. Eligibility. Participation in the Plan shall be determined by the
Board and shall be limited to employees of the Company and its subsidiaries.
5. Stock Subject to Plan. Subject to adjustments as provided in
Section 12(A) hereof, the aggregate number of shares of common stock, without
par value, of the Company ("Shares") as to which Awards may be granted under the
Plan shall not exceed 1,300,000 Shares. Such Shares may be authorized but
unissued Shares or treasury Shares.
The Board shall maintain records showing the cumulative total of all
Shares subject to Options outstanding, the number of Shares purchased as
Restricted Stock and their applicable restricted period under this Plan and the
number of Shares delivered in settlement of any other Award under the Plan.
If an Option granted hereunder shall expire or terminate for any reason
without having been fully exercised or if any Shares of Restricted Stock granted
under this Plan is forfeited to the Company or if any Shares to be issued
pursuant to an Award are not issued for any reason, then the Shares covered by
the unexercised portion of such Option, the forfeited Restricted Stock Shares
and the Shares not issued upon settlement of an Award shall be available for the
purposes of this Plan. In addition, any Shares which are used as full or partial
payment by a Participant of the exercise price upon exercise of an Option shall
be available for Awards under the Plan as shall any Shares which are withheld in
payment of tax withholding obligations of a Participant (as provided in Section
12 (F)).
6. Options.
(A) Allotment of Shares. The Board may, in its sole discretion and
subject to the provisions of the Plan, grant to eligible employees at
such times as it deems appropriate following adoption of the Plan by
the Board, Options to purchase Shares, subject to approval of the Plan
by the Company Shareholders.
Options may be allotted to participants in such amounts,
subject to the limitations specified in this Section, as the Board, in
its sole discretion, may from time to time determine.
(B) Option Price. The price per Share at which each non-qualified or
incentive stock option granted under the Plan may be exercised shall
not, as to any particular option, be less than one hundred percent
(100%) of the fair market value of a Share at the time such option is
granted. In the case of a participant who owns stock representing more
than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of its parent or any subsidiary (as
determined under Section 425(d) of the Code) at the time the incentive
stock Option is granted, the Option price shall not be less than 110%
of the fair market value of the Shares at the time the incentive stock
option is granted. The foregoing rule shall not apply to a nonqualified
stock option.
For purposes of Options granted hereunder, "fair market value"
of a Share shall mean the average of the high and low prices reported
in the consolidated reporting system (for exchange traded securities
and last sale reported over-the-counter securities) or the average of
the bid and asked prices (for other over-the-counter securities), on
the date the Option is granted, or, if no such prices are available,
the fair market value on such
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<PAGE> 3
date of a Share as the Board shall determine. Unless another date is
specified by the Board, the date on which the Board approves the
granting of an Option shall be deemed the date on which the Option is
granted.
(C) Option Period. An Option granted under the Plan shall terminate,
and the right of the participant (or the participant's estate, personal
representative, or beneficiary) to purchase Shares upon exercise of the
Option shall expire, on the date determined by the Board at the time
the Option is granted (the "Termination Date"). No incentive stock
option shall be exercisable more than ten (10) years after the date on
which it was granted, and no nonqualified stock option shall be
exercisable more than ten (10) years and one (1) day after the date on
which it was granted. In the case of a participant who owns stock
representing more than ten percent (10%) of the total combined voting
power of all classes of the Company's stock, no incentive stock option
shall be exercisable more than five (5) years after the date on which
it is granted.
(D) Exercise of Options.
(1) By a Participant During Continuous Employment.
Unless otherwise determined by the Board at the
time of grant, an Option will be exercisable in
four (4) equal annual installments commencing on
the first anniversary of the date the Option was
granted and within the guidelines established by
Section 6(F) applicable to incentive stock options.
In its discretion, the Board may at any time
accelerate the exercisability of an Option. During
the lifetime of a participant to whom an Option is
granted, the Option may be exercised only by the
participant or by the participant's
attorney-in-fact or legal guardian as hereinafter
provided (unless such exercise would disqualify an
Option as an incentive stock option).
A participant who has been continuously employed by
the Company or a subsidiary since the date of Option grant is
eligible to exercise all Options which are then exercisable up
to the Termination Date of such Options and within the
guidelines established by Section (F). The Board will decide
in each case, subject to the limitations set forth in Section
422 of the Code applicable to incentive stock options, to what
extent leaves of absence for government or military service,
illness, temporary disability, or other reasons shall not for
this purpose be deemed interruptions of continuous employment.
(2) By a Former Employee.
A participant who terminates employment with the
Company and its subsidiaries for reasons other than
retirement, permanent and total disability or death, must
exercise all Options pre viously awarded on or prior to the
date of his termination of employment (but no later than the
Termination Date of the Options). The exercise of such Options
must be within the guidelines established by Section 6(F). An
Option may be exercised on or prior to the date of such
termination of employment only for the number of Shares for
which it could have been exercised at the time the participant
terminated employment with the Company and its subsidiaries.
The failure to exercise all Options by a participant on or
prior to the date of his termination of employment will result
in the forfeiture of all unexercised Options.
(3) In Case of Retirement.
Upon retirement (as hereafter defined), the
non-qualified stock options of a participant must be exercised
within three (3) years of such retirement and the incentive
stock Options must be exercised within three (3) months of
such retirement and within the guidelines established by
Section 6(F) (but no later than the Termination Date of such
Option). For purposes of the Plan, "retirement" shall mean
that the participant on the date of termination of employment
has attained age 60 with 10 years of continuous employment
with the Company and its subsidiaries. If the participant
should die
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<PAGE> 4
within the three (3) year or three (3) month period following
retirement, as applicable, the provisions contained in Section
6(D), Paragraph 5 hereof shall apply. The exercisability of
all Options granted to such a Participant shall be accelerated
and the Options shall become immediately exercisable without
regard to the number of Shares for which it otherwise could
have been exercised on the date of retirement.
(4) In Case of Permanent and Total Disability.
If a participant who was granted an Option terminates
employment with the Company and its subsidiaries because of
permanent and total disability and is eligible for benefits
under the Company disability plan, or successor plan, upon
termination of employment, all non-qualified stock Options
previously awarded must be exercised within three (3) years of
such termination of employment and all incentive stock Options
must be exercised within one (1) year of such termination of
employment subject to the guidelines established by Section 6
(F) (but no later than the Termination Date of such Option).
If the participant should die during such three (3) year or
one (1) year period, as applicable, the provisions contained
in Section 6(D), Paragraph 5 hereof shall apply. The
exercisability of all Options granted to such a Participant
shall be accelerated and the Options shall become immediately
exercisable without regard to the number of Shares for which
it could otherwise have been exercised on the date of
termination of employment.
(5) In Case of Death.
If a participant who was granted an Option dies while
employed by the Company or a subsidiary, or during the three
(3) year or three (3) month period following retirement or
during the three (3) year or one (1) year period following
termination of employment due to permanent and total
disability, as applicable, all Options previously awarded must
be exercised no later than the Termination Date of such Option
by the participant's estate, or by a person who acquired the
right to exercise the Option by bequest or inheritance and
within the guidelines established by Section 6(F). The
exercisability of all Options granted to such a Participant
shall be accelerated and the Options shall become immediately
exercisable without regard to the number of Shares for which
it otherwise could have been exercised on the date of death.
(6) Termination of Options.
An Option granted under the Plan shall be considered
terminated in whole or in part, to the extent that, in
accordance with the provisions of the Plan, it can no longer
be exercised for Shares originally subject to the Option.
(E) Manner of Exercise and Payment.
(1) Exercise
Each option granted under this Plan shall be deemed
exercised to the extent that the participant shall deliver to
the Company written notice of the number of full Shares with
respect to which the Option is being exercised. The
participant shall at the same time tender to the Company
payment in full for the Shares for which the Option is
exercised, which may be in cash or, subject to Section 6(E),
Paragraph 2 hereof, in previously issued Shares or partly in
cash and partly in Shares, and shall comply with such other
reasonable requirements as the Board may establish, pursuant
to Section 12(D) of the Plan. These provisions shall not
preclude exercise of an Option, or payment for Shares, by any
other proper legal method specifically approved by the Board.
No person, estate or other entity shall have any of
the rights of a shareholder with reference to Shares subject
to an Option until a certificate for the Shares has been
delivered.
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<PAGE> 5
An Option granted under this Plan may be exercised
for any lesser number of whole Shares than the full amount for
which it could then be exercised, provided, however, that the
Board may require, in the agreement evidencing an Option, any
partial exercise to be with respect to a specified minimum
number of Shares. Such a partial exercise of an Option shall
not affect the right to exercise the Option from time to time
in accordance with the Plan for the remaining Shares subject
to the Option.
(2) Payment in Shares
The value of Shares delivered for payment of the
exercise price shall be the fair market value of the Shares
determined as provided in Section 6(B) on the date the Option
is exercised. If certificates representing Shares are used to
pay all or part of the exercise price of an Option, separate
certificates shall be delivered to the Company representing
the number of Shares so used, and an additional certificate or
certificates shall be delivered representing the additional
Shares to which the Option holder is entitled as a result of
exercise of the Option. Notwithstanding the foregoing and the
provisions of Section 6(E), paragraph (1), the Board, in its
sole discretion, may refuse to accept Shares delivered for
payment of the exercise price, in which event any certificates
representing Shares that were actually received by the Company
with the written notice of exercise shall be returned to the
person exercising such Option together with notice by the
Company of the refusal of the Company to accept such Shares.
In the event Shares are delivered for payment of the
option price as herein provided, then, at the discretion of
the Board, the participant may be granted an Option to
purchase a number of Shares equal to the number of Shares
delivered in payment of the exercise price, with an exercise
price equal to the current fair market value of such Shares,
and with a term of such Option extending to the expiration
date of the Option which was exercised with respect to which
Shares were delivered as payment of all or a portion of the
exercise price.
(3) Loans
The Company may make loans to such holders of Options
as the Board, in its discretion, may determine (including a
holder who is a director or officer of the Company) in
connection with the exercise of Options granted under the
Plan; provided, however, that the Board shall not authorize
the making of any loan where the possession of such discretion
or the making of such a loan would result in a "modification"
(as defined in Section 425 of the Code) of any incentive stock
option. Such loans shall be subject to the following terms and
conditions and such other terms and conditions as the Board
shall determine at the time the loan is made which are not
inconsistent with the Plan. Such loans shall bear interest at
such rates as the Board shall determine from time to time,
which rates shall be the then current market rates. In no
event may any such loan exceed the fair market value, at the
date of exercise, of the Shares covered by the Option, or
portion thereof, exercised by the holder. No loan shall have
an initial term exceeding five years, but any such loan may be
renewable at the discretion of the Board. At the time a loan
is made, Shares having a fair market value at least equal to
the principal amount of the loan shall be pledged by the
holder to the Company as security for payment of the unpaid
balance of the loan. Every loan shall comply with all
applicable laws, regulations and rules of the Board of
Governors of the Federal Reserve System and any other
governmental agency having jurisdiction.
(4) Award of Cash or Shares in Lieu of Exercise
The Board may elect, in lieu of accepting payment of
the option price and delivering any or all Shares as to which
an Option has been exercised, to pay the holder of such Option
an amount in cash or Shares, or a combination of cash and
Shares, equal to the amount by which the fair market
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<PAGE> 6
value (determined as provided in Section 6(B)) on the date of
exercise of the Shares as to which such Option has been
exercised exceeds the option price that would otherwise be
payable by the holder of such Option for such Shares. The
Board may also permit a Participant to simultaneously exercise
an Option and sell the Shares acquired upon exercise, pursuant
to a brokerage arrangement, approved in advance by the Board,
and use the proceeds from such a sale as payment of the option
price of such Shares.
(5) Persons Subject to Section 16 of the Exchange Act
Participants who are subject to Section 16 of the
Exchange Act are hereby advised that reliance on Rule 16b-3
may require that any equity security of the Company acquired
upon exercise of an option by such person be held at least
until the date six months after the date of grant of the
option.
(F) Limitations on Exercise. In the case of Options intended to be
incentive stock options, the aggregate fair market value, determined as
of the date of grant, of the Shares as to which such Options are
exercisable for the first time by a participant shall be limited to
$100,000 per calendar year.
Non-qualified stock options may be exercised by a participant
without regard to the foregoing limitation.
7. Stock Appreciation Rights.
(A) Granting of Stock Appreciation Rights. The Board may, in its
sole discretion and subject to the provisions of the Plan, grant to
eligible employees at such times as it deems appropriate following
adoption of the Plan by the Board, Stock Appreciation Rights, subject
to approval of the Plan by the Company Shareholders.
(B) Stock Appreciation Rights. A Stock Appreciation Right is a
right to receive the following amount of appreciation -- an amount
equal to the excess of the fair market value of a Share on the
exercise date over the fair market value of a Share on the date of
grant of the Stock Appreciation Right, multiplied by the number of
Shares with respect to which the Stock Appreciation Right shall have
been exercised.
(C) Terms of Grants. A Stock Appreciation Right may be granted in
tandem with, in addition to or completely independent of an Option or
any other Award under the Plan.
(D) Manner of Exercise. A Stock Appreciation Right may be
exercised by a Participant in accordance with procedures established
by the Board, and a Stock Appreciation Right shall be exercisable as
provided by the Board on the date of grant. The Board may also provide
that a Stock Appreciation Right shall be automatically exercised on
one or more specified dates. Notwithstanding the foregoing, all Stock
Appreciation Rights shall be automatically exercised as of the end of
the month in which the participant's employment terminates due to
death, permanent and total disability or retirement.
(E) Form of Payment. Payment upon exercise of a Stock Appreciation
Right may be made in cash or in Shares, or any combination thereof, as
the Board shall determine; provided, however, that any Stock
Appreciation Right exercised upon or subsequent to the occurrence of a
Change of Control (as defined in Section 12(B)) shall be paid in cash.
(F) Persons Subject to Section 16 of the Exchange Act.
Participants who are subject to Section 16 of the Exchange Act are
hereby advised that, unless the date of exercise of a Stock
Appreciation Right is automatic or fixed in advance under this Plan
and is outside the control of the Participant, reliance on Rule 16b-3
with respect to cash settlements of Stock Appreciation Rights requires
that (1) the Company on a regular basis
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<PAGE> 7
publicly releases for publication quarterly and annual summary
statements of sales and earnings and (2) exercises of Stock
Appreciation Rights resulting in full or partial cash settlements must
occur only during the period beginning with the third business day and
ending on the twelfth business day following release of such
information.
8. Limited Stock Appreciation Rights
(A) Granting of Limited Stock Appreciation Rights. The Board
may, in its sole discretion and subject to the provisions of the Plan,
grant to officers at such times as it deems appropriate following
adoption of the Plan by the Board, subject to approval of the Plan by
the Company Shareholders, rights to receive cash to Officers who are
Option holders equal to the fair market value of a Share of stock on
the exercise date over the exercise price of the related option
("Limited Stock Appreciation Rights") which rights, however, are
conditioned upon and may be exercised only if each of the following
three conditions are satisfied:
(1) The Company has equity securities registered under
the Exchange Act;
(2) The option holder is an Officer subject to Section
16(b) of the Exchange Act; and
(3) There has been an event of Change of Control as
defined in Section 12(B).
Such Limited Stock Appreciation Rights shall be evidenced by
agreements in such form and containing such additional terms not
inconsistent with the Plan as the Board shall from time to time
approve.
(B) Terms of Grants. Each Limited Stock Appreciation Right
shall relate to a specific Option under the Plan. The number of
Limited Stock Appreciation Rights granted to a Participant shall be
no more than the number of Shares that the Participant is entitled to
receive pursuant to the related Option. The number of Limited Stock
Appreciation Rights held by a Participant shall be reduced by:
(i) the number of Limited Stock Appreciation Rights
exercised for cash under the Stock Appreciation Rights
agreement; and
(ii) the number of Shares of stock purchased by such
participant pursuant to the related Option.
(C) Manner of Exercise. In no event shall a Limited Stock
Appreciation Right be exercisable within the first six (6) months
after the date of the grant. If an event of Change of Control occurs
and is outside the control of the Participant, all Limited Stock
Appreciation Rights held by such Participant (other than any Limited
Stock Appreciation Rights granted within the prior six months or in
response to the event of Change of Control) shall be automatically
exercised as of the date of the Change of Control without any election
by the Participant. Determination of whether the Change of Control is
within the control of the Participant shall be made based upon the
interpretations by the Securities and Exchange Commission or its staff
as then available and in effect. If the event of Change of Control is
outside the control of the Participant, then the Limited Stock
Appreciation Rights held by such Participant shall become immediately
exercisable but shall not be automatically exercised. A Participant
described in the immediately preceding sentence may exercise Limited
Stock Appreciation Rights by giving written notice of such exercise to
the Company, and the date upon which such notice is received by the
Company shall be the exercise date for the Limited Stock Appreciation
Right. See Section 7 (F). All Limited Stock Appreciation Rights shall
be automatically exercised as of the end of the month in which the
Participant's employment terminates due to death, permanent and total
disability or retirement.
(D) Appreciation Available. Each Limited Stock Appreciation
Right shall entitle a Participant to the following amount of
appreciation -- the excess of the fair market value of a Share on the
exercise date over
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<PAGE> 8
the option price of the related Option. The total appreciation
available to a Participant from any exercise of Limited Stock
Appreciation Rights shall be equal to the number of Limited Stock
Appreciation Rights being exercised, multiplied by the amount of
appreciation per Right determined under the preceding sentence.
(E) Payment of Appreciation. The total appreciation available to the
Participant from an exercise of Limited Stock Appreciation Rights shall
be paid to the Participant in cash. The amount thereof shall be the
amount of appreciation determined under Paragraph D above. Payment
shall be made within 10 days of the exercise of the Limited Stock
Appreciation Rights.
(F) Limitations Under Exercise of Limited Stock Appreciation Rights. A
Participant may exercise a Limited Stock Appreciation Right for cash,
only after a Change of Control and only in conjunction with the Option
to which the Limited Stock Appreciation Right relates. Limited Stock
Appreciation Rights may be exercised only by such persons as may
exercise the related Options under the Plan. Adjustment to the number
of Shares in the Plan and the price per Share pursuant to Section 12
(A) shall also be made in a similar manner to any Limited Stock
Appreciation Rights held by each Participant.
9. Restricted Stock.
(A) Granting of Restricted Stock. The Board may, in its sole discretion
and subject to the provisions of the Plan, grant to eligible employees
at such times as it deems appropriate following adoption of the Plan by
the Board, the right to purchase Shares of Restricted Stock, subject to
approval of the Plan by the Company Shareholders.
(B) Restricted Stock Price. The price at which Restricted Stock may be
purchased by a Participant under the Plan shall be determined by the
Board and shall not be less than the fair market value of a Share. Fair
market value shall be determined as provided in Section 6(B) hereof.
The purchase price per Share as to any particular Restricted Stock
grant shall also be known as the "Initial Price Per Share."
(C) Terms of Restricted Stock. At the time of a Restricted Stock grant,
the Board shall establish a period of time (the "Restricted Period")
applicable to the Restricted Stock, which shall not be more than ten
(10) years from the date of grant. Each grant of Restricted Stock may
have a different Restricted Period. The Board may in its sole
discretion, at the time of the grant of Restricted Stock is made,
prescribe conditions for the incremental lapse of restrictions during
the Restricted Period and for the lapse of termination of restrictions
upon the satisfaction of other conditions with respect to all or any
portion of the Restricted Stock. The Board may also, in its sole
discretion, at any time shorten or terminate the Restricted Period or
waive any conditions for the lapse or termination of restrictions with
respect to all or any portion of the Shares of Restricted Stock.
Unless another date is specified, the date on which the Board
approves the grant of Restricted Stock shall be deemed the date on
which the Restricted Stock is granted.
In order for a Participant to exercise his right to purchase
Shares of Restricted Stock under a grant (unless that payment date is
further extended by the Board), within thirty (30) days after the date
of grant, such Participant shall execute, retroactive to the date of
such grant, an agreement reflecting the number of Shares he is
purchasing and the conditions imposed upon the purchase of such Shares
as determined by the Board.
As payment for the purchase price of the Restricted Stock, the
Participant may tender to the Company payment in cash, in previously
issued Shares (taken at their fair market value on the date the
Restricted Stock is granted determined as provided in Section 6(B)) or
partly in cash and partly in previously issued Shares and shall comply
with such other reasonable requirements as the Board may establish,
pursuant to this Section 9(C). Notwithstanding the foregoing, the
Board, in its sole discretion, may refuse to accept Shares in payment
of the purchase price.
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<PAGE> 9
A stock certificate representing the number of Shares of
Restricted Stock granted to and purchased by a Participant shall be
registered in the Participant's name but shall be held in custody by
the Company for the Participant's account. The Participant shall have
the rights and privileges of a shareholder as to such Shares of
Restricted Stock, including the right to vote such Shares, except that
(i) the~Participant shall not be entitled to delivery of the
certificate until the expiration or termination of the Restricted
Period and the satisfaction of any other conditions prescribed by the
Board, (ii) none of the Shares may be sold, transferred, assigned,
pledged, or otherwise encumbered or disposed of during the Restricted
Period and until the satisfaction of any other conditions prescribed by
the Board, and (iii) all of the Restricted Stock shall be forfeited and
all rights of the~Participant to such Restricted Stock Shares shall
terminate without further obligation on the part of the Company (except
for the obligation of the Company to purchase the Restricted Stock from
the Participant at the Initial Price Per Share) in the event the
Participant has not remained in the continuous employment of the
Company or a subsidiary until the expiration or termination of the
Restricted Period and the satisfaction of any other conditions
prescribed by the Board applicable to such Restricted Stock. The Board
shall decide in each case to what extent leaves of absence for
government or military service, illness, temporary disability or other
reasons shall not, for this purpose, be deemed interruption of
continuous employment. If the Participant's continuous employment
should be terminated because of death, permanent and total disability
or retirement, the provisions contained in Section 9(D) shall apply.
At the discretion of the Board, cash and stock dividends may
be either currently paid or withheld by the Company for the
Participant's account, and interest may be paid on the amount of cash
dividends withheld at a rate and subject to such terms as determined by
the Board.
Each Certificate evidencing Shares of Restricted Stock shall
be inscribed with a legend substantially as follows:
"The Shares of common stock of Roberds, Inc. evidenced by
this certificate are subject to the terms and restrictions
of the Roberds, Inc. 1993 Stock Incentive Plan. Such Shares
are subject to forfeiture or cancellation under the terms of
said Plan and shall not be sold, transferred, assigned,
pledged, encumbered or otherwise alienated or hypothecated
except pursuant to the provisions of said Plan, a copy of
which is available from Roberds, Inc. upon request."
Upon the expiration or termination of the Restricted Period
and the satisfaction of any other conditions prescribed by the Board or
at such earlier time as provided for in Section 9(D), the restrictions
applicable to the Restricted Stock Shares shall lapse and a stock
certificate for the number of Restricted Stock Shares with respect to
which the restrictions have lapsed shall be delivered, free of all such
restrictions, except any that may be imposed by law, to the Participant
or the Participant's beneficiary or estate, as the case may be. The
Company shall not be required to deliver any fractional Shares but will
pay, in lieu thereof, the fair market value (determined in accordance
with Section 6(B) as of the date the restrictions lapse) of such
fractional Shares to the Participant or the Participant's beneficiary
or estate, as the case may be.
(D) Termination of Employment. All rights to the Restricted Stock
Shares shall be forfeited if the Participant terminates employment with
the Company and its subsidiaries for any reason except for death,
permanent and total disability or retirement prior to the expiration of
the restrictions on such Shares and such forfeited Shares shall be
purchased by the Company at the Initial Price Per Share within a
reasonable time period established by the Board. Any attempt to dispose
of any such Shares in contravention of the foregoing restrictions shall
be null and void and without effect.
If a Participant who has been in the continuous employ of the
Company or a subsidiary since the date on which the Restricted Stock
was granted dies, becomes permanently and totally disabled or retires
while in such employment and prior to the lapse of the restrictions on
the Restricted Stock, all such restrictions shall lapse and cease to be
effective as of the end of the month in which the Participant's
employment terminates due to death, permanent and total disability or
retirement.
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<PAGE> 10
(E) Persons Subject to Section 16 of the Exchange Act. Participants who
are subject to Section 16 of the Exchange Act are hereby advised that
reliance on Rule 16b-3 may require that any equity security of the
Company acquired upon exercise of Restricted Stock by such person be
held at least until the date six months after the date of grant of the
Restricted Stock.
10. Performance Units.
(A) Granting Performance Units. The Board may, in its sole discretion
and subject to the provisions of the Plan, grant to eligible employees
at such times as it deems appropriate following adoption of the Plan by
the Board, Performance Units, subject to approval of the Plan by the
Company Shareholders. Each Performance Unit shall represent the right
of a Participant to receive an amount equal to a Payment Value, which
Payment Value shall be determined by the Board and shall be based upon
the performance of the Participant, the Company, or a division of the
Company over a Performance Period or such other measure of performance
as may be determined by the Board. A Participant to whom an award of
Performance Units has been made shall not be required to provide any
consideration for a Performance Unit other than the rendering of
services or the payment of any minimum amount required by applicable
law, unless otherwise determined by the Board. Each Performance Unit
granted under the Plan shall be evidenced by a written Performance Unit
Agreement between the Company and the Participant. The Performance Unit
Agreement shall be in such form and shall contain such terms and
conditions as the Board shall determine.
(B) Terms of Grants. The Performance Period for each Performance Unit
granted under the Plan shall be of such duration as the Board shall
establish at the time of the award. The performance criteria for each
Performance Unit awarded under the Plan shall be determined by the
Board. More than one award of Performance Units may be granted to any
individual Participant under the Plan, and the terms and conditions of
Performance Units, such as the Performance Periods and performance
criteria, may differ. If during a Performance Period there should
occur, in the opinion of the Board, significant changes in economic
conditions or in the nature of the operations of the Company which the
Board did not foresee in establishing the performance criteria for such
Performance Period, and which in the Board's sole judgment, have, or
are expected to have, a substantial effect on the Participant's or the
Company's ability to meet the performance criteria, the Board may
revise the performance criteria formerly determined by it in such a
manner as the Board, in its sole judgment, may deem appropriate.
(C) Termination of Employment. A grant of Performance Units to a
Participant shall be forfeited if the Participant terminates employment
with the Company and its subsidiaries, during the Performance Period,
except for death, permanent and total disability or retirement prior to
the expiration of the Performance Period.
If a Participant who has been in the continuous employ of the
Company or a subsidiary since the date on which the Performance Unit
was granted dies, becomes permanently and totally disabled or retires
while in such employment and prior to the expiration of the Performance
Period, all Performance Units shall be deemed to be earned in such
amount as of the end of the month in which the Participant's employment
terminates due to death, permanent and total disability or retirement
as provided in the Performance Unit Agreement at the time of grant.
(D) Manner of Settlement. The Payment Value of a Performance Unit shall
be paid to a Participant in cash, in Shares, or in a combination of
cash and Shares as determined by the Board in its sole discretion. The
Payment Value of a Performance Unit shall be paid to the Participant on
such date following the conclusion of the Performance Period as the
Board shall designate at the time of grant.
(E) All other terms and conditions of a grant of Performance Units
shall be determined by the Board.
(F) Persons Subject to Section 16 of the Exchange Act. Participants who
are subject to Section 16 of the Exchange Act are hereby advised that
the Staff of the Securities and Exchange Commission has taken the
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<PAGE> 11
position that rights similar to Performance Units may be considered
Stock Appreciation Rights for purposes of Section 16, depending upon
the performance criteria for the particular Performance Units. See
Section 7(F).
11. Stock Units
(A) Granting Stock Units. The Board may, in its sole discretion and
subject to the provisions of the Plan, grant to eligible employees at
such times as it deems appropriate following adoption of the Plan by
the Board, either alone or in addition to other Awards made under the
Plan, units that are valued in whole or in part by reference to or
otherwise based on Shares ("Stock Units"), subject to the approval of
the Plan by the Company Shareholders. Each Stock Unit granted under
this Plan shall be evidenced by a written Stock Unit Agreement between
the Company and the Participant. The Stock Unit Agreement shall be in
such form and shall contain such terms and conditions as the Board may
determine.
(B) Terms of Grants. The Board shall determine the Participants to whom
Stock Units are to be granted, the times at which such awards are to be
made, the number of Shares to be granted pursuant to such awards and
all other terms and conditions regarding such awards. More than one
Stock Unit Award may be granted to an individual Participant under the
Plan, and the terms and conditions of Stock Unit Awards may differ. A
Participant to whom an award of Shares has been made pursuant to a
Stock Unit Award shall not be required to provide any consideration for
the Shares, other than the rendering of services or the payment of any
minimum amount required by applicable law, unless otherwise determined
by the Board.
(C) Termination of Employment. All rights to Stock Units shall be
forfeited if the Participant terminates employment with the Company and
its subsidiaries for any reason except for death, permanent and total
disability or retirement prior to the expiration of the applicable
measurement period for such Stock Units.
If a Participant who has been in the continuous employ of the
Company or a subsidiary since the date on which the Stock Unit was
granted dies, becomes permanently and totally disabled or retires while
in such employment and prior to the expiration of the measurement
period for such Stock Unit, the Stock Unit shall be deemed to be earned
in such amount as of the end of the month in which the participant's
employment terminates due to death, permanent and total disability or
retirement as provided in the Stock Unit Agreement at the time of
grant.
(D) Manner of Settlement. The amount due a Participant for Stock Units
which were granted may be paid in case in Shares, or in a combination
of cash and Shares, as determined by the Board in its sole discretion.
(E) All other terms and conditions of a grant of Stock Units shall be
determined by the Board.
(F) Persons Subject to Section 16 of the Exchange Act. Participants who
are subject to Section 16 of the Exchange Act are hereby advised that
the Staff of the Securities and Exchange Commission has taken the
position that rights similar to Stock Units may be considered Stock
Appreciation Rights for purposes of Section 16, depending upon the
performance criteria for the particular Stock Unit. See Section 7(F).
12. Other Provisions
(A) Adjustment of Shares. In the event that the outstanding Shares are
changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up,
stock dividend or combination of Shares, or issuance or exercise of
warrants or rights, the Board shall make an appropriate and equitable
adjustment in the number and kind of Shares subject to outstanding
Awards, or portions thereof then unexercised, and the number and kind
of Shares subject to the Plan to the end that after such event the
Shares subject to the Plan and the Participant's right to a
proportionate interest in the Company shall be maintained as before the
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<PAGE> 12
occurrence of such event. Such adjustment in an outstanding Award shall
be made without change in the total price applicable to the Award or
the unexercised portion of any Award (except for any change in the
total price resulting from rounding off Share quantities or prices) and
with any necessary corresponding adjustment in option price per Share.
Any such adjustment made by the Board shall be final and binding upon
all Participants, the Company and all other interested persons. Any
adjustment of an incentive stock option under this paragraph shall be
made in such manner so as not to constitute a "modification" within the
meaning of Section 425(h)(3) of the Code. The Board, in its sole
discretion may at any time make or provide for such adjustments to the
Plan or any Award granted thereunder as it shall deem appropriate to
prevent the reduction or enlargement of rights, including adjustments
in the event of changes in the outstanding common stock by reason of
mergers, consolidations, combinations, exchanges of Shares,
separations, reorganizations, liquidations, issuance or exercise of
warrants or rights and the like in which the Company is not the sole
surviving successor to the assets or business of the Company
immediately prior thereto. In the event of any offer to holders of
common stock generally relating to the acquisition of their Shares, the
Board may make such adjustments as it deems equitable in respect of
outstanding Awards. Any such determination of the Board shall be
conclusive.
(B) Change of Control. In the event the Company experiences a Change of
Control (as hereafter defined), all Options shall become exercisable
immediately prior to the Change of Control, provided that any portion
of such Option which is an incentive stock option shall be exercisable
up to the maximum amount allowed by Section 6(F) applicable to
incentive stock options and the balance shall become a non-qualified
stock option, all Restricted Stock restrictions shall lapse immediately
prior to such event, all Limited Stock Appreciation Rights and Stock
Appreciation Rights shall become exercisable immediately prior to the
Change of Control and all grants of Performance Units and Stock Units
shall be deemed to have been fully earned immediately prior to the
Change of Control, subject to the limitation that any Award which has
been outstanding less than six (6) months on the date of Change of
Control shall not be afforded such treatment.
For purposes of these provisions, the term "Persons" shall
mean any individual, firm, corporation, partnership, joint venture,
association, trust, or other entity and any "Affiliate" or "Associate"
thereof (as such terms are defined in Rule 12b-2 promulgated under the
1934 Act).
For purposes of this Plan, the term "Change of Control" of the
Company shall mean and shall be deemed to have occurred if:
(a) The "acquisition" after the date hereof by any "Person"
(as such term is defined below) of "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "1934 Act"),
as in effect on the date hereof) of any securities of the
Company which generally entitles the holder thereof to vote
generally for the election of directors of the Company (the
"Voting Securities") which, when added to the Voting
Securities then "Beneficially Owned" by such person, would
result in such Person "Beneficially Owning" twenty percent
(20%) or more of the combined voting power of the Company's
then outstanding Voting Securities; provided. however, that
for purposes of this paragraph (a), a Person shall not be
deemed to have made an acquisition of Voting Securities if
such Person: (i) acquires Voting Securities as a result of a
stock split, stock dividend or other corporate restructuring
in which all shareholders of the class of such Voting
Securities are treated on a pro rata basis; (ii) is generally
engaged in the business of underwriting securities and
acquires the Voting Securities ("Underwriting Securities") (x)
pursuant to the terms of an underwriting agreement (an
"Underwriting Agreement") to which the Company and such
underwriter are parties and which Underwriting Agreement is on
terms customarily used by that underwriter for primary or
secondary public offerings of equity securities or (y)
pursuant to stabilizing transactions to facilitate a
distribution contemplated by an Underwriting Agreement in
accordance with Rule 10b-7 promulgated under the 1934 Act; or
(z) to cover over allotments created in connection with a
distribution of Voting Securities pursuant to an Underwriting
Agreement; (iii) acquires the Voting Securities directly from
the Company; (iv) becomes the Beneficial Owner of more than
the permitted percentage of Voting Securities solely as a
result of the acquisition of Voting
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<PAGE> 13
Securities by the Company which, by reducing the number of
Voting Securities outstanding, increases the proportional
number of Shares Beneficially Owned by such Person; (v) is the
Company or any corporation or other Person of which a majority
of its voting power or its equity securities or equity
interest is owned directly or indirectly by the Company (a
"Subsidiary") or (vi) acquires Voting Securities in connection
with a "Non-Control Transaction" (as defined in paragraph (c)
below); or
(b) The individuals who, as of July 31, 1993, are members of
the Board of Directors of the Company (the "Incumbent Board"),
cease for any reason (other than a voluntary resignation by
any such member) to constitute at least two-thirds of the
Board of Directors of the Company; provided, however, that if
either the election of any new director or the nomination for
election of any new director by the Company's shareholders was
approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall be considered as a member of
the Incumbent Board; provided, further, however, that no
individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act as in
effect on the date hereof) or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board of Directors (a "Proxy Contest")
including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or
(c) Approval of shareholders of the Company of:
(1) A merger, consolidation or reorganization
involving the Company (a "Business Combination"), unless
(i) the shareholders of the Company,
immediately before the Business Combination, own, directly or
indirectly immediately following the Business Combination, at
least 75% of the combined voting power for the election of
directors generally of the outstanding securities of the
Corporation resulting from the Business Combination (the
"Surviving Corporation") in substantially the same proportion
as their ownership of the Voting Securities immediately before
the Business Combination, and
(ii) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for the Business Combination constitute at
least two-thirds of the members of the Board of Directors of
the Surviving Corporation, and
(iii) no Person (other than the Company or
any Subsidiary, a trustee or other fiduciary holding
securities under one or more employee benefit plans or
arrangements (or any trust forming a part thereof) maintained
by the Company, the Surviving Corporation or any Subsidiary,
or any Person who, immediately prior to the Business
Combination, had Beneficial Ownership of twenty percent (20%)
or more of the then outstanding Voting Securities) upon
confirmation of the Business Combination is the Beneficial
Owner of twenty percent (20%) or more of the combined voting
power for the election of directors generally of the Surviving
Corporation's then outstanding securities (a transaction
described in clauses (i) through (iii) shall be referred to as
a "Non-Control Transaction");
(2) A complete liquidation or dissolution of the Company; or
(3) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other
than a transfer to a Subsidiary).
Voting Securities acquired by a Person that is not deemed to
constitute an "acquisition" of such Voting Securities by such Person by
reason of either of the proviso to paragraph (a) above shall, except in
the case of Underwriting Securities nevertheless be deemed to be
Beneficially Owned by such Person for purposes of
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determining whether the "acquisition" of any additional Voting
Securities by such Person (which subsequent "acquisition" is not
covered by either proviso to paragraph (a) and, therefore, is
considered to be an "acquisition" of Voting Securities for purposes of
paragraph (a)) would result in such Person exceeding the twenty percent
(20%) or more threshold or the more than 30% threshold, as the case may
be, established therein.
Notwithstanding the foregoing, a change shall not be deemed to
occur solely because twenty (20%) or more of the then outstanding
Voting Securities is Beneficially Owned by (i) a trustee or other
fiduciary holding securities under one or more employee benefit plans
or arrangements (or any trust forming a part thereof) maintained by the
Company or any Subsidiary or (ii) any corporation which, immediately
prior to its acquisition of such interest, is owned directly or
indirectly by the shareholders of the Company in the same proportion as
their ownership of stock in the Company immediately prior to such
acquisition; furthermore, if an employee's employment is terminated and
the employee reasonably demonstrates that such termination (i) was at
the request of a third party who has indicated an intention or taken
steps reasonably calculated to effect a Change Control and who
effectuates a Change of Control or (ii) otherwise occurred in
connection with, or in anticipation of, a Change Control which actually
occurs, then for all purposes hereof, a Changed Control shall be deemed
to have occurred and the date of a Change of Control with respect to
the employment shall mean the date immediately prior to the date of
such termination of employment.
(C) Non-Transferability. No Award granted to a Participant under this
Plan shall be transferable other than by will or the laws of descent
and distribution or pursuant to a qualified domestic relations order as
defined in the Code, provided that transfer pursuant to a qualified
domestic relations order shall not be permitted with respect to
incentive stock options or in circumstances where such transfer would
cause a lapse of restriction for purposes of Section 83 of the Code.
Any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of, or to subject to execution, attachment or similar process,
any Award other than as permitted in the preceding sentence shall give
no right to the purported transferee.
(D) Compliance with Law and Approval of Regulatory Bodies. No Option
shall be exercisable and no Shares shall be delivered in settlement of
any Award and no unrestricted Shares shall be issued for Restricted
Stock under this Plan except in compliance with all applicable Federal
and state laws and regulations including, without limitation,
compliance with the rules of all domestic stock exchanges on which the
Company's Shares may be listed. Any Share certificate issued to
evidence Shares for which an Award is exercised or with respect to
which Restricted Stock restrictions lapse, shall bear such legends and
statements as the Board deems advisable in order to assure compliance
with Federal and state laws and regulations. No Award shall be
exercisable and no Shares shall be delivered and no Shares shall be
issued for Restricted Stock under this Plan until the Company has
obtained consent or approval from such regulatory bodies, Federal or
state, having jurisdiction over such matters as the Board may deem
advisable.
In the case of the exercise of an Award by a person or estate
acquiring the right to exercise such Award by bequest or inheritance or
in the case of a person or estate acquiring by bequest or inheritance
the right to receive Shares for Restricted Stock because of the lapse
of the restrictions, the right to the Payment Value of a Performance
Unit, or the right to receive settlement of a Stock Unit, the Board may
require reasonable evidence as to the ownership of the Award, and may
require such consents and releases of taxing authorities as it may deem
advisable.
(E) No Right to Employment. Neither the adoption of the Plan nor its
operation, nor any document describing or referring to the Plan, or any
part thereof, shall confer upon any Participant under the Plan any
right to continue in the employ of the Company or a subsidiary or shall
in any way affect the right and power of the Company or a subsidiary to
terminate the employment of any participant under the Plan at any time
with or without assigning a reason therefor.
(F) Tax Withholding. The Board shall have the right to deduct from any
settlement of an Award, including without limitation the delivery or
vesting of Shares, made under the Plan any Federal, state or local
taxes of any kind required by law to be withheld with respect to such
payments or to take any such other action as may be necessary in the
opinion of the Board to satisfy all obligations for payment of such
taxes. If Shares which would otherwise be delivered in settlement of
the Award are used to satisfy tax withholding, such Shares
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shall be valued based on their Fair Market Value determined in
accordance with section 6(B) when the tax withholding is required to be
made. Participants who are subject to Section 16 of the Exchange Act
are hereby advised that pursuant to Rule 16b-3 thereunder the use of
Shares to satisfy tax withholding will be treated as the exercise of a
Stock Appreciation Right. See Section 7(F).
(G) Amendment and Termination. The Board may at any time suspend, amend
or terminate the Plan, and, without limiting the foregoing, the Board
shall have the express authority to amend the Plan from time to time,
with or without approval by the shareholders, in the manner and to the
extent that the Board believes is necessary or appropriate in order to
cause the Plan to conform to provisions of Rule 16b-3 under the
Exchange Act and any other rules under Section 16 of the Exchange Act,
as any of such rules may be amended, supplemented or superseded from
time to time. Except for adjustments made in accordance with Section
12(A), the Board may not, without the consent of the grantee of the
Award, alter or impair any Award previously granted under the Plan. No
Award may be granted during any suspension of the Plan or after
termination thereof.
In addition to Board approval of an amendment, if the
amendment would: (i) materially increase the benefits accruing to
Participants; (ii) increase the number of Shares deliverable under the
Plan (other than in accordance with the provisions of Section 12(A) or,
(iii) materially modify the requirements as to eligibility for
participation in the Plan, then such amendment shall be approved by the
holders of a majority of the Company's outstanding capital stock
represented and entitled to vote at a meeting held for the purpose of
approving such amendment to the extent required by Rule 16b-3 of the
Exchange Act.
(H) Effective Date of the Plan. This Plan was adopted by the Board on
September 24, 1993 and by the Shareholders on September 24, 1993. The
Plan shall become effective on the date the Registration Statement
filed by the Company under the Securities Act of 1933 becomes effective
with respect to Shares to be issued pursuant to the Plan. Awards may be
granted under this Plan prior to the date the Plan becomes effective,
but all such Awards shall be subject to the Plan becoming effective, as
provided above.
(I) Duration of the Plan. Unless previously terminated by the Board,
this Plan shall terminate at the close of business on September 23,
2003, and no Award shall be granted under it thereafter, but such
termination shall not affect any Award theretofore granted.
(J) Use of Certain Terms. The terms "parent" and "subsidiary" shall
have the meanings ascribed to them in Section 425 of the Code and
unless the context otherwise requires, the other terms defined in
Section 421, 422 and 425, inclusive, of the Code and regulations and
revenue rulings applicable thereto, shall have the meanings attributed
to them therein.
ROBERDS, INC., by
/s/ Robert M. Wilson
- ------------------------------
Robert M. Wilson, its
Executive Vice President
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EXHIBIT 10.2.1
ROBERDS, INC.
AMENDED EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED MAY [ ], 1997
ARTICLE I - PURPOSE
Section 1.1 - The Roberds, Inc. Employee Stock Purchase Plan (the
"Plan") is intended to encourage employees of Roberds, Inc. and its Subsidiaries
to remain in the employ of the Corporation or its Subsidiaries and to acquire a
proprietary interest in the Corporation through the purchase of its Common
Stock. It is intended that this Plan shall constitute an "Employee Stock
Purchase Plan" within the meaning of Section 423 of the Code. Pursuant to the
Plan, Employees will be able to purchase Common Stock of the Corporation, at a
price less than its fair market value on the date of purchase, from funds
accumulated through payroll deductions within a specified period from the
effective date of any Offering under the Plan.
ARTICLE II - DEFINITIONS
Section 2.1 - The following words and phrases shall have the meanings
indicated for the purposes of the Plan, unless the context clearly indicates
otherwise:
(a) "Board" - The Board of Directors of Roberds, Inc..
(b) "Code" - The Internal Revenue Code of 1986, as amended.
(c) "Committee" - The Committee provided for in Article III of the
Plan.
(d) "Stock" - The Common Stock of the Company, without par value,
or any Common Stock which is a successor to that class.
(e) "Corporation" - Roberds, Inc., an Ohio corporation.
(f) "Employee" - Any individual employed by the Corporation or any
Subsidiary except persons whose customary employment is for either (i) not more
than 20 hours per week, or (ii) not more than 5 months during any calendar year,
provided that he shall have at least 90 days of continuous employment
immediately prior to any Offering Date specified in Section 6.1.
(g) "Offering" - Any offering made by the Corporation in
accordance with applicable laws and regulations and the terms and conditions of
the Plan, permitting eligible Employees to purchase Stock under the Plan.
(h) "Option" - The right of an eligible Employee to purchase Stock
pursuant to an Offering.
(i) "Participating Employee" - An Employee who makes an
authorization for payroll deductions pursuant to Section 6.2 below.
(j) "Plan" - The Roberds, Inc. Employee Stock Purchase Plan, as
herein set forth, and as amended from time to time pursuant to Section 13.1
below.
(k) "Subsidiary" - A corporation of which shares having 50% or
more of the voting power are owned or controlled, directly or indirectly, by the
Corporation.
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Section 2.2 - The masculine gender shall include the feminine, and the
singular shall include the plural, where appropriate.
ARTICLE III - ADMINISTRATION OF THE PLAN
Section 3.1 - The Plan shall be administered by the Company's Board, or
by a committee ("Committee") of the Board, as determined from time to time by
the Board. The Committee shall consist of no fewer than three directors of the
Company who shall be appointed, from time to time, by the Board. All references
in this Plan to the Committee shall be understood to refer either to the full
Board or to the Committee, to the extent administration of the Plan has been
delegated by the Board to the Committee.
Section 3.2 - The Committee shall have full power to construe and
interpret the Plan (subject to advice of the Corporation's General Counsel with
respect to any question of law), to determine and fix the terms of Offerings and
Options, subject to the requirements and provisions of the Plan, and generally
to determine any and all questions arising under the Plan.
ARTICLE IV - EMPLOYEES ELIGIBLE TO PURCHASE STOCK
Section 4.1 - All Employees of the Corporation or of any Subsidiary of
the Corporation as of 9 p.m., Eastern Time, on an Offering Date as specified in
Section 6.1, shall be granted an Option to purchase Stock as described in more
detail herein, except for any such Employee, who immediately after the granting
of an Option, would own (or be deemed to own under the rules of Section
423(b)(3) or 425(d) of the Code) stock of any and all classes possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Corporation or any Subsidiary. If the effect of the granting of
an Option to an Employee is such that his total stock ownership (as determined
under Sections 423(b)(3) and 425(d) of the Code) equals or exceeds such five
percent (5%) limitation, such Option shall be entirely void in the case of any
such Employee as if that Option had never been granted to him.
ARTICLE V - STOCK
Section 5.1 - The Stock subject to Offerings shall be the Corporation's
authorized but unissued shares of Stock and shares of Stock held in the
treasury, whether acquired by the Company specifically for use under the Plan or
otherwise, which may be used, as the Committee may from time to time determine,
for purposes of the Plan.
ARTICLE VI - OFFERINGS, GRANTING OF OPTIONS, AUTHORIZATION OF PAYROLL
DEDUCTIONS BY PARTICIPATING EMPLOYEES
Section 6.1 - Unless a different time period is specified by the
Committee, two six-month Offerings of Options to purchase shares of Stock under
the Plan will be made by the Committee to all Employees each calendar year,
commencing, respectively, on January 1 and July 1 of each calendar year (the
"Offering Dates") and terminating on June 30 and December 31 of each such year.
Notwithstanding the foregoing, the initial Offering under the Plan commenced on
January 1, 1994 and terminated on June 30, 1994. A new Offering of Options shall
be made with no further Committee action on the first day of each subsequent
six-month period thereafter, until the earlier of the expiration or termination
of the Plan, the suspension of further Offerings by the Committee or providing a
different time period for the Offerings. Every Employee on the effective date of
any Offering shall be deemed to have been granted an Option to purchase Stock in
an amount as provided in Section 6.2.
Section 6.2 - In an Offering, each Employee is granted an Option to
purchase the maximum number of whole shares of Stock which may be acquired based
on the percentage of the employee's total compensation which he has elected to
have withheld (up to a maximum of 15%) during his participation in the Offering.
Each eligible Employee may become a Participating Employee in an Offering by the
execution and delivery to the Corporation of a payroll deduction form not later
than the commencement date of any Offering under the Plan, as provided by the
Committee. A Participating Employee may authorize payroll deductions at the rate
of any whole percentage (up to a maximum of
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15) of his total compensation (which shall, for purposes of the Plan, be
determined without excluding the amount of any elective deferrals or other
amounts withheld from his compensation) during the period of the Offering.
After an Employee has become a Participating Employee in an Offering
his participation shall continue on the same basis in each subsequent Offering
thereafter, until: (i) such Offerings are terminated, (ii) the Participating
Employee withdraws or changes his payroll deduction pursuant to Section 6.4 or,
(iii) the Plan is terminated or expires.
For each Participating Employee authorizing a payroll deduction, the
Corporation will establish on its books a stock purchase account to which
payroll deductions will be credited. The amount credited to the account of each
Participating Employee shall be applied to pay for Stock purchased by such
Employee upon the exercise of his Option as provided herein. Stock subject to
Option under the Plan may only be purchased with amounts credited to an
Employee's stock purchase account; cash purchases are not permitted.
Section 6.3 - Amounts withheld from an Employee's pay shall be under
the control of the Corporation and need not be held in trust. Amounts credited
to the accounts of employees of Subsidiaries of the Corporation shall be
remitted to the Corporation from time to time.
Section 6.4 - A Participating Employee may, at any time not later than
five (5) business days prior to the close of any Offering, by written notice to
the Committee, direct the Corporation to reduce or cease payroll deductions and,
as the case may be:
(a) Exercise his Option to purchase with respect to the number
of shares which may be purchased at the Option Price for such Offering
(as determined pursuant to Section 7.1) with all or any specified part
of the amount then credited to his account, and withdraw in cash any
amount remaining in such account;
(b) Reduce the amount of his subsequent payroll deductions
and/or withdraw in cash all or any specified part of the amount then
credited to his account, in which event his Option to purchase shall be
reduced to the number of shares of Stock which may be purchased, at the
Option Price for such Offering (as determined pursuant to Section 7.1)
taking into account such reduced deduction or withdrawal;
(c) Withdraw in cash the amount credited to his account
and terminate his Option.
Any reduction made in the number of shares subject to Option to
purchase is subject to the provisions of Section 6.2 hereof and shall be
permanent.
ARTICLE VII - TERMS AND CONDITIONS OF OFFERINGS AND OPTIONS
Section 7.1 - Except as provided in subparagraph (d) of this Section
7.1, all eligible Employees shall have the same rights and privileges.
(a) Option Price.
Except as the Committee may otherwise provide before the commencement
of any Offering, the price per share at which Stock may be purchased thereunder
shall be the lesser of (1) eighty-five percent (85%) of the fair market value
per share of Stock determined on the first day of the Offering, or (ii)
eighty-five (85%) of the fair market value per share of Stock determined on the
last day of the Offering. For purposes of Stock to be purchased pursuant to any
Offering hereunder, "fair market value" of a share shall mean the average of the
high and low prices reported in the consolidated reporting system (for exchange
traded securities and last sale reported over-the-counter securities) or the
average of the bid and asked prices (for other over-the-counter securities),
determined on the date the Offering commences and on the date the Offering
terminates, or, if no such prices are available, the fair market value on such
dates of a share as the Board shall determine. Unless other dates are specified
by the Committee, the date on which the Offering commences and the date the
Offering terminates shall be deemed the dates on which the fair market value of
a share of Stock shall be determined.
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(b) Purchase of Stock
At the close of each Offering, a Participating Employee's
Option shall be exercised automatically for the purchase of that number
of full shares of Stock which the accumulated payroll deductions
credited to his account will purchase at the Option Price specified in
Section 7.1(a). Unless the Participating Employee otherwise directs,
any unused credit balance in his stock purchase account shall be used
to purchase Stock in the subsequent Offering, if he is a participant
therein.
(c) Term of Offering
The terms and Expiration Date of each Offering shall be
specified in each such Offering, but in no event shall any Offering
under the Plan be more than sixty (60) months in duration.
(d) Accrual Limitation
Notwithstanding any other provision of the Plan, no Offering
shall be deemed to have the effect of granting to any Employee an
Option which permits him to purchase Stock pursuant to all unexpired
Offerings under the Plan of the Corporation or any Subsidiary to accrue
at a rate which exceeds at any time twenty-five thousand dollars
($25,000) of the fair market value of the Stock (determined at the time
such Option is granted) during any calendar year in which such Option
is outstanding. For the purposes of this subparagraph (d):
(A) an Option accrues when the Option (or any
portion thereof) first becomes exercisable during any calendar
year;
(B) an Option accrues at the rate provided in the
applicable Offering, but in the case of no Employee may such
rate exceed twenty-five thousand dollars ($25,000) of the fair
market value of the Stock (determined at the time the Option
is granted) during any one calendar year;
(C) an Option that has accrued under any one
Offering may not be carried over by an Employee to any other
Offering; and
(D) only Options to purchase Stock that have been
granted under an Employee Stock Purchase Plan which complies
with Section 423 of the Code shall be taken into account for
purposes of this subparagraph (d).
(e) Nontransferability of Options
An Option shall not be transferable by the Employee to whom it
has been granted otherwise than by will or the laws of descent and
distribution, and shall be exercisable, during his lifetime, only by
him. However, in the discretion of the Committee, the terms of any
Offering may prohibit transfer under any circumstances and provide for
cancellation of the unexercised portion of any Option upon the death of
an Employee.
(f) Rights on Termination of Employment
Subject to any specific limitations and rules of uniform
application prescribed by the Committee in any Offering, in the event
that a Participating Employee ceases to be an Employee he shall have
the right for not more than three (3) months thereafter (or, in the
event of his death, his beneficiary or estate shall have the right for
not more than one (1) year thereafter) but not beyond the expiration of
any Offering, to: (i) elect to exercise his Option in respect to whole
Shares by applying all or any part of the amount previously credited to
his share purchase account and to receive any balance in cash; or (ii)
withdraw in cash the amount in his share purchase account and terminate
his election to purchase. In no event, however, shall anything
contained in this subparagraph (f) be deemed to confer upon any
Employee (or his beneficiary or estate in the event of his death) the
right to purchase more than the maximum number of shares of Stock that
he would otherwise have been entitled to purchase pursuant to the terms
of the applicable Offering.
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(g) Other Provisions
Each Offering shall contain such other provisions as the
Committee shall deem advisable, provided that no such provision may in
any way conflict, or be inconsistent with, the terms of the Plan as
amended from time to time.
(h) Legal Requirements Re Issuing Shares
No shares of Stock shall be issued or transferred pursuant to
an Option unless and until all legal requirements applicable to the
issuance or transfer or such shares have, in the opinion of counsel to
the Company, been complied with. In connection with any such issuance
or transfer, the person acquiring the shares shall, if requested by the
Corporation, give assurances satisfactory to counsel to the Corporation
that the shares are being acquired for investment and not with a view
to resale or distribution thereof and assurances in respect of such
other matters as the Corporation or a Subsidiary may deem desirable to
assure compliance with all applicable legal requirements.
ARTICLE VIII - RECAPITALIZATION OR REORGANIZATION AND STOCK DIVIDENDS
Section 8.1 - If the Corporation shall be the surviving corporation in
any merger, consolidation or reorganization, each outstanding Option shall
pertain to and apply to the securities to which a holder of the number of shares
subject to that Option would have been entitled. Upon the adoption of any plan
for the dissolution or liquidation of the Corporation, or upon the approval of
any merger, consolidation or reorganization in which the Corporation is not the
surviving corporation, each outstanding Option shall terminate, provided,
however, that each Participating Employee shall, in such event, subject to such
rules and limitations of uniform applications as the Committee may prescribe, be
entitled to the rights of terminating Employees provided in Section 7(f) with
respect to the Offering in effect prior to the adoption or approval of any such
Plan.
Section 8.2 - The aggregate number of shares of Stock which may be sold
pursuant to all Offerings, the aggregate number of shares of Stock which may be
purchased by the exercise of outstanding Options in any Offering and the number
of shares of Stock and the Option Price per share covered by each such Offering
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Stock of the Corporation resulting from a subdivision or
consolidation of shares of Stock or other capital adjustment, or the payment of
a stock dividend or other increase or decrease in such shares of Stock effected
without the receipt of consideration by the Corporation.
Section 8.3 - The adjustments provided for in this Article shall be
made by the Committee, whose determination in that respect shall be final.
Section 8.4 - Except as provided in this Article, no Participating
Employee shall have any rights by reason of any subdivision or consolidation of
shares of stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, merger or reorganization.
Section 8.5 - The grant of an Option under the Plan shall not affect in
any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
ARTICLE IX - RIGHTS AS STOCKHOLDERS
Section 9.1 - No Participating Employee nor the transferee of any
Option shall have any rights as a stockholder with respect to any Stock
purchased pursuant to any Offering until the issuance of a stock certificate for
such Stock. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued. Subject to Section 7(h), stock certificates shall be
issued promptly after the exercise of any Option in any Offering.
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ARTICLE X - TERM OF PLAN
Section 10.1 - Offerings may be made under the Plan from time to time,
provided that no Offering shall terminate later than December 31, 2007.
ARTICLE XI - NUMBER OF SHARES
Section 11.1 - The aggregate number of shares of Stock that may be sold
pursuant to all Offerings under the Plan shall not exceed 500,000, subject to
adjustment pursuant to Article VIII.
ARTICLE XII - INDEMNIFICATION OF COMMITTEE
Section 12.1 - The members of the Committee shall be indemnified by the
Corporation against the reasonable expenses incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
thereof, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Offering or
Option, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by legal counsel selected by the Corporation) or
paid by them in satisfaction of a judgment in any such action, suit or
proceeding. A member of the Committee shall not be entitled to indemnification
with respect to any matter or claim arising out of gross negligence or willful
misconduct by such member in the performance of his duties. As a condition of
any indemnification, a Committee member shall in writing offer the Corporation
the opportunity, as its own expense, to handle and defend any suit or claim
against him. The rights of indemnification provided in this Section 12.1 shall:
(a) operate as a contract right of each member of the Committee, (b) be in
addition to (and shall not limit) any other rights of indemnification provided
to the member of the Committee pursuant to law, the articles of incorporation or
regulations of the Corporation, or any other instrument, and (c) survive
termination of service by the member of the Committee and termination of the
Plan.
ARTICLE XIII - AMENDMENT OR DISCONTINUANCE OF THE PLAN
Section 13.1 - The Plan may be amended by the Board at any time,
provided that, without the approval of the shareholders of the Corporation, no
amendment shall be made which (a) shall cause any Option to fail to qualify as
an option under Section 423 of the code, (b) shall increase the number of shares
of Stock which may be optioned or sold pursuant to any Offering, (c) shall make
any change in the Employees or class of Employees eligible to participate in any
Offering, (d) shall amend the provisions of Section 10.1 to extend the term of
the Plan, or (f) shall amend this Article XIII.
Section 13.2 - The Board may by resolution adopted by a majority of the
entire Board discontinue the Plan.
Section 13.3 - No amendment or discontinuance of the Plan by the Board
or the shareholders of the Company shall adversely affect any Option theretofore
granted without the consent of any grantee of such Option.
ARTICLE XIV - EFFECTIVE DATE AND APPROVAL OF STOCKHOLDERS
Section 14.1 - The Plan was adopted by the Board on September 24, 1993
and approved by the shareholders on September 24, 1993. The Plan became
effective upon the effectiveness of the Company's Registration Statement, filed
by the Company under the Securities Act of 1933, on January 10, 1994,
Registration No. 73900.
The Plan was amended by the Board effective November 1, 1996, and was
amended again on February 20, 1997, to be effective upon approval by the
shareholders, and such shareholder approval was obtained on May [ ], 1997.
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EXHIBIT 10.3.1
ROBERDS, INC.
AMENDED 1993 OUTSIDE DIRECTOR STOCK OPTION PLAN
NOVEMBER 1, 1996
1. Purpose. The purpose of the 1993 Outside Director Stock Option Plan (the
"Plan") is to advance the interests of Roberds, Inc. ("the Company") and its
stockholders by offering to members of the Company's Board of Directors who are
not employees of the Company ("Outside Directors") who share responsibility with
management for guiding the long term growth and profitability of the Company,
the opportunity to acquire an equity interest in the Company, thereby achieving
a greater commonality of interest with other stockholders and providing an
additional incentive to such Directors to achieve the Company's long-term
business plans and objectives.
2. Awards Opportunities. Awards under the Plan shall be granted in the form of
non-qualified stock options.
3. Administration. (A) Committee. The Plan shall be administered by the
Company's Board of Directors (the "Board") or by a committee (the "Committee")
of the Board, as determined from time to time by the Board. The Committee shall
consist of no fewer than three directors of the Company who shall be appointed,
from time to time, by the Board. At any time that the Company has a class of
equity securities registered under Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), only directors who, at the time of
service, qualify as "non-employee directors" within the meaning of Rule 16b-3 or
its successor under the Exchange Act shall be members of the Committee. All
references in this Plan to the Board shall be understood to refer either to the
full Board or to the Committee, to the extent administration of the Plan has
been delegated by the Board to the Committee.
(B) Authority. The board, or the Committee, to the extent the Board has
delegated such authority to the Committee, shall have full and final authority
with respect to the Plan (i) to interpret all provisions of the Plan consistent
with law; (ii) to adopt, amend and rescind general and special rules and
regulations for the Plan's administration; and (iii) to make all other
determinations necessary or advisable for the administration of the Plan. The
Board may, with the consistent of the person or persons entitled to exercise any
outstanding Option, amend such Option award consistent with the provisions of
the Plan.
(C) Indemnification. No member of the Board shall be liable for any
action taken or determination made in good faith. The members of the Board and
the Committee shall be indemnified by the Company for any acts or omissions in
connection with the Plan to the full extent permitted by Ohio and Federal law.
4. Eligibility. Participation in the Plan shall be available to all Outside
Directors of the Company.
5. Stock Subject to Plan. Subject to adjustments as provided in Section 8(A)
hereof, the aggregate number of shares of common stock, without par value, of
the Company ("Shares") as to which awards may be granted under the Plan shall
not exceed 10,000 Shares. Such Shares may be authorized by unissued Shares or
treasury Shares.
The Board shall maintain records showing the cumulative total of all
Shares subject to Options outstanding.
If an Option granted hereunder shall expire or terminate for any reason
without having been fully exercised, then the Shares covered by the unexercised
portion of such Option shall again be available for the purposes of the Plan.
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<PAGE> 2
6. Options. (A) Allotment of Shares. The Board shall,
subject to the provisions of the Plan, grant to Outside Directors following
adoption of the Plan by the Board, subject to approval of the Plan by the
Company stockholders, Options to purchase Shares.
Each Outside Director serving at the time the Plan is approved by the
Shareholders will be allotted one Option in the amount of 2,000 shares.
Thereafter, each new Outside Director, upon election and taking of office shall
receive an Option for 2,000 shares. All Options shall be the form attached
hereto.
(B) Option Price. The price per share at which each Option granted
under the Plan may be exercised shall be the fair market value of a Share at the
time such Option is granted.
(C) Option Period. The effective date of a grant of each Option shall
be the later of (i) the date the Plan is approved by the stockholders of the
Company or (II) the date an Outside Director takes office. An Option granted
under the Plan shall terminate, and the right of the participant (or the
participant's estate, personal representative, or beneficiary) to purchase
Shares upon exercise of the Option shall expire, 10 years from the date the
Option is granted (the "Termination Date").
(D) Exercise of Options. (1) By a Participant During
Continuous Board Service.
An Option will be exercisable on the first anniversary of the
date the Option was granted and within the guidelines established by
Section 6(E). The Board may at any time accelerate the exercisability
of an Option. During the lifetime of a participant to whom an Option is
granted, the Option may be exercised only by the participant or by the
participant's attorney-in-fact or legal guardian as hereinafter
provided.
A participant who has been a Director of the Company since the
date of the Option grant is eligible to exercise all Options which are
then exercisable up to the Termination Date of such Options and within
the guidelines established by Section 6(E).
(2) By a former Director.
Participants whose membership on the Board of the Company has
terminated for reasons other than permanent and total disability or
death, must exercise all Options previously awarded within three (3)
months after such termination and within the guidelines established by
Section 6(E) (but no later than the Termination Date of the Options).
The Board may extend up to an additional four (4) months (but no later
than the expiration date of the Option) the period in which a
non-qualified Option must be exercised if Section 16(b) of the
Securities Exchange Act of 1934 would be applicable to the participant
if the participant exercised the Option within three (3) months of
termination. An Option may be exercised only for the number of Shares
for which it could have been exercised at the time the participant
terminated from the Board of the Company. Failure to exercise all
Options within the designated time period will result in their
termination.
(3) In Case of Permanent and Total Disability.
If a Director who was granted an Option terminates Board
membership because of permanent and total disability, the Option must
be exercised within one (1) year of such termination and within the
guidelines established by Section 6(E) (but no later than the
Termination Date of such Option). If the participant should die during
such one (1) year period, the provisions contained in Section 6(D),
Paragraph 4 hereof, shall apply. The Option may be exercised only for
the number of shares for which it could have been exercised at the time
the participant terminated as a Board member of the Company.
(4) In Case of Death.
If a participant who was granted an Option dies while a
Director of the Company or during the one year period specified in
Section 6(D), Paragraph 3, the Option must be exercised no later than
the Termination Date of such Option by the participant's estate, or by
a person who acquired the right to exercise the Option by bequest or
inheritance and within the guidelines established by Section 6(E). The
Option may be exercised
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<PAGE> 3
only for the number of shares for which it could have been exercised
at the time the participant terminated Board membership with the
Company.
(5) Termination of Options.
An Option granted under the Plan shall be considered
terminated in whole or in part, to the extent that, in accordance with
the provisions of the Plan, it can no longer be exercised for Shares
originally subject to the Option.
(E) Manner of Exercise and Payment.
(1) Exercise.
Each Option granted under this Plan shall be deemed exercised
to the extent that the participant shall deliver to the Company written
notice of the number of full Shares with respect to which the Option is
being exercised. The participant shall at the same time tender to the
Company payment in full for the shares for which the Option is
exercised, which may be in cash or, subject to Section 6(E), Paragraph
2 hereof, in previously issued Shares or partly in cash and partly in
Shares, and shall comply with such other reasonable requirements as the
Board may establish. These provisions shall not preclude exercise of an
Option, or payment for Shares, by any other proper legal method
specifically approved by the Board.
No person, estate or other entity shall have any of the rights
of a stockholder with reference to Shares subject to an Option until a
certificate for the Shares has been delivered.
An Option granted under this Plan may be exercised for any
lesser number of whole Shares than the full amount for which it could
then be exercised, provided, however, that the Board may require, in
the agreement evidencing an Option, any partial exercise to be with
respect to a specified minimum number of Shares. Such a partial
exercise of an Option shall not affect the right to exercise the Option
from time to time in accordance with the Plan for the remaining Shares
subject to the Option.
(2) Payment in Shares.
The value of Shares delivered for payment of the option price
shall be the fair market value of the Shares determined as provided in
Section 6(B) on the date the Option is exercised. If certificates
representing Shares are used to pay all or part of the exercise price
of an Option, separate certificates shall be delivered by the Company
representing the same number of Shares as each certificate so used, and
an additional certificate or certificates shall be delivered
representing the additional Shares to which the Option holder is
entitled as a result of exercise of the Option. Notwithstanding the
foregoing and the provisions of Section 6(E), paragraph (1), the Board,
in its sole discretion, may refuse to accept Shares in payment of the
option price of the Shares with respect to which such Option is to be
exercised, in which event any certificates representing Shares that
were actually received by the Company with the written notice of
exercise shall be returned to the person exercising such Option
together with notice by the Company of the refusal of the Company to
accept such Shares.
(3) Award of Cash or Shares in Lieu of Exercise.
The Board may elect, in lieu of accepting payment of the
option price and delivering any or all Shares as to which an Option has
been exercised, to pay the holder of such Option an amount in cash or
Shares, or a combination of cash and Shares, equal to the amount by
which the fair market value (determined as provided in Section 6(B)) on
the date of exercise of the Shares as to which such Option has been
exercised exceeds the option price that would otherwise be payable by
the holder of such Option for such Shares.
7. Other Provisions. (A) Adjustment of Shares. In the event that the outstanding
Shares are changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend or combination of
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<PAGE> 4
Shares, the Board shall make an appropriate and equitable adjustment in the
number and kind of Shares subject to outstanding Options, or portions thereof
then unexercised, and the number and kind of Shares subject to the Plan to the
end that after such event the Shares subject to the Plan and the participant's
right to a proportionate interest in the Company shall be maintained as before
the occurrence of such event. Such adjustment in an outstanding Option shall be
made without change in the total price applicable to the Option or the
unexercised portion of the Option (except for any change in the total price
resulting from rounding-off Share quantities or prices) and with any necessary
corresponding adjustment in option price per Share. Any such adjustment made by
the Board shall be final and binding upon all participants, the Company and all
other interested persons. The Board, in its sole discretion, may at any time
make or provide for such adjustments to the Plan or an Option granted thereunder
as it shall deem appropriate to prevent the reduction or enlargement of rights,
including adjustments in the event of changes in the outstanding common stock by
reason of mergers, consolidations, combinations or exchanges or shares,
separations, reorganizations, liquidations and the like in which the Company is
not the sole surviving successor to the assets or business of the Company
immediately prior thereto. In the event of any offer to holders of common stock
generally relating to the acquisition of their shares, the Board may make such
adjustments as it deems equitable in respect of outstanding Options. Any such
determination of the Board shall be conclusive.
(B) Non-Transferability. No Option granted to a participant under this
Plan shall be transferable other than by will or the laws of descent and
distribution. Any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of, or to subject to execution, attachment or similar process, any
Option other than as permitted in the preceding sentence shall give no right to
the purported transferee.
(C) Compliance with Law and Approval of Regulatory Bodies. No Option
shall be exercisable and no Shares shall be delivered under this Plan except in
compliance with all applicable Federal and state laws and regulations including,
without limitation, compliance with withholding tax requirements and with the
rules of all domestic stock exchanges on which the Company's shares may be
listed. Any share certificate issued to evidence Shares for which an Option is
exercised shall bear such legends and statements as the Board deems advisable in
order to assure compliance with Federal and state laws and regulations. No
Option shall be exercisable and no Shares shall be delivered until the Company
has obtained consent or approval from such regulatory bodies, Federal or state,
having jurisdiction over such matters as the Board may deem advisable.
In the case of the exercise of an Option by a person or estate
acquiring the right to exercise the Option by bequest or inheritance, the Board
may require reasonable evidence as to the ownership of the Option, may require
such consents and releases of taxing authorities as it may deem advisable.
(D) No Right to Board Membership. Neither the adoption of the Plan nor
its operation, nor any document describing or referring to the Plan, or any part
thereof, shall confer upon any participant under the Plan any right to continue
as a Board member of the Company.
(E) Amendment and Termination. Subject to the terms of this Section
7(E), the Board may at any time suspend, amend or terminate the Plan. Except for
the adjustments made in accordance with Section 7(A), the Board may not, without
the consent of the holder of the Option, alter or impair any Option previously
granted during any suspension of the Plan or after termination thereof.
In addition to Board approval of an amendment, if the amendment would
require approval by stockholders of the Company pursuant to any standards for
continued listing in any securities market in which the Company's securities are
listed, the receipt of such approval shall be a condition of such amendment.
(F) Effective Date of the Plan. This Plan was adopted by the Board on
September 24, 1993 and by the Shareholders on September 24, 1993. The Plan shall
become effective on the date the Registration Statement filed by the Company
under the Securities Act of 1933 becomes effective with respect to Shares to be
issued pursuant to the Plans. Options may be granted prior to the date the Plan
becomes effective, but all such grants shall be subject to the Plan becoming
effective, as provided above.
(G) Duration of the Plan. Unless previously terminated by the Board,
this Plan shall terminate at the close of business on December 31, 1998, and no
Option shall be granted under it thereafter, but such termination shall not
affect any Option theretofore granted.
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ROBERDS, INC., by
/s/ Robert M. Wilson
- ------------------------------
Robert M. Wilson, its
Executive Vice President
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EXHIBIT 10.3.3.1
ROBERDS, INC.
AMENDED AND RESTATED
DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS
1. PURPOSE AND ADMINISTRATION OF THE PLAN. The purpose of the Roberds, Inc.
Deferred Compensation Plan for Outside Directors ("Plan") is to provide a
procedure whereby a member of the Board of Directors of Roberds, Inc.
("Corporation" or "Company"), who is not an employee of the Corporation
("Director"), may defer the payment of all (but not less than all) of the fees
payable to the Director for services as a Director (including fees payable to
the Director for services as a member of any committees of the Board). This Plan
was adopted and effective as of May 23, 1995 ("Effective Date") and amended
effective November 7, 1995, and February 27, 1996.
The Corporation shall serve as Plan Administrator and shall execute its
administrative responsibility with respect to the Plan through the Executive
Committee of the Board ("Committee"). The decision of the Committee with respect
to any questions arising as to the administration or interpretation of the Plan
shall be final, conclusive, and binding. The Committee reserves the right to
modify this Plan from time to time or to terminate the Plan; provided, however,
that no provision of the Plan, if any, that qualifies the Plan under Rule
16b-3(c)(2)(ii) (as from time to time in effect) may be amended more than once
every six months, other than to comport with changes in the Internal Revenue
Code, the Employee Retirement Income Security Act, or the rules thereunder; also
provided, however, that no modification or termination of the Plan shall void an
election already in effect for the current calendar year or any preceding
calendar year, or adversely affect in any material respect any rights of a
Director, or his beneficiaries, to receive any amounts payable pursuant to the
Plan.
2. ELECTION TO DEFER. After the Effective Date, a Director may elect, on or
before December 31 of any year, to defer the receipt of payment of all fees
payable to the Director for services as a Director during the calendar year
following such election and for succeeding calendar years until the Director
ceases to be a Director. Any person who shall become a Director during any
calendar year may elect, before such Director's term begins, to defer the
receipt of payment of all Director's fees for the remainder of such calendar
year and for succeeding calendar years. Any elections under the Plan shall be
made by written notice delivered to the Corporation in the form attached hereto.
A Director may terminate his deferral election in the manner provided
in paragraph 6 below.
3. DIRECTORS' DEFERRED ACCOUNTS. (a) Fees deferred at the election of a Director
shall be held in the general funds of the Corporation and such fees shall be
credited to a separate deferred account ("Deferred Account") for the Director on
the date on which they otherwise would have been paid to the Director. A
separate Deferred Account shall be maintained for each Director who has made an
election to defer fees as provided in this Plan. At the time of making his
election, the Director shall specify how the deferred fees credited to his
Deferred Account shall be deemed invested. Such amounts may be deemed invested
in either (i) cash or (ii) a deemed investment in the common shares, without par
value of the Corporation. Each Director's Deferred Account shall have two
subaccounts, one for cash (the "Cash Subaccount") and another for deemed
investments in the Corporation's common shares (the "Deemed Share Subaccount").
(b) If the Director elects a deferred investment in cash, the Company
shall credit interest on the amount credited to the Director's Cash Subaccount
at the prime rate of interest charged by Bank One, Dayton, NA, or its successor
as principal bank lender to the Company. Such rate of interest shall be set on
January 1 of each calendar year, and that rate shall be utilized for all
purposes under this Plan for the balance of such calendar year, and shall be
re-set on January 1 of each succeeding calendar year. Such interest shall be
compounded annually, and shall be accrued on the unpaid balance in each
Director's Cash Subaccount. Any election by a director pursuant to Section 3(A)
that has
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the effect that he ceases investing deferred fees in deemed common shares and
instead invests deferred fees in cash shall not become effective until at least
six months after such election.
(c) If the Director elects to have the amount credited to his Deferred
Account deemed invested in the Corporation's deemed common shares, then the
total amount of deferred fees credited to his Deemed Share Subaccount shall be
deemed invested in common shares of the Corporation on the last calendar day of
each calendar quarter (a "Quarter End"); provided, however, that all fees
deferred into a Deemed Share Subaccount pursuant to an election shall remain in
cash form and not be deemed invested in deemed common shares until the first
such Quarter End that is more than six months after such Election. On the date
of such deemed investment, the total deferred fees in each Director's Deemed
Share Subaccount shall be divided by the then "fair market value" of a common
share, which shall be determined by averaging the high and low trading prices of
the Corporation's shares on such date. The Director's Deemed Share Subaccount
shall then be credited with that number of whole and fractional shares resulting
from such computation, which shares shall be deemed common shares. In the event
a Quarter End falls on a date on which the Corporation's shares did not trade,
the Corporation shall compute the fair market value of the shares by averaging
the high and low trading prices on the last date immediately preceding the
Quarter End on which there was trading in the Corporation's shares and the
average of the high and low trading prices on the next day following the Quarter
End on which there was trading in the Corporation's common shares, and then
determining the average of the trading prices for each of the two days.
A Director investing in deemed shares shall be entitled to credits
equivalent to cash dividends paid on the Company's actually outstanding common
shares ("Dividend Credits"). Such Dividend Credits will be made to the
Director's Deemed Share Subaccount on the amount of deemed shares credited to
the Director's Deemed Share Subaccount on the dates dividends are paid by the
Corporation on its actually outstanding common shares. Such Dividend Credits
shall be deemed reinvested in the Corporation's common shares on next Quarter
End, using the computation set forth in the preceding paragraph to determine the
number of whole and fractional shares to be credited to such account. Such
additional deemed shares shall then be added to the Director's Deemed Share
Subaccount. No interest shall be credited to a Director's Deemed Share
Subaccount for the period of time from when any Dividend Credits are credited to
his account until such Dividend Credits are converted to additional deemed
shares.
The number of deemed shares held in the Director's Deemed Share
Subaccount shall be adjusted from time to time to reflect stock splits, stock
dividends, or other changes in the Corporation's capital structure, in such
manner as the Committee shall determine.
4. DISTRIBUTIONS FROM DIRECTORS' ACCOUNTS. (a) The Director shall have the
option of having his Cash Subaccount distributed to him by payment of the value
of his Cash Subaccount in a lump sum on the Cessation Date (as defined below) or
in five approximately equal annual installments commencing on the Cessation
Date. Election of such option shall be made in writing, delivered to the
Corporation prior to the date of a Director's death, disability, resignation,
removal, failure to be reelected upon the expiration of his term or retirement
(the "Cessation Date"). If a Director fails to make such an election prior to
his Cessation Date, he shall be considered to have elected installment payments.
Any interest accrued on the amounts in the Director's Cash Subaccount prior to
the Cessation Date shall be paid in the same manner and over the same time
period as payments of the principal amounts, and the unpaid balance in a
Director's Cash Subaccount shall continue to earn interest as provided herein,
until the entire amount of the Cash Subaccount has been paid, which interest
shall be paid in full at the same time principal payments are made.
(b) If a Director should die before full payment of all amounts in his
Deferred Account, the Corporation shall pay the unpaid amounts to the Director's
beneficiaries or estate as provided herein, in the same manner as they would
have been paid to the Director.
(c) At the Cessation Date, for a Director who has a Deemed Share
Subaccount, the Corporation shall issue or acquire common shares equal to the
whole number of deemed shares in a Director's Deemed Share Subaccount, and shall
distribute the actual number of whole shares in the Director's Deemed Share
Subaccount in a lump sum to the Director as soon as practical after the
Cessation Date, and such shares shall be evidenced by a certificate for those
shares, fully paid and non-assessable, issued to the Director or his designated
beneficiary. Any dividends on the common shares paid between the Cessation Date
and the date on which the stock certificate is issued to the Director shall be
paid to the Director in cash as soon as is practical and without interest
thereon. Any funds, fractional shares,
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<PAGE> 3
or fractional deemed shares remaining in the Director's Deemed Share Subaccount
after such purchase and distribution shall be deemed invested in cash at fair
market value as defined herein, shall be credited to the Director's Cash
Subaccount, and shall be distributed to the Director in a lump sum as soon as
practical after the distribution of the shares in accordance with paragraph (a)
above.
5. BENEFICIARY DESIGNATION. (a) Each Director who has a Deferred Account
hereunder may designate any person or persons (who may be designated
contingently or successively and who may be an entity other than a natural
person) as his beneficiary or beneficiaries to whom his Plan benefits are to be
paid or distributed if he dies before receipt of all such benefits. Each
beneficiary designation shall be filed in the form prescribed by the Plan
Administrator and will be effective only when so filed during the Director's
lifetime. Each beneficiary designation filed with the Plan Administrator will
revoke all beneficiary designations previously filed with the Plan
Administrator. The revocation of the beneficiary designation, no matter how
effected, shall not require the consent of any designated beneficiary.
(b) If any Director fails to designate a beneficiary in the manner
provided above, or if he is not survived by his designated beneficiary or
beneficiaries, any amounts payable from the Director's Deferred Account shall,
following the Director's death, be paid to the estate of the Director.
(c) No beneficiary designated by a Director shall have any rights under
this Plan until (i) a validly executed beneficiary designation naming such
beneficiary shall have been delivered by the Director to the Corporation and
(ii) the Director shall have reached his Cessation Date.
6. TERMINATION OF ELECTION. A Director may terminate his election to defer
payment of fees by written notice delivered to the Corporation. Such termination
shall become effective as of the end of the calendar year in which notice of
termination is given with respect to fees payable for services as a Director
during subsequent calendar years. Any notice of termination by a Director who,
as of the date of such notice, is deferring fees into a Deemed Share Subaccount
(a) shall be irrevocable with respect to any calendar year commencing within six
months after the date of such notice and (b) shall not become effective until
the end of a calendar year that ends at least six months following the date of
the notice. Amounts credited to the Deferred Account of a Director prior to the
effective date of termination shall not be affected thereby and shall be paid
only in accordance with paragraph 4.
7. NON-ASSIGNABILITY. During the Director's lifetime, the right to the
Deferred Account and interest thereon shall not be transferable or assignable or
subject to claims of creditors of the Director.
8. BOARD AND SHAREHOLDER APPROVAL. The Plan was adopted and effective as of May
23, 1995. The Plan as amended became effective as of November 7, 1995, and is
currently pending approval by holders of a majority of the outstanding common
shares of the Company. Shareholder approval will be solicited in connection with
the annual Stockholder's meeting to be held in May 1996. If the Plan is not
approved, any elections by a Director to receive deemed shares in lieu of cash
compensation shall be void, and such cash compensation shall be deemed to have
been credited to the Director's Cash Subaccount.
9. MISCELLANEOUS. (a) The obligation of the Corporation under the Plan to make
payments or distribute property to Directors, or their beneficiaries,
constitutes the unsecured promise of the Corporation to make payments or
distribute property from its general assets, as provided herein. No Director or
beneficiary shall have any interest in, or a lien or prior claim upon, any
property of the Corporation. To the extent that anyone acquires a right to
receive payment from the Corporation of any amount payable pursuant to the Plan,
such right shall be no greater than the right of any unsecured general creditor
of the Corporation.
(b) Any other provision of this Plan notwithstanding, in the event the
Company experiences a "change in control," as defined in the 1993 Stock
Incentive Plan, or upon the insolvency or bankruptcy of the Corporation, then
any amounts in a Director's Cash Subaccount, including interest thereon, shall
be paid to the Director as soon as practical after such event. For purposes of
this subparagraph 8(b), any amounts credited to a Director's Deemed Share
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<PAGE> 4
Subaccount shall be converted into its cash equivalent value as of the date of
the respective event described herein, and shall be paid to the Director in cash
as soon as practical after such event.
(c) It is the express intent of the parties to this Agreement that the
amounts deferred pursuant to this Agreement shall not be subjected to federal
income taxation until such time as they are paid to the Director. It is
understood by the Director that the Company makes no representation or warranty
as to the income tax treatment of the amounts deferred under this Agreement.
In the event that, upon application of pertinent federal income tax
law, regulations, rulings, or final non-appealable court cases, it is determined
that the amounts deferred under this Agreement are subject to income taxation at
the time earned, the Committee and the Director may agree to deliver to the
Director all (but not less than all) of the cash in the Director's accounts,
issue or acquire common shares equal to the whole number of deemed shares in a
Director's Deemed Share Subaccount and distribute the actual number of whole
shares to the Director, and terminate any existing election in effect for that
Director.
ROBERDS, INC., BY
/s/ Robert M. Wilson
- ------------------------
Robert M. Wilson, its
Executive Vice President
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EXHIBIT 10.4.1.3
ASSIGNMENT AND ASSUMPTION OF LEASE
This Assignment and Assumption of Lease ("Assignment") is made as of
October 25, 1996, between DAF INVESTMENTS LTD., an Ohio limited liability
company ("Assignor"), and DAF WEST CARROLLTON PLAZA LTD., an Ohio limited
liability company ("Assignee"), under the following circumstances:
A. Pursuant to a certain Lease dated April 1, 1990, as amended by
Amendment to Lease Agreement dated September 24, 1993, and as further assigned
by Assignment and Assumption Agreement dated January 1, 1995 (the "Lease"),
which Lease is attached hereto as Exhibit A, Assignor as Lessor, leased to
Roberds, Inc., as Lessee, certain real property known generally as 1000 East
Central Avenue, West Carrollton, Ohio, and specifically as Lot 2500 of the
revised and consecutive numbered lots on the plat of the City of West
Carrollton.
B. Assignor desires to assign all of its right, title and
interest under the Lease to Assignee and Assignee agrees to assume all of
Assignor's liabilities and obligations under the Lease.
NOW, THEREFORE, for valuable consideration paid, receipt of which is
acknowledged, effective the date first written above, the parties agree as
follows:
1. Assignor assigns to Assignee all of its right, title and
interest in the Lease, together with all rights arising under or by virtue of
the Lease.
2. Assignee accepts this assignment and assumes and agrees to
perform all of the obligations of Assignor arising or accruing under this Lease.
WITNESS the execution hereof as of this 14th day of January, 1997.
Signed and Acknowledged
in the Presence of:
ASSIGNOR
DAF Investments Ltd., an
Ohio limited liability company
/s/ Robert M. Wilson /s/ Kenneth W. Fletcher
- -------------------------- --------------------------
As to Assignor and Assignee Kenneth W. Fletcher
Managing Member
/s/ Barbara L. Fogle
- --------------------------
As to Assignor and Assignee
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<PAGE> 2
ASSIGNEE
DAF West Carrollton Plaza Ltd.,
an Ohio limited liability company
/s/ Kenneth W. Fletcher
-------------------------
Kenneth W. Fletcher
Managing Member
STATE OF OHIO
SS:
COUNTY OF MONTGOMERY
The foregoing instrument was acknowledged before me this 14th day of
January, 1997, by Kenneth W. Fletcher, Managing Member of DAF Investments Ltd.,
an Ohio limited liability company, on behalf of the limited liability company.
/s/ Robert M. Wilson
------------------------------
Notary Public
STATE OF OHIO
SS:
COUNTY OF MONTGOMERY
The foregoing instrument was acknowledged before me this 14th day of
January, 1997, by Kenneth W. Fletcher, Managing Member of DAF West Carrollton
Plaza Ltd., an Ohio limited liability company, on behalf of the limited
liability company.
/s/ Robert M. Wilson
------------------------------
Notary Public
This Instrument Prepared By: Jon M. Rosemeyer, Esq., 2700 Kettering Tower,
Dayton, Ohio 45423
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<PAGE> 1
EXHIBIT 10.4.2.3
ASSIGNMENT AND ASSUMPTION OF LEASE
This Assignment and Assumption of Lease ("Assignment") is made as of
October 25, 1996, between DAF INVESTMENTS LTD., an Ohio limited liability
company ("Assignor"), and DAF WEST CARROLLTON PLAZA LTD., an Ohio limited
liability company ("Assignee"), under the following circumstances:
A. Pursuant to a certain Lease dated April 1, 1990, as amended by
Amendment to Lease Agreement, dated September 24, 1993, and as further assigned
by Assignment and Assumption Agreement dated January 1, 1995 (the "Lease"),
which Lease is attached hereto as Exhibit A, Assignor as Lessor, leased to
Roberds, Inc., as Lessee, certain real property known generally as 1100 East
Central Avenue, West Carrollton, Ohio, and specifically as lots numbered 4005
and 4006 of the revised and consecutive numbered lots on the plat of the City of
West Carrollton.
B. Assignor desires to assign all of its right, title and
interest under the Lease to Assignee and Assignee agrees to assume all of
Assignor's liabilities and obligations under the Lease.
NOW, THEREFORE, for valuable consideration paid, receipt of which is
acknowledged, effective the date first written above, the parties agree as
follows:
1. Assignor assigns to Assignee all of its right, title and
interest in the Lease, together with all rights arising under or by virtue of
the Lease.
2. Assignee accepts this assignment and assumes and agrees to
perform all of the obligations of Assignor arising or accruing under the Lease.
WITNESS the execution hereof as of this 14th day of January, 1997.
Signed and Acknowledged
in the Presence of:
ASSIGNOR
DAF Investments Ltd., an
Ohio limited liability company
/s/ Robert M. Wilson /s/ Kenneth W. Fletcher
- -------------------------- --------------------------
As to Assignor and Assignee Kenneth W. Fletcher
Managing Member
/s/ Barbara L. Fogle
- --------------------------
As to Assignor and Assignee
ASSIGNEE
DAF West Carrollton Plaza Ltd.,
an Ohio limited liability company
/s/ Kenneth W. Fletcher
--------------------------
Kenneth W. Fletcher
Managing Member
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<PAGE> 2
STATE OF OHIO
SS:
COUNTY OF MONTGOMERY
The foregoing instrument was acknowledged before me this 14th day of
January, 1997, by Kenneth W. Fletcher, Managing Member of DAF Investments Ltd.,
an Ohio limited liability company, on behalf of the limited liability company.
/s/ Robert M. Wilson
------------------------------
Notary Public
STATE OF OHIO
SS:
COUNTY OF MONTGOMERY
The foregoing instrument was acknowledged before me this 14th day of
January, 1997, by Kenneth W. Fletcher, Managing Member of DAF West Carrollton
Plaza Ltd., an Ohio limited liability company, on behalf of the limited
liability company.
/s/ Robert M. Wilson
------------------------------
Notary Public
This Instrument Prepared By: Jon M. Rosemeyer, Esq., 2700 Kettering Tower,
Dayton, Ohio 45423
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<PAGE> 1
EXHIBIT 10.6.3.4
AMENDMENT TO AMENDED AND RESTATED BUSINESS LOAN AGREEMENT
This Amendment to Amended and Restated Business Loan Agreement ("Amendment") is
made this 31st day of July, 1996, but is effective as of June 28, 1996
("Effective Date"), by and between Roberds, Inc. ("Borrower"), and Bank One,
Dayton, NA ("Bank One").
WITNESSETH:
WHEREAS, Borrower and Bank One entered into a Amended and Restated Business Loan
Agreement dated September 30, 1994 (the "Agreement") as amended by Amendments to
Amended and Restated Business Loan Agreement dated December 7, 1994 and October
13, 1995; and WHEREAS, Borrower desires to and Bank One has agreed to amend
certain financial covenants set forth in the Agreement.
NOW, THEREFORE, in consideration of the premises and the terms and conditions
set forth herein, Borrower and Bank One agree to amend the Agreement as follows:
1. On page 5, delete Section 6.2 in its entirety and insert the following in
its place:
6.2 FUNDED DEBT TO TANGIBLE NET WORTH. Borrower agrees to
maintain a ratio of Funded Debt to Tangible Net Worth of not more than 2.10 to
1.00 measured quarterly.
"Tangible Net Worth" shall be determined in accordance with
GAAP and shall be deemed to include the amount of total assets of Borrower
excluding the amount of Intangible Assets of Borrower minus the amount of total
liabilities of Borrower, exclusive of Subordinated Debt, if any.
"Intangible Assets" shall be determined in accordance with
GAAP and be deemed to include at book value, without limitation, goodwill,
patents, copyrights, secret processes, deferred expenses relating to sales,
general administrative, research and development expense.
"Funded Debt" shall be determined in accordance with GAAP and
shall be deemed to include all interest bearing borrowings plus capitalized
leases.
2. On page 6, delete Section 6.4 in its entirety and insert the following in
its place:
FIXED CHARGE COVERAGE. Borrower agrees to maintain a Fixed Charge
Coverage (net income after taxes minus dividends plus interest expense plus rent
expense plus depreciation/amortization divided by current maturities of
long-term debt (including capitalized leases but not including any amount
outstanding on the $40,000,000.00, as amended, Business Purpose Revolving
Promissory Note dated November 23, 1993 from Borrower to the order of Bank One
which may be considered current due to the maturity date of such promissory
note) plus interest expense plus rent expense of not less than the ratios set
forth for the following periods measured on a rolling four quarter basis:
Periods Ratios
Effective Date to 09/30/97 1.25 to 1.00
10/01/97 and thereafter 1.50 to 1.00
3. On page 6, delete Section 6.5 in its entirety and insert the following in
its place:
CAPITAL EXPENDITURES. Borrower agrees not to purchase, lease or otherwise
acquire or enter into any commitment to purchase, lease or otherwise
acquire additional capital assets where the aggregate liability or
expenditure therefore exceeds
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<PAGE> 2
$35,000,000.00 in 1996 and $10,000,000.00 in 1997 and thereafter,
except with prior written consent by Bank One.
4. Delete the Business Loan Agreement "Borrowing Base" Addendum attached to the
Agreement in its entirety and insert the Second Amended Business Loan Agreement
"Borrowing Base" Addendum attached hereto in its place.
5. This Amendment is a modification only and not a novation. Except for the
above-quoted modification(s), the Agreement, any agreement or security document,
and all the terms and conditions thereof, shall be and remain in full force and
effect with the changes herein deemed to be incorporated therein. This Amendment
is to be considered attached to the Agreement and made a part thereof. This
Amendment shall not release or affect the liability of any guarantor, surety or
endorser of the Agreement or release any owner of collateral securing the
Agreement. The validity, priority and enforceability of the Agreement shall not
be impaired hereby. To the extent that any provision of this Amendment conflicts
with any term or condition set forth in the Agreement, or any agreement or
security document executed in conjunction therewith, the provisions of this
Amendment shall supersede and control.
IN WITNESS WHEREOF, the parties have executed this Amendment effective as of the
day and year first written above.
ROBERDS, INC.
By: /s/ Wayne B. Hawkins
------------------------
Its: Treasurer
BANK ONE, DAYTON, NA
By: /s/ John B. Middleberg
------------------------
Its: Vice President
98
<PAGE> 1
EXHIBIT 10.6.3.5
SECOND
AMENDED AND RESTATED
BUSINESS LOAN AGREEMENT
Agreement by and between Bank One, Dayton, NA ("Bank One"), located at Kettering
Tower, Dayton, OH 45401, and Roberds, Inc. ("Borrower"), located at 1100 E.
Central Ave., West Carrollton, OH 45449-1888.
Borrower has requested that certain extensions of credit be provided by Bank
One, same evidenced by an Amended and Restated Business Purpose Revolving
Promissory Note in the amount of $45,000,000.00 dated December 31, 1996 and
executed by Borrower on any and all renewals, modifications, extensions or
substitutions therefore "Obligations."
In consideration of the mutual promises set forth below and the extensions of
credit as described above and subject to Borrower's satisfactory fulfillment of
all conditions incident to the borrowings, Bank One and Borrower agree as
follows:
ARTICLE I - DEFINITIONS
The following terms shall have the following meanings in this Agreement or in
any document made or delivered pursuant to or in conjunction with this
Agreement:
1.1 All computations and determinations as to accounting or financial matters
shall be made in accordance with generally accepted accounting principles
consistently applied ("GAAP"), and all accounting or financial terms shall have
the meanings ascribed to such terms by GAAP.
1.2 "Indebtedness" shall mean:
(a) All indebtedness and liabilities of whatsoever kind, nature and
description owed to Bank One by Borrower, whether direct or indirect, absolute
or contingent, due or to become due or whether now existing or hereafter
arising, and howsoever evidenced or acquired, and whether joint and several;
(b) All future advances which Bank One at any time may, but shall not
be required to, make for the protection or preservation of Bank One's rights and
interests arising hereunder, including, without limitation, advances for taxes,
levies, assessments, insurance, and reasonable attorneys' fees, if allowable by
law; and
(c) All costs and expenses incurred by Bank One in the protection and
preparation for sale of any of its collateral including, without limitation,
attorneys' fees, if allowable by law, and court costs.
1.3 "Obligation" shall mean the above referenced extensions of credit including
any Promissory Note, Guaranty, Letter of Credit or other instrument of Borrower
evidencing any loan, advance, credit or extension or renewal thereof made or
committed by Bank One to Borrower under this Agreement.
1.4 "Obligor(s)" shall mean all those parties, excluding Borrower, liable
for the Obligation.
1.5 "Person" shall mean and include an individual, partnership, corporation,
trust, unincorporated association or organization, government or any department
or agency thereof.
1.6 The aforestated definitions, and all other definitions which may be set
forth herein, shall be applicable to the singular and plurals of said defined
term.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
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<PAGE> 2
2.1 It is a duly organized, legally existing corporation in good standing under
the laws of the State of Ohio, is qualified to do business in and is in good
standing under the laws of any other state in which it conducts its business.
2.2 It has the power and is duly authorized to enter into this Agreement and to
execute and deliver to Bank One, now and from time to time hereafter, additional
instruments, resolutions, agreements and other instruments or documents relating
to the Obligation owed to Bank One. It has, by proper action, authorized and
empowered those persons whose signatures appear in this Agreement and any
instruments, documents and exhibits that have been delivered in connection
herewith, to execute the same for and on its behalf.
2.3 The execution by it of this Agreement or any other agreements, instruments,
or documents which may, from time to time hereafter, be executed in respect
hereto and delivered to Bank One, shall not constitute a breach of any
provisions contained in its articles of incorporation or bylaws, or if
applicable, partnership agreement, or any agreements to which it is now a party,
does not violate any law, statute, or ordinance or rule or regulation
promulgated pursuant thereto, and that the performance by it of its obligations
hereunder or any agreements executed by it and delivered hereunder shall not
constitute an event of default under any other agreement to which it is now a
party.
2.4 All financial statements and information relating to it which have been or
may hereafter be delivered by it, its agents or accountants to Bank One are true
and correct and have been prepared in accordance with GAAP and that there have
been no material adverse changes in its financial or business condition or
operations since the submission of any financial information to Bank One, and no
material adverse changes in its financial or business condition or operations
are imminent or threatened.
2.5 All of its Federal, State and other tax returns and reports, including
reports to any governmental authority, for the proper maintenance and operation
of its properties, assets and business, as may be required by law to be filed or
paid, have been filed, and all Federal, State and other taxes, assessments, fees
and other governmental charges (other than those presently payable, without
penalty) imposed upon it or its properties or assets, which are due and payable,
have been fully paid unless being contested by it in the ordinary course of
business and for which it has provided adequate reserves, except for those
disclosed by Borrower in writing to Bank One as of the date of this Agreement.
2.6 There is no litigation or legal or administrative proceedings,
investigations or other action of any nature, pending or, to its knowledge,
threatened against or affecting it, which have not been disclosed to Bank One
and involve the possibility of any judgment or liability not covered by
insurance which may materially or adversely affect any of its properties or
assets or its right to carry on its business as now conducted, except for those
disclosed by Borrower in writing to Bank One as of the date of this Agreement.
2.7 It has good, valid and marketable title to all of its property and assets
free of any adverse lien, security interest or encumbrance, except liens,
security interests, pledges and encumbrances disclosed to Bank One by Borrower
in writing prior to the date hereof or disclosed in its financial statement and
provided to Bank One.
2.8 All of the funds loaned to it pursuant to this Agreement have been or will
be used exclusively in its normal business operation, will not be diverted to or
used in any other manner, and will not be used for the purchasing or carrying of
any "Margin Stock" as defined in regulations promulgated by the Federal Reserve
Board or the Securities and Exchange Commission.
2.9 It possesses and will continue to possess all permits, licenses, trademarks,
patents and rights thereto to conduct its business and that its business does
not conflict or violate any valid rights of others with respect to the
foregoing.
2.10 It is in compliance in all material respects with all applicable provisions
of the Employee Retirement Income Security Act of 1974, as amended from time to
time, and the regulations and published interpretations thereof ("ERISA").
Neither a Reportable Event nor a Prohibited Transaction, as defined per ERISA,
has occurred and is continuing with respect to any Plan, nor has there been a
notice of intent to terminate a Plan or appoint a trustee to administrate a
Plan.
2.11 It is in material compliance with all Federal, State and local laws,
statutes, ordinances, regulations, rulings and interpretations relating to
industrial hygiene, public health or safety, environmental conditions, the
protection of the environment, the release, discharge, emission or disposal to
air, water, land or ground water, the withdrawal or use of ground water or the
use, handling, disposal, treatment, storage or management of or exposure to
Hazardous Materials
100
<PAGE> 3
("Hazardous Materials Laws"), the violation of which would have a material
effect on its business, its financial condition or its assets. The term
"Hazardous Materials" means any flammable materials, explosives, radioactive
materials, pollutants, toxic substances, hazardous water, hazardous materials,
hazardous substances, polychlorinated biphenyls, asbestos, urea formaldehyde,
petroleum (including its derivatives, by-products or other hydrocarbons) or
related materials or other controlled, prohibited or regulated substances or
materials, including, without limitation, any substances defined or listed as or
included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "pollutants" or "toxic substances" under any Hazardous
Materials Laws. It has not received any written or oral communication or notice
from any judicial or governmental entity nor is it aware of any investigation by
any agency for any violation of any Hazardous Materials Law.
2.12 Details of all litigation, legal or administrative proceedings,
investigation or other action of similar nature, pending or threatened against
it, at any time during the term of this Agreement, which in part or in whole may
or will render any of these Representations and Warranties no longer true,
accurate and correct in each and every respect, will be brought to the attention
of Bank One, in writing, within thirty (30) days from the date Borrower acquires
knowledge of same.
ARTICLE III - SECURITY
3.1 As security for the Indebtedness, regardless of whether the principal sum
evidenced by an Obligation is reduced to zero and thereafter increased/decreased
an unlimited number of times, Borrower hereby grants to Bank One or has
previously caused to be granted to Bank One a security interest in the following
property under separate instrument:
(A) Accounts, general intangibles, chattel paper, instruments,
and other forms of obligations and receivables
(B) Inventory and merchandise
(C) All goods, equipment, machinery, furnishings, fixtures, leasehold
improvements and other tangible personal property.
3.2 It is further agreed that the security described above shall secure
repayment of all Indebtedness and that a default in the terms of any note,
security agreement, mortgage, or other agreement from Borrower to Bank One shall
constitute a default of all notes, security agreements, mortgages, and other
agreements, and that Bank One may proceed in exercising its rights thereunder in
any order or manner it may choose. The purpose of this section being to cross-
collateralize and cross-default all Indebtedness. Additionally, the security
interest described above, if any, may be modified, added to or deleted from time
to time without modification to this Agreement.
3.3 Borrower agrees to provide Bank One with equipment not currently pledged to
Bank One and other related documentation satisfactory to Bank One no later than
June 30, 1997.
ARTICLE IV - AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as any Indebtedness is outstanding or
so long as this Agreement is in effect, Borrower shall:
4.1 Maintain insurance against fire, business interruption, public liability,
theft and other casualty on its insurable real and personal property to their
full replacement costs with companies acceptable to Bank One and against
liability on account of damage to persons or property and as required under all
applicable Workers' Compensation Laws. Furthermore, Borrower shall maintain any
other insurance as may from time to time be reasonably requested by Bank One,
shall insert a joint loss payee clause naming Bank One in all fire and extended
coverage policies and shall deliver certified copies of all such insurance
policies to Bank One upon demand.
4.2 Maintain, keep, and preserve its buildings and properties and every part
thereof in good repair, working order, and condition and from time to time make
all needful and proper repairs, renewals, replacements, additions, betterments,
and improvements thereto, so that at all times the efficiency thereof shall be
fully preserved and maintained.
4.3 Duly pay and discharge or cause to be paid and discharged all taxes,
assessments, and other governmental charges imposed upon it and its properties
or any part thereof or upon the income or profits therefrom, as well as all
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<PAGE> 4
claims for labor, materials, or supplies, which if unpaid might by law become a
lien or charge upon its property, except such items as are being in good faith
appropriately contested and for which it has provided adequate reserves.
4.4 Carry on and conduct its business in substantially the same manner as such
business is now and has heretofore been carried on, maintain management with the
same expertise and experience, and maintain its legal existence, and comply with
all valid and applicable statutes, rules and regulations.
4.5 Maintain, keep, and preserve a system of accounting in accordance with GAAP,
deliver to Bank One financial reports in a form satisfactory to Bank One as Bank
One may request from time to time, permit the duly authorized representative of
Bank One at all reasonable times to examine and inspect the books and records of
it or any related business entity of it, to make abstracts and copies thereof,
and to visit and inspect any of its property wherever same may be located.
4.6 Comply with all laws and regulations which it is required to comply with
including all Hazardous Materials Laws and regulations, and permit Bank One to
make environmental audits from time to time if requested by Bank One with costs
of same to be borne by Borrower.
4.7 Comply with all financial covenants contained in Article VI of this
Agreement and report any violation or breach thereof to Bank One immediately
upon Borrower's knowledge thereof.
ARTICLE V - NEGATIVE COVENANTS
Borrower covenants and agrees that so long as any Indebtedness is outstanding or
so long as this Agreement is in effect, except for that previously disclosed in
writing to and consented to by Bank One, Borrower shall not without prior
written consent of Bank One:
5.1 Create, incur or assume any indebtedness for borrowed money, other than to
Bank One, or act as guarantor for any indebtedness of others in an aggregate
amount greater than $100,000.00 at any time. For the purpose hereof, entering
into capital leases of personal property shall be deemed the incurring of
indebtedness for borrowed money. Notwithstanding the foregoing, Borrower may be
permitted to create, incur or assume any indebtedness for borrowed money for the
sole purpose of acquiring or refinancing Borrower's real estate.
5.2 Mortgage, pledge, assign, hypothecate, encumber, create or grant a security
interest in any of its assets except to Bank One, nor sell, lease, transfer,
assign or otherwise dispose of any of its assets, properties or business outside
of the ordinary course of business, except secured purchase money or lease
indebtedness up to the amount permitted by Section 5.1, if any.
5.3 Invest in, loan or advance money in excess of One Hundred Thousand Dollars
($100,000.00), to organize or participate in the organization or in the creation
of any other business entity.
5.4 Merge, transfer, acquire or consolidate with or into any other entity,
change ownership, dissolve, and/or transfer or sell any assets outside of the
ordinary course of business without the prior written consent of Bank One except
entities controlled by Roberds on the date of that certain Business Loan
Agreement dated November 23, 1993, provided that nothing contained shall be
construed to prohibit a public offering of Borrower's stock.
5.5 Release, redeem, retire, purchase, or otherwise acquire directly or
indirectly any of its capital stock in excess of 5% of the amount outstanding on
the date of this Agreement without the express written consent of the Bank, or
make any changes in its capital structure, or pay, set aside, allocate or
declare any dividends, in cash or other property, upon its capital stock in
excess of 20% of its annual net income without the express written consent of
the Bank.
ARTICLE VI - ADDITIONAL COVENANTS
Until the obligations have expired or been terminated, the Borrower
covenants and agrees with Bank One that at all times:
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<PAGE> 5
6.1 FINANCIAL REPORTS. Borrower covenants in accordance with paragraphs
4.5 and 4.7 that it will deliver to Bank One:
(a) Within ninety (90) days after the end of each fiscal year of
Borrower, audited financial statements of Borrower prepared in accordance with
GAAP by an independent public accountant of recognized national standing
(without a "going concern" or like qualification or exception and without any
qualification or exception as to the scope of such audit) which shall include a
balance sheet, statement of income, statement of reconciliation of net worth,
statement of changes in financial position and notes to financial statements and
Borrower will provide Bank One with copies of its most recent income tax returns
promptly upon request.
(b) Within thirty (30) days after the end of each fiscal month and
forty five (45) days after the end of each fiscal quarter of Borrower, direct
financial statements of Borrower prepared in accordance with GAAP which shall
include a balance sheet at the end of each such period and an income statement
for the period from the beginning of the current fiscal year to the end of such
period. These statements shall be prepared on substantially the same accounting
basis as the statements required in Section 6.1(a) above.
(c) On a quarterly basis and simultaneously with the financial
statements required in 6.1 (a) and (b) above, a compliance certificate, in form
attached hereto as Exhibit "A", certifying from a Financial Officer of Borrower
that the financial statements are complete and correct that Borrower is in
compliance with all financial covenants and that Borrower has no knowledge of
any condition, event or act which with notice or lapse of time or both, could
constitute an Event of Default or which materially and adversely could affect
the financial condition or operations of Borrower, or if such condition, event
or acts exist, specifying the nature and status thereof and stating whether any
change in GAAP or in the application thereof has occurred since the date of the
audited financial statements referred to in Section 6.1(a) and, if any such
change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate.
(d) Promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be.
(e) Promptly following any request therefore, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of this Agreement as
Bank One may reasonably request.
6.2 FUNDED DEBT TO TANGIBLE NET WORTH. Borrower agrees to maintain a
ratio of Funded Debt to Tangible Net Worth of not more than 2.10 to 1.00
measured quarterly.
"Tangible Net Worth" shall be determined in accordance with GAAP and
shall be deemed to include the amount of total assets of Borrower excluding the
amount of Intangible Assets of Borrower minus the amount of total liabilities of
Borrower, exclusive of Subordinated Debt, if any.
"Intangible Assets" shall be determined in accordance with GAAP and be
deemed to include at book value, without limitation, goodwill, patents,
copyrights, secret processes, deferred expenses relating to sales, general
administrative, research and development expense.
"Funded Debt" shall be determined in accordance with GAAP and shall be
deemed to include all interest bearing borrowings plus capitalized leases.
6.3 FUNDED DEBT TO EBITDA. Borrower agrees to maintain a ratio of Funded
Debt to EBITDA of not more than the ratios set forth for the following periods
measured at each quarter's end on a rolling four quarter basis.
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<PAGE> 6
<TABLE>
<CAPTION>
Periods Ratios
<S> <C> <C>
12/31/96 6.75:1.00
01/01/97 through 03/31/97 5.50:1.00
04/01/97 through 06/30/97 4.75:1.00
07/01/97 through 12/31/97 4.50:1.00
01/01/98 and thereafter 4.25:1.00
</TABLE>
"EBITDA" shall be defined as earnings before interest expense, taxes
and depreciation/amortization.
6.4 CURRENT RATIO. Borrower agrees to maintain a current ratio (Current
Assets divided by Current Liabilities) of not less than 1.4 to 1.0 measured
quarterly.
"Current Assets" shall be determined in accordance with GAAP and shall
be deemed to include inventory at lower of cost or current market value.
"Current Liabilities" shall be determined in accordance with GAAP.
6.5 FIXED CHARGE COVERAGE. Borrower agrees to maintain a Fixed Charge
Coverage (net income after taxes minus dividends plus interest expense plus
rent expense plus depreciation/amortization divided by current maturities of
long-term debt (including capitalized leases but not including any amount
outstanding on the $45,000,000.00 Amended and Restated Business Purpose
Revolving Promissory Note dated December 31, 1996 from Borrower to the order of
Bank One which may be considered current due to the maturity date of such
promissory note) plus interest expense plus rent expense of not less than 1.20
to 1.0 at fiscal year-end 1996, fiscal quarter-end March 31, 1997 and June 30,
1997, and beginning fiscal quarter ending September 30, 1997 and at each fiscal
quarter-end thereafter of not less than 1.25 to 1.00 measured on a rolling four
quarter basis.
6.6 CAPITAL EXPENDITURES. Borrower agrees not to purchase, lease or
otherwise acquire or enter into any commitment to purchase, capital lease or
otherwise acquire additional capital assets where the aggregate liability or
expenditure therefore exceeds $6,000,000.00 annually, except with prior
written consent by Bank One.
6.7 DEPOSIT ACCOUNTS. Borrower shall establish and maintain its principal
deposit accounts at Bank One as long as any Indebtedness remains outstanding or
so long as this Agreement remains in effect.
6.8 COMPENSATION. Borrower agrees, except with prior written consent of
Bank One, that cash salary and bonuses by Borrower to the following persons in
the aggregate shall not exceed the total amount set forth in any fiscal year of
the Borrower:
<TABLE>
<CAPTION>
Persons Aggregate Amount
<S> <C>
Kenneth Fletcher $2,000,000.00
Donald Wright
Howard Smith
</TABLE>
6.9 BORROWING BASE. Borrower is subject to certain "Borrowing Base"
conditions as set forth in the "Borrowing Base" Addendum attached hereto and
made a part hereof.
ARTICLE VII - DEFAULT AND REMEDIES
7.1 Borrower shall be in default hereunder upon the happening of any of the
following ("Event of Default"):
(a) The occurrence of an event of default under the terms of any
Obligation, security agreement, mortgage and other agreement executed in
connection therewith or herewith, including any renewal, extension or
modification thereof or hereof or in any other obligation or agreement with Bank
One, whether now or hereafter existing;
(b) Non-performance of any covenant, warranty or liability contained
or referred to herein; or
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<PAGE> 7
(c) If any warranty, representation or statement made or furnished to
Bank One or by or on behalf of Borrower or any Obligor, in connection with this
Agreement, or to induce Bank One to make a loan to Borrower, proves to have been
false in any material respect when made or furnished.
7.2 Upon the occurrence of an Event of Default, Bank One may, at its option,
declare principal and accrued interest of all Indebtedness to be immediately due
and payable forthwith, without presentation, demand, protest or notice of any
kind, all of which are hereby expressly waived. Bank One shall have all the
rights and remedies of a Secured Party under the Uniform Commercial Code, as
enacted in the state where Bank One's principal office is located, said rights
and remedies being cumulative in nature. Bank One may set off any of the
Borrower's deposits or accounts, and any other indebtedness of Bank One to
Borrower against the Indebtedness before or after an Event of Default, without
first looking to any property securing payment thereof.
7.3 Acceptance of payment, in full or part, or waiver of any Event of Default
shall not operate as a waiver of any current or later Event of Default, nor of
any other right of Bank One.
7.4 The provisions of this Agreement concerning any Event of Default are not
intended in any way to affect any rights of Bank One with respect to any
Indebtedness of Borrower to Bank One which may or hereafter be payable on
demand.
7.5 No delay or failure of Bank One in exercising any right, power, remedy or
privilege hereunder shall affect such right, power or privilege or be construed
as a waiver against Bank One.
7.6 Any waiver, permit, consent or approval by Bank One of any breach or default
hereunder must be in writing and shall be effective only to the extent set forth
in such writing.
ARTICLE VIII - MISCELLANEOUS
8.1 Borrower and Bank One acknowledge and agree that the financial covenants set
forth in Article VI and the other terms and conditions contained in this
Agreement were arrived at based on accounting rules, methods and principles,
federal and state tax laws, rules and regulations, and other government or
government agency laws, rules and regulations (together, "Rules") in effect and
adopted by Borrower as of the date of this Agreement. If, at any time during
which this Agreement is in effect, a change occurs or is instituted with respect
to any of the Rules or the application or interpretation thereof, a new Rule is
instituted, or a new or previously enacted Rule is adopted by Borrower, the
result of which materially affects, directly or indirectly, beneficially or
detrimentally, the financial position of Borrower, the calculation of any one or
more of the financial covenants, or any other term or condition of this
Agreement, Bank One and Borrower agree that some or all of the financial
covenants or other terms and conditions of this Agreement shall be amended in
whole or in part at the sole discretion of Bank One. In the event Borrower fails
or refuses to execute a written amendment to this Agreement evidencing its
consent to and agreement with amendments acceptable to Bank One to such
financial covenants and/or other terms and conditions of this Agreement promptly
upon request by Bank One, such failure or refusal shall constitute a default
hereunder and under each of the Obligations, and Bank One shall thereupon be
entitled to exercise any or all of its rights and remedies hereunder or
thereunder.
8.2 All notices required to be given under any term of this Agreement shall be
sufficient if mailed, via registered or certified mail, return receipt
requested, or sent via overnight or hand courier, to the parties at their
respective addresses as previously set forth.
8.3 All documents referred to in this Agreement shall for all purposes be
considered a part of this Agreement, and all terms used in this Agreement shall
have the meaning set forth in said documents, and this Agreement shall include
all of the provisions stated in said documents.
8.4 This Agreement is a continuing agreement and shall continue in effect
notwithstanding that from time to time, no Indebtedness may exist. This
Agreement shall continue as to any Indebtedness and as to any and all renewals,
extensions or modifications thereof.
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8.5 This Agreement may be executed in several counter-parts, each of which shall
be an original and all of which shall constitute the same instrument.
8.6 This Agreement, together with all other documents executed concurrently
herewith or attached hereto, constitutes the full and complete Agreement of the
parties and may not be modified except by written instrument signed by all
parties hereto.
8.7 This Agreement shall be binding upon and inure to the benefit of Borrower
and Bank One and their respective successors and assigns.
8.8 Borrower agrees to pay on demand all costs and expenses in connection with
the negotiation, preparation, execution, delivery, filing, recording,
administration, enforcement, litigation, collection, or filing of any legal
action on or for any Obligation, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for Bank One, with respect thereto.
Time is of the essence of all requirements of Borrower hereunder. The
obligations of Borrower under this paragraph shall survive payment of any
Obligation.
8.9 This Agreement shall be governed and construed in accordance with the laws
of the state where Bank One's principal office is located.
8.10 Any provision contained in this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
8.11 This Agreement amends and restates that certain Amended and Restated
Business Loan Agreement dated September 30, 1994, which amended and restated
that certain Business Loan Agreement dated November 23, 1993. This Agreement
contains the entire agreement of the parties and supersedes all prior agreements
and understandings, oral or written, with respect to the subject matter hereof.
Executed this 31 day of December, 1996.
Roberds, Inc.
By: /s/ Wayne B. Hawkins
Its: Treasurer
Bank One, Dayton, NA
By: /s/ John B. Middleberg
Its: Vice President
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EXHIBIT 10.6.3.6
AMENDMENT TO SECOND AMENDED AND RESTATED
BUSINESS LOAN AGREEMENT
This Amendment to Second Amended and Restated Business Loan Agreement
("Amendment") is made this 27th day of February, 1997 (the "Agreement Date") but
is effective as of December 31, 1996 (the "Effective Date"), by and between
Roberds, Inc. ("Borrower"), and Bank One, Dayton, NA ("Bank One").
WITNESSETH:
WHEREAS, Borrower and Bank One entered into a Second Amended and Restated
Business Loan Agreement dated December 31, 1996 (the "Agreement"); and WHEREAS,
Borrower and Bank One desire to amend the Agreement to amend certain financial
covenants as set forth herein below.
NOW, THEREFORE, in consideration of the premises and the terms and conditions
set forth herein, Borrower and Bank One agree to amend the Agreement as follows:
1. Delete Sections 6.2, 6.3 and 6.5 of the Agreement in their entirety and
insert the following in their place:
6.2 FUNDED DEBT TO TANGIBLE NET WORTH. Borrower agrees to maintain a ratio
of Funded Debt to Tangible Net Worth of not more than 2.10 to 1.00 measured
quarterly.
"Tangible Net Worth" shall be determined in accordance with GAAP and
shall be deemed to include the amount of total assets of Borrower excluding the
amount of Intangible Assets of Borrower plus $2,600,000.00 related to the
exposure with the Ohio Bureau of Workers' Compensation that was recorded by the
Borrower the fourth quarter of 1996 minus the amount of total liabilities of
Borrower, exclusive of Subordinated Debt, if any.
"Intangible Assets" shall be determined in accordance with GAAP and be
deemed to include at book value, without limitation, goodwill, patents,
copyrights, secret processes, deferred expenses relating to sales, general
administrative, research and development expense.
"Funded Debt" shall be determined in accordance with GAAP and shall be
deemed to include all interest bearing borrowings plus capitalized leases.
6.3 FUNDED DEBT TO EBITDA. Borrower agrees to maintain a ratio of Funded
Debt to EBITDA of not more than the ratios set forth for the following periods
measured at each quarter's end on a rolling four quarter basis.
Periods Ratios
12/31/96 6.75:1.00
01/01/97 through 03/31/97 5.75:1.00
04/01/97 through 06/30/97 4.75:1.00
07/01/97 through 12/31/97 4.50:1.00
01/01/98 and thereafter 4.25:1.00
"EBITDA" shall be defined as earnings before interest expense, taxes
and depreciation/amortization plus $2,600,000.00 related to the exposure with
the Ohio Bureau of Workers' Compensation that was recorded by the Borrower the
fourth quarter of 1996.
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6.5 FIXED CHARGE COVERAGE. Borrower agrees to maintain a Fixed Charge Coverage
(net income after taxes minus dividends plus $2,600,000.00 related to the
exposure with the Ohio Bureau of Workers' Compensation that was recorded by the
Borrower the fourth quarter of 1996 plus interest expense plus rent expense plus
depreciation/amortization divided by current maturities of long-term debt
(including capitalized leases but not including any amount outstanding on the
$45,000,000.00 Amended and Restated Business Purpose Revolving Promissory Note
dated December 31, 1996 from Borrower to the order of Bank One which may be
considered current due to the maturity date of such promissory note) plus
interest expense plus rent expense of not less than 1.20 to 1.0 at fiscal
year-end 1996, fiscal quarter-end March 31, 1997 and June 30, 1997, and
beginning fiscal quarter ending September 30, 1997 and at each fiscal
quarter-end thereafter of not less than 1.25 to 1.00 measured on a rolling four
quarter basis.
2. This Amendment is a modification only and not a novation. Except for the
above-quoted modification(s), the Agreement, any other agreement, instrument or
security document, and all the terms and conditions thereof, shall be and remain
in full force and effect with the changes herein deemed to be incorporated
therein. This Amendment is to be considered attached to the Agreement and made a
part thereof. This Amendment shall not release or affect the liability of any
guarantor, surety or endorser of the Agreement or release any owner of
collateral securing the Agreement. The validity, priority and enforceability of
the Agreement shall not be impaired hereby. To the extent that any provision of
this Amendment conflicts with any term or condition set forth in the Agreement,
or any agreement or security document executed in conjunction therewith, the
provisions of this Amendment shall supersede and control.
IN WITNESS WHEREOF, the parties have executed this Amendment effective as of the
day and year first written above.
ROBERDS, INC.
By: /s/ Wayne B. Hawkins
-------------------------------
Its: Treasurer
BANK ONE, DAYTON, NA
By: /s/ R. Michael Dunlavey
--------------------------------
Its: Vice President
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EXHIBIT 10.10.2
ROBERDS, INC.
SECOND AMENDED AND RESTATED
EXECUTIVE COMPENSATION PLAN
Effective for 1997
I. BACKGROUND
The Roberds, Inc. Executive Compensation Plan is designed to reward executive
officers and other senior managers with annual cash bonuses and grants of
incentive stock options ("ISOs"), if the Company's pre-tax profit exceeds
certain targets. As pre-tax profits grow, the awards increase. The system is
designed such that cash bonuses, profit-sharing contributions, and ISO awards
begin to be earned at a pre-tax earnings threshold ("Threshold"), established
annually by the Board of Directors upon the recommendation of management, and
grow substantially as the Company's internal target for pre-tax earnings
("Target") is approached. If the Target is exceeded, there are significant
increases in all forms of compensation, until the Company reaches the "Ceiling."
II. CASH BONUS PLAN (EXHIBIT A)
A. Profit plan. The annual profit plan is developed by executive
management on a market-by-market basis. It is based on the expected
performance for the year, adjusted for the impact of new store openings
and other known changes in the business, and then "stretched" to
develop high, but reasonable, targets for management. The internal plan
is based on a Target established annually by the Board of Directors,
upon the recommendation of management.
B. Pre-tax profit. All calculations under the Plan start with pre-tax
profit for the year. This is the expected audited, pre-tax earnings of
the entire Company, with all known adjustments for the year, but before
any year-end bonuses or profit-sharing contributions. The Board of
Directors can exclude certain items from the calculation of pre-tax
earnings if, in its judgment, management cannot exert significant
influence over the outcome of those items.
C. Chief Executive Officer. The Chief Executive Officer will be paid a
cash bonus, expressed as a percentage of his base pay, depending the
performance of the Company against its profit plan for the year. Below
the Threshold, the Chief Executive Officer earns no cash bonus.
Beginning at the Threshold, he earns a bonus equal to a percentage of
his base pay. The bonus percentage increases with profits to a maximum
percentage of his base pay set annually by the Board of Directors (the
"Ceiling"). The percentages are shown on Exhibit A, provided to the
Board of Directors.
D. Other senior executives. The other executive officers, and other senior
managers, share in a pool of money that also increases as pre-tax
profits increase. The pool is calculated as a percentage of the base
pay of the eligible managers. Below the Threshold, there is no money in
the pool. Beginning at the Threshold, the pool is a small percentage of
the base pay of the eligible managers, growing to maximum percentage of
their base pay at the Ceiling.
Once the size of the pool is determined, it is allocated to the
participants based on their relative "shares" in the bonus pool. The
shares are determined by reference to each manager's base pay as a
percentage of the base
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pay of the group. Certain managers have commission and override
arrangements that are a part of their compensation arrangements. For
these individuals, "base pay" is adjusted to reflect their estimated
total compensation for the year, before any year-end bonuses. Exhibit
B, provided to the Board of Directors, illustrates the individual
payouts to the group at various levels of profitability.
Once the amount of each individual's bonus is determined under the
formula, the Chief Executive Officer can reduce that amount by up to 50
percent, to reflect each individual executive's performance. Any
amounts that become available as the result of such reductions can be
used to increase other executives' bonuses, by up to 50 percent, to
reflect their individual performance. However, the total amount awarded
to all executives cannot exceed the total amount derived under the
formula.
The Board may establish a percentage of the cash bonus pool to be held
in a discretionary "pot." This money can be used by the Chief Executive
Officer to cure any inequities that may arise under the formula system
or to recognize outstanding achievements by an individual or group.
This pot does not have to be awarded. The Chief Executive Officer will
make specific recommendations to the Compensation Committee for any
awards from this pool.
E. Profit-sharing contribution. The Company has no fixed formula for
contributions to the profit-sharing plan. The contributions to the
profit-sharing plan will be adjusted annually by the Board of
Directors, based on the recommendation of management. However, in
doing so, the Board should be guided by the principles set forth in
this Plan for cash bonus awards: below the Threshold, no
profit-sharing contribution should be made; once the Threshold is
reached, contributions can be made a low percentage of pre-tax
earnings; that rate should grow as pre-tax earnings approach the
Target; and should increase more rapidly as the Target is exceeded.
The Board can elect to replace or supplement profit-sharing
contributions with "matching contributions" to the Company's section
401(k) plan.
F. Bonuses to other employees. Outside of the Plan, the Company may
also award cash bonuses to other lower-level employees not covered
by the Plan. These awards are made in the discretion of management;
however, none of these awards can be made to individuals
participating in the Plan.
G. Discretionary Pool. While the Plan is largely formula-driven, it is
recognized that circumstances can arise in which the Company fails to
meet its pre-tax profit plan (i.e., falls below the Threshold Amount),
but such shortfall is the result of unusual conditions or market
forces. Likewise, the Company could fail to meet its pre-tax profit
plan, but significantly outperform the comparable companies. In these
instances, management may have performed well under difficult
circumstances, but its effort simply did not yield the planned pre-tax
earnings.
In order to address such situations, the Plan permits the establishment
of a Discretionary Pool, so that cash awards can be made to key
executives even though the Company fails to achieve the Threshold
Amount. The Discretionary Pool shall be defined as a percentage of the
base pay of the executives described in sections C and D above. Such
percentage shall be established annually by the Board of Directors.
Awards from the Discretionary Pool shall be approved by the Board of
Directors.
III. ISO PLAN (EXHIBIT C)
A. Generally. The ISO award plan follows essentially the same approach as
the cash bonus plan. ISOs will be awarded as percentage of each
executive's base pay. No awards will be made if pre-tax earnings are
below the Threshold. Beginning at the Threshold, awards are made based
on a scale shown on Exhibit C, as distributed to the Board of
Directors. The award percentage grows as the performance against the
profit plan increases. The awards reach a maximum percentage of an
individual's base pay at the Ceiling.
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Once the dollar value of the ISOs is determined under the formula, that
value is converted to a number of shares based on the then-current
value of Roberds' stock at the date of grant.
Similar to the cash bonus plan, the ISO plan also reserves a "pot" of
shares for use by the Chief Executive Officer. These additional shares
can be used to cure inequities in the formula system or to reward
unusual efforts or results beyond those recognized by the formula
system.
The ISO plan includes all participants in the cash bonus plan. Outside
of the Plan, the Board may award ISOs to other lower-level employees,
upon the recommendation of management; provided, however, that no such
awards can be made to participants in the Plan.
B. Chief Executive Officer Plan. The Chief Executive Officer's ISO plan is
set at a slightly higher percentage of his base pay than that used for
the other employees, as shown on Exhibit C distributed to the Board of
Directors. This is done to reinforce his focus on long-term growth and
increases in shareholder value.
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EXHIBIT 10.11.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and effective as of March 1,
1996, by and between CHARLES H. PALKO ("Employee"), residing at 28898 Hidden
Trail, Farmington Hills, Michigan 48331, and ROBERDS, INC., an Ohio corporation
("Employer"), with its principal place of business at 1100 East Central Avenue,
Dayton, Ohio 45449-1888. In consideration of the mutual covenants and promises
of the parties hereto, Employer and Employee agree as follows:
SECTION I. EMPLOYMENT. Employer hereby agrees to employ Employee as Vice
President-Appliances, and in such other duties, capacities, and responsibilities
as Employer may, from time to time, assign Employee, and Employee accepts such
employment with Employer, subject to the terms and conditions set forth in this
Agreement. Employee has been elected an "executive officer" of Employer by the
Board of Directors of Employer.
SECTION II. TERM OF EMPLOYMENT. This Agreement, and the employment under it,
shall commence on March 1, 1996 and continue until February 28, 1998, unless
earlier terminated under the provisions set forth herein.
SECTION III. DUTIES OF EMPLOYEE. Employee will serve Employer faithfully and to
the best of his ability, under the direction of the President of Employer.
Employee will devote all of his time, energy, and skill during regular business
hours to such employment. Employee shall perform such services and act in such
executive capacity as the President shall direct.
SECTION IV. COMPENSATION. (a) Employee's salary shall be set at the rate of
$150,000 per year from March 1, 1996, until the first anniversary of this
Agreement.
(b) Employee's salary for the second year of this Agreement may be
increased to $175,000, at the discretion of the President and the Compensation
Committee of the Board of Directors, but shall not be reduced below $150,000
annually.
(c) Employer shall pay Employee's salary in accordance with the pay
practices of Employer, as applied to all executive officers. Such policy is
presently to pay executive officers weekly; however, it is expected to change to
a bi-weekly schedule in April 1996.
(d) Upon the execution of this Agreement, Employer shall make a cash
award to Employee equal to the value of 2,000 of its common shares, without par
value, as of March 1, 1996. The value of the shares shall be calculated as set
forth below.
(e) Employee shall participate in the Roberds, Inc. Executive
Compensation Plan, as amended from time to time, and any other compensation
plans or arrangements provided to Employer's executive officers.
SECTION V. FAILURE TO PAY EMPLOYEE. The failure of Employer to pay Employee
his salary as provided in Section IV may, in Employee's sole discretion, be
deemed a breach of this Agreement, and unless such breach is
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cured within ten days after written notice to Employer, this Agreement shall
terminate, including the noncompetition provisions of Sections XII and XIII.
SECTION VI. VALUATION OF COMMON STOCK. The common shares awarded to Employee, as
described in Section IV(d), shall be valued by taking the arithmetic mean of the
high and the low prices of the common shares of Employer as reported by The
Nasdaq Stock Market for activity on March 1, 1996.
SECTION VII. Not used.
SECTION VIII. OPTION TO PURCHASE COMMON STOCK. Concurrently with the
execution of this Agreement, Employer shall deliver to Employer an option to
purchase 10,000 shares of the common stock of Employer, in accordance with the
terms of the Roberds, Inc. 1993 Stock Incentive Plan.
SECTION IX. REIMBURSEMENT OF EXPENSES. (a) Employer shall reimburse
Employee for reasonable out-of-pocket expenses which Employee shall incur in
connection with his services for Employer rendered under this Agreement, on
presentation by Employee of appropriate vouchers to Employer.
(b) Employee agrees to move his principal residence to the greater
Dayton, Ohio area as soon as practical. In connection with such move, and in
accordance with Employer's moving expense reimbursement policies, Employer shall
reimburse Employee's actual expenses for moving himself, his family, and their
personal property; the real estate commissions paid on the sale of his current
residence located at the address first stated above; and temporary living
expenses in the greater Dayton, Ohio area until such time as the move is
completed. Employee acknowledges that some portion of these payments and
reimbursements by Employer may be subject to income tax.
SECTION X. RULES AND REGULATIONS OF EMPLOYER. Employee hereby agrees to abide
by, and observe, the policies, rules, regulations, and restrictions imposed on
employees and executive officers of Employer, as amended from time to time, as
well as those set forth in this Agreement. Violation of any such policies,
rules, or regulations may be cause for Employer invoking the provisions of
Section XI of this Agreement.
SECTION XI. TERMINATION. (a) If Employee shall fail or be unable to perform the
services required by this Agreement because of any physical or mental infirmity,
and such failure or inability shall continue for three consecutive months, or
for six months during any twelve-consecutive-month period, Employer shall have
the right to terminate this Agreement 90 days after delivering written notice of
the termination to Employer; provided, however, that Employee shall continue to
receive his full compensation to the date of termination, notwithstanding any
such infirmity. The noncompetition provisions of Sections XII and XIII shall
continue in full force and effect notwithstanding the termination of this
Agreement, but if after recovery from such infirmity as evidenced by a medical
certificate of a physician of Employer, Employer does not choose to hire
Employee in some executive capacity, the noncompetition provisions of Sections
XII and XIII, if still in effect, shall thereupon terminate.
(b) The President of Employer may terminate Employee, by giving written
notice to Employee of such termination, at any time with or without Cause (as
defined below); provided, however, that if such termination is for any reason
other than for Cause, the provisions of this Agreement, including the
compensation arrangements set forth in section IV, shall continue through the
term of this Agreement, as set forth in section II.
(c) The President of Employer may terminate Employee for "Cause." Cause
is defined as one or more of the following acts or conditions taken by or
created by Employee:
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(1) Employee's failure to strictly adhere to the terms of this
Agreement or any of Employer's policies, rules, or
regulations, as amended from time to time.
(2) Employee conducting himself in a manner that is
detrimental to Employer's business or reputation in the
business or investment community.
(3) The death of Employee during the term of this Agreement;
provided, however, that Employer shall pay to Employee's
estate any amounts that are owed to Employee under this
Agreement at the date of death.
In the event that Employer proposes to invoke one or more of the
provisions of subsection (c),(1-2) above, Employer shall provide written notice
to Employee setting forth the specific reasons for the proposed termination and
shall permit Employee a thirty-day period in which to address and resolve the
points raised in such notice. In the event such points are not resolved to the
satisfaction of the President of Employer, in his sole judgment and discretion,
then Employee shall be given written notice of his termination for Cause and
this Agreement shall terminate as of the date of the written notice of such
termination to Employee; provided, however, that Employer shall be liable to
Employee for any amounts owed to Employee through the date of such termination
for Cause, that the provisions of Sections XII through XV shall survive such
termination for Cause, and that no further payments will be made to Employee
under section IV subsequent to termination for Cause.
(d) The parties to this Agreement recognize, and anticipate, that the
employment of Employee with Employer will continue beyond the expiration of this
Agreement. Upon the expiration of this Agreement, Employer and Employee may: (i)
reach agreement to extend the term of this Agreement; (ii) enter into a new
employment agreement; or (iii) continue the employment of Employee without a
formal agreement. In the event that Employee's employment continues under
alternative (iii), this Agreement shall expire and shall be of no further force
or effect except for those provisions that survive termination or expiration, as
specifically set forth herein.
SECTION XII. NONCOMPETITION AFTER TERMINATION. Employee agrees that in addition
to any other limitation, for a period of one year after the termination of his
employment with Roberds, Inc., except a termination caused by Employer in
violation of the terms of this Agreement, and unless otherwise specified, he
will not directly or indirectly engage in, or in any manner be connected with or
employed by, any person, firm, or corporation engaged in the retail sale of
products similar to those sold by Employer within a radius of 200 miles of any
facility of Employer, its affiliates, or its subsidiaries, or any facility that
Employer has publicly announced its intention to open.
SECTION XIII. SOLICITATION AFTER TERMINATION. Employee agrees that in addition
to any other limitation, for a period of two years after the termination of his
employment with Roberds, Inc., except a termination caused by Employer in
violation of the terms of this Agreement, and unless otherwise specified, he
will not, on behalf of himself or on behalf of any other person, firm, or
corporation, call on any of the employees of Employer, or any of its affiliates
or subsidiaries, for the purpose of recruiting such employees to employment with
Employee, his then-current employer, or affiliates of his then-current employer.
Further, Employee agrees that, for such two-year period, if any employee of
Employer contacts Employee about employment with Employee, his then-current
employer, or any of its affiliates or subsidiaries, Employee shall contact
Employer prior to employing the prospective employee, and shall permit Employer
to discuss the matter with the prospective employee.
SECTION XIV. USE OF CONFIDENTIAL INFORMATION. Employee agrees that in addition
to any other limitation, regardless of the circumstances of the termination of
employment, he will not communicate to any person, firm, or corporation any
information relating to customer lists, retail prices, secrets, advertising,
vendor product pricing, nor any confidential knowledge or secrets which he might
from time to time acquire with respect to the business of the Employer, or any
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of its affiliates or subsidiaries. Employee acknowledges that Employer has other
confidentiality rules set forth in its employee handbook, and other rules
imposed by NATM Buying Corp., which also apply to Employee.
SECTION XV. INJUNCTIVE RELIEF. Employee acknowledges that the services to be
rendered are of a unique, special, and extraordinary character which would be
difficult or impossible for Employer to replace, so Employee agrees that, in the
event of a violation of any of the provisions of this Agreement, Employer shall,
in addition to any other rights and remedies available under this Agreement, at
law or otherwise, be entitled to an injunction to be issued by any court of
competent jurisdiction enjoining and restraining Employee from committing any
violation of this Agreement, and Employee hereby consents to the issuance of
such injunction.
SECTION XVI. COMMUNICATIONS TO EMPLOYER. From the time this Agreement commences
until its termination, Employee shall communicate and channel to Employer all
knowledge, business, and any other matters of information which could concern or
be in any way beneficial to the business of Employer, whether acquired by
Employee before or during the term of this Agreement; provided, however, that
nothing in this Agreement shall be construed as requiring such communications
when the information is lawfully protected from disclosure as a trade secret of
a third party. Any such information communicated to Employer shall be and remain
the property of Employer, notwithstanding the subsequent termination of this
Agreement.
SECTION XVII. TERMINATION BY EMPLOYEE. If Employer shall cease conducting its
business, take any action looking toward its dissolution or liquidation, make an
assignment for the benefit of its creditors, admit in writing its inability to
pay its debts as they become due, file a voluntary, or be the subject of an
involuntary petition, in bankruptcy, or be the subject of any state or federal
insolvency proceeding of any kind, then Employee may, in his sole discretion, by
written notice to Employer, terminate his employment and Employer consents to
his release under such circumstances and agrees that if Employer ceases to
operate or exist as a result of such event, the noncompetition and other
provisions of Sections XII through XIV shall thereupon terminate.
SECTION XVIII. BINDING EFFECT; MISCELLANEOUS. (a) This Agreement shall
be binding on and shall inure to the benefit of any successor or successors of
Employer and the personal representatives of Employee.
(b) This Agreement constitutes the entire Agreement between the parties
hereto, and supersedes all prior discussions, drafts, negotiations, proposals,
and agreements between the parties, whether written or oral. This Agreement may
not be amended except by a written instrument executed by the parties hereto.
(c) If any provision of this Agreement is ultimately determined to be
invalid or unenforceable, by a final non-appealable ruling of a court of
competent jurisdiction, the remaining provisions of this Agreement shall not be
affected by such determination, shall remain in full force and effect, and shall
be construed in manner most likely to carry out the original intent of the
parties.
(d) This Agreement may be executed in any number of counterparts, each
of which shall be an original, and all of which, taken together, constitute one
single, binding, enforceable agreement.
(f) Any notice given, or required to be given, under this Agreement,
shall be deemed to have been duly given if it is delivered to the addresses
shown above by either (i) first-class mail, postage prepaid or (ii) a nationally
recognized courier service. The parties may change such addresses at any time by
giving written notice to the other partly to this Agreement in the manner set
forth herein.
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SECTION XIX. LAW TO GOVERN CONTRACT. This Agreement shall be governed by
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and date first stated above.
ROBERDS, INC., by
/s/ Kenneth W. Fletcher
- ------------------------------
Kenneth W. Fletcher, its
President
/s/ Charles H. Palko
- ------------------------------
CHARLES H. PALKO
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EXHIBIT 10.11.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and effective as of
July 30, 1996, by and between MICHAEL E. RAY ("Employee"), residing at 680 Bay
Laurel Court, NE, St. Petersburg, Florida 33703 and ROBERDS, INC., an Ohio
corporation ("Employer"), with its principal place of business at 1100 East
Central Avenue, Dayton, Ohio 45449-1888. In consideration of the mutual
covenants and promises of the parties hereto, Employer and Employee agree as
follows:
SECTION I. EMPLOYMENT. Upon approval of its Board of Directors, Employer hereby
agrees to employ Employee as President-Tampa Market, and in such other duties,
capacities, and responsibilities as Employer may, from time to time, assign
Employee, and Employee accepts such employment with Employer, subject to the
terms and conditions set forth in this Agreement. Employee is expected to be
elected an "executive officer" of Employer by the Board of Directors of
Employer.
SECTION II. TERM OF EMPLOYMENT. This Agreement, and the employment under it,
shall commence on the day and date first written above and continue for one year
thereafter, unless earlier terminated under the provisions set forth herein.
SECTION III. DUTIES OF EMPLOYEE. Employee will serve Employer faithfully and to
the best of his ability, under the direction of the President of Employer.
Employee will devote all of his time, energy, and skill during regular business
hours to such employment. Employee shall perform such services and act in such
executive capacity as the President shall direct.
SECTION IV. COMPENSATION. (a) Employee's salary shall be set at the rate of
$105,000 per year from the day and date first written above through the first
anniversary of this Agreement.
(b) Employer shall pay Employee's salary in accordance with the pay
practices of Employer, as applied to all executive officers.
(c) Employee shall participate in the Roberds, Inc. Executive
Compensation Plan, as amended from time to time, and any other compensation
plans or arrangements provided to Employer's executive officers.
(d) Employer shall provide Employee with a late-model automobile for
Employee's use. Employee hereby acknowledges that any personal use of such
automobile shall be taxable to him pursuant to current income tax law and
regulations.
SECTION V. FAILURE TO PAY EMPLOYEE. The failure of Employer to pay Employee his
salary as provided in Section IV may, in Employee's sole discretion, be deemed a
breach of this Agreement, and unless such breach is cured within ten days after
written notice to Employer, this Agreement shall terminate, including the
provisions of Sections X and XI.
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<PAGE> 2
SECTION VI. OPTION TO PURCHASE COMMON STOCK. Subject to approval by Employer's
Board of Directors, Employer shall deliver to Employee an option to purchase
10,000 shares of the common stock of Employer, in accordance with the terms of
the Roberds, Inc. 1993 Stock Incentive Plan.
SECTION VII. REIMBURSEMENT OF EXPENSES. Employer shall reimburse Employee for
reasonable out-of-pocket expenses which Employee shall incur in connection with
his services for Employer rendered under this Agreement, on presentation by
Employee of appropriate vouchers to Employer.
SECTION VIII. RULES AND REGULATIONS OF EMPLOYER. Employee hereby agrees to abide
by, and observe, the written policies, rules, regulations, and restrictions
imposed on employees and executive officers of Employer, as amended from time to
time, and as provided to Employee, as well as those set forth in this Agreement.
Violation of any such policies, rules, or regulations may be cause for Employer
invoking the provisions of Section IX of this Agreement.
SECTION IX. TERMINATION. (a) If Employee shall fail or be unable to perform the
services required by this Agreement because of any physical or mental infirmity,
and such failure or inability shall continue for three consecutive months, or
for six months during any twelve-consecutive-month period, Employer shall have
the right to terminate this Agreement 90 days after delivering written notice of
the termination to Employee; provided, however, that Employee shall continue to
receive his full compensation to the date of termination, notwithstanding any
such infirmity. The provisions of Sections X and XI shall continue in full force
and effect notwithstanding the termination of this Agreement, but if after
recovery from such infirmity as evidenced by a medical certificate of a
physician of Employer, Employer does not choose to hire Employee in some
executive capacity, the provisions of Sections X and XI, if still in effect,
shall thereupon terminate.
(b) The President of Employer may terminate Employee, by giving written
notice to Employee of such termination, at any time with or without Cause (as
defined below); provided, however, that if such termination is for any reason
other than for Cause, the provisions of this Agreement, including the
compensation arrangements set forth in Section IV, shall continue through the
term of this Agreement, as set forth in Section II.
(c) The President of Employer may terminate Employee for "Cause." Cause
is defined as one or more of the following acts or conditions taken by or
created by Employee:
(1) Employee's failure to strictly adhere to the terms of this
Agreement or any of Employer's written policies, rules, or
regulations, as amended from time to time and provided to
Employee.
(2) Commission by Employee of a felony or any crime involving
moral turpitude; commission by Employee of any act that
exposes Employer, or any of its officers or directors, to any
criminal liability for such act of Employee; or any gross
negligence or willful misconduct in the performance of
Employee's duties that results in any detriment to Employer or
its officers or directors.
(3) The death of Employee during the term of this Agreement;
provided, however, that Employer shall pay to Employee's
estate any amounts that are owed to Employee under this
Agreement at the date of death.
In the event that Employer proposes to invoke one or more of the
provisions of subsection (c),(1-2) above, Employer shall provide written notice
to Employee setting forth the specific reasons for the proposed termination and
shall permit Employee a thirty-day period in which to address and resolve the
points raised in such notice. In the event such points are not resolved to the
satisfaction of the President of Employer, in his sole judgment and discretion,
then Employee shall be given written notice of his termination for Cause and
this Agreement shall terminate as of the date
118
<PAGE> 3
of the written notice of such termination to Employee; provided, however, that
Employer shall be liable to Employee for any amounts owed to Employee through
the date of such termination for Cause, that the provisions of Sections X
through XII shall survive such termination for Cause, and that no further
payments will be made to Employee under Section IV subsequent to termination for
Cause.
(d) The parties to this Agreement recognize, and anticipate, that the
employment of Employee with Employer will continue beyond the expiration of this
Agreement. Upon the expiration of this Agreement, Employer and Employee may: (i)
reach agreement to extend the term of this Agreement; (ii) enter into a new
employment agreement; or (iii) continue the employment of Employee without a
formal agreement. In the event that Employee's employment continues under
alternative (iii) above, this Agreement shall expire and shall be of no further
force or effect except for those provisions that survive termination or
expiration, as specifically set forth herein.
SECTION X. NONCOMPETITION AFTER TERMINATION. (a) Employee agrees that in
addition to any other limitation, for a period of one year after the termination
of his employment with Roberds, Inc., except a termination caused by Employer in
violation of the terms of this Agreement, and unless otherwise specified, he
will not directly or indirectly engage in, or in any manner be connected with or
employed by, any person, firm, or corporation engaged in the retail sale of
products similar to those sold by Employer within a radius of 200 miles of any
facility of Employer, its affiliates, or its subsidiaries, or any facility that
Employer has publicly announced its intention to open.
(b) Notwithstanding anything in subparagraph (a) above, if Employer
terminates Employee without Cause, the period of noncompetition, as set forth in
subparagraph (a) above, shall be from the date of termination through the date
this Agreement would otherwise expire under the provisions of Section II.
(c) If Employer continues the employment of Employee without a formal
employment agreement, as contemplated in Section IX,(d),(iii), then this Section
X shall not survive the expiration of the Agreement.
SECTION XI. SOLICITATION AFTER TERMINATION. Employee agrees that in addition to
any other limitation, for a period of two years after the termination of his
employment with Roberds, Inc., except a termination caused by Employer in
violation of the terms of this Agreement, and unless otherwise specified, he
will not, on behalf of himself or on behalf of any other person, firm, or
corporation, call on any of the employees of Employer, or any of its affiliates
or subsidiaries, for the purpose of recruiting such employees to employment with
Employee, his then-current employer, or affiliates of his then-current employer.
Further, Employee agrees that, for such two-year period, if any employee of
Employer contacts Employee about employment with Employee, his then-current
employer, or any of its affiliates or subsidiaries, Employee shall contact
Employer prior to employing the prospective employee, and shall permit Employer
to discuss the matter with the prospective employee.
SECTION XII. USE OF CONFIDENTIAL INFORMATION. Employee agrees that in addition
to any other limitation, regardless of the circumstances of the termination of
employment, he will not communicate to any person, firm, or corporation any
information relating to customer lists, retail prices, secrets, advertising,
vendor product pricing, nor any confidential knowledge or secrets which he might
from time to time acquire with respect to the business of the Employer, or any
of its affiliates or subsidiaries. Employee acknowledges that Employer has other
confidentiality rules set forth in its employee handbook, and other rules
imposed by NATM Buying Corp., which also apply to Employee. Except as
specifically provided elsewhere herein, this Section XII shall survive the
expiration or termination of this Agreement.
SECTION XIII. INJUNCTIVE RELIEF. Employee acknowledges that the services to be
rendered are of a unique, special, and extraordinary character which would be
difficult or impossible for Employer to replace, so Employee agrees that, in the
event of a violation of any of the provisions of this Agreement, Employer shall,
in addition to any other rights and remedies available under this Agreement, at
law or otherwise, be entitled to an injunction to be issued by any court
119
<PAGE> 4
of competent jurisdiction enjoining and restraining Employee from committing any
violation of this Agreement, and Employee hereby consents to the issuance of
such injunction.
SECTION XIV. COMMUNICATIONS TO EMPLOYER. From the time this Agreement commences
until its termination, Employee shall communicate and channel to Employer all
knowledge, business, and any other matters of information which could concern or
be in any way beneficial to the business of Employer, whether acquired by
Employee before or during the term of this Agreement; provided, however, that
nothing in this Agreement shall be construed as requiring such communications
when the information is lawfully protected from disclosure as a trade secret of
a third party. Any such information communicated to Employer shall be and remain
the property of Employer, notwithstanding the subsequent termination of this
Agreement.
SECTION XV. TERMINATION BY EMPLOYEE. If Employer shall cease conducting its
business, take any action looking toward its dissolution or liquidation, make an
assignment for the benefit of its creditors, admit in writing its inability to
pay its debts as they become due, file a voluntary, or be the subject of an
involuntary, petition in bankruptcy, or be the subject of any state or federal
insolvency proceeding of any kind, then Employee may, in his sole discretion, by
written notice to Employer, terminate his employment and Employer consents to
his release under such circumstances and agrees that if Employer ceases to
operate or exist as a result of such event, the noncompetition and other
provisions of Sections X through XII shall thereupon terminate.
SECTION XVI. BINDING EFFECT; MISCELLANEOUS. (a) This Agreement shall be binding
on and shall inure to the benefit of any successor or successors of Employer and
the personal representatives of Employee.
(b) This Agreement constitutes the entire Agreement between the parties
hereto, and supersedes all prior discussions, drafts, negotiations, proposals,
and agreements between the parties, whether written or oral. This Agreement may
not be amended except by a written instrument executed by the parties hereto.
(c) If any provision of this Agreement is ultimately determined to be
invalid or unenforceable, by a final non-appealable ruling of a court of
competent jurisdiction, the remaining provisions of this Agreement shall not be
affected by such determination, shall remain in full force and effect, and shall
be construed in manner most likely to carry out the original intent of the
parties.
(d) This Agreement may be executed in any number of counterparts, each
of which shall be an original, and all of which, taken together, constitute one
single, binding, enforceable agreement.
(f) Any notice given, or required to be given, under this Agreement,
shall be deemed to have been duly given if it is delivered to the addresses
shown above by either (i) first-class mail, postage prepaid or (ii) a nationally
recognized courier service. The parties may change such addresses at any time by
giving written notice to the other partly to this Agreement in the manner set
forth herein.
SECTION XVII. LAW TO GOVERN CONTRACT. This Agreement shall be governed by the
laws of the State of Ohio.
120
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and date first stated above.
ROBERDS, INC., by
/s/ Kenneth W. Fletcher
- ------------------------------
Kenneth W. Fletcher, its
President
/s/ Michael E. Ray
- ------------------------------
MICHAEL E. RAY
121
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in (i) Registration Statement No.
33-73900 of Roberds, Inc. on Form S-8, (ii) Registration Statement No. 33-81086
of Roberds, Inc. on Form S-8, (iii) Registration Statement No. 33-79182 of
Roberds, Inc. on Form S-8, (iv) Registration Statement No. 33-97262, of Roberds,
Inc. on Form S-8, and (v) Registration Statement No. 333-19903 of Roberds, Inc.
on Form S-8 of our report dated February 27, 1997 appearing in this Annual
Report on Form 10-K of Roberds, Inc. for the year ended December 31, 1996.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Dayton, Ohio
February 27, 1997
122
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
FORM 10-K
KNOW ALL MEN BY THESE PRESENTS: That each person whose signature appears below
has made, constituted and appointed, and by this instrument does make,
constitute and appoint Robert M. Wilson, Glenn E. Morrical, David L. Genger and
Robert T. Wilson, and each of them, his true and lawful attorney, with full
power of substitution and resubstitution to affix for him and in his name, as
attorney-in-fact his signature as a Director or Officer, or both, of ROBERDS,
INC., an Ohio corporation (the "Company"), to the Company's annual report on
Form 10-K for the year ending December 31, 1996, pursuant to the Securities
Exchange Act of 1934, as amended, and to any and all amendments and exhibits to
that Form 10-K, and to any and all applications and other documents pertaining
thereto, giving and granting to each such attorney-in-fact full power and
authority to do and perform every act and thing whatsoever necessary to be done,
as fully as the undersigned might do or could do if personally present, and
hereby ratifies and confirms all that each of such attorneys-in-fact or any such
substitute shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney has been signed this 27th day of
February, 1997.
/s/ Kenneth W. Fletcher /s/ Jerry L. Kirby
- -------------------------------------- ------------------------------
Kenneth W. Fletcher Jerry L. Kirby
/s/ Robert M. Wilson /s/ Gilbert P. Williamson
- ----------------------------------- ------------------------------
Robert M. Wilson Gilbert P. Williamson
/s/ Carl E. Gunter /s/ Donald C. Wright
- ----------------------------------- ------------------------------
Carl E. Gunter Donald C. Wright
/s/ Michael A. Bruns /s/ Howard W. Smith
- ----------------------------------- ------------------------------
Michael A. Bruns Howard W. Smith
/s/ James F. Robeson
- -----------------------------------
James F. Robeson
123
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