<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Roberds, Inc.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
[ROBERDS LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 30, 1999
March 24, 1999
To the Shareholders of
Roberds, Inc.:
The annual meeting of the shareholders of Roberds, Inc. will be held at
the Dayton Marriott Hotel, 1414 South Patterson Boulevard, Dayton, Ohio 45409 on
April 30, 1999 at 11:00 a.m., Eastern Daylight Savings Time, for the following
purposes:
1. To elect three Directors, each to hold office for a two-year term
and until their respective successors are elected and qualified.
2. To consider a proposal to amend the Company's 1993 Stock Incentive
Plan to increase the number of shares subject to the Plan.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Holders of Common Shares of record at the close of business on March 12, 1999
will be entitled to vote at the meeting.
By Order of the Board of Directors,
/s/ Robert M. Wilson
--------------------------------------
ROBERT M. WILSON, Secretary
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
GENERAL INFORMATION..............................................................1
ELECTION OF DIRECTORS............................................................2
BUSINESS EXPERIENCE OF DIRECTORS AND NOMINEES....................................3
EXECUTIVE COMPENSATION...........................................................5
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION...................8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................................11
PERFORMANCE COMPARISON..........................................................13
PROPOSAL TO AMEND THE 1993 STOCK INCENTIVE PLAN.................................14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..................19
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.........................20
INDEPENDENT AUDITORS............................................................20
SHAREHOLDER PROPOSALS...........................................................21
OTHER MATTERS...................................................................21
</TABLE>
<PAGE> 4
ROBERDS, INC.
1100 East Central Avenue
Dayton, Ohio 45449-1888
PROXY STATEMENT
March 24, 1999
GENERAL INFORMATION
The Proxy enclosed with this Proxy Statement is solicited by the Board
of Directors of Roberds, Inc. ("Company" and "Roberds"). When the Proxy is
properly executed and returned, the shares of the Company represented by the
Proxy will be voted at the 1999 annual meeting of shareholders as directed on
the Proxy, or if no direction is given on the Proxy, the shares will be voted
for the election of the nominees listed in this Proxy Statement, and for the
approval of the amendment to the Roberds, Inc. 1993 Stock Incentive Plan,
described more fully below. A shareholder may revoke a Proxy by giving notice to
the Company at the meeting or, in writing, at any time before its exercise. A
revocation will not affect any vote taken prior to the revocation. The presence
of a shareholder at the annual meeting does not by itself revoke a Proxy. The
approximate date on which the Proxy Statement and Proxy will first be sent to
shareholders is March 24, 1999.
The cost of solicitation of proxies in the enclosed form will be borne
by the Company. Arrangements have been made with brokerage houses and other
custodians, nominees and fiduciaries to send proxy materials to their
principals, and the Company may reimburse them for their expenses in so doing.
Officers, employees and agents of the Company also may request the return of
proxies in person or by telephone, facsimile transmission, telegram or other
electronic communication.
The holders of record of the Company's Common Shares at the close of
business on March 12, 1999 ("Record Date") will be entitled to vote at the
meeting. At the Record Date, there were 6,159,311 Common Shares outstanding and
entitled to vote at the meeting, each share being entitled to one vote. The
presence, in person or by proxy, of persons entitled to vote a majority of the
Common Shares outstanding at the Record Date constitutes a quorum for the
conduct of all business to be considered at the annual meeting. The inspectors
of election intend to treat properly executed proxies marked "abstain" as
"present" for these purposes. Such inspectors also will treat as "present"
shares held in "street name" by brokers that are voted on at least one proposal
to come before the annual meeting. Nominees for election as Directors receiving
the greatest number of votes will be elected as Directors. Votes that are
withheld or broker non-votes in respect of the election of Directors will not be
counted in determining the outcome of the election. All other questions and
matters brought before the annual meeting will be, unless otherwise provided by
law or by the Articles of Incorporation of the Company, decided by the vote of
the holders of a majority of the shares entitled to vote thereon present in
person or by proxy at the annual meeting. In voting for such other proposals,
votes may be cast in favor, against, or abstained. Abstentions will count as
present for purposes of the items on which the abstention is noted and will have
the effect of a vote against. The inspectors of election will not count broker
non-votes as present for purposes of determining whether a proposal has been
approved, and broker non-votes will have no effect on the outcome of any such
proposal.
<PAGE> 5
ELECTION OF DIRECTORS
The Company's Amended and Restated Code of Regulations ("Regulations")
fixes the number of Directors at seven but authorizes the Board of Directors to
increase or decrease the number of Directors by not more than two. The
Regulations authorize the Board of Directors to fill any vacancies by the
affirmative vote of a majority of the Directors then in office.
Mr. C.E. Gunter became a Director in November 1994. At the Board's
meeting on February 16, 1999, the Board accepted his resignation from the Board,
effective at the conclusion of the meeting, due to family health reasons. The
Board then voted to reduce the number of Directors from eight to seven, as
permitted under the Regulations. At the same time, the Board appointed Mr.
Melvin H. Baskin to fill the unexpired term of Mr. Kenneth W. Fletcher, who
passed away in January 1999.
The Regulations also classify the members of the Board of Directors
into two groups, with terms expiring in alternate years. All of the Directors,
including the current nominees, are identified in the table below. The terms of
the current nominees, Messrs. Baskin, Wilson and Robeson, expire at the annual
meeting to be held on April 30, 1999. All nominees are currently members of the
Board of Directors.
The Board of Directors of the Company has nominated the persons listed
below for election as Directors to hold office for two years or until the
election and qualification of their successors. If any nominee declines or is
unable to serve, which the Board of Directors has no reason to expect, the
persons named in the accompanying Proxy intend to vote for the balance of those
nominees named, and, if they deem it advisable, for a substitute nominee.
The following table sets forth information with respect to each of the
nominees and, in addition, the Directors whose terms expire at the 2000 Annual
Meeting of Shareholders:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------- --- --------
<S> <C> <C>
NOMINEES FOR TERMS TO EXPIRE IN 2001
Melvin H. Baskin 55 Chief Executive Officer and Director
Robert M. Wilson 46 President, Chief Administrative Officer, Chief
Financial Officer, General Counsel, Secretary and
Director
Dr. James F. Robeson 62 Vice Chairman of the Board and Director
DIRECTORS WHOSE TERMS EXPIRE IN 2000
Jerry L. Kirby 64 Director
Howard W. Smith 56 Director
Gilbert P. Williamson 62 Director
Donald C. Wright 62 Chairman of the Board and Director
</TABLE>
-2-
<PAGE> 6
During the past fiscal year, the Board of Directors of the Company met
on seven occasions. The Company's audit committee, which currently consists of
Jerry L. Kirby and Gilbert P. Williamson, met two times during the last fiscal
year. The audit committee reviews and acts, and reports to the Board of
Directors, with respect to various auditing and accounting matters, including
the selection of the Company's independent accountants, the scope of audit
procedures, the Company's internal audit program and results, the nature of
services to be performed by the independent accountants and the Company's
accounting practices. The Company's compensation committee, which currently
consists of Jerry L. Kirby, Chairman, and Gilbert P. Williamson, met, or took
unanimous written action in lieu of a meeting, nine times during the last fiscal
year. The compensation committee establishes and monitors executive
compensation. The Company's executive committee, which currently consists of
Gilbert P. Williamson, Chairman, James F. Robeson and Robert M. Wilson, acts on
behalf of the Board of Directors between meetings of the Board, and took
unanimous written action in lieu of a meeting once during 1998. All Directors
attended more than 75% of the aggregate of the total number of meetings of the
Board of Directors during the last fiscal year and the total number of meetings
held by each committee on which each Director served during the last fiscal
year, except for Gilbert P. Williamson, who attended 65% of the aggregate of
such meetings. The Board of Directors does not have a separate nominating
committee.
BUSINESS EXPERIENCE OF DIRECTORS AND NOMINEES
Melvin H. Baskin was elected Chief Executive Officer in July 1998 and
became a Director in February 1999. He also served as President from July
through October 1998. From July 1997 to July 1998, he was Chief Operating
Officer, Farm Stores Inc., Miami, Florida. From May 1997 through July 1997, he
was President, Breuner's Home Furnishings Corp., Lancaster, Pennsylvania, and
from June 1996 through July 1997 was President-Eastern Division of Breuner's.
From 1993 through May 1996, he was President, Alex & Ivy Country Division, The
Bombay Company, Inc., Fort Worth, Texas.
Jerry L. Kirby was elected a Director of the Company in 1993. Since
July 1998, he has been Chairman, Fifth Third Bank, Western Ohio, a subsidiary of
Fifth Third Bancorp, a $29 billion bank holding company, Dayton, Ohio, and is a
director of Fifth Third Bancorp. Prior thereto, he was CEO and a director of
CitFed Bancorp, Inc., the parent of Citizens Federal Bank, FSB of which Mr.
Kirby also served as a Director, President and CEO. CitFed Bancorp was a bank
holding company with $3 billion in assets, prior to its acquisition by Fifth
Third Bancorp in 1998. Mr. Kirby is also a director of Supply One, a distributor
and retailer of bath and kitchen fixtures, Dayton, Ohio. He was for six years a
director of the Cincinnati Branch of the Federal Reserve Bank of Cleveland.
Dr. James F. Robeson was elected Vice Chairman of the Board in February
1999. He served as Chief Executive Officer and President of the Company from
December 1997 through July 1998. He has also served as a Director of the Company
since 1993, and chaired the Audit Committee of the Board of Directors from 1993
through December 1997. Dr. Robeson was Interim Director, Miami University Art
Museum, Oxford, Ohio, from July 1996 through December 1997. He was Herbert E.
Markley Visiting Scholar in Business, Miami University, from 1995 through May
1997. From 1993 to the present, Dr. Robeson has served as an independent
consultant on marketing, logistics, and general business matters, including
services rendered through the firm of Coopers & Lybrand. From 1988 through 1993,
Dr. Robeson was Dean, Richard T. Farmer School of Business Administration, Miami
University. He is a director of Gummer Wholesale, a regional distributor of
grocery, candy, and tobacco products, Newark, Ohio; Huffy Corporation, a
diversified manufacturer and supplier of services to retailers, Dayton, Ohio;
DesignForum, a national retail store planning and design firm, Dayton, Ohio; and
MotoPhoto, Inc., a national photo finishing firm of corporate and franchise
retail outlets, Dayton, Ohio.
Howard W. Smith was elected a Director of Roberds, Inc. in 1993. He
was President, Dayton Market from 1988 through March 1996, when he retired from
the Company. He was also the Company's furniture buyer from 1988 through 1993.
-3-
<PAGE> 7
Gilbert P. Williamson was elected a Director of the Company in 1993.
He retired as Chairman and Chief Executive Officer of NCR Corporation in 1993.
From 1991 through 1993, he was a member of the Management Executive Committee
and board of directors of AT&T, New York, New York, following the purchase of
NCR by AT&T. He is a director of Santa Cruz Operation, Inc., a provider of
computer software, Santa Cruz, California; Fifth Third Bank, Western Ohio, a
subsidiary of Fifth Third Bancorp, a $29 billion bank holding company, Dayton,
Ohio; Dean Investment Associates, an asset management firm, Dayton, Ohio; Vertel
Corporation, a supplier of communication software, Woodland Hills, California;
and French Oil Machinery Co., a manufacturer of presses, Piqua, Ohio.
Robert M. Wilson was elected President and Chief Administrative
Officer in October 1998. He has been General Counsel, Secretary, and a Director
of the Company since 1993. He has also served as Chief Financial Officer of
Roberds since 1988. He was an Executive Vice President of the Company from 1988
through October 1998. He was Treasurer from 1993 through May 1995, and Assistant
Treasurer from May 1995 through May 1997.
Donald C. Wright is co-founder of the Company. He has served as a
director of the Company since 1971. He was elected Chairman of the Board in
February 1999. He served as Vice Chairman of the Board from 1993 to February
1999. He served as Treasurer and Secretary from 1971 through 1993. Mr. Wright
served as Assistant Secretary from 1993 through May 1997. He owns and operates
Don Wright Realty, Dayton, Ohio, a firm providing real estate brokerage services
to the public.
-4-
<PAGE> 8
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
--------------------------
The following table summarizes the compensation paid to the Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers determined as of the end of the last fiscal year (together
with the Chief Executive Officer, the "Named Executive Officers") during or with
respect to the fiscal years ended December 31, 1998, 1997, and 1996 for services
in all capacities to the Company.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Long Term
Annual Compensation Compensation
Awards
-------------------------------------------------------------------------------
Other
Annual All Other
Salary Bonus Compensation(3) Options Compensation(4)
Name And Principal Position Period ($) ($) ($) (# of shares) ($)
- --------------------------- ------ ----- ----- -------- ------------- -----
<S> <C> <C> <C> <C> <C> <C>
Melvin H. Baskin(1) FY 1998 192,308 25,000 24,125 50,000 -0-
Chief Executive Officer
James F. Robeson(2) FY 1998 153,058 -0- N/A -0- -0-
Chief Executive Officer and FY 1997 26,442 -0- N/A 30,000 -0-
President FY 1996 11,500 -0- N/A -0- -0-
Robert M. Wilson FY 1998 270,000 -0- N/A 27,000 -0-
President, Chief FY 1997 270,000 -0- N/A -0- -0-
Administrative
Officer, Chief Financial FY 1996 270,000 -0- N/A -0- 214
Officer,
General Counsel and
Secretary
Billy D. Benton(5) FY 1998 250,000 -0- N/A -0- -0-
Executive Vice President- FY 1997 158,654 -0- 46,664 106,000 -0-
Operations
Charles H. Palko FY 1998 173,558 -0- N/A 20,000 -0-
Vice President-Appliances FY 1997 150,000 -0- 31,552 -0- -0-
and Electronics FY 1996 124,616 19,750 N/A 10,000 -0-
Michael Van Autreve FY 1998 160,000 -0- N/A 16,000 -0-
Vice President-Bedding FY 1997 160,000 5,000 N/A -0- -0-
FY 1996 160,000 -0- N/A -0- 214
</TABLE>
1 Mr. Baskin joined the Company as Chief Executive Officer and President in
July 1998. Mr. Wilson succeeded him as President in October 1998.
2 Mr. Robeson served as Chief Executive Officer and President of the Company
from December 1997 to July 1998. He has served as a Director of the Company
since 1993. Mr. Robeson's salary figure for fiscal year 1998 includes
$7,500 for services as a director subsequent to his resignation as Chief
Executive Officer and President.
3 Other annual compensation for Messrs. Robeson, Van Autreve, and Wilson did
not exceed $50,000 or 10% of each of their combined annual salaries and
bonuses for any period reported. The amount shown for Mr. Baskin consists
of $23,625 in relocation costs paid for by the Company and $500 in legal
fees for the negotiation of his employment agreement. The amount shown for
Mr. Benton consists of $2,835 for the personal use of an automobile and
$43,829 in relocation expenses paid for by the Company. The amount shown
for Mr. Palko consists of relocation expenses paid for by the Company.
4 All other compensation consists of contributions to the individual's profit
sharing account and reallocations of those contributions in the year
indicated, as well as Company matching contributions under the Company's
Profit Sharing and Employee Retirement Savings Plan. For fiscal years 1998
and 1997, the Company made no profit sharing or 401(k) contributions to the
individuals listed above.
5 Mr. Benton joined the Company in May 1997.
-5-
<PAGE> 9
Option Grants in Last Fiscal Year
---------------------------------
The following table sets forth the stock options granted during the
year ended December 31, 1998 to the Named Executive Officers.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price
Appreciation for Option
Individual Grants Term(1)
- ------------------------------------------------------------------------------------ ------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options
Granted to Exercise
Options Employees in Price Expiration
Name Granted (#)(1) Fiscal Year ($/sh) Date(2) 5%($)(3) 10%($)(3)
---- ----------- ----------- ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Melvin H. Baskin 50,000 6.0 2.69 8/10/08 84,586 214,358
James F. Robeson None -- -- -- -- --
Robert M. Wilson 27,000 3.2 2.25 10/23/08 38,205 96,820
Billy D. Benton None -- -- -- -- --
Charles H. Palko 20,000 2.4 2.28 1/23/08 26,278 76,500
Michael Van Autreve 16,000 1.9 2.25 10/23/08 22,640 57,427
</TABLE>
1 The Options were granted pursuant to the 1993 Stock Incentive Plan.
2 The Options become exercisable as to 25% of the shares underlying such
options on each anniversary of the grant. None of the options include
automatic "reload" or tax reimbursement features.
3 Amounts have been calculated using the exercise price per share and assumed
compound annual rates of stock appreciation from the date of grant to the
date of expiration of 5% and 10% respectively.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
-------------------------------------------------------------------
Option Value
------------
The following table sets forth information for each Named Executive
Officer with regard to the aggregate stock options exercised during the year
ended December 31, 1998, and the stock options held at December 31, 1998.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value of Unexercised
Number of Unexercised in-the-Money Options
Options at December 31, 1998 at December 31, 1998(2)
---------------------------- ---------------------
Shares Acquired Value
Name On Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Melvin H. Baskin None None none 50,000 $ none $ none
James F. Robeson None None 9,500 22,500 none none
Robert M. Wilson None None 35,000 27,000 none none
Billy D. Benton None None 26,500 79,500 none none
Charles H. Palko None None 5,000 25,000 none none
Michael Van Autreve None None 15,000 16,000 none none
</TABLE>
1 Market value of underlying securities at exercise, minus the exercise
price.
2 Market Value of underlying securities at year end (based upon market value
of $2.0625 as of December 31, 1998) minus the exercise price.
-6-
<PAGE> 10
COMPENSATION OF DIRECTORS
Directors who are members of management receive no additional
compensation for their service as Directors. Directors who are not members of
management receive a monthly fee of $500, plus a fee of $1,000 for each meeting
attended. Mr. Wright is paid $75,000 annually for his service as a Director and
as Chairman of the Board. He does not receive a separate meeting fee. Directors
are reimbursed for their out-of-pocket travel expenses incurred in connection
with Company business.
The Company has a Deferred Compensation Plan for Outside Directors.
Under this plan, on or before December 31 of any year, a non-employee director
may elect to defer the receipt of payment of all fees payable to the director
for services during the calendar year following such election, and for
succeeding calendar years, until he elects not to defer compensation in a future
calendar year or ceases to be a director. At the time of his election, the
non-employee director must specify how the deferred fees will be deemed
invested. Such fees may be deemed invested in either (i) cash or (ii) Deemed
Common Shares. Fees deferred at the election of a non-employee director are
credited to a separate deferred account on the date on which they otherwise
would have been paid to the director.
If, for a given calendar year, a non-employee director elects a
deferred investment in cash, the Company credits interest on the amount credited
to the director's deferred account at the prime rate of interest charged by the
Company's principal bank lender. Such rate of interest is set on January 1 of
each calendar year, and is utilized for all purposes under the plan for the
balance of such calendar year, and is reset on January 1 of each succeeding
calendar year. Interest under the plan is compounded annually, and is accrued on
the unpaid balance in each director's deferred account. Non-employee directors
have the option of having cash in their deferred accounts distributed by payment
of the value of the cash in the account in a lump sum on the date of the
earliest of a director's death, disability, resignation, removal, failure to be
reelected upon the expiration of his term or retirement, or in five
approximately equal annual installments commencing on such date. The amounts
credited by the Company to a director's account are subject to the claims of the
company's general creditors.
If, for a given calendar year, a non-employee director elects to have
his deferred fees invested in Deemed Common Shares, then the total of such
deferred fees is deemed invested in Common Shares of the Company on the last day
of each calendar quarter. On the date of each such deemed investment, the total
cash-denominated amount in a non-employee director's deferred account is divided
by the then "fair market value" of a Common Share, which is determined by
averaging the high and low trading prices of the Common Shares on such date. The
non-employee director's deferred account is then credited with whole and
fractional shares resulting from such computation, which shares are Deemed
Common Shares. Non-employee directors investing in Deemed Common Shares are
entitled to receive credits equivalent to cash dividends, if any, paid on the
outstanding Common Shares. Under the plan, at the earliest of a director's
death, disability, resignation, removal, failure to be reelected upon expiration
of his term or retirement, the Company will issue or acquire Common Shares equal
to the whole number of Deemed Common Shares in a non-employee director's
deferred account and distribute the actual number of whole shares in the
director's account in a lump sum to the director as soon as practicable after
such date.
The Company also has an Outside Director Stock Option Plan for
non-employee directors. Under this plan, each non-employee director, upon
election and taking of office, receives an option for 2,000 shares. The price
per share at which each option granted under the plan may be exercised is the
fair market value of a Common Share at the time the option is granted. Options
granted under the Outside Director Stock Option Plan terminate, and the right of
the non-employee director (or his estate, personal representative, or
beneficiary) to purchase shares upon exercise of the option, expire 10 years
after the date of grant. Subject to certain limitations, options become
exercisable on the first anniversary of the date the option was granted.
Non-employee directors whose membership on the Board of Directors has terminated
for reasons other than permanent and total disability or death must exercise all
options previously awarded within three months after such termination and, in
the case of permanent and total disability, an option must be exercised within
one year after such termination.
-7-
<PAGE> 11
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
GENERAL
The Company's Board of Directors has a Compensation Committee
("Committee") which has the power and authority to: (i) review the
recommendations of management and adopt compensation philosophy and guidelines
for the Company; (ii) review the role of the CEO, his performance, and
compensation, and determine the base compensation, annual incentive bonus, and
stock-based awards made to the CEO; and (iii) determine the base compensation,
annual incentive bonus, and stock-based awards for all executive officers of the
Company. Mr. Kirby has served as chair of the Committee since its formation in
1993. The Committee consists of directors who are not employees of the Company.
The Committee has regularly engaged a compensation consulting firm to
study the Company's compensation system for executive officers; to compare the
Company's base pay, cash incentives, and stock-based compensation for executive
officers to those paid by comparable companies; and to develop recommendations
for an overall compensation system for executive officers and other senior
managers. Based on the consultant's report, the Committee adopted the Roberds,
Inc. Executive Compensation Plan ("Executive Plan") which became effective for
calendar 1995, and has been amended several times since its adoption.
In December 1997, Mr. Fletcher stepped down as CEO and President of the
Company, and Mr. Robeson, who was then a member of the Board of Directors and
the Committee, but not an employee of the Company, agreed to serve as CEO and
President. In December 1997, the Company entered into a Consulting Agreement
with Mr. Fletcher ("Consulting Agreement") and a compensation arrangement with
Mr. Robeson. At the same time, Mr. Robeson resigned from the Committee.
Under the Consulting Agreement, Mr. Fletcher provided services as a
director of the Company and was available to consult with the Company on
specified matters during 1998. In exchange for his services during 1998, the
Company paid Mr. Fletcher $117,212, reimbursed him for out-of-pocket expenses
incurred in furtherance of the Company's business, and provided him with a
Company car with an imputed value of $12,736. Mr. Fletcher died in January 1999,
and his Consulting Agreement terminated upon his death.
Mr. Robeson agreed to serve as CEO and President of the Company until a
permanent successor to Mr. Fletcher was hired and integrated into the Company.
At the time Mr. Robeson was appointed CEO and President, it was not clear to the
Committee how long Mr. Robeson would serve as CEO and President of the Company.
It was possible that Mr. Robeson would serve for only a few months or that he
could remain in his positions for a year or more. Therefore, at Mr. Robeson's
suggestion, the Committee excluded him from the Executive Plan, which focuses on
the Company's performance against its fiscal year profit plan, and relied
instead on a competitive base pay arrangement and a grant of Incentive Stock
Options to align his interests with those of the shareholders.
Based on Mr. Robeson's suggestions, the Committee terminated his fees
as a non-employee member of the Board of Directors, and set his base pay as CEO
and President of the Company at a rate just above the executive in the Company
with the next highest rate of pay, or $275,000 annually. This rate is within the
range reported by the compensation consulting firm in its 1996 report. Also at
Mr. Robeson's request, the Committee excluded him from participation in the
Executive Plan. Thus, he was not eligible for a cash bonus or stock option award
under the Executive Plan for 1998. In order to align Mr. Robeson's interests
with those of other shareholders, the Committee granted Mr. Robeson an Incentive
Stock Option on 30,000 Common Shares at the fair market value of the Common
Shares on the date of grant.
In July 1998, Mr. Baskin was elected Chief Executive Officer and
President of the Company and Mr. Robeson resigned from those positions. The
Committee set Mr. Baskin's base pay as CEO at $400,000, awarded him a signing
-8-
<PAGE> 12
bonus of $25,000, and agreed to reimburse certain of his relocation and other
expenses. In order to align Mr. Baskin's interests with those of other
Shareholders, the Committee granted Mr. Baskin an Incentive Stock Option on
50,000 Common Shares at the fair market value of the Common Shares on the date
of grant, with an additional 150,000 options to be granted in 50,000 increments
on the first, second and third anniversaries of the commencement of his
employment. In setting Mr. Baskin's base pay and stock option arrangements, the
Committee relied in part on a special study by the Company's compensation
consultants on the compensation arrangements for new CEO's recruited to
companies similar to Roberds, as well as the compensation arrangements for
incumbent CEOs at companies comparable to Roberds.
Based on the current levels of pay of the CEO and other executive
officers of the Company, the Committee does not believe that the limitations on
deductibility of annual compensation in excess of $1 million as provided by
section 162(m) of the Internal Revenue Code of 1986, as amended, are likely to
have an effect on the compensation plans of the Company in the foreseeable
future. As a result, the Committee has not adopted a policy with respect to
compensation exceeding the deductible limits. The Committee will consider the
deductibility of compensation, along with other factors, in future
determinations of compensation.
BASE PAY
Based upon the salary ranges recommended by the compensation
consultants in their reports, the base pay of comparable executives employed by
comparable companies, and periodic changes in duties and responsibilities, the
Committee has made periodic adjustments in the base pay of the Company's
executive officers. Based on the compensation consulting firm's reports, the
Committee believes that the base pay for Roberds' CEO and other executive
officers is competitive within the industry and similar to that offered by
comparable companies.
ANNUAL INCENTIVES
The Committee annually establishes Threshold, Target, and Ceiling
amounts of pre-tax income for the Company. Below the Threshold, no cash bonuses
are awarded to the executive officers. As pre-tax income grows above the
Threshold, the pool of money available for cash bonuses increases at an
increasing percentage rate. At the Ceiling amount, the pool reaches a maximum
percentage, but continues to grow in dollars as pre-tax income grows beyond the
Ceiling amount.
The CEO's cash bonus is expressed as a percentage of his base pay,
depending on the performance of the Company against the Threshold, Target, and
Ceiling amounts. Below the Threshold, no bonus is awarded to the CEO. As
explained above, for 1998 Mr. Robeson was excluded from the Executive Plan.
The other officers share in a pool of money that increases as the
Company's performance increases against the Threshold, Target, and Ceiling
amounts. Once the size of the pool is determined, each participant is awarded a
bonus based on his "share" of the pool. The shares are determined by reference
to each manager's base pay as a percentage of the base pay of the entire group.
The group (and the individuals) receives no bonus if the Company's performance
is below the Threshold. Beginning at the Threshold, managers receive a small
percentage of their base pay as a bonus, and the bonuses grow to a maximum
percentage of managers' base pay at the Ceiling amount. In addition, a
percentage of the cash bonus pool is available for awards upon the
recommendation of the CEO, to managers other than the CEO, to recognize
outstanding achievement.
The Executive Plan permits the CEO to recommend to the Committee that
the amounts awarded to executives under the formula system may be adjusted
upward and downward by up to 50 percent, in order to reflect the individual
performance of each executive. However, the total amount awarded to all
executives cannot exceed the total computed under the formula plan. The
Committee believes that the Executive Plan provides significant incentives for
the Company's CEO, the executive officers, and other senior managers to meet or
exceed the Company's annual profit plan. The Executive Plan makes a significant
portion of senior management's compensation contingent on the Company's
financial performance for the year. The combination of the base pay described
above and the bonuses established by
-9-
<PAGE> 13
the Executive Plan is intended to yield total cash compensation that is
comparable to the total cash compensation paid by comparable companies to their
CEOs and other executive officers.
The Company failed to meet the Threshold amount for 1998, and no cash
bonuses were paid to the CEO, other executive officers, or senior managers
participating in the Executive Plan.
LONG-TERM INCENTIVES
The Executive Plan establishes a mechanism for awarding Incentive Stock
Options ("ISOs") to senior management under the 1933 Stock Incentive Plan, as
amended. ISOs are awarded as a percentage of each executive's base pay. No
awards are made if the Company's earnings fall below the Threshold amount.
Beginning at the Threshold amount, awards are made to each executive as a
percentage of his base pay. Such percentage grows as earnings reach the Target,
and reaches a maximum percentage at the Ceiling amount. The minimum percentage
for the CEO is zero percent of his base pay, growing to a maximum percentage of
his base pay. The minimum percentage for all other participants (including the
other executive officers) is zero percent of their base pay, growing to a
maximum percentage of their base pay. The Committee reviews these percentages
annually. All executive officers are eligible for ISO awards, as are a number of
other managers. Once the dollar amount of the awards is determined under the
formula, the dollar amount is converted to a number of shares, based on the
then-current value of the Company's shares at the time of the award. Options on
that number of shares are granted at 100 percent of the then market value. If an
individual award made under the Executive Plan exceeds the dollar limits imposed
on ISOs by the Internal Revenue Code of 1986, as amended ("Code"), the maximum
permissible amount is granted in the form of an ISO, and the amount in excess of
the ISO limit is granted in "non-qualified stock options," as defined under the
Code. In addition, options may be awarded based upon the recommendation of the
CEO to the Committee in order to reward efforts or results beyond those
recognized by the formula system. As indicated above, for 1998, Mr. Robeson was
excluded from the Executive Plan.
The Committee believes that the stock-based awards to be made under the
Executive Plan will further align the interests of the Company's CEO, executive
officers, and senior and middle managers with those of the shareholders, and
will motivate management to increase the value of the Company's shares over the
long term.
Because the Company failed reach the Threshold amount in 1998, no stock
options were awarded under the Plan; however, an award was made to Mr. Baskin
when he joined the Company to align his interests with those of other
shareholders. In addition, the Committee granted awards in October 1998 to a
limited number of key senior and new employees for the purposes of encouraging
continuity of management and providing incentives for future performance.
Jerry L. Kirby, Chair
C.E. Gunter
Gilbert P. Williamson
-10-
<PAGE> 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PROPERTIES
The Company leases two of its Atlanta-area properties from Howard
Investments, an Ohio general partnership consisting of the Estate of Mr.
Fletcher and Messrs. Wright and Smith. The annual rental for each facility,
exclusive of operating expenses, is $600,000 during the current term. Each lease
provides for two extensions of 10 years each at the election of the Company, and
the annual rental during the extensions will be the "prevailing market rate"
determined at the time of such extensions. The current terms under these leases
are as shown in the following table:
<TABLE>
<CAPTION>
CURRENT
COMMENCEMENT EXPIRATION
LOCATION DATE DATE
- ----------------------- ---------------- ----------------
<S> <C> <C>
Marietta, Georgia 5/10/84 5/31/2004
Forest Park, Georgia 11/01/87 9/30/2007
</TABLE>
The Company leases its facilities at 1000 and 1100 East Central
Avenue, Dayton, Ohio from DAF West Carrollton Plaza Ltd., an Ohio limited
liability company which was controlled by Mr. Fletcher through 1998. Prior to
his death in January 1999, Mr. Fletcher's interest was transferred to his
spouse, Deborah A. Fletcher.
In December 1998, the Company took over approximately 3,500 square
feet of improved office space adjacent to its West Carrollton store in order to
accommodate its addition of senior staff members under its new centralized
corporate structure. The space was obtained by the Company's assumption of an
existing lease on the space between Don Wright Realty, a sole proprietorship
controlled by Mr. Wright, as lessee, and DAF West Carrollton Plaza, Ltd., as
lessor. Mr. Wright agreed to assign his existing lease on the space to Roberds,
Inc., without compensation to Mr. Wright. Roberds took over the space and
assumed the lease in December 1998. The lease runs through December 1999. The
transaction was reviewed and approved by a special committee of the Board of
Directors, consisting of members who were disinterested in the transaction. The
rent was reviewed by an independent broker and property manager, which concluded
that it was within the range of rents charged for comparable properties.
The Company's facilities in Piqua, Ohio and Richmond, Indiana are
leased from Mr. Wright. The term and annual rent under the leases associated
with these four Dayton-area properties, exclusive of operating expenses, are
shown in the following table:
<TABLE>
<CAPTION>
CURRENT
COMMENCEMENT EXPIRATION
LOCATION DATE DATE ANNUAL RENT
- --------------------- ------------ ----------- -----------
<S> <C> <C> <C>
1000 East Central Avenue 4/1/90 3/31/2015 $120,000
Dayton, Ohio
(Administrative building)
1100 East Central Avenue 4/1/90 3/31/2015 600,000
Dayton, Ohio
(Store)
1100 East Central Avenue
Dayton, Ohio
(Office space) 12/98 12/31/1999 28,000
Richmond, Indiana 4/1/88 3/31/2013 240,000
Piqua, Ohio 6/1/88 5/31/2013 240,000
</TABLE>
-11-
<PAGE> 15
The Company leases its Springfield, Ohio facility from Springfield
Properties, Inc., an Ohio corporation owned by the Estate of Mr. Fletcher and
Mr. Wright. The term and annual rent under the lease associated with this
property, exclusive of operating expenses, are shown in the following table:
<TABLE>
<CAPTION>
CURRENT
COMMENCEMENT EXPIRATION
LOCATION DATE DATE ANNUAL RENT
- ------------------------- ----------- ---------- -----------
<S> <C> <C> <C>
Springfield, Ohio 3/1/92 2/28/2017 $240,000
</TABLE>
OTHER TRANSACTIONS AND RELATIONSHIPS
Messrs. Fletcher and Wright personally guaranteed the mortgage loans
made in connection with the acquisition of two of the Company's stores prior to
the IPO. In February 1998, one of those loans was refinanced with the same
lender in anticipation of the maturity of the loan and to reduce the rate of
interest paid under the loan, and the lender released the personal guarantees of
Messrs. Fletcher and Wright. The principal balance at the time of the release
was approximately $3.1 million. At December 31, 1998, the principal amount of
the guaranty on the second mortgage loan was approximately $3.3 million.
In connection with the IPO, the Company and the initial shareholders of
the Company entered into a Tax Indemnification Agreement ("Indemnification
Agreement") that requires the Company to reimburse the initial shareholders for
certain additional taxes that they may have to pay for any adjustments in
taxable income through the date of the IPO. In addition, the Indemnification
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
Company's S Corporation status in prior years. All matters through 1994 have
been settled with the Internal Revenue Service, and the Company's obligations
under the Indemnification Agreement have effectively been satisfied.
-12-
<PAGE> 16
PERFORMANCE COMPARISON
The following graph illustrates the return that would have been
realized (assuming reinvestment of dividends) by an investor who invested $100
on December 31, 1993 in each of (i) the Company's Common Shares, (ii) the
Nasdaq Stock Market (U.S.) Index and (iii) the Nasdaq Retail Trade Stocks
Index.
PERFORMANCE GRAPH
Roberds, Inc.
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Roberds $ 100 $ 49 $ 61 $ 56 $ 20 $ 14
Nasdaq Stock
Market 100 98 138 170 209 293
Nasdaq Retail 100 91 100 120 141 170
</TABLE>
-13-
<PAGE> 17
PROPOSAL TO AMEND THE 1993 STOCK INCENTIVE PLAN
At its February 16, 1999 meeting, the Board of Directors adopted and
determined to submit to the shareholders for their approval an amendment as
described below ("Amendment") to the Company's 1993 Stock Incentive Plan, as
amended ("1993 Plan"). The complete text of the 1993 Plan, as proposed to be
amended, is set forth as Exhibit A, to which reference is made for a complete
description.
DESCRIPTION OF THE PLAN
Purpose
-------
The Plan was adopted in 1993. It was amended in 1995 to increase the
number of Common Shares available under the 1993 Plan and amended in 1996 to
reflect some of the changes in the rules promulgated under Section 16 of the
Securities Exchange Act of 1934 ("Exchange Act"). The purpose of the 1993 Plan
is to advance the interests of 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 interest in the Company or to enjoy performance-based
stock and/or cash incentives. Employees of the Company and its subsidiaries are
eligible for grants of incentive stock options, non-qualified stock options,
restricted stock, stock appreciation rights, limited stock appreciation rights,
performance units and stock units.
Certain awards under the 1993 Plan may be payable in cash or in Common
Shares at the election of the Company, but the actual aggregate number of Common
Shares and Common Share Equivalents to be issued under all forms of awards under
the 1993 Plan will not exceed the maximum allowable (1,300,000 prior to adoption
of the Amendment and 3,000,000 subsequent to the adoption of the Amendment),
except as may be necessary as an adjustment to prevent dilution.
Administration
--------------
The Compensation Committee of the Board of Directors administers the
1993 Plan, and has full authority to, among other things, determine the
employees who receive awards under the Plan, the number of shares in each award,
the form of the options, grants and conditions applicable to restricted stock,
the exercise dates of options and terms of restrictive periods and the
evaluation criteria for performance units. The Committee may have no less than
three members, all of whom must be "non-employee directors" within the meaning
of Rule 16b-3 of the Exchange Act. The current members of the Committee are
Messrs. Kirby and Williamson. The Board expects the vacancy on the Committee to
be filled by the end of 1999.
Shares Subject To The 1993 Plan
-------------------------------
The maximum number of shares available under the 1993 plan is 1,300,000
shares prior to the adoption of the Amendment, and 3,000,000 shares if the
Amendment is adopted. The number of Common Shares which remain available for
grant pursuant to the 1993 Plan, and Common Shares subject to outstanding
awards, will be appropriately and proportionately adjusted to reflect changes in
the Company's capitalization, including stock splits, stock dividends, mergers,
reorganizations, consolidations and recapitalizations.
Options
-------
For options granted to employees under the 1993 Plan, the option price
per share will be determined at the time of grant and will not be less than 100%
of the fair market value of Common Shares on the date of grant. In the case of
an incentive stock option granted to a participant who, at the date of grant,
owns shares possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of any subsidiary, the option price per
Common Share will be not less than 110% of the fair market value of Common
Shares at the date of grant.
-14-
<PAGE> 18
Payment of the option price upon exercise of an option may be made in cash,
Common Shares, or a combination. The 1993 Plan also allows the Board of
Directors to make loans to option holders in connection with the exercise of
options.
The term of each option will be fixed by the Committee at the time of
grant, provided that incentive stock options may not be exercisable more than
ten years from the grant date, or five years in the case of a participant who at
the date of grant owns shares possessing more than 10% of the voting power of
the Company. The grant and terms of incentive stock options will be limited to
the extent required by the Code. No non-qualified stock option may be
exercisable more than ten years and one day after the grant date. The Committee
will determine the time or times at which, and the conditions under which, each
option may be exercised. Generally, options will be exercisable in four equal
annual installments after the date of grant. The Committee may accelerate the
installment exercise provisions.
If the option price of any option granted to a participant under the
1993 Plan is paid in whole or in part by surrendering Common Shares already
owned by the optionee, the Committee may grant a "reload" or "replacement"
option to acquire the number of Common Shares surrendered. The exercise price of
such option will be equal to the fair market value of the Common Shares
surrendered, and the term of the option will extend to the expiration date of
the option which was exercised and in respect to which the Common Shares were
delivered.
All outstanding options will become exercisable with respect to 100% of
the subject shares upon the occurrence of a Change in Control (as defined in the
1993 Plan), except that no option may be exercised prior to six months from the
date of grant. Options granted under the 1993 Plan are not assignable or
transferable other than by inheritance.
Stock Appreciation Rights
-------------------------
Stock Appreciation Rights ("SARs") may be granted pursuant to the 1993
Plan separately or in tandem with other awards. An SAR may be exercised in
accordance with procedures established by the Committee, and shall be
exercisable as provided by the Committee upon the date of grant. Upon exercise
of an SAR, the holder will receive payment from the Company in an amount equal
to the excess of the fair market value of the Common Shares covered by the SAR
on the exercise date over the fair market value of the Common Shares covered by
the SAR on the grant date. The Committee may impose such conditions or
restrictions on the exercise of any SAR as it deems appropriate from time to
time. SARs granted under the 1993 Plan are not assignable or transferable other
than by inheritance.
The Committee may also grant to holders of options under the 1993 Plan
"Limited" SARs that become exercisable only in the event of a Change in Control,
subject to such terms and conditions as the Committee may specify at grant. Each
Limited SAR shall relate to a specific option granted under the 1993 Plan. Each
Limited SAR shall be settled solely in cash, in an amount equal to the excess of
the fair market value of a Common Share on the date of exercise over the option
price of the related option.
Restricted Stock Awards
-----------------------
Restricted Stock Awards may be granted pursuant to the 1993 Plan either
separately or in conjunction with other awards. Common Shares covered by
restricted stock awards may not be sold, pledged, assigned, or otherwise
transferred or encumbered by the recipient, except by will or by the laws of
descent and distribution, until termination of the restrictions applicable to
the award, which will be established by the Committee and need not be the same
for each award. However, during the Restriction Period (which shall not be more
than 10 years), recipients will have full voting rights and will be entitled to
dividends relating to such Common Shares.
At the discretion of the Committee, cash and stock dividends issued
with respect to the restricted stock may be either currently paid or held by the
Company for the recipient's account. Interest may be paid on cash dividends
withheld, at a rate, and subject to such terms, as determined by the Committee.
If an employee ceases to be employed before the end of the Restriction Period,
all Common Shares subject to restriction will be forfeited to the
-15-
<PAGE> 19
Company, except that in the event of retirement, permanent disability, death, or
in cases of special circumstances, the Committee is permitted to waive or
accelerate all or part of any remaining restrictions.
Performance Units
-----------------
Performance Units may be granted under the 1993 Plan either separately
or in conjunction with other awards. The Committee has complete authority to
select the employees to whom Performance Units shall be awarded, the number of
shares to be awarded, and all the terms and conditions of each Award.
Each Performance Unit will represent the right of the recipient to
receive an amount equal to a Payment Value, which Payment Value shall be
determined by the Committee and shall be based upon the performance of the
recipient, the Company, or a division of the Company, as determined by the
Committee at the time of the award. A Performance Unit shall be paid to the
recipient in cash, Common Shares or in a combination of cash and Common Shares
as determined by the Committee. A grant of Performance Units shall be forfeited
if the recipient terminates employment during the Performance Period, except for
death, permanent and total disability or retirement.
Stock Units
-----------
Awards of Stock Units consisting of Common Shares may be granted under
the 1993 Plan either separately or in conjunction with other awards. The
Committee will have complete authority as to the employees to whom Stock Units
will be granted, the number of Common Shares to be awarded, and all terms and
conditions of each award.
ACCOUNTING TREATMENT
Under present accounting rules as applied by the Company for
non-qualified and incentive stock options, to the extent the fair market value
of the shares subject to such options is equal to the option price at the date
of grant of the option, no charge to earnings for compensation expense is
necessary. Further, if the fair market value of the shares subject to those
options increases subsequent to the date of grant, the appreciation is not
recorded as a charge to earnings.
SARs and performance units are treated differently from options under
present accounting rules. During the period an SAR or performance unit is
outstanding, and is expected to be exercised, there will be a charge to earnings
for compensation expense in an amount by which the fair market value of the
shares covered by the grant exceeds the fair market value of those shares on the
date of grant.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the general federal income tax
consequences of transaction in awards under the 1993 Plan based on federal
income tax laws in effect as of March 1, 1999. This summary is not intended to
be exhaustive and does not describe foreign, state or local tax consequences.
For federal income tax purposes, under existing statutes, regulations
and authorities, an optionee does not realize taxable income at the time of the
grant of an incentive stock option, a non-qualified stock option, an SAR or a
Limited SAR. Upon the exercise of a non-qualified stock option, the Company is
entitled to a deduction and the optionee realizes ordinary income in the amount
by which the fair market value of the subject Common Shares exceeds the option
exercise price (special rules may apply in the case of directors and officers
who are subject to Section 16(b) of the Exchange Act).
Upon the exercise of an SAR or a Limited SAR, the Company is entitled
to a deduction and the optionee realizes ordinary income in the amount of the
cash or fair market value of the Common Shares received. On the subsequent sale
of Common Shares received upon the exercise of a non-qualified option or in
payment of SARs, the
-16-
<PAGE> 20
difference between the fair market value of the shares on the date of receipt
and the amount realized on the sale will be treated as a capital gain or loss,
which will be short-term or long-term depending on the period for which shares
were held prior to the sale.
An optionee will have no taxable income upon the exercise of an
incentive stock option (except that the alternative minimum tax may apply) and
generally does not realize taxable income until sale of the shares received upon
exercise of the option. If a sale does not occur until at least two years after
the date of grant, and at least one year after exercise of the option, any gain
or loss realized will be treated as long-term capital gain or loss. Under those
circumstances, the Company will not be entitled to a federal income tax
deduction in connection with either the grant or the exercise of the option. If
a disposition occurs prior to two years after grant or within one year after
exercise ("premature disposition"), then the difference between the option
exercise price and the fair market value of the shares on the date of exercise
(or, in certain cases, the amount realized on sale, if that amount is less than
the fair market value of the shares on the date of exercise) is taxable as
ordinary income to the optionee and is deductible by the Company for federal
income tax purposes.
With respect to the exercise of either a non-qualified or an incentive
stock option and the payment of the option price by the delivery of Common
Shares, to the extent that the number of shares received does not exceed the
number of shares surrendered, no taxable income will be realized by the optionee
at that time. The tax basis of the shares received will be the same as the tax
basis of the shares surrendered, and the holding period of the optionee in the
shares received will include the holding period for the shares surrendered
(except for purposes of the holding period requirement applicable to shares
acquired upon the exercise of an incentive stock option).
With respect to the exercise of a non-qualified stock option and the
payment of the option price by the delivery of Common Shares, to the extent that
the number of shares received exceeds the number of shares surrendered, ordinary
income will be realized by the optionee at that time in an amount equal to the
fair market value of the excess shares. The tax basis of the excess shares will
be equal to the fair market value of those shares at the time of exercise, and
the holding period of the optionee in the excess shares will begin on the date
those shares are transferred to the optionee.
With respect to the exercise of an incentive stock option and the
payment of the option price by the delivery of Common Shares, to the extent that
the number of shares received exceeds the number of shares surrendered, no
taxable income will be realized by the optionee at that time, the excess shares
will be considered incentive stock option stock with a zero basis, and the
holding period of the optionee in such shares will begin on the date the excess
shares are transferred to the optionee. If the shares surrendered were acquired
through the exercise of an incentive stock option and the surrender takes place
before satisfying the applicable holding period requirements for the surrendered
shares, the optionee will realize ordinary income at that time as a result of
the premature disposition of those shares in the amount described above. If any
of the excess shares received in the exchange are thereafter transferred by the
optionee, the optionee will be treated as having first disposed of the shares
with a zero basis.
The recipient of a grant of restricted stock will not realize taxable
income and the Company will not be entitled to a deduction with respect to such
grant on the date of the grant, unless the recipient makes a timely election
under section 83(b) of the Code to be taxed at the time of grant. Assuming no
such election is made, when the recipient either becomes entitled to freely
transfer the stock or the restrictions lapse, the recipient will realize
ordinary income in an amount equal to the excess of the fair market value of the
stock on such date over the amount, if any, that the recipient paid for the
stock. The Company will generally be entitled to a corresponding deduction.
A participant who has been granted either performance units or stock
units will not recognize taxable income at the time of grant. At the time the
award is paid, a participant will realize ordinary income equal to the fair
market value of the shares delivered or the amount of cash paid, and the Company
will be entitled to a deduction in the same amount (special rules may apply in
the case of directors and officers who are subject to Section 16(b) of the
Exchange Act).
-17-
<PAGE> 21
Under certain circumstances, the acceleration of vesting or the payment
of benefits under the 1993 Plan upon a Change of Control might result in all or
a portion of such payments being deemed as "excess parachute payments" for
purposes of Section 280G of the Code. To the extent it is so considered, the
optionee may be subject to a 20% excise tax and the Company may be denied a tax
deduction.
PROPOSED AMENDMENT TO THE PLAN
As a result of prior grants of Stock Awards under the 1993 Plan, there
were options on approximately 225,222 shares remaining at December 31, 1998. The
Board of Directors has determined that this number is insufficient to maintain
the 1993 Plan as an incentive device and has therefore adopted and proposed for
shareholder approval an amendment to the 1993 Plan to increase the number of
Common Shares covered by the 1993 Plan from 1,300,000 to 3,000,000 shares,
thereby increasing the number of shares available for purchase to approximately
1,925,222.
The Amendment will not revoke the options which have already been
issued under the 1993 Plan. The currently outstanding options have exercise
prices ranging from a low of $1.84 to a high of $13.00. At February 28, 1999,
the closing price of the shares on the Nasdaq National Market System was $2.875.
The approval of the Amendment and issuance of options under the amended
1993 Plan will give option holders an incentive to increase the value of the
shares, will encourage officers and employees of the Company to purchase shares,
and in so doing will enable the Company to attract and retain key employees upon
whose judgment, initiative and efforts the successful conduct of the business of
the Company largely depends. The Amendment is being submitted for stockholder
approval pursuant to Sections 162(m) and 422 of the Code.
As of the date of this Proxy Statement, the Company has not determined
the number of option grants, if any, that it will make following the approval of
the Amendment to any of the Named Executive Officers, the current executive
officers as a group, or all employees, including all current officers who are
not executive officers, as a group. If and when the grants become effective, the
exercise price per share will become exercisable as to 25% of the shares
underlying such options on each anniversary of the grant, and the options will
expire 10 years from the date of the grant. The Company intends to file an
amendment to its registration statement on Form S-8 with respect to the
additional shares to be offered with respect to the Amendment to the 1993 Plan.
Approval of the Amendment requires the affirmative vote of a majority
of the shares represented at the meeting. Proxies solicited by the Board of
Directors will be voted in favor of adoption of the Amendment unless
shareholders specify in their proxies a contrary choice.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
-18-
<PAGE> 22
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Shares by all nominees for election
as Directors, by all Directors, by all Named Executive Officers, by all
Directors and Officers as a group, and by each person known to the Company to be
a beneficial owner of five percent or more of the outstanding Common Shares at
January 31, 1999. Unless indicated otherwise in the table, the business address
for each person is c/o Roberds, Inc., 1100 East Central Avenue, Dayton, Ohio
45449-1888.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
SHARES BENEFICIALLY OWNED(1)
------------------------------------------------
BENEFICIAL OWNER NUMBER PERCENT
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Donald C. Wright(2) 1,495,670 24.3
433 Windsor Park Drive
Dayton, Ohio 45459
Howard W. Smith 176,627 2.9
P.O. Box 390
Gray Hawk, Kentucky 40434
Billy D. Benton(3) 49,855 *
Robert M. Wilson(4) 38,364 *
Michael Van Autreve(5) 27,770 *
James F. Robeson(6) 21,099 *
5120 Bonham Road
Oxford, Ohio 45056
Gilbert P. Williamson(7) 11,589 *
2320 Kettering Tower
Dayton, Ohio 45423
Charles H. Palko(8) 5,000 *
Jerry L. Kirby(9) 3,500 *
Fifth Third Centre
Dayton, Ohio 45402
C.E. Gunter(10) 2,000 *
2008 Malvern Court
Raleigh, North Carolina 27615
Melvin H. Baskin None *
All Directors and executive officers 1,848,521 30
as a group (17 persons)(11)
Deborah A. Fletcher(12) 1,324,401 21.5
5500 Terrace Creek
Dayton, Ohio 45459
Piedmont Capital Management Corporation(13) 828,300 13.4
One James Center
Richmond, Virginia 23219
- ------------------------------------
* Less than one percent.
</TABLE>
1 The persons named in the above table have sole voting and investment power
with respect to all shares shown as beneficially owned by them, except as
noted in the footnotes below.
2 Includes 650 shares held by Mr. Wright's spouse, for which Mr. Wright
disclaims any beneficial ownership.
3 Includes 26,500 shares underlying options that are currently exercisable.
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<PAGE> 23
4 Includes 35,000 shares underlying options that are currently exercisable,
and 1,000 shares held by Mr. Wilson as custodian for his minor son, over
which Mr. Wilson has voting power and dispositive power, but as to which he
disclaims beneficial ownership in all other respects.
5 Includes 15,000 shares underlying options that are currently exercisable.
6 Includes 3,500 shares held by Dr. Robeson's spouse for which Dr. Robeson
disclaims any beneficial ownership, 9,500 shares underlying options that
are currently exercisable, and 8,099 deemed common shares held in a
deferred compensation Deemed Share Subaccount.
7 Includes 2,000 shares underlying options that are currently exercisable and
9,589 deemed common shares held in a deferred compensation Deemed Share
Subaccount.
8 All 5,000 shares underlie options that are currently exercisable.
9 Includes 500 shares held by Mr. Kirby's spouse, for which Mr. Kirby
disclaims any beneficial ownership, and 2,000 shares underlying options
that are currently exercisable.
10 All 2,000 shares underlie options that are currently exercisable.
11 Includes 1,739,521 shares held directly and by attribution and 109,000
shares underlying options that are currently exercisable.
12 Includes 1,323,401 shares owned by the Kenneth W. Fletcher Trust dated
December 18, 1998, of which Ms. Fletcher is the sole trustee.
13 Based on an amended Schedule 13G filed by the shareholder on February 11,
1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company's review of Forms 3, 4 and 5 and certain written
representations from Directors and executive officers that have been submitted
to the Company with respect to the 1998 fiscal year, pursuant to Section 16(a)
of the Exchange Act, it appears that no such person failed to file, on a timely
basis, any reports required by that section, except Mr. Wayne P. McCollum, Chief
Information Officer, who inadvertently failed to include 1,000 Common Shares
beneficially owned by him on his initial filing on Form 3, but subsequently
amended Form 3 to reflect such ownership, and Mr. James H. Scott, who was one
month late reporting on Form 4 certain activity in his 401(k) and Employee Stock
Purchase Plan accounts in February 1998, when he was Market
President-Cincinnati.
INDEPENDENT AUDITORS
The firm of Deloitte & Touche LLP has served as the independent
auditors for the Company since 1987 including for the fiscal year ended December
31, 1998. The Company expects Deloitte & Touche LLP to so serve for the year
ending December 31, 1999. A representative of Deloitte & Touche LLP is expected
to be present at the annual meeting of shareholders. This representative will be
afforded an opportunity to make a statement at the meeting, if he so desires,
and will be available to respond to appropriate questions.
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<PAGE> 24
SHAREHOLDER PROPOSALS
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for next year's annual meeting of shareholders
is November 21, 1999. The Regulations of the Company impose additional
requirements affecting the submission of proposals by shareholders.
OTHER MATTERS
The management of the Company does not know of any matters which may
properly be presented at the meeting other than as specifically set forth in the
Notice of Annual Meeting. If any other matters come before the meeting or any
adjournment thereof, the persons named in the accompanying form of Proxy and
acting thereunder will vote in accordance with their best judgment with respect
to such matters.
ROBERDS, INC., by
/s/ Robert M. Wilson
-------------------------------
ROBERT M. WILSON, Secretary
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<PAGE> 25
EXHIBIT A
ROBERDS, INC.
AMENDED 1993 STOCK INCENTIVE PLAN
NOVEMBER 1, 1996
APRIL 30, 1999
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;
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<PAGE> 26
(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 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 3,000,000 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
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<PAGE> 27
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 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 previously 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.
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<PAGE> 28
(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 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
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<PAGE> 29
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.
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.
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<PAGE> 30
(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 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
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<PAGE> 31
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 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
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<PAGE> 32
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
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.
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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.
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
reason-
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able 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.
(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.
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<PAGE> 35
(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
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
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<PAGE> 36
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
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
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<PAGE> 37
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 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
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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 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
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<PAGE> 39
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 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.
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ROBERDS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 1999
The undersigned hereby constitutes and appoints Melvin H. Baskin and Robert
M. Wilson, and each of them, his true and lawful agents and proxies with full
power of substitution in each, to represent the undersigned at the annual
meeting of shareholders of ROBERDS, INC. to be held at the Dayton Marriott
Hotel, 1414 South Patterson Boulevard, Dayton, Ohio 45409 on April 30, 1999 at
11:00 a.m., Eastern Daylight Savings Time, and at any adjournments thereof, on
all matters coming before said meeting.
1. The election as directors of all nominees listed below, except as
indicated to the contrary.
Melvin H. Baskin, Robert M. Wilson and James F. Robeson
[ ] FOR ALL NOMINEES LISTED ABOVE [ ] VOTE WITHHELD
For all of the nominees above, except vote withheld from the
following nominee(s):
--------------------------------------------------------------------
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2. Proposal to amend the Roberds, Inc. 1993 Stock Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(CONTINUED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(CONTINUED FROM REVERSE SIDE)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED ABOVE.
Please sign exactly as name appears below.
When shares are held as joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated , 1999
-------------------------
------------------------------------
Print Name of Shareholder
------------------------------------
Signature
------------------------------------
Print Shareholder Name if held
jointly
------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
