Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
[X] Annual Report Pursuant To Section 13 or 15(d) of The Securities Exchange Act
of 1934 for the fiscal year ended February 1, 1997 ("Fiscal 1996").
[ ] Transition Report Pursuant To Section 13 or 15(d) of The Securities Exchange
Act of 1934 for the transition period from to ______.
[Commission file number 0-23874]
JOS. A. BANK CLOTHIERS, INC.
(Exact name of registrant as specified in its character)
Delaware 36-3189198
(State of Incorporation) (I.R.S. Employer Identification No.)
500 Hanover Pike, Hampstead, MD 21074
(Address of principal executive offices) (zip code)
(410) 239-2700
(Registrant's telephone number, including area code)
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<S> <C>
Securities registered pursuant to Section 12(g) of the Act: Securities registered pursuant to Section 12(b) of the Act:
Title of each class None
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Common Stock (the "Common Stock") par value $.01 per share
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III for this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant, based upon the closing price of shares of Common Stock on the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System at April 25, 1997 was approximately $25,891,267.
The number of shares of Common Stock, par value $0.01 per share, outstanding on
April 25, 1997 was 6,791,152.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of Definitive Proxy Statement for Annual Meeting of Shareholders to be
held on June 10, 1997 are incorporated by reference into Part III hereof.
Index to the exhibits appears on Page 18.
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PART I
Item 1. BUSINESS
General
Jos. A. Bank Clothiers, Inc., (the "Company"), established in 1905, is
a retailer, cataloger and manufacturer of Men's tailored and casual clothing and
accessories. The Company's products are sold exclusively under the Jos. A. Bank
label through its 68 Company-operated retail stores, 4 outlet stores and 8
franchise stores located throughout the Northeast, Midwest, South and
Mid-Atlantic regions of the U.S., as well as through the Company's nationwide
catalog operations. The Company's products are targeted at the male career
professional, and its marketing emphasizes the Jos. A. Bank line of quality
tailored and casual clothing, which is offered at price points typically
established at 20-30% below those of its principal competitors for items of
comparable quality. The Company believes that it is able to achieve this pricing
advantage for its men's suits, sport coats and pants, primarily by its designing
and manufacturing capabilities, and for other clothing and accessories by
effectively sourcing and negotiating with vendors. The Company has two
principal, wholly owned subsidiaries, The Joseph A. Bank Mfg. Co., Inc., (the
"Manufacturer") and National Tailoring Services, Inc. ("NTS").
History
In May 1991, the Company completed a debt and capital restructuring,
under which the Company issued a combination of new preferred stock and Common
Stock in exchange for all of its then outstanding preferred stock and Common
Stock, senior subordinated notes and subordinated debentures issued in
connection with the 1986 leveraged acquisition of the Company. As a result of
this restructuring, JAB Holdings, Inc., a Delaware corporation ("Holdings"), was
created and issued $47.4 million aggregate principal amount of 8% Secured Notes
due December 31, 1998 (the "Notes") to the Company's former debtholders. There
were no cash proceeds from the issuance of the Notes. During its existence,
Holdings had no operations and did not incur any costs or expenses on behalf of
the Company. As a result of this restructuring, Holdings became the holder of
90% of the Company's Common Stock.
As of January 29, 1994, the Company and Holdings completed a capital
restructuring, the overall substantive effect of which was to eliminate all of
the debt incurred in connection with the 1986 leveraged acquisition of the
Company. In connection with such restructuring, Holdings entered into an
exchange agreement (the "Exchange Agreement") with the holders of its Notes
pursuant to which all Notes were exchanged for common stock of Holdings.
Concurrently with the execution of the Exchange Agreement, the Company entered
into a merger and exchange agreement (the "Merger and Exchange Agreement") with
Holdings and the Company's other stockholders. Pursuant to the Merger and
Exchange Agreement: (i) the Company's preferred stock was converted into Common
Stock; (ii) Holdings' common stock was converted into the Company's Common
Stock; (iii) all existing shares of the Company's Common Stock other than the
shares issued in exchange for the Company's preferred stock or Holdings' common
stock were canceled; and (iv) Holdings was merged into the Company.
On May 10, 1994, the Company sold 2,000,000 shares of its Common Stock
for $10.00 per share in connection with an initial registration with the
Securities Exchange Commission. The net proceeds of $16,894,000 were used to pay
off long-term debt of approximately $8,100,000 and for the opening of new
stores.
In the first half of fiscal 1995, the men's and women's apparel
industries began suffering a significant down-turn. In the face of a potential
cash shortage and other factors affecting the women's business, the Company
decided to discontinue the women's product line (which was sold in the same
stores as the men's products) to generate cash. The women's product line
represented approximately $33 million and $26 million of sales in fiscal 1994
and 1995, respectively (or 19% and 15% of sales, respectively). With this loss
of the women's volume, and with the men's business experiencing a decline (but
improving) certain previously-profitable stores became unprofitable since the
store rents remained basically unchanged. Given these events, the Company
performed a store-by-store analysis to determine which stores were losing money
and not expected to generate future cash flows that were sufficient to support
the book values of the related store assets. Based upon this analysis, the
Company determined that (a) certain stores needed to be closed, down-sized or
relocated and (b) a provision of $3.5 million was required to write-down
specific store leasehold improvements and equipment and to cover costs of
exiting several store locations.
During fiscal year 1996, the Company focused on its core men's business
after discontinuing the women's business in 1995. Operating income for the year
ended February 1, 1997 improved $18.0 million to an operating income of $2.4
million from
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an operating loss of $15.6 million in 1995. The Company improved its operating
income in each quarter during fiscal 1996 compared to the same quarter in fiscal
1995. The turnaround in operating results for the year ended February 1, 1997
was due primarily to a) higher maintained margins which were driven by strong
suit sales, b) the elimination of the unprofitable, lower margin women's
business, c) men's comparable store sales increase of 9.3 percent, d) lower
operating expenses and e) the closure of several unprofitable stores. The
Company also restructured several leases to support its men's-only business,
adjusted its manufacturing capacity, relocated three stores and lowered its
store selling expenses. The increased men's comparable store sales was generated
on men's average inventory levels that were approximately $5.6 million lower
than the prior year as the Company improved its inventory turns as well as its
product selection.
The Company has not completely replaced the volume generated by the
women's division which generated sales of approximately $26 million in fiscal
1995. To increase sales and improve the leverage of its assets, the Company is
opening new stores, including six stores that were opened in fall 1996. The
Company expects to open up to ten new stores in 1997.
Strategy
The Company's strategy is to further enhance its competitive position
in men's proprietary label, updated apparel, including a full line of casual
wear, and accessories and to capitalize on the strength of the Jos. A. Bank name
and reputation through enhanced product offerings within its existing store base
and to increase the number of full-line stores, primarily in existing markets.
Store and Catalog Operations and Growth. The Company's strategy is to
operate its stores and catalogs as an integrated business and to
provide the same personalized service to its customers regardless of
whether merchandise is purchased through its stores or catalogs. The
Company believes that the synergy between the Company stores and
catalogs offers an important convenience to its customers and a
competitive advantage to the Company in identifying new store sites and
testing new business concepts. The Company also uses its catalog to
communicate the Jos. A. Bank image, to provide customers with fashion
guidance in coordinating outfits and to generate store traffic. The
Company believes there are opportunities to develop spin-off catalogs
to the existing customer base to grow the catalog volume.
The Company believes that it has substantial opportunity to increase
its store base by adding stores in its existing markets and entering
new markets. The Company opened four new full-line stores and two
franchise stores in fall 1996 and it expects to open up to ten new
stores in 1997. Substantially all of the stores to be opened in 1997
will be placed in existing markets which allows the Company to leverage
its existing advertising, management and distribution.
Competitive Pricing and Aggressive Promotion. The Company is a value
oriented retailer with price points typically established at 20% to 30%
below those of its principal competitors for items of comparable
quality. In addition to the Company's everyday values, the Company has
a Corporate Card program, which provides employees of participating
businesses and their families with discounts on all Jos. A. Bank
merchandise, and runs promotions throughout the year, such as wardrobe
and trade-in sales, designed to generate store traffic and create
shopping excitement.
Merchandising
The Company's target customer is a professional man, age 25 to 55, who
is well-educated and relatively affluent. The Company's merchandising strategy
focuses on achieving an updated classic look. The Company's stores offer a
distinctive collection of proprietary label, classic career clothing and
accessories, as well as casual wear for men, all made exclusively by or for the
Company in predominantly natural fibers. The men's line includes all clothing
and accessories necessary to dress the career man from head to toe, including
suits, shirts, vests, ties, sport coats, pants, formal wear, overcoats,
mufflers, sweaters, belts and braces, socks and underwear.
The market for classic quality men's clothing is segmented at various
points in men's careers and the Company has designed special collections to
target these segments:
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"Signature Collection" - is designed for the man who has achieved
success and is willing to pay for the value of the best fabric,
superior quality and extra details.
"Corporate Collection" - was created for the confident executive who
is making his mark and is looking to set himself apart. It features
updated, tailored clothing and dress furnishings offered in a range
of fabrics and silhouettes that reflect current trends in the men's
market.
"Executive Collection" - is designed for the executive creating or
replenishing his wardrobe essentials. It includes tailored clothing
and dress furnishings in a broad range of basic fabrics and styles at
affordable prices.
"Joe's Casual" - was created for the man who seeks the same quality
for leisure wear as for their working lives. Classic sportswear
featuring quality, styling, fabric and details comparable to brands
which are considerably more expensive.
Since Spring 1991, the Company has offered its male customers its
Business Express line, a concept for purchasing suits that allows customers to
customize their wardrobe by selecting separate, but perfectly matched, jackets
and pants from one of three coat styles, plain front or pleated pants, and
numerous fabric choices. Matching vests are also available in selected fabrics.
The Business Express line allows a customer to buy a suit with minimal
alteration that fits their unique body size, similar to a custom-made suit. Jos.
A. Bank is one of the few retailers in the country that has successfully
developed this concept which the Company believes is a competitive advantage.
The Company also signed a five-year agreement with David Leadbetter, a
world-renowned golf professional, to produce golf and other apparel under his
name. This line will be available in the Company's stores and catalog in fall
1997.
Design and Purchasing
The Jos. A. Bank merchandise is designed through the coordinated
efforts of the Company's merchandising and buying staffs working in conjunction
with either the Company's manufacturing division or contract manufacturers. The
merchandising and buying staffs oversee the development of each product in terms
of style, color and fabrication. Because the Company's designs are focused on
updated classic clothing, the Company experiences much less fashion risk than
other retailers. The process of creating a new garment begins approximately nine
months before the product's expected in-store date. In addition to being
responsible together with the merchandising staff for selecting and developing
appropriate products, the Company's buying staff is also responsible for
providing the catalog operations and stores with the correct amount of products
at all times.
The Company believes that it gains a distinct advantage over many of
its competitors in terms of quality and price by effectively sourcing piece
goods and then having merchandise manufactured to its own specifications by
contract manufacturers, either domestically or abroad, or in its own
manufacturing facility. For example, the Company currently buys quality English
and Italian wool for some of its suits and Italian silk for its neckwear, and
then has the suits made at its factory and neckwear hand sewn by contract
manufacturers in the U.S. The Company buys its shirts from leading U.S. and
overseas shirt manufacturers who also supply shirts to many of the Company's
competitors. All clothing manufactured for the Company by contract manufacturers
must conform to the Company's rigorous specifications with respect to
standardized sizing and quality.
The Company transacts business on an order-by-order basis and does not
maintain any long-term or exclusive contracts, commitments or arrangements to
purchase from any piece goods vendor or contract manufacturer. During fiscal
1996, Burlington Industries, Inc., Warren Corporation, Eighteen International
1981, Ltd., and High Mill Textiles accounted for over 70% of the piece goods
purchased by the Company. The Company does business with all of its vendors in
U.S. currency and has not experienced any material difficulties as a result of
any foreign political, economic or social instabilities. The Company believes
that is has good relationships with its piece goods vendors and contract
manufacturers and that there will be adequate sources to produce a sufficient
supply of quality goods in a timely manner and on satisfactory economic terms.
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Marketing, Advertising and Promotion
Strategy
Historically, the Company pursued a traditional or mass marketing
approach in support of it's retail locations. In 1996, in addition to employing
print and radio medias to convey its message, direct mail usage was enhanced to
achieve improved marketing efficiency. Core to each campaign, while primarily
promotional, is the identification of the Jos. A. Bank name as synonymous with
high quality, updated classic clothing offered at price points typically
established at 20-30% below those of its principal competitors for items of
comparable quality. The Company has a database of over one million customers who
have made purchases from either the catalog and/or retail stores. The Company
selects names from this database based on expectations of response to specific
promotions which allows the Company to more efficiently use its advertising
dollars.
In 1997, the Company is allocating a portion of its marketing
expenditures to image advertising on CNN Headline News. The Company believes
that it has strong brand recognition and wants to increase the awareness of its
name as a complement to its store opening strategy.
Product Specific Sales and Promotional Events
Throughout each season, the Company promotes specific items or
categories at specific prices that are below the normal retail price. Examples
are the trade-in sale whereby a customer receives $75 off the purchase of a suit
by "trading-in" an old suit which is donated to charity and the $199 suit sale.
These sales are used to complement promotional events and to meet the needs of
the customers. These events also include the wardrobe sale and the clearance and
roundup sales. Twice a year the Company stores conduct wardrobe sales in which
customers who purchase certain levels of merchandise receive an additional
amount of merchandise selected free. At the end of each season, the Company
stores conduct clearance sales to promote the sale of that season's merchandise.
Corporate Card
Through the Corporate Card program, the Company issues corporate
discount cards to employees of major companies. The card provides the holder and
members of his or her immediate family with a discount on all regularly priced
merchandise. The Company believes that this program enhances customer loyalty
from a core base of customers.
Apparel Incentive Program
Jos. A. Bank Clothiers apparel incentive gift certificates are used by
various companies as a reward for achievement. The Company also redeems
proprietary gift certificates marketed by major premium/incentive companies
through its stores and catalogs.
Jos. A. Bank Credit Card
In addition to accepting cash, checks and major credit cards, since
1992 the Company has offered customers its own credit card. The Company pays an
independent contractor to administer the Jos. A. Bank credit card and assume all
credit risks. The Company believes that the Jos. A. Bank credit card enhances
customer loyalty while providing the customer with additional credit. At the end
of fiscal 1996, the Company had approximately 97,000 credit card accounts, and
sales through the Jos. A. Bank credit card represented approximately 5% of total
retail sales for the year. The Jos. A. Bank credit card also provides the
Company with an important tool for building its customer mailing list.
Stores
At April 18, 1997, the Company operated 68 retail stores and 4 outlet
stores and had 8 franchise locations in a total of 30 states and the District of
Columbia. The following table sets forth the region and market of the 80 stores
that were open at such date.
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JOS. A. BANK STORES
Total #
Region & Market Of Stores
- --------------- --------------
Northeast
Connecticut 2
New York 5
Massachusetts 2
New Hampshire 1
Rhode Island 1
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Subtotal ............... 11
----
Mid-Atlantic
Delaware 1
New Jersey 3
Maryland 6(b)
Pennsylvania 5(b)
Washington, D.C. 1
----
Subtotal ............... 16
----
West
Denver, Colorado 1
----
Subtotal ............... 1
----
Midwest
Kansas 1
Illinois 6(a)
Indiana 1
Michigan 3
Minnesota 1
Missouri 1
Ohio 4
Wisconsin 1
----
Subtotal ................ 18
Total #
Region & Market Of Stores
- --------------- --------------
South
Alabama 2(a)
Florida 3
Georgia 3(a)
North Carolina 5(a)
South Carolina 1
Kentucky 1
Louisiana 1(a)
Mississippi 1(a)
Tennessee 3(a)
Texas 6
Virginia 7(a),(b)
West Virginia 1
----
Subtotal .............. 34
----
TOTAL 80
====
(a) Indicates one or more franchise stores.
(b) Indicates one or more outlet stores.
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During 1996, the Company opened four new full-line stores and two
franchise stores, and closed two unprofitable full-line stores and five catalog
stores. The stores that were closed represented approximately 2% of sales in
fiscal 1995.
The Company-operated stores are located in a variety of retail
settings, including high income shopping areas, malls, specialty village centers
and urban locations. In general, the store space in existing stores is divided
as follows: 71% selling space, 10% stockroom, 9% tailor shop and 10% service
area. The full-line stores average 8,500 square feet, with sizes ranging from
4,500 square feet to 19,000 square feet. A new store model has been developed to
support the mens-only business which requires approximately 5,000 square feet.
The selling space in newer stores is typically higher than the average,
(approximately 80%), as the Company decreased the space dedicated to the
stockroom, service area and tailor shop. The newer stores are designed to
utilize regional overflow tailor shops which allows the use of smaller tailor
shops within each store. Each store's selling area is designed to present a
broad selection of products with great depth of inventory, and is divided
generally as follows: 35% men's tailored clothing; 40% other men's clothing and
accessories; and 5% fitting rooms.
The Company's principal consideration in selecting store sites is
finding locations with excellent sales potential coupled with reasonable rental
rates. Stores in suburban areas are usually not located in malls, but in
high-income shopping areas near major malls. In urban locations, stores are
generally located in major retail or financial areas. Since the Company believes
that its stores are destination stores and that its customer do not like to be
inconvenienced, the Company stores are generally most successful in locations
that are easily accessible and provide sufficient parking. Thus, when stores are
located within a mall, they often have a private entrance to the parking area.
The Company has developed a standard store design to appeal to the
Company's quality oriented customers while remaining consistent with the
Company's value image. The design is based on the use of wooden fixtures with
glass shelving, Shaker style furniture with numerous tables to feature fashion
merchandise, carpet, quilted wall hangings and abundant accent lighting and is
intended to promote a pleasant and comfortable shopping environment. The Company
developed this standard design to effect cost savings in the design and
construction of new stores.
Stores normally employ a total of 5 to 25 full- and part-time sales
associates depending on their size. Store management consists of a store manager
and two or three department managers who are also sales associates. The typical
store manager has ten to fifteen years of experience in the tailored clothing
industry. Store management receives compensation in the form of a base salary
plus a bonus based on achieving targeted profit goals. In addition, store
managers are required to meet sales quotas. Sales associates receive a base
salary against a commission. A number of programs offer incentives to both
management and sales associates to increase sales.
The Company attributes part of its success to its customer service
policies. The Company encourages sales associates to develop one-on-one
relationships with their customers. Sales associates maintain personal business
planners containing information on customers' sizes, favorite styles and colors
and are encouraged to call their customers when new items are stocked and before
special promotions. The Company strives to create an environment in its stores
in which sales associates are responsive to customers' needs. Sales associates
are encouraged to assist customers in merchandise selection and wardrobe
coordination, and thereby encourage multiple purchases.
Each full line store has a tailor shop which provides a range of
tailoring services. Approximately 79% of the tailor shops are owned by the
Company, and the remainder are leased to independent tailors. The Company plans
to convert most of the leased shops to Company-owned shops in 1997. The Company
guarantees all the tailoring work and controls the pricing structure used in all
stores. In addition, NTS, the Company's wholly-owned tailoring subsidiary,
provides alteration services primarily to the Company's stores and, to a lesser
extent, outside retailers. NTS has four locations - Houston (leased location),
Atlanta (leased location), Chicago (in present store) and Hampstead, MD (in
distribution facility). Operating NTS has allowed the Company to reduce the
number of tailors in the stores by sending all overflow work to NTS. These
overflow shops experience higher productivity as the tailors are not interrupted
by store personnel during the course of the day. In every store, the store
manager and certain additional staff have been trained to fit tailored clothing
for alterations.
The Company has eight franchise locations. Generally, a franchise
agreement between the Company and the franchisee provides for a ten-year term
with an option, exercisable by the franchisee under certain circumstances, to
extend the term for an additional ten-year period. Franchisees pay the Company
an initial fixed franchise fee and then a percentage of sales. To assure that
customers at franchise locations receive the same personalized service offered
at Company operated stores, the Company
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typically requires certain franchisee employees to attend a Company sponsored
training program. In addition, franchisees are required to present and sell
merchandise according to the Company standardized procedures and to maintain and
protect the Company's reputation for high quality, classic clothing. Franchisees
purchase substantially all merchandise offered for sale in their stores from the
Company.
The Company presently has four outlet stores which are used to
liquidate excess merchandise and typically offer first quality products at a
reduced price. Because of the classic character of the Company's merchandise and
aggressive store clearance promotions, historically the Company has not had
significant quantities of merchandise to sell through its outlet stores.
Catalog
The Company's catalogs offer potential and existing customers
convenience in ordering the Company's merchandise. In fiscal 1996, the Company
distributed approximately 7.5 million catalogs, including catalogs sent to
stores for display and general distribution. During fiscal 1996, catalog sales
represented approximately 11% of net sales. The Company divides the year into
two merchandise seasons, Spring and Fall, and mails its catalog to active
customers as often as every four weeks. Catalog circulation has traditionally
included base catalogs offering a representative assortment of the Company's
entire range of merchandise. In addition to providing customers convenience in
ordering merchandise, the Company generally uses its catalogs to: (i)
communicate its image of quality clothing; (ii) provide customers with fashion
guidance in coordinating outfits; (iii) generate store traffic; and (iv) provide
the Company with market data, including identification of new store locations.
To make catalog shopping as convenient as possible, the Company
maintains a toll-free telephone number accessible 24 hours a day, seven days a
week. The Company utilizes on-line computer terminals to enter customer orders
and to retrieve information about merchandise and its availability. Catalog
sales associates are generally able to help select merchandise and can provide
detailed information regarding size, color, fit and other merchandise features.
In most cases, sample merchandise is available for catalog sales associates to
view, thereby allowing them to better assist customers. Clothing purchased from
the catalog may be returned to any Company store or to the Company by mail.
To process catalog orders, sales associates enter orders on-line into a
computerized catalog order entry system which automatically updates all files,
including the Company's customer mailing list and permits the Company to measure
the response to individual merchandise and catalog mailings. Sales and inventory
information is available to the Company's buyers the next day. Computer
processing of orders is performed by the warehouse management system which
permits efficient picking of inventory from the warehouse. The Company's
efficient order entry and fulfillment systems permit the shipment of most orders
the following day. Orders are shipped primarily by second day delivery or, if
requested, by expedited delivery services, such as UPS priority.
Distribution
Inventory of basic merchandise in the Company stores is replenished
regularly based on sales tracked through its state-of-the-art point-of-sale
terminals. The Company uses a centralized distribution system, under which all
merchandise is received, processed and distributed through the Company's
principal distribution facility located in Hampstead, Maryland. Merchandise
received at the distribution center is promptly inspected to insure expected
quality in workmanship and conformity to Company sizing specifications. The
merchandise is then allocated to individual stores, packed for delivery and
shipped to the stores, principally by common carrier, usually within two days of
receipt. Each store generally receives a shipment of merchandise twice a week
from the distribution center; however, when necessary because of a store's size
or volume, a store can receive shipments more frequently. Shipments to catalog
customers are also made from the central distribution facility.
Management Information Systems
Since November 1991, the Company has replaced substantially all of its
management information systems with updated technology. The new systems provide
for automated stock replenishment and distribution, integrated accounts payable
and general ledger maintenance, purchase order management, forecasting and
planning, extensive management reporting capabilities through interactive and
batch processing and a comprehensive human resource/payroll system to support
future growth plans. The Company uses IBM AS\400 systems for substantially all
applications.
In January 1993, a complete new mail order system was installed and
integrated into the merchandising system and later
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into the warehouse management system. Consistent with industry practice, the
Company uses an outside service to analyze and provide data in connection with
its catalog operations. The Company's last remaining mainframe system is used in
its manufacturing operation and has been modified to interface with its
merchandising systems. The Company plans to eliminate this remaining mainframe
system in 1997.
In order to assure the accuracy of inventory from purchase order
through the sale of an item to the consumer, the Company employs sophisticated
scanning, modern point-of-sale systems and updated distribution facilities. For
any item to be moved between stores and for all sales in the stores a bar-coded
tag must be scanned, which then causes the price to be captured via the price
look-up feature in the IBM 4680 point-of-sale terminal. A warehouse management
system was installed in August 1993 to improve the accuracy and control of
warehouse inventory. Since Fall 1993, warehouse distributions have been
controlled through the use of a "pick-to-light" system.
In connection with the millennium, the systems in many companies will
require significant modification to properly handle transactions. A thorough
review of the impact of this change is expected in the next year.
Manufacturing
Through its subsidiary, Manufacturer, the Company makes men's suits,
sport coats and pants at its two facilities located in the greater Baltimore
area. (See Item 2-Description of Properties) As of April 18, 1997, 383 employees
worked at these manufacturing facilities. From the initial inspection of piece
goods through final finishing and distribution, the Company's manufacturing
capabilities allow it complete control over merchandise flow, consistency of
sizing, and quality. The Company believes that its manufacturing capabilities
also allow the Company generally to achieve greater flexibility than it would be
able to achieve if the Company purchased items of comparable quality from
outside sources. In addition, the Company is using contract manufacturers for
certain categories of its clothing which can provide a quality product at
competitive prices.
The Company believes that the equipment and machinery it uses in its
manufacturing processes provide for efficient production and, in many instances,
represent the state-of-the-art in the industry. The Company currently utilizes
50% of its cutting capacity based on one shift per day and 75% of its sewing
capacity based on one shift per day. In fiscal 1996, the Company manufactured
approximately 50% of its tailored clothing which accounts for over 60% of the
Company's sales.
Competition
The Company competes primarily with other specialty retailers,
department stores and other catalogers engaged in the retail sale of apparel,
and to a lesser degree with other retailers of men's apparel. Among others, the
Company's store and catalog operations compete with Brooks Brothers, Nordstrom
and Lands End, as well as local competitors in each store's market. Many of
these major competitors are considerably larger and have substantially greater
financial, marketing and other resources than the Company.
In general, the Company believes that it maintains its competitive
position based not only on its ability to offer its quality career clothing at
price points typically established at 20-30% below those of its principal
competitors for items of comparable quality, but also on greater selection of
merchandise within the Company's focus on classic career clothing, the quality,
consistency and value of the Jos. A. Bank brand, and superior customer service.
The Company believes that it is able to achieve this pricing advantage for its
men's suits, sports coats and pants primarily by designing and manufacturing
substantially all of these items and for other men's clothing and accessories by
effectively sourcing and negotiating with vendors. In addition, the Company
believes that its Business Express program gives the Company distinct advantages
relative to its competition.
Trademarks
The Company is the owner in the United States of the trademark "Jos. A.
Bank". This trademark is registered in the United States Patent and Trademark
Office. A federal registration is renewable indefinitely if the trademark is
still in use at the time of renewal. The Company's rights in the Jos. A. Bank
trademark are a significant part of the Company's business. Accordingly, the
Company intends to maintain its trademark and the related registration. The
Company is not aware of any claims of infringement or other challenges to the
Company's right to use its trademark in the United States. The Company is also
the owner of pending applications for "The Miracle Tie Collection" (U.S. Serial
No. 75/219,824) and "Joe's Casual" (U.S. Serial No. 74/726,017).
9
<PAGE>
Employees
As of April 18, 1997, the Company had 1,139 full-time employees and 281
part-time employees.
As of April 18, 1997, 383 employees worked at the Company's
manufacturing facilities, approximately 97% of whom are represented by the Union
of Needletrades Industrial & Textile Employees. The current collective
bargaining agreement, which was extended in 1997, expires on April 30, 2001. The
Company believes that union relations are good. During the past 48 years, the
Company has had only one work stoppage, which occurred more than 18 years ago.
The Company believes that its relations with its non-union employees are also
good. A small number of our sales associates are union members.
Item 2. DESCRIPTION OF PROPERTY
Except as noted below, the Company owns its manufacturing, distribution
and corporate office facilities located in the Maryland area, subject to certain
financing liens. See "Notes to Consolidated Financial Statements -- Note 6." The
Company believes that its existing facilities are well maintained and in good
operating condition. The table below presents certain information relating to
the Company's corporate properties as of April 18, 1997:
<TABLE>
<CAPTION>
Location Gross Square Feet Owned/Leased Primary Function
- -------- ----------------- ------------ ----------------
<S> <C>
Hampstead, Maryland......... 210,000 Owned Corporate offices, distribution center,
catalog fulfillment and regional tailoring
overflow shop
Baltimore, Maryland......... 118,000 Owned Coat and pants sewing plant and
central pressing.
Baltimore, Maryland......... 51,000 Leased Cutting facility
</TABLE>
As of April 18, 1997, the Company had 72 Company-operated stores,
including its outlet stores, all of which were leased. The full line stores
average 8,500 square feet, including selling ,storage, tailor shop, and service
areas. The full line stores range in size from approximately 4,500 square feet
to approximately 19,000 square feet. The leases typically provide for an initial
term of between 10 and 15 years, with renewal options permitting the Company to
extend the term for between 5 and 10 years thereafter. The Company generally has
been successful in renewing its store leases as they expire. In most cases the
Company pays a fixed annual base rent plus a percentage rent based on the
store's annual sales in excess of specified levels. Most leases also require the
Company to pay real estate taxes, insurance and utilities and, other than free
standing locations, to make contributions toward the common area operating
costs. Most of the Company's lease arrangements provide for an increase in
annual fixed rental payments during the lease term.
In July 1996, the Company sold a 35,000 square foot manufacturing
facility in Hampstead, Maryland.
Item 3. LEGAL PROCEEDINGS
The Company has been named as a defendant in legal actions arising from
its normal business activities. Although the outcome of these lawsuits or other
proceedings against the Company cannot be accurately predicted, the Company does
not expect that any such liability will have a material adverse effect on the
business, net assets or financial position of the Company.
On December 14, 1995, the Company filed a Verified Complaint in the
United States District Court for the Northern District of Maryland (case No. MJG
95-3826) against J.A.B. of Lexington, Inc. and its principals (the "Defendants")
alleging federal trademark infringement, common law trademark and service mark
infringement, statutory unfair competition, common law unfair competition,
breach of franchise agreement, breach of lease, breach of promissory note and
breach of security agreement. Damages sought in the Verified Complaint are
unspecified. The Defendants have counterclaimed against the Company seeking
declaratory judgements, compensatory damages and punitive damages. The Company
denies the allegations in the counterclaims and intends to vigorously defend
same.
The unfair labor practice charge filed by the Regional Joint Board, Union of
Needletrades, Industrial and Textile Employees (Baltimore Regional Office,
National Labor Relations Board Case No. 5-CA-26484, as noted in the Company's
third quarter 10-Q, has been withdrawn by the Union.
10
<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the quarter ended February 1, 1997.
PART II
Item 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Price Range of Common Stock, subsequent to its initial public offering in
May 3, 1994
The Common Stock is quoted on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") National Market System under the trading
symbol "JOSB". The following table sets forth, for the periods indicated, the
range of high and low bid prices for the Common Stock, as reported on NASDAQ.
The approximate high and low bid prices for the Common Stock tabulated below
represent inter-dealer quotations which do not include retail mark-ups,
mark-downs or commissions. Such prices do not necessarily represent actual
transactions.
Fiscal 1995 Fiscal 1996
--------------- ---------------
High Low High Low
---- --- ---- ---
1st Quarter ................ $4.25 $2.50 $2.50 $1.63
2nd Quarter ................ 3.63 2.09 6.13 2.50
3rd Quarter ................ 4.88 2.50 4.88 2.94
4th Quarter ................ 3.00 1.50 5.00 3.00
1st Quarter (through April 25, 1997) $4.38 $3.63
On April 25, 1997 the closing sale price of the Common Stock was $3.81.
(b) Holders of Common Stock
At April 25, 1997, there were 169 holders of record of the Company's
Common Stock.
(c) Dividend Policy
The Company intends to retain its earnings to finance the development
and expansion of its business and for working capital purposes, and therefore
does not anticipate paying any cash dividends in the foreseeable future. In
addition, the Company's Credit Agreement prohibits the Company from paying cash
dividends.
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data with respect to each
of the fiscal years in the five-year period ended February 1, 1997 have been
derived from the Company's audited Consolidated Financial Statements. Fiscal
years 1992 through 1994 and fiscal year 1996 were 52-week years, and fiscal year
1995 was a 53-week year, each of which ended on the Saturday closest to the end
of January of the respective year. The information should be read in conjunction
with the Consolidated Financial Statements and Notes thereto that appear
elsewhere in the 10-K and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
11
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year
--------------------------------------------------------------------------
1992 1993 1994 1995 1996
----------- ----------- ----------- ------------ ------------
(in thousands, except per share data)
<S><C>
Consolidated Statements of Income (Loss) Information:
Net Sales:
Men's...................... $99,461 $121,319 $143,465 $143,659 $155,058
Women's.................... 23,895 28,259 32,589 25,908 --
- --------------------------------------------------------------------------------------------------------------------
Net Sales (a)................ 123,356 149,578 176,054 169,567 155,058
Cost of goods sold........... 65,120 79,580 94,199 100,789 84,866
- --------------------------------------------------------------------------------------------------------------------
Gross profit................. 58,236 69,998 81,855 68,778 70,192
- --------------------------------------------------------------------------------------------------------------------
Operating Expenses:
General and administrative. 15,258 15,168 16,817 17,852 16,720
Sales and marketing........ 37,540 47,156 59,375 63,013 50,924
Store opening costs........ 240 1,064 1,025 -- 192
Termination of executive equity plan -- 3,425(c) -- -- --
Termination of participation in
multi-employer pension plan -- 3,300(b) -- -- --
Store repositioning costs.. -- -- -- 3,500(e) --
- --------------------------------------------------------------------------------------------------------------------
Total operating expenses.... 53,038 70,113 77,217 84,365 67,836
- --------------------------------------------------------------------------------------------------------------------
Operating income (loss)...... 5,198 (115) 4,638 (15,587) 2,356
Interest expense, net....... (2,043) (2,075) (2,430) (3,444) (1,946)
Income (loss) before benefit (provision)
for income taxes, extraordinary item
and cumulative effect of change in
accounting principle 3,155 (2,190) 2,208 (19,031) 410
(Provision) benefit for income taxes (1,222) 3,833 (861) 5,845 (159)
- --------------------------------------------------------------------------------------------------------------------
Income (loss) before extraordinary item and
cumulative effect of change in accounting
principle 1,933 1,643 1,347 (13,186) 251
Extraordinary Item:
Utilization of tax operating loss
carryforward 1,086 -- -- -- --
Cumulative effect of change in
accounting principle...... -- 2,127 -- -- --
- --------------------------------------------------------------------------------------------------------------------
Net income (loss)............ $3,019 $3,770 $1,347 $(13,186) $251
- --------------------------------------------------------------------------------------------------------------------
Per Share Information:
Income (loss) before extraordinary
items and cumulative effect of
change in accounting principle $0.40 $0.34 $0.22 ($1.94) $0.04
Extraordinary items........ 0.22 -- -- -- --
Cumulative effect of change in
accounting principle -- 0.44 -- -- --
- --------------------------------------------------------------------------------------------------------------------
Net income (loss) per share.. $0.62 $0.78 $0.22 ($1.94) $0.04
- --------------------------------------------------------------------------------------------------------------------
Weighted average number of
shares outstanding (d)..... 4,862 4,862 6,241 6,790 6,824
Balance Sheet Information (As of End of
Fiscal Year):
Working capital............ $26,547 $36,138 $45,089 $35,722 $28,631
Total assets............... 62,707 83,803 101,783 90,671 81,410
Total debt ................ 19,492 27,525 23,975 30,245 18,433
Total long-term obligations 21,013 31,730 28,180 33,632 21,366
Shareholder`s equity....... 25,115 30,390 48,631 35,445 35,699
</TABLE>
12
<PAGE>
(a) In 1995, the Company discontinued its womens product line to concentrate
solely on its men's business.
(b) During fiscal 1993, the Company recognized an expense and a corresponding
liability of $3.3 million relating to its termination of participation
in a multi-employer pension plan.
(c) As of January 29, 1994, the employment agreements between the Company and
two executives were amended to surrender the executives' rights to receive
certain payments related to increases in the equity value of the Company
in exchange for, among other things, 373,553 shares of the Company's
Common Stock.
(d) Gives effect to the exercise of all stock options and all shares issued
in the initial public offering in May 1994.
(e) In fiscal 1995, the Company recorded an expense of $3.5 million related
to the early adoption of Statement of Financial Accounting Standards No.
121 and costs to exit certain leases and reposition stores.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
During fiscal year 1996, the Company focused on its core men's business
after discontinuing the women's business in 1995. Operating income for the year
ended February 1, 1997 improved $18.0 million to an operating income of $2.4
million from an operating loss of $15.6 million in 1995. The Company improved
its operating income in each quarter during fiscal 1996 compared to the same
quarter in fiscal 1995.
The turnaround in operating results for the year ended February 1, 1997
was due primarily to a) higher maintained margins which were driven by strong
suit sales, b) the elimination of the unprofitable, lower margin women's
business, c) men's comparable store sales increase of approximately 9.3 percent,
d) lower operating expenses and e) the closure of several unprofitable stores.
The Company has also restructured several leases to support its men's-only
business, adjusted its manufacturing capacity, relocated three stores and
lowered its store selling expenses. The increase in men's comparable store sales
was generated on men's average inventory levels that were approximately $5.6
million lower than the prior year as the Company improved its inventory turns.
The Company has not completely replaced the volume generated by the
women's division which generated sales of $25.9 million in fiscal 1995. To
increase sales and improve the leverage of its assets, the Company is opening
new stores, including six stores that were opened in fall 1996. The Company
expects to open up to ten new stores in 1997.
The Company's availability in excess of outstanding borrowings as
supported by the existing borrowing base under its Credit Agreement has
increased to $13.4 million at April 18, 1997 compared to $7.2 million at the
same time in 1996. In April 1996 the Company extended its $40 million Credit
Agreement to April 1999, which reduced the financial covenant requirements and
provides for a seasonal over-advance. An additional $7.3 million of potential
availability exists to support additional inventory purchases, if required.
Results of Operations
The following table is derived from the Company's Consolidated
Statements of Income (Loss) and sets forth, for the periods indicated, the items
included in the Consolidated Statements of Income (Loss), expressed as a
percentage of net sales.
13
<PAGE>
Percentage Of Net Sales
Fiscal Years
-------------------------------------
1994 1995 1996
Sales:
Men's .................................. 81.5% 84.7% 100.0%
Women's ................................ 18.5 15.3 --
- --------------------------------------------------------------------------------
Net Sales ................................ 100.0 100.0 100.0
Cost of goods sold ....................... 53.5 59.4 54.7
- --------------------------------------------------------------------------------
Gross profit ............................. 46.5 40.6 45.3
General and administrative expenses ...... 9.6 10.5 10.8
Sales and marketing expenses ............. 33.7 37.2 32.8
Store opening costs ...................... 0.6 -- .1
Store repositioning costs ................ -- 2.1 --
- --------------------------------------------------------------------------------
Operating income (loss) .................. 2.6 (9.2) 1.5
Interest expense, net .................... (1.3) (2.0) 1.2
- --------------------------------------------------------------------------------
Income (loss) before income taxes ........ 1.3 (11.2) 0.3
Income taxes ............................. (0.5) 3.4 0.1
- --------------------------------------------------------------------------------
Net income (loss) ........................ 0.8% (7.8)% 0.2%
- --------------------------------------------------------------------------------
Fiscal 1996 Compared to Fiscal 1995
Net Sales - Men's sales showed a strong improvement over the prior year as
reflected in the men's total sales increase of $11.4 million or 7.9% on sales of
$155.1 million in fiscal 1996 as compared to $143.7 million in fiscal 1995.
Men's comparable store sales also posted an increase of $10.6 million or 9.3% in
fiscal 1996, from $114.4 million to $125.0 million, while men's catalog sales
posted a $1.3 million increase or 8.3% on sales of $16.9 million in fiscal 1996
and $15.6 million in fiscal 1995. The increase in men's sales can be attributed
to favorable apparel trends, an improved merchandising mix, reduced competition
from attrition within the industry and improved efficiency in the Company's
marketing approach, among other factors.
Total sales decreased $14.5 million or 8.5% to $155.1 million in fiscal 1996
from $169.6 million in fiscal 1995 due to the discontinuance of the women's
product line which generated $25.9 million of net sales in fiscal 1995.
Gross Profit - Gross profit as a percentage of net sales rose to 45.3% in
fiscal 1996 from 40.6% in fiscal 1995. This improvement was due to the
elimination of the women's product line and the improvement of margins in the
continuing men's business through better sourcing and fresher product offering,
particularly in the higher margin suit and tie categories. Gross profit also
improved as the Company consolidated its in-store tailoring operations into
several Company-owned overflow shops. The 1996 cost of goods sold includes a
non-recurring cost of approximately $.4 million relating to cost overruns
associated with the manufacturing of formal wear on a contract basis, which the
Company has discontinued.
General and Administrative Expenses - General and administrative expenses
decreased $1.2 million to $16.7 million for fiscal 1996 compared to $17.9
million for fiscal 1995. Approximately $.7 million of the decrease was related
to severance in the first quarter of 1995 for terminated employees. The
remainder of the improvement was due primarily to lower professional fees and
payroll and related expenses which reflects the Company's continued focus on
controlling overhead costs. These reductions were partially offset by higher
employee relocation expenses and performance incentive compensation in 1996.
14
<PAGE>
Sales and Marketing Expenses - Sales and Marketing expense decreased $12.1
million to $50.9 million in fiscal 1996 from $63.0 million in fiscal 1995. These
expenses also decreased to 32.8% of sales in 1996 from 37.2% in 1995 due
primarily to a) more efficient retail store advertising expenditures resulting
from a shift in strategy putting a greater emphasis on direct mail, b) the
elimination of the women's product line and its related costs, c) the reduction
of the number of catalogs mailed to prospects in the first half of 1996, and d)
a $.3 million expense reduction related to a lease settlement.
Store Opening Costs - The Company opened four new full-line stores in fiscal
1996 and incurred approximately $.2 million of new store opening expense. The
Company expects the new store opening cost per store in 1997 to be comparable to
the costs in 1996 as its strategy is to open new stores in existing markets
which requires lower incremental costs of opening compared to a new market.
Interest Expense - The decrease of $1.5 million in interest expense for fiscal
1996 is attributable to lower inventories and $.6 million of interest income
related to an income tax refund received from the Company's pre-1986 parent. The
Company expects interest expense to increase in fiscal 1997 as it increases its
borrowings to finance new store openings.
Income Taxes - The Company has net tax operating loss carryforwards (NOLs) of
approximately $19.6 million which expire through 2010. The NOLs were generated
during periods in which the Company operated its women's business along with the
men's business. In 1995, the Company discontinued its women's business to focus
its efforts on its men's business. Realization of the future tax benefits of the
NOLs is dependent on the Company's ability to generate taxable income within the
carryforward period. Management has determined, based on the Company's history
of earnings and its repositioning strategy discussed earlier, that future
earnings of the Company will more likely than not be sufficient to utilize at
least $16 million of the NOLs prior to their expiration. Accordingly, the
Company has recorded a deferred tax asset of $6.1 million and a valuation
allowance of $1.4 million relating to the NOLs. The average minimum taxable
income that the Company would need to generate prior to the expiration of the
NOLs would be less than the average taxable income that the Company earned
during fiscal years 1992 through 1994, as adjusted for unusual charges.
Management believes that although the prior earnings and current year operating
results might justify a higher amount, the $6.1 million represents a reasonable
estimate of the future utilization of the NOLs and will continue to evaluate the
likelihood of future profit and the necessity of future adjustments to the
deferred tax asset valuation allowance. No assurance can be given that
sufficient taxable income will be generated for full utilization of the NOLs.
Fiscal 1995 Compared to Fiscal 1994
Net Sales - Net sales decreased $6.5 million or 3.7% to $169.6 million in
fiscal 1995 from $176.1 million in fiscal 1994. Total men's sales of $143.7
million in fiscal 1995 were comparable to the prior year, and sales from the
women's business declined $6.7 million from $32.6 million to $25.9 million as
the Company was exiting this product line. Men's comparable store sales
increased $4.1 million, or 3.6%, in fiscal 1995 while men's catalog sales
decreased $5.1 million, or 21.8%. The increase in men's comparable store sales
was primarily due to an increase in promotional activity and the expansion of
the sportswear offering. The decrease in catalog sales was primarily due to
decreased circulation as the Company reacted to increased paper and postage
costs.
Gross Profit - Gross profit as a percentage of net sales declined to 40.6% in
fiscal 1995 from 46.5% in fiscal 1994 due primarily to the significant erosions
in the women's gross margins resulting from the Company's decision to
discontinue its women's product line and the resulting need to sell off the
inventory (which was completed in fiscal 1995). Men's gross profit percentage
declined slightly from 1994 to 1995 primarily as a result of increased
promotional activity as the Company incurred startup costs for its new
sportswear line and competitive pressures in the men's apparel market.
General and Administrative Expenses - General and administrative expenses of
$17.9 million increased $1.1 million from $16.8 million in fiscal 1995 due
primarily to severance pay of $1.0 million, related to staff reductions during
1995.
Sales and Marketing Expenses - Sales and marketing expenses increased as a
percentage of net sales to 37.2% in fiscal 1995 from 33.7% in fiscal 1994
primarily as a result of higher marketing expenses for image advertising of the
increased sportswear offering, higher catalog costs due to increased postage and
paper costs and increased advertising necessitated by the promotional nature of
the men's clothing industry in fiscal 1995.
Store Opening Costs - The Company did not incur significant store opening
costs in fiscal 1995, compared to fiscal 1994 when it incurred $1.0 million.
15
<PAGE>
Store Repositioning Costs - The Company has recorded a $3.5 million charge
which includes a $2.3 million impairment of assets associated with the early
adoption of Statement of Financial Accounting Standards No. 121 and a $1.2
million charge to exit certain leases and reposition stores.
Interest Expense - Interest expense increased $1.0 million in fiscal 1995. The
increase was due primarily to increased interest rates on the revolving loan and
an increase in the outstanding balance.
Income Taxes -The Company has net tax operating loss carryforwards (NOLs) of
approximately $20 million which expire through 2010. SFAS No. 109 - Accounting
for Income Taxes requires that the tax benefit of such NOL's be recorded as an
asset to the extent that management assesses the utilization of such NOL's to be
"more likely than not". Realization of the future tax benefits is dependent on
the Company's ability to generate taxable income within the carryforward period.
Future levels of operating income are dependent upon general economic
conditions, including interest rates and general levels of economic activity,
competitive pressures on sales and margins and other factors beyond the
Company's control, and no assurance can be given that sufficient taxable income
will be generated for full utilization of the NOL's. Management has determined,
based on the Company's history of prior operating earnings and its expectations
for the future, that operating income of the Company will more likely than not
be sufficient to utilize at least $16 million NOL's prior to their expiration.
Liquidity and Capital Resources
The Company's availability in excess of outstanding borrowings as
supported by the existing borrowing base under its Credit Agreement has
increased to $13.4 million at April 18, 1997 compared to $7.2 million at the
same time in 1996. In April 1996 the Company extended its $40 million Credit
Agreement to April 1999, which reduced the financial covenant requirements and
provides for a seasonal over-advance. An additional $7.3 million of potential
availability exists to support additional inventory purchases if required. The
Company's availability at April 18, 1997 has increased by $6.2 million compared
to the same time in 1995 principally by a) lower inventory levels, b) better
terms with vendors, c) the tax refund from its pre-1986 parent and d) reduced
letter of credit requirements from several landlords. The Company reduced its
total debt by $11.8 million in 1996 to $18.4 million at February 1, 1997 from
$30.2 million at February 3, 1996.
The following table summaries the Company's sources and uses of funds
as reflected in the condensed consolidated statements of cash flows:
Year Ended
February 3, February 1,
1996 1997
----------- -----------
Cash provided by (used in):
Operating activities ................ $(3,564) $ 13,582
Investing activities, net ........... (2,094) (1,373)
Financing activities ................ 5,565 (12,134)
- --------------------------------------------------------------------------------
Net (decrease) increase in cash and
cash equivalents ........................ $ (93) $ 75
- --------------------------------------------------------------------------------
Cash provided by the Company's operating activities was due primarily
to improved operating results, the income tax refund received from its pre-1986
parent, improved vendor terms and lower inventory levels. Cash used in investing
activities relates primarily to leasehold improvements in new and relocated
stores and continued consolidation of the Company's tailoring operations, net of
proceeds from the sale of one of the Company's three manufacturing plants. Cash
used in financing activities represents primarily repayments of the revolving
loan under the Credit Agreement.
The Company spent $2.2 million on capital expenditures in fiscal year
1996 as it implemented its program to reposition its existing store base, which
included $1.1 million to open four new company-owned stores in fall 1996 and $.8
million to relocate three stores. The Company also opened two new franchise
stores. The Company closed two unprofitable full-line stores in 1996, as well as
five catalog stores. These closed stores accounted for less than 2% of sales in
1995.
16
<PAGE>
The Company expects to spend between $4.0 and $5.0 million in capital
expenditures to open up to ten new stores and renovate existing stores in 1997.
The Company believes that its current liquidity and Credit Agreement will be
adequate to maintain its currently anticipated working capital and investment
needs. The Company's plans and beliefs concerning 1997 contained herein are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those
forecast due to a variety of factors that can adversely affect the Company's
operating results, liquidity, and financial condition.
Seasonality
Unlike many other retailers, the Company's operations are not greatly
affected by seasonal fluctuations. Although variations in sales volumes do exist
between quarters, the Company believes the nature of its merchandise helps to
stabilize demand between the different periods of the year. The Company does not
expect seasonal fluctuation to materially affect its operations in the future.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENT DATA
The financial statements listed in Item 14(a) 1 and 2 are included in
the Report beginning on page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information included under the captions "Directors", "Executive
Officers" and "Compliance with Section 16(a) of the Exchange Act" in the
Company' proxy statement for the 1997 Annual Meeting of Shareholders to be filed
with the Commission (the "Proxy Statement") are incorporated herein by
reference.
Item 11. EXECUTIVE COMPENSATION
The information included under the captions "Executive Compensation",
"Executive Employment Agreements", "Compensation of Directors", "Report of the
Compensation Committee of the Board of Directors" and "Performance Graph" in the
Company's Proxy Statement are incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information included under the caption "Security Ownership of
Directors and Officers" in the Company's Proxy Statement is incorporated herein
by reference.
Item 13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
The information included under the caption "Certain Transactions" in
the Company's Proxy Statement is incorporated herein by reference.
17
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) The following Financial Statements of Jos. A. Bank Clothiers, Inc., the
notes thereto, and the related reports thereon of the independent public
accountants are filed under Item 8 of this report:
<TABLE>
<CAPTION>
1. Financial Statements Page
<S> <C>
Report of Independent Public Accountants................................... F-1
Consolidated Balance Sheets as of February 3, 1996 and February 1, 1997.... F-2
Consolidated Statements of Income (Loss) for the Years Ended
January 28, 1995, February 3, 1996 and February 1, 1997.................. F-3
Consolidated Statement of Shareholders' Equity for the Years Ended
January 28, 1995, February 3, 1996 and February 1, 1997.................. F-4
Consolidated Statements of Cash Flows for the Years Ended
January 28, 1995, February 3, 1996 and February 1, 1997.................. F-5
Notes to Consolidated Financial Statements................................. F-6
</TABLE>
2. Financial Statement Schedules
All required information is included within the Consolidated Financial
Statements and the notes thereto.
(b) Forms 8-K
No reports on Form 8-K were filed during the last quarter of the year
covered by this Annual Report on Form 10-K, which ended on February 1, 1997.
<TABLE>
<S> <C>
(c) Exhibits
3.1 -- Restated Certificate of Incorporation of the Company.*......................................
3.2 -- By-laws of the Company, together with all amendments thereto.*..............................
4.1 -- Form of Common Stock certificate.*..........................................................
4.2 -- Amended and Restated Stockholders Agreement, dated as of January 29, 1994,
among the parties named therein.*.........................................................
10.4(a) -- Second Amendment to Third Amended and Restated Credit
Agreement, dated as of October 24, 1994, by and among the
Company, Wells Fargo Bank, N.A. National Association and other
lenders named therein **..................................................................
10.4(b) -- Third Amendment to Third Amended and Restated Credit Agreement,
dated as of April 26, 1995, by and among the Company, Wells Fargo
Bank, N.A. and other lenders named therein. **............................................
10.4(c) -- Fourth Amendment to Third Amended and Restated Credit Agreement,
dated as of June 30, 1995, by and among the Company, Wells Fargo
Bank, N.A. and other lenders named therein. **............................................
10.4(d) -- Fifth Amendment to Third Amended and Restated Credit Agreement,
dated as of July 28, 1995, by and among the Company, Wells Fargo
Bank, N.A. and other lenders named therein. **............................................
10.4(e) -- Sixth Amendment to Third Amended and Restated Credit Agreement,
dated as of August 15, 1995, by and among the Company, Wells Fargo
Bank, N.A. and other lenders named therein. **............................................
10.4(f) -- Fourth Amended and Restated Credit Agreement, April 30, 1996, by and
among the Company, Wells Fargo Bank, N.A. ***.............................................
21.1 -- Company subsidiaries *
10.5(b) -- Amendment to Finley Employment Agreement, dated as of January 29,
1994, filed herewith......................................................................
10.6(b) -- Amendment to Schwartz Employment Agreement, dated as of January 29, 1994,
filed herewith............................................................................
</TABLE>
18
<PAGE>
<TABLE>
<S> <C>
10.5(a) -- Employment Agreement, dated as of March 31, 1994, between Timothy F. Finley and
Jos. A. Bank Clothiers, Inc., filed herewith..............................................
10.6(a) -- Employment Agreement, dated as of March 31, 1994, between Henry C. Schwartz and
Jos. A. Bank Clothiers, Inc., filed herewith..............................................
10.6(c) -- Amendment to Employment Agreement, dated February 3, 1996, by and between
Henry C. Schwartz and Jos. A. Bank Clothiers, Inc., filed herewith........................
10.7 -- Employment Agreement, dated February 5, 1996, between Frank Tworecke and Jos. A.
Bank Clothiers, Inc., filed herewith......................................................
10.8 -- Employment Agreement, dated February 5, 1996, between David E. Ullman and Jos. A.
Bank Clothiers, Inc., filed herewith......................................................
10.9 -- Jos. A. Bank Clothiers, Inc. Retirement and Savings Plan and Trust Agreement as
amended and restated effective April 1, 1994., filed herewith.............................
10.10 -- Collective Bargaining Agreement between Retail Employees Union Local 340,
Amalgamated Clothing and Textile Workers Union, AFL-CIO and Jos. A. Bank Clothiers
Inc., filed herewith......................................................................
10.11 -- Union Agreement, dated May 1, 1995, by and between Joseph A. Bank Mfg. Co., Inc. and
Baltimore Regional Joint Board, Amalgamated Clothing and Textile Workers Union (also known
as U.N.I.T.E.), filed herewith............................................................
</TABLE>
- ---------------
* Incorporated by reference to the Company's Registration Statement on Form
S-1 filed May 3, 1994.
** Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended January 28, 1995.
*** Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended February 3, 1996.
Pursuant to the requirements Section 13 and 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Hampstead, State of Maryland, on April 18, 1997.
19
<PAGE>
JOS. A. BANK CLOTHIERS, INC.
(registrant)
By: /s/: Timothy F. Finley
----------------------
TIMOTHY F. FINLEY
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
<S><C>
/s/: Timothy F. Finley Director, Chairman of the Board and Chief
- ----------------------- Executive Officer (Principal Executive Officer)... April 18, 1997
/s/: Frank Tworecke President and Chief Merchandising Officer......... April 18, 1997
- -----------------------
/s/: David E. Ullman Executive Vice President, Chief Financial Officer. April 18, 1997
- -----------------------
/s/: Thomas E. Polley Vice President, Controller (Principal
- ----------------------- Accounting Officer), Treasurer.................... April 18, 1997
/s/: Robert B. Bank Director.......................................... April 18, 1997
- -----------------------
/s/: Andrew A. Giordano Director.......................................... April 18, 1997
- -----------------------
/s/: Gary S. Gladstein Director.......................................... April 18, 1997
- -----------------------
/s/: Peter V. Handal Director.......................................... April 18, 1997
- -----------------------
/s/: David A. Preiser Director......................................... April 18, 1997
- -----------------------
/s/: Robert N. Wildrick Director......................................... April 18, 1997
- -----------------------
</TABLE>
20
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of Jos. A. Bank Clothiers, Inc.
We have audited the accompanying consolidated balance sheets of Jos. A. Bank
Clothiers, Inc. (a Delaware corporation) and subsidiaries as of February 3,
1996, and February 1, 1997, and the related consolidated statements of income
(loss), shareholders' equity and cash flows for the years ended January 28,
1995, February 3, 1996, and February 1, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Jos. A. Bank Clothiers,
Inc. and subsidiaries as of February 3, 1996, and February 1, 1997, and the
results of its operations and its cash flows for the years ended January 28,
1995, February 3, 1996, and February 1, 1997, in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
- -----------------------
Baltimore, Maryland,
March 11, 1997
F-1
<PAGE>
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
---------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
AS OF FEBRUARY 3, 1996 AND FEBRUARY 1, 1997
-------------------------------------------
(In Thousands, Except Share Information)
<TABLE>
<CAPTION>
ASSETS
February 3, 1996 February 1, 1997
---------------- ----------------
<S><C>
CURRENT ASSETS:
Cash and cash equivalents $ 644 $ 719
Accounts receivable 3,866 3,300
Inventories 43,273 40,883
Prepaid expenses and other current assets 4,333 4,874
Deferred income taxes 5,200 3,200
- -------------------------------------------------------------------------------------------------
Total current assets 57,316 52,976
NON-CURRENT ASSETS:
Property, plant and equipment, net 25,671 22,840
Other noncurrent assets, net 1,717 1,511
Deferred income taxes 5,967 4,083
- -------------------------------------------------------------------------------------------------
Total assets $ 90,671 $ 81,410
- -------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 8,929 $ 12,357
Accrued expenses 10,896 10,484
Current portion of long-term debt 856 685
Current portion of capital lease obligations 183 16
Current portion of pension liability 730 803
- -------------------------------------------------------------------------------------------------
Total current liabilities 21,594 24,345
NON-CURRENT LIABILITIES:
Long-term debt 29,389 17,748
Long-term capital lease obligations 16 --
Deferred rent 2,666 2,860
Pension liability 1,561 758
- -------------------------------------------------------------------------------------------------
Total liabilities 55,226 45,711
- -------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $.01 par, 20,000,000 shares authorized,
6,999,567 issued and 6,790,152 outstanding as of
February 3, 1996 and 7,000,567 issued and 6,791,152
outstanding as of February 1, 1997 70 70
Preferred stock, $1.00 par, 500,000 shares authorized,
none outstanding -- --
Additional paid-in capital 56,333 56,336
Accumulated deficit (19,038) (18,787)
Less 209,415 shares of common stock held in treasury,
at cost (1,920) (1,920)
- -------------------------------------------------------------------------------------------------
Total shareholders' equity 35,445 35,699
- -------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 90,671 $ 81,410
- -------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>
F-2
<PAGE>
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
---------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
----------------------------------------
FOR THE YEARS ENDED JANUARY 28, 1995, FEBRUARY 3, 1996 AND FEBRUARY 1, 1997
---------------------------------------------------------------------------
(In Thousands, Except Share Information)
<TABLE>
<CAPTION>
Years Ended
----------------------------------------------
Jan. 28, 1995 Feb. 3, 1996 Feb. 1, 1997
------------- ------------ ------------
<S><C>
NET SALES:
Men's $ 143,465 $ 143,659 $ 155,058
Women's 32,589 25,908 --
- -----------------------------------------------------------------------------------------------------------------------
NET SALES 176,054 169,567 155,058
COST OF GOODS SOLD 94,199 100,789 84,866
- -----------------------------------------------------------------------------------------------------------------------
Gross profit 81,855 68,778 70,192
- -----------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
General and administrative 16,817 17,852 16,720
Sales and marketing 59,375 63,013 50,924
Store opening costs 1,025 -- 192
Store repositioning costs -- 3,500 --
- -----------------------------------------------------------------------------------------------------------------------
Total operating expenses 77,217 84,365 67,836
- -----------------------------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 4,638 (15,587) 2,356
Interest expense, net (2,430) (3,444) (1,946)
- -----------------------------------------------------------------------------------------------------------------------
Income (loss) before (provision) benefit for
income taxes 2,208 (19,031) 410
(Provision) benefit for income taxes (861) 5,845 (159)
- -----------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 1,347 $ (13,186) $ 251
- -----------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE:
Fully diluted earnings (loss) per common share $ .22 $ (1.94) $ .04
- -----------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING 6,240,700 6,790,152 6,824,117
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-3
<PAGE>
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
---------------------------------------------
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
-----------------------------------------------
FOR THE YEARS ENDED JANUARY 28, 1995, FEBRUARY 3, 1996 AND FEBRUARY 1, 1997
---------------------------------------------------------------------------
(In Thousands, Except Share Information)
<TABLE>
<CAPTION>
Additional Total
Common Preferred Paid-In Accumulated Treasury Shareholders'
Stock Stock Capital Deficit Stock Equity
------ --------- ---------- ----------- -------- -------------
<S><C>
BALANCE, January 29, 1994 $ 50 $ -- $ 39,459 $ (7,199) $ (1,920) $ 30,390
Net proceeds from issuance of
common stock (2,000,000 shares)
pursuant to initial public offering 20 -- 16,874 -- -- 16,894
Net income -- -- -- 1,347 -- 1,347
- ------------------------------------------------------------------------------------------------------------------------
BALANCE, January 28, 1995 70 -- 56,333 (5,852) (1,920) 48,631
Net loss -- -- -- (13,186) -- (13,186)
- ------------------------------------------------------------------------------------------------------------------------
BALANCE, February 3, 1996 70 -- 56,333 (19,038) (1,920) 35,445
Net proceeds from issuance of
common stock (1,000 shares)
pursuant to Incentive Option Plan -- -- 3 -- -- 3
Net income -- -- -- 251 -- 251
- ------------------------------------------------------------------------------------------------------------------------
BALANCE, February 1, 1997 $ 70 $ -- $ 56,336 $ (18,787) $ (1,920) $ 35,699
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
---------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE YEARS ENDED JANUARY 28, 1995, FEBRUARY 3, 1996 AND FEBRUARY 1, 1997
---------------------------------------------------------------------------
(In Thousands)
<TABLE>
<CAPTION>
Years Ended
--------------------------------------------------
Jan. 28, 1995 Feb. 3, 1996 Feb. 1, 1997
------------- ------------ ------------
<S><C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,347 $ (13,186) $ 251
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Deferred tax (benefit) expense 427 (5,533) 3,884
Depreciation and amortization 4,088 4,668 3,901
(Gain) loss on disposition of assets -- 168 (25)
Store repositioning costs -- 3,500 --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (1,082) 679 566
(Increase) decrease in inventories (8,941) 8,609 2,390
(Increase) decrease in prepaid expenses and
other current assets (2,278) 3,491 (541)
(Increase) decrease in other non-current assets -- (776) 101
Increase (decrease) in accounts payable 3,794 (5,386) 3,428
Increase (decrease) in long-term pension liability (665) (665) (730)
Increase (decrease) in accrued expenses (350) 406 163
Increase in deferred rent 385 461 194
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating
activities (3,275) (3,564) 13,582
- ---------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (9,377) (2,231) (2,152)
Proceeds from disposal of assets -- 137 779
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (9,377) (2,094) (1,373)
- ---------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving loan agreement 67,310 54,364 29,786
Repayment of borrowings under revolving loan
agreement (62,710) (47,550) (40,680)
Proceeds from issuance of other long-term debt 324 -- --
Repayment of other long-term debt (8,474) (544) (918)
Net proceeds from issuance of common stock 16,894 -- 3
Principal payments under capital lease obligations (196) (212) (183)
Payments related to debt financing (130) (493) (142)
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 13,018 5,565 (12,134)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 366 (93) 75
CASH AND CASH EQUIVALENTS, beginning of year 371 737 644
- ---------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of year $ 737 $ 644 $ 719
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
---------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
JANUARY 28, 1995, FEBRUARY 3, 1996 AND FEBRUARY 1, 1997
-------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Description of Business - Jos. A. Bank Clothiers, Inc. (Clothiers) is a
manufacturer and nationwide retailer of classic men's clothing through
conventional retail stores, including catalog direct marketing and franchisees.
Fiscal Year - The Company maintains its accounts on a fifty-two / fifty-three
week fiscal year ending on the Saturday nearest to January 31. The fiscal years
ended January 28, 1995 (fiscal 1994) and February 1, 1997 (fiscal 1996), each
contained fifty-two weeks and the fiscal year ended February 3, 1996 (fiscal
1995) contained fifty-three weeks.
Basis of Presentation - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation - The consolidated financial statements include the
accounts of Clothiers and its wholly-owned subsidiaries, The Joseph A. Bank Mfg.
Co., Inc. and National Tailoring Services, Inc. (collectively referred to as the
Company). All significant intercompany balances and transactions have been
eliminated in consolidation.
Cash and Cash Equivalents - Cash and cash equivalents include overnight
investments.
Supplemental Cash Flow Information - Interest and income taxes paid were as
follows (in thousands):
Years Ended
-------------------------------------
January 28, February 3, February 1,
1995 1996 1997
----------- ----------- -----------
Interest paid $2,125 $2,679 $2,784
Income taxes paid 323 30 100
Inventories - Inventories are stated at the lower of first-in first-out, cost or
market. The Company capitalizes into inventories certain warehousing and
delivery costs associated with getting its manufactured and purchased
merchandise to the point of sale.
Catalogs and Promotional Materials - Costs related to mail order catalogs and
promotional materials are included in prepaid expenses and other current assets.
These costs are amortized over the expected periods of benefit, not to exceed
six months. At February 3, 1996 and February 1, 1997, prepaid catalog and
promotional materials were approximately $1,375,000 and $1,505,000,
respectively.
Property, Plant and Equipment - Property, plant and equipment are stated at
cost. The Company depreciates and amortizes property, plant and equipment on a
straight-line basis over the following estimated useful lives:
Estimated
Asset Class Useful Lives
---------------------- --------------
Buildings 25 years
Equipment 3-10 years
Furniture and fixtures 10 years
Leasehold improvements Initial term of
lease, not to
exceed 10 years
Other Noncurrent Assets - Other noncurrent assets includes deferred financing
costs of $620,000 and $514,000 as of February 3, 1996 and February 1, 1997,
respectively. Deferred financing costs were incurred in connection with the
Company's bank credit agreement described in Note 6 and are being amortized as
additional interest expense over the remaining term of the agreement using the
effective interest method. Other noncurrent assets include $776,000 and $675,000
of notes receivable as of February 3, 1996 and February 1, 1997, respectively.
Franchise Revenue Recognition - Initial franchise fees for a store are generally
recognized as revenue when the Company has provided substantially all the
initial franchise services. Inventory sales (and cost of sales) to the
franchisees are recognized when the inventory is shipped. Monthly franchise fees
are recorded when earned under the franchise agreements.
Lease Expense - The Company records lease expense in accordance with Statement
of Financial Accounting Standards (SFAS) No. 13 -- Accounting for Leases. As
such, rent expense on leases is recorded on a straight-line basis over the term
of the lease and the excess of expense over cash amounts paid are reflected as
"deferred rent" in the accompanying balance sheets.
Store Opening Costs - Costs incurred in connection with start-up and promotion
of new store openings are expensed as incurred.
F-6
<PAGE>
Income Taxes - The Company accounts for income taxes in accordance with SFAS No.
109 -- Accounting for Income Taxes. Under SFAS 109, the liability method is used
in accounting for income taxes. Deferred tax liabilities are determined based on
differences between the financial reporting and tax basis of assets and
liabilities and are measured using tax rates and laws that are expected to be in
effect when the differences are scheduled to reverse.
Earnings Per Share - Net income (loss) per common share was computed based on
the net income (loss) divided by the weighted average number of common shares
outstanding. Primary income (loss) per share approximates fully diluted income
per share in each year presented. For net income per common share, the effect of
stock options is factored into the calculation of weighted average shares
outstanding using the treasury stock method.
Accounting for Stock Based Compensation - In October 1995, the Financial
Accounting Standards Board issued SFAS No. 123, "Accounting for Stock Based
Compensation." With respect to stock options granted to employees, SFAS No. 123
permits companies to continue using the accounting method promulgated by the
Accounting Principles Board Opinion No. 25 ("APB No. 25"), "Accounting for Stock
Issued to Employees", to measure compensation expense or to adopt the fair value
based method prescribed by SFAS No. 123. If APB No. 25's method is continued,
pro forma disclosures are required as if SFAS No. 123 accounting provisions were
followed. Management has elected to continue to measure compensation expense
under APB No. 25, with pro forma footnote disclosures of the expense under the
SFAS No. 123 method (See Note 11).
Reclassifications - Certain reclassifications have been made to the February 3,
1996, financial statements in order to conform with the February 1, 1997,
presentation.
New Accounting Pronouncement - In February 1997, the FASB issued Statement No.
128 (SFAS 128), "Earnings per Share," which establishes new standards for
computing and presenting earnings per share. SFAS 128 is effective for financial
statements for periods ending after December 15, 1997, including interim
periods.
2. CAPITAL STRUCTURE AND INITIAL PUBLIC OFFERING
---------------------------------------------
Effective January 29, 1994, the Company changed its capital structure by
authorizing 20,000,000 shares of new Common Stock, $.01 par value per share
(Common Stock), and 500,000 shares of new preferred stock, $1.00 par value per
share (Preferred Stock).
The Company then issued 3,912,363 shares of its new Common Stock in exchange for
all of its previously issued preferred stock. The Company also issued 713,651
shares of its new Common Stock to the holders of its former common stock. All of
the previously issued preferred and common stock of the Company was canceled.
On May 10, 1994, the Company sold 2,000,000 shares of its Common Stock for
$10.00 per share in connection with an initial registration with the Securities
Exchange Commission. In connection with this transaction, the Company incurred
costs of $3,106,000 consisting principally of underwriting, legal, accounting
and other fees. The net proceeds of $16,894,000 were used to pay off long-term
debt of approximately $8,100,000 and for the opening of new stores.
3. INVENTORIES:
------------
Inventories at February 3, 1996 and February 1, 1997, consist of the following
(in thousands):
February 3, 1996 February 1, 1997
---------------- ----------------
Finished goods $ 35,650 $ 32,104
Work in process 2,331 4,717
Raw materials 5,292 4,062
- ------------------------------------------------------------
Total $ 43,273 $ 40,883
- ------------------------------------------------------------
4. PROPERTY, PLANT AND EQUIPMENT:
------------------------------
Property, plant and equipment at February 3, 1996 and February 1, 1997, consist
of the following (in thousands):
February 3, 1996 February 1, 1997
---------------- ----------------
Land $ 671 $ 475
Buildings and
improvements 28,112 28,062
Equipment,
furniture and fixtures 20,088 19,541
- ---------------------------------------------------------------
48,871 48,078
Less: Accumulated
depreciation and
amortization (23,200) (25,238)
- ---------------------------------------------------------------
Property, plant and
equipment, net $ 25,671 $ 22,840
- ---------------------------------------------------------------
5. ACCRUED EXPENSES:
-----------------
Accrued expenses at February 3, 1996 and February 1, 1997, consist of the
following (in thousands):
F-7
<PAGE>
Feb. 3, 1996 Feb. 1, 1997
------------ ------------
Accrued compensation
and benefits $ 3,129 $ 4,595
Accrued store
repositioning costs 1,200 273
Accrued advertising 2,961 2,142
Gift certificate
payable 1,108 1,135
Other accrued expenses 2,498 2,339
- --------------------------------------------------------
Total $ 10,896 $ 10,484
- --------------------------------------------------------
Other accrued expenses consist primarily of liabilities related to interest,
sales taxes, customer deposits, and percentage rent.
6. LONG-TERM DEBT:
---------------
Long-term debt at February 3, 1996 and February 1, 1997, consist of the
following (in thousands):
February 3, February 1,
1996 1997
-------------- -------------
Bank credit agreement-
Borrowings under
long-term revolving
loan agreement $ 28,904 $ 18,010
Note related to lease
termination, discounted
at 10.5%, payable in
variable installments
through January 15, 1998 396 89
Notes related to lease-
hold improvements,
interest at 2% plus
prime and 13.0%,
payable in monthly
installments through
June 1, 2012 484 134
Notes related to
building improve-
ments, interest at 10%,
payable in monthly
installments through
July 1, 1997 233 85
Mortgages payable,
interest at 3%, payable
in monthly installments
through September 1,
1999; secured by related
land and building 158 115
Mortgage payable, interest
at 6.5%, payable in
monthly installments
through May 1, 2000;
secured by related
properties 70 --
- -------------------------------------------------------------
Total debt 30,245 18,433
Less: Current maturities 856 685
- -------------------------------------------------------------
Long-term debt $ 29,389 $ 17,748
- -------------------------------------------------------------
Bank Credit Agreement - The Company maintains a $40 million bank credit
agreement (the "Credit Agreement"), which provides for a revolving loan whose
limit is determined by a formula based on the Company's inventories, accounts
receivable and real estate and equipment values. In April 1996, the Company
extended the Credit Agreement to April 1999. The amended Credit Agreement
changed the maximum borrowing under the revolver facility to $38,000,000 and
provided a term loan facility of $2,000,000 payable in monthly installments
based on a five-year amortization with any outstanding balance due in April
1999. The Credit Agreement also includes financial covenants concerning net
worth and working capital, among others, limitations on capital expenditures (up
to $7 million in fiscal 1997) and additional indebtedness and a restriction on
the payment of dividends. Interest rates under the amended agreement range from
prime plus 1.5% to prime plus 2.0% or LIBOR plus 3.5%. The amended agreement
also includes an early termination fee and provisions for a seasonal
over-advance.
As of February 3, 1996 and February 1, 1997 the Company's availability in excess
of outstanding borrowings under the formula was $5,500,000 and $13,750,000,
respectively. Substantially all assets of the Company are collateralized under
the Credit Agreement.
During the years ended January 28, 1995 and February 3, 1996, borrowings under
the Credit Agreement bore interest ranging from prime plus 1.5% to prime plus 2%
or LIBOR plus 3%. Amounts outstanding under the Credit Agreement as of February
1, 1997, bear interest at rates ranging from 9.0% to 10.75% which will vary in
the future depending upon prime and LIBOR.
In addition to borrowings under the Credit Agreement, the Company has issued
letters of credit aggregating approximately $517,000 at February 1, 1997, to
secure the payment of certain liabilities.
The aggregate maturities of the Company's long-term debt as of February 1, 1997,
are as follows: year ending 1998-$685,000; 1999-$479,000; 2000-$17,269,000;
F-8
<PAGE>
7. COMMITMENTS AND CONTINGENCIES:
------------------------------
Litigation - Lawsuits and claims are filed from time to time against the Company
in its ordinary course of business. Management, after reviewing developments to
date with legal counsel, is of the opinion that the outcome of such matters will
not have a material adverse effect on the net assets of the Company or the
accompanying financial statements taken as a whole.
Employment Agreements - The Company has employment agreements with certain of
its executives expiring between 1998 and 1999, aggregating base compensation of
$2,177,000 over the term. The contracts also provide for additional incentive
payments subject to performance standards. In addition, other employees are
eligible for incentive payments based on performance. For fiscal 1996, the
Company expensed approximately $925,000 in incentive payments. No incentive
payments were expensed in fiscal years 1994 and 1995.
Lease Obligations - The Company has numerous noncancelable operating leases for
retail stores, certain office space and equipment. Certain facility leases
provide for annual base minimum rentals plus contingent rentals based on sales.
Renewal options are available under the majority of the leases. The Company has
also entered into certain capital leases.
Future minimum lease payments under noncancelable operating and capital leases
together with the present value of net minimum lease payments of capital leases
at February 1, 1997, are as follows (in thousands):
Operating Capital
Leases Leases
--------- -------
1998 $ 10,185 $ 20
1999 9,944 --
2000 9,895 --
2001 8,487 --
2002 7,843 --
2003 and thereafter 30,731 --
- --------------------------------------------
Total $ 77,085 20
- --------------------------------------------
Less: Executory costs 3
- --------------------------------------------
Net minimum lease payments 17
Less: Amounts representing interest 1
- --------------------------------------------
Present value of net minimum lease
payments $ 16
- --------------------------------------------
The minimum rentals above do not include additional payments for percentage
rent, insurance, property taxes and maintenance costs that may be due as
provided for in the leases. Many of the noncancelable operating leases include
scheduled rent increases.
Total rental expense for operating leases, including contingent rentals and net
of sublease payments received, was $8,903,000, $ 10,189,000 and $10,224,000 for
the years ended January 28, 1995, February 3, 1996 and February 1, 1997,
respectively. Minimum rentals were $8,893,000, $ 10,023,000 and $9,986,000,
respectively. Contingent rentals, which are based on a percentage of sales,
approximated $259,000, $ 353,000 and $395,000, respectively. Additionally,
sublease payments received approximated $249,000, $187,000 and $156,000,
respectively.
The Company has signed a five-year agreement with David Leadbetter, a golf
professional, to produce golf and other apparel under his name. Payments are
based on sales volumes. The minimum annual commitment under this agreement is
$150,000.
8. BENEFIT PLANS:
--------------
Multi-Employer Pension Plan - Through the year ended January 29, 1994, the
Company's employees covered by a collective bargaining agreement participated in
plans with pension and post-retirement benefits administered by the national and
local Union of Needletrades Industrial & Textile Employees. The Company made
contributions to the plans in accordance with the collective bargaining
agreement.
During the year ended January 29, 1994, the Company's Board of Directors and
management decided to terminate the Company's participation in the
multi-employer pension plan. The related liability is being repaid in
installments over four years through October, 1998. As of February 1, 1997 , the
Company owed approximately $1,240,000 related to the termination.
Defined Benefit Pension Plan - In connection with the above termination, the
Company adopted a new noncontributory defined benefit pension plan to cover the
above-mentioned union employees with equivalent benefits to the multi-employer
plan. The Company's contributions are intended to provide for both benefits
attributed to service to date and for benefits expected to be earned in the
future. The annual contributions are not less than the minimum funding standards
set forth in the Employee Retirement Income Security Act of 1974, as amended.
The plan provides for eligible employees to receive benefits based principally
on years of service with the Company.
The following table sets forth the plan's funded status as of December 31, 1995
and 1996, the date of the latest actuarial valuations (in thousands).
F-9
<PAGE>
Actuarial present value of benefit obligations:
Feb. 3, Feb. 1,
1996 1997
------- -------
Accumulated benefit obligation,
including vested benefits of $520
and $605 $ 564 $ 728
- ------------------------------------------------------------
Projected benefit obligation for
service rendered to date $ (564) $ (728)
Fair value of plan assets 250 531
- ------------------------------------------------------------
Fair value of plan assets less
than projected benefit obligation (314) (197)
Unrecognized net loss (18) --
Unrecognized net transition liability 328 303
Adjustment required to recognize
minimum liability (328) (303)
- ------------------------------------------------------------
Accrued pension cost $ (332) $ (197)
- ------------------------------------------------------------
Net periodic pension expense for the years ended January 28, 1995, February 3,
1996 and February 1, 1997, includes the following components (in thousands):
Jan. 28, Feb. 3, Feb. 1,
1995 1996 1997
-------- ------- -------
Normal service
cost-benefits earned
during the period $ 74 $ 101 $ 84
Interest cost on
projected benefit
obligation 20 40 48
Actual return on plan
assets (1) (29) (48)
Net amortization
and deferral 14 42 37
- -------------------------------------------------------
Net periodic pension
expense $ 107 $ 154 $ 121
- -------------------------------------------------------
The Company recorded minimum pension liabilities of $328,000 and $303,000 at
February 3, 1996 and February 1, 1997, respectively, which is included in
"non-current pension liability", representing the excess of the unfunded
accumulated benefit obligation over previously accrued pension costs. A
corresponding intangible asset was recorded as an offset to this additional
liability, which is included in "other non-current assets".
In determining the actuarial present value of the projected benefit obligation,
the weighted average discount rate used was 7.75% fiscal 1996 and 8.0% in fiscal
1995 and the expected long-term rate of return on plan assets was 8.0% for
fiscal years 1995 and 1996.
Post-retirement Benefit Plan - In connection with the termination of
participation in the multi-employer pension plan described above, the Company
adopted a new post-retirement benefit plan to cover the above-mentioned union
employees with equivalent benefits to the multi-employer plan. The Company does
not pre-fund these benefits.
In accordance with SFAS No. 106, "Employers' Accounting for Post-retirement
Benefits Other than Pensions", the Company records the expected cost of these
benefits as expense during the years that employees render service. The Company
has adopted the standards on a prospective basis as permitted. As such, the
Company amortizes the related transition liability over 20 years. The following
table sets forth the post-retirement benefit program's funded status as of
December 31, 1995 and 1996, the dates of the latest actuarial valuations for the
related periods (in thousands):
Accumulated post-retirement benefit:
Feb. 3, Feb. 1,
1996 1997
------- -------
Retirees $ -- $ --
Fully eligible active plan participants (1,440) (1,145)
- -------------------------------------------------------------
(1,440) (1,145)
Unrecognized net transition liability 985 931
Unrecognized net gain (loss) 68 (418)
- -------------------------------------------------------------
Accrued post-retirement benefit
cost $ (387) $ (632)
- -------------------------------------------------------------
Net periodic post-retirement benefit expense for the years ended January 28,
1995, February 3, 1996 and February 1, 1997, includes the following components
(in thousands):
Jan. 28, Feb. 3, Feb. 1,
1995 1996 1997
-------- ------- -------
Normal service cost -
benefits earned during
the period $ 69 $ 99 $ 115
Interest cost on
accumulated post-
retirement benefit
obligation 57 90 88
Net amortization and
deferral 36 43 42
- ------------------------------------------------------------
Net periodic post-
retirement benefit
expense $ 162 $ 232 $ 245
- ------------------------------------------------------------
For measurement purposes, a 5% annual rate of increase in the per capita cost of
covered health care benefits was assumed.
F-10
<PAGE>
The health care cost trend rate assumption has a significant effect on the
amounts reported. Increasing the assumed health care cost trend rate by one
percentage point would increase the accumulated post-retirement benefit
obligation by $190,000 and would increase net periodic post-retirement benefit
cost by $35,000. The weighted average discount rate used in determining the
accumulated post-retirement benefit obligation was 7.75%.
Profit Sharing Plan - The Company maintains a defined contribution 401(k) profit
sharing plan for its employees. All employees are eligible to participate after
one year of service. Employee contributions to the plan are limited based on
applicable sections of the Internal Revenue Code. The Company is required to
match a portion of employee contributions to the plan and may make additional
contributions at the discretion of the directors of the Company. Contributions
by the Company to the plan were approximately $182,000, $239,000 and $223,000
for the years ended January 28, 1995 February 3, 1996 and February 1, 1997,
respectively.
9. STORE REPOSITIONING COSTS:
--------------------------
In the fourth quarter of fiscal 1995, the Company elected early adoption of SFAS
No.121 -- "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of". In the first half of fiscal 1995, the men's and
women's apparel industries began suffering a significant down-turn. In the face
of a potential cash shortage and other factors affecting the women's business,
the Company decided to discontinue the women's product line (which was sold in
the same stores as the men's products) to generate cash. The women's product
line represented approximately $33 million and $26 million of sales in fiscal
1994 and 1995, respectively (or 18% and 15% of sales, respectively). With this
loss of the women's volume, and with the men's business experiencing a decline
(but improving) certain previously-profitable stores became unprofitable since
the store rents remained basically unchanged.
Given these events, the Company performed a store-by-store analysis to determine
which stores were losing money and not expected to generate future cash flows
that were sufficient to support the book values of the related store assets.
Based upon this analysis, the Company determined that (a) certain stores needed
to be closed, down-sized or relocated and (b) a write-down of the specific store
leasehold improvements and equipment was required. As a result, the Company
recorded an impairment loss of $2,300,000 representing the writedown of assets
to fair value. The fair values were determined based on estimated future cash
flows and market value of the assets. In addition, the Company recorded a
$1,200,000 charge representing an estimate of costs to be incurred to implement
the Company's plan to reposition its store base and to exit certain leases as it
discontinued the women's business and re-aligned its stores to support the
remaining men's-only business. These costs are included in "store repositioning
costs" in the accompanying consolidated statement of income (loss) for the year
ended February 3, 1996 (fiscal 1995).
During fiscal 1996, the Company closed two unprofitable full-line stores and
five catalog stores and relocated three stores at a cost of approximately
$930,000, which included lease settlement payments and moving costs. The stores
that were closed in 1996 represented approximately 2% of sales in fiscal 1995.
In 1997, the Company expects to fully utilize the remaining reserve by
relocating an additional full-line store and close up to three remaining catalog
stores.
10. INCOME TAXES:
-------------
At February 1, 1997, the Company had approximately $19.6 million of tax net
operating loss carryforwards (NOLs) which expire as follows: In the year
2006 - $4.6 million, 2009 - $4.4 million and 2010 - $10.6 million. SFAS No.
109 requires that the tax benefit of such NOLs be recorded as an asset to the
extent that management assesses the utilization of such NOLs to be "more likely
than not". Realization of the future tax benefits is dependent on the
Company' ability to generate taxable income within the carryforward period.
Future, levels of operating income are dependent upon general economic
conditions, including interest rates and general levels of economic activity,
competitive pressures on sales and margins and other factors beyond the
Company's control. Therefore no assurance can be given that sufficient taxable
income will be generated for full utilization of the NOLs.
Management has determined, based on the Company's history of earnings and its
repositioning results in fiscal 1996, that future earnings of the Company will
more likely than not be sufficient to utilize at least $16 million NOLs prior to
their expiration. Accordingly, the Company has recorded a deferred tax asset of
$6.1 million and a valuation allowance of $1.4 million relating to the NOLs. The
average minimum taxable income that the Company would need to generate prior to
the expiration of the NOLs would be less than the average taxable income that
the Company earned during fiscal years 1992 through 1994, as adjusted for
unusual charges. Management believes that although the prior earnings and
current year operating results might justify a higher amount, the $6.1 million
represents a reasonable estimate of the future utilization of the NOLs.
Management will continue to evaluate the likelihood of future profit and the
necessity of future adjustments to the deferred tax asset valuation allowance.
During the year ended January 29, 1994, the Company filed for a prior year net
operating loss carryback to a year in which the Company was included in the
consolidated federal income tax return of its pre-1986 parent and the Company
recorded a deferred tax asset of $3,000,000 in anticipation of collecting the
refund. In March 1996, the refund plus interest was collected. Included in the
fiscal 1996 Financial Statements is $600,000 of interest income related to the
refund.
F-11
<PAGE>
The (provision) benefit for income taxes was comprised of the following (in
thousands):
Years Ended
------------------------------------------
January 28, February 3, February 1,
1995 1996 1997
----------- ----------- -----------
Federal:
Current $ (57) $ 74 $ (15)
Deferred (372) 4,824 (126)
State:
Current (377) 238 --
Deferred (55) 709 (18)
- ------------------------------------------------------------
Net (provision)
benefit for
income taxes $ (861) $ 5,845 $ (159)
- ------------------------------------------------------------
The differences between the recorded income tax (provision) benefit and the
"expected" tax (provision) benefit based on the statutory federal income tax
rate is as follows (in thousands):
Years Ended
--------------------------------
Jan. 28, Feb. 3, Feb. 1,
1995 1996 1997
-------- ------- -------
Computed federal
tax (provision)
benefit at
statutory rates $ (773) $ 6,470 $ (140)
State income taxes,
net of federal
income tax effect (285) 626 (23)
Valuation allowance -- (1,365) --
Other, net 197 114 4
- ---------------------------------------------------------
Net (provision)
benefit for income
taxes $ (861) $ 5,845 $ (159)
- ---------------------------------------------------------
Temporary differences between the financial reporting carrying amounts and tax
basis of assets and liabilities give rise to deferred income taxes. Total
deferred tax assets and deferred tax liabilities stated by sources of the
differences between financial accounting and tax basis of the Company's assets
and liabilities which give rise to the deferred tax assets and deferred tax
liabilities are as follows (in thousands):
Feb. 3, 1996 Feb.1, 1997
------------ -----------
Deferred Tax Assets:
Long-term pension
liability $ 768 $ 484
Inventories 956 487
Property, plant
and equipment 897 163
Accrued liabilities 1,919 2,085
Operating loss
carryforwards and
carrybacks 9,270 6,092
Valuation allowance (1,365) (1,365)
- -----------------------------------------------------
12,445 7,946
- -----------------------------------------------------
Deferred Tax Liabilities:
Prepaid expenses
and other current
assets (252) (628)
Property, plant and
equipment (902) --
Miscellaneous (124) (35)
- -----------------------------------------------------
(1,278) (663)
- -----------------------------------------------------
Net Deferred Tax Asset $11,167 $ 7,283
- -----------------------------------------------------
11. INCENTIVE OPTION PLAN:
----------------------
Effective January 28, 1994, the Company adopted an Incentive Plan (the Plan).
The Plan generally provides for the granting of stock, stock options, stock
appreciation rights, restricted shares or any combination of the foregoing to
the eligible participants, as defined. Approximately 954,000 shares of Common
Stock have been reserved for issuance under the Plan. The exercise price of an
option granted under the Plan may not be less than the fair market value of the
underlying shares of Common Stock on the date of grant and the options expire at
the earlier of termination of employment or ten years from the date of grant.
As of February 1, 1997 options for approximately 826,300 shares had been granted
under the plan at exercise prices ranging from $1.875 to $7.375 per share and
options for approximately 409,000 shares were exercisable at February 1, 1997.
In addition there are 209,415 options outstanding at $9.170 per share which were
issued in fiscal 1993 under employment agreements.
The Company has computed for pro forma disclosure purposes the value of all
compensatory options granted during fiscal year 1995 and 1996, using the
Black-Scholes option pricing model as prescribed by SFAS No. 123. Assumptions
used for the pricing model include 7.8% for the risk-free interest rate in 1996,
expected lives of 5-10 years, expected dividend yield of 0% each year and
expected volatility of 70% each year. Options were assumed to be exercised upon
vesting for the purposes of this valuation. Adjustments are made for options
forfeited prior to vesting. Had compensation costs for compensatory options been
determined consistent with SFAS No. 123, the Company's pro forma (loss) net
income would have been a loss of $(13,203,000) in 1995 and net income of
$223,000 in 1996.
F-12
<PAGE>
Pro forma (loss) earnings per share would have been $(1.94) in 1995 and $.03 in
1996.
The following table summaries the stock option activity for the years ended
February 3, 1996 and February 1, 1997:
Number of Exercise Price
Shares Per Share
--------- --------------
Outstanding as of
January 28, 1995 741,965 $ 4.00 - 9.170
Granted 29,000 1.875 - 3.875
Exercised -- --
Terminated -- --
- -----------------------------------------------
Outstanding as of
February 3, 1996 770,965 1.875 - 9.170
Granted 265,750 1.625 - 4.750
Exercised (1,000) 3.25
Terminated -- --
- -----------------------------------------------
Outstanding as of
February 1, 1997 1,035,715 1.625 - 9.170
- -----------------------------------------------
Weighted average fair value of options granted for the years ended February 3,
1996 and February 1, 1997, was $1.40 and $1.78, respectively.
12. RELATED PARTY TRANSACTIONS:
---------------------------
The Company has an executive who is the Chairman of the Board of a consulting
group. The Company paid the group approximately $78,000 , $69,000 and $31,000
for the years ended January 28, 1995, February 3, 1996 and February 1, 1997,
respectively, for professional services rendered.
The Company has also made a $200,000 loan to its President in accordance with
his employment contract which is included in "other noncurrent assets" in the
accompanying consolidated balance sheet.
13. QUARTERLY FINANCIAL INFORMATION (Unaudited)
-------------------------------------------
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- ------- -----
(In Thousands Except Per Share Amounts)
<S><C>
FISCAL 1996
- -----------
Men's Sales $ 37,346 $ 33,770 $ 36,817 $ 47,125 $ 155,058
Women's Sales -- -- -- -- --
Net sales 37,346 33,770 36,817 47,125 155,058
Gross profit 17,681 14,378 17,275 20,858 70,192
Income (loss) from operations 1,088 (878) 840 1,306 2,356
Net Income (loss) 228 (559) 109 473 251
Net Income (loss) per share .03 (.08) .02 .07 .04
FISCAL 1995
- -----------
Men's Sales $ 36,200 $ 31,788 $ 30,822 $ 44,849 $ 143,659
Women's Sales 8,223 9,483 7,016 1,186 25,908
Net sales 44,423 41,271 37,838 46,035 169,567
Gross profit 16,450 16,893 16,040 19,395 68,778
Store repositioning costs -- -- -- (3,500) (3,500)
Income (loss) from operations (6,168) (2,422) (2,364) (4,633) (15,587)
Net Income (loss) (4,203) (1,990) (2,043) (4,950) (13,186)
Net Income (loss) per share (0.62) (0.29) (0.30) (0.73) (1.94)
</TABLE>
F-13
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of March 31, 1994, between TIMOTHY F.
FINLEY ("Executive") and JOS A. BANK CLOTHIERS, INC. ("Employer").
WHEREAS, the parties hereto are parties to a Management Agreement,
dated as of May 10, 1991, as amended from time to time (the "Previous
Agreement") pursuant to which Executive is currently serving as the Chief
Executive Officer of Employer.
WHEREAS, the parties wish by this Employment Agreement to provide for
the terms of the continued employment of Executive and to terminate the Previous
Agreement, except with respect to Section 6 thereof which was the subject of an
amendment to the Previous Agreement, dated as of January 29, 1994, a copy of
which is attached hereto ("Section 6 of the Previous Agreement, as amended").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. Employment of Executive; Termination of Previous Agreement
Employer hereby agrees to employ Executive, and Executive
hereby agrees to be and remain in the employ of Employer, upon the terms and
conditions hereinafter set forth. Employer and Executive hereby agree that upon
the execution hereof, the Previous Agreement shall be deemed terminated except
with respect to Section 6 of the Previous Agreement, as amended, which shall
continue in full force and effect and be deemed a part of this Agreement. This
Agreement is a contract for personal services of Executive and services pursuant
hereto may only be performed by Executive.
2. Employment Period
The term of Executive's employment under this Agreement (the
"Employment Period") shall commence as of the date hereof and shall, subject to
earlier termination as provided in Section 5, continue for a period of five
years after commencement and be automatically renewed thereafter for successive
one-year periods unless, at least 180 days before the end of the initial
five-year period or any subsequent one-year period, either party gives notice to
the other of his or its desire to terminate the Employment Period, in which case
the Employment Period shall terminate as of the end of such period.
3. Duties and Responsibilities
3.1 General. During the Employment Period, Executive (i) shall
have the title of Chairman and Chief Executive Officer and (ii) shall devote
substantially all of his business time and expend his best efforts, energies and
skills to the business of the Company. The preceding sentence shall not be
construed to prohibit Executive from continuing to devote more than an
insignificant amount of time, in accordance with his past practice, to
management of his investments, serving on boards of directors, serving as Chief
Executive Officer of the Finley Group and participation in civic and
philanthropic activities.
Executive shall perform such duties, consistent with his
status as Chairman and Chief Executive Officer of Employer, as he may be
assigned from time to time by Employer's Board of Directors. Executive shall
have such authority, discretion, power and responsibility, and shall be
entitled to office, secretarial and administrative (at least one secretary
and/or administrative assistant of his selection) and other facilities and
conditions of employment, as are customary or appropriate to his position and
those currently exercised by and afforded to him. Without limitation of the
generality of the foregoing, Executive, within the general guidelines adopted
from time to time by the Board, shall have the power, without further approval
of the Board of Directors, to hire, fire and establish the terms of employment
(including all compensation and bonus arrangements of all employees of and
consultants and other advisers to the Company (other than the President).
Executive shall also serve without additional compensation as a director of the
Company and, if he should so desire, any of its subsidiaries. For all purposes
of this Agreement, the term "Company" means Employer and all corporations,
associations, companies, partnerships, firms and other enterprises controlled by
or under common control with Employer.
3.2 Location of Executive Offices. The Company will maintain
its principal executive offices at a location in any state on the eastern coast
of the United States from and including South Carolina to and including New
York. Executive shall not be required to perform services for the Company at any
other location, except for services rendered in connection with required travel
on the Company's business to an extent not substantially in excess of
Executive's past travel commitments for the Company.
4. Compensation and Related Matters
4.1 Base Salary. Employer shall pay to Executive during the
Employment Period an annual base salary (the "Base Salary") equal to the sum of
(a) $435,000, subject to such raises as the Compensation Committee (the
"Committee") of the Board of Directors of the Company or the Board of Directors
may from time to time determine in their sole discretion (the "Salary") and (b)
the "cost of living adjustment" (as determined below). The "cost of living
adjustment" shall be determined on each January 1 (or as soon as practicable
thereafter) of the Employment Period, commencing January 1, 1995, and shall be
an amount that equals the greater of (x) $0 or (y) the difference between (i)
the Salary multiplied by a fraction, (A) the numerator of which shall be the
Consumer Price Index for Urban Wage Earners and Clerical Workers (1967 = 100)
(the "Index"), published by the Bureau of Labor Statistics of the United States
Department of Labor in the column for the Baltimore, Maryland area entitled "All
Items" for the month of January for the calendar year for which the cost of
living adjustment is to be determined and (B) the denominator of which shall be
such Index number of the month in which the date of this Agreement falls and
(ii) the Salary. Any portion of increased Base Salary which is retroactively due
to Executive hereunder shall be payable within 15 days after the computation
thereof has been made. Appropriate adjustment shall be promptly made following
receipt of notice from Executive in the event there is a published amendment of
the Index figures upon which the computation is based. If publication of the
Index is discontinued, the parties shall accept comparable statistics on the
cost of living for the Baltimore, Maryland area as computed and published by any
recognized authority acceptable to the parties. The Base Salary for each
calendar year shall be payable in installments in accordance with the Company's
policy on payment of executives in effect from time to time.
4.2 Annual Bonus. For fiscal year 1995 (ending January 28,
1995) and for each fiscal year that begins during the Employment Period (each
such fiscal year, a "Bonus Year"), Executive shall be entitled to receive a
bonus of 75% of Base Salary (each, a "Bonus") based upon attainment of annual
quantitative and qualitative performance goals established by the Committee for
such Bonus Year in consultation with Executive, such performance goals to be
established as soon as possible following the beginning of each Bonus Year. The
relationship between the size of each Bonus and degree of attainment of
performance objectives shall be discretionary with the Committee. Bonus earned
for any Bonus Year shall be payable promptly following the determination
thereof, but in no event later than 90 days following the end of each Bonus
Year. The Bonus payable for the Bonus Year in which the Employment Period
terminates shall equal the Bonus that would have been paid had the Employment
Period not so terminated, multiplied by a fraction, the numerator of which shall
be the number of days of the Employment Period within the Bonus Year and the
denominator of which shall be 365.
4.3 Life Insurance. Employer shall maintain in effect at all
times during the Employment Period, at Employer's expense, a policy of term life
insurance, or such other type of policy as Executive shall request provided that
the cost to Employer thereof is approximately the same as the cost of such term
policy, on the life of Executive in the amount of not less than $2,000,000
naming such person as Executive shall designate from time to time as the owner
and beneficiary thereof. Executive agrees that Employer shall have the right to
obtain other life insurance on Executive's life, at Employer's sole expense and
with Employer or an affiliate thereof as the sole beneficiary thereof. Executive
shall (i) cooperate fully with Employer in obtaining all such insurance, (ii)
sign any necessary consents, applications and other related forms or documents,
and (iii) take any required medical examinations.
4.4 Automobile. Throughout the Employment Period, Employer
shall provide to Executive, at Employer's expense, a top-of-the-line Cadillac,
Lincoln, Lexus or comparable luxury automobile selected by Executive on a
biannual basis and equipped to Executive's satisfaction. Employer shall also be
responsible for all expenses of use and operation thereof.
4.5 Other Benefits. During the Employment Period, subject to,
and to the extent Executive is eligible under their respective terms, Executive
shall be entitled to receive such fringe benefits as are, or are from time to
time hereafter, generally provided by Employer to Employer's senior management
employees or other employees (other than those provided under or pursuant to
separately negotiated individual employment agreements or arrangements) under
any pension or retirement plan, disability plan or insurance, group life
insurance, medical and dental insurance, travel accident insurance, stock
option, phantom stock or other similar plan or program of Employer. Executive's
Base Salary shall (where applicable) constitute the compensation on the basis of
which the amount of Executive's benefits under any such plan or program shall be
fixed and determined. If, during the Employment Period, any plan or program in
which Executive participates (including those in which Executive currently
participates) shall be amended so as to result in an overall reduction of
Executive's benefits, or shall be terminated without being replaced by a new
plan or program providing for benefits equivalent overall to those provided for
Executive prior thereto, the Company shall make arrangements, in addition to any
such amended or terminated plan or program, for Executive to participate in a
plan or program so as to provide benefits to Executive at least equivalent
overall to those provided to Executive prior to such amendment or termination,
such benefits to be provided through a plan or program of insurance if
commercially available.
4.6 Expense Reimbursement. Employer shall reimburse Executive
for all business expenses reasonably incurred by him in the performance of his
duties under this Agreement and consistent with past practice upon his
presentation, not less frequently than monthly, of signed, itemized accounts of
such expenditures, all in accordance with Employer's procedures and policies as
adopted and in effect from time to time and applicable to its senior management
employees. Without limiting the generality of the foregoing, Employer shall
continue to pay for all of Executive's reasonable travel expenses incurred in
traveling from and to his permanent residence in Charlotte, North Carolina and
his reasonable living expenses while the Executive is residing in the Baltimore,
Maryland area, including, without limitation, hotel or other residential
accommodation expenses and meals, all such amounts to be treated as additional
salary for all securities acts reporting purposes.
4.7 Vacations. Executive shall be entitled to 20 days of
vacation during each calendar year, which shall accrue in accordance with the
Company's vacation policy in effect from time to time for its senior executive
officers, with reasonable carry-over allowances, which vacations shall be taken
at such time or times as shall not unreasonably interfere with Executive's
performance of his duties under this Agreement. Upon termination of Executive's
employment pursuant to Section 5 herein or non-renewal of the Employment Period
as provided for under Section 2 herein, for any reason whatsoever, Employer
shall pay Executive, in addition to any termination compensation provided for
under Section 6 herein, all unused vacation benefits, including any carry-over,
due Executive as of the date of termination, to be computed at the Executive's
then current Base Salary rate.
4.8 Tax Gross-up. In the event that any payments made by
Employer to or on behalf of Executive pursuant to the provisions of Section 4.3
through 4.6 hereof result in the payment of additional federal, state or local
income taxes by Executive, Employer shall pay to Executive the amount of such
additional taxes plus such additional amount as shall be necessary to hold
harmless Executive, as nearly as can be, from the obligation to pay such taxes
in respect of amounts payable pursuant to this Section 4.8.
5. Termination of Employment Period
5.1 Termination Without Cause. Employer or Executive may, by
delivery of not less than 60 days' notice to the other at any time during the
Employment Period, terminate the Employment Period without cause.
5.2 By Employer for Cause. Employer may, at any time during
the Employment Period by notice to Executive in accordance with and only after
full compliance with the procedure set forth herein terminate the Employment
Period "for cause" effective immediately. For the purposes hereof, "for cause"
means:
(i) the conviction of Executive in a court of
competent jurisdiction of a crime
constituting a felony in such jurisdiction
involving money or other property of
Employer or any of its affiliates or any
other felony involving moral turpitude; or
(ii) the willful (a) commission of an act not
approved of or ratified by the Board of
Directors involving a serious and material
conflict of interest or self-dealing
relating to any material aspects of Employer
or any such subsidiary or affiliate thereof;
or (b) commission of an act of fraud or
misrepresentation (including the omission of
material facts), provided that such acts
relate to the business of Employer and would
materially and negatively impact upon
Employer and its business; or (c) material
failure of Executive to obey directions of
the Board of Directors that are consistent
with Executive's status of Chief Executive
Officer; however, for the purposes of this
subsection (ii), the refusal of Executive to
comply with an order or directive of anyone
other than the majority of the Board of
Directors, or the refusal of Executive to
perform an act which is contrary to his
duties, responsibilities and/or authority as
Chief Executive Officer or is unlawful shall
not constitute "for cause". In the event of
an act or omission as provided for in this
subsection 5.2(ii), Employer shall provide
Executive with a written notice of intent to
terminate the Employment Period "for cause",
setting forth, with reasonable
particularity, the reasons and acts or
omissions constituting "cause" under this
subsection, and shall provide Executive
with at least thirty (30) calendar days
after such notice to cure or eliminate the
problem or violation giving rise to such
cause or any longer period as reasonably
needed by Executive, provided that it is
susceptible to cure or elimination and
Executive is proceeding diligently and in
good faith to cure such violation. In the
event and only after the Executive fails
to cure the problem or violation within
the period provided for herein, Employer
may exercise its right to terminate the
Employment Period in accordance with the
procedure set forth below.
Termination "for cause" shall be effected only if (A) Employer
has delivered to Executive a copy of a written notice of termination "for
cause", setting forth, with reasonable particularity, the reasons for such "for
cause" termination, and (B) has provided Executive with, on at least ten (10)
business days' prior written notice, in the case of a termination pursuant to
subsection 5.2(ii) the opportunity, together with Executive's counsel, to be
heard before Employer's Board of Directors, said hearing to occur at such
reasonable time and place that is mutually convenient to Executive, his counsel,
and Employer, and (C) Employer's Board of Directors (after such notice and
opportunity to be heard has been provided to Executive in the case of a
termination pursuant to subsection 5.2(ii)), adopts a resolution concurred in by
not less than majority of all of the directors of Employer then in office,
including at least two-thirds of all of the directors who are not officers of
Employer, that Executive was guilty of conduct constituting "for cause"
hereunder, which conduct has not been cured (if applicable), and specifying the
particulars thereof in detail.
5.3 By Executive for Good Reason. Executive may, at any time
during the Employment Period by notice to Employer, terminate the Employment
Period under this Agreement "for good reason" effective immediately. For the
purposes hereof, "good reason" means (i) any material breach by Employer of any
provision of this Agreement which , if susceptible of being cured, is not cured
within 30 days of delivery of notice thereof to Employer by Executive or (ii)
the occurrence of a change in control (as hereinafter defined) of Employer
provided that not more than 90 days shall have elapsed subsequent to Executive's
becoming aware of the occurrence of the change in control. Without limitation of
the generality of the foregoing, each of the following shall be deemed to be a
material breach of this Agreement by Employer: (x) any failure timely to pay (or
any reduction in) compensation (including benefits) paid or payable to Executive
pursuant to the provisions of Section 4 hereof; (y) any reduction in the duties,
responsibilities or perquisites of Executive as provided in Section 3.1 hereof
and (z) any transfer of the Company's principal executive offices outside the
geographic area described in Section 3.2 hereof or requirement that Executive
principally perform his duties outside such geographic area.
For purposes of this Agreement, a "change in control" of the
Company shall be deemed to have occurred if, as a result of a single transaction
or a series of transactions, (A) any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than a trustee or other fiduciary holding securities
under any employee benefit plan of the Company or a corporation owned, directly
or indirectly, by the stockholders of the Company (including any nominee
corporation that holds shares of the Company on behalf of the beneficial owners
of such corporation), in substantially the same proportions as their ownership
of stock of the Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 51% or more of the combined voting power of the Company's
then outstanding securities; or (B) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act, other than a trustee or other
fiduciary holding securities under any employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the stockholders of the Company
(including any nominee corporation that holds shares of the Company on behalf
of the beneficial owners of such corporation), in substantially the same
proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities and
there are at least a majority of directors serving on the Board of Directors
who were not serving in such capacity as of the date hereof or who were not
elected with the consent of the Executive; or (C) the shareholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 70% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the shareholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
the Company's assets; provided, however, the change in ownership of the
Company's securities resulting from the initial public offering thereof shall
not be deemed a "change in control" for purposes of this Agreement.
5.4 Disability. During the Employment Period, if, as a result
of physical or mental incapacity or infirmity (including alcoholism or drug
addiction), Executive shall be unable to perform his material duties under this
Agreement for (i) a continuous period of at least 180 days, or (ii) periods
aggregating at least 270 days during any period of 12 consecutive months (each a
"Disability Period"), and at the end of the Disability Period there is no
reasonable probability that Executive can promptly resume his material duties
hereunder pursuant hereto, Executive shall be deemed disabled ("the Disability")
and Employer, by notice to Executive, shall have the right to terminate the
Employment Period for Disability at, as of or after the end of the Disability
Period. The existence of the Disability shall be determined by a reputable,
licensed physician mutually selected by Employer and Executive, whose
determination shall be final and binding on the parties, provided, that if
Employer and Executive cannot agree upon such physician, such physician shall be
designated by the then acting President of the Baltimore City Medical Society,
and if for any reason such President shall fail or refuse to designate such
physician, such physician shall, at the request of either party, be designated
by the American Arbitration Association. Executive shall cooperate in all
reasonable respects to enable an examination to be made by such physician.
5.5 Death. The Employment Period shall end on the date of
Executive's death.
6. Termination Compensation; Non-Compete
6.1 Termination Without Cause by Employer or for Good Reason
by Executive. If the Employment Period is terminated by Employer pursuant to the
provisions of Section 5.1 hereof or by Executive pursuant to the provisions of
Section 5.3 hereof, Employer will pay to Executive (i) the greater of (a) the
Base Salary for the balance of the Employment Period, or (b) Base Salary for one
(1) year, calculated in each case, at the applicable Base Salary rate which
would have been in effect for each year during the balance of Employment Period,
assuming no termination, payable in equal installments at the times Base Salary
would have been paid had the Employment Period not been terminated; and (ii) on
the date due pursuant to the provisions of Section 4.2 hereof, the Bonus for the
then current Bonus Year prorated as provided in Section 4.2; provided, however,
in the event the Employment Period is terminated by Executive because of a
"change in control" pursuant to Section 5.3 (ii), then clause (i) of this
sentence shall be modified to read: "the Base Salary for the period which is
the greater of (a) eighteen (18) months or (b) the balance of the Employment
Period not to exceed twenty-four (24) months (calculated, in each case, at
the applicable Base Salary rate which would have been in effect for each year
during the balance of the Employment Period, assuming no termination) payable in
equal installments at the times Base Salary would have been paid had the
Employment Period not been terminate." All other benefits provided for in
Sections 4.3, 4.4, 4.5 and 4.8 shall be continued at the expense of Employer
for the period that payments are required to be made pursuant to the
preceding provisions of this Section 6.1.
6.2 Certain Other Terminations. If the Employment Period is
terminated by Employer pursuant to the provisions of Section 5.2, by Executive
pursuant to Section 5.1, or by death, pursuant to the provisions of Section 5.5,
Employer shall pay to Executive (i) Base Salary (calculated at its then current
rate per year) through the date of termination and (ii) in the case of
termination by death pursuant to the provisions of Section 5.5, when due
pursuant to provisions of Section 4.2 the Bonus for the Bonus Year in which the
date of termination occurred prorated as provided in said Section 4.2. Employer
shall have no obligation to continue any other benefits provided for in Section
4 past the date of termination.
6.3 Termination for Disability. If the Employment Period is
terminated by Employer pursuant to the provisions of Section 5.4, Employer shall
make all payments and continue all benefits provided for in Section 6.1 for the
balance of the Employment Period (assuming no termination), provided, however,
that such payments shall be reduced by any amounts actually paid to Executive
pursuant to any disability insurance or other such similar program maintained by
Employer.
6.4 Termination by Non-Renewal. In the event the Employment
Period expires because of an election by Employer to allow the Employment Period
to expire at the end of its then stated term as provided in Section 2 hereof,
Employer shall pay to Executive (i) Base Salary for the one year period
following the date of termination (calculated at its then current rate per
year), payable in equal installments at the times Base Salary would have been
paid had the Employment Period not been terminated and (ii) when due pursuant to
the provisions of Section 4.2 the Bonus for the Bonus Year in which the
Employment Period expired prorated as provided in said Section 4.2. Employer
shall have no obligation to continue any other benefits provided for in Section
4 past the date of termination.
6.5 Tax Grossup. In the event that any amounts paid to
Executive pursuant to the provisions of this Section 6 (including benefits
continued and payments deemed received by reason of changes in stock options
provided for therein, all such amounts, collectively, the "Severance Payments")
shall be deemed to be subject to the tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Excise Tax"), an additional amount (the
"Grossup Amount") shall be paid by Employer to Executive such that the net
amount retained by Executive, after deduction of any Excise Tax on the Severance
Payments and any federal, state and local income tax and Excise Tax upon the
payment provided for by this sentence, shall be equal to the Severance Payments.
The provisions of this Section 6.5 shall survive the expiration of the
Employment Period and shall continue in effect until expiration of the statute
of limitations for tax returns filed that include the period in which any
Severance Payments are made or, if earlier, final determination of tax liability
relating thereto. Payment of the Grossup Amount shall be made in accordance with
the computation thereof by the accountant to Executive in connection with
preparation of Executive's tax return for the relevant tax year, and shall be
adjusted upon final determination of tax liability, with any increase therein
being paid by the Employer to Executive or decrease therein being paid by
Executive to Employer within 30 days following the date of final determination
of tax liability.
6.6 No Other Termination Compensation. Executive shall not,
except as set forth in this Section 6 and in Section 4.7, be entitled to any
compensation following termination of the Employment Period, except as otherwise
provided in any stock options granted by Employer to Executive.
6.7 Mitigation. Executive shall not be required to mitigate
the amount of any payments or benefits provided for hereunder upon termination
of the Employment Period by seeking employment with any other person, or
otherwise, nor shall the amount of any such payments or benefits be reduced by
any compensation, benefit or other amount earned by, accrued for or paid to
Executive as the result of Executive's employment by or consultancy or other
association with any other person, provided, that any medical, dental or
hospitalization insurance or benefits provided to Executive with his employment
by or consultancy with an unaffiliated person during such period shall be
primary to the benefits to be provided to Executive pursuant to this Agreement
for the purposes of coordination of benefits.
6.8 Non-Compete. For the 6 month period following the
termination of the Employment Period for any reason whatsoever, including
termination pursuant to Section 6.4 (other than a termination by Executive
pursuant to Section 5.1, in which case the applicable period shall be one year)
and for so long as Employer is making and Executive is accepting the payments
required to be made to Executive pursuant to Section 6.1 or 6.4 hereof,
Executive shall not, directly or indirectly, (i) engage in any activities that
are in competition with the Company in any geographic area where the Company is
engaged in business, (ii) solicit any customer of the Company or (iii) solicit
any person who is then employed by the Company or was employed by the Company
within one year of such solicitation to (a) terminate his or her employment with
the Company, (b) accept employment with anyone other than the Company, or (c) in
any manner interfere with the business of the Company; provided, however, in the
event Executive violates any of the provisions of the foregoing at any time
after the expiration of 6 months (one year, in the case of a termination by
Executive pursuant to Section 5.1) following the termination of the Employment
Period, Employer's sole remedy under this Agreement shall be the right to
terminate any and all severance payments required under Section 6.1 or 6.4
hereof. Executive acknowledges and agrees that in the event of any violation or
threatened violation by Executive of his obligations under the preceding
sentence during the six month (or, in the case of a termination pursuant to
Section 5.1, the one year) period following the termination of the Employment
Period, Employer shall be entitled to injunctive relief without any necessity to
post bond.
7. Indemnification
The Company shall indemnify and hold Executive harmless from
and against any expenses (including attorneys' fees of the attorneys selected by
Executive to represent him, which shall be advanced as incurred), judgements,
fines and amounts paid in settlement incurred by him by reason of his being made
a party or threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of any act or omission to act by Executive during or
before the Employment Period or otherwise by reason of the fact that he is or
was a director or officer of Employer or any subsidiary or affiliate included as
a part of the Company, to the fullest extent and in the manner set forth and
permitted by the General Corporation Law of the State of Delaware and any other
applicable law as from time to time in effect. The provisions of this Section 7
shall survive any termination of the Employment Period or any deemed termination
of this Agreement.
8. Miscellaneous.
8.1 Notices. Any notice, consent or authorization required or
permitted to be given pursuant to this Agreement shall be in writing and sent to
the party for or to whom intended, at the address of such party set forth below,
by registered or certified mail, postage paid (deemed given five days after
deposit in the U.S. mails) or personally or by facsimile transmission (deemed
given upon receipt), or at such other address as either party shall designate by
notice given to the other in the manner provided herein.
If to Employer: Jos. A. Bank Clothiers, Inc.
500 Hanover Pike
Hampstead, Maryland 21074-2095
Attn: Secretary
With a copy to: Ralph J. Sutcliffe, Esq.
Kronish, Lieb, Weiner & Hellman
1114 Avenue of the Americas
New York, New York 10036
If to Executive: Mr. Timothy F. Finley
Jos. A. Bank Clothiers, Inc.
500 Hanover Pike
Hampstead, Maryland 21074-2095
8.2 Legal Fees. The Company shall pay the reasonable legal
fees and expenses incurred by Executive in connection with preparation,
negotiation, execution and delivery of this Agreement, as well as such fees and
expenses incurred in connection with any amendment or modification hereof or
enforcement of Executive's rights hereunder.
8.3 Taxes. Employer is authorized to withhold (from any
compensation or benefits payable hereunder to Executive) such amounts for income
tax, social security, unemployment compensation and other taxes as shall be
necessary or appropriate in the reasonable judgment of Employer to comply with
applicable laws and regulations.
8.4 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed therein.
8.5 Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
Baltimore, Maryland in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitration award in
any court having jurisdiction; provided, however, that Executive shall be
entitled to seek specific performance of his right to be paid until expiration
of the Employment Period during the pendency of any arbitration.
8.6 Headings. All descriptive headings in this Agreement are
inserted for convenience only and shall be disregarded in construing or applying
any provision of this Agreement.
8.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
8.8 Severability. If any provision of this Agreement, or any
part thereof, is held to be unenforceable, the remainder of such provision and
this Agreement, as the case may be, shall nevertheless remain in full force and
effect.
8.9 Entire Agreement and Representation. This Agreement
contains the entire agreement and understanding between Employer and Executive
with respect to the subject matter hereof. No representations or warranties of
any kind or nature relating to the Company or its several businesses, or
relating to the Company's assets, liabilities, operations, future plans or
prospects have been made by or on behalf of Employer to Executive. This
Agreement supersedes any prior agreement between the parties relating to the
subject matter hereof.
8.10 Successor and Assigns. This Agreement shall be binding
upon and inure to the benefit of each of the parties hereto and their respective
successors, heirs (in the case of Executive) and assigns.
[signatures on next page]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
JOS. A. BANK CLOTHIERS, INC.
By:_________________________
Name:_______________________
Title:______________________
____________________________
Timothy F. Finley
AMENDMENT TO FINLEY EMPLOYMENT AGREEMENT
AMENDMENT TO FINLEY EMPLOYMENT AGREEMENT, dated as of January 29, 1994,
between TIMOTHY F. FINLEY ("Executive") and JOS. A. BANK CLOTHIERS, INC.
("Clothiers").
WHEREAS, Executive, Clothiers and The Finley Group, Inc. ("Finley
Group") entered into a Management Agreement dated as of May 10, 1991, under
which Finley Group caused Executive to provide certain services to Clothiers
(the "Management Agreement"), which agreement was amended by an Amendment dated
August 24, 1992, and further amended by an Amendment and Novation Agreement
dated as of May 1, 1993, which Amendment and Novation Agreement substituted
Executive for Finley Group so that Finley's services are provided directly to
Clothiers (the Management Agreement, as so amended, the "Employment Agreement");
WHEREAS, Executive is currently employed by Clothiers under
the Employment Agreement;
WHEREAS, the Employment Agreement provides, in Section 6 thereof, that
the Executive is entitled to receive certain payments upon the occurrence of
certain events described in such Section 6;
WHEREAS, Clothiers proposes to enter into the Merger and Exchange
Agreement, of even date herewith, with JAB Holdings, Inc. ("Holdings") and each
of the Preferred Shareholders listed therein (the "Merger and Exchange
Agreement"), whereby, among other things, Holdings shall be merged (the
"Merger") into Clothiers;
WHEREAS, Executive and Clothiers deem it desirable that, in connection
with the Merger, Executive shall surrender his rights under Section 6 of the
Employment Agreement, in exchange for shares of common stock of Clothiers
("Common Stock"), upon the terms and conditions of this Amendment;
WHEREAS, it is condition precedent to the Merger that Executive and
Clothiers enter into this Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Section 6 of the Employment Agreement is deleted in its entirety,
and replaced with the following:
6. Issuance of Stock and Option.
Concurrently with consummation of the Merger:
(a) Clothiers shall issue to Executive 210,144
shares of Common Stock (the "Shares"), and shall deliver to Executive a stock
certificate, registered in the name of Executive, representing the Shares (net
of 72,395 Shares being withheld by Clothiers for payment of related payroll and
withholding taxes by Clothiers (the "Withheld Shares"). The surrender of
Executive's rights under Section 6 of the Employment Agreement as heretofore in
effect, accomplished by the execution of this Amendment, shall constitute full
and complete payment for the Shares;
(b) Immediately following the issuance of the Shares,
Executive shall sell to Clothiers, and Clothiers shall purchase, 41,061 of the
Shares for an aggregate cash purchase price equal to $376,529, and Executive
shall deliver to Clothiers the certificate representing the
Shares for cancellation of the number of Shares sold to Clothiers pursuant to
the provisions of this subparagraph (b) and reissuance of a certificate
representing the balance of the Shares;
(c) Clothiers will grant to Executive a non-qualified
stock option in form and substance as annexed to this Amendment as an exhibit to
purchase the number of Shares sold by Executive to Clothiers pursuant to
subparagraph (b) above, plus the number of Withheld Shares.
2. The second sentence of Section 13 of the Employment Agreement is
amended by deleting the portion thereof which reads "Except as provided in
Section 6(e) hereof, neither" and replacing such portion with "Neither".
3. Except as expressly amended hereby, the Employment Agreement shall
continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
____________________________
TIMOTHY F. FINLEY
JOS. A. BANK CLOTHIERS, INC.
By:_________________________
Name:
Title:
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of March 31, 1994, between HENRY C.
SCHWARTZ ("Executive") and JOS A. BANK CLOTHIERS, INC. ("Employer").
WHEREAS, the parties hereto are parties to an Employment Agreement,
dated as of May 10, 1991, as amended from time to time (the "Previous
Agreement") pursuant to which Executive is currently serving as the President
and Chief Merchandising Officer of Employer.
WHEREAS, the parties wish by this Employment Agreement to provide for
the terms of the continued employment of Executive and to terminate the Previous
Agreement, except with respect to Section 6 thereof which was the subject of an
amendment to the Previous Agreement, dated as of January 29, 1994, a copy of
which is attached hereto ("Section 6 of the Previous Agreement, as amended").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. Employment of Executive; Termination of Previous Agreement
Employer hereby agrees to employ Executive, and Executive
hereby agrees to be and remain in the employ of Employer, upon the terms and
conditions hereinafter set forth. Employer and Executive hereby agree that upon
the execution hereof, the Previous Agreement shall be deemed terminated except
with respect to Section 6 of the Previous Agreement, as amended, which shall
continue in full force and effect and be deemed a part of this Agreement. This
Agreement is a contract for personal services of Executive and services pursuant
hereto may only be performed by Executive.
2. Employment Period
The term of Executive's employment under this Agreement (the
"Employment Period") shall commence as of the date hereof and shall, subject to
earlier termination as provided in Section 5, continue for a period of three
years after commencement and be automatically renewed thereafter for successive
one-year periods unless, at least 180 days before the end of the initial
three-year period or any subsequent one-year period, either party gives notice
to the other of his or its desire to terminate the Employment Period, in which
case the Employment Period shall terminate as of the end of such period.
3. Duties and Responsibilities
3.1 General. During the Employment Period, Executive (i) shall
have the title of President and Chief Merchandising Officer and (ii) shall
devote substantially all of his business time and expend his best efforts,
energies and skills to the business of the Company. The preceding sentence shall
not be construed to prohibit Executive from continuing to devote more than an
insignificant amount of time, in accordance with his past practice, to
management of his investments, serving on boards of directors, serving as and
participation in civic and philanthropic activities.
Executive shall perform such duties, consistent with his
status as President and Chief Merchandising Officer of Employer, as he may be
assigned from time to time by Employer's Chief Executive Officer or the Board of
Directors. Executive shall have such authority, discretion, power and
responsibility, and shall be entitled to office, secretarial and administrative
and other facilities and conditions of employment, as are customary or
appropriate to his position and those currently exercised by and afforded to
him. Executive shall also serve without additional compensation as a director
of the Company and, if he should so desire, any of its subsidiaries. For all
purposes of this Agreement, the term "Company" means Employer and all
corporations, associations, companies, partnerships, firms and other enterprises
controlled by or under common control with Employer.
3.2 Location of Executive Offices. The Company will maintain
its principal executive offices at a location in any state on the eastern coast
of the United States from and including South Carolina to and including New
York. Executive shall not be required to perform services for the Company at any
other location, except for services rendered in connection with required travel
on the Company's business to an extent not substantially in excess of
Executive's past travel commitments for the Company.
4. Compensation and Related Matters
4.1 Base Salary. Employer shall pay to Executive during the
Employment Period an annual base salary (the "Base Salary") equal to the sum of
(a) $335,000, subject to such raises as the Compensation Committee (the
"Committee") of the Board of Directors of the Company or the Board of Directors
may from time to time determine in their sole discretion (the "Salary") and (b)
the "cost of living adjustment" (as determined below). The "cost of living
adjustment" shall be determined on each January 1 (or as soon as practicable
thereafter) of the Employment Period, commencing January 1, 1995, and shall be
an amount that equals the greater of (x) $0 or (y) the difference between (i)
the Salary multiplied by a fraction, (A) the numerator of which shall be the
Consumer Price Index for Urban Wage Earners and Clerical Workers (1967 = 100)
(the "Index"), published by the Bureau of Labor Statistics of the United States
Department of Labor in the column for the Baltimore, Maryland area entitled "All
Items" for the month of January for the calendar year for which the cost of
living adjustment is to be determined and (B) the denominator of which shall be
such Index number for the month in which the date of this Agreement falls and
(ii) the Salary. Any portion of increased Base Salary which is retroactively due
to Executive hereunder shall be payable within 15 days after the computation
thereof has been made. Appropriate adjustment shall be promptly made following
receipt of notice from Executive in the event there is a published amendment of
the Index figures upon which the computation is based. If publication of the
Index is discontinued, the parties shall accept comparable statistics on the
cost of living for the Baltimore, Maryland area as computed and published by any
recognized authority acceptable to the parties. The Base Salary for each
calendar year shall be payable in installments in accordance with the Company's
policy on payment of executives in effect from time to time.
4.2 Annual Bonus. For fiscal year 1995 (ending January 28,
1995) and for each fiscal year that begins during the Employment Period (each
such fiscal year, a "Bonus Year"), Executive shall be entitled to receive a
bonus of 50% of Base Salary (each, a "Bonus") based upon attainment of annual
quantitative and qualitative performance goals established by the Committee for
such Bonus Year in consultation with Executive, such performance goals to be
established as soon as possible following the beginning of each Bonus Year. The
relationship between the size of each Bonus and degree of attainment of
performance objectives shall be discretionary with the Committee. Bonus earned
for any Bonus Year shall be payable promptly following the determination
thereof, but in no event later than 90 days following the end of each Bonus
Year. The Bonus payable for the Bonus Year in which the Employment Period
terminates shall equal the Bonus that would have been paid had the Employment
Period not so terminated, multiplied by a fraction, the numerator of which shall
be the number of days of the Employment Period within the Bonus Year and the
denominator of which shall be 365.
4.3 Life Insurance. Employer shall maintain in effect at all
times during the Employment Period, at Employer's expense, a policy of term life
insurance, or such other type of policy as Executive shall request provided that
the cost to Employer thereof is approximately the same as the cost of such term
policy, on the life of Executive in the amount of not less than $1,000,000
naming such person as Executive shall designate from time to time as the owner
and beneficiary thereof. Executive agrees that Employer shall have the right to
obtain other life insurance on Executive's life, at Employer's sole expense and
with Employer or an affiliate thereof as the sole beneficiary thereof. Executive
shall (i) cooperate fully with Employer in obtaining all such insurance, (ii)
sign any necessary consents, applications and other related forms or documents,
and (iii) take any required medical examinations.
4.4 Automobile. Throughout the Employment Period, Employer
shall provide to Executive, at Employer's expense, a top-of-the-line Cadillac,
Lincoln, Lexus or comparable luxury automobile selected by Executive on a
biannual basis and equipped to Executive's satisfaction. Employer shall also be
responsible for all expenses of use and operation thereof.
4.5 Other Benefits. During the Employment Period, subject to,
and to the extent Executive is eligible under their respective terms, Executive
shall be entitled to receive such fringe benefits as are, or are from time to
time hereafter, generally provided by Employer to Employer's senior management
employees or other employees (other than those provided under or pursuant to
separately negotiated individual employment agreements or arrangements) under
any pension or retirement plan, disability plan or insurance, group life
insurance, medical and dental insurance, travel accident insurance, stock
option, phantom stock or other similar plan or program of Employer. Executive's
Base Salary shall (where applicable) constitute the compensation on the basis of
which the amount of Executive's benefits under any such plan or program shall be
fixed and determined. If, during the Employment Period, any plan or program in
which Executive participates (including those in which Executive currently
participates) shall be amended so as to result in an overall reduction of
Executive's benefits, or shall be terminated without being replaced by a new
plan or program providing for benefits equivalent overall to those provided for
Executive prior thereto, the Company shall make arrangements, in addition to any
such amended or terminated plan or program, for Executive to participate in a
plan or program so as to provide benefits to Executive at least equivalent
overall to those provided to Executive prior to such amendment or termination,
such benefits to be provided through a plan or program of insurance if
commercially available.
4.6 Expense Reimbursement. Employer shall reimburse Executive
for all business expenses reasonably incurred by him in the performance of his
duties under this Agreement and consistent with past practice upon his
presentation, not less frequently than monthly, of signed, itemized accounts of
such expenditures, all in accordance with Employer's procedures and policies as
adopted and in effect from time to time and applicable to its senior management
employees. Without limiting the generality of the foregoing, Employer shall
continue to pay for all of Executive's reasonable travel expenses incurred in
traveling from and to his permanent residence in New York and his reasonable
living expenses while the Executive is residing in the Baltimore, Maryland area,
including, without limitation, hotel or other residential accommodation expenses
and meals, all such amounts to be treated as additional salary for all
securities acts reporting purposes.
4.7 Vacations. Executive shall be entitled to 20 days of
vacation during each calendar year, which shall accrue in accordance with the
Company's vacation policy in effect from time to time for its senior executive
officers, with reasonable carry-over allowances, which vacations shall be taken
at such time or times as shall not unreasonably interfere with Executive's
performance of his duties under this Agreement. Upon termination of Executive's
employment pursuant to Section 5 herein or non-renewal of the Employment Period
as provided for under Section 2 herein, for any reason whatsoever, Employer
shall pay Executive, in addition to any termination compensation provided
for under Section 6 herein, all unused vacation benefits, including any
carry-over, due Executive as of the date of termination, to be computed at the
Executive's then current Base Salary rate.
4.8 Tax Gross-up. In the event that any payments made by
Employer to or on behalf of Executive pursuant to the provisions of Section 4.3
through 4.6 hereof result in the payment of additional federal, state or local
income taxes by Executive, Employer shall pay to Executive the amount of such
additional taxes plus such additional amount as shall be necessary to hold
harmless Executive, as nearly as can be, from the obligation to pay such taxes
in respect of amounts payable pursuant to this Section 4.8.
5. Termination of Employment Period
5.1 Termination Without Cause. Employer or Executive may, by
delivery of not less than 60 days' notice to the other at any time during the
Employment Period, terminate the Employment Period without cause.
5.2 By Employer for Cause. Employer may, at any time during
the Employment Period by notice to Executive in accordance with and only after
full compliance with the procedure set forth herein terminate the Employment
Period "for cause" effective immediately. For the purposes hereof, "for cause"
means:
(i) the conviction of Executive in a court of
competent jurisdiction of a crime
constituting a felony in such jurisdiction
involving money or other property of
Employer or any of its affiliates or any
other felony involving moral turpitude; or
(ii) the willful (a) commission of an act not
approved of or ratified by the Board of
Directors involving a serious and material
conflict of interest or self-dealing
relating to any material aspects of Employer
or any such subsidiary or affiliate thereof;
or (b) commission of an act of fraud or
misrepresentation (including the omission of
material facts), provided that such acts
relate to the business of Employer and would
materially and negatively impact upon
Employer and its business; or (c) material
failure of Executive to obey directions of
the Board of Directors that are consistent
with Executive's status of Chief Executive
Officer; however, for the purposes of this
subsection (ii), the refusal of Executive to
comply with an order or directive of anyone
other than the majority of the Board of
Directors, or the refusal of Executive to
perform an act which is contrary to his
duties, responsibilities and/or authority as
Chief Executive Officer or is unlawful shall
not constitute "for cause". In the event of
an act or omission as provided for in this
subsection 5.2(ii), Employer shall provide
Executive with a written notice of intent to
terminate the Employment Period "for cause",
setting forth, with reasonable
particularity, the reasons and acts or
omissions constituting "cause" under this
subsection, and shall provide Executive with
at least thirty (30) calendar days after
such notice to cure or eliminate the problem
or violation giving rise to such cause or
any longer period as reasonably needed by
Executive, provided that it is susceptible
to cure or elimination and Executive is
proceeding diligently and in good faith to
cure such violation. In the event and only
after the Executive fails to cure the
problem or violation within the period
provided for herein, Employer may exercise
its right to terminate the Employment Period
in accordance with the procedure set forth
below.
Termination "for cause" shall be effected only if (A) Employer
has delivered to Executive a copy of a written notice of termination "for
cause", setting forth, with reasonable particularity, the reasons for such "for
cause" termination, and (B) has provided Executive with, on at least ten (10)
business days' prior written notice, in the case of a termination pursuant to
subsection 5.2(ii) the opportunity, together with Executive's counsel, to be
heard before Employer's Board of Directors, said hearing to occur at such
reasonable time and place that is mutually convenient to Executive, his counsel,
and Employer, and (C) Employer's Board of Directors (after such notice and
opportunity to be heard has been provided to Executive in the case of a
termination pursuant to subsection 5.2(ii), adopts a resolution concurred in by
not less than majority of all of the directors of Employer then in office,
including at least two-thirds of all of the directors who are not officers of
Employer, that Executive was guilty of conduct constituting "for cause"
hereunder, which conduct has not been cured (if applicable), and specifying the
particulars thereof in detail.
5.3 By Executive for Good Reason. Executive may, at any time
during the Employment Period by notice to Employer, terminate the Employment
Period under this Agreement "for good reason" effective immediately. For the
purposes hereof, "good reason" means (i) any material breach by Employer of any
provision of this Agreement which , if susceptible of being cured, is not cured
within 30 days of delivery of notice thereof to Employer by Executive or (ii)
the occurrence of a change in control (as hereinafter defined) of Employer
provided that not more than 90 days shall have elapsed subsequent to Executive's
becoming aware of the occurrence of the change in control. Without limitation of
the generality of the foregoing, each of the following shall be deemed to be a
material breach of this Agreement by Employer: (x) any failure timely to pay (or
any reduction in) compensation (including benefits) paid or payable to Executive
pursuant to the provisions of Section 4 hereof; (y) any reduction in the duties,
responsibilities or perquisites of Executive as provided in Section 3.1 hereof
and (z) any transfer of the Company's principal executive offices outside the
geographic area described in Section 3.2 hereof or requirement that Executive
principally perform his duties outside such geographic area.
For purposes of this Agreement, a "change in control" of the
Company shall be deemed to have occurred if, as a result of a single transaction
or a series of transactions, (A) any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than a trustee or other fiduciary holding securities
under any employee benefit plan of the Company or a corporation owned, directly
or indirectly, by the stockholders of the Company (including any nominee
corporation that holds shares of the Company on behalf of the beneficial owners
of such corporation), in substantially the same proportions as their ownership
of stock of the Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 51% or more of the combined voting power of the
Company's then outstanding securities; or (B) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act, other than a trustee or
other fiduciary holding securities under any employee benefit plan of the
Company or a corporation owned, directly or indirectly, by the stockholders of
the Company (including any nominee corporation that holds shares of the Company
on behalf of the beneficial owners of such corporation), in substantially the
same proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities and there
are at least a majority of directors serving on the Board of Directors who
were not serving in such capacity as of the date hereof or who were not elected
with the consent of the Executive; or (C) the shareholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity) at least 70% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the shareholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets;
provided, however, the change in ownership of the Company securities resulting
from the initial public offering thereof shall not be deemed a "change in
control" for purposes of this Agreement.
5.4 Disability. During the Employment Period, if, as a result
of physical or mental incapacity or infirmity (including alcoholism or drug
addiction), Executive shall be unable to perform his material duties under this
Agreement for (i) a continuous period of at least 180 days, or (ii) periods
aggregating at least 270 days during any period of 12 consecutive months (each a
"Disability Period"), and at the end of the Disability Period there is no
reasonable probability that Executive can promptly resume his material duties
hereunder pursuant hereto, Executive shall be deemed disabled ("the Disability")
and Employer, by notice to Executive, shall have the right to terminate the
Employment Period for Disability at, as of or after the end of the Disability
Period. The existence of the Disability shall be determined by a reputable,
licensed physician mutually selected by Employer and Executive, whose
determination shall be final and binding on the parties, provided, that if
Employer and Executive cannot agree upon such physician, such physician shall be
designated by the then acting President of the Baltimore City Medical Society,
and if for any reason such President shall fail or refuse to designate such
physician, such physician shall, at the request of either party, be designated
by the American Arbitration Association. Executive shall cooperate in all
reasonable respects to enable an examination to be made by such physician.
5.5 Death. The Employment Period shall end on the date of
Executive's death.
6. Termination Compensation; Non-Compete
6.1 Termination Without Cause by Employer or for Good Reason
by Executive. If the Employment Period is terminated by Employer pursuant to the
provisions of Section 5.1 hereof or by Executive pursuant to the provisions of
Section 5.3 hereof, Employer will pay to Executive (i) the greater of (a) the
Base Salary for the balance of the Employment Period, or (b) Base Salary for one
(1) year, calculated in each case, at the applicable Base Salary rate which
would have been in effect for each year during the balance of Employment Period,
assuming no termination, payable in equal installments at the times Base Salary
would have been paid had the Employment Period not been terminated; and (ii) on
the date due pursuant to the provisions of Section 4.2 hereof, the Bonus for the
then current Bonus Year prorated as provided in Section 4.2; provided, however,
in the event the Employment Period is terminated by Executive because of a
"change in control" pursuant to Section 5.3 (ii), then clause (i) of this
sentence shall be modified to read: "the Base Salary for the period which is the
greater of (a) eighteen (18) months or (b) the balance of the Employment Period
not to exceed twenty-four (24) months (calculated, in each case, at the
applicable Base Salary rate which would have been in effect for each year during
the balance of the Employment Period, assuming no termination) payable in equal
installments at the times Base Salary would have been paid had the Employment
Period not been terminated." All other benefits provided for in Sections 4.3,
4.4, 4.5 and 4.8 shall be continued at the expense of Employer for the period
that payments are required to be made pursuant to the preceding provisions of
this Section 6.1.
6.2 Certain Other Terminations. If the Employment Period is
terminated by Employer pursuant to the provisions of Section 5.2, by Executive
pursuant to Section 5.1, or by death, pursuant to the provisions of Section 5.5,
Employer shall pay to Executive (i) Base Salary (calculated at its then current
rate per year) through the date of termination and (ii) in the case of
termination by death pursuant to the provisions of Section 5.5, when due
pursuant to provisions of Section 4.2 the Bonus for the Bonus Year in which the
date of termination occurred prorated as provided in said Section 4.2. Employer
shall have no obligation to continue any other benefits provided for in Section
4 past the date of termination.
6.3 Termination for Disability. If the Employment Period is
terminated by Employer pursuant to the provisions of Section 5.4, Employer shall
make all payments and continue all benefits provided for in Section 6.1 for the
balance of the Employment Period (assuming no termination), provided, however,
that such payments shall be reduced by any amounts actually paid to Executive
pursuant to any disability insurance or other such similar program maintained by
Employer.
6.4 Tax Grossup. In the event that any amounts paid to
Executive pursuant to the provisions of this Section 6 (including benefits
continued and payments deemed received by reason of changes in stock options
provided for therein, all such amounts, collectively, the "Severance Payments")
shall be deemed to be subject to the tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Excise Tax"), an additional amount (the
"Grossup Amount") shall be paid by Employer to Executive such that the net
amount retained by Executive, after deduction of any Excise Tax on the Severance
Payments and any federal, state and local income tax and Excise Tax upon the
payment provided for by this sentence, shall be equal to the Severance Payments.
The provisions of this Section 6.4 shall survive the expiration of the
Employment Period and shall continue in effect until expiration of the statute
of limitations for tax returns filed that include the period in which any
Severance Payments are made or, if earlier, final determination of tax liability
relating thereto. Payment of the Grossup Amount shall be made in accordance with
the computation thereof by the accountant to Executive in connection with
preparation of Executive's tax return for the relevant tax year, and shall be
adjusted upon final determination of tax liability, with any increase therein
being paid by the Employer to Executive or decrease therein being paid by
Executive to Employer within 30 days following the date of final determination
of tax liability.
6.5 No Other Termination Compensation. Executive shall not,
except as set forth in this Section 6 and in Section 4.7, be entitled to any
compensation following termination of the Employment Period, except as otherwise
provided in any stock options granted by Employer to Executive.
6.6 Mitigation. Executive shall not be required to mitigate
the amount of any payments or benefits provided for hereunder upon termination
of the Employment Period by seeking employment with any other person, or
otherwise, nor shall the amount of any such payments or benefits be reduced by
any compensation, benefit or other amount earned by, accrued for or paid to
Executive as the result of Executive's employment by or consultancy or other
association with any other person, provided, that any medical, dental or
hospitalization insurance or benefits provided to Executive with his employment
by or consultancy with an unaffiliated person during such period shall be
primary to the benefits to be provided to Executive pursuant to this Agreement
for the purposes of coordination of benefits.
6.7 Non-Compete. For the 6 month period following the
termination of the Employment Period for any reason whatsoever, including
termination pursuant to Section 6.4 (other than a termination by Executive
pursuant to Section 5.1, in which case the applicable period shall be one year)
and for so long as Employer is making and Executive is accepting the payments
required to be made to Executive pursuant to Section 6.1 hereof, Executive shall
not, directly or indirectly, (i) engage in any activities that are in
competition with the Company in any geographic area where the Company is engaged
in business, (ii) solicit any customer of the Company or (iii) solicit any
person who is then employed by the Company or was employed by the Company within
one year of such solicitation to (a) terminate his or her employment with the
Company, (b) accept employment with anyone other than the Company, or (c) in any
manner interfere with the business of the Company; provided, however, in the
event Executive violates any of the provisions of the foregoing at any time
after the expiration of 6 months (one year, in the case of a termination by
Executive pursuant to Section 5.1) following the termination of the Employment
period, Employer's sole remedy under this Agreement shall be the right to
terminate any and all severance payments required under Section 6.1 hereof.
Executive acknowledges and agrees that in the event of any violation or
threatened violation by Executive of his obligations under the preceding
sentence during the six month (or, in the case of a termination pursuant to
Section 5.1, the one year) period following the termination of the Employment
Period, Employer shall be entitled to injunctive relief without any necessity to
post bond.
7. Indemnification
The Company shall indemnify and hold Executive harmless from
and against any expenses (including attorneys' fees of the attorneys selected by
Executive to represent him, which shall be advanced as incurred), judgements,
fines and amounts paid in settlement incurred by him by reason of his being made
a party or threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of any act or omission to act by Executive during or
before the Employment Period or otherwise by reason of the fact that he is or
was a director or officer of Employer or any subsidiary or affiliate included as
a part of the Company, to the fullest extent and in the manner set forth and
permitted by the General Corporation Law of the State of Delaware and any other
applicable law as from time to time in effect. The provisions of this Section 7
shall survive any termination of the Employment Period or any deemed termination
of this Agreement.
8. Miscellaneous.
8.1 Notices. Any notice, consent or authorization required or
permitted to be given pursuant to this Agreement shall be in writing and sent to
the party for or to whom intended, at the address of such party set forth below,
by registered or certified mail, postage paid (deemed given five days after
deposit in the U.S. mails) or personally or by facsimile transmission (deemed
given upon receipt), or at such other address as either party shall designate by
notice given to the other in the manner provided herein.
If to Employer: Jos. A. Bank Clothiers, Inc.
500 Hanover Pike
Hampstead, MD 21074-2095
Attn: Secretary
With copy to: Ralph J Sutcliffe, Esq.
Kronish, Lieb, Weiner & Hellman
1114 Avenue of the Americas
New York, NY 10036
If to Executive: Mr. Henry C. Schwartz
Jos. A. Bank Clothiers, Inc.
500 Hanover Pike
Hampstead, MD 21074-2095
8.2 Legal Fees. The Company shall pay the reasonable legal
fees and expenses incurred by Executive in connection with preparation,
negotiation, execution and delivery of this Agreement, as well as such fees and
expenses incurred in connection with any amendment or modification hereof or
enforcement of Executive's rights hereunder.
8.3 Taxes. Employer is authorized to withhold (from any
compensation or benefits payable hereunder to Executive) such amounts for income
tax, social security, unemployment compensation and other taxes as shall be
necessary or appropriate in the reasonable judgment of Employer to comply with
applicable laws and regulations.
8.4 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed therein.
8.5 Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
Baltimore, Maryland in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitration award in
any court having jurisdiction; provided, however, that Executive shall be
entitled to seek specific performance of his right to be paid until expiration
of the Employment Period during the pendency of any arbitration.
8.6 Headings. All descriptive headings in this Agreement are
inserted for convenience only and shall be disregarded in construing or applying
any provision of this Agreement.
8.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
8.8 Severability. If any provision of this Agreement, or any
part thereof, is held to be unenforceable, the remainder of such provision and
this Agreement, as the case may be, shall nevertheless remain in full force and
effect.
8.9 Entire Agreement and Representation. This Agreement
contains the entire agreement and understanding between Employer and Executive
with respect to the subject matter hereof. No representations or warranties of
any kind or nature relating to the Company or its several businesses, or
relating to the Company's assets, liabilities, operations, future plans or
prospects have been made by or on behalf of Employer to Executive. This
Agreement supersedes any prior agreement between the parties relating to the
subject matter hereof.
8.10 Successor and Assigns. This Agreement shall be binding
upon and inure to the benefit of each of the parties hereto and their respective
successors, heirs (in the case of Executive) and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
JOS. A. BANK CLOTHIERS, INC.
By:_________________________
Name:_______________________
Title:______________________
____________________________
Henry C. Schwartz
AMENDMENT TO SCHWARTZ EMPLOYMENT AGREEMENT
AMENDMENT TO SCHWARTZ EMPLOYMENT AGREEMENT,udated as of January 29,
1994, between HENRY C. SCHWARTZ ("Executive") and JOS. A. BANK CLOTHIERS, INC.
("Clothiers").
WHEREAS, Executive and Clothiers are parties to an Employment Agreement
dated as of May 10, 1991 (the "Employment Agreement"), under which Executive has
been and continues to be employed by Clothiers;
WHEREAS, the Employment Agreement provides, in Section 6 thereof, that
the Executive is entitled to receive certain payments upon the occurrence of
certain events described in such Section 6;
WHEREAS, Clothiers proposes to enter into a Merger and Exchange
Agreement, of even date herewith, with JAB Holdings, Inc. ("Holdings") and each
of the Preferred Shareholders listed therein (the "Merger and Exchange
Agreement"), whereby, among other things, Holdings shall be merged (the
"Merger") into Clothiers;
WHEREAS, Executive and Clothiers deem it desirable that, in connection
with the Merger, Executive shall surrender his rights under Section 6 of the
Employment Agreement, in exchange for shares of common stock of Clothiers
("Common Stock"), upon the terms and conditions of this Amendment;
WHEREAS, it is a condition precedent to the Merger that Executive and
Clothiers enter into this Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Section 6 of the Employment Agreement is deleted in its entirety,
and replaced with the following:
6. Issuance of Stock and Option.
Concurrently with consummation of the Merger:
(a) Clothiers shall issue to Executive 163,409
shares of Common Stock (the "Shares"), and shall deliver to Executive a stock
certificate, registered in the name of Executive, representing the Shares (net
of 56,294 Shares being withheld by Clothiers for payment of related payroll and
withholding taxes by Clothiers (the "Withheld Shares"). The surrender of
Executive's rights under Section 6 of the Employment Agreement as heretofore in
effect, accomplished by the execution of this Amendment, shall constitute full
and complete payment for the Shares;
(b) Immediately following the issuance of the Shares,
Executive shall sell to Clothiers, and Clothiers shall purchase, 39,665 of the
Shares for an aggregate cash purchase price equal to $363,728, and Executive
shall deliver to Clothiers the certificate representing the Shares for
cancellation of the number of Shares sold to Clothiers pursuant to the
provisions of this subparagraph (b) and reissuance of a certificate representing
the balance of the Shares;
(c) Clothiers will grant to Executive a non-qualified
stock option in form and substance as annexed to this Amendment as an exhibit to
purchase the number of Shares sold by Executive to Clothiers pursuant to
subparagraph (b) above, plus the number of Withheld Shares.
2. The second sentence of Section 13 of the Employment Agreement is
amended by deleting the portion thereof which reads "Except as provided in
Section 6(e) hereof, neither" and replacing such portion with "Neither".
3. Except as expressly amended hereby, the Employment Agreement shall
continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
____________________________
HENRY C. SCHWARTZ
JOS. A. BANK CLOTHIERS, INC.
By:_________________________
Name:
Title:
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
THIS AMENDMENT, dated as of February 3, 1996, by and between Henry C.
Schwartz ("Executive") and Jos. A. Bank Clothiers, Inc. ("Employer"), is made to
that certain Employment Agreement, dated March 31, 1994, between Executive and
Employer (the "Employment Agreement").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which
are hereby acknowledged, Executive and Employer hereby amend the Employment
Agreement and agree as follows:
1. Employment of Executive; Termination of Previous Agreement
No change is hereby made to Section 1 of the Employment Agreement.
2. Employment Period
Section 2 of the Employment Agreement is hereby deleted and the
following is hereby inserted in lieu thereof:
"The term of Executive's employment under this Agreement (the
"Employment Period") shall commence March 31, 1994 and shall,
subject to earlier termination as provided in Section 5,
terminate on December 31, 1997."
3. Duties and Responsibilities
3.1 General.
Section 3.1 of the Employment Agreement is hereby deleted and the
following is hereby inserted in lieu thereof:
"During the Employment Period, Executive shall serve as
Vice Chairman of the Company and shall perform such duties,
consistent with his status as Vice Chairman, as he may be
assigned from time to time by Employer's Chief Executive
Officer or Board of Directors. Executive shall have the use
of an office at Employer's Manhattan store, and the
facilities located therein, for the conduct of Company
business. Upon request of the Board of Directors, during the
Employment Period, Executive shall also serve without
additional compensation as a director of the Company and any
of its subsidiaries."
3.2. Location of Executive Offices. Section 3.2 of the Employment
Agreement is hereby deleted.
4. Compensation and Related Matters
4.1. Base Salary.
Section 4.1 of the Employment Agreement is hereby deleted and the
following is hereby inserted in lieu thereof:
"From February 4, 1996 through March 31, 1997 (the
"Initial Period"), Employer shall owe to Executive a base
salary (the "Base Salary") of $405,589. The Base Salary
shall be payable in equal (or nearly equal) installments from
February 3, 1996 through December 31, 1997, in accordance with
the Employer's policy on payment of executives in effect from
time to time. That portion of the Employment Period occurring
after the Initial Period is herein referred to the "Deferral
Period" and that portion of the Base Salary payable during the
Deferral Period (i.e. $161,408) is hereinafter referred to as
the "Deferred Portion". Notwithstanding the agreement of the
parties to defer payment of the Deferred Portion of the Base
Salary, $383.39 of the Base Salary shall be deemed earned for
each day elapse during the Initial Period, such that the
entire Base Salary shall be deemed earned by March 31, 1997.
In the event this Agreement shall be rejected in any
bankruptcy proceeding involving Employer, Executive shall have
a priority wage claim for that portion of the Base Salary
earned but unpaid. No salary other than the Deferred Portion
shall be payable during the Deferral Period."
No change is hereby made to any compensation paid or payable to Executive prior
to the date hereof.
4.2. Annual Bonus. Section 4.2 of the Employment Agreement is
hereby deleted.
4.3. Life Insurance. No change is hereby made to Section 4.3 of
the Employment Agreement.
4.4 Automobile. Section 4.4 of the Employment Agreement is hereby
deleted.
4.5 Other Benefits.
Section 4.5 of the Employment Agreement is hereby deleted and the
following is hereby inserted in lieu thereof:
"During the Employment Period, subject to, and to the extent
Executive is eligible under their respective terms, Executive
shall be entitled to medical, dental, long term disability
and supplemental life insurance coverages (not less than
$250,000) as are, or are from time to time hereafter,
generally provided by Employer to Employer's senior management
employees. Executive's annualized Base Salary shall (where
applicable) constitute the compensation on the basis of which
the amount of Executive's benefits under any such plan or
program shall be fixed and determined."
4.6 Expense Reimbursement.
Section 4.6 of the Employment Agreement is hereby deleted and the
following is hereby inserted in lieu thereof:
"Employer shall reimburse Executive for all business expenses
reasonably incurred by him directly in the performance of
his duties under this Amendment, upon his presentation,
not less frequently then monthly, of signed, itemized
accounts of such expenditures, all in accordance with
Employer's procedures and policies as adopted and in effect
from time to time and applicable to its senior employees."
4.7 Vacations. Section 4.7 of the Employment Agreement is hereby
deleted.
4.8 Tax Gross-up. No change is hereby made to Section 4.8 of the
Employment Agreement.
5. Termination of Employment Period
5.1. Termination Without Cause.
Section 5.1 of the Employment Agreement is hereby deleted and the
following is hereby inserted in lieu thereof:
"Employer or Executive may, by delivery of notice to the
other at any time during the Employment Period, terminate
the Employment Period without cause."
5.2 By Employer for Cause. No change is hereby made to Section
5.2 of the Employment Agreement.
5.3 By Executive for Good Reason. Section 5.3 of the Employment
Agreement is hereby deleted.
5.4 Disability. No change is hereby made to Section 5.4 of the
Employment Agreement.
5.5 Death. No change is hereby made to Section 5.5 of the
Employment Agreement.
6. Termination Compensation; Non-Compete.
6.1. Termination Without Cause by Employer.
Section 6.1 of the Employment Agreement is hereby deleted and the
following is hereby inserted in lieu thereof:
"If the Employment Period is terminated by Employer pursuant
to the provisions of Section 5.1 hereof, Employer shall
continue to make payments to Executive as and when such
payments otherwise would have been due pursuant to Section
4.1, assuming no termination. All other benefits provided
for in Sections 4.5, 4.6 and 4.8 shall be continued at the
expense of Employer for the period that payments are
required to be made pursuant to the preceding provisions of
this Section 6.1."
6.2. Certain Other Terminations.
Section 6.2 of the Employment Agreement is hereby deleted and the
following is hereby inserted in lieu thereof:
"If the Employment Period is terminated by Employer pursuant
to Section 5.2, by Executive pursuant to Section 5.1 or by
the death of Executive pursuant to Section 5.5, amounts
which otherwise would have been payable through the date of
termination pursuant to this Agreement shall be paid and
all other amounts (including earned but unpaid Base Salary)
shall be forefeited. In the event of termination by death
pursuant to the provisions of Section 5.5, Employer shall
pay to Sandy Schwartz (or such other payee as may be
designated by Executive in his Last Will and Testiment, or any
codicil thereto, or by notice to Employer) that amount of the
Base Salary earned but unpaid, as calculated pursuant to
Section 4.1, through the date of such termination. If
Executive shall terminate this Agreement with not less than
six months remaining in the Employment Period, Executive shall
be relieved of the non-competition restrictions set forth in
Section 6.7."
6.3. Termination for Disability. No change is hereby made to
Section 6.3 of the Employment Agreement.
6.4. Tax Gross-up. No change is hereby made to Section 6.4 of the
Employment Agreement.
6.5. No Other Termination Compensation. No change is hereby made
to Section 6.5 of the Employment Agreement.
6.6 Mitigation. No change is hereby made to Section 6.6 of the
Employment Agreement.
6.7 Non-Compete. No change is hereby made to Section 6.7 of the
Employment Agreement; provided, however, that during the remainder of the
Employment Period Employer shall not unreasonably withhold its consent to any
request by Executive that he be permitted to provide consulting services to one
or more companies that are not in competition with Company.
7. Indemnification
No change is hereby made to Section 7 of the Employment Agreement.
8. Miscellaneous
8.1 Notice. Any notice, consent or authorization required or
permitted to be given pursuant to the Employment Agreement shall be addressed as
follows, or to such other address as either party shall give the other:
If to Employer: Jos. A. Bank Clothiers, Inc.
500 Hanover Pike
Hampstead, Maryland 21074-2095
Attn: General Counsel
If to Executive: Mr. Henry C. Schwartz
50 Sutton Place South
Apt. 17A
New York, New York 10022
8.2 Legal Fees. Section 8.2 of the Employment Agreement is hereby
deleted.
8.3 Taxes. No change is hereby made to Section 8.3 of the
Employment Agreement.
8.4 Governing Law. No change is hereby made to Section 8.4 of the
Employment Agreement.
8.5 Arbitration. No change is hereby made to Section 8.5 of the
Employment Agreement.
8.6 Headings. No change is hereby made to Section 8.6 of the
Employment Agreement.
8.7 Counterparts. No change is hereby made to Section 8.7 of the
Employment Agreement.
8.8 Severability. No change is hereby made to Section 8.8 of the
Employment Agreement.
8.9 Entire Agreement and Representation. No change is hereby made
to Section 8.9 of the Employment Agreement.
8.10 Successor and Assigns. No change is hereby made to Section
8.10 of the Employment Agreement.
Except as specifically amended hereby, the Employment Agreement shall
remain in full force and effect according to its terms. To the extent of any
conflict between the terms of this Amendment and the terms of the Employment
Agreement, the terms of this Amendment shall control and prevail. Mention in
any provision of the Employment Agreement which is not deleted hereby of any
other provision of the Employment Agreement which is deleted hereby shall be
disregarded in the reading and interpretation of the Employment Agreement,
amended hereby. Terms used but not defined herein shall have those respective
meaning attributed to them in the Employment Agreement. This Amendment shall
hereafter be deemed a part of the Employment Agreement for all purposes.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
JOS. A. BANK CLOTHIERS, INC.
By:_____________________________________
Timothy F. Finley, Chairman, Chief
Executive Officer and President
________________________________________
HENRY C. SCHWARTZ
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of February 5, 1996, between FRANK TWORECKE
("Executive") and JOS. A. BANK CLOTHIERS, INC. ("Employer").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Employment of Executive
Employer hereby agrees to employ Executive, and Executive hereby agrees to
be and remain in the employ of Employer, upon the terms and conditions
hereinafter set forth. The Agreement is a contract for personal services of
Executive and services pursuant hereto may only be performed by Executive.
2. Employment Period
The term of Executive's employment under this Agreement (the "Employment
Period") shall commence as of February 5, 1996 and shall, subject to earlier
termination as provided in Section 5, continue for a period of three years after
commencement and be automatically renewed thereafter for successive one-year
periods unless, at least 180 days before the end of the initial three-year
period or any subsequent one-year period, either party gives notice to the other
of his or its desire to terminate the Employment Period, in which case the
Employment Period shall terminate as of the end of such period.
3. Duties and Responsibilities
3.1 General. During the Employment Period, Executive (i) shall have the
title of Executive Vice President and Chief Merchandising Officer and (ii) shall
devote substantially all of his business time and expend his best efforts,
energies and skills to the business of the Company. The preceding sentence shall
not be construed to prohibit Executive from continuing to devote more than an
insignificant amount of time, in accordance with his past practice, to
management of his investments, serving on Boards of Directors and participation
in civic and philanthropic activities.
Executive shall perform such duties, consistent with his status as
Executive Vice President and Chief Merchandising Officer of Employer, as he may
be assigned from time to time by Employer's Chief Executive Officer (the "Chief
Executive Officer") or Board of Directors (the "Board of Directors"). Executive
shall have such authority, discretion, power and responsibility, and shall be
entitled to such secretarial and administrative assistance and other facilities
and conditions of employment, as are customary or appropriate to his position.
Upon request of the Board of Directors, Executive shall also serve without
additional compensation as a director of the Company and any of its
subsidiaries. For all purposes of this Agreement, the term "Company" means
Employer and all corporations, associations, companies, partnership, firms and
other enterprises controlled by or under common control with Employer.
3.2 Location of Executive Offices. The Company will maintain its principal
executive offices at a location in any state on the eastern coast of the United
States from and including South Carolina to and including New York. Executive
shall not be required to perform services for the Company at any other location,
except for services rendered in connection with required travel on the Company's
business.
4. Compensation and Related Matters
4.1 Base Salary. Employer shall pay to Executive during the Employment
Period an annual base salary (the "Base Salary") of $200,000 for the first year
of the Employment Period ("Year 1"); $400,000 for the second year of the
Employment Period; and $400,000 for the third year of the Employment Period. The
Base Salary for each year shall be payable in installments in accordance with
the Company's policy on payment of executives in effect from time to time.
4.2 Annual Bonus. For fiscal year 1996 (ending February 4, 1997) and for
each fiscal year that begins during the Employment Period (each such fiscal
year, a "Bonus Year"), Executive shall be entitled to receive a bonus (each, a
"Bonus") as hereinafter set forth. The Bonus for Bonus Year 1996 shall be
$175,000, payable on or before February 1, 1997. For Bonus Year 1997 (ending
January 31, 1998), Executive shall be entitled to receive a Bonus of up to 50%
of Base Salary based upon the attainment of quantitative and qualitative
performance goals established by the Compensation Committee of the Board of
Directors (the "Committee") for such Bonus Year in consultation with Executive,
such performance goals (the "Performance Goals"). For Bonus Year 1998 (ending
January 30, 1999), and for each Bonus Year thereinafter, Executive shall be
entitled to receive a Bonus of up to 75% of Base Salary based upon attainment of
the Performance Goals for such Bonus Year. The relationship between the size of
each Bonus and degree of attainment of performance objectives shall be
discretionary with the Committee. The Performance Goals for each Bonus Year
shall be established as soon as possible following the beginning of such Bonus
Year. The Bonus earned for any Bonus Year shall be payable promptly following
the determination thereof, but in no event later than 90 days following the end
of each Bonus Year. The Bonus payable for the Bonus Year in which the Employment
Period terminates shall equal the Bonus that would have been paid had the
Employment Period not so terminate, multiplied by a fraction, the numerator of
which shall be the number of days of the Employment Period within the Bonus Year
and the denominator of which shall be 365.
4.3 Housing - The Ohio House. Executive is the owner of a house located in
Cincinnati, Ohio (the "Ohio House"). Executive shall use reasonable efforts to
sell the Ohio House for the fair market value thereof. Executive shall not
accept an offer to purchase the Ohio House for less than the fair market value
thereof without the consent of the Company, which consent shall not be
unreasonably withheld. Upon settlement of the Ohio House, the Company shall
reimburse Executive for (a) the Deficiency (as hereinafter defined), but not
more than $100,000 and (b) the reasonable costs and expenses incurred by
Executive in connection with the sale and settlement of the Ohio House, but not
more than $30,000. For the purposes hereof, the "Deficiency" shall mean the
difference (but not less than zero) obtained by subtracting the gross selling
price of the Ohio House from $550,000.00 (the purchase price paid by Executive
for the Ohio House plus the cost of capital improvements).
4.4 Housing - The Mortgage Loan. The Company shall loan to Executive the
sum of $200,000 (the "Mortgage Loan"), repayable over ten years (or less) as
hereinafter set forth, to assist with the purchase of a house to be selected or
built by Executive (the "New House"). The Mortgage Loan shall be evidenced by a
promissory note (the "Note") and secured by, at Employer's option, a mortgage or
deed of trust (the "Mortgage"). The Mortgage Loan shall be funded (a) at
settlement of the New House or (b) if Executive shall elect to build the New
House and purchase the land therefor separately, at settlement of said land;
provided, however, that Employer shall not be responsible for funding more than
80% of the cost of said land. The difference between $200,000 and the amount
funded for said land shall be funded as mutually agreed upon by Employer and
Executive, but not later than settlement on the completed New House. The
Mortgage shall secure no less than a second lien on the New House. The Mortgage
Loan shall bear interest at the applicable "Federal Rate" (as hereinafter
defined) in effect on the date of the Mortgage Loan. For the purposes hereof,
the "Federal Rate" shall mean that rate of interest, determined by Employer's
auditors in accordance with Internal Revenue Service regulations, necessary to
prevent interest on the Mortgage Loan from being imputed to Executive as income
and to Employer as expense. Interest only shall be due and payable on the
Mortgage Loan for the first five years thereof. Thereafter, the Mortgage Loan
shall be repayable in sixty, equal payments of principal, plus accrued and
unpaid interest. All payments shall be due on the first of each month, with
interest payable in arrears. Notwithstanding anything to the contrary contained
herein or in the Note or Mortgage, Executive shall not be required to make the
principal and/or interest payments otherwise due during the Employment Period
and the Employer shall credit the Mortgage Loan account as if such payments had
been timely made. Amounts so credited shall be deemed forgiven and Executive
shall not be liable for repayment thereof. In the event (a) Executive shall
remain in the employ of Employer for at least 10 consecutive years; (b) Employer
shall terminate this Agreement without cause (Section 5.1); (c) Executive
shall terminate this Agreement for good reason (Section 5.3); (d) this Agreement
shall terminate or be terminated as a result of the death (Section 5.5) or
disability (Section 5.4) of Executive; (e) Employer (or any trustee of Employer)
shall reject this Agreement pursuant to powers granted under the United States
Bankruptcy Code (11 U.S.C. ss.ss. 101 et seq.), or any successor statute
thereto, and either (i) Employer and Executive, each acting in his/its sole
and absolute subjective discretion, shall fail to agree upon terms and
conditions for Executive's continued employment with Employer or (ii)
Executive, in his sole and absolute subjective discretion, shall fail to accept,
and thereafter Employer shall fail to withdraw its demand for, any proposed
revision in the terms and conditions of the Mortgage Loan; or (f) Employer shall
give notice of termination pursuant to Section 2 of this Agreement, then, and
in any of such events, the Mortgage Loan, and all interest due thereon, shall
be deemed paid in full. In the event (x) Executive shall terminate this
Agreement without cause (Section 5.1); (y) Executive shall give notice of
termination pursuant to Section 2; or (z) Employer shall terminate this
Agreement for cause (Section 5.2), Executive shall pay to Employer the unpaid
principal balance and all accrued interest on the Mortgage Loan. Upon payment
or deemed payment of the Mortgage Loan, and all interest due thereon, the Note
shall be canceled and returned to Executive and the Mortgage shall be released
of record. In addition to the Mortgage Loan, Employer shall reimburse Executive
for the reasonable costs and expenses incurred by Executive in connection
with the settlement of the New House, but not more than $30,000.
4.5 Life Insurance. Employer shall maintain in effect at all times during
the Employment Period, at Employer's expense, a policy of term life insurance,
or such other type of policy as Executive shall request provided that the cost
to Employer thereof is approximately the same as the cost of such term policy,
on the life of Executive in the amount of not less than $1,000,000 naming such
person as Executive shall designate from time to time as the owner and
beneficiary thereof. Executive agrees that Employer shall have the right to
obtain other life insurance on Executive's life, at Employer's sole expense and
with Employer or an affiliate thereof as the sole beneficiary thereof. Employer
shall also have the right, at its sole cost, to increase the amount of the
aforesaid $1,000,000 policy and Executive shall execute such assignments or
other documents necessary or desirable to assign to Employer the proceeds of the
policy in excess of $1,000,000 . Executive shall (i) cooperate fully with
Employer in obtaining all such insurance, (ii) sign any necessary consents,
applications and other related forms or documents, and (iii) take any required
medical examinations. If such examination(s) shall disclose that Executive is
not eligible for "standard, non-smoking risk" pricing for term life insurance,
the amount of such insurance shall be reduced to an amount which is available
for a premium equal to the premium which would have been charged for $1,000,000
of term life insurance had Executive been so eligible. At Executive's option and
expense, any policy maintained by Employer under this Section 4.5 shall be
transferred to Executive upon the expiration or termination of the Employment
Period, unless such transfer is otherwise prohibited. After such transfer,
Employer shall have no further responsibility with respect to said policy.
4.6 Automobile. Throughout the Employment Period, Employer shall provide to
Executive, at Employer's expense, an automobile in accordance with Employer's
policy in effect from time to time for the leasing of automobiles for use by
Employer's senior management. Employer shall also be responsible for all
expenses of use and operation of such automobile. At Executive's option,
Employer shall assume responsibility for Executive's existing car lease
payments, provided that such payments shall not exceed $800 per month. Upon
termination or expiration of the Employment Period, or upon expiration of any
automobile lease entered into by Employer in satisfaction of its obligations
under this Section 4.6, Executive shall have the right and option to assume the
lease on his then-current car and to exercise any buy-out option contained in
such lease.
4.7 Other Benefits. During the Employment Period, subject to, and to the
extent Executive is eligible under their respective terms, Executive shall be
entitled to receive such fringe benefits as are, or are from time to time
hereafter, generally provided by Employer to Employer's senior management
employees or other employees (other than those provided under or pursuant to
separately negotiated individual employment agreement or arrangements) under
any pension or retirement plan, disability plan or insurance, group life
insurance, medical and dental insurance, travel accident insurance, stock
option, phantom stock or other similar plan or program of Employer.
Executive's Base Salary shall (where applicable) constitute the compensation
on the basis of which the amount of Executive's benefits under any such plan
or program shall be fixed and determined. The first $200,000 (or such lesser
amount as may be necessary) of benefits under any life insurance policy
provided hereunder (but not the $1,000,000 policy under Section 4.5) shall
be assigned to Employer to pay the remaining principal balance of the Mortgage
Loan upon the death of Executive.
4.8 Expense Reimbursement. Employer shall reimburse Executive for all
business expenses reasonably incurred by him in the performance of his duties
under this Agreement upon his presentation, not less frequently than monthly, of
signed, itemized accounts of such expenditures, all in accordance with
Employer's procedures and policies as adopted and in effect from time to time
and applicable to its senior management employees. Without limiting the
generality of the foregoing, Employer shall pay for all of Executive's
reasonable travel expenses incurred in traveling from and to the Ohio House and,
prior to the earlier of settlement upon the New House or September 30, 1996, his
reasonable living expenses (not to exceed $5,000 per month) while the Executive
is residing in the Baltimore, Maryland area, including, without limitation,
hotel or other residential accommodation expenses and meals, all such amounts to
be treated as additional salary for all securities acts reporting purposes.
4.9 Tax Gross-up. In the event that any payments made by Employer to or on
behalf of Executive pursuant to the provisions of Section 4.3 through 4.8 hereof
(other than the Mortgage Loan or principal and interest forgiveness in
connection therewith) result in the payment of additional federal, state or
local income taxes by Executive, Employer shall pay to Executive the amount of
such additional taxes plus such additional amount as shall be necessary to hold
harmless Executive, as nearly as can be, from the obligation to pay such taxes
in respect of amounts payable pursuant to this Section 4.9.
4.10 Stock Options. On the date hereof, the Company shall grant to
Executive the right and option to purchase an aggregate of 60,000 shares (the
"Option Shares") of the Company's common stock, $.01 par value per share, which
option is intended, to the fullest extent permitted by law, to qualify as an
incentive stock option, as defined to Section 422 of the Internal Revenue Code
of 1986. The option to purchase one-half of the Option Shares shall be granted
pursuant to each of the Company's two option plans pursuant to the standard
agreements therefor, copies of which are attached hereto as Exhibits A and B,
respectively. The "Purchase Price" and "Closing Price" shall be determined with
reference to the date hereof in accordance with such agreements.
4.11 Vacations. Executive shall be entitled to 20 days of vacation during
each calendar year, which shall accrue in accordance with the Company's vacation
policy in effect from time to time for its senior executive officers, which
vacations shall be taken at such time or times as shall not unreasonably
interfere with Executive's performance of his duties under this Agreement. The
number of vacation days shall be prorated for any calendar year not wholly
within the Employment Period. Upon termination of Executive's employment
pursuant to Section 5 or non-renewal of the Employment Period pursuant to
Section 2, for any reason whatsoever, Employer shall pay Executive, in addition
to any termination compensation provided for under Section 6, all unused
vacation benefits, including any carry-over, due Executive as of the date of
termination, to be computed at the Executive's then current Base Salary rate.
5. Termination of Employment Period
5.1 Termination Without Cause. Employer or Executive may, by delivery of
not less than 60 days' notice to the other at any time during the Employment
Period, terminate the Employment Period without cause.
5.2 By Employer for Cause. Employer may, at any time during the Employment
Period by notice to Executive in accordance with and only after full compliance
with the procedure set forth herein terminate the Employment Period "for cause"
effective immediately. For the purposes hereof, "for cause" means:
(i) the conviction of Executive in a court of
competent jurisdiction of a crime
constituting a felony in such jurisdiction
involving money or other property of
Employer or any of its affiliates or any
other felony involving moral turpitude; or
(ii) the willful (a) commission of an act not
approved of or ratified by the Board of
Directors involving a series and material
conflict of interest or self-dealing
relating to any material aspects of Employer
or any such subsidiary or affiliate thereof;
or (b) commission of an act of fraud or
misrepresentation (including the omission of
material facts), provided that such acts
relate to the business of Employer and would
materially and negatively impact upon
Employer and its business; or (c) material
failure of Executive to obey directions of
the Board of Directors that are consistent
with Executive's status of Chief
Merchandising Officer; however, for the
purposes of this subsection (ii), the
refusal of Executive to comply with an order
or directive of anyone other than the
majority of the Board of Directors, or the
refusal of Executive to perform an act which
is contrary to his duties, responsibilities
and/or authority as Chief Merchandising
Officer or is unlawful shall not constitute
"for cause". In the event of an act or
omission as provided for in this subsection
5.2(ii), Employer shall provide Executive
with a written notice of intent to terminate
the Employment Period "for cause", setting
forth, with reasonable particularity, the
reasons and acts or omissions constituting
"cause" under this subsection, and shall
provide Executive with at least thirty (30)
calendar days after such notice to cure or
eliminate the problem or violation giving
rise to such cause or any longer period as
reasonably needed by Executive, provided
that it is susceptible to cure or
elimination and Executive is proceeding
diligently and in good faith to cure such
violation. In the event and only after the
Executive fails to cure the problem or
violation within the period provided for
herein, Employer may exercise its right to
terminate the Employment Period in
accordance with the procedure set forth
below.
Termination "for cause" shall be effected only if (A) Employer has
delivered to Executive a written notice of termination "for cause", setting
forth, with reasonable particularity, the reasons for such "for cause"
termination, and (B) has provided Executive with, on at least ten (10) business
days' prior written notice, in the case of a termination pursuant to subsection
5.2(ii) the opportunity, together with Executive's counsel, to be heard before
Employer's Board of Directors, said hearing to occur at such reasonable time and
place that is mutually convenient to Executive, his counsel, and Employer, and
(C) Employer's Board of Directors [after such notice and opportunity to be heard
has been provided to Executive in the case of a termination pursuant to
subsection 5.2(ii)], adopts a resolution concurred in by not less than majority
of all of the directors of Employer then in office, including at least
two-thirds of all of the directors who are not officers of Employer, that
Executive was guilty of conduct constituting "for cause" hereunder, which
conduct has not been cured (if applicable), and specifying the particulars
thereof in detail.
5.3 By Executive for Good Reason. Executive may, at any time during the
Employment Period by notice to Employer, terminate the Employment Period under
this Agreement "for good reason" effective immediately. For the purposes hereof,
"good reason" means (i) any material breach by Employer of any provision of this
Agreement which, if susceptible of being cured, is not cured within 30 days of
delivery of notice thereof to Employer by Executive or (ii) the occurrence of a
change in control (as hereinafter defined) of Employer provided that not more
than 90 days shall have elapsed subsequent to Executive's becoming aware of
the occurrence of the change in control. Without limitation of the generality
of the foregoing, each of the following shall be deemed to be a material
breach of this Agreement by Employer: (x) any failure timely to pay (or any
reduction in) compensation (including benefits) paid or payable to Executive
pursuant to the provisions of Section 4 hereof; (y) any reduction in the
duties, responsibilities or perquisites of Executive as provided in Section
3.1 hereof and (z) any transfer of the Company's principal executive offices
outside the geographic area described in Section 3.2 hereof or requirement that
Executive principally perform his duties outside such geographic area.
For purposes of this Agreement, a "change in control" of the Company shall
be deemed to have occurred if, as a result of a single transaction or a series
of transactions, (A) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than a trustee or other fiduciary holding securities under any employee
benefit plan of the Company or a corporation owned, directly or indirectly, by
the stockholders of the Company ( including any nominee corporation that holds
shares of the Company on behalf of the beneficial owners of such corporation),
in substantially the same proportions as their ownership of stock of the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 51% or more of the combined voting power of the Company's then
outstanding securities; or (B) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities under any employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the stockholders of the Company
(including any nominee corporation that holds shares of the Company on behalf of
the beneficial owners of such corporation), in substantially the same
proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities and there are
at least a majority of directors serving on the Board of Directors who were not
serving in such capacity as of the date hereof or who were not elected with the
consent of the Executive; or (C) the shareholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 70% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the shareholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets;
provided, however, the change in ownership of the Company's securities resulting
from the initial public offering thereof shall not be deemed a "change in
control" for purposes of this Agreement.
5.4 Disability. During the Employment Period, if, as a result of physical
or mental incapacity or infirmity (excluding alcoholism or drug addiction),
Executive shall be unable to perform his material duties under this Agreement
for (i) a continuous period of at least 180 days, or (ii) periods aggregating at
least 270 days during any period of 12 consecutive months (each a "Disability
Period"), and at the end of the Disability Period there is no reasonable
probability that Executive can promptly resume his material duties hereunder
pursuant hereto, Executive shall be deemed disabled ("the Disability") and
Employer, by notice to Executive, shall have the right to terminate the
Employment Period for Disability at, as of or after the end of the Disability
Period. The existence of the Disability shall be determined by a reputable,
licensed physician mutually selected by Employer and Executive, whose
determination shall be final and binding on the parties, provided, that if
Employer and Executive cannot agree upon such physician, such physician shall be
designated by the then acting President of the Baltimore City Medical Society,
and if for any reason such President shall fail or refuse to designate such
physician, such physician shall, at the request of either party, be designated
by the American Arbitration Association. Executive shall cooperate in all
reasonable respects to enable an examination to be made by such physician.
5.5 Death. The Employment Period shall end on the date of Executive's
death.
6. Termination Compensation; Non-Compete
6.1 Termination Without Cause by Employer or for Good Reason by Executive.
If the Employment Period is terminated by Employer pursuant to the provisions of
Section 5.1 hereof or by Executive pursuant to the provisions of Section 5.3
hereof, Employer will pay to Executive (i) the greater of (a) the Base Salary
for the balance of the Employment Period, or (b) Base Salary for one (1) year,
calculated in each case, at the applicable Base Salary rate which would have
been in effect for each year during the balance of Employment Period, assuming
no termination, payable in equal installments at the times Base Salary would
have been paid had the Employment Period not been terminated; and (ii) on the
date due pursuant to the provisions of Section 4.2 hereof, the Bonus for the
then current Bonus Year prorated as provided in Section 4.2; provided, however,
in the event the Employment Period is terminated by Executive because of a
"change in control" pursuant to Section 5.3 (ii), then clause (i) of this
sentence shall be modified to read: "the Base Salary for the period which is the
greater of (a) eighteen (18) months or (b) the balance of the Employment Period
not to exceed twenty-four (24) months (calculated, in each case, at the
applicable Base Salary rate which would have been in effect for each year during
the balance of the Employment Period, assuming no termination) payable in equal
installments at the times Base Salary would have been paid had the Employment
Period not been terminated." All other benefits provided for in Sections 4.5,
4.6, 4.7, 4.8, 4.9 and 4.11 shall be continued at the expense of Employer for
the period that payments are required to be made pursuant to the preceding
provisions of this Section 6.1.
6.2 Certain Other Terminations. If the Employment Period is terminated by
Employer pursuant to the provisions of Section 5.2, by Executive pursuant to
Section 5.1 or by death pursuant to the provisions of Section 5.5, Employer
shall pay to Executive (i) Base Salary (calculated at its then current rate per
year) through the date of termination and (ii) in the case of termination by
death pursuant to the provisions of Section 5.5, when due pursuant to provisions
of Section 4.2 the Bonus for the Bonus Year in which the date of termination
occurred prorated as provided in said Section 4.2. Employer shall have no
obligation to continue any other benefits provided for in Section 4 past the
date of termination.
6.3 Termination for Disability. If the Employment Period is terminated by
Employer pursuant to the provisions of Section 5.4, Employer shall make all
payments and continue all benefits provided for in Section 6.1 for the balance
of the Employment Period (assuming no termination), provided, however, that such
payments shall be reduced by any amounts actually paid to Executive pursuant to
any disability insurance or other such similar program maintained by Employer.
6.4 Termination by Non-Renewal. In the event the Employment Period expires
because of an election by Employer to allow the Employment Period to expire at
the end of its then stated term as provided in Section 2 hereof, Employer shall
pay to Executive (i) Base Salary for the one year period following the date of
termination (calculated at its then current rate per year), payable in equal
installments at the times Base Salary would have been paid had the Employment
Period not been terminated and (ii) when due pursuant to the provisions of
Section 4.2 the Bonus for the Bonus Year in which the Employment Period expired
prorated as provided in said Section 4.2. Employer shall have no obligation to
continue any other benefits provided for in Section 4 past the date of
termination.
6.5 Tax Grossup. [INTENTIONALLY DELETED.]
6.6 No Other Termination Compensation. Executive shall not, except as set
forth in this Section 6 and in Section 4.7, be entitled to any compensation
following termination of the Employment Period, except as otherwise provided in
any stock options granted by Employer to Executive.
6.7 Mitigation. Executive shall not be required to mitigate the amount of
any payments or benefits provided for hereunder upon termination of the
Employment Period by seeking employment with any other person, or otherwise,
nor shall the amount of any such payments or benefits be reduced by any
compensation, benefit or other amount earned by, accrued for or paid to
Executive as the result of Executive's employment by or consultancy or other
association with any other person, provided, that any medical, dental or
hospitalization insurance or benefits provided to Executive with his employment
by or consultancy with an unaffiliated person during such period shall be
primary to the benefits to be provided to Executive pursuant to this Agreement
for the purposes of coordination of benefits.
6.8 Non-Compete. For the 6 month period following the termination of the
Employment Period for any reason whatsoever, including termination by
non-renewal as described in to Section 6.4 (other than a termination by
Executive pursuant to Section 5.1, in which case the applicable period shall be
one year) and for so long as Employer is making and the Executive is accepting
the payments required to be made to Executive pursuant to either Section 6.1 or
6.4 hereof, Executive shall not, directly or indirectly, (i) engage in any
activities that are in competition with the Company in any geographic area where
the Company is engaged in business, (ii) solicit any customer of the Company or
(iii) solicit any person who is then employed by the Company or was employed by
the Company within one year of such solicitation to (a) terminate his or her
employment with the Company, (b) accept employment with anyone other than the
Company, or (c) in any manner interfere with the business of the Company;
provided, however, in the event Executive violates any of the provisions of the
foregoing at any time after the expiration of 6 months (one year, in the case of
a termination by Executive pursuant to Section 5.1) following the termination of
the Employment Period, Employer's sole remedy under this Agreement shall be the
right to terminate any and all severance payments required under Sections 6.1 or
6.4 hereof. Executive acknowledges and agrees that in the event of any violation
or threatened violation by Executive of his obligations under the preceding
sentence during the six month (or, in the case of a termination pursuant to
Section 5.1, the one year) period following the termination of the Employment
Period, Employer shall be entitled to injunctive relief without any necessity to
post bond.
7. Indemnification
The Company shall indemnify and hold Executive harmless from and against
any expenses (including attorneys' fees of the attorneys selected by Executive
to represent him, which shall be advanced as incurred), judgements, fines and
amounts paid in settlement incurred by him by reason of his being made a party
or threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of any act or omission to act by Executive during the Employment Period
or otherwise by reason of the fact that he is or was a director or officer of
Employer or any subsidiary or affiliate included as a part of the Company, to
the fullest extent and in the manner set forth and permitted by the General
Corporation Law of the State of Delaware and any other applicable law as from
time to time in effect. The provisions of this Section 7 shall survive any
termination of the Employment Period or any deemed termination of this
Agreement.
8. Miscellaneous
8.1 Notices. Any notice, consent or authorization required or permitted to
be given pursuant to this Agreement shall be in writing and sent to the party
for or to whom intended, at the address of such party set forth below, be
registered or certified mail, postage paid (deemed given five days after deposit
in the U.S. mails) or personally or by facsimile transmission (deemed given upon
receipt), or at such other address as either party shall designate by notice
given to the other in the manner provided herein.
If to Employer: Jos. A. Bank Clothiers, Inc.
500 Hanover Pike
Hampstead, Maryland 21074-2095
Attn: Secretary
If to Executive: Mr. Frank Tworecke
Jos. A. Bank Clothiers, Inc.
500 Hanover Pike
Hampstead, Maryland 21074-2095
8.2 Legal Fees. [INTENTIONALLY DELETED.]
8.3 Taxes. Employer is authorized to withhold (from any compensation or
benefits payable hereunder to Executive) such amounts for income tax, social
security, unemployment compensation and other taxes as shall be necessary or
appropriate in the reasonable judgement of Employer to comply with applicable
laws and regulations.
8.4 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Maryland applicable to
agreements made and to be performed therein.
8.5 Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Baltimore,
Maryland in accordance with the rules of the American Arbitration Association
then in effect. Judgement may be entered on the arbitration award in any court
having jurisdiction; provided, however, that Executive shall be entitled to seek
specific performance of his right to be paid until expiration of the Employment
Period during the pendency of any arbitration.
8.6 Headings. All descriptive headings in this Agreement are inserted for
convenience only and shall be disregarded in construing or applying any
provision of this Agreement.
8.7 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
8.8 Severability. If any provision of this Agreement, or any part thereof,
is held to be unenforceable, the remainder of such provision and this Agreement,
as the case may be, shall nevertheless remain in full force and effect.
8.9 Entire Agreement and Representation. This Agreement contains the entire
agreement and understanding between Employer and Executive with respect to the
subject matter hereof. No representations or warranties of any kind or nature
relating to the Company or its several businesses, or relating to the Company's
assets, liabilities, operations, future plans or prospects have been made by or
on behalf of Employer to Executive. This Agreement supersedes any prior
agreement between the parties relating to the subject matter hereof.
8.10 Successor and Assigns. This Agreement shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors,
heirs (in the case of Executive) and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
JOS. A. BANK CLOTHIERS, INC.
By: ____________________________________
Timothy F. Finley, Chairman, Chief
Executive Officer and President
________________________________________
FRANK TWORECKE
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of February 5, 1996, between DAVID E. ULLMAN
("Executive") and JOS. A. BANK CLOTHIERS, INC. ("Employer").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Employment of Executive
Employer hereby agrees to employ Executive, and Executive hereby agrees to
be and remain in the employ of Employer, upon the terms and conditions
hereinafter set forth. This Agreement is a contract for the personal services of
Executive and services pursuant hereto may only be performed by Executive.
2. Employment Period
The term of Executive's employment under this Agreement (the "Employment
Period") shall commence as of the date hereof and shall, subject to earlier
termination as provided in Section 5, continue through February 4, 1998 and
shall continue thereafter for successive one-year periods if, at least 180 days
before the end of the initial two year period or any subsequent one-year period,
Employer gives notice to Executive of its desire to continue the Employment
Period, in which case the Employment Period shall continue for one year beyond
the then-current term. Notwithstanding the foregoing, the Employment Period
shall not continue beyond its then-current term as a result of said notice from
Employer if, within thirty (30) days after receipt of such notice, Executive
shall notify Employer of Executive's intent to terminate this Agreement as of
the end of the then-current term.
3. Duties and Responsibilities
During the Employment Period, Executive (i) shall have the title of
Executive Vice President - Chief Financial Officer and (ii) shall devote
substantially all of his business time and expend his best efforts, energies and
skills to the business of the Company. Executive shall perform such duties,
consistent with his status as Executive Vice President - Chief Financial
Officer, as he may be assigned from time to time by Employer's Chief Executive
Officer (the "Chief Executive Officer").
4. Compensation and Related Matters
4.1 Base Salary. Employer shall pay to Executive during the Employment
Period an annual base salary (the "Base Salary") of $170,000 for each year of
the Employment Period. The Base Salary for each year shall be payable in
installments in accordance with the Company's policy on payment to executives in
effect from time to time.
4.2 Annual Bonus. For fiscal year 1996 and for each fiscal year that begins
during the Employment Period (each such fiscal year, a "Bonus Year"), Executive
shall be eligible to receive a bonus (each, a "Bonus") of up to 40% of Base
Salary pursuant to the terms and conditions of Employer's Bonus Plan in effect
from time to time.
4.3 Other Benefits. During the Employment Period, subject to, and to the
extent Executive is eligible under their respective terms, Executive shall be
entitled to receive such fringe benefits as are, or are from time to time
hereafter, generally provided by Employer to Employer's senior management
employees (other than those provided under or pursuant to separately negotiated
individual employment agreements or arrangements).
5. Termination of Employment Period
5.1 Termination Without Cause or Good Reason. Employer may terminate the
Employment Period at any time without cause. Executive may, by delivery of not
less than 60 days' notice to Employer at any time during the Employment Period,
terminate the Employment Period without good reason.
5.2 By Employer for Cause. Employer may, at any time during the Employment
Period by notice to Executive, terminate the Employment Period "for cause"
effective immediately. For the purposes hereof, "for cause" means any
misconduct, including, but not limited to (a) conviction of Executive in a court
of competent jurisdiction of a crime constituting a felony or other serious
offense; or (b) the commission of an act not approved of or ratified by the
Board of Directors involving a conflict of interest or self-dealing relating to
Employer or any subsidiary or affiliate thereof; or (c) commission of an act of
fraud or misrepresentation (including the omission of material facts); or (d)
failure of Executive to obey any order or directive of the Board of Directors of
the Company or the Chief Executive Officer, provided such order or directive is
lawful and not contrary to Executive's duties, responsibilities and authority as
an Executive Vice President of the Company and is consistent with Executive's
status as an Executive Vice President of the Company; or (e) violation by
Executive of any rule, regulation or policy of Employer generally applicable to
other employees of the Company.
5.3 By Executive for Good Reason. Executive may, at any time during the
Employment Period by notice to Employer, terminate the Employment Period under
this Agreement "for good reason" effective immediately. For the purposes hereof,
"for good reason" means (i) any material breach by Employer of any provision of
this Agreement which, if susceptible of being cured, is not cured within 30 days
of delivery of notice thereof to Employer by Executive or (ii) the occurrence of
a change in control (as hereinafter defined) of Employer provided that not more
than 90 days shall have elapsed subsequent to Executive's becoming aware of the
occurrence of the change in control. Without limitation of the generality of the
foregoing, each of the following shall be deemed to be a material breach of this
Agreement by Employer: (y) any failure timely to pay (or any reduction in)
compensation paid or payable to Executive pursuant to the provisions of Section
4 hereof; and (z) any reduction in the duties, responsibilities or perquisites
of Executive as provided in Section 3.1 hereof.
For purposes of this Agreement, a "change in control" of the Company shall
be deemed to have occurred if, as a result of a single transaction or a series
of transactions, (A) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than a trustee or other fiduciary holding securities under any employee
benefit plan of the Company or a corporation owned, directly or indirectly, by
the stockholders of the Company ( including any nominee corporation that holds
shares of the Company on behalf of the beneficial owners of such corporation),
in substantially the same proportions as their ownership of stock of the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 51% or more of the combined voting power of the Company's then
outstanding securities; or (B) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities under any employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the stockholders of the Company
(including any nominee corporation that holds shares of the Company on behalf of
the beneficial owners of such corporation), in substantially the same
proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities and there are
at least a majority of directors serving on the Board of Directors who were not
serving in such capacity as of the date hereof or who were not elected with the
consent of the Executive; or (C) the shareholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 70% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the shareholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets.
5.4 Death. The Employment Period shall end on the date of Executive's
death.
6. Termination Compensation; Non-Compete
6.1 Termination Without Cause by Employer or for Good Reason by Executive.
If the Employment Period is terminated by Employer pursuant to the provisions of
Section 5.1 hereof or by Executive pursuant to the provisions of Section 5.3
hereof, Employer will pay to Executive the greater of (a) Base Salary for the
balance of the Employment Period, or (b) Base Salary for one (1) year,
calculated in each case, at the applicable Base Salary rate which would have
been in effect for each year during the balance of Employment Period, assuming
no termination, payable in equal installments at the times Base Salary would
have been paid had the Employment Period not been terminated. All other benefits
provided for in Section 4.3 shall be continued at the expense of Employer for
the period that payments are required to be made pursuant to the preceding
provisions of this Section 6.1.
6.2 Certain Other Terminations. If the Employment Period is terminated by
Employer pursuant to the provisions of Section 5.2, by Executive pursuant to
Section 5.1 or as a result of the death of Executive pursuant to the provisions
of Section 5.4, Employer shall pay to Executive Base Salary (calculated at its
then current rate per year) through the date of termination. Employer shall have
no obligation to continue any other benefits provided for in Section 4 past the
date of termination.
6.3 No Other Termination Compensation. Executive shall not, except as set
forth in this Section 6, be entitled to any compensation following termination
of the Employment Period, except as otherwise provided in any stock options
granted by Employer to Executive.
6.4 Mitigation. Executive shall not be required to mitigate the amount of
any payments or benefits provided for hereunder upon termination of the
Employment Period by seeking employment with any other person, or otherwise, nor
shall the amount of any such payments or benefits be reduced by any
compensation, benefit or other amount earned by, accrued for or paid to
Executive as the result of Executive's employment by or consultancy or other
association with any other person, provided, that any medical, dental or
hospitalization insurance or benefits provided to Executive with his employment
by or consultancy with an unaffiliated person during such period shall be
primary to the benefits to be provided to Executive pursuant to this Agreement
for the purposes of coordination of benefits.
6.5 Non-Compete. For so long as any termination compensation is being paid
to Executive pursuant to this Section 6 or, in the event of termination of this
Agreement by Employer for cause or by Executive without good reason, for the
balance of what would have been the current Employment Period assuming no such
termination, Executive shall not, directly or indirectly, (i) engage in any
activities that are in competition with the Company in any geographic area where
the Company is engaged in business, (ii) solicit any customer of the Company or
(iii) solicit any person who is then employed by the Company or was employed by
the Company within one year of such solicitation to (a) terminate his or her
employment with the Company, (b) accept employment with anyone other than the
Company, or (c) in any manner interfere with the business of the Company.
Executive acknowledges and agrees that in the event of any violation or
threatened violation by Executive of his obligations under the preceding
sentence, Employer shall be entitled to injunctive relief without any necessity
to post bond.
7. Indemnification
The Company shall indemnify and hold Executive harmless from and against
any expenses (including attorneys' fees of the attorneys selected by Executive
to represent him, which shall be advanced as incurred), judgements, fines and
amounts paid in settlement incurred by him by reason of his being made a party
or threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of any act or omission to act by Executive during the Employment
Period or otherwise by reason of the fact that he is or was a director or
officer of Employer or any subsidiary or affiliate included as a part of
the Company, to the fullest extent and in the manner set forth and permitted
by the General Corporation Law of the State of Delaware and any other
applicable law as from time to time in effect. The provisions of this
Section 7 shall survive any termination of the Employment Period or any
deemed termination of this Agreement.
8. Miscellaneous
8.1 Notices. Any notice, consent or authorization required or permitted to
be given pursuant to this Agreement shall be in writing and sent to the party
for or to whom intended, at the address of such party set forth below, by
registered or certified mail, postage paid (deemed given five days after deposit
in the U.S. mails) or personally or by facsimile transmission (deemed given upon
receipt), or at such other address as either party shall designate by notice
given to the other in the manner provided herein. Notices to Employer shall be
sent to: Jos. A. Bank Clothiers, Inc., 500 Hanover Pike, Hampstead, Maryland
21074-2095, Attn: Secretary. Notices to Executive shall be sent to: Mr. David
Ullman, Jos. A. Bank Clothiers, Inc., 500 Hanover Pike, Hampstead, Maryland
21074-2095.
8.2 Taxes. Employer is authorized to withhold (from any compensation or
benefits payable hereunder to Executive) such amounts for income tax, social
security, unemployment compensation and other taxes as shall be necessary or
appropriate in the reasonable judgement of Employer to comply with applicable
laws and regulations.
8.3 Interpretation. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Maryland applicable to
agreements made and to be performed therein. All descriptive headings in this
Agreement are inserted for convenience only and shall be disregarded in
construing or applying any provision of this Agreement. This Agreement may be
executed in counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument. If any
provision of this Agreement, or any part thereof, is held to be unenforceable,
the remainder of such provision and this Agreement, as the case may be, shall
nevertheless remain in full force and effect.
8.4 Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Baltimore,
Maryland in accordance with the rules of the American Arbitration Association
then in effect. Judgement may be entered on the arbitration award in any court
having jurisdiction; provided, however, that Executive shall be entitled to seek
specific performance of his right to be paid until expiration of the Employment
Period during the pendency of any arbitration.
8.8 Entire Agreement and Representation. This Agreement contains the entire
agreement and understanding between Employer and Executive with respect to the
subject matter hereof. No representations or warranties of any kind or nature
relating to the Company or its several businesses, or relating to the Company's
assets, liabilities, operations, future plans or prospects have been made by or
on behalf of Employer to Executive. This Agreement supersedes any prior
agreement between the parties relating to the subject matter hereof.
8.9 Successor and Assigns. This Agreement shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors,
heirs (in the case of Executive) and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
JOS. A. BANK CLOTHIERS, INC.
By:_____________________________________
Timothy F. Finley, Chairman, Chief
Executive Officer and President
________________________________________
DAVID E. ULLMAN
JOS. A. BANK CLOTHIERS, INC.
RETIREMENT & SAVINGS PLAN
Plan and Trust Agreement
As Amended and Restated
Effective April 1, 1994
Jos. A. Bank Clothiers, Inc. Retirement & Savings Plan and Trust
As Amended and Restated Effective April 1, 1994
Jos. A. Bank Clothiers, Inc. previously established the Jos. A. Bank Clothiers,
Inc. Retirement & Savings Plan for the benefit of eligible employees of the
Company and its participating affiliates. The Plan is intended to constitute a
qualified profit sharing plan, as described in Code section 401(a), which
includes a qualified cash or deferred arrangement, as described in Code section
401(k).
The provisions of this Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between Jos. A. Bank Clothiers,
Inc. and Wells Fargo Bank, National Association. The Trust is intended to be tax
exempt as described under Code section 501(a).
The Plan constitutes an amendment and restatement of the Jos. A. Bank Clothiers,
Inc. Retirement & Savings Plan which was originally established effective as of
February 1, 1976, and its related trust agreement.
The Jos. A. Bank Clothiers, Inc. Retirement & Savings Plan and Trust, as set
forth in this document, is hereby amended and restated effective as of April 1,
1994.
Date: ____________________, 19___ Jos. A. Bank Clothiers, Inc.
By: ____________________________
Title:
The trust agreement set forth in those provisions of this Plan and Trust which
relate to the Trustee is hereby executed.
Date: _____________________, 19___ Wells Fargo Bank, National Association
By: ____________________________
Title:
Date: _____________________, 19___ Wells Fargo Bank, National Association
By: ____________________________
Title:
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
1. DEFINITIONS....................................................... 1
-----------
2 ELIGIBILITY....................................................... 8
-----------
2.1 Eligibility............................................. 8
2.2 Ineligible Employees.................................... 8
2.3 Ineligible or Former Participants....................... 8
3 PARTICIPANT CONTRIBUTIONS......................................... 9
-------------------------
3.1 Pre-Tax Contribution Election........................... 9
3.2 Changing a Contribution Election........................ 9
3.3 Revoking and Resuming a Contribution Election........... 9
3.4 Contribution Percentage Limits.......................... 9
3.5 Refunds When Contribution Dollar Limit Exceeded......... 10
3.6 Timing, Posting and Tax Considerations.................. 10
4 ROLLOVERS & TRUST-TO-TRUST TRANSFERS.............................. 11
------------------------------------
4.1 Rollovers............................................... 11
4.2 Transfers From Other Qualified Plans.................... 11
5 EMPLOYER CONTRIBUTIONS............................................ 12
----------------------
5.1 Company Match Contributions............................. 12
5.2 Company Discretionary Contributions..................... 12
5.3 Company Additional Contributions........................ 13
6 ACCOUNTING........................................................ 15
----------
6.1 Individual Participant Accounting....................... 15
6.2 Sweep Account is Transaction Account.................... 15
6.3 Trade Date Accounting and Investment Cycle.............. 15
6.4 Accounting for Investment Funds......................... 15
6.5 Payment of Fees and Expenses............................ 15
6.6 Accounting for Participant Loans........................ 16
6.7 Error Correction........................................ 16
6.8 Participant Statements.................................. 17
6.9 Special Accounting During Conversion Period............. 17
6.10 Accounts for QDRO Beneficiaries......................... 17
7 INVESTMENT FUNDS AND ELECTIONS.................................... 18
------------------------------
7.1 Investment Funds........................................ 18
7.2 Investment Fund Elections............................... 18
7.3 Responsibility for Investment Choice.................... 18
7.4 Default if No Election.................................. 18
7.5 Timing.................................................. 19
7.6 Investment Fund Election Change Fees.................... 19
8 VESTING & FORFEITURES............................................. 20
---------------------
8.1 Fully Vested Contribution Accounts...................... 20
8.2 Full Vesting upon Certain Events........................ 20
8.3 Vesting Schedule........................................ 20
8.4 Forfeitures............................................. 20
8.5 Rehired Employees....................................... 21
9 PARTICIPANT LOANS................................................. 22
-----------------
9.1 Participant Loans Permitted............................. 22
9.2 Limitations on Purpose of Participant Loan.............. 22
9.3 Loan Application, Note and Security..................... 22
9.4 Spousal Consent......................................... 22
9.5 Loan Approval........................................... 22
9.6 Loan Funding Limits..................................... 22
9.7 Maximum Number of Loans................................. 23
9.8 Source and Timing of Loan Funding....................... 23
9.9 Interest Rate........................................... 23
9.10 Repayment............................................... 23
9.11 Repayment Hierarchy..................................... 24
9.12 Repayment Suspension.................................... 24
9.13 Loan Default............................................ 24
9.14 Call Feature............................................ 24
10 IN-SERVICE WITHDRAWALS............................................ 25
----------------------
10.1 In-Service Withdrawals Permitted........................ 25
10.2 In-Service Withdrawal Application and Notice............ 25
10.3 Spousal Consent......................................... 25
10.4 In-Service Withdrawal Approval.......................... 25
10.5 Minimum Amount, Payment Form and Medium................. 25
10.6 Source and Timing of In-Service Withdrawal
Funding............................................... 26
10.7 Hardship Withdrawals.................................... 26
10.8 Rollover Account Withdrawals............................ 27
10.9 Over Age 59 1/2Withdrawals.............................. 28
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW ......... 29
---------------------------------------------------------
11.1 Benefit Information, Notices and Election............... 29
11.2 Spousal Consent......................................... 29
11.3 Payment Form and Medium................................. 29
11.4 Small Amounts Paid Immediately.......................... 30
11.5 Source and Timing of Distribution Funding............... 30
11.6 Deemed Distribution..................................... 30
11.7 Latest Commencement Permitted........................... 31
11.8 Payment Within Life Expectancy.......................... 31
11.9 Incidental Benefit Rule................................. 31
11.10 Payment to Beneficiary.................................. 31
11.11 Beneficiary Designation................................. 32
11.12 QJSA and QPSA Information and Elections ................ 32
12 ADP AND ACP TESTS................................................. 35
-----------------
12.1 Contribution Limitation Definitions..................... 35
12.2 ADP and ACP Tests....................................... 38
12.3 Correction of ADP and ACP Tests......................... 38
12.4 Multiple Use Test....................................... 39
12.5 Correction of Multiple Use Test......................... 39
12.6 Adjustment for Investment Gain or Loss.................. 39
12.7 Testing Responsibilities and Required Records........... 39
12.8 Separate Testing........................................ 40
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS...................... 41
--------------------------------------------
13.1 "Annual Addition" Defined............................... 41
13.2 Maximum Annual Addition................................. 41
13.3 Avoiding an Excess Annual Addition...................... 41
13.4 Correcting an Excess Annual Addition.................... 41
13.5 Correcting a Multiple Plan Excess....................... 42
13.6 "Defined Benefit Fraction" Defined...................... 42
13.7 "Defined Contribution Fraction" Defined................. 42
13.8 Combined Plan Limits and Correction..................... 42
14 TOP HEAVY RULES................................................... 43
---------------
14.1 Top Heavy Definitions................................... 43
14.2 Special Contributions................................... 44
14.3 Adjustment to Combined Limits for Different
Plans................................................. 45
15 PLAN ADMINISTRATION............................................... 46
-------------------
15.1 Plan Delineates Authority and Responsibility............ 46
15.2 Fiduciary Standards..................................... 46
15.3 Company is ERISA Plan Administrator..................... 46
15.4 Administrator Duties.................................... 47
15.5 Advisors May be Retained................................ 47
15.6 Delegation of Administrator Duties...................... 48
15.7 Committee Operating Rules............................... 48
16 MANAGEMENT OF INVESTMENTS......................................... 49
-------------------------
16.1 Trust Agreement......................................... 49
16.2 Investment Funds........................................ 49
16.3 Authority to Hold Cash.................................. 49
16.4 Trustee to Act Upon Instructions........................ 50
16.5 Administrator Has Right to
Vote Registered Investment Company Shares............. 50
16.6 Custom Fund Investment Management ...................... 50
16.7 Authority to Segregate Assets........................... 51
17 TRUST ADMINISTRATION.............................................. 52
--------------------
17.1 Trustee to Construe Trust............................... 52
17.2 Trustee To Act As Owner of Trust Assets................. 52
17.3 United States Indicia of Ownership...................... 52
17.4 Tax Withholding and Payment............................. 53
17.5 Trustee Duties and Limitations.......................... 53
17.6 Trust Accounting........................................ 53
17.7 Valuation of Certain Assets............................. 54
17.8 Legal Counsel........................................... 54
17.9 Fees and Expenses....................................... 54
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION................. 55
-------------------------------------------------
18.1 Plan Does Not Affect Employment Rights.................. 55
18.2 Limited Return of Contributions......................... 55
18.3 Assignment and Alienation............................... 55
18.4 Facility of Payment..................................... 56
18.5 Reallocation of Lost Participant's Accounts............. 56
18.6 Claims Procedure........................................ 56
18.7 Construction............................................ 57
18.8 Jurisdiction and Severability........................... 57
18.9 Indemnification by Employer............................. 57
19 AMENDMENT, MERGER AND TERMINATION................................. 58
---------------------------------
19.1 Amendment............................................... 58
19.2 Merger.................................................. 58
19.3 Plan Termination........................................ 58
19.4 Termination of Employer's Participation................. 59
19.5 Replacement of the Trustee.............................. 59
19.6 Final Settlement and Accounting of Trustee.............. 59
APPENDIX A - INVESTMENT FUNDS.............................................. 61
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES............................. 62
APPENDIX C - LOAN INTEREST RATE............................................ 63
1 DEFINITIONS
When capitalized, the words and phrases below have the following
meanings unless different meanings are clearly required by the context:
1.1 "Account". The records maintained for purposes of accounting
for a Participant's interest in the Plan. "Account" may refer
to one or all of the following accounts which have been
created on behalf of a Participant to hold specific types of
Contributions under the Plan:
(a) "Pre-Tax Account". An account created to hold Pre-Tax
Contributions.
(b) "Rollover Account". An account created to hold
Rollover Contributions.
(c) "Company Match Account". An account created to hold
Company Match Contributions.
(d) "Company Discretionary Account". An account created
to hold Company Discretionary Contributions.
(e) "Company Additional Account". An account created to
hold Company Additional Contributions.
1.2 "ACP" or "Average Contribution Percentage". The percentage
calculated in accordance with Section 12.1.
1.3 "Administrator". The Company, which may delegate all or a
portion of the duties of the Administrator under the Plan to a
Committee in accordance with Section 15.6.
1.4 "ADP" or "Average Deferral Percentage". The percentage
calculated in accordance with Section 12.1.
1.5 "Beneficiary". The person or persons who is to receive
benefits after the death of the Participant pursuant to the
"Beneficiary Designation" paragraph in Section 11, or as a
result of a QDRO.
1.6 "Break in Service". The end of five consecutive Plan Years (or
six consecutive Plan Years if absence from employment was due
to a Parental Leave) for which a Participant is credited with
no Hours of Service.
1.7 "Code". The Internal Revenue Code of 1986, as amended.
Reference to any specific Code section shall include such
section, any valid regulation promulgated thereunder, and any
comparable provision of any future legislation amending,
supplementing or superseding such section.
1.8 "Committee". If applicable, the committee which has been
appointed by the Company to administer the Plan in accordance
with Section 15.6.
1.9 "Company". Jos. A. Bank Clothiers, Inc. or any successor by
merger, purchase or otherwise.
1.10 "Compensation". The sum of a Participant's Taxable Income and
salary reductions, if any, pursuant to Code sections 125,
402(e)(3), 402(h), 403(b), 414(h)(2) or 457.
For purposes of determining benefits under this Plan,
Compensation is limited to $200,000 (as indexed for the cost
of living pursuant to Code sections 401(a)(17) and 415(d)) per
Plan Year. For purposes of determining benefits under this
Plan for Plan Years beginning after December 31, 1993,
Compensation is limited to $150,000 (as indexed for the cost
of living pursuant to Code sections 401(a)(17) and 415(d)) per
Plan Year.
For purposes of the preceding sentences, in the case of an HCE
who is a 5% Owner or one of the 10 most highly compensated
Employees, (i) such HCE and such HCE's family group (as
defined below) shall be treated as a single employee and the
Compensation of each family group member shall be aggregated
with the Compensation of such HCE, and (ii) the limitation on
Compensation shall be allocated among such HCE and his or her
family group members in proportion to each individual's
Compensation before the application of this sentence. For
purposes of this Section, the term "family group" shall mean
an Employee's spouse and lineal descendants who have not
attained age 19 before the close of the year in question.
For the purpose of determining HCEs and key employees,
Compensation for the entire Plan Year shall be used. For the
purpose of determining ADP and ACP, Compensation shall be
limited to amounts paid to an Eligible Employee while a
Participant.
1.11 "Contribution". An amount contributed to the Plan by the
Employer or an Eligible Employee, and allocated by
contribution type to Participants' Accounts, as described in
Section 1.1. Specific types of contribution include:
(a) "Pre-Tax Contribution". An amount contributed by the
Employer on an eligible Participant's behalf in
conjunction with a Participant's Code section 401(k)
salary deferral election.
(b) "Rollover Contribution". An amount contributed by an
Eligible Employee which originated from another
employer's qualified plan.
(c) "Company Match Contribution". An amount contributed
by the Employer on an eligible Participant's behalf
based upon the amount contributed by the eligible
Participant.
(d) "Company Discretionary Contribution". An amount
contributed by the Employer on an eligible
Participant's behalf and allocated on a pay based
formula to the Participant.
(e) "Company Additional Contribution". An amount
contributed by the Employer on an eligible
Participant's behalf which is fully vested.
1.12 "Contribution Dollar Limit". The annual limit placed on each
Participant's Pre- Tax Contributions, which shall be $7,000
per calendar year (as indexed for the cost of living pursuant
to Code section 402(g)(5) and 415(d)). For purposes of this
Section, a Participant's Pre-Tax Contributions shall include
(i) any Employer contribution made under any qualified cash or
deferred arrangement as defined in Code section 401(k) to the
extent not includible in gross income for the taxable year
under Code section 402(e)(3) or 402(h)(1)(B) (determined
without regard to Code section 402(g)), and (ii) any Employer
contribution to purchase an annuity contract under Code
section 403(b) under a salary reduction agreement (within the
meaning of Code section 3121(a)(5)(D)).
1.13 "Direct Rollover". A payment from the Plan to an Eligible
Retirement Plan specified by a Distributee.
1.14 "Disability". A Participant's total and permanent, mental or
physical disability resulting in termination of employment as
evidenced by presentation of medical evidence satisfactory to
the Administrator.
1.15 "Distributee". An Employee or former Employee, the surviving
spouse of an Employee or former Employee and a spouse or
former spouse of an Employee or former Employee determined to
be an alternate payee under a QDRO.
1.16 "Effective Date". April 1, 1994, unless stated otherwise. The
date upon which the provisions of this document become
effective. In general, the provisions of this document only
apply to Participants who are Employees on or after the
Effective Date. However, investment and distribution
provisions apply to all Participants with Account balances to
be invested or distributed after the Effective Date.
1.17 "Eligible Employee". An Employee of an Employer, except any
Employee:
(a) whose compensation and conditions of employment are
covered by a collective bargaining agreement to which
an Employer is a party unless the agreement calls for
the Employee's participation in the Plan; or
(b) who is treated as an Employee because he or she is a
Leased Employee.
1.18 "Eligible Retirement Plan". An individual retirement account
described in Code section 408(a), an individual retirement
annuity described in Code section 408(b), an annuity plan
described in Code section 403(a), or a qualified trust
described in Code section 401(a), that accepts a Distributee's
Eligible Rollover Distribution, except that with regard to an
Eligible Rollover Distribution to a surviving spouse, an
Eligible Retirement Plan is an individual retirement account
or individual retirement annuity.
1.19 "Eligible Rollover Distribution". A distribution of all or any
portion of the balance to the credit of a Distributee,
excluding a distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of a
Distributee or the joint lives (or joint life expectancies) of
a Distributee and the Distributee's designated Beneficiary, or
for a specified period of ten years or more; a distribution to
the extent such distribution is required under Code section
401(a)(9); and the portion of a distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
Employer securities).
1.20 "Employee". An individual who is:
(a) directly employed by any Related Company and for whom
any income for such employment is subject to
withholding of income or social security taxes, or
(b) a Leased Employee.
1.21 "Employer". The Company and any Subsidiary or other Related
Company of either the Company or a Subsidiary which adopts
this Plan with the approval of the Company.
1.22 "ERISA". The Employee Retirement Income Security Act of 1974,
as amended. Reference to any specific section shall include
such section, any valid regulation promulgated thereunder, and
any comparable provision of any future legislation amending,
supplementing or superseding such section.
1.23 "Forfeiture Account". An account holding amounts forfeited by
Participants who have left the Employer, invested in interest
bearing deposits of the Trustee, pending disposition as
provided in this Plan and Trust and as directed by the
Administrator.
1.24 "HCE" or "Highly Compensated Employee". An Employee described
as a Highly Compensated Employee in Section 12.
1.25 "Hour of Service". Each hour for which an Employee is entitled
to:
(a) payment for the performance of duties for any Related
Company;
(b) payment from any Related Company for any period
during which no duties are performed (irrespective of
whether the employment relationship has terminated)
due to vacation, holiday, sickness, incapacity
(including disability), layoff, leave of absence,
jury duty or military service;
(c) back pay, irrespective of mitigation of damages, by
award or agreement with any Related Company (and
these hours shall be credited to the period to which
the agreement pertains); or
(d) no payment, but is on a Leave of Absence (and these
hours shall be based upon his or her normally
scheduled hours per week or a 40 hour week if there
is no regular schedule).
The crediting of hours for which no duties are performed shall
be in accordance with Department of Labor regulation sections
2530.200b-2(b) and (c). Actual hours shall be used whenever an
accurate record of hours are maintained for an Employee.
Otherwise, an equivalent number of hours shall be credited for
each payroll period in which the Employee would be credited
with at least 1 hour. The payroll period equivalencies are 45
hours weekly, 90 hours biweekly, 95 hours semimonthly and 190
hours monthly.
Hours credited prior to a Break in Service are included.
An Employee's service with a predecessor or acquired company
shall only be counted in the determination of his or her Hours
of Service for eligibility and/or vesting purposes if (1) the
Company directs that credit for such service be granted, or
(2) a qualified plan of the predecessor or acquired company is
subsequently maintained by any Employer or Related Company.
1.26 "Ineligible". The Plan status of an individual during the
period in which he or she is (1) an Employee of a Related
Company which is not then an Employer, (2) an Employee, but
not an Eligible Employee, or (3) not an Employee.
1.27 "Investment Fund" or "Fund". An investment fund as described
in Section 16.2. The Investment Funds authorized by the
Administrator to be offered as of the Effective Date to
Participants and Beneficiaries are as set forth in Appendix A.
1.28 "Leased Employee". An individual who is deemed to be an
employee of any Related Company as provided in Code section
414(n) or (o).
1.29 "Leave of Absence". A period during which an individual is
deemed to be an Employee, but is absent from active
employment, provided that the absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States
armed forces and the individual returns to active
employment within the period during which he or she
retains employment rights under federal law.
1.30 "NHCE" or "Non-Highly Compensated Employee". An Employee
described as a Non-Highly Compensated Employee in Section 12.
1.31 "Normal Retirement Date". The later of the date on which a
Participant attains age 65 or completes five Years of Vesting
Service.
1.32 "Owner". A person with an ownership interest in the capital,
profits, outstanding stock or voting power of a Related
Company within the meaning of Code section 318 or 416 (which
exclude indirect ownership through a qualified plan).
1.33 "Parental Leave". The period of absence from work by reason of
pregnancy, the birth of an Employee's child, the placement of
a child with the Employee in connection with the child's
adoption, or caring for such child immediately after birth or
placement as described in Code section 410(a)(5)(E).
1.34 "Participant". An Eligible Employee who begins to participate
in the Plan after completing the eligibility requirements as
described in Section 2.1. A Participant's participation
continues until his or her employment with all Related
Companies ends and his or her Account is distributed or
forfeited.
1.35 "Pay". All cash compensation paid to an Eligible Employee by
an Employer while a Participant during the current period.
Pay is neither increased nor decreased by any salary credit or
reduction pursuant to Code sections 125 or 402(e)(3). Pay is
limited to $200,000 (as indexed for the cost of living
pursuant to Code sections 401(a)(17) and 415(d)) per Plan
Year. Pay is limited to $150,000 (as indexed for the cost of
living pursuant to Code sections 401(a)(17) and 415(d)) per
Plan Year effective for Plan Years beginning after December
31, 1993.
1.36 "Plan". The Jos. A. Bank Clothiers, Inc. Retirement & Savings
Plan set forth in this document, as from time to time amended.
1.37 "Plan Year". The annual accounting period of the Plan and
Trust which ends on each June 30.
1.38 "QDRO". A domestic relations order which the Administrator has
determined to be a qualified domestic relations order within
the meaning of Code section 414(p).
1.39 "Related Company". With respect to any Employer, that Employer
and any corporation, trade or business which is, together with
that Employer, a member of the same controlled group of
corporations, a trade or business under common control, or an
affiliated service group within the meaning of Code section
414(b), (c), (m) or (o).
1.40 "Settlement Date". For each Trade Date, the Trustee's next
business day.
1.41 "Spousal Consent". The written consent given by a spouse to a
Participant's election or waiver of a specified form of
benefit, including a loan or in-service withdrawal, or
Beneficiary designation. The spouse's consent must
acknowledge the effect on the spouse of the Participant's
election, waiver or designation and be duly witnessed by a
Plan representative or notary public. Spousal Consent shall
be valid only with respect to the spouse who signs the
Spousal Consent and only for the particular choice made by
the Participant which requires Spousal Consent. A Participant
may revoke (without Spousal Consent) a prior election, waiver
or designation that required Spousal Consent at any time
before payments begin. Spousal Consent also means a
determination by the Administrator that there is no spouse,
the spouse cannot be located, or such other circumstances as
may be established by applicable law.
1.42 "Subsidiary". A company which is 50% or more owned, directly
or indirectly, by the Company.
1.43 "Sweep Account". The subsidiary Account for each Participant
through which all transactions are processed, which is
invested in interest bearing deposits of the Trustee.
1.44 "Sweep Date". The cut off date and time for receiving
instructions for transactions to be processed on the next
Trade Date.
1.45 "Taxable Income". Compensation in the amount reported by the
Employer as "Wages, tips, other compensation" on Form W-2, or
any successor method of reporting under Code section 6041(d).
1.46 "Trade Date". Each day the Investment Funds are valued, which
is normally every day the assets of such Funds are traded.
1.47 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the
Plan and holds the Plan assets which are comprised of the
aggregate of Participants' Accounts and the Forfeiture
Account.
1.48 "Trustee". Wells Fargo Bank, National Association.
1.49 "Year of Vesting Service". A 12 consecutive month period
ending on the last day of a Plan Year in which an Employee is
credited with at least 1,000 Hours of Service.
Years of Vesting Service shall include service credited prior
to February 1, 1976.
2 ELIGIBILITY
2.1 Eligibility
All Participants as of April 1, 1994 shall continue their
eligibility to participate. Each other Eligible Employee
shall become a Participant on the first July 1, October 1,
January 1 or April 1 after the date he or she completes a 12
month eligibility period in which he or she is credited with
at least 1,000 Hours of Service. The initial eligibility
period begins on the date an Employee first performs an Hour
of Service. Subsequent eligibility periods begin with the
start of each Plan Year beginning after the first Hour of
Service is performed.
2.2 Ineligible Employees
If an Employee completes the above eligibility requirements,
but is Ineligible at the time participation would otherwise
begin (if he or she were not Ineligible), he or she shall
become a Participant on the first subsequent date on which he
or she is an Eligible Employee.
2.3 Ineligible or Former Participants
A Participant may not make or share in Plan Contributions,
nor generally be eligible for a new Plan loan, during the
period he or she is Ineligible, but he or she shall continue
to participate for all other purposes. An Ineligible
Participant or former Participant shall automatically become
an active Participant on the date he or she again becomes an
Eligible Employee.
3 PARTICIPANT CONTRIBUTIONS
3.1 Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect
to reduce his or her Pay by an amount which does not exceed
the Contribution Dollar Limit, within the limits described in
the Contribution Percentage Limits paragraph of this Section
3, and have such amount contributed to the Plan by the
Employer as a Pre-Tax Contribution. The election shall be
made as a whole percentage of Pay in such manner and with
such advance notice as prescribed by the Administrator. In no
event shall an Employee's Pre-Tax Contributions under the
Plan and all other plans, contracts or arrangements of all
Related Companies exceed the Contribution Dollar Limit for
the Employee's taxable year beginning in the Plan Year.
3.2 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or
her Pre-Tax Contribution election as of any July 1, October
1, January 1 or April 1 in such manner and with such advance
notice as prescribed by the Administrator. The changed
percentage shall become effective with the first payroll paid
after such date. Participants' Contribution election
percentages shall automatically apply to Pay increases or
decreases.
3.3 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Contribution election at
any time in such manner and with such advance notice as
prescribed by the Administrator, and such election shall be
effective with the first payroll paid after such date.
A Participant may resume Contributions by making a new
Contribution election at the same time in which a Participant
may change his or her election, but no earlier than six
months after the date he or she revoked his or her
Contribution election,in such manner and with such advance
notice as prescribed by the Administrator, and such election
shall be effective with the first payroll paid after such
date.
3.4 Contribution Percentage Limits
The Administrator may establish and change from time to time,
without the necessity of amending this Plan and Trust
document, the minimum, if applicable, and maximum Pre-Tax
Contribution percentages, prospectively or retrospectively
(for the current Plan Year), for all Participants. In
addition, the Administrator may establish any lower
percentage limits for Highly Compensated Employees as it
deems necessary. As of the Effective Date, the Pre-Tax
Contribution maximum percentage is 15%.
Irrespective of the limits that may be established by the
Administrator in accordance with this paragraph, in no event
shall the contributions made by or on behalf of a Participant
for a Plan Year exceed the maximum allowable under Code
section 415.
3.5 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Pre-Tax Contributions for a calendar
year to this and any other qualified defined contribution
plan in excess of the Contribution Dollar Limit may notify
the Administrator in writing by the following March 1 (or as
late as April 14 if allowed by the Administrator) that an
excess has occurred. In this event, the amount of the excess
specified by the Participant, adjusted for investment gain or
loss, shall be refunded to him or her by April 15 and shall
not be included as an Annual Addition under Code section 415
for the year contributed. Refunds shall not include
investment gain or loss for the period between the end of the
applicable Plan Year and the date of distribution. Any
Company Match Contributions attributable to refunded excess
Pre-Tax Contributions as described in this Section shall be
deemed a Contribution made by reason of a mistake of fact and
removed from the Participant's Account.
3.6 Timing, Posting and Tax Considerations
Participants' Contributions, other than Rollover
Contributions, may only be made through payroll deduction.
Such amounts shall be paid to the Trustee in cash and posted
to each Participant's Account(s) as soon as such amounts can
reasonably be separated from the Employer's general assets
and balanced against the specific amount made on behalf of
each Participant. In no event, however, shall such amounts be
paid to the Trustee more than 90 days after the date amounts
are deducted from a Participant's Pay. Pre-Tax Contributions
shall be treated as employer contributions in determining tax
deductions under Code section 404(a).
4 ROLLOVERS & TRUST-TO-TRUST TRANSFERS
4.1 Rollovers
The Administrator may authorize the Trustee to accept a
rollover contribution in cash, within the meaning of Code
section 402(c) or 408(d)(3)(A)(ii), directly from an Eligible
Employee or as a Direct Rollover from another qualified plan
on behalf of the Eligible Employee, if he or she is a
Participant. The Employee shall be responsible for furnishing
satisfactory evidence, in such manner as prescribed by the
Administrator, that the amount is eligible for rollover
treatment. A rollover contribution received directly from an
Eligible Employee must be paid to the Trustee in cash within
60 days after the date received by the Eligible Employee from
a qualified plan or conduit individual retirement account.
Contributions described in this paragraph shall be posted to
the applicable Employee's Rollover Account as of the date
received by the Trustee.
If it is later determined that an amount contributed pursuant
to the above paragraph did not in fact qualify as a rollover
contribution under Code section 402(c) or 408(d)(3)(A)(ii),
the balance credited to the Employee's Rollover Account shall
immediately be (1) segregated from all other Plan assets, (2)
treated as a nonqualified trust established by and for the
benefit of the Employee, and (3) distributed to the Employee.
Any such nonqualifying rollover shall be deemed never to have
been a part of the Plan.
4.2 Transfers From Other Qualified Plans
The Administrator may instruct the Trustee to receive assets
in cash or in kind directly from another qualified plan. The
Trustee may refuse the receipt of any transfer if:
(a) the Trustee finds the in-kind assets unacceptable;
(b) instructions for posting amounts to Participants'
Accounts are incomplete;
(c) any amounts are not exempted by Code section
401(a)(11)(B) from the annuity requirements of Code
section 417; or
(d) any amounts include benefits protected by Code
section 411(d)(6) which would not be preserved under
applicable Plan provisions.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee.
5 EMPLOYER CONTRIBUTIONS
5.1 Company Match Contributions
(a) Frequency and Eligibility. For each quarter of the
Plan Year, the Employer shall make Company Match
Contributions as described in the following
Allocation Method paragraph on behalf of each
Participant who contributed during the period.
(b) Allocation Method. The Company Match Contributions
(including any Forfeiture Account amounts applied as
Company Match Contributions in accordance with
Section 8.4) for each period shall total 50% of each
eligible Participant's Pre-Tax Contributions for the
period, provided that no Company Match Contributions
(and Forfeiture Account amounts) shall be made based
upon a Participant's Contributions in excess of 3% of
his or her Pay. The Employer may change the 50%
matching rate or the 3% of considered Pay to any
other percentages, including 0%, generally by
notifying eligible Participants in sufficient time to
adjust their Contribution elections prior to the
start of the period for which the new percentages
apply.
(c) Timing, Medium and Posting. The Employer shall make
each period's Company Match Contribution in cash as
soon as is feasible, and not later than the
Employer's federal tax filing date, including
extensions, for deducting such Contribution. The
Trustee shall post such amount to each Participant's
Company Match Account once the total Contribution
received has been balanced against the specific
amount to be credited to each Participant's Company
Match Account.
5.2 Company Discretionary Contributions
(a) Frequency and Eligibility. For each Plan Year, the
Employer may make a Company Discretionary
Contribution on behalf of each Participant who:
(1) was an Eligible Employee on the last day of
the period, and
(2) was credited with at least 1,000 Hours of
Service for the Plan Year.
In addition, such Contributions shall be made on
behalf of each Participant who met the requirements
of (2) but who ceased being an Employee during the
period after having attained his or her Normal
Retirement Date, or by reason of his or her
Disability or death.
(b) Allocation Method. The Company Discretionary
Contribution for each period, shall be in an amount
up to the greater of (i) the percentage equal to the
tax rate under Code section 3111(a) for the calendar
year which includes the first day of the Plan Year
and which is attributable to old-age insurance or
(ii) 5.7%, as determined by the Employer and
allocated among eligible Participants in direct
proportion to their Pay and an identical percentage
of each eligible Participant's Excess Pay. The
remaining amount, if any, shall be allocated in
direct proportion to each eligible Participant's Pay.
Excess Pay for this purpose shall mean Pay in excess
of the Social Security Taxable Wage Base for the
calendar year which includes the first day of the
Plan Year.
(c) Timing, Medium and Posting. The Employer shall make
each period's Company Discretionary Contribution in
cash as soon as is feasible, and not later than the
Employer's federal tax filing date, including
extensions, for deducting such Contribution. The
Trustee shall post such amount to each Participant's
Company Discretionary Account once the total
Contribution received has been balanced against the
specific amount to be credited to each Participant's
Company Discretionary Account.
5.3 Company Additional Contributions
(a) Frequency and Eligibility. For each Plan Year, the
Employer may make a Company Additional Contribution
on behalf of each Non-Highly Compensated Employee
Participant who contributed during the period and was
an Eligible Employee on the last day of the period.
In addition, such Contributions shall be made on
behalf of each Non- Highly Compensated Employee
Participant who contributed during the period and who
ceased being an Employee during the period after
having attained his or her Normal Retirement Date, or
by reason of his or her Disability or death.
(b) Allocation Method. The Company Additional
Contribution for each period shall be in an amount
determined by the Employer and allocated among
eligible Participants as follows:
(1) to the extent the Company Additional
Contributions are treated as Deferrals, as
such term is defined in Section 12.1, in
direct proportion to each eligible
Participant's Pay, subject to a maximum
dollar amount which may be contributed on
behalf of any Participant as determined by
the Administrator, and
(2) to the extent the Company Additional
Contributions are treated as Contributions,
as such term is defined in Section 12.1, as
a percentage of each eligible Participant's
Pre-Tax Contributions, subject to a maximum
dollar amount which may be contributed on
behalf of any Participant as determined by
the Administrator.
(c) Timing, Medium and Posting. The Employer shall make
each period's Company Additional Contribution in cash
as soon as is feasible, and not later than the
Employer's federal tax filing date, including
extensions, for deducting such contribution.
Notwithstanding, for purposes of satisfying the tests
described in Sections 12.2 and 12.4 Company
Additional Contributions must be made before the end
of the Plan Year following the Plan Year being
tested. The Trustee shall post such amount to each
Participant's Company Additional Contribution Account
once the total Contribution received has been
balanced against the specific amount to be credited
to each Participant's Company Additional Contribution
Account.
6 ACCOUNTING
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of Accounts
for each Participant in order to reflect transactions both by
type of Contribution and investment medium. Financial
transactions shall be accounted for at the individual Account
level by posting each transaction to the appropriate Account
of each affected Participant. Participant Account values shall
be maintained in shares for the Investment Funds and in
dollars for their Sweep and Participant loan Accounts. At any
point in time, the Account value shall be determined using the
most recent Trade Date values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected
Participant's Sweep Account. Any amount held in the Sweep
Account will be credited with interest up until the date on
which it is removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each
Trade Date. For any transaction to be processed as of a Trade
Date, the Trustee must receive instructions for the
transaction by the Sweep Date. Such instructions shall apply
to amounts held in the Account on that Sweep Date. Financial
transactions of the Investment Funds shall be posted to
Participants' Accounts as of the Trade Date, based upon the
Trade Date values provided by the Trustee, and settled on the
Settlement Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in
shares. The Trustee is responsible for determining the share
values of each Investment Fund as of each Trade Date. To the
extent an Investment Fund is comprised of collective
investment funds of the Trustee, or any other fiduciary to the
Plan, the share values shall be determined in accordance with
the rules governing such collective investment funds, which
are incorporated herein by reference. All other share values
shall be determined by the Trustee. The share value of each
Investment Fund shall be based on the fair market value of its
underlying assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to Account
maintenance, transaction and Investment Fund management and
maintenance, as set forth below, are paid by the Employer
directly, or indirectly, through the Forfeiture Account as
directed by the Administrator, such fees and expenses shall be
paid as set forth below. The Employer may pay a lower portion
of the fees and expenses allocable to the Accounts of
Participants who are no longer Employees.
(a) Account Maintenance: Account maintenance fees and
expenses, may include but are not limited to,
administrative, Trustee, government annual report
preparation, audit, legal, nondiscrimination testing,
and fees for any other special services. Account
maintenance fees shall be charged to Participants on
a per Participant basis provided that no fee shall
reduce a Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may
include but are not limited to, recurring payment,
Investment Fund election change and loan fees.
Transaction fees shall be charged to the
Participant's Account involved in the transaction
provided that no fee shall reduce a Participant's
Account balance below zero.
(c) Investment Fund Management and Maintenance:
Management and maintenance fees and expenses related
to the Investment Funds shall be charged at the
Investment Fund level and reflected in the net gain
or loss of each Fund.
As of the Effective Date, a breakdown of which Plan fees and
expenses shall generally be borne by the Trust (and charged to
individual Participants' Accounts) and those that shall be
paid by the Employer, directly or indirectly, is set forth in
Appendix B and may be changed from time to time, without the
necessity of amending this Plan and Trust Document.
The Trustee shall have the authority to pay any such fees and
expenses, which remain unpaid by the Employer for 60 days,
from the Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Account of the
Participant and accounted for in dollars as an earmarked asset
of the borrowing Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's
Account balance with the amount that would be credited to the
Account had no error or omission been made. Funds necessary
for any such restoration shall be provided through payment
made by the Employer, or by the Trustee to the extent the
error or omission is attributable to actions or inactions of
the Trustee, or if the restoration involves an employer
contribution account, the Administrator may direct the Trustee
to use amounts from the Forfeiture Account.
6.8 Participant Statements
The Administrator shall provide Participants with statements
of their Accounts as soon after the end of each quarter of the
Plan Year as is administratively feasible.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable
accounting methods in performing their respective duties
during the period of converting the prior accounting system of
the Plan and Trust to conform to the individual Participant
accounting system described in this Section. This includes,
but is not limited to, the method for allocating net
investment gains or losses and the extent, if any, to which
contributions received by and distributions paid from the
Trust during this period share in such allocation.
6.10 Accounts for QDRO Beneficiaries
A separate Account shall be established for an alternate payee
entitled to any portion of a Participant's Account under a
QDRO as of the date and in accordance with the directions
specified in the QDRO. In addition, a separate Account may be
established during the period of time the Administrator, a
court of competent jurisdiction or other appropriate person is
determining whether a domestic relations order qualifies as a
QDRO. Such a separate Account shall be valued and accounted
for in the same manner as any other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so
provides, the portion of a Participant's Account
payable to an alternate payee may be distributed, in
a form as permissible under the Distribution Once
Employment Ends Section and Code section 414(p), to
the alternate payee at the time specified in the
QDRO, regardless of whether the Participant is
entitled to a distribution from the Plan at such
time.
(b) Participant Loans. Except to the extent required by
law, an alternate payee, on whose behalf a separate
Account has been established, shall not be entitled
to borrow from such Account. If a QDRO specifies that
the alternate payee is entitled to any portion of the
Account of a Participant who has an outstanding loan
balance, all outstanding loans shall generally
continue to be held in the Participant's Account and
shall not be divided between the Participant's and
alternate payee's Accounts.
(c) Investment Direction. Where a separate Account has
been established on behalf of an alternate payee and
has not yet been distributed, the alternate payee may
direct the investment of such Account in the same
manner as if he or she were a Participant.
7 INVESTMENT FUNDS AND ELECTIONS
7.1 Investment Funds
Except for Participants' Sweep and loan Accounts, the Trust
shall be maintained in various Investment Funds. The
Administrator shall select the Investment Funds offered to
Participants and may change the number or composition of the
Investment Funds, subject to the terms and conditions agreed
to with the Trustee. As of the Effective Date, a list of the
Investment Funds offered to Participants is set forth in
Appendix A, and may be changed from time to time, without the
necessity of amending this Plan and Trust document.
7.2 Investment Fund Elections
Each Participant shall direct the investment of all of his or
her Contribution Accounts.
A Participant shall make his or her investment election in any
combination of one or any number of the Investment Funds
offered in accordance with the procedures established by the
Administrator and Trustee. However, during the period of
converting the prior accounting system of the Plan and Trust
to conform to the individual Participant accounting system
described in Section 6, Trust assets may be held in any
investment vehicle permitted by the Plan, as directed by the
Administrator, irrespective of Participant investment
elections.
The Administrator may set a maximum percentage of the total
election that a Participant may direct into any specific
Investment Fund, which maximum, if any, is set forth in
Appendix A, and may be changed from time to time, without the
necessity of amending this Plan and Trust document.
7.3 Responsibility for Investment Choice
Each Participant shall be solely responsible for the selection
of his or her Investment Fund choices. No fiduciary with
respect to the Plan is empowered to advise a Participant as to
the manner in which his or her Accounts are to be invested,
and the fact that an Investment Fund is offered shall not be
construed to be a recommendation for investment.
7.4 Default if No Election
The Administrator shall specify an Investment Fund for the
investment of that portion of a Participant's Account which is
not yet held in an Investment Fund and for which no valid
investment election is on file. The Investment Fund specified
as of the Effective Date is as set forth in Appendix A, and
may be changed from time to time, without the necessity of
amending this Plan and Trust document.
7.5 Timing
A Participant shall make his or her initial investment
election upon becoming a Participant and may change his or her
election at any time in accordance with the procedures
established by the Administrator and Trustee. Investment
elections received by the Trustee by the Sweep Date will be
effective on the following Trade Date.
7.6 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a
Participant's Account for Investment Fund election changes in
excess of a specified number per year as determined by the
Administrator.
8 VESTING & FORFEITURES
8.1 Fully Vested Contribution Accounts
A Participant shall be fully vested in these Accounts at all
times:
Pre-Tax Account
Rollover Account
Company Match Account
Company Additional Account
8.2 Full Vesting upon Certain Events
A Participant's entire Account shall become fully vested once
he or she has attained his or her Normal Retirement Date as an
Employee or upon his or her leaving the Employer due to his or
her Disability or death.
8.3 Vesting Schedule
In addition to the vesting provided above, a Participant's
Company Discretionary Account shall become vested in
accordance with the following schedule:
Years of Vesting Vested
Service Percentage
------- ----------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
If this vesting schedule is changed, the vested percentage for
each Participant shall not be less than his or her vested
percentage determined as of the last day prior to this change,
and for any Participant with at least three Years of Vesting
Service when the schedule is changed, vesting shall be
determined using the more favorable vesting schedule.
8.4 Forfeitures
A Participant's non-vested Account balance shall be forfeited
as of the Settlement Date following the Sweep Date on which
the Administrator has reported to the Trustee that the
Participant's employment has terminated with all Related
Companies. Forfeitures from all Employer Contribution Accounts
shall be transferred to and maintained in a single Forfeiture
Account, which shall be invested in interest bearing deposits
of the Trustee. Forfeiture Account amounts shall be utilized
to restore Accounts, to pay Plan fees and expenses and to
reduce Company Match Contributions as directed by the
Administrator.
8.5 Rehired Employees
(a) Service. If a former Employee is rehired, all Years
of Vesting Service credited prior to his or her
termination of employment shall be counted in
determining his or her vested interest.
(b) Account Restoration. If a former Employee is rehired
before he or she has a Break in Service, the amount
forfeited when his or her employment last terminated
shall be restored to his or her Account. The
restoration shall include the interest which would
have been credited had such forfeiture been invested
in the Sweep Account from the date forfeited until
the date the restoration amount is determined. The
amount shall come from the Forfeiture Account to the
extent possible, and any additional amount needed
shall be contributed by the Employer. The vested
interest in his or her restored Account shall then be
equal to:
V% times (AB + D) - D
where:
V% = current vested percentage
AB = current account balance
D = amount previously distributed
9 PARTICIPANT LOANS
9.1 Participant Loans Permitted
Loans to Participants are permitted pursuant to the terms and
conditions set forth in this Section.
9.2 Limitations on Purpose of Participant Loan
A Participant may only borrow to satisfy a financial need
determined to be a hardship. Hardship for this purpose shall
have the meaning set forth in Section 10.7(b).
9.3 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and with
such advance notice as prescribed by the Administrator. All
loans shall be evidenced by a promissory note, secured only by
the portion of the Participant's Account from which the loan
is made, and the Plan shall have a lien on this portion of his
or her Account.
9.4 Spousal Consent
A Participant is required to obtain Spousal Consent in order
to take out a loan under the Plan.
9.5 Loan Approval
The Administrator, or the Trustee if otherwise authorized by
the Administrator and expressly agreed to by the Trustee, is
responsible for determining that an loan request conforms to
the requirements described in this Section and granting such
request.
9.6 Loan Funding Limits
The loan amount must meet all of the following limits as
determined as of the Sweep Date the loan is processed:
(a) Plan Minimum Limit. The minimum amount for any loan
is $1,000.
(b) Plan Maximum Limit. Subject to the legal limit
described in (c) below, the maximum a Participant may
borrow, including the outstanding balance of existing
Plan loans, is 100% of the following Accounts which
are fully vested:
Pre-Tax Account
Company Match Account
Rollover Account
(c) Legal Maximum Limit. The maximum a Participant may
borrow, including the outstanding balance of existing
Plan loans, is 50% of his or her vested Account
balance, not to exceed $50,000. However, the $50,000
maximum is reduced by the Participant's highest
outstanding loan balance during the 12 month period
ending on the day before the Sweep Date as of which
the loan is made. For purposes of this paragraph, the
qualified plans of all Related Companies shall be
treated as though they are part of this Plan to the
extent it would decrease the maximum loan amount.
9.7 Maximum Number of Loans
A Participant may have only one loan outstanding at any given
time.
9.8 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the assets
of his or her own Accounts. The available assets shall be
determined first by Account type and then by investment type
within each type of Account. The hierarchy for loan funding by
type of Account shall be the order listed in the preceding
Plan Maximum Limit paragraph. Within each Account used for
funding a loan, amounts shall first be taken from the Sweep
Account and then taken by type of investment in direct
proportion to the market value of the Participant's interest
in each Investment Fund as of the Trade Date on which the loan
is processed.
Loans will be funded on the Settlement Date following the
Trade Date as of which the loan is processed. The Trustee
shall make payment to the Participant as soon thereafter as
administratively feasible.
9.9 Interest Rate
The interest rate charged on Participant loans shall be a
fixed reasonable rate of interest, determined from time to
time by the Administrator, which provides the Plan with a
return commensurate with the prevailing interest rate charged
by persons in the business of lending money for loans which
would be made under similar circumstances. As of the Effective
Date, the interest rate is determined as set forth in Appendix
C, and may be changed from time to time, without the necessity
of amending this Plan and Trust document.
9.10 Repayment
Substantially level amortization shall be required of each
loan with payments made at least monthly, generally through
payroll deduction. Loans may be prepaid in full or in part at
any time. The Participant may choose the loan repayment
period, not to exceed 5 years.
9.11 Repayment Hierarchy
Loan principal repayments shall be credited to the
Participant's Accounts in the inverse of the order used to
fund the loan. Loan interest shall be credited to the
Participant's Accounts in direct proportion to the principal
payment. Loan payments are credited by investment type based
upon the Participant's current investment election for new
Contributions.
9.12 Repayment Suspension
The Administrator may agree to a suspension of loan payments
for up to 6 months for a Participant who is on a Leave of
Absence. During the suspension period interest shall continue
to accrue on the outstanding loan balance. At the expiration
of the suspension period all outstanding loan payments and
accrued interest thereon shall be due unless otherwise agreed
upon by the Administrator.
9.13 Loan Default
A loan is treated as a default if scheduled loan payments are
more than 90 days late. A Participant shall then have 30 days
from the time he or she receives written notice of the default
and a demand for past due amounts to cure the default before
it becomes final.
In the event of default, the Administrator may direct the
Trustee to report the default as a taxable distribution. As
soon as a Plan withdrawal or distribution to such Participant
would otherwise be permitted, the Administrator may instruct
the Trustee to execute upon its security interest in the
Participant's Account by distributing the note to the
Participant.
9.14 Call Feature
The Administrator shall have the right to call any Participant
loan once a Participant's employment with all Related
Companies has terminated or if the Plan is terminated.
10 IN-SERVICE WITHDRAWALS
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions set forth in
this Section and as required by law as set forth in Section
11.7.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in
such manner and with such advance notice as prescribed by the
Administrator. The Participant shall be provided the notice
prescribed by Code section 402(f).
If an in-service withdrawal is one to which Code sections
401(a)(11) and 417 do not apply, such in-service withdrawal
may commence less than 30 days after the aforementioned notice
is provided, if:
(a) the Participant is clearly informed that he or she
has the right to a period of at least 30 days after
receipt of such notice to consider his or her option
to elect or not elect a Direct Rollover for the
portion, if any, of his or her in-service withdrawal
which will constitute an Eligible Rollover
Distribution; and
(b) the Participant after receiving such notice,
affirmatively elects a Direct Rollover for the
portion, if any, of his or her in-service withdrawal
which will constitute an Eligible Rollover
Distribution or alternatively elects to have such
portion made payable directly to him or her, thereby
not electing a Direct Rollover.
10.3 Spousal Consent
A Participant is required to obtain Spousal Consent in order
to make an in- service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee if otherwise authorized by
the Administrator and expressly agreed to by the Trustee, is
responsible for determining that an in-service withdrawal
request conforms to the requirements described in this Section
and granting such request.
10.5 Minimum Amount, Payment Form and Medium
There is no minimum amount for any type of withdrawal. With
regard to the portion of a withdrawal representing an Eligible
Rollover Distribution, a Participant may elect a Direct
Rollover. The form of payment for an in-service withdrawal
shall be a single lump sum and payment shall be made in cash.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made solely
from the assets of his or her own Accounts and will be based
on the Account values as of the Trade Date the in-service
withdrawal is processed. The available assets shall be
determined first by Account type and then by investment type
within each type of Account. Within each Account used for
funding an in-service withdrawal, amounts shall first be taken
from the Sweep Account and then taken by type of investment in
direct proportion to the market value of the Participant's
interest in each Investment Fund (which excludes Participant
loans) as of the Trade Date on which the in-service withdrawal
is processed.
In-Service withdrawals will be funded on the Settlement Date
following the Trade Date as of which the in-service withdrawal
is processed. The Trustee shall make payment as soon
thereafter as administratively feasible.
10.7 Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may
request the withdrawal of up to the amount necessary
to satisfy a financial need including amounts
necessary to pay any federal, state or local income
taxes or penalties reasonably anticipated to result
from the withdrawal. Only requests for withdrawals
(1) on account of a Participant's "Deemed Financial
Need", and (2) which are "Deemed Necessary" to
satisfy the financial need will be approved.
(b) "Deemed Financial Need". Financial commitments
relating to:
(1) the payment of unreimbursable medical
expenses described under Code section 213(d)
incurred (or to be incurred) by the
Employee, his or her spouse or dependents;
(2) the purchase (excluding mortgage payments)
of the Employee's principal residence;
(3) the payment of unreimbursable tuition and
related educational fees for up to the next
12 months of post-secondary education for
the Employee, his or her spouse or
dependents;
(4) the payment of funeral expenses of an
Employee's family member;
(5) the payment of amounts necessary for the
Employee to prevent losing his or her
principal residence through eviction or
foreclosure on the mortgage; or
(6) any other circumstance specifically
permitted under Code section
401(k)(2)(B)(i)(IV).
(c) "Deemed Necessary". A withdrawal is "deemed
necessary" to satisfy the financial need only if the
withdrawal amount does not exceed the financial need
and all of these conditions are met:
(1) the Employee has obtained all other possible
withdrawals and nontaxable loans available
from all plans maintained by Related
Companies;
(2) the Administrator shall suspend the Employee
from making any contributions to this Plan,
all other qualified and nonqualified plans
of deferred compensation and all stock
option or stock purchase plans maintained by
Related Companies for 12 months from the
date the withdrawal payment is made; and
(3) the Administrator shall reduce the
Contribution Dollar Limit for the Employee
for the calendar year next following the
calendar year of the withdrawal by the
amount of the Employee's Pre- Tax
Contributions for the calendar year of the
withdrawal.
(d) Account Sources for Withdrawal. The withdrawal amount
shall come only from the Participant's fully vested
Accounts, in the following priority order:
Rollover Account
Company Match Account
Pre-Tax Account
The amount that may be withdrawn from a Participant's
Pre-Tax Account shall not include any earnings
credited to his or her Pre-Tax Contribution Account
after December 31, 1988.
(e) Permitted Frequency. There is no restriction on the
number of Hardship withdrawals permitted to a
Participant.
10.8 Rollover Account Withdrawals
No in-service withdrawals are permitted from a Participant's
Rollover Account except as provided elsewhere in this Section.
10.9 Over Age 59 1/2 Withdrawals
(a) Requirements. A Participant who is an Employee and
over age 59 1/2 may withdraw from the Accounts listed
in paragraph (b) below.
(b) Account Sources for Withdrawal. The withdrawal amount
shall come only from the Participant's fully vested
Accounts, in the following priority order:
Rollover Account
Pre-Tax Account
Company Additional Account
Company Match Account
Company Discretionary Account
(c) Permitted Frequency. There is no restriction on the
number of Over Age 59 1/2 withdrawals permitted to a
Participant.
(d) Suspension from Further Contributions. An Over Age
59 1/2 withdrawal shall not affect a Participant's
ability to make or be eligible to receive further
Contributions.
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or
her death, shall be provided with information regarding all
optional times and forms of distribution available, to include
the notices prescribed by Code section 402(f) and Code section
411(a)-11. Subject to the other requirements of this Section,
a Participant, or his or her Beneficiary in the case of his or
her death, may elect, in such manner and with such advance
notice as prescribed by the Administrator, to have his or her
vested Account balance paid to him or her beginning upon any
Settlement Date following the Participant's termination of
employment with all Related Companies, or if earlier, at the
time required by law as set forth in Section 11.7.
If a distribution is one to which Code sections 401(a)(11) and
417 do not apply, such distribution may commence less than 30
days after the aforementioned notices are provided, if:
(a) the Participant is clearly informed that he or she
has the right to a period of at least 30 days after
receipt of such notices to consider the decision as
to whether to elect a distribution and if so to elect
a particular form of distribution and to elect or not
elect a Direct Rollover for all or a portion, if any,
of his or her distribution which will constitute an
Eligible Rollover Distribution; and
(b) the Participant after receiving such notice,
affirmatively elects a distribution and a Direct
Rollover for all or a portion, if any, of his or her
distribution which will constitute an Eligible
Rollover Distribution or alternatively elects to have
all or a portion made payable directly to him or her,
thereby not electing a Direct Rollover for all or a
portion thereof.
11.2 Spousal Consent
A Participant is required to obtain Spousal Consent in order
to receive a distribution under the Plan.
11.3 Payment Form and Medium
A Participant may elect to be paid in any of these forms,
except that the form described in (d) is only available for a
Participant who entered the Plan prior to April 1, 1994:
(a) a single lump sum, or
(b) a portion paid in a lump sum, and the remainder paid
later, or
(c) periodic installments over a period not to exceed the
life expectancy of the Participant and his or her
Beneficiary, or
(d) for a single Participant, a single life annuity and
for a married Participant, a single life annuity or a
joint and 50% survivor annuity with the Participant's
spouse as the joint annuitant.
Any annuity option permitted will be provided through the
purchase of a non-transferable single premium contract from an
insurance company which must conform to the terms of the Plan
and which will be distributed to the Participant or
Beneficiary in complete satisfaction of the benefit due.
Distributions other than annuity contracts shall generally be
made in cash. With regard to the portion of a distribution
representing an Eligible Rollover Distribution, a Distributee
may elect a Direct Rollover for all or a portion of such
amount.
11.4 Small Amounts Paid Immediately
If, at the time a Participant's employment with all Related
Companies ends, the Participant's vested Account balance is
$3,500 or less, the Participant's benefit shall be paid as a
single lump sum as soon as administratively feasible after his
or her employment with all Related Companies ends in
accordance with procedures prescribed by the Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from the
assets of his or her own Accounts and will be based on the
Account values as of the Trade Date the distribution is
processed. The available assets shall be determined first by
Account type and then by investment type within each type of
Account. Within each Account used for funding a distribution,
amounts shall first be taken from the Sweep Account and then
taken by type of investment in direct proportion to the market
value of the Participant's interest in each Investment Fund as
of the Trade Date on which the distribution is processed.
Distributions will be funded on the Settlement Date following
the Trade Date as of which the distribution is processed. The
Trustee shall make payment as soon thereafter as
administratively feasible.
11.6 Deemed Distribution
For purposes of Section 8.4, vested Account balances will be
deemed distributed as of the Settlement Date following the
Sweep Date on which the Administrator has reported to the
Trustee that the Participant's employment with all Related
Companies has terminated.
11.7 Latest Commencement Permitted
In addition to any other Plan requirements and unless a
Participant elects otherwise, his or her benefit payments will
begin not later than 60 days after the end of the Plan Year in
which he or she attains his or her Normal Retirement Date or
retires, whichever is later. However, if the amount of the
payment or the location of the Participant (after a reasonable
search) cannot be ascertained by that deadline, payment shall
be made no later than 60 days after the earliest date on which
such amount or location is ascertained but in no event later
than as described below.
Benefit payments shall begin by the April 1 immediately
following the end of the calendar year in which the
Participant attains age 70 1/2 (whether or not he or she is an
Employee).
11.8 Payment Within Life Expectancy
The Participant's payment election must be consistent with the
requirement of Code section 401(a)(9) that all payments are to
be completed within a period not to exceed the lives or the
joint and last survivor life expectancy of the Participant and
his or her Beneficiary. The life expectancies of a Participant
and his or her Beneficiary, if such Beneficiary is his or her
spouse, may be recomputed annually.
11.9 Incidental Benefit Rule
The Participant's payment election must be consistent with the
requirement that, if the Participant's spouse is not his or
her sole primary Beneficiary, the minimum annual distribution
for each calendar year, beginning with the year in which he or
she attains age 70 1/2, shall not be less than the quotient
obtained by dividing (a) the Participant's vested Account
balance as of the last Trade Date of the preceding year by (b)
the applicable divisor as determined under the incidental
benefit requirements of Code section 401(a)(9).
11.10 Payment to Beneficiary
Payment to a Beneficiary must either: (1) be completed by the
end of the calendar year that contains the fifth anniversary
of the Participant's death or (2) begin by the end of the
calendar year that contains the first anniversary of the
Participant's death and be completed within the period of the
Beneficiary's life or life expectancy, except that:
(a) If the Participant dies after the April 1 immediately
following the end of the calendar year in which he or
she attains age 70 1/2, payment to his or her
Beneficiary must be made at least as rapidly as
provided in the Participant's distribution election;
(b) If the surviving spouse is the Beneficiary, payments
need not begin until the end of the calendar year in
which the Participant would have attained age 70 1/2
and must be completed within the spouse's life or
life expectancy; and
(c) If the Participant and the surviving spouse who is
the Beneficiary die (1) before the April 1
immediately following the end of the calendar year in
which the Participant would have attained age 70 1/2
and (2) before payments have begun to the spouse, the
spouse will be treated as the Participant in applying
these rules.
11.11 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the Participant's
remaining Plan interest at the time of his or her death. The
designation may be changed at any time. However, a
Participant's spouse shall be the sole primary Beneficiary
unless the designation includes Spousal Consent for another
Beneficiary. If no proper designation is in effect at the time
of a Participant's death or if the Beneficiary does not
survive the Participant, the Beneficiary shall be, in the
order listed, the:
(a) Participant's surviving spouse,
(b) Participant's children, in equal shares, per stirpes
(by right of representation), or
(c) Participant's estate.
11.12 QJSA and QPSA Information and Elections
The following definitions, information and election rules
shall apply to any Participant who entered the Plan prior to
April 1, 1994 and who elects a life annuity option:
(a) Annuity Starting Date. The first day of the first
period for which an amount is payable as an annuity,
or, in the case of a benefit not payable in the form
of an annuity, the first day on which all events have
occurred which entitle the Participant to such
benefit.
(b) "QJSA". A qualified joint and 50% survivor annuity,
meaning a form of benefit payment which is the
actuarial equivalent of the Participant's vested
Account balances at the Annuity Starting Date,
payable to the Participant in monthly payments for
life and providing that, if the Participant's spouse
survives him or her, monthly payments equal to 50% of
the amount payable to the Participant during his or
her lifetime will be paid to the spouse for the
remainder of such person's lifetime.
(c) "QPSA". A qualified pre-retirement survivor annuity,
meaning that upon the death of a Participant before
the Annuity Starting Date, the vested portion of the
Participant's Account becomes payable to the
surviving spouse as a life annuity (except to the
extent of any outstanding Participant loan balance),
unless Spousal Consent has been given to a different
Beneficiary or the surviving spouse chooses a
different form of payment.
(d) QJSA Information to a Participant. No less than 30
and no more than 90 days before the Annuity Starting
Date, each Participant who requests a life annuity
form of payment shall be given a written explanation
of (1) the terms and conditions of the QJSA, (2) the
right to make an election to waive this form of
payment and choose an optional form of payment and
the effect of this election, (3) the right to revoke
this election and the effect of this revocation, and
(4) the need for Spousal Consent.
(e) QJSA Election. A Participant may elect (and such
election shall include Spousal Consent if married),
at any time within the 90 day period ending on the
Annuity Starting Date, to (1) waive the right to
receive the QJSA and elect an optional form of
payment, or (2) revoke or change any such election.
(f) QPSA Beneficiary Information to Participant. Upon
becoming a Participant (and with updates as needed to
insure such information is accurate and readily
available to each Participant who is between the ages
of 32 and 35), each married Participant shall be
given written information stating that (1) his or her
death benefit is payable to his or her surviving
spouse, (2) his or her ability to choose that the
benefit be paid to a different Beneficiary, (3) the
right to revoke or change a prior designation and the
effects of such revocation or change, and (4) the
need for Spousal Consent.
(g) QPSA Beneficiary Designation by Participant. A
married Participant may designate (with Spousal
Consent) a non-spouse Beneficiary at any time after
the Participant has been given the information in the
QPSA Beneficiary Information to Participant paragraph
above and upon the earlier of (1) the date the
Participant has terminated employment, or (2) the
beginning of the Plan Year in which that Participant
attains age 35.
(h) QPSA Information to a Surviving Spouse. Each
surviving spouse who requests a life annuity form of
payment shall be given a written explanation of (1)
the terms and conditions of being paid his or her
Account balance in the form of a single life annuity,
(2) the right to make an election to waive this form
of payment and choose an optional form of payment and
the effect of making this election, and (3) the
right to revoke this election and the effect of this
revocation.
(i) QPSA Election by Surviving Spouse. A surviving spouse
may elect, at any time up to the Annuity Starting
Date, to (1) waive the single life annuity and elect
an optional form of payment, or (2) revoke or change
any such election.
12 ADP AND ACP TESTS
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12
(where a definition is contained in both Sections 1 and 12,
for purposes of Section 12 the Section 12 definition shall be
controlling):
(a) "ACP" or "Average Contribution Percentage". The
Average Percentage calculated using Contributions
allocated to Participants as of a date within the
Plan Year.
(b) "ACP Test". The determination of whether the ACP is
in compliance with the Basic or Alternative
Limitation for a Plan Year (as defined in Section
12.2).
(c) "ADP" or "Average Deferral Percentage". The Average
Percentage calculated using Deferrals allocated to
Participants as of a date within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is
in compliance with the Basic or Alternative
Limitation for a Plan Year (as defined in Section
12.2).
(e) "Average Percentage". The average of the calculated
percentages for Participants within the specified
group. The calculated percentage refers to either the
"Deferrals" or "Contributions" (as defined in this
Section) made on each Participant's behalf for the
Plan Year, divided by his or her Compensation for the
portion of the Plan Year in which he or she was an
Eligible Employee while a Participant. (Pre-Tax
Contributions which will be refunded solely because
they exceed the Contribution Dollar Limit are
included in the percentage for the HCE Group but not
for the NHCE Group if such excess Pre-Tax
Contributions were made to plans of Related
Companies.)
(f) "Contributions" shall include Company Match
Contributions. In addition, Contributions may include
Pre-Tax and Company Additional Contributions, but
only to the extent that (1) the Employer elects to
use them, (2) they are not used or counted in the ADP
Test, (3) Company Additional Contributions are fully
vested when made and not withdrawable by an Employee
before he or she attains age 59 1/2, and (4) Pre-Tax
Contributions are necessary to meet the ACP Test
Alternative Limitation (defined in Section 12.2 (b))
or the Multiple Use Test.
(g) "Deferrals" shall include Pre-Tax Contributions. In
addition, Deferrals may include Company Additional
Contributions, but only to the extent that (1) the
Employer elects to use them, (2) they are not used or
counted in the ACP Test, and (3) such Contributions
are fully vested when made and not withdrawable by an
Employee before he or she attains age 59 1/2.
(h) "Family Member". An Employee who is, at any time
during the Plan Year or Lookback Year, a spouse,
lineal ascendant or descendant, or spouse of a lineal
ascendant or descendant of (1) an active or former
Employee who at any time during Plan Year or Lookback
Year is a more than 5% Owner (within the meaning of
Code section 414(q)(3)), or (2) an HCE who is among
the 10 Employees with the highest Compensation for
such Year.
(i) "HCE" or "Highly Compensated Employee". With respect
to each Employer and its Related Companies, an
Employee during the Plan Year or Lookback Year who
(in accordance with Code section 414(q)):
(1) Was a more than 5% Owner at any time during
the Lookback Year or Plan Year;
(2) Received Compensation during the Lookback
Year (or in the Plan Year if among the 100
Employees with the highest Compensation for
such Year) in excess of (i) $75,000 (as
adjusted for such Year pursuant to Code
sections 414(q)(1) and 415(d)), or (ii)
$50,000 (as adjusted for such Year pursuant
to Code sections 414(q)(1) and 415(d)) in
the case of a member of the "top-paid group"
(within the meaning of Code section
414(q)(4)) for such Year), provided,
however, that if the conditions of Code
section 414(q)(12)(B)(ii) are met, the
Company may elect for any Plan Year to apply
clause (i) by substituting $50,000 for
$75,000 and not to apply clause (ii);
(3) Was an officer of a Related Company and
received Compensation during the Lookback
Year (or in the Plan Year if among the 100
Employees with the highest Compensation for
such Year) that is greater than 50% of the
dollar limitation in effect under Code
section 415(b)(1)(A) and (d) for such Year
(or if no officer has Compensation in excess
of the threshold, the officer with the
highest Compensation), provided that the
number of officers shall be limited to 50
Employees (or, if less, the greater of three
Employees or 10% of the Employees); or
(4) Was a Family Member at any time during the
Lookback Year or Plan Year, in which case
the Contributions and Compensation of the
HCE and his or her Family Members shall be
aggregated and they shall be treated as a
single HCE.
A former Employee shall be treated as an HCE if (1)
such former Employee was an HCE when he separated
from service, or (2) such former Employee was an HCE
in service at any time after attaining age 55.
The determination of who is an HCE, including the
determinations of the number and identity of
Employees in the top-paid group, the top 100
Employees and the number of Employees treated as
officers shall be made in accordance with Code
section 414(q).
(j) "HCE Group" and "NHCE Group". With respect to each
Employer and its Related Companies, the respective
group of HCEs and NHCEs who are eligible to have
amounts contributed on their behalf for the Plan
Year, including Employees who would be eligible but
for their election not to participate or to
contribute, or because their Pay is greater than zero
but does not exceed a stated minimum.
(1) If the Related Companies maintain two or
more plans which are subject to the ADP or
ACP Test and are considered as one plan for
purposes of Code sections 401(a)(4) or
410(b), all such plans shall be aggregated
and treated as one plan for purposes of
meeting the ADP and ACP Tests, provided
that, for Plan Years beginning after
December 31, 1989, plans may only be
aggregated if they have the same Plan Year.
(2) If an HCE, who is one of the top 10 paid
Employees or a more than 5% Owner, has any
Family Members, the Deferrals, Contributions
and Compensation of such HCE and his or her
Family Members shall be combined and treated
as a single HCE. Such amounts for all other
Family Members shall be removed from the
NHCE Group percentage calculation and be
combined with the HCE's.
(3) If an HCE is covered by more than one cash
or deferred arrangement maintained by the
Related Companies, all such plans shall be
aggregated and treated as one plan for
purposes of calculating the separate
percentage for the HCE which is used in the
determination of the Average Percentage.
(k) "Lookback Year". Pursuant to Code section 414(q), the
Company elects as the Lookback Year the 12 months
ending immediately prior to the start of the Plan
Year.
(l) "Multiple Use Test". The test described in Section
12.4 which a Plan must meet where the Alternative
Limitation (described in Section 12.2(b)) is used to
meet both the ADP and ACP Tests.
(m) "NHCE" or "Non-Highly Compensated Employee". An
Employee who is not an HCE.
12.2 ADP and ACP Tests
For each Plan Year, the ADP and ACP for the HCE Group must
meet either the Basic or Alternative Limitation when compared
to the respective ADP and ACP for the NHCE Group, defined as
follows:
(a) Basic Limitation. The HCE Group Average Percentage
may not exceed 1.25 times the NHCE Group Average
Percentage.
(b) Alternative Limitation. The HCE Group Average
Percentage is limited by reference to the NHCE Group
Average Percentage as follows:
If the NHCE Group Then the Maximum HCE
Average Percentage is: Group Average Percentage is:
---------------------- ----------------------------
Less than 2% 2 times NHCE Group Average %
2% to 8% NHCE Group Average % plus 2%
More than 8% NA - Basic Limitation applies
12.3 Correction of ADP and ACP Tests
If the ADP or ACP Tests are not met, the Administrator shall
determine, no later than the end of the next Plan Year, a
maximum percentage to be used in place of the calculated
percentage for all HCEs that would reduce the ADP and/or ACP
for the HCE group by a sufficient amount to meet the ADP and
ACP Tests.
(a) ADP Correction. Pre-Tax Contributions shall, by the
end of the next Plan Year, be refunded (including
amounts previously refunded because they exceeded the
Contribution Dollar Limit) to the Participant in an
amount equal to the actual Deferrals minus the
product of the maximum percentage and the HCE's
Compensation. Any Company Match Contributions
attributable to refunded excess Pre-Tax Contributions
as described in this Section 12.3(a) shall be deemed
a Contribution made by reason of a mistake of fact
and removed from the Participant's Account.
(b) ACP Correction. Company Match Contributions shall, by
the end of the next Plan Year, be refunded to the
Participant in an amount equal to the actual
Contributions minus the product of the maximum
percentage and the HCE's Compensation.
(c) Investment Fund Sources. Once the amount of excess
Deferrals and/or Contributions is determined amounts
shall then be taken by type of investment in direct
proportion to the market value of the Participant's
interest in each Investment Fund (which excludes
Participant loans) at the time the correction is
made.
(d) Family Member Correction. To the extent any reduction
is necessary with respect to an HCE and his or her
Family Members that have been combined and treated
for testing purposes as a single Employee, the excess
Deferrals and Contributions from the ADP and/or ACP
Test shall be prorated among each such Participant in
direct proportion to his or her Deferrals or
Contributions included in each Test.
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is
used to meet both the ADP and ACP Tests, the ADP and ACP for
the HCE Group must also comply with the requirements of Code
section 401(m)(9). Such Code section requires that the sum of
the ADP and ACP for the HCE Group (as determined after any
corrections needed to meet the ADP and ACP Tests have been
made) not exceed the sum (which produces the most favorable
result) of:
(a) the Basic Limitation (defined in Section 12.2)
applied to either the ADP or ACP for the NHCE Group,
and
(b) the Alternative Limitation applied to the other NHCE
Group percentage.
12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator shall
determine a maximum percentage to be used in place of the
calculated percentage for all HCEs that would reduce either or
both the ADP or ACP for the HCE Group by a sufficient amount
to meet the multiple use limit. Any excess shall be handled in
the same manner that the distribution of excess Deferrals or
Contributions are handled.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a
Participant or forfeited in accordance with Section 12.3 or
12.5 shall be adjusted for investment gain or loss. Refunds
shall not include investment gain or loss for the period
between the end of the applicable Plan Year and the date of
distribution.
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the
Plan meets the ADP, ACP and Multiple Use Tests and that the
Contribution Dollar Limit is not exceeded. In carrying out its
responsibilities, the Administrator shall have sole discretion
to limit or reduce Deferrals or Contributions at any time. The
Administrator shall maintain records which are sufficient to
demonstrate that the ADP, ACP and Multiple Use Tests have been
met for each Plan Year for at least as long as the Employer's
corresponding tax year is open to audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs,
and the performance of the ADP, ACP and Multiple Use
Tests and any corrective action resulting therefrom
shall be made separately with regard to the Employees
of each Employer (and its Related Companies) that is
not a Related Company with the other Employer(s).
(b) Collective Bargaining Units: The performance of the
testing and any corrective action resulting therefrom
shall be applied separately to Employees who are
eligible to participate in the Plan as a result of a
collective bargaining agreement.
In addition, separate testing may be applied, at the
discretion of the Administrator and to the extent permitted
under Treasury regulations, to any group of Employees for whom
separate testing is permissible.
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
13.1 "Annual Addition" Defined
The sum of all amounts allocated to the Participant's Account
for a Plan Year. Amounts include contributions (except for
rollovers or transfers from another qualified plan),
forfeitures and, if the Participant is a Key Employee
(pursuant to Section 14) for the applicable or any prior Plan
Year, medical benefits provided pursuant to Code section
419A(d)(1). For purposes of this Section 13.1, "Account" also
includes a Participant's account in all other defined
contribution plans currently or previously maintained by any
Related Company. The Plan Year refers to the year to which the
allocation pertains, regardless of when it was allocated. The
Plan Year shall be the Code section 415 limitation year.
13.2 Maximum Annual Addition
The Annual Addition to a Participant's accounts under this
Plan and any other defined contribution plan maintained by any
Related Company for any Plan Year shall not exceed the lesser
of (1) 25% of his or her Taxable Income or (2) the greater of
$30,000 or one-quarter of the dollar limitation in effect
under Code section 415(b)(1)(A).
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any
additional Contributions would produce an excess Annual
Addition for such year, Contributions to be made for the
remainder of the Plan Year shall be limited to the amount
needed for each affected Participant to receive the maximum
Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a
Participant's Account (resulting from forfeitures,
allocations, reasonable error in determining Participant
compensation or the amount of elective contributions, or other
facts and circumstances acceptable to the Internal Revenue
Service) the excess amount (adjusted to reflect investment
gains) shall first be returned to the Participant to the
extent of his or her Pre-Tax Contributions (however to the
extent Pre-Tax Contributions were matched, the applicable
Company Match Contributions shall be forfeited in proportion
to the returned matched Pre-Tax Contributions) and the
remaining excess, if any, plus returned Company Match
Contributions, shall be forfeited by the Participant and used
to reduce subsequent Contributions as soon as is
administratively feasible.
13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess
Annual Addition, received allocations to more than one defined
contribution plan, the excess shall be corrected by reducing
the Annual Addition to this Plan only after all possible
reductions have been made to the other defined contribution
plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the
"projected annual benefit" and the denominator is the greater
of 125% of the "protected current accrued benefit" or the
normal limit which is the lesser of (1) 125% of the maximum
dollar limitation provided under Code section 415(b)(1)(A) for
the Plan Year or (2) 140% of the amount which may be taken
into account under Code section 415(b)(1)(B) for the Plan
Year, where a Participant's:
(a) "projected annual benefit" is the annual benefit
provided by the Plan determined pursuant to Code
section 415(e)(2)(A), and
(b) "protected current accrued benefit" in a defined
benefit plan in existence on (1) July 1, 1982, shall
be the accrued annual benefit provided for under
Public Law 97-248, section 235(g)(4), as amended, or
(2) on May 6, 1986, shall be the accrued annual
benefit provided for under Public Law 99-514, section
1106(i)(3).
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the
Participant's Annual Addition for each Plan Year to date and
the denominator is the sum of the "annual amounts" for each
year in which the Participant has performed service with a
Related Company. The "annual amount" for any Plan Year is the
lesser of (1) 125% of the Code section 415(c)(1)(A) dollar
limitation (determined without regard to subsection (c)(6)) in
effect for the Plan Year and (2) 140% of the Code section
415(c)(1)(B) amount in effect for the Plan Year, where:
(a) each Annual Addition is determined pursuant to the
Code section 415(c) rules in effect for such Plan
Year, and
(b) the numerator is adjusted pursuant to Public Law
97-248, section 235(g)(3), as amended, or Public Law
99-514, section 1106(i)(4).
13.8 Combined Plan Limits and Correction
If a Participant has also participated in a defined benefit
plan maintained by a Related Company, the sum of the Defined
Benefit Fraction and the Defined Contribution Fraction for any
Plan Year may not exceed 1.0. If the combined fraction exceeds
1.0 for any Plan Year, the Participant's benefit under any
defined benefit plan (to the extent it has not been
distributed or used to purchase an annuity contract) shall be
limited so that the combined fraction does not exceed 1.0
before any defined contribution limits will be enforced.
14 TOP HEAVY RULES
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the
following meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each
qualified plan of an Employer (and its Related
Companies) (1) in which a Key Employee is a
participant or was a participant during the
determination period (regardless of whether such plan
has terminated), or (2) which enables another plan in
the group to meet the requirements of Code sections
401(a)(4) and 410(b). The Employer may also treat any
other qualified plan as part of the group if the
group would continue to meet the requirements of Code
sections 401(a)(4) and 410(b) with such plan being
taken into account.
(b) "Determination Date". The last Trade Date of the
preceding Plan Year or, in the case of the Plan's
first year, the last Trade Date of the first Plan
Year.
(c) "Key Employee". A current or former Employee (or his
or her Beneficiary) who at any time during the five
year period ending on the Determination Date was:
(1) an officer of a Related Company whose
Compensation (i) exceeds 50% of the amount
in effect under Code section 415(b)(1)(A)
and (ii) places him within the following
highest paid group of officers:
Number of Employees Number of
not Excluded Under Code Highest Paid
Section 414(q)(8) Officers Included
----------------- -----------------
Less than 30 3
30 to 500 10% of the number of
Employees not excluded
under Code section
414(q)(8)
More than 500 50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation
exceeds $150,000, or
(4) a more than 0.5% Owner who is among the 10
Employees owning the largest interest in a
Related Company and whose Compensation
exceeds the amount in effect under Code
section 415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date
of (1) an Employee's Account, (2) the present value
of his or her other accrued benefits provided by all
qualified plans within the Aggregation Group, and (3)
the aggregate distributions made within the five year
period ending on such date. Plan Benefits shall
exclude rollover contributions and plan to plan
transfers made after December 31, 1983 which are both
employee initiated and from a plan maintained by a
non-related employer.
(e) "Top Heavy". The Plan's status when the Plan Benefits
of Key Employees account for more than 60% of the
Plan Benefits of all Employees who have performed
services at any time during the five year period
ending on the Determination Date. The Plan Benefits
of Employees who were, but are no longer, Key
Employees (because they have not been an officer or
Owner during the five year period), are excluded in
the determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year
in which the Plan is Top Heavy, the Employer shall
not allow any contributions (other than a Rollover
Contribution) to be made by or on behalf of any Key
Employee unless the Employer makes a contribution
(other than Pre-Tax and Company Match Contributions)
on behalf of all Participants who were Eligible
Employees as of the last day of the Plan Year in an
amount equal to at least 3% of each such
Participant's Taxable Income. The Administrator shall
remove any such contributions (including applicable
investment gain or loss) credited to a Key Employee's
Account in violation of the foregoing rule and return
them to the Employer or Employee to the extent
permitted by the Limited Return of Contributions
paragraph of Section 18.
(b) Overriding Minimum Benefit. Notwithstanding,
contributions shall be permitted on behalf of Key
Employees if the Employer also maintains a defined
benefit plan which automatically provides a benefit
which satisfies the Code section 416(c)(1) minimum
benefit requirements, including the adjustment
provided in Code section 416(h)(2)(A), if applicable.
If this Plan is part of an aggregation group in which
a Key Employee is receiving a benefit and no minimum
is provided in any other plan, a minimum contribution
of at least 3% of Taxable Income shall be provided to
the Employees specified in the preceding paragraph of
this plan. In addition, the Employer may offset a
defined benefit minimum by contributions (other than
Pre-Tax and Company Match Contributions) made to this
Plan.
14.3 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy, 100% shall
be substituted for 125% in determining the Defined Benefit
Fraction and the Defined Contribution Fraction.
15 PLAN ADMINISTRATION
15.1 Plan Delineates Authority and Responsibility
Plan fiduciaries include the Company, the Administrator, the
Committee and/or the Trustee, as applicable, whose specific
duties are delineated in this Plan and Trust. In addition,
Plan fiduciaries also include any other person to whom
fiduciary duties or responsibility is delegated with respect
to the Plan. Any person or group may serve in more than one
fiduciary capacity with respect to the Plan. To the extent
permitted under ERISA section 405, no fiduciary shall be
liable for a breach by another fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with this
Plan and Trust to the extent they are consistent with
ERISA;
(b) use that degree of care, skill, prudence and
diligence that a prudent person acting in a like
capacity and familiar with such matters would use in
the conduct of an enterprise of a like character and
with like aims;
(c) act with the exclusive purpose of providing benefits
to Participants and their Beneficiaries, and
defraying reasonable expenses of administering the
Plan;
(d) diversify Plan investments, to the extent such
fiduciary is responsible for directing the investment
of Plan assets, so as to minimize the risk of large
losses, unless under the circumstances it is clearly
prudent not to do so; and
(e) treat similarly situated Participants and
Beneficiaries in a uniform and nondiscriminatory
manner.
15.3 Company is ERISA Plan Administrator
The Company is the plan administrator, within the meaning of
ERISA section 3(16), which is responsible for compliance with
all reporting and disclosure requirements, except those that
are explicitly the responsibility of the Trustee under
applicable law. The Administrator and/or Committee shall have
any necessary authority to carry out such functions through
the actions of the Administrator, duly appointed officers of
the Company, and/or the Committee.
15.4 Administrator Duties
The Administrator shall have the discretionary authority to
construe this Plan and Trust, other than the provisions which
relate to the Trustee, and to do all things necessary or
convenient to effect the intent and purposes of the Plan,
whether or not such powers are specifically set forth in this
Plan and Trust. Actions taken in good faith by the
Administrator shall be conclusive and binding on all
interested parties, and shall be given the maximum possible
deference allowed by law. In addition to the duties listed
elsewhere in this Plan and Trust, the Administrator's
authority shall include, but not be limited to, the
discretionary authority to:
(a) determine who is eligible to participate, if a
contribution qualifies as a rollover contribution,
the allocation of Contributions, and the eligibility
for loans, withdrawals and distributions;
(b) provide each Participant with a summary plan
description no later than 90 days after he or she has
become a Participant (or such other period permitted
under ERISA section 104(b)(1)), as well as informing
each Participant of any material modification to the
Plan in a timely manner;
(c) make a copy of the following documents available to
Participants during normal work hours: this Plan and
Trust (including subsequent amendments), all annual
and interim reports of the Trustee related to the
entire Plan, the latest annual report and the summary
plan description;
(d) determine the fact of a Participant's death and of
any Beneficiary's right to receive the deceased
Participant's interest based upon such proof and
evidence as it deems necessary;
(e) establish and review at least annually a funding
policy bearing in mind both the short-run and
long-run needs and goals of the Plan. To the extent
Participants may direct their own investments, the
funding policy shall focus on which Investment Funds
are available for Participants to use; and
(f) adjudicate claims pursuant to the claims procedure
described in Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors
(including attorneys, accountants, actuaries, consultants,
record keepers, investment counsel and administrative
assistants) as it considers necessary to assist it in the
performance of its duties. The Administrator shall also comply
with the bonding requirements of ERISA section 412.
15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, has appointed a
Committee to administer the Plan on its behalf. The Company
shall provide the Trustee with the names and specimen
signatures of any persons authorized to serve as Committee
members and act as or on its behalf. Any Committee member
appointed by the Company shall serve at the pleasure of the
Company, but may resign by written notice to the Company.
Committee members shall serve without compensation from the
Plan for such services. Except to the extent that the Company
otherwise provides, any delegation of duties to a Committee
shall carry with it the full discretionary authority of the
Administrator to complete such duties.
15.7 Committee Operating Rules
(a) Actions of Majority. Any act delegated by the Company
to the Committee may be done by a majority of its
members. The majority may be expressed by a vote at a
meeting or in writing without a meeting, and a
majority action shall be equivalent to an action of
all Committee members.
(b) Meetings. The Committee shall hold meetings upon such
notice, place and times as it determines necessary to
conduct its functions properly.
(c) Reliance by Trustee. The Committee may authorize one
or more of its members to execute documents on its
behalf and may authorize one or more of its members
or other individuals who are not members to give
written direction to the Trustee in the performance
of its duties. The Committee shall provide such
authorization in writing to the Trustee with the name
and specimen signatures of any person authorized to
act on its behalf. The Trustee shall accept such
direction and rely upon it until notified in writing
that the Committee has revoked the authorization to
give such direction. The Trustee shall not be deemed
to be on notice of any change in the membership of
the Committee, parties authorized to direct the
Trustee in the performance of its duties, or the
duties delegated to and by the Committee until
notified in writing.
16 MANAGEMENT OF INVESTMENTS
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in
accordance with those provisions of this Plan and Trust which
relate to the Trustee, for use in providing Plan benefits and
paying Plan expenses not paid directly by the Employer. Plan
benefits will be drawn solely from the Trust and paid by the
Trustee as directed by the Administrator. Notwithstanding, the
Administrator may appoint, with the approval of the Trustee,
another trustee to hold and administer Plan assets which do
not meet the requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the
Trustee to invest Trust assets in one or more Investment
Funds. The number and composition of Investment Funds may be
changed from time to time, without the necessity of amending
this Plan and Trust document. The Trustee may establish
reasonable limits on the number of Investment Funds as well as
the acceptable assets for any such Investment Fund. Each of
the Investment Funds may be comprised of any of the following:
(a) shares of a registered investment company, whether or
not the Trustee or any of its affiliates is an
advisor to, or other service provider to, such
company;
(b) collective investment funds maintained by the
Trustee, or any other fiduciary to the Plan, which
are available for investment by trusts which are
qualified under Code sections 401(a) and 501(a);
(c) individual equity and fixed income securities which
are readily tradeable on the open market;
(d) guaranteed investment contracts issued by a bank or
insurance company; and
(e) interest bearing deposits of the Trustee.
Any Investment Fund assets invested in a collective investment
fund, shall be subject to all the provisions of the
instruments establishing and governing such fund. These
instruments, including any subsequent amendments, are
incorporated herein by reference.
16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment
manager of each Investment Fund to maintain sufficient deposit
or money market type assets in each Investment Fund to handle
the Fund's liquidity and disbursement needs. Each
Participant's and Beneficiary's Sweep Account, which is used
to hold assets pending investment or disbursement, shall
consist of interest bearing deposits of the Trustee.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in
the Investment Funds as soon as practicable after such
instructions are received from the Administrator,
Participants, or Beneficiaries. Such instructions shall remain
in effect until changed by the Administrator, Participants or
Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company
Shares
The Administrator shall be entitled to vote proxies or
exercise any shareholder rights relating to shares held on
behalf of the Plan in a registered investment company.
Notwithstanding, the authority to vote proxies and exercise
shareholder rights related to such shares held in a Custom
Fund is vested as provided otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the
Trustee, an investment manager for any Investment Fund
established by the Trustee solely for Participants of this
Plan (a "Custom Fund"). The investment manager may be the
Administrator, Trustee or an investment manager pursuant to
ERISA section 3(38). The Administrator shall advise the
Trustee in writing of the appointment of an investment manager
and shall cause the investment manager to acknowledge to the
Trustee in writing that the investment manager is a fiduciary
to the Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the
Trustee, shall be established for a Custom Fund. If a
Custom Fund consists solely of collective investment
funds or shares of a registered investment company
(and sufficient deposit or money market type assets
to handle the Fund's liquidity and disbursement
needs), its' underlying instruments shall constitute
the guidelines.
(b) Authority of Investment Manager. The investment
manager of a Custom Fund shall have the authority
to vote or execute proxies, exercise shareholder
rights, manage, acquire, and dispose of Trust assets.
(c) Custody and Trade Settlement. Unless otherwise
expressly agreed to by the Trustee, the Trustee shall
maintain custody of all Custom Fund assets and be
responsible for the settlement of all Custom Fund
trades. For purposes of this section, shares of a
collective investment fund, shares of a registered
investment company and guaranteed investment
contracts issued by a bank or insurance company,
shall be regarded as the Custom Fund assets instead
of the underlying assets of such instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the
Administrator nor the Trustee shall be obligated to
invest or otherwise manage any Custom Fund assets for
which the Trustee or Administrator is not the
investment manager nor shall the Administrator or
Trustee be liable for acts or omissions with regard
to the investment of such assets except to the extent
required by ERISA.
16.7 Authority to Segregate Assets
The Company may direct the Trustee to split an Investment Fund
into two or more funds in the event any assets in the Fund are
illiquid or the value is not readily determinable. In the
event of such segregation, the Company shall give instructions
to the Trustee on what value to use for the split-off assets,
and the Trustee shall not be responsible for confirming such
value.
17 TRUST ADMINISTRATION
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to construe
those provisions of this Plan and Trust which relate to the
Trustee and to do all things necessary or convenient to the
administration of the Trust, whether or not such powers are
specifically set forth in this Plan and Trust. Actions taken
in good faith by the Trustee shall be conclusive and binding
on all interested parties, and shall be given the maximum
possible deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth
in this Plan and Trust, the Trustee shall have all the power,
authority, rights and privileges of an absolute owner of the
Trust assets and, not in limitation but in amplification of
the foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell,
tender, exchange, dispose of, encumber, hypothecate,
pledge, mortgage, lease, grant options respecting,
repair, alter, insure, or distribute any and all
property in the Trust;
(b) borrow money, participate in reorganizations, pay
calls and assessments, vote or execute proxies,
exercise subscription or conversion privileges,
exercise options and register any securities in the
Trust in the name of the nominee, in federal book
entry form or in any other form as will permit title
thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate,
adjust, settle, enforce or foreclose, by judicial
proceedings or otherwise, or defend against the same,
any obligations or claims in favor of or against the
Trust; and
(d) lend, through a collective investment fund, any
securities held in such collective investment fund to
brokers, dealers or other borrowers and to permit
such securities to be transferred into the name and
custody and be voted by the borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of any
Trust assets outside the jurisdiction of the United States,
except as authorized by ERISA section 404(b).
17.4 Tax Withholding and Payment
(a) Withholding. The Trustee shall calculate and withhold
federal (and, if applicable, state) income taxes with
regard to any Eligible Rollover Distribution that is
not paid as a Direct Rollover. With regard to any
taxable distribution that is not an Eligible Rollover
Distribution, the Trustee shall calculate and
withhold federal (and, if applicable, state) income
taxes in accordance with the Participant's
withholding election.
(b) Taxes Due From Investment Funds. The Trustee shall
pay from the Investment Fund any taxes or assessments
imposed by any taxing or governmental authority on
such Fund or its income, including related interest
and penalties.
17.5 Trustee Duties and Limitations
Unless otherwise agreed to by the Trustee, the Trustee's
duties shall be confined to construing the terms of the Plan
and Trust as they relate to the Trustee, receiving funds on
behalf of and making payments from the Trust, safeguarding and
valuing Trust assets, and investing and reinvesting Trust
assets in the Investment Funds as directed by the
Administrator or Participants. The Trustee shall have no duty
or authority to ascertain whether Contributions are in
compliance with the Plan, to enforce collection or to compute
or verify the accuracy or adequacy or any amount to be paid to
it by the Employer. The Trustee shall not be liable for the
proper application of any part of the Trust with respect to
any disbursement made at the direction of the Administrator.
17.6 Trust Accounting
(a) Annual Report. Within 60 days (or other reasonable
period) following the close of the Plan Year, the
Trustee shall provide the Administrator with an
annual accounting of Trust assets and information to
assist the Administrator in meeting ERISA's annual
reporting and audit requirements.
(b) Periodic Reports. The Trustee shall maintain records
and provide sufficient reporting to allow the
Administrator to properly monitor the Trust's assets
and activity.
(c) Administrator Approval. Approval of any Trustee
accounting will automatically occur 90 days after
such accounting has been received by the
Administrator, unless the Administrator files a
written objection with the Trustee within such time
period. Such approval shall be final as to all
matters and transactions stated or shown therein and
binding upon the Administrator.
17.7 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is
not readily tradable and listed on a national securities
exchange registered under the Securities Exchange Act of 1934,
as amended, the Trustee may engage a qualified independent
appraiser to determine the fair market value of such property,
and the appraisal fees shall be paid from the Investment Fund
containing the asset.
17.8 Legal Counsel
The Trustee may consult with legal counsel of its choice,
including counsel for the Employer or counsel of the Trustee,
upon any question or matter arising under this Plan and Trust.
When relied upon by the Trustee, the opinion of such counsel
shall be evidence that the Trustee has acted in good faith.
17.9 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such
as may be mutually agreed upon by the Company and the Trustee.
Trustee fees and all reasonable expenses of counsel and
advisors retained by the Trustee shall be paid in accordance
with Section 6.
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any
Employee. The Employer expressly reserves the right to
discharge an Employee at any time, with or without cause,
without regard to the effect such discharge would have upon
the Employee's interest in the Plan.
18.2 Limited Return of Contributions
Except as provided in this paragraph, (1) Plan assets shall
not revert to the Employer nor be diverted for any purpose
other than the exclusive benefit of Participants or their
Beneficiaries; and (2) a Participant's vested interest shall
not be subject to divestment. As provided in ERISA section
403(c)(2), the actual amount of a Contribution made by the
Employer (or the current value of the Contribution if a net
loss has occurred) may revert to the Employer if:
(a) such Contribution is made by reason of a mistake of
fact;
(b) initial qualification of the Plan under Code section
401(a) is not received and a request for such
qualification is made within the time prescribed
under Code section 401(b) (the existence of and
Contributions under the Plan are hereby conditioned
upon such qualification); or
(c) such Contribution is not deductible under Code
section 404 (such Contributions are hereby
conditioned upon such deductibility) in the taxable
year of the Employer for which the Contribution is
made.
The reversion to the Employer must be made (if at all) within
one year of the mistaken payment of the Contribution, the date
of denial of qualification, or the date of disallowance of
deduction, as the case may be. A Participant shall have no
rights under the Plan with respect to any such reversion.
18.3 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not
otherwise required by law, no benefit provided by the Plan may
be anticipated, assigned or alienated, except:
(a) to create, assign or recognize a right to any benefit
with respect to a Participant pursuant to a QDRO, or
(b) to use a Participant's vested Account balance as
security for a loan from the Plan which is permitted
pursuant to Code section 4975.
18.4 Facility of Payment
If a Plan benefit is due to be paid to a minor or if the
Administrator reasonably believes that any payee is legally
incapable of giving a valid receipt and discharge for any
payment due him or her, the Administrator shall have the
payment of the benefit, or any part thereof, made to the
person (or persons or institution) whom it reasonably believes
is caring for or supporting the payee, unless it has received
due notice of claim therefor from a duly appointed guardian or
conservator of the payee. Any payment shall to the extent
thereof, be a complete discharge of any liability under the
Plan to the payee.
18.5 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to
payment of a Plan benefit after a reasonable search, the
Administrator may at any time thereafter treat such person's
Account as forfeited and use such amount to offset any
Employer Contributions or as otherwise provided in Section 8.
If such person subsequently presents the Administrator with a
valid claim for the benefit, such person shall be paid the
amount treated as forfeited, plus the interest that would have
been earned in the Sweep Account to the date of determination.
The Administrator shall pay the amount through an additional
Employer Contribution or direct the Trustee to pay the amount
from the Forfeiture Account.
18.6 Claims Procedure
(a) Right to Make Claim. An interested party who
disagrees with the Administrator's determination of
his or her right to Plan benefits must submit a
written claim and exhaust this claim procedure before
legal recourse of any type is sought. The claim must
include the important issues the interested party
believes support the claim. The Administrator,
pursuant to the authority provided in this Plan,
shall either approve or deny the claim.
(b) Process for Denying a Claim. The Administrator's
partial or complete denial of an initial claim must
include an understandable, written response covering
(1) the specific reasons why the claim is being
denied (with reference to the pertinent Plan
provisions) and (2) the steps necessary to perfect
the claim and obtain a final review.
(c) Appeal of Denial and Final Review. The interested
party may make a written appeal of the
Administrator's initial decision, and the
Administrator shall respond in the same manner and
form as prescribed for denying a claim initially.
(d) Time Frame. The initial claim, its review, appeal and
final review shall be made in a timely fashion,
subject to the following time table:
Days to Respond
Action From Last Action
------ ----------------
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
However, the Administrator may take up to twice the
maximum response time for its initial and final
review if it provides an explanation within the
normal period of why an extension is needed and when
its decision will be forthcoming.
18.7 Construction
Headings are included for reading convenience. The text shall
control if any ambiguity or inconsistency exists between the
headings and the text. The singular and plural shall be
interchanged wherever appropriate. References to Participant
shall include Beneficiary when appropriate and even if not
otherwise already expressly stated.
18.8 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and
administered under ERISA and other applicable federal laws
and, where not otherwise preempted, by the laws of the State
of California. If any provision of this Plan and Trust shall
become invalid or unenforceable, that fact shall not affect
the validity or enforceability of any other provision of this
Plan and Trust. All provisions of this Plan and Trust shall be
so construed as to render them valid and enforceable in
accordance with their intent.
18.9 Indemnification by Employer
The Employers hereby agree to indemnify all Plan fiduciaries
against any and all liabilities resulting from any action or
inaction, (including a Plan termination in which the Company
fails to apply for a favorable determination from the Internal
Revenue Service with respect to the qualification of the Plan
upon its termination), in relation to the Plan or Trust (1)
including (without limitation) expenses reasonably incurred in
the defense of any claim relating to the Plan or its assets,
and amounts paid in any settlement relating to the Plan or its
assets, but (2) excluding liability resulting from actions or
inactions made in bad faith, or resulting from the negligence
or willful misconduct of the Trustee. The Company shall have
the right, but not the obligation, to conduct the defense of
any action to which this Section applies. The Plan fiduciaries
are not entitled to indemnity from the Plan assets relating to
any such action.
19 AMENDMENT, MERGER AND TERMINATION
19.1 Amendment
The Company reserves the right to amend this Plan and Trust at
any time, to any extent and in any manner it may deem
necessary or appropriate. The Company (and not the Trustee)
shall be responsible for adopting any amendments necessary to
maintain the qualified status of this Plan and Trust under
Code sections 401(a) and 501(a). The Administrator shall have
the authority to adopt Plan and Trust amendments which have no
substantial adverse financial impact upon an Employer or the
Plan. All interested parties shall be bound by any amendment,
provided that no amendment shall:
(a) become effective until it is accepted in writing by
the Trustee (which acceptance shall not unreasonably
be withheld);
(b) except to the extent permissible under ERISA and the
Code, make it possible for any portion of the Trust
assets to revert to an Employer or to be used for, or
diverted to, any purpose other than for the exclusive
benefit of Participants and Beneficiaries entitled to
Plan benefits and to defray reasonable expenses of
administering the Plan;
(c) decrease the rights of any Employee to benefits
accrued (including the elimination of optional forms
of benefits) to the date on which the amendment is
adopted, or if later, the date upon which the
amendment becomes effective, except to the extent
permitted under ERISA and the Code; nor
(d) permit an Employee to be paid the balance of his or
her Pre-Tax Account unless the payment would
otherwise be permitted under Code section 401(k).
19.2 Merger
This Plan and Trust may not be merged or consolidated with,
nor may its assets or liabilities be transferred to, another
plan unless each Participant and Beneficiary would, if the
resulting plan were then terminated, receive a benefit just
after the merger, consolidation or transfer which is at least
equal to the benefit which would be received if either plan
had terminated just before such event.
19.3 Plan Termination
The Company may, at any time and for any reason, terminate the
Plan, or completely discontinue contributions. Upon either of
these events, or in the event of a partial termination of the
Plan within the meaning of Code section 411(d)(3), the
Accounts of each affected Employee who has not yet incurred
a Break in Service shall be fully vested. Distributions or
withdrawals will be made in accordance with the terms of the
Plan as in effect at the time of the Plan's termination or as
thereafter amended provided that a post-termination amendment
will not be effective to the extent that it violates Section
19.1 unless it is required in order to maintain the qualified
status of the Plan upon its termination. The Trustee's and
Employer's authority shall continue beyond the Plan's
termination date until all Trust assets have been liquidated
and distributed.
19.4 Termination of Employer's Participation
Any Employer may terminate its Plan participation upon written
notice executed by the Employer and delivered to the Company.
Upon the Employer's request, the Company may instruct the
Trustee and Administrator to spin off all affected Accounts
and underlying assets into a separate qualified plan under
which the Employer shall assume the powers and duties of the
Company. Alternatively, the Company may treat the event as a
partial termination described above or continue to maintain
the Accounts under the Plan.
19.5 Replacement of the Trustee
The Trustee may resign as Trustee under this Plan and Trust or
may be removed by the Company at any time upon at least 90
days written notice (or less if agreed to by both parties). In
such event, the Company shall appoint a successor trustee by
the end of the notice period. The successor trustee shall then
succeed to all the powers and duties of the Trustee under this
Plan and Trust. If no successor trustee has been named by the
end of the notice period, the Company's chief executive
officer shall become the trustee, or if he or she declines,
the Trustee may petition the court for the appointment of a
successor trustee.
19.6 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as is administratively
feasible after its resignation or removal as Trustee,
the Trustee shall transfer to the successor trustee
all property currently held by the Trust. However,
the Trustee is authorized to reserve such sum of
money as it may deem advisable for payment of its
accounts and expenses in connection with the
settlement of its accounts or other fees or expenses
payable by the Trust. Any balance remaining after
payment of such fees and expenses shall be paid to
the successor trustee.
(b) Final Accounting. The Trustee shall provide a final
accounting to the Administrator within 90 days of the
date Trust assets are transferred to the successor
trustee.
(c) Administrator Approval. Approval of the final
accounting will automatically occur 90 days after
such accounting has been received by the
Administrator, unless the Administrator files a
written objection with the Trustee within such time
period. Such approval shall be final as to all
matters and transactions stated or shown therein and
binding upon the Administrator.
APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered to Participants and Beneficiaries as of
the Effective Date include this set of daily valued funds:
Category Funds
-------- -----
Money Market Money Market
Income U.S. Treasury Allocation
Balanced Asset Allocation
Equity Growth Stock
Fidelity Contra
Combination LifePath
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the Money
Market Fund.
III. Maximum Percentage Restrictions Applicable to Certain Investment Funds
As of the Effective Date, there are no maximum percentage restrictions
applicable to any Investment Funds.
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be as follows:
1) Investment Management Fees: These are paid by Participants in that
management fees reduce the investment return reported and credited to
Participants.
2) Special Fund Maintenance Fees: These are paid by the Employer on a
quarterly basis.
3) Recordkeeping Fees: These are paid by Participants and are assessed
monthly and billed/collected from Accounts quarterly.
4) Loan Fees: A $3.50 per month fee is assessed and billed/collected
quarterly from the Account of each Participant who has an outstanding
loan balance for loans entered into on or after April 1, 1994. For
loans entered into prior to April 1, 1994, these are paid by the
Employer on a quarterly basis.
5) Investment Fund Election Changes: For each Investment Fund election
change by a Participant, in excess of 4 changes per year, a $10 fee
will be assessed and billed/collected quarterly from the Participant's
Account.
6) Recurring Payment Fees: A $3.00 per check fee will be assessed and
billed/collected quarterly from the Participant's Account.
7) Additional Fees Paid by Employer: All other Plan related fees and
expenses shall be paid by the Employer. To the extent that the
Administrator later elects that any such fees shall be borne by
Participants, the fees shall be added to the recordkeeping fees and
assessed against Participants' Accounts, per 3) above and estimates of
the fees shall be determined and reconciled, at least annually.
APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the Trustee's prime rate, plus 2%.
COLLECTIVE BARGAINING AGREEMENT
BETWEEN
RETAIL EMPLOYEES UNION
LOCAL 340, AMALGAMATED CLOTHING
AND TEXTILE WORKERS UNION, AFL-CIO
and
JOS. A. BANK CLOTHIERS, INC.
February 1, 1995
to
April 30, 1997
THIS AGREEMENT made as of the 1st day of February by and between the Retail
Employees Union, Local 340, Amalgamated Clothing and Textile Workers Union of
America, AFL-CIO, hereinafter referred to as the "UNION" for and in behalf of
the employees covered by this Agreement and Jos. A. Bank Clothiers, Inc.,
hereinafter referred to as the "EMPLOYER".
ARTICLE I: RECOGNITION
(A) The Employer recognizes the Union as the sole and exclusive bargaining agent
for all of its employees in the following appropriate unit:
Included: All salespeople, non-selling employees, tailors, fitter-tailors, and
pressers employed by the Employer at its store located at Madison Avenue and
46th Street in New York City, and any and all other heretofore included selling
and non-selling employees employed by the Employer in any store which shall be
hereafter operated or controlled by the Employer in New York City, Nassau,
Suffolk, Rockland and Westchester Counties, excluding any factory outlet stores
operated or controlled by the Employer.
Excluded: Office clerical employees, professional employees, guards and
supervisors as defined in the Act, including Store Manager, Assistant Store
Manager, Department Managers, Operations Managers, Tailor Shop Manager.
(B) The Union agrees that its members who are employees of the Employer will
work upon the terms and conditions set forth in this Agreement.
(C) The Employer shall recognize and deal with such representatives of the
employees as the Union may elect or appoint and shall permit such
representatives elected or appointed by the Union to visit the premises of the
Employer at reasonable times during working hours. Such Union representatives
shall, where practicable, notify the Employer in advance of their arrival at the
Employer's premises and such visits shall not unduly interfere with the
Employer's operations.
(D) In the event of a dispute over the compensation of any bargaining unit
member, the Employer will make available such bargaining unit payroll data as
the Union may reasonably require as the collective bargaining agent for such
unit employees.
(E) The Union shall have the right to post notices concerning the internal
administration of the Union on a bulletin board or boards to be located on
the premises of the Employer at mutually agreeable places.
ARTICLE II: UNION SECURITY
(A) In the manner and to the extent permitted by law, membership in the Union on
or after the 30th day following the date this contract is executed, or the 30th
day following the date of employment of each employee, whichever is later, shall
be required as a condition of employment; all employees who are now members or
thereafter become members of the Union, shall as a condition of continued
employment, remain members in good standing during the term of this contract.
For the purposes of this Article, employees shall be considered members in good
standing if they tender to the Union uniformly required periodic dues and
assessments.
ARTICLE III - CHECK-OFF
The Employer shall deduct from the wages of members of the bargaining unit upon
voluntary written authorization of said members, union dues, initiation fees and
assessments. The amounts deducted pursuant to such authorization shall be
transmitted promptly each month to the properly-designated official of the
Union, together with a list of names of the employees from whom the deductions
were made. The Union agrees to indemnify and hold the Employer harmless for any
and all liabilities that may be incurred by the Employer by reason of any
deduction provided for herein. The voluntary written authorization of any
member of the bargaining unit shall be provided on the standard Union checkoff
authorization form attached hereto and made a part hereof as Appendix A.
ARTICLE IV: MANAGEMENT RIGHTS
The Employer retains and shall continue to retain the right to operate and
manage its business and to exercise all of the customary rights and powers of
management, except as such rights and powers are expressly limited by the terms
of this Agreement. Without limitation of the foregoing this shall include the
Employer's right to establish or modify job requirements, work rules and
procedures, and performance standards, provided that the exercise of this right
shall not be unreasonable.
ARTICLE V: SENIORITY
(A) For benefit accrual, vacation and personal day selection purposes, seniority
shall be defined as the length of time an employee has been in continuous
employment in a bargaining unit position with the Employer since the employee's
most recent date of hire. Seniority shall be applicable or relevant only in
those provisions' which expressly so state.
(B) All newly hired non-selling employees will be regarded as probationary
employees for the first ninety (90) calendar days from the date of their hire.
Newly hired salespersons shall be regarded as probationary employees for the
first 120 calendar days from the date of their hire.
The aforesaid probationary periods may be extended by the Employer upon notice
to the Union for an additional sixty (60) calendar days. The Employer must give
counseling concerning any performance issue to any employee whose probationary
period has been extended at the end of 90 and 120 days of employment in the case
of non-selling employees and at the end of 120 and 150 days in the case of sales
employees.
During the probationary period, employees will not have seniority status and may
be laid off, terminated, transferred or demoted entirely at the discretion of
the Employer. The grievance and arbitration procedures of this contract shall
not be applicable to these actions. At the completion of the probationary
period, employees shall have seniority from the most recent date of hire.
(C) The Employer shall furnish the Union with a current seniority list on or
about January 30th of each year.
(D) Seniority rights shall be lost for all purposes, including layoff and
recall, in the event of termination of employment.
(E) The Employer shall have the right to transfer selling personnel on a
temporary basis from one floor to another and non-selling personnel from one
department to any other department in the store at any time, provided that the
Employer shall not transfer an employee for disciplinary reasons (other than job
performance-related reasons), and further provided that there shall be no
involuntary transfers of selling employees to non-selling positions. However,
selling personnel may be temporarily assigned for purposes of coverage on an
equitable rotating basis among all store selling personnel. Temporary
assignments shall not exceed seven (7) consecutive working days.
ARTICLE V: LAYOFFS
(A) For purposes of this Article there shall be such department groups as
specified in Appendix B attached hereto and made a part hereof. A department
group shall be defined as that department or grouping of departments within
which seniority rights may be exercised in the event of layoff or recall.
(B) Seniority shall be defined for purposes of this Article as the total length
of bargaining unit seniority with the Employer, whether or not interrupted by
employment with the Employer in a non-bargaining unit position, since the last
date of hire.
(C) All layoffs shall be in reverse order of seniority from the appropriate
seniority list, i.e., the last person hired shall be the first person laid off.
(D) Within each department group, seasonal and probationary employees shall be
laid off before regular employees, but without regard to seniority among and
between such seasonal and probationary employees. The Shop Steward shall be
accorded the most senior position of the appropriate seniority list, for layoff
and recall only.
(E) A laid off employee with one (1) or more years continuous service with the
Employer shall retain recall rights for twelve (12) months from the date of
layoff. Laid off employees with less than one years continuous service with the
Employer shall retain recall rights for six (6) months from the date of lay off.
Recalls shall be in reverse order of layoff.
ARTICLE VII: WAGES
(A) Non-Selling Employees
The minimum hourly wage rates for non-selling employees shall be as follows:
Job Classification February 1, 1995 4/1/96
------------------ ---------------- ------
Cashier ................ $ 7.50 $ 8.00
Shipping/Receiving Clerk $ 7.50 $ 8.00
Porter ................. $ 7.00 $ 7.50
Tailor ................. $11.00 $11.50
Fitter/Tailor .......... $14.43 $14.93
Presser ................ $11.00 $11.50
(B) Selling Employees
The base hourly wage rates for selling employees shall be as follows:
Regular Assignment February 1, 1995 4/1/96
------------------ ---------------- ------
First Floor $ 7.70 $ 8.20
Second Floor $ 9.62 $ 9.62
(C) Commission on net personal sales shall be calculated on a fiscal month basis
using a graduated commission percentage. Net sales is defined as individual
merchandise sales reduced by identified returns and the employee's share of
unidentified returns plus the employee's share of any unidentified or management
sales.
(D) Base commission percentage for selling employees is 4% of net sales. If net
sales during a fiscal month exceed the predetermined sales levels set forth
below, additional commission is paid, as shown.
Monthly Pre-determined Sales Levels
- --------------------------------------------------------------------------------
MEN'S
CLOTHING Commission % February March April May
- --------------------------------------------------------------------------------
(2ND FLOOR) %
- --------------------------------------------------------------------------------
ALL SALES BELOW 1ST
LEVEL 4.0
- --------------------------------------------------------------------------------
ALL SALES IN FIRST
LEVEL 5.0 $15,000 $30,000 $28,000 $26,000
- --------------------------------------------------------------------------------
ALL SALES IN SECOND
LEVEL 6.0 $21,000 $41,000 $38,000 $36,000
- --------------------------------------------------------------------------------
ALL SALES IN THIRD
LEVEL 7.0 $27,000 $53,000 $50,000 $47,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MEN'S CLOTHING (2ND
FLOOR) Commission % JUNE JULY AUGUST SEPTEMBER
- --------------------------------------------------------------------------------
ALL SALES BELOW 1ST
LEVEL 4.0
- --------------------------------------------------------------------------------
ALL SALES IN FIRST
LEVEL 5.0 $28,000 $16,000 $16,000 $31,000
- --------------------------------------------------------------------------------
ALL SALES IN SECOND
LEVEL 6.0 $39,000 $23,000 $23,000 $43,000
- --------------------------------------------------------------------------------
ALL SALES IN THIRD
LEVEL 7.0 $51,000 $30,000 $30,000 $56,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MEN'S CLOTHING (2ND
FLOOR) Commission % OCTOBER NOVEMBER DECEMBER JANUARY
- --------------------------------------------------------------------------------
ALL SALES BELOW 1ST
LEVEL 4.0
- --------------------------------------------------------------------------------
ALL SALES IN FIRST
LEVEL 5.0 $30,000 $28,000 $40,000 $17,000
- --------------------------------------------------------------------------------
ALL SALES IN SECOND
LEVEL 6.0 $41,000 $38,000 $55,000 $24,000
- --------------------------------------------------------------------------------
ALL SALES IN THIRD
LEVEL 7.0 $53,000 $50,000 $72,000 $31,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MEN'S
FURNISHINGS/SPORTSWEAR Commission % February March April May
(1ST FLOOR)
- --------------------------------------------------------------------------------
ALL SALES BELOW 1ST
LEVEL 4.0
- --------------------------------------------------------------------------------
ALL SALES IN FIRST
LEVEL 5.0 $10,000 $22,000 $20,000 $19,000
- --------------------------------------------------------------------------------
ALL SALES IN SECOND
LEVEL 6.0 $14,000 $29,000 $27,000 $25,000
- --------------------------------------------------------------------------------
ALL SALES IN THIRD
LEVEL 7.0 $19,000 $37,000 $36,000 $33,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MEN'S
FURNISHINGS/SPORTSWEAR Commission % JUNE JULY AUGUST SEPTEMBER
(1ST FLOOR)
- --------------------------------------------------------------------------------
ALL SALES BELOW 1ST
LEVEL 4.0
- --------------------------------------------------------------------------------
ALL SALES IN FIRST
LEVEL 5.0 $20,000 $11,000 $11,000 $22,000
- --------------------------------------------------------------------------------
ALL SALES IN SECOND
LEVEL 6.0 $27,000 $15,000 $15,000 $29,000
- --------------------------------------------------------------------------------
ALL SALES IN THIRD
LEVEL 7.0 $36,000 $21,000 $21,000 $37,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MEN'S
FURNISHINGS/SPORTSWEAR Commission % OCTOBER NOVEMBER DECEMBER JANUARY
(1ST FLOOR)
- --------------------------------------------------------------------------------
ALL SALES BELOW 1ST
LEVEL 4.0
- --------------------------------------------------------------------------------
ALL SALES IN FIRST
LEVEL 5.0 $22,000 $20,000 $29,000 $12,000
- --------------------------------------------------------------------------------
ALL SALES IN SECOND
LEVEL 6.0 $29,000 $27,000 $38,000 $16,000
- --------------------------------------------------------------------------------
ALL SALES IN THIRD
LEVEL 7.0 $37,000 $36,000 $50,000 $22,000
- --------------------------------------------------------------------------------
Example: During the month of February, a sales associate on the second floor
would be paid 4% commission on net sales up to $15,000 during the month. He or
she would receive 5% commission on net sales between $15,000 and $21,000, 6% on
net sales between $21,000 and $27,000 and 7% on those net sales in excess of
$27,000.
Net sales of $32,000 would reflect the following:
Sales % Paid Commission
----- ------ ----------
$15,000 4% $ 600.00
$6,000 5% $ 300.00
$6,000 6% $ 360.00
$5,000 7% $ 350.00
- ------- ---------
$32,000 $1,610.00
(E) Holiday, vacation and bereavement pay for selling employees will be based on
the employee's average earnings, determined semi-annually. However, new selling
employees are paid for holiday, vacations and bereavement leave at their hourly
base rate until they have worked a sufficient amount of time (at least six (6)
months) to determine their average earnings. Sick pay is paid at the selling
employee's hourly base rate.
ARTICLE VIII: HOURS OF WORK
(A) The normal hours of work for all full-time employees shall be forty (40)
hours, five (5) days per week, with one (1) meal period. The regular work week
shall be from Sunday through Saturday.
(B) All bargaining unit members shall receive overtime pay at the rate of time
and one half for hours worked in excess of forty (40) hours in any one work
week.
(C) Selection for overtime shall be on an equitable rotating basis.
(D) Each selling employee shall be required to devote a reasonable amount of
time to complete a sale or other duties if such employee is working on a sale or
project at the close of the day.
No employee shall receive overtime pay unless such overtime work shall have been
previously authorized by the employee's manager or such overtime work is
reasonably necessary to complete a sale or project.
All regular full time employees scheduled to work on Sunday shall be paid no
less than 8 times their straight time hourly rate of pay if hourly paid and no
less than 8 times their base hourly rate of pay if commissioned sales persons,
provided they work all of the Sunday hours for which they are scheduled, and
when they are paid for 8 hours on Sunday those hours shall also be counted as
time worked for purposes of computing their weekly overtime during the work
week in which that Sunday fell. Part-time employees shall be paid for Sunday
work on the basis of their hourly rate of pay times hours actually worked.
ARTICLE IX: VACATION
The Employer's vacation policies applicable to the bargaining unit shall remain
unchanged during the term of this collective bargaining agreement.
ARTICLE X: HOLIDAYS AND PERSONAL DAYS
(A) All full time employees covered by this Agreement who are otherwise
eligible, shall receive a day's pay for the following regular holidays: New
Year's Day, Easter, Memorial Day, July Fourth, Labor Day, Thanksgiving Day and
Christmas Day, plus four (4) personal days making a total of eleven (11) paid
holidays per calendar year.
(B) To be eligible for holiday pay full time employees (1) must be employed for
thirty (30) days or more prior to each of the seven (7) holidays specified in
paragraph (A) of this Article and ninety (90) days or more prior to each
personal holiday; and (2) must work their scheduled day before and their
scheduled day after the holiday, unless excused for bona fide illness attested
by a physician's certificate, or for other good cause acceptable to the
Employer.
(C) In the event a paid holiday falls during an employee's vacation period, the
employee shall receive an extra day's pay.
(D) If it is necessary for a department or the store to remain open on one of
the listed holidays, employees who work on that holiday shall be granted a
"floating" holiday to be taken at a time mutually convenient to the employee's
Department Manager or the Store Manager.
(E) If a paid holiday falls on an employee's regularly scheduled day off during
the work week, the employee shall be entitled to receive a paid day off at a
time mutually convenient to the employee's Department Manager or the Store
Manager.
(F) All "floating" holidays must be taken within one (1) year from the date on
which the holiday for which they are substituting occurs.
(G) Vacation or holiday time will not be accrued during any leave of absence,
including sick leave, disability or workers compensation leave.
ARTICLE XI: BEREAVEMENT LEAVE
(A) Each employee shall have three (3) working days off with pay in the event of
the death of a parent, child, brother, sister, spouse or registered domestic
partner, grandparent or grandchild. One (1) day off with pay shall be granted in
the event of the death of a parent-in-law or brother or sister-in-law.
ARTICLE XII: JOB BIDDING AND POSTING
(A) The Employer shall post permanent vacancies in bargaining unit jobs on the
bulletin board for three (3) working days together with location and title of
vacancy. Employees who bid for such jobs shall do so in writing. The Employer
shall give fair and reasonable consideration to all such applications. However,
the Employer's determination as to the filling of such vacancies shall be final
and not subject to the arbitration provisions hereof. Vacancies shall not be
filled during the posting period.
(B) If a bargaining unit employee shall successfully bid on, or transfer into a
new bargaining unit position or from a non-selling to a selling position, such
employee may be required to serve a trial period not to exceed the normal
probationary period for his or her new position. During the aforementioned trial
period such employee may be returned to his or her old position at the
discretion of the Employer with no loss of seniority and without reference to
the grievance and arbitration provisions of this contract.
ARTICLE XIII: LEAVES OF ABSENCE
(A) The Employer shall give good faith consideration to requests for leaves of
absence for good cause. Such leaves shall not exceed thirty (30) days and the
Employer shall not unreasonably withhold its consent. The Employer may consider
seasonal staffing requirements when evaluating leave requests. An employee shall
not lose seniority rights during such a leave. Extensions to an approved leave
shall require the mutual agreement of the Employer and the employee. Written
confirmation of approval of any leave request or extension shall be provided to
the employee, stating the reason for the leave and its duration. A copy of
said confirmation shall be provided to the Union.
(B) To be eligible for a leave of absence an employee must have six (6) months
continuous service.
(C) Family & Medical Leaves of Absence Under the Family and Medical Leave Act.
1. An employee who has been employed by the Employer for at least
twelve (12) months (and who has worked at least 1,250 hours during the twelve
(12) months immediately preceding the employee's request for leave under this
paragraph) shall be entitled to at least twelve (12) weeks of unpaid Family
Leave, within any twelve (12) month period, without loss of seniority rights,
for the following reasons:
a. for the birth or placement of a child for adoption or
foster care; or
b. to care for a spouse, child or parent with a serious health
condition as such terms are defined by the Family and Medical Leave Act of 1993
("FMLA"); or
c. to take medical leave when the employee is unable to work
because of the employee's own serious health condition as defined in the FMLA.
2. An employee requesting Family Leave shall present satisfactory proof
of the reason for such leave.
3. Family Leave may be taken on an intermittent basis under 1b) and c)
above when there is a medical necessity for such intermittent leave as provided
in the FMLA.
4. The Amalgamated Retain Insurance Fund currently provides health care
coverage for an employee on Family Leave to the extent required by the FMLA.
(D) Leaves of absence shall not be granted for the purpose of taking outside
employment without permission from the Employer. Any employee on leave of
absence who accepts outside employment without the Employer's permission shall
have his or her services with the Company terminated for cause.
(E) Failure to report for work upon expiration of the leave of absence shall be
considered a voluntary resignation of the employee's position with loss of all
seniority rights.
(F) Union shop stewards will be granted up to two (2) days off annually, without
pay, to attend Union training sessions relating to grievance processing. Such
days off shall be scheduled at least two (2) weeks in advance, taking into
account the seasonal staffing needs of the Employer.
ARTICLE XIV: SICK LEAVE
All regular full-time employees are eligible for sick leave. New employees
become eligible on the first day of the month following 60 days of continuous
employment.
(A) Eligible employees can use sick leave to continue income when they are
absent from work due to illness or injury, or when they have an appointment with
a doctor and have made prior arrangements with their Manager.
(B) All eligible employees will be credited with six (6) days of sick leave on
January 1st of each year (pro-rated for new employees who start during the
year).
(C) There is no carryover of sick leave from one year to the next. Commencing in
January 1996 all full-time employees will be paid 50% of the value of any sick
days not used as of the immediately preceding December 31st.
ARTICLE XV: JURY SERVICE
(A) Employees shall be paid the difference between their regular straight time
pay for days spent on jury service and the per diem amount received for such
service. Such jury duty pay shall be paid for no more than two (2) weeks or such
lesser period as may be served.
(B) Employees called to jury duty who are released from such duty before 2:00
p.m. on any day served shall call their manager at the store to see if their
services are desired for the remainder of that work day, and, if so, employees
shall report to work promptly.
ARTICLE XVI: SAFETY AND HEALTH
(A) The Employer agrees to provide a safe and healthful working environment for
all employees, in keeping with the nature of the work.
(B) The Employer agrees to maintain adequate first aid equipment and supplies to
meet the needs of employees in case of minor accidents.
(C) All accidents or illnesses arising at the worksite or in connection with
work processes or procedures shall be reported immediately to the supervisor.
(D) Store management and the Union Shop Steward shall work together in the
interests of maintaining a safe and healthy work place.
ARTICLE XVII: NON-DISCRIMINATION
(A) There shall be no discrimination for Union activities or discrimination
based upon race, creed, national origin, age, disability, sex or sexual
preference in accordance with applicable law.
ARTICLE XVIII: SEVERANCE PAY
(A) Severance pay shall be provided in the event of the store or a department
thereof closing permanently and the employee not having been afforded other
bargaining unit employment by the Employer. The amount of severance pay shall be
one week's pay for each two full years of service, to a maximum of eight weeks
pay.
ARTICLE XIX: GRIEVANCE AND ARBITRATION
(A) All complaints, disputes or grievances arising between the parties hereto,
involving questions of interpretation or application of any provision of this
Agreement (including whether discipline or discharge is for just cause) shall be
subject to the grievance procedure as provided hereafter.
(B) All cases of discharge shall immediately be taken up at the second step of
the grievance procedure as outlined below.
(C) The first step shall be between the Department Manager and the employee, who
may be accompanied by the shop steward. The second step meeting, which shall be
preceded by the grievance having been reduced to writing and provided to the
other party, shall be between the Union Business Agent, who may be accompanied
by the Chief Steward, and a Company designee. Within a reasonable period,
ordinarily not to exceed two weeks, after the second step is completed, the
grieving party may refer the matter to arbitration.
(D) The following shall be the Arbitrators under this Agreement:
Roger Maher
Barbara Deinhardt
Elliot Shriftman
Richard Adelman
Milton Rubin
The parties shall communicate with the first Arbitrator on the list and request
the case be scheduled for hearing. If the first arbitrator does not offer a date
within 30 days, the parties shall communicate with the second arbitrator, etc.
In subsequent cases, the parties shall first communicate with the Arbitrator
named immediately following the arbitrator who heard the last prior case. In the
event of the unavailability within a reasonable time of all of the above-named
Arbitrators, the dispute shall be submitted to arbitration under the voluntary
Labor Rules of the American Arbitration Association.
(E) The authority of any arbitrator shall be limited to the interpretation and
application of the terms and conditions of this Agreement. The arbitrator may
not modify, amend or add to the terms of this Agreement. The decision of the
Arbitrator shall be final and binding upon the Union, the aggrieved employee(s)
and the Employer. The oath required by law of the arbitrator is expressly waived
by the parties. Costs of arbitration shall be shared equally by the Union and
the Employer.
ARTICLE XX: STRIKES AND LOCKOUTS
(A) Under no circumstances shall strikes, sympathy strikes, stoppages of work,
or other concerted activity against the Employer be ordered, sanctioned or
engaged in by the Union, its officials, or agents or engaged in by the
employees; nor shall lockouts be engaged in by the Employer, its officials, or
agents during the term of this Agreement.
(B) In the event of any concerted activity against the Employer proscribed under
(A) above, the Union, acting through its officers, shall promptly and publicly
state that such activity is not authorized by the Union.
(C) Any employee who engages in such activity shall be subject to such
discipline as the Employer may see fit to impose, including termination of
employment. Any such action by the Employer shall be subject, on an
individual-by-individual basis, to the grievance and arbitration provision
herein.
ARTICLE XXI: INSURANCE FUND
The Employer agrees to pay 11 percent of gross earnings of all of its employees
who come under the scope of this Agreement to the Amalgamated Retail Insurance
Fund to provide certain health and welfare benefits to its employees.
The Union and the Employer further agree to sign any and all instruments
necessary to effectuate the provisions of this Article.
ARTICLE XXII: 401(K) PROGRAM
All regular employees will become eligible to participate in the Jos. A. Bank
Clothiers, Inc., Retirement and Savings Plan on July 1, October 1, January 1, or
April 1, whichever is appropriate following one year of service (i.e., the
12-month period after date of hire in which the employee worked at least 1,000
hours). For every dollar contribution the employee makes (up to 3% of salary)
the Employer contributes an additional fifty cents.
ARTICLE XXIII: DURATION OF AGREEMENT AND MISCELLANEOUS
(A) This collective bargaining agreement between the parties shall be effective
as of the date hereof and shall remain in full force and effect until April 30,
1997 (with no reopenings or adjustments of any kind or nature during the term
hereof except as provided herein) and shall continue from year to year
thereafter unless written notification to the contrary is given by either party
to the other by certified or registered mail at least sixty (60) days prior to
the expiration date.
(B) All of the terms and conditions of this Agreement shall apply to all
employees of the Employer who are in the bargaining unit regardless of whether
such employees are members of the Union.
(C) If any clause of this contract is ruled invalid by operation of law, or by
any constituted legal authority, the remainder of the contract shall remain in
full force and effect.
(D) Sales made by non-bargaining unit personnel shall be turned over to the
bargaining unit personnel on an equitable basis.
(E) All employees in the bargaining unit shall be entitled to two (2) paid
fifteen (15) minute breaks per shift, one to be taken in the first half of the
shift and one in the second half of the shift.
On pay day, employees shall be entitled to use one of their fifteen (15) minute
breaks to extend their lunch period by that amount.
In witnesses whereof, we set our hands and seals this ____ day of
________________, 1995.
FOR THE UNION FOR THE COMPANY
_____________________(SEAL) ______________________(SEAL)
_____________________(SEAL) ______________________(SEAL)
_____________________(SEAL) ______________________(SEAL)
_____________________(SEAL) ______________________(SEAL)
_____________________(SEAL) ______________________(SEAL)
APPENDIX A
Facsimile of Union Check-Off Authorization Card.
APPENDIX B
For the purposes set forth in Article V, LAYOFFS, the bargaining unit is divided
into the following department groups:
a. First Floor Selling
b. Second Floor Selling
c. Porters
d. Other non-Selling
e. Tailors
f. Fitter-tailors
g. Pressers
AGREEMENT dated May 1, 1995 by and between
Joseph A. Bank Mfg. Co., Inc. (North Ave. Coat Shop, Hampstead
Coat Shop, Brookhill Road Cutting
Floor, Rubin Bldg. Pants
Division & Hampstead Distribution
Center)
(hereinafter referred to as the "Employer" or "Manufacturer" and the BALTIMORE
REGIONAL JOINT BOARD, AMALGAMATED CLOTHING AND TEXTILE WORKERS UNION, an
unincorporated association, for and in behalf of itself and the employees now
employed, or hereafter to be employed by the Employer (hereinafter collectively
referred to as the "Union").
WHEREAS, the employer and the Union are parties to a collective bargaining
agreement dated as of October 1, 1993 and the parties have requested
modification of certain of the provisions of said agreement, and
WHEREAS, the parties have reached agreement, and
NOW THEREFORE, in consideration of the mutual covenants, promises and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
COVERAGE:
A. The term "Employees" as used in this Agreement shall include all employees of
the Employer except executive, administrative, office clericals, supervisory
and guards as defined in the National Labor Relations Act.
ARTICLE II
UNION RECOGNITION:
A. The Employer recognizes the Union as the exclusive collective bargaining
agent for the employees in the bargaining unit described above with reference to
wages, hours and working conditions.
B. The Employer shall recognize and deal with such representatives of the
employees as the Union may elect or appoint and shall permit such
representatives elected or appointed by the Union to visit its plant at any time
during working hours in accordance with existing rules.
C. The Employer agrees to make available to the Union such payroll and
production records as the Union may reasonably require as the collective
bargaining agent and/or contracting party hereunder.
ARTICLE III
UNION SECURITY:
A. In the manner and to the extent permitted by law membership in the Union on
completion of the trial period of each employee or on and after the 30th day
following execution of this Agreement, whichever is later, shall be required as
a condition of employment of each employee. In the event that the trial period
is less than thirty (30) days, membership in the Union shall not be required
until thirty (30) days after date of employment. All employees who are now
members or hereafter become members of the Union shall, as a condition of
continued employment, remain members in good standing during the term of this
Agreement.
B. Trial Period: Hampstead Coat Shop, Brookhill Road Cutting Floor, and
Distribution Center and North Avenue Coats and Pants; All new experienced
employees shall have a trial period of two (2) weeks. All new inexperienced
employees shall have a trial period of ninety (90) days.
It is agreed that the Employer shall pay to an employee who has completed his
probationary period indicated in the collective bargaining agreement at least
twenty-five (25) cents an hour above the then existing Federal or State minimum
wage whichever is higher. This provision is not to substitute for or supersede
locally negotiated higher time work and piece work minimum rates, if any exist.
ARTICLE IV
WAGES:
1. Time Rate Employees:
(a) Effective October 2, 1995, the Employer shall grant a wage increase of
twenty (20) cents per hour to all time rate employees.
(b) Effective September 30, 1996, the Employer shall grant a wage increase
of twenty (20) cents per hour to all time rate employees.
(c) Effective September 29, 1997, the Employer shall grant a wage increase
of twenty (20) cents per hour to all time rate employees.
2. Piece Rate Employees:
(a) Effective October 2, 1995, the Employer shall incorporate into all
existing piece rates the equivalent of the time rate wage increase of twenty
(20) cents per hour.
(b) Effective September 30, 1996, the Employer shall incorporate into all
existing piece rates the equivalent of the time rate wage increase of twenty
(20) cents per hour.
(c) Effective September 29, 1997, the Employer shall incorporate into all
existing piece rates the equivalent of the time rate increase of twenty (20)
cents per hour.
3. In the event an employee is regularly and formally scheduled to work more or
less than forty (40) hours per week, or more or less than thirty six (36) hours
per week in the case of cutters, the payments in paragraph 1 and 2 above shall
be adjusted pro rata.
4. During the term of this Agreement the Employer shall, by mutual agreement
with the Union, have the option to incorporate all or any part of the
on-the-clock payments into the piece rates of all piece workers except the June
3, 1968 increase of twenty-five cents (25(cent)) per hour. The 25(cent) per hour
on-the-clock shall not apply to any employee hired after October 1, 1985.
5. Except as otherwise provided in sub-paragraph A hereof, in the event that any
of the operations of the Employer are changed or new operations are added, piece
rates for such operations shall be mutually agreed upon between the Union and
the Employer and shall become effective as of the time that such operation is
changed or new operation begun. The new piece rates shall maintain the average
earnings of the employees prevailing at the time that the operation is changed
or new operation begun. It is understood that the phrase maintain the average
earnings of the employees' refers to maintaining the average earnings of the
section, and not to individual employees within the section.
A. Anything to the contrary herein notwithstanding the Employer shall recognize
and abide by specifications and grades generally prevailing in the clothing
industry. Any change in such specifications affecting grades shall be effective
only when mutually agreed upon by the Employer and the Union.
6. If an employee is temporarily transferred from one job or operation to
another at the request of the Employer, he shall, while working on the job or
operation to which he has been transferred, be paid his average earnings
prevailing at the time of the transfer. The conditions to apply upon permanent
transfer shall be mutually agreed upon by the Employer and the Union at the time
of such transfer.
7. Minima of Schedule "A" shall apply only to indicated operations and workers
thereon.
ARTICLE V
REPORTING PAY:
Employees who report for work at their regular starting time, or at such hour
designated by the Employer, shall be paid their established time or piece rate
earnings for all work performed between the hour they report for work and the
hour that they are dismissed, but in no event shall they be paid less than six
(6) hours, or four (4) hours on Saturday. This clause shall not apply in the
event of power failure, fire, or other cause over which the Employer has no
control. In the case of the first five (5) hours of call in pay, failure of
other employees to report for work shall be considered cause over which the
Employer has no control only if an emergency arises which it could not foresee
and it had taken adequate steps to train and provide relief workers. Excessive
absenteeism shall relieve the Employer of the obligation to pay the sixth hour
of call in pay.
ARTICLE VI
HOURS OF WORK:
1. Regular Work Week: The regular hours of work for all employees may be eight
(8) hours in any one day, from Monday to Friday inclusive. The time when work
shall begin and end each day shall be agreed upon by the Employer and the Union.
The thirty-six (36) hour week for all manufacturing operations in which it has
been heretofore established shall be maintained.
2. Overtime: Time and one-half shall be paid for all work outside the regular
daily hours. No work shall be performed on Saturday except by mutual agreement
of the parties. Time and one-half shall be paid for all work performed on
Saturdays irrespective of the number of hours worked during the week. No work
shall be performed on a designated holiday except by mutual agreement of the
parties, and, if agreed upon, at double time. Overtime pay for work on a
designated holiday shall be in addition to holiday pay to which the employee is
entitled pursuant to the Paragraph dealing with holidays.
3. Notice of Overtime: The Employer agrees to give reasonable notice to the
employees and the appropriate union shop committee representative when overtime
is to be worked.
ARTICLE VII
MACHINE BREAKDOWN TIME AND WAITING TIME:
An employee paid on piece rate basis who is required to wait for work due to
machine breakdown beyond his control shall be compensated at the rate of the
employee's average hourly earnings for all such waiting time in excess of
fifteen (15) minutes per day. An employee paid on a piece rate basis who is
required to wait for work due to cause beyond his control other than for machine
breakdown shall be compensated at the rate of the employee's average hourly
earnings for all such waiting time in excess of thirty (30) minutes per day.
However, in no event will the combined unpaid machine down time and waiting time
exceed thirty minutes per day. Any employee who finds it necessary to wait for
work shall, on each separate occasion, notify his immediate supervisor both at
the beginning and end of such waiting period. Payment for waiting time shall
cover only such time as follows such notification. The Employer may transfer
such employees to another machine during machine down time, on the same job, the
employee will be paid piece rate earnings.
ARTICLE VIII
VACATIONS:
A. Vacation Period. It is mutually agreed that there shall be the following
vacation periods for the employees entitled to vacation pay as hereinafter
provided.
1. The Summer Vacation Period shall be two consecutive weeks beginning with the
last full week of July and the first week of August, unless the Employer and the
Union shall mutually agree upon some other two consecutive weeks during the
summer months.
2. The Christmas Vacation Period shall be between Christmas Day and New Year's
Day of each year.
3. Fourth Week of Vacation: Any employee with 20 years, or more, of employment,
with the Employer or predecessor employers is entitled to a fourth (4th) week of
paid vacation to be taken during the ensuing twelve (12) month period following
the date that the employee reaches 20 or more years of employment. The schedule
of vacations by section shall be fixed by mutual agreement with the Union in
accordance with the needs of production. Individual employees may bid for an
available week in order of section seniority or such other rotational system as
mutually agreed to with the Union. If mutually agreed to with the Union at the
local level, an employee may elect to work during the employee's week of
vacation at straight time in addition to vacation pay. The amount of time off
and pay shall be the same as the preceding Winter Vacation.
4. In the event that a paid holiday falls within the vacation period, employees
entitled to holiday pay shall be entitled to such holiday pay in addition to
vacation pay hereinafter provided.
B. Eligibility and Pay for Employees Employed Prior to October 1, 1985:
1. For the Summer Vacation Period:
(a) All employees who have been on the payroll of the Employer for at least six
(6) months prior to the commencement of the Summer Vacation period and, except
as hereinafter provided, who are on such payroll at the commencement of the
Summer Vacation Period are eligible for a paid vacation.
(b) The amount of each employee's vacation pay for the Summer Vacation Period
shall be determined in the manner set forth in this subparagraph. If the
employee has been on the payroll of the Employer:
(i) Six (6) months but less than nine (9) months, he shall receive one-half of
one week's pay,
(ii) Nine (9) months but less than one (1) year, he shall receive three-fourths
of one week's pay,
(iii) One year or more, he shall receive two (2) week's pay.
(c)(i) First Week: In the case of hourly and weekly employees, one week's pay
shall be the employee's current regular weekly rate. In the case of piece work
employees, one week's pay shall be forty (40) times the individual employee's
straight time average hourly earnings for the four (4) consecutive busiest weeks
of the current vacation year beginning June 1st in the previous calendar year
and ending May 31st in the current vacation year. If an employee did not work in
each of the said four (4) weeks, his vacation pay shall be forty (40) times his
straight time average hourly earnings for the four (4) busiest weeks of the
vacation year in which he did work all four (4) weeks. The Company and the Union
have agreed to use the first (1st) calendar quarter (January, February & March)
of the year to compute vacation pay. The full amount of the wage increases
scheduled to be paid on October 2, 1995, September 29, 1996 and September 27,
1997 shall be included as applicable.
(ii) Second Week: An eligible employee who has worked not less than 1000 hours
in the 12 months beginning June 1st in the previous calendar year and ending May
31st in the current vacation year shall receive for his second week's vacation
pay the same amount as the employee's vacation pay for the first week.
For eligible employees who worked less than 1000 hours during the entire
aforesaid twelve (12) months period, the second week's vacation pay shall be two
and one-half percent (2 1/2%) of the employee's straight time earnings in the
twelve (12) months beginning June 1st in the previous calendar year and ending
May 31st in the current vacation year.
2. For the Christmas Vacation Period:
(a) All employees who have been on the payroll of the Employer one year or more
prior to December 1st and, except as hereinafter provided, who are on such
payroll at the commencement of the Christmas Vacation Period are eligible for a
paid Christmas vacation.
(b) The amount of each employee's vacation pay for the Christmas Vacation Period
shall be determined in the manner set forth in the following subparagraphs;
(i) An employee who has worked not less than 1000 hours in the entire aforesaid
twelve (12) months period,
(a) If an hourly or weekly employee, he shall receive his current rate less
three-quarters of the wage increase scheduled to be paid on October 2, 1995,
September 29, 1996 and September 27, 1997, as applicable.
(b) If a piece work employee, he shall receive forty (40) times his straight
time average hourly earnings for the four (4) busiest weeks of the current
vacation year, beginning December 1st in the previous calendar year and ending
November 30th in the current year, which average hourly earnings shall be
adjusted by three-quarters of the wage increase scheduled to be paid on October
2, 1995, September 29, 1996 and September 27, 1997, as applicable. The Company
and the Union have agreed to use the first (1st) calendar quarter (January,
February & March) of the year to compute vacation pay.
(ii) An employee who worked less than 1000 hours in the entire aforesaid twelve
(12) months period shall receive two and one-half percent (2 1/2%) of his
straight time earnings in the twelve (12) months beginning December 1st in the
previous calendar year and ending November 30th in the current vacation year.
C. Eligibility for Employees Employed After October 1, 1985:
Each employee hired by the Employer on or after October 1, 1985 shall receive
vacation pay in accordance with the following requirements:
(i) On completion of 1 year of service, 1 week vacation at the next ensuing
regularly scheduled vacation period (either winter or summer, whichever comes
first).
(ii) On Completion of 2 years of service, 2 weeks of summer vacation except that
an employee who first becomes eligible for two weeks of vacation prior to the
winter vacation shall receive one week of winter vacation and one week of summer
vacation.
(iii) On completion of 3 years of service, 2 weeks of summer vacation and 1 week
of winter vacation.
D. General Conditions:
1. In the event a paid holiday falls within the vacation period, employees
entitled to holiday pay shall be entitled to such holiday pay in addition to
vacation pay heretofore provided.
2. An employee otherwise eligible for a paid vacation shall not be deemed
ineligible because of the fact that he is temporarily laid off or ill at the
commencement of the vacation period. The Impartial Chairman is expressly
empowered to determine in accordance with the arbitration procedure provided in
this Agreement whether an employee, discharged prior to the commencement of a
vacation period but otherwise eligible for a paid vacation, shall be entitled to
vacation pay.
3. An employee who has been in the employ of the Employer a sufficient length of
time to have earned a paid vacation as herein set forth but whose employment has
been terminated because of termination of business or the closing of a plant,
shall be entitled to vacation pay pro-rated as of the date of termination of
employment.
4. Vacation pay as hereinabove provided shall be paid on the pay day immediately
preceding the applicable vacation period.
5. Where an employee has been permanently and formally scheduled to work less
than the regular work week for his operation the eligibility and vacation pay
scheduled for such employee shall be adjusted pro-rata. The 1000 hours
requirement contained in paragraph C above shall be similarly pro-rated.
6. Retired and Permanently Disabled Employees:
Employees who, during any vacation year, retire under either an Amalgamated plan
or a Company plan, whichever is in effect at the time of retirement, or receive
Federal Old Age Social Security Retirement Benefits, or become totally and
permanently disabled so as to become eligible for and subsequently receive
disability insurance benefits pursuant to the Social Security Act, as amended,
shall receive pro-rata vacation pay for the vacation year, measured from the
commencement of the preceding vacation periods, summer, Christmas, and, where
applicable, the fourth week, to the date last worked. The vacation pay herein
provided shall be paid upon presentation to the Employer of proof of retirement
or the Certificate of Award issued by the Social Security Administration, as
appropriate.
7. Anything to the contrary notwithstanding contained in this Article VIII, the
Union shall have the right to present to the Employer the question of vacation
pay for the Christmas vacation period on behalf of an employee who does not
qualify for same because he was employed after December 1st but prior to
Christmas Day during the previous calendar year. If agreement between the Union
and the Employer is not reached the Impartial Chairman is expressly empowered to
settle said matter.
8. For the purpose of Section B and C, an employee who has completed a
probationary period with an employer in contractual relations with the Union and
who has been unemployed because of layoff or plant closing and is reemployed in
the same local market within one year of loss of employment shall receive credit
for each year of employment with the prior employer.
ARTICLE IX
HOLIDAYS:
A. 1. All employees shall be entitled to the following eleven (11) holidays with
pay subject to paragraph E:
New Years Day; National Observance of Martin Luther King, Jr.'s Birthday; Good
Friday; Easter Monday; Memorial Day; Independence Day; Labor Day; Thanksgiving
Day; Friday After Thanksgiving Day; Last Weekday Prior to the Commencement of
Christmas Vacation; Christmas Day.
The Employer and the Union may substitute two other holidays for those listed
above, by mutual agreement. Should any of the above holidays fall on Sunday, the
day celebrated as such shall be considered the holiday.
2. All such holidays shall be paid for irrespective of the day of the week on
which the holiday falls.
3. In the event of back-to-back paid holidays, if a worker is absent without
reasonable excuse, either the day before or the day after the paid holiday,
he/she shall lose only one holiday's pay.
B. In the case of hourly and weekly employees, the pay for each holiday shall be
one-fifth (1/5) of the employee's current regular weekly rate plus any increase
due at that time. In the case of piece workers the employee's pay for each
holiday shall be eight (8) times the employee's straight time average hourly
earnings as such earnings were computed for the purpose of determining the first
week's vacation pay for the summer vacation period immediately preceding such
holiday, plus any increase due at that time.
C. Any employee who, without reasonable excuse, is absent from work or who does
not work all his/her scheduled hours on the work day before or the work day
after a holiday shall not be entitled to holiday pay. Reasonable excuse shall be
limited to the following:
1. Illness of the employee;
2. Death in the immediate family of the employee;
3. Lack of work for the employee.
D. Notwithstanding the provisions of this Paragraph, it is understood that
holiday pay shall not be paid any employees if the Employer's factory is shut
down in all its manufacturing departments for five (5) consecutive weeks as
follows:
1. The entire two (2) weeks immediately preceding the week in which such
paid holiday occurs; and
2. The entire week during which such paid holiday occurs; and
3. The entire two (2) weeks immediately following the week in which such
paid holiday occurs.
E. Trial Period, Intervening Holidays: If a holiday falls within the initial
trial period, the employee shall receive his holiday pay on the first full pay
period following the successful completion of the trial period. If the employee
does not complete the initial trial period for any reason no holiday pay is
payable. This paragraph shall not apply to employees who have completed their
initial trial period with any employer in contractual relations with the Union.
ARTICLE X
BEREAVEMENT PAY:
A. An employee who has been on the payroll of the Employer for six (6) months or
more shall be granted bereavement pay in the event of a death in his immediate
family.
B. The immediate family is defined as father, mother, sister, brother, spouse,
children, mother-in-law, father-in-law, brother-in-law, sister-in-law,
grandmother, grandfather and grandchildren.
C. Bereavement pay shall be paid for the day before, the day of and the day
following the funeral when these days fall on days the employee would otherwise
have worked. In the event that the death occurs outside the United States and
notice thereof does not reach the employee until after the funeral, Bereavement
Pay shall be paid for the three (3) days following receipt of notice provided
that such days are days on which the employee would otherwise have worked.
D. Bereavement pay shall be based on the employee's daily time or piece rate
earnings as established for the purpose of holiday pay.
E. No bereavement pay will be granted unless the employee notifies the Employer
and requests leave. At its discretion, the Employer may require evidence of
death and kinship.
ARTICLE XI
EQUAL DIVISION OF WORK:
During any slack season or whenever there is insufficient work, the available
work shall be divided, insofar as is practicable, equally among all regular
employees of the Employer in order that continuity of employment may be
maintained unless the Employer and the Union shall mutually agree upon a lay-off
and the conditions applicable thereto.
It is understood that this clause has been mutually interpreted to provide for
seniority of the employee as the basis for layoff and this interpretation has
been reflected in local agreements.
ARTICLE XII
PAYMENT OF WAGES AND CHECKOFF:
A. The Employer agrees that he shall pay its employees on a prescribed day in
each week.
B. The Employer shall deduct from the wages of his employees upon written
authorization of the employees, union dues, initiation fees and assessments. The
amounts deducted pursuant to such authorization shall be transmitted at
intervals to the properly designated official of the Union, together with a list
of names of the employees from whom the deductions were made on forms to be
provided by the Union. Sums deducted by the Employer as union dues, initiation
fees or assessments shall be kept separate and apart from general funds of the
Employer and shall be deemed trust funds. The above mentioned monies are to be
paid to the Baltimore Regional Joint Board, A.C.T.W.U. immediately after it is
collected at least once a month.
ARTICLE XIII
INSURANCE:
The Employer agrees to contribute sums of money equal to a stated percentage of
its payroll to the Amalgamated Insurance Fund (social insurance), and to the
Amalgamated Cotton Garment and Allied Industries Fund (social insurance) as
provided in Exhibits I and II annexed hereto, the terms and provisions of said
Exhibits being specifically incorporated herein by reference. Contributions to
the Clothing Fund are applicable to employees of Hampstead Coat Shop, North
Avenue Coat Shop and Brookhill Road Cutting Floor. Contributions to the Cotton
Fund are applicable to employees of the Rubin Building Pants Division and
Hampstead Distribution Center.
ARTICLE XIV
HEALTH AND WELFARE FUND:
The Employer agrees to contribute sums of money equal to two (2) percent of its
payroll to the Baltimore Regional Joint Board, Amalgamated Clothing and Textile
Workers Union Health and Welfare Fund, to be used to provide health and welfare
benefits to the members. The terms and provisions of Exhibit III being
specifically incorporated herein by reference.
ARTICLE XV
UNION LABEL:
The Employer agrees to affix copies of the label of the Amalgamated Clothing and
Textile Workers Union to men's and boy's clothing including, without limitation,
single pants manufactured by the Employer or by registered Union contractors on
behalf of the Employer, all as provided in Exhibit IV annexed hereto, the terms
and provisions of said Exhibit IV being specifically incorporated herein by
reference. In addition thereto, the Employer agrees that the size ticket placed
on each garment shall contain a legend to the effect that the same is
manufactured by ACTWU Union labor. The exact wording to be affixed on the size
ticket shall be set by mutual agreement between the Clothing Manufacturers
Association of the USA and the International Union.
ARTICLE XVI
MILITARY SERVICE:
In the event that an employee enlists or is conscripted into the Armed Forces of
the United States of America or is called into service as a member of the
National Guard or Army, Navy, Air Force or Marine Corps Reserves, he shall, upon
discharge from service be reinstated with all his rights and privileges enjoyed
by him at the time he entered service; provided, that he shall request
reinstatement within the period fixed by law and provided that the Employer
shall have the right to discharge any person whom it hired by reason of the
entry into military service of the person to be reinstated.
ARTICLE XVII
PART ONE, OTHER FACTORIES AND CONTRACTORS:
A. During the term of this Agreement the Employer agrees that it shall not,
without the consent of the Union, remove or cause to be removed its present
plant or plants from the city or cities in which such plant or plants are
located.
B. Where the Employer has a surplus of work, or its present factories cannot
meet manufacturing requirements, including anticipated quarterly production
needs, because of model or make variations, cost, customer requirements or
scheduling conflicts, the Employer shall inform the Baltimore Joint Board of
the need to contract out, and the Baltimore Joint Board shall have the
opportunity within the next ten (10) calendar days, to meet with the Employer
and suggest alternatives to the subcontracting of the needed work.
Where no alternative to subcontracting is acceptable to the Employer,
the Baltimore Joint Board shall have one (1) calendar week after being so
informed, to refer the Employer to plants in contractual relations with the
ACTWU, and the Employer shall give preference to such plants, provided they are
fully capable of meeting the Employer's scheduling, cost and quality
requirements.
In the event no ACTWU plant is able to meet the Employer's
scheduling, cost and quality requirements, or is available to perform the needed
work within the Employer's time requirements then the Employer shall have the
right to determine the manufacturing facility or facilities in which the needed
garments shall be made and shall notify the Baltimore Joint Board of its choice.
C. It is agreed that imports other than corduroy clothing not made in Union
shops, are within the scope of Article XVII. The Employer shall notify the Union
of its intention as to such corduroy clothing, and the quantities involved and
shall make available to the Union all pertinent documentation involved in such
transaction. In the event corduroy clothing becomes an important production item
in shops under contract with the Union, this exception to Article XVII
shall be subject to renegotiation upon reasonable notice from the Union, then
existing commitments shall not be interfered with.
D. Subject to the provisions of Part 2 - Outsourcing of this Article, the
Employer agrees that it shall not send out work for cut, make and trim.
PART TWO - OUTSOURCING
A. Permissible outsourcing. During the term of this agreement and subject to all
of the conditions contained herein the Employer shall be permitted to outsource:
1. During the period between October 1, 1994 and September 30, 1995
the Employer may outsource no more than 10% of production;
2. During the period between October 1, 1995 and September 30, 1996
the Employer may outsource no more than 15% of production;
3. During the period between October 1, 1996 and September 30, 1997
the Employer may outsource no more than 20% of production;
4. During the period between October 1, 1997 and September 30, 1998
the Employer may outsource no more than 22% of production.
Outward processing production (known as "807" or "807 A" production) will be
defined as outsourced products. Further, outsourcing will not excuse the
participating firm from making needed investment in its domestic facilities and
equipment. Any Employer who outsources hereby commits to invest in improved
physical plant, equipment and EDI systems in its own facilities.
These "outsourcing" provisions do not apply to production sourced to
domestic facilities within the United States. Such production is governed by the
"Other factories and contractors" provisions contained in Part One of this
Article XVII.
B. Notification. The Employers must give the Union advance notification of its
planned outsourcing. Said notification shall include:
1. The number and types of units the Employer plans to outsource;
2. The reasons why the outsourcing is planned;
3. Name and location of the source.
The Union shall have the opportunity to find a suitable alternative source
within one week of said notice.
C. Guarantees. If, during the term of this agreement, an Employer outsources
more than an experimental level of production it shall, for each contract year
during which it outsources, guarantee that its current full time employees work
at least 1470 hours, in addition to vacations and holidays during said contract
year. An experimental level of production is defined as the greater of 1000
units or 2% of the domestic production in the preceding contract year to a
maximum of 3000 units.
For the purpose of this Agreement, a suit or overcoat/topcoat should count as 1
unit; a coat as 2/3 of a unit; a pair of pants as 1/3 of a unit and a vest as
1/6th of a unit.
Such hours as are not worked (1) at the option of the employee or because the
employee is not available for employment, (2) because of power failure, fire or
other cause over which the firm has no control as defined in the Reporting Pay
provision of the Collective Bargaining Agreement (but not including short time
for lack of sales), and (3) hours otherwise compensated for pursuant to the
firm's Collective Bargaining Agreement with the Union, shall be counted toward
fulfilling the guarantees.
For each unit outsourced pursuant to this Agreement up to 10%, the Employer
shall pay $1.00 per unit divided among all of the employees of the Employer on
the payroll as of the beginning and the end of the contract year, as a holiday
bonus, not later than December 15 following the end of each contract year for
which the employer is required to make such payments pursuant to the outsourcing
agreement. This payment, if the employee so elects, may be made by the Employer
to the National Plus 401(K) program which will make such arrangements as are
necessary to receive said payments. Subject to the foregoing provisions, the
Employer shall pay $1.50 per unit for units outsourced between 10% and 15% and
$1.75 for outsourcing above 15%.
An Employer electing to participate in an outsourcing program shall so notify
the Joint Board Manager and the Union's International President, with respect to
the planned outsourcing by certified mail, RRR. The Union's one week period to
find a suitable alternative to the outsourcing shall begin to run upon earliest
receipt of that notice. All reports and information required by the National
Agreement with respect to the outsourcing program shall be made to the Joint
Board Manager and to the Union's International President.
D. Shipping. The Firm shall receive and ship all units subject to this Article
only in facilities under contract with the Union.
E. Records. The Union shall be provided such records as are required to monitor
compliance with the terms of this Article, in addition to all other rights with
respect to inspection of records guaranteed to it under the Collective
Bargaining Agreement. The information shall be kept confidential. Any breach of
such confidentiality shall terminate the right of the Union to examine such
records upon the decision of an arbitrator that the Union did breach the
confidentiality agreement.
F. Continuation of Contracting. Unless the Employer brings work, that had been
performed by its existing contractors, into its facilities covered by this
Agreement , it shall during any contract year in which it outsources production
continue to supply work to contractors at such levels as supplied in the
previous year. Contractors shall include all contractors of shoulder pads, coats
fronts, sponging and examining, to the extent now contracted. The measure of
damages payable to the Union for failure to supply the amount of work required
by the preceding sentence shall be that applied to other violations of this
Article.
G. Damages. Claims that any Employer is in violation of this Article shall be
resolved through the grievance and arbitration provisions of this Agreement. If
the Arbitrator finds that the Employer has violated this Article by outsourcing
in excess of the limits set forth herein, the Arbitrator shall impose damages
equal to one and one half times the unit labor cost of these outsourced units in
excess of the limit. Said damages shall be paid to the Joint Board that is party
to an Agreement with the Employer for distribution to the affected employees.
STANDARDS: It is agreed that all Employers will comply with the following work
standards in any outsourcing:
Wages: Companies will only do business with partners, contractors or other
sources who provide wages and benefits that comply with any applicable law and
provide a living wage defined as a specified market-basket of consumerism priced
in local currency and adjusted for inflation in the country from which the
product is being sourced.
Working Hours: Companies will only do business with partners, contractors, or
other sources outside the United States that comply with all applicable laws and
will not utilize a source who requires more than a 48 hour work week and does
not provide at least one day off in each seven days.
Forced or Compulsory Labor: In the manufacture of its products, Companies will
not work with business partners that use forced or other compulsory labor,
including labor that is required as a means of political coercion or as
punishment for holding or for peacefully expressing political views. Companies
will not purchase materials that were produced by forced prison of other
compulsory labor and will terminate business relationships with any sources
found to utilize such labor.
Child Labor: Companies will not work with business partners that use child
labor. The term "child" generally refers to a person who is less than 14 years
of age, or younger than age for completing compulsory education if that age is
higher than 14. In countries where the law defines "child" to include
individuals who are older than 14, companies will apply that definition.
Freedom of Association: Companies will use business partners that share a
commitment to the right of Employees to establish and join organizations of
their own choosing, and abide by international standards as specified by the ILO
regarding freedom of association.
Companies will assure that no employee is penalized because of his or her
exercise of this right. Companies recognize and respect the right of all
employees to organize and bargain collectively, and to strike.
Discrimination: Companies will not use business partners who discriminate on the
basis of personal characteristics rather than people's ability to do the job.
They will not utilize partners who use corporal punishment or other forms of
mental or physical coercion.
Safe and Healthy Work Environment: Companies will have business partners that
provide employees a safe and healthy workplace and that do not expose workers to
hazardous conditions.
Continued Violators: If the Union determines that countries or companies have
repeatedly violated the foregoing work standards or are pervasive violators of
human rights, it shall notify the Employer and give it 60 days to remedy the
violations. If the union chooses it may take the alleged violations to binding
expedited arbitration. If the union proves its case, the company shall cease to
contract with that country or company.
Monitoring: Employers and the ACTWU shall periodically monitor the compliance of
their contractors/suppliers with the above standards and reports of this
monitoring will be made available to the other party.
H. The Employer agrees that none of its work will be performed in the homes of
any employees.
ARTICLE XVIII
DISCHARGES AND DISCIPLINE:
A. No employee covered by this Agreement shall be discharged without just cause.
The Union shall present all complaints of discharge without just cause to the
Employer within seven (7) days after the discharge. If the complaint cannot be
adjusted by mutual consent, it shall be submitted to the Arbitrator hereinafter
designated in this Agreement for determination pursuant to the procedure
provided. The Arbitrator shall issue his decision and award within seven (7)
days from the conclusion of the hearing of the discharge in dispute. If the
Arbitrator finds that the employee was discharged without just cause, he shall
order reinstatement and may require the payment of back pay in such amount as,
in his judgment, the circumstances warrant. This paragraph shall not apply to
an employee during his trial period.
B. In the manner and to the extent permitted by law, it shall not be a violation
of this Agreement nor ground for discharge, discipline or replacement for
employees covered by this Agreement to refuse to cross a picket line or to
refuse to perform work on the clothing of any other employer.
ARTICLE XIX
GRIEVANCE AND ARBITRATION PROCEDURE:
A. Any complaint, grievance or dispute arising under, out of or relating
directly or indirectly to the provisions of this Agreement between the Union or
any employees and the Employer, or the interpretation or performance thereof,
shall, in the first instance be taken up for adjustment by a representative of
the Union and a representative of the Employer. Any and all matters in dispute,
including a dispute concerning the interpretation or application of the
arbitration provision, which have not been adjusted pursuant to the procedure
therein provided shall be referred for arbitration and final determination to
a member of a panel or arbitrators herein designated, and his decision or award
shall be final, conclusive and binding on all parties; and the parties hereby
stipulate and consent that the Arbitrator may make findings, decisions and
awards which may be enforced by appropriate judgment thereon to be entered in a
Court of Law or Equity.
Any grievance which is submitted to arbitration shall be heard by one of the
members of a panel of three arbitrators, who shall be Jerome H. Ross, Bernard
Cushman and Joseph M. Sharnoff. These arbitrators shall hear grievances on a
rotating basis in order set forth above, provided that if the arbitrator whose
turn it is to hear a grievance cannot meet the timetable set forth herein, the
next available arbitrator shall hear the case and the rotation shall continue
from there. If none of the arbitrators can hear the case within said timetable,
then the arbitrator who can hear it first will be utilized and the rotation will
continue from there.
Hearings shall be held no later than fifteen calendar days after the arbitrator
has received his assignment at a place mutually agreeable to the Union and the
Company. The hearing shall be conducted by the arbitrator in whatever manner
will most expeditiously permit the full presentation of all evidence and
arguments for both parties, provided, however, that the parties shall have the
right to file written briefs with the arbitrator within seven calendar days
following the closing of the hearing record.
The award of the arbitrator shall be rendered no later than ten calendar days
from the day the hearing concluded or the briefs are submitted unless an
extension of time is mutually agreed upon by the parties. A lengthy opinion
shall not be requested or required from the arbitrator. Rather, the arbitrator
is instructed to issue an award and a summary statement of no more than five
pages which briefly sets forth the basis for the award. The parties may request
the arbitrator to notify them of his award by telephone after the award has been
mailed.
The decision of the arbitrator shall be limited to the matter presented to him;
he shall have no authority to amend, alter or change any provision of this
Agreement. The decision of the arbitrator shall be final and conclusive on the
Company, the Union and the employee(s) involved. The arbitrator's fees and
expenses shall be borne equally by the Union and the Company.
In the event of any controversy, the Employer's manufacturing books, vouchers,
papers and records shall be available for inspection by duly authorized
representatives of the arbitrator herein designated to make such examination,
for the purpose of determining the amount of goods cut or being cut, made or
being made, by or for the Employer and for the purpose of ascertaining the names
and addresses of the persons doing such work, and for the general purpose
of determining whether the terms of this Agreement are being fully carried
out.
Except as expressly provided otherwise in the Agreement, with respect to any
dispute subject to arbitration or any claim, demand, or act arising under the
Agreement which is subject to arbitration, the procedure established in this
Agreement for the adjustment thereof shall be the exclusive means for its
determination. No proceeding or action in a court of law or equity or
administrative tribunal shall be initiated with respect thereto other than to
compel arbitration or to enforce, modify, or vacate an award. This paragraph
shall constitute a complete defense to or ground for a stay of an action
instituted contrary hereto.
ARTICLE XX
CIVIL RIGHTS
1. The Employer and the Union shall not discriminate nor perpetuate the effect
of past discrimination, if any, against any employee or applicants for
employment on account of race, color, religion, creed, sex, or national origin.
This clause shall be interpreted broadly to be co-extensive with all federal,
state or local anti-discrimination laws and where available, judicial
interpretations thereof.
2. Representatives of the Employer and the Union shall meet to review compliance
with this provision and to mutually agree upon such steps as are necessary to
achieve compliance. If, upon failure to so mutually agree, either party invokes
the arbitration procedure of the Agreement to resolve the dispute, the Impartial
Chairman shall fashion his award to grant any and all relief appropriate to
effectuate this Article.
ARTICLE XXI
STRIKES, STOPPAGES AND LOCKOUTS
A. This Agreement provides for an orderly adjustment of differences. Strikes,
stoppages, and lockouts are therefore prohibited. If a strike, stoppage or
lockout shall occur then the parties agree that any remedy sought by either
party arising from such act shall be resolved through the medium of the
arbitration machinery and the aggrieved party shall have the right to demand an
immediate hearing on twenty-four (24) hours notice before the Arbitrator.
B. Anything contained in subparagraph A to the contrary notwithstanding:
1. In the event that the Employer violates this Agreement by employing Union
contractors who are not registered by it as required by this Agreement, the
Union shall be free to order a stoppage of the Employer's work in the shop of
such unregistered contractors.
2. Except to the extent that the employment of a non-union contractor is
authorized expressly by Article XVII-Part Two, Outsourcing, in the event that
the Employer violates this Agreement by employing a non-union contractor, the
Union shall be free to take such action, including stoppages, as it deems
appropriate to require the Employer to cease employing non-union contractors.
3. In the event that either party fails to comply with the decision or award of
the Arbitrator within ten (10) days after service of a copy thereof, the other
party shall be immediately free to call a strike, stoppage or lockout as the
case may be.
ARTICLE XXII
LEAVE OF ABSENCE:
Leave of absence shall be granted an employee upon request if the employee is
ill or a member of his immediate family is seriously ill. Illness shall be
certified by a doctor's certificate. Leave on account of illness shall include
leave of absence in maternity cases. Leave of absence shall be for an initial
period of not more than one (1) month. In the event of a leave of absence for
personal illness including maternity, the leave of absence may be extended to an
additional period of one (1) month each up to a total of one (1) year unless the
employee was employed for less than six (6) months. In the event of a leave of
absence because of serious illness in the employee's immediate family, the
initial leave and extension shall not extend for more than three months unless
mutually agreed otherwise. Such employee shall upon return to work from such
leave be reinstated to his previous job. In the case where a job or operation
has been abolished during employee's absence such provision shall apply to
re-employment as would have applied had such employee been at work at the time
the job or operation was abolished.
Leaves of absence shall be granted for justifiable personal reasons. The
Employer may limit the number of leaves for personal reasons granted at any
given time to avoid an unreasonable effect on the Employer's ability to operate.
Such leaves may be limited to an initial period of two (2) weeks with extensions
granted by mutual agreement.
An employee who becomes a paid officer of the Union shall be entitled to a leave
of absence for the term of his office.
ARTICLE XXIII
MORE FAVORABLE PRACTICES:
Any custom or practice existing in the plant of the Employer at the time of the
execution of this Agreement more favorable to the employees than the provisions
hereof shall be continued as heretofore. It is understood that this clause is to
be mutually interpreted to provide that prior contrary past practices do not
prevail over subsequently negotiated contract provisions, such as Paragraph D
of Article XXIV.
ARTICLE XXIV
INTRODUCTION OF TECHNOLOGICAL CHANGES, ETC:
A. The Union has long cooperated with Employers in the introduction of new
machinery, changes in manufacturing techniques, and technological improvements
in clothing plants. This policy has been established by mutual agreement,
generally on a market level, between the Employer and the Union. Underlying such
agreement has been the recognition of these basic conditions: (a) wages of the
affected workers were not to be reduced, and (b) workers were not to be thrown
out of employment. Such policy is reaffirmed and shall continue to be dependent,
preferably by mutual agreement on a market level.
B. If, however, in the event that the introduction of any such new machinery,
changes in manufacturing techniques and technological improvements would not, in
the opinion of either party be consistent with the maintenance of the aforesaid
basic conditions, then the Employer and the Union shall each appoint a committee
which jointly shall study and seek to resolve the problems attendant upon such
change.
C. Subject to the foregoing basic conditions (a) and (b) of paragraph A above,
the scope of the general arbitration clause shall remain in full force and
effect and applicable to all covered by this Agreement.
D. To provide for reasonably comparable implementation of the basic conditions
set forth in Article XXIV, including the definition of technological change, the
Employer and the Union shall utilize the following guidelines in the absence of
mutually satisfactory guidelines heretofore established on a market or local
union level. Where the Employer contemplates such a technological change, the
Employer shall give prior notice to the Union. Rates for such newly introduced
or changed machinery shall be established by mutual agreement. While employed on
the newly introduced or changed machinery, a worker shall be paid wages earned
plus the difference, if any, between the expected earnings under the newly
established rate and his prior earnings. Workers in the affected operation shall
not be thrown out of employment, instead, if a job is available on a
substantially equivalent operation, with the opportunity for substantially
equivalent earnings, a worker may be transferred to such job, and during a
period of retraining equal to the normal training period for similarly
experienced workers, shall be guaranteed his former average hourly earnings. If
such a job is not available, the worker shall have the option of (a) accepting
another job with a guarantee, during a period of retraining equal to the normal
training period for similarly experienced workers, of his former average hourly
earnings, or (b) severance pay in such amounts as shall be mutually agreed to
by the Employer and the Union. A worker electing to take a job which is not on
a substantially equivalent operation with the opportunity for substantially
equivalent earnings may subsequently elect to take severance pay, in which
event such severance pay shall be reduced by any make-up pay paid pursuant to
the normal training program applied. In the event the worker elects to take
severance pay, such worker shall retain for one year his seniority and recall
rights to his former job or section.
ARTICLE XXV
JURY DUTY:
An employee called for involuntary trial jury duty will be paid the difference
between the pay received for such jury duty and his straight time average weekly
earnings (calculated for the eight (8) weeks immediately preceding such jury
duty) for the period of such jury duty. The employee shall present a receipt for
the amount of jury duty pay received. An employee who receives a notice to serve
as a juror must notify his Employer not later than the next work day. If the
Employer deems it necessary to have the employee excused from jury duty, the
Union and the employee agree to cooperate in seeking to have the employee
excused.
ARTICLE XXVI
SUCCESSORS:
In the event the Employer merges or consolidates with or its business is
acquired by another person, firm or corporation, the Employer shall remain bound
by all of the terms and provisions of this Agreement for the full term hereof.
ARTICLE XXVII
SEPARABILITY:
Should any part or provision of this Agreement be rendered or declared illegal
by reasons of any existing or subsequently enacted legislation or by any decree
of a court of competent jurisdiction or by the decision of any authorized
government agency such invalidation of such part or provision shall not
invalidate the remainder thereof. In such event, the parties agree to negotiate
substitute provisions.
ARTICLE XXVIII
VOLUNTARY CHECKOFF FOR POLITICAL CONTRIBUTIONS:
In the event that voluntary authorization to deduct voluntary political
contributions weekly from an individual member's pay is signed, the Employer
agrees to deduct the said amount and remit the said sum to the Baltimore
Regional Joint Board Political Education Committee. The Union shall reimburse
the Employer for any expense incurred due to this provision.
ARTICLE XXIX
SAFETY AND HEALTH STUDY COMMITTEE:
Whereas eliminating occupational safety and health hazards for employees in the
men's and boys' tailored clothing industry is to the mutual benefit of the
Employer and the Union, the parties to this Agreement shall form and maintain a
joint Labor-Management Safety and Health Study Committee.
The Committee shall be composed of equal numbers of representatives selected by
the Employer and by the Union.
The Committee shall hold meetings as often as necessary for the purpose of
developing the means and structure to undertake joint safety and health studies
to analyze occupational hazards in the industry and to suggest appropriate
measures for control of such hazards.
A Safety and Health Study Committee shall be established in each plant. It will
meet regularly at dates, times, and place to be determined by local management
after consultation with the Union. The employees shall be paid their established
time rate or piece rate average by the Employer while attending such meetings.
ARTICLE XXX
FEDERAL FUNDS:
The Union shall cooperate with the Employer to facilitate the availability of
federal funds for training programs.
ARTICLE XXXI
A. FAMILY LEAVE:
1. An employees who has been employed by the Employer for at least twelve (12)
months (and who has worked at least 1,250 hours during the twelve (12) months
immediately preceding the employee's request for leave under this paragraph)
shall be entitled to at least twelve (12) weeks of unpaid Family Leave, within
any twelve (12) month period, without loss of seniority rights for the following
reasons:
a. For the birth or placement of a child for adoption or foster care;
or
b. To care for a spouse, child or parent with a serious health
condition as such terms are defined by the Family and Medical Leave Act of 1993
("FMLA"); or
c. To take medical leave when the employee is unable to work because
of the employee's own serious health condition as defined in the FMLA.
2. An employee requesting Family Leave shall present satisfactory proof of the
reason for such leave.
3. Family Leave may be taken on an intermittent basis under 1b) and c) above
when there is a medical necessity for such intermittent leave as provided in the
FMLA.
B. Child Care Facilities: The Employer and the Union shall establish a local
committee to study the availability of child care facilities.
ARTICLE XXXII
SUB PROGRAM:
Should the employees agree to purchase additional insurance coverage provided by
the Amalgamated Insurance Company, the Employer shall check off the employees'
cost of the program, upon presentation of proper authorization, and pay the same
over to the Amalgamated Life Insurance Company as required by the contract
between the employees and the Amalgamated Life Insurance Company.
ARTICLE XXXIII
ORGANIZATIONAL HIRING:
The Employer agrees that it will hire employees who have been discharged from
other employers during an organizing campaign conducted by the Union. The
Employer is not required by this Section to hire an employee who is not
qualified to perform the job that is being applied for. The Employer is not
required to employ such applicants if it does not have jobs available. Any
employee hired under this Section is subject to the Employer's regular
probationary period for new employees.
The Employer is not required to unlawfully give preference to employees applying
under this section.
The Union will hold the Employer harmless for any liability, included but not
limited to attorney's fees imposed by enforcement of this clause.
ARTICLE XXXIV
NATIONAL HEALTH INSURANCE:
The inflationary spiral affecting health care costs in the United States has
caused the parties concern over the continued viability of their insurance
program. Therefore, the parties agree that it would benefit the insurance
program and the Employer if an appropriate National Health Insurance Program is
enacted. It is further understood that the National Clothing Industry
Labor-Management Committee shall meet to determine the best way to mount a joint
campaign in support of the establishment of an appropriate National Health
Insurance Program and to implement such a campaign.
ARTICLE XXXV
MORE FAVORABLE CONDITIONS
If the Union enters into any agreement with any manufacturer of Mens or Boys
tailored clothing that has resigned from the CMA, which provides any terms or
conditions more favorable to that employer than any terms of conditions
contained in this Agreement then upon written notice given by the Employer such
terms and conditions shall automatically be extended to the Employer which shall
have the right to make such terms or conditions retroactive to the effective
date of such terms or conditions in the agreement containing such more favorable
terms or conditions.
ARTICLE XXXVI
TERM OF AGREEMENT:
This Agreement shall be effective upon the date hereof and shall remain in full
force and effect until midnight April 30, 1998. It shall be automatically
renewed from year to year thereafter unless on or before March 1, 1998, or March
1, of any year thereafter, notice in writing by certified mail is given by
either the Employer or the Union to the other of its desire to propose changes
in this Agreement or of intention to terminate the same, in either of which
events this Agreement shall terminate upon the ensuing April 30th.
IN WITNESS WHEREOF, the parties hereto have caused their signature to be affixed
effective the day and year hereinabove first written.
JOSEPH A BANK MFG. CO.
---------------------------------
BALTIMORE REGIONAL JOINT BOARD,
AMALGAMATED CLOTHING AND TEXTILE
WORKERS UNION
---------------------------------
Manager
AGREEMENT dated May 1, 1995 by and between
Joseph A. Bank Mfg. Co., Inc. (North Ave. Coat Shop, Brookhill
Road Cutting Floor, Hampstead
Coat Shop, Rubin Bldg. Pants
Division & Hampstead Distribution
Center)
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